REG - Great Portland Ests. - GPE business update

Great Portland EstatesAnnouncement

11/04/2024 07:00

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RNS Number : 1049K  Great Portland Estates PLC  11 April 2024

 

11 April 2024

 

GPE business update

Great Portland Estates plc (GPE) publishes a business update, with the
highlights including:

·        £22.5 million of leases signed in year to 31 March 2024,
9.1% ahead of March 2023 ERV

o   £13.7 million of Flex; 29 lettings 12.3% ahead of March 2023 ERV

o   £7.0 million of retail; 4.7% ahead of March 2023 ERV

o   £5.3 million of rent under offer; market lettings 20.3% ahead of March
2023 ERV

o   Vacancy low at sub 2.0%

·        Good development progress into supply starved market

o   Commitment to 143,100 sq ft redevelopment of Minerva House, SE1

o   Commenced 67,600 sq ft development of French Railways House, SW1

o   Together delivering profit on cost 21.2%; development yield 6.7%

·        Flex footprint expanded to more than 500,000 sq ft, on track
to hit 1 million sq ft

o   Four Fully Managed schemes on-site (145,000) sq ft; to deliver £27.9
million of rent roll, £15.1 million of NOI

o   Flex rent roll £30.1 million; up 41% since March 23

·        Organic rent roll growth opportunities of 90%(1) to £211.0
million, before further ERV growth or acquisitions

Toby Courtauld, Chief Executive, said: "We are delighted to report another
strong quarter's leasing, bringing our total transactions for the year to
£22.5 million, 9.1% ahead of ERV. Our Fitted & Fully Managed spaces have
performed particularly well; our spaces are full and our ability to provide a
market-leading, hassle-free experience for our customers is driving returns
and reinforces our ambition to grow our Flex activities to 1 million sq ft.

Given the strength of occupational demand, and the increasing scarcity of high
quality space to let, we have started two new developments this quarter. Our
latest scheme, Minerva House, will take full advantage of its impressive river
frontage, creating an enviable South Bank HQ destination with new public realm
and gardens whilst delivering outstanding sustainability and re-use
credentials.

Looking forward, with interest rates and yields at around their peak, we are
increasingly confident that our growing development and Flex activities,
combined with strengthening rental growth, will drive attractive returns in
the near term. Furthermore, with the investment market moving in our favour,
we expect to add to our growth prospects as the year progresses.

 Great Portland Estates plc                                                      +44  (0)  20  7647  3000
 Toby Courtauld, Chief Executive
 Nick Sanderson, Chief Financial & Operating Officer
 Stephen Burrows, Director of Investor Relations and Joint Director of Finance

 FGS Global
 James Murgatroyd & Gordon                                                       +44  (0)  20  7251  3801
 Simpson

For further information see www.gpe.co.uk or follow us on X at @GPE_london

LEI Number: 213800JMEDD2Q4N1MC42

1. As at 30 September 2023

Strong leasing continued, 9.1% ahead of ERV

·       14 new leases and renewals signed in the quarter generating
annual rent of £5.7 million (our share: £4.6 million), with market lettings
on average 4.9% ahead of March 2023 ERV;

·       In total, 66 new leases and renewals signed in the year
generating annual rent of £22.5 million (our share: £19.8 million), with
market lettings on average 9.1% ahead of March 2023 ERV, including:

o   24 Fully Managed leases signed at an average £208 per sq ft, 12.6%
ahead of the March 23 Fully Managed ERV;

o   Five fitted leases signed at an average £79 per sq ft, 9.5% above the
March 2023 Fitted ERV; and

o   26 new retail leases securing £7.0 million of rent with market lettings
4.7% ahead of the March 2023 ERV, including new London flagship store for TK
Maxx.

·       Eleven rent reviews were settled in the year, securing £8.4
million of annual rent (our share: £5.8 million), 3.3% ahead of the previous
passing rent;

·       Total space covered by new lettings, reviews and renewals was
401,500 sq ft;

·       A further £5.3 million of rent under offer, with market
lettings 20.3% ahead of March 2023 ERV; and

·       99.3% of rent charged collected within seven working days
(quarter to June and month of April).

Notable transactions during the quarter included:

·       At 16 Dufour's Place, W1, we signed two new Fully Managed
leases bringing the overall average rent in the fully let building to £250
per sq ft:

o   On the 2(nd) floor (3,100 sq ft), we signed a three year lease (break at
21 months) with a new customer at a rent of £273 per sq ft an increase of
42.9% on the previous passing rent; and

o   On the ground floor (1,070 sq ft) we extended the lease with an existing
customer for a further year at a rent of £223 per sq ft, an uplift of 19.5%.

·       At Mount Royal, Oxford Street, W1, TK Maxx, Europe's leading
off-price apparel and homeware retailer, has signed up for its latest London
flagship store. The brand's new space comprises 22,500 sq ft across the ground
and first floor levels, with 70 ft of Oxford Street frontage. This will be TK
Maxx's second store on Oxford Street, and their first store west of Oxford
Circus, having traded successfully from the street since 2019. Superdrug, the
high street health and beauty retailer, has also recently re-geared its retail
lease for their 8,000 sq ft store, committing to another 10 years. GPE has a
further 20,000 sq ft of prime retail space under offer at the western side of
Mount Royal; and

·       At 2 Aldermanbury Square, EC2, our committed development
scheme, Clifford Chance LLP has confirmed that it will be proceeding to lease
the entirety of office space (321,100 sq ft) following the expiry of their
option to hand back the first to fourth floors of the building. Our
development works are progressing well, where we are substantially increasing
the size of the building (up from 176,000 sq ft) and completion is expected in
early 2026.

Commitment to the redevelopment of Minerva House, SE1

At Minerva House, SE1, we have now committed to the extensive refurbishment of
143,100 sq ft of new Grade A offices. Our scheme will take full advantage of
the building's river frontage and, by adding additional storeys, we will be
able to create outdoor terraces and amenity space with commanding views over
central London. The refurbishment will also improve the public realm around
the building, creating new and improved connections through the site as well
as attractive new gardens that will contribute to local greening and
biodiversity and provide space for people to enjoy in the setting of Southwark
Cathedral. Our proposals will retain and reuse the majority of the existing
building's structure, including two primary façades, contributing to the
building's market leading sustainability credentials. The scheme is
anticipated to complete in December 2026, and deliver a profit on cost of
19.1%, an ungeared IRR of 11.7% and a 7.0% development yield.

Flex progress on track for 1 million sq ft

Our four on-site Flex refurbishments are progressing well, with 6 St Andrew
Street, EC4 and Alfred Place, W1 on track to be delivered in Q3 2024, whilst
Egyptian and Dudley House, SW1 and 141 Wardour Street, W1 will complete in
2025. Together with good progress across our various on-floor refurbishments,
we have increased our committed Flex space to 503,000 sq ft (up from 434,000
in September 2023) and we make continued progress towards our 1m sq ft
ambition. Moreover, we are seeing continued strong demand for our Flex spaces
and, following a productive leasing quarter, our completed Fitted and Fully
Managed spaces are now 98% let.

Britain's Most Admired Company 2023 - Property

We were delighted to be awarded 1st place in the recent Britain's Most Admired
Company awards (Property), as voted by our peers.

Annual Results

A provisional date has been set for GPE to announce its full year results on
23 May 2024, with the results presentation available on our website from
9.00am.

 

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