Great Portland Estates Plc · LSE:GPE
Great Portland Estates — H1 2025 Earnings Presentation
106 slides from Great Portland Estates's earnings presentation, November 2024
Slide 1: Half Year Results 2024
Half Year Results 2024 We unlock potential, creating sustainable space for London to thrive
Slide 2: Executing Growth Strategy: On Track
Half Year Results 2024 Executing Growth Strategy: On Track • Taking advantage of compelling market opportunity • Timing right to buy, not sell • 3 acquisitions; £106m, 30% of Rights Issue proceeds • Adding to programme of HQ & Flex; into supply crunch and rental growth • Strong operational performan
Slide 3: Agenda
Agenda Delivering Our Strategy Toby Courtauld, Chief Executive Market Opportunity Platform for Growth - Development Toby Courtauld, Chief Executive - New Business - Flex Nick Sanderson, Chief Financial & Operating Officer Financial Results Nick Sanderson, Chief Financial & Operating Officer Investin
Slide 4: Delivering on Our Growth Strategy
Delivering on Our Growth Strategy Contra-Cyclical Capital Management; raise and buy when cheap...sell and return when too expensive £m Index 130.0 Central London 166 138 336 250.0 120.0 Real capital values1 (RHS) 110.0 Acquisitions less Sales 0.0 100.0 - Acquisitions £1.7bn H1 ‘25 90.0 - Disposals £
Slide 5: Half Year 2024 Results
Half Year 2024 Results Strong Operational Performance GPE Lettings (£m) vs Vacancy Rate • Excellent leasing continues; £10.5m H1 ’25 20.0% • 7.0%> Mar ‘24 ERV1; Offices: 8.9% beat 60 Investment Lettings Pre-lets Vacancy (right hand scale) • Under Offer £7.1m, 16.2%> Mar ‘24 ERV1 13.2% • ERVs up 1.1%
Slide 6: Opportunity: Best Rents Set to Rise Strongly
Opportunity: Best Rents Set to Rise Strongly Demand above avg; vacancy low; prospective supply low; best and Flex rents rising Demand Up; Leasing Activity Robust; Flight to Quality Office Vacancy3 ; West End and City Prime Globally Low City & West End Leasing 1 May ‘24 20.0% m sq ft 10 year avg. c.2
Slide 7: Opportunity: London Investment Market Disrupted
Opportunity: London Investment Market Disrupted Volumes lower than GFC Market Commentary Real Capital Values Inflecting; Remain Near 2009 Low Central London Real Capital Value 1 • Cycle inflected Index, March 2000 = 100 125 • Turnover volumes remain disrupted; lower than GFC • Stock available up 26%
Slide 8: Market Outlook; Strongly Supports Our Strategy
Market Outlook; Strongly Supports Our Strategy Bifurcated markets: positive prime rental and yield outlook Office Rents Yields Near Term Outlook Near Term Outlook Driver May ‘24 Nov ‘24 Driver May ‘24 Nov ‘24 GDP / GVA growth Rental growth Business confidence Weight of money Business investment Gilt
Slide 9: Agenda
Agenda Delivering Our Strategy Toby Courtauld, Chief Executive Market Opportunity Platform for Growth - Development Toby Courtauld, Chief Executive - New Business - Flex Nick Sanderson, Chief Financial & Operating Officer Financial Results Nick Sanderson, Chief Financial & Operating Officer Investin
Slide 10: Significant Capex Programme
Significant Capex Programme 40% of portfolio; delivering into deep supply shortage 19/23 Wells St, Whittington House, Thirty O ne Alfred Place, The Courtyard, 7/15 Gresse St , 2 Aldermanbury Minerva House, W1 (Flex) WC1 WC1 (Flex) WC1 (Flex) W1 (Flex) Sq, EC2 SE1 3 On site HQ 51% pre-let1 0.5m sq ft
Slide 11: On Site HQ Developments; Good Progress
On Site HQ Developments; Good Progress All Prime; exemplary sustainability; strong pre-let potential 2 Aldermanbury Square, EC2 30 Duke Street St James’s, SW17 322,600 sq ft; +83% 68,600 sq ft; +25% 100% pre-let; c.1,700t of steel for re-use Steel reuse from City Place House = column free floors On
Slide 12: Near Term HQ Programme
Near Term HQ Programme Delivering into supply-constrained market Soho Square, W1 St Thomas Yard, SE11 185,300 sq ft; +89% Major refurb / extension; in design More profitable than tower proposals Terracing Start on site Q3 ‘26 Anticipated finish Q4 ‘28 93,800 sq ft; +63% New build; best in class amen
Slide 13: Agenda
Agenda Delivering Our Strategy Toby Courtauld, Chief Executive Market Opportunity Platform for Growth - Development Toby Courtauld, Chief Executive - New Business - Flex Nick Sanderson, Chief Financial & Operating Officer Financial Results Nick Sanderson, Chief Financial & Operating Officer Investin
Slide 14: Compelling Acquisition Opportunities
Compelling Acquisition Opportunities A strong start Probability GPE Targets1 Sites Quoted Price Capex Total Weighted2 A list May ‘24 8 £244m £491m £735m £350m Acquired 3 £106m £95m £201m £201m 3 acquired since May ‘24 • In line with our disciplined Fully Managed Fully Managed HQ acquisition criteria
Slide 15: Whittington House, Alfred Place, WC1
This isWhittington Acquired; a title House, Alfred Place, WC1 Adding to our HQ refurbishment pipeline Bought Nov ‘24 Whittington Target HQ metrics House • £58.5 million; c.60% discount to replacement cost1 Stabilised Yield 150-200 bps > cap rate 6.8% (+155bp) • 105 year LLH at 10% gearing from City
Slide 16: 19/23 Wells St, W1
This is19/23 Acquired; a titleWells St, W1 Adding to West End Fully Managed cluster Bought off market: Oct ‘24 • £19 million, £991 psf; 7.6% NIY • 45% discount to replacement cost 1 • Simultaneous regear with freeholder to new 125 yr LLH @ 15% gearing • Close to existing GPE West End holdings Upgrad
Slide 17: Agenda
Agenda Delivering Our Strategy Toby Courtauld, Chief Executive Market Opportunity Platform for Growth - Development Toby Courtauld, Chief Executive - New Business - Flex Nick Sanderson, Chief Financial & Operating Officer Financial Results Nick Sanderson, Chief Financial & Operating Officer Investin
Slide 18: GPE Flex: Exploiting a Growth Opportunity
GPE Flex: Exploiting a Growth Opportunity Continuing to drive our Fully Managed growth in a growing market What we said Today Our Unique, Differentiated Fully Managed Offer about the market Growing market Expecting to reach 50m sq ft 1 • All-in-one, hassle free customer experience 2,549 sq ft 2.8 yr
Slide 19: GPE Fully Managed: Driving Income Growth
GPE Fully Managed: Driving Income Growth Strong leasing and operations driving performance; more to come Strong Leasing Ahead of ERV Our Platform Delivering Outsized Performance Leasing Well: Retention key to success 12 months to FY25 H1: 11 Fully Managed lettings, £5.5m, 8.9% > ERV Lettings Sept ‘2
Slide 20: Financial Results: Platform for Growth
Financial Results: Platform for Growth Passing the valuation & earnings trough, with opportunity-rich portfolio & strong balance sheet % of Property Portfolio Sept 24 Change 6 months portfolio valuation2 ERV Growth2 Yield Portfolio value 1 £2,496.5m +0.8%2 Retail 20.4% 1.2% +0.9% +4bps Office 79.6%
Slide 21: Investing to Deliver Value Growth
Investing to Deliver Value Growth Total capex of £795m to deliver surpluses of £225m 2 with upside potential Development and Refurbishment Programme £m NIY On site Near Term Surplus to come Surplus 300 £394m £401m £225m Sensitivity +25bps Flat -25bps -50bps Flat £131m £225m £329m £444m +5% £201m £29
Slide 22: Investing to Deliver Income Growth
Investing to Deliver Income Growth Significant rent roll growth to drive earnings growth beyond FY ‘25 350 On site HQ developments and Fully Managed refurbs Fully Managed Rent Roll £156.1m Near-term HQ developments and Fully Managed refurbs Vacancy and other refurbishments Opex 30.7 300 Opex Reversi
Slide 23: Investing From Strong Balance Sheet
Investing From Strong Balance Sheet Proactive management of debt profile Attractive Debt Profile: Well Positioned £m 500 5.8% £450m ESG-linked RCF Sustainable Bond £175m portion of £150m ESG-linked RCF £250m Sustainable Bond 400 Term loan Term Loan repaid 3+1+1 year term 7-year term 175bp margin 90b
Slide 24: Commitment to Conservative Leverage
Commitment to Conservative Leverage LTV expected to rise as we invest into a rising market Illustrative Pro Forma LTV Analysis Based on Current Rents and Before any Yield Compression 45 Contra cyclical capital management: % Total investment: £1.1 bn buy in weak markets; sell once recovered Total sal
Slide 25: Platform for Growth
Platform for Growth Financial Outlook Strong balance sheet to deliver growth ambitions • FY25 LTV expected to remain above through cycle range midpoint in a rising market • Maintain diversified & flexible debt book and healthy liquidity Positioned for positive TAR • Values inflecting with positive T
Slide 26: Agenda
Agenda Delivering Our Strategy Toby Courtauld, Chief Executive Market Opportunity Platform for Growth - Development Toby Courtauld, Chief Executive - New Business - Flex Nick Sanderson, Chief Financial & Operating Officer Financial Results Nick Sanderson, Chief Financial & Operating Officer Investin
Slide 27: Outlook: Growth
Outlook: Growth 1. Strong market opportunity 2. Executing our Growth Strategy • London remains Europe’s business capital Income growth • Serious shortage of Grade A supply • Focus on customers’ needs; quality, service, sustainability, amenity • Rents rising; best outperforming the rest • Flex spaces
Slide 28: Agenda
Agenda Toby Courtauld, Chief Executive Nick Sanderson, Chief Financial & Operating Officer Dan Nicholson, Executive Director Q&A: Janine Cole, Sustainability & Social Impact Director ir@gpe.co.uk Simon Rowley, Director of Flex Workspaces Marc Wilder, Leasing Director Andrew White, Development Direct
Slide 29: Disclaimer
Disclaimer This presentation contains certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or impli
Slide 30: Appendix: Portfolio and Valuation
Appendix: Portfolio and Valuation We unlock potential, creating sustainable space for London to thrive Appendix
Slide 31: Compelling Acquisition Opportunities
Compelling Acquisition Opportunities Acquisition Criteria: Fully Managed Vendors’ Value Aspirations Continue to Soften • Amenity-rich locations; excellent transport links Stock Traded Near GPE ‘Fair Value’ • Clustering around existing GPE holdings: Soho, Mayfair/St James’s, Fitzrovia, Southwark, Far
Slide 32: Our Portfolio
Our Portfolio1 Significant potential to add value Portfolio by Asset Class by Value Portfolio by Product by Area Committed Developments Retail Ready to Fit £275m; Exit Yield: 5.0% Development Valuation: (2.0%) 501k sq ft 1,719k sq ft Pipeline Cap Val £489 psf £191m; NIY: 3.3% 9% 15% Valuation: (2.1
Slide 33: GPE Portfolio Mix
GPE Portfolio Mix1 At 30 September 2024 By Type (by value) By Location (by value) Midtown 6% Southwark Retail 7% 20% City Noho 15% 36% Office 80% Rest of West End 36% 1. Includes share of Joint Ventures 33
Slide 34: Property Valuation
Property Valuation1 H1 Growth of 0.8% Attractive ERV Growth; Prime spaces Driving Value Growth… … with TEY up to 5.4% Today % of Property 6 months portfolio Valuation1 ERV Growth1 Yield Net Initial Yield True Equivalent Yield % Retail 20% 1.2% +0.9% +4bps 6.7 Office 80%2 0.8% +1.2% +2bps 5.7 5.3 5.4
Slide 35: The Valuation
The Valuation Including share of Joint Ventures Movement % Office vs Retail 1 To 30 Sep‘24 £m 6 months 12 months Offices Retail2 North of Oxford St 906.9 1.6% (1.4%) H1’25 H1’25 +1.2% +0.8% Rest of West End 839.4 1.7% 1.6% H2’24 H2’24 (1.2%) Total West End 1,746.3 1.7% - (2.4%) Total City, Midtown &
Slide 36: The Valuation
The Valuation1 Drivers of valuation movement % movement Yield shift Rental value movement Residual 6 months (0.6%) 1.1% 0.3% 12 months (2.2%) (2.3%) 3.1% (6.0%) (4.0%) (2.0%) - 2.0% 4.0% 1. Including share of Joint Ventures 36
Slide 37: The Valuation
The Valuation Including share of Joint Ventures Net Initial Yield1 Equivalent Yield Basis point +/- % % 6 month 12 month North of Oxford Street Offices 3.6% 5.4% 4 16 Retail 3.4% 5.5% 5 27 Rest of West End Offices 3.5% 5.3% 2 9 Retail 3.4% 4.7% 2 25 Total West End 3.5% 5.3% 3 16 City, Midtown and So
Slide 38: The Valuation
The Valuation Including share of Joint Ventures 6 months to Value Sep‘24 Change 12 months £m £m % % North of Oxford St 906.9 14.6 1.6% (1.4%) Rest of West End 839.4 13.9 1.7% 1.6% Total West End 1,746.3 28.5 1.7% - City, Midtown and Southwark 474.8 (3.2) (0.7%) (5.7%) Investment portfolio 2,221.1 25
Slide 39: The Valuation
The Valuation Wholly Owned 6 months to Value Sep‘24 Change 12 months £m £m % % North of Oxford St 869.4 14.3 1.7% (1.5%) Rest of West End 490.3 13.4 2.8% 2.4% Total West End 1,359.7 27.7 2.1% (0.1%) City, Midtown and Southwark 378.1 (4.2) (1.1%) (4.5%) Investment portfolio 1,737.8 23.5 1.4% (1.1%) D
Slide 40: The Valuation
The Valuation Joint Ventures (100%) 6 months to Value Sep‘24 Change 12 months £m £m % % North of Oxford St 74.9 0.5 0.6% 0.1% Rest of West End 698.3 1.1 0.2% 0.4% Total West End 773.2 1.6 0.2% 0.4% City, Midtown and Southwark 193.5 1.9 1.0% (10.0%) Investment portfolio 966.7 3.5 0.4% (1.9%) Developm
Slide 41: The Valuation
The Valuation1 ERV and reversionary potential Average Office Average Reversionary Movement in ERV Rent Passing Office ERV Potential 6 months To 30 Sep‘24 12 months % £m % £ per sq ft £ per sq ft % North of Oxford St Offices 1.4% 0.7 4.8% 87.40 104.00 9.5% Retail 1.1% 0.1 2.7% 6.5% Rest of West End O
Slide 42: GPE Leasing Progress
GPE Leasing Progress GPE: Investment Portfolio Lettings1 Lettings, % ahead of ERV2 £m (18.6) (6.0) 7.8 13.3 8.7 4.2 4.5 8 .7 1.5 3.4 5.9 8.4 0.7 7.5 4.1 9.1 7.0 30 2009 – FY 2024 Avg +4.0% above ERV 20 10 0 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 24 HY 25 GPE: Space Under Offer3
Slide 43: GPE Customers
GPE Customers1 By sector Retailers, hospitality & leisure TMT Professional & Business Services Financial Servcies Corporates Government & Other 100% Government & Other 0% Corporates 19% 75% Financial Services 22% Professional & Business Services 16% 50% TMT 11% Retailers: Head Offices 8% 25% Retaile
Slide 44: Top Customers
Top Customers1 30 Sep ’24 Customer Sector £m Kohlberg Kravis Roberts Financial Services 4.4 Runway East Professional & Business Services 4.4 Glencore Corporate 3.1 Exane Financial Services 2.8 Richemont2 Retailers & Leisure 2.7 Top 10 Uniqlo Retailers & Leisure 2.6 26.1% Fashion Retail Academy2 Reta
Slide 45: Portfolio Management
Portfolio Management Customer retention, 12 months to Sep ‘24 1 Area (000 sq ft) 450 400 400 350 300 273 250 200 150 127 100 75% 50 21% 4% 0 Expiries & Breaks Refurbishment / Sub total Retained Relet / Under offer Remaining Development 1. Joint Ventures at 100% 45
Slide 46: Portfolio Management
Portfolio Management Movement in reversions1 6 months to 30 Sep ‘24 31 Mar ‘24 At beginning of period £10.8m £14.9m Portfolio activity2 (£1.3m) (£4.0m) Reversion capture (£0.8m) (£1.4m) Acquisitions and disposals - (£1.2m) ERV movement £1.0m £2.5m At end of period £9.7m £10.8m 1. Based on let portfo
Slide 47: Portfolio Management
Portfolio Management Expiry profile1 % by total rental income subject to lease expiry or break Years to March Investment Portfolio Near Term Developments 40.0 30.0 20.0 0.3 3.5 30.4 10.0 21.3 0.8 13.3 13.1 8.6 8.5 0.0 '25 '26 '27 '28 '29 After 1. Includes share of Joint Ventures 47
Slide 48: Portfolio Management
Portfolio Management Void rate, % by rental value 1 % by rental value as at 30 Sep ‘24 Investment Portfolio Newly completed developments Development / refurbishment Pre-Let 50 45 40 11.2 11.6 35 30 2.4 3.3 12.2 3.5 4.2 7.1 13.1 25 14.5 HQ 14.6% 4.7 5.5 15.4 4.7 5.8 6.4 20 12.9 30.5 32.0 22.0 14.8 4.
Slide 49: Appendix: Financials
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Slide 50: Balance Sheet
Balance Sheet Proportionally consolidated for Joint Ventures £m Group JVs Total Mar ‘24 Investment property 2,013.2 483.3 2,496.5 2,331.2 Other assets 46.4 2.2 48.6 37.3 Net debt at book value (524.1) 22.7 (501.4) (691.8) Other liabilities (102.2) (12.9) (115.1) (93.7) Net assets and EPRA NTA 1,433.
Slide 51: Income Statement
Income Statement Proportionally consolidated for Joint Ventures £m Group JVs Total Sep ’23 Rental income 31.5 7.7 39.2 45.0 Fees from joint ventures 1.0 - 1.0 0.6 Property and administration costs (23.9) (1.5) (25.4) (26.4) Revaluation of other investments (0.1) - (0.1) - Finance costs (3.9) (2.5) (
Slide 52: EPRA Performance Measures
EPRA Performance Measures Measure Sep ‘24 Mar ‘24 EPRA Net Tangible Assets £1,928.6m £1,582.6m EPRA NTA per share 475p 520p1 EPRA NDV £1,980.0m £1,633.7m EPRA NDV per share 488p 537p1 EPRA NRV £2,110.7m £1,752.7m EPRA NRV per share 520p 576p1 EPRA LTV 23.3% 32.6% Sep ’24 Sep ’23 EPRA earnings £8.5m
Slide 53: EPRA NTA Per Share
EPRA NTA Per Share Marginally up as valuations inflect pence 480 2 1 4 475 475 473 5 470 465 460 455 450 Mar '24 Wholly owned valuation JV valuation EPRA EPS Final dividend Sep '24 Pro forma 53
Slide 54: Administration Costs
Administration Costs Growth in overhead expected to moderate £m 45 Salaries and other employee costs Performance/share-based pay 150 145 40 Other Headcount 129 10.3 124 35 114 111 110 11.6 8.9 30 12.0 25 7.9 8.6 8.0 7.8 9.6 6.9 20 4.4 7.7 3.7 3.7 15 5.6 4.5 6.1 6.2 10 20.1 18.1 16.5 12.6 13.4 13.7 1
Slide 55: Robust Debt Metrics
Robust Debt Metrics Low-cost debt book Sep ‘24 Mar ’24 Net debt excluding JVs1 (book value £m) 547.7 738.0 Gearing (net debt/net equity) 28.5% 46.8% Total net debt including 526.2 713.5 50% JV cash balances (£m) EPRA loan-to-property value 23.3% 32.6% Pro Forma Sep ‘24 Mar ’24 Interest cover ratio a
Slide 56: Debt Pricing Update
Debt Pricing Update Bond markets and interest rates UK Interest Rates1 Government Bond Yields1 % % 6 10yr Gilt Base Rate 5 10yr Bund 5yr Swap 10yr Treasury 4 10yr Gilt 3 2 1 0 -1 Bond Spreads GBP BBB Bonds (ex Financials) Yields1 % % iBoxx GBP BBB Non-Financial Spreads 1 8 4 Real Estate IG Spreads2,
Slide 57: Joint Venture Business
Joint Venture Business Contribution to Group % of net assets held in JV Net assets held in JV1 40 Access to new property Risk sharing £125.7m 35 £323.4m 30 25 £46.2m 20 Total £495.3m 15 As % of 25.7% Group net assets 10 Previous joint venture partners 5 0 Mar '14 Mar '15 Mar '16 Mar '17 Mar '18 Mar
Slide 58: Appendix: Flex
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Slide 59: Our Flex Portfolio
Our Flex Portfolio Proven in numerous buildings and central London locations: 525,000 sq ft; 133 units GPE Flex: Key Selling Points • Well located, high quality buildings • Self contained • From reputable owner • Thoughtfully designed 5 3 • Sustainably managed • Embedded technology 19/23 Wells Str
Slide 60: Three Flex Products
Three Flex Products We understand our customers GPE Flex Products Flex Fitted Fully Managed Partnerships GPE delivered; Partnership delivered; What Customers Want by floor /building by desk/room Dedicated, fully furnished space; customised branding ✓ ✓ Flexible agreements; space to grow ✓ ✓ ✓ Sustai
Slide 61: 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 62: 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 • food & beverage 3 • cleaning service • maintenance inc. handyman service • planting • waste management • business rates No. of u
Slide 63: 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 64: Fully Managed: Four Schemes in Refurbishment
Fully Managed: Four Schemes in Refurbishment Collectively delivering best in class space into our target clusters SIX St Andrew St, EC4 Thirty One Alfred Place, WC1 • 47,900 sq ft • 41,500 sq ft • ERV1 £183 sq ft • ERV1 £194 sq ft • Unit range: 1,200 to 5,800 sq ft • Unit range: 700 to 5,400 sq ft •
Slide 65: Fully Managed: Growing our Southbank cluster
Fully Managed: Growing our Southbank cluster Integrating existing ownership of Woolyard with Bramah House acquisition 1 2 Sep ‘20 • 36,100 sq ft offices; acquired 2006 • Prime Southbank location on Bermondsey Street • 100% Ready to Fit; generating £1.5m rent roll Sep ‘21 • Refurbishment of central c
Slide 66: Our Flex Performance
Our Flex Performance How we measure performance Target Lettings 12mths to Sep ‘24 Calculation Purpose Fitted Managed Fitted Managed Flex NE rent − opex − voids Book value + Capex Relative income return on capital Yield on cost 5.0%+ 6.0%+ 6.1% 6.8% invested Average over 10 years post refurb Fully Ma
Slide 67: Fully Managed: Customer and submarket mix
Fully Managed: Customer and submarket mix Customer mix: Flex market v GPE GPE submarket mix: focus on key clusters % committed at Sep ’24 (inc. on site refurbs) 100% Avg Rent roll £psf at Sep ‘24 Fitzrovia 24% Avg Rent £223 psf Southwark 14% 80% Avg Rent £169 psf 60% City 12% Avg Rent £145 psf West
Slide 68: Appendix: Market Conditions
Appendix: Market Conditions 68
Slide 69: London Market Conditions
London Market Conditions London growing and set to outperform the wider UK 1 Robust London Business Activity London Remains in Upper Range of Activity; vs. Rest of UK Sep ‘24: 54.6 PMI March 24: Business activity index 70 London Jobs Business Activity 56 55 54 53 50 52 51 50 Sep ‘24: 52.8 30 '06 '08
Slide 70: London Market Conditions
London Market Conditions New Space Letting at Record Speed1 Investment Market; Pressure on Yields 25% 1200 40 Months to 75% let Cost of Debt2 City Prime Yields 30 City Capital Values3 20 1000 Let post PC (months) 20% 10 0 (10) 800 Let pre PC (months) (20) 15% 05 07 09 11 13 15 17 '19 '21 '23 Central
Slide 71: London Market Conditions
London Market Conditions Active Demand Occupiers Looking to Increase / Decrease Space by Area 1 Active Demand by Sector1 m sq ft Tech & Media Professional Services 25% 6.0 Financial & Banking 5.0 20% Increasing 50% by area 4.0 15% 3.0 Decreasing 10% 15% by area 2.0 5% 1.0 0% 0.0 '14 '15 '16 '17 '18
Slide 72: London Market Conditions
London Market Conditions London remains the leading global commercial hub FDI projects & jobs created by region ‘23 1 FDI projects (financial & professional services) by city ’19 – ‘232 400 # FDI Projects (LH scale) Jobs created by FDI 30,000 359 697 25,000 300 300 590 20,000 197 200 15,000 420 13,6
Slide 73: Central London Active Demand
Central London Active Demand Active Demand Central London demand 10 year quarterly average m sq ft 14.0 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 Q1 '07 Q1 '08 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q1 '18 Q1 '19 Q1 '20 Q1 '21 Q1 '22 Q1 '23 Q1 '24 Source: Cushman and Wakefield
Slide 74: City & Southbank Active Requirements
City & Southbank Active Requirements >10,000 sq ft Change Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep 12 1s t 6 2nd 6 000 sq ft ‘14 ‘14 ‘15 ‘15 ‘16 ‘16 ‘17 ‘17 ‘18 ‘18 ‘19 ‘19 ‘20 ‘20 ‘21 ‘21 ‘22 ‘22 ‘23 ‘23 ‘24 ‘24 mths mths mths Professional 945 841 904
Slide 75: West End Active Requirements
West End Active Requirements >10,000 sq ft Change Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep 12 1s t 6 2nd 6 000 sq ft ‘14 ‘14 ‘15 ‘15 ‘16 ‘16 ‘17 ‘17 ‘18 ‘18 ‘19 ‘19 ‘20 ‘20 ‘21 ‘21 ‘22 ‘22 ‘23 ‘23 ‘24 ‘24 mths mths mths Professional 40 20 115 275 120 35
Slide 76: City Take-Up
City Take-Up m sq ft Secondhand New Completed Pre-let 10-Year Average 1.3m sq ft 2.5 2.0 1.5 1.0 0.5 0.0 Q1 '05 Q1 '06 Q1 '07 Q1 '08 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q1 '18 Q1 '19 Q1 '20 Q1 '21 Q1 '22 Q1 '23 Q1 '24 4.9 6.3 5.0 3.8 4.2 6.3 3.8 4.1 5.5 6.4 6.2 4.7 5.5 5.8
Slide 77: West End Take-Up
West End Take-Up m sq ft Secondhand New Completed Pre-let 10-Year Average 1.0m sq ft 1.5 1.0 0.5 0.0 Q1 '05 Q1 '06 Q1 '07 Q1 '08 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q1 '18 Q1 '19 Q1 '20 Q1 '21 Q1 '22 Q1 '23 Q1 '24 4.4 4.7 4.9 3.6 3.1 4.7 4.3 3.5 4.0 4.4 4.4 3.7 4.7 4.2 4.2
Slide 78: City Office Under Offer
City Office Under Offer m sq ft 2.0 10-year average: 1.5 1.4m sq ft 1.0 0.5 0.0 Q1 '04 Q1 '05 Q1 '06 Q1 '07 Q1 '08 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q1 '18 Q1 '19 Q1 '20 Q1 '21 Q1 '22 Q1 '23 Q1 '24 Source: CBRE 78
Slide 79: West End Office Under Offer
West End Office Under Offer m sq ft 2.5 2.0 1.5 10-year average: 1.2m sq ft 1.0 0.5 0.0 Q1 '04 Q1 '05 Q1 '06 Q1 '07 Q1 '08 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q1 '18 Q1 '19 Q1 '20 Q1 '21 Q1 '22 Q1 '23 Q1 '24 Source: CBRE 79
Slide 80: London Market Conditions
London Market Conditions Structural decline in rent as % of salary cost 1 London Office Rent as a % of Salary Costs 60% 50% City West End 40% 30% 20% 10% 0% '72 75 '78 81 '84 87 '90 93 '96 99 '02 05 '08 11 '14 '17 '20 23 1. ONS, PMA 80
Slide 81: Occupier Controlled Vacant Space
Occupier Controlled Vacant Space 1 Halved in the West End since April 2021 m sq ft City West End 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Mar '20 Sep '20 Mar '21 Sep '21 Mar '22 Sep '22 Mar '23 Sep '23 Mar '24 Sep '24 1. Savills 81
Slide 82: Central London Vacancy
Central London Vacancy Newly completed & secondhand vacancy (sq ft) as a % of total stock Central London West End 10.0% 10.0% 8.0% 9.0% 6.0% 8.0% 4.0% 3.4% 2.0% 7.0% 1.3% 0.0% 6.5% '12 Q3 '14 Q3 '16 Q3 '18 Q3 '20 Q3 '22 Q3 '24 Q3 6.0% 5.0% City 4.0% 10.0% 3.0% 8.7% 2.0% 8.0% 2.0% 6.0% 4.0% 1.0% 2.0%
Slide 83: Annual change in occupied stock, million sq ft
Annual change in occupied stock, million sq ft -8 -6 -4 -2 0 2 4 6 8 -10 CBRE M sq ft 2006 Q1 2007 Q1 2008 Q1 Q3 Net Absorption 2009 Q1 2010 Q1 2011 Q1 2012 Q1 Central London Demand 2013 Q1 Net Absorption 2014 Q1 2015 Q1 2016 Q1 Change in occupied stock (LHS) vs Central London Prime Rent Index (RHS)
Slide 84: London Market Conditions
London Market Conditions PMA: Office Market Balance1 Months supply West End 100 City Forecast 80 60 40 Rent falling 20 Rent rising 0 '07 '10 '13 '16 '19 '22 '25 '28 1. PMA 84
Slide 85: West End Top Prime Rents
5.0 0.0 10.0 30.0 35.0 15.0 20.0 25.0 Months Q1 1995 Source: CBRE Q1 1996 Q1 1997 Q1 1998 Q1 1999 vs. rent free periods Q1 2000 Q1 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 West End Top Prime Rents Q1 2006 Q1 2007 Rent Free Periods (LHS) Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Rent (RHS) Q1 2013 Q1 2014
Slide 86: City Top Prime Rents
0.0 5.0 10.0 15.0 35.0 20.0 25.0 30.0 Months Q1 1995 Source: CBRE Q1 1996 Q1 1997 Q1 1998 Q1 1999 vs. rent free periods Q1 2000 Q1 2001 Q1 2002 City Top Prime Rents Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Rent Free Periods (LHS) Q1 2009 Q1 2010 Q1 2011 Q1 2012 Rent (RHS) Q1 2013 Q1 2014 Q1 2
Slide 87: Retail
Retail Vacancy falling, retailers active and Zone A rents returning to growth Prime West End Retail Vacancy (% unit count)1 Recent Oxford Street Transactions 14.2% 13.7% 12.9% 12.4% 12.2% 11.3% 11.3% 11.1% 9.4% 9.3% Retail: Central London Prime Zone A Rental Growth1 6.5% Index: 2009 = 100 6.1% Prime
Slide 88: History of Rental Lags to Yield Moves
History of Rental Lags to Yield Moves West End prime yields and rental growth Nominal Prime Rental Value (LHS) Prime Yields (RHS) 7.0% £150 6.5% £140 8 qtrs £130 6.0% £120 5.5% £110 4 qtrs 5.0% £100 1 qtr 5 qtrs 4.5% £90 6 qtrs 2 qtrs £80 4.0% 7 qtrs £70 3.5% £60 6 qtrs 3.0% £50 £40 2.5% Mar '90 Mar
Slide 89: Equity Demand and Supply
Equity Demand and Supply Central London investment & development property Equity Demand 1 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 £bn May Nov May Nov May Nov May Nov May Nov May Nov Nov May Nov May Nov May Nov May Nov SE Asia Private 6.5 6.5 9.0 9.0 7.5 14.0 15.5 15.5 14.4 13.7 13.8 1
Slide 90: Appendix: Sustainability
Appendix: Sustainability 90
Slide 91: Update to Net Zero Roadmap
Update to Net Zero Roadmap • Scope 1, 2 and 3 emissions: more challenging targets • Further 42% reduction by 2030; 90% by 2040 from 2023 baseline • Business targeting net zero by 2040 • Embodied carbon and energy intensity reduction ‘30 targets: increased ambition • Internal Carbon Price increased f
Slide 92: Sustainability
Sustainability Statistics for end of FY ‘24 Progress on EPCs Progress towards Net Zero • Remain 100% compliant with ‘23 EPC legislation • 6% reduction in energy intensity (kWh/m2) when compared with previous year (FY23). 36% reduction when compared to 2016 baseline • 40% of portfolio achieving minim
Slide 93: Sustainability
Sustainability Prime buildings are sustainable buildings: agents’ views Impact of Energy Efficiency Certification on Investment Deal 1 Energy Efficiency Impact on Office Space Performance4 BREEAM certificate EPC2 Total Returns 120 Efficient Inefficient Capital values 20.6% 3.7% Yields (NIY) 24bp N/A
Slide 94: Sustainable Finance
Sustainable Finance Updated Sustainable Finance Framework and new sustainable debt issuance £250m Sustainable Bond Sustainable Finance Framework • Issued Sep ‘24 • Coupon of 5.375% • Rated Baa2 by Moody’s • Matures Sep ‘31 • Proceeds used to finance Eligible Green and Social Projects under our Susta
Slide 95: Social Impact Strategy
Social Impact Strategy £136,000 social value created YTD; total £3.9m created towards £10m 2030 target Healthy and inclusive communities Diverse skills / accessible employment opportunities • XLP: £59K fundraised through Charity Golf Day with 2AS and • 94 hours of volunteering by GPE GPE football to
Slide 96: Appendix: Investment and Development
Appendix: Investment and Development 96
Slide 97: Investing to Deliver Growth
Investing to Deliver Growth Total capex of £795m into supply constrained market meeting customer needs On Site Schemes – 3 HQ and 4 Fully Managed Refurbishments; 32% pre-let Expected Capex £394m New Build Earliest Capex to Surplus to ERV Area start come come £m 188 HQ schemes 534,300 £353m £99.8m £4
Slide 98: Strong Track Record of Recycling Discipline
Strong Track Record of Recycling Discipline Sales of £3.2bn since 2012 Major sales accoun t edforover80%ofs ales Major sales have accounted for >80% of sales proceeds £m Sales ’12 - '24 >£50m £2.6bn (81%) 600 <£50m £0.6bn (19%) 400 200 0 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 12/14 New
Slide 99: HQ: Feeding Ready to Fit schemes
HQ: Feeding Ready to Fit 6 schemes Existing Completed Existing Targeting On Site Near Term 322,400 sq ft 534,300 sq ft 230,000 sq ft 353,600 sq ft Capex to come ERV £353m £49m Creating Total 887,900 sq ft Minerva House, SE1 Whittington St Thomas House, WC1 Yard, SE13 Earliest Start 2023 2024 2025 20
Slide 100: 30 Duke Street, St James's, SW1
This Street 30 Duke is a title St James’s, SW1 Unlocking development potential in the existing GPE pipeline Full planning consent Best-in-class offices / retail: 68,600 (+25%) Works commenced: Q1 ’24 Anticipated completion: Q3 ‘26 Exemplary sustainability & circular economy credentials • Recycled st
Slide 101: Minerva House, SE1
This is Minerva a title House, SE1 Unlocking development potential in the existing GPE pipeline • Existing: 91,700 sq ft • Full planning consent: 143,100 office led scheme (+56%) • Refurbish floors 1-5; retention of existing structure & north and west building elevations • Significant carbon saving
Slide 102: Minerva House
Minerva House Circular economy and innovative transport approach Circular Economy: Reuse / Recycling of Structure & Façade, Bricks, Floor, Carpets and Glass Reuse / Recycling 77% 35% Retained Reinforcement 362m2 776m3 structure reduction of whole bricks of crushed brick and to be reused marble to be
Slide 103: 2 Aldermanbury Square. Steel re-use
2 Aldermanbury Square. Steel re-use 90% of existing steelwork reclaimed 30 Duke St reet; entire structure 30 Duke Street, SW1 made of st eel 30 Duke Street, SW 1 103
Slide 104: Development Scheme Review
Development Scheme Review Completions since May 2009 New build Cost Profit Yield on Rent % let PC area sq ft £m1 £m1 cost2 £m pa1, 2 at PC3 BREEAM Rating 184/190 Oxford St, W1 Apr ‘11 26,400 28.7 7.1 SOLD SOLD 100% - 23 Newman St, W1 (Residential) Oct ‘11 24,900 26.4 0.8 SOLD SOLD n/a Echohomes/Very
Slide 105: Delivering The Developments
Delivering The Developments Managing construction costs: inflation Average Construction Inflation Index 1 HQ developments Forecast Flex refurbishments 180 170 New Fetter Lane Minerva House 33 Margaret St Walmar House 160 24 Britton St 240 Blackfriars Rd 2 Aldermanbury Sq 3 4 30 Broadwick St 2 95 Wig
Slide 106: Our Integrated Team
Our Integrated Team GPE senior management Executive Committee Nick Sanderson Toby Courtauld Dan Nicholson Chief Financial & Chief Executive Executive Director Operating Officer Janine Cole Darren Lennark Carrie Heiss Andrew White Marc Wilder Sustainability & Social General Counsel & Company Human Re
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