London property developer Great Portland Estates PLC (LON:GPOR) reported a healthy start to its new financial year, with further progress in rent reviews of existing properties and new lettings.
Some £2.2mln of annual rent was added from nine new lettings in the quarter to 30 June and another £2.3mln from seven rent reviews.
Rising rents
With a focus in the last year being on making use of the “reversionary potential” of its existing portfolio, where existing passing rent roll is below the estimated market rental value, the seven reviews in the quarter were made at 17.2% above previous rates. This was down on the 19.2% increase seen from the 27 reviews in the previous trading year.
The remainder of the portfolio is felt to have reversionary potential now at 7.5% and worth £7.7mln of annual rents, from 8.3% at the last year-end.
A further 12 lettings are under offer, the FTSE 250-listed company said, which would bring in a total of £3.7mln in annual rent, of which GPOR’s share would be £2.9mln, with lettings 9.4% ahead of March 2019 estimated rental value.
Three committed development schemes, on Oxford Street, Hanover Square and on Whitechapel Road, are more than 23% pre-let or under-offer, up from 23% at the end of March.
Flexible offices
Flexible and co-working space now represents 100,900 square feet, or 4.9%, of the group’s office portfolio, with a further 132,500 sq ft or 6.4% being appraised.
Net debt increased 21% since the year end to £188.9mln as of 30 June, while cash in the bank and undrawn committed credit facilities stood at £578mln.
Chief executive Toby Courtauld said the second quarter has “started well with encouraging levels of enquiries from prospective occupiers”.
Broker Peel Hunt said: “The London occupier market continues to appear robust with little new supply being delivered especially in the areas in which Great Portland operates and the company continues to secure new lettings and rent reviews at or ahead of ERV. The shares trade on 19% discount to NAV and a 1.8% dividend yield.”