(Alliance News) - Great Portland Estates PLC on Tuesday said it was encouraged by its recent leasing performance, and reported progress on several ongoing developments.

GBP16.1 million of leases were signed by London-based property developer in the 9 months to December 31, 10% ahead of estimated rental value in March.

The company signed 12 new leases and renewals over the period, generating annual rent of GBP5.0 million, with market lettings on average 6.5% ahead of March ERV. Great Portland also added that they have a further GBP6.0 million of rent currently under offer, with market lettings 5% ahead of March ERV.

Progress is being made at the net-zero Aldermanbury Square property in central London, which Great Portland pre-let to international law firm Clifford Chance LLP in November 2022. The company has increased the planned size of the building to 322,600 square foot from 176,000 square foot, and expects to finish the project by the first quarter of 2026. The development is currently anticipated to deliver a loss on cost of 12% from the commitment date in 2022, but will deliver an estimated GBP28.3 million of future profit from the September valuation.

Vacant possession has also been obtained to provide 67,000 square foot of "grade A" space at French Railways House, Soho, ahead of "major office-led redevelopment" of the property. The company said it will "shortly commence" the strip of the buildings, and expects the scheme to deliver profit on cost of 25% alongside a redevelopment yield of 6.5%.

Extensive refurbishment is expected to commence at Minerva House in the current quarter, which will deliver 143,000 square foot of new "grade A offices with river frontage".

Great Portland is also eyeing refurbishment for 29,900 square foot of new fully managed space at a Wardour Street property, Soho, and anticipates profit on cost of greater than 19% with yield on cost above 6.5%.

Chief Executive Officer Toby Courtauld said that the company's recent leasing success "reaffirms" confidence in its portfolio rental value guidance of between 2.5% and 5% for the 2024 financial year.

He added: "Despite a recent improvement in the outlook for interest rates, the macro-economic backdrop in which we operate remains challenging, limiting activity in our investment markets and placing selective upward pressure on yields, particularly for non-prime spaces. However, as we start the new year, we are encouraged by early indications that acquisition opportunities are starting to emerge."

Shares in Great Portland Estates were down 0.4% at 404.60 pence each in London on Tuesday morning.

By Hugh Cameron, Alliance News reporter

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