The Directors of Great Portland Estates plc announce the results for the Group for the year ended 31 March 2021.
Valuation lower driven by retail value declines; office rents stable
- Portfolio valuation of £2.5 billion, down 8.7%2 (-1.7% offices and -27.3% retail)
- Rental values down by 4.0%2 (+0.5% offices and -16.7% retail); yield expansion of 11 bps
- Total property return of -5.9%, with capital return of -8.4% v MSCI Central London (quarterly index) of -6.3%
- Office rental value guidance range for new financial year at +5% to -2.5% (retail: -5% to -10%)
Final dividend maintained against unprecedented market backdrop
- IFRS NAV and EPRA3 NTA per share of 779 pence, down 10.3% in last 12 months
- After revaluation deficit, IFRS loss after tax of £201.9 million (2020: £51.8 million profit)
- EPRA3 earnings of £40.1 million, down 29.6% on 2020. EPRA3 EPS of 15.8 pence, down 28.2%
- Total accounting return4 of minus 8.8% (2020: +3.2%); final dividend per share maintained at 7.9 pence
Leasing ahead of ERV; potential rent roll growth of 104%
- £12.9 million p.a. let, market lettings 2.4% above March 2020 ERV
- Flex space now c.13% of office portfolio, appraising further 134,100 sq ft
- Underlying vacancy rate of 6.6%; average office rent of £56.70 per sq ft; 7.8% reversionary
- Total potential rent roll growth of 104% to £194 million5
- £8.0 million of lettings since 1 April, 13.9% above March 2021 ERV
- Further £5.5 million under offer, 1.2% above March 2021 ERV
- £40 million of new annual rent in negotiation
Two best-in-class schemes completed; £860 million capex committed and near-term programme
- The Hickman, E1 (75,300 sq ft) completed in September, 28% let; 16.7% profit on cost
- Hanover Square, W1 (221,500 sq ft) completed in November, 75% let or under offer; 7.3% profit on cost
- 1 Newman Street & 70/88 Oxford Street, W1 (122,700 sq ft) completion in June 2021, already 32% pre-let
- Major office refurbishment at 50 Finsbury Square, EC2 (128,100 sq ft) commenced; targeting NZC
- Near term: four schemes (909,400 sq ft); three planning applications submitted; strong occupier interest ahead of potential starts in 2022
- Total pipeline: eight schemes (1.3 million sq ft), all income producing, 2.3 years WAULT, 17% reversionary1
March quarter rent collection ahead of all four previous quarters
- 85% of March rent collected (82% excluding deposits; 91% from office units; 59% from RHL6 sectors)
- 87% of rent for the year ended 31 March 2021 now collected (79% excluding deposits)
- All offices open for business with COVID-19 Secure status; 29% current occupier utilisation
Exceptional financial strength; well positioned with total liquidity £443 million
- Property LTV of 18.4%, weighted average interest rate and maturity of 2.5% and 8.1 years
- Enhanced debt profile with £150 million USPP; average coupon and term of 2.77% and 14.5 years
- £400m of ESG-Linked RCF extended to 2026; strong outperformance against ESG targets
- Prospective capex of c.£900 million (incl. refurbishments); reviewing £1.7bn of acquisitions and £0.4bn of sales; financial discipline to be maintained
Positioned for change and continued innovation
- Roadmap to Net Zero & Decarbonisation Fund launched; COVID Community Fund successfully deployed
- Outstanding occupier satisfaction (NPS of +42); award winning sesame™ app
- Strong employee engagement: 95% employees recommend GPE as ‘great place to work’
"Over the last year we have been operating in some of the most challenging trading conditions we have experienced. Our markets in central London have been in lockdown for much of the time, affecting all aspects of life and impacting our operations. Despite this context, GPE remains in robust health with a strong balance sheet given our low leverage and high liquidity, allowing us the capacity for significant investment to drive growth. Whilst uncertainty remains, we are encouraged by the recent acceleration in enquiries we are receiving from prospective occupiers, particularly for our prime Grade A and flex office products. With limited supply across central London over the next few years, we can expect innovative, flexible and well serviced space with strong wellbeing and sustainability credentials to command an increasing premium to poorer space. As a result, we expect to grow our flex office offer and to bring forward our near-term development programme, committing circa £900 million of capital expenditure to deliver exemplar, net zero carbon spaces designed to satisfy the changing needs of tomorrow’s occupier. Although it may take a little time for the full buzz of London to return, we believe it will, driven by this great capital’s magnetic appeal as the cultural and commercial heart of the UK, and its unique position as a global city. With a recovering market, our strong finances, a portfolio full of opportunity and a deeply talented and committed team, we can look to our future with confidence."
1 All values include share of joint ventures unless otherwise stated
2 On a like-for-like basis
3 In accordance with EPRA guidance
4 As is usual practice in our sector, we use Alternative Performance Measures (APMs) to help explain the performance of the business. These include quoting a number of measures on a proportionately consolidated basis to include joint ventures, as it best describes how we manage the portfolio, like-for-like measures and using measures prescribed by EPRA. The measures defined by EPRA are designed to enhance transparency and comparability across the European real estate sector. Reconciliations of APMs are included in note 8 of the financial statements. In October 2019, EPRA issued new Best Practice Recommendations for Net Asset Value (NAV) metrics, these recommendations are effective for accounting periods starting on 1 January 2020 and have been adopted by the Group. Our primary NAV metric is EPRA NTA which we consider to be the most relevant measure for the Group (as it most closely mirrors EPRA NAV)
5 Gross contracted rent excluding impact of tenant incentives, including share of JVs and CBRE rental estimates at March 21
6. Retail, Hospitality and Leisure
