Oglesby upbeat as rent payments pick up

Bruntwood chief executive Chris Oglesby said the business continues to trade well despite Covid-19 headwinds, with a trading update reporting that 92% of March quarter rents have been paid across the group.

The developer and landlord said that as of 22 July, 75% of June quarter rents had been paid, in line with the March quarter but behind the 92% collected at the same date in 2019. In the stockmarket update on Friday for its retail bond plc, the company said it had received requests for support from customers representing less than 5% of its rent roll, with “the majority of requests relating to the deferral of rent rather than the waiver of liabilities”.

In a further statement today, Oglesby said that speaking with almost all of its 3,000 customers has been key to rental income holding up. “We have continued to trade well throughout the second quarter despite the significant headwinds created by the pandemic. Key to this has been our early and proactive engagement with customers.

“Our rental income has held-up well as a result and our diverse customer base and significant financial headroom remains a source of strength moving forward.

“The return to the workplace is ramping up across our key cities. Our teams have worked tirelessly to make our buildings Covid-secure, giving confidence to our customers that they can come back safely. We expect the numbers of people using our buildings to grow in ever increasing numbers in line with the change in government guidance on working in offices from August and the reopening of schools in September.”

Bruntwood currently has 300 staff furloughed out of its 867-strong workforce, with the majority expected back in September. The business raised £90m through its second retail bond in March.

Following the repayment of the 2020 retail bonds on 24 July and the drawdown of a £10m development facility for the Booths Park No6 development, the group will have £30m of cash reserves, £50m of undrawn committed available facilities and £68m of unencumbered assets upon which further finance could be secured.

Bruntwood said it has modelled the forecast covenant performance on each loan facility, and that valuation covenant headroom is in excess of 30% on the majority, adding that income would have to fall by over 30% on all of its facilities before any interest cover covenants are breached. The earliest major bank facility maturity is not until March 2022.

The 90,000 sq ft Citylabs 2.0, fully pre-let, reached practical completion in July. Booths Park No6, also pre-let, remains on schedule for a January 2021 finish.

The 400,000 sq ft first commercial phase of Circle Square, part of the Bruntwood SciTech joint venture with L&G, is due for completion in November 2020. Bruntwood said while the majority of this space is either exchanged or instructed with solicitors, further phases of Circle Square will only be commenced when instructed lettings become contractually unconditional, while “further development schemes will only proceed based on the achievement of pre-let hurdles”.