Great Portland Estates (GPOR) has provided a classic example of what an exceptionally well run company can achieve in a market lacking any momentum. Despite uncertainty in the London office market, the rent roll was increased by 7 per cent in the year to March 2018, and with supply in the West End remaining tight, the previous year’s Brexit-induced £136.9m downshift in the valuation of the portfolio was replaced with an uplift of £35.5m.
As chief executive Toby Courtauld pointed out: “With London’s investment market remaining competitive, we have no need to buy, preferring the relative returns on offer from investing in our portfolio." However, this didn’t stop the company from unlocking some of the value within the portfolio through disposals, which totalled £329m at a 5.4 per cent premium to book value. The result of this meant that net debt shrank from £576.8m to £67.5m, all of which is contained in joint ventures.
Rental income is expected to grow as the reversionary element is crystallised as rents are renewed. There were 34 rent reviews during the year, and these were secured on average at a 29.6 per cent premium to previous rents and 3.2 per cent ahead of estimated rental value.
Analysts at Peel Hunt are forecasting adjusted net asset value at the March 2019 year-end of 841.2p, from 845p in 2018.
| GREAT PORTLAND ESTATES (GPOR) | ||||
| ORD PRICE: | 669.2p | MARKET VALUE: | £1.89bn | |
| TOUCH: | 668.1-669.3p | 12-MONTH HIGH: | 709p | LOW: 580p |
| DIVIDEND YIELD: | 1.7% | TRADING STOCK: | £19.5m | |
| DISCOUNT TO NAV: | 20% | |||
| INVEST PROPERTIES: | £2.73bn* | NET DEBT: | 3% | |
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 564 | 422 | 123 | 8.8 |
| 2015 | 695 | 507 | 148 | 9 |
| 2016 | 847 | 555 | 163 | 9.2 |
| 2017 | 796 | -140 | -40.8 | 10.1 |
| 2018 | 840 | 76.7 | 21.5 | 11.3** |
| % change | +6 | - | - | +12 |
| Ex-div | 31 May | |||
| Payment: | 09 Jul | |||
| *Including joint ventures **Excludes special dividend of 32.15p a share | ||||
