Great Portland Estates Plc · LSE:GPE
Great Portland Estates — FY2024 Earnings Presentation
109 slides from Great Portland Estates's earnings presentation, May 2024
Slide 1: Full Year 2024 Results
Full Year 2024 Results We unlock potential, creating sustainable space for London to thrive
Slide 2: Agenda
Agenda Key Messages Toby Courtauld, Chief Executive Market Opportunity Benefits of Rights Issue Financial Results Nick Sanderson, Chief Financial & Operating Officer Flex Update Development Summary Toby Courtauld, Chief Executive Outlook Q&A ir@gpe.co.uk 3
Slide 3: Well positioned to drive strong income growth and long-term value
Full Year 2024 Results Well positioned to drive strong income growth and long-term value Strong Operational Performance • Excellent leasing continues; £22.5m 20.0% • 9.1%> Mar ‘23 ERV; Offices: 11.1% beat Investment Lettings Pre-lets Vacancy (right hand scale) 60 • Under Offer £4.8m, 4.0%> Mar ‘24 E
Slide 4: Clear Strategy to Take Advantage
Clear Strategy to Take Advantage Successful contra-cyclical track record Strategy Our Track Record London GVA expected to continue to outperform wider UK GDP (2.1% vs 1.9% avg ‘25-’27)2 100% central London London business activity PMI healthier than UK (London 57.1, UK 52.1)1 Creating the best space
Slide 5: Agenda
Agenda Key Messages Toby Courtauld, Chief Executive Market Opportunity Benefits of Rights Issue Financial Results Nick Sanderson, Chief Financial & Operating Officer Flex Update Development Update Toby Courtauld, Chief Executive Outlook Q&A ir@gpe.co.uk 6
Slide 6: Opportunity: Disrupted Investment Markets
Opportunity: Disrupted Investment Markets Significant yield & value correction; volumes lower than GFC Real Capital Values Nearing 2009 Low Significant Real Correction, even in Mayfair Central London Real Capital Value1 Real capital values (£ per sq ft) deflated by RPI2 125 Index, March 2000 = 100 2
Slide 7: Opportunity: Best Rents Set to Rise Strongly
Opportunity: Best Rents Set to Rise Strongly Demand up; 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 Leasing1 25.0% 24.8% Manhattan GPE Portfolio Vacancy 1.
Slide 8: Timing Right to Capture Opportunity
Timing Right to Capture Opportunity Market outlook improving; expectation that valuations troughed; possible yield compression Office Rents Yields Near Term Outlook Near Term Outlook Driver Nov ‘23 May ‘24 Driver Nov ‘23 May ‘24 GDP / GVA growth Rental growth Confidence Weight of money Business inve
Slide 9: Compelling Acquisition Opportunities
Compelling Acquisition Opportunities Clear acquisition criteria; growing conviction on near-term opportunity Flex HQ Repositioning • Amenity-rich locations; excellent transport links • Tired, inefficient, poor EPC ratings, with angles to exploit • Clustering around existing GPE holdings: Soho, Mayfa
Slide 10: Compelling Acquisition Opportunities
Compelling Acquisition Opportunities Expect to unearth more in 2024 GPE Quoted Probability A+B Target Sub-Markets A+B Target Uses Targets1 Sites Price Capex Total Weighted By Value4 By Value4 A 8 £244m £491m £735m £350m2 Southwark 10% West End B 19 £1,168m WIP £1,168m £257m 63% HQ City 49% Flex A &
Slide 11: Compelling Acquisition Opportunities
Compelling Acquisition Opportunities Three likely ‘A’ near-term acquisitions GPE Quoted Probability Targets1 Sites Price Capex Total Weighted A 8 £244m £491m £735m £350m2 3 likely near term acquisitions Near Term 3 £250m £172m • 147,000 sq ft existing area • Majority West End; all off market • All a
Slide 12: The Courtyard, WC1: Acquired
The Courtyard, WC1: Acquired Adding to our West End Fully Managed cluster Property swap exchanged April ‘241 • Bought: The Courtyard; £28.6m; £462 psf on existing area • 69% discount to replacement cost2 Goodge St • Sold: 95/96 New Bond Street, W1; £18.2m, £2,039 psf, in line with BV Existing GPE Ho
Slide 13: Soho Square, W1: Acquired
Soho Square, W1: Acquired Adding to our HQ development pipeline Bought off market: Aug 2023 • £70 million; 27% discount to replacement cost4 • Existing: 57,500 sq ft office & retail Best in class HQ redevelopment • 100,300 sq ft Grade A office & retail consented; potential to improve • Anticipated c
Slide 14: Agenda
Agenda Key Messages Toby Courtauld, Chief Executive Market Opportunity Benefits of Rights Issue Financial Results Nick Sanderson, Chief Financial & Operating Officer Flex Update Development Update Toby Courtauld, Chief Executive Outlook Q&A ir@gpe.co.uk 15
Slide 15: Delivering Long Term Value and Income Growth
Delivering Long Term Value and Income Growth Expected near-term development surpluses increased by £55m to £175m Proposed Rights Issue will grow well timed capex programme from £498m to £666m; delivering 840,600 sq ft into supply starved market Development surplus to come c.£69m c.£51m c.£55m c.£175
Slide 16: Delivering Long Term Value and Income Growth: Flex
Delivering Long Term Value and Income Growth: Flex Accelerating Fully Managed NOI growth to £76m Creating Additional Value of c.£150m from Service Profit Alone +£25m NOI £76m3 Higher Income, Higher Value Ready to Fit ERV £45m Fitted ERV £63m Fully Managed NOI £76m Services profit +£14m £13m (£76m-£6
Slide 17: Delivering Long Term Value and Income Growth
Delivering Long Term Value and Income Growth Significant rent roll growth opportunity whilst maintaining recycling discipline Potential additional Rent Roll1 of 132% to come through organic growth and use of proceeds £m Rental growth and further acquisitions Use of Proceeds 26.53 249.3 250 12.3 +96%
Slide 18: Sector-Leading Prospective Returns
Sector-Leading Prospective Returns Attractive and accretive prospective returns whilst maintaining balance sheet strength Set to Deliver Attractive Returns • Expect TAR CAGR of 10%+ into the medium term (before yield compression) • Driven by development surpluses and rental growth capture, whilst ta
Slide 19: Agenda
Agenda Key Messages Toby Courtauld, Chief Executive Market Opportunity Benefits of Rights Issue Financial Results Nick Sanderson, Chief Financial & Operating Officer Flex Update Development Update Toby Courtauld, Chief Executive Outlook Q&A ir@gpe.co.uk 21
Slide 20: Financial Results
Financial Results Impacted by higher interest rate environment; NTA down 14.1% H1, 4.0% H2 12m EPRA NTA (pps) Portfolio and Net Assets Mar 24 Change Portfolio value1 £2,331.2m (12.1%2) 800 757 7 624 Rent Roll £107.5m +1.0% (105) (22) 550 (13) EPRA NTA & 624p (17.6%) IFRS NAV per share 300 Mar '23 Wh
Slide 21: Property Valuation
Property Valuation1 ERV growth 3.8%; yield expansion 56bps; but best continues to outperform, 74% portfolio WE Attractive ERV Growth; Yield Expansion Driving Value Decline… … with TEY up to 5.3% Today % of Property ‘Topped Up’ Initial Yield True Equivalent Yield 12 months portfolio Valuation ERV Gro
Slide 22: Balance Sheet Strength
Balance Sheet Strength Track record of conservative leverage and extensive liquidity GPE Target LTV Range = 10%-35% through the Cycle Extensive Liquidity (£m) EPRA LTV1 (%) Recent repayment of £175m USPP & Pro forma cancellation of £200m facility Mar ‘09 Post Rights 700 666 44.9% Sep ‘12 18.2% 633 6
Slide 23: Flex Performance
Flex Performance Strong leasing driving performance, with footprint up 102k sq ft over year Our Unique Offer; 100% GPE Owned Space Leasing Momentum Driving Performance Leasing Well: Fully Managed Outperforming Trailing twelve months Mar 22 Mar 23 Mar 24 FY24: 29 Flex lettings, £13.7m £13.7m • H2: 17
Slide 24: Agenda
Agenda Key Messages Toby Courtauld, Chief Executive Market Opportunity Benefits of Rights Issue Financial Results Nick Sanderson, Chief Financial & Operating Officer Flex Update Development Update Toby Courtauld, Chief Executive Outlook Q&A ir@gpe.co.uk 26
Slide 25: Significant Capex Programme
Significant Capex Programme 49% of portfolio; delivering into deep supply shortage Kent House, 7/15 Gresse St, The Courtyard, 33 Alfred Place, Soho Square Estate 2 Aldermanbury Minerva House, W1 (Flex) W1 (Flex) WC1 (Flex) WC1 (Flex) W1 Sq, EC2 SE1 3 Committed 50% pre-let1 0.5m sq ft 7 Flex Refurbs
Slide 26: Profit to come on Committed HQ Developments
Profit to come on Committed HQ Developments All Prime; exemplary sustainability; strong pre-let potential 2 Aldermanbury Square, EC2 French Railways House, SW1 322,600 sq ft; +83% 67,600 sq ft; +23% 100% pre-let; 1,500t of steel for re-use Consented; using steel from City Place Hse On budget Start o
Slide 27: Agenda
Agenda Key Messages Toby Courtauld, Chief Executive Market Opportunity Benefits of Rights Issue Financial Results Nick Sanderson, Chief Financial & Operating Officer Flex Update Development Update Toby Courtauld, Chief Executive Outlook Q&A ir@gpe.co.uk 29
Slide 28: Opportunity
Opportunity Well set to take advantage 1. Clear strategy • Central London; set to outperform; 74% West End, 93% Elizabeth Line • Best in class HQ & Flex; significant pipeline and ambition • Focus on customers’ needs & sustainability • Track record of contra-cyclical capital discipline • Maintain str
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: Our Portfolio
Our Portfolio1 Significant potential to add value Portfolio by Asset Class by Value Portfolio by Product by Area Committed Developments Ready to Fit Retail £201m; Exit Yield: 4.9% 1,740k sq ft Development Valuation: (28.7%) 487k sq ft Pipeline Cap Val £359 psf £190m; NIY: 4.4% 9% 11% Valuation: (18
Slide 32: GPE Portfolio Mix
GPE Portfolio Mix1 At 31 March 2024 By Type (by value) By Location (by value) Midtown 4% Southwark Retail 9% 21% City 13% Noho 37% Office 79% Rest of West End 37% 1. Includes share of Joint Ventures 34
Slide 33: The Valuation
The Valuation Including share of Joint Ventures Movement % Office vs Retail1 To 31 Mar‘24 £m 12 months 6 months Offices Retail2 North of Oxford St 870.3 (10.7%) (3.0%) Rest of West End 694.6 (3.9%) 0.2% H2’24 H2’24 (1.2%) H1’24 (2.4%) Total West End 1,564.9 (7.8%) (1.6%) H1’24 (9.6%) (12.4%) Total C
Slide 34: The Valuation: Drivers of valuation movement
The Valuation1 Drivers of valuation movement % movement Yield shift Rental value movement Residual 6 months (2.3%) (2.1%) 2.0% 12 months (8.5%) (7.4%) 3.8% (18.0%) (16.0%) (14.0%) (12.0%) (10.0%) (8.0%) (6.0%) (4.0%) (2.0%) - 2.0% 4.0% 6.0% 1. Including share of Joint Ventures 36
Slide 35: The Valuation
The Valuation Including share of Joint Ventures Initial Yield Equivalent Yield Basis point +/- % % 12 month 6 month North of Oxford Street Offices 3.3% 5.3% 49 28 Retail 2.7% 5.4% 71 19 Rest of West End Offices 4.1% 5.2% 49 8 Retail 4.0% 4.7% 56 23 Total West End 3.6% 5.2% 53 15 City, Midtown and So
Slide 36: The Valuation
The Valuation Including share of Joint Ventures 12 months to Value Mar‘24 Change 6 months £m £m % % North of Oxford St 870.3 (104.6) (10.7%) (3.0%) Rest of West End 694.6 (27.9) (3.9%) 0.2% Total West End 1,564.9 (132.5) (7.8%) (1.6%) City, Midtown and Southwark 438.4 (89.9) (17.0%) (5.7%) Investmen
Slide 37: The Valuation: Wholly Owned
The Valuation Wholly Owned 12 months to Value Mar ‘24 Change 6 months £m £m % % North of Oxford St 833.6 (99.6) (10.7%) (3.2%) Rest of West End 345.9 (16.8) (4.6%) 0.2% Total West End 1,179.5 (116.4) (9.0%) (2.2%) City, Midtown and Southwark 347.7 (51.9) (13.0%) (4.1%) Investment portfolio 1,527.2 (
Slide 38: The Valuation: Joint Ventures
The Valuation Joint Ventures (100%) 12 months to Value Mar‘24 Change 6 months £m £m % % North of Oxford St 73.5 (10.1) (12.0%) (0.6%) Rest of West End 697.4 (22.1) (3.1%) 0.3% Total West End 770.9 (32.2) (4.0%) 0.2% City, Midtown and Southwark 181.4 (76.0) (29.5%) (11.5%) Investment portfolio 952.3
Slide 39: The Valuation: ERV and reversionary potential
The Valuation1 ERV and reversionary potential Average Office Average Reversionary Movement in ERV Rent Passing Office ERV Potential 12 months To 31 Mar‘24 6 months % £m % £ per sq ft £ per sq ft % North of Oxford St Offices 5.3% 1.9 2.2% 85.90 102.10 9.7% Retail 3.0% 0.4 1.6% 8.1% Rest of West End O
Slide 40: 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 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 GPE: Space Under Offer3 Under Offer
Slide 41: GPE Customers
GPE Customers1 By sector Retailers, hospitality & leisure TMT Professional & Business Services Financial Servcies Corporates Government & Other 100% Government & Other 0% Corporates 18% 75% Financial Services 23% Professional & Business Services 17% 50% TMT 11% Retailers: 25% Head Offices 8% Retaile
Slide 42: Top Customers
Top Customers1 31 March 2024 Customer Sector £m Kohlberg Kravis Roberts Financial Services 4.4 Runway East Professional & Business Services 3.6 Glencore Corporate 3.1 Exane Financial Services 2.8 Richemont2 Retailers & Leisure 2.7 Top 10 Fashion Retail Academy2 Retailers & Leisure 2.5 25.7% Uniqlo R
Slide 43: Portfolio Management
Portfolio Management Customer retention, 12 months to March 20241 Area (000 sq ft) 700 600 570 500 150 400 420 300 200 83% 100 14% 3% 0 Expiries & Breaks Refurbishment / Sub total Retained Relet / Under offer Remaining Development 1. Joint Ventures at 100% 45
Slide 44: Portfolio Management
Portfolio Management Movement in Reversions1 6 months to 31 March 2024 30 Sep 2023 At beginning of period £14.9m £9.9m Portfolio activity2 (£4.0m) £0.2m Reversion capture (£1.4m) (£0.3m) Acquisitions and disposals (£1.2m) £3.9m ERV movement £2.5m £1.2m At end of period £10.8m £14.9m 1. Based on let
Slide 45: 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 1.1 0.4 27.2 3.3 10.0 20.3 16.8 12.9 10.0 8.0 0.0 2025 2026 2027 2028 2029 After 1. Includes share of Joint Ventures 47
Slide 46: Portfolio Management
Portfolio Management Void rate, % by rental value1 % by rental value as at 31 March 2024 Investment Portfolio Newly completed developments Development / refurbishment Pre-Let 50 45 40 11.6 35 30 2.4 3.3 12.2 3.5 4.2 7.1 13.1 25 14.5 HQ 17% 4.7 5.5 15.4 4.7 5.8 6.4 20 12.9 32.0 22.0 14.8 4.3 9.4 15 0
Slide 47: Appendix: Financials
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Slide 48: Balance Sheet
Balance Sheet Proportionally consolidated for Joint Ventures £m Group JVs Total Mar ‘23 Investment property 1,855.1 476.1 2,331.2 2,380.0 Other assets 34.6 2.7 37.3 45.0 Net debt at book value (717.5) 25.7 (691.8) (437.6) Other liabilities (80.5) (13.2) (93.7) (68.8) Net assets and EPRA NTA 1,091.7
Slide 49: Income Statement
Income Statement Proportionally consolidated for Joint Ventures £m Group JVs Total Mar ’23 Rental income 72.1 19.4 91.5 89.1 Fees from joint ventures 1.7 - 1.7 2.4 Property and administration costs (54.1) (3.6) (57.7) (55.7) Loss on development management contracts - - - (0.1) Trading property reven
Slide 50: Income Statement
Income Statement EBITDA proportionally consolidated for Joint Ventures £m Group JVs Total Mar ‘23 Rental income 72.1 19.4 91.5 89.1 Fees from joint ventures 1.7 - 1.7 2.4 Property and administration costs (54.1) (3.6) (57.7) (55.7) Development management contracts profit - - - (0.1) Trading property
Slide 51: EPRA Performance Measures
EPRA Performance Measures Measure Mar ‘24 Mar ‘23 EPRA Net Tangible Assets £1,582.6m £1,918.6m EPRA NTA per share 624p 757p EPRA NDV £1,633.7m £2,002.0m EPRA NDV per share 644p 790p EPRA NRV £1,752.7m £2,092.2m EPRA NRV per share 691p 826p EPRA LTV 32.6% 19.8% Mar ’24 Mar ’23 EPRA earnings £17.9m £2
Slide 52: Earnings and Dividends
Earnings and Dividends Earnings anticipated to inflect in 2025 EPRA Earnings FY ‘24 EPRA Earnings: Outlook for FY ‘25 £m Good Flex leasing full year impact of 1 Newman Street retail lettings Inflationary pressures and provisioning for share-based payments • Expected to be broadly stable (vs. £17.9m
Slide 53: Administration Costs
Administration Costs Growth in overhead expected to moderate £m 45 Salaries and other employee costs Performance/share-based pay 150 145 Other 40 Headcount 129 10.3 Continued focus on 124 discretionary spend 35 114 111 110 11.6 30 8.9 Performance related pay (bonus & RSP/LTIP): 1st year of new RSP 1
Slide 54: Capex Programme
Capex Programme £895m into supply constrained market meeting customer needs HQ – Five Office-Dominated Schemes; Three On-Site Total Potential Capex Expected Capex £693m Committed Capex £424m 2 Aldermanbury Sq £212m £m Soho & The Courtyard (£168m) £m French Railways House £95m 350 Uncommitted capex (
Slide 55: Illustrative Pro Forma LTV Analysis
Illustrative Pro Forma LTV Analysis Based on today’s rents and before any yield compression 45 % Capital discipline: buying in weak markets now; selling once recovered Total investment: £1,177m Total sales: £660m 5.41 Net investment: £517m 40 3.8 35 14.4 2.0 5.6 30.4 30 0.82 25.6 25 14.2 20 18.2 15
Slide 56: Robust Debt Metrics
Robust Debt Metrics Low-cost debt book Pro Forma Post Rights Issue6 Mar ‘24 March ’23 Net debt excluding JVs1 (book value £m) 402.2 738.0 457.7 Gearing (net debt/net equity) 21.0% 46.8% 24.0% Total net debt including 377.7 713.5 440.0 50% JV cash balances (£m) EPRA loan-to-property value 18.2% 32.6%
Slide 57: 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 58: 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 £122.7m 35 £322.6m 30 25 £46.0m 20 Total £491.3m 15 As % of 31.0% Group net assets 10 Previous joint venture partners 5 0 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Mar 19 Ma
Slide 59: Appendix: Flex
Appendix: Flex 61
Slide 60: GPE Flex: Differentiated Opportunity
GPE Flex: Differentiated Opportunity Continuing to drive customer footprint and income growth Our Flex Offers – not WeWork, not Co-working Why Flex Matters to GPE Well-located, high-quality buildings operated by trusted owner • The default choice for sub 5,000 sq ft office space Leased by floor/unit
Slide 61: Our Flex Portfolio
Our Flex Portfolio Proven in numerous buildings and locations: 503,000 sq ft; 123 units GPE Flex: Key Selling Points • Well located, high quality buildings • Self contained • From reputable owner • Thoughtfully designed 5 3 • Sustainably managed • Embedded technology 1 2 16 1 1 4 3 7/15 Gresse Str
Slide 62: 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 63: 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 64: 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 • cleaning service • maintenance inc. handyman service • planting • waste management • business rates No. of uni
Slide 65: 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 66: Growing With Our Flex Customers
Growing With Our Flex Customers Our journey with Synthesia Limited 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 Man
Slide 67: Our Flex Performance
Our Flex Performance How we measure performance Target Lettings 12mths to Mar-24 Calculation Purpose Fitted Managed Fitted Managed Net effective Flex NE rent − Opex Additional rent being generated from 30%+ 50%+ 64% 117% rent beat Ready to Fit NE rent Flex Flex 10yr net cashflow Additional cashflow
Slide 68: Appendix: Market Conditions
Appendix: Market Conditions 70
Slide 69: London Market Conditions
London Market Conditions London growing and set to outperform the wider UK Robust London Business Activity 1 London Continues to Outperform Rest of UK Mar ‘24: 57.1 PMI March 24: Business activity index 70 London Jobs Business Activity 53 8 52 6 51 50 4 49 2 47 50 46 0 45 -2 44 43 -4 Mar ‘24: 49.8 3
Slide 70: London Market Conditions
London Market Conditions New Space Letting at Record Speed1 Investment Market; Pressure on Yields 25% 1200 40 Cost of Debt2 Months to 75% let City Prime Yields City Capital Values3 30 1000 Let post PC (months) 20% 20 800 10 15% 600 0 10% (10) 400 (20) 5% Let pre PC (months) 200 (30) (40) 0% 0 05 07
Slide 71: London Market Conditions
London Market Conditions Active Demand Occupiers Looking to Increase / Decrease Space by Area1 Active Demand by Sector1 m sq ft Tech & Media Professional Services 30% 6.0 Financial & Banking 25% 5.0 20% 4.0 Increasing 51% by area 15% 3.0 Decreasing 24% by area 10% 2.0 5% 1.0 0% 0.0 '14 '15 '16 '17 '
Slide 72: 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 73: City & Southbank Active Requirements
City & Southbank Active Requirements >10,000 sq ft Change Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar 12 1st 6 2nd 6 000 sq ft 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 2024 mths mths mths Prof
Slide 74: West End Active Requirements
West End Active Requirements >10,000 sq ft Change Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar 12 1st 6 2nd 6 000 sq ft 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 2024 mths mths mths Professional
Slide 75: 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 2007 Q1 2005 Q1 2006 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 4.9 6.3 5.0 3.8 4.2 6.3 3.8 4.1 5.5
Slide 76: 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 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 4.4 4.7 4.9 3.6 3.1 4.7 4.3 3.5 4.0 4.4
Slide 77: City Office Under Offer
0.0 0.5 1.0 1.5 2.0 Q1 2004 Source: CBRE m sq ft Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 City Office Under Offer Q1 2010 Q1 2011 Q1 2012 1.4m sq ft 10-year average: Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 79
Slide 78: West End Office Under Offer
0.0 0.5 1.0 1.5 2.0 2.5 Q1 2004 Source: CBRE m sq ft Q1 2005 Q1 2006 Q1 2007 Q1 2008 1.2m sq ft Q1 2009 10-year average: Q1 2010 Q1 2011 West End Office Under Offer Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 80
Slide 79: London Market Conditions
London Market Conditions Structural decline in rent as % of salary cost1 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 81
Slide 80: Occupier Controlled Vacant Space
0.5 1.0 1.5 2.0 2.5 3.0 3.5 m sq ft Mar-20 1. Savills May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Halved in the West End since April 2021 Sep-21 Nov-21 City Jan-22 Occupier Controlled Vacant Space1 Mar-22 May-22 West End Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-
Slide 81: Central London Vacancy
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2012 Q3 2013 Q1 Source: CBRE 2013 Q3 2014 Q1 Central London 2014 Q3 2015 Q1 2015 Q3 2016 Q1 2016 Q3 2017 Q1 2017 Q3 2018 Q1 2018 Q3 2019 Q1 2019 Q3 2020 Q1 2020 Q3 2021 Q1 Central London Vacancy 2021 Q3 2022 Q1 2022 Q3 2023 Q1 2023 Q3 2024 Q1 1
Slide 82: Annual change in occupied stock, million sq ft
Annual change in occupied stock, million sq ft -6 -4 0 2 6 8 -8 -2 4 -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 Net Absorption 2013 Q1 2014 Q1 2015 Q1 2016 Q1 Change in occupied stock (LHS) vs Central London Prime Rent Index (RHS)
Slide 83: 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 85
Slide 84: West End Top Prime Rents
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 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 Rent (RHS) Q1 2012 Q1 2013 Q1 2014
Slide 85: City Top Prime Rents
0.0 5.0 10.0 15.0 20.0 30.0 25.0 35.0 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 Rent Free Periods (LHS) Q1 2008 Q1 2009 Q1 2010 Q1 2011 Rent (RHS) Q1 2012 Q1 2013 Q1 2014 Q1 2
Slide 86: 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% 6.5% Retail: Central London Prime Zone A Rental Growth1 6.1% Index: 2009 = 100 5.40%
Slide 87: 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 £90 2 qtrs 4.5% 6 qtrs £80 4.0% 7 qtrs £70 3.5% £60 6 qtrs 3.0% £50 £40 2.5% Mar '89 Mar
Slide 88: Equity Demand and Supply
Equity Demand and Supply Central London investment & development property Equity Demand1 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 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 14.3 1
Slide 89: London Investment Market Conditions
London Investment Market Conditions Significant decline in asset supply Asset Supply down 32% to £3.9bn1 6.0 City West End 0.3 1.2 2.2 0.1 4.0 1.1 1.2 2.0 1.7 2.0 1.4 3.5 0.8 1.9 0.5 0.0 On the market Sold Under offer Withdrawn Still Available New for sale On the market Nov '23 May '24 1. GPE, avail
Slide 90: Appendix: Sustainability
Appendix: Sustainability 92
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 Progress on EPCs Progress towards Net Zero • 100% compliant with ‘23 EPC legislation • 6% reduction in energy intensity (kWh/m2) when compared • 40% of portfolio compliant with anticipated minimum B rating with previous year. 36% reduction when compared to 2016 by 2030 (fell last year
Slide 93: Sustainability
Sustainability Prime buildings are sustainable buildings: agents’ views Impact of Energy Efficiency Certification on Investment Deal1 Energy Efficiency Impact on Office Space Performance4 BREEAM certificate EPC2 Total Returns 120 Efficient Inefficient Capital values 20.6% 3.7% 100 Yields (NIY) 24bp
Slide 94: Sustainable debt
Sustainable debt £450m ESG Linked RCF Sustainable Finance Framework (SFF) • Issued Jan 20 • First RCF by UK REIT with adjustable margin based on performance against ESG-linked KPIs • Fully available for general corporate purposes • Entire RCF matures in Jan 27 • KPIs aligned with updated Roadmap to
Slide 95: Social Impact Strategy
Social Impact Strategy £1.5m social value created FY ’24; total £3.8m created towards £10m 2030 target Healthy and inclusive communities Diverse skills / accessible employment opportunities • XLP: £82K fundraised through Community Week • 26 weeks of internships • Volunteering: 1,890 hours donated YT
Slide 96: Appendix: Investment and Development
Appendix: Investment and Development 98
Slide 97: Long Track Record of Accretive Acquisitions
Long Track Record of Accretive Acquisitions Three recent HQ / Flex acquisitions; £123m; >25% below replacement cost; all close to Elizabeth line Long-Term Acquisition Track Record Examples Soho Square Estate, W1; acquired August ’23; £70.0m Ungeared Acquired/PC Area sq ft Invested Returns HQ 95 Wigm
Slide 98: Strong Track Record of Recycling Discipline
Strong Track Record of Recycling Discipline Sales of £3.2bn since 2012 Major sales accounted for over 80% of sales 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 Ne
Slide 99: HQ: Feeding Ready to Fit
HQ: Feeding Ready to Fit 6 schemes Existing Completed Near Existing Targeting New Build1 Committed 322,400 sq ft 533,300 sq ft Pipeline Total Term 155,500 sq ft 264,800 sq ft c.50k sq ft Capex to come ERV £424m £49m Minerva House, SE1 Committed New City Court, SE1 Earliest Start 2023 2024 2025 2026
Slide 100: French Railways House & 50 Jermyn Street, SW1
French Railways House & 50 Jermyn Street, SW1 Unlocking development potential in the existing GPE pipeline Full planning consent Best-in-class offices / retail: 67,600 (+23%) Works commenced: Q1 ’24 Anticipated completion: Q3 ‘26 Exemplary sustainability & circular economy credentials • Recycled ste
Slide 101: Minerva House, SE1
Minerva 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 over new build s
Slide 102: 2 Aldermanbury Square. Steel re-use
2 Aldermanbury Square. Steel re-use 90% of existing steelwork reclaimed French Railways House; entire French Railways House, SW1 structure made of steel French Railways House, SW1 104
Slide 103: Minerva House: Circular economy and innovative transport
Minerva House Circular economy and innovative transport approach Circular Economy: Reuse / Recycling of Structure & Façade, Bricks, Floor, Carpets and Glass Reuse / Recycling 362m2 776m3 of whole bricks of crushed brick and to be reused marble to be reused in in facades terrazzo floor finishes 16,49
Slide 104: Opportunity Rich Capex Opportunity
Opportunity Rich Capex Opportunity 13 major schemes Existing New build Earliest Capex Uplift in Next Steps Area area (sq ft)2 Start (£m) ERV (%) 2 Aldermanbury Square, EC2 176,000 322,600 On Site £212m +153% Complete main works French Railways House1 , SW1 54,700 67,600 On Site £95m +165% Commence d
Slide 105: Development Scheme Review
Development Scheme Review Completions since May 2009 New build area Cost Profit Yield on Rent % let PC sq ft £m1 £m1 cost2 £m pa1, 2 at PC3 BREEAM Rating 184/190 Oxford St, W1 Apr 2011 26,400 28.7 7.1 SOLD SOLD 100% - 23 Newman St, W1 (Residential) Oct 2011 24,900 26.4 0.8 SOLD SOLD n/a Echohomes/Ve
Slide 106: Delivering The Developments
Delivering The Developments Managing construction costs: inflation Average Construction Inflation Index1 Forecast 180 170 New Fetter Lane Forecast at May ‘23 33 Margaret St Walmar House 160 24 Britton St 240 Blackfriars Rd 2 Aldermanbury Sq 30 Broadwick St Forecast at May ‘24 95 Wigmore St 150 48 Br
Slide 107: 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
Slide 108: What is a Rights Issue?
What is a Rights Issue? What is a Rights Issue? Key Terminology A rights issue is a way for a UK listed company to raise additional capital Existing Shares Number of shares outstanding pre rights issue A company issues new ‘shares’ and gives its existing shareholders the right to buy the new shares
Slide 109: Example options during a Rights Issue
Example options during a Rights Issue Transaction Summary – Assuming a shareholding of 100 Illustration Main Shareholder Options shares representing 10% of the example company Example company Value of existing shares £415 pre Rights Taking up Rights in full ensures that 100% Rights acquired 60 share
Great Portland Estates — FY2024 Earnings Presentation on 6ix