Great Portland Estates expects to be a net seller over the next six months at a time when the London property markets “lack clear direction as the ongoing Brexit negotiations have yet to provide clarity”.
In the company’s half-year results for the six months to 30 September, GPE said that it expected “some modest expansion” in gilt yields, which could subsequently impact the investment market in the comping months, but that “poor visibility on market outlook continues”.
“With investment pricing strong and prime yields currently trending flat, we are likely to remain a net seller as we continue to explore opportunities to crystallise further returns from the long-dated portfolio as it continues to see robust demand from international capital,” it said.
GPE has been taking advantage of a buoyant London investment market, despite political and economic uncertainty, having sold £329m of assets since 1 April but made no acquisitions.
Following on from the sales, the company also announced a £200m share buyback programme to return equity to shareholders with the case “surplus to our current needs”. It said the move reflected the company’s “ongoing commitment to capital allocation and balance sheet discipline, whilst also ensuring that we retain our significant financial flexibility to deliver our development programme and fund potential acquisition opportunities which may emerge given the ongoing economic and political uncertainty”.
The value of the company’s portfolio grew by 0.6% during the period and its EPRA NAV also nudged up by 0.5% to 849p with net assets of £2.38bn.
Chief executive Toby Courtauld said: “Whilst we expect, and are planning for, continued political and economic uncertainty, particularly given the ongoing Brexit negotiations, GPE remains exceptionally well positioned: our well-located portfolio is full of opportunity, with 92% in close proximity to a Crossrail station; our properties are let off low rents with significant further reversionary potential; our exceptional income-producing development pipeline offers nearly 1.3m sq ft of flexible future growth potential, meaning that we have no need to buy.
“But if any market weakness should emerge, we retain significant financial capacity to exploit it; meanwhile, our talented team remains focused on maximising the opportunity we have to generate long-term value across our business.”
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