Great Portland Estates Plc · LSE:GPE
Great Portland Estates — Investor Presentation (February 2024)
26 slides from Great Portland Estates's investor presentation, February 2024
Slide 1: Investor & analyst Flex session - Feb 2024
Investor & analyst Flex session - Feb 2024 We unlock potential, creating sustainable space for London to thrive
Slide 2: Agenda
Agenda Business update & overview Toby Courtauld, Chief Executive The Flex market, the GPE offer & Simon Rowley, Director of Flex Workspaces leasing Our Flex growth opportunity Nick Sanderson, Chief Financial and Operating Officer Summary Toby Courtauld, Chief Executive Q&A 2
Slide 3: Q3 Business Update
Q3 Business Update Strong Operational Performance Preparation ongoing for two profitable near-term schemes • £16.1 million of leases signed (9 months to 31 Dec 2023) • Minerva House, SE1 anticipated H1 start • 10.7%> Mar ‘2023 ERV • 143,100 sq ft of new Grade A offices; river frontage • £4.9 million
Slide 4: Why Flex matters
Why Flex matters 1. The default choice for sub 5,000 sq ft office space 57% of West End lettings sub 5,000 sq ft 1 2. The market is sizeable and growing 50m sq ft by 2028 in central London 1 3. The customer base is diverse & broader than just SMEs 57% customers to have 10%+ in flex (2028) 1 4. Custo
Slide 5: The Flex Market Opportunity
The Flex Market Opportunity Themes play to GPE positioning The Market is Maturing Corporate Occupation Increasingly the Norm Size of companies occupying flexible office space globally4 : • Increasingly default choice for smaller spaces: 57% of West End lettings sub 5,000 sq ft1 2023 8 20 20 20 34 •
Slide 6: Our Flex Offers: Fitted
Our Flex Offers: Fitted Hassle-free experience; business ready Private floor with your own front door Customer branded, customisable space Desks, chairs & soft furnishings all included Plug and play with a secure internet connection sesame® smart building app and lifestyle concierge service Straight
Slide 7: Our Flex Offers: Fully Managed
Our Flex Offers: Fully Managed All the benefits of Fitted, plus full-service delivery by GPE; all-in-one bill Services include: • community manager and concierge service • business rates • food & beverage • cleaning service • maintenance inc. handyman service • planting • waste management No. of uni
Slide 8: Our Flex Offers: Flex Partnerships
Our Flex Offers: Flex Partnerships By desk and room Leveraging partner infrastructure: • High-intensity, smaller spaces / co-working • Delivers increased amenity; enlivens building • Incubator for future Fitted / Fully Managed customers • Provides customers with expansion / project space Partnership
Slide 9: Not WeWork, Not Co-Working
Not WeWork, Not Co-Working Our Unique Flex Offer Proven in numerous buildings and locations: 434,000 sq ft; 105 units Well-located, high-quality buildings operated by trusted owner 20 2,400 sq ft Leased by floor/unit (not desk): ‘Fully Yours’ Buildings Avg unit size • Fitted: Dedicated, furnished sp
Slide 10: Our Flex Performance
Our Flex Performance Strong leasing driving performance Leasing Momentum Driving Performance Trailing twelve months Fitted Fully Managed Sep 22 Mar 23 Sep 23 Lettings 12mths to Sept-23 13% Actual Actual Target £12.1m £11.8m H1 Net Effective Rent Beat1 +66% +103% >50% £207psf £6.4m 11% Relative Cashf
Slide 11: Flex Opportunity
Flex Opportunity Customer retention key; further benefits from scale Strong Customer Satisfaction and Retention: Key to Success Benefits from GPE Scale GPE Office Fitted Fully Managed • Clustering NPS 44 42 62 • Customer retention & growth 85% • Opex management 75% • Pricing power Customer 68% • Fit
Slide 12: Growing With Our Flex Customers
Growing With Our Flex Customers Our journey with Synthesia so far… 16 Dufour’s Place, W1 Kent House, W1 • Synthesia is an AI Video generator • Dec 21: Series B fund raised company founded in 2017 • July 22: new lease 3,547 sq ft • From Albert House (The Office Group) • 3-year term, Fully Managed Aug
Slide 13: Attractive Growth Opportunity
Attractive Growth Opportunity Targeting growth to 1m sq ft: predominantly Fully Managed Growth to 1m+ sq ft: Predominantly Fully Managed (000 sq ft) +48% +56% • Organic: Portfolio well suited; 84% GPE office spaces <10k sq ft 1,000 • 208k sq ft (48%) further planned conversions • Acquisitions: 5 pur
Slide 14: Attractive Organic Growth Opportunity
Attractive Organic Growth Opportunity Investment in Fully Managed space to drive returns; NOI up by 195% by 2028 Fully Managed space today: Rising to 189,000 sq ft post Further growth to 381,000 sq ft by 2028: 75,000 sq ft let refurbishment: £17m NOI by 2025 £36m of NOI by 2028 (up 195% 3) Rent rol
Slide 15: Flex Acquisitions
Flex Acquisitions Clear criteria GPE Flex Requirements • Amenity rich locations/excellent transport links • Clustering around existing GPE holdings desirable • Targeting Soho, Mayfair/St James’s, Fitzrovia, Southwark, Farringdon/Midtown • 30-60k sq ft with divisible floorplates • Target unit size of
Slide 16: Flex Acquisitions: St Andrew Street, EC4
Flex Acquisitions Strong acquisition track record; 6 St Andrew Street, EC4 • Bought May 2022; £30m; 46,200 sq ft • Under refurbishment; completion Q4 ‘24 • Two new floors • 9 floors, 1,200 – 5,800 sq ft • Targeting c.£178 psf; total NOI £4.9m • Large amenity provision • Welcome lounge and boardroom
Slide 17: Flex Acquisitions: Wardour Street, W1
Flex Acquisitions Strong acquisition track record; 141 Wardour Street, W1 • Bought May 2023; £39m; 29,900 sq ft • Under refurbishment; completion Q2 ‘25 • Attractive floor plates, 6 floors, sub 5,000 sq ft • Terraces on top 3 floors with shared rooftop space • Best in class amenity to help achieve p
Slide 18: Summary
Summary GPE Positioning Strong • Flex spaces a core element of the GPE office offer • Prerequisite for maximising returns from smaller spaces • Synergies with HQ repositioning activities • The market is growing, with a widening customer base • The GPE Flex offer is seeing strong demand, driven by ou
Slide 19: Appendix
Appendix We unlock potential, creating sustainable space for London to thrive
Slide 20: GPE Group Strategy
GPE Group Strategy Addressing all the key themes Key Themes… … Addressing Each Through Our Strategic Givens Low financial leverage; through the cycle Macro challenges focus on in-demand markets with supply shortage Create the best; leasing well & prime rents rising Best outperforms rest 100% central
Slide 21: London Market Conditions
London Market Conditions Macro affecting yields; London leasing fundamentals compelling; best rents rising Main Messages ‘Best vs Rest’2 Near-term macro challenges; central London outperforming UK Rental values (2018=100) Grade A as % of market lettings4 32% • London GVA > UK GDP (1.7% vs 1.4% avg ‘
Slide 22: London Market Conditions
London Market Conditions Vacancy low; prospective supply low; best rents rising Office Vacancy 1 ; West End Prime Globally Low New Office Supply to Tighten Further2, 3 24.4% Manhattan Spec Completions (‘23-’26 avg)3 2.7m sq ft p.a. 25.0% New / Pre-Let Take Up (10 yr avg)2 5.0m sq ft p.a. Central Lon
Slide 23: Where Next For Capital Activity?
Where Next For Capital Activity? Take advantage of re-emerging cycle Capital Activity (£m) Progress Capex Programme • HQ & Flex in core locations – well timed into supply shortage Committed Capex Development & Flex Capex • Healthy demand; rents to rise 200 Acquisitions less Sales1 Grow Flex 180 250.
Slide 24: Our Portfolio
Our Portfolio1 Significant potential to add value Portfolio by Asset Class by Value Portfolio by Product by Area Committed Ready to Fit Developments Long-Dated Retail 1,724k sq ft £105m £675m 518k sq ft 5% Development Pipeline 12% 20% Prime £280m 29% 24 % Flex 2 16% 434k sq ft Opportunity Assets A
Slide 25: Our Flex Performance: How we measure performance
Our Flex Performance How we measure performance Target Lettings 12mths to Sept-23 Calculation Purpose Fitted Managed Fitted Managed Net effective Flex NE rent − Opex Additional rent being generated from 30%+ 50%+ 66% 103% rent beat Ready to Fit NE rent Flex Additional cashflow being generated 10yr c
Slide 26: Disclaimer
Disclaimer This presentation contains statements that constitute forward-looking statements relating to the business, financial performance, results of operations, financial condition, liquidity, prospects, growth and strategies and results of GPE and the industry in which GPE operates. T hese state
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