Bruntwood swings to £224.3m paper loss

After making a £79.6m profit in 2022, ‘sizeable valuation shifts’ contributed to the firm’s substantial pre-tax loss in 2023.

Bruntwood made a £224.3m loss for the year ended 30 September 2023, its annual results show.

The company said that rising interest rates and the bond market crisis drove a 17% decline in its Bruntwood portfolio valuation, and a 12% decrease for Bruntwood SciTech – the joint venture between the firm and Legal & General.

“Despite us seeing a paper loss created by some sizable valuation shifts, the performance of our portfolio didn’t waver,” Bruntwood and Bruntwood SciTech chief executive Chris Oglesby said.

“Our gross profit performance points to the continuing appeal of our modern, world-class workspace, retail space, and specialist facilities for tech, life science, and innovation-led companies of all sizes.”

Bruntwood’s gross profit increased 18% to £74.3m year-on-year and operating profit rose from £31.1m in 2022 to £48.9m in 2023.

During the period, Bruntwood continued to invest in its portfolio, with £19.1m spent on refurbishment and capital improvement projects. It also invested a further £11.5m – matched by Legal & General – into Bruntwood SciTech to fund growth within this portfolio.

Bruntwood SciTech in turn invested £18.2m in refurbishment and capital improvements and £62.1m in new development schemes.

Bruntwood’s Pall Mall in Manchester is due to complete this year. Credit: via Citypress

The 2023 results, published today, pre-date the £500m new investment into the Bruntwood SciTech platform, which saw Greater Manchester Pension Fund become a third shareholder partner and inject £150m new investment. That deal also saw 30 city centre assets previously held in the 100% family-owned portfolio, transferred over to SciTech.

Read Place North West’s exclusive interview with Chris Oglesby following the transaction

Oglesby added: “These numbers represent our historic business structure prior to the major changes to the size and shape of our respective portfolios created by the £500m investment and welcoming of a new shareholder, and are a snapshot of UK real estate during one of its most difficult years in recent memory.”

Since the SciTech deal completed, Bruntwood has repaid £170m of debt and created headroom in its banking facilities to be able to refinance its £91m 6% retail bond which falls due in February 2025.

Despite a difficult year for the market, Oglesby insists there is no reason to panic.

“As a long-term, patient capital operator we have never judged the success of our business on the mark-to-market valuation shift over a 12-month accounting period, but instead the impact of our investments into communities over many years.

“We’re now a quarter of the way into our current financial year following the investment deal and with GMPF as our new JV partner in Bruntwood SciTech. While being prudent about what we deliver and when, as both the real estate market and wider UK economy remains fragile, we continue to have confidence in the strength of our products, the sectors we are invested in supporting, the opportunities within our growth pipeline, and will continue to build and invest in our towns and cities into 2024 and beyond.”

Bruntwood SciTech has a 3.6m sq ft development pipeline, which includes projects such as ID Manchester, with the aim of supporting the UK’s target to become a global science and technology superpower by 2030.

2024 is set to see the completion of various projects including the first phase of the Birmingham Health Innovation Campus, the redevelopment of West Village in Leeds, and a major refurbishment of Pall Mall in Manchester.