Circle Property pleased with rent collection performance

Regional office investor Circle Property updated the market on Friday, reporting that it had collected 75% of its rent for the quarter to December.

The AIM-traded firm said that reflected both the lack of exposure to retail, and the strength of its covenants.

Taking into account agreed monthly payments, the September quarterly rent collection stood at 80% of rent due.

Rent collection for the March and June quarters had improved since its last update, and now stood at 93% and 89%, respectively.

The company said it remained in “constant and constructive” dialogue with all tenants, adopting a flexible approach to the payment of arrears according to need, and expected its rent collection numbers to continue to increase further.

Looking at its valuations, the company said its investment and development portfolio, which was almost entirely focused in the regional office sector with no exposure to retail, other than two public houses and one restaurant in Birmingham, had been independently valued at £137.85m as at 30 September, down from £139.45m at the end of March.

That marginal valuation decline was due to the earmarked strategic investment of approximately £1.6m to refurbish two assets, being K3 in Kents Hill, Milton Keynes and 135 Aztec West in Bristol, rather than negative market movement.

Over the six month period, net asset value per share decreased by 1%, reflecting an unaudited estimated NAV of £2.83 per share.

On the financial front, Circle Property said it had a financing facility in place with RBS and HSBC for £100m.

The senior revolving facility was for £65m, of which it had drawn £62.3m, with an accordion option for a further £35m.

As at 30 September, the firm had £4.5m cash on balance, reflecting a gross loan-to-value ratio of 43.77%.

In total, the Company has £7.2m of immediate liquidity at its disposal.

As it had previously announced, with the challenges arising from Covid-19, and the likely implications for the economy, the board considered it prudent to reduce gearing from the current level.

It said it had a number of assets that benefited from its active management approach, and where it had added “considerable” value following redevelopment, lease restructures or renewals.

Circle Property said it believed those investments, with secure tenants and long-term income attached, would be “highly sought after” as investors looked to secure income in an uncertain and low yielding macroeconomic environment.

“We have continued to work closely with our tenants and this has resulted in strong levels of rent collection,” said chief executive officer John Arnold.

“Despite the disruption caused by the Covid-19 pandemic, our focus on regional offices and our notable lack of exposure to retail property has allowed us to maintain a strong portfolio valuation of £137.85m.

“We continue to actively manage our portfolio and we look forward to updating investors further on the progress made at our Interim Results in due course.”

At 0834 BST, shares in Circle Property were down 3.08% at 157.5p.