London-focused real estate investor Great Portland Estates (GPE) has announced a rights issue to the tune of £350 mln (€410 mln).
According to the firm, the rights issue will allow GPE to 'take advantage of the attractive new acquisition and development opportunities emerging in central London commercial real estate and deliver attractive and accretive shareholder returns'.
The rights issue is expected to result in a loan to value ratio of 18.2% post receipt of the net proceeds of the funds, and an illustrative increase in available investment capacity of approximately £450 mln.
The firm said it would issue 152 million new shares at a price of 230 pence each.
The announcement, delivered as part of GPE's annual results, also revealed that the firm had acquired mixed-use scheme The Courtyard for £28.6 mln, in the form of a property swap with the City of London Corporation (CLC).
While GPE has acquired the long leasehold interest at The Courtyard, 1/3 Alfred Place, WC1 for £28.6 mln, it has also sold its short leasehold interest in 95/96 New Bond Street, W1 to CLC for £18.23 mln.
GPE will make a net cash payment to CLC of £10.4 mln on completion in January 2025.
The Courtyard comprises 62,000 ft2 (5,800 m2) of vacant office and partially let retail space, which GPE will substantially refurbish as a fully managed, flexible workspace plus retail units. The refurbishment is expected to begin in the fourth quarter of 2025, representing £62 mln of investment.
The building is expected to deliver £8.0 mln of fully managed rent roll annually with a further £1.0 mln from the retail space, generating a running yield in excess of 6% and an ungeared IRR of 11%+.
The Courtyard is in a prime West End location, within walking distance of the Elizabeth line station at Tottenham Court Road and is opposite to GPE’s 31/34 Alfred Place, which is currently under refurbishment to create 41,700 ft2 of flexible workspace.
Toby Courtauld, CEO of GPE said: 'The fully underwritten rights issue will allow GPE to seize the significant opportunity we see emerging in the central London commercial real estate space.
'We have seen a correction in asset values over the last 18 months with central London commercial real estate now trading in line with levels last seen in 2009 in real terms.
'We are currently tracking approximately £1.4 bn of acquisition opportunities which we believe are capable of being purchased at or below replacement cost, with GPE well placed to take advantage of these opportunities given our best in class offering, sustainability credentials and differentiated flex offering.
'Beyond this, there is a further £1.4 bn of opportunities on our watchlist. GPE have a strong track record and a disciplined approach to allocating capital, ensuring we operate in tune with London's cyclical property markets with the objective of delivering attractive stakeholder returns.'
in the firm's results, GPE announced that it had been a net buyer in 2023 for the first time since 2013.
