LONDON (Alliance News) - UK property investment and development company Great Portland Estates PLC said Wednesday London's property market fundamentals remain supportive, though it is "too early to tell" what impact the upcoming UK referendum will have on the market, as it saw profit and revenue grow in its financial year.
Great Portland Estates posted a rise in pretax profit for its financial year ended March 31, to GBP555.1 million from GBP507.4 million, after revenue grew to GBP128.8 million from GBP88.8 million.
Net rental income increased to GBP75.5 million from GBB66.0 million, whilst Great Portland recorded a GBP442.2 million surplus from investment property, up from GBP380.6 million a year earlier.
Great Portland said its portfolio valuation grew 15% during the year, whilst it posted rental value growth of 9.9%.
Great Portland said with good occupational demand and restricted supply "favouring the landlord, barring a major deterioration in the economic situation or extended period of uncertainty following the EU referendum", it estimated that rental value growth across our office and retail portfolio will be attractive at around 5.0% for the next twelve months, "particularly in the context of a very low inflation environment".
Great Portland declared a final dividend of 5.6 pence per share, up from 5.5p per share a year earlier, which takes its full year dividend to 9.2p per share, up from 9.0p per share.
The results came as Great Portland announced it had purchased the entire share capital of 73/77 Oxford Street in London, for GBP71.0 million. The gross capital commitment for the site was GBP72.3 million, which it said reflected a day one yield of 2.1%, increasing to 3.2% once reversions have been captured, the company added.
"Whilst already reversionary, we expect the location to show strong rental growth in the coming years as Crossrail nears completion and our Hanover Square development is completed," said Chief Executive Toby Courtauld.
"Global economic and political uncertainties, including the upcoming EU referendum, are affecting broader business confidence and investor appetite. It is too early to tell what the impact on the London property market will be although an extended political stalemate as the consequences of the referendum result are worked out would be unhelpful," said Courtauld.
"Despite this more uncertain back drop, London's commercial property market fundamentals remain supportive: London's economy is growing, its workforce expanding and demand for quality office space remains robust. n the investment market, as rental growth is captured, we can expect some mild expansion of yields, particularly for some secondary assets where pricing has run ahead of the growth on offer," Courtauld added.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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