One of GPE’s office redevelopments, at Hanover Square
(Picture: GPE)Great Portland Estates, one of central London’s major landlords, took a hit today from the revaluation of its property portfolio after a turbulent time for the City and the West End.
The FTSE 250 company reported a loss of almost £87 million and acknowledged that property values are under pressure. But it was upbeat on its prospects and the capital’s ability to get through the looming recession.
Toby Courtauld, Chief Executive, said: “Whilst economic challenges may persist in the near term, our experience is that many customers are looking through the downturn in assessing their real estate needs, seeking to trade up to great spaces that are fit for future working patterns.”
The company is entirely focused on central London and has always highlighted the cyclical nature of its business. Courtauld pointed to its “plan to deliver our £1.1 billion capex programme into this shortage and a recovering economy”.
The valuation of its properties was over £2.6 billion at the end of September, a decrease of 3.4% on a like-for-like basis since March 31.
With higher interest rates looming, GPE said it expected “investment activity in the central London commercial property market to remain muted”, with “prime yields to come under further upward pressure.”
It pre-let a major office development at 2 Aldermanbury Square to the law firm Clifford Chance, which will move back to the City from Canary Wharf where it has been based since 2003, after the project is completed in late 2025. It is using the steel removed from the old building there in its redevelopment at 50 Jermyn Street.
There are three other near-term redevelopment schemes starting from 2023, while others are nearing completion, including at 50 Finsbury Square, which is due to be finished next month and will be the new home of Inmarsat.
GPE said its five on-site and near-term projects will deliver over 1 million square feet of office space. A further three medium-term schemes take its pipeline to 1.3 million square feet.
Courauld added: “Demand for best in class spaces remains robust, driving strong leasing activity, best illustrated by our own record leasing since March.”
It signed 63 new leases in the six months to September 30, including at 1 Newman Street and Kent House in the West End. Hanover Square will be home to a new retail outlet from Opera Gallery, the seller of modern art, which will join Canali, Pronovias, Seiko, Moyses Stevens and WatchHouse in the luxury goods arcade there.
GPE’s shares fell 18p to 526p, a slip of just over 3%.
