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Great Portland valuation growth improves

The commercial property group managed to offset a further decline in retail
November 20, 2019

Great Portland Estates’ (GPOR) office assets managed to offset a further decline in the value of retail properties and those with shorter leases during the first half, nudging up the like-for-like portfolio value by 0.8 per cent.

IC TIP: Hold at 782p

While net rental income was down slightly on the comparable half-year due to asset disposals, those properties that were let were agreed at an average 9.4 per cent ahead of estimated rental values. Flexible space accounts for 10 per cent of the office portfolio, including a new partnership with City Place House. Given new lets were secured at an average 35 per cent above estimated rental values, it is unsurprising management is appraising a further 153,000 sq ft of space. 

Developments – which accounted for just over half of the commercial property group’s assets – were 48 per cent pre-let or under offer by the end of September, helping boost their valuation by 6 per cent. In the West End, where development activity is focused, 59.3 per cent of space was under offer or pre-let. 

Brokerage Berenberg forecasts adjusted net asset value (NAV) of 879p at the March 2020 year-end, falling to 805p at the same time in 2021.

GREAT PORTLAND ESTATES (GPOR)   
ORD PRICE:782pMARKET VALUE:£1.99bn
TOUCH:782-782.4p12-MONTH HIGH:812pLOW: 644p
DIVIDEND YIELD:1.6%TRADING PROP:na
DISCOUNT TO NAV:10%  
INVESTMENT PROP:£2.65bn*NET DEBT:14%
Half-year to 30 SepNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201884540.412.04.3
201986644.416.74.7
% change+2+10+39+9
Ex-div: 21 Nov   
Payment: 02 Jan   
*Includes investments in joint ventures