Continued growth in both capital and rental values, outperforming London market
Portfolio valuation up 8.0% in year (developments: 20.1%) and 2.6% in Q4
12 month Total Property Return of 11.7% outperforming IPD's Central London index of 10.5%, driven by capital return of 8.5% vs 6.1% for IPD Central London (West End offices capital return of 10.9% vs 6.7% for IPD)
Rental value growth of 4.9% (4.7% West End offices, 7.6% West End retail) vs 3.9% for IPD Central London
Strong financial performance
EPRA NAV per share of 446 pence up 10.7% in year and 3.7% in Q4
Net assets of £1,537.7 million (March 2012: £1,238.3m)
EPRA profit before tax of £22.2 million up 27.6% on 2012. EPRA earnings per share of 6.9 pence up 23.2%
After revaluation surplus, reported profit before tax of £180.6 million (2012: £155.2 million)
Total dividend per share of 8.6 pence (2012: 8.4 pence), up 2.4%
Development programme delivering significant surpluses
Two pre-let schemes completed (196,600 sq ft), total profit of £79.1 million, profit on cost of 51%
Five committed schemes (691,700 sq ft), 63% pre-let, expected profit on cost of 34%, completions from July 2013
Major development opportunity from 20 uncommitted schemes, covering 1.8 million sq ft, including five schemes (630,900 sq ft) with potential starts in next 18 months
Total development programme of 2.5 million sq ft covering 55% of existing portfolio
Accretive acquisitions and disciplined capital recycling
More than 80% of £137.8 million share placing already invested; 5.5% net initial yield, 31% beneath replacement cost
Total property acquisitions of £286.0 million (our share: £271.0 million); net initial yield of 4.7%, all below replacement cost and let off low rents with angles to exploit
Disposals of £300.5 million (our share: £184.2 million) at a net initial yield of 2.8% and an average 4.0% premium to book value
Significant letting activity - beating ERVs
84 new lettings (290,600 sq ft) securing annual income of £13.4 million (our share: £10.2 million), including pre-lets of £3.1 million p.a. (our share: £1.6 million)
Market lettings were 6.6% ahead of valuers' March 2012 ERV (8.7% excluding pre-let)
EPRA vacancy level reduced to 2.3% (March 2012: 3.3%), average office rent only £38.10 sq ft, reversionary potential of 12.3%
Since year end:
- Further lettings of £11.8 million, 2.8% premium to March 2013 ERV
- £10.9 million of pre-lets including 142,500 sq ft at 12/14 New Fetter Lane, EC4 to Bird & Bird paying £8.3 million p.a. on 20.25 year term, no breaks
- Further £3.3 million under offer, pro forma void rate down to 2.0%
Robust financial position with low leverage and high liquidity
Gearing remains conservative at 42.8%, loan to property value of 32.7%, weighted average interest rate low at 3.7%
Significant cash and undrawn facilities of £282 million, weighted average drawn debt maturity of 6.9 years
Toby Courtauld, Chief Executive, said:
"We are pleased to report on a strong year for Great Portland, characterised by numerous leasing successes beating market rents, significant surpluses from our development programme and accretive buying and profitable selling from our investment business.
Whilst macro-economic concerns persist, particularly in relation to the Eurozone economies, conditions in our central London markets remain supportive; the pick-up in tenant demand we identified in November is translating into lettings whilst the supply of new space to let is set to remain muted for some time, noticeably so in the core of the West End. Absent an economic set back, given the continued scarcity of finance for speculative development, we can look forward to healthy rates of rental growth in selected London sub-markets.
In our investment markets, yields remain well supported by the excess of demand over supply, measured at a ratio of almost 9:1. As a result, for well let liquid lot sizes, prime yields could reduce in the next few months.
In this market context, we expect to continue outperforming: demand for our space from prospective tenants is strong; our exceptional development pipeline will provide material surpluses in the near-term and gives us a platform for growth well into the next decade; our reversionary portfolio, 53% of which has been acquired at attractive pricing during the recession, is rich with opportunities for value creation; and our conservative gearing and plentiful, low-cost firepower, will enable us to execute our exciting growth plans and exploit new opportunities as we find them."
