Login to UKBP
Commercial Property News
Mike Slade says recovery stalling as Helical swings back to FY profit
Helical Bar Plc reported today that it had swung back to a pre-tax profit of £7.9 million in it's FY 2009-10 ending March 31st. after a loss of £71.9 million the previous year.
It's diluted EPRA net asset value, including trading and development stock surplus, was down 5% to 272p per share (2009: 286p).
Helical has repaid £68million of debt during the period, partly as a result of its renegotiation of loans and partly arising from the sale of Rex House and industrial units at Southampton, Southall and Kidlington. Since the year end, the Group has repaid £9million of loans from the sale of Watford, Paignton and Whitstable and will repay a further £10million on the sale of Fieldgate Street, London E1 in June 2010.
At 31 March 2010 the Group had net borrowings of £203.0million (2009: £224.7million) and gross property values of £435.5million (2009: £497.2million).
Noted industry veteran Michael Slade, Chief Executive, said:
"In the year to 31 March 2010, commercial property started to recover from the 44% decline in capital values between their peak in June 2007 and their trough in July 2009. Since then, capital values have improved by approximately 14%. This recovery is now stalling as buyers digest the potential clouds on the horizon. The derivative market points to negligible capital growth for the foreseeable future and IPF forecasts are no more optimistic. The overwhelming concern centres on the banking crisis spilling over into a sovereign wealth problem whilst on a domestic level, the market remains worried over tenant demand/failure, forced sales as the banks slowly unload and a constipated new planning regime."
"Set against good gains by the majors with a strong London weighting, Helical's efforts this year at first may seem pedestrian. This is a function of how we have managed our way through the last three years of crisis. I draw your attention to the Chairman's Statement on our adjusted net asset value per share outperformance over the last two difficult years which demonstrates the virtues of avoiding hugely dilutive rights issues. That path never was and never will be Helical's way. Shareholders can be grateful that your management team maintains a sizeable shareholding in the company."
"In every market cycle, Helical has experienced a period during which it repositions its business to prepare for opportunities in forthcoming years. It is no accident that half of our portfolio is made up of development and trading property rather than mainstream investment stock. Now is the time to be working up major projects, both in Central London offices and in large residential plays in West London, as well as keeping an eye open for attractive investment opportunities as and when they arise.
"Interestingly, we made our first major investment acquisition in four and a half years when buying the Clyde Shopping Centre in Glasgow with joint venture partners last autumn. This was followed by the purchase of nine industrial and office investments last month. More recently we have been appointed 'asset and development manager' at the 360,000 sq ft City office property, 200 Aldersgate, reflecting our long experience of City development. Legal agreements have been exchanged to acquire the site at Mitre Square, London EC3 from the City of London and Ansbacher and a planning application for a new, high quality office development of 270,000 sq ft NIA has been submitted. A start on site could be as early as the first quarter of 2011. With responsibility for some 3,500 residential units to be built in West London at Fulham Wharf, Hammersmith Town Hall and White City, in addition to our growing Retirement Villages portfolio, we look also to benefit from an improving residential market.
"Having successfully navigated our way through the crisis period and in doing so outperformed our peers, we now look to monetising our portfolio of opportunity, sharing risk with partners, and maintaining a strong balance sheet."
It's diluted EPRA net asset value, including trading and development stock surplus, was down 5% to 272p per share (2009: 286p).
Helical has repaid £68million of debt during the period, partly as a result of its renegotiation of loans and partly arising from the sale of Rex House and industrial units at Southampton, Southall and Kidlington. Since the year end, the Group has repaid £9million of loans from the sale of Watford, Paignton and Whitstable and will repay a further £10million on the sale of Fieldgate Street, London E1 in June 2010.
At 31 March 2010 the Group had net borrowings of £203.0million (2009: £224.7million) and gross property values of £435.5million (2009: £497.2million).
Noted industry veteran Michael Slade, Chief Executive, said:
"In the year to 31 March 2010, commercial property started to recover from the 44% decline in capital values between their peak in June 2007 and their trough in July 2009. Since then, capital values have improved by approximately 14%. This recovery is now stalling as buyers digest the potential clouds on the horizon. The derivative market points to negligible capital growth for the foreseeable future and IPF forecasts are no more optimistic. The overwhelming concern centres on the banking crisis spilling over into a sovereign wealth problem whilst on a domestic level, the market remains worried over tenant demand/failure, forced sales as the banks slowly unload and a constipated new planning regime."
"Set against good gains by the majors with a strong London weighting, Helical's efforts this year at first may seem pedestrian. This is a function of how we have managed our way through the last three years of crisis. I draw your attention to the Chairman's Statement on our adjusted net asset value per share outperformance over the last two difficult years which demonstrates the virtues of avoiding hugely dilutive rights issues. That path never was and never will be Helical's way. Shareholders can be grateful that your management team maintains a sizeable shareholding in the company."
"In every market cycle, Helical has experienced a period during which it repositions its business to prepare for opportunities in forthcoming years. It is no accident that half of our portfolio is made up of development and trading property rather than mainstream investment stock. Now is the time to be working up major projects, both in Central London offices and in large residential plays in West London, as well as keeping an eye open for attractive investment opportunities as and when they arise.
"Interestingly, we made our first major investment acquisition in four and a half years when buying the Clyde Shopping Centre in Glasgow with joint venture partners last autumn. This was followed by the purchase of nine industrial and office investments last month. More recently we have been appointed 'asset and development manager' at the 360,000 sq ft City office property, 200 Aldersgate, reflecting our long experience of City development. Legal agreements have been exchanged to acquire the site at Mitre Square, London EC3 from the City of London and Ansbacher and a planning application for a new, high quality office development of 270,000 sq ft NIA has been submitted. A start on site could be as early as the first quarter of 2011. With responsibility for some 3,500 residential units to be built in West London at Fulham Wharf, Hammersmith Town Hall and White City, in addition to our growing Retirement Villages portfolio, we look also to benefit from an improving residential market.
"Having successfully navigated our way through the crisis period and in doing so outperformed our peers, we now look to monetising our portfolio of opportunity, sharing risk with partners, and maintaining a strong balance sheet."
Thu, 3rd Jun 2010