Statement from the Chief Executive
We have delivered a record leasing year and strong financial performance, whilst evolving our strategy to meet our customers’ changing needs, with a clear focus on creating high quality, sustainable HQ and Flex office spaces in central London.”
Evolving our strategy and organisation We are resolutely focused on providing our customers with great spaces in central London that are flexible, sustainable and beautifully designed, offering high quality services to deliver them an enticing real estate experience. To ensure we meet our customers’ evolving needs and changing working patterns, we have evolved our strategy incorporating flexibility, service, technology and sustainability as imperatives to the delivery of a truly differentiated product. To support our strategy evolution, we are now organising ourselves into two complementary, overlapping activities: – HQ repositioning – delivering large, best-in-class HQ buildings; and – Flex spaces – smaller fitted units, often with higher service levels. Both of these areas are primed for growth, with our £1.1 billion near-term development programme and the opportunity to deliver more than 600,000 sq ft of Flex space across our existing portfolio. These activities are also strongly aligned with our sustainability ambitions and delivering our detailed Roadmap to Net Zero by 2030.
Our ‘Customer first’ approach To deliver these ambitions, we are putting customer needs at the centre of everything we do. As well as providing both choice and flexibility, sustainability, and health and wellbeing are integral to our offer, our services are enhancing the customer experience and our use of technology is future-proofing our buildings for tomorrow’s working patterns. Positive feedback from our customers is already strong, with our net promoter score of +27.8, significantly ahead of the UK office sector average of +2.0 and in the upper quartile for London offices. We have also refreshed our corporate brand and redefined our product lines, each tailored to match specific customer needs: – ‘Ready to Fit’ – for businesses typically taking larger spaces on longer leases who want to fit out the space themselves;
Record leasing year drives strong operational performance In a year full of challenges, our strong operational focus has delivered a record leasing year with £38.5 million of leases signed, with market letting 9.8% ahead of ERV. The breadth of our leasing activities demonstrates the ongoing attractions of our spaces, including the £8.5 million pre-letting of all the office space at our 50 Finsbury Square net zero carbon refurbishment scheme and the leasing of the entirety of 103/113 Regent Street for £4.7 million, central London’s largest retail letting in the year. We completed our 1 Newman Street development (122,700 sq ft) at the eastern end of Oxford Street, directly opposite the new Elizabeth Line station which will open this summer. We have also grown our Flex office offer to 13% of our office portfolio, including our most recent Flex partnership deal at the Hickman in Whitechapel, where our tech-enabled refurbishment was awarded a SmartScore ‘platinum’ rating, the first building in the world to achieve this accolade.
Delivering robust financial results These successes delivered robust financial results, with IFRS NAV and EPRA NTA per share rising by 7.2% over the year. When combined with an ordinary dividend maintained at 12.6 pence per share, our Total Accounting Return was +8.8%. We delivered an IFRS profit for the year of £167.2 million and a diluted EPRA EPS of 10.8 pence, a decline of 31.6%, in part driven by rental income foregone through our profitable sale of 160 Old Street for £181.5 million during the year and increased provision for performance related pay. Across our portfolio, property values were up 6.1% over the year, well ahead of our central London benchmarks. Our offices delivered a stronger relative valuation performance, up by 7.9%, whilst retail values remained flat. Office ERVs were up 4.1% in the year, with prime office investment yields holding firm, whilst retail ERVs fell 0.7%, although the retail outlook appears to be improving with West End footfall back to 80% of pre-pandemic levels and our ERVs rising by 0.2% in the second half.
– ‘Fitted’ spaces – where businesses can move into fully furnished, well designed workspaces, with their own front door, furniture, meeting rooms, kitchen and branding; and – ‘Fully Managed’ – fitted space where GPE handles all day-to-day running of the workplace in one monthly bill.
Annual Report 2022 Great Portland Estates plc 19
Strategic Report – Annual review
Toby Courtauld Chief Executive
