Great Portland upbeat on recent leasing performance

The FTSE 250 company said the leases included 12 new agreements and renewals, with a combined annual rent of £5m, of which £4.1m was GPE's share.

Market lettings, on average, surpassed the March ERV by 6.5%.

Additionally, GPE currently had £6m of rent under offer, with market lettings running 5% higher than the March ERV.

Progress was also reported in GPE's development projects, with the net-zero 2 Aldermanbury Square development in EC2 advancing well as the basement was under construction and completion expected in the first quarter of 2026.

GPE said it had obtained vacant possession for the redevelopment of French Railways House in SW1, aiming to provide 67,600 square feet of new Grade A space, an increase from the previous 54,700 square feet.

The project was set to deliver a profit on cost of 24.9% and a development yield of 6.5%.

Preparations were meanwhile in full swing for two additional HQ schemes, with Minerva House in SE1 set to undergo extensive refurbishment, with completion expected this quarter, resulting in 143,100 square feet of new Grade A offices along the riverfront.

At the same time, planning permission was being refined for a new 91,000 square foot development at Soho Square Estate in W1, with a potential start date in the first quarter of 2025.

The projects were expected to yield healthy returns, with an anticipated profit on cost exceeding 18% and a development yield greater than 6%.

GPE said it was also expanding its Flex offerings, with a commitment to refurbish 141 Wardour Street in W1 to provide 29,900 square feet of new fully-managed space.

The endeavour was projected to yield a profit on cost of over 19% and a yield on cost exceeding 6.5%.

“Operationally, we are pleased, once again, to have delivered a strong leasing quarter with £5m of new leasing deals, bringing the total deals for the financial year to date to £16.1m, 10.4% ahead of the valuer's ERV,” said chief executive officer Toby Courtauld.

“This success reaffirms our confidence in our portfolio rental value guidance of 2.5% to 5% growth for the financial year, with the best space potentially higher still.

“Despite a recent improvement in the outlook for interest rates, the macroeconomic backdrop in which we operate remains challenging, limiting activity in our investment markets and placing selective upward pressure on yields, particularly for non-prime spaces.”

However, Courtauld said that as the company started the new year, it was encouraged by early indications that acquisition opportunities were starting to emerge.

“In this context, GPE is well placed.

“Despite rising barriers to entry in our markets, including a more challenging planning regime, 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 Flex offer is meeting customer demand that is increasingly discerning; and with our strong balance sheet, plentiful liquidity and recycling opportunities, we remain well placed to capitalise on opportunities as they arise.”

Reporting by Josh White for Sharecast.com.