Top-performing Helical Bar said this morning it was relishing tougher market conditions, as it revealed a solid set of half-year results.

'Helical thrives in cyclical markets and our worst fear was that yields would stay low, offering pedestrian prospective returns for mainstream property assets,’
said Giles Weaver. ‘Helical has done many of its best deals in challenging markets and we are certainly more confident of being able to source interesting deals at sensible prices over the next couple of years than over the last two.’

Pretax profits in the six months to 30 September slipped from £11.4m to £7.3m, but last year’s figure was boosted by £4.6m of trading profits, compared with nothing this year. This year’s profits showed higher net rental income of £7.9m and a higher profit from Gerald Kaye’s development team of £4.3m, compared with £1.7m last year.

Helical’s net asset value inched up from 334p to 342p a share, but this is not particularly meaningful since the company does not revalue its portfolio at the half-year stage.

Portfolio potential
Helical’s shares have dropped 23% to 363p so far this year, which leaves them trading at a discount to forecast NAV for only the third time in the company’s 22 years as a property company under the leadership of Mike Slade.

‘It is clear to us that the market is undergoing its biggest correction since the early ‘90s and a consensus is building that a 10-15% fall in capital values caused by a 75-100 basis point rise in yields is playing out,’ said Weaver.

‘The latent potential within our portfolio that we expect to unlock over the next few years should comfortably exceed the potential diminution in value that would be caused by such a rise in yields.’