REG - Great Portland Ests. - Quarterly trading update

Great Portland EstatesAnnouncement

04/07/2024 07:00

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RNS Number : 0590V  Great Portland Estates PLC  04 July 2024

 

4 July 2024

 

Quarterly trading update

Great Portland Estates plc (GPE) publishes a trading update for the quarter to
30 June 2024.

 

Toby Courtauld, Chief Executive, said: "The strong leasing demand we have
experienced for some time has continued into the new financial year. Despite
the portfolio being virtually full, we signed £4.3 million of new leasing
deals in the quarter, 7.7% ahead of the valuer's ERV.  This strong
performance reaffirms our confidence in our portfolio rental value guidance of
+3.0% to +6.0% growth for the financial year, with our guidance for prime
spaces higher still at +5.0% to +10.0%.

We are well placed to take advantage of both the strength in occupational
markets and the current disruption in London's investment market. Our
substantial capex programme is set to deliver the very best, sustainable
spaces into a market starved of such supply; our focus on HQ development and
our Fully Managed offer is meeting discerning customer demand; and, with our
recent capital raise, we have the financial firepower to exploit our pipeline
of acquisition opportunities, accelerating our growth into increasingly
favourable market conditions."

 

Sustained levels of leasing activity

·      12 new leases and renewals signed in the quarter generating
annual rent of £4.3 million (our share: £4.0 million), with market lettings
on average 7.7% ahead of March 2024 ERV, including:

o   seven Fully Managed leases signed generating an additional £3.1 million
of rent at an average £210 per sq ft (£237 per sq ft across the four West
End deals), in total 8.3% ahead of March 2024 ERV; and

o   three new retail leases securing £1.1 million of rent with market
lettings 6.0% above March 2024 ERV.

·      Our investment void rate remains near record lows at 1.2% at 31
May 2024; and

·      A further £5.1 million of rent is currently under offer; market
lettings 3.8% ahead of March 2024 ERV.

In April 2024, we let the retail space at 141 Wardour Street, W1 to British
luxury retail brand, REPRESENT, for its new London flagship store. The space
comprises 5,000 sq ft across two floors, which will be its second store
globally to date, following its LA opening in West Hollywood.

During the quarter, at 16 Dufour's Place, W1, we renewed leases with existing
customers on the 1st and 5th floors (5,100 sq ft) on a Fully Managed basis at
an average rent of £249 per sq ft, an increase of 29% on the previous terms.

Property swap to acquire The Courtyard, WC1

In April 2024, the Group exchanged contracts to buy The Courtyard, WC1 for
£10.4 million of cash and through a property exchange of 95/96 New Bond
Street, W1 for £18.2 million (£462 per sq ft; 69% below replacement cost) .
The Courtyard comprises 62,000 sq ft of vacant office and partially let retail
space and is well suited to be repositioned into the Group's Fully Managed
offering. The Courtyard is located in a prime West End location, around 400
metres from Tottenham Court Road Elizabeth line station, and is adjacent to
Alfred Place, one of the Group's other Fully Managed buildings.

 

£350 million rights issue completed

In June 2024, we completed a fully underwritten £350 million rights issue to
seize the significant opportunity we are seeing emerge in our central London
real estate investment markets. The correction in asset values over the last
18 months has resulted in central London commercial real estate now trading in
line with levels last seen in 2009 in real terms. We are currently tracking
approximately £1.3 billion of acquisition opportunities (£1.4 billion in May
including The Courtyard) which we believe are capable of being purchased at or
below replacement cost, with GPE well placed to take advantage of these
opportunities given our best in class workspaces, sustainability credentials
and differentiated flex offering. Beyond this, there is a further £1.5
billion of opportunities on our watchlist.

 

We expect that the acquisitions and developments we acquire through the
deployment of the proceeds of the Rights Issue will enhance shareholder
returns, be accretive to both EPRA earnings and NTA per share and support our
ambition to deliver a Total Accounting Return of 10% plus over the medium term
(before yield compression). Furthermore,  with the macro-economic environment
improving, there is further upside should property yields contract in a
falling interest rate and improving rental growth environment.

 

AGM

Our Annual General Meeting will be held at 11.30 this morning at The Royal
College of Nursing, 20 Cavendish Square, London, W1G 0RN.

 

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

 

For further information see www.gpe.co.uk or follow us on Twitter at
@GPE_London

 

LEI Number: 213800JMEDD2Q4N1MC42

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