Helical recorded a loss of £93.1m and saw the net asset value (NAV) of its portfolio fall 17.5% to £502.3m in the six-month period to 30 September 2023.
During the reporting period, vacancy increased across Helical’s portfolio to 18.5% and the company warned this was likely to rise to circa 25% following the expiry of a short-term licence arrangement with WeWork at The Tower (EC1) and the departure of Baker McKenzie from 100 New Bridge Street (EC4) ahead of the building’s redevelopment.
Gerald Kaye, chief executive of Helical, said: “Occupational demands are evolving in the office sector, with tenants using their premises to optimise the work experience for their employees. Amenity, connectivity, service and sustainability are encouraging businesses towards new buildings. At the same time, buildings that provide a poorer working environment are driving occupiers away. This bifurcation of the market between the ‘best-in-class’ and the rest is accelerating with rental growth continuing for the ‘best’ and values falling for the rest. This will provide opportunities to acquire potential developments and major refurbishments at levels that allow for strong capital returns.
“We have experienced a further significant outward yield movement in the period, and while interest from potential occupiers has been encouraging, lease negotiations are taking longer to conclude. However, having taken the pain of reductions in value, Helical is now well positioned to drive growth through the letting of the vacant space in its investment portfolio.”
Kaye said at The JJ Mack Building (pictured), EC1, recent letting progress had been “encouraging” and the building will be around 60% let when the space currently under offer completes in December.
He added: “Our development pipeline is expected to provide surpluses for the foreseeable future. Scheduled to start in 2024 and be delivered from late 2025 onwards, this pipeline will be supplemented with additional ‘equity-light’ opportunities as building owners seek specialists in office development and refurbishment to partner with them to maximise the value of their assets. In addition, banks and other financial institutions with non-performing assets should provide additional opportunities for Helical to create value.”
