Helical’s chief exec on going from disposals to development

New Helical chief executive Matthew Bonning-Snook’s first months in the top post – his latest role in almost three decades with the company – have been busy on the dealmaking front. Now, he and the team are turning their attention to a packed development pipeline. In recent months the company has sold its £139.2m stake in the JJ Mack Building, EC1, to AshbyCapital and offloaded 25 Charterhouse Square, also in EC1, for £43.5m. It has also sold 50% of its 100 New Bridge Street, EC4, development by entering a joint venture with Orion Capital Managers, and agreed the sale of the Power House, W4, for £7m. The investment market remains “in a state of thawing” given the past rise in interest rates, Bonning-Snook told EG as the company published its latest results. “Since the Budget we have seen a fair bit of volatility on where five-year swap rates are, albeit they did come down below 4% yesterday [25 November],” he added. “I suspect there’ll be continued volatility on that. But the general trajectory is that [the Bank of England is] going to try to keep control of inflation and interest rates should come down.” Until that picture becomes clearer, the company is unlikely to make many more disposals. “We’re in no hurry to do any further sales at the moment,” Bonning-Snook said. “By the time we come around to selling some of the investment stock, we would expect to be selling into quite a different market, one that will also see continued rental growth, which is what people are buying into.” Prior to the Budget, several larger London assets were being marketed. “We’ll see whether those come through in the beginning of next year,” Bonning-Snook said. “But if it takes a bit longer, it takes a bit longer. That is not a huge concern to us. “What we are very pleased about is that we managed to recycle the assets that we did, which put us on the front foot in order to fund the development scheme.” That pipeline features on-site schemes, including a 194,500 sq ft project at 100 New Bridge Street, EC4; repositioning the 128,000 sq ft Brettenham House, WC2; and a joint venture with Transport for London at the 141,000 sq ft 10 King William Street, EC4. With an eye further ahead to prelets, Bonning-Snook is upbeat about the outlook for London office leasing, anticipating deals to average £100 per sq ft in the coming months. “Think back two years to Clifford Chance at £77 per sq ft [at GPE’s 2 Aldermanbury Square, EC2]. Then you got HSBC at £87 per sq ft [at Orion Capital Managers’ 81 Newgate Street, EC1] and you got Citadel at £95, £97 [at British Land’s 2 Finsbury Avenue, EC2] . “It’s moving on again. Occupiers are willing to pay because they are keen to create the right space for the workforce and try to get people back into the office. And often that involves more space rather than less, so we are seeing net absorption.” Some parts of the capital will benefit more than others. Bonning-Snook pointed to “a wide spread of vacancy” across submarkets, ranging from Aldgate out at 26% to Shoreditch at 12% and the City at around 6%, “with virtually zero new stock coming through”. “Areas that are relatively close to each other have quite different dynamics,” the chief executive said. “But if you’re a City law firm and you want space in the City, it doesn’t really matter how much space is in Aldgate or anywhere else that is suffering from oversupply. They are all going to be after the same space. “At the moment there’s been an interesting lull where a number of bigger occupiers are thinking about what steps to take next. I think there will be a first mover advantage in those that do take those steps. If they pay the right rents, they will get those good buildings and the others are going to find they face a struggle.” See lettings information for London >>