Good morning, everyone. I'm delighted to welcome all of you to the presentation of Helical's Half-Year Results to 30 September 2022, whether you are here in the room or virtual on the webcast facility. Please let me set out the agenda for today. We will follow a format that is familiar to many of you. I will run through the highlights from the results, provide some market commentary, and set out the way forward. Tim will explain the numbers, particularly concentrating on debt. Matthew will report on the portfolio highlights and sustainability. After this, I will sum up. We will then be delighted to answer any questions any of you may have. Our profit after tax is GBP 17.2 million. Our EPRA NTA value has decreased 3.3% from GBP 5.72 in March to GBP 5.53.
The valuations are down by 2.2%, offset to some extent by 4.3% ERV growth. Generally, we have seen a downward yield movement of 25 basis points, with an increase on the JJ Mack building valuation. Now practical completion has been achieved and developer's profit is released. Our LTV has reduced from 36.4% to 26.4%. We are proposing an interim dividend per share of GBP 0.0305. We became a REIT on 1st April , and I will describe our key achievements since then. We have sold Kaleidoscope, 55 Bartholomew, and Trinity at a total value of GBP 196.7 million, 5.3% above March book value. Practical completion of the JJ Mack building was achieved four hours ahead of program on the original date of September 30 and within budget.
We are pleased to have let two floors to Partners Group. More on that shortly. In total, 62,340 sq ft has been let at an 8.5% premium to ERV. What is happening out there? We have had ultra-low interest rates since 2008, and we'd all become complacent about them going up. The post-COVID inflation spike felt around the industrial world, accentuated by Putin's invasion of Ukraine, has caused the Federal Reserve to lead the way, pushing up interest rates, and this has been followed by other central banks. Property yields are rising to reflect the increase in the cost of debt. We wait to see where interest rates finish up.
While we identified bifurcation in the letting market a few years ago and had always maintained that rents for best-in-class space would continue to grow, the rise in interest rates is the catalyst to create the same bifurcation in the investment market. Mutton was dressed as the finest lamb, but now only the best-in-class, most sustainable buildings will achieve the prime yields. The rest have decoupled and pricing rediscovery is ongoing. Certainly, the prime yields have moved. We have seen a 25 basis point shift, and perhaps we will see a further expansion going forward, dependent both on the path of interest rates and the rental growth story. However, we expect this to be in a narrow band. This is supported by recent sales at Fins, Fifty Finsbury Square, 21 Moorfields, and our own Kaleidoscope, which all reflect the scarcity of best-in-class product.
The pricing of the poorer quality second-hand space must be realistic and should surely be the vacant possession value at lease expiry plus the value of the cash flow until that point. The real CapEx cost must be factored in to enable a building to be refurbished and relet at the requisite rent and to achieve the prime yield. There are going to be some nasty surprises as owners face up to this new reality. Anecdotally, a poor quality city building, which was on the market at GBP 157 million at 4.8% net initial yield earlier this year, is reported to be under offer at GBP 105 million, 7.25%. A drop in capital value of circa GBP 300 a sq ft and reflective of the amount of CapEx that will be required.
The top graph shows that pre-2008 and the collapse in interest rates, the gap between the prime London yield and SONIA was much narrower. Going back further to the 1980s, prime yields in London were around 5%, whereas the average U.K. base rate at that time was around 11%. I would also remind you that London offices are not bonds. The middle graph shows some correlation with an increased level of transactional turnover as rental growth is anticipated or achieved. We will see this for the best in class.
While values are changing because of this shift in interest rates and the bifurcation that is occurring, the fundamentals of the prime market remain strong. We do not have an oversupply of good quality office space in the way that we did in the downturns in the early 1990s, dot-com bust in 2001, nor the GFC. On all these occasions, the oversupply led to falling rents. The bottom graph shows investment activity tailing off after a strong first quarter, and we await the Q4 stats with interest. Barring a pre-Christmas surge, it feels like a subdued fourth quarter. By the way, the graphs are all on single pages in the appendix, so they are easier for you to read later if you wish.
The bifurcation in tenant demand has been accentuated between the best, the newly developed or refurbished buildings at the forefront of sustainability with top quality amenities and the rest, the tired second-hand buildings with weak sustainability credentials and poor amenity. According to JLL, of the 7.88 million sq ft of take-up recorded so far this year, 57% has been pre-let or in newly built or comprehensively refurbished space. Of the 3.5 million sq ft currently under offer, this percentage rises to 75%. In looking at this, it is important to differentiate between the best in class, which is where Helical are operating, and what is described as grade A, as this has become such a wide definition that in CBRE's analysis, it includes 75% of all the Central London office stock. There is a pull for tenants to move to the best.
This is to attract and retain the brightest staff, to encourage greater attendance at the office, to provide a dynamic and exciting workspace, as well as to meet their net zero carbon and other sustainability objectives. The push for tenants to move out of the poorer quality space is the ratchet of the Minimum Energy Efficiency Standards, MEES, whereby the landlord will be in breach letting space below EPC E from April 2023, rising to below EPC B by 2030. The graphs highlight the shift to new or comprehensively refurbished space from the second-hand, which is on the bottom graph, which represents a long tail of about 70% of total availability. Some agents are saying that they cannot buy a viewing for the poorer quality second-hand space.
Assuming London maintains its attraction as a leading world city, which it will barring economic or political catastrophe, there will be ongoing demand for best in class office space. The first graph shows the constrained nature of the future pipeline. Annual Central London ten-year average take-up is 12.5 million sq ft. As explained, this take-up is ever more targeted to the best in class space. There is a shortage. The second graph shows the net addition to the occupied stock. More space is being occupied. This is because of, first, more office employment. It has increased 150,000 in the 12 months to March 2022. Second, because of less dense occupation.
As greater amenity is incorporated in buildings, the British Council for Offices, in their latest specification, have pushed out their density from one person to 8 square meters to one to 10 square meters with a reduced utilization factor of 60%. Each occasion there is a downturn, one thinks, "What is different this time?" The third graph shows rolling 12-month construction starts since 1985. Look at the peaks. 13 million sq ft in the early 1990s crash, 10 million sq ft in the dotcom 2001 downturn, 8 million sq ft in the GFC, and 4 million sq ft now. Much less space is being completed, and occupiers are much more focused on this new space. I believe that is the difference.
It is going to take 10-15 years to upgrade the London office stock to the correct level of sustainability, so there will be an intrinsic shortage, which is a great opportunity for Helical. We are cognizant of market conditions and do not wish to raise our LTV beyond the band of 20%-35% in which we are operating. We have recycled capital from the three sales mentioned earlier, and we will continue with this capital recycling as we find new opportunities. We remain focused on Central London, and may I take this opportunity to stress that the fully open Elizabeth line is a fantastic piece of infrastructure which really enhances our capital city. We prefer island or edge-of-block rather than mid-terrace locations. We want good public realm, whether we control or borrow this, and we are looking for larger floor plates.
The reason for this is we believe the market for smaller floor plates, many of whose occupiers want furnished space as standard, is overcrowded. While we will do ground up new development where there is good reason, we believe there will be far greater emphasis on refurbishment going forward. This has the advantages of considerable savings in carbon, less planning and construction risk, and greater speed back to market. That's our carbon-friendly new building. Any building should be net zero carbon, BREEAM outstanding, NABERS five-star plus and EPC A. In our buildings, we will maximize tenant amenity with plenty of bike parking space, high-quality changing facilities, as well as the latest technology and wellness. In short, we are only interested in best-in-class buildings. If we do not think we can create that, we will not touch it.
We believe interesting opportunities will continue to arise, particularly as passive overseas owners will not have the experience nor skill sets to put the tired old buildings back into the best-in-class category. This slide shows that our portfolio is new and will be added to by 100 New Bridge Street when completed. Our assets are multi-let, giving opportunity to regularly add value. We are tireless to ensure our building management is to the highest standards and that our buildings are maintained as new. Since first April, we have let 62,340 sq ft in eight units, delivering GBP 3.3 million of contracted rent. The vacancy across the portfolio is 19.2% at 30 September, today it is 16.3% or 7% on a like-for-like basis, up from 6%.
I thought it would be interesting to look at the rents we have achieved in Farringdon over the years, which illustrates ongoing rental growth for best-in-class space. In 2016, we let all of 25 Charterhouse Square at GBP 75 a sq ft. In 2019, we completed and let 1 Bartholomew, and the highest rent of GBP 85 a sq ft was achieved on the 10th floor, which benefited from a large roof terrace overlooking St. Paul's. The average rent was GBP 81 a sq ft. Kaleidoscope was let at the start of 2021 to TikTok. The 5th floor, the highest, was a portion of rent of GBP 90 a sq ft, with an average across the whole building of GBP 86 a sq ft. There is a large terrace on the roof available for all floors to use.
The JJ Mac building was finished in September, and we have let both the sixth floor and the seventh, which has a large terrace, at rents of GBP 95 and GBP 107 per sq ft, respectively. This is some way ahead of the previous highest of GBP 90 a sq ft at Kaleidoscope. The blended rent will come down as we let the lower floors, but the upward direction of travel is clear. Our passing rent today is GBP 34.3 million, and the chart shows how this rent doubles to almost GBP 59.7 million, with contracted rent uplifts of GBP 4.8 million, rent from letting the current available space of GBP 9.6 million, and a development pipeline of GBP 9.3 million of additional rent. Let's look at the future upside we see in the portfolio.
With yields moving around, we have concentrated on rent reversion and growth. The Bower, The Loom, and 25 Charterhouse Square show good increases as we either let the vacant space or complete rent reviews. The JJ Mac building provides a further surplus as we have set the rental tone post the valuation date. 100 New Bridge Street gives a surplus as we go through the development process. On that positive note, I will now hand over to Tim.
Thank you, Gerald, good morning, everyone. Gerald has mentioned the highlights of a good half year for the company. I'm going to look at the buildup of our EPRA earnings, our EPRA NTA per share before moving on to our gearing levels and debt profile, including looking at our interest rate hedging, our loan covenants, and the cost of our debt. Finally, we'll look at a summary of our current financial position, highlighting the strength of our balance sheet and the extent of our current firepower. Turning to slide 16 and looking at our EPRA and IFRS profit. Net rental income of GBP 18.2 million is 29% higher than last year, mainly reflecting the contribution from our acquisition of 100 New Bridge Street earlier this year.
It's worth noting that our rent collection is strong, with almost 98% of rent for the period collected, and our bad debt provision for the period was less than GBP 100,000. We made a development profit of just under GBP 1 million from development management fees at the JJ Mac building and profits from the sale of residential units at Bart Square. Our total administration costs of GBP 6 million were almost 20% lower than last year, with our net finance costs marginally higher at GBP 7.2 million. Overall, on an EPRA basis, we generated earnings of GBP 5.8 million or 4.8p per share, compared to GBP 1.1 million or 0.9p last year. Moving on to the non-EPRA components of our profit.
An outward movement in yields generated a valuation loss of GBP 35 million in the main group, which was partly offset by a gain of GBP 15 million in the valuation of the JJ Mac building held in joint venture. A profit on sale of investment assets of GBP 5 million. The biggest movement in the period was in the gain on the mark-to-market valuation of our derivative financial instruments, which contributed GBP 26.6 million, reflecting the low level of our interest rate swaps against the current forecast future interest rates. Overall, we made a net profit before tax of GBP 17.2 million. As we are now a REIT, there is no tax charge to set against these profits, so our post-tax profit is also GBP 17.2 million, compared to GBP 22.2 million last year.
The rise in EPRA earnings and the level of realized capital profits support an increase in our dividends, despite the current economic backdrop. The board have taken the decision to increase the interim dividend by 5.2% to 3.05p per share. Turning to slide 17. The EPRA NTA per share at March were boosted by EPRA earnings per share of 4.8p, but reduced by investment losses of 12.4p and dividends paid in the half year of 8.3p, leaving an EPRA NTA per share at 30th September of 552.6p, down 3.3%. Our EPRA NDV per share, however, was up 1.5%, reflecting the impact of the surplus on the valuation of our hedging instruments.
While we're on the balance sheet, it's worth noting the total accounting return of 2.3% on an IFRS basis and -2.5% on an EPRA basis. Looking at our LTV and gearing on slide 18, which shows a history over the last 10 years, the profitable sales of Kaleidoscope, Trinity, and 55 Bartholomew, as well as residential units at Bart Square, all contributed to a reduction in the LTV to 26.4% and the balance sheet gearing to 34.9%. Turning to slide 19. We used GBP 150 million of sale proceeds to reduce the outstanding borrowings on our GBP 400 million RCF, reducing them to GBP 250 million. We also extended the expiry date of this facility to July 26th and converted it into a sustainability-linked loan.
All our borrowings are now either green loans or sustainability-linked loans. Most of the remaining metrics on this slide will be referred to on the last page of our presentation. Just to mention, we have a GBP 60 million RCF which is undrawn and which will expire next month. Turning to slide 20. In a period of high inflation and increased interest rates, all of our borrowings are protected by a combination of interest rate swaps and fixed rates. This interest rate protection covers our debt until the current expiry of the facilities, with the RCF expiring in July 26th, and the joint venture loan expiring in July 2024, although that has a one-year extension option.
Looking at our loan covenants and debt cost on page 21, it's worth noting that we can withstand a 48% fall in property values and a 37% fall in rental income before we start to reach our banking covenants. Even then, we have the ability to cover any potential breaches using our cash resources, increasing the percentages on the slide from 48% to 58%, from 37% to 50%, and from 60% to 72%. Looking at our cost of debt, the weighted average cost at 30th September was 3%. Without our interest rate protection, the average cost of debt at that date would have been around 4.7%.
Looking forward to the expiry of the RCF, using the current forecast SONIA rate for July 26th of 3.5%, the weighted average cost of our debt fully utilized will be around 5.5%, all other things being equal. Finally, a summary of our financial position on slide 22. We have a net asset value approaching GBP 700 million, a net debt level of around GBP 242 million, giving an LTV of 26.4%, down 10% since March. As Gerald has noted, we're comfortable operating in a range of between 20% and 35%. We have GBP 293 million of cash and undrawn facilities, although as mentioned, GBP 60 million of those facilities fall away next month. We're protected against interest rate rises until the expiry of our debt facilities.
We have a strong balance sheet with protection against future interest rate rises and good capacity to invest in new schemes. With that, I'll hand you over to Matthew.
Thank you, Tim. Good morning, everyone. I would like to provide you with an update on our portfolio highlights and our sustainability initiatives. The JJ Mack building, comprising just over 200,000 sq ft of offices and 5,500 sq ft of retail, was completed, as Gerald mentioned, on the 30th of September. It is EPC A platinum WELL Enabled, and we are targeting BREEAM outstanding and NABERS five star. The building is intelligent with advanced technology to both maximize the efficiency of the building services and the occupier's experience. It benefits from quality changing facilities, touch-free access from door to desk, and smart app user controls within a data-rich environment. Farringdon Station, now with the game-changing Elizabeth line added, is two minutes walk.
Reflecting this quality and location, we have let the sixth floor of 22 and a half thousand square foot and the seventh floor of 15 and a half thousand square foot with a 6,000 square foot roof terrace to Partners Group on 15-year leases at a blended rent of GBP 100 per square foot. We have good interest from a range of tenants in other parts of the building. Sustainability has been a core focus on this project, with a carbon champion appointed at the outset as part of the design team. This has helped reduce the embodied carbon by over 40% against the RIBA current benchmark, and we are in the process of offsetting the remaining carbon such that it will be our first net zero building.
We are also expecting it to be the first UK commercial building to achieve outstanding under the new 2018 BREEAM assessment criteria. It incorporates a range of sustainable technologies, including an intelligent and dynamic water management and recycling system linked to real-time weather forecasting, and was financed using a green development facility with Allianz. 100 New Bridge Street was acquired in March, and we were receiving rent of GBP 7 million per annum until lawyers Baker McKenzie vacate towards the end of next year. We submitted a planning application in June for a comprehensive refurbishment, retaining the existing frame and core but recladding most of the facades. By adding space at the top of the building and by infilling the existing atrium, we increased the NIA from 167,000 sq ft to 191,000 sq ft.
The building occupies a prominent and well-located site surrounded by public realm, which we will enhance to include a pocket park. We will create a best-in-class carbon-friendly new building aiming for BREEAM Outstanding, NABERS 5 Star and EPC A. Given the retained structure, we are targeting a much-reduced embodied carbon figure of 430 kilograms of CO₂ emissions per meter square. As well as the normal amenity, there will be an extensive roof terrace with great views of St Paul's. We aim to start on site next October with a rapid program to completion in Q1 2025. Amenity, there will be an extensive roof terrace with great views of St Paul's. We aim to start on site next October with a rapid program to completion in Q1 2025. At the Bower, the offices remain fully let.
We have let the 12th floor to Stenn, a digital finance platform, at GBP 80 per sq ft. We also have rent reviews on 11 floors at the tower over the next 18 months. At the Loom, we have let one unit at GBP 60 per sq ft in the period and have completed a further letting since the period end at GBP 55 per sq ft. We have one under offer and a further four under negotiation, we're making good progress reducing the vacancy in this building. At 25 Charterhouse Square, we have let the ground floor unit to SolidNature, a natural stone retailer, we are in active negotiations on the fourth floor, which has been refurbished after the previous tenant exercised their break clause. During the half year period, three office buildings were sold.
In May, we completed the sale of Trinity, our last remaining building in Manchester, which was sold to clients of Mayfair Capital at a net initial yield of 5%. The following month, we completed on the sale of 55 Bartholomew to a private European investor at a net initial yield of 4.5%. In September, we sold the corporate vehicle, which owned the long leasehold interest in Kaleidoscope to the Chinachem Group at a disposal price of GBP 158.5 million, reflecting GBP 1,789 per sq ft capital value and a net initial yield of 4.25%. Each asset was sold at a premium to the 31st of March book value.
On the residential front at Bart Square, we have in the period completed on a further six sales, leaving eight available, two of which are reserved. We have also sold the residential ground rent interest to the residents for GBP 3.7 million. Our efforts on the sustainability front has meant that we have maintained the highest scores in MSCI and EPRA Sustainability Best Practice and have improved our GRESB rating to five stars for both our developments and our standing investments. At a property level, our portfolio by value is 99% EPC A or B-rated and 87% BREEAM Outstanding or Excellent, demonstrating the highly sustainable qualities of our portfolio, which is almost entirely new or recently refurbished. I will now hand back to Gerald to summarize.
Thank you, Matthew. As Tim explained, we are well placed to take advantage of any opportunities. We have been busy recycling capital and with the three sales at Kaleidoscope, 55 Bartholomew and Trinity. Our existing portfolio is new and sustainable. We will continue to asset manage it to advance performance, and we take every opportunity to improve sustainability and energy performance. We seek to let the remaining floors at the JJ Mack building at equally strong rents. If anyone would like to see the building, do please let me know. We look forward to our new project at 100 New Bridge Street, and we will be aiming to continue achieving market-leading rents. We will be judicious, adding new opportunities to the portfolio with our recycled capital within sensible LTV parameters, where we can create best-in-class space for discerning tenants. Thank you.
I'm now delighted to answer any questions any of you may have.
Thanks, Gerald. It's Matthew Saperia from Peel Hunt. Can I ask you two questions? The first one, you talk about your carbon-friendly new build strategy. Is that gonna make it harder for developers generally to add new space to buildings, given that you have to retain the core and the structure? The second question, thinking about the progress you've made in securing ever-increasing rental values with ever more sustainable buildings. Thinking about the occupiers' total occupancy costs, are these buildings more or cheaper for them to occupy and therefore you're able to charge more rent? Is that a trend that we're likely to see continue going forwards?
Look, I think on your first question, obviously sustainability is pushing refurbishment much more, and we're also seeing that coming through the planning system. If you want to demolish an existing building, you have to present a compelling case to the planning authorities as to why you want to do it. And you're seeing the row or the debate going on with the Marks & Spencer building in Oxford Street, where they want to demolish it and put in a new store and various people have objected to it, and it's currently with the Secretary of State. That is a living example of what's going on. Yep, certainly we'll see more refurbishment.
Obviously as well as saving the carbon, they're quicker, there's less planning risk and easier to deliver. Your second question was on costs. Now, obviously, if the building is highly energy efficient, it's gonna be cheaper to run. We're certainly seeing at the JJ Mac building, the service charge there is going to be very reasonable. It's interesting where the service charge is in some of the towers, and certainly Partners Group will be making a big saving in their service charge coming to the JJ Mac building.
Thanks. It's Max Nimmo at Numis. Just two quick questions if I can. On the JJ Mac building, what sort of timeframe should we factor in for lease-up? I appreciate there's you wanna hit the best rents you can there, but what kind of... When would you be happy to kind of commit to leasing up the rest of it in terms of a timeframe? Secondly, just on the potential of adding new assets, I think we kind of roughly know what kind of areas you're looking for, but just what kind of key things are you looking for in secondary repricing or the types of assets that appeal to you for potential acquisition?
On the letting of the JJ Mac building, I'm conscious I'll be standing here in six months' time. We've got as Matthew said, we've got strong interest and hopefully we can push that into signed leases. We've, as I say, a good level of viewings, so we'll see where that gets us. There is a shortage of this high-quality space. On the second point, I mean, I think I outlined the sort of thing we're looking at. The pricing rediscovery, as I said, is still ongoing. But obviously anything one buys has got to be able to reflect the full cost of turning it back into a best-in-class building.
Some buildings we look at, we just think we can't turn them into a best-in-class building 'cause the micro location might be poor or the building doesn't have a good outlook or just the way the building was originally built is, you know, doesn't make for good space. Great. Well, look, thank you very much, everyone, we look forward to seeing you again soon. Thank you.