Circle Property

LN: CRC

£53.1m market cap

186p last close

Circle Property is an AIM-quoted property investment company that actively manages its assets, placing an emphasis on total returns rather than maximising short-term income. It targets the acquisition of well-located regional office properties where it has identified a clear opportunity to add value.

Investment summary

In the six months ending 30 September 2018 (H119) Circle Property continued to generate strong returns. The H119 NAV total return of 21.1% takes the total return since IPO in February 2016 to 93%, a compound annual average of 29.0%. This reflects the benefits, in terms of rising income and capital values, of letting recently refurbished space, of which we forecast more to come. Meanwhile management is seeking to replenish the refurbishment pipeline. H119 net rental income increased 35% on H118 and NAV per share increased 20% to 275p per share. DPS increased c 15% y-o-y, to 3.0p, 1.5x covered by Edison adjusted earnings (income earnings). We increased our forecast end-FY20 NAV per share by 7% to 290p, leaving our forecast DPS growth unchanged despite the dampening effect of mature asset disposals on near-term income earnings. Our forecasts assume no reinvestment of sales proceeds although accretive additions are targeted by management.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 4.4 2.3 10.0 3.14 59.2 N/A
2018A 5.5 3.2 14.0 8.99 20.7 16.6
2019E 7.0 4.5 16.3 9.37 19.9 17.2
2020E 7.5 5.0 5.1 10.96 17.0 10.2
Last updated on 15/02/2019
Industry outlook

The supply demand balance for regional office and industrial property remains generally firm, and a positive yield spread between the regions and London offers potential for further narrowing. Parts of the retail sector are displaying clear signs of stress.

Last updated on 15/02/2019
Share price graph
Balance sheet
Forecast net debt (£m) 45.9
Forecast gearing ratio (%) 58
Price performance
%
1m
3m
12m
Actual (3.4) (5.6) 14.5
Relative* (7.6) (7.9) 15.2
52-week high/low 230.0p/156.0p
*% relative to local index
Key management
Edward Olins Chief Operating Officer
John Arnold Chief Executive