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Great Portland Estates PLC

Great Portland Estates PLC Trading Update

Great Portland Estates PLC (LON:GPOR) today published its trading update for the quarter to 30 June 2019.

Continued leasing successes and capturing reversion

  • 9 new lettings (35,400 sq ft) signed generating annual rent of £2.2 million (our share: £1.9 million); market lettings in line with March 2019 ERV
  • 7 rent reviews settled securing £2.3 million per annum; 17.2% above previous passing rent; remaining reversionary potential of 7.5% (£7.7 million)
  • 12 lettings under offer totalling £3.7 million p.a. of rent (our share: £2.9 million), including 5,000 sq ft of retail at our Hanover Square development; market lettings 9.4% ahead of March 2019 ERV
  • Flex and co-working space now 100,900 sq ft, 4.9% of office portfolio; appraising further 132,500 sq ft
  • Vacancy rate low at 4.2% (March 2019: 4.8%)

Three committed development schemes progressing well; development programme 54% of portfolio

  • Good progress on our three BREEAM ‘Excellent’ committed schemes (414,900 sq ft), including Hanover Square, W1 which is already 53% pre-let or under offer; all located near to Crossrail stations, 19.1% forecast profit on cost, capital expenditure to come of £120.6 million. Good levels of occupier interest
  • Exceptional and flexible development pipeline; 10 schemes (1.4 million sq ft), income producing, 3.2 years average lease length, 9.7% reversionary1

Strong financial position; further surplus equity returned through share buyback

  • LTV2 of 9.9%, weighted average interest rate of 2.7%, drawn debt 100% fixed or hedged
  • Cash and undrawn committed facilities of £578 million, low marginal cost of debt of 1.7%
  • Share buyback of up to £200 million ongoing; £96.9 million (13.5 million shares) purchased to date

1. Existing use of development pipeline at 31 March 2019
2. Based on property values at 31 March 2019

Toby Courtauld, Chief Executive, said:

“I am pleased to report continued positive activity over the first quarter with healthy leasing, excellent progress at our three committed development schemes, which are already more than 23% pre-let or under-offer, and further surplus equity returned to shareholders through our ongoing share buyback programme. The second quarter has started well with encouraging levels of enquiries from prospective occupiers attracted to our brand of high quality, well located space. Today we have £3.7 million of lettings under offer at a 9.4% premium to March 2019 ERVs.

Whilst the current political uncertainties could lead to economic turbulence, 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 strategy, exciting portfolio including our exceptional development pipeline of more than 1.4 million sq ft and talented team, supported by our collaborative culture, deep market knowledge and financial strength, we have the capacity to choose our path to maximise returns for shareholders and we look to our future with confidence.”