Great Portland Estates PLC launches decarbonisation fund to reach net-zero target

PLC () has launched a decarbonisation fund to support its target to reach net-zero carbon emissions by 2030.

The landlord has set an internal carbon price of £95 per tonne to apply to the carbon from its development schemes and operational emissions from its investment portfolio starting next year.

READ: Great Portland Estates COVID-19 fund hands out £325,000

The fund will be operational from April 2021 and will be used to finance the deep retro-fit needed to reduce emissions from our buildings, support investment in on-site renewable energy supplies and fund research into low carbon solutions.

Separately, when reporting its half-year results, the property developer said it expects investment activity in the central London commercial property market to pick up from its recent low level of turnover in part due to the record real yield spread over gilt yields.

Rental value movement range for the financial year to March 31, 2021, is expected to drop by 5%-10%, mostly driven by the ongoing negative outlook for retail property.

The coronavirus (COVID-19) pandemic has accelerated some trends such as the hit on the retail, hospitality and leisure sectors, particularly in large urban centres, but the firm has seen early shifts in the nature of demand for offices.

Office occupiers are likely to seek flexible rents in environmentally friendly, pleasant spaces, with less traditional desk space and more communal spaces to encourage activities that cannot be done while working from home.

Great Portland noted that its portfolio is well-placed to cater to these needs, as 82% of units are 10,000 square feet and more than 93% of the portfolio is below ten storeys in height.

In the six months to September 30, 2020, Great Portland’s portfolio valuation fell by 7% to £25bn, with the value per share (EPRA NTA) down 8% to 800p, though the FTSE 250 company still declared an interim dividend of 4.7p per share which was flat on 2019.

Around 80% of September rent has been collected to date including amounts covered by rent deposits, though revenue in the period tumbled 29% to £38mln.

Cash and undrawn facilities at period-end were £465mln.

Analysts at Liberum downgraded the stock to ‘hold’ from ‘buy’ but raised the target price to 710p from 630p because they expect rental and capital values in London to fall further.

Shares dipped 2% to 685.6p on Wednesday at the opening bell.