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Helical prepares to buy

Writedowns held back net asset growth at Helical Bar in its first half, but management is bullish about buying into new opportunities as the property cycle turns.

Properties totalling £64m have been sold or are in solicitors' hands, with many being "hard to sell" empty properties. The sales generated a loss of nearly £10m, which, coupled with a writedown to development property assets, wiped 10p off underlying net assets per share. There was an additional impairment of £8.3m on non-property investment Quotient Biosciences Group, which knocked a further 10p from assets. However, revaluations on the investment portfolio added back 9p, and £43m of further disposals are expected by Helical's March year-end.

Chief executive Mike Slade believes selling assets at below book value to generate equity, pay down debt and fund acquisitions is the best strategy. "We're under offer on three new deals, which we hope to complete by Christmas," he revealed. Helical's City of London office scheme at 200 Aldersgate comes to market in January, and Mr Slade is confident of lettings success, and is hoping to bag a pre-let to start construction at its other City development, Mitre Square. Existing joint-venture partnerships give Helical exposure to 3,000 residential units in London.

HELICAL BAR (HLCL)
ORD PRICE:271pMARKET VALUE:£291m
TOUCH:271-273p12-MONTH HIGH:362pLOW: 260p
DIVIDEND YIELD:0.7%TRADING STOCK:nil
PREMIUM TO NAV:25%
INVESTMENT PROPERTIES:£255mNET DEBT:91%

Half year to 30 SepNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2009217-8.83-7.51.75
2010217-3.16-3.71.75
% change - - - -

Ex-div: 1 Dec

Payment: 23 Dec

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IC View

The market has not responded well to Helical's disposal programme, with its shares dropping 20 per cent in the last month. And, although deal-flow looks promising, the shares trade at a chunky premium to net assets and now look fairly priced.

Last IC view: Buy, 296p, 25 Nov 2011

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