Landlord Great Portland Estates (GPOR) provided further evidence of the strong demand for premium space in London's fashionable West End, and a combination of rising rents and capital appreciation helped to lift profits by a half. The previous half year's valuation surplus of £169m jumped to £301m, while net rental income grew by 16 per cent to £39.2m.
In an effort to capitalise on the demand/supply imbalance, the 1.2m sq ft committed development programme is the largest the group has ever undertaken, and there is a further 1.3m sq ft contained in a future pipeline. Crucially, when taking the existing portfolio and adding the development arm, chief executive Toby Courtauld believes the reversionary potential if all rents were marked to market is over 100 per cent. Vacancy rates remained historically low at just 3.6 per cent.
Great Portland has also continued to recycle money from mature investments to fund its development arm, with sales totalling £117m, around 16 per cent above March 2015 book value. And there is a further £215m of properties earmarked for sale. Around half of the existing development properties are pre-let, and Mr Courtauld thinks that a vast majority will be pre-let by the March year-end.
Analysts at Investec are forecasting adjusted net asset value by the March year-end of 846p a share (from 709p in 2015).
| GREAT PORTLAND ESTATES (GPOR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 844p | MARKET VALUE: | £2.9bn | |
| TOUCH: | 843.5-845p | 12-MONTH HIGH: | 893p | LOW: 677p |
| DIVIDEND YIELD: | 1.1% | DEVELOPMENT PROP: | £142m | |
| PREMIUM TO NAV: | 5% | |||
| INVESTMENT PROP: | £3.45bn* | NET DEBT: | 24% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 629 | 247 | 72 | 3.5 |
| 2015 | 802 | 371 | 109 | 3.6 |
| % change | +28 | +50 | +51 | +3 |
Ex-div: 19 Nov Payment: 4 Jan *Includes investments in joint ventures | ||||
