GPE secures record rent despite fall in capital values

GPE has boasted record leasing in a year dominated by falling capital values. In its annual results to the end of March 2023, Great Portland Estates said it had secured a record £55.5m of rent across 105 lettings and 686,700 sq ft of space – 3.3% ahead of ERV. This took the total rent roll to £91.2m, up from £84.2m the previous year. Vacancies in the investment portfolio fell from 10.8% to just 2.5%. However, like others in the sector, overall performance was hit by falling capital values, resulting in a pretax loss of £164m, down from the previous year’s profit of £166.7m. The portfolio value, including joint ventures, fell from £2.7bn to £2.4bn, while net assets dropped from £2.11bn to £1.92bn, with the decrease largely caused by a £184.9m fall in property valuation. However, GPE pointed out that it had fared remarkably well compared with its peers. It delivered a total property return of -4.1%, which compared favourably with the central London MSCI annual index of -8.1%. Capital returns of -6.2% were an improvement on -11% for MSCI. GPE said the outperformance was driven by greater-than-benchmark weighting to the West End, along with GPE delivering a record leasing year. Chief executive Toby Courtauld (pictured) said: “During a year marked by elevated political and economic uncertainty, we have delivered a strong operating performance with record leasing, positive rental growth and resilient financial results.” He added that GPE was so confident of a “growing divergence between the prospects of the best spaces versus the rest” and equally confident that what it offered was the best that it had increased its rental growth guidance for prime offices to between 3% to 6% for the year. Courtauld added: “We believe this is set to widen further as customers seek out sustainable and well-designed prime spaces, of which there is a marked shortage, particularly in the West End.” GPE said it has taken a strategic focus on prime HQ and flex spaces. Courtauld said. “Our office-led capex programme extends to more than £800m of best-in-class sustainable spaces and we are targeting growth of our flex space to more than 1m sq ft.” Courtauld added: “So with exceptionally strong finances and plentiful liquidity, we will continue capitalising on opportunities that are emerging, and with our experienced team, we can look to our future with confidence.” To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Image: GPE