TIDMGPOR
RNS Number : 6623I
Great Portland Estates PLC
03 April 2020
3 April 2020
Great Portland Estates Trading Update
Great Portland Estates plc ("GPE") today publishes a trading
update and summary on the impact of COVID-19 on the business to
date.
Toby Courtauld, Chief Executive, said:
"Despite these unprecedented conditions, the GPE team is pulling
together well, focussing on our top priorities of the safety and
wellbeing of our occupiers, suppliers and employees and ensuring
that our portfolio is as prepared as can be for a potentially
prolonged period of lockdown. However long the Coronavirus lasts,
with our low gearing and ample liquidity, GPE is well positioned to
weather the impact until market conditions normalise. In the
meantime, unsurprisingly, we expect leasing activity to decline
until the crisis passes, particularly in retail, although it is
pleasing that a number of our office pre-letting negotiations are
ongoing and we continue to receive new enquiries from prospective
occupiers."
COVID-19 update - working with our stakeholders
-- We are supporting our occupiers, particularly in the retail,
hospitality and leisure sectors, through agreeing on a case by case
basis the payment of monthly rents or deferring rental payments
-- We are operating our properties in line with UK Government
guidelines. All of our occupied buildings remain operational,
albeit the majority of our occupiers are working from home, and
activity on two of our three development sites has temporarily been
suspended
-- We are maintaining our regular payments to suppliers to
ensure their cash flow is maintained given the challenging economic
backdrop
-- We extended our partnership with Centrepoint, our charity
partner focused on youth homelessness, to 2022 and increased our
annual donation to GBP75,000
Trading update - rent collection and leasing performance
-- We collected 62.9% of quarterly rent due within seven working
days of the March quarter day (Dec 2019: 99.3%, March 2019: 99.2%)
with a further 4.5% expected imminently; more than 60% of the
outstanding rent is from occupiers in the retail, hospitality and
leisure sectors
-- We secured four new lettings (10,900 sq ft) in the quarter to
31 March 2020, generating annual rent of GBP0.7 million (our share:
GBP0.7 million) and with market lettings 19.1% ahead of March 2019
ERV
-- 13 further lettings are currently under offer totalling
GBP9.0 million p.a. of rent (our share: GBP9.0 million), including
three office pre-lettings. A further two new pre-let offers have
been received in the past seven days
Strong financial position - LTV(1) of 14.1% and total liquidity
of GBP411 million
-- We remain in a robust financial position, with LTV(1) of
14.1%, net gearing(2) of 14.7% and interest cover not
measureable(3) , providing substantial headroom above our Group
debt covenants (values could fall by 72% before breach(2) ). Our
weighted average debt maturity is 5.7 years and our next Group
level debt maturity is in 2024
-- Our liquidity position is strong with total liquidity of
GBP411 million at 31 March 2020. We increased the drawn position on
our GBP450 million unsecured revolving credit facility, from GBP66
million to GBP150 million on 18 March, with our cash on deposit of
GBP111 million exceeding our committed capex to come (GBP76 million
at 31 December 2019)
-- In line with our normal convention, a decision about payment
of a final dividend will be made once the year end results are
finalised in May
-- At this stage, we expect to deliver our annual results to 31
March 2020 in line with our existing timetable on Wednesday 20 May
2020, with the external property valuation expected to include a
material valuation uncertainty statement
3. Due to low levels of consolidated net debt, there was no net
interest charge under the definition of our covenants. As a result,
interest cover was not measureable. Excluding the benefit of
capitalised interest cover was 21.7x.
Our people, operations and suppliers
As we manage the impact of COVID-19, we have adapted our
operations to provide business continuity. All our head office
staff are now working from home, utilising technology to keep in
regular communication with each other and our stakeholders. Whilst
activities currently continue onsite at The Hickman, E1, our
contractors have temporarily suspended activities at our Hanover
Square, W1 and Oxford House, W1 development sites while they
consider how they can continue to work within Government guidelines
. At this stage, it is too early to determine how the current
situation will adversely impact expected practical completion
dates, however our earliest long-stop date under our existing
pre-let agreements is not until June 2022. All of our leased
buildings remain operational to provide access for our occupiers as
required. We are also maintaining our regular payments to suppliers
to ensure their cash flow is maintained given the challenging
economic backdrop.
Supporting our occupiers
Our occupiers are important stakeholders in our business and we
have implemented measures to help support them through these
unprecedented times. We recognise that the retail, leisure and
hospitality sectors, 33% of our portfolio by rent roll (including
office occupiers), have been hardest hit by the economic impact of
restrictions on movement. Accordingly, we are in discussions with
our retail occupiers who are facing cash flow difficulties to offer
monthly payment terms. Furthermore, our smaller independent
occupiers have been offered a three month rent deferral while our
larger occupiers are being assessed on a case-by-case basis. We
will be reviewing these concessions at regular intervals and
welcome the significant support the Government has provided to
assist businesses in these sectors during this extremely difficult
period.
Rent collection for the March quarter
62.9% of quarterly rents (which represent 91% our total rent
roll) were secured within seven working days of the 25 March
quarter day (Dec 2019: 99.3%, Mar 2019: 99.2%) with a further 4.5%
expected imminently. Of the balance outstanding, 60% is due from
retail, leisure and hospitality occupiers. At 25 March, we had a
further 9% of our rent roll on monthly payment terms (Dec 2019: 8%,
Mar 2019: 6%). Given the ongoing support that we are providing some
of our occupiers in managing their cash flow, we expect an increase
in the proportion of occupiers moving to monthly payment terms in
the near term. During the quarter, three of our smaller occupiers
went into administration (December 2019: two), representing only
0.3% of our rent roll. At 31 March 2020, we held rent deposits and
bank guarantees totalling GBP25.8 million, including GBP7.4 million
for our retail, leisure and hospitality occupiers (of which GBP3.8
million (equivalent to 12 months rent) relates to New Look, our
largest retail occupier).
Leasing in the quarter
We completed four new lettings during the quarter, generating
annual rent of GBP0.7 million (our share: GBP0.7 million) with
market lettings 19.1% above March 2019 ERVs. We currently have a
further 127,000 sq ft of space under offer which would deliver
approximately GBP9.0 million p.a. in rent (our share: GBP9.0
million), with market lettings 9.0% above September 2019 ERV.
Strong financial position
We remain in a strong financial position with low levels of
financial leverage (LTV(1) of 14.1%) and high liquidity, with
substantial headroom above our debt covenants. At 31 March 2020,
Group consolidated net debt was GBP349 million, down from GBP403.1
million at 31 December 2019, with the reduction attributable to the
24/25 Britton Street, EC1 sale in January offset by on-going
development capital expenditure across the Group. Including the
non-recourse debt in the joint ventures, total net debt was GBP373
million (31 December 2019: GBP418.0 million). The Group's key bank
covenants and headroom at 30 September 2019, the last formal
measurement date, were as follows:
Key Covenants Requirement At 30 September
2019
Net debt/net equity <1.25x 0.15x
------------- ----------------
Unsecured asset value/unsecured
borrowings >1.66x 5.92x
------------- ----------------
Interest cover >1.35x n/a(2)
------------- ----------------
1. Net debt at 31 March 2020 using September 2019 property valuations
2. Due to low levels of consolidated net debt, there was no net
interest charge under the definition of our covenants. As a result,
interest cover was not measureable. Excluding the benefit of
capitalised interest cover was 21.7x.
At 31 March 2020, the Group, including our share of joint
ventures, had cash on deposit of GBP111 million and further undrawn
committed credit facilities of GBP300 million.
Supporting our communities
Given how the current situation is likely to impact some of the
more vulnerable members in our communities, we have increased our
annual donation to our charity partner Centrepoint to GBP75,000
from GBP50,000. In addition we have extended our existing three
year partnership by another year to May 2022.
Forthcoming results
Our intention is to release our annual results to 31 March 2020,
as scheduled, on Wednesday 20 May 2020. We will update the market
should our timetable change. Our results will include an external
valuation of our property portfolio. All RICS property valuations,
including ours at 31 March 2020, will include a statement
highlighting a material valuation uncertainty given the current
levels of market disruption.
Contacts:
Great Portland Estates plc +44 (0) 20 7647 3000
Toby Courtauld, Chief Executive
Nick Sanderson, Finance and Operations Director
Stephen Burrows, Director of Financial Reporting
and Investor Relations
Finsbury Group +44 (0) 20 7251 3801
James Murgatroyd
Gordon Simpson
Forward Looking Statements
This document may contain 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
of results expressed or implied by such forward-looking
statements.
Any forward-looking statements made by or on behalf of 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 document relating to GPE or its
share price, or the yield on its shares, should not be relied upon
as an indicator of future performance.
This information is provided by RNS, the news service of the
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END
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