Following the recent practical completion of 201 Bishopsgate and the additional letting of its 7th floor, 84% of this office development is let. The Broadgate Tower is due to reach practical
completion shortly and is currently 42% let after the recent agreements with Reed Smith LLP.
Ropemaker, our City office development, and Osnaburgh Street, Regent's Place are
progressing on programme with some 90% of the construction costs contracted. The residential
units at Osnaburgh Street are attracting considerable interest (despite market conditions) with
more than 75% of the 62 open market units reserved by purchasers following the initial phase of
marketing, at prices overall above current valuation. The social housing has been pre-sold to a
Housing Association.
Also at Regent's Place, planning consent has been obtained for our proposed development of the
North East Quadrant, and we are on site to prepare for the next phase of offices and residential
on this Estate.
At 122 Leadenhall demolition and preparation of the sub-structure is proceeding satisfactorily;
however, we are reviewing timing of construction and target completion in order to optimise cost
and occupational demand.
The master planning at Meadowhall has been completed for the proposed mixed use scheme
adjacent to our Meadowhall Shopping Centre and a planning application was lodged in May.
Planning has also been submitted for the new office tower in the centre of Birmingham's prime
business area, at Colmore Row.
Our retail developments at Giltbrook, Nottingham and at Puerto Venecia, Zaragoza, Spain, are
also on programme and proceeding in accordance with our year end report. At the recently
completed Puerto Venecia retail park, further lettings contracted include 40,000 sq ft to Media
Markt for a new flagship store. Tenant interest also continues to be positive for the Puerto
Venecia shopping centre (under construction) where more than 60% is pre-sold, leased or under
offer.
Portfolio Valuation
The table below shows the principal valuation movements by sector for Q1, overall a 5.0%
decline.
The capital return from the portfolio at -5.0% for the quarter, as measured by IPD (calculated for
our UK assets on average capital employed and excluding capitalised interest) was behind the
IPD Benchmark at -4.1%. The capital return from our Retail was slightly ahead of IPD; the overall
portfolio difference arises primarily due to our higher weighting in City Offices. In particular the
office developments have seen greater capital value decreases than the Benchmark this quarter.
Over the last six months the portfolio capital return has outperformed the Benchmark.
Also due to the City Offices weighting, like for like rental value (ERV) movement for the overall
portfolio was -0.5% for the quarter, against the IPD Benchmark showing no change. Retail
produced rental growth at 0.5% (IPD 0.1%), while the rental value decline for our City Offices
was -2.9% (IPD -2.5%).
The net equivalent yield (after notional purchaser's costs) on the portfolio at 5.8% moved out
22 bps over the quarter.
