TIDMGPE
RNS Number : 5961R
Great Portland Estates PLC
07 July 2022
7 July 2022
Positive quarter: GPE Trading Update
Ahead of its Annual General Meeting at 11:00 today, Great
Portland Estates plc (GPE) publishes a trading update for the
quarter to 30 June 2022.
Continued leasing success
-- GBP6.0 million of new annual rent signed, including GBP1.9
million of Flex space and GBP1.7 million of retail space, market
lettings 2.6% ahead of March 2022 ERV
-- GBP9.5 million of further lettings under offer (up from
GBP9.4 million at May), 1.9% ahead of March 2022 ERV
-- c.GBP33 million of new annual rent in negotiation,
demonstrating demand for prime offices and best in class flexible
spaces
Accretive sales and acquisitions
-- Sale of 6/10 Market Place, W1 for GBP28.2m, 4.1% net initial
yield, 3% above March 22 book value
-- Acquisition of 6/10 St Andrew Street, EC4 completed for
GBP30.0 million (GBP650 per sq ft), growing our fully managed
offer
-- Acquisition of 2 Cathedral Street, SE1 for GBP7.1 million, 4.4% net initial yield
Strong financial position; total liquidity of GBP343 million
-- LTV of 22.2%, weighted average interest rate of 2.4% (fully
drawn), cash & undrawn facilities of GBP343 million
-- Total prospective capex of c.GBP970 million (including
refurbishments), including GBP15.1 million to complete pre-let 50
Finsbury Square development and a further GBP267.0 million to
deliver our prospective scheme at 2 Aldermanbury Square, EC2
Toby Courtauld, Chief Executive, said:
"I am pleased to report continued positive activity over the
first quarter with healthy leasing, excellent progress at 50
Finsbury Square, EC2, which is already 98% pre-let or under-offer,
and the completion of our acquisition of 6/10 St Andrew Street, EC4
for our fully managed offer. The second quarter has started well
with our Customer first approach delivering encouraging levels of
enquiries from prospective customers attracted to our brand of high
quality, well-located space, more than 93% of which is within
walking distance of an Elizabeth Line station. Today we have GBP9.5
million of lettings under offer, at a premium to March 2022 ERVs,
with an additional GBP33 million under negotiation.
Whilst the current macro-economic backdrop is expected to be
volatile in the short-term, we remain convinced of the long-term,
enduring appeal of our capital city and its property markets to
businesses and investors alike. With our clear strategic focus,
strong balance sheet, opportunity rich portfolio and experienced
team, we remain confident in our outlook."
Great Portland Estates plc +44 (0) 20 7647 3000
Toby Courtauld, Chief Executive
Nick Sanderson, Chief Financial & Operating
Officer
Stephen Burrows, Director of Financial Reporting
& IR
FGS Global
James Murgatroyd +44 (0) 20 7251 3801
Gordon Simpson
For further information see www.gpe.co.uk or follow us on
Twitter at @GPE_plc
Leasing momentum continued into first quarter after record
leasing year
The leasing highlights in the quarter included:
-- 19 new leases and renewals signed generating annual rent of
GBP6.0 million (our share: GBP5.4 million), with market lettings on
average 2.6% ahead of March 2022 ERV;
-- of the 19 new leases, we signed six Flex lettings including
five for our fully managed offer, achieving on average GBP170 per
sq ft, 4.5% ahead of March 2022 ERV;
-- two rent reviews were settled securing GBP0.5 million of
annual rent (our share: GBP0.5 million) in-line with the previous
passing rent and 15% ahead of ERV;
-- total space covered by new lettings, reviews and renewals was 62,800 sq ft;
-- we have collected more than 95% of the rents due (across both office and retail space); and
-- a further 37 lettings under offer (103,300 sq ft) which would
deliver approximately GBP9.5 million p.a. in rent (our share:
GBP8.7 million), with market lettings 1.9% ahead of March 2022 ERV,
and a further c.GBP33 million in negotiation.
The largest transaction in the period was at 1 Newman Street,
W1, where we leased the third floor (13,700 sq ft) to Scape UK
Management. The student accommodation specialist has committed to a
10-year lease (with a five year break) at GBP92.50 per sq ft. The
last remaining office floor is also currently under offer.
In early July, we leased a further retail unit at Hanover
Square, W1 to the Opera Gallery, who will be relocating further
north on New Bond Street to create a new larger flagship premises
across basement, ground and first floor levels totalling over 6,100
sq ft of space. Opera Gallery will join other luxury retailers at
Hanover, including Canali, Pronovias, Seiko, Moyses Stevens and
WatchHouse, as well as the London Fashion Academy by Jimmy Choo.
This letting takes the retail space at Hanover to 73% let, with
three retail stores remaining.
Good development progress
At 50 Finsbury Square EC2, construction is advancing well with
the scaffolding now largely removed ahead of expected completion
later this year. The scheme will deliver 129,200 sq ft of
refurbished space, including 121,800 sq ft of offices all of which
is pre-let to Inmarsat. The majority of the remaining 7,300 sq ft
of retail space is now under offer or in negotiation.
At 2 Aldermanbury Square, EC2 our enabling works are progressing
well ahead of an anticipated construction start in late 2022. Our
proposed development will substantially increase the size of the
building to 321,100 sq ft (up from 176,000 sq ft) and will deliver
our second Net Zero Carbon building, after 50 Finsbury Square, EC2.
The scheme also includes a number of public realm and amenity
improvements that will have a positive impact on the local area and
improve accessibility to the western entrance of the Liverpool
Street Elizabeth Line station. To date, we have been greatly
encouraged by the strong customer interest in the scheme.
Disposal ahead of book value
In June, GPE sold the freehold of 6, 7/8 and 9/10 Market Place,
W1 to a UK private property company. The property comprises three
adjoining mixed use assets totalling 18,000 sq ft including
multi-let offices and restaurant/café space.
The headline sale price of GBP28.2 million reflects a net
initial yield of 4.1% on a topped up basis and capital value of
GBP1,480 per sq ft. After deduction of outstanding occupier
incentives and rental guarantees, the net price is GBP27.8m, 3.0%
ahead of the March 2022 book value.
Two attractive acquisitions
In May we completed the off-market acquisition of the long
leasehold interest at 6/10 St Andrew Street, EC4 for GBP30.0
million (GBP650 per sq ft). The 46,200 sq ft building is currently
vacant, and benefits from planning permission for a two-storey
extension.
The building is located within five minutes walking distance of
Chancery Lane and Farringdon stations and is only 450 metres from
the new Farringdon Elizabeth Line. It has excellent fundamentals
and requires substantial refurbishment to bring it in line with
GPE's net zero carbon commitment. It will provide approximately
48,000 sq ft over lower ground and eight upper floors, with two
private terraces as well as a communal roof terrace and winter
garden. St Andrew Street will deliver best-in-class Fully Managed
office space in a core target location, with outstanding amenity
space at ground floor and roof top levels.
Also in May, we acquired 2 Cathedral Street, SE1 for GBP7.1
million reflecting a 4.4% net initial yield and GBP1,100 per sq ft.
The 6,400 sq ft freehold building is currently let until 2029 at a
rent of GBP332,000 per annum. The property is located in the heart
of Borough Market and will complement GPE's Minerva House holding
in this exciting submarket.
Strong financial position; LTV low at 22.2%
At 30 June 2022, Group consolidated net debt was GBP574.2
million, up from GBP531.2 million at 31 March 2022. The increase
was largely due to on-going development capital expenditure across
the Group and net acquisitions. Group gearing increased to 27.4% at
30 June 2022 from 25.4% at 31 March 2022.
Including cash held in joint ventures, total net debt was
GBP550.6 million at 30 June 2022 (31 March 2022: GBP502.3 million)
equivalent to a low EPRA loan to property value of 22.2%(2) (31
March 2022: 20.5%). At 30 June 2022, the Group, including our share
of joint ventures, had cash and undrawn committed credit facilities
of GBP343 million.
Our weighted average interest rate was 2.4% (fully drawn) at the
quarter end, up 30 basis points since 31 March 2022. At 30 June
2022, 77% of the Group's total drawn debt was fixed or hedged. Our
weighted average drawn debt maturity was 6.5 years at 30 June 2022
(31 March 2022: 6.9 years).
30 June 31 March
2022 2022
======== =========
GPE net debt (GBPm) 574.2 531.2
====================================== ======== =========
GPE gearing(1) 27.4% 25.4%
====================================== ======== =========
Total net debt including 50% JV cash
balances (GBPm) 550.6 502.3
====================================== ======== =========
EPRA LTV(2) 22.2% 20.5%
-------------------------------------- -------- ---------
1. Based on net asset value at 31 March 2022
2. Based on property values and net liabilities at 31 March 2022
Sustainability reporting
We have recently published our Sustainability Performance Report
to 31 March 2022, which is now available on our website at:
www.gpe.co.uk/media/4594/sustainability_performance_report_2022.pdf
.
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END
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