Great Portland Estates' (GPOR) shares rose 3 per cent on half-year results that bear eloquent witness to the strength of the West End commercial property market. The company's portfolio was marked up 6.7 per cent, boosting adjusted book value by 9.2 per cent to 487p a share over the six months to the end of September. That wasn't far off the 11 per cent book value gain clocked in the whole year to the end of March.
An exceptionally strong market has helped. The weight of money trying to find a home in London shows no sign of dissipating and a very tight supply of new buildings or refurbishment projects continues to bolster rents. Judging by the IPD index for central London, Great Portland has continued to outperform the market over the past 12 months - but only just, with the bulk of development profits offset by lost income.
Developments will nonetheless continue to drive returns. The group currently has three schemes under way, expected by its valuers to deliver an average profit on cost of 37 per cent. It is also due to start another five depending on "practical details" such as lease expiries and negotiations on affordable housing, according to chief executive Toby Courtauld. Easily the largest of these is Rathbone Place, an old Royal Mail depot at the eastern end of Oxford Street.
Broker Morgan Stanley expects adjusted book value to climb to 508p by the year-end.
GREAT PORTLAND ESTATES (GPOR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 571p | MARKET VALUE: | £1.96bn | |
| TOUCH: | 569-571p | 12-MONTH HIGH: | 605p | LOW: 446p |
| DIVIDEND YIELD: | 1.5% | TRADING PROPERTIES: | nil | |
| PREMIUM TO NAV: | 17% | NET DEBT: | 47% | |
| INVESTMENT PROPERTIES: | £2.42bn* | |||
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 421 | 76.7 | 24.8 | 3.30 |
| 2013 | 487 | 146.9 | 43.0 | 3.40 |
| % change | +16 | +92 | +73 | +3 |
Ex-div: 20 Nov Payment: 2 Jan *Includes £362m within joint ventures | ||||
