Great Portland Estates has delivered an “outstanding” set of annual results, posting an 11.9% hike in net asset value as the West End continues to demonstrate resilience.
The London-focused REIT said its portfolio increased in value by 9.2% in the year to March 2012 with developments rising by 13.7%. Its net assets now stand at £1.23bn.
Rental value growth was also strong, 7.8%, led by West End shops on 11.2% and offices on 8.6%.
Like its larger peers Land Securities and British Land, its profit before tax fell significantly from £261m to £155m, reflecting a smaller revaluation surplus than 2011.
Earnings per share were 5.6p.
The group said it had a record year for lettings, completing 88 new deals across almost 500,000 sq ft and generating £25.2m of rent per year.
It added that market lettings were 6.5% ahead of valuers’ March 2011 ERV, rising to 13.3% excluding prelets.
GPE completed four schemes during the period, is on site at three and has a “significant development potential” with 16 uncommitted schemes, covering 2.6m sq ft, all with flexible start dates.
It has around £457m of undrawn facilities and its gearing is conservative at 40.3%.
Chief executive Toby Courtauld said: “While we can expect further turbulence in the UK and eurozone economies, conditions in London’s property markets, particularly the West End, remain favourable. Tenant demand for new space is trending at the long-run average, with some pockets of strong interest from the likes of the TMT sector, while the supply of new space is low.
“Over the next few years, absent a material economic setback, given the scarcity of development finance and minimal development completions, we expect this balance to move further in landlords’ favour, supporting the case for rental growth.
“London continues to attract a significant flow of investment capital from around the world. As a result, we expect yields for prime assets, particularly in the West End, to remain stable for the time being. In this market context, we expect to continue to outperform.
“Our developments are attracting healthy tenant interest and delivering material surpluses, while our conservative gearing combined with plentiful, low-cost firepower will enable us to deliver on our existing growth plans and exploit new opportunities as we find them.”
bridget.oconnell@estatesgazette.com
