Great Portland confident amid future economic uncertainty

The FTSE 250 firm said it saw yield contraction of 10 basis points, and rental value growth of 0.3%, with a 12 month capital return of 2.5% compared to 4.7% for IPD Central London.

Rental value growth guidance for new financial year was a range of 1.0% to a negative 2.5%.

On the financial front, Great Portland reported EPRA net asset value per share of 845p, up 5.8% year-on-year and 3.9% in the second half, and a total accounting return of 7.1%.

Net assets stood at £2.37bn on 31 March, down from £2.74bn a year earlier, though that was post the return of £416m to shareholders.

EPRA earnings totalled £66.5m, an increase of 12.1%, while EPRA earnings per share were 20.4p - up 17.9% - and cash earnings per share were 17.0p, up 68.3%.

After revaluation surplus, Great Portland said reported IFRS profit before tax was £76.7m, swinging from a loss of £140.2m in the 2017 financial year.

Total dividends per share were 11.3p, up 11.9%, with the board declaring a 14.1% rise in the final dividend to 7.3p.

The company’s pro forma loan-to-value ratio stood at 11.6%, with its weighted average interest rate lower at 2.3%, its debt maturity extended to 5.9 years, as well as being 100% fixed or hedged.

Pro forma cash and undrawn facilities stood at £666m.

“We are pleased to report good results for the year, driven by the successful execution of our clear strategy,” said CEO Toby Courtauld.

“We have let more space across our high quality investment portfolio than ever before and delivered significant pre-lettings at our developments, beating rental value estimates; we have taken advantage of heightened demand for prime assets, crystallising profits through selective selling, often at new benchmark prices; we have maintained balance sheet discipline, returning surplus equity totalling £416m to shareholders, whilst preserving gearing at only 12%; we have committed to three new development schemes, all near Crossrail and already 11% pre-let; and we have delivered healthy earnings per share and net asset value per share growth of 17.9% and 5.8% respectively.

“As a result, we have raised the final dividend by 14.1%.”

Whilst the company expected - and was planning for - continued economic uncertainty, Courtauld said it looked to its future with confidence.

He added that although Great Portland could expect a softening in market rents and some secondary asset yields, occupier demand remained “healthy” across its retail and office portfolio.

“With London's investment markets remaining competitive, we have no need to buy, preferring the relative returns on offer from investing in our portfolio.

“It is full of opportunity, including 1.7 million square feet of development potential, 0.4 million square feet of which is now on site.”

In addition, he said the firm’s low average rents provided it with “plenty of reversion” to capture, and its team was ready to capitalise on its many opportunities for organic growth as it continue to broaden our offering to meet evolving occupier needs.

“Either way, after five years of net sales, we have the financial strength to exploit any market weakness where we unearth it.”