The staggering momentum behind London property values that has richly rewarded Great Portland Estates in recent years is all but spent. The West End landlord's portfolio rose 3.9 per cent in value during the half, but the gains were ominously weighted towards the first quarter – the mark-up for July to September was only 0.5 per cent.
That mirrored the rental growth pattern in surveyors' estimates – 2.1 per cent in the first quarter, 0.5 per cent in the second. And management expects rents to remain flat in the office sector, despite low levels of supply, as potential tenants hold back from committing to space due to economic uncertainty. Conditions are brighter in retail, which accounts for 22.6 per cent of the West End portfolio, as global chains continue to compete for the few prime pitches that become available.
Profits fell 31 per cent in the period, even adjusting for the lower valuation surplus. That reflects higher capital spending on five schemes that Great Portland is currently building for completion in 2012-13, most of which are already pre-let. Reflecting those lower profits, and two major acquisitions – on Gray's Inn Road and Rathbone Place, just north of Oxford Street – net debt increased from £349m to £473m.
Brokerage Evolution expects full-year adjusted NAV of 401p (360p for 2011).
GREAT PORTLAND ESTATES (GPOR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 362p | MARKET VALUE: | £1.13bn | |
| TOUCH: | 361-362p | 12-MONTH HIGH: | 450p | LOW: 317p |
| DIVIDEND YIELD: | 2.3% | TRAD PROP: | nil | |
| DISCOUNT TO NAV: | 4% | |||
| INVEST PROPERTIES: | £1.22bn | NET DEBT: | 41% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 313 | 117 | 37.3 | 3.1 |
| 2011 | 379 | 79.1 | 25.6 | 3.2 |
| % change | +21 | -32 | -31 | +3 |
Ex-div: 16 Nov Payment: 4 Jan | ||||
