Great Portland Estates’ results for the year ended 31 March 2015 show a 24.6% uplift in its EPRA NAV as the property portfolio delivered underlying capital growth of 18.0% with a total property return of 21.5%. This in turn was driven by falling yields. Including rent from pre-lets and leases currently in rent free periods, the adjusted initial yield of the investment portfolio at 31 March 2015 was 3.4%, 50 basis points lower than at the start of the financial year. The portfolio underperformed the IPD however. The Group’s 21.5% total return compares to the central London IPD benchmark of 24.3% and a capital return of 18.8% versus 20.3% for IPD. They believe this relative under-performance resulted from a lower relative income return due to the scale of development activities as a proportion of their portfolio and the greater rate of capital growth this year for secondary properties compared to their more prime portfolio.
EPRA earnings per share were up 15.5% to 12.7p, that’s on profit before tax up 17.4%. The dividend has been increased by 2.3% to 9p. The total shareholder return for the year was 30.3%, well ahead of the FTSE 350 Real Estate return of 25.1%.
£344m of property was sold including 79% of the apartments at Rathbone Square and the sale of their pre-let development at New Fetter Lane. Development profits made a strong contribution. The valuation of development properties rose by 28.2%, in particular the valuation of 73/89 Oxford Street rose by 53%.
375,300 sq ft of new planning consents were secured across their six near-term projects (548,600 sq ft), including an enhanced consent for the 223,600 sq ft Hanover Square, W1 scheme. In total, their 2.5m sq ft development programme covers over half of the existing portfolio. They reckon they will be delivering around 25% of the West End’s total forecast speculative supply over the next four years.
The vacancy rate fell to 2.0% (March 2014: 3.7%).
GPOR : High development weighting holds back income at Great Portland