Helical saw the net asset value (NAV) of its portfolio decline significantly in its full year results for the year ended 31 March 2023. In the reporting period its NAV was down 11.4% to £608.7m, compared with £686m to the year end 31 March 2022.
The developer posted an IFRS loss of £64.5m compared with profit of £88.9m in 2022 and its see-through total property return was -£51.4m (2022: £89.5m).
It proposed paying a final divided for the year of 8.70p per share (2022: 8.25p) – an increase of 5.5%.
Gerald Kaye, Helical chief executive, said: “The central London office market has suffered a fall in capital values over the last year and Helical has not been immune to these market movements, with our portfolio experiencing a valuation decline of 10.1% (on a like-for-like basis). While previous valuation falls have been caused by recessions following periods of economic exuberance leading to an oversupply of new office space, the current decline in values reflects a number of differing cyclical and structural factors.
“The impact of all these factors has accelerated the bifurcation in the market. With best-in-class property valuations adjusting to reflect the movement in bond yields, it is the older, poorer quality buildings that are facing what is likely to be a deeper correction, with downward price discovery potentially not reaching an endpoint until a lease ends and the rent stops, or from refinancing events.
“Tenant demand for the best, newly developed or refurbished buildings at the forefront of sustainability with top quality amenities is strong, and seeing rising rental values.”
Kaye said the developer had continued to recycle capital out of its mature, stabilised assets, reduced leverage and cut administration costs for the year ahead by more than 13%.
Coupled with a “substantial” office development pipeline of circa 790,000 sq ft, Kaye added that Helical was “well placed to capitalise on any ongoing market dislocation and the structural trends impacting the office sector”.
