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Rental values grew 2% (2.4% West End offices, 2.7% West End retail), with an acceleration in the second quarter (1.1% versus 0.9% in the first quarter). Net asset value per share was up 5.2% to 424p. After a revaluation surplus, reported profit before tax was £76.7m (2011: £79.1m), with the interim dividend per share increased 3.1% to 3.3p. Including non-recourse debt in the joint ventures, total net debt was £814.6m (March 31st 2012: £686.9m) equivalent to a loan to value ratio of 37.7% at September 30th 2012 (March 31st 2012: 34.2%). Toby Courtauld, Chief Executive, said: "We are pleased to report a strong start to this financial year, and another period of outperformance of the London commercial property market; we have delivered material surpluses from our development programme, further attractive acquisitions in the West End, profitable disposals and numerous lettings ahead of market rates.
On the back of solid interim results Great Portland Estates (GPE) has said it is looking to raise significant funding to enable it to make further acquisitions in London's West End. The property company plans to raise around £140m via a proposed placing of up to 31.25m shares. A spokesperson was coy about the proposed issue price as the book has not yet been built, but it is likely to be at a discount to yesterday's closing price of 459.3p, given the dilutive effect of the placing (9.99% of the current issued share capital). The funds will be used to top up a war chest of £400m in cash and undrawn credit facilities that will be used to buy property in central London. It is already in detailed discussions about three such property purchases costing about £110m, and a further three are in detailed analysis. Interim resultsFor the six months ended September 30th, GPE delivered a total property return of 12.8%, outperforming IPD's central London benchmark of 9.6%, driven by a capital return of 9.6% against 5.1% for the IPD central London. The IPD (Investment Property Databank) provides benchmarking and portfolio analysis services across the globe.
Great Portland: Deutsche Bank raises target from 570p to 610p, buy rating kept.
Great Portland Estates: Exane BNP Paribas upgrades to neutral, target lifted from 420p to 460p.
Toby Courtauld, Chief Executive, said, "Against a backdrop of global economic turbulence and increased central bank monetary stimulus, a significant quantity of capital from around the world continues to flow into the central London property market, resulting in yields reducing in the quarter for prime West End assets. With resilient tenant demand, minimal vacancy of Grade A space and constrained development supply, we expect further rental growth, particularly at our well-located, high quality buildings. Following our recent off-market, accretive purchases, we will continue to capitalise on strong investor demand to crystallise surpluses on some of our mature assets, recycling the capital into our significant development pipeline. With numerous opportunities to exploit across our well-located portfolio and our strong financial position, we expect to deliver further attractive returns to our shareholders."
Key points from the quarter1: · Portfolio valuation2 up 3.1%, 5.2% and 8.2% over 3, 6 and 12 months respectively · Rental value growth2 of 0.9% (1.3% West End offices, 0.4% West End retail) · EPRA NAV3 per share of 417 pence at 30 June 2012 up 3.5%, 8.0% and 11.2% over 3, 6 and 12 months respectively · EPRA NNNAV3 per share of 413 pence at 30 June 2012 up 4.6%, 8.1% and 9.8% over 3, 6 and 12 months respectively · Purchases totalling £159.0 million since 31 March 2012, all in the West End, including the acquisition of The Jermyn Street Estate, SW1 announced on 23 July 2012 · Disposals of £140.5 million (our share: £80.5 million) since 31 March 2012 · A further £261 million (our share: £190 million) of properties in the market to sell, of which more than £187 million are currently under offer · Five committed development schemes (651,100 sq ft) on site, expected profit on cost of 41%. Completions from autumn 2012 to spring 2014 · Major development potential increased to 17 uncommitted schemes, covering 2.7 million sq ft, all with flexible start dates. 3.4 million sq ft total development programme covering 55% of existing portfolio · 15 new leases signed generating £1.4 million p.a. (our share: £1.3 million p.a.); market lettings at 5.6% ahead of March 2012 rental values · EPRA vacancy level reduced to 2.7% (31 March 2012: 3.3%) · Gearing remains conservative at 45.5%, loan to property value of 35.1%, weighted average interest rate low at 4.1%, significant cash and undrawn facilities of £370 million · New £80.0 million (our share: £40.0 million) ten year, fixed rate non-recourse debt facility (in the Great Victoria Partnership) completed on 17 July 2012
http://www.investegate.co.uk/Article.aspx?id=201207240700103130I
Ian Hawksworth, Chairman of GCP and Chief Executive of Capco commented, "The sale of The Jermyn Street Estate releases capital back into the Joint Venture and allows our partners GPE to further expand their Piccadilly portfolio in light of their recent acquisition of French Railways House and 50 Jermyn Street. GCP will consider further disposals on a case by case basis over the remainder of this year." Toby Courtauld, Chief Executive of GPE said, "We are delighted to have bought the half of the Jermyn Street Estate we didn't already own. With our recent acquisition adjoining the properties, this gives us circa 185,000 sq. ft. of prime real estate with opportunities to grow income in the short term. In the longer term, the combined properties offer a superb development opportunity in one of the West End's premier sub markets, with the potential to deliver material uplift in both quality and quantity of accommodation on the site."
Great Capital Partnership Sells Jermyn Street Estate for £120 million. The Great Capital Partnership ("GCP"), the 50/50 Joint Venture between Capital & Counties Properties PLC ("Capco") and Great Portland Estates plc ("GPE") announces today that it has exchanged contracts to sell The Jermyn Street Estate, SW1 to GPE for £120 million or £60 million for the half share GPE does not already own. The Estate consists of five properties, 54-56 Jermyn Street, Dudley House, Egyptian House, Empire House and Foxglove House. All these assets are held on separate 125 year headleases from The Crown Estate at a combined fixed headrent of £675,000 per annum until September 2014, thereafter reverting to 10% of rents received. The properties comprise a mix of office and retail accommodation and extend to a total circa 133,000 sq. ft. with frontages to both Piccadilly and Jermyn Street. There are currently 62 tenants across the estate including Standard Chartered Bank, Wiltons, Starbucks and Kent & Curwen. GCP completed a comprehensive refurbishment of circa 27,700 sq. ft. of vacant office accommodation in June 2012, of which 3,800 sq. ft. (14%) has been let so far. The properties generate a current net rental income of circa £4.5 million after payment of the headrent and have an estimated net rental value today of £7.3 million. The sale reflects a net initial yield of 3.7% and net reversionary yield of 6.0% after the deduction of actual costs incurred in the transaction. The Estate was sold at a 3.3% premium on the June 2012 valuation. Completion of the purchase is conditional on approval from both the freeholder and lenders to GCP.
http://www.investegate.co.uk/Article.aspx?id=201207230700062120I
Gearing is at 40% and since the year end a £510m debt facility has been secured at an average interest rate of 4%. Martin Scicluna, Chairman of Great Portland Estates, isn't afraid to blow the firm's trumpet, in his speech to the AGM today he will say: "With our developments attracting healthy tenant interest and delivering material surpluses, combined with our conservative gearing and plentiful, low-cost firepower [...] we look to the future with confidence."
Ahead of its annual general meeting today, Great Portland Estates has revealed its net asset value per share and portfolio valuation are on the up. The firm focuses on central London properties, 80% of which are in the "under-supplied" West End market. For the 12 months to March 31st, net assets per share increased by 11.9% and the property portfolio delivered like-for-like valuation growth of 9.2%, outperforming its central London benchmark index (known as IPD) which increased by 7.5%. The firm secured £25m of annual rent during the year at levels it says are "well ahead" of the estimated rental value. Great Portland's development programme has seen four schemes complete since March, delivering a 31% profit on cost. The group also has five committed developments on site which it expects to deliver a 38% profit on cost and which have already been "significantly" de-risked through pre-lettings.
Espirito Santo upgrades Great Portland Estates from neutral to buy, target price raised from 402p to 448p.
Great Portland Estates Buy 07-Jun-12 £80,766.00 Nick Sanderson 21,000 @ 384.60p
"The London office investment markets remain a challenging and competitive environment. Deploying capital into the fund's development and refurbishment activities is a prudent and cost effective course of action for us to adopt," Deacon said.
"Over the longer term, these two adjoining properties offer a superb development opportunity in one of the West End's premier sub markets, potentially delivering material uplift in both the quantity and quality of accommodation on the site," he added. As for Henderson, Nick Deacon, Director of Property at Henderson Global Investors, said the proceeds from the sale would be reinvested into the firm's CLOF 1 fund's development programme over the near term, including the fund's joint venture with Istithmar P&O at Regent Quarter in King's Cross, the proposed redevelopment of 54-57 Great Marlborough Street in Soho and Bishop's Court in Spitalfields.
The properties are held leasehold from The Crown Estate, with the leases expiring in 2057 and 2053, respectively. They have a total fixed ground rent of £13,250 per annum. Handily, the properties adjoin the Piccadilly Estate, a 130,000 square foot office and retail holding owned by the Great Capital Partnership, GPE's 50:50 Partnership with Capital and Counties Properties. "The acquisition offers an attractive net initial yield of 5.1% which we expect to be able to grow to around 7% over the next 24 months as a result of imminent lease events and focused asset management," said Toby Courtauld, GPE's Chief Executive.
Real estate investment trust Great Portland Estates (GPE) has bought interests in two properties in the heart of London's St James's district from fund management firm Henderson Global Investors. GPE is paying £39.0m for the leasehold interests in French Railways House and 50 Jermyn Street, SW1. The purchase price reflects a net initial yield of 5.1% and a capital value of £782 per square foot. The 1950's properties are multi-let to nine tenants, producing a gross rent of £2.12m per annum, which reflects an average rent of £46.50 per square foot on the offices and £125 per square foot Zone A on the retail space.
Nick Deacon, Director of Property at Henderson Global Investors said. "We have held these properties for over 6 years. The sale forms part of a strategic repositioning of the Fund which we have undertaken over the last 18 months. The proceeds will be reinvested into CLOF 1's development programme over the near term, including the Fund's joint venture with Istithmar P&O at Regent Quarter in King's Cross, the proposed redevelopment of 54-57 Great Marlborough Street in Soho and Bishop's Court in Spitalfields. The London office investment markets remain a challenging and competitive environment. Deploying capital into the Fund's development and refurbishment activities is a prudent and cost effective course of action for us to adopt."
Great Portland Estates plc ("GPE") announces the acquisition of the head leasehold interests in French Railways House and 50 Jermyn Street, SW1, for £39.0 million from Henderson Global Investor's Central London Office Fund 1 ("CLOF 1"). The purchase price reflects a net initial yield of 5.1% and a capital value of £782 per sq. ft. The properties were both built in the 1950's and provide 49,879 sq. ft. of office and retail accommodation on an underdeveloped 0.3 acre site. They are multi-let to 9 tenants producing a gross rent of £2.12 million per annum, which reflects an average rent of £46.50 per sq. ft. on the offices and £125 per sq. ft. Zone A on the retail, offering good short term reversionary potential; all of the leases have events between 2012 and 2014. The properties are held leasehold from The Crown Estate ("TCE"), expiring in 2057 and 2053, respectively, with a total fixed ground rent of £13,250 per annum. They adjoin the Piccadilly Estate, a 130,000 sq. ft. office and retail holding owned by the Great Capital Partnership ("GCP"), GPE's 50:50 Partnership with Capital and Counties Properties PLC. Toby Courtauld, GPE Chief Executive said, "We are pleased to announce this acquisition in the heart of St James's. The acquisition offers an attractive net initial yield of 5.1% which we expect to be able to grow to around 7% over the next 24 months as a result of imminent lease events and focused asset management. Over the longer term, these two adjoining properties offer a superb development opportunity in one of the West End's premier sub markets, potentially delivering material uplift in both the quantity and quality of accommodation on the site".
http://www.investegate.co.uk/Article.aspx?id=201206010700065795E
"While occupational demand remains at around the long-term average, current availability of new space is considerably below the average and the resultant forecast supply crunch suggests that rental growth prospects are favourable in the medium term," he said.
Chief Executive Toby Courtauld said the investment market continued to benefit from significant excess of demand for assets over supply, with the appetite from overseas investors at high levels.
The firm recorded rental value growth of 7.8% on a like-for-like basis and pushed up its dividend slightly to 8.4p per share. However, the firm's profits were hit by development and refurbishment costs, which pushed adjusted pre-tax profits down 65% to £17.4m.
Property firm Great Portland Estates said London had continued to attract a significant flow of investment capital from around the world, resulting in a record leasing year. Net assets per share at the end of March was 403p per share, an increase of 11.9% over the year, largely due to the rise in value of the company's property portfolio.