Great Portland Estates said it is unlikely to find a major tenant for its planned 100 Bishopsgate skyscraper “within the next six to twelve months”.
The London office developer has yet to commit to the proposed skyscraper in the City, which is a joint venture with Canadian company Brookfield. Economic difficulties facing the financial sector, including the ongoing eurozone crisis, have buffeted the property market in recent times.
Great Portland Estates chief executive Toby Courtauld said “it will be a tall order in the near term” to secure a major tenant for 100 Bishopsgate. He added: “By near term I mean in the next six to 12 months.”
The office developer has been looking to sell down its stake in the Bishopsgate scheme, but Courtauld said a tenant did not necessarily need to be found before this could take place. He said: “It (a stake sale) doesn’t have to follow a pre-let. If the right opportunity came along for us to take some money out and put it elsewhere we would do that.”
Great Portland Estates, like its rival Derwent London, has performed fairly well during the economic downturn due to a more diverse range of tenants seeking smaller office spaces in the capital’s West End. This area of London is expected to continue to outperform the rest of the country, but Courtauld said it is not immune to the eurozone crisis.
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“There will be a slowdown in the rate of growth and we will maintain low gearing,” Courtauld told Reuters. “We also have the financial flexibility to buy assets at the right price in distressed sales.”
He added that property in the West End had benefited from “an excess of demand for assets over supply, and a vacancy rate of around 1 per cent for West End Grade A office space”.
The London-based company’s adjusted net asset value (NAV) went up to 378p a share at the end of September, 20 per cent higher than the 316p a share it was recorded at a year previously. The value of Great Portland Estates’ portfolio rose by 3.9 per cent since March to reach £1.8bn, the company said.
Great Portland Estates’ results are in line with expectations, analysts Jefferies and JP Morgan said, while its strong balance sheet leaves it in a good position.
JP Morgan analyst Osmaan Malik said: “Given this environment, Great Portland looks positioned for a win-win situation.”