UPDATE 2-Great Portland buys London offices as NAV rises

* NAV/share up 15.5 percent on year to 283 pence

* Recommends full-year dividend of 8 pence

* Expects office rents to peak again in four years

* Shares up 2 percent

(Adds analyst comment, CEO interview, share reaction)

By Daryl Loo

LONDON, May 20 (BestGrowthStock) – British landlord Great Portland
(GPOR.L: ) said it had two new acquisitions as it sees better
rental conditions in its core London office market after beating
forecasts with a 15.5 percent annual rise in the value of its
assets.

At 0852 GMT, Great Portland’s shares were up 1.2 percent at
302 pence, against the broader British property stocks index
(.FTELUK: ) which was 0.4 percent higher.

“Great Portland currently ticks the right boxes — further
room for acquisitions, strong development potential and positive
outlook for rental growth,” JPMorgan analyst Osmaan Malik, who
has an “overweight” rating on the stock, said in a note.

It announced two new London acquisitions, which will provide
about 310,000 square feet of office space. One of the purchases
is a joint venture with U.S. real estate private equity firm
Starwood Capital, worth a total of 129 million pounds ($184
million).

“When we raised capital from the market last year to invest
in London to take advantage of price weakness due to the
recession, we said we would invest that capital by the end of
2010,” Chief Executive Toby Courtauld told Reuters in an
interview.

With the latest two deals, Great Portland has invested
around 100 million pounds on top of the 166 million pounds
raised in a rights issue last year.

“We’re well ahead of target,” Courtauld said, adding that
purchases last year have outperformed its existing portfolio
with a 24 percent jump in values.

Great Portland, which owns office and retail property mainly
in London’s West End business district, said on Thursday its
adjusted net asset value (NAV) per share at the end of March was
283 pence, ahead of the consensus forecast of 274 pence.

Land Securities (LAND.L: ) and British Land (BLND.L: ),
Britain’s two biggest property companies, both reported strong
rises in full-year NAV earlier this week, and unveiled major
office development plans in London amid a supply shortage.
[ID:nLDE64B16H] [ID:nLDE6430HT]

RENTAL RECOVERY

Great Portland said rental values across its properties fell
6.2 percent over the year to March due to the recession, despite
a 3.1 percent rebound in the final quarter led by London
offices, but sees strong rental recovery in the coming years.

“We think the next peak for (office) rents is at least four
years away, and that peak could well be higher than the last
peak (in late 2008),” Courtauld said.

“When you have a serious supply shortage which we are going
to have over the next two to three years, and you have economic
growth, rents will rise faster that they otherwise do.”

It proposed total dividends of 8 pence per share, or a
combined payout of 25 million pounds, in line with guidance.

Great Portland, which had net gearing of 26.5 percent at the
end of March, along with cash and undrawn credit facilities of
477 million pounds, said it was on the lookout for more
acquisitions and investments in new developments.

The company in March teamed up with Brookfield Properties
(BPO.TO: ), one of New York’s biggest landlords, to jointly
develop the 100 Bishopsgate building in London while bank
financing for new developments remains tight. [ID:nLEE6EV001]

“We have a development pipeline of about 2.8 million square
feet, more than half of our existing asset base, so it’s a very
substantial potential pipeline,” Courtauld said.

“The low gearing level allows us the financial flexibility
without having to go back to our banks to seek finance.”

Stock Market Today

(Reporting by Daryl Loo; editing by Sinead Cruise and Karen
Foster)
($1 = 0.7017 pound)

UPDATE 2-Great Portland buys London offices as NAV rises