Circle Property maintains dividend as values rise

Specialist regional UK property investment, development and management company Circle Property announced its results for the six months to 30 September on Wednesday.

The AIM-traded firm posted a 16.3% increase in value of the group's portfolio of 16 UK investment properties to £90.425m, up from £77.735m at the end of March, resulting primarily from the group's successful asset management initiatives.

It reported 17% growth in net asset value per share to £1.79, and an operating profit of £1.15m, compared with £0.84m for the almost four month period from 4 December 2015 to 31 March 2016.

That contributed to a pre-tax profit of £8.27m and an increase in earnings per share to 29.0p per share from 3.8p for the previous period.

Net rental income for the six months to 30 September was £2.0m, rising from £1.1m, while annualised rental income as at 30 September was £5.7m compared with £5.9m at 31 March.

That was despite a loss of £0.8m of annualised rent resulting from the group strategically vacating Somerset House in Birmingham to facilitate a refurbishment of the building.

An additional £2.3m of annualised rent is obtainable by the end of 2018, the board claimed, upon the letting of the completed refurbishments at current ERVs.

Circle’s weighted average unexpired lease term to break was now 7.81 years, up from 5.6 years at 31 March, and 11.53 years to expiry, up from 6.85 years.

Based upon the September valuation of £90.425m, the portfolio now reflects a net initial yield of 6% and a reversionary yield of 9.15%.

In June, Circle signed a new £50m revolving facility with RBS which facilitated the refinancing of £39m of existing facilities at a lower cost, and provided capital for further acquisitions.

Following that transaction, as at 30 September the group's secured debt amounted to £44.0m with a weighted average term to expiry of 4.4 years and a weighted average cost of 2.44% secured on the company's investment property portfolio.

The board declared an interim dividend of 2.4p per share, which maintained the level of dividend paid for the previous reporting period.

It confirmed the dividend will be paid on 18 January to shareholders on the register on 16 December with an ex-dividend date of 15 December.

“At the time of IPO we set out a clear objective to deliver attractive returns by investing in and managing value from regional offices which are often overlooked by other investors,” said chief executive John Arnold.

“With strong growth across all key metrics and significant lettings successes these results not only demonstrate our team's ability to do just that, but also show that there is plenty of growth to be had in the regions, where Brexit has had little or no impact thus far.

“We will now look to progress our current pipeline of asset management opportunities, whilst also exploring ways to undertake new acquisitions and grow our portfolio.”