Circle Property PLC Valuation and Trading Update and Acquisition (1511M)

TIDMCRC

RNS Number : 1511M

Circle Property PLC

26 April 2018

26 April 2018

Circle Property Plc

("Circle" or the "Company")

VALUATION AND TRADING UPDATE AND ACQUISITION

22.6% valuation uplift reflecting continued asset management success and strong supply-demand dynamics in regional office markets

Circle Property Plc, a specialist regional UK property investment, development and management company, provides the following update on trading ahead of its preliminary results for the 12 months ended 31 March 2018, which it intends to announce in June 2018. In addition, the Company announces the GBP4.2 million acquisition of 710 & 720 in Aztec West Business Park, which is Bristol's premier business park.

Continued strong portfolio valuation growth

-- The Company's focus on active asset management initiatives has continued to deliver significant growth in the value of Circle's portfolio.

-- On a macro level, the Company continues to benefit from the ongoing buoyant demand for space in well located office assets in regional cities, at a time when supply continues to reduce through permitted development rights.

-- As at 31 March 2018, the portfolio was independently valued at GBP114.025 million, up 22.6% since 31 March 2017 (GBP93.025 million) and up 54.31% since IPO in February 2016 respectively. The strong momentum achieved in the first half, continued through the second half.

Asset management success driving income growth

-- Circle achieved significant growth in annual contracted rents which were up 21.49% to GBP6,829,243 over the year (2017: GBP5,621,233), of which:

o 50% is attributable to the leasing of refurbished space in the Company's redevelopment pipeline;

o 21% is attributable to lease renewals within its core portfolio; and

o the remaining 28% is as a result of the acquisition at Aztec West.

-- Estimated Rental Values across the portfolio increased by 12.45% to GBP9,925,069 pax. This underlines the potential future income growth generation from the Company's assets as this reversion is captured and recently refurbished vacant space is leased.

-- Occupancy across the Company's portfolio excluding completed developments, remained high at 99%, reflecting the demand for office space in strong regional cities across the UK.

-- The leisure elements at the Somerset House development in Birmingham are now fully occupied. Camerons Brewery has signed a 20 year lease with 15 years to first break on a 5,424 sq ft restaurant at a rent of GBP175,000 per annum. Moreover, strong interest has been received for the recently refurbished office space on the upper floors.

Acquisition of additional buildings at Aztec West in Bristol provides further opportunity for value creation

-- In an off-market transaction Circle has completed the GBP4.2 million acquisition of 710 & 720 Aztec West Business Park, adding to the Company's holdings within Bristol's premier business park, where it already owns a fully leased 13,258sq ft unit (number 135). The acquisition price represents a net initial yield of 7.9%. The properties are fully let with a weighted unexpired lease term of 4.85 years and generate a total passing rent of GBP351,573 per annum.

-- The acquisition was funded through a GBP5 million extension to the Company's existing GBP50 million loan facility with RBS.

John Arnold, CEO of Circle Property Plc, commented:

"2017 was another strong year for Circle. We continue to see strong demand for high quality office space in our key markets. Supply continues to diminish as more offices convert to residential. Indeed, in Bristol the office supply has shrunk by 17% over the last year.

There is a clear opportunity to achieve further gains by capturing rental reversion as we lease up the vacant space in our redevelopment pipeline and through reviews and renewals across the under-rented elements of the portfolio.

The recent acquisition at Aztec West provides us with another high quality asset from which we believe we can create additional value. We continue to see a strong pipeline of opportunities that we are keen to progress."

This announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014.

ENDS

 
                         [phone] 
 Circle Property Plc      8503 
 John Arnold, CEO 
  Edward Olins, COO 
 
                        [phone] 
 Smith & Williamson      4000 
 Azhic Basirov 
  Katy Birkin 
 
  Radnor Capital 
  Iain Daly               [phone] 
  Joshua Cryer            1830 
                        [phone] 
 FTI Consulting          1000 
 Giles Barrie 
  Richard Sunderland 
  Eve Kirmatzis 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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April 26, 2018 02:00 ET (06:00 GMT)