Helical hopeful despite £93m loss
Helical has said it is confident that strong lettings and a well-positioned development pipeline will deliver growth, as it fell to a £93m loss.
In its six-month results, the developer said the loss, down from a profit of £17.2m last year, was “primarily driven by revaluation losses”, with net asset value down 17.5% to £502.3m.
The IFRS investment property portfolio value fell to £595.1m from £681.7m in March. The see-through investment portfolio fell by 11.8% to £745.6m, from £839.5m in March.
Helical has said it is confident that strong lettings and a well-positioned development pipeline will deliver growth, as it fell to a £93m loss.
In its six-month results, the developer said the loss, down from a profit of £17.2m last year, was “primarily driven by revaluation losses”, with net asset value down 17.5% to £502.3m.
The IFRS investment property portfolio value fell to £595.1m from £681.7m in March. The see-through investment portfolio fell by 11.8% to £745.6m, from £839.5m in March.
During the period Helical completed five new lettings totalling 10,381 sq ft and delivering contracted rent of £576,803, in line with March ERVs.
Vacancy increased across the portfolio to 18.5%, up from 16.1% in March.
This is set to rise to 25%, following the expiry of the WeWork licence arrangement and the departure of Baker McKenzie from 100 New Bridge Street, EC4, in anticipation of its redevelopment as a 194,000 sq ft scheme.
However, Helical pointed to a comparatively strong performance across its portfolio, with an average outward yield adjustment of 46bps, against the 75bps outward movement for City office prime yields reported by Savills.
Chief executive Gerald Kaye said: “Having taken the pain of reductions in value, Helical is now well positioned to drive growth through the letting of the vacant space in its investment portfolio.”
But it is in its development pipeline that Helical sees the real potential.
“Our development pipeline is expected to provide surpluses for the foreseeable future,” said Kaye. Scheduled to start in 2024 and be delivered from late 2025 onwards, this pipeline will be supplemented with additional “equity-light” opportunities, he added, as building owners refurbish to maximise the value of their assets.
“In addition, banks and other financial institutions with non-performing assets should provide additional opportunities for Helical to create value,” he said.
Kaye added: “Bifurcation of the market between the best-in-class and the rest is accelerating, with rental growth continuing for the best and values falling for the rest. This will provide opportunities to acquire potential developments and major refurbishments at levels that allow for strong capital returns.”
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