We have a clear strategic focus that enables us to deliver attractive long-term value to our stakeholders. Our primary focus remains on maximising value from our portfolio organically through creating exciting spaces for occupiers, driving rental growth, delivering developments and recycling capital, whilst continuing to explore acquisition opportunities where we see value.
The core principles of our business model
The core principles of our business model are:
- 100% central London, with a West End focus
- Reposition properties let off low rents
- Flex operational risk through the property cycle
- Maintain low financial leverage
- Disciplined capital management; raise to acquire, distribute excess
- Sustainability touches everything we do
Toby Courtauld Chief Executive
Our focused business model is all about repositioning properties to unlock their full potential. When combined with the effective reading of the property cycle, in a market we know inside out, we deliver attractive long-term returns for our stakeholders.
Our business model is underpinned by
How we create London spaces
With a 100% London focus, with 56% of our portfolio in our development programme and pipeline we are well positioned for future growth. With detailed business plans for each property reviewed quarterly and our focus on improving sustainability metrics that enhance the long term value of the business and reduce obsolescence, we create efficient, resilient healthy and innovative space which meets the changing demands of modern occupiers and is sensitive to the environment in which it is located.
Strong stakeholder relationships
Building and nurturing the relationships we have with our stakeholders is critical to our success and too valuable to outsource. As a result, we manage all aspects of our property portfolio in-house. We aim to build lasting relationships based on professionalism, fair-dealing and integrity.
We are committed to providing space that meets occupiers’ needs, across a wide range of industries, helping us maintain high retention rates and low vacancy rates. We also aim to be innovative in our approach, utilising technology to improve the occupier experience, providing flexible spaces to meet a variety of needs and ensuring that sustainability touches everything we do. We are committed to building strong relationships with both our joint venture partners and key suppliers, including contractors, debt providers and advisors. In order to create space for London to thrive, we have a responsibility to ensure we have a long lasting positive impact on the communities in which we work. As a result, we also aim to have ongoing positive engagement with local authorities, planning departments and our local communities.
Our culture and people
Our people care passionately about both their work and the success of our organisation, collaborating with others, inside and outside the Company, to deliver great results that benefit GPE and all those who have a stake in our business. Our success, and how we deliver it, is based on our clear purpose and firmly embedded values. Our culture is fundamental to our ability to attract, develop, motivate and retain our talented people.
Our experienced management team and in-house specialists are incentivised to deliver strong returns and outperform our KPI benchmarks. Our culture is entrepreneurial and collegiate, based on strong values, with a disciplined approach to risk management and governance.
While our primary objective is to deliver returns consistently ahead of our cost of capital, we also seek to minimise the cost of our capital through the appropriate mix of equity and debt finance, and to ensure that we have access to sufficient financial resources to implement our business plans. Optimising and flexing the allocation of capital across our portfolio, including between our investment and development activities, is key to our business and ensuring that we maximise returns on a risk adjusted basis through the property cycle. Accordingly, we operate with four key ‘givens’:
- conservative leverage to enhance, not drive, returns;
- sustainable ordinary dividends;
- disciplined capital allocation; and
- balance sheet efficiency – track record of accretively raising and returning capital.
Our preference for low financial leverage helps to provide downside protection when operating in the cyclical central London property market and to maintain the financial flexibility to allow us to act quickly on new investment opportunities as they arise.
Flexing our activities through the cycle
Our proactive management of the portfolio is shaped in tune with the property cycle. By reading this cycle, and adapting our activities accordingly, we aim to deliver long-term sustainable shareholder value.
At different points in the cycle we aim to:
We look to buy tired, inefficient properties assets, often with poor environmental credentials, in strong locations with angles to exploit. They are usually priced below replacement cost, typically acquired off-market and let off low rents.
Through lease restructuring, refurbishment or redevelopment, we deliver the kind of high quality, sustainable spaces today’s occupiers want, while enhancing the local environment and being sensitive to the communities in which we operate. We manage potential risk through pre-letting, joint ventures and forward sales.
We aim to provide efficient, resilient, healthy and innovative space to meet the demands of modern occupiers. Delivering a spectrum of spaces to appeal to a variety of occupier needs, whether on a traditional or flexible basis. We also recognise the need to constantly evolve to meet emerging trends, including the utilisation of technology and increasing levels of service provision to enhance the occupier experience.
We typically rotate 10-20% of the portfolio every year by selling properties where we’ve executed our business plans or to monetise expected future profits. The proceeds are then reinvested into higher return opportunities. Through this recycling, we have created a legacy of high quality, sustainable buildings which benefit London and the communities in which they are located.
Nick Sanderson Chief Financial & Operating Officer
With our strong balance sheet and talented team, we are well placed to continue delivering superior long-term returns.