The property group Bruntwood has fallen into the red in what its boss called one of the most difficult years for real estate in recent memory.
Bruntwood said gross profits for the year to October 2 stood at £74.3m, up 18% on 2022, thanks to “improved occupancy levels and rental growth across its UK-wide portfolio”. Operating profits rose 57% to £48.9m
However the group made a paper lose caused by what its boss called sizable valuation shifts
Gross profits rose thanks to strong occupancy levels, rental growth across its UK-wide portfolio, and the completion of lettings at the 400,000 sq ft No.1 and No.2 Circle Square in Manchester
The results cover the period up to 30 September 2023, pre-dating a £500m new investment into the Bruntwood SciTech platform, which saw Greater Manchester Pension Fund become a third shareholder partner and inject £150m new investment, alongside a significant increase in investment from existing shareholders, Legal & General and Bruntwood, through cash and asset transfer.
The £500m investment deal was the first of its kind by a UK local authority pension fund and was one of the largest single real estate investments of 2023.
It makes Bruntwood SciTech the largest dedicated property platform serving the UK’s innovation economy, with £1.5bn in assets across nine campus locations and 31 city centre innovation hubs, offering 4.8m sq ft of world-class specialist workspace, support, and like-minded communities for 1,100 high-growth start-ups, scale ups, and global businesses.
This year is set to see the completion of the first phase of the Birmingham Health Innovation Campus and redevelopment of West Village in Leeds, topping out of No.3 Circle Square and Citylabs 4.0 in Manchester, and getting underway with several new developments; the third phase of Manchester Science Park’s masterplan – Greenheys, redevelopment of the iconic Met Tower in Glasgow into a tech hub, and a major refurbishment of the city-centre innovation hub Pall Mall in Manchester.
Commenting on the figures, Bruntwood SciTech CEO Chris Oglesby, said: “These numbers represent Bruntwood SciTech prior to its major new investment and portfolio acquisition that has fundamentally transformed its scale, and are a snapshot of UK real estate during one of its most difficult years in recent memory.
“But despite us seeing a paper loss created by some sizable valuation shifts, the performance of our portfolio didn’t waver, with our gross profit performance pointing to the continuing appeal of our modern, world-class, specialist workspaces for science, tech and innovation-led companies of all sizes.
“As a long-term, patient capital operator we have never judged the success of our business over a 12 month accounting period, but instead the impact of our investments into the cities we are part of over many years. On that measure, we are pleased to have passed some significant milestones in 2023.
“We’re now a quarter of the way into our current financial year following the investment deal and with GMPF as our new JV partner. While being prudent about what we deliver and when, while both the real estate market and wider UK economy remains fragile, we continue to have confidence in the strength of our products, the sectors we are invested in supporting, and the opportunities within our 3.6m sq ft pipeline. We will continue to build and invest in our campuses and cities into 2024 as we work towards our target to create a UK-wide £5bn portfolio by 2032 that can support 2,600 high-growth businesses.”
