Half year results 2019 – development and leasing successes driving strong operational performance

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The Directors of Great Portland Estates plc announce the results for the Group for the six months ended 30 September 2019.


Valuation up 0.8%2, driven by committed developments and rental value growth

  • Portfolio valuation up 0.8%2 (developments: up 6.0%2)
  • Rental value growth of 1.0%2 (+1.4% offices, -0.2% retail); yield compression of 1 bp
  • Total property return of 2.7%, with capital return of 1.0% v MSCI Central London (quarterly index) of 0.2%
  • Rental value growth guidance range for the financial year maintained at minus 2.0% to +1.5%; potential to outperform if business friendly outcome to current political uncertainties

Solid financial performance; interim dividend up 9.3%

  • EPRA3 NAV per share of 868 pence, up 1.8% over six months
  • EPRA3 earnings of £28.1 million, up 11.1% on H1 2018. EPRA3 EPS of 10.6 pence, up 17.8%
  • After revaluation surplus, IFRS profit after tax of £44.1 million (2018: £33.7 million)
  • Total accounting return4 of 2.7% over six months; interim dividend per share of 4.7 pence, up 9.3%

Strong leasing, 9.4% ahead of ERV; flexible space offering grown, leasing 35% ahead of ERV

  • £9.9 million let, 220,100 sq ft, market lettings 9.4% above March 2019 ERV
  • Flex space now c.10% of office portfolio, including a new partnership at City Place House; 35% > ERV so far, appraising further 153,000 sq ft
  • 23 rent reviews secured £11.7 million p.a., 20.9% ahead of passing rent, 0.6% ahead of ERV at review date
  • £3.6 million reversion captured since March 2019; further reversionary potential of 7.8% (£8.3 million)
  • Vacancy rate down to 2.3% (31 March 2019: 4.8%); average office rent of £56.00 per sq ft; 79% of retail (28% of portfolio by value) in prime West End locations5
  • Like-for-like rent roll up 5.6% to £106.0 million, with total potential future growth of 45% to £153.3 million6
  • Q3 started well; £2.2 million p.a. of lettings completed since 1 October, market lettings in line with September 2019 ERV; £8.1 million of lettings under offer, 5.4% ahead of September 2019 ERV

Excellent progress on committed schemes, 48% pre-let or under offer

  • Three committed schemes (414,900 sq ft) progressing well, 18.9% forecast profit on cost, 48% pre-let (including flagship store on New Bond Street) or under offer with good levels of occupier interest
  • Exceptional and flexible development pipeline of 10 schemes (1.4 million sq ft), currently income producing, with 3.0 years average lease length, 12.1% reversionary (existing use)
  • Total programme covering 54% of existing portfolio

Rock solid financial position; £200 million share buyback successfully completed

  • Property loan-to-value4 of 13.3%, weighted average interest rate of 2.6%, weighted average debt maturity of 6.4 years, cash/undrawn committed facilities of £434 million (including £450 million RCF extended to 2024)
  • Share buyback of £200 million completed; 27.8 million shares purchased at average share price of £7.20

Market leading sustainability, innovating and promoting from within; strong and creative culture

  • Five-star GRESB rating for fourth consecutive year; participation in Better Buildings Partnerships Climate Change Commitment, aligned with our strategy and ambitious carbon targets
  • Market leading app rolled out across entire portfolio; encouraging uptake
  • Promoting internal talent, realigning operating structure for higher service provision and broadening Inclusion & Diversity and Community programmes
"I am pleased to report another period of strong operational activity with healthy leasing ahead of ERV, the continued successful rollout of our flexible space offering, the completion of our share buyback programme and excellent progress at our three committed developments. Our second half has started well, despite elevated levels of macro-economic and political uncertainty. Occupier interest today remains robust in a market where high quality space is scarce and we have delivered lettings totalling £2.2 million of rent with a further £8.1 million under offer at a 5.4% premium to September 2019 ERVs. Whilst activity in our investment market has slowed, for the international investor, London continues to provide appealing value relative to other global cities. Although we expect continued political and possibly macro-economic turbulence, GPE is in great shape and ready to take advantage of any market weakness: We are attracting occupiers to our brand of high quality, sensibly-priced sustainable space; we are innovating across our portfolio of well-located properties which is let off low rents with further reversionary potential; our exceptional development pipeline provides us with nearly 1.4 million sq ft of value creating opportunities meaning we have no immediate need to buy; yet, with our modest gearing, we retain significant and low cost financial capacity; and our collaborative culture and focus on developing our experienced and talented team will enable us to maximise the opportunity we have to generate long-term value across our business."
Toby Courtauld
Toby Courtauld
Chief Executive