We unlock potential, creating sustainable space for London to thrive
Full Year Results 2022
Agenda
Introduction
Toby Courtauld, Chief Executive
Financial Results & New Business
Nick Sanderson, Chief Financial & Operating Officer
Market Business Update Outlook
Toby Courtauld, Chief Executive
Q&A
ir@gpe.co.uk
2
Robust Results
31 March 2022
12 months
H2
H1
+6.1%
+4.1%
+2.0%
+48.6%
+20.3%
+29.7%
Portfolio ERV movement1
+3.0%
+1.4%
+1.6%
Total Property Return
+9.4%
+5.5%
+3.7%
+8.8%
+5.5%
+3.2%
Property Valuation1
Developments1
Outperformance of
MSCI2
Total Accounting Return
+2.4pps2
1. Like-for-like, including share of joint ventures 2. Outperformance of MSCI Central London Annual Index
3
Strategy Evolving
Meeting Customers’ Changing Needs Our Strategic Givens
Customer Needs
100% central London
Quality
Focus on prime
Reposition properties
Flexibility
Our Flex spaces
Match risk to cycle
Service
Low financial leverage
Health & Wellbeing
Disciplined capital management
Technology
Customer first Amenity provision & design sesame®. World’s 1st Platinum SmartScore
Sustainability: an imperative
Sustainability
Strategic imperative
Customer first
Social Impact
New strategy launched
Our Office Products
Two complementary, overlapping business streams
HQ Repositioning
Flex
Four core office products Ready to Fit
Fitted
GPE delivered; by floor /building
Fully Managed
Flex Partnerships
Partnership delivered; by desk/room
A differentiated, growth strategy: significant extra return for little extra risk 4
Operating Well
Strength & Opportunity 1. Record Leasing: Healthy Momentum; More to Come Investment Lettings
40
Pre-lets £38.5m 9.8%>ERV
£m, years to March
30
x3 £12.9m 2.4%>ERV
20 10
£38.5m1 p.a. leased 9.8%2 > Mar ‘21 ERV • Offices +8.7%; retail +12.3% Office leasing: HQ Repositioning 66%; Flex 34% Vacancy rate (excl. devs.) 4.4% (Nov ’21: 5.1%) • 10.8% overall (Nov ’21: 14.0%): 83% prime £9.4m1 U/O • 2.5%2 > Mar ‘22 ERV c.£32m1 in negotiation
0 '19
'20
'21
'22
2. Deep Opportunity: Organic & New Business
3. Financial Strength & Capacity
Flex Ambition • From 13% of offices today4 to 25% (600k sq ft) by 2027 • Further opportunities through acquisition HQ Repositioning • 8 schemes, 1.3m sq ft • £1.1bn potential near-term commitment5 New Business • 2 acquisitions; further £1.0bn under review
EPRA LTV Low at 20.5% Liquidity More than £391m Low cost of debt 2.1% avg. fully drawn Sustainable Finance Framework
Material Growth Potential…
… Well Placed to Capitalise
Organic income growth +89% Externally: through acquisitions
Balance sheet strength: capacity Great team: 89% say GPE ‘a great place to work’ Enhanced operating capabilities and brand
London: a Dominant World City; Long-Term Growth 1. 100% 2. Market lettings i.e. excluding short term lets ahead of development 3. Year to March 2022, including JVs 4. By area 5. Including land
5
Agenda
Introduction
Toby Courtauld, Chief Executive
Financial Results & New Business
Nick Sanderson, Chief Financial & Operating Officer
Market Business Update
Toby Courtauld, Chief Executive
Outlook Q&A
6
Financial Highlights
Balance Sheet
March ‘22
March ‘21
Change
Portfolio value1
£2,647.4m
£2,457.1m
+6.1%2
EPRA NTA & IFRS NAV per share
835p
779p
+7.2%
EPRA NDV per share
838p
777p
+7.9%
20.5%
20.0%
+0.5pps
March ‘22
March ‘21
Change
£27.4m
£40.1m
(31.7%)
EPRA EPS
10.8p
15.8p
(31.6%)
Dividend per share
12.6p
12.6p
-%
March ‘22
March 21
Change
8.8%
(8.8%)
+17.6pps
EPRA loan-to-property value
Income Statement EPRA Earnings
Total Accounting Return 1. Including share of JVs 2. Like-for-like change
7
EPRA NTA per share up 7.2%1 12 Months to 31 March 2022
850
11
840
3
1
54
830
13
820
Flex values +8.6%2 Yield compression on Fully Managed service profit to 8.5%
H2 38p
810 800 790 780
835
Retail H2 Values up 0.9% ERVs up 0.2%
H1 16p
779
770 760
+7.2% Office
Retail
Portfolio
Property +7.9% valuation
0.0%
+6.1%
ERV growth +4.1%
-0.7%
+3.0%
Yield -18ps
+3bps
-13bps
750
Like-for-Like Valuation Committed Dev
Long Dated
Active Portfolio Mgmt
+12.1%
+5.0%
Pipeline
+48.6%
-5.9%
740 Mar '21
Property Revaluation
1. Adjusted per EPRA guidance
Profit on Disposals
EPS
Ordinary Dividends
2. Buildings with >40% Flex office space committed
Other
Mar '22
8
EPRA Earnings
12 Months to 31 March 2022
EPRA Earnings: £27.4m; EPRA EPS: 10.8p ECL provision
3.6
Development leasing Development VP Other expiries & breaks
3.1 (3.1) (3.1)
£m
Surrender premium 3.9
50 45 40
40.1
0.5
EPS Outlook • Expected FY ‘23 EPS < FY ’22 • Sale of Old St, EC1 • Lower surrender premia • Securing VP to deliver more Flex and near-term developments • To deliver higher prospective total returns
FY 22 FY 21 Rent collection 95% 87% Delinquencies3 0.1% 4.0%
5.4
pence
1.4
20
(31.7%)
8.0
30
27.4
9.8 Vacancy costs Leasing and marketing
2.2
4.0 1.9
Performance related pay
6.3
Employee costs
2.7
10
Sales, development acceleration and Flex growth
5 '09 '10
'11
'12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 TAR up: 100%
• HQ Repositioning: development surpluses • Flex: higher income return
5 0
DPS (p)
10
0
20 15
EPRA EPS (p)
15
35
25
Development Acceleration EPS down: 50%
Mar '21
Rental income
JV fees JV EPRA Property earnings costs
Admin costs
Interest/ Mar '22 other
1. Adjusted per EPRA guidance. 2. Our share 3. Percentage of rent roll
Dividend in line with FY ‘21 • Final 7.9p • Total dividend 12.6p 9
Organic Rent Roll Growth Opportunity
Potential Additional Rent Roll (£92.3m)1
89% potential uplift 59.0 50 Finsbury Sq, EC22
180
£9.0m
Offices 100% pre-let £8.5m Retail available £0.5m Already let £17.5m
Available
The Hickman,
E12
£1.8m
1 Newman St,
W12, 5
£6.3m
Hanover Sq, W12
Total ERV £72.3m
Earliest starts
2 Aldermanbury Sq, EC2
2022
Minerva House, SE1
2023
French Railways, SW1
4
3
New City Court, SE1
2023 2024
£1.8m
150
£9.9m Under offer / in negotiation 37%
6.5
+89% £92.3m
9.0
£9.5m of which 62% potentially Flex
120
196.4
9.9 4.9
3.0
104.1
90
Up 9% Mar '22
Investment Voids
Refurbs
Portfolio Reversion
Recently Completed
Committed
Near Term
Pro Forma
HQ Repositioning: Developments 1. Gross contracted rent excluding impact of occupier incentives; includes share of JVs 2. CBRE rental estimates March 22 3. Including 50 Jermyn St, SW1. 4. Final ERV of schemes less current vacant ERV. 5. 1 Newman St & 70/88 Oxford St, W1
10
Financial Strength
To deliver growth ambitions LTV1 (%); EPRA metric adopted 60%
Historic GPE LTV 31 Mar ‘22 19.0% 30 Sept ‘21 16.7%
50% 40%
37.7%
30%
35.4%
18.8%
17.9%
13.3%
5.8%
Committed (£24m) Pro forma EPRA LTV (RHS)
400
18.2%
17.2%
'14
'16
20.5%
200 100
'18
'20
29.1% 24.1%
0% '12
Near-term HQ repositioning capex (£836m)
300
20.2%
10%
EPRA LTV 20.5% 18.2%
Flex capex (£120m)
£m
39.7%
42.5%
Mar '22
Key Debt Metrics
Mar ‘22
Mar ‘21
WADM
6.9 years
8.1 years
% Unsecured
96%
98%
Cash /Undrawn
£391m
£443m
WAIR
2.5%
2.5%
WAIR if fully drawn
2.1%
2.0%
Market leading ESG-linked RCF and ICMA-aligned Sustainable Finance Framework
277
50% 40%
35.1%
25.0% 21.7%
20%
Significant Capacity for Investment - £980m2
247
194
30% 168
94
20% 10%
0
0% '23
'24
French Railways House, SW1, £79m
'25
'26
'27+
2 Aldermanbury Square, EC2, £267m
Minerva House, SE1, £113m
New City Court, SE1, £377m
Near Term HQ Repositioning: • Capex £836m; land value £274m3 • Total prospective commitment £1.1bn; 15%+ PoC4
1. Periods to September unless otherwise stated 2. Pro forma for the acquisition of St Andrew St, assumes constant values and excludes development surpluses and prospective sales; Cap ex spend includes £24m committed, £120m Flex and £836m near term HQ repositioning. Flex capex includes St Andrew St acquisition and associated refurbishment costs. 3. BV March ’22 4. Target
11
Acquisition Opportunities
GPE strategy offering up more opportunities; 2 recent acquisitions
Stock Traded Near GPE ‘Fair Value’1 Since Nov ’21
GPE Flex Requirements
c.£1.0bn traded
• Amenity rich locations/excellent transport links
Over Priced (10-25%)
• Clustering around existing GPE holdings desirable • 30-60k sq ft with divisible floorplates
6
• Target unit size of 2-6k sq ft Mispriced (>25%)
At 'fair value'
• Ability to create internal & external amenity space
11 deals
1 21
• High quality ground floor experience 2
Near 'fair value' (<10%)
• Potential to enhance sustainability credentials • Opportunity to deliver stabilised income of 6%+
• 4 assets, at or near ’fair value’ - all suitable for Flex • GPE acquired 2 assets at ’fair value’ for £67m • 7/15 Gresse St, W1 • 6/10 St Andrew St, EC4
1. Deals reviewed & traded / under offer stock near ‘fair value’ over previous 6 months
12
Recent Acquisitions
Strengthening our Fully Managed offer 7/15 Gresse St, W1
6/10 St Andrew St, EC4
• £36.5 million; £847 psf
• £30 million; £650 psf
• 43,000 sq ft; flexible 2-4k sq ft floorplates • Fitzrovia; 200m from Crossrail station
• 46,000 sq ft; flexible 2-6k sq ft floorplates
• Vacant possession: H2 ’23; refurb c.£20m
• Vacant possession: now; refurb c.£30m
• Target headline rent: £200+ psf
• Target headline rent: £170+ psf
• EPC rating: current E / prospective B
• EPC rating: current D / prospective B
• Stabilised income yield 6.3%; ungeared IRR 7.5%
• Stabilised income yield 6.8%; ungeared IRR 7.5%
• Farringdon; 450m from Crossrail station
13 13
Acquisition Opportunities Good pipeline of assets under review
Stock Traded Near GPE ‘Fair Value’1 Since Nov ’21
GPE Flex Requirements
c.£1.0bn traded
• Amenity rich locations/excellent transport links
Over Priced (10-25%)
• Clustering around existing GPE holdings desirable • 30-60k sq ft with divisible floorplates
6
• Target unit size of 2-6k sq ft Mispriced (>25%)
At 'fair value'
• Ability to create internal & external amenity space
11 deals
1 21
2
• High quality ground floor experience
Near 'fair value' (<10%)
• Potential to enhance sustainability credentials • Opportunity to deliver stabilised income of 6%+
Current Deals Under Review by Type2 £bn
• 65% off market
1.6
• Flex: 11 opportunities • All central locations
£1.0bn under review2 12 assets
1.2
Flex £600m
0.8 0.4
HQ Repositioning £440m
0.0 2018 ‘18
2019 ‘19 2020 ‘20 2021 ‘21 2022 ‘22
• HQ repositioning: 3 opportunities • New development • Refurbishment/extension • Including JV/swap potential • Targeting sustainability-stranded assets More to Come
1. Deals reviewed & traded / under offer stock near ‘fair value’ over previous 6 months 2. As at May 2022
14
Positive Social Impact
Delivering Our Purpose; delivering for Our Customers
Social Impact Strategy, Launched Nov ‘21
Strategy launched in November • Creating a lasting positive impact in our communities • Commitment to create £10 million of social value by 2030 • £631k created in FY22 • Exec team co-mentoring programme with socially / ethnically diverse talent (partnering with Arrival Education) Three year strategic partnerships recently launched • XLP: creating positive futures for young people growing up on inner-city estates in London • National Energy Action: alleviating fuel poverty Delivering Our Purpose; delivering for Our Customers
New Partnerships
15
Summary
Strong Results and Operational Progress
• Strong uplift in NTA • 8.8% TAR > cost of capital • Ordinary dividend maintained • Sector leading debt metrics • Significant organic growth opportunity • Potential 89% rent roll uplift • Prospective £1.1bn HQ Repositioning commitment • First acquisitions since 2017 • Flex focused • More to come • Significant capacity for investment • Well positioned to access incremental capital • Recycling discipline continues
GPE in Great Financial Shape 16
Agenda
Introduction
Toby Courtauld, Chief Executive
Financial Results & New Business
Nick Sanderson, Chief Financial & Operating Officer
Market Business Update
Toby Courtauld, Chief Executive
Outlook Q&A
17
London Market Conditions
Current Uncertainty; Medium Term, London Compelling Fundamentals Support Leasing Market
Employment Growth
• Barriers to entry up; supply/demand favourable • 3 year GVA1: London +2.8% p.a. (UK: +2.5% p.a.) • Office employment growth: 179k new jobs by ’262 Active Demand / Take Up: • Recovering well • Today, active demand at 5 year average Under Offer: • No discernible impact from uncertainties • Trading up; hybrid working & sustainability New Supply remains tight: • 55% under supply 2022-20256 • Macro uncertainties to reduce supply further Feeding into Leasing Activity
80
50 35 20 '06
12.0
'10
'14
m sq ft
Spec Completions ('22-’25 avg.)6 New / Pre-Let Take Up (10 yr
Active Demand7
Take Up8
'18
'22
New Supply to Tighten Further
City & West End Leasing (as at March)4 m sq ft
London Jobs3
65
Under Offer
14.0
3.1m sq ft p.a.
avg.)5
4.8m sq ft p.a.
Impending new supply shortage
55%
8 year avg.
8.0 7.0
Market Peaks Pre-Let
Completed & Let Spec
4.0
‘19
‘20
‘21
‘22
Active Requirements
‘19
‘20
‘21
‘22
Take Up
‘19 ‘20 ‘21 ‘22
Under Offer
Apr
0.0
0.0
'91 '03 '17 '18 '19 '20 '21 1. Oxford Economics 2. CBRE. 3. Markit PMI London Report, all sectors 4. CBRE / Knight Frank, West End and City combined 5. CBRE 6. GPE forecast central London Speculative Grade A 7. As at March 8. 12 months to March
'22
'23
'24
'25 18
London Market Conditions
Current Uncertainty; Medium Term, London Compelling
Flex: Significant Central London Growth1 m sq ft
17.0
+359% 3.7
'07
'21
• 10%-15% p.a. forecast growth3 • 30% of all corporate office space by 20304 • Default for <5k sq ft; increasingly for <10k sq ft
Investment Market • Turnover Q1 ’22 vs ’21: up 4.2x to £5.2bn2 • Asset supply and equity capital stable • Multiplier 5.7 times • Asian, German, US investors – all active Equity Demand vs Asset Supply £bn
Equity Demand5 On Market Asset Supply6 Multiple (RHS)
X
40.0
12.0 8.0
20.0
5.7x 4.0
Retail Nov ‘21; past the trough; supported by GPE results Today; weaker sentiment; defer recovery? • Streets busier; footfall up; encouraging enquiries • Crossrail opens next week
0.0
0.0 Nov '17 Nov '18 Nov '19 Nov '20 Nov '21 May '22
GPE: • Good deal flow; £1.0bn under review • Invest in existing portfolio: £1.1bn total commitment near-term developments
1. Cushman & Wakefield, Flexible workspace stock inc. ‘21 year end forecast 2. GPE 4. JLL 5. CBRE 6. GPE, available stock on the market
3. The Instant Group, 2022
19
London Market Conditions
Current Uncertainty; Medium Term, London Compelling Office Rents
Yields Near Term Outlook
Near Term Outlook Driver
Nov ‘21
Today
GDP / GVA growth
Driver
Nov ‘21
Today
Rental growth
Confidence
Weight of money
Business investment
Gilts
Employment growth BBB bonds
Active demand / Take-up
Exchange rate
Vacancy rates
Political risk
Development completions
GPE Portfolio
Yield Outlook
Rental Values
Nov ’21: FY ’22 Guidance
FY ’22 Actual
May ’22: FY ’23 Guidance
Offices
+2.5% to +5.0%
+4.1%
0% to +6.0%
-2.5% to 0%
-0.7%
-2.5% to +2.5%
Retail Portfolio
+2.0% to +5.0%
+3.0%
0% to +5.0%
Yields
FY ’22 Actual
Office
-18bps
Retail
+3bps
Near Term Prime Secondary
Near term: Weight of money offsetting rising money rates Longer term: Best vs rest 20
Operational Update A Record Leasing Year
38.5
£m, years to March
40
Retail Office HQ Repositioning Flex
30 20
14.4
10
9
0
8.8
17.4 12.9 9.4
5.4
3.5
'20
'21
12.3 '22
Retail • £12.3m up 350% vs FY ’21 • 12.3% > ERV Mar ’21 • Including largest retail letting in West End • H2 ERV up 0.2% HQ Repositioning • FY’22 £17.4m; £15.4m completed & committed developments • 7.4% > ERV Mar ’21 Flex
• •
FY ‘22 £8.8m, 11.7% > ERV Mar ’21
• •
FY ERV up 7.9%1 Avg. lease term 3.1 4 years
•
Leasing quicker, for more, with rich seam of demand
Flex Performance Returns vs. Ready to Fit Last 12 months
Fitted
Fully Managed
Actual
Actual
Target
Net Effective Rent
+34%
+75%
>50%
Relative Cashflow2
+10%
+43%
>35%
Yield on Cost3
4.8%
6.6%
>6.0%
Where Next? More Growth • Organic growth: 600k sq ft by 2027 • New business: • Convert Gresse St, W1 & St Andrew St, EC4; +90k sq ft • Add through further acquisitions Other Priorities • • • •
Focus on driving operating efficiencies Build on GPE NPS score (+28 vs UK office sector +2) Implement EPC B strategies; c.£20m investment Appraise further sales: c.£200m under review
Income & Value Upside
1. Like-for-like basis 2. 10 year cashflow uplift after voids and fit out costs 3. Absolute yield on cost, including land value 4. Earlier of break and expiry date
21
Significant Development Programme Strong Platform for Growth
35 Portman Sq, W1
Kingsland & Carrington Hse, W1
7/15 Gresse St, W1
6/10 St Andrew St, EC4
50 Finsbury Sq, EC2
2 Aldermanbury Sq, EC2
New City Court, SE1
Minerva House, SE1
1 Committed 100% pre-let1 2 Major Refurbishments 0.1m sq ft 4 Near Term 2022/23 Starts 0.9m sq ft 3 Medium Term2 c.0.2m sq ft
Mount Royal, W1
French Railways House, SW1
10 Schemes Total 1.4m sq ft 24% of portfolio3
1. Offices 2. Existing area 3. Excluding refurbishments
22
On-Site Development: 50 Finsbury Sq, EC2 Offices Pre-Let to Inmarsat
• 129,200 sq ft: exemplary sustainability • Delivers on Statement of Intent • Targeting Net Zero Carbon • BREEAM ‘Excellent’ • WELL enabled • Offices 121,800; 100% pre-let to Inmarsat • 20 years (15 year break); market rent free • £69.75 psf; 11.2% > ERV Mar ‘21 • Retail 7,400 sq ft; 52% under offer • Encouraging interest in remainder • Forecast completion Q4 ’22
GPE profit on cost
39.1%
Development yield
6.5% 23
Four Near-Term Schemes
All Prime; Exemplary Sustainability; Strong Growth Potential; Good Timing 2 Aldermanbury Square, EC2
New City Court, SE1
321,100 sq ft; +82% Enabling works started Anticipated start H2 ‘22
389,100 sq ft; +297% Expected planning outcome Q4 ’22 Anticipated start Q1 ‘24
French Railways House, SW11
Minerva House, SE1
67,700 sq ft; +24% Planning permission granted Earliest start Q4 ‘23
139,900 sq ft; +52% Planning submitted Anticipated start Q4 ‘23
917,800 ft; +118%; 1. Includes 50sq Jermyn St, SW1c.214% 1. Including 50 Jermyn St, SW1
rental increase; c.£836m capex; all Net Zero Carbon; move the needle 24
Near Term
2 Aldermanbury Square, EC2 • Demolition commenced • 321,100 sq ft, up 82% • Excellent public realm and amenities • Communal roof terrace • New pedestrian routes • New garden above City Tower podium • Aiming to exceed GPE’s 2030 embodied carbon target • Capex: £267m; ERV: £24.1m • Appropriate contingency for inflation • Encouraging early letting interest
GPE expected profit on cost
15%-20%
Expected development yield
5%-6% 25
Where Next? GPE Portfolio (£m)1
Year to March ‘22: £40m net investor (inc. capex)
Committed Capex Development & Flex Capex Sales less Acquisitions1
HQ Repositioning 250 Progress 4 Near Term • c.£830m capex; c.£1.1bn2 total commitment 200 • >£72m ERV (+214% uplift) • Targeting 15%+ profit on cost
250.0 0.0
150
(250.0) (500.0) (750.0)
MSCI Central London Capital Growth Index, qtrly (RHS) 2012
2014
2016
Annual Forecasts (Capex only)
Flex Growth 100 • Existing: c.250k sq ft (13% office portfolio) • Grow to c.600k sq ft by 2027 (25% office portfolio) 50 • Plus: 2 recent acquisitions • Plus: more to come • Targeting 6%+ stabilised income yield 0
2018 2020 2022 2024 2026 Year to March
Our Organic Flex Ambition (000 sq ft) 600k sq ft
250k sq ft 66 74 110 Today
+140%
335
Fully Managed
170
Fitted
95
Partnership
2027
Sales & Acquisitions • Sales likely; c.£200m under review • Good acquisitions deal flow; £1.0bn under review • £600m Flex Clear Operating Direction • Customer first • Sustainability • Targeting returns > cost of capital
1. Only includes exchanged or completed sales 2. Based on increased portfolio size post near-term developments
26
Opportunity Clear strategic priorities • Focus, deep knowledge • Evolving; two complementary business streams; great potential • Differentiated: customer first & sustainability
Market • Short-term uncertainty • Medium term positive • Employment indicators supportive • Good occupier demand for Prime & Flex • Impending supply shortage • Healthy investor demand
Belief in London • Absolutely & relatively • World’s most compelling mixed-use location • New industries growing • Best retail improving • Crossrail opening next week; GPE: 93% near station
Portfolio opportunities • HQ Repositioning: Move the needle • Flex spaces: +140% organic growth • Acquisitions: focused strategy • Strong balance sheet
Powerful, collaborative culture; great team • Restructured for evolving strategy • Clear purpose, unifying values • Supporting our communities • Exceptional people engagement • Experienced senior team
GPE in great shape; confident outlook 27
Agenda
Toby Courtauld, Chief Executive Nick Sanderson, Chief Financial & Operating Officer Q&A: ir@gpe.co.uk
Dan Nicholson, Executive Director Janine Cole, Sustainability & Social Impact Director Robin Matthews, Investment Director Steven Mew, Customer Experience and Flex Director Marc Wilder, Leasing Director Andrew White, Development Director
28
29
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 implied by such forward-looking statements. Any forward-looking statements made by or on behalf of Great Portland Estates plc (GPE) speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. GPE does not undertake to update forward-looking statements to reflect any changes in GPE’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Information contained in this presentation relating to the Company or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.
30
Attractive Total Returns with Upside Potential
HQ Repositioning
Flex
1. Driving capital value growth through development surpluses
1. Driving higher net income per sq ft Targeting 6%+ stabilised income yield 600,000 sq ft potential3
Potential development commitment £1.1bn2 Targeting 15%+ profit on cost 2. Delivering new rent >£72m ERV from near-term schemes (>200% uplift)
2. Delivering Value Upside Customer retention Operational economies Yield compression
Targeting blended returns ahead of our cost of capital 1. Including land value.
2. Gross development cost of near-term schemes 3. Pre acquisitions
31
Our Portfolio
Significant Potential to Add Value
Portfolio by Asset Class by Value1 Committed Development £168m
Portfolio by Product by Area2 Long-Dated
Retail
Ready to Fit
£473m
520k sq ft
1,730k sq ft
6% Development Pipeline £473m
18% Prime 32%
18%
20%
11%
Active Portfolio £1,563m
58%
3
Opportunity Assets 37%
Flex 250k sq ft
1. Portfolio breakdown as at May 2022 2. Portfolio breakdown by area, as at March 2022 3. 13% of office portfolio
32
Significant Opportunity to Grow Flex Portfolio by Product by Area
Our Portfolio is Well Suited for Flex
March 20221
Retail
Prime 32%
20%
11%
Flex Fitted 4% Fully Managed 4% Flex Partnerships 3%
Ready to Fit
Opportunity Assets 37%
• 87% of office spaces < 10,000 sq ft • Clusters of ownership • Facilitates relocation as businesses grow • Aids service provision • Flexible layouts; capable of amenity provision and subdivision • 20% of portfolio by 2027 (25% of office portfolio) Our Flex Strategy • Significant conversion to Flex • If not Flex or HQ repositioning, maximise value and exit Restructured Team
By 2027
1
Ready to Fit
Retail 18%
Flex Fitted 6% Fully Managed 11% Flex Partnerships 3%
20%
• Focussed Flex leadership • Appointed Flex specialists in design, procurement, acquisitions and leasing • Customer service culture and team being built
Prime 42% Opportunity Assets 20%
1. By sq ft, assuming completion of all near-term schemes
Flex: primed for growth 33
Our Flex Portfolio
Proven in Numerous Buildings and Locations: 250,000 sq ft; 57 Units
GPE Flex: Key Selling Points • Well located, high quality buildings • Self contained • From reputable owner • Thoughtfully designed • Sustainably managed • Embedded technology 7/15 Gresse Street
1
1
3 2
2 5 3
1
2 8 7
4 2 1
3 9
Flex Partnerships 3 units
1 Fully Managed 25 units
#
Number of units
1 1
6/10 St Andrew Street
Recent Flex acquisitions
1 Fitted 29 units
7
34
Three Flex Products
We Understand Our Customers GPE Flex Products
Fully Managed
Fitted
What Customers Want Dedicated, fully furnished space; customised branding Flexible agreements; space to grow Sustainably developed; proven workplace experts / trusted landlord sesame® - smart workplace app; Wi-Fi enabled; concierge service; helpdesk
✓ ✓ ✓ ✓
GPE delivered; by floor /building
IT support Community manager; food & beverage Full maintenance support1 1. Cleaning service & maintenance; landscaping & planting; waste management
✓ ✓ ✓ ✓ ✓ ✓ ✓
Flex Partnerships
Partnership delivered; by desk/room
✓ ✓ ✓ ✓ ✓ ✓ 35
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 forward process, simple, flexible agreements No intermediary; deal directly with GPE Space to grow: expand organically within 1.9 m sq ft office portfolio No. of units1 29 Average lease term 4.1 years term certain Average unit size 2,500 sq ft Average rent £90 psf, +34%2 1. Including committed. 2. Net effective vs Ready to Fit, deals completed in last 12 months
36
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 units1 25 Average lease term 1.8 years term certain Average unit size 2,600 sq ft Average rent £174 psf, +75%2 1. Including committed. 2. Net effective Vs Ready to Fit, deals completed in last 12 months
37
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 opportunity Partnership agreements: • Revenue/profit share; upside potential • To date, utilised ahead of redevelopment to maximise cashflow • First long-term partnership at The Hickman (20,500 sq ft)
38
Flex: Delivering Strong Returns Growing Track Record
Net Effective Rent at 16 Dufour’s Place, W1 Fully Managed vs. Ready to Fit (£psf) 195
200
100
Avg. term certain 2.4 years
75
80 60
105 10
+75%
0 Ready to Fit
Ready to Fully GPE Rent free Fit Net Managed operating Effective costs 1 Rent
What Have We Learned Since 2018? • Limited risk vs. Ready to Fit • Lease terms not materially shorter • Faster leasing; reduced downtime • Accessing broader seam of potential customers • Strong returns from Fully Managed justify additional operational intensity
Fully Managed Net
Further Upside to Come • Proven customer retention • Improved cash flow • Valuation benefit • Economies of operational scale • Fit out costs • Service delivery costs of Fully Managed space • Track record of Fully Managed profit • Yield compression from existing 10% fully managed service profit • Too wide when compared to alternative real estate investments Confidence to Deliver our Flex Ambition
1. Includes cost of services, rates, broker fees, excl Fit out costs 2. 10 year cashflow uplift after voids and fit out costs 3. Absolute yield on cost, including land value
39
The Cycles So Far
Midtown & West End; Capital Growth
500.0
Nominal Capital Growth (West End and Midtown MSCI)
3.5 Yrs
400.0
8.5 Yrs
2.0 Yrs
Real Capital Value Index (monthly)
4.0 Yrs
1.7 Yrs
6.75 Yrs
300.0
200.0
100.0
0.0
Dec ‘89
Dec '86
Dec '88
MSCI. Mar 87 = 100
Dec '90
Jun ‘93
Dec '92
Dec ‘01
Dec '94
Dec '96
Dec '98
Dec '00
Dec '02
Dec ‘03
Dec '04
Dec ‘07
Dec '06
Sep ‘09
Dec '08
Jun ‘16
Dec '10
Dec '12
Dec '14
Dec '16
Dec '18
Dec '20
Dec '22 40
Office Rent as a % of Salary Costs Rent as % of Salary 45%
40%
City
West End
35%
30%
25%
20%
15%
10%
5%
0% '74
'76
'78
Source: ONS, PMA
'80
'82
'84
'86
'88
'90
'92
'94
'96
'98
'00
'02
'04
'06
'08
'10
'12
'14
'16
'18
'20
'22 41
Delivering the Developments Managing Construction Costs: Inflation
Average Construction Inflation1 Forecast
160 New Fetter Lane
33 Margaret St
May ‘22 forecast
Walmar House
150
24 Britton St 95 Wigmore St
140
240 Blackfriars Rd
30 Broadwick St The Hickman
48 Broadwick St 184 / 190 Oxford St
130
City Tower
Finsbury Sq
Rathbone Square 73/89 Oxford St
Nov ‘21 forecast
160 Great Portland St
120
1 Newman Street & 70/88 Oxford Street
110
Hanover Sq 55 Wells St
100
160 Old St
90
78/92 Great Portland St
80 '10
'11
'12
'13
'14
'15
'16
'17
'18
1. Based on Arcadis, Alinea, Aecom and Gardiner and Theobald London indices
'19
'20
'21
'22
'23
'24
'25
'26 42
Balance Sheet
Proportionally Consolidated for Joint Ventures
Group
JVs
Total
March ‘21
2,088.8
558.6
2,647.4
2,457.1
30.6
2.3
32.9
32.8
(531.2)
28.9
(502.3)
(451.0)
(58.1)
(7.0)
(65.1)
(67.3)
1,530.1
582.8
2,112.9
1,971.6
7.9
-
7.9
(3.0)
1,538.0
582.8
2,120.8
1,968.6
EPRA NTA per share
605p
230p
835p
779p
EPRA NDV per share
608p
230p
838p
777p
£m Investment property Other assets Net debt at book value Other liabilities Net assets and EPRA NTA Fair value of financial liabilities EPRA NDV
43
Income Statement
Proportionally Consolidated for Joint Ventures £m
Group 62.6
JVs
Total
Mar‘21
24.0
86.6
79.5
5.1
-
5.1
3.7
(52.7)
(1.9)
(54.6)
(37.0)
(0.4)
-
(0.4)
(0.1)
Finance costs
(1.7)
(7.6)
(9.3)
(7.9)
Profit before revaluation of investment property
12.9
14.5
27.4
38.2
Revaluation of investment property
107.9
31.4
139.3
(240.2)
Reported profit/(loss) before tax
120.8
45.9
166.7
(202.0)
0.5
-
0.5
0.1
121.3
45.9
167.2
(201.9)
12.9
14.5
27.4
38.2
-
-
-
1.9
EPRA Earnings
12.9
14.5
27.4
40.1
EPRA EPS
5.1p
5.7p
10.8p
15.8p
Rental income Fees from joint ventures Property and administration costs Loss on development management contracts
Tax Reported profit/(loss) after tax EPRA Earnings Profit before revaluation of investment property Debt redemption costs from joint ventures
44
Cash Earnings per Share
Proportionally Consolidated for Joint Ventures
£m
Group
JVs
Total
Mar‘21
EPRA Earnings
12.9
14.5
27.4
40.1
Less: spreading of lease incentives
(1.2)
(8.4)
(9.6)
(1.4)
Less: capitalised interest
(7.2)
-
(7.2)
(9.2)
3.9
-
3.9
1.5
8.4
6.1
14.5
31.0
3.3p
2.4p
5.7p
12.2p
LTIP charge
Cash EPS
45
EPRA Performance Measures
Measure
Mar ‘22
Mar ‘21
£2,112.9m
£1,971.6m
835p
779p
£2,120.8m
£1,968.6m
838p
777p
£2,306.1m
£2,150.9m
911p
849p
20.5%
20.0%
Mar ‘22
Mar ‘21
£27.4m
£40.1m
Diluted EPRA EPS
10.8p
15.8p
EPRA costs (by portfolio value)
1.9%
1.4%
EPRA Net Tangible Assets EPRA NTA per share EPRA NDV EPRA NDV per share EPRA NRV EPRA NRV per share EPRA LTV
EPRA earnings
46
Administration Costs £m 40.0
1 Salaries and other employee costs
Performance related pay
Other
Annual Average Headcount (RHS) 124
35.0 111 30.0
110
114 7.2
102
6.3 5.0
6.4
6.4
20.0
10.3
8.1
4.7 5.9
80
3.5 40
12.0
13.2
13.9
14.6
2018
2019
2020
14.8
2.3 1.5 1.3 1.0 1.1 7.2
Performance related pay (bonus & LTIP) increase driven by MSCI outperformance and strong NPS/employee engagement scores
60
4.0
4.8
10.0
5.0
Plc costs Legal and advisory 2 120 IT and digital Head office costs Other 100
25.0
15.0
129
140
17.5 20
0.0
Increased headcount to support o Customer first – sustainability, marketing, customer service o Flex growth – fitout, leasing o PLC/governance – CoSec, reporting
0 2017
2021
1. Includes directors, temporary staff, benefits and training 2. Includes insurance
2022
47
Joint Venture Business Contribution to Group
Net assets held in JV1
% of net assets held in JV 40
Access to new property
Risk sharing
£169.7m
35
£361.8m 30 25
£51.3m
20 15 10
Total
£582.8m
As % of Group net assets
27.6%
Previous joint venture partners 5 0 Mar 14
Mar 15
Mar 16
1. Active joint ventures only
Mar 17
Mar 18
Mar 19
Mar 20
Mar 21
Mar-22
48
Robust Debt Metrics Low-Cost Debt Book
March ‘22
March ’21
531.2
477.5
Net gearing
25.4%
24.6%
Total net debt including 50% JV non-recourse debt (£m)
502.3
451.0
20.5%
20.0%
Net debt excluding JVs (book value £m)
EPRA loan-to-property value
March ‘22
March ‘21
Interest cover
n/a1
n/a1
Weighted average cost of debt2
2.9%
2.7%
9.7x
12.5x
Weighted average interest rate3
2.5%
2.5%
% of debt fixed / hedged
84%
91%
391
443
Net debt to EBITDA
Cash & undrawn facilities (£m)
1. Calculated in accordance with unsecured debt covenants which exclude capitalised interest, resulting in no net interest charge for the 12 month calculation period 2. For the period (including costs) 3. As at balance sheet date (excluding costs)
49
Debt Maturity Profile1 £m
ESG-linked RCF2
500
Debenture Bonds
Mar ‘21
Private Placement Notes %
Today
WADM 8.1 years
Interest rate3
% Unsecured
1.6%
400
Cash / Undrawn Facilities WAIR
6.9 years
98%
96%
£443m
£391m
2.5%
2.5%
WAIR if fully drawn
2.1%
300
200
2.2% 2.8%
100 1.6%
2.7% 5.6%
2.8%
2.7% 2.9%
0 2022
‘22
2023
‘23
2024
‘24
2025
‘25
2026
‘26
2027
‘27
2028
‘28
2029
‘29
2030
‘30
1. Total facilities (joint ventures at share) 2. Revolving credit facility 3. As at today
2031
‘31
2032
‘32
2033
‘33
2034
‘34
2035
‘35
50
Sustainable debt £450 ESG Linked RCF • • • • •
•
Sustainable Finance Framework (SFF)
Issued Jan 21 First RCF by UK REIT with adjustable margin based on performance against ESG-linked KPIs Fully available for general corporate purposes £400m matures in Jan 27, £50m in Jan 25 KPIs aligned with GPE sustainability strategy, including: o Reducing portfolio energy intensity o Reducing embodied carbon of refurbishments and developments o Increasing portfolio biodiversity Headline 90bp margin increase/decrease by up to 2.5bp o Adjustments for the year ended March 22 donated to London Wildlife Trust
• Published July 21 • Fully integrating sustainability across our debt capital structure • Aligned to principles issued by International Capital Markets Association (ICMA) and Loan Markets Association (LMA) • Potential to issue debt instruments to finance projects with a positive environmental and/or social impact • Covers range of debt instruments including public bonds, USPPs and bank loans 51
The Valuation
Including Share of Joint Ventures
Leasehold Assets down 2.9%1
Movement % To 31 Mar ‘22 North of Oxford St Rest of West End Total West End Total City, Midtown & Southwark Investment Portfolio Development properties Properties held throughout year Acquisitions Total Portfolio
£m
12 months
6 months
978.6
3.4%
3.3%
814.1
7.5%
4.0%
1,792.7
5.2%
3.6%
649.6
1.0%
1.8%
Leasehold <100 years2
H1’22 (1.7%)
Freehold / long leasehold H2’22 H1’22 +4.5% +2.5%
H2’22 (1.0%)
Biannual Valuation Movement, Total Portfolio1 2,442.3
4.1%
3.1% +4.1%
167.6
48.6%
20.3%
2,609.9
6.1%
4.1%
37.5
(0.1%)
(0.1%)
2,647.4
6.0%
4.0%
1. Like-for-like net movement 2. 9.0% of portfolio by value
+2.0%
(2.4%) (6.6%) H1 ‘21
H2 ‘21
H1 ‘22
H2 ‘22
52
The Valuation1
Drivers of Valuation Movement
% movement
Yield shift
6 months
12 months
Rental value movement
2.8%
1.2%
-0.4%
-2.0%
1. Including share of Joint Ventures
0.0%
2.0%
Residual
0.0%
4.4%
2.0%
4.0%
6.0%
8.0%
53
The Valuation
Including Share of Joint Ventures Initial Yield
Equivalent Yield Basis point +/-
%
%
6 month
12 month
Offices
3.1%
4.3%
-9
-10
Retail
2.6%
4.6%
-1
3
Offices
2.6%
4.2%
-5
-6
Retail
2.5%
4.1%
-1
4
Total West End
2.8%
4.3%
-5
-5
City, Midtown and Southwark
3.4%
4.6%
-31
-34
2.9% (3.8% ex rent free)
4.4%
-12
-13
North of Oxford Street
Rest of West End
Total Portfolio1 1. Excludes developments
54
The Valuation
Including Share of Joint Ventures
12 months to
North of Oxford St Rest of West End Total West End City, Midtown and Southwark Investment portfolio Development properties Properties held throughout the year Acquisitions Total portfolio
Value £m
Mar ‘22 £m
Change %
6 months %
978.6
31.9
3.4%
3.3%
814.1
56.7
7.5%
4.0%
1,792.7
88.6
5.2%
3.6%
649.6
6.7
1.0%
1.8%
2,442.3
95.3
4.1%
3.1%
167.6
54.8
48.6%
20.3%
2,609.9
150.1
6.1%
4.1%
37.5
-
(0.1%)
(0.1%)
2,647.4
150.1
6.0%
4.0% 55
The Valuation Wholly Owned
12 months to Value £m
Mar ‘22 £m
Change %
6 months %
North of Oxford St
934.7
39.9
4.5%
4.0%
Rest of West End
435.1
8.6
2.0%
2.5%
1,369.8
48.5
3.7%
3.5%
513.9
6.5
1.3%
1.6%
1,883.7
55.0
3.0%
3.0%
167.6
54.8
48.6%
20.3%
2,051.3
109.8
5.7%
4.2%
37.5
-
(0.1%)
(0.1%)
2,088.8
109.8
5.5%
4.1%
Total West End City, Midtown and Southwark Investment portfolio Development properties Properties held throughout the year Acquisitions Total portfolio
56
The Valuation
Joint Ventures (100%)
12 months to
North of Oxford St Rest of West End Total West End City, Midtown and Southwark Investment portfolio Development properties Properties held throughout the year Acquisitions Total portfolio
Value £m
Mar ‘22 £m
Change %
6 months %
87.8
(15.9)
(15.4%)
(9.2%)
758.1
96.1
14.5%
5.8%
845.9
80.2
10.5%
4.0%
271.4
0.4
0.2%
2.3%
1,177.3
80.6
7.8%
3.6%
-
-
-
-
1,177.3
80.6
7.8%
3.6%
-
-
-
-
1,177.3
80.6
7.8%
3.6% 57
The Valuation1
ERV and Reversionary Potential
Movement in ERV To 31 March ‘22
12 months
%
6 months %
£m
Average Office Rent Passing
Average Office ERV
Reversionary Potential
£ per sq ft
£ per sq ft
%
North of Oxford St Offices
3.4%
1.2
2.4%
(2.5%)
(0.4)
(1.9%)
6.5%
1.6
3.4%
1.1%
0.2
2.4%
2.9%
2.6
2.0%
84.00
85.40
1.3%
Offices
3.4%
1.6
0.3%
46.30
55.80
16.3%
Retail
0.8%
-
1.3%
(5.9%)
Total City, Midtown & Southwark
3.3%
1.6
0.3%
14.7%
Total Let Portfolio
3.0%
4.2
1.4%
Retail
73.60
78.70
4.3% (1.3%)
Rest of West End Offices Retail Total West End
100.00
97.30
(1.7%) 2.4%
City, Midtown & Southwark
1. Including share of Joint Ventures
67.50
69.50
4.7%
58
Sustainability Progress on EPCs
Progress against Net Zero Carbon Roadmap
• 100% compliant with 2023 EPC legislation • 37% of portfolio compliant with anticipated minimum B rating by 20301 • Rises to 49% of portfolio compliant on delivery of 50 Finsbury Square, EC2 and 2 Aldermanbury Square, EC2
•
EPC Ratings: percentage of portfolio by area
Decarbonisation Fund
18%
31%
23%
16%
6%
-
-
6%
Targeted under development
30
Current FRI Current managed portfolio
• •
• • •
20
37% reduction in carbon footprint since baseline set in 2019 24% improvement in energy intensity (kwh/m2) when compared with our 2016 baseline Continue to purchase 100% of energy sourced from zero carbon, renewable energy supplies
Investments FY ‘22 £403k by fund; 100% deployed in 200 Gray’s Inn Road energy efficiency projects Income FY ‘22 £522k into fund from operational carbon emitted during year ended March ’22 Internal Carbon Price remains at £95 per tonne for year ending March 23
10
0
A
1. By area
B
C
D
E
F
G
Managed portfolio uncertified
59
Social Value Social Impact Strategy • • • •
Launched November 2021 Four pillars to our approach £630,800 social value generated during the year £1.25 million generated since 1 April 2020
Charity Partnerships Centrepoint • £116K raised during year • £430K raised during four year relationship Groundwork London • Air Quality Projects: £26K invested, 7 Islington schools Westminster Bikes • Supporting unemployed Westminster residents through City & Guilds bike mechanic qualification • £30K social value generated
Inclusive Leadership
New Charity Partnerships
• GPE Executive Committee participating in Inclusive Leadership Programme with Arrival Education • Co-mentoring socially and ethnically diverse talent
Work to create positive futures for young people growing up on inner-city estates in London
The UK’s leading fuel poverty charity
60
Market Rents PMA: Office Market Balance1
PMA: Prime Headline Rents
Months supply
£ per sq ft, years to December Stagflation scenario
100 Forecast
West End
140
City 80
Stagflation
Headline West End3 Headline City3 Spot Rent Free4 West End
scenario2
City
Nov ’21 24
May ’22 21 – 24
27
24 - 27
Forecast
110 60 Rent falling 80 40
50
20
GPE Office Rent rising Rental Equilibrium at 20 months
0 '07
'10
'13
'16
'19
'22
'25
20
ERV
£69.50 psf
RP5
£67.50 psf
'06 95th
1. PMA 2. West End and City combined
'08
'10
'12
69% West End6 93% near Crossrail7 Current reversion 4.7% '14
'16
'18
'20
'22
'24
'26
3. PMA, percentile 4. GPE, months, assuming a 10 year term 5. Rent Passing 6. By value 61 7. Within 800m of a Crossrail station
Source: CBRE, GPE Jun-22
Jun '21
Jun '20
1 qtr
Jun '19
Jun '18
Jun 17
Jun 16
Jun 15
30 Jun 14
30 Jun 13
30 Jun 12
30 Jun 11
Nominal Prime Rental Value (LHS)
30 Jun 10
30 Jun 09
30 Jun 08
3 qtrs
30 Jun 07
30 Jun 06
30 Jun 05
30 Jun 04
30 Jun 03
£100
30 Jun 02
30 Jun 01
30 Jun 00
30 Jun 99
30 Jun 98
30 Jun 97
30 Jun 96
30 Jun 95
30 Jun 94
30 Jun 93
30 Jun 92
30 Jun 91
£75
30 Jun 90
30 Jun 89
History of rental lags to yield moves
West End Prime Yields and Rental Growth
Prime Yields (RHS)
£125 7.0%
6.5%
6 qtrs 6.0%
2 qtrs 5.5%
3 qtrs 5.0%
7 qtrs 4.5%
5 qtrs 4.0%
£50 3.5%
4 qtrs 3.0%
£25 2.5%
62
Central London Prime Yields (%) 7.0
6.0
5.0
4.0
West End
City
Source: CBRE
2021
2016
2011
2006
2001
1996
1991
1986
3.0
63
Central London Office Yields vs Other Global Cities (%) 5.0
4.0
3.0
2.0
1.0
0.0 New York
Source: JLL/CBRE
London City
London West End
Singapore
Amsterdam
Hong Kong
Paris
Berlin
Tokyo
64
Central London Office Completions1 Market Peaks
M sq ft 14.0
Completed & Let
Pre-Let
Spec
CBRE Projected
Vacancy rate 14.5%
12.0
10.0
Vacancy rate 10.5%
8.0
6.0
4.0
2.0
0.0
'91
'03
'09
'10
'11
1. CBRE / GPE; schemes > 20,000 sq ft
'12
'13
'14
'15
'16
'17
'18
'19
'20
'21
'22
'23
'24
'25 65
Net Office Job Creation in London1 179,000 jobs to be created over, 2021-2026
‘000s of jobs 0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
2021-2026
’21
’26
’21 ’26
’21 ’26
‘21 ‘26
1. Oxford Economics, May 2022; Professional Services, Creative, Banking & Insurance, Public Sector
Professional Services +120,000 jobs
Creative +52,000 jobs
Banking & Insurance +4,000 jobs
Public Sector +3,000 jobs
66
London Office Jobs
London Finance and Business Services Employment
% p.a. 10%
Finance
Business Services
8% 6% 4% 2% 0% -2% -4% -6% -8% -10% '09 Q1
Source: ONS
'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
67
GPE Leasing Progress GPE: Investment Portfolio Lettings1 £m 30.0
Lettings, % ahead of ERV2 (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
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
'21
'22
2.5
5.5
1.2
12.2
2.5
20.0 10.0 0.0 GPE: Space Under Offer3 % 15.0
Under Offer, % ahead of ERV2 17.2
1.2
4.2
2.4
0.1
2.6
6.9
2.1
8.1
10.0 5.0 0.0 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 20 Mar 20 Sep 20 Mar 21 Sep 21 Mar 22 1. 100%, inc development lettings, excludes pre-lets; avg. for Mar ‘09 – Mar ‘22 2. % ahead of March ERVs excluding short-term lets ahead of development 3. As at reporting date; avg for Sept ‘15 – Mar ’22.
68
Source: CBRE 01
Q1 '22
Q4 '21
Q3 '21
Q1 '21
'20
19
'18
17
'16
15
'14
13
'12
11
'10
09
'08
07
'06
05
City
'04
03
'02
%
'00
99
'98
97
'96
95
'94
93
'92
91
'90
89
'88
87
'86
85
'84
Void Rate
Ready to Occupy Space
20.0 West End
15.0
10.0
5.0
0.0
69
Central London Availability By Type1 Million sq ft
30 Secondhand
New
2021-2022
20 Secondhand -8%
10
New +35% 0 '16
1. CBRE
'17
'18
'19
'20
'21
'22
70
City Active Requirements >10,000 sq ft
Change
000 sq ft
May 2012
Nov May 2012 2013
Professional 1,073 1,073 Services
838
Nov May 2013 2014 838
Nov May 2014 2015
945
841
1,232 1,041
435
Nov 2015
May 2016
Nov 2016
May 2017
Nov 2017
698
649
991
881
728
1,310 1,352
840
631 1,468 1,202
904
May 2018
Nov 2018
May 2019
Nov 2019
907 1,282 1,395 2,356
Financial Services
1,139
1,197
894
Manufacturin g& Corporates
137
67
55
175
90
55
209
436
361
414
252
214
165
199
Misc
350
441
423
666
497
127
344
436
328
391
262
352
367
Marketing & Media
133
61
71
124
233
493
188
218
440
632
683
217
IT & Tech
257
234
554
422
204
109
581
654
433
418
476
Government
259
92
25
70
480
430
560
262
318
179
Insurance
926
831
568
417
475
456
366
305
202
434
1,743
1,618 1,466
May 2020 2,361
May 2021
Nov May 12 2021 2022 mnths
1st 6 2nd 6 mnths mnths
1,810
-12%
-6%
-7%
456 1,639 1,090
139%
259%
-33%
1,658 2,053 1,938
725
405
321
28
39
30
35
93
252
228
145%
171%
-10%
370
521
957
163
20
240
120
20
-92%
-50%
-83%
247
81
67
200
60
72
616
237
88
-86%
-61%
-63%
782
519
711
470
947
934
219
152
793
798
425%
422%
1%
184
227
165
162
108
110
90
70
45
45
30
-33%
0%
-33%
332
285
155
222
177
247
395
424
307
184
320
4%
-40%
74%
2,819 3,962 5,208 4,384
11%
31%
-16%
Total 4,274 3,996 3,428 3,944 3,965 2,946 4,462 4,361 3,571 4,090 4,538 4,007 4,268 4,645 4,232 5,581 4,438
Source: Knight Frank
Nov 2020
71
West End Active Requirements >10,000 sq ft
Change Nov 2014
May 2015
Nov 2015
May 2016
Nov 2016
May 2017
Nov 2017
May 2018
Nov 2018
May 2019
40
20
115
281
120
353
170
55
75
22
134
54
60
152
185
125
310
68%
-32%
148%
261
409
367
502
421
374
499
300
372
329
293
620
693
890
624
649
290
720
11%
-55%
148%
445
154
319
177
376
538
512
598
447
445
792
725
854
554
603
249
323
159
299
-7%
-51%
88%
373
210
330
262
225
203
304
140
208
262
317
388
474
242
125
213
12
25
50
50
100%
100%
0%
782
810
145
163
218
360
225
538
570
418
548
720
551
420
316
562
162
285
521
500
272
-48%
-4%
-46%
IT & Technology
95
172
276
207
125
130
223
234
465
284
272
298 1,072
107
258
186
164
37
157
189
173
10%
20%
-8%
Government
109
64
83
130
17
-
-
-
180
283
131
105
242
185
47
67
-
-
-
25
-
-
-
1,313 1,849
-1%
-29%
41%
000 sq ft
May 2012
Professional Services
100
110
156
206
Financial Services
358
368
616
Manufacturing & Corporates
155
485
Miscellaneous
432
Marketing & Media
Total
Nov May 2012 2013
Nov May 2013 2014
150
Nov May Nov 2019 2020 2020
May 2021
2,031 2,382 1,931 1,451 1,390 1,279 1,644 2,316 2,361 2,643 2,130 2,312 3,357 2,283 2,609 2,221 2,159 1,359 1,860
Source: Knight Frank
Nov May 12 2021 2022 mnths
1st 6 mnths
2nd 6 mnths
72
Source: CBRE Q1 2022
Q1 2021
Q1 2020
Q1 2019
Q1 2018
Q1 2017
Q1 2016
Q1 2015
Q1 2014
Rent (RHS)
Q1 2013
Q1 2012
Q1 2011
Q1 2010
Rent Free Periods (LHS)
Q1 2009
Q1 2008
Q1 2007
Q1 2006
Q1 2005
Q1 2004
Q1 2003
Months
Q1 2002
Q1 2001
Q1 2000
Q1 1999
Q1 1998
Q1 1997
Q1 1996
Q1 1995
City Top Prime Rents
vs. Rent Free Periods
Net Rent (RHS) £ psf
35.0 80.00
30.0
25.0 60.00
20.0
15.0 40.00
10.0
5.0
0.0 20.00
73
Source: CBRE Q1 2022
Q1 2021
Q1 2020
Q1 2019
Q1 2018
Q1 2017
Q1 2016
Q1 2015
Q1 2014
Rent (RHS)
Q1 2013
Q1 2012
Q1 2011
Q1 2010
Rent Free Periods (LHS)
Q1 2009
Q1 2008
Q1 2007
Q1 2006
Q1 2005
Q1 2004
Q1 2003
Months
Q1 2002
Q1 2001
Q1 2000
Q1 1999
Q1 1998
Q1 1997
Q1 1996
Q1 1995
West End Top Prime Rents
vs. Rent Free Periods
Net Rent (RHS) £ psf
35.0 140.00
30.0 120.00
25.0 100.00
20.0 80.00
15.0
10.0 60.00
5.0 40.00
0.0 20.00
74
City Take-Up
Secondhand
m sq ft
New Completed
Pre-let
10-Year Average 1.3m sq ft
2.5
2.0
1.5
1.0
0.5
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
5.8
Q1 2022
Q1 2021
Q1 2020
Q1 2019
Q1 2018
Q1 2017
Q1 2016
Q1 2015
Q1 2014
Q1 2013
Q1 2012
Q1 2011
Q1 2010
Q1 2009
Q1 2008
Q1 2007
Q1 2006
Q1 2005
0.0
2.5
4.1
Annual Take-Up (m sq ft) Source: CBRE
75
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
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
1.8
Q1 2022
Q1 2021
Q1 2020
Q1 2019
Q1 2018
Q1 2017
Q1 2016
Q1 2015
Q1 2014
Q1 2013
Q1 2012
Q1 2011
Q1 2010
Q1 2009
Q1 2008
Q1 2007
Q1 2006
Q1 2005
0.0
4.0
Annual Take-Up (m sq ft) Source: CBRE
76
Source: CBRE Q1 2022
Q1 2021
Q1 2020
Q1 2019
Q1 2018
Q1 2017
Q1 2016
Q1 2015
Q1 2014
Q1 2013
Q1 2012
1.5
Q1 2011
Q1 2010
Q1 2009
Q1 2008
Q1 2007
Q1 2006
Q1 2005
Q1 2004
City Office Under Offer
m sq ft
2.0
10-year average: 1.4m sq ft
1.0
0.5
0.0
77
Source: CBRE Q1 2022
Q1 2021
Q1 2020
Q1 2019
Q1 2018
Q1 2017
Q1 2016
Q1 2015
Q1 2014
Q1 2013
Q1 2012
Q1 2011
Q1 2010
Q1 2009
Q1 2008
Q1 2007
Q1 2006
Q1 2005
Q1 2004
West End Office Under Offer
m sq ft
2.0
1.5 10-year average: 1.0m sq ft
1.0
0.5
0.0
78
Equity Demand and Supply
Central London Investment & Development Property
Equity Demand1 2014
2015
2016
2017
2018
2019
2020
2021 May
2022 Nov
May
£bn
May
Nov
May
Nov
May
Nov
May
Nov
May
Nov
May
Nov
Nov
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
16.3
15.7
16.0
11.3
UK REITs
2.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.2
1.5
1.8
1.8
2.0
2.5
2.5
2.0
Sovereign / Overseas Funds
11.5
17.0
18.0
16.0
17.3
16.0
14.0
14.5
15.4
13.8
10.0
10.5
13.5
14.5
12.1
14.7
UK Funds
2.0
2.5
4.0
3.5
2.5
1.5
1.0
1.0
0.8
1.0
1.7
1.7
1.8
2.0
2.0
2.0
US Capital
4.5
5.5
5.5
4.5
4.5
4.5
6.0
5.0
4.0
3.0
3.0
3.0
3.0
4.0
5.0
5.0
German Funds
1.3
1.5
2.5
1.8
1.0
1.5
2.0
2.0
1.2
1.0
1.5
1.5
2.0
2.5
2.5
1.7
27.8
34.0
40.0
35.8
33.8
38.5
39.5
39.0
37.0
34.0
31.8
32.8
38.6
41.2
40.1
36.7
Asset Supply2 2014 May
2015 Nov
May
2016 Nov
May
2017 Nov
May
2018 Nov
May
2019 Nov
May
2020 Nov
City
£0.7bn
£1.8bn £1.0bn
£6.1bn £3.3bn
£3.1bn £4.2bn
£7.9bn £2.3bn £2.4bn £1.8bn £1.6bn
West End
£1.6bn
£1.5bn £1.0bn
£1.8bn
£1.4bn
£3.2bn £3.7bn
£1.6bn
£1.7bn
£2.3bn £3.3bn £2.0bn £7.9bn £4.9bn £4.5bn £5.9bn
£1.9bn
£1.7bn £2.0bn
£11.1bn £6.0bn £4.3bn £3.5bn £3.6bn
1. CBRE, figures not available for May 20 2. GPE, available stock on the market
May
2022
2021 Nov
May
Nov
May
6 mnth % chng
12 mnth % chng
£0.6bn
£6.9bn £4.1bn £4.2bn £4.3bn
2%
5%
£1.1bn
£2.2bn £2.2bn £2.5bn £2.1bn
(16%)
(5%)
£1.7bn
£9.1bn £6.3bn £6.7bn £6.4bn
(4%)
2%
79
Investment Activity West End & City
Available assets Nov ’21 to May ‘22 £bn 8.0 City
6.0
West End
1.6 2.4 4.2
1.0 4.3
4.0
0.7 0.5
1.7
0.6
2.0 1.9
2.5
2.1
0.4
0.0 On the market Nov '21 Source: GPE
Sold
Under offer
Withdrawn
Available
New for sale
On the market May '22 80
GPE Portfolio Mix1 At 31 March 2022
By Type (by value)
By Location (by value)
Midtown 5% Southwark 7%
Residential 1% Retail 20%
Office 79%
1. Includes share of Joint Ventures
Noho 38%
City 19%
Rest of West End 31%
81
GPE Customers1 By Sector
Retailers, hospitality & leisure
TMT
Professional & Business Services
Financial Servcies
Corporates
Government & Other
100%
Government & Other 2%
Corporates 14%
75%
Financial Services 16%
Professional & Business Services 25%
50%
TMT 13%
25%
Retailers: Head Offices 10%
Retailers: Retail Stores 20%
0% Mar '09 Mar '10 Mar '11 Mar '12 Mar '13 Mar '14 Mar '15 Mar '16 Mar '17 Mar '18 Mar '19 Mar '20 Mar '21 Mar' 22
1. Includes share of Joint Ventures
82
Top Customers1 31 March 2022
Customer Kohlberg Kravis Roberts
Sector Financial Services
Glencore
Corporate
3.1
Runway East
Professional & Business Services
2.8
Exane SA
Financial Services
2.8
New Look2
Retailers & Leisure
2.7
Retailers & Leisure
2.7
Winckworth Sherwood
Professional & Business Services
2.5
Fashion Retail Academy2
Retailers & Leisure
2.5
Carlton Communications
TMT
2.4
Uniqlo
Retailers & Leisure
2.3
Independent Television News
TMT
1.8
Dennis Publishing
TMT
1.6
RBH Group
Retailers & Leisure
1.5
Ahli United Bank (UK)
Financial Services
1.4
Brown-Forman Beverages
Corporate
1.3
Heineken
Corporate
1.3
Bell Rock Capital Management
Financial Services
1.2
Lionsgate UK
TMT
1.2
Guy’s and St Thomas NHS Foundation
Government
1.0
Brown Advisory Limited Total
Professional & Business Services
Richemont
2
1. Contracted rent, including share of Joint Ventures 2. Office occupiers
£m 4.4
Top 10 27.1%
Top 20 39.9%
1.0 41.5 83
Portfolio Management
Customer Retention, 12 months to March 20221
Area (000 sq ft) 400
378 163
350
300
250 215
140
200
150
65%
100
8 4%
50
67 31%
0 Expiries & Breaks
1. Joint Ventures at 100%
Refurbishment / Development
Sub total
Retained
Relet / Under offer
Remaining
84
Portfolio Management Movement in Reversions1
6 months to 31 March 2022
30 Sep 2021
£6.5m
£7.5m
Portfolio activity2
(£2.8m)
-
Reversion capture
(£0.3m)
(£1.6m)
-
(£0.3m)
ERV movement
£1.5m
£0.9m
At end of period
£4.9m
£6.5m
At beginning of period
Disposals
1. Based on let portfolio; includes share of Joint Ventures 2. Includes lease expiries, breaks, new lettings and amounts transferred to the development portfolio
85
Portfolio Management Expiry Profile1
% by total rental income subject to lease expiry or break Years to March Investment Portfolio
Near Term Developments
40.0
0.3
30.0
20.0
8.3 2.8 28.9
10.0
17.2
16.8 12.4 5.2
8.1
2026
2027
0.0 2023
2024
1. Includes share of Joint Ventures
2025
After 86
Portfolio Management Void Rate, % by Rental Value1
35.0
Investment Portfolio
Newly completed developments
Development / refurbishment
Pre-Let
30.0 2.4 3.6
25.0
5.2
4.8 14.7
20.0
15.0
15.4
4.7
4.7
7.9
22.0
0.6
8.2 19.0
22.3 12.3
10.7 13.4 12.5 8.4
18.3
6.6 5.6
3.7
6.4
3.3
2.4
2.3
3.7
2.3
2.0
3.6
3.1
3.1
4.9
4.8
4.8
2.3
2.0
10.8% 6.6
5.1
4.4
10 M ar 11 Se p 1 M 1 ar 12 Se p 12 M ar 13 Se p 13 M ar 14 Se p 14 M ar 15 Se p 15 M ar 16 Se p 16 M ar 17 Se p 17 M ar 1 Se 8 pt 18 M ar 1 Se 9 pt 1 M 9 ar 2 Se 0 pt 20 M ar -2 Se 1 p21 M ar -2 2
3.2
8.3 5.4
8.9
Se p
M ar
10
0.0
2.7
6.8
9.4
18.4 18.9
6.6
5.0 4.4
4.3
14.8
19.5
0.2
16.0 16.9
6.4
3.7
5.8 12.9
3.0
10.0
3.5
3.3
6.4
17.6 8.8
12.2
10.0
24.4
10.0
10.8
7.1
4.2
1. Includes share of Joint Ventures
87
HQ Repositioning : Feeding Ready to Fit 7 Schemes, Starts from H2 ‘22 Existing 420,300 sq ft
Near-Term Capex £836m
ERV £72m
Completed 917,800 sq ft
Medium Term
Existing 204,500 sq ft
Targeting 214,300 sq ft
Pipeline Total
Increase 118%
New Build1 1,132,100 sq ft Increase 81%
Minerva House, SE1
Mount Royal, W1
New City Court, SE1 Earliest Start
2022
2 Aldermanbury Square, EC2
2023
French Railways 2 House, SW1
2024
2025
2026
Kingsland/ Carrington Hse, W1
1. Existing area used where insufficient design information exists. 2. Including 50 Jermyn St, SW1
2027
2028
35 Portman Square, W1
88
Low Carbon HQ Repositioning Our Three Innovative Approaches
Re-use and Extend
Low Carbon New Build
Circular Economy New Build
Minimise carbon by reutilising as much of existing building
Re-use of elements of buildings such as basements. Efficient low carbon modular construction. Use of recycled materials to reduce whole life carbon
Re-use of elements of buildings such as basements. Efficient low carbon modular. Re-used materials arising from the dismantling of other buildings
Minerva House SE1
50 Finsbury Sq EC2
1. Including 50 Jermyn St, SW1
2 Aldermanbury Sq EC2
New City Court SE1
French Railways House SW11
89
Opportunity Rich Pipeline 7 Schemes
Existing Area
New build area (sq ft)1
Opportunity Area
Earliest Start
Capex (£m)
Uplift in ERV (%)
Next Steps
2 Aldermanbury Square, EC2
176,000
321,100
Crossrail
2022
£267m
Demolition
2
54,600
67,700
Core West End
2023
£79m
Detailed Design
New City Court, SE1
98,000
389,100
London Bridge
2024
£377m
Planning Appeal
Minerva House, SE1
91,700
139,900
London Bridge
2023
£113m
Planning Permission
420,300
917,800
Kingsland/Carrington House, W1
39,600
48,800
Core West End
2024
Design
Mount Royal, W1
92,100
92,100
Core West End
2028
Design
35 Portman Square, W1
72,800
73,400
Core West End
2026
Design
204,500
214,300
French Railways House, SW1
Near Term Total
Pipeline Total
£836m
214%
1,132,100
1. Existing area used where insufficient design information exists. 2. Including 50 Jermyn St, SW1
90
Development Scheme Review Completions since May 2009 PC
New build area sq ft
Cost £m1
Profit £m1
Yield on cost2
Rent £m pa1, 2
% let 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/Very Good
24 Britton St, EC1
Nov 2011
51,300
19.3
6.4
SOLD
SOLD
100%
Very Good
160 Great Portland St, W1
May 2012
92,900
63.3
26.8
SOLD
SOLD
100%
Very Good
33 Margaret St, W1
Dec 2012
103,700
91.0
52.1
SOLD
SOLD
97%
Excellent
95 Wigmore St, W1 (GWP)
Jul 2013
112,200
54.8
34.2
SOLD
SOLD
92%
Excellent
City Tower, 40 Basinghall St, EC2
Sep 2013
138,200
35.6
11.8
5.4%
3.1
24%
Very Good
240 Blackfriars Road, SE1 (GRP)
Apr 2014
236,700
67.6
37.7
SOLD
SOLD
57%
Excellent
Walmar House, W1
Oct 2014
60,300
59.6
32.1
7.4%
4.2
12%
Very Good
12/14 New Fetter Lane, EC4
Nov 2015
142,300
49.6
51.9
SOLD
SOLD
100%
Excellent
48/50 Broadwick St, W1 (Residential)
Feb 2016
6,500
8.6
1.1
SOLD
SOLD
n/a
-
90/92 Great Portland St, W1
Aug 2016
8,600
5.0
(0.1)
SOLD
SOLD
0%
Excellent
30 Broadwick St, W1
Nov 2016
92,300
132.4
47.4
SOLD
SOLD
25%
Excellent
73/89 Oxford St & 1 Dean St, W1
Jul 2017
90,200
200.4
51.0
SOLD
SOLD
91%
Excellent
Rathbone Square, W1 (Commercial)
Mar 2017
268,900
292.8
83.1
SOLD
SOLD
91%
Excellent
78/80 Great Portland St, W1
May 2017
18,100
20.7
2.6
SOLD
SOLD
2%
Excellent
84/86 Great Portland St, W1
May 2017
22,700
28.3
4.2
SOLD
SOLD
100%
Very Good
55 Wells St, W1
Nov 2017
37,300
50.8
9.6
SOLD
SOLD
10%
Excellent
Rathbone Square, W1 (Residential)
Nov 2017
151,700
280.1
3.5
SOLD
SOLD
n/a
Sustainable Homes L4
160 Old St, EC1 (GRP)
Apr 2018
161,700
66.5
13.0
SOLD
SOLD
71%
Excellent
The Hickman, E1
Sep 2020
75,300
61.0
10.2
6.4%
3.9
0%
Excellent
Hanover Sq, W1 (GHS)
Nov 2020
219,400
312.2
22.8
4.2%
12.8
55%
Excellent
Jul 2021
122,700
294.2
(28.4)
4.2%
12.4
33%
Excellent
2,264,300
2,248.9
480.9
4.3%
36.4
1 Newman St & 70/88 Oxford Street, W1
As at completion Profit on cost: 21%
1. GPE share 2. Rent / yield on costs for assets held only 3. Based on ERV of property
91
Our Integrated Team GPE Senior Management Executive Committee
Toby Courtauld Chief Executive
Nick Sanderson Chief Financial & Operating Officer
Dan Nicholson Executive Director
Janine Cole Sustainability & Social Impact Director
Carrie Heiss Human Resources Director
Robin Matthews Investment Director
Steven Mew Customer Experience and Flex Director
Andrew White Development Director
Marc Wilder Leasing Director
Darren Lennark Company Secretary & General Counsel
Stephen Burrows Director of Financial Reporting & IR
Helen Hare Director of Projects
Martin Leighton Director of Corporate Finance
Hugh Morgan Director of Investment Management
David O’Sullivan Director of Occupier & Property Services
James Pellatt Director of Workplace & Innovation
Anisha Patel Director of Marketing
Piers Blewitt
Head of Planning Strategy & Senior Development Mgr
Rebecca Bradley Head of Property Services
Lisa Day Head of Occupier Services
Alexis George Head of Health & Safety
Charlie Turrell Head of Financial Planning and Analysis
Martin Quinn Head of Technical Project Delivery and Senior Project Manager
Steven Rollingson Head of IT`
Simon Rowley Director of Office Leasing and Flex
Senior Management
92