Great Portland Estates, the London-listed landlord said it had signed 37 new leases and renewals in the six months to 30 September, as workers returned to the office.
The West End-focused landlord said market lettings were on average 13.4 per ahead of March 2023’s estimated rental value (ERV) with an annual rent role of £11.2m.
It said it also has a further £7.3. of lettings under offer, 5.7 per cent above March 2023 ERV.
Demand for the company’s offices and retail outlets has grown as workers have returned to central London.
The vacancy rate across the portfolio is just 3.5 per cent. Off the back of these robust results the company has upgraded its rental value growth guidance for the year, to between 2.5 per cent and five per cent for the portfolio overall, and three per cent and eight per cent for prime property.
Great Portland has been investing heavily in its Flex offering, a flexible workspace solution for companies that don’t want to take on long, burdensome leases. It has developed 434,000 square feet (sq ft) of space for Flex so far, with a target of 1m sq ft.
Despite the bullish letting update, Great Portland Estates reported a 10.3 per cent decline in the value of its portfolio, driven by a 12.4 per cent decline in the value of its retail properties. The value of the portfolio was £2.3bn. The IFRS net asset value per share declined 14.1 per cent from the March 2023 level to 650p.
During the period the company completed three acquisitions totalling £123m and has a further £0.7bn of deals under review. The group’s loan-to-value ratio was 28.9 per cent and it declared a dividend of 4.7p per share.
Toby Courtauld, Great Portland’s chief executive said today: “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.”
Shares in the company declined two per cent in London on Thursday morning.