EQS-News: Circle Property PLC

London, UK, 4 September 2017

Edison issues initiation on Circle Property (CRC)

Circle Property is an investor in regional UK commercial real estate, founded in 2002 and quoted on AIM since February 2016. It focuses on obtaining assets with good underlying characteristics at attractive prices, whose value can be increased through refurbishment, changes of use and other active asset management initiatives. The experienced executive team takes a hands-on approach and develops an individual management plan for each asset, minimising voids and maximising income and value. The current portfolio of £93m generates annual rents of £5.7m, supporting a c 3% prospective dividend yield, and gave an 18.1% NAV return in FY17.

Other investors in regional commercial property trade at NAV on average, whereas Circle is now at a discount of c 15% to 31 March 2017 basic NAV/share of 183p. This may be in part due to perceived development risk, or illiquidity. Our base case forecasts do not include the potential uplift to rental income and NAV should newly refurbished space be let in FY18, and only allow for rents to increase by 2% per annum (below inflation), leaving considerable upside if new tenants are found.

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