Great Portland Estates, the listed London developer and investor, said it was turning its attention to £350 million of sales of prime London assets over the next 12 months as the investment market picks up, in upbeat full year results.
The group was bullish on rents, developments and profits surplus from these this morning as it reported on the financial year ended 31 March 2025.
GPE said it is rotating towards sales as the investment market strengthens with £350 million of near-term disposals planned, and 50% of them already under offer, and £650 million over the medium term. The sales will be brought forward once business plans complete, with its major development at 2 Aldermanbury Square in the City due to transfer into long-dated investments in the first quarter of next year.
GPE gave as examples of the sort of assets on the market as: 1 Newman Street, or Oxford House, 103/113 Regent Street, 2 Aldermanbury Square and its Hanover Square development, saying they would all eventually be sold.
GPE flagged the successful deployment of rights proceeds raised at the start of the financial year with £325 million invested, alongside strong operational performance, record investment leasing at a 10.6% premium to March 2024 estimated rental values (ERV) and a portfolio valuation increase of 3.6%. Rental values were up by 5%, while the portfolio estimated rental value (ERV) growth guidance has been upgraded to 4% to 7% for full year 2026.
It says its developments are delivering premium space into a supply drought saying there is between £220 million and £580 million of surplus to come depending on rental growth and yield shift. Its balance sheet strength has been maintained it said, with an EPRA loan to value of 30.8%, and cash and undrawn facilities of £376 million.
Speaking to CoStar News, chief executive Toby Courtauld said: "A year ago we told the market the time was right to acquire assets at a discount and we invested £325 million into classic GPE-style opportunities feeding the fully managed and the HQ pipeline. Our operating platform has in turn done really well. On our developments we think that absent any rent growth or yield compression they will throw off £220 million of surplus and if we get 20% rental growth and 0.25% on yield that goes to £580 million. That is as big a surplus as we have ever delivered and would be heavily driven by rents."
Courtauld described the market backdrop as incredibly supportive. "Prime vacancy in Mayfair is virtually zero. If you look at our income trajectory it is very strong. There is a lot to play for on assets we already own."
In terms of sales Courtauld said: "As this market evolves we are talking about rotating into a more balanced position. The next 12 months will be more balanced and we expect £350 million of sales."
In terms of the business's performance on the stock markets, Courtauld added: "There is a lot of dynamism helping our relative stock performance. We have a lot of work to deliver, a lot of growth there through development and our fully managed opportunity."
Nick Sanderson, chief financial and operating officer at GPE, added: "The equity market is looking for the strategy being implemented. Our strategy has been very consistent. We have been building the foundations of the fully managed portfolio and we said we will go buying and developing. And we are not saying it is job done; there is a lot more to harvest. And we are providing even more visibility than normal about the prospective future performance."
Courtauld added in a statement with the results: “We are pleased to report on a productive and successful year during which we achieved or exceeded most of the challenging operational targets we set ourselves, in spite of the often extreme and unpredictable macro-political backdrop; we successfully raised and then deployed, ahead of schedule, significant fresh equity capital into exciting new opportunities at a sizeable average discount of more than 50% to those assets’ replacement cost; we delivered a record quantity of investment leasing at a healthy 11% premium to ERV, growing rent roll by 15% and validating our focus on creating premium spaces, with our prime office rental values rising by 7.6% and Fully Managed capital values by 12.8% over the year. Pleasingly, our commitment to customer service has been rewarded with an exceptional 87% customer retention rate and an industry-leading Net Promoter Score.
Looking forward, Courtauld said, that despite ongoing macro-economic uncertainty, many of the conditions necessary for a period of attractive growth in central London’s commercial property values are "increasingly evident and we are well placed to prosper".
As such it has upgraded its forecasts for the year.
"We have amassed an enviable pipeline of prime development and refurbishment opportunities covering almost 40% of our portfolio from which we expect to generate material surpluses, given the extreme shortage of such space; London’s growing relative attractions are generating early signs of a reinvigorated investment market which will allow us to crystalise surpluses through asset sales; and our deeply experienced teams and strong financial position will enable us to take full advantage of these supportive conditions and generate attractive returns for shareholders, with a prospective 10%+ annualised return on equity and a threefold increase in EPRA EPS over the medium term."
The period saw four acquisitions (£162 million, all West End) at a 53% discount to replacement cost, including the headquarters development opportunity at One Chapel Place, W1 for £56 million.
It was a strong leasing year, with rent roll up 15% with high customer satisfaction scores. There was £37.7 million of lettings signed (GPE share: £32.6 million), with market lettings on average 10.6% ahead of March 2024 estimated rental value.
Its flex offer now takes in 582,000 square foot. Vacancy marginally increased to 5.9%. There are a further £3 million of lettings under offer 14.4% above the March 2025 ERV.
The portfolio valuation is £2.9 billion, up 3.6%, with offices at plus 4.3%. GPE posted an IFRS profit after tax of £116 million with the dividend maintained at £31.9 million or 7.9 pence per share.
It is making good progress at seven on-site development and refurbishment schemes, it said.
Analysts at Panmure Liberum Real Estate said: "In our view the FY25 actuals are not the story. This is as bullish as we have seen GPE both in messaging and development commitment. We see strong upside to our development forecasts in terms of volume, margins and lower risk. We think the market’s view of last year’s equity placement and deployment could change starting with this release. NTA 494p up 4.4% yoy, EPRA EPS 5.2p (PanLib 4.7p), Portfolio rent growth guidance upgraded to 4-7%, development volumes up, profits guidance up. All in all about as positive as we can remember from GPE."