Executing our growth strategy
Great Portland Estates plc is pleased to announce results for the Group for the year ended 31 March 20251, with highlights including:
- Successful deployment of rights proceeds; £325 million allocated
- Strong operational performance, record investment leasing at 10.6% premium to March 2024 ERV
- Valuation +3.6%2 (inc. Fully Managed +12.8%); EPRA NTA +4.4%3 ; TAR +6.0%3
- Rental values up by 5.0%2, portfolio ERV growth guidance upgraded to 4.0% to 7.0% for FY26
- Developments delivering premium space into supply drought; c.£220m to c.£580m surplus to come
- Balance sheet strength maintained, EPRA LTV 30.8%, cash and undrawn facilities £376 million
- Significant income & value growth to come; prospective 10%+ annualised ROE with EPRA EPS up 3x
We are pleased to report on a productive and successful year during which we achieved or exceeded most of the challenging operational targets we set ourselves, in spite of the often extreme and unpredictable macro-political backdrop; we successfully raised and then deployed, ahead of schedule, significant fresh equity capital into exciting new opportunities at a sizeable average discount of more than 50% to those assets’ replacement cost; we delivered a record quantity of investment leasing at a healthy 11% premium to ERV, growing rent roll by 15% and validating our focus on creating premium spaces, with our prime office rental values rising by 7.6% and Fully Managed capital values by 12.8% over the year. Pleasingly, our commitment to customer service has been rewarded with an exceptional 87% customer retention rate and an industry-leading Net Promoter Score.
Looking forward, despite ongoing macro-economic uncertainty, we believe that many of the conditions necessary for a period of attractive growth in central London’s commercial property values are increasingly evident and we are well placed to prosper; with healthy demand, rents at our well-located, premium spaces will continue rising and we have upgraded our forecasts for the year; we have amassed an enviable pipeline of prime development and refurbishment opportunities covering almost 40% of our portfolio from which we expect to generate material surpluses, given the extreme shortage of such space; London’s growing relative attractions are generating early signs of a reinvigorated investment market which will allow us to crystalise surpluses through asset sales; and our deeply experienced teams and strong financial position will enable us to take full advantage of these supportive conditions and generate attractive returns for shareholders, with a prospective 10%+ annualised return on equity and a threefold increase in EPRA EPS over the medium term.
Successful deployment of rights issue proceeds
- £325 million of rights issue proceeds allocated (including capex)
- Four acquisitions (£162 million, all West End) at a 53% discount to replacement cost, including:
- HQ development opportunity at One Chapel Place, W1 for £56.0 million
- Rotating towards sales as investment market strengthen
- £350 million of near-term disposals planned (>50% already under offer)
Strong leasing year, beating ERV by 10.6%; rent roll up 15% with high customer satisfaction scores
- £37.7 million signed (our share: £32.6 million), with market lettings on average 10.6% ahead of March 2024 ERV
- Our Flex offer now 582,000 sq ft with Fully Managed NOI now £19.3 million; up 93% since Interim Results
- Total rent roll up 15% to £123 million, with organic growth potential of 131%
- Vacancy marginally increased to 5.9% as we deliver well-timed refurbishments
- Additional £17.6 million signed since year end at 5.5% premium to March 2025 ERV inc. 30 Duke Street pre-let
- Further £3.0 million of lettings under offer 14.4% above March 2025 ERV
- Leading Net Promoter Score +26.1 (+48.3 Fully Managed); high customer retention 87% (91% Fully Managed)
Valuation up 3.6%2 (inc. Fully Managed +12.8%) driven by rental value growth +5.0%2
- Portfolio valuation of £2.9 billion, up 3.6%2; offices +4.3%2
- Rental values up by 5.0%2 (+5.3% offices (+7.6% Prime) & +3.5% retail); yield expansion of 12 bp
- Portfolio ERV growth guidance upgraded to 4.0% to 7.0% for FY26 (prime offices 6.0% to 10.0%)
- IFRS NAV and EPRA4 NTA per share of 494 pence, up 4.4% since March 20243 ahead of consensus5
- EPRA4 earnings £20.2 million, EPRA4 EPS 5.2 pence, at cyclical trough as expected and in line with consensus5
- IFRS profit after tax of £116.0 million; dividend maintained at £31.9 million or 7.9 pence per share
- ROE +6.0%3 for FY 2025 with prospective >10% ROE CAGR into medium term
Significant development and refurbishment programme set to deliver £217+ million in surpluses
- Good progress at seven on-site development and refurbishment schemes, £357 million capex to come
- Entirety of offices at 30 Duke Street, SW1 pre-let, 15-year term substantially ahead of ERV and underwrite
- Expected to deliver 35.1% profit on cost and 7.1% development yield
- Two Fully Managed refurbishments completed with strong leasing successes (62% let at 31 March)
- Further four near-term schemes; three HQ, one Flex, starts from Q1 2025; total capex £343 million
- Combined expected surplus of £217 million at current rents and yields; £342 million with 10% rental growth
- Pioneering Circularity Score implemented to reduce use of virgin materials in development
Strong liquidity; £376 million of cash & undrawn facilities; LTV 30.8%
- New £250 million sustainable sterling bond issued in September; new £150 million RCF in October
- EPRA LTV 30.8%, cash and undrawn facilities £376 million; weighted average debt maturity of 5.2 years
1 All values include share of joint ventures unless otherwise stated 2 On a like-for-like basis 3 Pro forma for rights issue 4 In accordance with EPRA guidance. We prepare our financial statements using IFRS, however we also use a number of adjusted measures in assessing and managing the performance of the business. These include like-for-like figures to aid in the comparability of the underlying business and proportionately consolidated measures, which represent the Group’s gross share of joint ventures rather than the net equity accounted presentation included in the IFRS financial statements. These metrics have been disclosed as management review and monitor performance of the business on this basis. We have also included a number of measures defined by EPRA, which are designed to enhance transparency and comparability across the European Real Estate sector, see note 9 to the financial statements. Our primary NAV metric is EPRA NTA which we consider to be the most relevant investor measure for the Group. 5 Company compiled analyst consensus (EPS: 5.3p NTA: 484p)
