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Great Portland Estates report strong Q3 results and a return to development
Great Portland Estates Plc today posted an 8.7% increase in the value of its portfolio in Q3 due to the rebound in valuations and said it is ready to start three developments this year, including the Marcol House redevelopment in Regent Street.
The company said in the three months to Dec. 31 the value of its portfolio climbed 8.7% to £1.20 billion, compared with a 2.6% rise in the previous quarter, due to yield compression, while net asset value per share rose 11.6% to 251 pence.
The company said that it has made £107.4 million of new investments and development commitments since Sept. 30 and £161.5 million of total commitments since its rights issue.
U.K. landlords have been hit hard in the past two years as the credit crunch hurt demand for space and tenants went bankrupt, resulting in falling values and covenant breaches. Most property companies went back to investors for more cash to shore up their balance sheets.
Despite better property prices in the London market, rental values are still under pressure amid a weak economy. Great Portland experienced a rental decline of 1.1% in the quarter.
Toby Courtauld, Chief Executive, said,
"London's investment markets have continued to strengthen since we reported in November with a significant surfeit of buyers over sellers. Despite this competitive environment, 97% of the capital raised in our rights issue last summer has been committed and these assets have all shown healthy increases in value since acquisition. We continue to see a number of interesting opportunities, however we expect the second half of 2010 to present a deeper pool as the deleveraging process gathers pace.
With the take up of office space improving, we have seen isolated examples of rents rising. If the UK economy continues to recover, supporting occupational demand, we remain of the view that more general rental growth will return towards the end of this year as the supply of space to let diminishes.
In the meantime, our priorities remain cash generation, tenant retention and the commencement of a new development programme timed to benefit from the anticipated recovery in occupational markets starting this quarter with our 111,000 sq ft scheme at Marcol House, Regent Street, W1."
Great Portland's shares closed last night at 296 pence. They have gained 74% in value in the past year.
The company said in the three months to Dec. 31 the value of its portfolio climbed 8.7% to £1.20 billion, compared with a 2.6% rise in the previous quarter, due to yield compression, while net asset value per share rose 11.6% to 251 pence.
The company said that it has made £107.4 million of new investments and development commitments since Sept. 30 and £161.5 million of total commitments since its rights issue.
U.K. landlords have been hit hard in the past two years as the credit crunch hurt demand for space and tenants went bankrupt, resulting in falling values and covenant breaches. Most property companies went back to investors for more cash to shore up their balance sheets.
Despite better property prices in the London market, rental values are still under pressure amid a weak economy. Great Portland experienced a rental decline of 1.1% in the quarter.
Toby Courtauld, Chief Executive, said,
"London's investment markets have continued to strengthen since we reported in November with a significant surfeit of buyers over sellers. Despite this competitive environment, 97% of the capital raised in our rights issue last summer has been committed and these assets have all shown healthy increases in value since acquisition. We continue to see a number of interesting opportunities, however we expect the second half of 2010 to present a deeper pool as the deleveraging process gathers pace.
With the take up of office space improving, we have seen isolated examples of rents rising. If the UK economy continues to recover, supporting occupational demand, we remain of the view that more general rental growth will return towards the end of this year as the supply of space to let diminishes.
In the meantime, our priorities remain cash generation, tenant retention and the commencement of a new development programme timed to benefit from the anticipated recovery in occupational markets starting this quarter with our 111,000 sq ft scheme at Marcol House, Regent Street, W1."
Great Portland's shares closed last night at 296 pence. They have gained 74% in value in the past year.
Wed, 20th Jan 2010