Bruntwood Bond 2 PLC June 21 Quarterly Rent Update
July 21 2021 - 2:00AM
RNS Non-Regulatory
TIDMBRU2
Bruntwood Bond 2 PLC
21 July 2021
21st July 2021
BRUNTWOOD GROUP LIMITED
BRUNTWOOD INVESTMENTS PLC
BRUNTWOOD BOND 2 PLC
UPDATE STATEMENT ON COVID-19 RENT COLLECTION AND INTERIM
RESULTS
Bruntwood Group Limited ("Bruntwood") today updates the market
on the impact of the Covid-19 pandemic on its business and a
summary of the latest rent collection position.
Chris Oglesby, CEO of Bruntwood, said
"Over the last quarter we have continued to keep our buildings
open for customers and support them to work safely and effectively
from them. There has been a phased return to workplaces with
footfall stabilising around 40% during this quarter. In parallel
customers are preparing for more substantial numbers of staff to
return as the national Covid restrictions are lifted.
This quarter saw the successful conclusion of the Manchester ID
procurement process for Bruntwood SciTech and also the acquisition
of Castle House which will enhance our footprint in Leeds.
We know from engagement in the business communities in our
cities the value that businesses are placing on their offices as
places for people to collaborate, create and develop strong
business cultures. There is a growing recognition about the impact
of long term homeworking on colleagues mental wellbeing and career
development both of which have major impacts on individuals and
businesses"
Financial Position
On 30th June Bruntwood agreed a new GBP276m, 15-year
sustainable-linked loan facility with Aviva Investors. The
agreement sees Bruntwood consolidate and extend the maturity of its
long-term funding facilities until 2036 by refinancing and
increasing an existing credit line of GBP114m to GBP155m and
extending the term of the existing GBP121m Aviva facility
originally due to mature in 2031.
As at 16th July, the Group had GBP30m of cash reserves (compared
to GBP17m on 20 April, the date of the last update), GBP40m of
undrawn committed available facilities and GBP68m of unencumbered
assets upon which further finance could be secured. In addition,
the group has GBP19m of retained bonds which it could issue to the
market.
Bruntwood has modelled various scenarios including reviewing
estimated customer default rates, lower retention rates, higher
concessions and valuation yield movement. Based on the output of
these models, The Board considers there to be sufficient income and
valuation headroom across Bruntwood's debt facilities and does not
expect Bruntwood to breach any terms relating to them. We have
modelled the forecast covenant performance on each loan facility.
Valuation covenant headroom is in excess of 20% across our
facilities. Income would have to fall by over 30% on all of our
facilities before any interest cover covenants are breached. In
addition, we would expect that the existence of GBP68m of
unencumbered assets would provide the resources to remedy any
breaches in such circumstances. The earliest major bank facility
maturity is not until March 2022.
Impact on Operations
As of 16th July 2021, 95% of March quarter rents and 98% of
December rents were collected with the balance being on payment
plans or being actively pursued at the date of this
announcement.
Some 85% of June rents had been collected as at the same date.
This is consistent with the March / December quarters at a
comparable point. We continue to speak with all our customers on a
regular basis and work with every customer to support them as far
as possible through these challenging times. We will continue to
work closely with all customers and where support is required we
will seek to reach a fair solution for everyone.
Strong cash collection and a focus on controlling non-essential
expenditure has ensured that the business continues to stay cash
positive before capital outlay is taken into account. Retention
levels at break and expiry are in excess of 70% and vacancy levels
are currently 9.9%, showing a consistent positive trend across the
year.
Headline rents remain consistent with previous run rates
although there is some evidence of pressure on the rent free
concessions and fit out contributions required to secure new
lettings, albeit consistent with our forward plan assumptions.
Since the last update, Bruntwood SciTech has continued to make
significant traction on it's lettings plan at both Alderley Park
(the 1m sq ft life science campus) and the newly completed Circle
Square scheme (400k sq ft of commercial office space aimed at the
digital and tech sectors). SciTech continues to advance its growth
plans with the 120k sq ft Enterprise Wharf development on the
digital focussed Innovation Birmingham campus starting on site,
planning permission for the first phase of Birmingham Health
Innovation Campus being secured and further acquisition
opportunities being investigated.
In May 2021 Bruntwood SciTech was selected as the preferred
development partner by the University of Manchester in respect of
the ID Manchester site in the heart of the city centre's innovation
district after an almost two year procurement process. This will
see Bruntwood SciTech working in Joint Venture with the University
of Manchester to deliver a 4 million sq ft mixed use campus across
the final major development site of scale left in Manchester City
Centre.
ENDS
For further information, please see Bruntwood's website at
https://bruntwood.co.uk/ or contact:
Kevin Crotty (Chief Financial Officer) +44 (0) 161 212 2222
Sean Davies (Director of Financing
& Investment) +44 (0) 161 212 2222
Patrick King (Peel Hunt) +44 (0) 203 597 8622
Mark Glowery (Allia C&C) +44 (0) 203 039 3465
Forward-Looking Statements: This announcement contains certain
forward-looking statements with respect to Bruntwood's expectations
and plans, strategy, management objectives, future developments and
performances, costs, revenues and other trend information. These
statements are subject to assumptions, risk and uncertainty. Many
of these assumptions, risks and uncertainties relate to factors
that are beyond Bruntwood's ability to control or estimate
precisely and which could cause actual results or developments to
differ materially from those expressed or implied by these
forward-looking statements. Certain statements have been made with
reference to forecast process changes, economic conditions and the
current regulatory environment. Any forward-looking statements made
by or on behalf of Bruntwood are based upon the knowledge and
information available to Directors on the date of this
announcement. Accordingly, no assurance can be given that any
particular expectation will be met and Bruntwood's bondholders are
cautioned not to place undue reliance on the forward-looking
statements. Additionally, forward-looking statements regarding past
trends or activities should not be taken as a representation that
such trends or activities will continue in the future. Other than
in accordance with its legal or regulatory obligations (including
under the UK Listing Rules and the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority), Bruntwood
does not undertake to update forward-looking statements to reflect
any changes in events, conditions or circumstances on which any
such statement is based. Past bond performance cannot be relied on
as a guide to future performance. Nothing in this announcement
should be construed as a profit forecast. The information in this
announcement does not constitute an offer to sell or an invitation
to buy securities in Bruntwood or an invitation or inducement to
engage in any other investment activities.
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END
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