Great Portland Estates (GPOR) has published a trading update and summary on the impact of COVID-19 on the business to date. Summaries of the key takeaways are provided below.
COVID-19 update
- GPOR is supporting our occupiers, particularly in the retail, hospitality and leisure sectors, through agreeing on a case by case basis the payment of monthly rents or deferring rental payments
- GPOR is operating our properties in line with UK Government guidelines. All of its occupied buildings remain operational, albeit the majority of our occupiers are working from home, and activity on two of our three development sites has temporarily been suspended
- GPOR is maintaining its regular payments to suppliers to ensure their cash flow is maintained given the challenging economic backdrop
- GPOR has extended its partnership with Centrepoint to 2022 and has increased its annual donation to £75,000.
Update on rent collection and leasing performance
- GPOR collected 62.9% of quarterly rent due within seven working days of the March quarter day (Dec 2019: 99.3%, March 2019: 99.2%) with a further 4.5% expected imminently; more than 60% of the outstanding rent is from occupiers in the retail, hospitality and leisure sectors.
- GPOR secured four new lettings (10,900 sq ft) in the quarter to 31 March 2020, generating annual rent of £0.7 million (our share: £0.7 million) and with market lettings 19.1% ahead of March 2019 ERV
- 13 further lettings are currently under offer totalling £9.0 million p.a. of rent (our share: £9.0 million), including three office pre-lettings. A further two new pre-let offers have been received in the past seven days.
Strong financial position – LTV of 14.1% and total liquidity of £411 million
- GPOR says that it remains in a robust financial position, with LTV of 14.1%, net gearing of 14.7% and interest cover not measureable, which it says provides substantial headroom above its Group debt covenants (values could reportedly fall by 72% before breach). GPOR’s weighted average debt maturity is 5.7 years and its next Group level debt maturity is in 2024
- GPOR describes its liquidity position as strong (total liquidity of £411 million at 31 March 2020). The company has increased the drawn position on its £450 million unsecured revolving credit facility, from £66 million to £150 million on 18 March. Its cash on deposit of £111 million exceeds its committed capex to come (£76 million at 31 December 2019).
- In line with its normal practice, a decision about payment of a final dividend will be made once the year end results are finalised in May
- GPOR currently expects to deliver its annual results to 31 March 2020 in line with the existing timetable on Wednesday 20 May 2020, with the external property valuation expected to include a material valuation uncertainty statement.
[QD Comment: Like many other commercial property companies, Great Portland’s income is taking a hit in the face of COVID-19, and there will likely be more of this come to come. However, the impact for now seems to be limited to sectors that are obviously exposed, and the portfolio has significant exposure to other areas that should prove resilient. GPOR also has considerable cash resources at hand, which should allow it to weather the current storm for sometime. We’ll get a better indication of how management and the board feel when we see what they decide to do with the final dividend].