Great Portland Estates plc (“GPE”) today publishes its trading update for the quarter to 30 June 2017.
Continued successful leasing ahead of ERV and capturing reversion
- 20 new lettings (94,500 sq ft) signed generating annual rent of £6.0 million (our share: £5.2 million), including £1.2 million pre-letting at 84/86 Great Portland Street, W1; 2.3% ahead of March 2017 ERV
- Ten rent reviews settled securing £3.8 million per annum; 62% above previous passing rent, 3.4% ahead of ERV; remaining reversionary potential of 17.6% (£20.5 million)
- 26 lettings under offer totalling £13.1 million p.a. of rent (our share: £10.4 million); 1.3% ahead of March 2017 ERV
- Rent roll of £115.9 million, up 5.7% over three months
- Vacancy rate of 6.5% (falling to 4.5% if we convert all investment lettings under offer)
- 99.8% of rent collected within seven working days
Selective acquisitions; increasing Crossrail exposure
- Purchase of freehold of Cityside and Challenger House, 40/42 Adler Street and 2/8 Whitechapel Road, London E1 for £49.6 million, or £320 per sq ft on the consented net internal area; angles to exploit and adding to the development pipeline
Committed programme de-risked; flexible pipeline covering 40% of existing portfolio
- Three committed schemes (350,000 sq ft), all expected to complete in next eight months; capital expenditure to come of £28.6 million, 67% pre-let or pre-sold (with a further 10% under offer)
- Good progress across two existing near-term uncommitted schemes (309,300 sq ft), including phased access agreement signed with Crossrail at Hanover Square,W1; potential capital expenditure of £152.0 million
- Further development opportunity acquired at Cityside House, Whitechapel E1 (76,500 sq ft)
- Exceptional and flexible medium-term development pipeline of 12 schemes (1.3 million sq ft), all income producing, with 4.0 years average lease length, 19.2% reversionary1
Strong financial position; low LTV of 14.1%2 and significant liquidity
- £110.0 million special dividend paid on 31 May 2017
- Pro forma LTV of 14.1%2, weighted average interest rate of 2.7%, drawn debt 96% fixed or capped
- Pro forma cash and undrawn committed facilities of £552.9 million2, low marginal cost of debt of 1.4%
- Existing use of development pipeline at 31 March 2017
- Based on property values at 31 March 2017 pro forma for remaining net deferred sales proceeds of £112 million from the commercial sales of 73/89 Oxford Street, W1 and Rathbone Square, W1
"I am pleased to report another quarter of strong operational activity with continued leasing successes ahead of ERV and our acquisition in Whitechapel, close to its new Crossrail station, adding to our pipeline of future opportunity. Despite the ongoing uncertain economic and political environment, we continue to attract occupiers for our brand of high quality, well located, sensibly priced space with £13.1 million of lettings currently under offer at a 1.3% premium to March 2017 ERVs. GPE is in great shape with exceptional long-term potential: our recent refinancing successes and four years of net sales activity gives us unprecedented financial capacity; our investment portfolio is well let, off low average rents and with significant reversionary potential; our remaining committed development programme is materially de-risked, being 67% pre-let or pre-sold with strong occupier interest in much of the balance; our exceptional income-producing development pipeline offers more than 1.7 million sq ft of flexible future growth potential; and we have a first-class team ready to capitalise on this period of uncertainty."
