GREAT PORTLAND ESTATES PLC (Reuters) - Great Portland Estates Plc (>> Great Portland Estates PLC) said on Wednesday it would develop more property than it had planned over the next four years as prices in central London shoot up due to an acute shortage of offices and shops.
However, Great Portland's shares fell as much as 4.2 percent as its net asset value failed to increase as much as that of Land Securities Group Plc (>> Land Securities Group plc), Britain's largest listed property developer, which reported the previous day.
Great Portland's stock rose 2.8 percent on Tuesday after Land Securities said its adjusted diluted net asset value (NAV) rose 27.6 percent to 1,293 pence per share in the year ended March 31.
Great Portland's EPRA NAV per share rose 24.6 percent to 709 pence in the same period. That was in line with the consensus estimate compiled by the company but was below the 27.6 percent growth achieved in 2013/14.
NAV is a key measure for developers as it reflects the value of buildings. EPRA NAVs are calculated according to European Public Real Estate Association guidelines.
"We see potential for a de-rating into this slowdown (in NAV growth) given the shares trade close to their peak rating," Investec analyst Alison Watson wrote, reducing her rating on the stock to "hold" from "buy".
Great Portland said it would add 2.5 million square feet of property, up from its earlier target of 2.3 million square feet, to its existing portfolio of 3.6 million square feet. The company said it would spend over two-thirds of its planned spending of 324.6 million pounds ($503 million) by March 2017.
Great Portland said in May last year that it planned to spend 54.4 million pounds on its development projects.
"We have an extremely strong position in (the central London) market over the next four years at a time when speculative deliveries are needed, because there are not a lot of them coming on stream, so that should bode well for the next few years," Chief Executive Toby Courtauld told Reuters.
Investors, with easy access to cheap credit, have poured into the British commercial property market, and property firms such as Great Portland are delivering strong payouts amid a scarcity of prime assets that has pushed up rents.
However, a report by Deloitte published on Tuesday showed that the volume of space under development will rebound through to 2019, with a potential supply increase hitting West End in 2016, ahead of any central London area. (http://bit.ly/1IIGK27)
Great Portland's shares were down 3.8 percent at 842 pence at 1226 GMT, among the top percentage losers on the FTSE-250 Midcap Index <.FTMC>.
($1 = 0.6444 pounds)
(Reporting by Esha Vaish in Bengaluru; Editing by Anupama Dwivedi and Ted Kerr)
By Esha Vaish
