Helical reports solid development and letting progress

17th Jul 2024 11:37

(Sharecast News) - Helical updated the market on its recent trading on Wednesday, reporting significant advancements in its development projects, lettings, sales, and financial performance.

The London-listed firm, which was holding its annual general meeting, said that in terms of developments, it entered a joint venture with Orion Capital Managers on 17 May, selling a 50% interest in 100 New Bridge Street, EC4, for £55m.

It said the parties had secured a £155m development financing arrangement to cover construction costs.

Mace had started construction on the 194,000 square foot building, which was expected to complete in the first quarter of 2026.

Additionally, enabling works had started at Brettenham House, WC2, with the main contractor selection process underway.

Refurbishment work to modernise the 1930s heritage office building was slated to start in the third quarter, and be available for occupancy by the first quarter of 2026.

The Places for London Joint Venture (PfLJV) with Transport for London was meanwhile making progress with several projects.

At 10 King William Street, EC4, initial site works commenced ahead of the planned acquisition on 1 October.

Design enhancements were ongoing to improve amenities and public spaces

The Southwark Over Station Development, SE1, was also progressing through pre-application discussions and stakeholder engagements, with a planning application expected in the late summer for a student accommodation scheme and affordable housing.

In Paddington, W2, consent for terracing enhancements was obtained, with site acquisition scheduled for January 2026.

Helical also reported positive letting activity.

At The Loom, E1, a new dynamic pricing model led to the letting of 12,103 square feet across six units to four new tenants, reducing the vacancy rate from 34.9% to 27.1%.

At The JJ Mack Building, EC1, the fourth floor, comprising 23,566 square feet, was leased to Amex's Global Business Travel division for £2.2m annually.

Additional lettings were expected to complete imminently, leaving only the fifth floor available.

The Bower, EC1, was meanwhile undergoing refurbishment of three former WeWork floors, with completion expected by early September and significant interest already shown.

In sales, Helical completed the sale of 25 Charterhouse Square, EC1, to Ares Management for £43.5m on 25 April.

Financially, Helical said it had drawn £188m under its £300m revolving credit facility (RCF) at an effective interest rate of 1.9%.

The company said it was in advanced discussions to renew and extend the facility.

In joint ventures, Helical had drawn £66.7m of the £69.9m facility with PIMCO for The JJ Mack Building, achieving an effective interest rate of 2.3%.

The £155m development financing for 100 New Bridge Street remained undrawn.

As of 30 June, Helical had around £66m in cash and £203m in undrawn loan facilities, with a weighted average cost of debt of 2.2% and an average maturity of 1.8 years.

On the board front, changes included Matthew Bonning-Snook succeeding Gerald Kaye as chief executive following Wednesday's meeting, with Kaye continuing as a consultant for key developments.

Amanda Aldridge joined the board as an independent non-executive director and would chair the audit and risk committee following Joe Lister's departure.

Helical had announced a final dividend of 1.78p per share for the year ended 31 March, which, if approved, would be paid on 2 August, bringing the total dividend for the year to 4.83p.

"The leasing market for new 'best-in-class' office developments and major refurbishments remains strong and these assets are showing continued rental growth," said chief executive officer Gerald Kaye.

"Our pipeline of new developments being delivered into a supply constrained market should enable Helical to deliver surpluses over a sustained period.

2As well as the sale of 25 Charterhouse Square, EC1 and the 50% sale of 100 New Bridge Street, EC4, we have achieved some notable letting success across the portfolio in the Period, including reducing the vacancy at The Loom, E1 by nearly 8% and closing in on 100% occupancy at The JJ Mack Building, EC1."

Kaye said the company was "encouraged" by improving occupier sentiment.

"This is my last update as chief executive of Helical before handing over the role to Matthew Bonning-Snook later today following the 2024 AGM.

"I wish him well and have every confidence in his ability to take the business forward as a London focused development company."

At 0957 BST, shares in Helical were up 0.84% at 239.5p.

Reporting by Josh White for Sharecast.com.