19th Jul 2007 07:01
Great Portland Estates PLC19 July 2007 19 July 2007 Great Portland portfolio value up over 6% in Q1 The Directors of Great Portland Estates plc ("GPE") are pleased to present theInterim Management Statement including the quarterly valuation of the Group'sproperties as at 30 June 2007, the details of which can be accessed by copying and pasting the link below into your web browser: http://www.rns-pdf.londonstockexchange.com/rns/4995a_-2007-7-18.pdf Highlights of the quarter: • Valuation of portfolio, including share of joint ventures, up 6.1% to £1,732 million. • Valuation of development properties(1) up 10.6%, net of capital expenditure. • Adjusted NAV per share(2) up 8.1% to 642p. • REIT NNNAV per share(2) up 8.8% to 645p. • Portfolio rental value growth of £3.8 million (up 4.6% on a like-for-like basis). • West End office rental values increased by £2.8 million, or 6.0% like-for-like. • Strong letting activity continues with £6.6 million of new rents secured. • Significant recycling of capital - £244 million of acquisitions(1) and £162 million of sales. • Valuation of acquisitions, including the Great Capital Partnership ("GCP"), up 7.1% net of costs. • Since the quarter end, further purchases totalling £159.5 million have been contracted in GCP. (1)Includes Group's share of joint ventures.(2)Unaudited estimate based on valuation increase and other items, see table below. Toby Courtauld, Chief Executive of GPE said, "We have made a good start to this financial year. The strong valuation growthover the first quarter reflects the extensive improvements we are bringing toour portfolio through refurbishment, redevelopment and astute asset managementsupported by good market conditions in central London. With constrained supply of new offices, particularly in the West End where morethan 80% of our portfolio is located, we expect rents to continue to rise. Ourdevelopment business continues to power ahead and, with significant newacquisitions adding to our pipeline, we remain optimistic about the Group'sprospects." Valuation The valuation of the Group's properties as at 30 June 2007 was £1,732 millionincluding our share of joint venture assets. All properties, includingacquisitions and our share of joint ventures, rose in value by £99.0 million or6.1% since 31 March 2007. All of the investment portfolio valuation uplift wasdue to rental growth and asset management with no yield compression. Rental values grew across the portfolio by 4.6% during the quarter, broadly inline with the run rate recorded over the past twelve months. West End officerental values were 6.0% higher whilst those in the City and Southwark rose by5.0%. The Group average office rent passing remains comparatively low atapproximately £32.60 per sq ft, and, with the average office rental value at £43.60 per sq ft, the overall portfolio is 28% reversionary in its current state.The wholly owned portfolio true equivalent yield was unchanged over the quarterand stands at 4.9% (4.9% for joint venture properties). The strongest valuation gain over the quarter came from those properties underdevelopment which rose by 10.6%, net of capital expenditure. Acquisitions madeduring the quarter also performed well, rising in value by 7.1%, net ofacquisition costs. The valuation of properties in the Great Capital Partnershiprose by 7.7% to £502.5 million between 2 April 2007 and 30 June 2007, net of setup costs. Estimated NAV per share and financing The portfolio valuation movement of £99.0 million for the three months to 30June 2007 has been used to estimate the pro forma NAV per share. Adjusted NAVper share as at 30 June 2007 was estimated at 642p (up 8.1% on 31 March 2007),whilst REIT NNNAV per share was estimated at 645p (up 8.8% on March 2007), bothnet of a provision for the payment of the final 2007 dividend of 7.55p. Furtherdetails are set out in the table below. Pro Forma Estimated Balance Sheet £m Pence % per Change shareAdj NAVAt 31 March 2007 1,076.0 594 Valuation uplift 99.0 56Final dividend (13.6) (8) At 30 June 2007 1,161.4 642 8.1% REIT NNNAVMark to Market of debt 5.1 3 At 30 June 2007 1,166.5 645 At 31 March 2007 1,074.3 593 8.8% Note: These pro forma estimates do not include retained earnings for the quarterand are unaudited Net debt at 30 June 2007 was £483 million, up £94 million from 31 March 2007,mainly due to the investment in the Great Capital Partnership and capitalexpenditure on developments. Gearing at 42% was 6% higher than the level as at31 March 2007. Since the quarter end the Group's debt facilities have been enhanced to supportrecent acquisitions and the growing development pipeline. A new £200 millionfive year revolving credit facility has been arranged on more advantageous termsthan the smaller, shorter-term facility that it will replace. Investment activity The Group has continued to find a significant number of investment opportunitiesduring the quarter completing acquisitions totalling £243.8 million (includingshare of joint ventures). The Great Capital Partnership ("GCP"), a new £460 million joint venture withCapital & Counties, was completed at the start of the quarter and theintegration process is progressing well. Since the quarter end, the partnershiphas acquired a further £159.5 million of properties in 4 separate transactions(100% values). The largest acquisition involved the purchase of 3 assets onRegent Street, W1 for a price of £111.8 million. Taken together, the propertiescomprise 128,100 sq ft of retail and office space, with good improvementopportunities and reversionary potential. The remaining three acquisitions were of properties next to existing GCP assets.54/56 Jermyn Street, SW1 has been purchased for £19.5 million and is adjacent toGCP's Piccadilly holdings. In midtown, 43 Fetter Lane, EC4 has been acquired for£20.5 million and, together with 12/14 New Fetter Lane, EC4 forms a potentiallysignificant development scheme in a London sub market with low vacancy rates. 10/12 Park Crescent, W1 was purchased for £7.7 million providing a secure incomestream with plenty of asset management opportunities. Two further interests have been acquired by the Group during the quarter,adjacent to existing holdings in Bermondsey Street, SE1 and in Hanover Square,W1. The £162 million of disposals represent the injection of Group assets intoGCP. Letting and development Letting activity remains healthy across the business and we continue to securerents at or ahead of expected levels. Two of the recently refurbished floors atKent House, W1 have been let at rents of £65.00 per sq ft and £77.50 per sq ft.The Tooley Street scheme, SE1, pre-sold last year, has been entirely prelet toSouthwark Borough Council at an average rent of £38.50 per sq ft, whilst at 160Great Portland Street, W1 the Group has restructured its lease with the existingtenant extending the lease term over 85,000 sq ft of space from 2008 to 2018 andincreasing the office rent to an average of £55 per sq ft. The near-term development pipeline is in good shape; construction work isprogressing well at both 60 Great Portland Street, W1 and at the 110,000 sq ftWells & More scheme, Mortimer Street, W1. At Blackfriars Road, SE1 we haveexecuted a surrender arrangement with the current tenant to allow constructionwork to commence in January 2008, one year earlier than previously reported,lowering construction costs and delivering the 192,000 sq ft building earlier tothe market. Following the 1.1 million sq ft of planning permissions obtained during thequarter, satisfactory headway is being made in the preparation of planningapplications for many of the Group's future development opportunities. Contacts: Toby Courtauld Chief Executive Great Portland Estates plc 020 7647 3042Timon Drakesmith Finance Director Great Portland Estates plc 020 7647 3034 FinsburyJames Murgatroyd 020 7251 3801Gordon Simpson 020 7251 3801 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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