London landlord GPE benefits from better investment conditions

GPE, one of central London’s biggest listed landlords said that the capital’s favourable investment market, with improving economic conditions and falling interest rates, has allowed the firm to push ahead with its expansion plans.

Great Portland Estate signed 15 new leases and renewals during the quarter to 30 September, generating annual rent of £6.1m, with market lettings on average 6.4 per cent ahead of last year’s estimated rent value (ERV). 

Following the 22,500 sq ft letting to TK Maxx the firm announced last year, in the quarter GPE completed three new retail deals at Mount Royal, W1.

These include the new immersive gaming brand, Activate (We Do Play), children’s toy store, Keikoo and Italian restaurant brand, Caffé Concerto.

In September, GPE let 6,900 sq ft of retail space on a ten-year lease at 6/7 Portman Square, Orchard Court, W1 to luxury brand for professional-grade home appliances, Gaggenau. 

It cited the “favourable conditions” as helping its pipeline of assets going forward. The firm said it had £1bn additional assets under active review and was “closely monitoring” a further £600m in potential opportunities.

GPE reiterated its rental growth guidance for the financial year, with portfolio-wide growth of three per cent to six per cent. For prime office space, its guidance is stayed at five per cent to 10 per cent.

London’s commercial property market has only recently begun to recover from a torrid few years during the pandemic, with values stabilising and investment widely expected to pick up going forward.

The market has been characterised by a flight to quality this year, with smaller, sustainable and high tech buildings commanding premiums.

Chief executive Toby Courtauld said: “We are pleased to have maintained our leasing momentum… furthermore, following a successful £350m rights issue and £250m debt issuance since our results in May, we have both the financial capacity and the increasing confidence that we can deploy the proceeds into accretive acquisitions.”

“Today, we have around £100m under offer, fully aligned to the acquisition criteria we set out in May. Beyond this, we have a further £1.6bn under active review or on our watchlist to buy.

“With economic conditions improving and interest rates now falling, London’s unique characteristics set it apart as a global office hub with healthy long-term growth prospects.

“Meanwhile, favourable investment markets play to our acquisition ambitions and with our balance sheet strength we expect to add to our recent purchases, enhancing our already attractive growth prospects.”