Great Portland Estates (GPOR) is on a roll, delivering high-spec West End offices into a solid market with little rival supply. The two development schemes completed over the year to 31 March - one let to property broker Savills, the other to visual effects company Double Negative - are now worth £79.1m, or 51 per cent, more than they cost. The company's portfolio as a whole was marked up 8 per cent last year, boosting adjusted net asset value (NAV) by 11 per cent to 446 per share.
The unusual market conditions that are making West End developments so profitable for well-funded companies like Great Portland - no lending for speculative development, very strong interest in long-let assets from overseas investors, the natural churn of office tenants - show every sign of continuing. Office take-up in the West End remains slightly below its long-term average, but has ticked up recently. Having delayed relocating in a circumspect business environment, many tenants with expiring commercial leases "are rapidly reaching the conclusion they need to make a decision", says chief executive Toby Courtauld.
That underpins confidence in the five development schemes to which Great Portland is currently committed. One of these is a 12-storey office on New Fetter Lane, the whole of which the company this month pre-let to law firm Bird & Bird on a 20-year lease.
Brokerage Oriel Securities expects adjusted NAV to rise to 477p next March.
GREAT PORTLAND ESTATES (GPOR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 592p | MARKET VALUE: | £2.04bn | |
| TOUCH: | 591-593p | 12-MONTHHIGH: | 600p | LOW: 364p |
| DIVIDEND YIELD: | 1.5% | TRADING PROP: | nil | |
| PREMIUM TO NAV: | 31% | |||
| INVESTMENT PROP: | £2.25bn* | NET DEBT: | 43% | |
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 234 | -436 | -180.0 | 9.0 |
| 2010 | 280 | 157 | 55.5 | 8.0 |
| 2011 | 359 | 261 | 83.8 | 8.2 |
| 2012 | 402 | 155 | 50.2 | 8.4 |
| 2013 | 451 | 181 | 56.3 | 8.6 |
| % change | +12 | +16 | +12 | +2 |
Ex-div: 29 May Payment: 9 Jul *Includes £348m within joint ventures | ||||
