Great Portland Estates (LSE:GPOR)’ investors will be keen to see how the FTSE 250 real estate investment trust (REIT)’s net asset value (NAV) tracked over the past six months when results are published on Wednesday.
Like all real estate sectors, Great Portland’s core portfolio of Central London office and London retail assets have seen a sharp fall in valuations, with the Investment Property Databank (IPD) Index showing a 16% and 11% year-on-year decline respectively.
Barclays analysts expect to see an 11% NAV drop in Great Portland’s assets for the period, resulting in a per-share NAV of 706p, marking around a 30% discount to the current share price.
Forward guidance, however, will be the real tester for Great Portland.
Investors could be expected to galvanise around real estate trusts If the market indicates a cyclical bottom, so Great Portland will want to offer some optimism on its estimated rental value (ERV) for the year ahead.
“Given higher inflation and the ‘flight-to-quality’ trend, we will also be looking for any evidence of these themes translating to higher rents,” added Barclays.
However, a good outcome on this front is hardly a given.
ERV numbers for the first half were mixed, with retail slipping and offices ticking just 1% higher, and full-year guidance at that time pointed to a 0% growth in ERV across all asset classes.
Yet If FTSE 100 constituent LandSec’s full-year results offer any read across (both have a strong footing in Central London office property) then consumer-facing retail assets are expected to bounce higher as consumer trends revert back to pre-Covid levels.