Great Portland Estates plans to return £306m to shareholders following profitable property sales.
The group reports another strong quarter of leasing and good progress on development schemes.
GPE said that in the three months to the end of December 21 new lettings (208,600 sq ft) were signed generating annual rent of £10.7m (its share: £7.2m), including £4.8m pre-letting at 160 Old Street, EC1; 2.0% ahead of March 2017 ERV.
In addition, six rent reviews were settled securing £2.4m per annum; 36% above previous passing rent, 2.4% ahead of ERV; remaining reversionary potential of 16.9% (£18.2m) and 11 lettings were under offer totalling £9.6m p.a. of rent (its share: £6.3m); 1.8% ahead of September 2017 ERV.
GPE said it also made good progress on development schemes:
- Rathbone Square, W1 (residential) and 55 Wells Street, W1 were completed (together 189,000 sq ft), 93% pre-sold or under offer; 13 of 142 Rathbone private residential units now handed over to buyers
- 160 Old Street, EC1 (161,700 sq ft) due for completion in April; 57% pre-let, capex to come of £4.5m
- Good progress across three near-term uncommitted schemes (414,300 sq ft), including planning permission for new build scheme at Oxford House, W1 and continued handover of land from Crossrail at Hanover Square, W1; potential capital expenditure of £231.1m
- Exceptional and flexible medium-term development pipeline of 13 schemes (1.3 million sq ft), currently income producing, with 3.7 years average lease length, 17.7% reversionary
GPE said it was crystallising significant surpluses; commercial sales of £319m (its share) 2.7% ahead of book value
- Sale of 240 Blackfriars Road, SE1 from GRP JV for £266.0 million (GPE share: £133.0 million, net initial yield of 3.94%, capital value of £1,176 per sq ft), GPE whole life surplus of £69.5 million (87% capital return)
- Sale of 30 Broadwick Street, W1 for £185.9 million (net initial yield of 4.0%, capital value of £2,015 per sq ft), GPE whole life surplus of £83.32 million (77%2 capital return)
It said it proposed to return net proceeds from commercial property sales of £306m to shareholders - an expected payment of c.94 pence per share.
Chief executive Toby Courtauld said: 'We are pleased to report another very active quarter, maintaining our leasing momentum ahead of ERV and successfully progressing our developments.
'We have also continued to recycle capital profitably with the sale of two long-let properties, crystallising the significant value that we created through their redevelopment.
'With pro forma LTV of only 7% following these sales, we are proposing to return the net proceeds of £306 million to shareholders, reflecting our ongoing commitment to balance sheet discipline, whilst also ensuring that we retain significant financial flexibility for both the next programme of developments and acquisitions.
'Today, in spite of the macro-economic and political uncertainties, tenant interest remains healthy across our portfolio with £9.6 million of lettings currently under offer.
'Moreover, GPE is in great shape with attractive long-term potential: 89% of our portfolio is located near to central London Crossrail stations which open in late 2018; our investment portfolio is well-let off low average rents with significant near-term reversion to capture; our future development opportunities now cover 44% of our portfolio, including three potential starts in the next six months; we have the financial strength to fund this exciting development programme and also exploit any future market weakness, and our first class team is ready to capitalise on opportunities as we unearth them.'