Circle Property PLC still seeing plenty of activity in the regional office sector

() said rent collection across its portfolio improved in the final quarter of 2020.

Since the outbreak of the COVID-19 pandemic in March 2020, average rent collection has clocked in at 90.5% while in the fourth quarter it currently stands at 92%; for the current quarter, the repayment rate is 84%.

Those struggling to meet the payments mostly come from the property company’s limited retail assets, comprising two pubs and one restaurant in central Birmingham. The tenants in those properties remain solvent and are expected to reopen and resume rental payments when lockdown restrictions allow.

Circle’s rental income has been increasing throughout the year as rent-free periods on more recently granted leases come to an end and net income now stands at £7.9mln a year, which is more than £1mln higher than at the end of March 2020.

The company said its offices remain under-rented which in turn means that tenants are less likely to operate break clauses, making Circle’s income more robust.

In its trading update, the company revealed it has recently let one property and sold another.

In Bristol, the property at 135 Aztec West has been let to Fertility Bristol on a 15-year lease (with a tenant break option at the end of the 11th year). The property will generate an income of £296,893, equivalent to £21.50 per square foot.

In Milton Keynes, the company has sold Power House for £3.55mln, which represents a 9.23% increase on the September 2020 valuation.

“From our direct experience during the period, we are pleased to see that there is plenty of activity in the regional office sector, with strong demand for well-designed office space, which provides office workers with flexible, safe environments. We believe that as the UK progresses out of the pandemic, office workers will be keen to return to the workplace and we aim to ensure that our offices provide attractive working conditions fit for the future,” said John Arnold, the chief executive of Circle Property.