Developments, rather than acquisitions, will be Great Portland’s focus, after it posted positive year-end results to March 2011.
After registering a 26.9% increase in property portfolio value, a jump in pre-tax profits from £156.6m to £261m, and completing commercial property purchases worth £213m, the property and investment company intends to direct resources toward its projected 2.2m sq ft pipeline of central London offices.
Since 2009, £370m of acquisitions were made, delivering an ungeared internal rate of return of 37%, pushing total portfolio value above £1.1bn. Many of the deals occurred with the market on its commercial property knees. A combination of improving economy, increasing occupier demand for City and West End offices, and a lack of new supply has led Great Portland to forecast returns from new acquisitions will become harder to generate. “As a result, our focus is shifting to the delivery of our major development programme” said Toby Courtald, CEO.
Total annual income from the 477,000 sq ft portfolio was £20.7m, rental values rose 10.8%, and it has six schemes totalling 405,800 sq ft on site and 1.8m sq ft projects in its near-term programme.
Commercial property acquisitions have not been entirely renounced; Westminster City Council has approved a proposed 205,000 development at Hanover Square, W1, including the refurbishment of Grade II listed 20 Hanover Square and the construction of two new buildings.
A total of £175m of deals are reportedly still under negotiation, fortified by April’s debt issue which took cash and undrawn facilities to £518m.
£300m of commercial property investment remains in 100 Bishopsgate, a 165m skyscraper in the City of London. Great Portland is keen to reduce its exposure in the 40-storey building by 50%, to 25%. Talks have begun on finding investors for the 955,000 sq ft scheme, which has Canadian developer Brookfield as the other 50% shareholder.
