Great Portland Estates (GPE) has issued a trading update reporting that the Group is performing well on all fronts as it rides the wave of London’s growing economy.
The continued economic upturn enabled the Central London investment and development company to complete 17 new lettings totalling 34,900 sq ft in the quarter to 30 June 2015, generating annual rent of £2.4 million. In addition, five rent reviews were concluded securing £0.8 million per anum, 47 per cent above previous passing rent. Overall, the vacancy rate across GPE’s portfolio stands at just 2.4 per cent.
Among the new lettings was the last remaining retail space at the refurbished Walmar House on Regent Street, where outdoor clothing specialist North Face signed a ten year lease on the 6,400 sq ft unit. The scheme is now fully let and will generate a rent roll of £4.3 million with a WAULT of 13.9 years.
GPE reports good progress in its development pipeline with six committed West End schemes, totalling 626,100 sq ft, expected to be completed over the course of the next two years.
Construction is progressing well at GPE’s 408,800 sq ft mixed use scheme at Rathbone Square, where work on the building’s superstructure will commence shortly. The Group expects to embark on a pre-letting campaign for the 214,900 sq ft of office space later this summer.
Among the other developments expected to complete over the next 24 months are 30 Broadwick Street, 78/82 Great Portland Street and 73/89 Oxford Street. GPE’s total development programme equates to 2.5 million sq ft covering 54 per cent of the existing portfolio.
During the quarter GPE continued with its profitable capital recycling activity. This included the £222.4 million sale of 95 Wigmore Street by the Great Wigmore Partnership (GWP) – a joint venture between GPE and Aberdeen Asset Mamagement – and the purchase of Starwood Capital’s 50 per cent interest in the Great Star Partnership, giving GPE full ownership of the venture.
Commenting on GPE’s performance, Chief Executive Toby Courtauld said: “I am delighted to be able to report another quarter of strong activity. The Group is performing well on all fronts; our development properties are generating significant interest; our asset management activities are capturing the meaningful reversionary potential across the investment portfolio and our capital recycling is crystallising material profits.
“London’s economy continues to grow, supporting good levels of demand for the limited quantity of available office and retail space, particularly in our core West End market. As a result, our outlook remains positive.”
Mr Courtauld continued to say that GPE expects healthy occupier demand to generate both pre-letting activity and rental growth. He concluded by saying that the Group’s development programme will deliver attractive returns for shareholders and that the strength of the balance sheet will allow GPE to exploit its portfolio opportunities to the full.
