Great Portland Estates lifts rental forecasts after strong leasing year

(Sharecast News) - Great Portland Estates has raised its estimates for rental growth this year after a solid performance over the 12 months to 31 March, with profits and valuations coming in ahead of expectations. The West End office-focused real estate group said it expects estimated rental value (ERV) across its portfolio to rise by 4-7% over the current year.

GPE reported a strong leasing year, beating ERV by 10.6%. Rental values were 5.0% higher than last year, helping to drive a 3.6% increase in the portfolio valuation to £2.9bn.

Earnings per share fell 11.9% year-on-year to 5.2p, driven by the greater number of shares in issue following last summer's rights issue, but came in ahead of the 5.0p consensus forecast.

Net tangible assets per share rose 4.4% to 494p per share, beating the 490p market estimate.

Shore Capital analyst Andrew Saunders said the recovery in activity across the West End office market "has validated the company's decision to raise £325m of equity last summer (at a deep discount to prevailing NTA at the time) using the capital to deploy into well-timed acquisitions with assets trading at a 50% discount to prevailing replacement cost at the time".

"We are pleased to report on a productive and successful year during which we achieved or exceeded most of the challenging operational targets we set ourselves, in spite of the often extreme and unpredictable macro-political backdrop," said chief executive Toby Courtauld.

"Looking forward, despite ongoing macro-economic uncertainty, we believe that many of the conditions necessary for a period of attractive growth in central London's commercial property values are increasingly evident and we are well placed to prosper."

The stock was down 0.3% at 339p by 0848 BST.