BRU2 Bruntwood Bd 6%

TIDMBRU2

Bruntwood Bond 2 PLC

23 October 2020

23rd October 2020

BRUNTWOOD GROUP LIMITED

BRUNTWOOD INVESTMENTS PLC

BRUNTWOOD BOND 2 PLC

UPDATE STATEMENT ON COVID-19 AND LATEST RENT COLLECTION

Bruntwood Group Limited ("Bruntwood") today updates the market on the impact of the Covid-19 pandemic on its business, including a summary of the latest rent collection position.

Chris Oglesby, CEO of Bruntwood, said

"Since the start of the COVID crisis - our primary focus has always been the safety and wellbeing of our colleagues and customers. Over the last seven months, we made every effort to stay connected with them - provided a wide range of both colleague and customer support and communications. This includes a comprehensive "return to the workplace" programme and operational plans in place across all of our buildings to ensure they operate to the highest standards of COVID safeguarding - as positively assessed by The British Safety Council. All of this meant that, when they were ready, both customers and colleagues have felt safe and comfortable coming back into our COVID secure spaces; and in recent months we have been gradually welcoming back increasing numbers."

Financial Position

Following the repayment of the 2020 Retail bonds, the Group has GBP30m of cash reserves, GBP50m of undrawn committed available facilities and GBP68m of unencumbered assets upon which further finance could be secured.

The Board has modelled various scenarios including reviewing estimated customer default rates, lower retention rates, higher concessions and valuation yield movement. Based on the output of these models, The Board considers there to be sufficient income and valuation headroom across Bruntwood's debt facilities and does not expect Bruntwood to breach any terms relating to them. We have modelled the forecast covenant performance on each loan facility. Valuation covenant headroom is in excess of 30% on the majority of our facilities and in excess of 25% on our NatWest Club facility. Income would have to fall by over 30% on all of our facilities before any interest cover covenants are breached. In addition, we would expect that the existence of GBP68m of unencumbered assets would provide the resources to remedy any breaches in such circumstances. The earliest major bank facility maturity is not until March 2022.

Impact on Operations

Bruntwood has a well diversified customer base and is not exposed to the failure of any single customer or sector. We have sought to pass on the benefit of any savings made by Bruntwood in respect of lightly utilised customer space during the Covid period, and we continue to work with customers in response to any requests for support which are considered on a case by case basis.

As of 20th October 2020, 95% of March quarter rents and 90% of June rents were collected with the balance being on payment plans or being actively pursued at the date of this announcement. If we exclude retail customers, the relevant metrics increase to 97% of March rent and 93% of June.

As at 20th October 2020, 79% of September quarter rents had been collected (81% excluding retail). This is ahead of the March / June quarters at a comparable point but behind the 92% collected at the same date last year. We continue to speak with all our customers on a regular basis and work with every customer to support them as far as possible through these challenging times. We will continue to work closely with all customers and where support is required we will seek to reach a fair solution for everyone.

Strong cash collection and reduction in non-essential overheads has meant that the business continues to run cash positive before capital outlay is taken into account. Despite lettings being well behind where we would expect them to be in a non-Covid year, record retention levels mean that vacancy has remained consistent at 8.6%.

The 400,000 square foot first commercial phase of Circle Square (part of the SciTech JV with Legal and General) is on track to reach practical completion in November 2020. The majority of space is prelet. Future phases and further development schemes will only proceed based on the achievement of pre-let hurdles or equivalent de-risking mechanisms. All of our current major development schemes are pre-funded with any equity requirement having already been injected.

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 
 

Forward-Looking Statements: This announcement contains certain forward-looking statements with respect to Bruntwood's expectations and plans, strategy, management objectives, future developments and performances, costs, revenues and other trend information. These statements are subject to assumptions, risk and uncertainty. Many of these assumptions, risks and uncertainties relate to factors that are beyond Bruntwood's ability to control or estimate precisely and which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Certain statements have been made with reference to forecast process changes, economic conditions and the current regulatory environment. Any forward-looking statements made by or on behalf of Bruntwood are based upon the knowledge and information available to Directors on the date of this announcement. Accordingly, no assurance can be given that any particular expectation will be met and Bruntwood's bondholders are cautioned not to place undue reliance on the forward-looking statements. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), Bruntwood does not undertake to update forward-looking statements to reflect any changes in events, conditions or circumstances on which any such statement is based. Past bond performance cannot be relied on as a guide to future performance. Nothing in this announcement should be construed as a profit forecast. The information in this announcement does not constitute an offer to sell or an invitation to buy securities in Bruntwood or an invitation or inducement to engage in any other investment activities.

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END

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October 23, 2020 03:00 ET (07:00 GMT)

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