Good morning. I'm delighted to welcome everyone to Helical's annual results presentation for the year ending the 31st of March 2025. I'm joined by Tim Murphy, our Chief Finance Officer; James Moss, who will be taking over from Tim in July at the AGM; and Rob Sims, our Chief Investment Officer. The agenda here sets out what we will try and cover during the course of the presentation. Having taken over as CEO in July of last year, I'm 10 months in, but I'm hugely encouraged by the substantial progress that we have made in that short time period. Perhaps I can start by re-emphasizing what the company is seeking to achieve, what we said at the interims, provide detail on what has been accomplished over the financial year, before talking more broadly about current market dynamics.
Helical seeks to be a central London development-focused business delivering best-in-class, typically large-scale office projects, but increasingly mixed-use, alternative uses, and frequently in joint ventures or through equity-light structures in well-located undersupplied markets in order to provide enhanced shareholder returns. At the half-year, we reported on the GBP 245 million of asset sales we had executed despite the muted investment market, and that as a consequence, we had a fully funded development pipeline. We highlighted the emerging supply imbalance in specific sub-markets and that with rising rents, now was the time to build. With our joint venture in place with TfL's property company, Places for London, we had three initial seed sites with other sites under consideration.
We set out that we would seek further equity-light structures akin to our deal at Brettonham House, and that we felt this strategy meant that we were well placed to deliver substantial profits over the next few years. How did we fare over the course of the year, and what did we get done? As you can see from this timeline, we had an extremely busy year overall. We had the asset sales amounting to GBP 245 million, which included the sale of Charterhouse Square, the Powerhouse, and a 50% share in a 100 New Bridge Street site and JJ Mack Building. We signed the development agreement on our equity-light scheme at Brettonham House, obtained a completely new planning permission for student use at Southwark, and improved the consents in place at 10 King William Street and at Paddington.
To add to this, we signed a building contract and a financing agreement allowing us to start construction at 10 King William Street. We also forward-sold 100 New Bridge Street halfway through construction to an owner-occupier in a market-defining transaction. We even found time to move office ourselves, which was one of the key steps to reduce our admin budget by 25%. All in all, a very productive year. Looking now at the market backdrop, how do we see things? The office leasing market remains robust for quality, amenity-rich space in the low-vacancy sub-markets. Cushman & Wakefield's analysis of over 530 office moves in central London last year is clear that there is net absorption. Companies are taking more space of better quality, not less but better. Central London active demand is 31% of the long-term average, and under-offers 46% of the long-term average.
Of the 10 million sq ft under construction, 46% is either pre-let or under offer, and much of the five-year speculative pipeline is reported by JLL as having substantial barriers to entry. Increased construction and financing costs, together with contractor and finance availability, impact development viability and deliverability. The difficulties of obtaining planning permission, assets being in the wrong hands, and change of use all put a brake on the supply of office space. The shortage in certain markets is unlikely to be fixed quickly. Tenant demand for the best space remains strong, but increased fit-out costs will deter some of the active demand, particularly where re-gearing remains a possibility. Whilst the capital markets remain subdued, according to CBRE, investment volumes have increased by 49% on the previous quarter.
The reduction in the five-year swap rate, increased data points, and a returning interest from institutional capital against the backdrop of the improving rental growth story should see a gradual return to more normal trading volumes. Given the encouraging market dynamics and our productive year in executing transactions, I will let Tim cover how this has influenced our financial results.
I want to take you through the results for the year, and later James will take us through the group financing and the balance sheet. Looking at the results, the business has bounced back strongly after two years of yield expansion. It's profitable, the pipeline is generating realized surpluses, and the balance sheet is strong. We generated an EPRA TAR, EPRA Total Accounting Return, of 6.3%, with the EPRA NTA per share of 348 pence. LTV is 20.9% and net debt GBP 113 million, both the lowest on record with plenty of cash and available bank facilities. I will come to the dividend later, but let's look at the earnings. As expected, net rents are down on last year, reflecting asset sales and lease expiries, particularly at the Bower and 100 New Bridge Street pre-development. Looking elsewhere, we increased net development profits to GBP 2.2 million from GBP 0.4 million last year.
However, for the first time, we have offset the staff costs of the development team against development profits. Others in the sector have capitalized such costs, but with a growing stream of DM fees and promotes, we believe this to be the more appropriate treatment for Helical. The resulting net administration costs, including in joint ventures and adding in performance-related pay, fell from GBP 11.3 million to GBP 10.9 million. You will all know, and Matthew has just mentioned it, that we have moved offices and reduced headcount, focusing directly on our development activities, as well as cutting back on other overheads. We have previously stated and now reaffirm that our recurring overheads in the current year to March 2026 are forecast to be 25% less than that for the last financial year to March 2024.
Net finance costs were substantially down over the period, reflecting a lower average level of debt compared to last year, with the expense of restructuring our revolving credit facility treated as a non-recurring item for EPRA earnings. On an EPRA basis, we generated net earnings of GBP 2.7 million or 2.2 pence per share. Moving on to the non-EPRA components of the income statement, the gain on sale and revaluation, mainly from 100 New Bridge Street, offset by the loan restructuring costs and the movement in the mark-to-market value of interest rate swaps, ended in an IFRS profit of GBP 27.9 million. The EPRA NTA per share of 331 at the end of March last year was increased by the EPRA EPS generated in the period, as mentioned, of 2.2 pence, and by investment gains of 26 pence.
We paid dividends of 3.3 pence in the year, and the cost of restructuring the previous RCF and other costs reduce this metric. At March 2025, EPRA NTA per share was 348 pence, an increase of 5.1% over the year. Turning to dividends, you will remember that we substantially reduced the dividends we declared in May and November last year to reflect the minimum payable under the REIT rules. In fact, very little additional dividend is now due to be paid as a PID under these REIT rules for this year.
In view of the overall results, the strong balance sheet, and the record low level of gearing, the board are proposing to use some of the capital profits from the sale of the JJ Mack Building to supplement the dividend payment and recommend to shareholders a final dividend of GBP 0.035, which would boost the total dividend to GBP 0.05, a 3.5% increase on last year's total. This final dividend will all be an ordinary dividend with no PID element. In addition, as a consequence of our success both at the JJ Mack Building and 100 New Bridge Street and expected future development gains, we have tweaked our dividend policy to note that we shall continue to anchor the distributions with the annual PID as a minimum, but will seek to distribute a proportion of realized earnings and development profits which are surplus to business requirements.
In accordance with this, and as previously announced, we will use some of the net realized gains on the completion of the sale of 100 New Bridge Street next April to fund a payment to shareholders. That currently remains in the range of 50%-100% of the realized gains, which also currently remains at the indicated level of GBP 27 million. With that, I'll hand you over to Rob.
The past year has seen significant progress and growing momentum across all five of our development schemes, as well as our two income-producing assets. Helical's early conviction in committing to an extensive development pipeline has resulted in three exciting schemes being under construction today. Together, these schemes will deliver 460,000 sq ft of best-in-class office space into a supply-constrained market during 2026. We are also pleased to have secured important planning permissions for our next two development projects in the year, thereby enabling main works to commence on both schemes within the next 12 months. Thanks to the solid foundations established through our recent activities, our existing portfolio is now exceptionally well positioned to deliver strong returns as we achieve the key future milestones outlined on this slide.
Turning to each asset in more detail, at 100 New Bridge Street, we were pleased to announce the exchange of contracts for the forward sale in early April. The transaction illustrates Matthew's earlier comments on the key market trends. It demonstrates both strong prime rental growth with an average ERV of GBP 100 per sq ft adopted by the purchaser, and price discovery with a 5% capitalization rate applied when calculating the GBP 333 million net sales price. Furthermore, at a capital value of GBP 2,000 per sq ft on a topped-up basis, the transaction illustrates liquidity returning for best-in-class large lot sizes. On site, good progress continues towards the April 26 practical completion date, with a key milestone of the structure having topped out last month.
The exchange of contracts has enabled a significant portion of the profit targeted upon the formation of the joint venture with Orion to be taken within the year. We anticipate further profit to be realized once the final development milestones are reached. Brettonham House is easily located by anyone walking along the Thames today, as the 1930s building is currently encased in scaffolding whilst work progresses at pace underneath. This extensive refurbishment project, when delivered in Q2 2026, will highlight Helical's capability to sympathetically upgrade a historic building to deliver an amenity-rich, modern workplace. By carefully stitching together two adjacent buildings, the newly provided 128,000 sq ft office will feature five levels of external terrace, making the most of the previously underutilized sweeping views along the Thames.
Initial tenant engagement has been encouraging, and the state of the general occupational market gives us confidence that the future returns on our GBP 12.5 million equity-light investment will be substantial. At 10 King William Street, it has been pleasing to commence the construction on the first of the three initial schemes to be developed in partnership with Places for London. The site was formally acquired in October, and the main contract and development debt facility was signed in February. On site, the basement box and core are now formed, and the main structural works will commence in June. Once completed in December 2026, we believe this scheme will push the boundaries of Helical's renowned amenity offer. This exemplary 140,000 sq ft office will provide tenants with a wellness suite, business lounge, and rooftop pavilion, alongside high-quality changing facilities and a revitalized shared space on Abchurch Lane.
Having executed significant steps to mitigate the development risk, a number of potential occupiers have sought presentations on the scheme with a view to pre-let in the whole. These occupiers are increasingly aware that core city space is extremely limited and therefore accelerating searches, demonstrating a willingness to pay premium rents to secure scarce prime space. At Southwark, the joint venture received a resolution to grant planning permission in March. The AHMM design scheme will provide 429 student rooms, all of which will be studios, in a building to be constructed above the Tube Station entrance. Forty-four affordable housing units are also to be delivered in an adjacent building. Unanimous approval was received just over a year after the joint venture decided to shift from an office-led scheme to an alternative use on the site to deliver the best value.
This prominent, extremely well-connected site will provide exceptional student accommodation with a number of leading academic institutions easily accessed by the Jubilee line below. The site will also provide residents of both buildings with a vibrant cultural offering immediately on their doorstep. It is anticipated that the main works will start on site in Q1 2026, subject to obtaining the requisite gateway approvals. Discussions are progressing in relation to a potential equity-light forward funding arrangement for this scheme. In light of this, the joint venture has agreed in principle with TfL to defer the site drawdown until later in the year. This enables the partner's capital to be used more efficiently in the interim period. At Paddington, the focus remains on enhancing the existing planning consent to ensure the completed scheme satisfies the exacting requirements of modern occupiers.
Consent has been obtained during the year to add external terraces to each of the 15 office floors, all of which benefit from superb views south across London. Ahead of the site acquisition in January 2026, tenders have been received from prospective main contractors, and an enabling works package has been instructed to expedite the delivery program. At the Bower, the third to sixth floors have been significantly refurbished in the period. The fourth floor was subsequently let on a five-year lease at GBP 72.50, GBP 5 ahead of the original WeWork rent. The remaining floors are currently being marketed and provide a range of different types of fitted space. These floors are generating good levels of interest with a broad mix of potential occupiers interested.
The flexible offering beyond the Bower on the first and second floors has also seen encouraging uptake during the period, with all desks being utilized shortly after the year-end. These floors provide valuable expansion space for existing tenants, as well as enabling growth businesses to access the campus. Elsewhere in the building, Fresher have taken assignment of three floors from Farfetch following their consolidation into the warehouse. This further diversifies the overall tenant mix. During the year, two floors did become available in the tower. Sten entered an unforeseen administration, whilst another floor saw a lease expiry. These floors now provide a mix of fitted and traditional café space. There is just one floor in the warehouse currently vacant, which has been fully refurbished, and viewings are now ongoing. All retail units continue to be occupied, adding vibrancy and footfall to the estate.
Following all these movements, the vacancy rate across the campus currently stands at 19%. Going forward, the focus will be on early engagement with existing tenants to ensure the Walter's extended. Encouragingly, one early lease renewal completed in the period, with OpenPaid extending their occupation for a further five years at a rent in line with current ERVs. We continue to invest to enhance the campus, with a current focus on providing greater amenity to all tenants. In particular, we are currently assessing the potential for a refreshed hub area and a communal terrace. We remain confident that both buildings provide a variety of highly desirable spaces within a sub-market which remains attractive to tenants. Furthermore, the quality and fitted nature of the available spaces mean we should be able to convert interest quickly.
At the Loom, the team's intensive work to retain existing occupiers, accommodate internal growth, and attract new tenants in a challenging market has begun to be rewarded, with the vacancy rate reducing by 6% during the year. At 29%, the rate remains elevated, and work continues to ensure that each of the over 40 units are best placed to meet the requirements of a diverse occupier mix. Encouragingly, there has been an increase in the number of viewings, and we remain confident that the quality of the Loom will enable these to be converted more regularly in the year ahead. In summary, positive momentum is building across each asset, ensuring the portfolio is well positioned to deliver further strong property returns. In addition, the actions taken to accelerate the delivery of the existing pipeline and the compelling market dynamics mean we are now also evaluating new opportunities.
With a significant amount of activity to be undertaken in the year ahead across this exciting pipeline, I will now let James explain how it has been funded.
Indeed, it has been a busy year, and we are delighted to end with a balance sheet in such great shape. The GBP 245 million of sales in the year have fully funded the equity for the pipeline. In addition, we have arranged almost GBP 500 million of debt, GBP 280 million of which is to fund the development of 100 New Bridge Street and 10 King William Street. Looking forward, we have started discussions with lenders to fund our development at Paddington, and we are really pleased with the level of interest we have seen so far. Our aim is to have this lined up for the beginning of next year when we draw down the site. The recent forward sale of 100 New Bridge Street should return around GBP 90 million of equity once complete. This provides us with the confidence to find and commit to future opportunities and pay meaningful returns to shareholders.
Turning to the sales in the year, as previously reported, the journey started in April with a sale of 25 Charterhouse Square for GBP 44 million, followed closely by 50% of 100 New Bridge Street in May for GBP 55 million. We then, in October, sold 50% interest of JJ Mack Building to our joint venture partner, Ashby Capital, for GBP 139 million, returning GBP 71 million of equity. Prior to this sale, we had let 46,000 sq ft in the year, with a record rent of GBP 115 per sq ft being achieved on the top floor and taking the building to 90% let at an average rent of GBP 95 per sq ft. Last, and in this case least, we sold the Powerhouse in December for GBP 7 million. As you can see in the chart, the results of these sales have been to reduce our LTV and net debt to record lows.
This leaves us in a great position to build out our pipeline. As previously stated, our aim is to contain LTV to 35%. Our committed CapEx would take our forecast LTV at March next year to just below 35%, excluding the impact of any valuation movements. This falls materially to 16% on the completion of the sale of 100 New Bridge Street. It is not only on the property side of the business that we have been very busy. We have arranged three new debt facilities, a GBP 155 million development facility agreement with NatWest and an institutional lender to fund 100 New Bridge Street, and a GBP 125 million facility with HSBC to fund 10 King William Street. It is really pleasing to see high street lenders coming into the spec office development market in such a strong way. Both facilities have four-year terms with extension options.
Additionally, with both loans, there are margin step-downs based on construction and letting progress, with the forward sale of 100 New Bridge Street triggering a 100 basis point reduction for that facility. Finally, we have financed our GBP 300 million revolving credit facility, right-sizing it to GBP 210 million and resetting its maturity to three years with the ability to extend to five years. Our debt is fully hedged with a maturity of four years on a fully drawn and extended basis. We have GBP 245 million of cash and undrawn facilities, and the cost of our investment debt is low at 3.8%. In summary, our exciting pipeline is funded, and we have a strong balance sheet with a historic low LTV. Our increasing development management fees and promoters will help cover the overheads, which are reduced by 25%.
Finally, on completion of the sale of 100 New Bridge Street, we have the efficacy available for new opportunities and to return funds to shareholders. I will hand back to Matthew to explain what you can expect from Helical going forward.
In terms of the profit potential from our development pipeline, we have recognized GBP 24 million this year but anticipate a further GBP 95 million, assuming base case assumptions, rising to GBP 135 million if rents rise by just a further 5%. There is a lot to go for. The Places for London joint venture was seeded with three initial sites, but the agreement was always designed to add further opportunities, and I am pleased to say that we have four further sites under active discussion. This includes three mixed-use sites in West London and an office scheme in Farringdon. The image on the slide shows a gap in the street frontage on Charterhouse Street just above the market, which adjoins a vacant Places for London-owned building and surplus railway land to the rear, and a detailed viability assessment is currently underway.
We also continue to look for other central London equity-light transactions and have several currently under review. Looking ahead, what are we seeking to achieve? We want to reduce the vacancy across the existing portfolio. We want to see some pre-leasing of the schemes under construction. We wish to forward fund Southwark, obtain debt financing for Paddington, and announce further projects to the existing pipeline. In summary, we have had a busy year of deal execution, ensuring that we had the required equity for our development pipeline, which is now starting to deliver substantial profits, vindicating our early decision to build into undersupplied markets. As a trusted and transparent partner, we have access to opportunities through our excellent joint venture with Places for London and through our strong market relationships. We have expertise in structuring bespoke transactions.
We work with great partners and debt providers, and we have a reputation for delivering innovative and market-leading product which achieves premium pricing. With an exceptional team capable of managing complex development projects across a variety of uses, we are excited about the future. We look forward to delivering on our ambitions and sharing surplus capital as our development profits come through. Thank you for attending today, and we will be happy to answer any questions that you might have.
Thank you. Good morning. It's Matt Spier from Pilhan. Two questions, if I may. Matthew, you obviously set out on, I think, a previous slide just how sensitive your upside is to rental growth. Thinking about the comments you made about sort of pre-letting interest at 10 King William Street, I mean, how do you sort of manage the upside on profit versus the security of a pre-let sort of somewhere ahead of practical completion on, well, I guess that scheme and the other ones in the pipeline?
That's a very good question. I think with 10 King William Street, it's an eminently pre-lettable building, and it would be great to let it as one. Indeed, we have been talking to a number of single occupiers, a number of active law firms in particular at the moment, and we have RFPs, so we are in discussions. I think most of those businesses are looking sufficiently far ahead now, 2028, 2029, etc. They realize they've got 12-18 months of fitting out. Those businesses that are there should be out there looking, and they are. I think they appreciate they have to pay tomorrow's rent in order to get today's deal. I think in that particular instance, a pre-let would pay off, and we'd be open to pre-letting.
I think with Brettonham House it is probably a slightly different proposition because the building is scaffolded and sheeted, and the views of the Thames are amazing, but not behind a scaffolding sheet. It will be an amazing Art Deco building and probably best seen when finished. The way that deal is structured, it probably makes sense to ride the rental for a bit longer, but perhaps less so on 10 King William Street. It is horses for courses.
Perfect. Thanks. One quick one if I may. You talked about the four schemes that you're negotiating with Places for London. The three, how far west and how much mixed use may they be?
They're not particularly far west. I mean, they're all, well, I would call central London, just about. I think what's interesting, when you go into these different use classes, it brings more optionality for us, particularly in terms of equity-light structuring. For example, when you build PBSA, there is a forward sale market, and therefore, if we're putting money into planning and we're able to forward sell and we're able to make decent development profits and we're a relatively low amount of equity invested, those transactions are always interesting to us. Expect more of that type of thing.
Hi, it's Max Nimmo at Deutsche Numis. Maybe just on the dividend point, it's obviously great to have a positive surprise on that this morning, so thank you for that. Going forward, should we think of it as being potentially a little bit lumpy and kind of dependent on when development profits come in, i.e., it can go up and can go down, or are you trying to kind of broadly smooth it with the profits that come through?
I think inevitably it will be lumpy. What we've tried to indicate is that we need to realize these capital profits before we're willing to use them to return surplus capital to shareholders. Very much surplus capital, surplus to business requirements, so there will be a debate internally as and when these profits are realized, but we're trying to indicate that we've got a greater focus perhaps on total shareholder return than we had in the past. We're committed to paying out the minimum PID, which we're required to anyway. There will be an additional element of earnings on top of the PID that we will use to consider where the normal dividend, if that's the way to phrase it, would be, and then there will be lumpy cash returns, again, depending on the requirements of the business.
Okay, great. Got it. Thank you. Secondly, just on Paddington, on the financing, can you give us a rough indication? Should we think of that in terms of the costings similar to where debt's been costing on some of the other projects in terms of development financing?
Yeah, I think that's right. It clearly is a different lot size, and we will be going to, we would expect it to be from a different lender. Where our opportunity there lies probably is in rather pulling in equity first. We're probably going to put the equity in pari passu as we go through. I think that will help the IRR, and yeah, similar levels.
Great. Thank you.
I think we have one question that's been sent in. Could I ask about M&A plans? Thanks. We don't have any M&A plans currently, but I'm not sure there's much more we can add to that at the current moment, but I hope that answers the question.
Yeah, that's the only question.
I think that's the only question. Oh, and Ben.
I probably do not need the microphone. Just on behalf of the city community, I am also conscious it is Tim's last-seven results, so I am sure everyone in the room will join me in thanking Tim for all his interactions with him over the years. I know, like me, it has been huge fun, and we wish him the best of luck for the next stage of his career and whatever that may hold or his retirement as it is being planned. Tim, thank you on behalf of everyone in here, and we wish you luck.
That's very kind.
Stole my spanner, Matthew.
Stole my spanner.
Stole Mr. Rob Sims' spanner. I can see what Matthew was going to say.
Yeah. No, we will miss him hugely. I mean, I've worked alongside Tim for 30 of the 31 years he's been here, but it's very rare you end up with a CFO who's not only highly numerate as you would wish and hope for, but he's also a very gifted wordsmith, and he's been part of the team for so many years, and we will all miss him.
Thank you.
I'm sure we'll have plenty of time. He's here until July, so we have plenty of time to raise a glass before.
As I keep saying, we have just set the budgets for next year, and I am determined to use all the entertaining budget in the next two months. I feel very fortunate to have worked, A, in this industry, B, for this company, and C, and probably most importantly, of course, with the most wonderful team at Helical. They are the best. They will continue to be the best. I want to thank you all for your support in my journey, that horrible word, through the real estate sector of the last 31 years. It is right that our gearing and LTV is at the lowest in living memory because I have the spreadsheets to prove it going back 30-odd years.
Which Tim promised to hand over to me.
Thank you very much. I know I leave the company in fantastic shape and also with an amazing team, so it's safe in their hands. Thank you.