TIDMGPE
RNS Number : 6196T
Great Portland Estates PLC
16 November 2023
16 November 2023
Positioned strongly for return of the cycle
The Directors of Great Portland Estates plc announce the results
for the Group for the six months ended 30 September 2023 (1) , with
highlights including:
-- Strong leasing as customers demand best, sustainable spaces; record 13.4% ahead of ERV(2)
-- Upgrading rental value growth guidance to +2.5% to +5.0%, +3.0% to +8.0% for Prime office
-- Central London busy and workers have returned; 75% portfolio
in West End, 93% near Elizabeth Line
-- GBP123m of acquisitions; two Flex & one HQ opportunity, with more expected in 2024
-- Flex space increased to 434,000 sq ft; GBP5.4 million of
Fully Managed lettings 13.6% ahead of Flex ERV
-- Delivering more than 1 million sq ft of Grade A, sustainable
spaces into supply drought; commitment to French Railways House,
SW1 development
-- Yield driven valuation decline of 10.3% (ERVs up 1.8%); IFRS
& EPRA NTA per share of 650 pence
-- Stable EPRA EPS and ordinary dividend 4.7 pence, in-line with guidance
-- More than GBP500 million liquidity with new term loan signed;
LTV 28.9%; GBP0.3 billion sales under discussion
-- Cycle returning; GPE strong track record & positioning to
capitalise on emerging market opportunities
Toby Courtauld, Chief Executive, said: "Whilst macro-economic
concerns and rising interest rates impacted our property valuation,
the fundamentals in our leasing markets remain healthy. With
customers increasingly demanding the very best, sustainable spaces,
and discounting the rest, they are competing in a market
increasingly starved of new, Grade A supply, putting further upward
pressure on prime rents and we have upgraded our rental growth
forecasts for the second half.
With further selective yield expansion a possibility, our
investment markets remain relatively quiet, although we are
exploiting these conditions to our advantage. We bought three
buildings in the period, all off market and adding to both our Flex
and development programmes. Looking forward, we expect further
acquisition opportunities to emerge, and with our trademark
disciplined capital management, we will continue to recycle
capital, selling properties to crystallise value on completion of
our business plans.
In this context, GPE's positioning is strong; 75% of our
portfolio is in the heart of the West End; our substantial capex
programme will deliver the prime spaces the market demands; our
Flex office offer is growing, is well suited to evolving customer
needs, as evidenced by our market-leading NPS score, and is
delivering our highest rental growth; and our strong balance sheet
and plentiful liquidity combined with our long track record of
creating opportunities in cyclical markets means that we are well
positioned to capitalise. With GPE in great shape, and London set
to outperform, we look to our future with confidence."
Strong leasing, record 13.4% ahead of ERV(2) ; Flex currently
434,000 sq ft, targeting one million sq ft
-- 37 new leases and renewals generating annual rent of GBP11.2
million p.a. across 113,500 sq ft, market lettings 13.4% above
March 2023 ERV including:
o three Fitted and nine Fully Managed leases, achieving on
average GBP220 per sq ft on the Fully Managed space, 13.6% ahead of
March 2023 ERV; and
o 18 new retail leases securing GBP4.1 million of rent, with
market lettings 18.1% ahead of March 2023 ERV
-- Our committed Flex offer now 434,000 sq ft, targeting growth to one million sq ft
-- Rent roll up 4.2%; vacancy 3.5% (Mar 2023: 2.5%); reversion up to 13.5%
-- Further GBP7.3 million of lettings under offer, 5.7% above March 2023 ERV
-- Senior operational team changes to further enhance
market-leading customer experience and satisfaction
ERVs up 1.8% (3) , with valuation down 10.3% (3) driven by yield
expansion; EPRA(4) NTA per share of 650 pence
-- Portfolio valuation of GBP2.3 billion, down 10.3%(3) ; -9.6%
offices (inc. Flex -7.1%) and -12.4% retail
-- Rental values up by 1.8%(3) (+1.9% offices (inc. Flex +1.7%)
and +1.2% retail); yield expansion of 43 bp
-- Portfolio rental value growth guidance upgraded to 2.5% to
5.0% for financial year, prime offices 3% to 8%
-- IFRS NAV and EPRA(4) NTA per share of 650 pence, down 14.1% since March 2023
-- EPRA(4) earnings of GBP11.8 million, up 3.5% on 2022. EPRA(4) EPS of 4.7 pence, up 4.4%
-- IFRS loss after tax of GBP253.4 million ; loss per share of
100.1 pence; interim dividend maintained at 4.7 pence
Two Flex acquisitions and acquisition of HQ development
opportunity in Soho Square, W1
-- Three acquisitions (GBP123 million) including:
o Two Flex (GBP53 million) inc. 141 Wardour Street, W1 in core
Soho for GBP39 million (GBP1,156 per sq ft) and Bramah House, 65/71
Bermondsey Street, SE1 for GBP14 million (GBP892 per sq ft)
o HQ development opportunity on Soho Square, W1 for GBP70
million (GBP772 per sq ft on consented NIA)
-- More opportunities to come, one building under offer further GBP0.7 billion under review
Committed capex of GBP392 million, including French Railways
House, SW1; Soho Square added to pipeline
-- Good progress at our pre-let net-zero carbon 2 Aldermanbury
Square, EC2; existing building deconstructed; anticipated
completion Q1 2026
-- Commitment to major office-led redevelopment at French
Railways House, SW1, to provide 67,600 sq ft (up
from 54,700 sq ft) of new Grade A space; reusing steel from City Place House, EC2
-- Planning permission obtained for the redevelopment of Minerva
House, SE1 and work underway to prepare the site for a potential
start early next year
-- Reviewing the Planning Inspector's report and Secretary of
State's planning refusal at New City Court, SE1
-- Significant refurbishment programme to enhance our Fully
Managed offer inc. 6/10 St Andrew Street, EC4
-- With construction cost inflation moderating, programme well
timed to deliver into supply constrained market
Significant liquidity; new GBP250 million Term Loan; GBP508
million (5) of cash & undrawn facilities; EPRA LTV 28.9%
-- EPRA LTV of 28.9%, weighted average interest rate of 3.8%,
cash and undrawn facilities of GBP508 million(5) ; weighted average
debt maturity of 5.1 years
-- New GBP250 million unsecured Term Loan drawn in October
(1) All values include share of joint ventures unless otherwise
stated (2) Leasing in period to 30 September 2023 (3) On a
like-for-like basis (4) In accordance with EPRA guidance. We
prepare our financial statements using IFRS, however we also use a
number of adjusted measures in assessing and managing the
performance of the business. These include like-for-like figures to
aid in the comparability of the underlying business and
proportionately consolidated measures, which represent the Group's
gross share of joint ventures rather than the net equity accounted
presentation included in the IFRS financial statements. These
metrics have been disclosed as management review and monitor
performance of the business on this basis. We have also included a
number of measures defined by EPRA, which are designed to enhance
transparency and comparability across the European Real Estate
sector, see note 7 to the financial statements. Our primary NAV
metric is EPRA NTA which we consider to be the most relevant
investor measure for the Group. (5) Pro forma for new Term Loan
Contacts:
Great Portland Estates plc +44 (0) 20 7647 3000
Toby Courtauld, Chief Executive
Nick Sanderson, Chief Financial & Operating Officer
Stephen Burrows, Director of Investor Relations
and Joint Director of Finance
FGS Global +44 (0) 20 7251 3801
James Murgatroyd
Gordon Simpson
The results presentation will be broadcast live at 8.30am today
with the link available at:
www.gpe.co.uk/investors/latest-results
A conference call facility will also be available to listen to
the presentation at 10.00am today on the following numbers:
UK: 0808 109 0701 (freephone) International: +44 (0) 33 0551
0202
Conference PIN: 0863454#
A video interview with Toby Courtauld and Nick Sanderson is
available, along with accompanying presentation materials and
appendices, at:
www.gpe.co.uk/investors/latest-results
For further information see www.gpe.co.uk or follow us on
Twitter at @GPE_London
LEI Number: 213800JMEDD2Q4N1MC42
Disclaimer
This announcement contains certain forward-looking statements.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Actual outcomes and results may differ materially from any outcomes
or results expressed or implied by such forward-looking
statements.
Any forward-looking statements made by or on behalf of Great
Portland Estates plc (GPE) speak only as of the date they are made
and no representation or warranty is given in relation to them,
including as to their completeness or accuracy or the basis on
which they were prepared. GPE does not undertake to update
forward-looking statements to reflect any changes in GPE's
expectations with regard thereto or any changes in events,
conditions or circumstances on which any such statement is
based.
Information contained in this announcement relating to the
Company or its share price, or the yield on its shares, should not
be relied upon as an indicator of future performance.
To view the accompanying graphics please paste the below into
your web browser
http://www.rns-pdf.londonstockexchange.com/rns/6196T_1-2023-11-15.pdf
Half Year Results
Our business
Our business is accompanied by graphics (see Appendix 1 and
3)
Our leasing activities
During the six months to 30 September 2023, demand in our
occupational markets remained robust despite the challenging macro
environment and we continued to secure new lettings materially
ahead of the valuer's estimates. Key highlights include:
-- 37 new leases were signed during the first half (2022: 63
leases), generating annual rent of GBP11.2 million (our share:
GBP10.5 million; 2022: GBP15.1 million), with market lettings 13.4%
above March 2023 ERVs (offices; 11.1%; retail 18.1%),
including:
o three Fitted and nine Fully Managed leases, achieving on
average GBP220 per sq ft on the Fully Managed space, 13.6% ahead of
March 2023 ERV; and
o 18 new retail leases securing GBP4.1 million of rent with
market lettings 18.1% ahead of March 2023 ERV.
-- three rent reviews securing GBP5.7 million p.a. (our share:
GBP3.2 million; 2022: GBP5.2 million) of rent were settled during
the half year, 3.0% ahead of previous passing rent and 20.4% ahead
of ERV;
-- total space covered by new lettings, reviews and renewals
during the first half was 182,900 sq ft (2022: 358,000 sq ft);
-- 92% (by area) of the 90 leases with breaks or expiries in the
twelve months to 30 September 2023 were retained, re-let, or are
under offer, leaving only 35,300 sq ft still to transact; and
-- following the successful leasing period, the Group's rent
roll has increased by 4.2% to GBP110.9 million whilst the Group's
vacancy has increased to 3.5% (31 March 2023: 2.5%).
The table below summarises our leasing transactions in the
period:
Leasing Transactions Three months Six months Six months
ended 30 September ended 30 September ended 30 September
2023 2023 2022
--------------------------- -------------------- -------------------- --------------------
New leases and renewals
completed
Number 15 37 63
GPE share of rent p.a. GBP4.3 million GBP10.5 million GBP15.1 million
Area (sq ft) 48,000 113,500 205,300
Rent per sq ft (including GBP121 GBP131 GBP104
retail)
Rent reviews settled
Number 2 3 9
GPE share of rent p.a. GBP2.8 million GBP3.2 million GBP5.2 million
Area (sq ft) 60,900 69,400 152,700
Rent per sq ft (including GBP87 GBP82 GBP66
retail)
---------------------------- -------------------- -------------------- --------------------
Note: Includes joint ventures at share
Notable transactions during the six months included:
-- At the Hickman, E1, the building is now fully let following
letting the remaining office space to a digital transformation
company, which will occupy 6,757 sq ft on the second floor on a
Fitted five-year lease with an option to break at year three;
-- At our Piccadilly Buildings, San Carlo, the award-winning
restaurant group, signed a lease for its new flagship Cicchetti,
occupying 7,000 sq ft over ground and basement floors, across two
units;
-- At 16 Dufour's Place, W1, we renewed the 3rd floor (3,100 sq
ft) lease with a marketing firm on a Fully Managed basis. They have
taken an additional two year lease, paying a rent of GBP278 per sq
ft, an increase of 53% on their previous terms. Since inception,
our retention rate across our Fully Managed spaces has been 85%;
and
-- On Regent Street we completed two flagship retail lettings to
The North Face and JOSEPH. The North Face has traded successfully
at GPE's Walmar House site since 2015 and signed a 10 year lease on
an additional 10,000 sq ft ahead of March 23 ERV. Further south on
Regent St, British contemporary designer fashion brand, JOSEPH, has
also signed a lease for a new store located at Kingsland House, 124
Regent Street, W1, completing the repositioning of the retail
offering at the building.
At 30 September 2023, the Group's vacancy rate (including share
of joint ventures) was 3.5%, up from 2.5% at 31 March 2023. The
average passing rent across our office portfolio was GBP71.80 per
sq ft, down from GBP72.20 per sq ft at 31 March 2023.
Since 30 September 2023, our leasing activity included:
-- At the Hickman, E1, we completed the letting to New Look on
the third and fourth floors (23,242 sq ft) on a Fitted basis on
ten-year leases with an option to break at year seven. New Look is
an existing GPE customer and will vacate 35,860 sq ft at Wells
& More, W1, which will provide GPE with the opportunity to
refurbish and re-lease the space in this prime Fitzrovia location;
and
-- Currently we have 88,800 sq ft of space under offer which
would deliver approximately GBP7.3 million p.a. in rent (our share:
GBP4.7 million), with market lettings 5.7% above March 2023
ERVs.
On track to create 1,000,000 sq ft of Fitted and Fully Managed
office spaces
Evolving patterns of work are changing what many customers want
from their office space. Across our smaller office floors, rather
than providing Ready to Fit space for our customers to make their
own, we are making occupation of our spaces easier by providing
these floors on a Fitted basis, or increasingly overlaying service
provision on a Fully Managed basis. Today, our committed Flex
offerings are an integral part of our office offer and total
434,000 sq ft, comprising 128,000 sq ft of Fitted space, 189,000 sq
ft of Fully Managed space (of which 75,000 is let with the
remainder under refurbishment) and Flex partnerships of 117,000 sq
ft. During the period, our activities included rolling out our
Fully Managed offering to a number of floors across the portfolio,
including Kent House,W1, Woolyard, SE1 and Alfred Place, WC1.
Looking forward, our portfolio is well suited to further Flex
growth. Our average building size is small at around 65,000 sq ft
and more than 80% of our floors are sub-10,000 sq ft. Accordingly,
we are targeting to grow Flex organically to more than 640,000 sq
ft, with the majority of the growth to be offered on a Fully
Managed basis. Most of this growth will be delivered as we complete
the refurbishment of 6/10 St Andrew Street, EC4 in 2024, and 7/15
Gresse Street, WC1, 141 Wardour Street, W1, and Bramah House, SE1,
which are anticipated to complete in 2025 and 2026. Furthermore, we
are excited for opportunities to further supplement this growth
through acquiring buildings that lend themselves to our flexible
space offer. In total, we are now targeting growth, both
organically and through acquisition, to one million sq ft.
Team reorganisation to meet evolving market needs
During the period, we made a number of operational team changes
to enhance the delivery of our market-leading, Customer First
approach, as we continue to innovate, further digitise our
activities, grow our Flex workspace offer and deliver both great
spaces and experiences for our customers. These included:
-- Rebecca Bradley's role as Director of Customer Experience has
been expanded to include leadership of our new Customer Strategy
& Insights team. Her responsibilities include the strategic and
operational delivery of customer experience across all our spaces,
ensuring both strong customer relationship management and
retention;
-- Simon Rowley has assumed the newly created role of Director
of Flex Workspaces, as we focus on growing our Flex offer to more
than one million sq ft;
-- Jordan McLean has joined GPE in the newly created role of
Director of IT, Innovation & Digital Transformation. With over
25 years of experience, Jordan has a proven track record in driving
business transformation through digital solutions, including
spending 10 years in the retail sector with Morrisons and Asda;
and
-- Helen Hare's role as Director of Projects has been expanded
and now includes responsibility for our Building Surveying and
Technical Services teams.
Steven Mew (Customer Experience & Flex Director), David
O'Sullivan (Director of Workplace Services) and James Pellatt
(Director of Innovation) will be leaving GPE and we would like to
thank them for their loyal service and contribution to the
organisation and senior leadership team.
Our development activities and capex programme
We have continued to make progress across our development
pipeline and we have advanced our plans to further invest in the
expansion of our Fully Managed office spaces. Since March 2023, we
have committed to the 67,600 sq ft development of French Railways
House, SW1 and continued to make good progress at 2 Aldermanbury
Square, EC2 which is scheduled to complete in Q1 2026 with the
offices 100% pre-let. Whilst we were unsuccessful in our planning
applications at New City Court, SE1, during the period we have
added to the pipeline with the acquisition of the Soho Square
Estate, W1. In total we have committed capital expenditure of
GBP392 million across four development and Flex schemes, with a
further GBP358 million that we could potentially commence over the
next five years.
Two committed development schemes, including new commitment at
French Railways House, SW1
Following the agreement of a new headlease at French Railways
House, SW1 in July 2023, we are now committed to the redevelopment
of the site. Our major office-led redevelopment will provide 67,600
sq ft (up from 54,700 sq ft) of new Grade A space. The scheme is
expected to complete in mid-2026 and will embrace the principles of
the circular economy. We will retain the existing foundations and
basement, typically the largest embodied carbon element of a
building, and construct a lightweight building above to allow the
retention of the substructure. We will also reuse the structural
steel from the demolition of 2 Aldermanbury Square, EC2 in its
construction. This will almost eliminate the embodied carbon in the
steelwork and allow for the delivery of 9,500 sq ft best in class,
column-free floorplates.
Good progress ahead of potential start at Minerva House, SE1
During the period, Southwark Council resolved to grant planning
permission for the redevelopment of Minerva House, SE1 and good
progress has been made to prepare the site for a potential start
early next year. Our plans will take the overall commercial space
to 143,100 sq ft, an increase of approximately 56% on the existing
area.
We plan to reposition the building to take full advantage of its
Thames river frontage and, by adding additional storeys, create
outdoor terraces and amenity space with commanding views over
central London. The refurbishment will also improve the public
realm around the building, creating new and improved connections
through the site as well as attractive new gardens that will
contribute to local greening and biodiversity and provide space for
people to enjoy in the setting of Southwark Cathedral. Our
proposals will retain and reuse the majority of the existing
building's structure, including two primary façades, greatly
reducing the carbon impact of the development. Furthermore, we
expect to deliver BREEAM Outstanding, NABERS 5*, WELL Core
Platinum, WiredScore Platinum, SmartScore Platinum and CyclingScore
Platinum accreditations.
Planning applications at New City Court, SE1 refused
We submitted two planning applications to Southwark Council to
redevelop New City Court, SE1 on the Southbank, the first in
December 2018 for a 372,500 sq ft scheme, and a second in April
2021 for a 389,100 sq ft scheme.
In January 2022, having explored all avenues to have both
schemes approved without success, we regretfully appealed for
non-determination. This triggered a planning inquiry that closed in
August 2022. In September 2023, we received confirmation that the
Planning Inspector's report recommended the planning applications
were refused and the Secretary of State agreed with its
conclusions. We are carefully reviewing the Planning Inspector's
report and Secretary of State's decision and will provide a further
update in due course. New City Court currently has a rent roll of
GBP2.9 million.
Adding to the pipeline with the acquisition of the Soho Square
Estate, W1
Building on our successful track record at the eastern end of
Oxford Street, we have added to our near-term programme with the
acquisition of 16/19 Soho Square, 29/43 Oxford Street and 7
Falconberg Mews, W1 for GBP70 million (GBP772 per sq ft on
consented NIA). The 56,150 sq ft mixed-use buildings are currently
multi-let at c.GBP1.5 million p.a. with vacant possession expected
by March 2024. The 0.5 acre site benefits from planning consent to
demolish the existing buildings and deliver around 91,000 sq ft of
new Grade A office and prime retail space.
The buildings are located in the heart of the West End at the
eastern end of Oxford Street and back onto Soho Square, just 100
metres from the new Tottenham Court Road Elizabeth Line station.
GPE intends to re-work the designs to improve the quality of office
and retail space, further increasing its attractiveness to
prospective customers in a materially undersupplied market. The
redevelopment will provide a best-in-class HQ office building on
Soho Square with flagship retail fronting Oxford Street, arranged
over basement, lower ground, ground and eight upper floors, with
multiple private terraces and a communal roof terrace.
Significant refurbishment programme underway to enhance our
Fully Managed office offer
As we grow our flexible office offer, we are currently
refurbishing three buildings to provide new dedicated Fully Managed
spaces as well as converting a significant number of floors across
our portfolio. The buildings being refurbished include 6/10 St
Andrew Street, EC4 and Alfred Place, WC1 which together will
deliver around 86,000 sq ft of well designed, tech-enabled and
sustainable space which will also benefit from high levels of
service delivery and amenity provision. Beyond these buildings, we
are anticipating commencing Egyptian House, SW1, 141 Wardour
Street, W1 and Gresse Street, W1 in 2024.
Together with other flex and refurbishment capex across the
portfolio, this programme will total around GBP170 million and,
once delivered, will increase our flexible office offerings to
around 642,000 sq ft.
Our investment activities
The investment market has slowed significantly over the period
as inflation has remained persistently ahead of projections,
resulting in the expectation that interest rates will need to
remain higher for longer. This has put upward pressure on property
yields reducing values, particularly in the City. Whilst most
values have fallen, the declines have not been uniform. Better
quality assets have been more resilient, further widening the gap
between the best and the rest. In this context, we are well placed.
Our business model requires raw material, typically short let, low
quality buildings in prime locations, to reposition towards prime.
Markets such as these provide opportunities to acquire at
cyclically attractive pricing and during the period we made three
acquisitions stocking our Fully Managed and HQ development
pipelines.
Three acquisitions for GBP123 million
In May we acquired the freehold interest at 141 Wardour Street
W1 for GBP39 million (GBP1,156 per sq ft). The 33,717 sq ft
building is currently vacant, has been stripped out and benefits
from planning consent for a comprehensive refurbishment. The
building is located in the heart of Soho, within five minutes
walking distance of the new Tottenham Court Road Elizabeth line
station. Following our substantial refurbishment, the building will
provide outstanding Fully Managed office space designed to meet
evolving customer needs and GPE's net zero carbon commitments.
Also in May, we acquired Bramah House, 65/71 Bermondsey Street,
SE1 for GBP14 million, reflecting a 5.9% net initial yield and a
capital value of GBP892 per sq ft. The 15,696 sq ft freehold
building is currently multi-let with a WAULT of 3.2 years to
expiries. The property is located opposite our existing ownership
at Woolyard. Together, both buildings will create a GPE Fully
Managed campus on Bermondsey Street, adjacent to London Bridge
Station.
As detailed earlier, in August, we also acquired King Sloane
Properties Limited, which owns the freehold interests at 16/19 Soho
Square, 29/43 Oxford Street and 7 Falconberg Mews, W1.
Further opportunities to come
Looking ahead, we anticipate that market conditions will
continue to provide opportunities to buy. We are monitoring the
market closely and have around GBP0.7 billion of potential
acquisitions currently under review. Our focus remains on
development and repositioning opportunities, buildings that would
suit our flex offer and assets that are challenged from a
sustainability perspective. We also have around GBP300 million of
sales under discussion where we have completed our business plans,
which, once sold, will provide additional firepower to take
advantage of current market conditions.
Valuation
Valuation is accompanied by graphics (see Appendix 2)
The valuation of the Group's properties was GBP 2,302.7 million
as at 30 September 2023 (31 March 2023: GBP2,380.0 million),
reflecting a valuation decrease of 10.3% on a like-for-like basis
since 31 March 2023. At 30 September 2023, the wholly-owned
portfolio was valued at GBP 1,819.1 million (31 March 2023:
GBP1,855.5 million) and the Group had three active joint ventures
which owned properties valued at GBP483.6 million (our share) (31
March 2023: GBP524.5 million) by CBRE. At 30 September 2023, 75% of
our portfolio was located in the West End.
Yield driven valuation decline
The key drivers behind the Group's valuation movement for the
six-month period were:
-- higher investment yields - given the backdrop of higher
interest rates, equivalent yields increased by 43 basis points over
the period (office +35 basis points; retail +52 basis points)
reducing valuation. City yields increased by 63 basis points. At 30
September 2023, the portfolio true equivalent yield was 5.2 % (West
End: 5.1%; Rest of central London: 5.7%) and reversionary yield was
6.2%;
-- rental value growth - the continued demand for our best in
class spaces has helped increase our rental values. Since the start
of the financial year, rental values increased by 1.8% on a
like-for-like basis, with our flex offices increasing by 1.7% and
our overall office portfolio up by 1.9%, whilst our retail
portfolio increased by 1.2%;
-- developments - the valuation of our committed development
properties decreased by 33.0% on a like-for-like basis to GBP129.5
million during the period, given development returns are more
sensitive to movements in investment yields; and
-- portfolio management - a strong six months, 37 new leases,
rent reviews and renewals were completed, securing GBP 13.7 million
(our share) of annual income, supporting the valuation. At 30
September 2023, the portfolio was 13.5% reversionary.
Including rent from pre-lets and leases currently in rent free
periods, the topped-up initial yield of the investment portfolio at
30 September 2023 was 4.2%, 40 basis points higher than the start
of the financial year.
Whilst the overall valuation decreased by 10.3% during the six
months on a like-for-like basis, (or cumulatively by 16.2% from the
31 March 2022 peak), elements of the portfolio continued to show
greater variation:
-- our Flex office space reduced in value by 7.1% outperforming
the Group's wider office space which fell by 9.6% in value, after a
49 basis point yield shift in comparison to a 35 basis point
movement for the whole office portfolio;
-- retail space underperformed offices falling in value by 12.4%
resulting from a greater yield expansion of 52 basis points;
-- including developments, our West End portfolio (-7.1%)
performed better than our rest of London portfolio (-18.5%), given
a more aggressive yield expansion in the City (+63 bp) versus +32
bp for the West End;
-- newer, higher quality buildings outperformed older assets,
with those assets with a capital value per sq ft in excess of
GBP1,000 per sq ft, reducing in value by 5.0% compared to those
with a capital value per sq ft of less than GBP1,000 per sq ft
which reduced by 18.2%; and
-- buildings with better sustainability credentials
outperformed. Buildings with an EPC rating of A or B reduced in
value by 6.2%, out-performing properties with an EPC of C or D
which fell by 16.0% in the six months.
Near-term market outlook
Our markets are cyclical, as a result, we actively monitor
numerous lead indicators to help identify key trends in our
marketplace. Over the last six months, given the increased economic
uncertainty, our property capital value indicators have
deteriorated from those we reported in May. Investment market
activity has remained subdued, with current levels of interest
rates and uncertainty putting some upward pressure on yields.
However, we anticipate that once there is confidence that rates
have peaked, and inflation is under control, investment activity
will return given the weight of money waiting on the sidelines to
invest.
In the occupational market, given the scarcity of high quality
spaces in central London we expect our leasing and rental
performance of the portfolio in the first half of the year to
continue. Accordingly, we have upgraded our rental value growth
range for the financial year to 31 March 2024 to between 2.5% and
5.0%.
Our financial results
Our financial results are accompanied by graphics (see Appendix
4)
We prepare our financial statements using IFRS. We also use a
number of Alternative Performance Measures (APMs) to help explain
the performance of the business. These include quoting a number of
measures on a proportionately consolidated basis to include joint
ventures, as it describes how we manage the portfolio,
like-for-like measures and using measures prescribed by the
European Public Real Estate Association (EPRA). The measures
defined by EPRA are designed to enhance transparency and
comparability across the European real estate sector.
Reconciliations of APMs are included in note 7 to the accounts.
We calculate net assets and earnings per share in accordance
with EPRA's Best Practice Recommendations. The recommendations are
designed to make the financial statements of public real estate
companies clearer and more comparable across Europe, enhancing the
transparency and coherence of the sector. EPRA's Best Practice
Recommendations include three NAV metrics: EPRA Net Tangible Assets
(NTA), Net Reinvestment Value (NRV) and Net Disposal Value (NDV).
We consider EPRA NTA to be the most relevant investor metric for
the Group and the primary measure of net asset value and relevant
reconciliations between IFRS numbers and EPRA metrics are included
in note 7 to the accounts.
Valuation fall from yield expansion drives 14.1% decrease in
EPRA NTA per share
IFRS NAV per share and EPRA NTA per share at 30 September 2023
were 650 pence per share, a decrease of 14.1% over the last six
months, largely due to the 10.3% like-for-like decrease in the
value of the property portfolio. The main drivers of the 107 pence
per share decrease in NTA from 31 March 2023 were:
-- the decrease of 104 pence per share arising from the
revaluation of the property portfolio;
-- EPRA earnings for the period of 5 pence per share increased NTA; and
-- the final dividend of 8 pence per share reduced NTA.
The EPRA NTA decrease of 14.1%, combined with the payment of
last year's final dividend of 7.9 pence per share, delivered a
total accounting return for the six months to 30 September 2023 of
minus 13.1% (2022: -4.0%).
At 30 September 2023, the Group's net assets were GBP1,647.1
million, down from GBP1,918.6 million at 31 March 2023, with the
decrease largely attributable to the fall in property valuation.
EPRA NDV per share reduced marginally to 680 pence at 30 September
2023 compared to 790 pence at 31 March 2023 (down 13.9%), supported
by the impact of rising interest rates on the fair values of our
fixed rate low coupon debt.
Earnings stable, in line with guidance and our portfolio
activities
Revenue from our wholly-owned properties rose from GBP43.5
million to GBP47.6 million. Whilst rental income (including the
spreading of lease incentives) was largely stable, service charge
income rose by GBP3.8 million as we recovered higher service charge
spend across the portfolio and Fully Managed services income rose
from GBP1.4 million to GBP2.7 million as we continued to roll out
and lease up our flexible office offer.
Adjusting for acquisitions, disposals and transfers to and from
the development programme, like-for-like rental income (including
from joint venture properties) increased 5.8% on the prior period
after estimated credit loss provisions.
Cost of sales increased from GBP14.2 million to GBP16.3 million
for the period to 30 September 2023, with the increase primarily
due to higher service charge expenses as a result of increased
redecoration and refurbishment works and higher utility costs. This
increase was in part offset by lower other property costs due to
reduced levels of vacancy and the recovery of business rates paid
in prior years.
Administration costs were GBP20.9 million, an increase of GBP3.3
million, primarily driven by inflationary pressures on employee
costs, including provisioning for share-based payments, along with
investment associated with further digitising our business,
including the delivery of a new CRM.
EPRA earnings from joint ventures (excluding fair value
movements) were GBP5.9 million, an increase of GBP3.0 million from
the prior year, largely driven by Hanover Square, W1 now being
fully let in addition to receiving an insolvency settlement at
Mount Royal, W1 from the Arcadia administration, which had
previously been written off. In total, our joint ventures delivered
a IFRS loss before tax of GBP39.6 million (2022: GBP14.8
million).
Gross interest on our debt facilities was GBP10.4 million, up
GBP2.1 million on the prior period. This increase was primarily due
to higher drawn balances, and higher underlying rates, on our
GBP450 million revolving credit facility. We capitalised interest
of GBP4.3 million (2022: GBP4.6 million) . As a result, the Group
had net finance costs (including interest receivable) of GBP4.4
million (2022: GBP1.9 million).
EPRA earnings were GBP 11.8 million, 3.5% higher than for the
same period last year. Revaluation losses together with EPRA
earnings resulted in an IFRS loss after tax of GBP253.4 million
(2022: GBP86.6 million). The basic and diluted loss per share for
the period was 100.1 pence, compared to loss of 34.3 pence per
share for 2022. Diluted EPRA earnings per share was 4.7 pence
(2022: 4.5 pence). Looking forward, we anticipate that the
combination of higher interest rates and increased vacancy, as we
refurbish our spaces for our Flex offerings and commit to our
near-term developments, will reduce the Group's earnings over the
forthcoming 18 months.
Results of joint ventures
The Group's net investment in joint ventures was GBP 500.4
million, a decrease from GBP538.8 million at 31 March 2023, largely
due to an 8.2% like-for-like decrease in value of the property
portfolio. Our share of joint venture net rental income was GBP10.0
million, up from GBP8.4 million last year primarily as a result of
the leasing activity at Hanover Square, W1 completing. The
underlying joint venture profits are stated after charging GBP0.6
million of GPE management fees (2022: GBP1.5 million) with the
decrease attributable to a reduction in leasing fees following the
completion of leasing at Hanover Square, W1.
Overall, our three active joint ventures represent an important
proportion of the Group's business. At 30 September 2023, joint
ventures represented 21.0% of the portfolio valuation, 30.4% of net
assets and 22.5% of rent roll (31 March 2023: 22.0%, 28.1% and
23.9% respectively).
Strong liquidity; more than GBP500 million of cash and undrawn
facilities; EPRA LTV 28.9%
The Group's consolidated net debt increased to GBP663.3 million
at 30 September 2023, compared to GBP457.7 million at 31 March
2023. The increase was largely due to three acquisitions in the
period totalling some GBP123.0 million (excluding costs) as well as
the on-going development capital expenditure across the Group of
GBP51.4 million in the six months. Group gearing increased to 40.5%
at 30 September 2023 (31 March 2023: 24.0%). Including cash
balances in the joint ventures, total net debt was GBP638.0 million
(31 March 2023: GBP440.0 million) equivalent to an EPRA loan to
value of 28.9% (31 March 2023: 19.8%).
The Group is operating with substantial headroom over its debt
covenants. At 30 September 2023, property values would have to fall
by around 38% before covenant breach. Through the cycle, the Group
aims to maintain a target LTV range between 10% and 35%, consistent
with our low leverage levels over the last 10 years. Our interest
cover ratio under our Group covenants was high at 6.2 times
(covenant: 1.35 times).
The Group's weighted average cost of debt, including fees, for
the period was 3.7 % (year to 31 March 2023: 3.0%). The weighted
average interest rate (excluding fees) at the period end was 3.8%,
up from 2.7% at 31 March 2023, as we increased amounts drawn on the
RCF over the period, which had an all-in rate of 6.1% at 30
September 2023.
In September 2023, we agreed a new GBP250 million unsecured Term
Loan at a headline margin of 175 basis points over SONIA with three
existing relationship banks. The loan has an initial three-year
term which may be extended to a maximum of five years at GPE's
request, subject to bank consent. GPE has put in place a GBP200
million interest rate cap to protect against any further increases
in rates whilst preserving the benefit of any reductions. The loan
was drawn on 9 October 2023. Following this financing, the Group
has cash and undrawn credit facilities in excess of GBP500 million.
This significant liquidity will support the delivery of our
strategic priorities, including funding the Group's near-term
development programme and the Group's GBP175 million private
placement debt maturity in May 2024.
Today, including the new Term Loan, 93% of the Group's total
debt was at fixed or capped rates (31 March 2023: 97%), 97% (31
March 2023: 95%) was unsecured and our weighted average drawn debt
maturity was 4.7 years (31 March 2023: 6.4 years).
Taxation
The tax charge in the income statement for the half year was
GBPnil (2022: GBP0.1 million credit) and the effective tax rate on
EPRA earnings was 0% (2022: 0%). The majority of the Group's income
is tax-free as a result of its REIT status. Other allowances were
available to set against non-REIT profits.
As a REIT, the majority of rental profits and chargeable gains
from our property rental business are exempt from UK corporation
tax, provided we meet a number of conditions including distributing
at least 90% of the rental income profits of this business (known
as Property Income Distributions (PIDs)) on an annual basis. These
PIDs are then typically treated as taxable income in the hands of
shareholders. During the six months ended 30 September 2023, the
Group paid a PID of GBP20.0 million.
The Group's REIT exemption does not extend to either profits
arising from the sale of trading properties or gains arising from
the sale of investment properties in respect of which a major
redevelopment has completed
within the preceding three years.
Dividends
The Board has declared an interim ordinary dividend of 4.7 pence
per share (2022: 4.7 pence) which will be paid on 4 January 2024.
None of this interim dividend will be a REIT Property Income
Distribution (PID) in respect of the Group's tax-exempt property
rental business.
Principal risks and uncertainties
The Group recognises that the successful management of risk is
critical to enable delivery of the Group's strategic priorities.
Ultimate responsibility for risk rests with the Board but the
effective day-to-day management of risk is integral to the way the
Group does business and its culture. The Board undertakes a robust
assessment of the principal risks facing the Group on a regular
basis.
The principal risks and uncertainties facing the Group for the
remaining six months of the financial year remain in line with
those detailed on pages 64 to 77 of the 2023 Annual Report with no
material changes:
Failure to meet customer needs Failure to profitably deliver the
development programme
Climate change and decarbonisation People
----------------------------------
London attractiveness Health and safety
----------------------------------
Adverse macro-economic environment Cyber security and infrastructure
failure
----------------------------------
Poor capital allocation decisions Failure to profitably deliver the
and/or misreading market conditions Flex Strategy
----------------------------------
The Board and Executive Committee continue to regularly review
the potential risks and impacts presented by the volatile economic
backdrop, including in relation to elevated levels of inflation and
higher underlying interest rates, as well as the potential impacts
of geo-political tensions arising from events both in the Ukraine
and, more recently, the Middle East. The Board also continues to
monitor both short-term impacts and potential longer-term
structural changes in working practices, an evolving planning
regime and the level and nature of demand for space in central
London.
As a result of heightened economic uncertainty, the Group's
forecasts and business plans continue to be prepared under a
variety of market scenarios to reflect a number of potential
outcomes.
Condensed group income statement
For the six months ended 30 September 2023
Six months Six months
Year to to 30 to 30
31 March September September
2023 2023 2022
Audited Unaudited Unaudited
GBPm Notes GBPm GBPm
--------------- ---------------------------------------------- ------- --------------- --- ------------
91.2 Revenue 2 47.6 43.5
(32.2) Cost of sales 3 (16.3) (14.2)
59.0 31.3 29.3
(38.3) Administrative expenses (20.9) (17.6)
(0.8) Expected credit losses 12 (0.1) (1.2)
(0.1) Development management income/(losses) - 0.1
Operating profit before deficit from
investment property and results of joint
19.8 ventures 10.3 10.6
(145.0) Deficit from investment property 8 (219.7) (80.6)
0.1 Surplus on revaluation of other investments - -
(33.4) Share of results of joint ventures 9 (39.6) (14.8)
(158.5) Operating loss (249.0) (84.8)
6.0 Finance income 4 2.9 3.1
(11.5) Finance costs 5 (7.3) (5.0)
(164.0) Loss before tax (253.4) (86.7)
0.1 Tax 6 - 0.1
--------------- ---------------------------------------------- ------- --------------- --- ------------
(163.9) Loss for the period (253.4) (86.6)
--------------- ---------------------------------------------- ------- --------------- --- ------------
(64.8p) Basic loss per share 7 (100.1p) (34.3p)
--------------- ---------------------------------------------- ------- ------------- --- ------------
(64.8p) Diluted loss per share 7 (100.1p) (34.3p)
--------------- ---------------------------------------------- ------- ------------- --- ------------
9.5p Basic EPRA earnings per share 7 4.7p 4.5p
--------------- ---------------------------------------------- ------- ------------- --- ------------
9.5p Diluted EPRA earnings per share 7 4.7p 4.5p
--------------- ---------------------------------------------- ------- ------------- --- ------------
All results are derived from continuing operations in the United
Kingdom and are attributable to ordinary equity holders.
Condensed group statement of comprehensive income
For the six months ended 30 September 2023
Six months
Year ended to 30 Six months
31 March September to 30 September
2023 2023 2022
Audited Unaudited Unaudited
GBPm GBPm GBPm
---------- ------------------------------------------------- ---------- ----------------
(163.9) Loss for the period (253.4) (86.6)
Items that will not be reclassified subsequently
to profit and loss:
0.3 Actuarial gain on defined benefit scheme - 0.6
Deferred tax on actuarial loss on defined benefit
(0.1) scheme - (0.1)
(163.7) Total comprehensive expense for the period (253.4) (86.1)
---------- ------------------------------------------------- ---------- ----------------
Condensed group balance sheet
At 30 September 2023
* Restated
As at As at As at
31 March 30 September 30 September
2023 2023 2022
Audited Unaudited Unaudited
GBPm Notes GBPm GBPm
--------- -------------------------------------- ----- ------------- ---------------
Non-current assets
1,922.2 Investment property 8 1,880.8 2,135.7
538.8 Investment in joint ventures 9 500.4 561.5
3.5 Property, plant and equipment 10 2.7 4.2
4.1 Pension asset 4.4 4.3
1.8 Other investments 11 2.2 1.5
2,470.4 2,390.5 2,707.2
--------- -------------------------------------- ----- ------------- ---------------
Current assets
15.8 Trade and other receivables 12 29.5 14.0
19.4 Cash and cash equivalents 19 23.4 23.6
Current assets held for sale
- Investment property held for sale 8 5.0 -
--------- -------------------------------------- ----- ------------- ---------------
35.2 57.9 37.6
--------- -------------------------------------- ----- ------------- ---------------
2,505.6 Total assets 2,448.4 2,744.8
--------- -------------------------------------- ----- ------------- ---------------
Current liabilities
- Interest-bearing loans and borrowings 14 (174.9) -
- Corporation tax (0.3) -
(56.8) Trade and other payables 13 (63.0) (57.3)
(56.8) (238.2) (57.3)
--------- -------------------------------------- ----- ------------- ---------------
Non-current liabilities
(458.5) Interest-bearing loans and borrowings 14 (491.9) (610.3)
(66.7) Head lease obligations 16 (66.7) (66.7)
(2.0) Occupational lease obligations 17 (1.5) (2.4)
Provisions in respect of warranties on
(3.0) sold buildings (3.0) -
(530.2) (563.1) (679.4)
--------- -------------------------------------- ----- ------------- ---------------
(587.0) Total liabilities (801.3) (736.7)
--------- -------------------------------------- ----- ------------- ---------------
1,918.6 Net assets 1,647.1 2,008.1
--------- -------------------------------------- ----- ------------- ---------------
Equity
38.7 Share capital 15 38.7 38.7
46.0 Share premium account 46.0 46.0
326.7 Capital redemption reserve 326.7 326.7
1,504.4 Retained earnings 1,233.0 1,593.9
2.8 Investment in own shares 18 2.7 2.8
--------- -------------------------------------- ----- ------------- ---------------
1,918.6 Total equity 1,647.1 2,008.1
--------- -------------------------------------- ----- ------------- ---------------
757p Diluted net assets per share 7 650p 794p
--------- -------------------------------------- ----- ------------- -------------
757p Diluted EPRA NTA per share 7 650p 794p
--------- -------------------------------------- ----- ------------- -------------
* Cash and cash equivalents and monies held in trade and other
payables have been restated as at 30 September 2022 following
clarification by IFRIC on classification of funds with externally
imposed restrictions, see note 1 for further details.
Condensed group statement of cash flows
For the six months ended 30 September 2023
* Restated
Six months Six months
Year to to to
31 March 30 September 30 September
2023 2023 2022
Audited Unaudited Unaudited
GBPm Notes GBPm GBPm
--------- --------------------------------------------- ----- ------------- -------------
Operating activities
(158.5) Operating loss (249.0) (84.8)
175.1 Adjustments for non-cash items 20 258.4 95.0
5.3 (Increase)/decrease in receivables (13.7) 7.1
(6.1) Increase/(decrease) in payables 2.8 (7.5)
--------- --------------------------------------------- ----- ------------- -------------
15.8 Cash generated by operations (1.5) 9.8
(17.6) Interest paid (10.2) (8.1)
0.1 Interest received - -
(1.7) Cash flow (used in)/from operating activities (11.7) 1.7
--------- --------------------------------------------- ----- ------------- -------------
Investing activities
7.5 Distributions from joint ventures - 3.5
9.0 Repayment of loans by joint ventures 1.8 6.0
- Investment in joint ventures (0.1) -
Purchase and development of investment
(120.4) property (173.2) (90.1)
(0.2) Purchase of plant and equipment (0.1) (0.1)
(0.7) Purchase of other investments (0.4) (0.5)
217.4 Sale of properties (0.5) 27.4
----- -------------
112.6 Cash flow (used in)/from investing activities (172.5) (53.8)
--------- --------------------------------------------- ----- ------------- -------------
Financing activities
(387.0) Revolving credit facility repaid 14 (23.4) (160.0)
314.0 Revolving credit facility drawn 14 231.4 239.0
Repayment of short-term interest-bearing
- loans and borrowings - (0.2)
(3.3) Payment of lease obligations (1.7) (1.7)
(31.9) Dividends paid 22 (18.1) (18.1)
--------- --------------------------------------------- ----- ------------- -------------
(108.2) Cash flow from/(used in) financing activities 188.2 59.0
--------- --------------------------------------------- ----- ------------- -------------
2.7 Net increase in cash and cash equivalents 4.0 6.9
16.7 Cash and cash equivalents at 1 April 19.4 16.7
--------- --------------------------------------------- ----- ------------- -------------
19.4 Cash and cash equivalents at balance sheet 23.4 23.6
date
--------- --------------------------------------------- ----- ------------- -------------
* Cash and cash equivalents and payables in respect of customer
deposits have been restated as at 1 April 2022 and 30 September
2022 following clarification by IFRIC on classification of funds
with externally imposed restrictions. As a result, the previously
reported cash flows from operating activities for the period ended
30 September 2022 decreased from GBP1.8 million to GBP1.7 million.
There was no impact on the other components of the statement of
cash flows for the period ended 30 September 2022. See note 1 for
further details.
Condensed group statement of changes in equity
For the six months ended 30 September 2023 (unaudited)
Share Capital Investment
Share premium redemption Retained in own Total
capital account reserve earnings shares equity
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------- --------- --------- ----------- --------- ------------ -------
Total equity at 1 April 2023 38.7 46.0 326.7 1,504.4 2.8 1,918.6
Loss for the period - - - (253.4) - (253.4)
Actuarial gain on defined benefit scheme - - - - - -
Deferred tax on defined benefit scheme - - - - - -
Total comprehensive expense for the period - - - (253.4) - (253.4)
-------------------------------------------- --------- --------- ----------- --------- ------------ -------
Employee share-based incentive charge - - - - 1.9 1.9
Transfer to retained earnings - - - 2.0 (2.0) -
Dividends to shareholders - - - (20.0) - (20.0)
Total equity at 30 September 2023 38.7 46.0 326.7 1,233.0 2.7 1,647.1
-------------------------------------------- --------- --------- ----------- --------- ------------ -------
Condensed group statement of changes in equity
For the six months ended 30 September 2022 (unaudited)
Share Capital Investment
Share premium redemption Retained in own Total
capital account reserve earnings shares equity
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------------------- --------- --------- ----------- --------- ------------ -------
Total equity at 1 April 2022 38.7 46.0 326.7 1,697.9 3.6 2,112.9
Loss for the period - - - (86.6) - (86.6)
Actuarial gain on defined benefit scheme - - - 0.6 - 0.6
Deferred tax on defined benefit scheme - - - (0.1) - (0.1)
Total comprehensive expense for the period - - - (86.1) - (86.1)
----------------------------------------------- --------- --------- ----------- --------- ------------ -------
Employee share-based incentive charge and other
items - - - - 1.3 1.3
Transfer to retained earnings - - - 2.1 (2.1) -
Dividends to shareholders - - - (20.0) - (20.0)
Total equity at 30 September 2022 38.7 46.0 326.7 1,593.9 2.8 2,008.1
----------------------------------------------- --------- --------- ----------- --------- ------------ -------
Condensed group statement of changes in equity
For the year ended 31 March 2023 (audited)
Share Capital Investment
Share premium redemption Retained in own Total
capital account reserve earnings shares equity
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------------- --------- --------- ----------- --------- ------------ -------
Total equity at 1 April 2022 38.7 46.0 326.7 1,697.9 3.6 2,112.9
Loss for the year - - - (163.9) - (163.9)
Actuarial gain on defined benefit scheme - - - 0.3 - 0.3
Deferred tax on defined benefit scheme - - - (0.1) - (0.1)
Total comprehensive expense for the year - - - (163.7) - (163.7)
------------------------------------------ --------- --------- ----------- --------- ------------ -------
Employee share-based incentive charge - - - - 1.3 1.3
Transfer to retained earnings - - - 2.1 (2.1) -
Dividends to shareholders - - - (31.9) - (31.9)
Total equity at 31 March 2023 38.7 46.0 326.7 1,504.4 2.8 1,918.6
------------------------------------------ --------- --------- ----------- --------- ------------ -------
Condensed notes forming part of the half year results
1 Basis of preparation
The information for the year ended 31 March 2023 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor ' s
report on those accounts was not qualified, did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying the report and did not contain
statements under section 498(2) or (3) of the Companies Act
2006.
The annual financial statements of Great Portland Estates plc
will be prepared in accordance with the requirements of the
Companies Act 2006 and in accordance with United Kingdom adopted
International Financial Reporting Standards (IFRSs). The condensed
set of financial statements included in this half-yearly financial
report has been prepared in accordance with United Kingdom adopted
International Accounting Standard 34 Interim Financial Reporting
and in accordance with the Disclosure, Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority. The
accounting policies and methods of computation applied are
consistent with those applied in the Group's latest annual audited
financial statements. The nature of the Critical Judgements and Key
Sources of Estimation Uncertainty applied in the condensed
financial statements have remained consistent with those applied in
the Group's latest annual audited financial statements. The key
source of estimation uncertainty is the valuation of the property
portfolio. There were no critical judgements made in the
preparation of the condensed financial statements. The Group's
performance is not subject to seasonal fluctuations.
New standards, amendments and interpretations are in issue and
effective for the Group's financial year ended 31 March 2023, but
they do not have a material impact on the interim financial
statements. There were no new or revised IFRSs, amendments or
interpretations in issue but not yet effective that are potentially
material for the Group and which have not yet been applied.
The Group has assessed the impact of the IFRS Interpretation
Committee's recent agenda decision in respect of Demand Deposits
with Restrictions on Use arising from a Contract with a Third Party
(IAS 7). The Group holds customer deposits in separate designated
bank accounts where the use of the monies is restricted and defined
in the lease agreements; however, the access to these monies by the
Group is not restricted. Following the clarification by IFRIC,
these customer deposits are judged to meet the definition of 'cash'
under IAS 7. The Group comparative balances have been restated to
reflect this change in classification, which resulted in GBP16.6
million of customer deposits as at 30 September 2022 being
reclassified and presented gross as cash and cash equivalents and
payables with no impact on net assets or the income statement.
Going concern
The directors have considered the appropriateness of adopting
the going concern basis in preparing the financial statements for
the period ended 30 September 2023, with particular focus on the
impact of geopolitical tensions and high inflation on the
macro-economic conditions in which the Group is operating. The
directors also considered the Group's net current liability
position as at 30 September 2023, which is driven by the maturity
in May 2024 of a GBP175 million private placement (see note 14).
The directors' assessment is based on the next 12 months of the
Group's financial forecasts, including a going concern scenario
which included the following key assumptions:
- a 20% decline in the valuation of the property portfolio from
30 September 2023;
- an 8% annual reduction in rental income; and
- an overall decrease of around 77% in EPRA earnings.
The going concern scenario demonstrates that the Group over a
period of at least 12 months:
- has significant liquidity to fund its ongoing operations,
including the drawdown in October 2023 of a new GBP250 million Term
Loan;
- has sufficient funds to repay its GBP175 million Private
Placement Notes in May 2024 when they mature;
- is operating with significant headroom above its Group debt
financing covenants;
- property values would have to fall by a further 11% before
breach (or 38% from 30 September 2023 values);
- the Group does not project any breaches of ICR, with minimum
coverage of 1.69x (vs 1.35x covenant) throughout the going concern
period; and
- has no debt maturities other than set out above.
Based on these considerations, together with extensive stress
testing, available market information and the directors' knowledge
and experience of the Group's property portfolio and markets, the
directors have adopted the going concern basis in preparing the
accounts for the period ended 30 September 2023.
2 Revenue
Year to
31 March Six months Six months
2023 to 30 September to 30 September
GBPm 2023 GBPm 2022 GBPm
--------- ----------------------------- ---------------- ----------------
66.6 Gross rental income 32.0 32.8
5.9 Spreading of lease incentives 3.4 2.5
12.5 Service charge income 8.9 5.1
2.4 Joint venture fee income 0.6 1.5
3.7 Fully Managed services income 2.7 1.4
0.1 Trading property revenue - 0.2
91.2 47.6 43.5
--------- ----------------------------- ---------------- ----------------
The table below sets out the Group's gross rental income split
between types of space provided:
Six months
Year to to Six months
31 March 30 September to 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ----------------- ------------- ----------------
42.4 Ready to fit 17.8 21.1
11.1 Retail 6.1 5.9
3.8 Fitted 2.7 1.6
4.1 Fully Managed 2.6 1.9
5.2 Flex Partnerships 2.8 2.3
--------- ----------------- ------------- ----------------
66.6 32.0 32.8
--------- ----------------- ------------- ----------------
The table below sets out the Group's net rental income, please
see note 7 for the Group's alternative performance measures:
Year to Six months Six months
31 March to 30 September to 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ----------------------------- ---------------- ----------------
66.6 Gross rental income 32.0 32.8
(0.6) Expected credit losses (0.1) (1.1)
66.0 Rental income 31.9 31.7
5.9 Spreading of lease incentives 3.4 2.5
(1.0) Ground rent (0.3) (0.5)
70.9 35.0 33.7
--------- ----------------------------- ---------------- ----------------
3 Cost of sales
Year to
31 March Six months Six months
2023 to 30 September to 30 September
GBPm 2023 GBPm 2022 GBPm
--------- ------------------------------------------------ ---------------- ----------------
Service charge expenses (including Fully Managed
18.2 service costs) 12.9 7.8
13.0 Other property expenses 3.1 5.9
1.0 Ground rent 0.3 0.5
32.2 16.3 14.2
--------- ------------------------------------------------ ---------------- ----------------
The table below sets out the Group's property costs, please see
note 7 for the Group's alternative performance measures:
Six months
Year to to Six months
31 March 30 September to 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ------------------------------------------------ ------------- ----------------
(12.5) Service charge income (8.9) (5.1)
(3.7) Fully Managed services income (2.7) (1.4)
Service charge expenses (including Fully Managed
18.2 service costs) 12.9 7.8
13.0 Other property expenses 3.1 5.9
0.2 Expected credit losses - 0.1
--------- ------------------------------------------------ ------------- ----------------
15.2 4.4 7.3
--------- ------------------------------------------------ ------------- ----------------
4 Finance income
Six months
Year to to Six months
31 March 30 September to 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ----------------------------------------- ------------- ----------------
5.9 Interest income on joint venture balances 2.9 3.1
0.1 Interest on cash deposits - -
6.0 2.9 3.1
--------- ----------------------------------------- ------------- ----------------
5 Finance costs
Six months
Year to to Six months
31 March 30 September to 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ------------------------------------------------- ------------- ----------------
5.7 Interest on revolving credit facilities 4.3 2.2
10.9 Interest on private placement notes 5.5 5.5
1.2 Interest on debenture stock 0.6 0.6
2.4 Interest on obligations under head leases 1.2 1.2
0.1 Interest on obligations under occupational leases - 0.1
20.3 Gross finance costs 11.6 9.6
(8.8) Less: capitalised interest at an average interest (4.3) (4.6)
cost of 3.7% (2022: 2.9%)
--------- ------------------------------------------------- ------------- ----------------
11.5 7.3 5.0
--------- ------------------------------------------------- ------------- ----------------
6 Tax
Six months
Year to to Six months
31 March 30 September to 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ----------------------------------- ------------- ----------------
Current tax
- UK corporation tax - current period - -
- UK corporation tax - prior periods - -
--------- ----------------------------------- ------------- ----------------
- Total current tax - -
(0.1) Deferred tax - (0.1)
(0.1) Tax credit for the period - (0.1)
--------- ----------------------------------- ------------- ----------------
The difference between the standard rate of tax and the
effective rate of tax arises from the items set out below:
Six months Six months
Year to to to
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- --------------------------------------------------- ------------- -------------
(164.0) Loss before tax (253.4) (86.7)
--------- --------------------------------------------------- ------------- -------------
Tax credit on loss at standard rate of 25% (2022:
(31.2) 19%) (63.4) (16.5)
35.1 Changes in the fair value of properties not subject 66.2 18.8
to tax
(7.1) REIT tax-exempt rental profits and gains (4.2) (3.1)
2.0 Difference between accounting profit and tax - -
profit on disposal
1.1 Other 1.4 0.7
(0.1) Tax credit for the period - (0.1)
--------- --------------------------------------------------- ------------- -------------
During the period, deferred tax of GBPnil was debited directly
to equity (2022: GBP0.1 million debited). The Group recognised a
net deferred tax asset at 30 September 2023 of GBPnil (2022:
GBPnil). This consists of deferred tax assets of GBP1.2 million
(2022: GBP0.9 million) and deferred tax liabilities of GBP1.2
million (2022: GBP0.9 million).
Movement in deferred tax:
Recognised
in the At 30
At 1 April income Recognised September
2023 statement in equity 2023
GBPm GBPm GBPm GBPm
--------------------------------------------- ---------- ---------- ---------- ----------
Net deferred tax asset/(liability) in respect - - - -
of other temporary differences
--------------------------------------------- ---------- ---------- ---------- ----------
A deferred tax asset of GBP6.8 million (2022: GBP4.5 million),
mainly relating to revenue losses and contingent share awards, was
not recognised because it is uncertain whether future taxable
profit will arise against which this asset can be utilised.
As a REIT, the majority of rental profits and chargeable gains
from the Group's property rental business are exempt from UK
corporation tax. The Group is otherwise subject to corporation tax.
In particular, the Group's REIT exemption does not extend to either
profits arising from the sale of trading properties or gains
arising from the sale of investment properties in respect of which
a major redevelopment has completed within the preceding three
years.
In order to ensure that the Group is able to both retain its
status as a REIT and to avoid financial charges being imposed, a
number of tests (including a minimum distribution test) must be met
by both Great Portland Estates plc and by the Group as a whole on
an ongoing basis. These conditions are detailed in the Corporation
Tax Act 2010.
7 Earnings per share, alternative performance measures and EPRA
metrics
Adjusted earnings and net assets per share are calculated in
accordance with the Best Practice Recommendations issued by the
European Public Real Estate Association (EPRA). The recommendations
are designed to make the financial statements of public real estate
companies clearer and more comparable across Europe, enhancing the
transparency and coherence of the sector. The directors consider
these standard metrics to be the most appropriate method of
reporting the value and performance of the business. The
reconciliations between these measures and the equivalent IFRS
figures are shown in the tables below.
Earnings per share:
Weighted average number of ordinary shares
Six months Six months
Year to to to
31 March 30 September 30 September
2023 2023 2022
No. of No. of No. of
shares shares shares
----------- ------------------------------------------ ------------- -------------
253,867,911 Issued ordinary share capital at 1 April 253,867,911 253,867,911
(941,432) Investment in own shares (887,159) (964,408)
----------- ------------------------------------------ ------------- -------------
Weighted average number of ordinary shares
252,926,479 - basic 252,980,752 252,903,503
----------- ------------------------------------------ ------------- -------------
Basic and diluted earnings per share
Six months Six months
to 30 Six months Six months to 30 Six months Six months
Year to31 September to 30 to 30 September to 30 to 30
March 2023 September September 2022 September September
2023 Loss 2023 2023 Loss 2022 2022
Loss after No. of Loss after No. of Loss
per share tax shares per share tax shares per share
pence GBPm million pence GBPm million pence
---------- ----------------------- ---------- ---------- ---------- ---------- ---------- ----------
(64.8) Basic (253.4) 253.0 (100.1) (86.6) 252.9 (34.3)
Dilutive effect of LTIP
- shares - 0.1 - - - -
(64.8) Diluted (253.4) 253.1 (100.1) (86.6) 252.9 (34.3)
---------- ----------------------- ---------- ---------- ---------- ---------- ---------- ----------
EPRA Earnings per share
Six months Six months Six months Six months
Year to to 30 Six months to 30 to 30 Six months to 30
31 March September to 30 September September to 30 September
2023 2023 September 2023 2022 September 2022
(Loss)/ Profit/(loss) 2023 Earnings/ Profit/(loss) 2022 Earnings/
Earnings after No. of (expense) after No. of (expense)
per share tax shares per share tax shares per share
pence GBPm million pence GBPm million pence
---------- ------------------------ -------------- ---------- ---------- -------------- ---------- ----------
(64.8) Basic (253.4) 253.0 (100.1) (86.6) 252.9 (34.3)
Deficit from investment
57.3 property (note 8) 219.7 - 86.8 80.6 - 31.9
Deficit from joint
venture
investment property
(note
17.1 9) 45.5 - 18.0 17.7 - 7.0
- Trading property revenue - - - (0.2) - (0.1)
(0.1) Deferred tax (note 6) - - - (0.1) - -
9.5 Basic EPRA earnings 11.8 253.0 4.7 11.4 252.9 4.5
---------- ------------------------ -------------- ---------- ---------- -------------- ---------- ----------
Dilutive effect of LTIP
- shares - 0.1 - - - -
---------- ------------------------ -------------- ---------- ---------- -------------- ---------- ----------
9.5 Diluted EPRA earnings 11.8 253.1 4.7 11.4 252.9 4.5
---------- ------------------------ -------------- ---------- ---------- -------------- ---------- ----------
Net assets per share:
In accordance with EPRA, we report three NAV metrics: EPRA Net
Tangible Assets (NTA), Net Reinvestment Value (NRV) and Net
Disposal Value (NDV). We consider EPRA NTA to be the most relevant
measure for the Group and the primary measure of net asset value
alongside IFRS net asset value.
Number of ordinary shares
31 March 30 September
2023 30 September 2022
No. of 2023 No. of
shares No. of shares shares
----------- ------------------------------ -------------- ------------
253,867,911 Issued ordinary share capital 253,867,911 253,867,911
(887,159) Investment in own shares (887,159) (1,025,440)
----------- ------------------------------ -------------- ------------
252,980,752 Number of shares - basic 252,980,752 252,842,471
----------- ------------------------------ -------------- ------------
326,340 Dilutive effect of LTIP shares 479,867 -
----------- ------------------------------ -------------- ------------
253,307,092 Number of shares - diluted 253,460,619 252,842,471
----------- ------------------------------ -------------- ------------
EPRA net assets per share
31 March 30 September 30 September 30 September 30 September 30 September
2023 2023 2023 2023 2023 2022
EPRA NTA IFRS EPRA EPRA EPRA EPRA
GBPm GBPm NTA GBPm NDV GBPm NRV GBPm NTA GBPm
--------- ---------------------------- ------------ ------------ ------------ ------------ ------------
IFRS basic and diluted net
1,918.6 assets 1,647.1 1,647.1 1,647.1 1,647.1 2,008.1
Fair value of financial
- liabilities - - 76.4 - -
- Real estate transfer tax - - - 168.0 -
--------- ---------------------------- ------------ ------------ ------------ ------------ ------------
Net assets used in per share
1,918.6 calculations 1,647.1 1,647.1 1,723.5 1,815.1 2,008.1
--------- ---------------------------- ------------ ------------ ------------ ------------ ------------
31 March 30 September 30 September 30 September 30 September 30 September
2023 2023 2023 2023 2023 2022
EPRA NTA IFRS EPRA EPRA EPRA EPRA
pence pence NTA pence NDV pence NRV pence NTA pence
--------- ---------------------------- ------------ ------------ ------------ ------------ ------------
758 Net assets per share 651 651 681 717 794
--------- ---------------------------- ------------ ------------ ------------ ------------ ------------
757 Diluted net assets per share 650 650 680 716 794
--------- ---------------------------- ------------ ------------ ------------ ------------ ------------
Total Accounting return
Year to Six months Six months
31 March to 30 September to 30 September
2023 2023 2022
per share per share per share
pence pence pence
---------- -------------------------------- ---------------- ----------------
835.0 Opening EPRA NTA (A) 757.0 835.0
757.0 Closing EPRA NTA 650.0 794.0
---------- -------------------------------- ---------------- ----------------
(78.0) Decrease in EPRA NTA (107.0) (41.0)
---------- -------------------------------- ---------------- ----------------
12.6 Ordinary dividend paid in period 7.9 7.9
---------- -------------------------------- ---------------- ----------------
(65.4) Total return (B) (99.1) (33.1)
---------- -------------------------------- ---------------- ----------------
(7.8%) Total accounting return (B/A) (13.1%) (4.0%)
---------- -------------------------------- ---------------- ----------------
Cash earnings per share
Six months Six months
to 30 Six months Six months to 30 Six months Six months
Year to September to 30 to 30 September to 30 to 30
31 March 2023 September September 2022 September September
2023 Profit 2023 2023 Profit 2022 2022
Earnings after No. of Earnings after No. of Earnings
per share tax shares per share tax shares per share
pence GBPm million pence GBPm million pence
---------- -------------------- ------------ ------------ ------------ ------------ ------------ ------------
Diluted EPRA
9.5 earnings 11.8 253.1 4.7 11.4 252.9 4.5
(3.5) Capitalised interest (4.3) - (1.7) (4.6) - (1.8)
Spreading of tenant
lease
(2.3) incentives (3.4) - (1.3) (2.5) - (1.0)
Spreading of tenant
lease
incentives in joint
(2.8) ventures (2.3) - (0.9) (3.3) - (1.3)
Employee share-based
incentive
charge and other
0.5 items 1.9 - 0.7 1.3 - 0.5
Cash earnings per
1.4 share 3.7 253.1 1.5 2.3 252.9 0.9
---------- -------------------- ------------ ------------ ------------ ------------ ------------ ------------
EPRA loan-to-property value and net debt
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
-------- ----------------------------------------------- ------------ ------------
21.9 GBP21.9 million 5.625% debenture stock 2029 21.9 21.9
14.0 GBP450.0 million revolving credit facility 222.0 166.0
425.0 Private placement notes 425.0 425.0
(3.2) Less: cash balances (unrestricted) (5.6) (7.0)
-------- ----------------------------------------------- ------------ ------------
457.7 Group net debt 663.3 605.9
-------- ----------------------------------------------- ------------ ------------
27.8 Net payables (excluding customer rent deposits) 19.0 26.7
-------- ----------------------------------------------- ------------ ------------
485.5 Group net debt including net payables 682.3 632.6
-------- ----------------------------------------------- ------------ ------------
3.4 Joint venture net payables (at share) 8.5 7.5
(17.7) Joint venture cash balances (at share) (25.3) (24.0)
471.2 Net debt including joint ventures (A) 665.5 616.1
-------- ----------------------------------------------- ------------ ------------
1,855.5 Group properties at market value 1,819.1 2,069.0
524.5 Joint venture properties at market value (at 483.6 545.0
share)
2,380.0 Property portfolio at market value including 2,302.7 2,614.0
joint ventures (B)
-------- ----------------------------------------------- ------------ ------------
19.8% EPRA Loan-to-property value (A/B) 28.9% 23.6%
-------- ----------------------------------------------- ------------ ------------
Net gearing
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
-------- ------------------------------------------- ------------ ------------
Nominal value of interest-bearing loans and
460.9 borrowings 668.9 612.9
2.0 Obligations under occupational leases 1.5 2.4
(3.2) Less: cash balances (unrestricted) (5.6) (7.0)
-------- ------------------------------------------- ------------ ------------
459.7 Adjusted net debt (A) 664.8 608.3
1,918.6 Net assets 1,647.1 2,008.1
(4.1) Pension scheme asset (4.4) (4.3)
-------- ------------------------------------------- ------------ ------------
1,914.5 Adjusted net equity (B) 1,642.7 2,003.8
-------- ------------------------------------------- ------------ ------------
24.0% Net gearing (A/B) 40.5% 30.4%
-------- ------------------------------------------- ------------ ------------
8 Investment property
Investment property
Freehold Leasehold Total
GBPm GBPm GBPm
-------------------------------------------------- -------- --------- -------
Book value at 1 April 2023 883.5 925.0 1,808.5
Costs capitalised 9.5 25.7 35.2
Movement in lease incentives 4.7 (0.2) 4.5
Interest capitalised - 1.0 1.0
Acquisitions 128.9 - 128.9
Transfer to investment property under development - (38.0) (38.0)
Transfer to investment property held for sale (5.8) - (5.8)
Net valuation deficit (97.0) (86.0) (183.0)
-------------------------------------------------- -------- --------- -------
Book value at 30 September 2023 923.8 827.5 1,751.3
-------------------------------------------------- -------- --------- -------
Investment property under development
Freehold Leasehold Total
GBPm GBPm GBPm
-------------------------------------------------- -------- --------- -------
Book value at 1 April 2023 - 113.7 113.7
Costs capitalised - 9.9 9.9
Interest capitalised - 3.3 3.3
Transfer from investment property - 38.0 38.0
Net valuation deficit - (35.4) (35.4)
Book value at 30 September 2023 - 129.5 129.5
-------------------------------------------------- -------- --------- -------
Book value of investment property at 30 September
2023 923.8 957.0 1,880.8
-------------------------------------------------- -------- --------- -------
Investment property held for sale - current asset
Freehold Leasehold Total
GBPm GBPm GBPm
---------------------------------------------------- -------- --------- -------
Book value at 1 April 2023 - - -
Transfer from investment property - exchanged for
sale 5.8 - 5.8
Net valuation deficit (0.8) - (0.8)
---------------------------------------------------- -------- --------- -------
Book value at 30 September 2023 5.0 - 5.0
---------------------------------------------------- -------- --------- -------
Book value of total investment property at 30
September 2023 928.8 957.0 1,885.8
---------------------------------------------------- -------- --------- -------
Book value of total investment property at 31 March
2023 883.5 1,038.7 1,922.2
---------------------------------------------------- -------- --------- -------
Deficit from investment property
Six months
Year to to Six months
31 March 30 September to 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ---------------------------------------------- ------------- ----------------
(141.7) Net valuation deficit on investment property (219.2) (81.0)
(3.3) (Loss)/profit on sale of investment properties (0.5) 0.4
(145.0) Deficit from investment property (219.7) (80.6)
--------- ---------------------------------------------- ------------- ----------------
The book value of investment property includes GBP66.7 million
(31 March 2023: GBP66.7 million) in respect of the present value of
future ground rents. The market value of the portfolio (excluding
these amounts) is GBP1,819.1 million (31 March 2023: GBP1,855.5
million). The total portfolio value including joint venture
properties of GBP483.6 million (31 March 2023: GBP524.5 million)
(see note 9) was GBP2,302.7 million (31 March 2023: GBP2,380.0
million). At 30 September 2023, property with a carrying value of
GBP104.5 million (31 March 2023: GBP111.0 million) was secured
under the first mortgage debenture stock (see note 14). At the
balance sheet date, one property had exchanged for sale and
accordingly was classified as held for sale. The sale is
anticipated to complete in November 2023.
The Group's investment properties, including those held in joint
ventures (note 9), were valued on the basis of Fair Value by CBRE
Limited (CBRE), external valuers, as at 30 September 2023. The
valuations have been prepared in accordance with the current
version of the RICS Valuation - Global Standards (incorporating the
International Valuation Standards) and the UK national supplement
(the Red Book) and have been primarily derived using comparable
recent market transactions on arm's length terms.
Real estate valuations are complex and derived using comparable
market transactions, which are not publicly available and involve
an element of judgement and estimation. Therefore, we have
classified the valuation of the property portfolio as Level 3 as
defined by IFRS 13; this is in line with EPRA guidance. There were
no transfers between levels during the period. Inputs to the
valuation, including capitalisation yields (typically the true
equivalent yield) and rental values, are defined as 'unobservable'
as defined by IFRS 13.
Everything else being equal, there is a positive relationship
between rental values and the property valuation, such that an
increase in rental values will increase the valuation of a property
and a decrease in rental values will reduce the valuation of the
property. Any percentage movement in rental values will translate
into approximately the same percentage movement in the property
valuation. However, due to the long-term nature of leases, where
the passing rent is fixed and often subject to upwards only rent
reviews, the impact will not be immediate and will be recognised
over a number of years. The relationship between capitalisation
yields and the property valuation is negative and more immediate;
therefore an increase in capitalisation yields will reduce the
valuation of a property and a reduction will increase its
valuation.
A decrease in the capitalisation yield by 50 basis points would
result in an increase in the fair value of the Group's investment
property by GBP245.1 million, whilst a 50 basis point increase (the
actual movement was 43 basis points for the current period) would
reduce the fair value by GBP202.1 million. There are
interrelationships between these inputs as they are determined by
market conditions, and the valuation movement in any one period
depends on the balance between them. If these inputs move in
opposite directions (i.e. rental values increase and yields
decrease) valuation movements can be amplified, whereas if they
move in the same direction they may offset, reducing the overall
net valuation movement. There is a negative relationship between
development costs and the property valuation, such that an increase
in estimated development costs will decrease the valuation of a
property under development and a decrease in estimated development
costs will increase the valuation of a property under
development.
The valuation of the property portfolio reflects its fair value
taking into account the market view of all relevant factors
including the climate related risks associated with the properties.
This includes the impact of expected regulatory changes, and we
estimate that the investment required to upgrade our existing
buildings to the new minimum EPC B rating by 2030 is less than
GBP15 million (including share of joint ventures).
Key inputs to the valuation (by building and location) at 30
September 2023
ERV True equivalent yield
Average Range Average Range
GBP per sq ft GBP per sq ft % %
---------------------------- ------- -------------- -------------- ----------- -------------
North of Oxford Street Office 97 54 - 174 5.1 4.6 - 7.3
Retail 66 34 - 107 5.1 4.5 - 8.9
Rest of West End Office 99 57 - 167 5.5 3.3 - 7.0
Retail 101 15 - 266 4.8 3.2 - 6.7
City, Midtown and Southwark Office 77 47 - 170 5.5 5.1 - 6.7
Retail 24 24 - 27 5.8 5.2 - 6.4
------------------------------------ -------------- -------------- ----------- -------------
Key inputs to the valuation (by building and location) at 31
March 2023
ERV True equivalent yield
Average Range Average Range
GBP per sq ft GBP per sq ft % %
---------------------------- ------- -------------- -------------- ----------- -------------
North of Oxford Street Office 88 54 - 131 4.8 4.3 - 6.8
Retail 63 33 - 107 4.5 4.2 - 7.5
Rest of West End Office 101 57 - 163 5.4 3.3 - 7.3
Retail 96 15 - 266 4.7 3.2 - 7.1
City, Midtown and Southwark Office 75 47 - 167 5.0 4.5 - 6.1
Retail 25 25 - 27 5.5 4.6 - 5.9
------------------------------------ -------------- -------------- ----------- -------------
During the period, the Group capitalised GBP0.7 million (2022:
GBP0.7 million) of employee costs in respect of its development
team into investment properties under development. At 30 September
2023, the Group had capital commitments of GBP394.8 million (2022:
GBP16.0 million).
9 Investment in joint ventures
Balances
Equity with partners Total
GBPm GBPm GBPm
----------------------------------------------- ------ -------------- ------
At 1 April 2023 324.4 214.4 538.8
Movement on joint venture balances - 1.1 1.1
Additions 0.1 - 0.1
------ -------------- ------
Share of profit of joint ventures 5.9 - 5.9
Share of revaluation deficit of joint ventures (45.5) - (45.5)
Share of results of joint ventures (39.6) - (39.6)
At 30 September 2023 284.9 215.5 500.4
----------------------------------------------- ------ -------------- ------
The investments in joint ventures comprise the following:
Ownership Country of Incorporation/registration Ownership Ownership
31 March 30 30 September
2023 September 2022
2023
--------- ------------------------------- ------------------------------------- ---------- -------------
50% The GHS Limited Partnership Jersey 50% 50%
50% The Great Ropemaker Partnership United Kingdom 50% 50%
50% The Great Victoria Partnerships United Kingdom 50% 50%
--------- ------------------------------- ------------------------------------- ---------- -------------
The investment properties include GBP5.1 million (2022: GBP5.1
million) in respect of the present value of future ground rents,
net of these amounts the market value of our share of the total
joint venture properties is GBP483.6 million. At 30 September 2023,
the Group's share of joint venture capital commitments was GBPnil
million (2022: GBP1.4 million).
Transactions during the period between the Group and its joint
ventures, who are related parties, are set out below:
Six months Six months
Year to to to
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ------------------------------------------------ ------------- ---------------
Movement on joint venture balances during the
3.1 period (1.1) 3.0
(214.4) Balances receivable at the period end from joint (215.5) (214.5)
ventures
5.9 Interest on balances with partners 2.9 3.1
7.5 Distributions - 3.5
2.4 Joint venture fees paid 0.6 1.5
--------- ------------------------------------------------ ------------- ---------------
The joint venture balances are repayable on demand and bear
interest as follows: the GHS Limited Partnership at 4.0% p.a. and
the Great Ropemaker Partnership at 2.0% p.a. The Group earns fee
income from its joint ventures for the provision of management
services. All of the above transactions are made on terms
equivalent to those that prevail in arm's length transactions.
Summarised balance sheets
Six months Six months Six months
Year to to 30 to 30 to 30
31 March The GHS The Great The Great September September September
2023 Limited Ropemaker Victoria 2023 2023 2022
At share Partnership Partnership Partnerships Total At share At share
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------- ---------------- ------------- ------------- ---------------- -------------- ------------------------ -----------
Investment
529.6 property 641.0 262.8 73.6 977.4 488.7 550.1
3.6 Current assets 2.2 2.8 0.6 5.6 2.8 2.2
Cash and cash
17.7 equivalents 11.0 21.0 18.5 50.5 25.3 24.0
Balances from
(214.4) partners (227.4) (130.5) (73.1) (431.0) (215.5) (214.5)
Current
(7.0) liabilities (9.9) (12.0) (0.7) (22.6) (11.3) (9.7)
Obligations
under head
(5.1) leases - (10.2) - (10.2) (5.1) (5.1)
--------- ---------------- ------------- ------------- ---------------- -------------- ------------------------ -----------
324.4 Net assets 416.9 133.9 18.9 569.7 284.9 347.0
--------- ---------------- ------------- ------------- ---------------- -------------- ------------------------ -----------
Summarised income statements
31
March 30 30
2023 The GHS The Great The Great 30 September September September
At Limited Ropemaker Victoria 2023 2023 2022
share Partnership Partnership Partnerships Total At share At share
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------- ---------------- ---------------------------- -------------- ---------------- ------------- --------- -----------
Net rental
18.2 income 10.0 7.6 2.4 20.0 10.0 8.4
Property and
administration
(2.2) costs (0.9) (0.9) (0.4) (2.2) (1.1) (2.3)
Net finance
(6.2) costs (4.6) (1.5) - (6.1) (3.0) (3.2)
Share of profit
of joint
9.8 ventures 4.5 5.2 2.0 11.7 5.9 2.9
Revaluation of
investment
(43.2) property (27.5) (53.9) (9.5) (90.9) (45.5) (17.7)
------- ---------------- ---------------------------- -------------- ---------------- ------------- --------- -----------
Results of joint
(33.4) ventures (23.0) (48.7) (7.5) (79.2) (39.6) (14.8)
------- ---------------- ---------------------------- -------------- ---------------- ------------- --------- -----------
10 Property, plant and equipment
Right
of use
asset for Fixtures
occupational Leasehold and
leases improvements fittings/other Total
GBPm GBPm GBPm GBPm
------------------------------------- ------------- ------------- --------------- -----
Cost or valuation
At 1 April 2023 4.9 5.6 2.1 12.6
Additions - - 0.1 0.1
------------------------------------- ------------- ------------- --------------- -----
At 30 September 2023 4.9 5.6 2.2 12.7
------------------------------------- ------------- ------------- --------------- -----
Accumulated depreciation
At 1 April 2023 3.3 3.9 1.9 9.1
Charge for the period 0.4 0.4 0.1 0.9
------------------------------------- ------------- -------------
At 30 September 2023 3.7 4.3 2.0 10.0
------------------------------------- ------------- ------------- --------------- -----
Carrying amount at 30 September 2023 1.2 1.3 0.2 2.7
------------------------------------- ------------- ------------- --------------- -----
Carrying amount at 31 March 2023 1.6 1.7 0.2 3.5
------------------------------------- ------------- ------------- --------------- -----
11 Other investments
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
-------- ---------------------- ------------ ------------
1.0 At 1 April 1.8 1.0
0.7 Acquisitions 0.4 0.5
0.1 Surplus on revaluation - -
1.8 2.2 1.5
-------- ---------------------- ------------ ------------
In January 2020, the Group entered into a commitment of up to
GBP5 million to invest in Pi Labs European PropTech venture capital
fund. At 30 September 2023, the Group had made net investments of
GBP2.2 million. Launched in 2014, Pi Labs is Europe's longest
standing PropTech VC and this third fund has a primary focus to
invest in early stage PropTech start-ups across Europe and the UK
that use technology solutions to enhance any stage of the real
estate value chain. Key areas of focus for the fund include
sustainability, the future of work, the future of retail,
commercial real estate technologies, construction technology and
smart cities.
12 Trade and other receivables
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
-------- ------------------------------ ------------ ------------
8.3 Trade receivables 7.8 8.7
(1.7) Expected credit loss allowance (0.3) (3.8)
6.6 7.5 4.9
4.4 Prepayments and accrued income 1.1 2.2
- Other taxes 8.3 0.1
4.8 Other trade receivables 12.6 6.8
15.8 29.5 14.0
-------- ------------------------------ ------------ ------------
Trade receivables consist of rent and service charge monies,
which are due on the quarter day with no credit period. Interest is
charged on trade receivables in accordance with the terms of the
occupier ' s lease. Trade receivables are provided for based on the
expected credit loss, which uses a lifetime expected loss allowance
for all trade receivables based on an assessment of each individual
occupier's circumstance. This assessment reviews the outstanding
balances of each individual occupier and makes an assessment of the
likelihood of recovery, based on an evaluation of their financial
situation. Where the expected credit loss relates to revenue
already recognised this has been recognised immediately in the
income statement.
Six months
Year to to Six months
31 March 30 September to 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ------------------------------------------------ ------------- ----------------
Movements in expected credit loss allowance
(6.0) Balance at 1 April (1.7) (6.0)
Expected credit loss allowance during the period
(1.0) (see below) (0.1) (1.4)
0.8 Expected credit loss allowance in respect of - 0.8
future periods
4.5 Amounts written-off as uncollectible 1.5 2.8
(1.7) (0.3) (3.8)
--------- ------------------------------------------------ ------------- ----------------
The expected credit loss for the period comprises:
Gross Net of VAT Gross Net of VAT
30 September 30 September 30 September 30 September
2023 2023 2022 2022
GBPm GBPm GBPm GBPm
---------------------------------------------- ------------- ------------- ------------- -------------
Expected credit loss allowance for the period
Group 0.1 0.1 1.4 1.2
Joint ventures (at share) - - (0.1) (0.1)
---------------------------------------------- ------------- ------------- ------------- -------------
Total 0.1 0.1 1.3 1.1
---------------------------------------------- ------------- ------------- ------------- -------------
13 Trade and other payables
* Restated
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
-------- --------------------------------------------- ------------ -------------
15.1 Rents received in advance 16.5 14.2
5.9 Accrued capital expenditure 9.5 7.9
Payables in respect of customer rent deposits
16.2 (see note 1) 17.8 16.6
15.2 Other accruals 14.2 16.7
0.7 Other taxes - -
3.7 Other payables 5.0 1.9
56.8 63.0 57.3
-------- --------------------------------------------- ------------ -------------
*The 2022 comparatives have been restated to reflect the IFRIC
Decision on Deposits. Amounts held in respect of customer rent
deposits have been recorded as cash and cash equivalents, with a
corresponding liability recorded within trade and other payables of
GBP16.6 million.
14 Interest-bearing loans and borrowings
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
-------- ---------------------------------------------- ------------ ------------
Current liabilities at amortised cost
Unsecured
GBP175.0 million 2.15% private placement notes
- 2024 174.9 -
Non-current liabilities at amortised cost
Secured
22.0 GBP21.9 million 5.625% debenture stock 2029 22.0 22.0
Unsecured
12.8 GBP450.0 million revolving credit facility 220.9 164.6
174.8 GBP175.0 million 2.15% private placement notes - 174.8
2024
39.9 GBP40.0 million 2.70% private placement notes 40.0 39.9
2028
29.9 GBP30.0 million 2.79% private placement notes 29.9 29.9
2030
29.9 GBP30.0 million 2.93% private placement notes 29.9 29.9
2033
24.9 GBP25.0 million 2.75% private placement notes 24.9 24.9
2032
124.3 GBP125.0 million 2.77% private placement notes 124.3 124.3
2035
458.5 666.8 610.3
-------- ---------------------------------------------- ------------ ------------
In April 2023, the Group extended the maturity of GBP50 million
of its GBP450 million unsecured revolving credit facility (RCF) to
January 2027, coterminous with the remainder of the facility. The
facility is unsecured, attracts a floating rate based on a headline
margin which was reduced to 90.0 basis points over SONIA (plus or
minus 2.5 basis points subject to a number of ESG linked targets).
At 30 September 2023, the Group had GBP228 million (2022: GBP284
million) of undrawn committed credit facilities.
In September 2023, the Group arranged a new GBP250 million
unsecured Term Loan at a headline margin of 175 basis points over
SONIA with three existing relationship banks. The loan has an
initial three-year term which may be extended to a maximum of five
years at GPE's request, subject to bank consent. The loan was drawn
on 9 October 2023, increasing our committed cash and undrawn credit
facilities to GBP508 million. The Group also entered a GBP200
million interest rate cap (at a cost of GBP2.1 million) to protect
against any further increases in rates whilst preserving the
benefit of any reductions. The interest rate cap was effective from
9 October 2023.
At 30 September 2023, properties with a carrying value of
GBP104.5 million (31 March 2023: GBP111.0 million) were secured
under the Group's debenture stock.
Fair value of financial liabilities
31 March 31 March 30 September 30 September
2023 2023 30 September 30 September 2022 2022
Book Fair 2023 2023 Book Fair
value value Items not carried at fair Book value Fair value value value
GBPm GBPm value GBPm GBPm GBPm GBPm
-------- -------- -------------------------------- ------------ ------------ ------------ ------------
GBP21.9 million 5.625% debenture
22.0 22.4 stock 2029 22.0 21.5 22.0 21.4
423.7 339.9 Private placement notes 423.9 348.0 423.7 332.8
GBP450.0 million revolving
12.8 12.8 credit facility 220.9 220.9 164.6 164.6
458.5 375.1 666.8 590.4 610.3 518.8
-------- -------- -------------------------------- ------------ ------------ ------------ ------------
The fair values of the Group's cash and cash equivalents and
trade payables and receivables are not materially different from
those at which they are carried in the financial statements. The
fair values of the Group's private placement notes and debenture
stock were determined by comparing the discounted future cash flows
using the contracted yields with those of the reference gilts plus
the implied margins.
15 Share capital
Six months Six months Six months Six months
Year to Year to to to to to
31 March 31 March 30 September 30 September 30 September 30 September
2023 2023 2023 2023 2022 2022
Number GBPm Number GBPm Number GBPm
----------- --------- ------------------------ ------------- ------------- ------------- -------------
Allotted, called up and
fully paid
At the beginning and end
253,867,911 38.7 of the period 253,867,911 38.7 253,867,911 38.7
----------- --------- ------------------------ ------------- ------------- ------------- -------------
At 30 September 2023, the Company had 253,867,911 ordinary
shares with a nominal value of 15(5) (19) pence each.
16 Head lease obligations
Head lease obligations in respect of the Group's leasehold
properties are payable as follows:
Present Present
Minimum value of Minimum value of
lease Impact minimum lease Impact minimum
payments of discounting lease payments payments of discounting lease payments
30 September 30 September 30 September 30 September 30 September 30 September
2023 2023 2023 2022 2022 2022
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Less than one year 2.4 (2.4) - 2.4 (2.4) -
Between two and five
years 9.7 (9.5) 0.2 9.7 (9.5) 0.2
More than five years 302.2 (235.7) 66.5 302.8 (236.3) 66.5
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
314.3 (247.6) 66.7 314.9 (248.2) 66.7
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
17 Occupational lease obligations
Obligations in respect of the Group's occupational leases for
its head office are payable as follows:
Present Present
Minimum value of Minimum value of
lease Impact minimum lease Impact minimum
payments of discounting lease payments payments of discounting lease payments
30 September 30 September 30 September 30 September 30 September 30 September
2023 2023 2023 2022 2022 2022
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Less than one year 1.0 - 1.0 1.0 - 1.0
Between two and five
years 0.5 - 0.5 1.5 (0.1) 1.4
1.5 - 1.5 2.5 (0.1) 2.4
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
18 Investment in own shares
Six months Six months
Year to to to
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ------------------------------------- ------------- -------------
(3.6) At the beginning of the period (2.8) (3.6)
(1.3) Employee share-based inventive charge (1.9) (1.2)
2.1 Transfer to retained earnings 2.0 2.1
- Other - (0.1)
(2.8) At the end of the period (2.7) (2.8)
--------- ------------------------------------- ------------- -------------
The investment in the Company's own shares is held at cost and
comprises 887,159 shares (31 March 2023: 887,159 shares) held by
the Great Portland Estates plc LTIP Employee Share Trust which will
vest for certain senior employees of the Group if performance
conditions are met.
During the period, no shares (2022: no shares) were awarded to
directors and senior employees in respect of the 2019 LTIP award.
The fair value of shares awarded and outstanding at 30 September
2023 was GBP11.1 million (31 March 2023: GBP8.4 million).
19 Cash and cash equivalents
*Restated
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ------------------------------------------------- ------------- -------------
3.2 Cash held at bank (unrestricted) 5.6 7.0
Amounts held in respect of customer rent deposits
16.2 (restricted) 17.8 16.6
19.4 23.4 23.6
--------- ------------------------------------------------- ------------- -------------
* The 2022 comparatives have been restated to reflect the IFRIC
Decision on Deposits. Amounts held in respect of customer rent
deposits have been recorded as cash and cash and equivalents, with
a corresponding liability recorded within trade and other payables
of GBP16.6 million.
20 Notes to the group statement of cash flow
Adjustment for non-cash items
Six months Six months
Year to to to
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
--------- ----------------------------------------------- ------------- -------------
145.0 Deficit from investment property 219.7 80.6
(0.1) Surplus on revaluation of other investments - -
Employee share-based incentive charge and other
1.3 items 1.9 1.3
(5.9) Spreading of tenant lease incentives (3.4) (2.5)
33.4 Share of results from joint ventures 39.6 14.8
1.7 Depreciation 0.9 0.9
(0.3) Other (0.3) (0.1)
--------- ----------------------------------------------- ------------- -------------
175.1 Adjustments for non-cash items 258.4 95.0
--------- ----------------------------------------------- ------------- -------------
21 Lease receivables
Future aggregate minimum rents receivable under non-cancellable
leases are:
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
-------- -------------------------- ------------ ------------
The Group as a lessor
58.3 Less than one year 61.4 60.1
129.9 Between one and five years 137.7 145.6
66.7 More than five years 63.4 75.3
-------- -------------------------- ------------ ------------
254.9 262.5 281.0
-------- -------------------------- ------------ ------------
The Group leases its investment properties. The weighted average
length of lease at 30 September 2023 was 3.3 years (2022: 3.4
years). All investment properties, except those under development
or being prepared for development, generated rental income and no
contingent rents were recognised in the period (2022: GBPnil).
22 Dividends
The declared interim dividend of 4.7 pence per share (2022: 4.7
pence per share) was approved by the Board on 15 November 2023 and
is payable on 4 January 2024 to shareholders on the register on 24
November 2023. The dividend is not recognised as a liability in the
Half Year Results.
23 Reserves
The following describes the nature and purpose of each reserve
within equity:
Share capital
The nominal value of the Company's issued share capital,
comprising 15(5) (19) pence ordinary shares.
Share premium
Amount subscribed for share capital in excess of nominal value
less directly attributable issue costs.
Capital redemption reserve
Amount equivalent to the nominal value of the Company's own
shares acquired as a result of share buy-back programmes.
Retained earnings
Cumulative net gains and losses recognised in the Group income
statement together with other items such as dividends.
Investment in own shares
Amount paid to acquire the Company's own shares for its employee
share based incentives less accounting charges.
Dire ctors' responsibility statement
The Directors confirm that the condensed interim financial
statements have been prepared in accordance with United Kingdom
adopted International Accounting Standard 34, "Interim Financial
Reporting", and that the Interim Results includes a fair review of
the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the period and their impact on the interim condensed financial
statements, and a description of the principal risks and
uncertainties for the remainder of the financial year; and
-- material related party transactions in the period and any
material changes in the related party transactions described in the
last annual report.
By the order of the Board
Toby Courtauld Nick Sanderson
Chief Executive Chief Financial & Operating Officer
15 November 2023 15 November 2023
Independent review report to Great Portland Estates PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Great Portland Estates PLC's condensed
consolidated interim financial statements (the "interim financial
statements") in the Half Year Results of Great Portland Estates PLC
for the 6 month period ended 30
September 2023 (the " period " ).
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed group balance sheet as at 30 September 2023;
-- the Condensed group income statement and Condensed group
statement of comprehensive income for the period then ended;
-- the Condensed group statement of cash flows for the period then ended;
-- the Condensed group statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year
Results of Great Portland Estates PLC have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half Year
Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half Year Results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the Half
Year Results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Half Year Results, including
the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Half Year Results based on our review.
Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
15 November 2023
Directors and shareholders' information
Directors
Richard Mully Mark Anderson
Chair, Non-Executive Non-Executive Director
Toby Courtauld Nick Hampton
Chief Executive Non-Executive Director
Nick Sanderson Emma Woods
Chief Financial & Operating Officer Non-Executive Director
Dan Nicholson Champa Magesh
Executive Director Non-Executive Director
Shareholders' information
Financial calendar 2023
Ex-dividend date for interim dividend 23 November
Registration qualifying date for interim
dividend 24 November
2024
Interim dividend payable 4 January
Announcement of full year results 22 May*
Annual General Meeting 4 July*
Final dividend payable 8 July*
*Provisional.
Shareholder enquiries Dividend payments
All enquiries relating to holdings As a REIT, dividend payments must
of shares, bonds or debentures in be split between PIDs and non-PIDs.
GPE, including notification of change Information in respect of the tax
of address, queries regarding dividend/interest consequences for shareholders of
payments or the loss of a certificate, receiving dividends can be found
should be addressed to the Company's on the Company's website at
registrars: www.gpe.co.uk/investors/shareholder-information/reits
Equiniti Limited Company Secretary
Aspect House Darren Lennark
Spencer Road Registered office:
Lancing 33 Cavendish Square
West Sussex London W1G 0PW
BN99 6DA Tel: 020 7647 3000
Fax: 020 7016 5500
Tel: +44 (0) 371 384 2030 (Lines are Registered Number: 596137
open 8.30am-5.30pm Monday to Friday)
E-mail: customer@equiniti.com
See www.shareview.co.uk for further
information
Website: www.gpe.co.uk
The Company's corporate website holds,
amongst other information, a copy
of our latest annual report and accounts,
a list of properties held by the Group
and press announcements.
Glossary
Building Research Establishment Environmental Assessment
Methodology (BREEAM)
Building Research Establishment method of assessing, rating and
certifying the sustainability of buildings.
Cash EPS
EPRA EPS adjusted for non-cash items: tenant incentives,
capitalised interest and charges for share-based payments.
Core West End
Areas of London with W1 and SW1 postcodes.
Development profit on cost
The value of the development at completion, less the value of
the land at the point of development commencement and costs to
construct (including finance charges, letting fees, void costs and
marketing expenses).
Development profit on cost %
The development profit on cost divided by the land value at the
point of development commencement together with the costs to
construct.
Earnings per Share (EPS)
Profit after tax divided by the weighted average number of
ordinary shares in issue.
EPRA metrics
Standard calculation methods for adjusted EPS and NAV as set out
by the European Public Real Estate Association (EPRA) in their Best
Practice and Policy Recommendations.
EPRA net disposal value (NDV)
Represents the shareholders' value under a disposal scenario,
where deferred tax, financial instruments and certain other
adjustments are calculated to the full extent of their liability,
net of any resulting tax. Diluted net assets per share adjusted to
remove the impact of goodwill arising as a result of deferred tax
and fixed interest rate debt.
EPRA Net Reinstatement Value (NRV)
Represents the value of net assets on a long-term basis. Assets
and liabilities that are not expected to crystallise in normal
circumstances such as the fair value movements on financial
derivatives, real estate transfer taxes and deferred taxes on
property valuation surpluses are therefore excluded.
EPRA net tangible assets (NTA)
Assumes that entities buy and sell assets, thereby crystallising
certain levels of unavoidable deferred tax. Diluted net assets per
share adjusted to remove the cumulative fair value movements on
interest-rate swaps and similar instruments, the carrying value of
goodwill arising as a result of deferred tax and other intangible
assets.
Estimated Rental Value (ERV)
The market rental value of lettable space as estimated by the
Company's valuers at each balance sheet date.
Fair value - investment property
The amount as estimated by the Company's valuers for which a
property should exchange on the date of valuation between a willing
buyer and a willing seller in an arm's-length transaction after
proper marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion. In line with market practice,
values are stated net of purchasers' costs.
Ready-to-fit
Offices for businesses typically taking larger spaces on longer
leases who want to fit out the space themselves.
Fitted spaces
Where businesses can move into fully furnished, well designed
workspaces, with their own front door, furniture, meeting rooms,
kitchen and branding.
Fully Managed
Fitted space where GPE handles all day-to-day running of the
workplace in one monthly bill.
Flex partnerships
Revenue share agreements with flexible space operators, these
are typically structured via lease arrangements with the revenue
share recognised within rental income.
IFRS
United Kingdom adopted international accounting standards.
Internal Rate of Return (IRR)
The rate of return that if used as a discount rate and applied
to the projected cash flows that would result in a net present
value of zero.
Like-for-like portfolio
The element of the portfolio that has been held for the whole of
the period of account.
EPRA Loan-to-Value (LTV)
The nominal value of total bank loans, private placement notes,
debenture stock and any net liabilities/assets, net of cash
(including our share of joint ventures balances), expressed as a
percentage of the market value of the property portfolio (including
our share of joint ventures).
Net assets per share or Net Asset Value (NAV)
Equity shareholders' funds divided by the number of ordinary
shares at the balance sheet date presented on a diluted and
undiluted basis.
Net debt
The book value of the Group's bank and loan facilities, private
placement notes and debenture loans plus the nominal value of the
convertible bond less cash and cash equivalents.
Net gearing
Total Group borrowings (including the convertible bonds at
nominal value) less short-term deposits and cash as a percentage of
equity shareholders' funds, calculated in accordance with our bank
covenants.
Net initial yield
Annual net rents on investment properties as a percentage of the
investment property valuation having added notional purchaser's
costs.
Non-PIDs
Dividends from profits of the Group's taxable residual
business.
PMI
Purchasing Managers Index.
Property Income Distributions (PIDs)
Dividends from profits of the Group's tax-exempt property rental
business.
REIT
UK Real Estate Investment Trust.
Rent roll
The annual contracted rental income.
Return on shareholders' equity
The growth in the EPRA diluted net assets per share plus
dividends per share for the period expressed as a percentage of the
EPRA net assets per share at the beginning of the period.
Reversionary or under-rented
The percentage by which ERV exceeds rent roll on let space.
Reversionary potential
The percentage by which ERV exceeds rent roll on let space.
Topped up initial yield
Annual net rents on investment properties as a percentage of the
investment property valuation having added notional purchaser's
costs and contracted uplifts from tenant incentives.
Total Accounting Return (TAR)
The growth in EPRA NTA per share plus ordinary dividends paid,
expressed as a percentage of EPRA NTA per share at the beginning of
the period.
Total potential future growth
Portfolio rent roll plus the ERV of void space, space under
refurbishment and the committed development schemes, expressed as a
percentage uplift on the rent roll at the end of the period.
Total Property Return (TPR)
Capital growth in the portfolio plus net rental income derived
from holding these properties plus profit on sale of disposals
expressed as a percentage return on the period's opening value as
calculated by MSCI.
Total Shareholder Return (TSR)
The growth in the ordinary share price as quoted on the London
Stock Exchange plus dividends per share received for the period
expressed as a percentage of the share price at the beginning of
the period.
Triple net asset value (NNNAV)
NAV adjusted to include the fair value of the Group's financial
liabilities and deferred tax on a diluted basis.
True equivalent yield
The constant capitalisation rate which, if applied to all cash
flows from an investment property, including current rent,
reversions to current market rent and such items as voids and
expenditures, equates to the market value having taken into account
notional purchaser's costs. Assumes rent is received quarterly in
advance.
Ungeared IRR
The ungeared internal rate of return (IRR) is the interest rate
at which the net present value of all the cash flows (both positive
and negative) from a project or investment equal zero, without the
benefit of financing. The internal rate of return is used to
evaluate the attractiveness of a project or investment.
Vacancy rate
The element of a property which is unoccupied but available for
letting, expressed as the ERV of the vacant space divided by the
ERV of the total portfolio.
Weighted Average Unexpired Lease Term (WAULT)
The Weighted Average Unexpired Lease Term expressed in
years.
Whole life surplus
The value of the development at completion, less the value of
the land at the point of acquisition and costs to construct
(including finance charges, letting fees, void costs and marketing
expenses) plus any income earned over the period.
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END
IR FFUEFIEDSESF
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November 16, 2023 02:00 ET (07:00 GMT)
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