Great Portland Estates reports strong quarter for leasing

Great Portland Estates (GPE) reported robust leasing activity for the quarter ended 30 June on Thursday, having signed 12 new leases and renewals generating an annual rent of £4.3m, with market lettings on average 7.7% ahead of its March estimated rental value (ERV).

The FTSE 250 company said that included seven fully managed leases bringing in £3.1m, averaging £210 per square foot, and three new retail leases securing £1.1m at 6% above March ERV.

It said the investment void rate remained low at 1.2% as of 31 May.

Additionally, £5.1m of rent was currently under offer, with market lettings 3.8% ahead of March ERV.

A notable lease was signed with British luxury retail brand Represent for its new London flagship store at 141 Wardour Street, W1, covering 5,000 square feet.

GPE also renewed leases at 16 Dufour's Place, W1, increasing the average rent to £249 per square foot, a 29% rise from previous terms.

In April, GPE acquired The Courtyard, WC1, through a property swap involving 95/96 New Bond Street, W1, and an additional £10.4m in cash.

The Courtyard offered 62,000 square feet of vacant office and partially-let retail space, and would be integrated into GPE’s fully managed offering.

In June, GPE successfully completed a £350m rights issue to capitalise on emerging opportunities in central London’s real estate market.

The firm said it was tracking around £1.3bn in acquisition opportunities, and had a further £1.5bn on its watchlist.

GPE said it was aiming to enhance shareholder returns, expecting acquisitions to be accretive to EPRA earnings and net tangible assets per share, supporting a total accounting return ambition of 10% plus over the medium term.

“The strong leasing demand we have experienced for some time has continued into the new financial year,” said chief executive officer Toby Courtauld.

“Despite the portfolio being virtually full, we signed £4.3m of new leasing deals in the quarter, 7.7% ahead of the valuer's ERV.

“This strong performance reaffirms our confidence in our portfolio rental value guidance of 3.0% to 6.0% growth for the financial year, with our guidance for prime spaces higher still at 5.0% to 10.0%.”

Courtauld said the company was “well placed” to take advantage of both the strength in occupational markets and the current disruption in London's investment market.

“Our substantial capex programme is set to deliver the very best, sustainable spaces into a market starved of such supply; our focus on HQ development and our fully managed offer is meeting discerning customer demand; and, with our recent capital raise, we have the financial firepower to exploit our pipeline of acquisition opportunities, accelerating our growth into increasingly favourable market conditions.”

At 0940 BST, shares in Great Portland Estates were up 1.16% at 347.5p.

Reporting by Josh White for Sharecast.com.