Circle Property Plc (“Circle” or the “Group”) 7 December 2016 CIRCLE DELIVERS STRONG GROWTH IN PROFIT AND NAV FROM UK REGIONAL PROPERTY PORTFOLIO Circle Property Plc (AIM: CRC), a specialist regional UK property investment, development and management company today announces its results for the six months to 30 September 2016. Financial Highlights 16.3% increase in val ue of the Group’s portfolio of 16 UK investment properties to £90.425 million (31 March 2016: £77.735 million) resulting primarily from th e Group’s successful asset management initiatives . 17% growth in Net Asset Value per share to £1.79 per share (31 March 2016: £1.53 per share). An operating profit to £1.15 million, compared with £0.84 million for the almost four month period from 4 December 2015 to 31 March 2016 contributing to a pre-tax profit of £8.27 million and an increase in earnings per share to 29.0 pence per share from 3.8 pence for the previous period. Net rental income for the six month period to 30 September was £2.0 million compared with £1.1 million for the period to 31 March 2016. Annualised rental income as at 30 September 2016 was £5.7 million compared with £5.9 million at 31 March 2016, despite a loss of £0.8 million of annualised rent resulting from the Group strategically vacating Somerset House in Birmingham to facilitate a refurbishment of the building. An additional c£2.3 million of annualised rent is obtainable by the end of 2018 upon the letting of the completed refurbishments at current ERVs. The weighted average unexpired lease term to break is now 7.81 years (5.6 years at 31 March 2016) and 11.53 years to expiry (6.85 years at 31 March 2016). Based upon the September valuation of £90.425m the portfolio reflects a net initial yield of 6% and a reversionary yield of 9.15%. In June 2016, Circle signed a new £50 million revolving facility with RBS which facilitated the refinancing of £39 million of existing facilities at a lower cost, and provides capital for further acquisitions. Following this transaction and as at 30 September the Group ’s secured debt amounts to £ 44.0 million with a weighted average term to expiry of 4.4 years and a weighted average cost of 2.44 % secured on the Company’s investment property portfolio. The Board has declared an interim dividend of 2.4 pence per share, which maintains the level of dividend paid for the previous reporting period. This dividend will be paid on 18 January 2017 to shareholders on the register on 16 December 2016 with an ex-dividend date of 15 December 2016. Operational Highlights Three significant lease contracts were secured during the period, adding £648,300 of annualised rent and comprising: o A lease surrender and new 25 year lease with the Compass Group at the Kents Hill Conference Centre in Milton Keynes at a commencing rent of £1,500,428 and representing a 71% increase over the previous rental level.
o Signed a new 10 year lease with Urgent Technology in April on 4,350 sq. ft. of vacant ground floor space at the 21,400 sq. ft. Power House office in Milton Keynes at £70,000 per annum, representing an increase of 8% over the previous tenant ’s rent. o The Group has also entered into an agreement with Topps Tiles for a new 10 year lease with a five year break option on 4,700 sq. ft. of currently vacant space at the 37,200 sq. ft. Baildon Bridge retail park bringing occupancy at the park to 91%. Significant progress with development pipeline: o K1, Kents Hill Park, Milton Keynes is refurbished and fully let. At K2 the refurbishment completed in July 2016 with 40,000 sq. ft. available to let in which there is good interest. ERV is £600,000 per annum. o In July 2016 planning permission was obtained for a change of use of the ground floor of Somerset House, Temple Street, Birmingham from offices to A3 restaurant. A lease surrender with the existing ground floor tenant has been agreed (to complete December 2016), with both ground floor A3 units totalling approximately 10,950 sq. ft. under offer to two national restaurant chains at a combined rent of £410,000 per annum. The refurbishment of floors 1-6 totalling 36,455 sq. ft. will commence in December with completion scheduled for July 2017. o At 36, Great Charles Street, Birmingham the rolling refurbishment of the offices on the Ground to 7 th floors totalling approximately 25,000 sq. ft. is well underway with completion due in February 2017. Three tenants are being retained and moved into newly refurbished floors and approximately 17,000 sq. ft. is to be offered to the market in spring 2017 with a rent yet to be announced. When complete, the ERV of the building will exceed £500,000 per annum. Occupancy was 81.1% compared with 89.1% at 31 March, primarily due to the strategic take back of 46,000 sq. ft. of space at Somerset House and 59,600 sq. ft. of other space being refurbished across the portfolio which account for 96% of the total vacant space. Excluding properties which are undergoing refurbishments, occupancy across the remainder of the investment portfolio rose to 96.0% from 90.6% at 31 March 2016. The Group’s po rtfolio of 16 commercial property investments and developments remains strongly diversified across the UK with the South East and London representing 48.5% by value, the South West 21.0%, the West Midlands 15.7% and the East Midlands 8.4%. Over 80% of the portfolio is offices or conference centre. In November the Group completed the sale of the Skoda dealership in Warrington for £1.32 million representing a 6% yield and a 32% premium to the 30 September valuation. John Arnold, Chief Executive at Circle Property Plc, commented: “ At the time of IPO we set out a clear objective to deliver attractive returns by investing in and managing value from regional offices which are often overlooked by other investors. With strong growth across all key metrics and significant lettings successes these results not only demonstrate our team’s ability to do just that, but also show that there is plenty of growth to be had in the regions, where Brexit has had little or no impact thus far. We will now look to progress our current pipeline of asset management opportunities, whilst also exploring ways to undertake new acquisitions and grow our portfolio. ” Circle Property Plc +44 (0)20 7930 8503 John Arnold, CEO Edward Olins, COO Peel Hunt (Nominated Adviser and broker to the Group) +44 (0) 20 7418 8900 Capel Irwin Edward Fox FTI Consulting +44 (0)20 3727 1000 Richard Sunderland Giles Barrie
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