Matthew Bonning-Snook, Helicial's property director, will succeed Gerald Kaye as chief executive at its annual general Meeting in July.
The announcement was made in full-year results that also provided an update on a review of the business in the face of continued steep losses and valuation falls that has pivoted Helical towards an "equity-light" development model.
Kaye has informed the board that, after 30 years with the company, he will be handing over his executive duties and stepping down from the board at the 2024 AGM. He will remain as an external consultant having agreed to support on the delivery of the company’s next major office developments at 100 New Bridge Street, EC4 and Brettenham House, WC2.
Bonning-Snook joined the business in 1995 and the voard in 2007, and has been responsible for delivering a number of projects. The voard said it believes he is well-placed to lead the business through the next phase of its development programme, which is focused on three over-station development schemes in joint venture with TfL’s Places for London, at 10 King William Street, EC4, Southwark, SE1 and Paddington, W2, in addition to the two major office developments.
Gerald Kaye, Chief Executive of Helical, said: “I have worked alongside Matthew for almost 30 years and believe he is the right person to succeed me as Chief Executive of Helical. I know that he is fully focused on realising profits from the Company’s exceptional development pipeline and I look forward to continuing to make my own contribution to the ongoing success of Helical in a consultant role.”
Helical also announced the results of a business review.
Richard Cotton, chairman, said in a statement that the review found that, given the quality of its committed development schemes and the anticipated supply shortage and ability to attract premium rents and strong returns, the board had unanimously agreed that it was in a position to generate potential returns that "on a three-year view far exceeds the likely returns from alternative strategies to return capital to shareholders". Those alternative strategies would have most obviously included asset sales.
The board has signed off on a detailed three-year plan, which also encompassed business cost reduction and management incentives, which provides a "clear blueprint for future growth", Cotton said.
He added that there are "very clear priorities for our experienced team of investment and development professionals, centred on reducing the portfolio vacancy in our completed buildings and maximising the potential in our development pipeline, all at a lower operational cost".
Helical said that the intention is to increasingly adopt an “equity-light” model to take advantage of market opportunities with a disciplined approach to capital deployment. It added it needs to complete its asset management plans, principally through leasing up vacancy, and be ready to realise value as and when liquidity returns to the investment market. It needs to adjust its dividend payout given recurring earnings are insufficient to cover the historic level of dividend and development profits are "inherently lumpy".
It also plans to make a significant reduction in its fixed overheads, and it has started to implement changes to reduce its running overheads by 25% by the end of March 2025. It is consulting on the introduction of a new three-year management incentive plan that is designed to strengthen the alignment of the executive and senior management team with shareholder returns.
Helical posted an International Financial Reporting Standards loss loss of £189.8 million (2023: £64.5 million) and a see-through Total Property Return of minus £162.7 million (2023: minus £51.4 million).
The group’s share of net rental income decreased 23.8% to £25.5 million (2023: £33.5 million) while it reported a net loss on sale and revaluation of investment properties of minus £188.6 million (2023: minus £88.1 million).
The Total Property Return, as measured by MSCI, was minus 20.3%, compared withthe MSCI Central London Offices Total Return Index of minus 5.7%.
The Euroepan Public Real Estate Association earnings per share of 3.5p (2023: 9.4p). The final dividend proposed is 1.78p per share (2023: 8.70p).
Net asset value was down 34.1% to £401.1 million (31 March 2023: £608.7 million).
The see-through loan to value increased to 39.5% (31 March 2023: 27.5%) with a pro-forma LTV, post year-end sales, of 28.7%. The group’s share of cash and undrawn bank facilities is £115.5 million (31 March 2023: £244.2 million).
Operationally, there has been good letting momentum, Helical said. During the year it completed 13 new lettings, comprising 136,660 square feet (Helical share: 86,237 square feet), delivering contracted rent of £11.7 million per annum (Helical share: £7.1 million), 1.1% above 31 March 2023 estimated rental values.
At The JJ Mack Building, EC1, it let 100,847 square feet at a 1.8% premium to 31 March 2023 ERVs. Post year-end, it let the ground floor office space to J Sainsbury and has placed the fourth floor, 10th floor and remaining ground floor retail unit under offer. On completion of these lettings 90% of the building will be let at an average office rent of £95 per square feet, with just one floor remaining.
At The Bower, EC1, it forfeited the leases for six floors let to WeWork at The Tower, taking back control of the space. Since then it has re-let one floor back to it until June 2024 and has entered into a management agreement for infinitSpace to provide serviced offices on two floors. The remaining vacant fourth, fifth and sixth floors are being refurbished to be let on a Cat A+ basis.
Shortly before the year-end, it exchanged on the £43.5 million sale of 25 Charterhouse Square, EC1, with completion of the sale in April 2024.
Recently it entered into a joint venture arrangement for the redevelopment of 100 New Bridge Street, EC4, selling a 50% interest in the site for £55 million structured on a preferred equity basis to a vehicle led by Orion Capital Managers.
There was an outward yield adjustment of 95 basis points for its portfolio in the year to 31 March 2024, increasing the true equivalent yield for the portfolio to 6.34% (31 March 2023: 5.39%) and reducing the investment portfolio valuation to £660.6 million (31 March 2023: £839.5 million).
Adding to its development pipeline, terms have been agreed, and contracts will shortly be signed, with the long leasehold owner of the existing building at Brettenham House, WC2 for the wholesale refurbishment of the 120,000 square feet office building, with Helical acting as development manager and contributing towards construction costs.
This transaction is an example of the “equity-light” model that Helical will seek to pursue in the future with ownership remaining with the long leaseholder and its equity contribution limited. Work has already started and it expects to deliver the completed scheme in first quarter 2026.