# Great Portland Estates deliver another productive quarter

- Link: https://www.directorstalkinterviews.com/great-portland-estates-deliver-another-productive-quarter/412805485
- Published: 2020-02-13T08:11:56+00:00
- Author: Amilia Stone

**Great Portland Estates plc** (LON:GPOR) today published its trading update for
the quarter to 31 December 2019.

**Continued leasing successes ahead of March 2019 ERV**

·   Twelve new lettings (48,900 sq ft) generating annual rent of £3.7 million (our
share: £3.5 million); market lettings 1.4% ahead of March 2019 ERV

·   Flexible space now c.11% of office portfolio at 35% > ERV^(1) and appraising
further c.149,000 sq ft

·   Seven lettings under offer totalling £9.2 million p.a. of rent (our share: £
9.2 million), market lettings 6.9% ahead of March 2019 ERV

·   Vacancy rate remains low at 2.4%; average office rent only £55.10; reversionary
potential 9.2% (£9.5 million)

·   99.3% of rent collected within seven working days; only two occupier delinquencies(
0.2% of rent roll)

**Committed schemes 50% pre-let or under offer; total programme covers 54%^(2) of
existing portfolio**

·   Three committed schemes (414,900 sq ft), with two completing in 2020; 50% pre-
let or under offer; all located near to Crossrail stations, 18.7% forecast profit
on cost, capital expenditure to come of £76.0 million

·   Three near-term uncommitted schemes (818,900 sq ft), expected capital expenditure
of c.£600 million and expected ERV of c.£55 million

·   Total pipeline of 10 schemes (1.4 million sq ft), all income producing, 2.8 
years average lease length, 13.6% reversionary^(3)

**£64.5 million sale, 6.2% above book value; new PropTech VC investment**

·   24/25 Britton Street, EC1 sold in January for £64.5 million, 6.2% above September
2019 book value reflecting net initial yield of 4.07% and capital value of £1,255
per sq ft, crystallising 15.7% p.a. IRR since refurbishment in 2011

·   Commitment of up to £5 million to invest in Pi Labs European PropTech venture
capital (‘VC’) fund

**Strong financial position; new £450 million ESG-linked RCF aligned to ambitious
[sustainability](https://www.directorstalkinterviews.com/sustainability-green-stocks-news)
targets**

·   LTV^(2) of 15.8% (or 13.7% pro forma for 24/25 Britton Street, EC1 sale), weighted
average interest rate of 2.5%; cash and undrawn committed facilities of £368 million

·   £200 million share buyback completed, 27.8 million shares purchased at average
price of £7.20

·   New innovative £450 million ESG-linked revolving credit facility (‘RCF’), headline
margin of 90 bp

> **Toby Courtauld, Great Portland Estates Chief Executive, said:**
> “I am pleased to report on another productive quarter, combining healthy leasing
> ahead of ERV, good progress at our six committed and near-term developments and
> continued capital discipline, profitably recycling out of mature assets and returning
> surplus equity to shareholders as we completed our share buyback programme. The
> final quarter has started well; we have issued an innovative ESG-linked revolving
> credit facility and demand for our brand of high quality, sustainable space remains
> robust with £9.2 million of lettings currently under offer at a 6.9% premium to
> March 2019 ERVs.
> The clear outcome of the General Election is encouraging increased transaction
> activity in our investment markets and, whilst further political and macro-economic
> turbulence is possible, GPE is in great shape: We are innovating across our portfolio,
> including the continued rollout of our flexible space offering; our exceptional
> development pipeline provides us with nearly 1.4 million sq ft of value creating
> opportunities; and with a talented team, supported by our collaborative culture,
> deep market knowledge and financial strength, we are well positioned to maximise
> the opportunity we have to generate long-term value across our business”.

_1.Rental value of space prior to conversion, now open and trading as flexible space_

_2.Based on property values at 30 September 2019_

_3.Existing use of development pipeline at 31 December 2019 _

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