2 February 2024
BRUNTWOOD GROUP
LIMITED
BRUNTWOOD
INVESTMENTS PLC
BRUNTWOOD BOND 2
PLC
STATEMENT ON 2023
ANNUAL RESULTS
Bruntwood Group Limited ("Bruntwood") today
announces the publication of its 2023 financial statements and a
summary of the latest rent collection position. The results cover
the year and two days ended 2 October 2023 (the "Relevant Period"),
(pre-dating new investment into the Bruntwood SciTech platform
(Project Quantum) announced in October 2023)
Highlights
●
Reported Group operating profit of £48.9m (2022:
£31.1m)
●
Shareholders' Funds £453.4m (2022:
£671.5m)
●
Further investment of £19.1m of capital
●
Revaluation losses of £(199)m (2022: £35.76m
gain)
● Loss for the year of £(218.5)m (2022: £72.88m
profit)
●
Compliant with all loan covenants.
Underlying performance for the Relevant Period
was strong with operating profit rising from £31.1m in 2022 to
£48.9m for 2023. Bruntwood benefited from high levels of occupancy
with rent collection in line with previous years.
However, our bottom line reflected unrealised
losses as a result of the revaluation of our portfolio which, under
our accounting policy, requires to take any change in valuation to
the Profit and Loss Account. Given the economic backdrop and the
sharp increase in interest rates, valuation yields have come under
unprecedented pressure. Our average valuation yield has moved from
6.74 % to 7.92% which, all other factors being equal, would give
rise to a 19% reduction in value. Our portfolio has, however, seen
a 17% decrease, with positive movements driven by our activity in
increasing rental levels and reducing vacancy.
Chris Oglesby, CEO of Bruntwood,
commented
"These numbers are a snapshot of UK commercial
real estate for one of its most difficult years in recent memory.
Despite us seeing a paper loss created by some sizable valuation
shifts, the performance of our portfolio didn't waver, with our
operating profit performance pointing to the continuing appeal of
our modern, world-class, specialist workspaces for science, tech
and innovation-led companies of all sizes.
As a long-term, patient capital operator we have
never judged the success of our business over a 12 month accounting
period, but instead the impact of our investments into the cities
we are part of over many years."
Financial
Position
The Group filed its annual accounts for the
period ending October 2nd 2023. The full financial statements can
be found at:
https://bruntwood.co.uk/our-performance/disclaimer/retail-bond-2025/
Post Balance
Sheet Events
On 16th October 2023, we announced
the new investment in the Bruntwood SciTech platform (Project
Quantum ) which saw Greater Manchester Pension Fund and Legal and
General inject £320m of new equity, alongside increased investment
from Bruntwood by way of asset transfer. The deal also facilitated
significant de-gearing of the 100% owned group.
As of 31st January 2024, the Group has
successfully refinanced its principal loan within Bruntwood
SciTech, providing an additional £100m of capital to fund its
capital commitments. The refinancing will enable £26m of deferred
consideration on Project Quantum to be paid to Bruntwood
Ltd.
Following completion of Project Quantum,
Bruntwood Limited reduced its outstanding debt from £615m to £188m.
£49m of this debt is entirely secured against Bruntwood's interests
in joint ventures with local authorities. Of the remaining debt,
£91m relates to the unsecured retail bond due in February 2025 and
a £48m three year, bank club loan which is secured against
Property totalling £260m in value. This facility contains an
accordion feature which, if exercised, would provide Bruntwood with
the ability to refinance the outstanding retail bond at
maturity.
As at 31 January 2024 the Group has £11.3m of
cash reserves (31 January 2023: £16m), and £2.5m of available
undrawn committed facilities (31 January 2023: £40m). In addition,
the £26m of deferred Project Quantum funds are due to be received
imminently. The retail bond covenants have been tested and met as
at September 2023. The covenant testing and compliance certificate
can be found on the Bruntwood website (link as above).
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, (Singer Capital
Markets)
Mark Glowrey (Allia C&C)