Great Portland Estates plc (GPE) has released a trading update for the quarter ending 30 June 2024, showcasing continued robust leasing demand and strategic growth initiatives.

Despite a nearly full portfolio, GPE signed new leasing deals worth £4.3 million during the quarter, exceeding the valuer’s Estimated Rental Value (ERV) by 7.7%. This performance supports the company’s forecast of 3.0% to 6.0% rental growth for the year, with prime spaces projected to achieve even higher growth rates of 5.0% to 10.0%.

Chief Executive Toby Courtauld commented, “Our substantial capex programme is set to deliver the very best, sustainable spaces into a market starved of such supply. Our focus on HQ development and our Fully Managed offer is meeting discerning customer demand, and with our recent capital raise, we have the financial firepower to exploit our pipeline of acquisition opportunities, accelerating our growth into increasingly favourable market conditions.”

The quarter saw 12 new leases and renewals, generating an annual rent of £4.3 million, with market lettings averaging 7.7% above March 2024 ERV. This includes seven Fully Managed leases, which added £3.1 million in rent at an average of £210 per sq ft, and three new retail leases, securing £1.1 million of rent, 6.0% above March 2024 ERV. The investment void rate remained low at 1.2% as of 31 May 2024, with an additional £5.1 million of rent currently under offer.

Notably, GPE let the retail space at 141 Wardour Street, W1 to British luxury brand REPRESENT for its new London flagship store, covering 5,000 sq ft across two floors. Additionally, leases were renewed at 16 Dufour’s Place, W1, with existing customers on a Fully Managed basis, at an average rent of £249 per sq ft, marking a 29% increase from previous terms.

In April 2024, GPE acquired The Courtyard, WC1, for £10.4 million in cash and through a property exchange of 95/96 New Bond Street, W1, valued at £18.2 million. The Courtyard, comprising 62,000 sq ft of vacant office and partially let retail space, is primed for repositioning into GPE’s Fully Managed offering.

Furthermore, GPE completed a £350 million rights issue in June 2024, positioning the company to capitalise on emerging opportunities in the central London real estate market. Asset value corrections over the past 18 months have made central London commercial real estate more attractive, aligning with levels last seen in 2009. GPE is currently tracking around £1.3 billion in acquisition opportunities, with a further £1.5 billion on its watchlist.

The acquisitions and developments funded by the rights issue are expected to enhance shareholder returns, be accretive to EPRA earnings and NTA per share, and support the company’s goal of achieving a Total Accounting Return of over 10% in the medium term. Courtauld noted the potential for further upside with improving macro-economic conditions and contracting property yields in a favourable interest rate and rental growth environment.