Chairman’s statement

“Great Portland Estates has had an excellent year despite the volatile market conditions.”

Martin Scicluna Chairman

Great Portland Estates has had an excellent year despite the volatile market conditions. We focused on our strategic priorities, delivered a strong financial performance and the Group is well positioned for a sustained recovery in the real estate sector.

The financial results reflect the quality of our property portfolio and the efforts of our employees – adjusted net assets per share up 15.5%, EPRA earnings per share up 11% with low debt levels to allow for future investment. Total dividends amount to 8 pence per share or a combined payout of £25 million, in line with guidance given in May 2009. Total shareholder return for the year of 81.9% was well ahead of our FTSE 350 Real Estate benchmark of 59.8%.

Over the last 12 months, central London's investment and occupational property markets look like they have turned the corner. After substantial falls, real estate capital values bottomed out in the summer of 2009. We took advantage of this situation by raising £166 million in a Rights Issue in May 2009, almost all of which was invested in acquisitions at low prices by December 2009. Many of these investments, like Marcol House, W1 and 90 Queen Street, EC4 have already borne fruit and have generated returns ahead of the rest of our portfolio.

Since the beginning of 2010, tenant demand seems to have stabilised and, absent a double-dip recession, we anticipate that rental value growth will broaden from the prime end to much of the rest of the market during the second half of this calendar year. With an expected drought in the supply of high quality office space over the next few years, we have several major projects primed for commencement over the next 12 months.

At an operational level our teams have again shown their focus and expertise by leasing more space and generating higher rental income than the previous year. Tenant retention rates have been high too which has helped to reduce our portfolio void space to below 4%.

We were delighted to have received external recognition of our success when we were named Property Developer of the Year in April 2010 by Property Week and our annual report won the PricewaterhouseCoopers BPT Award for "Excellence in Reporting" last autumn. In July 2009, we welcomed Jonathan Nicholls as a Non-Executive Director and Chair of the Audit Committee to replace Kathleen O'Donovan who retired after providing six years of tremendous support. In September 2009, Robert Noel resigned as Property Director having made a significant contribution to the Group's progress since 2002 and we wish him well in his new role. Following his departure, Timon Drakesmith and Neil Thompson's roles have increased with Neil Thompson taking on the role of Portfolio Director and we have supplemented the team through recruitment into the Investment and Development teams.

In conclusion, your company has thrived in a very challenging environment and is well placed to provide attractive returns in the coming years.

Adjusted net assets per share graph Portfolio value graphAdjusted earnings per share graph
EPRA adjustments on a diluted basis see note 7