VALUATION AND TRADING UPDATE

16 May 2019

Circle Property Plc

("Circle" or the "Company")

VALUATION AND TRADING UPDATE

Circle Property Plc, a specialist regional UK office investment, development and management company, provides the following update on trading ahead of its preliminary results for the 12 months ended 31 March 2019, which it intends to announce in June 2019.

Valuation growth from active management continues

·      Circle's continued focus on the active management of its portfolio of well located office assets in regional cities delivered another year of market leading NAV growth, by which measure Circle is the best performing listed UK real estate company over the last three years¹.

·      As at 31 March 2019, the portfolio was independently valued at £124.6 million, up 9.23% since 31 March 2018 (£114.1 million).

·      An unaudited NAV of £78.4 million (£2.77 per share), up 20.43% since 31 March 2018 (£2.30 per share) and up 95% since IPO in February 2016. 

Strategic disposal of non-core assets increases focus on offices

·      Circle disposed of £9.5 million of non-core, retail and roadside assets above book value including:

o  A petrol filling station close to Stonehenge on the A303 for £3.5 million (October 2018); and

o  Two high street retail assets in Week Street, Maidstone, for £1.4 million in aggregate (October 2018)

o  The Company also sold Baildon Bridge Retail Park, Shipley, near Bradford, in April 2019 post year end, for £4.6 million in line with the most recent valuation, removing its last exposure to the challenged retail market.

·      The proceeds of these sales will be recycled into the Company's refurbishment and redevelopment pipeline as well as future investment opportunities.

·      The portfolio now comprises 21 regional office buildings with reversionary potential and added value opportunity from active management, and an industrial property near Ipswich.

Lettings activity grows income

·      Over the year, Circle agreed 12 new lettings across the investment and development portfolio, comprising a total of 78,000 sq ft at an aggregate contracted annual rent of over £1.35 million. 

·     Post year end, the Company let the entire first floor, comprising 20,000 sq ft, of K2 office building at Kents Hill Park, Milton Keynes, to Grand Union Housing Group, achieving full occupancy at the business park.  The headline rent of £340,000 equates to £17.50 per sq ft and set a new benchmark rent at Kents Hill Park.  Circle will now commence on the refurbishment of the third building, K3, on the 22 acre business park, which will be offered either as a single let 12,000 ft building or up to four suites of approx. 3,000 sq ft each.

Refinancing provides firepower for investment opportunities

·      The Company completed an agreement with RBS and HSBC for a £100 million new financing facility. The facility replaces a £55 million facility with RBS agreed in June 2016 and amended in March 2018. The new facility comprises a senior revolving facility agreement for £60 million, with an "accordion" option to extend the facility by a further £40 million. The facility has a four-year term, with the option of a further two-year extension, at an interest rate of 2.05% over LIBOR.

John Arnold, CEO of Circle Property Plc, commented: "This is our third successive year of delivering total return in excess of 20% for investors and is a direct result of our proven strategy and active management approach. Following the significant refinancing and the strategic disposals completed over the course of the year, our balance sheet is stronger than ever with all the essential building blocks now in place for Circle's next phase of growth.   

"We continue to have confidence in capturing the reversionary opportunity in the portfolio and assessing value accretive acquisition opportunities as and when they arise."

¹ Source: Radnor Capital research, 31 March 2019

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

ENDS