Helical plc, the London-focused property development and investment company, has launched a £5 million share buyback programme, the firm confirmed on Tuesday. The initiative will see the company repurchase its own ordinary shares on the open market, with all acquired shares subsequently cancelled. The programme is expected to run until the earlier of completion of the £5 million allocation or the company's next annual general meeting.
The decision comes as Helical's share price has traded at a notable discount to its net asset value (NAV), a common trend among UK-listed real estate firms grappling with higher interest rates and shifting demand for office space. As of the latest trading session, Helical shares were down approximately 18% over the past twelve months, underperforming the FTSE 350 Real Estate Index. The buyback is intended to signal board-level confidence in the company's financial position and long-term prospects.
Helical's portfolio is predominantly composed of office properties in central London, a sub-sector that has faced persistent headwinds since the pandemic. Hybrid working patterns have reduced overall occupancy demand, while rising borrowing costs have compressed property yields. In its most recent trading update, the company reported a decline in portfolio valuation, though it noted strong rental collection rates and active asset management. The buyback programme does not alter the company's development pipeline, which includes several projects in the City and West End.
Analysts at Peel Hunt commented that the buyback is a logical use of surplus cash given the current share price discount, but warned that it does not address the structural challenges facing the London office market. 'Share buybacks can improve per-share metrics in the short term, but the fundamental driver of long-term value remains rental growth and capital values,' they noted. For UK investors holding Helical shares, the programme may provide modest price support, though it is unlikely to reverse broader sector trends.
The broader FTSE 250 index, where Helical is listed, has seen a slight uptick in corporate buyback activity in recent months as companies seek to deploy cash reserves. However, the property sector remains under scrutiny from pension funds and retail investors alike, with many questioning the sustainability of dividends and capital returns in a higher-rate environment. Helical's move is a measured step, but the market's reaction will depend on whether the buyback is followed by stronger operational performance.
Source: Helical plc press release