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Circle Property’s portfolio value soars to £125mln

The company, which invests in and rents out UK office space, has seen the value of its portfolio climb more than 12% over the past six months to just shy of £125mln
office block
Circle earns £7.5mln a year in rental income

The value of Circle Property PLC’s (LON:CRC) portfolio has increased by £14mln over the past six months.

At the end of March, the portfolio was valued at £111mln but it now stands at just shy of £125mln – a 12.4% rise on a like-for-like basis.

Circle now estimates an unaudited net asset value (NAV) of £78.7mln (278p per share), almost double what it was at the IPO in February 2016.

READ: Circle renegotiates lease with major tenant at biggest asset

“Our careful stock selection and active asset management strategy continues to yield results as we report another significant uplift in our portfolio's valuation at the half year,” said chief executive John Arnold.

“The regional office markets in which we operate remain buoyant and we continue to be focused on growing the Company, expanding the share register and seeking new acquisition opportunities.”

Over the past six months, almost £700,000 has been added to Circle’s annual rental income, which has increased 9.9% to £7.5mln (31 Mar: £6.8mln).

That could rise in the near future as well, with “good interest” from potential clients at its recently refurbished and redeveloped office blocks.

The company has been hard at work renegotiating a long-term lease with a major tenant at a business Park in Milton Keynes, as well as filling the last remaining space at Somerset House in Birmingham, where it agreed on a 15-year lease with a tenant worth £796,000 a year.

READ: Circle expects regional demand for high-quality office space to continue

Circle has also added to its holdings at Aztec Park, one of Bristol’s more popular business parks. It bought two fully-let buildings there for £4.2mln representing a net initial yield of 7.9%.

 As part of a review of what it considers to be its non-core assets, the group sold a petrol station and convenience store in Wiltshire which it had owned since 2005 for £3.5mln – an 18.6% premium to book value.

“The sale [in Wiltshire] will enable us to recycle capital from a non-core, ex-growth asset into higher yielding investment opportunities in strong regional office markets, in line with our strategy,” said Arnold.

Circle shares jumped 3% at the opening bell on Thursday to 205p.

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January 29 2019
“We believe that our NAV forecasts are conservative and the shares are significantly under-valued given the company’s track record and growth prospects.”

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