GPE’s total shareholder return for the year was 40.7%, against the 21.3% return by the FTSE 350 Real Estate benchmark. Martin Scicluna, chairman of Great Portland Estates, will say at the REIT’s AGM: “Over the next few years, absent an economic set back, given the continued scarcity of finance for speculative development, we can look forward to healthy rates of rental growth in selected London sub-markets.
“In this market context, we are well positioned to continue to outperform: demand for our space from prospective tenants is strong; our exceptional development pipeline will deliver material surpluses in the near-term and gives us a platform for growth well into the next decade; our reversionary portfolio is rich with opportunities for value creation; our disciplined capital recycling will crystallise attractive gains and our conservative gearing and plentiful, low-cost firepower, will enable us to execute our exciting growth plans and exploit new opportunities as we find them.”
GPE’s development programme, now in its third year, is delivering surpluses for shareholders, with five completed projects generating a profit on cost of 55%.
Scicluna said: “We currently have another five committed schemes where we expect to deliver a profit on cost of 34% and which are already 63% pre-let. With a further 20 uncommitted schemes, our total development programme extends to 2.5m sq ft, covering 55% of the existing portfolio, including our enviable development sites at Rathbone Place and Hanover Square. “We anticipate that our development activities will continue to drive market leading returns, particularly given the supportive conditions in our occupational markets.”
GPE has continued to recycle capital successfully, with profitable selling of mature properties complemented by accretive acquisitions of properties in attractive locations, with angles to exploit and at entry prices materially below replacement cost. “GPE’s £271m of acquisitions in the year include three purchases since our November share placing, with more than 80% of the £138m raised successfully invested within four months.”
“Despite continued macro-economic concerns and capital market volatility, conditions in our central London markets remain supportive; improving tenant demand is translating into lettings whilst the supply of new space to let is set to remain muted for some time, particularly in the core of the West End.”
Source: James Wallace, Finance Editor, CoStar News