Circle sees valuations lift

By Paul Norman - Thursday, October 11, 2018 9:02

Circle Property, the specialist regional UK office investment and development company, said its regional focused offices had seen strong valuation growth in the first half of 2018 thanks to a busy leasing period, in a trading update

The company pointed in particular to leasing of its redevelopment and refurbishment pipeline.

As at 30 September 2018 the independent valuation of the company’s portfolio was £124.875m, up 12.37% on a like-for-like basis over a six month period since 31 March 2018 (£111.125m).

The company estimates an unaudited NAV of £78.7m (£2.78 per share) as at 30 September 2018, which represents an 87% growth in NAV since IPO in February 2016.

It said £677,276 has been added to the contracted rental income resulting in a 9.9% increase to £7.506m (31 March 2018: £6.829m).

It added that construction on the company’s redevelopment and refurbishment pipeline is now complete with good interest from potential tenants.

This included completion of the acquisition of 710 & 720 Aztec West Business Park in April 2018 for £4.2m in an off-market transaction representing a net initial yield of 7.9%. 

It also completed a 15 year lease with BE Offices at Somerset House in Birmingham, at a contracted rent of £795,729 pa taking it to full occupancy.

The conclusion of a lease renegotiation with a major tenant at Kents Hill Business Park in Milton Keynes included the removal of two break clauses at years 15 and 20 in its lease which has 23 years remaining before expiry and is now RPI linked.

The company also announced that simultaneous to agreeing a lease re-gear with the tenant, it has completed the disposal of a non-core asset on the A303 at Solstice Park in Amesbury, Wiltshire for £3.5m, representing an 18.6% premium to book value. Circle acquired the roadside site in 2005, before developing it into a petrol filling station and convenience store let to Co-operative Group Food. The proceeds of the sale will be reinvested into the refurbishment and acquisition pipeline.

John Arnold, CEO of Circle Property, said: “Our careful stock selection and active asset management strategy continues to yield results as we report another significant uplift in our portfolio’s valuation at the half year. The regional office markets in which we operate remain buoyant and we continue to be focused on growing the Company, expanding the share register and seeking new acquisition opportunities where we can apply our active asset management expertise to unlock value for our shareholders.

"Furthermore, the sale at Solstice Park will enable us to recycle capital from a non-core, ex-growth asset into higher yielding investment opportunities in strong regional office markets, in line with our strategy.”

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