LONDON (ShareCast) - (Sharecast News) - Great Portland Estates reported a 0.3% fall in its portfolio valuation down 0.3% for the year ended 31 March on Wednesday, although developments were up 11.9%, with offices up 1.0% and retail down 3.5%.
The FTSE 250 company said its rental value grew 1.4%, with 3.5% growth in offices, while retail fell 4.3%, with the value falling at the upper end of its guidance for growth of between -2.0% and 1.5%.

Total property return for the year stood at 3.7%, with a capital return of 0.3% compared to the MSCI Central London quarterly index performance of -0.8%.

Its IFRS and EPRA net asset value per share was 868p, up 1.8% over 12 months, with net assets standing at £2.2bn.

EPRA earnings totalled £57m, which was up 6.1% year-on-year, as the firm's total accounting return improved to 3.2% from 2.3%.

EPRA earnings per share grew 13.4% to 22p, and cash earnings per share were 4.7% higher at 17.9p, while the company's IFRS profit after tax rose to £51.8m from £49.5m.

The board declared a total dividend per share of 12.6p, up 3.3% on 2019, including a final dividend of 7.9p, in line with that paid in 2019.

Looking at the ongoing impact of the Covid-19 coronavirus pandemic, Great Portland said it was engaging with its occupiers, addressing requests for help on a case-by-case basis.

It said 71% of its March quarter rents had been collected - 62.9% within seven working days - with two-thirds of the balance relating to occupiers from the retail, hospitality and leisure sectors.

There had been seven occupier delinquencies since April 2019, totalling 1.3% of the rent roll, with £25.8m held in rent deposits and bank guarantees.

All of the company's properties remained open, and were operating to government guidelines, the board said.

A new community fund was also being launched, seeded with more than £0.28m from reduced fees and bonus payments to board directors, and contributions by the executive committee and group matching.

No employees had been furloughed, and the firm said there were no current plans to access any UK government Covid-19 funding.

The board said the company was in an "exceptionally strong" financial position, with a "low" loan-to-value ratio of 14.2% and total liquidity of £411m.

Its property loan-to-value stood at 14.2%, with a net gearing of 16.2% and interest cover not measurable.

Great Portland said it had "substantial" headroom above its debt covenants, adding that March values could fall 70% before a breach, while its weighted average interest rate stood at 2.2%, and its weighted average debt maturity being 5.8 years.

Cash totalled £111m, and undrawn committed facilities were £300m, with committed development and refurbishment capital expenditure to come of £66m.

"I am pleased to report on a strong operational performance for the year, with GPE today in the enviable position of being both well placed to withstand the impacts from the Covid crisis and able to look to our future with confidence," said chief executive officer Toby Courtauld.

"Whilst much of the year to March 2020 was characterised by political and economic uncertainty, nothing could have prepared us for the social and economic consequences of the Covid pandemic and I am proud of the response from each and every member of the GPE team.

"We are engaging extensively with our occupiers, offering assistance on a case by case basis and have established a new community fund, seeded by GPE's people to bring some relief to those in London hardest hit by the crisis."

Courtauld said the company had examined the implications for the business, adding it was clear that it needed to plan for a recession with an increase in unemployment, leading to reduced occupational demand for space, implying falling rental and capital values.

"Key to our market's performance will be both the depth of the downturn and the shape of the recovery.

"Given this uncertainty, we are pausing the provision of guidance on rental value movements until the picture becomes clearer.

"Whatever the outcome, whilst some working practices might change, our human desire to congregate and create underpins our belief that London's magnetic appeal as a global business capital will persist for the long term."

That belief, Courtauld said, was reinforced by the firm's current leasing discussions, illustrating occupiers' ongoing appetite to secure high quality, sustainable space.

"Guided by our strong purpose and unifying values, we have positioned GPE for any market eventuality; our low leverage is both defensive and gives us significant capacity for growth; our portfolio is virtually fully let, off low rents and has material upside potential from our extensive development pipeline; and our talented team with its deep market knowledge, combined with our financial strength, gives us the ability to choose our path to deliver on all our ambitions."

In a separate announcement on Wednesday morning, Great Portland Estates said Exane BNP Paribas has pre-let 39,970 square feet of office space in its development at 1 Newman Street and 70/88 Oxford Street, W1, as headquarters for its Exane BNP Paribas Cash Equities business.

It said Exane BNP Paribas would occupy the fifth, sixth and seventh floors, as well as ancillary basement space on three separate 15-year leases.

Completion of the leases was conditional only upon practical completion, and obtaining a change of use of around 400 square feet of basement from A1 retail space to B1 ancillary offices.

The company said the 119,100 square foot development comprises 81,200 square feet of offices and 37,900 square feet of retail space, and was anticipated to complete in the third quarter of 2021.

At 0905 BST, shares in Great Portland Estates were down 2.18% at 627.4p.

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