Great Portland Estates has posted an 18% drop in its retail portfolio valuation, as the pandemic takes its toll on rental values.
The developer’s overall portfolio value fell 6.6% to £2.5bn on a like-for-like basis in the six months ending September, compared with March. This was largely driven by a 3.9% decline in rental value, with offices down 0.7% and retail down 13%. Investment yields also rose by five basis points.
Office values fell by 2.4% during the period. Leasehold properties with terms less than 100 years, which represent 15.1% of its portfolio, reduced in value by 9.9% as demand for shorter leaseholds shrank.
The City, Midtown and Southwark portfolio was cited as the most resilient performer during the period, slipping by 4.6% on a like-for-like basis.
Joint venture properties fell in value by 8.7% over the period, while its wholly owned portfolio declined by 5.8% on a like-for-like basis.
Its EPRA NTA per share stood at 800p per share at the end of September, down 7.8% on the previous six months owing to the decline in portfolio values.
Net rental income fell 22.5% to £30.6m, compared with a £39.5m equivalent last year. The developer made an IFRS pretax loss of £154.8m, compared with £44.1m profit in 2019.
The group delivered a -5.1% total property return for the six months ending 30 September 2020, compared to the Central London MSCI quarterly benchmark of -1.7%, and a capital return of -6.4%.
Toby Courtauld, chief executive, said the firm is growing its flex office offer and improving its sustainability credentials in response to accelerated trends in the wider market.
However, he was bullish that “however occupiers’ demands evolve, our human desire to congregate and create will underpin London’s magnetic appeal as a global business capital for the long-term”.
Courtauld said: “With unemployment rising, albeit from a low level, we should expect rents and capital values in London to fall further.
“However, we are encouraged by the level of new enquiries we continue to receive from prospective occupiers, particularly for our developments and our flex space product, along with increasing activity in the central London investment market.”
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