great portland estates appendix 1 - rns submit · great portland estates appendix 1 ... w1 1 101.0...

Great Portland Estates

Appendix 1

London Economy: Jobs growth

40

45

50

55

35

60

Dec 08

Source: Lloyds Purchasing Manager Index (PMI) Report.

Dec 09 Dec 10 Dec 11 Dec 12 Dec 13

Employment intentions Trend

Growth

Decline

Central London office potential completions1

0

2

4

6

8

10

12

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Million sq ft

Completed GPE projections West End West End core2

Source: CBRE and GPE data.

1. Excluding pre-lets.2. Includes W1 & SW1 postcode.

Headline office rents

£ per sq ft

2004 2006 2008 2010 2012 2014 2016 20180

120

140

40

60

80

20

100

PMA Prime West End PMA Prime City

GPE current office passing rent£42.00 per sq ft

PMA forecasts

Source: PMA


Appendix 1

London equity demand and asset supply

0

25

30

10

20

15

5

0

10x

12x

4x

8x

6x

2x

May

10

Nov

10

May

11

Nov

11

May

12

Nov

12

May

13

May

14

Nov

13

£ bn

Equity demand

Source: CBRE/GPE

Asset supply Demand multiple (RHS)

Lead indicatorsGiven the cyclical nature of our markets, we actively monitor numerous lead indicators to help identify key trends in our market place which are described in the table below:Selected lead indicators Trends in year

Property capital values

Equity prices

Bond prices

Real yield spread (West End property)1

Volume of net new commercial property lending (including from non-bank sources)

Transaction volumes in central London direct real estate investment markets

Direction of pricing on IPD based derivative contracts

Rental values

Forecast UK GDP growth

Forecast London GVA growth

West End retail sales

Business confidence levels in the central London economy

UK output from the financial and business services sector

Employment levels in London’s finance and business services sectors

Central London office market balance2

1. West End property yields over ten year gilt yields adjusted for inflation.

2. Amount of space available to let given current rates of take-up expressed in terms of months.


Portfolio performanceWholly-owned

£m

Joint ventures

£mTotal £m

Proportion of portfolio

%

Valuation movement

%

North of Oxford Street Office 806.7 78.5 885.2 33.1 19.4

Retail 117.1 122.2 239.3 8.9 19.1

Residential1 7.3 10.5 17.8 0.7 (53.3)

Rest of West End Office 272.4 17.5 289.9 10.8 12.1

Retail 191.7 25.0 216.7 8.1 27.8

Residential1 3.6 – 3.6 0.1 (9.4)

Total West End 1,398.8 253.7 1,652.5 61.7 17.1

City, Midtown and Southwark Office 177.4 151.1 328.5 12.3 11.2

Retail 4.8 – 4.8 0.1 4.4

Total City, Midtown and Southwark 182.2 151.1 333.3 12.4 11.1

Investment property portfolio 1,581.0 404.8 1,985.8 74.1 16.0

Development property 347.4 133.9 481.3 18.0 31.4

Total properties held throughout the year 1,928.4 538.7 2,467.1 92.1 18.7

Acquisitions 108.5 102.5 211.0 7.9 7.8

Total property portfolio 2,036.9 641.2 2,678.1 100.0 17.8

Portfolio characteristics

Investment properties

£m

Development properties

£m

Total property portfolio

£mOffice

£mRetail

£mResidential

£mTotal £m

Net internal area sq ft

000’s

North of Oxford Street 1,250.7 281.7 1,532.4 1,090.7 330.6 111.1 1,532.4 1,255

Rest of West End 612.8 – 612.8 367.0 242.1 3.7 612.8 616

Total West End 1,863.5 281.7 2,145.2 1,457.7 572.7 114.8 2,145.2 1,871

City, Midtown and Southwark 333.3 199.6 532.9 521.8 6.0 5.1 532.9 1,385

Total 2,196.8 481.3 2,678.1 1,979.5 578.7 119.9 2,678.1 3,256

By use: Office 1,642.6 336.9 1,979.5

Retail 532.7 46.0 578.7

Residential 21.5 98.4 119.9

Total 2,196.8 481.3 2,678.1

Net internal area sq ft 000’s 2,784 472 3,256

1. Residential values have been reduced as a result of our successful planning applications during the year which move lower value social housing requirements off-site to other parts of the portfolio.

Our portfolio – 100% central London

57%

23%

7%

9%

4%

22%

74%

4%

Locations

North of Oxford Street £1,532.4m

Rest of West End £612.8m

Southwark £241.8m

Midtown £182.2m

City £108.9m

Business mixOffice £1,979.5mRetail £578.7mResidential £119.9m

Appendix 2


Appendix 2

Total property return (% p.a.) relative to IPD central London benchmarkYears to 31 March (%)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

GPEGPE IPD central LondonIPD central London RelativeRelative

-40

-30

-20

-10

0

10

20

30

40


Purchases for the year to 31 March 2014

DescriptionPrice

£mNet

initial yieldNet internal

area sq ft£ per sq ft

Oxford House, W1 90.0 3.5% 79,000 1,139

Total 90.0 3.5% 79,000 1,139

Sales for the year to 31 March 2014

DescriptionPrice

£mNet

initial yieldNet internal

area sq ft£ per sq ft

90 Queen Street, EC4 61.0 5.4% 68,400 891

Park Crescent West, W11 52.5 2.0% 129,200 813

Hanover Square, W11 101.0 0.7% 208,000 971

20 St James’s Street, SW1 54.5 2.1% 55,500 982

Total 269.0 2.3% 461,100 916

1. Our share.

Appendix 3

Committed schemes and pipeline

DevelopmentAnticipated

finish

New building

area1

Cost to come

£m2

Current ERV £m2

Secured income

£m2Profit

on cost

Committed

Walmar House, 288/300 Regent Street, W1 Aug 2014 60,300 4.4 4.1 0.3 39%

12/14 New Fetter Lane, EC4 Sept 2015 142,500 50.0 8.3 8.3 42%

Total of committed 202,800 54.4 12.4 8.6 41%

Near-term

7 projects 2015–2017 828,100

Pipeline

13 projects 1,162,400

Total programme

22 projects, 50% of GPE’s existing portfolio 2,193,300

1. Areas in sq ft and at 100%.

2. For those held in JV, amounts shown at 50%.

GPE’s net investment in joint ventures

2010 2011 2012 20142013

25.2 23.8 12.515.6

14.77.1

25.2

7.5 10.27.9

5.29.47.4

%

Access to new properties Risk sharing Bank work out

0

5

10

15

20

25

30

35

40

45

Joint venture – partner

GRP – BP Pension fund £180.2m

GHS – Hong Kong Monetary Authority £103.2m

GVP – Liverpool Victoria £83.1m

GWP – Scottish Widows £106.3m

GSP – Starwood Capital £51.9m

GCP – Capital & Counties £0.1m

Total £524.8m

As % of Group net assets 27.2%


Appendix 3

GPE tenant mix

Retailers & LeisureTechnology, media and telecoms

Banking & FinanceCorporates

29%

14%

17%

1%Professional services

GovernmentOther

13%

25%

1%

New letting and renewals by quarter

0

15

5

10

June 2013

September 2013

December 2013

March 2014

14.6

3.5

5.3

2.5

£m

Net gearing and interest cover

0

70

30

40

50

60

20

Net gearing (%)

2006

10

2007 2008 2009 2010 2011 2012 2013 2014

44.6

36.040.3

65.1

26.4

31.4

42.8

30.3

40.3

2.01.8

2.0 2.0

3.84.0

4.3

2.4

2.0

Interest cover (X)

Annual lettings by type

March2012

March2013

March 2014

0

30

10

15

20

5

25

7.010.3 10.7

18.2

3.1

12.1

3.1

£m

Other development lettingsPre-letsInvestment lettings


Sources of debt funding1

Private placementConvertible bondDebentureJV debt (our share)Group bank debt

16%

21%

2%

41%

20%

1. Based on drawn position at 31 March 2014.

Appendix 3

Debt maturity profile1

0

400

200

250

300

350

Debt maturity profile1

£m

50

2015 2016 2017 2018 2019 2020 2021 202920222014

38

350

150

111

37

150

102

4826

40

143150

100

Group debt JV debt (our share)

1. Based on committed facilities at 31 March 2014.


EPRA net assets per share

400

420

440

460

480

500

520

540

560

580

600Pence

446

6417

339

11

-9 -2569

March-13 Investment properties

Revaluations

Joint venture properties

Development properties

Profit on disposals

EPS Total dividend

Other March-14

EPRA profit before tax

0

5

10

15

20

25

30

35

40

45£m

March-13 Rental income and JV fees

JV profits Property costs

Admin costs

Net interest

March-14

22.2

13.4 0.2

-1.2 -1.8

5.6 38.4

Appendix 4


Debt analysis

March 2014 March 2013

Net debt excluding JVs (£m) 586.1 658.9

Net gearing 30.3% 42.8%

Total net debt including 50% JV non-recourse debt (£m) 687.1 761.1

Loan-to-property value 25.7% 32.7%

Total net gearing 35.6% 49.5%

Interest cover 4.3x 2.4x

Weighted average interest rate 3.5% 3.7%

Weighted average cost of debt 3.9% 4.3%

% of debt fixed/hedged 98% 71%

Cash and undrawn facilities (£m) 508 282

EPRA performance measures

Measure Definition of Measure March 2014 March 2013

EPRA earnings Recurring earnings from core operational activities £38.4m £22.2m

EPRA earnings per share EPRA earnings divided by the weighted average number of shares 11.2p 6.9p

Diluted EPRA earnings per share EPRA earnings divided by the diluted weighted average number of shares 11.0p 6.9p

EPRA net assets Net assets adjusted to exclude the fair value of financial instruments £1,961.3m £1,533.9m

EPRA net assets per share EPRA net assets divided by the number of shares at the balance sheet date on a diluted basis 569p 446p

EPRA triple net assets EPRA net assets amended to include the fair value of financial instruments and debt £1,898.3m £1,491.4m

EPRA triple net assets per share EPRA triple net assets divided by the number of shares at the balance sheet date on a diluted basis 550p 434p

EPRA vacancy ERV of non-development vacant space as a percentage of ERV of the whole portfolio 5.0% 4.3%

Appendix 4


Rental incomeWholly-owned Share of joint ventures

Rent roll £m

Reversionary potential

£m

Rental values

£mRent roll

£m

Reversionary potential

£m

Rental values

£m

Total rental values

£m

London North of Oxford Street Office 34.3 7.4 41.7 3.5 0.1 3.6 45.3

Retail 7.5 1.7 9.2 5.6 1.1 6.7 15.9

Rest of West End Office 12.1 3.8 15.9 0.9 0.6 1.5 17.4

Retail 7.8 1.7 9.5 1.6 0.6 2.2 11.7

Total West End 61.7 14.6 76.3 11.6 2.4 14.0 90.3

City, Midtown and Southwark Office 9.1 1.0 10.1 10.0 2.9 12.9 23.0

Retail 0.3 – 0.3 – – – 0.3

Total City, Midtown and Southwark 9.4 1.0 10.4 10.0 2.9 12.9 23.3

Total let portfolio 71.1 15.6 86.7 21.6 5.3 26.9 113.6

Voids 3.0 2.1 5.1

Premises under refurbishment 14.2 6.1 20.3

Total let portfolio 103.9 35.1 139.0

Rent roll security, lease lengths and voidsWholly-owned Joint ventures

Rent roll secure for five years

%

Weighted average

lease length Years

Voids %

Rent roll secure for five years

%

Weighted average

lease length Years

Voids %

London North of Oxford Street Office 49.4 9.7 3.9 100.0 11.1 –

Retail 31.3 4.6 – 87.3 8.0 –

Rest of West End Office 13.0 2.2 4.6 25.4 3.3 5.6

Retail 45.0 5.0 – 78.4 10.5 –

Total West End 39.5 7.0 3.5 85.0 8.9 0.6

City, Midtown and Southwark Office 61.4 7.1 – 23.9 4.1 10.1

Retail 85.4 15.9 – – – –

Total City, Midtown and Southwark 62.1 7.3 – 23.9 4.1 10.0

Total let portfolio 42.5 7.0 2.9 56.8 6.7 6.0

Rental values and yieldsWholly-owned Joint ventures Wholly-owned Joint ventures

Average rent £psf

Average ERV £psf

Average rent £psf

Average ERV £psf

Initial yield

%

True equivalent

yield %

Initial yield

%

True equivalent

yield %

London North of Oxford Street Office 49 60 84 88 2.5 4.6 – 4.2

Retail 42 53 105 118 3.5 4.7 3.6 4.5

Rest of West End Office 41 55 17 28 3.6 4.8 0.9 4.0

Retail 68 82 44 62 3.4 4.4 2.0 4.3

Total West End 48 58 63 71 2.9 4.6 1.8 4.3

City, Midtown and Southwark Office 33 44 33 44 4.9 5.4 5.1 5.6

Retail 25 28 – 32 5.8 5.6 – –

Total City, Midtown and Southwark 33 42 33 43 4.9 5.4 5.1 5.6

Total let portfolio 45 55 44 52 3.1 4.7 2.8 4.7

Appendix 5


Top ten tenants

Tenant

Rent roll (our share)

£m

% of rent roll

(our share)

1 Savills plc 7.0 7.6

2 Double Negative 4.8 5.2

3 The Engine Group 3.8 4.1

4 New Look 3.0 3.3

5 Ipsos Mori UK 2.0 2.2

6 VNU Business Publications 1.8 1.9

7 Standard Chartered Bank 1.7 1.8

8 Fallon London Limited 1.6 1.7

9 Lane Clark & Peacock 1.5 1.7

10 Carlton Communications 1.5 1.6

Total 28.7 31.1

Appendix 5


Appendix 6M

arke

t ris

k

Ris

kIm

pact

Miti

gatio

nIm

pact

cha

nge

from

last

yea

r Li

kelih

ood

chan

ge

from

last

yea

rC

omm

enta

ry

Cen

tral L

ondo

n re

al e

stat

e m

arke

t un

derp

erfo

rms

othe

r UK

pro

pert

y se

ctor

s

Red

uced

mar

gin

of o

utpe

rfor

man

ceTh

e ex

ecut

ion

of th

e G

roup

’s st

rate

gy c

over

ing

the

key

area

s of

inve

stm

ent,

deve

lopm

ent a

nd a

sset

man

agem

ent

is a

djus

ted

and

upda

ted

thro

ugho

ut th

e ye

ar, in

form

ed b

y re

gula

r res

earc

h in

to th

e ec

onom

y, th

e in

vest

men

t and

oc

cupa

tiona

l mar

kets

.

The

Gro

up’s

stra

tegi

c pr

iorit

ies

and

trans

actio

ns a

re

cons

ider

ed in

ligh

t of r

egul

ar re

view

of d

ashb

oard

le

ad in

dica

tors

and

ope

ratio

nal p

aram

eter

s.

The

Gro

up a

ims

to m

aint

ain

low

fina

ncia

l lev

erag

e th

roug

hout

the

prop

erty

cyc

le.

The

cent

ral L

ondo

n re

al e

stat

e m

arke

t has

co

nsid

erab

ly o

utpe

rfor

med

the

wid

er U

K m

arke

t du

ring

the

year

end

ed 3

1 M

arch

201

4, d

emon

stra

ted

by IP

D’s

cent

ral L

ondo

n TP

R e

xcee

ding

IPD

’s un

iver

se

by 2

.5 p

erce

ntag

e po

ints

on

an a

bsol

ute

basi

s an

d th

e ou

tlook

con

tinue

s to

be

favo

urab

le.

Econ

omic

reco

very

fa

lters

Wor

se th

an e

xpec

ted

perf

orm

ance

of

the

busi

ness

Reg

ular

eco

nom

ic u

pdat

es a

re re

ceiv

ed a

nd s

cena

rio

plan

ning

is u

nder

take

n fo

r diff

eren

t eco

nom

ic c

ycle

s.

69.3

% o

f inc

ome

from

com

mitt

ed d

evel

opm

ents

al

read

y se

cure

d.

The

Gro

up a

ims

to m

aint

ain

low

fina

ncia

l lev

erag

e th

roug

hout

the

prop

erty

cyc

le.

Ove

r the

last

12

mon

ths,

the

UK

eco

nom

y ha

s su

bsta

ntia

lly im

prov

ed, w

ith th

e fo

cus

shift

ing

from

th

e ris

k of

an

impe

ndin

g Eu

rozo

ne c

risis

to e

cono

mic

gr

owth

and

the

outlo

ok fo

r int

eres

t rat

es.

Inve

stm

ent m

anag

emen

t

Ris

kIm

pact

Miti

gatio

nIm

pact

cha

nge

from

last

yea

r Li

kelih

ood

chan

ge

from

last

yea

rC

omm

enta

ry

Diffi

culty

in

sour

cing

inve

stm

ent

oppo

rtun

ities

at

attra

ctiv

e pr

ices

, poo

r in

vest

men

t dec

isio

ns

and

mis

-tim

ed

recy

clin

g of

cap

ital

Not

suf

ficie

ntly

ca

pita

lisin

g on

mar

ket

inve

stm

ent c

ondi

tions

The

Gro

up h

as d

edic

ated

reso

urce

s w

hose

rem

it is

to

con

stan

tly re

sear

ch e

ach

of th

e su

b-m

arke

ts w

ithin

ce

ntra

l Lon

don

seek

ing

the

right

bal

ance

of i

nves

tmen

t an

d de

velo

pmen

t opp

ortu

nitie

s su

itabl

e fo

r cur

rent

and

an

ticip

ated

mar

ket c

ondi

tions

.

Reg

ular

revi

ew o

f pro

pert

y cy

cle

by re

fere

nce

to d

ashb

oard

of

lead

indi

cato

rs.

Det

aile

d du

e di

ligen

ce is

und

erta

ken

on a

ll ac

quis

ition

s pr

ior t

o pu

rcha

se to

ens

ure

appr

opria

te re

turn

s.

Bus

ines

s pl

ans

are

prod

uced

on

an in

divi

dual

ass

et b

asis

to

ens

ure

the

appr

opria

te ro

tatio

n of

thos

e bu

ildin

gs w

ith

limite

d re

lativ

e po

tent

ial p

erfo

rman

ce.

Reg

ular

revi

ew o

f the

pro

spec

tive

perf

orm

ance

of i

ndiv

idua

l as

sets

and

thei

r bus

ines

s pl

ans

with

join

t ven

ture

par

tner

s.

The

Gro

up h

as c

ontin

ued

to in

vest

and

recy

cle

capi

tal

agai

nst a

bac

kdro

p of

mod

erat

e ca

pita

l val

ue g

row

th in

ce

ntra

l Lon

don

and

a su

rfei

t of b

uyer

s to

sel

lers

in th

e in

vest

men

t mar

ket.

Lack

of a

vaila

ble

stoc

k m

itiga

ted

by d

epth

of

oppo

rtun

ity in

cur

rent

por

tfol

io.

Dur

ing

the

year

one

acq

uisi

tion

of £

90 m

illion

was

m

ade

toge

ther

with

dis

posa

ls o

f £26

9 m

illion

at

prem

ium

to b

ook

valu

e of

9.5

%.

Inap

prop

riate

ass

et

conc

entra

tion,

mix

an

d lo

t size

Red

uced

liqu

idity

an

d re

lativ

e pr

oper

ty

perf

orm

ance

Reg

ular

revi

ew o

f por

tfol

io m

ix a

nd a

sset

con

cent

ratio

n.

Adj

ustm

ent o

f the

por

tfol

io a

s ap

prop

riate

thro

ugh

unde

rtak

ing

acqu

isiti

ons

and/

or d

evel

opm

ent p

roje

cts

in jo

int v

entu

re o

r for

war

d fu

ndin

g.

The

Gro

up c

ontin

ues

to m

onito

r its

por

tfol

io m

ix a

nd

asse

t con

cent

ratio

n ris

k. O

ur la

rges

t ass

et is

onl

y 7.

7%

of th

e to

tal p

ortf

olio

and

23

.9%

of t

he p

ortf

olio

is h

eld

in jo

int v

entu

res.


Appendix 6A

sset

man

agem

ent

Ris

kIm

pact

Miti

gatio

nIm

pact

cha

nge

from

last

yea

r Li

kelih

ood

chan

ge

from

last

yea

rC

omm

enta

ry

Poo

r man

agem

ent

of v

oids

, ren

tal

mis

-pric

ing,

low

te

nant

rete

ntio

n,

sub-

optim

al re

nt

revi

ews,

tena

nt fa

ilure

s an

d in

appr

opria

te

refu

rbis

hmen

ts

Failu

re to

max

imis

e in

com

e fr

om

inve

stm

ent p

rope

rtie

s

The

Gro

up’s

in-h

ouse

ass

et m

anag

emen

t and

leas

ing

team

s pr

oact

ivel

y m

anag

e te

nant

s to

ens

ure

chan

ging

ne

eds

are

met

with

a fo

cus

on re

tain

ing

inco

me

in li

ght o

f va

cant

pos

sess

ion

requ

irem

ents

for r

efur

bish

men

ts a

nd

deve

lopm

ents

and

liai

se re

gula

rly w

ith e

xter

nal a

dvis

ers

to e

nsur

e co

rrec

t pric

ing

of le

ase

trans

actio

ns.

The

Gro

up h

as a

div

erse

tena

nt b

ase

with

its

ten

larg

est

tena

nts

repr

esen

ting

only

31.

1% o

f ren

t rol

l.

Tena

nts’

cove

nant

s ar

e an

alys

ed a

nd s

ecur

ity s

ough

t as

appr

opria

te a

s pa

rt o

f the

leas

e ap

prov

al p

roce

ss. R

egul

ar

cont

act w

ith te

nant

s is

mai

ntai

ned

to id

entif

y if

tena

nts

are

suff

erin

g fin

anci

al d

ifficu

lties

and

thei

r pro

pose

d ac

tions

.

The

Gro

up c

ontin

ues

to m

onito

r a lo

w v

oid

rate

whi

ch

was

3.7

% a

t 31

Mar

ch 2

014.

Ten

ant d

elin

quen

cies

w

ere

0.7%

of t

he re

nt ro

ll for

the

year

to 3

1 M

arch

201

4.

The

Gro

up c

ontin

ues

to a

ctiv

ely

man

age

the

port

folio

to

max

imis

e oc

cupa

ncy

and

driv

e re

ntal

gro

wth

.

Dur

ing

the

year

we

secu

red

£25

.9 m

illion

of n

ew re

ntal

in

com

e in

clud

ing

£12.

1 m

illion

pre

-lets

.

69.3

% o

f inc

ome

from

com

mitt

ed d

evel

opm

ents

al

read

y se

cure

d.


Appendix 6D

evel

opm

ent m

anag

emen

t

Ris

kIm

pact

Miti

gatio

nIm

pact

cha

nge

from

last

yea

r Li

kelih

ood

chan

ge

from

last

yea

rC

omm

enta

ry

Poo

r exe

cutio

n of

dev

elop

men

t pr

ogra

mm

e th

roug

h:

– in

corr

ect r

eadi

ng o

f th

e pr

oper

ty c

ycle

;

– in

appr

opria

te

loca

tion;

– fa

ilure

to g

ain

viab

le

plan

ning

con

sent

s;

– fa

ilure

to re

ach

agre

emen

t with

ad

join

ing

owne

rs o

n ac

cept

able

term

s;

– le

vel o

f spe

cula

tive

deve

lopm

ent;

– co

nstru

ctio

n co

st

infla

tion;

– co

ntra

ctor

ava

ilabi

lity

and

inso

lven

cy ri

sk;

– a

build

ing

bein

g in

appr

opria

te to

te

nant

dem

and;

– po

or d

eman

d fo

r res

iden

tial

apar

tmen

ts

– qu

ality

and

be

nchm

arks

of t

he

com

plet

ed b

uild

ings

;

– co

nstru

ctio

n an

d pr

ocur

emen

t del

ays;

– in

effe

ctiv

e m

arke

ting

to

pros

pect

ive

tena

nts;

an

d

– po

or d

evel

opm

ent

man

agem

ent.

Poo

r dev

elop

men

t re

turn

sS

ee M

arke

t ris

k ab

ove.

Prio

r to

com

mitt

ing

to a

dev

elop

men

t the

Gro

up c

ondu

cts

a de

taile

d Fi

nanc

ial a

nd O

pera

tiona

l app

rais

al p

roce

ss w

hich

ev

alua

tes

the

expe

cted

retu

rns

from

a d

evel

opm

ent i

n lig

ht o

f lik

ely

risks

. Dur

ing

the

cour

se o

f a d

evel

opm

ent,

the

actu

al c

osts

and

est

imat

ed re

turn

s ar

e re

gula

rly m

onito

red

to s

ignp

ost p

rom

pt d

ecis

ions

on

proj

ect m

anag

emen

t, le

asin

g an

d ow

ners

hip.

Ear

ly e

ngag

emen

t with

adj

oini

ng o

wne

rs.

69.3

% o

f inc

ome

from

com

mitt

ed d

evel

opm

ents

alre

ady

secu

red.

In-h

ouse

Pro

ject

Man

agem

ent t

eam

util

ise

appr

opria

te

proc

urem

ent m

etho

ds to

opt

imis

e th

e ba

lanc

e of

pric

e ce

rtai

nty

and

risk.

Due

dilig

ence

is u

nder

take

n of

the

finan

cial

sta

bilit

y of

de

mol

ition

, mai

n co

ntra

ctor

s an

d m

ater

ial s

ub-c

ontra

ctor

s pr

ior t

o aw

ardi

ng o

f con

tract

s.

Wor

king

with

age

nts,

pot

entia

l occ

upie

rs’ a

nd p

urch

aser

s’

need

s an

d as

pira

tions

are

iden

tified

dur

ing

the

plan

ning

ap

plic

atio

n an

d de

sign

sta

ges.

In-h

ouse

Lea

sing

/Mar

ketin

g te

am li

aise

with

ext

erna

l ad

vise

rs o

n a

regu

lar b

asis

and

mar

ketin

g tim

etab

les

desi

gned

in a

ccor

danc

e w

ith le

asin

g/m

arke

ting

obje

ctiv

es.

All

our m

ajor

dev

elop

men

ts a

re s

ubje

ct to

BR

EE

AM

ratin

gs

with

a ta

rget

to a

chie

ve a

ratin

g of

‘Ver

y G

ood’

on

maj

or

refu

rbis

hmen

ts a

nd ‘E

xcel

lent

’ on

new

bui

ld p

rope

rtie

s.

Pro

-act

ive

liais

on w

ith e

xist

ing

tena

nts

befo

re a

nd d

urin

g th

e de

velo

pmen

t pro

cess

.

Sel

ectio

n of

con

tract

ors

and

supp

liers

bas

ed o

n tra

ck

reco

rd o

f del

iver

y an

d cr

edit

wor

thin

ess.

In-h

ouse

Pro

ject

Man

agem

ent t

eam

clo

sely

mon

itor

cons

truct

ion

and

man

age

cont

ract

ors

to e

nsur

e ad

equa

te

reso

urci

ng to

mee

t pro

gram

me.

Reg

ular

revi

ew o

f the

pro

spec

tive

perf

orm

ance

of i

ndiv

idua

l as

sets

and

thei

r bus

ines

s pl

ans

with

join

t ven

ture

par

tner

s.

Pos

t-co

mpl

etio

n re

view

s un

dert

aken

on

all d

evel

opm

ents

to

iden

tify

best

pra

ctic

e an

d ar

eas

for i

mpr

ovem

ent.

The

Gro

up’s

deve

lopm

ent p

rogr

amm

e of

hig

h qu

ality

co

re c

entra

l Lon

don

proj

ects

con

tinue

s to

att

ract

qu

ality

tena

nts

with

£12

.1 m

illion

of p

re-le

ts s

ecur

ed

sinc

e 1

Apr

il 20

13.


Appendix 6D

evel

opm

ent m

anag

emen

t

Ris

kIm

pact

Miti

gatio

nIm

pact

cha

nge

from

last

yea

r Li

kelih

ood

chan

ge

from

last

yea

rC

omm

enta

ry

An

inap

prop

riate

le

vel o

f dev

elop

men

t un

dert

aken

as

a pe

rcen

tage

of t

he

port

folio

Und

erpe

rfor

man

ce

agai

nst K

PIs

Reg

ular

revi

ew o

f the

leve

l of d

evel

opm

ent u

nder

take

n as

a p

erce

ntag

e of

por

tfol

io, in

clud

ing

the

impa

ct o

n th

e G

roup

’s in

com

e pr

ofile

and

fina

ncia

l gea

ring,

am

ongs

t oth

er

met

rics.

Dev

elop

men

ts o

nly

com

mitt

ed w

hen

pre-

lets

obt

aine

d an

d/or

mar

ket s

uppl

y co

nsid

ered

to b

e su

ffici

ently

con

stra

ined

.

With

fore

cast

ed s

uppl

y of

cen

tral L

ondo

n of

fice

spac

e ex

pect

ed to

be

scar

ce in

the

near

to m

ediu

m te

rm,

the

Gro

up h

as c

ontin

ued

its n

ear-t

erm

dev

elop

men

t pr

ogra

mm

e to

cap

italis

e on

the

expe

cted

resu

lting

re

ntal

gro

wth

giv

en im

prov

ing

tena

nt d

eman

d.

Fina

ncia

l ris

ks

Ris

kIm

pact

Miti

gatio

nIm

pact

cha

nge

from

last

yea

r Li

kelih

ood

chan

ge

from

last

yea

rC

omm

enta

ry

Lim

ited

avai

labi

lity

of fu

rthe

r cap

ital

Gro

wth

of b

usin

ess

is c

onst

rain

ed o

r un

able

to e

xecu

te

busi

ness

pla

ns

Cas

h flo

w a

nd fu

ndin

g ne

eds

are

regu

larly

mon

itore

d to

en

sure

suf

ficie

nt u

ndra

wn

faci

litie

s ar

e in

pla

ce.

Fund

ing

mat

uriti

es a

re m

anag

ed a

cros

s th

e sh

ort,

med

ium

an

d lo

ng te

rm.

The

Gro

up’s

fund

ing

mea

sure

s ar

e di

vers

ified

acr

oss

a ra

nge

of b

ank

and

bond

mar

kets

. Stri

ct c

ount

erpa

rty

limits

ar

e op

erat

ed o

n de

posi

ts.

The

Gro

up h

as c

ontin

ued

to d

iver

sify

the

sour

ce a

nd

exte

nd th

e m

atur

ity la

dder

of i

ts d

ebt fi

nanc

ing.

In S

epte

mbe

r 201

3, t

he C

ompa

ny ra

ised

£15

0 m

illion

th

roug

h a

conv

ertib

le b

ond

at 1

% c

oupo

n.

Cas

h an

d un

draw

n cr

edit

faci

litie

s ar

e £

508

milli

on.

Incr

ease

d in

tere

st

rate

s or

a fa

ll in

ca

pita

l val

ues

Adv

erse

mar

ket

mov

emen

ts n

egat

ivel

y im

pact

on

debt

co

vena

nts

Reg

ular

revi

ew o

f cur

rent

and

fore

cast

deb

t lev

els

and

finan

cing

ratio

s.

Form

al p

olic

y to

man

age

inte

rest

rate

exp

osur

e by

hav

ing

a hi

gh p

ropo

rtio

n of

deb

t with

fixe

d or

cap

ped

inte

rest

rate

s th

roug

h de

rivat

ives

.

Sig

nific

ant h

eadr

oom

ove

r all

finan

cial

cov

enan

ts a

t 31

Mar

ch 2

014.

We

estim

ate

that

val

ues

coul

d fa

ll by

48%

from

thei

r 31

Mar

ch 2

014

leve

ls b

efor

e gr

oup

debt

cov

enan

ts

coul

d be

end

ange

red.

Cen

tral L

ondo

n pr

oper

ty v

alue

s ar

e ex

pect

ed to

be

nefit

from

rent

al v

alue

gro

wth

and

con

tinue

d st

rong

in

vest

men

t dem

and.

Sho

rt te

rm in

tere

st ra

tes

have

re

mai

ned

low

ove

r the

last

12

mon

ths,

alth

ough

ther

e is

a g

row

ing

expe

ctat

ion

of in

crea

ses

in th

e m

ediu

m

term

as

the

econ

omy

grow

s.

Inap

prop

riate

cap

ital

stru

ctur

eS

ub-o

ptim

al N

AV

per s

hare

gro

wth

Reg

ular

revi

ew o

f cur

rent

and

fore

cast

cap

ital r

equi

rem

ents

an

d ge

arin

g le

vels

and

fina

ncin

g ra

tios.

The

Gro

up’s

exis

ting

capi

tal s

truct

ure

is w

ell p

lace

d to

take

adv

anta

ge o

f opp

ortu

nitie

s as

they

aris

e an

d to

del

iver

our

nea

r-ter

m d

evel

opm

ent p

rogr

amm

e.


Appendix 6P

eopl

e

Ris

kIm

pact

Miti

gatio

nIm

pact

cha

nge

from

last

yea

r Li

kelih

ood

chan

ge

from

last

yea

rC

omm

enta

ry

Inco

rrec

t lev

el a

nd m

ix

rete

ntio

n of

peo

ple

to

exec

ute

our b

usin

ess

plan

. Stra

tegi

c pr

iorit

ies

not a

chie

ved

Inab

ility

to a

ttra

ct,

deve

lop,

mot

ivat

e an

d re

tain

tale

nted

em

ploy

ees

Reg

ular

revi

ew is

und

erta

ken

of th

e G

roup

’s re

sour

ce

requ

irem

ents

and

suc

cess

ion

plan

ning

.

The

Com

pany

has

a re

mun

erat

ion

syst

em th

at is

stro

ngly

lin

ked

to p

erfo

rman

ce a

nd a

form

al s

ix-m

onth

ly a

ppra

isal

sy

stem

to p

rovi

de re

gula

r ass

essm

ent o

f ind

ivid

ual

perf

orm

ance

and

iden

tifica

tion

of tr

aini

ng n

eeds

.

Ben

chm

arki

ng o

f rem

uner

atio

n pa

ckag

es o

f all

empl

oyee

s is

und

erta

ken

annu

ally

.

An

addi

tiona

l Pro

ject

Man

ager

and

Dev

elop

men

t M

anag

er w

ere

recr

uite

d in

201

4.

Staf

f ret

entio

n is

hig

h at

95%

aga

inst

a b

ackd

rop

of a

n in

crea

sing

ly c

ompe

titiv

e em

ploy

men

t mar

ket.

Oth

er s

enio

r man

ager

s re

mai

n un

chan

ged.

Reg

ulat

ory

Ris

kIm

pact

Miti

gatio

nIm

pact

cha

nge

from

last

yea

r Li

kelih

ood

chan

ge

from

last

yea

rC

omm

enta

ry

Adv

erse

regu

lato

ry

risk

incl

udin

g ta

x, p

lann

ing,

en

viro

nmen

tal

legi

slat

ion

and

EU

dire

ctiv

es in

crea

ses

cost

bas

e

Red

uces

flex

ibilit

y an

d m

ay in

fluen

ce

pote

ntia

l inv

esto

r and

oc

cupi

er in

tere

st in

bu

ildin

gs

Sen

ior G

roup

repr

esen

tativ

es s

pend

con

side

rabl

e tim

e,

usin

g ex

perie

nced

adv

iser

s as

app

ropr

iate

, to

ensu

re

com

plia

nce

with

cur

rent

and

pot

entia

l fut

ure

regu

latio

ns.

Lobb

ying

pro

pert

y in

dust

ry m

atte

rs is

und

erta

ken

by a

ctiv

e pa

rtic

ipat

ion

of th

e E

xecu

tive

Dire

ctor

s th

roug

h re

leva

nt

indu

stry

bod

ies.

Env

ironm

enta

l Pol

icy

Com

mitt

ee m

eets

at l

east

qua

rter

ly

to c

onsi

der s

trate

gy in

resp

ect o

f env

ironm

enta

l leg

isla

tion.

Dur

ing

2013

new

bui

ldin

g re

gula

tions

cam

e in

to e

ffec

t re

quiri

ng fu

rthe

r red

uctio

ns o

n ca

rbon

em

issi

ons

whi

ch

will

impa

ct o

n B

RE

EA

M re

quire

men

ts a

nd p

lann

ing.

Th

e ris

k to

the

Gro

up fr

om in

crea

sing

regu

latio

n in

clud

ing

cert

ain

EU d

irect

ives

hav

ing

unfo

rese

en

cons

eque

nces

rem

ains

. How

ever

, pos

t pub

licat

ion

of

FCA

rule

s in

Jun

e 20

13, t

he G

roup

was

det

erm

ined

to

be

outs

ide

scop

e of

AIF

MD

.

Hea

lth a

nd S

afet

y in

cide

nts

Loss

of o

r inj

ury

to e

mpl

oyee

s,

cont

ract

ors

or te

nant

s

Res

ulta

nt re

puta

tiona

l da

mag

eTh

e G

roup

has

ded

icat

ed H

ealth

and

Saf

ety

pers

onne

l to

over

see

the

Gro

up’s

man

agem

ent s

yste

ms

whi

ch in

clud

e re

gula

r ris

k as

sess

men

ts a

nd a

nnua

l aud

its to

pro

activ

ely

addr

ess

key

Hea

lth a

nd S

afet

y ar

eas

incl

udin

g em

ploy

ee,

cont

ract

or a

nd te

nant

saf

ety.

On

deve

lopm

ents

, the

Gro

up o

pera

tes

a pr

e-qu

alifi

catio

n pr

oces

s to

ens

ure

sele

ctio

n of

com

pete

nt c

onsu

ltant

s an

d co

ntra

ctor

s w

hich

incl

udes

a H

ealth

and

Saf

ety

asse

ssm

ent.

Con

tract

ors’

resp

onse

s to

acc

iden

ts a

nd n

ear m

isse

s ar

e ac

tivel

y m

onito

red

and

follo

wed

-up

by o

ur P

roje

ct

Man

ager

s an

d H

ead

of S

usta

inab

ility.

The

Gro

up h

ad n

o re

port

able

acc

iden

ts d

urin

g th

e ye

ar.

Ther

e w

ere

no o

ther

inci

dent

s ac

ross

the

Gro

up’s

in

vest

men

t or d

evel

opm

ent p

ortf

olio

.

great portland estates appendix 1 - rns submit · great portland estates appendix 1 ... w1 1 101.0...

Documents