17 December 2018 Circle Property Plc ("Circle" or the "Company") Interim Results show continued strong NAV and income growth Circle Property Plc (AIM: CRC) , the specialist regional UK office investment and development company today announces its results for the six months to 30 September 2018. The results show a continuation of the strong asset management led total returns that the Company has achieved since IPO in February 2016. Financial highlights • NAV per share up 30.33% to £2.75 (30 th Sept 2017: £2.11), representing a 19.80% uplift since 31 st March 2018 (£2.30p) The Company’s NAV has now grown 84.56% since IPO in February 2016. • Portfolio valuation up 12.37% to £124,8m (31 March 2018: £111.13m). • Since IPO, Circle has delivered a NAV compound average growth rate of 29.5% and a total return compound average growth rate of 32.1% • 9.9% increase in annualised contracted rental income to £7.51m (31 March 2018: £6.83m). A further £214,582 of contracted rent has been signed since the period end. • 25.2% increase in net rental income to £3.80m (September 2017: £3.01m). • 60% increase in profit before tax to £13.80m (30 September 2017: £8.6m). • 28% increase in net operating profit to £2.30m which excludes gains on investment properties (30 September 2017: £1.80m). • Due to investment sales above valuation and valuation uplifts, LTV has reduced to 40% (31 March 2018: 45.5%). • Interim dividend of 3.0p per share, which maintains the level of dividend paid for the previous reporting period. This dividend will be paid on 17 January 2019 to shareholders on the register on 14 December 2018 with an ex-dividend date of 13 December 2018. Operational highlights • The Company’s current r edevelopment and refurbishment pipeline is now complete, with Somerset House, providing 38,805 sq ft (10.33% of the Company’s total office floor area) completed and let with in the last 12 months. BE Offices’ fit -out of Somerset House will be complete in Spring 2019 with one third of the space already reserved for licensees of the serviced office operator. • Portfolio occupancy of 90% • WAULT of 10.15 years to break (31 March 2018: 7.24 years) and 11.07 years (31 March 2018: 10.50 years) to expiry. • Leasing momentum continues on competitive terms:
• In July 2018, ALD Automotive Ltd (part of SG Hambro) leased 5,400 sq ft in Park House, Northampton at a rent of £77,462pa (£14.32 psf) for a 10-year term with a five-year tenant break. • Two new five-year leases completed at 36 Great Charles Street Birmingham, for a combined annual headline rent of £93,264, before incentives. In June, Vectos Microsim Ltd took the 1,253 sq ft rear suite of the seventh floor and in July, Shaw Trust leased the 3,600 sq ft first floor. • In September, a lease variation was completed with the Company’s largest tenant, Compass Contract Services Limited (part of Compass Group) at Kents Hill Park, Milton Keynes, whereby the 15 and 20 year break options on a 25 year lease were removed, whilst the 3% per annum fixed rental increases were replaced by annual RPI increases. • In November 2018 (post period end) the remaining 13,500 sq ft on the ground floor at K2 Kents Hill Business Park, Milton Keynes was let to Deutsche Telekom subsidiary, T-Systems Ltd, at £214,582 pa (£15.50 per sq ft) on a 10-year term with tenant break at the fifth year. Portfolio restructuring and disposal programme • In line with the Company’s strategy of disposing of legacy non -core assets and focusing its portfolio on the undersupplied regional office market, a petrol filling station let to the Co-Operative Group in Amesbury was sold to an institutional investor for £3.5m in July 2018, representing an 18.64% above the 31 March 2018 valuation. The sale was simultaneous with the completion of a lease extension from two to 15 years, without breaks. • In November 2018, two shops let to Morrisons and A-Plan Insurance in Week Street, Maidstone were disposed of for £1.35m, in line with the valuation. John Arnold, CEO of Circle Property Plc, commented: “Circle’s continued focus on the active management of its regional office assets, particularly the leasing of space in the redevelopment and refurbishment pipeline, has once again delivered strong portfolio valuation growth and stre ngthened the Company’s income profile during the first half of the year. This has been achieved despite the increased levels of hesitation in signing new tenancies, which we believe largely results from the nervousness created by extended uncertainty surrounding Brexit negotiations. However, as anticipated, this has led to a number of buying opportunities emerging and we are finding more off-market deals as a result. As a consequence of our active asset management, we are also pleased to have disposed of non-core assets at or above valuation. We have continued to sign tenants since the period end which gives us confidence in our ability to lease the remaining vacant space in the portfolio, adding further income and value to our assets.” ENDS
This announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014. Circle Property Plc +44 (0)20 7930 8503 John Arnold, CEO Edward Olins, COO Smith & Williamson +44 (0) 20 7131 4000 Azhic Basirov Katy Birkin Radnor Capital +44 (0) 20 3897 1830 Joshua Cryer Iain Daly FTI Consulting +44 (0)20 3727 1000 Giles Barrie Circle@fticonsulting.com Richard Sunderland Eve Kirmatzis Chief Executive’s statement We have had another strong start to the year building on the momentum achieved in the previous reporting periods and delivering on the strategy we set out at the time of the IPO. Our efforts have translated to significant growth in NAV and portfolio valuation. Further increases to contracted rent roll, as well as double- digit net rental income growth, combined with an extension of the average lease length to over 11 years have resulted in the portfolio generating higher quality and more visible income to un derpin the Company’s progressive dividend. We have now completed the Company’s current redevelopment and refurbishment programme and our focus is now focussed firmly on both leasing up the remaining 10% of the portfolio which was vacant at the end of the period and continuing to explore ways to grow the Company. In terms of leasing up space, we have made good progress after a strong first half, with a further 2.19% of the portfolio leased since the period end. The fact that our stock selection and asset management programme means we are able to offer well located and recently refurbished high quality space at competitive rents, combined with the ongoing decline in regional office supply due to residential conversion permitted development rights, gives me confidence in our ability to continue to attract tenants.
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