Bruntwood has been hit by a 17% fall in the value of its portfolio over the past year owing to turmoil in the UK real estate market.
The decline led to a pretax loss of £224.3m for the 12 months to 2 October 2023, from £79.6m profit for the year to the end of September 2022.
Bruntwood said external factors, including interest rate rises and the bond market crises, were responsible for the downward pressure on property valuations across the UK real estate sector.
The developer’s gross profit increased 18% to £74.3m from £62.9m the previous year, with operating profit up 57% to £48.9m from £31.1m.
The figures were driven by improved occupancy levels and rental growth across Bruntwood’s UK-wide portfolio as it continued to invest in its property, with £19.1m spent on refurbishment and capital improvement projects during its most recent financial year.
Bruntwood’s sole-owned £260m portfolio of workspaces, primarily located in suburban town centres, alongside a £100m portfolio of town-centre regeneration projects with Trafford and Bury councils, is expected to continue to expand and deliver refurbishments in 2024.
Bruntwood has invested a further £11.5m – matched by its partner Legal & General – to fund the portfolio growth of its Bruntwood SciTech platform.
Following the end of its financial year on 2 October 2023, Bruntwood and Legal & General agreed a £500m new investment into Bruntwood SciTech, which saw Greater Manchester Pension Fund become a third shareholder partner and inject £150m of new investment.
The deal has helped Bruntwood to repay £170m of debt and create headroom in its banking facilities to refinance its £91m 6% retail bond which falls due in February 2025.
Chris Oglesby, chief executive at Bruntwood and Bruntwood SciTech, said: “Despite us seeing a paper loss created by some sizeable valuation shifts, the performance of our portfolio didn’t waver, with our gross profit performance pointing to the continuing appeal of our modern, world-class workspace, retail space, and specialist facilities for tech, life sciences, and innovation-led companies of all sizes.
“We’re now a quarter of the way into our current financial year following the investment deal and with Greater Manchester Pension Fund as our new jv partner in Bruntwood SciTech. While being prudent about what we deliver and when, as both the real estate market and wider UK economy remains fragile, we continue to have confidence in the strength of our products, the sectors we are invested in supporting, the opportunities within our growth pipeline, and will continue to build and invest in our towns and cities into 2024 and beyond.”
Image from Bruntwood
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