Third quarter valuation and business update

29 January 2015

 

In today’s Interim Management Statement, the Directors of Great Portland Estates plc (“GPE” or “Group”) announce an update on trading, as well as the quarterly valuation of the Group’s properties as at 31 December 2014. Details of the Group’s recent valuation and rental value trends are set out in the Appendices.

Growth in rental values and capital values driving NAV per share uplift

  •  Portfolio valuation1 up 5.2%, 10.3% and 19.9% over 3, 6 and 12 months respectively
  • Continued strong valuation performance from our development properties up 9.6%, 19.6% and 36.0% over 3, 6 and 12 months respectively
  • Rental value growth1 of 3.0% (2.9% West End offices, 3.9% West End retail) over 3 months, 11.2% over 12 months
  • EPRA NAV2 per share of 680 pence at 31 December 2014 up 6.9%, 14.7% and 29.0% over 3, 6 and 12 months respectively

Continued successful leasing activity; 4.9% ahead of ERV

  • 20 new lettings (116,300 sq ft) signed generating annual rent of £6.3 million (our share: £5.4 million), including £2.8 million of lettings at our recently completed scheme at Walmar House, Regent Street, W1; market lettings 4.9% ahead of March 2014 rental values
  • Vacancy rate low at 3.2% (30 Sept 2014: 2.3%), low average office rent passing of £44.90 per sq ft, reversionary potential of 24.1%

Development commitments up; delivering surpluses with more to come

  • Committed programme expanded by 0.1 million sq ft to 0.6 million sq ft, all five schemes in West End, now including 89,700 sq ft new-build development at 73/89 Oxford Street, W1, expected profit on cost of 18%
  • Good progress across further six near-term schemes (0.5 million sq ft) including revised planning application submitted to enhance Hanover Square scheme, all with potential starts in next 18 months, 70% in West End
  • Major development opportunity from additional 12 uncommitted pipeline schemes (1.1 million sq ft)
  • Total development programme of 2.2 million sq ft covering 51% of the existing portfolio, 71% in West End, 46% with planning permission

Disciplined capital recycling crystallising profits

  • Two disposals completed in quarter generating £112.1 million in initial gross proceeds, including £96.3 million from sale of 12/14 New Fetter Lane, EC4 which crystallised ungeared IRR of 55.1%
  • To date, 130 private residential units pre-sold at Rathbone Square, W1 for £223.1 million (79% of the total by value)

Strong financial position

  • Loan-to-value of 21.4%, weighted average interest rate of 3.77%, drawn debt 100% fixed or hedged
  • Cash and undrawn committed facilities of £481 million, capex to come at committed and near-term development schemes of £497 million

 

I am delighted to be able to report another quarter of strong growth. The Group is performing well on all fronts, with outstanding returns coming from our development properties and attractive rates of rental growth across the investment portfolio. Despite heightened political uncertainty ahead of the UK General Election, London’s economy continues to expand at a sustainable rate, supporting healthy demand for the limited quantity of available office and retail space, particularly in our core market of the West End. As a result, our outlook remains positive; we can expect higher rates of rental growth compared to last year; we will be increasing our development commitments during 2015, starting new schemes across central London; and the strength of our balance sheet will allow us to exploit our many portfolio opportunities to the full.

Toby Courtauld Chief Executive of GPE

1On a like for like basis, including Joint Ventures, see Appendix
2In accordance with EPRA guidance

Contacts

  • Nick Sanderson

    Finance and Operations Director

    Contact details

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  • Finsbury

    James Murgatroyd

    Gordon Simpson

    Contact details

    T: 020 7251 3801

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