Great Portland Estates plc ("GPE") today publishes its trading update for the quarter to 30 June 2018.
Leasing successes ahead of March 2018 ERV and capturing reversion
- 11 new lettings (41,700 sq ft) signed generating annual rent of £2.5 million (our share: £1.6 million); market lettings 1.9% ahead of March 2018 ERV
- 9 rent reviews settled securing £5.0 million per annum; 20.8% above previous passing rent, 5.1% ahead of ERV; remaining reversionary potential of 9.2% (£9.7 million)
- 20 lettings under offer totalling £4.4 million p.a. of rent (our share: £3.8 million); 4.4% ahead of March 2018 ERV
- Successfully trialled flex space offering across 12,000 sq ft, securing rent at 35% premium to net effective rental value; appraising further c.100,000 sq ft across existing portfolio
- Vacancy rate of 6.3% (falling to 4.6% if we convert all investment lettings under offer)
- 99.00% of rent collected within seven working days; no occupier delinquencies
Good progress on development schemes; flexible programme covering 49% of existing portfolio
- 160 Old Street, EC1 (161,700 sq ft) completed in April, now 71% let with a further 9% under offer and strong interest in remaining space; 19.6% profit of cost
- Good progress across three committed schemes (412,000 sq ft), including our Hanover Square estate, W1 which is already 25.8% pre-let; all located near to Crossrail stations, 15.9% forecast profit on cost, capital expenditure to come of £233.0 million. Encouraging levels of occupier interest
- Exceptional and flexible development pipeline of 13 schemes (1.3 million sq ft), currently income producing, with 3.6 years average lease length, 12.2% reversionary1
Continued net sales; commercial sales of £49.6 million, 2.4% ahead of book value
- Sale of 78/92 Great Portland Street and 15/19 Riding House Street, W1 for £49.6 million, net initial yield of 3.9%, capital value of £1,362 per sq ft; crystallising development profit on cost of 12.4%
- Approximately £150 million in the market for sale; seeking to crystallise further surpluses and take advantage of strong investment markets
Strong financial position; £306 million returned to shareholders
- £306 million (93.65 pence per share) returned to shareholders via a B share scheme
- LTV2 of 12.6%, weighted average interest rate of 2.3%, drawn debt 100% fixed or hedged
- Cash and undrawn committed facilities of £636 million, low marginal cost of debt of 1.6%
- Existing use of development pipeline at 31 March 2018
- Based on property values at 31 March 2018
"I am pleased to report another quarter of positive operational activity with healthy leasing, ahead of ERV, and encouraging occupier interest across our three newly committed development schemes which are already 11% pre-let. We continue to attract occupiers for our brand of high quality, well located, sensibly priced space with £4.4 million of lettings currently under offer at a 4.4% premium to March 2018 ERVs. Despite the ongoing economic and political uncertainty, GPE is in great shape with enviable long-term potential: five years of net sales activity gives us unprecedented financial capacity even after returning more than £400 million to shareholders; our investment portfolio is well let, off low average rents and we are capturing its reversionary potential; our committed development programme is progressing well; our exceptional income-producing development pipeline offers more than 1.3 million sq ft of flexible future growth potential; and we have a first-class team ready to capitalise on our many opportunities."
