GPE Reports Sustained Leasing Activity and Significant Developments Across Key London Assets

Toby Courtauld, Chief Executive, said: “We are pleased to have maintained our leasing momentum, delivering a strong quarter with £6.1 million of new lettings, bringing the total for the financial year to date to £10.5 million, 7.0% ahead of the valuer’s ERV, with our Fully Managed spaces outperforming once more. With £8.8 million of lettings currently under offer at a 16% premium to ERV, we reaffirm our confidence in our portfolio rental value guidance of +3.0% to +6.0% growth for the financial year.

Furthermore, following a successful £350 million rights issue and £250 million debt issuance since our results in May, we have both the financial capacity and the increasing confidence that we can deploy the proceeds into accretive acquisitions. Today, we have around £100 million under offer, fully aligned to the acquisition criteria we set out in May. Beyond this, we have a further £1.6 billion under active review or on our watchlist to buy.

With economic conditions improving and interest rates now falling, London’s unique characteristics set it apart as a global office hub with healthy long-term growth prospects; strong customer demand for our market-leading HQ and Flex spaces is enabling us to lease ahead of expectations in a market starved of such centrally-located, quality space and underpinning our conviction in our sizeable near-term pipeline. Meanwhile, favourable investment markets play to our acquisition ambitions and with our balance sheet strength we expect to add to our recent purchases, enhancing our already attractive growth prospects. “

Great Portland Estates plc (GPE), a leading real estate investment trust, today provides a trading update for the six months ending September 2024, highlighting robust leasing activity and substantial progress across key developments in Central London.

During the quarter, GPE signed 15 new leases and renewals, generating an annual rent of £6.1 million (GPE share: £4.1 million), with market lettings on average 6.4% ahead of March 2024 estimated rental values (ERVs). In total, over the last six months, GPE secured 28 new leases and renewals, resulting in annual rent of £10.5 million (GPE share: £8.2 million). Noteworthy leasing highlights include:

• 11 Fully Managed leases, generating £5.5 million in rent roll at an average £197 per sq ft, 8.9% ahead of March 2024 ERVs.
• 12 new retail leases, securing £4.2 million in rent, with market lettings 3.5% ahead of March 2024 ERVs.

Additionally, six rent reviews were settled, resulting in £6.7 million of annual rent (GPE share: £4.2 million), 3.3% ahead of previous passing rents. GPE currently has a further £8.8 million of rent under offer, with market lettings 15.9% ahead of March 2024 ERVs. The Group’s rent roll has increased to £109.6 million, up 2% since 1 April 2024.

Following last year’s announcement of a 22,500 sq ft letting to TK Maxx, GPE completed three new retail deals at Mount Royal, W1, totalling 20,000 sq ft. These include the immersive gaming brand Activate (We Do Play), children’s toy store Keikoo, and Italian restaurant brand Caffé Concerto. GPE has now secured lettings on almost 60% of available space at Mount Royal.

In September, GPE also completed a 6,900 sq ft retail lease to Gaggenau, the luxury home appliance brand, at 6/7 Portman Square, W1, on a 10-year lease. The deal sees Gaggenau double its footprint as it relocates from its current location at Wigmore Street.

Given the strong leasing performance, GPE reiterates its rental growth guidance for the financial year, with portfolio-wide growth expected between 3.0% and 6.0%, and stronger growth of 5.0% to 10.0% for prime office space.

GPE is nearing completion on two Fully Managed refurbishment schemes, which are generating significant customer interest:

• SIX at 6 St Andrew Street, EC4, offering 48,000 sq ft of refurbished office space across nine floors, will be completed later this month. The space features flexible workspaces, a rooftop terrace, and wellness amenities, targeting high sustainability ratings.
• 31/34 Alfred Place, WC1, located in Fitzrovia, offers 41,700 sq ft of newly refurbished office space and will also complete this month, enhancing GPE’s prime office portfolio.

GPE continues to make good progress across its three on-site development schemes, which total 533,300 sq ft. At 2 Aldermanbury Square, EC2, construction is advancing, with the steel frame reaching the ninth floor, while Minerva House, SE1, and French Railways House, SW1, are also progressing through deconstruction and early construction phases. Pre-let interest remains strong, particularly at French Railways House, where completion is still two years away.

Capitalising on a favorable investment market, GPE has continued its pipeline of acquisitions, with three buildings currently under offer, valued at approximately £100 million. GPE has £1.0 billion in additional assets under review, primarily off-market, focusing on HQ repositioning and Flex opportunities, with another £0.6 billion on the watchlist.

In September, GPE successfully issued its first sterling-denominated senior unsecured sustainable bond, raising £250 million with a term of seven years and a 5.375% interest rate. The bond was rated Baa2 by Moody’s and was 5.5 times oversubscribed, underscoring investor confidence in GPE’s sustainability and long-term growth strategies.