Helical eyes discounted assets despite falling profit

Helical is eyeing discounted assets as price discovery drives down prices for second-rate stock. The REIT this morning announced a total property return of just £4m for the first half of 2022. IFRS profit after tax was £17.2m, down from £22.2m for H1 2021. Rents fell by £9.4m for the period to £37m. The net loss on sale and revaluation of investment properties of £30.4m was partially offset by profit from joint venture activities of £15.1m, including a £15.3m gain on revaluation of investment properties held in joint ventures. Net asset value rose by 0.8% to £692.7m, while the total portfolio fell, on an IFRS basis, from £938.8m to £738.5m. However, chief executive Gerald Kaye was optimistic that that quality of Helical’s assets would shine through, adding that the “bifurcation” between the best in class and the rest “will accelerate”. Pointing to the recent letting at the JJ Mack Building, Kaye added: “We believe there is an intrinsic shortage of this top-quality space as demand exceeds supply over the short and medium term.” However, he said values for less sustainable, second-hand stock would continue to fall. “Price discovery will continue for the poorer-quality, less-sustainable second-hand buildings as they decouple from the rest of the market,” he said. This will provide a significant opportunity for Helical, Kaye added. “In time, these assets will provide Helical with the opportunity to turn these tired office buildings into market-leading and highly sustainable new spaces providing amenity-rich and technologically-enabled offices which will appeal to discerning tenants seeking the best environment for their staff. This will enable us to continue to provide strong returns from our developments over the medium term.”   To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews