London landlord Great Portland Estates pulled its guidance on rental values for the year, but warned that the coronavirus crisis would continue to have a negative impact on property in the capital.
The property firm’s portfolio value dropped 0.3 per cent in the year ended 31 March as retail property values fell 3.5 per cent. Its office portfolio value increased one per cent.
The company reported rental value growth of 1.4 per cent, in line with expectations, although retail rents dropped 4.3 per cent.
Great Portland Estates did not offer guidance for the year, saying it expects rent and capital values to continue to fall in the event of a recession sparked by the coronavirus pandemic.
However, it said it remained confident of London’s “magnetic appeal as a global business capital”.
Great Portland Estates said it had collected 71 per cent of quarterly rent due in March, and that it was working with tenants on a “case by case basis” during the coronavirus crisis.
It has not furloughed any employees under the coronavirus job retention scheme, and does not plan to access any government funding due to the pandemic.
The company said market lettings were 8.8 per cent March last year and it expected “robust demand” for flexible office space after the lockdown.
The company will pay a final dividend per share of 7.9p.
Great Portland Estates chief executive Tony Courtauld said: “As we examine the implications for our business, it is clear that we must plan for a recession with an increase in unemployment, leading to reduced occupational demand for space, implying falling rental and capital values.
“Key to our market’s performance will be both the depth of the downturn and the shape of the recovery.
“Given this uncertainty, we are pausing the provision of guidance on rental value movements until the picture becomes clearer.
“Whatever the outcome, whilst some working practices might change, our human desire to congregate and create underpins our belief that London’s magnetic appeal as a global business capital will persist for the long term.
“This belief is reinforced by our current leasing discussions, illustrating occupiers’ ongoing appetite to secure high quality, sustainable space.”