We unlock potential,
creating sustainable space
for London to thrive
Annual Report and Accounts 2023
Governance
80 Overview
81 Introduction from the Chair
84 The Board
86 Leadership and purpose
90 Engaging with our investors
92 Engaging with our employees
94 Board consideration of stakeholder
interests and s.172(1) matters
98 Division of responsibilities
100 Composition, succession
and evaluation
106 Audit, risks and internal controls
114 Directors’ remuneration report
147 Report of the Directors
150 Directors’ responsibilities statement
Strategic Report – Overview
01 Statement from the Chair
02 An evolving strategy…
03 …underpinned by our values and
commitment to sustainability
04 Creating great spaces
in central London
06 Putting our customers first
12 How we create value
14 Our near-term strategic priorities
16 Our key performance indicators
Strategic Report – Annual review
19 Statement from the Chief Executive
21 Our markets
23 Our development activities
and capex programme
26 Our leasing and Flex activities
28 Our investment activities
30 Our financial results
34 Our portfolio
37 Sustainability
54 Our people and culture
58 Our stakeholder relationships
62 Engaging with our stakeholders
64 Our approach to risk
Financial statements
152 Group income statement
152 Group statement of
comprehensive income
153 Group balance sheet
154 Group statement of cash flows
155 Group statement of changes
in equity
156 Notes forming part of the
Group financial statements
179 Independent auditor’s report
189 Company balance sheet
190 Company statement of changes
in equity
191 Notes forming part of the
Company financial statements
Other information
196 Five-year record
197 Our properties and customers
199 Portfolio statistics
200 Glossary
202 Shareholders’ information
204 Financial calendar
In this report
Cover image: The ground floor communal
space at Wells & More, W1.
See our website
www.gpe.co.uk
For more
information
We believe in the power of people
and partnerships to create exceptional,
sustainable places in London that deliver for
our customers and drive consistent growth
and performance for our investors.
Our spaces are designed and managed to
create a sustainable legacy for our great city.
One that inspires, enriches and enhances
the lives of our customers and the communities
that surround them.
Statement from the Chair
Committed to London, our true global city
Whilst heightened uncertainty prevailed across the global
political and economic landscape, London’s position as a truly
global city remains undiminished. Central London is busy, with
West End footfall nearing pre-pandemic levels. The opening
of the Elizabeth line has added significant world-class capacity
to the transport infrastructure, allowing even more people
to enjoy both the business and leisure attractions of our
diverse and vibrant capital.
Creating magnetic spaces, for our customers
and their people
As our customers incorporate hybrid working into their real
estate plans, we are delivering high quality office spaces for their
people, along with choice, service and flexibility. All of our spaces
have sustainability, health and wellbeing, and technology central
to the customer offer and around 21% of our office space is
now available on a Flex basis. Our Customer First approach is
a real differentiator, delivering personal customer experiences
every day, and we are delighted that this was reflected in our
market-beating Net Promoter Score.
Record leasing, with a flight to quality
With this backdrop, we experienced strong demand across
our prime office and retail portfolio, and we remain committed
to creating great sustainable spaces in central London for
both our customers and communities. As the market bifurcates
with demand focusing on the best spaces and prime new
supply remaining constrained, this has played to our strengths,
helping to deliver another record leasing year, including
strengthening retail activity.
At the height of UK political and economic instability in
the autumn, we secured both our largest ever pre-letting
with Clifford Chance LLP at our landmark City development
scheme at 2 Aldermanbury Square, and the sale of our recently
completed net zero carbon refurbishment at 50 Finsbury
Square to an international investor. Our outstanding leasing
performance, combined with our sale and development
activities, delivered a portfolio performance well ahead
of our central London benchmark.
Investing, from a position of financial strength
Our £0.8 billion development and refurbishment programme
is well underway as we focus on creating prime HQ and Flex
office spaces. With two schemes on site, and a further two
due to commence this year, we have the financial strength to
deliver these projects and also to take advantage of emerging
opportunities in the investment market, as vendors are
impacted by both debt repricing and the leasing challenges
of properties with weak sustainability credentials. As a result,
we are primed for growth.
Innovating, building for London’s sustainable future
As the needs of our customers, society and the planet evolve,
we are innovating too. We are embracing the circular economy,
including through the reuse of steel and other materials
across our development schemes, and we have updated our
Sustainability Statement of Intent with v2.0, further evolving
our approach to climate resilience and social impact. As we
seek to build a sustainable legacy for our great capital city,
we have also continued to invest in our charity partnership
with XLP, a charity focused on creating positive futures for
young people growing up on inner city estates in London.
Greater together, with confident outlook
We welcomed Champa Magesh to the Board, whilst thanking
Wendy Becker and Charles Philipps, who stood down during
the year, for their many years of valuable contribution. I would
of course like to extend my personal thanks to all my other
Board colleagues, GPE management and the wider team
for all their ongoing efforts.
We can look to the future with confidence as we are well
placed to capitalise on opportunities that emerge and to
continue unlocking potential, creating sustainable spaces
for London to thrive.
Our Strategic Report, on pages 01 to 78, has been
reviewed and approved by the Board.
On behalf of the Board
Richard Mully
Chair
24 May 2023
“We expect continued strong demand
for the magnetic spaces we create for our
customers and communities in thriving central
London locations. Quality, sustainability and
exceptional service are core to our offer.”
Richard Mully Chair
Strategic Report – Overview
01Annual Report 2023 Great Portland Estates plc
An evolving
strategy…
Our business model
In order to unlock potential, we apply our specialist skills to
reposition properties to produce high quality, sustainable spaces,
with high levels of service that our customers demand.
Our near-term priorities
In the near term, our priority is to create
exciting sustainable spaces for our
customers, whether through expanding
our flexible offerings or delivering on our
ambitious development programme.
This includes further embedding our
Customer First approach by launching
our new service proposition and
standards across our portfolio.
See more on our near-term
strategic priorities on page 14
See more on how we create value on page 12
Customer First:
partnering with our
customers to meet
their evolving needs
Flex
spaces
Smaller fitted
units, often with
higher service
levels
Flex
Partnerships
Fully
Managed
Fitted Ready to Fit
For businesses
who want to fit out
the space themselves
Fully furnished,
well-designed
workspaces
Fitted space where
GPE handles all
day-to-day running
of the workplace
Delivered by
desk or room
HQ
repositioning
Delivering large,
best-in-class
HQ buildings
Two complementary,
overlapping products
Four core office solutions
See more on HQ
repositioning on page 23
See more on our leasing and
Flex activities on page 26
Our purpose
We unlock potential, creating
sustainable space for London to thrive.
Acquire Manage RecycleReposition
Our strategic principles
Our strategy is underpinned
by a set of clear principles:
100% central London
Reposition properties
Match risk to cycle
Low financial leverage
Disciplined capital management
Sustainability: an imperative
Customer First
02 Great Portland Estates plc Annual Report 2023
Highlights
One year
2023 2022
Portfolio valuation
1
£2.38bn £2.65bn
IFRS NAV & EPRA NTA per share 757p 835p
(Loss)/profit after tax £(163.9)m £167.2m
Total Property Return (TPR)
1
(4.1%) 9.4%
Total Accounting Return (TAR) (7.8%) 8.8%
Total Shareholder Return (TSR) (27.3%) 6.6%
As is usual practice in our sector, we use alternative performance
measures (APMs) to help explain the performance of the business. These
include quoting a number of measures on a proportionally consolidated
basis to include joint ventures, as it best describes how we manage the
portfolio, like-for-like measures and using measures prescribed by EPRA.
The measures defined by EPRA are designed to enhance transparency
and comparability across the European real estate sector. Reconciliations
of APMs are included in note 8 of the financial statements.
1. Includes share of joint ventures.
2. MSCI Annual Central & Inner London index.
Our financial performance
Ten years
2023 Benchmark
Total Property Return (TPR)
1
192.0% 198.5%
2
Total Accounting Return (TAR) 94.0% 47.0%
Total Shareholder Return (TSR) 20.1% 80.9%
IFRS
net assets
£1.9bn
2022: £2.1bn
Customer satisfaction
(NPS Score)
+44.0
2022: +27.8
EPRA
Loan to Value
1
19.8%
2022: 20.5%
Employee
engagement index (EEI)
84%
2022: 86%
Cash and undrawn
credit facilities
1
£457m
2022: £391m
Reduction in
energy intensity
-32.2%
2022: -24.3%
Dividend per share
12.6p
2022: 12.6p
Committed Flex space
414,000
sq ft
…underpinned by our values and
commitment to sustainability
Our values
Our values define who we are and how
we act, and are at the heart of what we do:
Our approach to sustainability
Creating sustainable spaces sits
at the heart of our purpose. We are:
See more on our financial results on pages 30 to 33
See more on sustainability on pages 37 to 53See more on our people and culture on pages 54 to 57
Decarbonising
our business to
become net zero
by 2030
Integrating
climate resilience
across our
business
Putting health
and wellbeing
front and
centre
Creating a lasting
positive social
impact in our
communities
Strategic Report – Overview
03Annual Report 2023 Great Portland Estates plc
R
I
V
E
R
T
H
A
M
E
S
C R O W
N
D A
L
E
R
D
P
I
C
C
A
D
I
L
L
Y
P
A
R
K
L
A
N
E
B
A
K
E
R
S
T
G L O U C E S T E R P L
M
A
R
Y
L
E
B
O
N
E
R
D
E
U
S
T
O
N
R
D
E
U
S
T
O
N
R
D
F
A
R
R
I
N
G
D
O
N
R
D
T
H
E
O
B
A
L
D
S
R
D
C
L
E
R
K
E
N
W
E
L
L
R
D
O
L
D
S
T
V
I
C
T
O
R
I
A
E
M
B
A
N
K
M
E
N
T
U
P
P
E
R
T
H
A
M
E
S
S
T
T
H
E
M
A
L
L
F
L
E
E
T
S
T
F
L
E
E
T
S
T
Q
U
E
E
N
V
I
C
T
O
R
I
A
S
T
C H
E
A P S I
D
E
L
O
N
G
L
N
K
I
N
G
W
I
L
L
I
A
M
S
T
C
I
T
Y
R
D
M
O
O
R
G
A
T
E
L
O
N
D
O
N
W
A
L
L
W
A
T
E
R
L
O
O
B
R
I
D
G
E
T
H
E
C
U
T
U
N
I
O
N
S
T
Y
O
R
K
R
D
S
T
A
M
F
O
R
D
S
T
S
O
U
T
H
W
A
R
K
S
T
W
A
T
E
R
L
O
O
R
D
C
O
N
S
T
I
T
U
T
I
O
N
H
I
L
L
S L O
A
N E
S
T
W
H
I
T
E
H
A
L
L
H
O
R
S
E
G
U
A
R
D
S
R
D
R
E
G
E
N
T
S
T
C
H
A
R
I
N
G
C
R
O
S
S
R
D
S
H
A
F
T
E
S
B
U
R
Y
A
V
E
G
O
W
E
R
S
T
M
I
D
L
A
N
D
R
D
P
A
N
C
R
A
S
R
D
G
O
O
D
G
E
S
T
B R O O K S T
G
R
O
S
V
E
N
O
R
S
T
G
E O
R G
E S T
N E W C A V E N D
I
S H S
T
W
E
Y M O U T H S T
S
E
Y
M
O
U
R
P
L
C R A W F O R D S
T
A
L
D
W
Y
C
H
B
E E
C H
S
T
B
U
N
H
I
L
L
R
O
W
R O B E R T S T
J
U
D
D
S
T
O
U
T
E
R
C
I
R
C
L
E
P
O
R
T
L
A
N
D
P
L
P A L L
M
A
L
L
O
X
F
O
R
D
S
T
N
E
W
O
X
F
O
R
D
S
T
H
I
G
H
H
O
L
B
O
R
N
N
E
W
G
A
T
E
S
T
K I N G S W A
Y
W O
B
U
R N
P
L
E V
E
R S
H
O L
T
S
T
T
O
T
T
E
N
H
A
M
C
O
U
R
T
R
D
H
A
M
P
S
T
E
A
D
R
D
W I G M O R E S T
M
O
R
T
I
M
E
R
S
T
E
D
G
W
A
R
E
R
D
P
A
R
K
R
D
A
L B A N Y S T
G R
E A T P
O
R T
L A
N D
S T
G
R
A
Y
’
S
I
N
N
R
D
B
I
R
D
C
A
G
E
W
A
L
K
W
E
S
T
M
I
N
S
T
E
R
B
R
I
D
G
E
S
T
R
A
N
D
S
T
P
A
U
L
’
S
C
H
U
R
C
H
Y
A
R
D
C
A
N
N
O
N
S
T
B
L
A
C
K F
R
I A R S
B
R I D G E
B L A
C K
F R I A R S
R D
S
O
U
T
H
W
A
R
K
B
R
I
D
G
E
L
O
N
D
O
N
B
R
I
D
G
E
A
L
D
E
R
S
G
A
T
E
S
T
G
O
S
W
E
L
L
R
D
P
E
N
T
O
N
V
I
L
L
E
R
D
C
I T
Y
R
D
C H I S
W
E L L
S T
C
A
L
E
D
O
N
I
A
N
R
D
Y
O
R
K
W
A
Y
B
R
O
M
P
T
O
N
R
D
K
I
N
G
S
C
R
O
S
S
R
D
O
U
T
E
R
C
I
R
C
L
E
V
I
C
T
O
R
I
A
S
T
A
B
I
N
G
D
O
N
S
T
E
A
S
T
R
D
W A
P
P I N G
H
I
G
H
S
T
V
A
U
G
H
A
N
W
A
Y
L
E
M
A
N
S
T
C
O
M
M
E
R
C
I
A
L
S
T
G
R
E
A
T
E
A
S
T
E
R
N
S
T
W
H
I
T
E
C
H
A
P
E
L
R
D
A
L
D
G
A
T
E
H
I
G
H
S
T
M
A
N
S
E
L
L
R
D
T
O
W
E
R
B
R
I
D
G
E
R
D
M
I N
O R
I
E S
C A
B
L E S T
L
O
W
E
R
T
H
A
M
E
S
S
T
B
I
S
H
O
P
S
G
A
T
E
G
R
A
C
E
C
H
U
R
C
H
S
T
G
R
E
A
T
D
O
V
E
R
S
T
A
B
B
E
Y
S
T
T
O
O
L
E
Y
S
T
J
A
M
A
I
C
A
R
D
D
R
U
I
D
S
T
B
E
T
H
N
A
L
G
R
E
E
N
R
D
G
O
S
S
E
T
S
T
C
O L U M
B
I
A
R D
G
R
O
S
V
E
N
O
R
P
L
B
A
Y
L
I
S
R
D
L
A
M
B
E
T
H
P
L
A
C
E
R
D
W
E
S
T
M
I
N
S
T
E
R
B
R
I
D
G
E
R
D
L O N D O N R D
S
T
G
E
O
R
G
E
’
S
R
D
B
U
C
K
I
N
G
H
A
M
G
A
T
E
B
E
L
G
R
A
V
E
P
L
U
P
P
E
R B E
L
G
R
A V E
S
T R
E
E
T
P
I T
F
I
E
L D
S
T
A
L
I
E
S
T
T
H
E
H
I
G
H
W
A
Y
E
S
M
I
T
H
F
I
E
L
D
C
O
R
N
H
I
L
L
L
E
A
D
E
N
H
A
L
L
S
T
F
E
N
C
H
U
R
C
H
S
T
C
O M
M
E R C
I A
L R
D
C
A N N O N
S
T R D
V
A
L
L
A
N C E
R
D
S
Q U I R R E L S T
S C AT L
E
R
S
T
C
H E S H
I R
E
S
T
T
A
N
N
E
R
S
T
K
E
N
N
I
N
G
T
O
N
R
D
R
O
Y
A
L
M
I N
T
S T
N
E W
R
D
K
I
N
G
S
L
A
N
D
R
D
H
A
C K N
E Y
R D
Leicester
Square
Leicester
Square
Covent
Garden
Covent
Garden
Old
Street
Old
Street
HolbornHolborn
Chancery LaneChancery Lane
Piccadilly
Circus
Piccadilly
Circus
FarringdonFarringdon
Green
Park
Green
Park
Goodge
Street
Goodge
Street
Bond
Street
Bond
Street
Marble
Arch
Marble
Arch
Hyde Park
Corner
Hyde Park
Corner
Oxford
Circus
Oxford
Circus
Regent’s
Park
Regent’s
Park
Great
Portland
Street
Great
Portland
Street
Euston
Square
Euston
Square
EustonEuston
Mornington
Crescent
Mornington
Crescent
King’s Cross
St Pancras
King’s Cross
St Pancras
AngelAngel
Russell
Square
Russell
Square
BlackfriarsBlackfriars
St Paul’sSt Paul’s
BankBank
Mansion
House
Mansion
House
London
Bridge
London
Bridge
BoroughBorough
WaterlooWaterloo
Lambeth
North
Lambeth
North
SouthwarkSouthwark
WestminsterWestminster
BarbicanBarbican
MoorgateMoorgate
TempleTemple
St James’s
Park
St James’s
Park
Charing
Cross
Charing
Cross
EmbankmentEmbankment
Baker
Street
Baker
Street
Warren
Street
Warren
Street
Tottenham
Court Road
BermondseyBermondsey
Tower
Hill
Tower
Hill
Fenchurch
Street
Fenchurch
Street
Liverpool
Street
Liverpool
Street
AldgateAldgate
Aldgate EastAldgate East
WhitechapelWhitechapel
Bethnal
Green
Bethnal
Green
Shoreditch
High Street
Shoreditch
High Street
MonumentMonument
HYDE PARKHYDE PARK
GROSVENOR
SQUARE GARDEN
GROSVENOR
SQUARE GARDEN
CAVENDISH
SQUARE
CAVENDISH
SQUARE
PORTMAN
SQUARE
PORTMAN
SQUARE
HANOVER
SQUARE
HANOVER
SQUARE
RUSSELL
SQUARE
RUSSELL
SQUARE
BEDFORD
SQUARE
GARDEN
BEDFORD
SQUARE
GARDEN
LINCOLN’S
INN FIELDS
LINCOLN’S
INN FIELDS
INNER TEMPLE
GARDENS
INNER TEMPLE
GARDENS
JUBILEE
GARDENS
JUBILEE
GARDENS
BERKELEY
SQUARE
BERKELEY
SQUARE
REGENT’S PARKREGENT’S PARK
GREEN PARKGREEN PARK
ST JAMES’S
PARK
ST JAMES’S
PARK
ST JAMES’S
SQUARE
ST JAMES’S
SQUARE
SOHO
SQUARE
SOHO
SQUARE
BELGRAVE
SQUARE
GARDEN
BELGRAVE
SQUARE
GARDEN
ARCHBISHOP
PARK
ARCHBISHOP
PARK
WAPPING
GARDENS
WAPPING
GARDENS
WEAVERS
FIELDS
WEAVERS
FIELDS
MAYFAIR
COVENT
GARDEN
SOUTHBANK
SOUTHWARK
HOLBORN
BLOOMSBURY
FITZROVIA
CAMDEN
ISLINGTON
CLERKENWELL
SHOREDITCH
WHITECHAPEL
WAPPING
BETHNAL
GREEN
BARBICAN
CITY OF
LONDON
MARYLEBONE
BELGRAVIA
WESTMINSTER
Portfolio valuation
1
£2.4bn
2022: £2.6bn
Rent roll
1
£1 06.4m
2022: £104.1m
No. of customers
2
283
2022: 295
Property sq ft
2
2.6m sq ft
2022: 2.5m sq ft
Our portfolio
1
1. Including share of joint ventures.
2. Includes joint ventures.
Mount
Royal
183/190
Tottenham
Court Road
95/96
New Bond
Street
Hanover
Square
Elm Yard
Wells
& More
23/24
Newman
Street
Walmar
House
200 & 214
Gray’s Inn
Road
103/113
Regent
Street
Poland
Street
1 Newman
Street &
70/88 Oxford
Street
Creating great spaces
in central London
7/15
Gresse
Street
35
Portman
Square
6 Brook
Street
Pollen
House
Kingsland
House
48/54
Broadwick
Street &
16 Dufour’s
Place
31/34
Alfred
Place
The
Piccadilly
Buildings
Elsley
House
Kent
House
Orchard
Court
Carrington
House
04 Great Portland Estates plc Annual Report 2023
R
I
V
E
R
T
H
A
M
E
S
C R O W
N
D A
L
E
R
D
P
I
C
C
A
D
I
L
L
Y
P
A
R
K
L
A
N
E
B
A
K
E
R
S
T
G L O U C E S T E R P L
M
A
R
Y
L
E
B
O
N
E
R
D
E
U
S
T
O
N
R
D
E
U
S
T
O
N
R
D
F
A
R
R
I
N
G
D
O
N
R
D
T
H
E
O
B
A
L
D
S
R
D
C
L
E
R
K
E
N
W
E
L
L
R
D
O
L
D
S
T
V
I
C
T
O
R
I
A
E
M
B
A
N
K
M
E
N
T
U
P
P
E
R
T
H
A
M
E
S
S
T
T
H
E
M
A
L
L
F
L
E
E
T
S
T
F
L
E
E
T
S
T
Q
U
E
E
N
V
I
C
T
O
R
I
A
S
T
C H
E
A P S I
D
E
L
O
N
G
L
N
K
I
N
G
W
I
L
L
I
A
M
S
T
C
I
T
Y
R
D
M
O
O
R
G
A
T
E
L
O
N
D
O
N
W
A
L
L
W
A
T
E
R
L
O
O
B
R
I
D
G
E
T
H
E
C
U
T
U
N
I
O
N
S
T
Y
O
R
K
R
D
S
T
A
M
F
O
R
D
S
T
S
O
U
T
H
W
A
R
K
S
T
W
A
T
E
R
L
O
O
R
D
C
O
N
S
T
I
T
U
T
I
O
N
H
I
L
L
S L O
A
N E
S
T
W
H
I
T
E
H
A
L
L
H
O
R
S
E
G
U
A
R
D
S
R
D
R
E
G
E
N
T
S
T
C
H
A
R
I
N
G
C
R
O
S
S
R
D
S
H
A
F
T
E
S
B
U
R
Y
A
V
E
G
O
W
E
R
S
T
M
I
D
L
A
N
D
R
D
P
A
N
C
R
A
S
R
D
G
O
O
D
G
E
S
T
B R O O K S T
G
R
O
S
V
E
N
O
R
S
T
G
E O
R G
E S T
N E W C A V E N D
I
S H S
T
W
E
Y M O U T H S T
S
E
Y
M
O
U
R
P
L
C R A W F O R D S
T
A
L
D
W
Y
C
H
B
E E
C H
S
T
B
U
N
H
I
L
L
R
O
W
R O B E R T S T
J
U
D
D
S
T
O
U
T
E
R
C
I
R
C
L
E
P
O
R
T
L
A
N
D
P
L
P A L L
M
A
L
L
O
X
F
O
R
D
S
T
N
E
W
O
X
F
O
R
D
S
T
H
I
G
H
H
O
L
B
O
R
N
N
E
W
G
A
T
E
S
T
K I N G S W A
Y
W O
B
U
R N
P
L
E V
E
R S
H
O L
T
S
T
T
O
T
T
E
N
H
A
M
C
O
U
R
T
R
D
H
A
M
P
S
T
E
A
D
R
D
W I G M O R E S T
M
O
R
T
I
M
E
R
S
T
E
D
G
W
A
R
E
R
D
P
A
R
K
R
D
A
L B A N Y S T
G R
E A T P
O
R T
L A
N D
S T
G
R
A
Y
’
S
I
N
N
R
D
B
I
R
D
C
A
G
E
W
A
L
K
W
E
S
T
M
I
N
S
T
E
R
B
R
I
D
G
E
S
T
R
A
N
D
S
T
P
A
U
L
’
S
C
H
U
R
C
H
Y
A
R
D
C
A
N
N
O
N
S
T
B
L
A
C
K F
R
I A R S
B
R I D G E
B L A
C K
F R I A R S
R D
S
O
U
T
H
W
A
R
K
B
R
I
D
G
E
L
O
N
D
O
N
B
R
I
D
G
E
A
L
D
E
R
S
G
A
T
E
S
T
G
O
S
W
E
L
L
R
D
P
E
N
T
O
N
V
I
L
L
E
R
D
C
I T
Y
R
D
C H I S
W
E L L
S T
C
A
L
E
D
O
N
I
A
N
R
D
Y
O
R
K
W
A
Y
B
R
O
M
P
T
O
N
R
D
K
I
N
G
S
C
R
O
S
S
R
D
O
U
T
E
R
C
I
R
C
L
E
V
I
C
T
O
R
I
A
S
T
A
B
I
N
G
D
O
N
S
T
E
A
S
T
R
D
W A
P
P I N G
H
I
G
H
S
T
V
A
U
G
H
A
N
W
A
Y
L
E
M
A
N
S
T
C
O
M
M
E
R
C
I
A
L
S
T
G
R
E
A
T
E
A
S
T
E
R
N
S
T
W
H
I
T
E
C
H
A
P
E
L
R
D
A
L
D
G
A
T
E
H
I
G
H
S
T
M
A
N
S
E
L
L
R
D
T
O
W
E
R
B
R
I
D
G
E
R
D
M
I N
O R
I
E S
C A
B
L E S T
L
O
W
E
R
T
H
A
M
E
S
S
T
B
I
S
H
O
P
S
G
A
T
E
G
R
A
C
E
C
H
U
R
C
H
S
T
G
R
E
A
T
D
O
V
E
R
S
T
A
B
B
E
Y
S
T
T
O
O
L
E
Y
S
T
J
A
M
A
I
C
A
R
D
D
R
U
I
D
S
T
B
E
T
H
N
A
L
G
R
E
E
N
R
D
G
O
S
S
E
T
S
T
C
O L U M
B
I
A
R D
G
R
O
S
V
E
N
O
R
P
L
B
A
Y
L
I
S
R
D
L
A
M
B
E
T
H
P
L
A
C
E
R
D
W
E
S
T
M
I
N
S
T
E
R
B
R
I
D
G
E
R
D
L O N D O N R D
S
T
G
E
O
R
G
E
’
S
R
D
B
U
C
K
I
N
G
H
A
M
G
A
T
E
B
E
L
G
R
A
V
E
P
L
U
P
P
E
R B E
L
G
R
A V E
S
T R
E
E
T
P
I T
F
I
E
L D
S
T
A
L
I
E
S
T
T
H
E
H
I
G
H
W
A
Y
E
S
M
I
T
H
F
I
E
L
D
C
O
R
N
H
I
L
L
L
E
A
D
E
N
H
A
L
L
S
T
F
E
N
C
H
U
R
C
H
S
T
C
O M
M
E R C
I A
L R
D
C
A N N O N
S
T R D
V
A
L
L
A
N C E
R
D
S
Q U I R R E L S T
S C AT L
E
R
S
T
C
H E S H
I R
E
S
T
T
A
N
N
E
R
S
T
K
E
N
N
I
N
G
T
O
N
R
D
R
O
Y
A
L
M
I N
T
S T
N
E W
R
D
K
I
N
G
S
L
A
N
D
R
D
H
A
C K N
E Y
R D
Leicester
Square
Leicester
Square
Covent
Garden
Covent
Garden
Old
Street
Old
Street
HolbornHolborn
Chancery LaneChancery Lane
Piccadilly
Circus
Piccadilly
Circus
FarringdonFarringdon
Green
Park
Green
Park
Goodge
Street
Goodge
Street
Bond
Street
Bond
Street
Marble
Arch
Marble
Arch
Hyde Park
Corner
Hyde Park
Corner
Oxford
Circus
Oxford
Circus
Regent’s
Park
Regent’s
Park
Great
Portland
Street
Great
Portland
Street
Euston
Square
Euston
Square
EustonEuston
Mornington
Crescent
Mornington
Crescent
King’s Cross
St Pancras
King’s Cross
St Pancras
AngelAngel
Russell
Square
Russell
Square
BlackfriarsBlackfriars
St Paul’sSt Paul’s
BankBank
Mansion
House
Mansion
House
London
Bridge
London
Bridge
BoroughBorough
WaterlooWaterloo
Lambeth
North
Lambeth
North
SouthwarkSouthwark
WestminsterWestminster
BarbicanBarbican
MoorgateMoorgate
TempleTemple
St James’s
Park
St James’s
Park
Charing
Cross
Charing
Cross
EmbankmentEmbankment
Baker
Street
Baker
Street
Warren
Street
Warren
Street
Tottenham
Court Road
BermondseyBermondsey
Tower
Hill
Tower
Hill
Fenchurch
Street
Fenchurch
Street
Liverpool
Street
Liverpool
Street
AldgateAldgate
Aldgate EastAldgate East
WhitechapelWhitechapel
Bethnal
Green
Bethnal
Green
Shoreditch
High Street
Shoreditch
High Street
MonumentMonument
HYDE PARKHYDE PARK
GROSVENOR
SQUARE GARDEN
GROSVENOR
SQUARE GARDEN
CAVENDISH
SQUARE
CAVENDISH
SQUARE
PORTMAN
SQUARE
PORTMAN
SQUARE
HANOVER
SQUARE
HANOVER
SQUARE
RUSSELL
SQUARE
RUSSELL
SQUARE
BEDFORD
SQUARE
GARDEN
BEDFORD
SQUARE
GARDEN
LINCOLN’S
INN FIELDS
LINCOLN’S
INN FIELDS
INNER TEMPLE
GARDENS
INNER TEMPLE
GARDENS
JUBILEE
GARDENS
JUBILEE
GARDENS
BERKELEY
SQUARE
BERKELEY
SQUARE
REGENT’S PARKREGENT’S PARK
GREEN PARKGREEN PARK
ST JAMES’S
PARK
ST JAMES’S
PARK
ST JAMES’S
SQUARE
ST JAMES’S
SQUARE
SOHO
SQUARE
SOHO
SQUARE
BELGRAVE
SQUARE
GARDEN
BELGRAVE
SQUARE
GARDEN
ARCHBISHOP
PARK
ARCHBISHOP
PARK
WAPPING
GARDENS
WAPPING
GARDENS
WEAVERS
FIELDS
WEAVERS
FIELDS
MAYFAIR
COVENT
GARDEN
SOUTHBANK
SOUTHWARK
HOLBORN
BLOOMSBURY
FITZROVIA
CAMDEN
ISLINGTON
CLERKENWELL
SHOREDITCH
WHITECHAPEL
WAPPING
BETHNAL
GREEN
BARBICAN
CITY OF
LONDON
MARYLEBONE
BELGRAVIA
WESTMINSTER
Business mix
Locations
North of Oxford Street
Rest of West End
Office
Retail
Residential
£958.1m
£765.7m
£318.0m
£214.8m
£123.4m
£1,866.6m
£501.0m
£12.4m
40%
32%
5%
9%
14%
78%
21%
City
Southwark
Midtown
1%
Value
Value
Locations
Business mix
Locations
North of Oxford Street
Rest of West End
Office
Retail
Residential
£958.1m
£765.7m
£318.0m
£214.8m
£123.4m
£1,866.6m
£501.0m
£12.4m
40%
32%
5%
9%
14%
78%
21%
City
Southwark
Midtown
1%
Value
Value
Business mix
100% central
London, with 19%
in our development
programme
Business mix
Locations
North of Oxford Street
Rest of West End
Office
Retail
Residential
£958.1m
£765.7m
£318.0m
£214.8m
£123.4m
£1,866.6m
£501.0m
£12.4m
40%
32%
5%
9%
14%
78%
21%
City
Southwark
Midtown
1%
Value
Value
Minerva
House
2 Cathedral
Street
50
Finsbury Square
(sold)
See more
on page 28
2
Aldermanbury
Square
See more
on page 24
Buildings providing Flex space
City
Tower
Woolyard
New City
Court
The Hickman
& Challenger
House
North of Oxford Street Rest of West End City MidtownSouthwark
6/10
St Andrew
Street
See more
on page 29
Strategic Report – Overview
05Annual Report 2023 Great Portland Estates plc
Greater
choice.
See more on page 07
Trusted
partners.
See more on page 08
Driving
innovation.
See more on page 10
Future
London.
See more on page 11
Putting our
customers first
We aim to help our customers thrive,
by designing, creating, managing and owning
market-leading, sustainable workspaces,
delivering personal customer experiences
every single day.
06 Great Portland Estates plc Annual Report 2023
Greater
choice.
Our Customer First approach offers a variety of products
across our diverse central London portfolio, providing customers
with solutions and choices to create the space the way they
want it and on flexible terms that suit them.
Our recent leasing success demonstrates that this approach is working.
This year we delivered a record amount of leasing, completing 105 new
leases generating £55.5 million in annual rent. This included continued
growth in our Fitted and Fully Managed spaces as well as signing our
largest ever pre-let with Clifford Chance LLP at 2 Aldermanbury Square,
EC2. We also made substantial progress across our retail portfolio,
leasing all but one unit across our Oxford Street and Hanover Square
developments, as London’s iconic shopping districts were buoyed by
the recovery in West End footfall and the opening of the Elizabeth line.
With a portfolio stacked full of opportunity, delivering best-in-class
HQ spaces, flagship retail stores and an expanding Flex offer,
never have we provided a greater amount of choice across
London’s most exceptional places.
See more on page 27
Strategic Report – Overview
07Annual Report 2023 Great Portland Estates plc
Trusted
partners.
We believe in the power of people and partnerships to create
exceptional, sustainable spaces that deliver for our customers.
However, these spaces are rare. They are in high demand,
but supply is increasingly scarce. As a result, London businesses
are looking further ahead and pre-leasing space early
to secure their next home.
Testament to this, in November 2022, we pre-let the entirety of the
workspace at 2 Aldermanbury Square, EC2 to Clifford Chance LLP, one
of the world’s pre-eminent law firms. Clifford Chance will occupy up to
322,600 sq ft of best-in-class offices alongside expanded public realm
and amenity, and new retail space. Construction of the new building has
begun with completion expected in late 2025. In Clifford Chance we have
found a partner who shares our values and, in particular, our commitment
to the highest sustainability standards, with 2 Aldermanbury Square
set to hit our 2030 sustainability commitments almost five years early.
We are delighted to welcome Clifford Chance to GPE and look forward
to working together to create their new London office.
See more on page 24
08 Great Portland Estates plc Annual Report 2023
Strategic Report – Overview
09Annual Report 2023 Great Portland Estates plc
Driving
innovation.
We recognise the importance of innovation when it comes to designing,
constructing and operating buildings. With sustainability embedded
from the outset, our approach to the principles of the circular
economy is a great example of our innovative thinking.
At our 2 Aldermanbury Square, EC2, development scheme the principles
of our sustainability strategy have been embedded from the outset.
During building deconstruction, the steel columns and beams identified
as suitable for reuse were dismantled to maintain their maximum effective
length. Once removed, the steel will be tested, processed, stored in the UK
and, most importantly, recertified so that it can be reused to form structural
elements on the new building and the structural frame for another of our
proposed developments at French Railways House & 50 Jermyn Street, SW1.
Through collaboration and early engagement, our project teams have
optimised the structural designs of the new buildings to accommodate
significant amounts of reused steel, in turn maximising the embodied carbon
savings. By challenging ourselves and our partners across the value chain
to see the art of the possible, we are designing buildings that aim to be
net zero carbon in construction and operation, whilst also challenging
industry embodied carbon norms for new build developments.
See more on pages 38 and 39
10 Great Portland Estates plc Annual Report 2023
Future
London.
We want to build a sustainable legacy for our great capital city
with positive social impact at its heart, whilst also supporting
a thriving economy for London’s future.
We have a strong track record of creating and developing spaces
that have a positive impact on their surrounding area, its residents and
the wider community. This includes the creation of brand new public
spaces, local regeneration and making our buildings accessible to the
communities around them. However, our impact goes beyond our spaces.
In April 2022, we announced a new three-year charity partnership
with XLP, which aims to create positive futures for young people
living in areas of London that experience high levels of anti-social
behaviour and gang violence. Our partnership provides an annual
corporate donation of £75,000 and at least 240 hours of GPE employee
time each year. Together, we aim to help XLP empower young people
from disadvantaged backgrounds to complete their education,
avoid anti-social behaviour and ultimately become independent
and confident contributors within their communities.
After all, when our communities thrive, our business
and our customers’ businesses thrive too.
See more on page 43
Strategic Report – Overview
11Annual Report 2023 Great Portland Estates plc
How we create value
In order to unlock potential, we apply our specialist skills to reposition properties to
produce high quality, sustainable spaces that our customers demand. Our disciplined
approach to allocating capital shapes our activities, ensuring we operate in tune
with London’s cyclical property markets to maximise returns.
Our stakeholder relationships
– Intense, supportive, customer-focused approach to
understand customers’ needs. Utilising regular customer
feedback to create bespoke action plans.
– Strong levels of customer satisfaction.
– Open relationship with debt and equity providers based
on clear investment case and transparent disclosure.
– Deep relationships with key suppliers (including contractors)
and joint venture partners.
– Positive engagement with local communities,
local authorities and planning departments.
Our portfolio and sustainability
– 100% central London, in attractive locations well served
by local infrastructure with enduring customer demand.
– Located in markets with high barriers to entry playing to our strengths.
– Continual repositioning of buildings to enhance the customer
experience, improve sustainability performance, future proof
value and enhance the environment in which they are located.
– Measures to improve the climate resilience of our buildings
integrated within the design of our spaces.
– Positioned for future growth; 19% of portfolio in development
programme. Potential c.£700 million commitment across four
on-site and near-term development schemes. All net zero carbon.
– Disciplined capital allocation
approach; must be accretive
to existing portfolio.
– Tired, inefficient properties,
often with poor EPC ratings,
with angles to exploit.
– Attractive central London locations
supported by infrastructure
improvements/local investment.
– Discount to replacement cost
and typically off-market.
– Off low rents and low capital
values per sq ft.
– Optionality: flexible business plans.
– Opportunity to enhance
sustainability credentials and
grow our Flex portfolio.
See more on our investment activities
on pages 28 and 29
– Through lease restructuring,
the delivery of flexible space,
refurbishment or redevelopment.
– Deliver high quality sustainable
spaces into supportive markets that
meet and exceed customer needs.
– Manage risk through pre-letting,
joint ventures and forward sales.
– Deliver climate-resilient buildings
that integrate market-leading
sustainability standards,
flexibility, amenity, wellbeing
and technological innovation.
– Enhance the local environment
and public realm.
– Deliver a lasting positive social
impact in our communities.
See more on our development activities
on pages 23 to 25
We apply our specialist skills to reposition properties…
…to create value
575hrs
Volunteering hours
donated to XLP
-6.6%
Like-for-like portfolio
valuation decline
1
100%
BREEAM ’Excellent’
completions
£768k
Contributed to our
Decarbonisation Fund
See our KPIs on pages 16 and 17
See more on our stakeholder relationships
on pages 58 to 60
See more on our portfolio and sustainability
on pages 34 to 36 and 37 to 53
Sustainability touches everything we do
During the year, we
bought 6/10 St Andrew
Street, EC4, to add to
our flexible office offer.
We have committed to
the development and
we anticipate starting
on-site in June 2023.
Repositioning buildings
is key to adding value.
This year, our activities
focused on growing
our flexible office offers,
pre-letting 2 Aldermanbury
Square, EC2 and preparing
our near-term development
pipeline.
…underpinned by key resources and relationships…
Acquire Reposition
+44.0
Net Promoter Score,
outperforming
the industry office
average of +3.8
£1.16m
Social value created
12 Great Portland Estates plc Annual Report 2023
Our people and culture
– Experienced management team supported by specialist in-house
Portfolio Management, Customer and Workspace Services,
Development, Investment, Leasing and Finance teams and
support functions.
– Entrepreneurial, collegiate and inclusive culture based on
strong values with disciplined approach to risk management.
– Reward linked to purpose, strategy and values with close
alignment with stakeholders to deliver value and outperformance.
– Effective governance structure.
– Strong employee engagement.
Our capital strength
– Consistently strong balance sheet and conservative
financial leverage.
– Low cost, diversified debt facilities and plentiful liquidity.
– Evolving debt book to align with our values via
ESG-linked financing.
– Sustainable Finance Framework in place.
– Disciplined allocation of capital through analytical,
risk adjusted IRR decision making.
– Support low and progressive dividend policy.
– Tax efficient REIT structure.
See more in our investment activities
on pages 28 and 29
See more about our customers
on pages 56 and 75
– Deliver a ‘Customer First’ approach,
providing efficient, resilient, healthy
and innovative space to meet the
demands of modern customers.
– Provide a greater choice of spaces to
appeal to a variety of customer needs,
whether on a Ready to Fit, Fitted or
Fully Managed basis.
– Constantly evolving to lead emerging
trends, including the use of technology
to enhance the customer experience.
– Detailed business plan for every property
reviewed quarterly to maximise total
returns over our cost of capital.
– Strong sustainability credentials to
maximise customer appeal, enhance
the long-term property value and
reduce obsolescence.
– Disciplined capital recycling
through the sale of properties
where we have executed
our business plans, projected
returns are insufficient or where
we are able to monetise our
expected future profits.
– Create a legacy of high
quality, sustainable buildings
to benefit London and the
communities in which they
are located.
– Reinvest proceeds into higher
return opportunities.
– Return excess equity capital to
shareholders when reinvestment
opportunities are limited.
85%
Employees who
recommend GPE as
a great place to work
73%
Employee
Inclusion Index
84%
Employee
Engagement Index
-9.3%
EPRA NTA NAV decline
19.8%
EPRA loan to value
1
£457m
Cash and undrawn
facilities
1
See more on our culture and people
on pages 54 to 57
See more on our capital strength
on page 32
Our customers are
demanding the very best
spaces for their people,
together with greater levels
of service and amenity.
Therefore, the spaces we
deliver and the services we
provide are evolving to meet
these growing demands.
During the year, we sold
50 Finsbury Square, EC2,
taking the opportunity to
crystallise the development
surpluses we had created.
In a challenging market,
the building was sold for
£190 million, broadly in
line with the 31 March 2022
valuation and at a 3.85%
net initial yield.
1. Includes share of joint ventures.
Manage Recycle
Strategic Report – Overview
13Annual Report 2023 Great Portland Estates plc
Our near-term strategic priorities
We have a clear strategic focus that enables us to deliver attractive long-term value to our
stakeholders. In the near term, our priority is to create exciting sustainable spaces for our
customers, whether through expanding our flexible offerings or delivering on our ambitious
development programme. This includes further embedding our Customer First approach
by launching our new service proposition and standards across our portfolio.
Priorities for 2022/23 Priorities for 2022/23
1
Progress
sustainability
agenda
2
Drive
innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
‘Customer First’
approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
See more on pages 37 to 53 See more on pages 54 to 57 See more on pages 26 and 27 See more on pages 56 and 57 See more on pages 23 to 25 See more on pages 23 to 25
Key initiatives
– Deliver Climate Resilience Strategy.
– Launch Sustainable Spaces Brief.
– Commence business plans to
upgrade portfolio EPC ratings.
– Deploy Decarbonisation Fund.
– Identify ‘stranded’ assets
for acquisition.
– Develop a GPE data warehouse,
to aid information flows and
decision making.
– Implement updated Innovation
Strategy – discover potential
disruptors and implement
known technology.
– Launch new GPE website.
– Implement People Plan.
– Deliver 600,000 sq ft of Flex
space organically by 2027.
– Further supplement growth of
Flex space through acquisition.
– Deliver the majority of our Flex
space on a Fully Managed basis.
– Further enhance systems and
structures to support Flex growth.
Key initiatives
– Finalise our customer vision,
strategy and implementation plan.
– Refine customer journeys for
key touchpoints.
– Deliver engagement plan to
communicate our customer strategy.
– Establish KPIs to assess progress
towards customer vision.
– Commence development of
2 Aldermanbury Square, EC2, sign
construction contract Q4 2022.
– Lease remaining retail space at
Hanover Square, W1 and 1 Newman
Street & 70/88 Oxford Street, W1.
– Seek a pre-let of 2 Aldermanbury
Square, EC2.
– Complete 50 Finsbury Square, EC2
in late 2022.
– Resolve planning status
at New City Court, SE1.
– Further develop design concepts
and planning consultation on
medium-term pipeline.
– Achieve planning permission
at Minerva House, SE1.
Progress in year
– All £768,000 contributed to our
Decarbonisation Fund in the year.
– Sustainability Statement of Intent
and New Sustainable Spaces Brief
launched incorporating our climate
resilience approach.
– EPC analysis evolving, with asset plans
to achieve EPC B ratings across the
portfolio by 2030, with an anticipated
cost of less than £20 million.
– To date, limited ‘stranded assets’
coming to the investment market.
– Data warehouse developed and
launched. Dashboards created to
enhance management information.
– New customer-focused GPE website
launched in October 2022.
– Trialled five pieces of proptech
for adoption in the portfolio.
– Achieved SmartScore Platinum
accreditation for 160 Old Street, EC1
and a Gold for 16 Dufour’s Place, W1.
– Flex space comprises around
414,000 sq ft, or 21% of office
portfolio.
– Additional Flex acquisition
at 6/10 St Andrew Street, EC4
due to commence on-site in
June 2023.
– Flex management pack developed,
with dashboards on all GPE key
flexible office metrics.
– Team enhanced to support
further growth of our Flex offer.
Progress in year
– Customer First workshops held
for all employees.
– Customer vision and customer
promise (service proposition and
service standards) developed.
– In depth customer journeys
mapped to refine GPE processes.
– Implementation of phase 1 of new
customer relationship management
(CRM) system to help manage and
analyse customer interactions and
marketing and sales opportunities.
– Development of 2 Aldermanbury
Square commenced, with the
entirety of the offices pre-let
to Clifford Chance.
– Leasing at Hanover Square and
1 Newman Street & 70/88 Oxford
Street virtually complete.
– 50 Finsbury Square completed in
January 2023, delivering our first
net zero carbon development.
– Planning applications at
New City Court appealed for
non-determination, resolution
expected summer 2023.
– Planning submitted for Minerva
House with the decision delayed,
now expected June 2023.
– New head lease under negotiation
at French Railways House, to unlock
the redevelopment.
Priorities for 2023/24
Progress
sustainability and
innovation agenda
Enhance portfolio
through sales and
acquisitions
Unchanged
Priorities for 2023/24
Unchanged
Unchanged Unchanged
Key initiatives
– Roll out new metering initiative
to transform capture of energy
usage across the portfolio.
– Deliver climate change Transition
Plan by March 2024, in line with
UK legislation.
– Implement initiatives under
Innovation Strategy and explore
emerging technologies including
artificial intelligence.
– Continue to evolve approach
to circular thinking.
– Acquire Flex opportunities to
help deliver growth ambition.
– Supplement development pipeline
through acquisition.
– Maintain discipline of capital recycling
through the sale of properties where
we have executed our business
plans and prospective returns are
insufficient. Recycle proceeds
into development programme.
– Explore opportunities to JV
larger developments.
– Deliver Flex growth to more
than one million sq ft over next
five years, both organically
and through acquisitions.
– Evolve and embed new marketing
messages on Flex key selling points.
– Commence the refurbishment
of 6/10 St Andrew Street, EC4,
Alfred Place, W1 and Egyptian
House, SW1.
Key initiatives
– Roll out customer service proposition
and training to all GPE employees
and service partners.
– Establish KPIs, along with greater
engagement from customers,
to measure success of the
Customer First programme.
– Deliver roll-out of phase 2 of CRM.
– Progress the redevelopment of
2 Aldermanbury Square to time
and budget.
– Maintain close relationship with
Clifford Chance to help deliver
a building that meets its needs.
– Deliver the refurbishment of
6/10 St Andrew Street by Q3 2024,
prepare marketing campaign
for launch.
– Resolve planning status at
New City Court and Minerva House.
– Commence the redevelopment
of French Railways House
& 50 Jermyn Street, SW1.
– Prepare Minerva House for start
on-site.
14 Great Portland Estates plc Annual Report 2023
Priorities for 2022/23 Priorities for 2022/23
1
Progress
sustainability
agenda
2
Drive
innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
‘Customer First’
approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
See more on pages 37 to 53 See more on pages 54 to 57 See more on pages 26 and 27 See more on pages 56 and 57 See more on pages 23 to 25 See more on pages 23 to 25
Key initiatives
– Deliver Climate Resilience Strategy.
– Launch Sustainable Spaces Brief.
– Commence business plans to
upgrade portfolio EPC ratings.
– Deploy Decarbonisation Fund.
– Identify ‘stranded’ assets
for acquisition.
– Develop a GPE data warehouse,
to aid information flows and
decision making.
– Implement updated Innovation
Strategy – discover potential
disruptors and implement
known technology.
– Launch new GPE website.
– Implement People Plan.
– Deliver 600,000 sq ft of Flex
space organically by 2027.
– Further supplement growth of
Flex space through acquisition.
– Deliver the majority of our Flex
space on a Fully Managed basis.
– Further enhance systems and
structures to support Flex growth.
Key initiatives
– Finalise our customer vision,
strategy and implementation plan.
– Refine customer journeys for
key touchpoints.
– Deliver engagement plan to
communicate our customer strategy.
– Establish KPIs to assess progress
towards customer vision.
– Commence development of
2 Aldermanbury Square, EC2, sign
construction contract Q4 2022.
– Lease remaining retail space at
Hanover Square, W1 and 1 Newman
Street & 70/88 Oxford Street, W1.
– Seek a pre-let of 2 Aldermanbury
Square, EC2.
– Complete 50 Finsbury Square, EC2
in late 2022.
– Resolve planning status
at New City Court, SE1.
– Further develop design concepts
and planning consultation on
medium-term pipeline.
– Achieve planning permission
at Minerva House, SE1.
Progress in year
– All £768,000 contributed to our
Decarbonisation Fund in the year.
– Sustainability Statement of Intent
and New Sustainable Spaces Brief
launched incorporating our climate
resilience approach.
– EPC analysis evolving, with asset plans
to achieve EPC B ratings across the
portfolio by 2030, with an anticipated
cost of less than £20 million.
– To date, limited ‘stranded assets’
coming to the investment market.
– Data warehouse developed and
launched. Dashboards created to
enhance management information.
– New customer-focused GPE website
launched in October 2022.
– Trialled five pieces of proptech
for adoption in the portfolio.
– Achieved SmartScore Platinum
accreditation for 160 Old Street, EC1
and a Gold for 16 Dufour’s Place, W1.
– Flex space comprises around
414,000 sq ft, or 21% of office
portfolio.
– Additional Flex acquisition
at 6/10 St Andrew Street, EC4
due to commence on-site in
June 2023.
– Flex management pack developed,
with dashboards on all GPE key
flexible office metrics.
– Team enhanced to support
further growth of our Flex offer.
Progress in year
– Customer First workshops held
for all employees.
– Customer vision and customer
promise (service proposition and
service standards) developed.
– In depth customer journeys
mapped to refine GPE processes.
– Implementation of phase 1 of new
customer relationship management
(CRM) system to help manage and
analyse customer interactions and
marketing and sales opportunities.
– Development of 2 Aldermanbury
Square commenced, with the
entirety of the offices pre-let
to Clifford Chance.
– Leasing at Hanover Square and
1 Newman Street & 70/88 Oxford
Street virtually complete.
– 50 Finsbury Square completed in
January 2023, delivering our first
net zero carbon development.
– Planning applications at
New City Court appealed for
non-determination, resolution
expected summer 2023.
– Planning submitted for Minerva
House with the decision delayed,
now expected June 2023.
– New head lease under negotiation
at French Railways House, to unlock
the redevelopment.
Priorities for 2023/24
Progress
sustainability and
innovation agenda
Enhance portfolio
through sales and
acquisitions
Unchanged
Priorities for 2023/24
Unchanged
Unchanged Unchanged
Key initiatives
– Roll out new metering initiative
to transform capture of energy
usage across the portfolio.
– Deliver climate change Transition
Plan by March 2024, in line with
UK legislation.
– Implement initiatives under
Innovation Strategy and explore
emerging technologies including
artificial intelligence.
– Continue to evolve approach
to circular thinking.
– Acquire Flex opportunities to
help deliver growth ambition.
– Supplement development pipeline
through acquisition.
– Maintain discipline of capital recycling
through the sale of properties where
we have executed our business
plans and prospective returns are
insufficient. Recycle proceeds
into development programme.
– Explore opportunities to JV
larger developments.
– Deliver Flex growth to more
than one million sq ft over next
five years, both organically
and through acquisitions.
– Evolve and embed new marketing
messages on Flex key selling points.
– Commence the refurbishment
of 6/10 St Andrew Street, EC4,
Alfred Place, W1 and Egyptian
House, SW1.
Key initiatives
– Roll out customer service proposition
and training to all GPE employees
and service partners.
– Establish KPIs, along with greater
engagement from customers,
to measure success of the
Customer First programme.
– Deliver roll-out of phase 2 of CRM.
– Progress the redevelopment of
2 Aldermanbury Square to time
and budget.
– Maintain close relationship with
Clifford Chance to help deliver
a building that meets its needs.
– Deliver the refurbishment of
6/10 St Andrew Street by Q3 2024,
prepare marketing campaign
for launch.
– Resolve planning status at
New City Court and Minerva House.
– Commence the redevelopment
of French Railways House
& 50 Jermyn Street, SW1.
– Prepare Minerva House for start
on-site.
Strategic Report – Overview
15Annual Report 2023 Great Portland Estates plc
Our key performance indicators (KPIs) measure the principal metrics that we focus on
to run the business, and they, along with the key measures that drive them, help determine
how we are remunerated. Over the longer term, we aim to outperform our benchmarks
through successfully executing our strategy. Over the last 12 months, the challenging macro-
economic environment impacted absolute property returns and real estate share prices.
However, our strong operating performance helped us outperform many of our benchmarks.
Our key performance indicators
Financial KPIs
Total Shareholder Return
% (TSR)
Total Property Return
% (TPR)
Rationale
TSR is a standard measure of shareholder value creation
over time. It measures the movement in a company’s
share price plus dividends expressed as an annual
percentage movement.
Commentary
TSR of the Group has been benchmarked against the TSR of
the FTSE 350 Real Estate Index (excluding agencies). The TSR
of the Group was -27.3%
1
for the year, compared to -28.5%
for the benchmark following the repricing of real estate
shares given the impact of rising global interest rates.
See more on page 133
Rationale
TPR measures a company’s performance at driving value
from its property portfolio. It is calculated as the net capital
growth of the portfolio plus the net rental income plus profit
or loss on disposals expressed as a percentage return on
the period’s opening value as calculated by MSCI.
Commentary
TPR has been compared to a benchmark of around £50 billion
of similar assets included in the MSCI central London annual
benchmark. Relative to the annual benchmark of -8.1%, the Group
generated a portfolio TPR of -4.1%. The outperformance of 4.0%
was driven by our greater than benchmark weighting to the
West End, along with GPE delivering a record leasing year.
See more on pages 43 to 35
Total Accounting Return
% (TAR)
Growth of committed Flex space
sq ft
Rationale
TAR is measured as absolute EPRA NTA per share growth
(the industry standard measure of a real estate company’s
success at creating value) plus any ordinary dividends paid,
expressed as a percentage of the period’s opening EPRA NTA.
Commentary
This year we compared our TAR to a target year on year
growth of 3% or more. TAR was -7.8% for the year.
The TAR underperformance was driven by the impact
of rising interest rates on the property valuation.
See more on pages 30 to 33 and note 8 to the financial statements
Rationale
Growth of our Flex offer is an integral part of the Group’s
strategy and a near-term strategic priority designed to
enhance our valuation and income growth. We are targeting
to grow our Flex space to more than one million sq ft over
the next five years.
Commentary
During the year, we increased our committed Flex space
to 414,000 sq ft, exceeding a targeted 341,000 sq ft,
with the outperformance supported by the acquisition of,
and commitment to refurbish, 6/10 Andrew Street, EC4.
See more on pages 22, 25 and 27
LTIP Exec Bonus
LTIP Exec Bonus
1
53
All
All
14.0
(7.2)
1.7
Benchmark (italics)
(1.0)
(12.4)
21.1
2019 2020 2021 2022 2023
(27.3)
6.6
(28.5)
20.8
-10
-20
30
10
20
-30
0
2019
3.7
2020 2021 2022 2023
(5.9)
(3.2)
(4.1)
(8.1)
9.4
7.0
2.9
3.5
4.5
Benchmark (italics)
0
-5
20
10
15
-10
5
2019
4.04.0
3.2
2.3
2020 2021 2022 2023
4.0 4.0
Benchmark (italics)
(8.8)
3.0
(7.8)
8.8
0
-5
5
20
10
15
-10
87,600
219,600
266,700
Benchmark (italics)
2019 2020 2021 2022 2023
414,000
250,000
341k
200,000
100,000
500,000
300,000
400,000
0
1. On a spot basis.
Exec Bonus
3
16 Great Portland Estates plc Annual Report 2023
Non-financial KPIs
Customer satisfaction
(NPS)
Employee engagement
% (EEI)
Rationale
High levels of customer satisfaction are critical to both
attracting and retaining businesses in our buildings.
Commentary
The Net Promoter Score (NPS) of the Group is compared to
the office industry average, expressed as a number between
-100 and +100, with a minimum target of the industry average.
Our NPS of +44.0 significantly outperformed the office
industry average of +3.8.
See more on pages 56 and 57
Rationale
Maintaining high levels of employee engagement,
and an inclusive culture, is key to motivation, productivity
and ultimately the delivery of our business plans.
Commentary
From the 2022/23 financial year, we compare a
blended Employee Engagement Index and Employee
Inclusion Index (EEII) score of the Group to a 65% hurdle.
At 78% we outperformed the benchmark, and aim
to improve performance as we progress our diversity
and inclusion initiatives.
See more on pages 52 to 55
Energy consumption
% reduction
Rationale
Lowering our energy intensity is an essential part
of delivering our Roadmap to Net Zero.
Commentary
Our target is to reduce energy intensity by 40% by 2030,
when compared to our 2016 baseline. For this year, the
benchmark was 199.0 kWh/m
2
and we delivered 158.5 kWh/m
2
across all occupied buildings. A number of projects were
undertaken during the year to improve energy intensity, with
our performance improving despite increased occupancy
levels as workers returned to the office following
the pandemic.
See more on page 50
Exec Bonus
Exec Bonus
Exec Bonus
Our KPIs looking forward
Given the macro-economic backdrop, for future years the
Group is moving to a more target-based operational scorecard,
designed to motivate management to optimise returns for
shareholders by focusing on clear and measurable objectives
to deliver our strategic priorities.
Each of the measures is designed to directly or indirectly drive
our financial KPIs and shareholder value in the longer term and
form an integral part of the revised Directors’ remuneration
policy to align performance and executive remuneration.
See more in Directors’ remuneration report on page 121
Performance criteria for
Executive Directors’ and
certain senior managers’
long-term incentives.
LTIP
Performance criteria for
Executive Directors’ and all
employees’ annual bonuses in
the case of the financial KPIs
and certain senior executives’
annual bonuses in the case
of the non-financial KPIs.
Exec Bonus
1
Progress sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our ‘Customer First’
approach
5
Deliver and lease the
committed schemes
6
Prepare the pipeline
All
All six priorities
See Directors’ remuneration
report on pages 114 to 146
Our KPIs are driven by our
strategic priorities:
The sustainability KPIs have been simplified to focus on one
priority measure, to reduce our energy consumption, which aligns
to our Net Zero Carbon Roadmap and which management has
the ability to impact year on year across a significant proportion
of the portfolio. Embodied carbon and biodiversity targets have
continued to be measured separately and are set out on page 50.
1
4 2
42.0
2021 2022 2023
(6.1)
44.0
27.8
3.8
2.0
40
50
30
20
10
0
Benchmark (italics)
100
20
80
60
40
93
2021
86
2022
84
2023
78
2023
(EEII)
75 75 75
65
Benchmark (italics)
0
-30
-10
-15
-5
-20
-25
(25.1)
(24.3)
2021 2022 2023
(8.0)
(11.4)
(32.2)
(14.9)
Benchmark (italics)
Strategic Report – Overview
17Annual Report 2023 Great Portland Estates plc
In this section:
19 Statement from the Chief Executive
21 Our markets
23 Our development activities
and capex programme
26 Our leasing and Flex activities
28 Our investment activities
30 Our financial results
34 Our portfolio
37 Sustainability
54 Our people and culture
58 Our stakeholder relationships
62 Engaging with our stakeholders
64 Our approach to risk
Strategic
Report
Annual review
GPE Future London
Photography Award
This year, we proudly initiated the
GPE Future London Photography Award,
with Nico Froehlich being selected as
our inaugural winner. The purpose of this
prestigious award is to provide a platform
for up-and-coming artists to help bridge
the gap between university and a career
in the arts. Nico’s exhibition, around
the theme of ‘The space in-between’
showcases a multifaceted portrayal
of London and will be open to the public
at one of our buildings, Wells & More,
from July and will be in place for a year.
www.nicofroehlich.com
#gpephotographyaward
18 Great Portland Estates plc Annual Report 2023
Statement from the Chief Executive
Strategic positioning delivering success
Despite an uncertain political and economic backdrop,
our leasing successes, positive progress at our development
schemes, successful recycling and disciplined capital
management together delivered resilient financial results.
Last year we outlined our evolving strategy, setting out
two complementary, overlapping activities:
– HQ repositioning – delivering large, best-in-class
HQ buildings; and
– Flex spaces – smaller fitted units, often Fully Managed
and with higher service levels.
This year we saw the benefit of our efforts: we completed
our largest ever pre-let, sold 50 Finsbury Square, EC2 for
a market-beating yield, increased our Flex space footprint
to 414,000 sq ft and raised our ambition for growth to one
million sq ft, with recent acquisitions further demonstrating
our intent. With a portfolio full of opportunity, exceptional
financial strength and a talented team, we remain
extremely well positioned.
Customer First; together we thrive
The foundation of our success, across the breadth of our
business, rests on our providing spaces and experiences
that our customers want. Our Customer First approach,
puts customer needs at the centre of everything we do,
helping them to thrive, by designing, creating, managing
and owning market-leading, sustainable workspaces,
delivering personal customer experiences every single day.
This year, to ensure we continue to deliver and maintain
the highest standards, we have developed our new service
proposition ‘Together we thrive’ which sets out five service
standards that we will always adhere to, ensuring both a
consistency in our approach and the promise of a compelling
offer to our customers. We have also restructured and
enhanced our teams to increase our capability and improve
the diversity of our customer facing roles. Encouragingly,
our approach is working well, with positive feedback from
our customers and our Net Promoter Score rising to +44.0,
significantly ahead of the industry average of +3.8.
Another record leasing year
During the year, we saw sustained demand for both our office
and retail spaces. We delivered a record £55.5 million of new
leases, with market lettings 3.3% ahead of the March 2022 ERV.
In October, we pre-let all 321,100 sq ft of office space at our
2 Aldermanbury Square, EC2 development to Clifford Chance
LLP, demonstrating, once again, the enduring attraction
of well-designed and located, modern, sustainable offices.
We also signed 31 new deals across our Flex spaces, securing
£11.8 million in rent. With our portfolio well suited to Flex,
and our long track record of delivering best-in-class spaces,
we are being rewarded for our endeavours, setting new
record rents as we further expand our offer.
Retail activity also continued to recover, with levels of footfall
in the West End’s key shopping streets close to pre-pandemic
levels. This was reflected in our leasing, with 35 deals completed,
securing £10.2 million of rent and reducing our retail vacancy
rate significantly, from 20.4% to 5.5%.
Outperforming in challenging markets
Despite our operational successes, the challenging macro-
economic and geopolitical environment put property values
in our markets under pressure. Across our portfolio, property
values reduced by 6.6% over the year, reflecting the global
impact of rising interest rates on property yields. Whilst values
were down, our portfolio performance was well ahead of
our central London benchmarks. Our retail space was down
4.5%, outperforming our office space, which was down by 7.3%,
with our Flex office spaces again outperforming traditional
offices, down 5.1%. Despite the economic disruption, office
ERVs continued to grow, up 3.3% in the year, reflecting the
continued shortage of high quality office space across our
markets. Our retail ERVs declined by 1.5%; however, looking
forward, we are increasingly optimistic for the coming year.
The valuation decline reduced IFRS NAV and EPRA NTA per share
by 9.3% over the year. When combined with an ordinary dividend
maintained at 12.6 pence per share, our Total Accounting Return
was minus 7.8%. Including the revaluation of the portfolio,
we delivered an IFRS loss for the year of £163.9 million.
Diluted EPRA EPS was 9.5 pence, a decline of 12.0%, driven by
our reduced surrender premium, investment in our Customer
First and digitisation initiatives, along with the impact of
our strong outperformance against our MSCI benchmark
on performance-related pay.
Strong London fundamentals
Whilst macro-economic volatility persists, we remain
confident that we are well placed for the prevailing market
conditions. London remains a dominant global city and has
bounced back quickly from the pandemic, with London
business activity and optimism recovering in the first three
months of 2023. It is clear from our recent leasing experience
that high quality offices remain in high demand. With hybrid
working here to stay, and customers having more choices
about where they work, our spaces need to provide compelling
reasons to come into the office. With average office rents
only c.5% – 10% of a typical London business’ salary cost,
and the office environment a key tool in attracting and
retaining talent, we anticipate that competition for the
very best spaces will remain healthy.
“Whilst markets were challenging,
we delivered an exceptional
operational performance.
Record leasing, net zero carbon
development starts and completions,
our Flex expansion and a strong
NPS score all contributed to our
resilient financial results.”
Toby Courtauld Chief Executive
Strategic Report – Annual review
19Annual Report 2023 Great Portland Estates plc
Statement from the Chief Executive continued
So, with office demand robust, we expect that the uncertain
economic outlook in the near term will exacerbate the
shortage of new deliveries in central London, further restricting
supply. As a result, we anticipate supportive rental conditions
for the best spaces with rents for prime office space likely
to rise over the next 12 months by 3.0% to 6.0%. We expect
retail rents to grow between 0.0% to 5.0%.
Our opportunity-rich portfolio
With these supportive market conditions characterised by
the sharp bifurcation between the best spaces and the rest,
our clear strategy means we have a portfolio which is well
positioned for growth. Furthermore, as lower quality space
falls from favour, we anticipate that the investment market
will present opportunities for us to add to our HQ development
pipeline and expand our Fitted and Fully Managed offers.
Crucially, we have the financial strength to deliver on these
ambitions with our EPRA loan-to-value ratio at only 19.8%,
and £457 million of available firepower.
HQ repositioning – significant progress
During the year, we completed the development of 50 Finsbury
Square, EC2, which was verified as our first net zero carbon
development, eight years ahead of our sustainability target.
Despite a challenging backdrop, we sold the building in
October 2022, achieving a headline sale price of £190.0 million
which reflected a market-beating topped-up net initial
yield of 3.85%.
We also had significant success at 2 Aldermanbury Square,
EC2. In November 2022, following the pre-let of the offices,
we committed to the redevelopment of the building and
entered a building contract with Lendlease. The demolition
of the existing building is almost complete, including the
extraction of the steel to repurpose in other developments,
and we expect to deliver a new best-in-class, net zero
carbon building in December 2025.
We have made good progress in preparing our three other
near-term schemes which, together with 2 Aldermanbury
Square, will deliver 0.9 million sq ft of prime, predominantly
office space with exemplary sustainability credentials,
along with £60.0 million of ERV following our proposed
£0.7 billion of total investment.
Flex spaces – targeting growth to one million sq ft
With continued demand for our Flex spaces, we have
significantly expanded our footprint to 414,000 sq ft across
22 of our buildings. With customers prepared to pay a premium
for a hassle free, high quality, real estate experience, our Flex
offers are achieving significant rental and cash flow premia.
This year, we completed our largest ever Fitted letting at
The Hickman, E1 where an existing customer took 23,200 sq ft,
moving from Wells & More, W1. We have also experienced
significant growth in the rents we have been achieving for our
Fully Managed spaces with an average rent of £181 per sq ft
achieved in the year.
With our portfolio ideally suited to delivering more Flex,
and the investment market presenting more opportunities
to buy, we have increased our ambition and are now seeking
to grow our Flex office offering to more than one million
sq ft over the next five years. Since the year end, we have
made continued progress, having completed two further
Flex acquisitions.
Sustainability and embracing the circular economy
Today’s customers have increasingly ambitious sustainability
strategies, in part reflecting growing expectations from
employees wanting to work in businesses demonstrating
a progressive and responsible approach to sustainability.
Our customers are therefore rightly expecting that the spaces
they occupy reflect those ambitions, and we are working hard
to satisfy their, and other stakeholders’, sustainability needs.
Our original Statement of Intent was launched in 2020.
Since then, our approach and thinking on sustainability has
developed considerably and we recently released version 2.0,
which sets out our progress to date and updates our approach.
Alongside this we published ‘Our Brief for Creating Sustainable
Spaces’, which sets out how we will meet our commitments as
we design, construct, fit out and operate our spaces. The Brief
is designed to inform and help our supply chain as we respond
to climate risk and the opportunities inherent in the transition
to a low carbon economy. This includes our sector-leading
approach to the circular economy and the future proofing
of our spaces.
Outlook
During a year marked by elevated political and economic
uncertainty, we have delivered a strong operating performance
with record leasing, positive rental growth and resilient
financial results.
Despite the impact of recent interest rate rises, London has
continued to recover and is evidently busier than this time last
year; centrally located offices are returning to more normal
levels of occupation, and the West End is seeing higher numbers
of both shoppers and tourists, supported by the opening of
the Elizabeth Line.
From here, whilst macro-economic challenges are likely
to persist, we do not expect the recovery to be uniform.
For some time, we have witnessed a growing divergence
between the prospects of the best spaces versus the rest,
and we believe this is set to widen further as customers seek
out sustainable and well designed, prime spaces, of which
there is a marked shortage, particularly in the West End.
Consequently, we have increased our rental growth guidance
for our prime offices to be between 3.0% to 6.0% for the year.
Through our strategic focus on prime HQ and Flex offerings,
we are well positioned to benefit, and we are growing our
ambition. Our office-led capex programme extends to more
than £800 million of best-in-class sustainable spaces and we
are targeting growth of our Flex space to more than one million
square feet, underpinned by our Customer First service approach
which is delivering industry-leading customer satisfaction.
So, with exceptionally strong finances and plentiful liquidity,
we will continue capitalising on opportunities that are emerging,
and with our experienced team, we can look to our future
with confidence.
20 Great Portland Estates plc Annual Report 2023
Our markets
Occupational markets
1
– Activity levels remain healthy; central London take-up
11.8 million sq ft in year, up 6.9%, although Q1 2023 slowed
to 2.1 million sq ft, 33.0% below ten-year average.
– Central London active demand 6.6 million sq ft,
down 4.8% year on year (Knight Frank).
– Availability remains elevated at 25.4 million sq ft,
marginally ahead of 31 March 2022 and remains
55.0% ahead of the ten-year average.
– Space under offer 3.2 million sq ft, down from
4.4 million sq ft at 31 March 2022.
– Central London vacancy rate 8.3% at 31 March 2023;
down from 9.0% last year.
– Supply remains tight; availability of space newly
completed or under construction low, at 33.1%
of total stock (8.4 million sq ft).
– Rents for prime spaces significantly outperformed
Grade B rents at +2.0% v -5.0% respectively for
the West End (Savills).
Our markets softened over the year, as the monetary response to rising inflation
pushed up interest rates across the world. The most immediate impact was felt in
our investment market, with upward pressure on property yields impacting values.
However, despite the economy slowing, our occupational markets were resilient,
with the best spaces showing continued demand and rising rents.
Investment markets
1
– Investment markets challenged given heightened interest
rate environment.
– Demand for London real estate normalised post pandemic;
office investment deals £11.2 billion in 2022, up 11.7%
year on year. However, six months to 31 March 2023
demonstrate significant slowdown, with only £2.3 million
of transactions, down 53.1% on prior six months.
– We estimate that £4.6 billion of real estate is currently
on the market to buy versus £27.5 billion of equity
demand looking to invest.
– Given rising global interest rates, prime yields
have softened; CBRE reports prime yields of 3.75%
and 4.75% for the West End and City respectively.
– Retail yields now stable; 4.00% Regent Street,
4.25% Oxford Street and 2.75% Bond Street.
The West End
– Office take-up 4.9 million sq ft,
up 22.5% on preceding year.
– Availability 6.1 million sq ft,
up 2.4%.
– Vacancy 3.6%, down from 4.6% at
31 March 2022; vacancy of newly
completed space only 0.6%.
– Prime office rental values
£140 per sq ft at 31 March 2023,
up 12.0% in year.
– Retail vacancy stabilised;
Zone A rents maintained
on key retail streets.
The City
– Office take-up 4.8 million sq ft,
up 10.0% on preceding year.
– Availability 10.8 million sq ft,
down 8.7%.
– Vacancy 11.7% down from
12.9% at 31 March 2022;
vacancy of newly completed
space only 2.4%.
– Prime office rental values
£72 per sq ft, up 1.4% in year.
Near-term outlook
We actively monitor numerous lead indicators to help
identify key trends in our marketplace. Over the last year,
our property capital value indicators have marginally
worsened, driven by the continued macro-economic
uncertainty, heightened levels of inflation and interest rates,
and geopolitical tensions.
Today we expect the flight to quality to continue, with
investment demand to support prime yields in the near
term, with upward pressure on secondary spaces. In the
occupational market, given a strong leasing and rental
performance of the portfolio, our rental value growth
range for the financial year to 31 March 2023 is positive
at between 0.0% and 5.0%, predominantly driven by the
positive expected performance of our office portfolio.
1. To 31 March 2023 and sourced from CBRE unless otherwise stated.
Macro-economic backdrop
– IMF estimates global GDP growth of 3.4% in 2022
and forecasts 2.8% and 3.0% growth for 2023
and 2024 respectively.
– UK still forecast to grow; 0.3% GDP growth in 2023
or 1.3% p.a. over next three years with London expected
to outperform at 1.6% p.a. (Oxford Economics).
– Consumer confidence recovering from 2022 lows,
now at highest level since February 2022.
– Deloitte CFO survey: having run below average
throughout 2022, business confidence has risen sharply
and is now well above its long-term average.
– UK composite PMI surveys have improved, now indicating
expansion; 53.9 in April 2023.
– Inflationary risks remain; UK CPI 10.1% in March 2023,
forecast to decline over the course of 2023.
Strategic Report – Annual review
21Annual Report 2023 Great Portland Estates plc
The future office
Although the pandemic’s impact on London is quickly receding,
it has left an impact. As London’s workers return in force, many
employees continue to value the flexibility and convenience
of remote work. Therefore, the office of the future will need
to adapt to offer the best of both worlds, providing employees
with the flexibility they desire while maintaining the benefits
of face-to-face collaboration and team building that the office
provides. All combined with high services levels as differentiator.
Improving retail sentiment
For a number of years, more shops have been closing in the UK
than opening, with sales from physical stores moving online.
This trend was accelerated during the pandemic with retailers
having to adapt and, in some cases, greatly reduce the physical
space they occupy. However, whilst the economic outlook in the
UK remains challenging, there are signs of optimism. Footfall
is returning to more normal levels, domestic and international
tourism has returned and leasing activity has improved.
Our response
The workplace must be somewhere that is worth travelling to.
The best offices need to act as a magnet for their workforce,
providing services and amenities that employees cannot get
at home. The quality of the office experience matters. In our
view, the best buildings need to provide flexible work settings,
support the health and wellbeing of employees, promote
sustainability and be more human in scale and connected
to the communities in which they sit. They also need to be
well connected to high quality public transport to minimise
the impact of the commute. Buildings that cannot meet
these criteria risk being stranded.
We are well placed to capitalise. Our development programme
is delivering spaces matched to meet this evolving demand,
and as buildings which do not meet these criteria suffer,
we anticipate opportunities will emerge to acquire new
raw material for our future pipeline.
Our response
We believe that central London’s attraction as a premium
retail destination is undiminished. Its unique combination
of tourist destinations, flagship stores, selection of restaurants
and a deep cultural offer remains and will continue to
attract shoppers from around the world.
Retail comprises 21% of our portfolio by value. We aim to
provide high quality, modern retail units into locations with
enduring appeal. Accordingly, the bulk of our activities
centre on the prime shopping streets delivering new retail
experiences into locations that benefit from the newly
opened Elizabeth line.
This year we experienced a significant improvement
in retail sentiment. We completed £10.2 million of retail
lettings, and finished the year with the retail units at both
our 70/88 Oxford Street, W1 and Hanover Square, W1
developments virtually fully let.
The growing demand for flexible spaces
London has witnessed significant growth in the demand for
flexible office space in recent years. Advances in technology,
the growth in start-up businesses, increased mobility in the
workforce and the rise of the gig economy have helped drive
this growth. A plethora of new suppliers have entered the
market to meet this demand. Flexible spaces have bounced
back quickly as people have returned to the workplace post
pandemic and we expect this growth to continue.
The need for sustainable spaces
The demand for highly sustainable spaces is growing fast.
Customers, together with their employees, are increasingly
aware of their impact on the environment and are demanding
spaces with the highest sustainability and wellbeing credentials.
Regulation is also accelerating, both through the planning regime
and from forthcoming legislation to tighten EPC and other
sustainability regulations. Sustainability is therefore no longer
only a moral obligation; it is a prerequisite for high quality spaces
and a strategic and economic imperative.
Our response
Whilst for many businesses, securing high quality,
well-located space for longer-term occupation is vital,
we recognise that customers are increasingly seeking
an element of flexibility for some parts of their business.
To meet this growing demand, we have a Fitted offer to
provide dedicated, fully furnished space on flexible terms,
allowing customers to move in and out of the space with
ease. Where our customers want a higher level of service
provision we have a growing Fully Managed offer, which
extends our proposition to provide additional services and
amenity. Interest in these spaces remains high. They typically
let quicker and we are charging a premium for a hassle-free
real estate experience. Over time we expect this to be the
default requirement for spaces of less than 10,000 sq ft.
See more on pages 26 and 27
Our response
Sustainability is becoming an increasing differentiator
between the best space and the rest. Therefore, owners
of real estate need the expertise to either create new high
quality spaces or retro fit existing space in line with the new
and evolving requirements. Buildings that are not repositioned
risk being stranded. We see this as an opportunity. We are
an experienced developer with a track record of delivering
the highly sustainable buildings that customers demand.
We also know how to reposition assets through refurbishment
and renovation. Furthermore, buildings with poorer
sustainability credentials are a potential avenue for future
acquisitions, allowing us to create value by transforming
unloved buildings into desirable, highly sustainable,
prime real estate.
See more on pages 37 to 53
Our markets continued
The nature of demand for our spaces is undergoing a significant transformation
as key themes continue to shape and evolve our markets. These themes are united
by a common thread – the widening gap in demand between the best spaces
and the rest. Against this backdrop, we are well placed to outperform.
22 Great Portland Estates plc Annual Report 2023
Our development activities and capex programme
In a busy year, our development activities continued to
play to the theme of the best quality assets outperforming
the rest. This was demonstrated by the completion, and
subsequent sale, of 50 Finsbury Square, and the pre-letting
and commencement of our development of 2 Aldermanbury
Square. Today, our capex programme provides a significant
platform for growth, with a potential capital commitment
of more than £0.8 billion from our on-site and near-term
schemes, and from our programme of Flex conversions.
Repositioning our buildings through redevelopment and
refurbishment is a core part of the GPE business model
and presents a significant organic growth opportunity.
Our forecasts suggest that the future supply of new spaces
in London is severely constrained. We estimate that only
2.8 million sq ft p.a. of new space will be delivered on average
over the next four years, in a market where the average take-
up of new space is almost double that, at 5.0 million sq ft p.a.
Given this shortage, we have a significant capex programme
aimed to meet this expected excess demand.
One scheme completed in the year
At 50 Finsbury Square, EC2, refurbishment of the building
completed in January 2023, with the leases to Inmarsat
Global Limited and various smaller retailers commencing
shortly thereafter.
The finished 129,200 sq ft building comprises nine floors
of office space, an integrated cafe and business lounge
and new retail and leisure facilities. With innovation at the
heart of the design, the project was designed to be highly
operationally efficient and adaptable and provide a healthy
and productive environment for its occupiers. It is also
our first building to be verified as net zero carbon, beating
industry standards for embodied carbon at only 270kg per m
2
and low energy consumption in-use at only 115kWh per m
2
.
It is also the first GPE development to have our internal
carbon price applied, contributing almost £365,000 to
GPE’s Decarbonisation Fund. The proceeds of the fund will
be reinvested across our wider GPE portfolio to improve
the Group’s energy performance.
With the lettings concluded, the sale to a private German
family office completed in February 2023. Based on the
sales price, the scheme delivered a profit on cost of 37.4%.
Operational measures
1
2023 2022
(Loss)/profit on cost (2.1%) 39.1%
Ungeared IRR 4.4% 20.0%
Yield on cost 5.4% 6.5%
Income already secured 99.5% 94.5%
BREEAM Excellent (targeted) 100% 100%
Committed capital expenditure
to come
2
£265.2m £23.9m
1. Committed developments at date of report.
2. Including share of joint ventures.
Our approach
Upgrading our portfolio through development
using targeted capital expenditure creates sustainable
spaces with improved customer appeal and longevity.
This enhances both rental values and capital returns.
The cyclical nature of central London property markets
means it is critical for us to match this development
activity to the appropriate point in the cycle, delivering
new buildings into a supportive market when quality
space is scarce and demand is resilient. By combining
our forensic analysis of market conditions with our
active portfolio management, we aim to be opportunistic
and flexible when planning the start and, therefore,
completion dates for our schemes.
We have a good track record of matching our activities
to the ebb and flow of London’s cyclical market and
providing spaces that customers want. Today, we have
three committed schemes (one development and two Flex
refurbishment) and a substantial pipeline of opportunities.
As a result, the successful leasing of these schemes and
preparation of the development programme are key
near-term strategic priorities.
37.4%
Profit on cost at
50 Finsbury Square, EC2
“We expect that the supply of new spaces
in central London will fall short of the
continued demand we are seeing across
our markets. As a result, our development
programme is well placed to benefit.”
Andrew White Development Director
2022/23 Strategic priorities:
5
Deliver and lease
the committed schemes
6
Prepare the pipeline
Business model
Acquire Reposition Manage Recycle
Strategic Report – Annual review
23Annual Report 2023 Great Portland Estates plc
Our development activities and capex programme continued
One committed scheme, offices 100% pre-let
Following the pre-let of all the office space to Clifford Chance
in November 2022, we committed to the redevelopment of
2 Aldermanbury Square, EC2. Our scheme will substantially
increase the size of the building to 322,600 sq ft (up from
176,000 sq ft) and will deliver our second net zero carbon
building, after 50 Finsbury Square, EC2.
We are currently on-site demolishing the old building and,
as part of this process, are carefully extracting the structural
steel and reconditioning it for reuse. Once removed, the steel
will be tested, processed, recertified and stored in appropriate
conditions in the UK until such a time that it can be reused
to form some structural elements on the new building
and the structural frame for our proposed development
at French Railways House & 50 Jermyn Street, SW1, one
of our near-term development schemes. This pioneering
approach will reduce the embodied carbon of the steel
when reused by around 99%.
The scheme also includes a number of public realm and
amenity improvements that will have a positive impact
on the local area and improve accessibility to the western
entrance of the Liverpool Street Elizabeth line station.
The cost to complete the scheme is £265.2 million. Given
recent upward pressure on yields, the scheme is expected to
deliver a loss on cost of 2.1%. However, cost saving measures
and the anticipated future correction of valuation yields,
once interest rates reduce, should enable the scheme to
make an acceptable profit.
See our case study on pages 08 and 09
In total, we have £307.4 million of committed capital expenditure,
including £265.2 million at our committed development.
Three near-term development schemes
Beyond our one committed scheme, we have a substantial
and flexible pipeline of six uncommitted schemes,
including three schemes in our near-term pipeline.
In May 2022, we obtained planning permission at
French Railways House & 50 Jermyn Street, SW1, part
of our Piccadilly Estate. Our proposed major office-led
redevelopment will provide 66,600 sq ft (up from 54,700 sq ft)
of new Grade A space. The scheme is designed to embrace the
principles of the circular economy. We will retain the existing
foundations and basement, typically the largest embodied
carbon element of a building, and build as light a new
building as possible to allow the retention of the substructure.
We will also reuse the structural steel from the demolition of
2 Aldermanbury Square, EC2, in its construction. If successful,
this will save around 1,000 tonnes of carbon and almost eliminate
the embodied carbon in the steelwork. The development
of the building is subject to freeholder consent.
At New City Court, SE1, we have submitted two planning
applications, one in 2018 and one in 2021. Having explored
all avenues to have both schemes approved by Southwark
Council without success, we regretfully appealed for
non-determination, with the associated public inquiry
taking place in July 2022. With the inquiry now concluded,
we expect a decision from the Secretary of State in summer
2023. Once planning consent is obtained, given the size of
this development, we anticipate seeking a partner to help
deliver the ultimate development.
At Minerva House, SE1, we submitted planning permission
for a 140,300 sq ft major office refurbishment in November
2021, with the planning decision now expected in June 2023.
Our proposals will reposition this building, taking full
advantage of its river frontage and, by adding additional
storeys, we will be able to create outdoor terraces and
amenity space with commanding views over central London.
The refurbishment will also improve the public realm around
the building, creating new and improved connections through
the site as well as attractive new gardens that will contribute
to local greening and biodiversity and provide space for
people to enjoy in the setting of Southwark Cathedral.
Our proposals will retain and reuse the majority of the
existing building’s structure, including two primary façades,
leading to an anticipated embodied carbon of 450kg CO
2
/
sqm (saving 3,067 tonnes of CO
2
) and expected BREEAM
Outstanding, NABERS 5*, WELL Core Platinum, WiredScore
Platinum, SmartScore Platinum and CyclingScore
Platinum accreditations.
In total, our on-site and three near-term schemes comprise
around £700 million of anticipated capital expenditure and
are expected to deliver 0.9 million sq ft of best-in-class,
highly sustainable space, perfectly placed to benefit from
a market where forward look supply is severely constrained.
With a further three schemes in the medium-term pipeline,
our development programme totals 1.1 million sq ft and will
provide strong growth potential over the coming years,
which we plan to supplement through further acquisitions.
One committed scheme:
322,600 sq ft
2 Aldermanbury Square, EC2
Size 322,600 sq ft
Construction cost £302m
Expected completion date Q4 2025
BREEAM target Excellent
Distance to Elizabeth line station 250 metres
99%
Embodied carbon saving from steel reuse
24 Great Portland Estates plc Annual Report 2023
Significant capex programme
In order to expand our Flex office offers, and meet our
ambitious targets for growth, we are planning to refurbish
four standalone buildings to provide new dedicated Fully
Managed spaces, as well as converting a significant number
of individual floors across our portfolio. The dedicated
buildings to be refurbished include our recent purchases
at 6/10 St Andrew Street, EC4, 7/15 Gresse Street, W1,
Alfred Place, WC1 and Egyptian House, SW1 (Piccadilly).
Two major committed refurbishments
At 6/10 St Andrew Street, EC4, which was purchased as
a vacant building in May 2022, we have recently agreed
a new head lease and will be shortly starting on-site.
Our plans include the addition of two new storeys, together
with extensive terracing and significant amenity throughout
the building. We anticipate that the scheme will cost
£31.2 million to construct and will complete in August 2024,
delivering 46,200 sq ft of new Grade A Fully Managed offices.
At 31/34 Alfred Place, WC1, in the heart of Fitzrovia,
we have committed to an extensive refurbishment of the
entirety of the 42,700 sq ft building to provide outstanding
Fully Managed office space. The cost to convert the space
will be £11.0 million and we anticipate the scheme will be
completed in January 2024.
Further expanding our Flex offers
Together with our other planned conversions, we anticipate
growing our Flex offerings organically to around 0.5 million sq ft.
Moreover, we are aiming to add to this programme through
acquisition, as demonstrated by the recent purchases
of Bramah House, SE1 and 141 Wardour Street, W1 and are
targeting enlarging our Flex offerings to one million sq ft
over the next five years.
How we are positioned
In total, our anticipated development and Flex capex
programme provides a strong platform for organic growth,
totalling around £830 million over the next five years, and
will deliver 1.4 million sq ft of well-designed, tech-enabled
and sustainable space with high levels of service delivery
and amenity provision.
Computer Generated Images.
Three near-term schemes:
596,000 sq ft, all net zero carbon
New City Court, SE1
Proposed size 389,100 sq ft
Earliest start 2024
Opportunity area London Bridge
Distance to London Bridge 25 metres
Minerva House, SE1
Proposed size 140,300 sq ft
Earliest start 2023
Opportunity area London Bridge
Distance to London Bridge 250 metres
French Railways House &
50 Jermyn Street, SW1
Proposed size 66,600 sq ft
Earliest start 2024
Opportunity area Core West End
Distance to Elizabeth line station 750 metres
596,000 sq ft
Three near-term developments
Strategic Report – Annual review
25Annual Report 2023 Great Portland Estates plc
Our leasing and Flex activities
Despite the challenging macro-economic and geopolitical
environment, demand for best-in-class spaces remained
robust, delivering strong leasing activity and helping us
deliver a record leasing year, signing £55.5 million of new
leases and beating rental values by 3.3%. This included
our largest ever pre-let at 2 Aldermanbury Square, EC2
to leading international law firm Clifford Chance LLP.
Given the continued demand for the very best spaces, we have
continued to focus our efforts on delivering high-quality HQ
redevelopments, growing our Flex offerings and concentrating
our retail efforts on the very best shopping streets. We expect
the trend of the best spaces outperforming the rest to
continue. This supportive demand, combined with the limited
future supply of new prime space in central London, means
that occupational market dynamics remain in our favour.
During the year, our rental values increased by 2.1% across
the portfolio. Within this, our offices continue to perform
better than our retail space, with our office rental values
increasing by 3.3% compared with a 1.5% fall in retail
rental values. Within our offices, our Flex property rental values
outperformed, increasing by 4.0% on a like-for-like basis.
See our markets on pages 21 and 22
The key leasing highlights for the year included:
– 105 new leases and renewals completed during the year
(2022: 65 leases), generating annual rent of £55.5 million
(our share: £52.8 million; 2022: £38.5 million), with market
lettings 3.3% ahead of ERV;
– of the new leases signed, 17 were Fitted and 14 were
Fully Managed space, achieving on average £181 per sq ft
on the Fully Managed space, 8.2% ahead of March 2022 ERV;
– 35 new retail leases securing £10.2 million of rent with
market lettings 9.1% below March 2022 ERV, including
three units at Hanover Square, W1, where all of the retail
space is now let, with the exception of a small unit which
is under offer;
– 11 rent reviews securing £11.5 million of rent (our share:
£6.3 million; 2022: £4.1 million) were settled at an increase
of 2.6% over the previous rent and 5.0% ahead of ERV
at review date;
– total space covered by new lettings, reviews and renewals
was 861,200 sq ft (2022: 580,800 sq ft);
– the Group’s vacancy rate decreased to 2.5%
(31 March 2022: 10.8%);
– the Group’s rent roll has increased by 2.2% to £106.4 million
following a successful leasing period (not including the
pre-let at 2 Aldermanbury Square, EC1); and
– 91% (by area) of the 122 leases with breaks or expiries
in the 12 months to 31 March 2023 were retained, re-let,
or are under offer, leaving 32,000 sq ft still to transact.
Operational measures
2023 2022
New lettings and renewals £55.5m £38.5m
Premium to ERV
1
(market lettings) 3.3% 9.8%
Vacancy rate
2
2.5% 10.8%
ERV growth
2
2.1% 3.0%
Reversionary potential
2
9.3% 4.7%
Rent collected within seven days
3
99.5% 85.8%
1. ERV at beginning of financial year.
2. Including share of joint ventures.
3. For March 2023 quarter, including benefit of rent deposits.
Our approach
We consider that a close relationship with our customers
is vital to our success. As a result, we manage all aspects
of our property portfolio in-house, enabling us to
continually refine our understanding of what customers
want and how we can meet their needs. We aim to
deliver a premium experience, through our high quality
teams, the energised spaces we provide and high
levels of customer service, all supported by technology.
Our portfolio managers work closely with our Leasing and
Marketing teams to ensure the spaces appeal to market
demand and with our Development team to ensure that
vacant possession is achieved on a timely basis ahead
of key development starts, wherever possible relocating
customers to other buildings within our portfolio.
Our portfolio managers, supported by our Workplace
and Customer Experience teams, administer a portfolio
of approximately 283 customers, from a diverse range
of industries, in 43 buildings across 33 sites. This diversity
limits our exposure to any one customer or sector, with
our 20 largest customers at 31 March 2023 accounting
for 39.4% (2022: 39.9%) of our rent roll.
“Our Customer First approach has helped
deliver a record leasing year, with rents 3.3%
ahead of the valuer’s estimate. We signed
our largest ever pre-let at 2 Aldermanbury
Square, with Clifford Chance, and made
substantial progress leasing the remainder
of our retail space at our Hanover Square
and 70/88 Oxford Street developments.”
Marc Wilder Leasing Director
2022/23 Strategic priority:
3
Deliver on our Flex ambition
5
Deliver and lease the
committed schemes
Business model
Acquire Reposition Manage Recycle
26
Great Portland Estates plc Annual Report 2023
£55.5m
Leases signed in record
leasing year
Lettings £m (years to March)
12.3
3.5
5.4
9
14.4
Retail Office FlexHQ Repositioning
8.8
38.5
9.4
12.9
17.4
60
0
10
20
30
50
40
202220212020
10.2
11.8
55.5
33.5
2023
Vacancy rate now only 2.5%
At 31 March 2023, the Group’s overall vacancy rate (including
share of joint ventures) was 2.5%, down from 10.8% at 31 March
2022, due to our strong leasing. Activity at our completed
developments significantly contributed to this reduction,
including Hanover Square, W1, 70/88 Oxford Street, W1 and
The Hickman, E1.
How we are positioned
Despite heightened levels of uncertainty, we expect current
trends to continue, with demand for the best space outstripping
supply and a greater need for smaller spaces to be provided
on a flexible basis. Buildings that are unable to meet this
evolving demand, particularly in the face of competition
from growing secondary supply, will underperform. The gap
between the best and the rest is likely to widen further.
We have further ambitions for growth and are targeting
to grow our Flex offer to more than one million sq ft over
the next five years. This growth would take these offerings to
more than 40% of our office portfolio. We expect a proportion
of this growth to come from acquiring new raw material
to convert, as demonstrated by our acquisitions of 7/15
Gresse Street, W1 and 6/10 St Andrew Street, EC4 earlier in
2022 as well as the recent acquisition of Bramah House, SE1
and 141 Wardour Street, W1 in May 2023.
Against this backdrop we remain well positioned: our
leasing record remains strong, our committed development
programme is focused on high quality, well-located office-
led schemes that have enduring demand, we are delivering
innovative products that lease well, our average office rent
remains low at £72.20 per sq ft and 92% of our portfolio
is within walking distance of an Elizabeth line station.
Flex: £11.8 million, continues to grow
During the year, including our Flex partnerships, we increased
our committed Flex offerings across the portfolio and they now
total 414,000 sq ft (or c.21% of our offices). This included rolling
out our offering to three new buildings in the year, including
at Wells & More, W1, as well as committing to the 46,200 sq
ft refurbishment of our recent acquisition of 6/10 St Andrews
Street, EC4, and extensive refurbishment of Alfred Place,
WC1; see Our development activities.
In total, we signed £11.8 million of new leases in our Flex space;
17 Fitted and 14 Fully Managed leases at a combined 10.8%
ahead of March 2022 ERV. Our Fully Managed deals achieved
on average £181 per sq ft, 8.2% ahead of March 2022 ERV.
Whilst inflationary pressures have reduced the margins on our
Fully Managed space, recent and anticipated leasing deals
demonstrate that this is being more than outweighed by
rental uplifts.
We also let a further 27,900 sq ft of office space at
The Hickman in two lettings, both on Fitted terms. The first
customer will occupy the offices on the third and fourth
floors (23,250 sq ft) on ten-year leases with a break at
year seven. The second has moved from a nearby location
and now occupies the second floor (North), 4,650 sq ft on
a 37-month term. The Hickman is now 100% let or under offer.
Ready to Fit: £33.5 million, significant pre-let
The largest transaction in the year, and our largest ever
leasing transaction, was the pre-let of all 321,100 sq ft of office
space at our 2 Aldermanbury Square, EC2 net zero carbon
development to leading international law firm Clifford Chance.
Clifford Chance will pay an initial rent of £77.00 per sq ft on
a 20-year term and benefit from an initial 38 months rent
free. Clifford Chance also has an option to hand back the
first to fourth floors of the building (up to 89,000 sq ft) which
expires on 1 March 2024. Demolition of the existing building has
commenced, with completion anticipated in December 2025;
see Our development activities.
At 1 Newman Street, W1, we signed a further two office leases
(27,700 sq ft) in the year for a combined rent of £2.6 million p.a.
These two lettings completed the 80,700 sq ft office leasing
at an average 3.2% ahead of ERV and an average void period
of only five months.
Retail: £10.2 million, strong leasing progress
During the year, our retail leasing was strong. At 70/88 Oxford
Street, W1, we leased a new London flagship store to Reserved
(19,645 sq ft) on the ground and first floors. We also leased
a two further smaller units to the jewellery brand Pandora
(3,675 sq ft) and to The Fragrance Shop (2,300 sq ft). Following
these lettings, the building is now fully let.
At Hanover Square, W1, we achieved four further retail lettings
to premium brands on New Bond Street, including: Opera
Gallery, which will be relocating further north on New Bond
Street to create a new larger flagship premises (6,100 sq ft),
Bang & Olufsen (4,000 sq ft), Dsquared2 (4,700 sq ft) and Hackett
(2,350 sq ft). All of the retail space at Hanover Square is now let,
with the exception of a small unit which is under offer.
Overall, our retail vacancy rate reduced from 20.4% to 5.5%
over the year.
Strategic Report – Annual review
27Annual Report 2023 Great Portland Estates plc
Our investment activities
During the period, the investment market and property
values came under pressure as they adjusted to increased
inflation and a higher interest rate environment. Against
this backdrop, we made a significant sale, disposing of
50 Finsbury Square, EC2 at a market-beating yield of 3.85%,
and bought two smaller properties to augment our portfolio.
Sales for the year ended 31 March 2023
Price
£m
Premium/
(discount)
to book
value %
Price per
sq ft
£
NIY
%
50 Finsbury Square, EC2 190.0 (1.7) 1,471 3.9
6/10 Market Place, W1 27.8 3.0 1,480 4.1
Total 217.8 (1.1) 1,472 3.9
In June 2022, we sold the freehold of 6, 7/8 and 9/10 Market
Place, W1 to a UK private property company. The property
comprises three adjoining mixed-use assets totalling
18,000 sq ft including multi-let offices and restaurant/
cafe space. The headline sale price of £28.2 million reflects
a net initial yield of 4.1% on a topped-up basis and capital
value of £1,480 per sq ft. After deduction of outstanding
occupier incentives and rental guarantees, the net price
was £27.8 million, 3.0% ahead of the March 2022 book value.
In October 2022, despite the wider macro uncertainty,
we exchanged on the sale of our 50 Finsbury Square, EC2
development to a private German family office. The headline
price of £190.0 million reflected a topped-up net initial yield
of 3.85% and capital value of £1,471 per sq ft (or £1,690 per sq ft
on expiry of rent frees) and was marginally below the March
2022 book value. Construction of the 129,200 sq ft building
completed in January, with the leases to Inmarsat, and various
retailers, commencing shortly thereafter. With the lettings
concluded, the sale completed in February 2023.
Acquisitions for the year ended 31 March 2023
Price
£m
NIY
%
Area
sq ft
Cost
per
sq ft
6/10 St Andrew Street, EC4 30.0 n/a 46,200 650
2 Cathedral Street, SE1 7.1 4.4 6,400 1,100
Total 37.1 4.4 52,600 705
In May 2022, we completed the off-market acquisition of
the long leasehold interest at 6/10 St Andrew Street, EC4
for £30.0 million (£650 per sq ft).
The 46,200 sq ft building is currently vacant and benefits
from planning permission for a two-storey extension.
The building is located within five minutes’ walking distance
of Chancery Lane and Farringdon stations and is only
450 metres from the new Farringdon Elizabeth line. It has
excellent fundamentals and requires substantial refurbishment
to bring it in line with GPE’s net zero carbon commitment.
It will provide approximately 48,000 sq ft over lower ground
and eight upper floors, with two private terraces as well as
a communal roof terrace and winter garden. St Andrew Street
will deliver best-in-class Fully Managed office space in a core
location, with outstanding amenity space at ground floor
and rooftop levels. We anticipate starting on-site in June
this year.
Operational measures
1
2023 2022
Acquisitions £37.1m £36.5m
Capital value per sq ft £705 £847
Sales £217.8m £90.8m
(Discount)/premium to book value
2
(1.1%) 5.0%
Capital value per sq ft £1,472 £1,091
Total investment transactions
3
£254.9m £127.3m
Net investment
4
£(180.7)m £(54.3)m
1. Including share of joint ventures.
2. Based on book values at start of financial year.
3. Purchases plus sales.
4. Purchases less sales.
Our approach
Buying at the right price and selling at the right time is
central to our business model. Using our extensive network of
market contacts, our Investment team adopts a disciplined
approach with clearly defined acquisition criteria.
See more on pages 12 and 13
To supplement our organic Flex growth, we are also
targeting acquisitions suitable for conversion to
Flex office space, with the following requirements:
– amenity-rich locations with excellent transport links;
– clustering around existing GPE holdings is desirable;
– 30,000 – 60,000 sq ft with divisible floorplates;
– target unit size of 3,000 – 5,000 sq ft;
– ability to create internal and external amenity space;
– high quality ground floor experience;
– product and market appropriate refurbishment
capex; and
– opportunity to deliver stabilised income of 6%+.
Once we have acquired a property, the Investment
team works closely with our Portfolio Management and
Development teams to deliver the business plan and
maximise the property’s potential. Every asset’s business
plan is updated quarterly, providing estimates of forward
look returns under different market scenarios. These plans
also help to inform our sales activities, with the assets
providing the lower risk-adjusted returns often being
sold and the proceeds recycled into better performing
opportunities or returned to shareholders.
“The acquisition of St Andrew Street is
a great opportunity for us to completely
reposition a tired, vacant building into
a sustainable, high quality, beautifully
designed, Fully Managed office space that
caters to our customers’ evolving demands.”
Dan Nicholson Executive Director
Business model
Acquire Reposition Manage Recycle
28
Great Portland Estates plc Annual Report 2023
Of the £524 million deals we had under review since November
2022, encouragingly 26% have subsequently traded within 10%
of our view of fair value.
Near fair value
10%–25% ahead
Near 'fair value' (<10%)
26%
74%
How we are positioned
We are actively seeking new buildings for our Flex offerings,
as well as opportunities for repositioning or development and
we increasingly expect the sustainability challenge to provide
us with opportunities to acquire stranded assets needing
a sustainability solution.
Current value deals under review £bn
£741m under review – 9 assets
1.6
2.0
1.2
0.8
0.4
0.0
May
2018
Nov
2018
May
2019
Nov
2019
May
2020
Nov
2020
May
2021
Nov
2021
May
2022
Nov
2022
May
2023
Flex
HQ Repositioning
80%
20%
Our deal flow remains good and we are constantly reviewing
acquisition opportunities. We currently have £0.7 billion of
potential acquisitions under review, predominantly off-market,
and assets which play into our strategic focus on Flex and
HQ repositioning.
In May 2023, we acquired the freehold interest at Bramah
House, SE1 and 141 Wardour Street, W1 for £14.0 million and
£39.0 million respectively. We will substantially refurbish both
buildings to provide outstanding Fully Managed office space.
Also in May 2022, we acquired 2 Cathedral Street, SE1 for
£7.1 million, reflecting a 4.4% net initial yield and £1,100 per sq ft.
The 6,400 sq ft freehold building is currently let until 2029
at a rent of £332,000 per annum. The property is located
in the heart of Borough Market and will complement GPE’s
Minerva House holding in this exciting submarket.
Disciplined approach
We have seen a clear shift in sentiment in our investment
markets over the last 12 months, as greater economic
uncertainty and rising interest rates have put upward pressure
on property yields and lowered values. Looking forward,
we anticipate that this will present an opportunity to buy
and there is some evidence of owners being more motivated
to sell. However, we remain disciplined. Any potential
purchase needs to outperform the assets we already own,
and with our existing portfolio stacked with opportunity,
the hurdle is high.
3.85%
NIY on sale of
50 Finsbury Square, EC2
6/10 St Andrew St, EC4
Area 46,200 sq ft
Acquisition date May 2022
Price £30.0m
Opportunity Fully Managed refurbishment
2 Cathedral St, SE1
Area 6,400 sq ft
Acquisition date May 2022
Price £7.1m
Opportunity Proximity to Minerva House
Two acquisitions – £37.1 million
Strategic Report – Annual review
29Annual Report 2023 Great Portland Estates plc
Our financial results
As is usual practice in our sector, we use alternative performance
measures (APMs) to help explain the performance of the
business. These include quoting a number of measures on
a proportionately consolidated basis to include joint ventures,
as it best describes how we manage the portfolio, like-for-like
measures and using measures prescribed by EPRA. The measures
defined by EPRA are designed to enhance transparency
and comparability across the European real estate sector.
Reconciliations of APMs are included in note 8 of the
financial statements.
See more about performance measures and
EPRA metrics on page 33 and note 8 to the accounts
Lower IFRS NAV and EPRA NTA per share
driven by valuation declines
IFRS NAV and EPRA NTA per share at 31 March 2023 were
757 pence per share, a decrease of 9.3% over the year,
largely due to the 6.6% like-for-like valuation decrease
in the property portfolio. When combined with ordinary
dividends paid of 12.6 pence per share, this delivered
a Total Accounting Return of minus 7.8%.
EPRA NTA pence per share
780
720
700
820
800
840
31 March
2023
740
760
Increase Decrease Total
31 March
2022
835
Revaluation
(73)
Loss on
disposals
(1)
Ordinary
dividends
(13)
EPS
10
Other
(1)
757
The main drivers of the 78 pence per share decrease
in EPRA NTA from 31 March 2022 were:
– the decrease of 73 pence per share arising from
the revaluation of the property portfolio;
– the small loss on disposal after sale fees from
50 Finsbury Square, EC2 and 6/10 Market Place, W1
reduced NTA by one pence per share;
– EPRA earnings for the year of ten pence per share
enhanced NTA;
– ordinary dividends paid of 13 pence per share reduced
NTA; and
– other items reduced NTA per share by one pence per share.
At 31 March 2023, the Group’s net assets were £1,918.6 million,
down from £2,112.9 million at 31 March 2022, with the decrease
largely attributable to the decrease in property valuation
of £184.9 million. EPRA NDV and EPRA NRV were 790 pence
and 826 pence at 31 March 2023 respectively, compared
with 838 pence and 911 pence at 31 March 2022.
See more about our capital strength on page 32
Revenue increased due to increased rental income
Revenue for the year was £91.2 million, up from £84.2 million on
the prior year, driven by higher gross rental income, increased
service charge income and greater income associated with
our Fully Managed spaces given its expansion. The increase
in revenue was supported by our successful leasing, where
we signed 105 leases, generating new annual income of
£55.5 million p.a. and greatly reduced our investment void
from 10.8% at 31 March 2022 to 2.5% at 31 March 2023.
Net rental income, after taking account of expected
credit losses (see below), lease incentives and ground rents,
was £70.9 million, up from £62.6 million in the prior year,
as we saw the benefit from the lease commencements
at our recently completed developments and a reduced
credit loss provision as rental collection rates return to
pre-pandemic levels.
Adjusting for acquisitions, disposals and transfers to and
from the development programme, like-for-like rental
income (including share of joint ventures) increased
by 6.5% excluding expected credit losses.
Joint venture fee income for the year was £2.4 million,
a decrease of £2.7 million, as a result of no property disposals
and associated fees in the current year (2022: sale of
160 Old Street, EC1 by the Great Ropemaker Partnership).
£1.9bn
Net assets
“In a year marked by economic
and political challenges, our
operational performance was
strong and our results resilient.”
Nick Sanderson Chief Financial & Operating Officer
30
Great Portland Estates plc Annual Report 2023
Improving rent collection
Over the course of the financial year, and as the impact of
the pandemic continued to fade, we experienced a further
improvement in our rent collection performance. We secured
99.5% of all rents, including in our joint ventures, due for the
December 2022 and March 2023 quarterly charge. Accordingly,
the level of expected credit loss provisions in the Group reduced
to £0.8 million (£0.6 million including our share of joint ventures)
from £4.1 million in the prior year.
At 31 March 2023, we had around 16% of our rent roll on
monthly payment terms (March 2022: 8%), with the increase
attributable to an increase in Fully Managed leases. Since
1 April 2022, six of our customers have gone into administration,
representing less than 1.2% of our rent roll. At 31 March 2023,
we held rent deposits and bank guarantees totalling £20.2 million,
including our share of joint ventures.
Cost of sales increased
Cost of sales increased from £30.1 million to £32.2 million
for the year ended 31 March 2023. This increase was primarily
driven by increased costs associated with our leasing initiatives,
given the record leasing year, greater service charge costs
as we emerged from the pandemic and additional costs
associated with managing our Fully Managed offer.
Taken together, net service charge income, other property
costs and expected credit loss provisions for service charges
reduced to £15.2 million from £17.7 million in the prior year.
Joint venture earnings
EPRA earnings from joint ventures were £9.8 million, down
from £14.5 million last year, largely as a result of the disposal
of 160 Old Street, EC1 and the one-off surrender premium of
£3.9 million (our share) at 103/113 Regent Street, W1 received
in the prior year.
Administration costs
Administration costs were £38.3 million, £3.3 million higher
than the previous year. The increase in the Group’s overhead
was primarily as a result of the investment associated
with digitising elements of the business, the delivery of our
Customer First programme and marketing costs associated
with our growing Flex activities. Employment costs also
rose, due to inflationary salary uplifts, increased headcount
to support our enhanced operational capabilities and
higher performance-related pay given our strong relative
outperformance against our TPR benchmarks.
Increased interest costs
Gross interest paid on our debt facilities was £20.3 million,
£4.0 million higher than the prior year. This increase was
primarily due to a combination of higher average drawn
debt on our £450 million revolving credit facility, which
was used to fund both our recent acquisitions as well as
the Group’s development capital expenditure, together
with higher underlying interest rates. Capitalised interest
increased by £1.6 million to £8.8 million as our development
activity increased, following the commitment to develop
2 Aldermanbury Square, EC2. As a result, the Group had net
finance costs (including interest receivable) of £5.5 million
(2022: £1.7 million).
EPRA earnings
EPRA earnings were £24.0 million, 12.4% lower than last
year as expected, predominantly due to reduced surrender
premiums, together with increased administration and
finance costs offset by increased net rental income and lower
credit loss provisions.
EPRA earnings £m
Increase Decrease Total
31 March
2022
27.4
Rental
income
8.3
Joint
venture
fees
(2.7)
Joint
venture
EPRA
earnings
(4.7)
Property
costs
2.5
Admin
costs
(3.3)
31 March
2023
24.0
(3.8)
Net
Interest
0.3
Other
0
30
25
35
20
15
10
5
40
Revaluation declines in the Group’s investment properties,
together with reduced EPRA earnings, led to the Group’s
reported IFRS loss after tax of £163.9 million (2022: profit of
£167.2 million). Basic and diluted loss per share for the year
were both a 64.8 pence loss, compared with a 66.0 pence profit
for 2022. Diluted EPRA EPS was 9.5 pence (2022: 10.8 pence), a
decrease of 12.0% and cash EPS was 1.4 pence (2022: 5.7 pence).
For the forthcoming year, we anticipate that EPRA earnings
will be broadly stable given the balance of new income
coming on line as spaces are converted to our Flex offer being
offset by new spaces going into refurbishment and other
inflationary pressures.
Results of joint ventures
The Group’s net investment in joint ventures decreased to
£538.8 million at 31 March 2023, down from £582.8 million in the
previous year. The decrease is largely due to the 6.3% like-for-
like decrease in value of the property portfolio. Our share of
joint venture net rental income was £18.2 million, down 24.2%
from last year. This decrease was primarily as a result of the
profitable sale of 160 Old Street, EC1 and a one-off surrender
premium of £3.9 million (our share) received in the prior year,
offset by increased leasing activity at Hanover Square, W1.
See more about our joint ventures on page 59
Strategic Report – Annual review
31Annual Report 2023 Great Portland Estates plc
Our financial results continued
Our capital strength
While our primary objective is to deliver returns consistently
ahead of our cost of capital, we also seek to minimise the
cost of our capital through the appropriate mix of equity
and debt finance, and to ensure that we have access to
sufficient financial resources to implement our business plans.
Optimising and flexing the allocation of capital across our
portfolio, including between our investment and development
activities, is key to our business and ensuring that we maximise
returns on a risk-adjusted basis through the property cycle.
Accordingly, we operate with four key ‘givens’:
– conservative leverage to enhance, not drive, returns;
– sustainable ordinary dividends;
– disciplined capital allocation; and
– balance sheet efficiency – track record of accretively
raising and returning capital.
Our preference for low financial leverage helps to provide
downside protection when operating in the cyclical central
London property market and to maintain the financial
flexibility to allow us to act quickly on new investment
opportunities as they arise.
EPRA LTV low at 19.8%
The Group’s consolidated net debt decreased to £457.7 million
at 31 March 2023, compared with £531.2 million at 31 March
2022. The decrease was largely due to the sales proceeds
received from 50 Finsbury Square, EC2 for £190.0 million offset
by £112.8 million of development capital expenditure across the
Group and two acquisitions, including 6/10 St Andrew Street,
EC4 for £37.1 million (excluding costs). As a result, the Group’s
gearing decreased to 24.0% at 31 March 2023 from 25.4%
at 31 March 2022.
Including cash balances in joint ventures, total net debt
was £440.0 million (2022: £502.3 million), equivalent to a low
EPRA LTV of 19.8% (2022: 20.5%). At 31 March 2023, we had
no external debt in any of our joint ventures. At 31 March 2023,
the Group, including its joint ventures, had unrestricted
cash (£21 million) and undrawn committed credit facilities
(£436 million) totalling £457 million.
Debt analysis
March
2023
March
2022
Net debt excluding JVs (£m) 457.7 531.2
Net gearing 24.0% 25.4%
Total net debt including 50%
JV cash balances (£m) 440.0 502.3
EPRA LTV 19.8% 20.5%
Interest cover 10.2x n/a
Weighted average interest rate 2.7% 2.5%
Weighted average cost of debt 3.0% 2.9%
% of drawn debt fixed/hedged 97% 84%
Cash and undrawn facilities (£m) 457 391
The Group’s weighted average cost of debt for the year,
including fees and joint venture debt, was 3.0%, marginally
higher than the prior year. The weighted average interest rate
(excluding fees) was 2.7% at the year end, up 20 basis points
over the 12 months. Our weighted average drawn debt maturity
was 6.4 years at 31 March 2023 (31 March 2022: 6.9 years),
supported by one of our relationship banks in our revolving
credit facility extending their £50 million commitment to
January 2027, in line with the other banks.
At 31 March 2023, 97% of the Group’s total drawn debt was at
fixed or hedged rates (2022: 84%). The Group is operating with
substantial headroom over its debt covenants. At 31 March
2023, given our low levels of leverage, property values would
have to fall by around 58% before covenant breach.
Balance sheet discipline
When considering the appropriate level of financial leverage in
the business, we apply the same capital discipline that we use
when making asset-level decisions. Typically, we aim for an LTV
ratio of between 10% and 35% through the cycle and today
we are at the lower end of the range, given our portfolio activities
and market cycle position. Additionally, we have a track record of
accretively raising and returning equity capital to shareholders
at the appropriate time and in the appropriate circumstances,
including returning £616 million to shareholders between
2017 and 2020, following profitable recycling activity. Our key
considerations when making such capital decisions include:
– the market outlook;
– opportunities for growth (both capital expenditure
and acquisitions);
– opportunities for profitable recycling activity; and
– current and prospective debt ratios (including LTV
and interest cover).
Taxation
The tax credit in the income statement for the year was
£0.1 million (2022: £0.5 million) and the effective tax rate on
EPRA earnings was 0% (2022: 0%). The majority of the Group’s
income is tax free as a result of its REIT status, and other
allowances were available to set against non-REIT profits
(including the taxable profit on the sale of 50 Finsbury Square,
EC2). The Group complied with all relevant REIT tests for
the year to 31 March 2023.
As a REIT, the majority of rental profits and chargeable
gains from our property rental business are exempt from UK
corporation tax, provided we meet a number of conditions,
including distributing at least 90% of the rental income profits
of this business (known as Property Income Distributions (PIDs))
on an annual basis. These PIDs are then typically treated as
taxable income in the hands of shareholders. During the year,
the Group paid £25.8 million of PIDs.
The Group’s REIT exemption does not extend to either profits
arising from the sale of trading properties or gains arising from
the sale of investment properties in respect of which a major
redevelopment has completed within the preceding three
years (including the sale of 50 Finsbury Square, EC2, which
completed in February 2023). The Group is otherwise subject
to corporation tax.
Despite being a REIT, we are subject to a number of other taxes
and certain sector-specific charges in the same way as non-
REIT companies. During the year, we incurred £17.3 million in
respect of stamp taxes, section 106 contributions, community
infrastructure levies, empty rates in respect of vacant space,
head office rates, employer’s National Insurance and
irrecoverable VAT.
All entities within the Group are UK tax resident; as our business
is located wholly in the UK, we consider this to be appropriate.
The Group maintains an open working relationship with HMRC
and seeks pre-clearance in respect of complex transactions.
HMRC regards the Group as ‘low risk’ and maintaining this
status is a key objective of the Group.
See more about our tax strategy at:
www.gpe.co.uk/about-us/governance
32 Great Portland Estates plc Annual Report 2023
Ordinary dividends
Given the low yielding nature of London real estate, the Group
operates a low and progressive ordinary dividend policy,
with the aim of maintaining average dividend cover of
1.0x through the cycle. The Board has recommended a final
dividend of 7.9 pence per share (2022: 7.9 pence) which
will be paid, subject to shareholder approval, on 10 July 2023
to shareholders on the register on 2 June 2023. All of this
final dividend will be a REIT PID in respect of the Group’s
tax-exempt property rental business.
Together with the interim dividend of 4.7 pence per share,
the total dividend for the year is 12.6 pence per share,
consistent with the prior 12 months.
Ordinary dividends: 12.6 pence per share
2020 20212019
7
13
2023
10
11
12
8
9
12.2
12.6 12.612.612.6
2022
EPRA performance measures
Measure Definition of measure
March
2023
March
2022
EPRA earnings* Recurring earnings from core operational activities £24.0m £27.4m
EPRA EPS* EPRA earnings divided by the weighted average number of shares 9.5p 10.8p
Diluted EPRA EPS* EPRA earnings divided by the diluted weighted average number of shares 9.5p 10.8p
EPRA costs
(by portfolio value)*
EPRA costs (including direct vacancy costs) divided by market value
of the portfolio 2.2% 1.9%
EPRA capital
expenditure*
The Group’s capital expenditure on the portfolio categorised
between acquisitions, development and on the investment portfolio £149.3m £151.6m
EPRA NTA* Assumes that entities buy and sell assets, thereby crystallising certain
levels of unavoidable deferred tax. Diluted net assets per share adjusted
to remove the cumulative fair value movements on interest rate swaps
and similar instruments, the carrying value of goodwill arising as a result
of deferred tax and other intangible assets £1,918.6m £2,112.9m
EPRA NTA per share* EPRA NTA assets divided by the number of shares at the balance sheet
date on a diluted basis 757p 835p
EPRA NDV* Represents the shareholders’ value under a disposal scenario, where
deferred tax, financial instruments and certain other adjustments are
calculated to the full extent of their liability, net of any resulting tax.
Diluted net assets per share adjusted to remove the impact of goodwill
arising as a result of deferred tax and fixed interest rate debt £2,002.0m £2,120.8m
EPRA NDV per share* EPRA NDV assets divided by the number of shares at the balance sheet
date on a diluted basis 790p 838p
EPRA NRV* Represents the value of net assets on a long-term basis. Assets and
liabilities that are not expected to crystallise in normal circumstances
such as the fair value movements on financial derivatives, real estate
transfer taxes, and deferred taxes on property valuation surpluses
are therefore excluded £2,092.2m £2,306.1m
EPRA NRV per share* EPRA NRV assets divided by the number of shares at the balance sheet
date on a diluted basis 826p 911p
EPRA LTV Debt (including net payables) divided by market value of the property 19.8% 20.5%
EPRA NIY Annualised rental income based on cash rents passing at the balance
sheet date less non-recoverable property operating expenses,
divided by the market value of the property increased by estimated
purchasers’ costs. See calculation table on page 168 2.5% 2.3%
EPRA ‘topped-up’ NIY EPRA NIY adjusted to include rental income in rent-free periods
(or other unexpired lease incentives). See calculation table on page 168 3.2% 3.1%
EPRA vacancy rate ERV of non-development vacant space as a percentage of ERV
of the whole portfolio (minus developments). See calculation table
on page 199 20.4% 21.1%
* Audited; reconciliation to IFRS numbers included in note 8 to the financial statements.
£457m
Cash and undrawn facilities
Strategic Report – Annual review
33Annual Report 2023 Great Portland Estates plc
Our portfolio
Our portfolio is exclusively based in central London,
with the majority located in the West End. Our customers
are diverse, and their demands and preferences are
evolving at a rapid pace. As a result, we are committed
to shaping our products and services to meet these
changing needs.
Well-located central London portfolio
Our specialist approach requires focus. As a result, we only
operate in central London. Whilst our origins lie in the West
End, we recognise that central London is growing, and as it
grows, new locations will become sought after by customers
seeking new homes for their businesses. As a result, we remain
opportunistic and will invest across central London where
we see both value and opportunities for growth.
See more about our customers on pages 58 and 59
Our portfolio by value – 72% in West End
1
32%
North of Oxford Street £958.1m
Rest of West End £765.7m
City £318.0m
Southwark £214.8m
Midtown £123.4m
9%
5%
40%
14%
1. Including share of joint ventures.
Evolving our products
To succeed, we need to provide our customers with great
spaces that are flexible, sustainable and beautifully designed,
offering high quality services to provide an enticing real estate
experience. To achieve this Customer First approach, and
meet changing needs and working patterns, we have evolved
our products to focus on two complementary, overlapping
activities, and our portfolio is well suited to deliver both:
– HQ repositioning – developing larger, best-in-class HQ
buildings. Growing demand for very high quality, brand
new space has remained strong and the future supply of
space remains limited. Today our development programme
totals 18.9% of the Group’s existing portfolio. This pipeline
of opportunity provides raw material, often with poor
sustainability credentials, which we can transform into best-
in-class spaces designed to let well in their local markets,
be future proofed in a rapidly changing world and have
regard to the wider environment in which they are located.
– Flex spaces – smaller fitted units, often with higher service
levels. Customers in our smaller spaces are increasingly
demanding the provision of flexibility, amenity and service
provision. Accordingly, we have developed a choice of
Flex offerings to meet this need. We provide spaces that
are delivered flexibly on a Fitted or Fully Managed basis,
making life easier and hassle free. Where the management
of the space is more intensive, delivered by the desk or room,
we partner with another provider to meet this demand.
Our portfolio, with around 78% of our spaces sub-10,000 sq ft,
is perfectly placed to meet this demand.
Operational measures
-6.6%
Property valuation decline
(on a like-for-like basis)
18.9%
Percentage of portfolio in
development programme
+42 bps
Outward yield movement
21%
Percentage of office portfolio
converted to our Flex offerings
“The rise in global interest rates
has impacted property yields,
reducing values. This decline has
more than offset the positive impact
of rental growth that we continue
to capture across our portfolio.”
Hugh Morgan Director of Investment Management
Our approach
Our focused business model is based upon
repositioning properties to unlock their often hidden
potential. This repositioning relies on having a deep
understanding of the markets in which we operate,
to enable us to unearth new opportunities, provide
spaces that customers demand and develop buildings
for the customers of tomorrow.
We aim to position our portfolio to maximise
the opportunity for future growth. As a result, every
property has a detailed business plan which forecasts
each and every customer’s future cash flows and,
using our own assumptions for future movements in
rents and yields, forecasts the forward look returns
for the portfolio. If a property’s prospective returns
do not meet our required investment hurdles, taking
into account both our cost of capital and the risks,
typically it is sold.
34 Great Portland Estates plc Annual Report 2022
100%
Of the portfolio in central London
The overall valuation decline of 6.6% during the year was
largely driven by our office portfolio which reduced by 7.3%,
driven by yield expansion of 48 basis points. Our Flex offices
were only down 5.1% as a result of rental value increases
of 4.2% across the Flex portfolio on a like-for-like basis. Our
retail performed slightly better, falling in value by only 4.5%.
Furthermore, properties with an EPC rating of A or B reduced
in value by 4.5%, outperforming properties with an EPC of C
or greater, which fell by 8.6%. Short leasehold properties
(<100 years), which represent around 9% of the portfolio,
reduced in value by 10.4% compared to a decrease of 6.2%
in the rest of the portfolio, as investor demand for shorter
leasehold assets remained low. We also saw a significant
bifurcation in valuation based on capital value per sq ft.
Properties with a value greater than £1,000 per sq ft fell
by 4.5% compared to a greater decline in those less than
£1,000 per sq ft of 10.5%.
Our joint venture properties fell in value by 6.3% over the year,
driven by higher investment yields partially offset by leasing
successes at our recently completed development at
Hanover Square, W1. The wholly-owned portfolio decreased
by 6.7% on a like-for-like basis.
Our relative performance
The Group delivered a Total Property Return (TPR) for the
year of minus 4.1%, compared with the central London MSCI
annual index of minus 8.1%, and a capital return of minus 6.2%,
versus minus 11.0% for MSCI. This outperformance was driven
by greater than benchmark weighting to the West End,
along with GPE delivering a record leasing year.
Long-term outperformance
Relative returns vs MSCI
Relative capital growth % p.a.
1
GPE
280
330
230
180
130
80
MSCI Central London Universe
’04 ’07’06’05 ’10’09’08 ’13’12’11 ’16’15’14 ’20 ’21 ’22 ’23’19’18’17
1. 2004 – first pure comparability to MSCI Central London.
Both of these business activities are complementary and
primed for growth. Our on-site and near-term developments
will commit £0.7 billion of capital, delivering 0.9 million sq ft
of brand new space, and we have an ambition to significantly
grow our Flex offerings to more than one million sq ft in the
coming years.
Portfolio down 6.6%, driven by higher
investment yields
The valuation of our portfolio, including our share
of joint ventures, declined over the 12 months by 6.6%
on a like-for-like basis, to £2,380.0 million at 31 March 2023.
The key drivers behind the Group’s valuation decrease
for the year, including joint ventures at share, were:
– higher investment yields – given the backdrop of
higher interest rates, equivalent yields increased by
42 basis points (2022: -13 basis points) during the year
(office: +48 basis points; retail: +22 basis points)
reducing valuations. At 31 March 2023, the portfolio
true equivalent yield was 4.8%;
See more about our markets on pages 21 and 22
– rental value growth – since the start of the financial
year we have seen continued demand for the best spaces
and our rental values increased by 2.1% on a like-for-like
basis, with our office portfolio up by 3.3%. ERVs in our
retail portfolio reduced by 1.5%. However, we anticipate
that we are nearing the trough for retail rents given
the declines experienced in previous years;
See more about our market on pages 21 and 22
– active portfolio management – we delivered a record
leasing year, signing 116 new leases, rent reviews
and renewals, with new lettings 3.3% ahead of ERV.
This secured £59.1 million (our share) of annual income,
supporting the valuation over the year; and
See more about our leasing and Flex activities on pages 26 and 27
– developments – the valuation of our committed development
properties decreased by 21.0% on a like-for-like basis
to £89.0 million during the year. Our development returns
are especially sensitive to movements in investment yields.
At 2 Aldermanbury Square, EC2 this impact more than
outweighed the benefit of securing a major pre-letting
ahead of the valuer’s assumptions.
See more about our development activity on pages 23 to 25
Valuation declines driven by outward yield shift %
Rental value growth
1% 2%0%-1%-2%-3%-4%-5%
Yield shift
Residual
-6%-7%-8%-9% 3%
2.1%(0.6)% (8.1)%
Including rent from pre-lets and leases currently in rent-free
periods, the adjusted initial yield of the investment portfolio
at 31 March 2023 was 3.8%, the same as at the start of the
financial year.
Strategic Report – Annual review
35Annual Report 2022 Great Portland Estates plc
Our portfolio continued
Portfolio performance
Wholly-
owned
£m
Joint
ventures
1
£m
Total
£m
Proportion
of portfolio
%
Valuation
movement
%
North of Oxford Street Office 742.4 – 742.4 31.1 (3.7)
Retail 169.9 41.2 211.1 8.9 (5.9)
Residential 4.6 – 4.6 0.2 11.5
Rest of West End Office 245.0 237.8 482.8 20.3 (7.9)
Retail 155.8 122.1 277.9 11.7 (4.1)
Residential 5.0 – 5.0 0.2 (2.3)
Total West End 1,322.7 401.1 1,723.8 72.4 (5.2)
City, Midtown and Southwark Office 392.9 123.4 516.3 21.7 (8.8)
Retail 11.6 – 11.6 0.5 17.6
Residential 2.8 – 2.8 0.1 (6.4)
Total City, Midtown and Southwark 407.3 123.4 530.7 22.3 (8.4)
Investment property portfolio 1,730.0 524.5 2,254.5 94.7 (6.0)
Development property 89.0 – 89.0 3.8 (21.0)
Total properties held throughout the year 1,819.0 524.5 2,343.5 98.5 (6.6)
Acquisitions 36.5 – 36.5 1.5 (11.3)
Portfolio valuation 1,855.5 524.5 2,380.0 100.0 (6.7)
1. GPE share.
Portfolio characteristics
Investment
properties
£m
Development
properties
£m
Total
property
portfolio
£m
Office
£m
Retail
£m
Residential
£m
Total
£m
Net
internal
area sq ft
000’s
North of Oxford Street 958.1 – 958.1 742.4 211.1 4.6 958.1 760
Rest of West End 765.7 – 765.7 482.8 277.9 5.0 765.7 568
Total West End 1,723.8 – 1,723.8 1,225.2 489.0 9.6 1,723.8 1,328
City, Midtown and Southwark 567.2 89.0 656.2 641.4 12.0 2.8 656.2 1,237
Total 2,291.0 89.0 2,238.0 1,866.6 501.0 12.4 2,380.0 2,565
By use: Office 1,778.0 88.6 1,866.6
Retail 500.6 0.4 501.0
Residential 12.4 – 12.4
Total 2,291.0 89.0 2,380.0
Net internal area sq ft 000’s 2,242 323 2,565
£2.4bn
Portfolio valuation
36 Great Portland Estates plc Annual Report 2022
Sustainability
Creating sustainable spaces sits at the heart of our purpose. Whilst the world
of sustainability can be complicated, our approach is simple and is set out in our
Sustainability Statement of Intent ‘The Time is Now’.
During the year we…
– Updated our Sustainability Statement of Intent. Working with our stakeholders we are:
Decarbonising
our business to
become net zero
by 2030
See page 41
Integrating
climate resilience
across our
business
See page 40
Creating a lasting
positive social
impact in our
communities
See page 43
Putting health
and wellbeing
front and
centre
See page 42
How our sustainability strategy supports our business
Statement of Intent for 2030, ‘The Time is Now V2.0’
Sets out the four pillars of our approach to sustainability
– Launched ‘Our Brief for Creating Sustainable Spaces’
– Delivered our first net zero carbon building at 50 Finsbury Square, EC2
For more information see page 23
Climate resilience Decarbonise
Our Roadmap to Net Zero
Health and wellbeing Social impact
Social Impact Strategy
www.gpe.co.uk/media/
jopd1yjk/nzcr_2021.pdf
www.gpe.co.uk/media/kr4oocvx/
social_impact_strategy_2021.pdf
www.gpe.co.uk/documents/
the-time-is-now
Our Brief for Creating Sustainable Spaces
Sets out how we implement the four pillars of our approach as we design, construct, fit out and manage our spaces
Supported by strong governance and reporting
Transparent disclosure through our annual sustainability performance report
www.gpe.co.uk/sustainability/
governance-reporting
For TCFD response see pages 44 to 50
www.gpe.co.uk/documents/
sustainable-spaces-brief
Strategic Report – Annual review
37Annual Report 2023 Great Portland Estates plc
Sustainability continued
Continually adapting and evolving our approach
What’s changed about our approach?
Our updated Sustainability Statement of Intent and newly launched ‘Brief for Creating Sustainable Spaces’ set out our refocused
strategy recognising the importance of integrating climate resilience across our business, and how circular thinking and innovative
technology can support improved sustainability outcomes. Strong relationships with our key stakeholders are essential for success.
Advancing our sustainability thinking
Changing stakeholder relationships
Integrating climate resilience
across our business
Climate resilience is now central
to our sustainability strategy.
Climate resilience in its broadest
sense addresses how businesses
adapt to the physical impacts of
climate change, whilst mitigating
their own carbon emissions.
We are continuing to address
transitional risks, including evolving
legislation and best practice
whilst decarbonising our business.
We’re designing our buildings to be
more climate resilient, including
embedding nature-based solutions
across our portfolio and working with
our supply chain and communities.
For further information see page 40
Customers
We will create exceptional,
inviting work spaces that meet and
exceed the needs of our customers.
We put our customers at the heart
of everything we do, embracing
open dialogue on how we can jointly
meet our sustainability ambitions.
This approach is relevant for all
our customers irrespective of the
size of space that they occupy.
Our approach to sustainability
therefore applies to all our products,
from Ready to Fit through to
Fully Managed.
For further information
on what our customers can
expect from us, see ‘Our Brief for
Creating Sustainable Spaces’
at www.gpe.co.uk/documents/
sustainable-spaces-brief
Circular thinking
In order to continue to develop
and refurbish our buildings,
whilst minimising carbon
emissions, we are embracing the
principles of the circular economy
in the design of all our spaces
irrespective of project scope.
This is demonstrated by our steel
reuse project at 2 Aldermanbury
Square, EC2, the reuse of the glazing
and stone from the facade at
50 Finsbury Square, EC2, and the
repurposing and reuse of furniture
in our Fully Managed spaces.
For further information see page 41
and our case study on page 10
Communities
We will continue to maintain
close positive relationships with
our communities and will prioritise
the climate resilience of our local
neighbourhoods by supporting
access to, and management of,
existing and new green spaces and
working with a fuel poverty charity.
Our Social Impact Strategy has been
fully integrated within ‘Our Brief
for Creating Sustainable Spaces’
to ensure that it is embedded in
the design, construction, fit-out
and operation of our spaces.
For further information, see
our Social Impact Strategy at
www.gpe.co.uk/sustainability
Innovation
To assist in meeting our net zero
carbon targets, and to continue to
evolve our portfolio to meet ever
more challenging requirements,
we are embracing the opportunity
presented by technology throughout
the life cycle of the building, from
design to construction and from fit
-out to operation. Increasingly our
customers are looking for more
detailed information on subjects
such as resource consumption,
waste management and indoor
air quality, and through the
implementation of technology
we are better able to meet
their needs.
For further information see page 42
and our case study on page 10
Suppliers
We are working with our supply
chain partners to deliver on our
sustainability ambitions. We are
highly collaborative and encourage
innovation and open debate.
Additionally, we are working
to improve transparency within
our supply chain, ensuring that
the materials we use are sourced
ethically. Our business cannot be
climate resilient without a resilient
supply chain. We are also working
with our partners to consider the
impact of the physical risks of
climate change on their businesses.
For further information, see
our Supplier Code of Conduct at
www.gpe.co.uk/investors/our-
relationships/our-service-partners
38 Great Portland Estates plc Annual Report 2023
Our business model is to take poorly performing, unloved buildings and reposition them
into best-in-class sustainable spaces. In order to deliver our sustainability strategy we
work with our whole value chain, whether that is our supply chain partners, our customers,
local communities and planning authorities, investors, purchasers or lenders.
50 Finsbury Square, EC2
Major refurbishment and GPE’s first net zero carbon development
200 Gray’s Inn Road, WC1
Headquarters multi-let building, substantial investment from Decarbonisation Fund
2 Aldermanbury Square, EC2
Headquarters development with a strong focus on circular thinking
Supply chain
The major refurbishment of 50 Finsbury
Square involved retaining 82% of
the original structure and embracing
circular economy principles to deliver
GPE’s first net zero carbon building.
Through the integration of our internal
carbon price, our internal team and
supply chain partners were focused on
reducing carbon throughout the project,
delivering a final upfront embodied
carbon figure of 270kgCO
2
e/m
2
.
Joint venture partners
In order to support a rapid improvement
in energy efficiency at our most energy
intensive building, investment from
the GPE Decarbonisation Fund was
used to support projects that would
result in a reduction in operational
carbon emissions. Our investment was
matched by our joint venture partner
BP Pension Fund.
The project is expected to save
approximately 660tCO
2
e per year and
pay back in an average of two years.
Supply chain
In order to be truly innovative,
collaboration with our supply chain
partners is critical. Our steel reuse
project required close collaboration
with our principal contractor, demolition
contractor, structural engineers and
wider professional team as well as with
the professional team for our forthcoming
project at French Railways House, W1
and our insurers.
For further information,
see the case study on page 10
Customers and purchasers
The building was pre-let to Inmarsat;
with clauses in the lease to ensure the
maintenance of the EPC rating.
The building was sold in February 2023,
with financial penalties in the contract
of sale should the net zero carbon
verification not be achieved. Verification
was completed in March 2023.
Supply chain and customers
Working across supply chains and with
our customers in the building, we rapidly
installed energy efficiency measures
including building management system
upgrades, improved controls and LED
lighting systems.
By working with our customers, we
were able to optimise plant operating
times, agree set points, aligned with
occupancy levels, and introduce energy
councils to support behavioural change.
Customers
The sustainability features of
2 Aldermanbury Square were central
to discussions with our customer,
Clifford Chance LLP. Right from the
start it played a significant role in
their decision to pre-let the building,
three years ahead of completion.
Discussions included net zero carbon
in operation, embodied carbon
and the delivery of a NABERS rating
for the building.
Strategic Report – Annual review
39Annual Report 2023 Great Portland Estates plc
Sustainability continued
Our progress
Portfolio rated
EPC B or above
43.4%
compared to 37.2% in 2022
due to our upgrade programme
Increase in
biodiversity
8.6%
exceeding our year-on-year
3% biodiversity net gain target
Embodied
carbon analysis
100%
third party verified embodied
carbon analysis for all projects
over £5 million
Charitable
donations
£74k
to charities supporting climate
resilience of our London communities
Integrate climate adaptation and resilience
measures into our buildings
During the year we increased biodiversity across the portfolio
by 8.6% (when compared with the previous year) through
the enhancement of existing biodiverse living roofs and new
planters at 1 Newman Street, W1, and Hanover Square, W1.
Our supply chain, ecologist and Customer Experience team
came together to identify opportunities to improve the quality
of existing green spaces, delivering 1,000m
2
of improved
biodiverse planting.
Through design, we are integrating measures such as passive
solar shading, sustainable drainage systems, including blue
roofs, and greywater and rainwater harvesting as standard
to support the climate resilience of our buildings.
Working with our supply chain
During the year, we established a consistent framework
for embodied carbon monitoring that will be applied to all
our projects, whether Ready to Fit, Fitted or Fully Managed.
Embodied carbon analysis is completed for all projects, with
third party verification completed for projects over £5 million.
Supporting the resilience of our communities
As energy costs have escalated, the link between the climate
crisis and social inequality has been clearly demonstrated.
In the first year of our partnership with National Energy Action,
we were able to bring their ‘Warm Welcome’ programme
to London. This provided energy saving advice and financial
support to 194 new and expectant parents struggling to
pay their energy bills.
We have also continued to prioritise supporting community
groups who maintain London’s green spaces, including
Bankside Open Spaces Trust and London Wildlife Trust.
Recognising the importance of addressing
all aspects of climate resilience in our
business strategy, we have repositioned
climate resilience in our Statement of Intent.
In order to become a climate resilient business,
we must address transitional climate risk,
integrate climate adaptation measures
into building design and work to support
the resilience of our customers, suppliers
and communities.
Our commitments
– Address the transitional risk of climate change
and implement net zero carbon plans at each asset;
– Integrate climate adaptation and resilience measures
into our buildings;
– Work with our supply chain partners to improve
the resilience of our supply chain; and
– Support the climate resilience of our communities.
Our actions
Addressing transitional risk through net zero
carbon plans
Following on from our work to establish a trajectory for each
building to reach an EPC B rating, last year we commenced
a project to create net zero carbon asset level plans.
The findings of the initial phase of this work resulted in the
implementation of an 18-month portfolio wide metering
project. This will substantially improve the quality and
granularity of energy data, enabling more rapid identification
of the energy efficiency measures required to reach energy-use
intensity targets. Furthermore, the project will also improve the
alignment between occupancy and energy efficiency data,
allowing for more intelligent management of building systems.
During the year we also increased the number of our buildings
with EPC ratings of B and above by 16.7% (by floor area)
from last year up to 43.4%. Whilst it is unlikely that we will
reach 100% B rated and above buildings before 2030 (due to
our business model of repositioning poorly performing assets),
good progress is being made through our retrofit programmes.
Looking forward
– We will undertake a risk assessment to better
understand the climate risk embedded within
our supply chain;
– As our metering project is delivered at each building,
we will use the revised data to create a net zero
carbon asset plan; and
– The work we undertake with our supply chain and
also on our net zero carbon asset plans will be used
to form our climate transition plan to be launched
by March 2024.
We are integrating climate resilience
across our business
40 Great Portland Estates plc Annual Report 2023
Our progress
Energy intensity
reduction
32.2%
when compared
to our 2016 baseline
Net zero carbon
building
First
delivered at
50 Finsbury Square
Carbon intensity
reduction
66.2%
when compared
to our 2016 baseline
Decarbonisation
Fund contribution
£768k
from the application of our internal
carbon price to embodied carbon
and operational emissions
All properties in our development pipeline are fossil fuel free.
At existing buildings, we are seeking to remove gas-fired boilers
as they reach the end of their useful life. For the year ended
March 2023, we delivered our first fossil fuel free development
at 50 Finsbury Square, EC2 and completed feasibility studies
for the removal of gas boilers at a further three buildings.
Addressing the embodied carbon of projects
Following completion of our first net zero carbon building
at 50 Finsbury Square, EC2, we are working to significantly
reduce our carbon emissions across our pipeline of
development projects.
Our 2 Aldermanbury Square, EC2, development incorporates
circular economy principles, including the dismantling and
reuse of over 1,500 tonnes of structural steel during demolition,
either for use in our portfolio or by the wider industry.
Through early stage contractor involvement, collaboration
with materials manufacturers and a clear drive from the
project team to think differently, we are maximising the
use of lower carbon materials and materials with greater
recycled content.
Offset residual carbon emissions
As part of delivering our first net zero carbon building at
50 Finsbury Square, EC2, 4,646 tonnes of carbon were offset.
To align with the UKGBC net zero framework, £76,000 was
spent offsetting carbon to UN Gold standard offset projects.
A further £365,000 was transferred into our Decarbonisation
Fund to ensure that our full internal carbon price of £95 per
tonne was levied on the development. The full £768,000
available to spend within our Decarbonisation Fund
for the year ended 31 March 2023 was fully committed
to energy efficiency projects across the portfolio.
Our Roadmap to Net Zero sets out in
detail how we will decarbonise our business
to become net zero and incorporates our
carbon reduction hierarchy to: reduce
embodied carbon, reduce energy intensity
and increase our renewable energy supply
before offsetting as a last resort.
Our commitments
– Reduce energy intensity by 40% across our occupied
portfolio by 2030 (when compared to our 2016 baseline);
– Reduce our carbon intensity by 69% across our occupied
portfolio by 2030 (when compared to our 2016 baseline);
– Reduce our embodied carbon by 40% by 2030 across
our new build developments and major refurbishments
(when compared to our 2020 baseline); and
– Become a net zero carbon business by 2030, offsetting
residual carbon only once the preceding measures
have been addressed.
Our actions
Driving energy efficiency across our buildings
During the year, we reduced our total energy consumption by
19%, translating into a reduction in energy intensity of 18%,
and a total energy intensity reduction of 32.2% since 2016.
Energy reductions were achieved in part by optimising
plant run times to better align with building occupancy
and through financial investment into LED lighting upgrades
and Building Management System (BMS) improvements at
our largest energy consuming site, 200 Gray’s Inn Road, WC1.
These projects are expected to save 3,226 MWh annually.
Reducing our carbon intensity
All electricity procured is backed by Renewable Energy
Guarantees of Origin (REGO), whilst gas is either biogas or
carbon offset by the supplier. We recognise that whilst this
helps to stimulate the ‘greening’ of the national grid, the
greatest impact we can have is in reducing the amount
of fossil fuels used across our business.
During the year, our carbon intensity (energy-related) reduced
by 24%, bringing our reduction when compared with our 2016
baseline to 66.2%.
Looking forward
– We will continue to implement NABERS UK Design
for Performance and NABERS UK Energy for Offices;
– We will set out our carbon offsetting strategy;
– We will implement ‘Our Brief for Creating
Sustainable Spaces’; and
– Through the delivery of our metering project across
our portfolio we will identify further opportunities
to make energy efficiency savings.
We are decarbonising our business
to become net zero by 2030
Strategic Report – Annual review
41Annual Report 2023 Great Portland Estates plc
Sustainability continued
Manage and monitor internal air quality
We proactively design, manage and maintain our spaces
and the systems within to deliver improved indoor air
quality. Since the pandemic, air quality sensors have been
installed across our spaces allowing us to provide indoor
air quality information to our customers.
Our Flex Design Guidelines, established during the year,
ensure that we provide a consistent standard of design.
Measures to support wellbeing and sustainability are integral
to this and include biophilia, low-VOC products and glue-free
carpet tiles. By following these Guidelines, we have delivered
a further five SKA Gold certified spaces during the year.
Promote initiative to support the health
and wellbeing of our stakeholders
Our health and wellbeing programmes are designed to
support all stakeholder groups throughout our value chain.
At our development project, 50 Finsbury Square, EC2,
The Lion’s Barber’s Collective (professionally trained barbers
and counsellors) provided free haircuts to over 60 operatives
to support positive mental health conversations.
We continue to work with customers at our buildings to
encourage active commuting by retrofitting cycle storage
and shower facilities. Our customer events programme to
promote physical health and mental wellbeing delivered a
wide variety of events from bike and yoga sessions to healthy
food giveaways and 2,800 customers’ employees participated.
To champion access to urban green spaces within our
communities, we continue to work with charities including
Bankside Open Spaces Trust and London Wildlife Trust.
A sustainable building should also contribute
to the wellbeing of our customers and the
local community, supporting healthier,
happier and more productive lives.
Our commitments
– Integrate wellbeing considerations into the design
of our spaces;
– Support improved external air quality across our
portfolio and communities;
– Manage and monitor indoor air quality for the health
and wellbeing of our customers; and
– Promote initiatives to support the health and wellbeing
of our people, customers and supply chain partners.
Our actions
Incorporate wellbeing into the design of our spaces
Our Wellbeing Brief, now integrated into ‘Our Brief for Creating
Sustainable Spaces’, ensures that our buildings are designed to
enable the achievement of wellbeing ratings, such as the WELL
Building Standard or the Fitwel rating. It also brings together
our focus on creating biodiverse, outdoor space for our
customers to promote social interaction and access to nature.
Working with leading disability organisation, Purple,
we completed four building audits as part of our commitment
to create inclusive spaces. These improved our understanding
of how we can improve the experience for customers with
visible and non-visible disabilities. Learnings such as signage,
use of colour and toilet specifications are being fed into the
design of our spaces. 130 hours of disability awareness training
was delivered across the GPE team.
Support improved external air quality
The development and refurbishment of our buildings can have
a negative impact on local air quality. We work closely with
our supply chain partners to look at innovative ways to deliver
construction materials efficiently to our projects and to reduce
the number of vehicles on the road network.
Working with our Principal Contractors we target fossil fuel
free construction. Together with Groundwork London and
Islington Council, we also funded research to assess if the
impact of construction traffic recirculating particulates
settled on roads could be mitigated through road washing.
Looking forward
– Implement ‘Our Brief for Creating Sustainable
Spaces’, which includes all requirements from
our Wellbeing Brief;
– Achieve a further uplift in biodiversity net gain to
improve the quality of our green spaces to support
the health and wellbeing of our customers; and
– Continue to implement the outcomes of our
inclusive spaces audits.
We are putting health and wellbeing
front and centre
Our progress
Disability awareness
training for our people
130hrs
delivered by Purple, a leading
disability organisation
Community funding for
air quality initiatives
£16k
through Groundwork
London road washing pilot
SKA Gold spaces
delivered
Five
delivered during the year
covering 21,600 sq ft
Customers’ employees
reached
2,800
customers’ employees participated
in our health and wellbeing events
42 Great Portland Estates plc Annual Report 2023
of £75,000, a further £62,000 was contributed through
donations in kind, fundraising, and volunteering (including
volunteering by our service partners). Five employees also
supported XLP through mentoring or volunteering. In addition,
as part of our art project, we awarded a scholarship to a
local photographer. The successful photographer will also
be partnering with XLP to support its young people.
Championing accessible employment opportunities
To promote entry-level roles at GPE and reach a wider,
more diverse talent pool, we launched our Early Careers
Programme. We also hosted our first work placements through
10,000 Black Interns, which led to 29 weeks of internships in total,
with all interns paid at least the London Living Wage. Our first
two directly employed apprentices started in March 2023 and
our team reached 39 young people through Career Workshops.
We also actively advocate for ethical labour practices
within our supply chain, for example by ensuring all people
working on our behalf are paid the London Living Wage,
and by undertaking Labour Practice Audits to help eradicate
modern slavery.
Supporting the growth of local businesses
To understand the value created through our supply chain,
we measured our spend with local micro, small and medium
enterprises (MSMEs) for the first time. Given our central
London focus, our procurement created £93 million in local
economic value which is reflective of the nature of our
business and supply chain. We have not counted this number
in our social value target. Instead, we focus on the actions
that drive positive impact, for example increasing our spend
with voluntary, community & social enterprises (VCSEs).
Here, our direct spend of £380,000 created £46,000 social value.
We know that the socially disadvantaged
members of our communities will be most
impacted by climate change. We are
therefore committed to supporting the
people, and the communities, in which
we work to have a better quality of life,
whilst also supporting a thriving economy
for London’s future.
Our commitments
– Create at least £10 million of social value in our local
communities by 2030 and improve access to nature;
– Support charitable and non-profit organisations that
challenge inequality, and tackle health and wellbeing;
– Champion diverse skills and accessible employment
opportunities; and
– Support the growth of local business and social enterprise.
Our actions
Creating measurable social value
During the year, we focused on helping our people to
understand how they can create a positive social impact
within their own roles and worked with our service partners
to integrate social value into our relationships to amplify
our impact. We created £1.16 million in social value through
our Social Impact Strategy, measured using the National
Social Value Measurement Framework. This brings our
total social value creation to £2.4 million over three years.
The largest contributors to this total were the value of space
donated to charities free of charge (£280,000), financial
investment in improving London’s green spaces and biodiversity
(£112,000) and donations to our charity partners.
Delivering impact through charitable partnerships
Connecting our people with our communities increases their
understanding of how we can become a more diverse and
inclusive business that better reflects our local communities.
In April 2022, we commenced a three-year partnership
with XLP, a charity that unlocks the potential of young people
from disadvantaged backgrounds growing up in inner city
areas within London. In addition to a financial donation
Looking forward
– We will continue to increase the number of social
enterprises with which we are engaging, introducing
them to our customers and our supply chain.
– We will set out our biodiversity offsetting strategy
to support our communities, where there is no scope
to increase biodiversity net-gain at our buildings.
– We will continue to look for additional opportunities
to let space to charities.
We are creating a lasting positive
social impact in our communities
Our progress
Social value created
during the year
£1.16m
created through our social
impact strategy, including
our service partners
Hours donated to
charity partner, XLP
575
donated by GPE employees
(target: 240 hours)
Weeks of internships
provided
29
through 10,000 Black Interns
programme
Spend with social
enterprises
£380k
annual direct spend with voluntary,
community & social enterprises (VCSE)
Strategic Report – Annual review
43Annual Report 2023 Great Portland Estates plc
Great Portland Estates plc has, at the time of publication,
complied with the requirements of LR 9.8.6(8)R by
including climate-related financial disclosures consistent
with the TCFD Recommendations and Recommended
Disclosures. Additional information can be found on
page 17 (Non-financial KPIs), page 51 in our SECR table
(performance) and pages 64 to 77 (our approach to risks).
For further information, see www.gpe.co.uk/sustainability/
governance-reporting
Governance
Board oversight of climate-related risks
and opportunities
The Board has ultimate responsibility for oversight of climate
and sustainability risks and opportunities (e.g. acquisition
of stranded assets), with a particular focus on the impact on
our business strategy. A report is provided by the Sustainability
and Social Impact Director at each Board meeting covering
progress against our sustainability strategy, upcoming
risks and opportunities and implications on our Roadmap
to Net Zero and our Social Impact Strategy. This process
is designed to ensure the Board is kept informed about
climate-related issues.
www.gpe.co.uk/documents/the-time-is-now
In addition, during the year:
– the Audit Committee reviewed findings from the ESG
data assurance process;
– the Remuneration Committee reviewed progress against
ESG-linked KPIs incorporated within the remuneration
of Executive Committee members;
– the Board reviewed the definitive appraisal of
2 Aldermanbury Square, EC2 including the embodied
carbon impact and payment into our Decarbonisation Fund;
– the Board approved the acquisition of 6/10 St Andrew Street,
EC4 with consideration of the EPC risks and the impact
on our net zero commitments; and
– the Board approved the repositioning of climate resilience
within our Statement of Intent ‘The Time is Now’, recognising
the increased materiality and importance of embedding
resilience against climate change into the business model.
At half year and year end, as part of our robust risk assessment
review, the Executive Committee, Audit Committee and Board
reviewed and assessed the impact on the business of climate-
related risks. Climate change and decarbonisation is considered
a principal risk for the Group. This process involves consideration
of the risks, internal controls, emerging risks and ongoing
monitoring and mitigation of risks. Opportunities connected
with market transition are also considered. Risks discussed
included EPC and energy performance legislation, changes
to planning requirements (including retrofit challenges and
evolving carbon offset guidance), the climate resilience of
buildings, increased costs and availability of materials.
Opportunities included the approval of costs for our steel
reuse project at 2 Aldermanbury Square, EC2, and the
increasing demand and pricing of buildings with exemplary
net zero carbon credentials such as 50 Finsbury Square, EC2,
where a financial penalty was included in our contract of
sale for the building, in the event that we failed to deliver
a net zero carbon building.
Management’s role in assessing and managing
climate-related risks and opportunities
The Chief Executive chairs the quarterly Sustainability
Committee meeting, also attended by the Chief Financial
& Operating Officer, Executive Director, Development
Director, Customer Experience and Flex Director, Sustainability
and Social Impact Director and key department heads.
This provides strategic oversight on climate risk and resilience,
reviews the progress and evolution of the Sustainability
Strategy, and monitors performance against our targets.
The Committee also provides oversight of the Decarbonisation
Fund. Climate-related risks and opportunities are brought
to the attention of the Board by the Chief Executive and
the Sustainability and Social Impact Director.
Our Development and Portfolio Sustainability sub-committees,
report quarterly to the Sustainability committee, and
provide operational oversight on climate-related risks and
opportunities including energy efficiency measures, the use
of alternative materials and technological solutions.
The Sustainability and Social Impact Director and our
in-house Sustainability team manage the strategic direction
and operational management of sustainability-related issues.
In addition, there are clear departmental responsibilities
for sustainability including:
– Director of Corporate Finance – oversight of the
ESG-linked Revolving Credit Facility (RCF) and
Sustainable Finance Framework;
– Development Director and Director of Projects
– integration of sustainability across all projects,
irrespective of scope;
– Director of Workplace Services – operational energy
efficiency and the implementation of energy efficiency
measures, including the allocation of Decarbonisation
Fund monies to retrofit projects; and
– Executive Director – ensuring climate risk is considered
when acquiring assets and responding to opportunities
to reposition potentially stranded assets.
Our Sustainability and Social Impact Director, Executive
Director and Director of Projects track, monitor and
manage our business response to expected legislative
changes on EPCs.
Sustainability continued
Task Force on Climate-related Financial Disclosures (TCFD)
44 Great Portland Estates plc Annual Report 2023
Our strategy
Climate resilience and tackling both physical and transitional
climate risks is ingrained within our business strategy.
We identify and acquire unloved properties, reposition
them through lease restructuring, delivery of flexible space,
refurbishment or redevelopment and then manage them for
income or recycle them. The buildings we develop can be in
use for between 40 and 60 years; we therefore consider the
whole building life cycle when reviewing climate-related risks.
We recognise the changing needs of our customers in relation
to their own sustainability performance and commitments,
as well as the importance placed on transparency and
reporting from our investors. As a result, sustainability
is a strategic imperative.
Climate-related risks, opportunities,
and financial impacts
To assess how various climate risk drivers may impact GPE,
we use the TCFD framework’s categorisation of transition
and physical climate risks. We consider climate-related
risks and opportunities over three time horizons: short,
medium and long term.
Short term (S) Medium term (M) Long term (L)
1–5 years 5–10 years 10+ years
The risks, and opportunities, identified on pages 46 to 47
have been categorised into the time horizons above and
indicated with the letters in bold.
In line with our Group risk management policy and approach,
GPE defines a ‘material’ risk or opportunity by the likelihood
of it occurring and the potential impact it may have.
Our risk review process has highlighted the need for financial
modelling on the impact of climate change and the need
to complete the metering and energy management project
to improve the granularity of energy data to inform asset
business plans. The need to further increase customer
engagement on energy consumption to reduce our Scope 3
emissions was also highlighted.
In the short term, we are responding to the transitional risks
of climate change, upgrading EPC ratings, and retrofitting
existing buildings to improve energy efficiency. We are
also responding to ever increasing customer requirements
on sustainability, particularly demands for net zero carbon
and fossil fuel free buildings, which in turn impacts our
supply chains, particularly in connection with alternative
building materials.
In the medium term, given the concentration of our
business activities in London, we expect transitional risks
to continue to have the greatest focus. However, physical
risks may already be impacting our supply chain partners
where we are sourcing products and raw materials from
outside of Europe.
In the longer term, we expect the transitional risks outlined
above to be amplified by the greater impact of physical
risks, both within our supply chain and in London as hotter
summers become more frequent.
The above themes are explored in more detail within
the tables on pages 46 to 47, along with a review of the
potential climate-related opportunities.
1. The Chief Executive, Toby Courtauld, is Chair of the Sustainability Committee, allowing him to provide the Board with regular updates on sustainability matters.
Development Sustainability
Sub-committee
Sustainable Finance
Committee
Management Committees
Portfolio Sustainability
Sub-committee
Executive Committee Sustainability Committee
1
Nomination Committee Audit Committee Remuneration Committee
Board Committees
Strategic Report – Annual review
45Annual Report 2023 Great Portland Estates plc
Sustainability continued
Task Force on Climate-related Financial Disclosures (TCFD) continued
Transition risks and opportunities
Risks and impacts Opportunities and impacts Progress to date and next steps
Policy and legal
S Ability to keep pace with rapidly evolving
legislation on EPCs – leading to increased
costs and the risk of stranded assets.
S Additional legislative burden and impact
on investor and customer behaviour linked to
the proposed introduction of ‘energy in-use’
performance ratings.
S Evolving local planning requirements
leading to increased complexity of
developing commercial buildings.
S/M Changes to investor behaviour due to
impact of investor-related legislation such
as EU and UK Taxonomy and Sustainability
Disclosure Regulations.
S Increasing complexity of regulatory
environment may present opportunities to
acquire lower rated buildings (stranded assets)
at reduced prices for repositioning.
S Proactive response to legislative changes
improves desirability of GPE assets for
customers and investors.
S Deep knowledge supports transition of
business to a ‘retrofit first’ approach which
is challenging in London and technically
more difficult.
S/M Potential increased returns and improved
valuation connected with higher demand
for more sustainable space.
Review of EPC upgrade costs completed
and upgrade works continue.
Building business plans include steps and
costs to upgrade to EPC B or to divest
where appropriate.
Active review of stranded assets to acquire
and reposition.
Piloting NABERS Design for Performance
at two developments and NABERS UK Energy
for Offices at two properties to keep pace
with evolving legislation on ‘energy in-use’.
Active member of numerous industry groups
to support collective industry response to
climate change.
Technology
S Outdated utility metering impacting
quality of energy consumption data.
S Building systems in new developments
complex or not fully understood – leading
to inefficiencies in building operation.
S Increased costs associated with research
and development of technological solutions.
M Pace of technological change not
responding to evolving legislation and
customer demand for sustainable spaces.
S Early adoption of technology supports
improved visibility and management of
utility consumption data and associated
reduced costs for our customers.
S Payback of costs (dependent on energy
consumption and variable energy costs)
likely to be short term and will support
improved collaboration with customers.
S/M Implementation of new technologies
to drive down embodied carbon provides
opportunity to capitalise on customer
appetite for net zero carbon buildings.
Cross-portfolio, extensive metering
project underway.
Proactive investment in R&D expenditures
in new and alternative technologies.
Digital Twins technology now being rolled out
to assist in the monitoring and management
of plant and equipment.
Onboarding of new data platform.
Air quality sensors and desk occupancy
monitoring in place to understand occupancy
density and fresh air requirements.
Investment in Pi Labs supports innovation
and R&D.
Market
S Volatility in energy market and prices,
energy security concerns leading to
increased energy costs.
S/M Availability of net zero energy tariffs.
S/M Increased costs of raw materials driven
by growing demand for sustainable products
may impact on ability to reduce embodied
carbon of future developments.
S Increased cost of development and
refurbishment driven by increasingly
complex planning regime.
S/M Increased customer demand for
highly sustainable buildings may lead
to the risk of stranded assets.
S Increased collaboration with customers
and supply chain supporting faster progress
on energy efficiency.
S Proactive approach to reducing
consumption and improving energy security,
including on-site energy generation, passive
cooling and connection to local heat and
power networks supports customer demand
for sustainable spaces.
S Ability to capitalise on deep knowledge
of London market, where other developers
may not be as well placed to navigate
complexities.
Energy councils established with customers.
Supply chain workshops underway to deal
with operational energy efficiency challenges.
100% of energy purchased on net zero
carbon tariffs. Procurement policy under
review for REGO and RGGO backed energy.
Our ‘Brief for Creating Sustainable
Spaces’ launched.
All future major developments designed
to be fossil fuel free.
Reputation
S Ability to meet increasing requirements
on sustainability disclosure from investors
and lenders.
S Potential for increasing customer
expectations regarding the sustainability
credentials of their spaces to conflict with
increasing requirements on amenity and
service provision.
M Ability to secure sufficient supplies of
sustainable materials to meet embodied
carbon targets for our developments.
S Greater scrutiny from third parties on all
sustainability-related reporting including
approach to offsetting.
M Potential detrimental impact on
reputation of owning lower EPC rated assets.
S Continued transparency of reporting
coupled with frequent investor engagement
results in increased confidence in ability
of business to deliver on sustainability goals.
S Launch of ‘Our Brief for Creating Sustainable
Spaces’ will support best practice approach
to sustainable design irrespective of
the product.
S Early engagement and collaborative
relationships with supply chain to support
early warning of supply issues and ability
to source alternative solutions.
M Early adoption of innovative approaches
to energy efficiency and low carbon
construction and materials.
Continued engagement with investors
on climate-related issues and extensive
disclosure of ESG data through benchmarks,
indices and industry groups – see table
on page 53.
Sustainability is a standing agenda item
in six-monthly customer meetings with
proactive utility data sharing.
EPC reviews to be integrated within asset plans,
net zero carbon asset plans underway, and
delivered alongside metering project.
Business model to actively purchase
buildings that need to be repositioned
to create value.
‘Brief for Creating Sustainable Spaces’
launched.
46
Great Portland Estates plc Annual Report 2023
Physical risks and opportunities
In 2019, we conducted physical climate risk modelling to quantify the potential impacts of climate change on London under
a range of future emission scenarios for 2045. Following the best practice outlined by the TCFD, we used four Intergovernmental
Panel on Climate Change projections, from a 1.5°C global temperature rise (RCP 2.6) up to 5.4°C (RCP 8.5), and applied a risk
rating to each risk. With a central London portfolio the climate-related physical risks profile is consistent across all buildings.
We have energy and carbon targets for 2030 which have been verified by the Science Based Targets initiative as being in line
with a 1.5°C warming scenario. However, we recognise that current projections suggest that a 2°C or 4°C warming scenario
is more likely and have therefore set out our response to both scenarios below. Our business strategy is to acquire poorly
performing assets and reposition them; we do not believe that this strategy will need to change in either eventuality.
Risks and impacts Opportunities and impacts Progress to date and next steps
Two degree warming scenario
Our Statement of Intent and Social
Impact Strategy include requirements for:
– increased biodiversity and solar shading,
and the support of community greening;
– drought resistant planting;
– use of sustainable drainage systems;
– reduced water consumption;
– designing of climate resilient buildings that
are robust, adaptable and have longevity;
– working with our supply chain to improve
transparency of ethical sourcing
processes; and
– working with our partners to consider
impact of extreme weather events on
our supply chain.
Climate resilience measures are incorporated
in the design of our spaces, and we work
with our consultants and project teams
to ensure our developments are able to
meet the evolving requirements of planning
authorities and customer expectations.
Sustainability considerations are integrated
within our acquisition process so that we are
able to forecast the required improvements
for assets to mitigate both transition and
financial risks.
Our ‘Brief for Creating Sustainable Spaces’
outlines key performance requirements on
incorporating climate resilience in the design
of all our spaces irrespective of size and scale.
S/M Delay in development process
due to interruptions to development
capacity, e.g. supply chain interruptions
or transport difficulties.
S/M Increased severity of extreme
weather events, like flash floods.
S/M Increased annual temperature.
M Increased extreme weather events
such as high winds, extreme rainfall
and high temperatures.
M Reduction in precipitation.
M/L Increased insurance premiums.
S Potential increase in valuation of buildings
that are climate resilient and adaptable.
Four degree warming scenario
S Increased capital costs from damage
to properties.
S Increased operating costs (e.g. higher
energy demand due to cooling, inadequate
water supply).
M/L Significant increase in insurance
premiums and in some cases unable
to insure assets.
M/L Reduced demand for office spaces
where extreme weather events affect
access to our buildings or comfort
within office spaces.
M/L Potential water shortages and
subsidence within London.
M Increased demand for buildings with
climate resilience measures such as
passive cooling, nature-based solutions
and sustainable urban drainage
systems incorporated.
Impact of climate-related risks and opportunities
on the organisation’s businesses, strategy and
financial planning
Our Sustainability Statement of Intent, and Roadmap to
Net Zero set out our sustainability strategy. We have refocused
our strategy to ensure that climate resilience is integrated
across our business. We consider climate risk throughout
our processes, including leasing, customer relationships,
development appraisals, asset business plans, financing
arrangements, acquisitions and remuneration arrangements.
Financial planning (operating costs, capital expenditure
and allocation)
Our internal carbon price of £95 per tonne ensures that
embodied carbon is included in all development appraisals;
design decisions are therefore considered in the context
of their impact on carbon emissions.
During the year, financial investment was agreed to support
our innovative circular economy project to reuse steel.
Our internal carbon price feeds into our Decarbonisation Fund
which is used to bring forward energy efficiency improvements.
Last year, we undertook a detailed review to understand
the cost of improving our portfolio to an EPC B rating.
We estimated that the cost would be about £20 million in
the current regularly environment and these are works that
would have, in any event, been incorporated into our work
to reposition assets.
We are undertaking a similar exercise to create an energy
intensity trajectory to 90 kWh per m
2
by 2030. This will
be completed once our cross-portfolio metering project
is delivered. During the next financial year we will be
formalising our approach to carbon offsetting, as scrutiny
on approach and the cost of offsets increase.
Key – Risk and Time Horizon
S Short Term: 1–5 years
M Medium Term: 5–10 years
L Long Term: 10+ years
Strategic Report – Annual review
47Annual Report 2023 Great Portland Estates plc
Access to capital
It is increasingly important to demonstrate how financing
is linked to ESG considerations. Our Sustainable Finance
Framework is in place and sets out how we may link
future debt facilities to our business activities. In addition,
our ESG-linked RCF incorporates KPIs on energy intensity,
embodied carbon and biodiversity.
Acquisitions and divestments
We seek to acquire assets that are at risk of being stranded
to refurbish and reposition them. We may also seek to divest
from assets where it is not possible to upgrade to an EPC
B rating. When making an acquisition, we undertake due
diligence on the buildings ability to reach an EPC B rating
and net zero carbon. For the first time this year, our ability
to deliver a building verified as net zero carbon was included
within a contract of sale with a financial penalty in the
event it was not achieved.
Developments
We take a whole life carbon approach to development,
designing for climate resilience, longevity, and adaptability.
All buildings in our development pipeline will be net zero
carbon and fossil fuel free. At 2 Aldermanbury Square,
EC2, where we are removing steel to be reused in another
development, we anticipated our activities to be cost neutral
due to technical challenges associated with adopting
circular economy principles. However we anticipate that
when used at our forthcoming development at French
Railways House, the embodied carbon of the steel will be
reduced by 99%. Our internal carbon price of £95 per tonne
applied at practical completion of our developments
incentivises the reduction of embodied carbon and supports
progress towards net zero. Our ‘Brief for Creating Sustainable
Spaces’ will ensure that we set the right design brief for
all our spaces.
Managing assets
Our Roadmap to Net Zero sets out how we can reduce
energy consumption and carbon emissions to reach our net
zero target by 2030. Our internal carbon price of £95 per
tonne is applied to operational carbon emissions, with our
Decarbonisation Fund supporting ongoing investment in
energy efficiency projects across our portfolio.
Our Sustainability Statement of Intent has been updated
to reposition climate resilience to ensure it is integrated
across our business. Our revised Brief for Creating Sustainable
Spaces further sets out how we will ensure that the design
of our spaces supports reductions in carbon emissions.
Performance on the above impacts the remuneration
of our Executive Committee and Board Directors –
see page 124. See our Sustainability Performance Report
at www.gpe.co.uk/sustainability/our-performance
for our progress against our KPIs.
Resilience of organisation’s strategy considering
different climate-related scenarios
Our strategy enables us to build resilience considerations
into the acquisition, design, development and operation
of buildings. As we have a 100% central London-focused
property portfolio, impacts from climate-related physical
risks are limited and consistent across all buildings. We do
not believe we will need to change our strategy in a 1.5, 2
or 4 degree warming scenario.
We have outlined on pages 46 to 47 the climate-related risks
and opportunities identified by our business and how we
are responding to these risks to ensure business resilience.
Risk management
We undertake materiality reviews of ESG risks.
See www.gpe.co.uk/sustainability/our-approach for
our latest materiality review. During the next financial year
this will be updated to reflect a double materiality approach.
As part of a robust assessment of the principal and emerging
risks facing the Group, at the half-year and year end, the
Executive Committee, Audit Committee and Board review
and assess the Group’s principal and emerging risks, including
climate-related risks. Consideration is given to the risks and
associated internal controls in place, emerging risks and
ongoing monitoring.
Assessment of identified risks is based on their potential impact
and likelihood using a defined criteria and is assessed on a
gross, net and target risk basis. Climate change and the need
to decarbonise remained a principal risk for 2023 and our net
risk assessment of this risk remained constant during the year.
Controls for managing our climate-related risks are outlined
on pages 46 and 47.
Our Sustainability Committee and sub-committees for our
portfolio and developments also monitor, manage and report
on climate-related risks. Our Sustainability and Social Impact
Director is a member of our Executive Committee.
Sustainability is also considered at our Design Review Panel,
and ratings such as BREEAM, SKA and NABERS Design for
Performance and NABERS UK Energy for Performance further
support risk management. Energy Action Plans are in place
for all assets.
Our recently launched Brief for Creating Sustainable Spaces,
incorporates sustainability in design across the whole
property life cycle and all products. It includes requirements
to ensure energy efficiency in operation, such as soft landings,
commissioning and handover. The brief also supports the
circular thinking process for all our projects to minimise
the quantity of new materials used reducing the embodied
carbon associated with our projects.
Sustainability continued
Task Force on Climate-related Financial Disclosures (TCFD) continued
48 Great Portland Estates plc Annual Report 2023
Metrics and targets
Metrics used to assess climate-related risks
and opportunities in line with strategy and
risk management processes
Risk adaptation & mitigation metrics Unit 2022/23 2021/22
EPCs rated A and B by floor area
1
% 43 37
EPCs rated F and G by floor area % 0 0
Proportion of portfolio
with green building ratings
by floor area % 48 55
Estimated annual savings from
energy efficiency measures
implemented during the year MWh 3,226 3,777
Internal carbon price £ 95 95
Total contribution to
Decarbonisation Fund £ 768,000 403,000
Electricity purchased
from renewable sources % 100 100
On-site renewable energy
generation MWh 8 27
1. Based on current floor area, excluding on-site development.
The percentage of the portfolio with a green building rating
was impacted by the acquisition of three new buildings which
are currently within our capital expenditure programme.
The increase in the contribution to our Decarbonisation Fund
was due to the development completion of 50 Finsbury Square,
EC2 during the year. On-site renewable energy generation
decreased during the current reporting period due to the sale
of 160 Old Street, EC1 in 2021.
EPC ratings: percentage of portfolio (by sq ft)
B ECA
0
35
GFD
15
30
25
20
5
10
Current managed portfolio EPCs Current FRI EPCs
Targeted under development EPCs
7.3
18.7
0.3
0.9
4.9
1.0
Uncertified
8.3
2.4
24.7
8.0
21.6
1.9
0
0
Our portfolio is fully compliant with 2023 EPC legislation,
(no F or G rated space). During the year, the percentage of
our properties that are EPC A or B rated increased to 43.4%
(2022: 37.2%) and the amount of unrated space fell to 1.0%
(2022: 6.1%).
Last year, we estimated that the cost to get our portfolio
to EPC B and above would be approximately £20 million.
Due to acquisitions made during the year, and changes to
the regulator calculation methodology, we expect to revisit
this estimate during the forthcoming year as part of our
transition plan.
Disclosure of Scope 1, 2 and where appropriate
Scope 3-related risks
Detailed reporting of our sustainability performance,
including energy consumption and Scope 1, 2 and relevant
Scope 3 metrics (including carbon emissions associated
with water consumption and waste management), is included
within our Streamlined Energy and Carbon Reporting (SECR)
table on page 51 of this report.
Additional ESG disclosure on a variety of climate-related
metrics, disclosure on our KPIs and exposure to climate-
related risks and opportunities is included in our Sustainability
Performance Report.
Selected emissions data (Scope 1, 2 and some Scope 3)
is independently assured by Deloitte LLP.
Additional ESG disclosure and the independent assurance
statement are available at www.gpe.co.uk/sustainability/
governance-reporting
Targets used by the organisation to manage
climate-related risks and opportunities and
performance against targets
Please see our Sustainability Statement of Intent and
our Roadmap to Net Zero for full details on our targets.
www.gpe.co.uk/documents/the-time-is-now
Our Sustainability Performance Report details our full
performance against our targets for the last financial year.
www.gpe.co.uk/sustainability/governance-reporting
Criteria and progress against our ESG-linked RCF
In 2020, we issued our £450 million sustainability-linked
revolving credit facility (RCF) and became the first UK REIT
to issue an RCF with a margin linked to our performance
against ESG-linked KPIs. The energy consumption KPI is
also incorporated in remuneration arrangements for the
reporting year; see page 124.
Strategic Report – Annual review
49Annual Report 2023 Great Portland Estates plc
Sustainability continued
Task Force on Climate-related Financial Disclosures (TCFD) continued
KPI 1
Reduction in
energy consumption
KPI 2
Reduction in
carbon impact
KPI 3
Increase in
biodiversity
We will reduce our portfolio energy
intensity (kWh per m
2
) by 25.5%
by 2026, when compared with
our 2016 baseline of 234 kWh/m
2
.
This is consistent with our existing
stated target set out in ‘Our
Roadmap to Net Zero’ to achieve
a 40% reduction in energy intensity
by 2030.
This target applies to energy
consumed within our portfolio and
to all energy purchased by GPE,
including electricity sub-metered to
our customers. Detailed information
on energy consumption and
energy intensity (including scope
of independent limited assurance)
can be found in our Sustainability
Performance Report.
We have set a target to reduce the
embodied carbon of our developments
by 40% by 2030. This is measured
against a 2020 baseline of 954kg
CO
2
e per m
2
.
This target is tested from RIBA
Stage 3, throughout the design
and construction phase and
again at practical completion
to verify reductions.
Embodied carbon reviews are
undertaken by a competent,
independent consultant, using
recognised guidance, in line with
the RICS professional statement
for Whole Life Carbon Assessment
for the Built Environment, 1st Edition.
We are committing to an increase
in biodiversity net gain across
our existing buildings by 18%
by 2026.
Due to our development at
Hanover Square, W1, contributing
to a 62% uplift in biodiversity net
gain during the first year of the KPI,
the target has now been re baselined
to require a 3% uplift in biodiversity
net gain on a like for like basis.
Target
For March 2023, the RCF target
was a 15% reduction in energy
consumption (199 kWh/m²),
when compared with our
2016 baseline.
Target
For March 2023, we targeted
a 20% reduction in embodied
carbon against our 2020 baseline
for all developments in design
or construction phases.
A 10% reduction was targeted
for buildings reaching practical
completion in 2023.
Target
For March 2023, we targeted
a 3% increase in biodiversity
net gain across our existing
portfolio on a like-for-like basis.
Achievement
For the year ended March 2023
we achieved a reduction in
energy intensity of 32.2%
(158 kWh/m²) when compared
with our 2016 baseline.
After two years where performance
was significantly impacted by the
pandemic, our expectation was
that our energy intensity would
increase during the year. However,
as a result of our investment
in energy saving initiatives,
particularly at our most energy
intensive site, 200 Gray’s Inn Road,
W1, our performance improved.
Achievement
We achieved an average reduction
of 28%* for the four projects in
scope, which included 2 Aldermanbury
Square, EC2, 6 St Andrews Street,
EC4, Egyptian & Dudley House, W1,
and Alfred Place, WC1.
There were no projects in scope
for practical completion due to
the sale of 50 Finsbury Square.
More detail on each of these projects
can be found in our Sustainability
Performance Report.
Achievement
For the year ended March 2023,
we achieved an 8.6% uplift in
biodiversity net gain across
our portfolio.
This increase was driven
by enhancements at two sites,
1 Newman Street, W1, and Hanover
Square, W1. Nearly 1,000 m
2
of
existing biodiverse living roofs
were improved through increased
planting across the two sites.
Additional ground-floor planters
were also installed in the Medici
Courtyard, W1, covering 13.8 m
2
.
Three long term sustainability KPIs are integrated into our ESG linked RCF.
* Subject to external verification.
50 Great Portland Estates plc Annual Report 2023
Streamlined Energy and Carbon Reporting (SECR)
Our SECR disclosure presents our greenhouse gas (GHG) emissions across Scope 1, 2 and select 3 metrics and associated
energy use, together with an appropriate intensity metric, as required by the Large and Medium-Sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended). Our complete Scope 3 disclosure can be found on page 52.
Energy consumption
Year ended 31 March Unit 2022/23
D
2021/22
1
YoY
% change
Energy
consumption
2,3
Gas used for shared services in managed portfolio (kWh) 7,325,541 11,233,508 -35%
Landlord purchased electricity used in common parts areas
for the managed portfolio
(kWh) 11,486,161 16,123,958 -29%
Landlord procured electricity sub-metered to customers (kWh) 17,915,413 17,882,052 0%
Total absolute energy use (kWh) 36,727,115 45,239,518 -19%
Absolute energy
intensity
4
Landlord purchased energy used for common parts areas
and electricity sub-metered to customers (Scope 1, 2 and 3)
across the portfolio divided by normalised floor area
(kWh/m
2
) 158 194 -18%
GHG emissions
Absolute Scope 1 and 2 Greenhouse Gas emissions Unit 2022/23
D
2021/22
YoY
% change
Scope 1
emissions
Emissions from the combustion of fuel:
gas used for shared services in managed portfolio (tCO
2
e) 1,337 2,058 -35%
Emissions from operations of facilities:
fugitive emissions from refrigerant losses (tCO
2
e) 219 187 17%
Total Scope 1 emissions (tCO
2
e) 1,556 2,245 -31%
Scope 2
emissions
Emission from the purchase of electricity used in common
parts areas for the managed portfolio (location-based) (tCO
2
e) 2,221 3,424 -35%
Emission from the purchase of electricity used in common
parts areas for the managed portfolio (market-based)
3
(tCO
2
e) 0 0 0%
Total Scope 2 emissions (tCO
2
e) 2,221 3,424 -35%
Total Scope 1 and 2 emissions (location-based) (tCO
2
e) 3,777 5,669 -33%
Total Scope 1 and 2 emissions (market-based) (tCO
2
e) 1,556 2,245 -31%
Emissions intensity Scope 1 and 2 (location-based) (tCO
2
e/m
2
) 0.0593 0.0951 -38%
Scope 3
emissions
Emissions from landlord purchased electricity
sub-metered to customers (tCO
2
e) 3,464 3,797 -9%
Total energy-related Scope 1 (incl. fugitive emissions
from refrigerant losses), 2 and select Scope 3 emissions (tCO
2
e) 7,242 9,465 -23%
Absolute
emissions
intensity
4
Emissions from landlord purchased energy used for
common parts areas and electricity sub-metered
to customers (Scope 1, 2 and 3) across the portfolio
divided by normalised floor area (tCO
2
e/m
2
) 0.0303 0.0398 -24%
D Metrics with independent limited assurance provided by Deloitte LLP in accordance with the International Standard on Assurance Engagements (ISAE3000).
1. We have re-stated 2021/22 assured figures to reflect improved data quality and coverage, e.g. replacement of some estimated data with actual meter
readings. Re-stated figures have therefore not been assured by Deloitte LLP.
2. As a business 100% focused on central London, all energy is consumed in the UK.
3. 100% of purchased electricity is REGO-backed and 100% of purchased gas is biogas or carbon offset gas.
4. The intensity metrics includes energy-related building emissions (location-based), excluding customer-procured energy. Floor area is an appropriate
intensity metric as it directly relates to our business activities.
Independent limited assurance
Deloitte LLP has provided independent limited assurance
over the published metrics, identified by ‘D’ in the SECR table
in accordance with the International Standard on Assurance
Engagements (ISAE3000).
Deloitte’s full unqualified Assurance Statement, together
with our Basis of Reporting, can be found on our website at
www.gpe.co.uk/sustainability/governance-reporting
Our methodology
Emissions are calculated using the UK government’s
Environmental Reporting Guidelines and the Greenhouse Gas
Protocol. We have used the operational control approach for
consolidating our GHG emissions; included in this are emissions
and energy usage from our managed properties (including 100%
of emissions from joint venture properties) and head office usage.
Where we have purchased electricity, which is sub-metered
to customers, this is itemised separately under our Scope 3,
though is included within our energy intensity target.
Our full Sustainability Performance Report, aligned with
EPRA Sustainability Best Practice Recommendations and
SASB Real Estate indicators, can be found at www.gpe.co.uk/
sustainability/governance-reporting. This includes more
extensive reporting on our emissions and our Basis of Reporting.
Strategic Report – Annual review
51Annual Report 2023 Great Portland Estates plc
Sustainability continued
Streamlined Energy and Carbon Reporting (SECR)
Total carbon footprint
Year ended 31 March
2022/23
tCO
2
e
2021/22
1
tCO
2
e
Scope 1 emissions
D
1,556 2,245
Scope 2 emissions
D
2,221 3,424
Scope 3 emissions
2
Purchased goods and services 7,056 5,513
Capital goods 9,501 4,273
Fuel and energy-related activities 2,232 2,969
Upstream transportation and distribution 25 78
Waste generated 37 17
Business travel – flights, TfL, rail and taxi travel
D
91 24
Employee commuting 73 69
Use of sold products 3,272 4,195
End-of-life treatment of sold products 45 47
Downstream leased assets 6,617 6,973
Total Scope 3 emissions 28,949 24,158
Total Scope 1, 2 & 3 emissions 32,726 29,827
D Metrics with independent limited assurance provided by Deloitte LLP in accordance with the International Standard on Assurance Engagements (ISAE3000).
1. 2021/22 figures have been re-stated to reflect improved data quality and coverage.
2 Scope 3 categories 8 (upstream leased assets), 9 (downstream transportation and distribution), 10 (processing of sold products) and 14 (franchises)
are not applicable to our business and so are not reported above. Category 15 (investments) is captured elsewhere.
Energy performance
We saw a 19% reduction in total energy consumption during
the year, despite an increase in average office occupancy as
people returned to the office post COVID-19. The significant
reduction was partly driven by reductions in energy consumption
for landlord areas, as electricity sub-metered to our customers
remained level year-on-year. Direct electricity consumption
for landlord-controlled common parts areas reduced by 29%
and gas consumption for shared services reduced by 35%.
Energy reductions were also driven by the exclusion of two large
sites from operational energy reporting during the period –
2 Aldermanbury Square, EC2, (formerly City Place House) where
demolition commenced in March 2022, and 160 Old Street, EC1,
which was sold in September 2021. Three smaller buildings were
sold in this reporting period, in June 2022, being 6, 7/8, and
9/10 Market Place, W1. Whole building electricity at our largest
energy consuming site, 200 Gray’s Inn Road, WC1, decreased
by 8% due to our investment in energy efficiency.
This year, we outperformed our energy intensity target by
achieving 158 kWh/m
2
, against a benchmark of 199 kWh/m
2
and a stretch target of 181 kWh/m
2
. Compared with last year,
our energy intensity dropped 18.4% from 194 kWh/m
2
.
Compared with our 2016 baseline, we achieved a 32.2%
reduction in energy intensity.
An increase in floor area due to better data availability
and a change in carbon emissions factors will also have
impacted our intensity figures.
Energy efficiency actions
Energy reductions were achieved by optimising building plant
run times, continued financial investment in our largest energy
consuming site, 200 Gray’s Inn Road, WC1, and implementation
of recommendations from energy audits. Primary energy
efficiency actions taken during the reporting year include:
– optimisation works in our buildings, such as adjusting
plant controls to better align with building occupancy,
is estimated to have saved 2,198 MWh;
– investing £284,000 in LED lighting upgrades at three of
our buildings, is expected to save a combined 986 MWh
per year and a pay back in two years; and
– NABERS UK Energy for Offices readiness assessments at
three of our buildings: The Hickman, E1, City Tower, EC2,
and 200 Gray’s Inn Road, WC1.
We also commenced a substantial programme of works
to upgrade our metering infrastructure, which will improve
and fully automate metering across our portfolio. The project
includes electricity, heat and water metering, Building
Management System controls and networks, including
gas metering on shared services. Once complete, we will
have access to automated, granular data, we will develop
fully costed building-level net zero carbon transition plans,
in line with our Roadmap to Net Zero.
For more detail on our performance see pages 40 to 41
Performance against our Roadmap to Net Zero
As a signatory of the Better Buildings Partnership’s (BBP)
Climate Commitment, we are required to disclose progress
annually against our Roadmap to Net Zero. Our carbon
footprint and narrative on progress during the last year
is set out below.
Overall performance
Our total carbon footprint (Scopes 1, 2 and 3) increased by 10%
or 2,900tCO
2
e during the year. This was expected and primarily
driven by increased development activity at our two major
developments, 50 Finsbury Square, EC1, and 2 Aldermanbury
Square, EC2, as well as increased refurbishments for our ‘Fitted’
and ‘Fully Managed’ products. Nevertheless, we have made
significant reductions where carbon emissions are in our
direct control.
Scope 1 and 2 emissions
Our Scope 1 and 2 (location-based) emissions decreased by
33% or 1,891tCO
2
e compared with last year. This decrease was
driven by energy efficiency projects and portfolio changes,
as detailed in the previous section.
52 Great Portland Estates plc Annual Report 2023
Indirect energy-related Scope 3 emissions
Our Scope 3 emissions from customer electricity (both sub-
metered and directly procured by customers) reduced by 5%
compared with last year. This highlights that over the coming
years, engaging our customers to continue to reduce energy
consumption is going to be critical for us to meet our net zero
carbon ambitions, as these cover Scope 3 emissions from
customer energy usage.
Indirect Scope 3 emissions
The majority, 88%, of our carbon emissions fall outside our direct
control and form our Scope 3 emissions; these are emitted
by our supply chain and the customers occupying our spaces.
The 20% uplift in our total Scope 3 carbon emissions for the
year was driven primarily by increased development activity.
During the reporting period, we completed our first net zero
carbon building, 50 Finsbury Square, EC2, which accounts for
the 379% increase in emissions from construction materials and
services for new developments. 2 Aldermanbury Square, EC2,
which underwent demolition throughout the entire reporting
period, accounts for the 305% uplift in emissions from waste
generated during demolition. Our Carbon Measurement
Framework ensures that we report embodied carbon
consistently across our projects and supply chain.
Emissions from corporate business travel and employee
commuting have increased following the lifting of restrictions
after the COVID-19 pandemic. Taken together, business travel,
employee commuting and working from home emissions have
increased by 77% compared with last year. This is also due to
an increase in employee headcount of 6% from last year.
Emissions from operational procurement, including maintenance
and repair materials and services, have increased as a proportion
of our footprint as we updated our methodology to use more
accurate, up-to-date carbon emissions factors for the past
two reporting years. The increase of 32% this year compared to
last year is due to the roll out of our ‘Fitted’ and ‘Fully Managed’
offering, which forms part of our Customer First proposition
and has driven more procurement.
Carbon footprint progress: annual carbon emissions (tCO
2
e)
1
5,669
4,894
5,070
7,136
Scope 1 & 2: Owner generated energy emissions
Scope 3: Occupier generated energy emissions
Scope 3: Embodied carbon emissions from development activities
Scope 3: Corporate emissions
Scope 3: Other (non-energy) emissions from investment portfolio
Roadmap target
2
2,418
26,453
11,405
4,289
3,095
19,726
4,681
12,410
29,827
7,139
6,973
45,000
0
9,000
18,000
27,000
36,000
202220212020
3,777
9,744
12,423
32,726
6,617
2023
424
309
93
165
We participate in:
We are signatories of:
Longer-term performance
In Our Roadmap to Net Zero, we set out our ambition to reduce
emissions from our baseline of 42KtCO
2
e to 18KtCO
2
e by 2030.
The graph below shows our progress to date, demonstrating
that our performance towards net zero needs to be monitored
over the longer-term, as our normal cycle of business activity,
such as our decision to sell or develop assets, will inevitably
cause fluctuations in emissions. Although this is to be expected,
our overriding aim must be to reduce the impact of economic
activity on our carbon emissions if we are to reach our goals.
Over the next year, a key priority is to fully engage our
customers on energy efficiency and to continue to create
smart, low energy consuming spaces that are fit for the future.
Further information
Our full Sustainability Performance Report, aligned with
EPRA Sustainability Best Practice Recommendations and
SASB Real Estate indicators, can be found at www.gpe.co.uk/
sustainability/governance-reporting. This includes more
extensive reporting on our emissions and our Basis of Reporting.
This report also includes emissions from our development sites
and performance in investor indices.
We also disclose our performance to numerous external
benchmarks and are signatories to relevant commitments
detailed below.
1. 2022 data has been restated.
2. Target aim for all Roadmap to Net Zero achievements.
Strategic Report – Annual review
53Annual Report 2023 Great Portland Estates plc
Our people and culture
We recognise that the ability to attract, retain and
develop our people is critical to the success of our business.
This year we revisited our people ambition, and it remains
inextricably linked to our business purpose. Just as GPE
as a business is focused on unlocking potential and creating
sustainable space for London to thrive, our people ambition
is to unlock potential, creating opportunities for our people
and our customers to thrive.
We aim to be the place where the best people do their
best work. In order to achieve this, we need to provide
our people with the best working experience and
working environment.
Our values
Our values, outlined on page 3, define who we are and how
we act. They give us direction and describe how everyone at GPE
is expected to behave and how we do business. Our values are
embedded in our people practices, including our performance
review and bonus processes. Furthermore, on a quarterly basis,
we publicly acknowledge and reward individuals who have
demonstrated that they, in some specific way, ‘live our values’.
Our CEO makes these awards, which are peer nominated.
There were 31 individual awards made in 2022/23.
Our culture
Our culture is progressive, with a bias towards action.
It comprises an entrepreneurial spirit and an open, pragmatic
approach combined with innovative thinking and intellectual
rigour to deliver compelling results for our customers.
Our culture is also supportive and characterised by kindness
and respect. Our people are encouraged to be themselves
and support each other.
We work hard to ensure that communication channels
are open and effective. Our CEO leads weekly ‘All-Company’
calls and circulates weekly round-up e-mails to keep people
informed of key activities across the business. This contributes
to unlocking potential and giving our people the tools that
they need to do their best work.
Our workforce
With a workforce of 139 people as at 31 March 2023, everyone
knows each other. Teamwork and pulling together for a
common objective are core to how we operate, and people
know they can depend on each other to deliver.
We successfully on-boarded 29 new joiners this year and said
goodbye to 21 colleagues. Our retention rate of 83.5% as a
measure of stability (up from 82% in 2022) reflects a generally
steady and stable workforce. Our workforce comprises
a good balance in terms of length of service and this both
refreshes and reinforces our culture. As at 31 March 2023,
our average length of service is 6.7 years.
Employee voice
Feedback from our people plays a vital role in continuing
to retain top talent, and we regularly survey our population.
While down a little from April 2022, our most recent
engagement scores (March 2023) remain overwhelmingly
favourable, with 90% of our population responding.
84%
Employee
Engagement
Index (EEI)
86% in April 2022
85%
of our employees would
recommend GPE as
a great place to work
89% in April 2022
87%
of our employees
believe in what GPE
is trying to achieve
88% in April 2022
78%
say their work gives
them a personal feeling
of accomplishment
81% in April 2022
Feedback from the year’s surveys included suggestions on how
we can work more efficiently. This led to several tangible actions
including the establishment of a management-led workstream
on system and process improvements and reducing meetings.
We also launched a new ‘Listening Initiative’ where small groups
of employees meet monthly with an Executive Committee
member. People are encouraged to speak up, share opinions
and make further suggestions for improvement.
Organising around our customers
We have continued to evolve the shape of the organisation
to reflect our commitment to putting customers first and
growing our Flex office footprint. We have made several key
management changes and appointments this year:
– Dan Nicholson assumed leadership for our New Business
team whilst retaining overall responsibility for Portfolio
Management, the Group’s Development activities and
Health and Safety;
– Nick Sanderson assumed overall responsibility for our Flex,
Customer Experience and Marketing activities alongside
his other financial and operational responsibilities;
– Rebecca Bradley was promoted to the newly created role of
Customer Experience and Relationships Director. In this role,
Rebecca is responsible for the overall service provision to
customers across all our spaces;
– Jack Kelly was promoted to Flex Customer Experience Lead.
Jack is responsible for customer experience, and acts as
Commercial Relationship Manager, for our Fully Managed
spaces; and
– David O’Sullivan assumed the role of Director of Workplace
Services, with responsibility for all the technical aspects
of our buildings.
In addition, we have recruited specialists to support the
acceleration of our flexible office space roll-out and focus
on customers:
– Grace Tomlinson joined our Leasing team as Leasing
and Broker Relationships Manager focused on Flex;
– Anthony Osho joined as our Customer First Lead; and
– Nicola Jones joined as Flex Customer Experience
Senior Manager.
“GPE is powered by our people and they
are at the heart of everything we do.
While we put our customers first,
we couldn’t do that without a team
of engaged and happy colleagues.”
Carrie Heiss Human Resources Director
54 Great Portland Estates plc Annual Report 2023
Diversity &
Inclusion
Employee
Experience
Leadership
Capability
Growth &
Progression
Performance
& Reward
Health &
Wellbeing
Providing the best work experience
Our People Strategy is referred to internally as OneGPE
and reflects our belief that we are both ‘greater together’
and ‘united’ in achieving our people ambition. It sets out
six key areas of focus.
For each of these areas of focus, we have a stated aspiration
which guides our actions. Over the last year, we have achieved some
significant progress, all of which contributes to improving the working
environment for everyone at GPE.
Employee Experience
– Introduced new technology to automate and streamline
key aspects of the employee experience. This included
a new HR Information System to improve the accuracy
and management of our data and introducing a new
tool to automate and administer 360-degree feedback.
Leadership Capability
– Developed and published a bespoke leadership competency
framework for leaders, managers and individual contributors;
– Introduced two development programmes to support
the competency framework: ‘Momentum’ for our senior
leaders and ‘Inspire’ for our people managers; and
– The Executive Committee participated in a bespoke
nine-month inclusive leadership programme in partnership
with Arrival. A main feature of this programme for each
leader was a co-mentoring relationship with diverse talent
from outside of GPE; the level of leadership below is now
embarking on a similar programme.
Growth & Progression
– Enhanced our annual talent review process and nearly
doubled participation in our internal GPE mentorship
scheme (from 17 pairings in 2022 to 30 pairings in 2023); and
– Introduced an Early Careers Programme using both
apprenticeships and internships as a formal route to
full-time employment at GPE.
Performance & Reward
– Revised our performance management process and
strengthened our ratings system; simplified and improved
our annual personal bonus assessment process.
Health & Wellbeing
We acknowledge the significant amount of time our people
spend at work and we believe that working in a positive
environment is essential for maintaining overall health. By doing
what we can to champion a healthy and positive workplace,
we believe this can contribute to our people achieving a great
quality of life overall. Our policies, practices and general
offerings reflect this commitment. In addition to an excellent
overall benefits package, GPE employees have access to:
– an Employee Assistance Programme with 24x7 access
to trained counsellors;
– trained mental health first aiders across all departments
and preventative health measures (mini health ‘MOTs’); and
– social, sporting, and volunteering opportunities.
This year we formed an employee-led Health & Wellbeing
Impact Group. The group meets regularly and organises
a number of events throughout the year, bringing awareness
to, and education on, a number of important issues related to
mental health, physical health, financial health and general
wellbeing. Examples this year included:
– ‘GPE Time to Talk’, a week of events encouraging people to
engage with each other and highlighting the link between
loneliness and poor mental health;
– Men’s Health Awareness Week;
– Menopause awareness luncheon/discussion group; and
– a voluntary six-week ‘New Year, New You’ competition
involving cross-departmental teams tracking individual
and team physical activities.
We make every effort to stay close to issues that are important
to our colleagues. This year we felt it was appropriate to support
a significant segment of our population through the cost of
living crisis. The Remuneration Committee was pleased to
approve a one-time payment of £1,500 made to colleagues
with a salary below £70,000.
We also have an active Health & Safety Committee, chaired
by Dan Nicholson, our Executive Director. Among other things,
the Committee provides a forum for employees and management
to combine efforts to resolve health and safety issues and to
support the prevention of injury and sickness, whilst increasing
awareness and developing strategies to make GPE a safe
and healthy workplace.
Strategic Report – Annual review
55Annual Report 2023 Great Portland Estates plc
Our people and culture continued
Diversity and inclusion (D&I) is intentionally depicted at the centre
of our OneGPE People Strategy, and we have established our
GPE.Connect framework (see page 57) to drive our progress.
In December 2022, we surveyed our population with a set of
targeted questions on D&I. We were pleased with the responses
and will use this feedback to build on our progress.
– 80% felt GPE was doing the right things to improve D&I;
– 74% believed that people genuinely care about them
as an individual; and
– 72% said they felt comfortable working at GPE,
accepted and able to be themselves.
We are convinced that diverse leadership teams create
a competitive advantage and, this year, we took the decision
to set aspirational gender and ethnic diversity representation
targets for the business, as set out on page 57. Details regarding
the Board’s Diversity Policy and its representation targets can
be found in the Nomination Committee report on page 103.
As at 31 March 2023, women represented 34% of the Executive
Committee combined with their direct reports, and 33% of our
Operating Committee, being the layer below the Executive
Committee comprising Directors and Heads of Department.
Our aim is for women to hold 40% of the roles in our Executive
and Operating Committees by the end of 2025, while we also
look to increase our ethnic minority representation.
Diversity disclosure tables
Gender: as at 31 March 2023
Number
of Board
members
Percentage
of the Board
Number of
Senior Positions
on Board
(CEO, CFO,
SID and Chair)
Number
in Executive
Management*
Percentage
of Executive
Management
Number
of total
employees
Percentage
of total
employees
Men 6 60% 4 7 78% 71 51%
Women 4 40% – 2 22% 67 48%
Other categories – 0% – – 0% 1 1%
Not specified/prefer not to say – 0% - – 0% – 0%
* In accordance with the UK Listing Rules’ definition, Executive Management comprises the Executive Committee (being the most senior executive
body below the Board).
Ethnic Background: as at 31 March 2023
Number
of board
members
Percentage
of the Board
Number of
Senior Positions
on Board
(CEO, CFO,
SID and Chair)
Number
in Executive
Management*
Percentage
of Executive
Management
Number
of total
employees
Percentage
of total
employees
White British or other White
(including minority-white groups) 9 90% 4 9 100% 102 73%
Mixed/multiple ethnic groups – 0% – – 0% 9 6.5%
Asian/Asian British 1 10% – – 0% 9 6.5%
Black/African/Caribbean/
Black British – 0% – – 0% 8 6.0%
Other ethnic group,
including Arab – 0% – – 0% 3 2.0%
Not specified/prefer not to say – 0% – – 0% 8 6.0%
Approach to data collection
Each Board member is requested to complete a standard form questionnaire on a strictly confidential and voluntary basis through which the individual
self-reports their ethnicity and gender identity. The figures in the tables above for the Executive Management and broader employee population are
taken from self-reported data. In each case the data is aligned to the definitions specified in the UK Listing Rules. Over 90% of our population have
self-reported personal information for ethnicity and gender identity as well as religion, sexual orientation and disability.
Senior leadership gender diversity as at 31 March 2023
Males Females % Female
Executive Committee 7 2 22%
Operating Committee 10 5 33%
Senior leadership roles 17 7 29%
Information on the gender diversity of our Board and of our
total employee population is set out in the diversity disclosure
tables below. As at 31 March 2023, our ‘senior management’
population of Executive Committee members (excluding the
Executive Directors) and members of our Operating Committee
comprised 14 men (67%) and 7 women (33%).
Executive Committee and direct reports as at 31 March 2023
66%
34%
Male 25
Female 13
Diversity & Inclusion
The Executive Committee
and their direct reports include
Executive Directors, other Executive
Committee members (including
the General Counsel and Company
Secretary) and their direct
reports comprising individuals
for whom they have direct line
management responsibility,
excluding administrative or
support roles.
We set out below the diversity data required by the new Listing Rules disclosure requirements. Details regarding the Board’s
Diversity Policy and representation targets, its approach to D&I and our Board diversity statement can be found in the
Nomination Committee report on page 103.
56 Great Portland Estates plc Annual Report 2023
Our ambition
At GPE, we genuinely believe that diversity gives us strength. We hire talented, unique individuals
who are encouraged to share their perspectives, collaborate and be their authentic selves while
they support their colleagues to do the same. We serve a dynamic global capital city made
up of many cultures and we strive to reflect that diversity with a workplace built on merit
and equality. We value and respect all roles at GPE and know that everyone plays a unique
part in our collective success. We also believe that every person at GPE has the responsibility
to create and sustain an inclusive environment. We truly believe we are greater together.
Systems
We aspire to integrate D&I into our core organisational
structure, policies and practices to promote equitable
advancement, retention and reward.
Talent
We aspire for GPE’s population to be representative
of the rich diversity of London itself.
In the last year we…
– put gender diversity targets into personal objectives
of all Executive Committee members;
– introduced new inclusion questions in employee surveys
and set executive bonus targets based on a blended
Employee Engagement and Inclusion score. A blended
score of 78% was achieved and we are building on the
encouraging feedback;
– introduced internal job posting processes and refreshed
our ‘career opportunities’ page on the internet;
– focused on more ‘intentional’ recruitment,
challenging recruitment sources and training hiring
managers to mitigate bias; and
– formalised Personal Development Plans/career
conversations for all employees.
In the last year we…
Communicated our ambitious representation targets:
– 40% of GPE’s colleagues will identify with an ethnic
minority category as defined by the ONS by 2027;
– 20% of all management roles at GPE will be held
by colleagues who identify with an ethnic minority
category by 2025; and
– 40% of all senior leadership roles will be held by
women by 2025.
Additionally:
– collected and published our full demographic profile
to all colleagues and established a quarterly tracker
to monitor progress.
Culture
We aspire to make our culture even more inclusive; providing
a safe and welcoming environment which affirms and
supports all our colleagues. A work environment where
people feel comfortable to be themselves and know that
they are accepted and supported for who they are.
Community
We aspire to connect our people with our communities;
partnering where we can to increase our impact and
to support a more inclusive industry.
In the last year we…
– strengthened the contribution of the Inclusion Committee
established in 2022;
– established four employee-led Impact Groups
based on interest expressed by employees:
– Race & Ethnicity Impact Group;
– Women’s Impact Group;
– Health & Wellbeing Impact Group; and
– Parents & Carers Impact Group;
– held celebration and awareness events for International
Women’s Day, Pride Month, Black History Month and
various religious celebrations;
– achieved Level 2 accreditation as a Disability Confident
Employer (supported by Purple Tuesday); and
– published six internal newsletters featuring a wide
array of people-related subject matters and personal
stories from our employees, focusing on strands of
diversity not represented in the Impact Groups such
as religion, disability, neurodiversity and LGBTQ+.
In the last year we…
– launched our Early Careers programme to make entry-level
careers within GPE more accessible to a diverse talent pool;
– hosted 29 weeks of internships through the 10,000
Black Interns programme;
– founded a cross-sector networking group for Women
in Investment (WIN);
– facilitated three Career Workshops, reaching 39 young people
through our charity partner, XLP, Young Westminster Foundation
and 2–3 Degrees, focusing on CV writing and interview skills;
– volunteered nearly 500 hours of time for XLP, giving our
people a greater understanding of the issues facing
our London communities; and
– ran the inaugural GPE Future London Photography prize.
The aim of the prize is to unlock the potential of an emerging
artist to establish their career following graduation. Nico
Froehlich was the first winner of the prize, and his work can
be seen throughout this report, highlighting the people
and spaces of London.
In 2022, we established a framework of four pillars to
review progress against our diversity and inclusion (D&I)
agenda, building on our initial D&I Strategy launched
in 2019 which helped us achieve National Equality
Standard accreditation in April 2020.
Strategic Report – Annual review
57Annual Report 2023 Great Portland Estates plc
Our stakeholder relationships
Whichever offer our customers choose, they are each
developed with sustainability at their core. We future proof
our spaces, incorporating the latest technology to enhance
the customer experience, such as our smart workplace app,
sesame®, and they are designed to promote health and
wellbeing for our customers and local communities, with highly
adaptable open plan configurations and outdoor spaces.
We recognise that to deliver a high quality service, we need
to have a direct relationship with our customers. Therefore,
we have dedicated in-house Customer Experience and
Workplace Services teams whose roles are to manage the
day-to-day operation of our buildings and deliver an
attractive service provision to all of our customers.
Our service proposition
It takes a true partnership to unlock potential, that’s why
we work hand in hand with our customers to ensure we thrive
together. We understand there is no one size fits all approach
and that we need to work closely with our customers to
understand their challenges and changing needs. To ensure we
continue to deliver and maintain the highest standards, we have
developed a new service proposition, ‘Together we thrive’,
which includes five service standards that are being rolled out
across the business to ensure consistency in our approach,
whilst also providing a strong promise to our customers:
Knowledge of the changing needs of our customers requires
a close relationship and regular engagement. A key element
of our approach, in addition to frequent day-to-day interaction,
is to require our team to formally meet with every customer
twice a year and we have enhanced our engagement, with
Executive Committee members meeting a cross section of our
customers at least annually. These meetings, combined with
the independent customer satisfaction surveys we undertake,
provide an understanding of how our customers’ real estate
needs are developing and provide valuable insight into
the health of the sectors in which they operate.
Examples of topics raised during the year
– The rising cost of energy for our customers;
– Ensuring safety of buildings and health and wellbeing
of people and supporting a safe return to the office;
– Opportunities to improve service charge and
management processes;
– Greater utilisation of our sesame® app;
– Single point of contact to support customer
requirements and future business needs; and
– Swift communication of building issues.
Approach and objectives
Customer First
We know that every business is different, so we provide
choice to allow our customers to create their space the way
they want it. Our Ready to Fit offering provides flexibility
for customers to design and build the space that is just right
for them and their people. We also provide Fitted spaces
that are designed by our in-house experts. Customers can
also choose to have their space Fully Managed by us, where
we take care of everything, making life easier and hassle
free so they can concentrate on their business.
Customers
Understanding our customers’ businesses and
having a deep appreciation of what they require
enables us to deliver a workplace environment
in which they can focus on their own business
activities. Having a strong, enduring relationship
with our customers means we can work with them
to ensure they remain satisfied within their existing
workspace, and allows us to retain or relocate
them when their occupational requirements
change. Our ‘Customer First’ approach is vital to
help us design and deliver spaces and an experience
which allows our customers’ businesses to thrive.
The role of the property owner is rapidly changing
as the needs of customers evolve. An attractive
office is now considered more than simply a location
in which to do business. It serves a broader purpose.
It needs to enhance the productivity of the
workforce, align to a business’s brand and play
a key role in attracting and retaining talent in
a competitive marketplace.
GPE customer mix %
11%
29%
16%
28%
Retail, hospitality
and leisure
1
Professional
Banking and finance
Corporates
Technology, media
and telecoms
Government
15%
1%
1. 22% in retail units, 7% in offices.
Our key stakeholders have been identified as our investors, people,
customers, joint venture partners, communities, local planning authorities
and suppliers. See more on our people and culture on pages 54 to 57
See more on engaging with our investors on pages 90 and 91
See more on our communities on page 43
Building and nurturing the relationships we have with our stakeholders is critical to our
success and too valuable to outsource. As a result, we manage all aspects of our property
portfolio in-house. We aim to build lasting relationships based on professionalism,
fair dealing and integrity.
Service standards:
Actively
listen
Bring the
energy
Be
flexible
Add
value
Keep our
word
Service proposition:
Together we thrive
58 Great Portland Estates plc Annual Report 2023
Our joint venture partners
Joint ventures are an important part of our
business and today they comprise three active
partnerships, with BP Pension Fund (GRP), the HKMA
(GHS) and Threadneedle (GVP). Our joint ventures
are built on long-term relationships with trusted,
high quality partners. At 31 March 2023, they made
up 22.0% of the portfolio valuation, 28.1% of net
assets and 23.9% of rent roll (at 31 March 2022: 21.1%,
27.6% and 22.8% respectively).
Approach and objectives
Our approach has been to seek joint venture partners to
help us unlock real estate opportunities that might not have
been available to GPE alone, either through sharing risk or
providing access to new properties. The success of our joint
venture activities relies on strong relationships with our
partners, based on frequent engagement. Each partnership
has a joint board (including at least one GPE Executive
Director) that meets quarterly on a formal basis with frequent
ad hoc engagement throughout the year. The joint venture
properties are valued quarterly, with detailed management
information being provided to the joint venture board.
Examples of topics raised during the year
– Consideration of the implementation of Fully Managed
space in Elm Yard, WC1 in GRP;
– Energy usage at the energy intensive 200 Gray’s Inn Road,
WC1; and
– Approval of a number of retail leasing transactions
at Hanover Square, W1 in GHS.
How did we respond
– Fully Managed space implemented on third and fourth floors
at Elm Yard;
– Allocation of £148,000 of our Decarbonisation Fund for
200 Gray’s Inn Road to replace the building management
system and install LED lighting; and
– Leasing virtually all of Hanover Square, W1 with one small
retail unit remaining.
Next steps
Looking forward, we are working closely with our partners
to advance our business plans, including completion of the
retail leasing at Hanover Square, W1, in our GHS joint venture
and planning for the refurbishment of significant elements
of 200 Gray’s Inn Road, WC1, in GRP.
How did we respond
– Established Energy Councils (see below);
– Workplace Services technical team visits with customers
to walk their spaces and offer energy-saving tips
and advice;
– Senior management tours of all development sites
and the managed portfolio exclusively focusing on
health and safety;
– Creation of a Relationship Manager role for our
Flex portfolio;
– Detailed customer journey mapping completed,
service charge and Flex process improvements being
implemented; and
– Utilising sesame’s® ‘social wall’ and ‘push’ notifications
alongside conventional communication tools to keep
our customers fully informed.
High levels of customer satisfaction
We commission an annual independent customer satisfaction
survey which consists of ten questions and is designed to
determine our customers’ satisfaction with their building,
communication, our understanding of their business needs
and ease of doing business with us. This year 92 customers
participated. A key output of the survey is a Net Promoter
Score (NPS), which is best translated as the willingness
to recommend GPE. It is expressed as an absolute number
between -100 and +100.
Our NPS remains high, at +44.0 in 2023 (2022: +27.8). This is the
highest NPS score we have achieved and is materially ahead
of the industry average of +3.8. From the valuable feedback
and comments we receive, we prepare building-specific
action plans to further improve our services. The plans are
produced within four weeks of the results and implemented
as soon as possible, demonstrating that we have listened
and, more importantly, acted on feedback.
Next steps
For many of our customers, the energy consumed in their
building represents a significant proportion of their carbon
footprint. This energy consumption also accounts for a
quarter of our own footprint. Together, we have an incentive
to lower the impact. We are therefore working closely with
some of our more energy-intensive customers to identify
opportunities to improve building energy performance
and encourage behavioural change.
Furthermore, given the rising cost of energy, we have
established Energy Councils with our customers outlining
simple adjustments that together will help reduce overall
consumption. The Energy Councils will continue to have
input and advice from our Sustainability team and our
Customer Experience team will host a series of ‘town hall’
meetings where customers can discuss and debate the
challenges of reducing their energy footprint.
Operational
measure
Customer satisfaction
(Net Promoter Score)
+44.0
2022: +27.8
Operational
measure
Net assets in
joint venture
28.1%
2022: 27.6%
Strategic Report – Annual review
59Annual Report 2023 Great Portland Estates plc
Our stakeholder relationships continued
Local planning authorities
Developing new buildings in central London is
appropriately challenging. Conservation areas
protect a large proportion of the city, building
heights are restricted, development needs to
be considerate to local residents and justified in
sustainability terms. Consequently, the planning
process is increasingly demanding. Therefore,
our relationships with local planning authorities
and communities are key to the delivery of new
spaces in London.
Approach and objectives
Navigating the planning process is key to our success.
We engage with local authorities, residents and other
stakeholders in an open, transparent and constructive
manner to understand their needs and, where possible,
adjust our proposals to take account of comments received.
This enables us to secure planning consents that are beneficial
to us and the local communities in which they are built. We
are committed to creating a lasting positive social impact.
During the demolition and construction phases, we maintain
regular meetings with residents and stakeholders to ensure
we mitigate the impact of the works.
Examples of topics raised during the year
– Provision of high quality sustainable spaces to deliver
benefits to the local environment and economy;
– Our planning appeal for non-determination at
New City Court, SE1;
– Submission of our planning application at
Minerva House SE1; and
– Various appropriate consultations with local
communities and interest groups.
How did we respond
– Proactive engagement regarding the design and development
of schemes, with changes made to incorporate feedback;
– Planning performance agreements with local authorities; and
– Utilising technology to help engage with local communities,
including using dedicated web portals, social media,
targeted leafleting and virtual ‘town hall’ meetings.
Next steps
Communicating the social impact of our proposals
continues to increase in importance as we seek to ensure
our schemes are positively contributing to the needs of the
local community. We will continue to regularly meet with
officers, elected members, residents and other stakeholders
in our key local authorities to ensure that we continue to
discuss how our proposed schemes can positively contribute
to their ‘good growth’ and climate emergency plans.
Over the next 12 months we will be launching consultations
for further development projects, with the priority for
the forthcoming year being to resolve the planning status
at New City Court and achieve planning consent at
Minerva House, both SE1.
Our suppliers
We work with a diverse range of suppliers, from small
independents to large multinationals. The successful
and profitable delivery of our larger projects requires
strong relationships and collegiate working across
our supply chain. Whilst most procurement is subject
to a tender process to ensure we obtain value for
money, we aim to partner with suppliers who share
our values, work to secure the best people with
an established track record and, where possible,
retain key team members on successive projects.
Approach and objectives
The close relationship we foster with our suppliers, alongside
a track record of successful project delivery and a deep pipeline
of future work, means that people want to work with us, and
ensures that we have good access to quality partners. For our
development, refurbishment and fit-out projects, regular
communication is paramount. This starts with the design process,
where we encourage our design team to consider the art of
the possible and work with our contractors to explore new and
innovative ways of working. Involvement of our leasing agents
throughout the process also helps us to ensure that our buildings
are optimally designed and, where appropriate, evolve over
the project to remain relevant.
We also aim to treat our suppliers fairly through prompt payment,
including bi-monthly payment terms with some of our largest
contractors. Whilst we expect all our suppliers to comply with
standards and codes that may be specific to their industry, our
Supplier Code of Conduct sets out the standards that we require.
Furthermore, we need to work closely with our suppliers to enable
us to achieve the goals set out in our Sustainability Statement
of Intent. We therefore ensure that the sustainability and social
impact goals of our suppliers are taken into account prior to
tendering our contracts.
Examples of topics raised during the year
– Prompt payment terms;
– Support for site safety and mental health;
– Impacts of inflationary pressures and supply chain
disruption; and
– Greater collaboration to reduce our carbon footprint
and improve social impact.
How did we respond
– 31 days’ average payment terms, bi-monthly payments
to largest suppliers;
– Working with suppliers on information sharing and initiatives
to reduce carbon through the supply chain; and
– Working with suppliers to manage procurement options
and minimise the risk of modern slavery.
Next steps
After entering a construction contract with Lendlease
to deliver the redevelopment of 2 Aldermanbury Square,
EC2 and a construction contract with Multiplex to deliver
Minerva House, SE1, we continue to consider contractors
for our other near-term schemes.
Operational
measure
Average supplier payment period
31 days
2022: 30 days
60 Great Portland Estates plc Annual Report 2023
2023 2022 2021
Enforcement notices or fines received – – –
Employees
Work-related fatalities – – –
Reportable injuries/incidents – – –
First aid injuries 1 1 –
Number of days off due to accidents
and incidents – – –
At our occupied buildings
Work-related fatalities – – –
Reportable injuries/incidents 1 1 –
First aid injuries 2 8 4
At our developments
Work-related fatalities – – –
Reportable injuries/incidents – 1 –
First aid injuries – 4 4
Providing safe, healthy
and secure environments
We are dedicated to creating and maintaining safe, healthy and secure environments
for our communities and people. We are constantly striving to set the highest standards
for health and safety in the industry and are committed to continuously improving
our practices and procedures.
We monitor our health and safety
performance across our portfolio
through a set of key performance
indicators, which help us to track
our progress and identify areas for
improvement. Our proactive approach
includes regular audits, refresher
training for our employees and supply
chain, and a focus on fire safety
management in line with the latest
fire and building safety legislation.
During the year, in response to
changes in legislation, we appointed
external consultants to review our
fire strategies across the portfolio.
Working closely with our Customer
Experience Managers and our
Building Surveyors, we completed
fire door inspections across all our
buildings. We have also continued to
support our customers by providing
them with educational advice on
their own fire safety duties within
their demised areas and how they
can improve their assessments
of fire risk.
Looking ahead, we aim to continue
our focus on fire safety management,
including to ensure that a ‘golden
thread’ of information is available
and accessible for every building in
our portfolio and that we complete
monitoring activities in line with
evolving requirements. We believe
that many of the proposed changes
under the Fire Safety Act 2021 and
The Fire Safety (England) Regulations
2022 are suitable for our commercial
properties, as well as the intended
residential sector, and we seek
to proactively enhance fire safety
measures to minimise fire risks across
our portfolio.
Fostering a health and safety culture,
and supporting the health and wellbeing
of our colleagues, is key to the delivery
of our Health and Safety Strategy.
During the most recent employee
engagement survey, 91% of employees
agreed that GPE cares about their
health and safety, and we will continue
to engage with colleagues to ensure
they have the support they need.
As part of our commitment to
creating inclusive spaces for those
with hidden and visible disabilities,
this year we commenced a
project working with disability-led
organisations Purple Tuesday and
the Sunflower Charity. As part of our
commitment, we have also initiated
a project to complete user experience
access audits across the portfolio
with the aim of becoming a Disability
Confident Leader in the coming
year and improving the customer
experience journey through our spaces.
We were pleased to achieve Level 2
accreditation as a Disability Confident
Employer in March 2023.
Going forward, we are also engaging
with other disability-led businesses
and charities to help us ensure that
our spaces continue to be inclusive
for all.
Health and safety incidents
by year
Where accidents occur, we aim
to support and collaborate with our
supply chain to better understand
and maximise opportunities for
improvement so that any future
risk can be mitigated and to ensure
that a no-blame culture for all
workers is maintained.
Strategic Report – Annual review
61Annual Report 2023 Great Portland Estates plc
Engaging with our stakeholders
You can read more about our approach to s.172(1) matters and stakeholder engagement as follows:
Key decisions and
long-term consequences
Statement from the Chair
See more on page 01
An evolving strategy underpinned by our
values and commitment to sustainability
See more on pages 01 and 02
How we create value
See more on pages 12 and 13
Impact on decisions
See more on page 94
Letter from the Chair of the Board
See more on pages 81 to 83
What we did in 2022/23
See more on pages 96 and 97
Employees
Our people and culture
See more on pages 54 to 57
Leadership and purpose
See more on pages 88, 89, 92 and 93
Fostering business relationships with
suppliers, customers and others
Our stakeholder relationships
See more on pages 38, 43, 54 to 60, 90 and 91
Leadership and purpose
See more on page 89
Communities
We are creating lasting positive social
impact in our communities
See more on pages 43 and 58 to 60
Leadership and purpose
See more on page 89
Environment
Sustainability
See more on pages 37 to 53
Our stakeholder relationships
See more on pages 58 to 60
High standards of business conduct
Our people and culture
See more on pages 54 to 57
Our stakeholder relationships
See more on pages 58 to 60
Letter from the Chair of the Board
See more on pages 81 to 83
Anti-fraud, bribery and corruption,
ethics and whistleblowing
See more on pages 95 and 110
Investors
Letter from the Chair of the Board
See more on page 83
Leadership and purpose
See more on pages 89 to 91
Our engagement
Our extensive engagement efforts help to ensure that
the Board can understand, consider and balance broad,
and sometimes conflicting, stakeholder interests when
making decisions to deliver long-term sustainable success.
Every decision the Board makes will not necessarily result in
a positive outcome for all stakeholders; however, the Board
aims to treat stakeholders fairly and consistently, guided
by GPE’s purpose, values and strategic priorities, and the
long-term interests of the Company.
Board processes
While the Board will engage directly with stakeholders
on certain issues, stakeholder engagement will often take
place at an operational level, with the Board receiving regular
updates on stakeholder views from the Executive Directors
and senior management.
As part of our Director induction process, Directors receive
a briefing and induction materials regarding their duties
under s.172. Training has further been delivered by the
Company Secretariat team to management to ensure that
they understand the duties of the Board and the importance
of s.172(1) matters in GPE’s strategy discussions and decision
making. Board papers for all key decisions are required
to include a specific section reviewing the impact of the
proposal on relevant stakeholder groups as well as other
s.172(1) considerations.
Page 94 sets out some examples of how the Board has
considered s.172(1) matters in its decision making in 2022/23.
Section 172(1) statement
The Directors have acted in the way that they considered,
in good faith, would be most likely to promote the success
of the Company for the benefit of its members as a whole
and, in doing so, have had regard, amongst other matters,
to those matters set out in section 172(1)(a) to (f) of the
Companies Act 2006, being:
– the likely consequences of any decision in the long term;
– the interests of the Company’s employees;
– the need to foster the Company’s business relationships
with suppliers, customers and others;
– the impact of the Company’s operations on the
community and the environment;
– the desirability of the Company maintaining a reputation
for high standards of business conduct; and
– the need to act fairly as between members of the Company.
Our stakeholders
As explained on pages 58 to 60, GPE has identified its key
stakeholders as being its: investors, people, customers,
JV partners, communities, local planning authorities and
suppliers. Building and nurturing these relationships based
on professionalism, fair dealing and integrity is critical
to our success.
62 Great Portland Estates plc Annual Report 2023
Non-financial information statement
This table is disclosed on a voluntary basis and signposts related non-financial information in this report and further reading
on our website.
Reporting area
1
Policies Website Reference in 2023 Annual Report
1. Environmental
matters
Sustainability Policy Statement
Creating Sustainable Spaces –
Sustainable Spaces Brief
Our Guiding Principles of Design
Sustainability Statement of Intent
Our Roadmap to Net Zero
www.gpe.co.uk/sustainability
www.gpe.co.uk/sustainability/
our-approach
www.gpe.co.uk/investors/
investment-case/our-guiding-
principles
See more about sustainability,
including our updated Sustainability
Statement of Intent, on pages 37 to 53
2. Employees
Our values
Diversity Policy
Our People Plan
Personal Development Plans
www.gpe.co.uk/our-people/
our-values
www.gpe.co.uk/investors/
governance
www.gpe.co.uk/our-people/
diversity-inclusion
www.gpe.co.uk/our-people
See more about our values
on pages 03 and 54
See more about people and culture
on pages 54 to 57
See more about diversity and inclusion
on pages 55 to 57, 100 and 103
3. Human rights
Supplier Code of Conduct
Annual Modern
Slavery Statement
www.gpe.co.uk/investors/
our-relationships/our-service-
partners
www.gpe.co.uk/our-modern-
slavery-statement
See more about how we behave,
human rights and supplier stewardship
on page 95
See more about mitigating
the risk of modern slavery
on pages 43 and 95
See more about our suppliers
on pages 60 and 61
4. Social
Social Impact Strategy
Creating Sustainable
Relationships
GPE Standard Supply Terms
Health and Safety Policy
www.gpe.co.uk/sustainability
www.gpe.co.uk/investors/our-
relationships/our-service-partners
www.gpe.co.uk/health-safety
See more about our stakeholder
relationships on pages 58 to 60
See more about communities
on pages 42, 43 and 60
See more about our Social Impact
Strategy on pages 38 and 43
See more about our suppliers
on page 60
See more about providing safe,
healthy and secure environments
on page 61
5. Anti-corruption
and anti-bribery
Anti-Fraud, Bribery
& Corruption Policy
Ethics Policy
Whistleblowing Policy
Gifts and Hospitality Policy
Use of GPE Suppliers Policy
Conflicts of Interest Policy
Inside Information and
Share Dealing Policy
www.gpe.co.uk/investors/
governance
See more about anti-corruption
and anti-bribery matters
on page 95
See more about our Anti-Fraud,
Bribery & Corruption, Ethics
and Whistleblowing Policies
on page 110
6. Business model
www.gpe.co.uk/why-gpe/
our-brand
www.gpe.co.uk/investors/
investment-case
See more about how we create value
on pages 12 and 13
7. Principal risks
and uncertainties
Group Risk Management Policy www.gpe.co.uk/investors/
governance
www.gpe.co.uk/investors/
investment-case/our-strategy
See more about our approach to risk
on pages 64 to 77
8. Non-financial
key performance
indicators
www.gpe.co.uk/investors/
investment-case/key-
performance-indicators
See more about our KPI benchmarks
on pages 16 and 17
See more about our near-term
strategic priorities on pages 14 and 15
1. Board oversight of these policies and matters is also covered through ‘What we did in 2022/23’ on pages 96 and 97.
Strategic Report – Annual review
63Annual Report 2023 Great Portland Estates plc
Our approach to risk
The successful management of risk is critical for the
Group to deliver its strategic priorities. Whilst the ultimate
responsibility for risk management rests with the Board,
the effective day-to-day management of risk is integral
to the way we do business and the culture of our team.
Our attitude to risk is one of collective responsibility, with the
identification and management of risks and opportunities
being part of the mindset of the GPE team. Our organisational
structure, including close involvement of senior management
in all significant decisions and in-house management of our
development, portfolio and occupational service activities,
together with our prudent and analytical approach, is designed
to align the Group’s interests with those of shareholders.
Setting and monitoring our ‘risk appetite’
The Group’s overarching risk appetite is set in the context that we
focus on a single market, that of central London, operating out of
a single head office within close proximity to all of our activities.
Central London’s real estate markets have historically been
highly cyclical and, as a result, we apply a disciplined approach
to our capital allocation and managing our operational risk,
in particular our development exposure, in tune with prevailing
market conditions. Furthermore, we aim to operate with low
financial risk by maintaining conservative financial leverage.
We use a suite of key operational parameters as an
important tool to set and then measure the Group’s risk
profile. These parameters consider, amongst other matters,
the Group’s size, financial gearing, interest and fixed charge
cover, level of speculative and total development exposure,
level of Flex exposure and single asset concentration risk.
These parameters are revisited annually as part of the
Board’s strategy review and reviewed at each Board meeting.
We monitor the Group’s actual and forecast position over
a five-year period against these parameters.
We set a target risk position for each of our principal risks
to determine whether the net risk position of each principal
risk is within the Board’s risk appetite level, and to determine
any appropriate risk response.
Our risk culture and how we manage our risks
Our overarching risk management process comprises four main
stages, as summarised in the diagram below. We believe that
effective management of risk is based on a ‘top-down’ and
‘bottom-up’ approach with appropriate controls and oversight,
as outlined on page 65, which include:
14
2
3
Risk identification
– Identification and description of
significant and emerging risks that
could affect GPE’s key objectives
– Risks categorised with assignment
of accountabilities and executive
ownership of principal risks
Risk monitoring, reporting and escalation
– Risks documented, reported and monitored
on a regular basis by management,
Executive Committee, Audit Committee
and Board
– New risks and significant changes to
risk profiles escalated as appropriate
Risk assessment
– Potential impact and likelihood of
risk assessed using defined criteria
– Principal risks assessed on a gross,
net and target risk basis
Risk response
– Appropriate response determined
with reference to risk appetite
– Risk response may include Treat,
Transfer, Terminate or Tolerate
Communication
and
consultation
– our strategy setting process;
– the quality of our people and culture;
– established procedures and internal controls;
– policies for highlighting and controlling risks;
– oversight by the Board, Committees and management; and
– ongoing review of market conditions and the property cycle.
Moreover, risk management is an integral part of all our activities.
We consider risks and, more positively, where these might also
provide opportunities, as part of every business decision we make,
including how they would affect the achievement of our strategic
priorities and the long-term performance of our business.
Six-monthly assessment of principal and emerging
risks, opportunities and effectiveness of controls
As part of a robust assessment of the principal and emerging risks
facing the Group, at the half-year and year end, the Executive
Committee, Audit Committee and Board formally review the
Group’s principal and emerging risks, including those that would
threaten its business model, future performance, solvency
or liquidity and reputation. Importantly, part of this review
is the consideration of:
– the internal operational controls in place to mitigate
the principal risks, how key controls have operated in the
preceding six months and additional activities and controls to
further reduce risks where desirable, including any instances
where net risk assessments may exceed the target risk position;
– consideration of any emerging risks and opportunities; and
– the Board’s ongoing monitoring of these risks.
Whilst emerging risks and opportunities are considered
as part of this formal six-monthly assessment, the Board
spends additional time at scheduled Board meetings on
‘blue sky’ thinking and consideration of possible emerging
risks. Executive Committee members are tasked to provide a
summary in their regular Board updates of the three ‘things’
concerning and exciting them the most. We also ask our Heads
of Department the same question to continually challenge
ourselves as to how we should evolve. Emerging risks are also
considered by the Board as part of its annual strategy review.
While risks relating to structural market changes and short-
and medium-term climate change are considered within our
principal risks, we have also spent time this year discussing
emerging risks across a number of themes such as long-term
climate change, evolving building and fire safety requirements,
advances in technology, de-globalisation, geopolitical
tensions, evolving working patterns and behaviours,
economic policies, energy security and the impacts of
increasing regulatory burden.
64 Great Portland Estates plc Annual Report 2023
Board oversight of risk
Business risk
Nomination Committee Audit Committee
Board
Remuneration Committee
Operational Committee oversight
Weekly/Monthly
Development management
Portfolio management
Investment management
Financial management
Workplace and Customer services
Inclusion Committee
Quarterly
Living our values
Health and safety
Development management review
Portfolio management review
Sustainability
Social impact
Executive Committee
High-level risk assessment
framework
Strict approval requirements
Extensive documentation
to support decisions
Formal policies and procedures
consistently applied
Defined performance indicators
with sensitivity analysis
External review of key
controls/internal audit
Observations from the
external auditor
Whistleblowing Policy
Focused market expertise
Open communication
Transparent disclosure
with stakeholders
Integrity in business conduct
Interests aligned with shareholders
Qualified and experienced
personnel with specific roles
Intense Development,
Portfolio Management,
Workplace Services and
Customer Experience teams
Conservative attitude
to capital deployment
Analytical rigour
Investment return benchmarks
Debt leverage, covenant
compliance and liquidity limits
Regular review of business plans,
dashboard lead indicators
and operational parameters
Occupancy targets
Development appraisal parameters
Leasing objectives and customer
covenant testing
People and culture
guided by our values
Procedures and
internal controls
Policies for highlighting
and controlling risk
Strategic Report – Annual review
65Annual Report 2023 Great Portland Estates plc
Our approach to risk continued
As macro uncertainty has prevailed across the global
landscape, including heightened UK political and economic
instability in the latter part of 2022, the Board and the Audit
Committee have overseen the Company’s response to the
challenging macro environment, including rising inflation,
interest rates and property yields, and supply chain pressures.
This has included actions taken to mitigate risks but also to
position GPE to take advantage of the opportunities arising
from uncertain markets.
The Board and Audit Committee continue to monitor
macro-economic and political risks, including those risks
arising from Russia’s invasion of Ukraine and geopolitical
tensions, as well as the UK’s evolving international trade
arrangements and their potential impacts on the UK economy,
our operations and London’s attractiveness. Further details
on market impacts can be found in ‘Our markets’ on pages
21 and 22 and our viability assessment on page 78.
As the impacts of COVID-19 have abated and the emphasis
of our risks landscape has transitioned from pandemic to
macro-economic uncertainty, we have taken the opportunity
to reframe, consolidate and simplify the descriptions of certain
principal risks where considered appropriate, while amending
some risk descriptions to reflect how they have evolved over
the past 12 months. Save for introducing a standalone ‘Adverse
macro-economic environment’ risk, as explained below, and the
consolidation of certain risks, the risks to the business, at a
high level, remain broadly unchanged from the previous year.
Key changes include the following:
– given the heightened instability of the macro and
geopolitical environment, ‘Adverse macro-economic
environment’, which previously formed part of the ‘London
attractiveness’ risk, has been introduced as a standalone
principal risk, also incorporating the previous year’s related
risk of ‘Property market dislocation and its impact on
financial leverage’. The increased risk of customer and
supplier failure in a challenging economic environment has
also been more explicitly referenced in the risk description;
– global investor appetite for commercial real estate and
offices can impact our markets, activities and returns, and
is an important consideration in our investment decisions.
The risk of reduced investor appetite adversely impacting
returns has therefore been incorporated within our ‘Poor
capital allocation decisions and/or misreading market
conditions’ risk;
– given the extent to which structural retail changes have
already occurred, and are already reflected in property
valuations, our principal retail risk is now thought to primarily
relate to the macro-economic environment impacting
consumer spending and the demand for, profitability
and value of retail space. Our previous standalone retail
risk has therefore been incorporated within the new
‘Adverse macro-economic environment’ risk;
Likelihood
Low Medium High
Low HighMedium
Impact
Principal risk
1 Failure to meet customer needs
2 Climate change and decarbonisation
3 London attractiveness
4 Adverse macro-economic environment
5 Poor capital allocation decisions and/or misreading
market conditions
6 Failure to profitably deliver the development programme
7 People
8 Health and safety
9 Cyber security & infrastructure failure
10 Failure to profitably deliver the Flex Strategy
Net risk heatmap
2
3
4
5
7
Net risk rating as assessed after existing controls and mitigation
1
Risk severity
MediumLow High
9
10
1
8
6
66 Great Portland Estates plc Annual Report 2023
– as the impacts of COVID-19 have subsided, pandemic is
no longer considered to be a standalone principal risk for
the Company at the current time. However, we recognise
that a future pandemic could reduce people’s appetite to
travel to, work and shop in London and therefore impact
the demand for, and value of, our buildings. The risk
of pandemic has therefore been incorporated into our
‘London attractiveness’ risk. That risk has additionally been
expanded to include the risks to London’s attractiveness
arising from political uncertainty, government policies
and the potential disruption of energy supplies;
– as well as ensuring that our buildings have the necessary
sustainability and energy performance credentials to
minimise our carbon impacts, we must ensure they are
resilient to the impacts of climate change, and this has
now been expressly referenced in our ‘Climate change
and decarbonisation’ risk;
– to simplify the risk register, our ‘Planning’ risk has now been
incorporated into the wider ‘Failure to profitably deliver
the development programme’ risk, of which it is a sub-risk;
– as we scale-up our operational activities, having the right
organisational structure is an important factor in GPE being
able to deliver its strategy and this has now been reflected
in our ‘People’ risk. The recruitment of additional skills and
capabilities, together with our team reorganisation, has
helped to mitigate our ‘People’ risk during the year; and
– we continue to assess and manage the potential impacts
of new building and fire safety regulations, including under
the Building Safety Act 2022, which has now been referenced
in our ‘Health and safety’ risk.
A description of the Group’s principal risks, and a summary
of the key controls and steps taken to mitigate those risks,
is shown on pages 68 to 77. The risks are not set out in priority
order. Given the above changes to our principal risks, along
with the recalibration of our risk rating criteria in the year,
the risk movements do not show the year-on-year assessment
changes of each risk but instead reflect the Board’s view of
the directional change of the re-framed risks over the period.
The likelihood and impact of each principal risk is assessed
on a gross, net (taking account of the Group’s existing
controls and mitigations) and target risk basis (to determine
whether the net risk position is within the Board’s appetite
level). The net risk assessment for each principal risk
is shown on the heatmap on page 66.
The Board’s ongoing monitoring of the
Group’s principal risks and controls
Ongoing monitoring of our principal risks and controls
by the Board is undertaken through:
– relatively low levels of authority for transactions
requiring Board approval, with investment transactions
and development approvals requiring, amongst other
matters, consideration of the impact on financial
leverage, interest cover and portfolio risk/composition;
– the Executive Committee’s oversight of all day-to-day
significant decisions;
– the Chief Executive reporting on the market conditions
dashboard, operational parameters and sustainability,
as appropriate, at each scheduled Board meeting;
– members of the Executive Committee regularly providing
a review of the development programme, occupational
markets and key property matters to the Board;
– the Chief Financial & Operating Officer reporting
on Group forecasts, including actual and prospective
leverage metrics, HR, Flex, customer experience and
marketing matters, cyber and IT initiatives and social
impact matters at scheduled Board meetings;
– the Executive Director reporting on the customer
watch list and delinquencies, voids and vacancy rates,
health and safety matters and new business opportunities
at scheduled Board meetings;
– the Executive Directors communicating with the Board
on any significant market and operational matters
between Board meetings;
– senior managers attending the Board and Committee
meetings as appropriate to discuss specific risks either
across the business, such as sustainability, health and
safety, people and cyber, or relating to transactions;
– the Audit Committee meeting with the valuers at least
twice a year to better understand market conditions
and challenge the assumptions underlying the
valuation; and
– the Audit Committee receiving internal audit reports
on key risk and control areas and observations from
the external auditor.
Strategic Report – Annual review
67Annual Report 2023 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
Failure to meet customer needs
We fail to identify and react
effectively to shifting patterns of
workspace use and/or understand
and provide spaces that meet quickly
evolving customer needs, including
potential longer-term structural
changes in working and/or retail
practices that change the level
and nature of demand for space
in central London. This could lead
to GPE failing to deliver space and
lease terms that customers want
and/or an inappropriate mix of Flex
versus traditional space, resulting in
poor investment returns, potentially
stranded assets and losing customers
to competitors.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– HQ repositioning and Flex office strategy to meet evolving customer demand.
– Quarterly review of individual property business plans and the market
more generally.
– Portfolio Management, Leasing, Flex and Customer Experience quarterly
updates to the Executive Committee with reporting at scheduled Board
meetings.
– Board and management review of GPE’s flexible space offer across
the portfolio, including broadening our product offer.
– The Group’s in-house Customer Experience and Workspace Services
teams have proactive engagement with customers to understand their
occupational needs and requirements with a focus on retaining income,
including through meetings and regular customer surveys which help us
track our Net Promoter Score.
– Programme of engagement for members of the Executive Committee to
meet with a selection of customers across the portfolio at least once a year.
– Working with potential customers to address their needs and aspirations
during design stages of projects.
– Board and management oversight of the development and implementation
of our Innovation Strategy and related initiatives.
– Design (supported by a specialist fit-out team) and innovation activities
in the areas of sustainability, technology, wellbeing and experience.
– Customer First programme and strategy in place, with dedicated leadership
and newly adopted customer relationship management system, to further
strengthen GPE’s customer insight and Customer First approach across the
business. Customer service proposition and Standards in place to ensure
consistency when delivering the strategy.
– Board annual strategy review, including market updates received from
third parties.
Decreased
With hybrid working here to stay, and customers having more choices about where they work, our spaces need to
provide compelling reasons to come into the office. With average office rents only c.5% – 10% of a typical London
business’ salary cost, and the office environment a key tool in attracting and retaining talent, we anticipate that
competition for the very best spaces will remain healthy. We continue to witness a growing divergence between the
prospects of the best spaces versus the rest, and we believe this is set to widen further as customers seek out sustainable
and well designed, prime spaces, of which there is a marked shortage, particularly in the West End.
Our strategy of focusing on the best spaces, both through our development of large, best-in-class HQ buildings and
smaller fitted units, often with higher service levels, is underpinned by the need to meet the evolving demands of our
customers. To ensure we are delivering the spaces our customers want, we have continued to develop our Customer
First approach and embed this into our culture and across our business operations. This has included, amongst other
things, a refresh of our Fully Managed branding, the reorganisation and strengthening of our teams with new hires
and promotions, and the launch of our new customer service proposition and associated service standards.
Testament to our approach, we had a record leasing year, completing 105 new leases and renewals, and securing
£55.5 million of rent at a 3.3% premium to March 2022 ERVs, whilst continuing the successful roll-out of our flexible
space offering.
We continue to design and innovate in the areas of sustainability, technology, wellbeing and service provision. During the
year, we expanded our flexible offerings in line with quickly evolving customer demand, including the further roll-out
of our Fully Managed offer, and our ambition has now grown. Together with planned acquisitions, we are aiming to
expand our Flex office offering to more than one million sq ft over the next five years.
A close relationship with our customers is vital to our success. We were very pleased by this year’s independent
customer satisfaction survey, which updated our understanding of how our customers view their buildings and
the services we provide. Encouragingly, our Net Promoter Score remained high at +44.0, significantly above the
industry average.
Climate change and decarbonisation
The need to decarbonise our business
increases the cost of our activities
through the need to retro-fit buildings
to improve their sustainability
credentials (e.g. minimum energy
efficiency standards and building
ratings) and make them resilient to
the impact of climate change. This
also reduces our ability to redevelop
due to planning restrictions,
increased regulation and stakeholder
expectations, the increased cost
of low carbon technology/materials
(including utilisation of the circular
economy) and potentially the pricing
of carbon. Failure to meet the climate
challenge could impact our ability
to raise capital, deliver buildings,
reduce the demand for the buildings
we own, cause significant reputational
damage and result in exposure to
environmental activism and potentially
stranded assets.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
4
Embed our
Customer
First approach
6
Prepare
the pipeline
– Regular Board and Executive Committee review of Sustainability Policy
and response to climate risk.
– Sustainability Committee meets quarterly to consider strategy in
respect of climate change-related risks. Its Portfolio and Development
sub-committees meet regularly and report to the Sustainability
Committee on progress.
– Social Impact Committee meets quarterly to oversee the delivery
of our Social Impact Strategy.
– Dedicated Sustainability and Social Impact Director on the Executive
Committee supported by Sustainability Leads.
– Design Review Panel reviews design brief for all buildings to ensure that
forthcoming sustainability risks are considered.
– Sustainable Spaces Brief and Sustainability Strategy in place with climate
resilience strategy.
– Net Zero Carbon Roadmap with embodied carbon targets established
and approved by the Board. Decarbonisation Fund established to
support energy efficiency retro-fitting in existing buildings.
– ESG-linked RCF and annual bonus measures for Executive Committee
members to support delivery of decarbonisation within the business.
– Programme of ESG investor engagement in place, with regular review
of reporting requirements and participation in investor indices.
– Steering group to assess, manage and monitor EPC risks across the
portfolio both to estimate compliance costs and to inform our buy,
hold and sell strategy and decisions.
– Participation in industry bodies to influence policy and drive innovation.
No change
With the built environment contributing approximately 40% of the UK’s carbon footprint and the climate change
debate being both a moral and economic imperative, particularly for our customers and other stakeholders, we have
been further expanding our sustainability commitments and activities. Our original Statement of Intent was launched
in 2020 and set out our approach to sustainability. Since then, our approach and thinking has developed considerably.
In our recently released version 2.0, we set out progress we have made to date and updated and repositioned our
Climate Resilience pillar, whilst continuing to prioritise reducing our carbon emissions in line with our stated goal,
under our Roadmap to Net Zero, to reach net zero carbon by 2030.
Together with our Statement of Intent, we also published Our Brief for Creating Sustainable Spaces, which sets out
how we will meet our commitments as we design, construct, fit out and operate our spaces. The brief is designed to
support us as we respond to climate risk and the opportunities connected with the transition to a low carbon economy.
Our Sustainable Finance Framework governs our potential future debt issuance, with the aim of financing projects
that have a positive environmental and/or social impact. This builds on our ESG-linked revolving credit facility, which
includes targets to reduce embodied carbon from our new developments and major refurbishments by 40% and to
improve biodiversity net gain across our portfolio by 25%, in each case by 2030. The rate of interest we pay on this facility
depends on our performance against these targets. Furthermore, sustainability targets have been included within the
objectives of many of our senior executives and are being used to assess levels of remuneration. Good progress has
been made against the 2022/23 annual targets, as set out on pages 17, 40 and 41.
We continue to work to improve the number of our buildings rated for their sustainability credentials. The UK government
has previously announced its intention that all buildings will require an Energy Performance Certificate (EPC) rating
of B or above by 2030. We estimate that 80%–90% of London’s buildings do not currently meet this standard.
As a result, we have created individual asset plans to proactively improve our EPC ratings to meet government and
broader stakeholder expectations, to assess potential exposures and inform our hold/sell strategies. Furthermore,
we expect the sustainability challenge to provide us with potential opportunities to acquire orphaned assets
needing a sustainability solution.
For further details of how we are innovating to develop sustainable spaces, see pages 10, 38 and 39.
68 Great Portland Estates plc Annual Report 2023
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
Failure to meet customer needs
We fail to identify and react
effectively to shifting patterns of
workspace use and/or understand
and provide spaces that meet quickly
evolving customer needs, including
potential longer-term structural
changes in working and/or retail
practices that change the level
and nature of demand for space
in central London. This could lead
to GPE failing to deliver space and
lease terms that customers want
and/or an inappropriate mix of Flex
versus traditional space, resulting in
poor investment returns, potentially
stranded assets and losing customers
to competitors.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– HQ repositioning and Flex office strategy to meet evolving customer demand.
– Quarterly review of individual property business plans and the market
more generally.
– Portfolio Management, Leasing, Flex and Customer Experience quarterly
updates to the Executive Committee with reporting at scheduled Board
meetings.
– Board and management review of GPE’s flexible space offer across
the portfolio, including broadening our product offer.
– The Group’s in-house Customer Experience and Workspace Services
teams have proactive engagement with customers to understand their
occupational needs and requirements with a focus on retaining income,
including through meetings and regular customer surveys which help us
track our Net Promoter Score.
– Programme of engagement for members of the Executive Committee to
meet with a selection of customers across the portfolio at least once a year.
– Working with potential customers to address their needs and aspirations
during design stages of projects.
– Board and management oversight of the development and implementation
of our Innovation Strategy and related initiatives.
– Design (supported by a specialist fit-out team) and innovation activities
in the areas of sustainability, technology, wellbeing and experience.
– Customer First programme and strategy in place, with dedicated leadership
and newly adopted customer relationship management system, to further
strengthen GPE’s customer insight and Customer First approach across the
business. Customer service proposition and Standards in place to ensure
consistency when delivering the strategy.
– Board annual strategy review, including market updates received from
third parties.
Decreased
With hybrid working here to stay, and customers having more choices about where they work, our spaces need to
provide compelling reasons to come into the office. With average office rents only c.5% – 10% of a typical London
business’ salary cost, and the office environment a key tool in attracting and retaining talent, we anticipate that
competition for the very best spaces will remain healthy. We continue to witness a growing divergence between the
prospects of the best spaces versus the rest, and we believe this is set to widen further as customers seek out sustainable
and well designed, prime spaces, of which there is a marked shortage, particularly in the West End.
Our strategy of focusing on the best spaces, both through our development of large, best-in-class HQ buildings and
smaller fitted units, often with higher service levels, is underpinned by the need to meet the evolving demands of our
customers. To ensure we are delivering the spaces our customers want, we have continued to develop our Customer
First approach and embed this into our culture and across our business operations. This has included, amongst other
things, a refresh of our Fully Managed branding, the reorganisation and strengthening of our teams with new hires
and promotions, and the launch of our new customer service proposition and associated service standards.
Testament to our approach, we had a record leasing year, completing 105 new leases and renewals, and securing
£55.5 million of rent at a 3.3% premium to March 2022 ERVs, whilst continuing the successful roll-out of our flexible
space offering.
We continue to design and innovate in the areas of sustainability, technology, wellbeing and service provision. During the
year, we expanded our flexible offerings in line with quickly evolving customer demand, including the further roll-out
of our Fully Managed offer, and our ambition has now grown. Together with planned acquisitions, we are aiming to
expand our Flex office offering to more than one million sq ft over the next five years.
A close relationship with our customers is vital to our success. We were very pleased by this year’s independent
customer satisfaction survey, which updated our understanding of how our customers view their buildings and
the services we provide. Encouragingly, our Net Promoter Score remained high at +44.0, significantly above the
industry average.
Climate change and decarbonisation
The need to decarbonise our business
increases the cost of our activities
through the need to retro-fit buildings
to improve their sustainability
credentials (e.g. minimum energy
efficiency standards and building
ratings) and make them resilient to
the impact of climate change. This
also reduces our ability to redevelop
due to planning restrictions,
increased regulation and stakeholder
expectations, the increased cost
of low carbon technology/materials
(including utilisation of the circular
economy) and potentially the pricing
of carbon. Failure to meet the climate
challenge could impact our ability
to raise capital, deliver buildings,
reduce the demand for the buildings
we own, cause significant reputational
damage and result in exposure to
environmental activism and potentially
stranded assets.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
4
Embed our
Customer
First approach
6
Prepare
the pipeline
– Regular Board and Executive Committee review of Sustainability Policy
and response to climate risk.
– Sustainability Committee meets quarterly to consider strategy in
respect of climate change-related risks. Its Portfolio and Development
sub-committees meet regularly and report to the Sustainability
Committee on progress.
– Social Impact Committee meets quarterly to oversee the delivery
of our Social Impact Strategy.
– Dedicated Sustainability and Social Impact Director on the Executive
Committee supported by Sustainability Leads.
– Design Review Panel reviews design brief for all buildings to ensure that
forthcoming sustainability risks are considered.
– Sustainable Spaces Brief and Sustainability Strategy in place with climate
resilience strategy.
– Net Zero Carbon Roadmap with embodied carbon targets established
and approved by the Board. Decarbonisation Fund established to
support energy efficiency retro-fitting in existing buildings.
– ESG-linked RCF and annual bonus measures for Executive Committee
members to support delivery of decarbonisation within the business.
– Programme of ESG investor engagement in place, with regular review
of reporting requirements and participation in investor indices.
– Steering group to assess, manage and monitor EPC risks across the
portfolio both to estimate compliance costs and to inform our buy,
hold and sell strategy and decisions.
– Participation in industry bodies to influence policy and drive innovation.
No change
With the built environment contributing approximately 40% of the UK’s carbon footprint and the climate change
debate being both a moral and economic imperative, particularly for our customers and other stakeholders, we have
been further expanding our sustainability commitments and activities. Our original Statement of Intent was launched
in 2020 and set out our approach to sustainability. Since then, our approach and thinking has developed considerably.
In our recently released version 2.0, we set out progress we have made to date and updated and repositioned our
Climate Resilience pillar, whilst continuing to prioritise reducing our carbon emissions in line with our stated goal,
under our Roadmap to Net Zero, to reach net zero carbon by 2030.
Together with our Statement of Intent, we also published Our Brief for Creating Sustainable Spaces, which sets out
how we will meet our commitments as we design, construct, fit out and operate our spaces. The brief is designed to
support us as we respond to climate risk and the opportunities connected with the transition to a low carbon economy.
Our Sustainable Finance Framework governs our potential future debt issuance, with the aim of financing projects
that have a positive environmental and/or social impact. This builds on our ESG-linked revolving credit facility, which
includes targets to reduce embodied carbon from our new developments and major refurbishments by 40% and to
improve biodiversity net gain across our portfolio by 25%, in each case by 2030. The rate of interest we pay on this facility
depends on our performance against these targets. Furthermore, sustainability targets have been included within the
objectives of many of our senior executives and are being used to assess levels of remuneration. Good progress has
been made against the 2022/23 annual targets, as set out on pages 17, 40 and 41.
We continue to work to improve the number of our buildings rated for their sustainability credentials. The UK government
has previously announced its intention that all buildings will require an Energy Performance Certificate (EPC) rating
of B or above by 2030. We estimate that 80%–90% of London’s buildings do not currently meet this standard.
As a result, we have created individual asset plans to proactively improve our EPC ratings to meet government and
broader stakeholder expectations, to assess potential exposures and inform our hold/sell strategies. Furthermore,
we expect the sustainability challenge to provide us with potential opportunities to acquire orphaned assets
needing a sustainability solution.
For further details of how we are innovating to develop sustainable spaces, see pages 10, 38 and 39.
Strategic Report – Annual review
69Annual Report 2023 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties continued
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
London attractiveness
London’s appeal may be impacted
by reduced appetite to travel to,
work and shop in London due to
changes in working patterns, changes
in government policies or political
instability, the rise of alternative
destinations for international trade,
the impact of civil unrest, terrorism,
a pandemic, the impact of long-
term climate change (including risk
of flooding), disruption to energy
supplies and/or the relative expense
of operating in London. This results
in reduced international capital
flows into London, leading to a lack
of investment and/or capital flight,
lower leasing demand and elevated
vacancy, decreasing income, asset
values and development viability.
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board annual strategy review with regular economic and market updates
received from third parties.
– Strategic financial forecasts are updated prior to each Board meeting
with scenario planning for different economic cycles and eventualities.
– Regular review of strategic priorities and transactions in light of the
Group’s dashboard of lead indicators and operational parameters.
– Key London indicators are monitored to help inform GPE’s view of London’s
recovery following COVID-19.
– The impacts of international trading relationships, supply chain disruption
and geopolitical issues continue to be monitored and reported to the
Executive Committee and Board.
– Active participation in industry groups to promote London.
– Business Continuity Plan in place to manage our response to a major
incident or disruption.
No change
London generates around a quarter of UK GDP and is one of the world’s leading commercial, creative and financial
centres, with a deep pool of talent. It has one of the world’s largest commercial real estate markets, with around
440 million sq ft of office and retail property attracting a deep and diverse mix of customers and property investors,
many from overseas. London’s markets are also highly liquid and London remains one of the leading global destinations
for real estate investment due to its combination of relative value, strong legal system, time zone advantages,
international connectivity and a welcoming attitude to global businesses.
Whilst London has quickly recovered from the pandemic with West End footfall and tourism nearing pre-pandemic levels,
and whilst the risk of an imminent recession is fading, the outlook for macro-economic conditions remains unclear.
Factors such as the UK’s global trading relationships, the impact of geopolitical tensions, supply chain disruption,
lower GDP forecasts, inflationary pressures, increasing interest rates and rising costs of living still weigh on sentiment.
However, London is resilient, our leasing activity remains robust, and with business activity and optimism recovering
in recent months, we believe that its attraction as a global cultural and business centre is undiminished.
Adverse macro-economic environment
Adverse macro-economic conditions
driven by events such as geopolitical
tensions, UK political instability
or government policy, challenging
international trading relationships
and supply chain disruption results
in weakened UK GDP growth and
risk of recession. Increased inflation
(including energy prices), materially
higher interest rates and reduced
consumer spending impair investor
and occupier demand, increase
customer and supplier failure, curtail
income and reduce asset values and
returns. As a result, GPE’s financial
leverage increases and potentially
results in limited availability of
capital and/or a breach of our
banking covenants.
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Regular review of financing and capital structure, including gearing levels,
by the Chief Financial & Operating Officer and Executive Committee.
– Board annual strategy review including regular economic and market
updates received from third parties.
– Strategic financial forecasts are updated prior to each scheduled
Board meeting with scenario planning for different economic cycles
and eventualities.
– Regular review of strategic priorities and transactions in light of the
Group’s dashboard of lead indicators and operational parameters.
– Regular review of current and forecast debt, hedging levels and
financing ratios under various market scenarios.
– The Group aims to maintain a consistent policy of conservative
financial leverage.
– Proactive balance sheet management.
– Investor relations programme, with regular broker consultation,
to build a supportive base in the event of future fundraisings.
– The Group’s funding measures are diversified across a range of bank
and bond markets. Sustainable Finance Framework in place for
future debt issuances.
– Selection of customers, contractors and suppliers based on
creditworthiness and close monitoring of rent and service charge
collection rates.
Increased
The challenging macro-economic environment persisted over the course of the financial year as the economic
bounceback from the pandemic faded, and the geopolitical tensions put pressure on international supply chains
and energy prices. This was compounded by heightened UK political and economic instability during autumn 2022.
The resultant impact on inflation and interest rates continues to be felt, however, consensus forecasts suggest
that the UK will narrowly miss recession in 2023, and recent confidence metrics demonstrate growing optimism.
Despite this backdrop, our property values were resilient, reducing by 6.6% over the year driven by the impact of rising
interest rates on property yields. Whilst values were down, GPE delivered another record leasing year and our portfolio
performance was well ahead of our central London benchmarks. Encouragingly, our office ERVs continued to grow,
up 3.3% in the year, reflecting the continued shortage of high quality space across our markets. Our retail portfolio
saw values and ERVs decline by 4.5% and 1.5% respectively. However, despite this decline, our retail leasing velocity
was strong as footfall levels and consumer spending approached pre-pandemic levels and the outlook is improving.
Over the long term, real estate markets have historically been cyclical, and London has been no exception to this.
As a result, we have consistently adopted a conservative approach to financial leverage. As at 31 March 2023,
our property LTV was 19.8%, net gearing was 24.0% and interest cover was 10.2 times. As a result, we have substantial
headroom above our Group debt covenants. We estimate property values could fall around 58% before Group
debt covenants could be endangered, even before factoring in mitigating management actions. The Group also
has significant financial capacity with liquidity of £457 million (including joint ventures), comprising unrestricted
cash of £21 million and undrawn committed credit facilities of £436 million.
70 Great Portland Estates plc Annual Report 2023
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
London attractiveness
London’s appeal may be impacted
by reduced appetite to travel to,
work and shop in London due to
changes in working patterns, changes
in government policies or political
instability, the rise of alternative
destinations for international trade,
the impact of civil unrest, terrorism,
a pandemic, the impact of long-
term climate change (including risk
of flooding), disruption to energy
supplies and/or the relative expense
of operating in London. This results
in reduced international capital
flows into London, leading to a lack
of investment and/or capital flight,
lower leasing demand and elevated
vacancy, decreasing income, asset
values and development viability.
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board annual strategy review with regular economic and market updates
received from third parties.
– Strategic financial forecasts are updated prior to each Board meeting
with scenario planning for different economic cycles and eventualities.
– Regular review of strategic priorities and transactions in light of the
Group’s dashboard of lead indicators and operational parameters.
– Key London indicators are monitored to help inform GPE’s view of London’s
recovery following COVID-19.
– The impacts of international trading relationships, supply chain disruption
and geopolitical issues continue to be monitored and reported to the
Executive Committee and Board.
– Active participation in industry groups to promote London.
– Business Continuity Plan in place to manage our response to a major
incident or disruption.
No change
London generates around a quarter of UK GDP and is one of the world’s leading commercial, creative and financial
centres, with a deep pool of talent. It has one of the world’s largest commercial real estate markets, with around
440 million sq ft of office and retail property attracting a deep and diverse mix of customers and property investors,
many from overseas. London’s markets are also highly liquid and London remains one of the leading global destinations
for real estate investment due to its combination of relative value, strong legal system, time zone advantages,
international connectivity and a welcoming attitude to global businesses.
Whilst London has quickly recovered from the pandemic with West End footfall and tourism nearing pre-pandemic levels,
and whilst the risk of an imminent recession is fading, the outlook for macro-economic conditions remains unclear.
Factors such as the UK’s global trading relationships, the impact of geopolitical tensions, supply chain disruption,
lower GDP forecasts, inflationary pressures, increasing interest rates and rising costs of living still weigh on sentiment.
However, London is resilient, our leasing activity remains robust, and with business activity and optimism recovering
in recent months, we believe that its attraction as a global cultural and business centre is undiminished.
Adverse macro-economic environment
Adverse macro-economic conditions
driven by events such as geopolitical
tensions, UK political instability
or government policy, challenging
international trading relationships
and supply chain disruption results
in weakened UK GDP growth and
risk of recession. Increased inflation
(including energy prices), materially
higher interest rates and reduced
consumer spending impair investor
and occupier demand, increase
customer and supplier failure, curtail
income and reduce asset values and
returns. As a result, GPE’s financial
leverage increases and potentially
results in limited availability of
capital and/or a breach of our
banking covenants.
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Regular review of financing and capital structure, including gearing levels,
by the Chief Financial & Operating Officer and Executive Committee.
– Board annual strategy review including regular economic and market
updates received from third parties.
– Strategic financial forecasts are updated prior to each scheduled
Board meeting with scenario planning for different economic cycles
and eventualities.
– Regular review of strategic priorities and transactions in light of the
Group’s dashboard of lead indicators and operational parameters.
– Regular review of current and forecast debt, hedging levels and
financing ratios under various market scenarios.
– The Group aims to maintain a consistent policy of conservative
financial leverage.
– Proactive balance sheet management.
– Investor relations programme, with regular broker consultation,
to build a supportive base in the event of future fundraisings.
– The Group’s funding measures are diversified across a range of bank
and bond markets. Sustainable Finance Framework in place for
future debt issuances.
– Selection of customers, contractors and suppliers based on
creditworthiness and close monitoring of rent and service charge
collection rates.
Increased
The challenging macro-economic environment persisted over the course of the financial year as the economic
bounceback from the pandemic faded, and the geopolitical tensions put pressure on international supply chains
and energy prices. This was compounded by heightened UK political and economic instability during autumn 2022.
The resultant impact on inflation and interest rates continues to be felt, however, consensus forecasts suggest
that the UK will narrowly miss recession in 2023, and recent confidence metrics demonstrate growing optimism.
Despite this backdrop, our property values were resilient, reducing by 6.6% over the year driven by the impact of rising
interest rates on property yields. Whilst values were down, GPE delivered another record leasing year and our portfolio
performance was well ahead of our central London benchmarks. Encouragingly, our office ERVs continued to grow,
up 3.3% in the year, reflecting the continued shortage of high quality space across our markets. Our retail portfolio
saw values and ERVs decline by 4.5% and 1.5% respectively. However, despite this decline, our retail leasing velocity
was strong as footfall levels and consumer spending approached pre-pandemic levels and the outlook is improving.
Over the long term, real estate markets have historically been cyclical, and London has been no exception to this.
As a result, we have consistently adopted a conservative approach to financial leverage. As at 31 March 2023,
our property LTV was 19.8%, net gearing was 24.0% and interest cover was 10.2 times. As a result, we have substantial
headroom above our Group debt covenants. We estimate property values could fall around 58% before Group
debt covenants could be endangered, even before factoring in mitigating management actions. The Group also
has significant financial capacity with liquidity of £457 million (including joint ventures), comprising unrestricted
cash of £21 million and undrawn committed credit facilities of £436 million.
Strategic Report – Annual review
71Annual Report 2023 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties continued
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
Poor capital allocation decisions and/or misreading market conditions
We make poor decisions regarding
the allocation of capital and/or fail
to adequately read market conditions
(including global investor appetite
for commercial real estate and offices)
such that our leasing, buying, selling
or development activities deliver
inadequate investment returns, restrict
our ability to finance our operations
or result in inappropriate asset
concentration, building mix and/or
level of development undertaken
as a percentage of the portfolio.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board annual strategy review including regular economic and market
updates received from third parties.
– Strategy review forecast on an asset-by-asset basis to provide a business
plan for each individual property which is subsequently reviewed against
the performance of the business as a whole.
– Strategic financial forecasts are updated prior to each scheduled
Board meeting with scenario planning for different economic cycles.
– Regular reviews conducted of individual property IRRs, including quarterly
review of individual property dashboards, and market generally. Quarterly
review of asset-by-asset business plans to assess future performance
and to inform hold/sell decision making.
– Weekly investment meetings held and regular dialogue maintained with
key intermediaries.
– Portfolio Management, Flex, Customer Experience, Development and
Leasing quarterly updates to the Executive Committee with reporting
at scheduled Board meetings.
– Regular review of property cycle by reference to a dashboard of lead
indicators.
– Dedicated in-house team with remit to research submarkets in central
London, seeking the right balance between investment and development
opportunities for both current and prospective market conditions.
– Detailed due diligence processes for all prospective acquisitions/capital
expenditure to help ensure appropriate returns.
No change
We continue to assess potential acquisition opportunities across central London and regularly review the forward-
look performance of our portfolio to maximise returns. During the year, we crystallised our development profit on the
sale of 50 Finsbury Square, EC2 and sold 6/10 Market Place, W1. We also purchased 2 Cathedral Street, SE1 to augment
our HQ repositioning of Minerva House, SE1 and 6/10 St Andrew Street, EC4, to expand our growing Flex offer, further
supplemented by our recent acquisitions of Bramah House, SE1 and 141 Wardour Street, W1 in May 2023. We expect
further acquisition opportunities to emerge over the coming year.
During the year, following the pre-let of all of the offices to Clifford Chance LLP, we committed to the development
of 2 Aldermanbury Square, EC2. The cost to complete the scheme is £265.2 million, and we anticipate completion in
December 2025. We have a further three development schemes in our near-term pipeline which, together with our
expected Flex conversions and wider refurbishment plans, form our significant £0.8 billion capex programme which
is designed to deliver significant new space into a market with limited supply of high quality space.
Failure to profitably deliver the development programme
We fail to translate the development
pipeline and current committed
schemes into profitable developments.
This may result from poor development
management (including of supply
chain disruption, the impacts of
inflation or adverse yield movements),
an increasingly challenging planning
and regulatory environment, failure
to agree acceptable terms with
freeholders/adjoining owners/other
stakeholders, poor timing of activity
and/or inappropriate products for an
evolving market and customer needs
(including sustainability expectations).
This results in reduced development
activity, weak leasing performance,
reputational damage and reducing
property returns.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Strategic financial forecasts are updated prior to each scheduled
Board meeting with scenario planning for different economic cycles.
– Development management quarterly updates to the Executive Committee
with reporting to each scheduled Board meeting.
– Regular review of portfolio mix and asset concentration. Adjustment
of the portfolio as appropriate through undertaking acquisitions and/or
development projects in joint venture or forward funding.
– Regular meetings with key cost advisers, main contractors and subcontractors
to monitor market conditions. Procurement routes and when to fix prices kept
under close review.
– Prior to committing to a development, the Group conducts a detailed
financial and operational appraisal process which evaluates the expected
returns from a development in light of likely risks. During the course of a
development, the actual costs and estimated returns are regularly monitored
to signpost prompt decisions on project management, leasing and ownership.
– Regular pipeline review meetings between the Development and Portfolio
Management teams and quarterly asset review sessions.
– Selection of contractors and suppliers based on their track record of delivery
and creditworthiness, corporate responsibility and sustainability credentials.
– Post-completion reviews undertaken through Final Appraisal process on
all developments to identify best practice and areas for improvement.
– Regular, proactive engagement with key stakeholders: working closely with
agents, potential customers, and purchasers to identify and address their
needs and aspirations, including in respect of safety, sustainability, wellbeing
and technology during the planning application and design stages; regular
meetings with local authorities, planning officers and experienced planning
advisers; early engagement with local residents and community groups,
adjoining owners and freeholders.
– The Group’s Design Review Panel reviews design briefs for all buildings
for sustainability considerations. All our major developments are subject
to an appropriate sustainability rating requirement.
– Regular review of the prospective performance of individual assets
and their business plans with joint venture partners.
Increased
We currently have one committed development scheme on-site, 2 Aldermanbury Square, EC2, set to deliver 322,600 sq ft
of high quality space, and targeting net zero carbon and BREEAM ‘Excellent’. The office element of the building is 100%
pre-let, and due for completion in late 2025. We have recently committed to the refurbishment 6/10 St Andrew Street,
EC4 to supplement our growing Fully Managed offer, with completion expected in August 2024.
Beyond this, the Group is preparing a further six schemes set to deliver more than 1.1 million sq ft across the coming decade,
which are being designed to meet the highest standards of sustainable design, embrace technology and provide a
variety of adaptable and flexible working environments.
During the year, we completed the development of 50 Finsbury Square, EC2, which was verified as our first net zero
carbon development eight years ahead of our sustainability target. Despite a challenging macro-economic backdrop,
we sold the building in October 2022 for a market-beating yield, achieving a headline sale price of £190.0 million.
Given the inflationary backdrop and the impact of rising interest rates on property yields, we continue to monitor
development viabilities, including construction pricing and the resilience of supply chains, and we are working closely
with our suppliers to mitigate this risk as we plan to embark on the remainder of our near-term programme.
To successfully deliver our developments, we work closely with both local authorities and communities to secure
planning consents to create great new sustainable spaces, helping London to thrive. We aim to engage with local
authorities in an open, transparent and non-adversarial manner. Having obtained planning permission at French
Railways House & 50 Jermyn Street, SW1, we are currently awaiting the outcomes of our planning applications at
Minerva House and New City Court, both SE1, which are expected over the summer.
In line with our Social Impact Strategy, as a matter of course, we liaise with community stakeholders to understand
their needs and, where possible, we will adjust our proposals to take account of comments received. We use planning
performance agreements with the local planning authority to ensure that our planning applications are determined
in a timely manner.
Moreover, sustainability is becoming ever more important in the planning process, with key local authorities declaring
climate emergencies. We will look to work with them to support their principles of ‘good growth’ and continue to
evolve our strategies for reducing the carbon footprint of our development activities.
72 Great Portland Estates plc Annual Report 2023
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
Poor capital allocation decisions and/or misreading market conditions
We make poor decisions regarding
the allocation of capital and/or fail
to adequately read market conditions
(including global investor appetite
for commercial real estate and offices)
such that our leasing, buying, selling
or development activities deliver
inadequate investment returns, restrict
our ability to finance our operations
or result in inappropriate asset
concentration, building mix and/or
level of development undertaken
as a percentage of the portfolio.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board annual strategy review including regular economic and market
updates received from third parties.
– Strategy review forecast on an asset-by-asset basis to provide a business
plan for each individual property which is subsequently reviewed against
the performance of the business as a whole.
– Strategic financial forecasts are updated prior to each scheduled
Board meeting with scenario planning for different economic cycles.
– Regular reviews conducted of individual property IRRs, including quarterly
review of individual property dashboards, and market generally. Quarterly
review of asset-by-asset business plans to assess future performance
and to inform hold/sell decision making.
– Weekly investment meetings held and regular dialogue maintained with
key intermediaries.
– Portfolio Management, Flex, Customer Experience, Development and
Leasing quarterly updates to the Executive Committee with reporting
at scheduled Board meetings.
– Regular review of property cycle by reference to a dashboard of lead
indicators.
– Dedicated in-house team with remit to research submarkets in central
London, seeking the right balance between investment and development
opportunities for both current and prospective market conditions.
– Detailed due diligence processes for all prospective acquisitions/capital
expenditure to help ensure appropriate returns.
No change
We continue to assess potential acquisition opportunities across central London and regularly review the forward-
look performance of our portfolio to maximise returns. During the year, we crystallised our development profit on the
sale of 50 Finsbury Square, EC2 and sold 6/10 Market Place, W1. We also purchased 2 Cathedral Street, SE1 to augment
our HQ repositioning of Minerva House, SE1 and 6/10 St Andrew Street, EC4, to expand our growing Flex offer, further
supplemented by our recent acquisitions of Bramah House, SE1 and 141 Wardour Street, W1 in May 2023. We expect
further acquisition opportunities to emerge over the coming year.
During the year, following the pre-let of all of the offices to Clifford Chance LLP, we committed to the development
of 2 Aldermanbury Square, EC2. The cost to complete the scheme is £265.2 million, and we anticipate completion in
December 2025. We have a further three development schemes in our near-term pipeline which, together with our
expected Flex conversions and wider refurbishment plans, form our significant £0.8 billion capex programme which
is designed to deliver significant new space into a market with limited supply of high quality space.
Failure to profitably deliver the development programme
We fail to translate the development
pipeline and current committed
schemes into profitable developments.
This may result from poor development
management (including of supply
chain disruption, the impacts of
inflation or adverse yield movements),
an increasingly challenging planning
and regulatory environment, failure
to agree acceptable terms with
freeholders/adjoining owners/other
stakeholders, poor timing of activity
and/or inappropriate products for an
evolving market and customer needs
(including sustainability expectations).
This results in reduced development
activity, weak leasing performance,
reputational damage and reducing
property returns.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Strategic financial forecasts are updated prior to each scheduled
Board meeting with scenario planning for different economic cycles.
– Development management quarterly updates to the Executive Committee
with reporting to each scheduled Board meeting.
– Regular review of portfolio mix and asset concentration. Adjustment
of the portfolio as appropriate through undertaking acquisitions and/or
development projects in joint venture or forward funding.
– Regular meetings with key cost advisers, main contractors and subcontractors
to monitor market conditions. Procurement routes and when to fix prices kept
under close review.
– Prior to committing to a development, the Group conducts a detailed
financial and operational appraisal process which evaluates the expected
returns from a development in light of likely risks. During the course of a
development, the actual costs and estimated returns are regularly monitored
to signpost prompt decisions on project management, leasing and ownership.
– Regular pipeline review meetings between the Development and Portfolio
Management teams and quarterly asset review sessions.
– Selection of contractors and suppliers based on their track record of delivery
and creditworthiness, corporate responsibility and sustainability credentials.
– Post-completion reviews undertaken through Final Appraisal process on
all developments to identify best practice and areas for improvement.
– Regular, proactive engagement with key stakeholders: working closely with
agents, potential customers, and purchasers to identify and address their
needs and aspirations, including in respect of safety, sustainability, wellbeing
and technology during the planning application and design stages; regular
meetings with local authorities, planning officers and experienced planning
advisers; early engagement with local residents and community groups,
adjoining owners and freeholders.
– The Group’s Design Review Panel reviews design briefs for all buildings
for sustainability considerations. All our major developments are subject
to an appropriate sustainability rating requirement.
– Regular review of the prospective performance of individual assets
and their business plans with joint venture partners.
Increased
We currently have one committed development scheme on-site, 2 Aldermanbury Square, EC2, set to deliver 322,600 sq ft
of high quality space, and targeting net zero carbon and BREEAM ‘Excellent’. The office element of the building is 100%
pre-let, and due for completion in late 2025. We have recently committed to the refurbishment 6/10 St Andrew Street,
EC4 to supplement our growing Fully Managed offer, with completion expected in August 2024.
Beyond this, the Group is preparing a further six schemes set to deliver more than 1.1 million sq ft across the coming decade,
which are being designed to meet the highest standards of sustainable design, embrace technology and provide a
variety of adaptable and flexible working environments.
During the year, we completed the development of 50 Finsbury Square, EC2, which was verified as our first net zero
carbon development eight years ahead of our sustainability target. Despite a challenging macro-economic backdrop,
we sold the building in October 2022 for a market-beating yield, achieving a headline sale price of £190.0 million.
Given the inflationary backdrop and the impact of rising interest rates on property yields, we continue to monitor
development viabilities, including construction pricing and the resilience of supply chains, and we are working closely
with our suppliers to mitigate this risk as we plan to embark on the remainder of our near-term programme.
To successfully deliver our developments, we work closely with both local authorities and communities to secure
planning consents to create great new sustainable spaces, helping London to thrive. We aim to engage with local
authorities in an open, transparent and non-adversarial manner. Having obtained planning permission at French
Railways House & 50 Jermyn Street, SW1, we are currently awaiting the outcomes of our planning applications at
Minerva House and New City Court, both SE1, which are expected over the summer.
In line with our Social Impact Strategy, as a matter of course, we liaise with community stakeholders to understand
their needs and, where possible, we will adjust our proposals to take account of comments received. We use planning
performance agreements with the local planning authority to ensure that our planning applications are determined
in a timely manner.
Moreover, sustainability is becoming ever more important in the planning process, with key local authorities declaring
climate emergencies. We will look to work with them to support their principles of ‘good growth’ and continue to
evolve our strategies for reducing the carbon footprint of our development activities.
Strategic Report – Annual review
73Annual Report 2023 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties continued
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
People
Failure to attract, incentivise
and retain high quality, suitably
diverse and experienced individuals
negatively impacts our ability
to deliver our strategic objectives
and has a detrimental impact on
our values and inclusive culture.
Additionally, failure to design and
implement the right organisational
structure (structure, skills, resourcing
levels) will impede our ability to
achieve our strategic objectives.
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Regular review is undertaken of the Group’s resourcing requirements,
performance management, talent review and succession planning.
– The Group has a competitive and attractive employee value proposition
that is strongly linked to performance and values and a formal six-monthly
appraisal system to provide regular assessment of individual performance.
– Regular benchmarking of remuneration and non-financial packages to
ensure they remain competitive in the market.
– Personal development planning and ongoing training support for employees,
together with focused initiatives to nurture potential successors, including
mentoring and coaching programmes.
– Clear articulation of GPE values and behaviours which are embedded in key
people practices. We place strong emphasis on creating an inclusive culture,
supported by the work of our Inclusion Committee and four employee-led
impact groups.
– Board, Nomination and Executive Committee oversight of our People Plan
and diversity and inclusion strategy.
– Hybrid Working Policy to give employees appropriate flexibility to perform
their roles.
– Focus on people engagement with regular two-way communication
and responsive employee-focused activities.
Decreased
The motivation of our people and maintaining our strong inclusive culture remains fundamental to the delivery of our
strategic priorities. The strength of our values and appeal of our culture was highlighted with our most recent employee
pulse survey showing 85% of our people would ‘recommend GPE as a great place to work’. While slightly down from the
prior year, our most recent engagement scores remain very favourable. We continue to develop our talent from within,
including making several internal promotions to our senior management team. We have also reorganised our teams
and enhanced our skills and capabilities to support the delivery of our Customer First approach.
We continue to progress our diversity and inclusion strategy, which forms an integral part of our People Plan. During
the year, the Board and Nomination Committee have continued to oversee the implementation of key initiatives and
the setting of clear representation targets across the Group. See pages 57 and 103 for further details.
The physical and mental wellbeing of our people remains a key priority, and we have offered financial support to team
members on lower salaries during the cost of living crisis, along with wider support across the organisation. We seek
to be a caring and supportive employer with a comprehensive Wellbeing Programme to support physical and mental
health with a focus on de-stigmatising the reality of mental health challenges. We have trained mental health first
aiders and have introduced innovative tools to support the mental health of our employees and family members.
We have continued our Board Engagement Programme to enable the Board to listen and respond to feedback from
employees and to discuss important matters impacting the business. During the year, we launched four new Employee Impact
Groups to strengthen our engagement and feedback from under-represented groups, overseen by our Inclusion Committee.
We continue to focus on growing the breadth, depth and diversity of our talent, providing focused development
support where needed in an inclusive environment. While our employee retention rate for the year was high at 83.5%,
retention and incentivisation remain important areas of focus under our People Plan.
Health and safety
A health and safety incident
(including by our contractors) results
in loss of life, significant injury or
widespread infection, and financial
and/or reputational damage to GPE.
Furthermore, significant changes
in health and safety and fire safety
regulations (including pursuant to the
Building Safety Act 2022) and practice,
driven by government intervention
following events such as Grenfell,
increase compliance and development
costs and/or risks of non-compliance.
1
Progress
sustainability
and innovation
agenda
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Quarterly Health and Safety Committee meetings are held, with formal
quarterly reporting on health and safety to the Executive Committee
and regular reporting to the Board, including on progress against
our Health and Safety Strategy.
– Regular health and safety site checks are undertaken by Executive
Committee members, the senior leadership team, the Development
and Project Management teams and third parties, along with regular
senior leadership tours of buildings.
– Pre-qualification and competency checks are undertaken for contractors
and consultants with contractor management processes in place.
– Formal reporting on near misses/significant incidents and accidents.
– Proactive health and safety KPIs to monitor and track performance
and drive behaviours.
– Annual external cycle of health and safety, fire safety and water safety audits.
– Online health and safety risk management system in place for the business.
– Comprehensive golden thread of fire safety management procedures in place.
– Activities are undertaken to monitor and raise employee awareness and
understanding of health and safety matters, including through employee
engagement surveys.
– Comprehensive health and wellbeing programme in place for employees
with mental health first aiders and an employee assistance programme.
No change
We continue to focus on ensuring that we have a best-in-class and proactive health and safety culture. With the
introduction of the Fire Safety Act and Building Safety Act, we have proactively strengthened our practices and
procedures in response to new and anticipated requirements. We continue to monitor evolving regulation and assess
its potential impact on our portfolio.
The Group had one reportable accident during the year. Where accidents do occur, we work with our supply chain
on accident investigation to understand lessons learned and opportunities for improvement, to consider how the
work could have been set up differently and to understand how, as a client, we can better support our suppliers.
We continue to undertake activities to raise employee awareness and understanding of health and safety requirements
and have improved the monitoring of health and safety across the portfolio through the introduction of a set of
proactive key performance indicators. In our most recent employee pulse survey, 91% of respondents agreed or
strongly agreed that the organisation takes health and safety seriously.
Cyber security and infrastructure failure
A cyber attack or infrastructure
failure leads to business or network
disruption within our portfolio or loss
of information or personal and/or
customer data. There is the potential
for greater impact on Fully Managed
customers, to which we provide
increased infrastructure support, and
high-risk customers. This results in
litigation, reputational damage and/
or financial or regulatory penalties.
1
Progress
sustainability
and innovation
agenda
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
– IT and cyber security updates are regularly reported to the Executive
Committee and the Board, which oversee the implementation of our
three-year IT strategy adopted in March 2021.
– Cyber security systems and controls are in place and regularly reviewed,
with external support, against best practice.
– A head office and portfolio IT risk register is maintained.
– The Group’s IT Disaster Recovery Plan is regularly reviewed and tested
and recovery of data at an off-site recovery centre is tested during the year.
– Regular testing of IT security is undertaken, including penetration testing
of key systems.
– The Group’s data is regularly backed up and replicated.
– The Group’s Cyber Third Party Management and Security Policy and
processes are designed to identify and control cyber-related risks
arising from our third-party relationships.
– Employee awareness training on cyber risk is undertaken regularly.
– Cyber risk insurance is in place.
– Each building has a bespoke Emergency Action Plan, maintaining
appropriate systems to mitigate any infrastructure failure.
No change
Cyber security risk has remained elevated due to the rise in attempted cyber crime arising from geopolitical tensions,
combined with greater reliance on technology and increased vulnerabilities created by remote and hybrid working.
We have continued to invest time and resource into our cyber security measures, both in our head office and across
our portfolio.
The implementation of recommendations from a simulated cyber-attack exercise during the year, together with
an internal audit cyber security review, has served to strengthen the design and operation of our controls.
Our three-year IT Strategy is designed in part to further enhance our IT and cyber controls as we continue to innovate
and digitise our business.
74 Great Portland Estates plc Annual Report 2023
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
People
Failure to attract, incentivise
and retain high quality, suitably
diverse and experienced individuals
negatively impacts our ability
to deliver our strategic objectives
and has a detrimental impact on
our values and inclusive culture.
Additionally, failure to design and
implement the right organisational
structure (structure, skills, resourcing
levels) will impede our ability to
achieve our strategic objectives.
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Regular review is undertaken of the Group’s resourcing requirements,
performance management, talent review and succession planning.
– The Group has a competitive and attractive employee value proposition
that is strongly linked to performance and values and a formal six-monthly
appraisal system to provide regular assessment of individual performance.
– Regular benchmarking of remuneration and non-financial packages to
ensure they remain competitive in the market.
– Personal development planning and ongoing training support for employees,
together with focused initiatives to nurture potential successors, including
mentoring and coaching programmes.
– Clear articulation of GPE values and behaviours which are embedded in key
people practices. We place strong emphasis on creating an inclusive culture,
supported by the work of our Inclusion Committee and four employee-led
impact groups.
– Board, Nomination and Executive Committee oversight of our People Plan
and diversity and inclusion strategy.
– Hybrid Working Policy to give employees appropriate flexibility to perform
their roles.
– Focus on people engagement with regular two-way communication
and responsive employee-focused activities.
Decreased
The motivation of our people and maintaining our strong inclusive culture remains fundamental to the delivery of our
strategic priorities. The strength of our values and appeal of our culture was highlighted with our most recent employee
pulse survey showing 85% of our people would ‘recommend GPE as a great place to work’. While slightly down from the
prior year, our most recent engagement scores remain very favourable. We continue to develop our talent from within,
including making several internal promotions to our senior management team. We have also reorganised our teams
and enhanced our skills and capabilities to support the delivery of our Customer First approach.
We continue to progress our diversity and inclusion strategy, which forms an integral part of our People Plan. During
the year, the Board and Nomination Committee have continued to oversee the implementation of key initiatives and
the setting of clear representation targets across the Group. See pages 57 and 103 for further details.
The physical and mental wellbeing of our people remains a key priority, and we have offered financial support to team
members on lower salaries during the cost of living crisis, along with wider support across the organisation. We seek
to be a caring and supportive employer with a comprehensive Wellbeing Programme to support physical and mental
health with a focus on de-stigmatising the reality of mental health challenges. We have trained mental health first
aiders and have introduced innovative tools to support the mental health of our employees and family members.
We have continued our Board Engagement Programme to enable the Board to listen and respond to feedback from
employees and to discuss important matters impacting the business. During the year, we launched four new Employee Impact
Groups to strengthen our engagement and feedback from under-represented groups, overseen by our Inclusion Committee.
We continue to focus on growing the breadth, depth and diversity of our talent, providing focused development
support where needed in an inclusive environment. While our employee retention rate for the year was high at 83.5%,
retention and incentivisation remain important areas of focus under our People Plan.
Health and safety
A health and safety incident
(including by our contractors) results
in loss of life, significant injury or
widespread infection, and financial
and/or reputational damage to GPE.
Furthermore, significant changes
in health and safety and fire safety
regulations (including pursuant to the
Building Safety Act 2022) and practice,
driven by government intervention
following events such as Grenfell,
increase compliance and development
costs and/or risks of non-compliance.
1
Progress
sustainability
and innovation
agenda
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Quarterly Health and Safety Committee meetings are held, with formal
quarterly reporting on health and safety to the Executive Committee
and regular reporting to the Board, including on progress against
our Health and Safety Strategy.
– Regular health and safety site checks are undertaken by Executive
Committee members, the senior leadership team, the Development
and Project Management teams and third parties, along with regular
senior leadership tours of buildings.
– Pre-qualification and competency checks are undertaken for contractors
and consultants with contractor management processes in place.
– Formal reporting on near misses/significant incidents and accidents.
– Proactive health and safety KPIs to monitor and track performance
and drive behaviours.
– Annual external cycle of health and safety, fire safety and water safety audits.
– Online health and safety risk management system in place for the business.
– Comprehensive golden thread of fire safety management procedures in place.
– Activities are undertaken to monitor and raise employee awareness and
understanding of health and safety matters, including through employee
engagement surveys.
– Comprehensive health and wellbeing programme in place for employees
with mental health first aiders and an employee assistance programme.
No change
We continue to focus on ensuring that we have a best-in-class and proactive health and safety culture. With the
introduction of the Fire Safety Act and Building Safety Act, we have proactively strengthened our practices and
procedures in response to new and anticipated requirements. We continue to monitor evolving regulation and assess
its potential impact on our portfolio.
The Group had one reportable accident during the year. Where accidents do occur, we work with our supply chain
on accident investigation to understand lessons learned and opportunities for improvement, to consider how the
work could have been set up differently and to understand how, as a client, we can better support our suppliers.
We continue to undertake activities to raise employee awareness and understanding of health and safety requirements
and have improved the monitoring of health and safety across the portfolio through the introduction of a set of
proactive key performance indicators. In our most recent employee pulse survey, 91% of respondents agreed or
strongly agreed that the organisation takes health and safety seriously.
Cyber security and infrastructure failure
A cyber attack or infrastructure
failure leads to business or network
disruption within our portfolio or loss
of information or personal and/or
customer data. There is the potential
for greater impact on Fully Managed
customers, to which we provide
increased infrastructure support, and
high-risk customers. This results in
litigation, reputational damage and/
or financial or regulatory penalties.
1
Progress
sustainability
and innovation
agenda
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
– IT and cyber security updates are regularly reported to the Executive
Committee and the Board, which oversee the implementation of our
three-year IT strategy adopted in March 2021.
– Cyber security systems and controls are in place and regularly reviewed,
with external support, against best practice.
– A head office and portfolio IT risk register is maintained.
– The Group’s IT Disaster Recovery Plan is regularly reviewed and tested
and recovery of data at an off-site recovery centre is tested during the year.
– Regular testing of IT security is undertaken, including penetration testing
of key systems.
– The Group’s data is regularly backed up and replicated.
– The Group’s Cyber Third Party Management and Security Policy and
processes are designed to identify and control cyber-related risks
arising from our third-party relationships.
– Employee awareness training on cyber risk is undertaken regularly.
– Cyber risk insurance is in place.
– Each building has a bespoke Emergency Action Plan, maintaining
appropriate systems to mitigate any infrastructure failure.
No change
Cyber security risk has remained elevated due to the rise in attempted cyber crime arising from geopolitical tensions,
combined with greater reliance on technology and increased vulnerabilities created by remote and hybrid working.
We have continued to invest time and resource into our cyber security measures, both in our head office and across
our portfolio.
The implementation of recommendations from a simulated cyber-attack exercise during the year, together with
an internal audit cyber security review, has served to strengthen the design and operation of our controls.
Our three-year IT Strategy is designed in part to further enhance our IT and cyber controls as we continue to innovate
and digitise our business.
Strategic Report – Annual review
75Annual Report 2023 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties continued
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
Failure to profitably deliver the Flex Strategy
The failure to appropriately structure
our activities, achieve appropriate
pricing, maximise operational
efficiencies or adequately control
costs impacts the delivery of our
Flex office strategy and our ability
to generate appropriate risk-adjusted
returns. Further, as we scale up our
Flex office delivery and increase our
focus on service provision, the failure
by GPE and/or its service partners
to deliver high quality service impacts
customer satisfaction, demand and
retention and asset values.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board and management oversight of the development and implementation
of the Flex business plan with regular review of Flex KPIs to monitor performance.
– Board annual strategy review with regular market updates.
– Quarterly Flex updates to the Executive Committee with reporting
at scheduled Board meetings.
– Dedicated Flex leadership and team in place under a new organisational
structure with regular review of team skills and capabilities to support
delivery.
– Customer First Programme and Strategy in place to strengthen GPE’s
customer insight and Customer First approach.
– Proactive customer engagement led by our dedicated Customer
Experience and Workplace Services teams to ensure our customers’
occupational needs are met.
– Quarterly review of individual assets plans and the market generally.
– Close management oversight of costs and services, including design
and delivery.
– Design (supported by a specialist fit-out team) and innovation activities
in the areas of sustainability, technology, wellbeing and experience.
New Flex Design Guidelines & Principles adopted to provide consistency
and increase efficiencies across the portfolio.
– Board and management oversight of our Innovation Strategy
and related initiatives to support customer needs.
No change
To profitably deliver our Flex Strategy and scale up our Flex operations, we have improved our ability to deliver this
operationally intensive side of our business, control the associated cost base and generate appropriate risk-adjusted
returns. We have also recruited additional expertise to focus on improving management information, budgeting,
customer experience and delivery.
During the year, including our Flex partnerships, we increased our committed Flex offerings across the portfolio,
and they now total 414,000 sq ft (or approximately 21% of our office portfolio). This included rolling out our offering to
three new buildings in the year, including at Wells & More, W1, as well as committing to the 42,700 sq ft refurbishment
of 6/10 St Andrews Street, EC4 and the extensive refurbishment of Alfred Pace, WC1. In total, we signed £11.8 million
of new leases in our Flex space, which included 17 Fitted and 14 Fully Managed leases at a combined 10.8% ahead of
March 2022 ERV.
We continue to evolve our operating model and closely monitor costs and prospective risk-adjusted returns
as we refine our offer. A Flex management pack with operational KPIs has been further developed to monitor
performance and maximise returns.
To date, we remain encouraged by the leasing performance and feedback we have had for our products,
which was reflected in this year’s independent customer satisfaction survey, where our Net Promoter Score
remained high, particularly for our Flex offers. The ongoing development of our Customer First programme is
designed to ensure continuous feedback and provide valuable insight to help us deliver the type and quality
of services our customers demand.
76 Great Portland Estates plc Annual Report 2023
Principal risk Strategic priorities How we monitor and manage risk
Directional travel of
net risk movement
over the last 12 months Commentary
Failure to profitably deliver the Flex Strategy
The failure to appropriately structure
our activities, achieve appropriate
pricing, maximise operational
efficiencies or adequately control
costs impacts the delivery of our
Flex office strategy and our ability
to generate appropriate risk-adjusted
returns. Further, as we scale up our
Flex office delivery and increase our
focus on service provision, the failure
by GPE and/or its service partners
to deliver high quality service impacts
customer satisfaction, demand and
retention and asset values.
1
Progress
sustainability
and innovation
agenda
2
Enhance
portfolio
through sales
and acquisitions
3
Deliver on our
Flex ambition
4
Embed our
Customer
First approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board and management oversight of the development and implementation
of the Flex business plan with regular review of Flex KPIs to monitor performance.
– Board annual strategy review with regular market updates.
– Quarterly Flex updates to the Executive Committee with reporting
at scheduled Board meetings.
– Dedicated Flex leadership and team in place under a new organisational
structure with regular review of team skills and capabilities to support
delivery.
– Customer First Programme and Strategy in place to strengthen GPE’s
customer insight and Customer First approach.
– Proactive customer engagement led by our dedicated Customer
Experience and Workplace Services teams to ensure our customers’
occupational needs are met.
– Quarterly review of individual assets plans and the market generally.
– Close management oversight of costs and services, including design
and delivery.
– Design (supported by a specialist fit-out team) and innovation activities
in the areas of sustainability, technology, wellbeing and experience.
New Flex Design Guidelines & Principles adopted to provide consistency
and increase efficiencies across the portfolio.
– Board and management oversight of our Innovation Strategy
and related initiatives to support customer needs.
No change
To profitably deliver our Flex Strategy and scale up our Flex operations, we have improved our ability to deliver this
operationally intensive side of our business, control the associated cost base and generate appropriate risk-adjusted
returns. We have also recruited additional expertise to focus on improving management information, budgeting,
customer experience and delivery.
During the year, including our Flex partnerships, we increased our committed Flex offerings across the portfolio,
and they now total 414,000 sq ft (or approximately 21% of our office portfolio). This included rolling out our offering to
three new buildings in the year, including at Wells & More, W1, as well as committing to the 42,700 sq ft refurbishment
of 6/10 St Andrews Street, EC4 and the extensive refurbishment of Alfred Pace, WC1. In total, we signed £11.8 million
of new leases in our Flex space, which included 17 Fitted and 14 Fully Managed leases at a combined 10.8% ahead of
March 2022 ERV.
We continue to evolve our operating model and closely monitor costs and prospective risk-adjusted returns
as we refine our offer. A Flex management pack with operational KPIs has been further developed to monitor
performance and maximise returns.
To date, we remain encouraged by the leasing performance and feedback we have had for our products,
which was reflected in this year’s independent customer satisfaction survey, where our Net Promoter Score
remained high, particularly for our Flex offers. The ongoing development of our Customer First programme is
designed to ensure continuous feedback and provide valuable insight to help us deliver the type and quality
of services our customers demand.
Strategic Report – Annual review
77Annual Report 2023 Great Portland Estates plc
Our approach to risk continued
Viability statement
Assessment of the Group’s prospects
In accordance with Provision 31 of the 2018 UK Corporate
Governance Code, the Board has assessed the prospects
of the Group over a longer period than the 12 months required
by the ‘Going Concern’ provision. The work conducted for
this longer-term assessment supports the Board’s statements
on both viability, as set out below, and going concern, as set
out on page 156.
The Group’s future prospects are assessed regularly and
at an annual strategy review in late March. This review is led
by the Chief Executive drawing on expertise across the Group.
This year it included an assessment of the macro-economic
environment, forecasts of key property market metrics
(including yields and rental value movements), annual valuation
movements for each of our properties, the financial metrics
associated with our Flex offerings, the costs associated with
meeting emerging sustainability regulations and a selection
of development scenarios. It also included a number of market
assumptions, including base, upside and downside scenarios,
to reflect different potential economic outcomes, including
further disruption from political and economic uncertainty,
and a number of business activity responses, including
development activity, sales and acquisitions.
The key outputs from this process are full financial statements
for a five-year forecast period, with a primary focus on the
first three years. The forecasts are summarised in a dashboard,
which analyses profits, cash flows, funding requirements, key
financial ratios, compliance with the REIT rules and headroom
in respect of the financial covenants contained in the Group’s
various loan arrangements. The strategy review was considered
by the Board in March 2023, with updated forecasts, including
a Going Concern market scenario to reflect the impact of
an event similar to the 2008/09 financial crisis in severity,
presented to the Board in May.
The forecasts contain a number of assumptions, including:
– estimated year on year movements in rental values and yields
for each of our properties under a number of scenarios;
– the continued conversion of some of our office space
to our Flex offerings;
– the refinancing of the Group’s existing debt facilities as
they fall due, including its £175 million private placement
notes maturing in May 2024 and its revolving credit facility
maturing in January 2027, as disclosed in note 15;
– a number of sales and acquisition scenarios with appropriate
new debt facilities to support growth;
– the completion of the Group’s committed development
programme in line with our most recent estimated
completion dates and the commencement of certain
pipeline projects; and
– forecast interest rates.
Assessment of risks
The Group’s principal risks are subject to regular review by the
Executive Committee, the Audit Committee and the Board.
The review conducted for the preparation of the Annual Report
and the Viability Statement demonstrated limited change in
our principal risks over the year.
The risks with the greatest potential impact on the Group’s viability
were considered as follows (see pages 65 to 77 above):
– London attractiveness: we rely on London’s magnetism
and relative appeal to other financial centres to continue
to attract global capital, businesses and talent from
around the world to support demand for our properties;
– Adverse macro-economic environment: a challenging
economic backdrop could instigate financial stress in our
key markets materially reducing property values, and the
viability of Group’s developments, and impairing the Group’s
income risking a breach of our banking covenants; and
– Climate change and decarbonisation: a changing
climate could impact the resilience of our buildings,
impact our ability to deliver new developments and
reduce the demand for the buildings we own.
Assessment of viability
A three-year viability period is considered an optimum balance
between our need to plan for the long term and the shorter-term
nature of our active business model, which often includes high
levels of recycling of our property portfolio, an average lease
length of around three years and a near-term development
programme which will be commenced over the same period.
The assessment of viability included stress testing the resilience
of the Group, and its business model, to the potential impact of
the risks set out above. Specifically, given the ongoing macro-
economic uncertainty, high inflationary environment and rising
interest rates, our assessment of viability was based on the
Group’s performance under a Going Concern market scenario,
with further sensitivity analysis to understand the resilience of
the Group to a significant economic shock.
The Going Concern market scenario reduced prime office rental
values by 19%, with secondary offices down 23% from March
values and assumed an outward yield shift of 100 basis points
for prime offices, 200 basis points for secondary offices and
125 basis points for retail. When combined, over the three-year
period, this scenario reduced property values by around 33%.
The assessment demonstrated that given the Group’s low
levels of debt and high liquidity, it would be able to withstand
the impact of this scenario over the period of the financial
forecast and continue to operate with headroom above the
financial covenants contained in its various loan arrangements.
Moreover, this was before any mitigating actions such as
property sales or pausing of the capital expenditure associated
with the conversion of office space to the Group’s Flex offerings.
In addition, reverse stress tests were performed, to understand
how extensive any valuation and income fall would be required
to extinguish the Group’s liquidity and/or breach the Group’s
gearing, interest cover ratio or inner borrowing covenants. In the
three-year period, before any mitigating actions, rental income
would need to fall by an additional 38% and property values
would need to fall by a further 55%, before the Group breached
its banking covenants.
The assessment also included a review of the potential impact of
climate change on the Group. Whilst it would be unlikely to affect
the viability of the Group within the three-year review period,
we ran a scenario to assess the impact of significant increases
in the cost of development to meet sustainability requirements
(an additional 10% on our committed development capex).
This did not impact our viability assessment.
Viability statement
Whilst the Directors have no reason to believe that the
Group will not be viable over a longer period, based on this
assessment of the prospects and viability of the Group, the
Directors confirm that they have a reasonable expectation
that the Group will be able to continue in operation and
meet its liabilities as they fall due over the three-year
period ending 31 March 2026.
78 Great Portland Estates plc Annual Report 2023
In this section:
80 Overview
81 Introduction from the Chair
84 The Board
86 Leadership and purpose
90 Engaging with our investors
92 Engaging with our employees
94 Board consideration of stakeholder
interests and s.172(1) matters
98 Division of responsibilities
100 Composition, succession and evaluation
106 Audit, risks and internal controls
114 Directors’ remuneration report
147 Report of the Directors
150 Directors’ responsibilities statement
Governance
GPE Future London Photography
Award Winner
www.nicofroehlich.com
#gpephotographyaward
Governance
79Annual Report 2023 Great Portland Estates plc
Overview
Statement by the Directors on compliance with the provisions of the UK Corporate Governance Code
The UK Corporate Governance Code 2018 (the Code) applied to GPE’s financial year ended 31 March 2023. The Board
considers that it has complied in full with the provisions of the Code during the year with the exception of Provision 38,
which requires the alignment of Executive Director pension contributions with the wider workforce, in respect of which
GPE was not compliant for the entirety of the financial year. In line with our prior commitment, the pension contributions
of the Chief Executive and Chief Financial & Operating Officer were aligned with the wider workforce from 1 January 2023
and the Company was fully compliant with Provision 38 from that date. The Code is publicly available at www.frc.org.uk.
A summary of the system of governance adopted by the Company and how we have applied the principles of the Code
is set out on pages 81 to 149.
Leadership
and purpose
Provides an overview of
the activities undertaken
by the Board in the year,
how the Board has
considered its s.172
responsibilities and its
governance framework.
– A review of the year from the Chair
– The Board’s attendance and activities during the year
– Setting the Company’s standards
– Purpose, values and culture
– Stakeholder engagement and how the Board has
considered its s.172 and stakeholder responsibilities
– Our conflicts of interest procedures
– Board induction and development
See more about our approach to leadership
and purpose on pages 81 to 97
Division of
responsibilities
Explains the roles of the
Board and its Directors.
– The role and interaction of the Board and
its Committees during the year
– The roles of the individual Directors
See more about our approach to division
of responsibilities on pages 98 and 99
Composition,
succession
and evaluation
Sets out the key processes
which ensure that the
Board and its Committees
can operate effectively.
– Composition and diversity
– Nomination Committee report
– This year’s Board evaluation
See more about our approach to effectiveness
on pages 100 to 105
Audit, risks and
internal controls
Explains the role of
the Board and the Audit
Committee in ensuring
the integrity of the
financial statements and
maintaining effective
systems of internal controls.
– Internal controls and ongoing risk management
– Fair, balanced and understandable
– Audit Committee report
See more about our approach to accountability
on pages 106 to 113
Remuneration
Describes the Company’s
remuneration arrangements
in respect of its Directors,
how these have been
implemented in 2022/23
and details of our proposed
revised remuneration
policy to govern future
arrangements.
– Statement by the Remuneration Committee Chair
– Annual report on remuneration
– Directors’ remuneration policy
See more about our approach to remuneration
on pages 114 to 146
80 Great Portland Estates plc Annual Report 2023
Introduction from the Chair
Dear fellow shareholder
I am delighted to introduce this year’s Corporate Governance
report for the financial year ended 31 March 2023.
The Board recognises that how the Group does business is as
important as what it does. A strong governance framework
with robust supporting processes across the Group, with high
standards set from the top, is a key factor in our ability to
deliver sustainable business performance, generate value
for our shareholders and contribute to wider society.
A key part of the Board’s role is to provide entrepreneurial
leadership, with appropriate oversight, challenge and support
to management. At GPE, the Board’s support, advice and
interaction extend beyond the boardroom, supporting
our efforts to promote and monitor culture and ensure its
alignment with our purpose, values and strategy.
Board focus and oversight
Key areas of the Board’s focus during the year have included
our response to uncertain macro conditions and the volatile
global and political landscape, the evolution of our strategy,
driving our Flex ambitions alongside the development
pipeline, embedding our Customer First approach in our
culture and our operations, wider stakeholder engagement,
progressing our sustainability and social impact agendas
and advancing our diversity and inclusion agenda.
Further details can be found in ‘What we did in 2022/23’
on pages 96 and 97.
2018 UK Corporate Governance Code
and s.172 reporting
This report demonstrates how we have applied the principles
and complied with the provisions of the UK Corporate
Governance Code 2018 (the Code) during the year and our
approach to governance in practice. Our Code compliance
statement can be found on page 80. Details of how the
Board has discharged its duty under s.172 of the Companies
Act 2006 can be found on pages 62, 94, 96 and 97.
Board composition
Succession planning is an important part of our governance
processes. Furthermore, as our strategy evolves, so too do the
skills and expertise required for our Board. Having identified
a need to strengthen the Board’s technology, digital and data
expertise, we were pleased to welcome Champa Magesh to
the Board from 1 August 2022. In addition, a search process is
progressing for an additional Non-Executive Director to enhance
the Board’s City, financial and transaction experience and
with the aspiration of increasing the Board’s overall diversity.
As planned, Wendy Becker stepped down from the Board
and Nick Hampton as Chair of the Audit Committee from
the conclusion of the 2022 AGM. Following detailed handover
processes, Emma Woods and Vicky Jarman became our new
Chairs of the Remuneration and Audit Committee respectively,
each bringing valuable experience to their roles.
Charles Philipps retired from the Board on 30 March 2023
following nine years of service and was succeeded as
Senior Independent Director by Nick Hampton. Separately,
Alison Rose will be stepping down from the Board from the
conclusion of the 2023 AGM to focus on her other commitments.
I would like to thank both Charles and Alison for their
hugely valuable contributions and insights throughout
their tenures and wish them every success for the future.
Further details regarding Board changes, and our Board
appointment processes, can be found in the Nomination
Committee report on page 102.
Diversity and inclusion
The Board continues to focus on strengthening diversity
and inclusion at GPE, both in relation to the Board and
more broadly throughout the organisation. A diverse Board
and workforce, which is representative of London and
our customers, is a strategic imperative as we enhance our
customer approach and develop our operations to meet the
evolving needs of a diverse customer base. We believe that
a more diverse and inclusive culture will help GPE to become
a more profitable, successful and innovative organisation.
We have seen good progress in a number of areas following the
adoption of our new People Plan last year and the incorporation
of diversity and inclusion metrics within the annual bonus
objectives of our Executive Committee members. However,
there is still much to do. We were therefore pleased to approve
a new Board Diversity Policy which sets out our diversity
targets at Board level (available at www.gpe.co.uk/investors/
governance) reflecting the latest recommendations from the
FTSE Women Leaders Review and the Parker Review. We have
also set aspirational diversity targets for the wider organisation,
alongside wider initiatives, to ensure we continue to drive
meaningful progress. See ‘Our people and culture’ on pages
56 and 57 and our Nomination Committee report on page 103
for further details, including for our disclosure against new
Listing Rule requirements.
“At GPE, the Board’s support,
advice and interaction extend beyond
the boardroom, supporting our efforts
to promote and monitor culture and
ensure its alignment with our purpose,
values and strategy.”
Richard Mully Chair
Governance
81Annual Report 2023 Great Portland Estates plc
Board effectiveness review
This year, we undertook an external Board evaluation
which was facilitated by Milena Djurdjevic of Calibro Consult.
Details of this process, the findings of the review and our
progress against the actions arising from the 2022/23
Board evaluation can be found on pages 104 and 105.
Purpose, strategy and consideration of the likely
consequences of decisions for the long term
In the context of changing markets and evolving customer
needs, the Board has spent significant time this year
considering the development of our strategy to ensure we are
well positioned, particularly in view of the macro-economic
backdrop, to maximise the opportunity we have to generate
long-term value across our business in line with our purpose –
to unlock potential, creating sustainable space for London to
thrive. As part of these discussions, we challenge our purpose
and strategic ‘givens’ and reflect on customers’ changing
needs, the optimum size for our business, whether our risk
profile is appropriate and on our investment and disposal
strategies. The Group’s business model and strategy are
outlined on pages 12 to 15.
We remain confident that London’s commercial property
market has enduring appeal. We have been pleased to see
footfall returning towards pre-pandemic levels in the West End
this year, supported by the opening of the new Elizabeth line,
and there has been strong customer demand across our prime
office and retail portfolio. This included signing our largest
ever pre-letting with Clifford Chance LLP at 2 Aldermanbury
Square, EC2 and substantial progress across our retail portfolio,
leasing almost all the remaining retail space at our 70/88
Oxford Street, W1 and Hanover Square, W1 developments.
We continue to evolve with our customers’ needs to create
market-leading, sustainable workspaces in London, with
sustainability, health and wellbeing, technology and customer
service at the centre of our offer. Our customers are at
the heart of what we do, and the Board has spent time
overseeing the development and continued implementation
of our Customer First approach to respond to developing
workplace themes and to shape the spaces and services we
provide. Ensuring that GPE has the necessary skills, diversity
and operational capabilities to deliver its ambitious plans
has also remained a key priority for the Board.
As the market bifurcates, with demand focusing on the best
spaces which remain in limited supply, our activities remain
focused on our two complementary, overlapping activities
of HQ repositioning and the delivery of flexible office spaces,
providing quality, choice and flexibility for our customers.
The Board has progressed our £0.8 billion development
programme this year, including our landmark City
development scheme at 2 Aldermanbury Square, EC2, in
addition to the completion and sale of our net zero carbon
refurbishment at 50 Finsbury Square, EC2. At the same time,
we grew our committed Flex space to more than 400k sq ft,
and we are now seeking to grow this to 1 million sq ft over
the next five years through a combination of organic growth
and acquisitions. To this end, the Board was pleased to
approve the acquisition of 6/10 St Andrew Street, EC4 in May
2022 and more recently the acquisitions of Bramah House,
SE1 and 141 Wardour Street, W1 in May 2023, and we expect
further acquisition opportunities to arise.
While the retail market has seen marked improvement,
we continue to monitor individual asset plans and GPE’s
exposure to any underperforming retail assets.
Sustainability is integral to our offer and sits at the heart of
our purpose. The Board sees sustainability as a differentiator
and an opportunity for GPE, including the acquisition of
perceived stranded assets where GPE’s skills and credentials
could potentially allow us to address sustainability demands
and requirements that existing owners cannot.
The Board recognises the importance of innovation and
technology in enhancing our operations and our customer
offer and regularly discusses the related risks and opportunities.
The Board has continued to oversee the implementation
of our Innovation Strategy and the delivery of key projects
in the year. This has included the launch of the first phase
of our new customer relationship management system
and the development of a data warehouse to support our
operations, the use of smart building technology to help
us better understand the use and energy performance of
our buildings, and the reuse of steel and other materials
across our development schemes.
Stakeholder engagement and support
Building and nurturing strong working relationships with our
stakeholders is critical to our success and the development
of our strategy and is intrinsic in our day-to-day activities.
As well as direct engagement, a key part of the Board’s role is,
therefore, the oversight of work undertaken by the GPE team
to maintain and enhance these relationships.
Much of the year was impacted by geopolitical tensions,
the volatile economic and political landscape and the cost
of living crisis. The wellbeing of our employees has remained
paramount and we were pleased to be able to provide support
in the form of a one-time payment made to those most
impacted by inflationary pressures, as further explained on
page 118. We also established several Employee Impact Groups
in the year to strengthen our engagement with colleagues
from under-represented groups leading to a number of
initiatives to build on our inclusive culture and support the
wellbeing of our employees.
We have also supported our customers, including with the
establishment of Energy Councils at each of our buildings
to help our customers mitigate the impacts of rising energy
costs. More broadly, our Customer First programme is proving
to be a real differentiator, delivering personal customer
experiences every day, and we are delighted that this was
reflected in our excellent Net Promoter Score. This outcome
is a great credit to the continual hard work and dedication
of the entire GPE team.
We continue to focus on customer and supplier engagement
as we look to embed our Customer First approach and progress
our sustainability ambitions, as further described below.
Further details of how we engage with our stakeholders
are set out on pages 43, 54 to 62 and 89 to 94.
Introduction from the Chair continued
82 Great Portland Estates plc Annual Report 2023
Sustainability and the impact of the
Company’s operations on the community
and the environment
Sustainability and responding to climate change is an
economic and strategic imperative as well as a moral
obligation. Sustainability and our wider ESG considerations
are therefore integrated across all our business activities.
During the year, the Board has received regular reports and
updates from our Sustainability and Social Impact Director
and has held detailed discussions regarding our sustainability
objectives, strategy, risks and opportunities. The Board was
pleased to approve our updated Sustainability Statement of
Intent in March 2023, further evolving our approach to climate
resilience and social impact, alongside Our Brief for Creating
Sustainable Spaces which sets out how we will deliver on
the commitments in our Statement of Intent as we design,
construct and manage the spaces our customers require.
The Board has continued to monitor the progress against our
Roadmap to Net Zero, the impact of our internal carbon price
and the deployment of monies from our Decarbonisation
Fund to finance the reduction of emissions from our buildings.
These initiatives continue to drive meaningful behavioural
change across the business, including a 32.2% reduction
in energy intensity against our 2016 baseline.
As a Board, we recognise that working collaboratively
with our stakeholders is key to achieving our sustainability
ambitions. Our pre-let discussions with Clifford Chance LLP
at 2 Aldermanbury Square, EC2, and our investment in our
innovative steel reuse project in the year, are both examples of
how we are collaborating with our customers and supply chain
to deliver more sustainable and climate-resilient buildings.
ESG metrics continue to feature as an important element
of our annual bonus targets, as further explained in the
Directors’ remuneration report on pages 116, 117 and 121.
We have continued to oversee the delivery of our Social
Impact Strategy, which is designed to create a lasting
positive social impact in our communities, with a target
of creating £10 million of social value by 2030. We are
delighted that, for 2022/23, GPE generated £1.16 million in
social value through our community programmes and direct
business activities. See page 43 for further details regarding
the social value we created in the year.
As we seek to build a sustainable legacy for our great capital
city, we have further invested in our three-year charity
partnerships with XLP, a charity focused on creating positive
futures for young people growing up on inner city estates in
London, and National Energy Action, a charity which focuses
on alleviating fuel poverty. See page 43 for further details.
Maintaining a reputation for high standards
of business conduct
We aspire to the highest standards of conduct and, together
with a culture of continuous improvement in standards and
performance, this helps to ensure that good governance
extends beyond the boardroom.
Annually, the Board approves the Group’s Anti-Fraud, Bribery
& Corruption, Ethics, Gifts and Hospitality and Whistleblowing
Policies, each of which are also reviewed in advance by the
Audit Committee. Each of these policies is available on our
website at www.gpe.co.uk/about-us/governance
In September each year, the Board considers and approves
our Modern Slavery Statement, which explains the activities
we have undertaken during the year to demonstrate our
commitment to seeking to ensure that there is no slavery,
forced labour or human trafficking within any part of our
business or in our supply chains. A copy of our Modern
Slavery Statement is available at www.gpe.co.uk/our-
modern-slavery-statement. More on how we behave
can be found on pages 42 and 95.
We seek sustainable long-term, two-way relationships with
our supply chain, building mutual trust to deliver exceptional
results in a responsible way. Our Supplier Code of Conduct,
which is available on our website at www.gpe.co.uk/
our-relationships/our-suppliers, sets out the standards
we require of our suppliers to help ensure they operate
ethically and responsibly.
I am delighted that the efforts of our team have been
rewarded by winning a number of awards, including,
amongst others, Developer of the Year along with the award
for Best West End New Build for 1 Newman Street & 70/88
Oxford Street, W1 at the OAS Development Awards 2022,
the Innovation Award (Business) at the EG Tech Awards 2022,
the Best New Workplace Award for The Hickman, E1 at the
Building London Planning Awards 2022 and the Sustainable
Property Company of the Year Award at the Young Norwood
Property Awards 2023. I am also very pleased to report
on our achieving a gold award in relation to EPRA’s 2022
Best Practice Recommendations and Sustainability Best
Practice Recommendations.
Engaging with our shareholders
We believe that communication with our shareholders is key.
To this end, in addition to our comprehensive investor relations
programme led by Toby Courtauld and Nick Sanderson,
as detailed on pages 90 and 91, as Chair of GPE, I proactively
seek periodic engagement with many of our institutional
shareholders to discuss and hear their views on GPE’s business
and governance arrangements.
I, together with Nick Hampton as Senior Independent Director,
am available to meet with shareholders as appropriate.
Each of our Committee chairs is also available to engage
with shareholders on significant matters related to their areas
of responsibility. During the year, Emma Woods, as Chair of
our Remuneration Committee, met with many of our largest
shareholders to discuss the proposed changes to our Directors’
remuneration policy, as further described in the Directors’
remuneration report on page 118.
The AGM also provides the Board with an opportunity
to engage with and answer questions from shareholders.
Arrangements for the 2023 AGM can be found in our
2023 AGM Notice.
On behalf of the Board, I would like to thank all our of
shareholders and other stakeholders for their continued
support as we work to evolve and execute GPE’s strategy
to deliver long-term sustainable success.
Richard Mully
Chair
24 May 2023
Governance
83Annual Report 2023 Great Portland Estates plc
Richard Mully
BSc (Hons), MBA
Chair
Committees:
N
Date appointed to the Board:
December 2016
Date appointed as Chair:
February 2019
Independent: Yes, on
appointment as Chair
Relevant skills and experience:
Richard is currently Senior
Advisor to TPG Real Estate
Actis LLP and Hodes Weill LLC.
He has extensive property,
banking and private equity
experience. This, combined
with his Senior Independent
and Non-Executive Director
experience, enables him
to provide constructive
leadership, challenge and
support to the Board and
wider business for the benefit
of all stakeholders. Richard
was formerly Chairman
of Arlington Business Parks
Partnership LLP, Vice Chairman
and member of the Supervisory
Board of Alstria Office REIT-
AG, founder and Managing
Partner of Soros Real Estate
Partners LLC, a Non-Executive
Director and Chairman of the
Remuneration Committee
of Standard Life Aberdeen
plc and Senior Independent
Director at ISG, Hansteen
Holdings and St Modwen
Properties.
Current external
commitments:
Senior Advisor to TPG Real
Estate, Actis LLP and Hodes
Weill LLC.
Toby Courtauld
MA, MRICS
Chief Executive
Committees:
E
S
Joint venture directorships:
Director of the GHS Limited
Partnership
Date appointed to the Board:
April 2002
Independent: No
Relevant skills and experience:
Toby joined the Group in
April 2002 as Chief Executive
and has nearly three decades
of extensive experience in real
estate. He was previously with
the property company MEPC
for 11 years, where he gained
broad experience ranging from
portfolio management through
to corporate transactions
and general management
as a member of the Group
Executive Committee. He has
previously been President of
the British Property Federation
Board and Policy Committee.
Toby’s significant knowledge
of the Company and the sector
enables him to provide broad
leadership of the business
internally and externally,
through the successful design
and implementation of the
Company’s strategy, values
and business plans and their
exemplary communication to
a wide range of stakeholders.
Current external
commitments:
Director of The New West
End Company, Non-Executive
Director of Liv-ex Limited,
Member of the Council of
Imperial College and Chair
of its Property Committee.
Nick Sanderson
BA (Hons), ACA
Chief Financial &
Operating Officer
Committees:
E
S
S
I
Joint venture directorships:
Director of the GHS Limited
Partnership and the Great
Ropemaker Partnership
Date appointed to the Board:
July 2011
Independent: No
Relevant skills and experience:
Nick joined the Group in
July 2011 as Finance Director,
was subsequently promoted
to Finance & Operations
Director and is now Chief
Financial & Operating Officer.
He was formerly Partner, Head
of Real Estate Corporate
Finance Advisory at Deloitte,
following ten years of real
estate investment banking
experience in Europe and Asia
with Nomura, Lehman Brothers
and UBS Investment Bank. Nick’s
wide-ranging property-related
financial experience combined
with strategic and corporate
finance skills enables him to
provide valuable support in
developing, implementing and
articulating the Company’s
strategy, and taking leadership
over the delivery of a wide
range of financial and
operational matters along with
our Flex, customer experience
and marketing activities.
Current external
commitments:
Member of the Reporting
and Accounting Committee
of EPRA and Trustee of the
Outward Bound Trust.
Dan Nicholson
MA (Cantab), MA, MRICS
Executive Director
Committees:
E
S
H
Joint venture directorships:
Director of the Great
Ropemaker Partnership,
the Great Victoria Partnership
and the Great Victoria
Partnership (No. 2)
Date appointed to the Board:
September 2021
Independent: No
Relevant skills and experience:
Dan joined the Group
in September 2021 as an
Executive Director and now
has responsibility for the New
Business, Portfolio Management,
Development Management and
the Workplace Services teams.
He has extensive knowledge
of the real estate industry and,
prior to joining GPE, spent over
ten years with Tishman Speyer,
for the majority of which he
ran their UK business. Dan
started his career as a surveyor
at Lambert Smith Hampton
before gaining broad property
investment, development and
asset management experience
in a number of organisations,
including at City & West End
Property Group, Quintain
Estates & Development plc
and real estate private equity
firm, Three Delta LLP. Dan’s
significant sector and business
expertise enables him to
provide valuable support in
developing and implementing
the Company’s strategy.
Current external
commitments:
Non-Executive Director of
Bioregional Homes Limited.
Chair Executive Directors
The Board
R
N S S
A E H
Committee memberships:
Committee Chair:
A
Audit Committee
E
Executive Committee
N
Nomination Committee
S
Sustainability Committee
R
Remuneration Committee
H
Health & Safety Committee
S
Social Impact Committee
I
Inclusion Committee
84 Great Portland Estates plc Annual Report 2023
Non-Executive Directors
successful customer-facing
and digital transformation
initiatives. Before joining Trainline,
Champa held senior positions
at Amadeus IT Group between
2015 and 2020 and previously
held leadership roles at American
Express, Royal Bank of Scotland
and Cisco Systems. Champa’s
significant digital transformation,
technology, operational and
broad commercial experience
enable her to provide valuable
insight as GPE evolves its strategy,
products and Customer First
approach.
Current external commitments:
None. Trainline plc executive
team and President of Trainline
Partnership Solutions until
30 April 2023.
Dame Alison Rose
1
BA (Hons)
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
April 2018
Independent: Yes
Relevant skills and experience:
Alison is currently Chief Executive
Officer of NatWest Group plc
and was previously Deputy Chief
Executive Officer of NatWest
Holdings and Chief Executive
Officer of Royal Bank of Scotland
Commercial and Private Banking.
She has also held a number of
other banking and finance roles
within Royal Bank of Scotland
and NatWest Markets. Alison’s
significant experience of real
estate financing, capital markets
and customer relations through
her different roles at Royal Bank
of Scotland and NatWest enables
her to provide an informed view
and helpful challenge to Board
and Committee discussions.
Current external commitments:
Chief Executive Officer of
NatWest Group plc, Vice-Chair
of BITC, Co-Chair of the UK
Government’s Rose Review and
Energy Efficiency Taskforce,
Non-Executive Director of the
Sustainable Markets Initiative,
Member of the Board of the
Institute of International Finance,
and Trustee of the Coutts
Charitable Foundation.
1. Alison Rose will be stepping down from the
Board from the conclusion of the 2023 AGM.
Emma Woods
MA (Hons)
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
February 2022
Independent: Yes
Relevant skills and experience:
Emma is currently a
Non-Executive Director,
Senior Independent Director
and Chair of the Remuneration
Committee of The Gym Group
plc, Non-Executive Director
and Chair of the Remuneration
Committee of Huel Limited
(a nutritional food company)
and Chair of Tortilla Mexican
Grill plc. Emma was formerly
Chief Executive Officer at
Wagamama between 2018
and 2021 and subsequently
an Advisory Board Member
of the Wagamama Brand
Board. She has also held senior
marketing roles at Merlin
Entertainments, Pizza Express
and Unilever. Emma’s extensive
operational, customer service,
digital and marketing skills,
combined with her non-
executive and remuneration
committee experience, allow
her to provide valuable strategic
insight and challenge, including
to further enhance delivery on
our customers’ needs, as well
serving as a strong foundation
for her effective performance as
Remuneration Committee Chair.
Current external commitments:
Chair of Tortilla Mexican Grill plc,
Non-Executive Director of
The Gym Group plc and
Huel Limited.
Vicky Jarman
BEng, ACA
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
February 2020
Independent: Yes
Relevant skills and experience:
Vicky is currently a Non-Executive
Director of Melrose Industries plc.
She is a chartered accountant
who qualified at KPMG before
spending over ten years with
Lazard Ltd working in the
Investment Banking team and
then as Chief Operating Officer
for the London and Middle East
operations until 2009. Vicky has
previously been a Non-Executive
Director and Chair of the Audit
Committees of Equiniti Group plc,
Hays plc and De La Rue plc, a Non-
Executive Director of Signature
Aviation plc and Entain plc and
Senior Independent Director
at Equiniti Group plc. Vicky’s
significant financial, commercial
and non-executive experience
enable her to contribute to the
strategy of the business and its
long-term sustainable success,
and provide a strong basis for
her effective performance as
Audit Committee Chair.
Current external commitments:
Non-Executive Director
of Melrose Industries plc.
Champa Magesh
MBA, MSIM
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
August 2022
Independent: Yes
Relevant skills and experience:
Champa, until April 2023, was
a member of the executive team
at Trainline plc and President
of Trainline Partner Solutions,
where she was responsible for
Trainline’s business travel and
white label businesses. Champa
has over 20 years’ international
business experience gained in
multiple industries and diverse
functional areas, underpinned
by a strong technology focus,
and a background in leading
Nick Hampton
MA (Hons)
Senior Independent Director
Committees:
A
N
R
Date appointed to the Board:
October 2016
(Senior Independent Director
from 30 March 2023)
Independent: Yes
Relevant skills and experience:
Nick is currently Chief Executive
Officer (previously Chief Financial
Officer) of Tate & Lyle PLC, and
prior to this spent 20 years with
PepsiCo in a number of financial,
commercial and operational
roles. Nick’s strong financial
background, and general
management experience, as well
as his deep knowledge of GPE,
provide a strong basis for him to
offer wise counsel in his role as
Senior Independent Director.
Current external commitments:
Chief Executive Officer
of Tate & Lyle PLC.
Mark Anderson
Dip Mgmt, MBA, FRICS
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
September 2021
Independent: Yes
Relevant skills and experience:
Mark is currently Property and
International Managing Director
of Whitbread Plc and leads its
international businesses and
M&A activities. Mark previously
spent 16 years at J Sainsbury PLC
in a variety of senior positions,
finally managing all aspects
of its property estate. Mark’s
significant property, operational
and customer service knowledge
and expertise, gained over many
years, enable him to provide
valuable strategic insight
and challenge to Board and
Committee discussions.
Current external commitments:
Property and International
Managing Director of Whitbread
Plc and Trustee of Tourism for
All UK.
Changes to the Board during 2022/23
– Wendy Becker stepped down from the Board on 7 July 2022.
– Champa Magesh joined the Board on 1 August 2022.
– Charles Philipps stepped down from the Board on 30 March 2023.
Governance
85Annual Report 2023 Great Portland Estates plc
Audit
Committee
See Committee
report on pages
106 to 113
Nomination
Committee
See Committee
report on pages
100 to 105
Leadership and purpose
The Board’s attendance in 2022/23
Attendance at scheduled Board and Committee meetings during the year was as follows:
1. There were six scheduled Board meetings in 2022/23. The Board
also held a strategy review session and additional meetings to
consider matters of a time-sensitive nature – see Board activities
on pages 87, 96 and 97.
2. Non-Executive Directors (including the Chair), where not a member
of a Committee, have a standing invitation to attend meetings
of that Committee where appropriate.
3. Executive Directors are not members of the Audit, Nomination
or Remuneration Committees. However, they are invited to attend
for parts or all of certain Committee meetings where appropriate.
4. Charles Philipps stepped down from the Board on 30 March 2023
and was succeeded in the role of Senior Independent Director
by Nick Hampton.
5. Mark Anderson was unable to attend the Audit, Nomination
and Remuneration Committee meetings on 20 September 2022
due to a prior business commitment preceding his appointment.
Mark received meeting papers in advance and was able to
provide comments to the Chair of the respective meetings.
6. Wendy Becker stepped down from the Board at the conclusion
of the 2022 AGM held on 7 July 2022. The number in parenthesis
is the number of meetings she could have attended in the year.
7. Nick Hampton stepped down as Chair of the Audit Committee
from the conclusion of the 2022 AGM held on 7 July 2022 and was
succeeded in that role by Vicky Jarman. Nick Hampton remains
a member of the Audit Committee.
8. Champa Magesh was appointed to the Board and also the Audit,
Nomination and Remuneration Committees with effect from
1 August 2022. The number in parenthesis is the number of meetings
she could have attended in the year.
9. Alison Rose was unable to attend the Board meeting held on
20 January 2023, the Audit, Nomination and Remuneration Committee
meetings held on 11 May 2022, the Nomination Committee meeting
on 20 September 2022 and the Remuneration Committee meeting
held on 30 March 2023, in each case due to late scheduling conflicts
with material business commitments. Alison received meeting papers
in advance and was able to provide comments to the Chair of the
respective meetings.
10. Emma Woods succeeded Wendy Becker as Chair of the Remuneration
Committee from the conclusion of the 2022 AGM held on 7 July 2022.
5
Scheduled meetings
5
Scheduled meetings
4
Scheduled meetings
6
Scheduled meetings
1
Chair
2
Richard Mully
– –
Executive Directors
3
Toby Courtauld
– – –
Nick Sanderson
– – –
Dan Nicholson
– – –
Non-Executive
Directors
2
Charles Philipps
4
Mark Anderson
5
Wendy Becker
6
–
Nick Hampton
7
Vicky Jarman
Champa Magesh
8
(3/3) (4/4)
Alison Rose
9
Emma Woods
10
Board meetings attended
Board meetings not attended
Committee meetings attended
Committee meetings not attended
Board
Remuneration
Committee
See Committee
report on pages
114 to 146
(4/4) (3/3)
(2/2) (1/1) (2/2)
86 Great Portland Estates plc Annual Report 2023
Board activities
The Board typically meets for scheduled Board meetings six times a year in addition to an annual strategy review session.
The Board also meets as necessary to consider matters of a time-sensitive nature.
The role and interaction of the Board and its Committees during the year
The Board has a duty to promote the long-term sustainable success of the Company for its shareholders. The Board is
responsible for establishing and monitoring the Company’s purpose, values and strategy and ensuring that these and its culture
are aligned. Its role includes the oversight of human resource levels and succession planning, approval of major acquisitions,
disposals, capital expenditure and financing arrangements and of the Group’s systems of internal control, governance and
risk management. The Board provides and promotes effective and entrepreneurial leadership across the business within
the Group’s governance framework.
2022/23 May July September November January March
Purpose, strategy and implementation
Purpose and strategic review, discussion and setting of business plan
Chief Executive’s report including market conditions dashboard, operational
parameters, strategic risks and opportunities, sustainability, innovation,
team resourcing and development
–
Executive Director’s and other Board reports on valuation, leasing activity,
key portfolio and development activities, asset strategies, the longer-term
pipeline, new business opportunities and health and safety updates
–
Chief Financial & Operating Officer’s report including forecasts, finance
initiatives, debt and equity markets update, social impact update and
operational matters including Flex and customer experience, marketing,
HR and IT
–
Shareholder analysis and/or investor relations updates
–
Board property tour
– – – – –
Risks
Formal review of risk management and internal controls
– – – –
Ongoing monitoring of risks
Governance
Review of half-year or annual results, going concern,
viability statement, dividend policy and analyst presentation
– – – –
Stakeholder feedback, including shareholders and analysts,
employees, customers, communities, suppliers, joint venture partners and
local planning authorities
Reports from Board Committees
–
Corporate governance matters including authority levels,
Terms of Reference, UK Corporate Governance Code compliance
– – –
Health and safety reports including strategy and updates
– –
Sustainability updates including vision, strategy, targets and Roadmap
Corporate Responsibility including review of the Company’s
Modern Slavery Statement, Anti-Fraud, Bribery & Corruption, Ethics,
Gifts and Hospitality and Whistleblowing Policies
– – – –
Evaluation
Board evaluation
– – – – –
Conflicts of interest
Board meeting matter
Other ad hoc matters for consideration by the Board
at both scheduled and unscheduled Board meetings,
in addition to the above, include:
– major potential acquisitions and disposals;
– significant leasing arrangements;
– approval of major developments;
– significant financing arrangements;
– Board and senior management appointments; and
– appointments of principal advisers.
A forward agenda for the Board is maintained to ensure that
all necessary and appropriate matters are covered during the
year and to allow sufficient time for discussion and debate.
The Board receives papers and presentations from the Executive
Directors and senior managers are regularly invited to attend
to provide further insight and feedback on specific matters.
Significant matters discussed and major transactions approved
by the Board in the year are shown on pages 96 and 97.
Where Directors are unable to attend meetings, their comments,
as appropriate, are provided to the Board or Committee
Chair prior to the meeting.
At least annually, the Board reviews the nature and scale
of matters reserved for its decision.
Governance
87Annual Report 2023 Great Portland Estates plc
Our purpose, strategy, values and culture
Our purpose is to unlock potential, creating sustainable space
for London to thrive. In setting our purpose, we believe our role
relates not only to our buildings, but also to the people who live
and work there and what and how we contribute to the wider
public realm, community and environment.
The Board sets our strategy and strategic priorities to align
with our purpose, which informs our decisions regarding our
acquisition, repositioning, operation or sale of properties.
Our purpose is underpinned by our values and behaviours, which
encapsulate who we are and how we do business. Our purpose,
values and behaviours were articulated through a Board-
sponsored, employee-driven initiative, and engaging all our
employees in this process meant we were able to develop a
unifying purpose and set of values which are well understood
and regularly discussed. At GPE, everyone is accountable for
living by our shared set of behaviours, which form an important
part of our workforce policies and remuneration processes.
Our culture is underpinned by a clear alignment of purpose,
strategy, values and incentives. It is our culture that makes
us unique. Further details regarding our culture, values
and behaviours can be found on page 54.
Our culture inspires us to go further for our customers,
partners, each other and the business. As we innovate and
adapt in a fast-changing market to deliver our customer,
sustainability, technology and flexible space ambitions,
our strong culture has never been more important and
we must therefore work hard to preserve and enhance it.
A key objective for the Board is to monitor our culture,
and to address any instances where there is a misalignment
between our purpose, culture, values and behaviours.
Our culture is not about rules, but about actions, and the
Board and senior management seek to lead by example
in communicating and demonstrating the values and
behaviours which lie at the heart of our culture.
How the Board monitors culture
The Board is committed to ensuring that
the tone of our values is set from the top by
both the Board and senior management.
Our smaller size and the high level of
regular Board interaction with employees
facilitates the Board’s monitoring of
culture and the implementation of our
values, which we do in a number of ways:
– inclusion of culture, values and
behaviour-led questions within
employee surveys, along with a targeted
annual diversity and inclusion survey
with Board analysis of the results;
– regular face-to-face engagement
with employees as part of our
Non-Executive Director breakfast
programme, our programme of
employee engagement sessions,
Board and Committee presentations,
property tours and other meetings
and engagements throughout the year
(see ‘Engaging with our employees’
on pages 92 and 93 for more details);
– ‘Living Our Values’ is an integral part
of every individual’s objective setting
and annual performance reviews,
with outcomes being reported via
the Remuneration Committee.
360-degree feedback reviews for senior
management prompt open feedback on
culture and values which then feeds into
an individual’s personal development
plan. Our bonus structure ensures a
strong link between the values and
remuneration, with a proportion of each
employee’s personal bonus based on
their values and behaviours;
– the Executive Committee holds
regular ‘Living Our Values’ meetings
with Heads of Department which
are then discussed with the Board;
– policies, pay and diversity and inclusion
activities are reviewed and developed
to ensure they appropriately capture
and reflect our values;
– reviews of compliance, whistleblowing
statistics, health and safety incidents
and internal audit reports to identify and
address any areas not meeting expected
standards of conduct or behaviour;
– feedback from our stakeholder
engagement programmes, including
our customer survey results, helps
the Board to assess how the values
and behaviours are embedded in our
interactions with third parties and
the way we do business; and
– review of supplier payment practices.
The Group’s response to the cost of living
crisis this year has further demonstrated
the strength of our collaborative culture
and the commitment of our people
to serve in the best interests of our
stakeholders. See pages 118, 58 to 59,
40 and 43 for details regarding the
financial and wider support we provided
to employees in the year, the work
undertaken to support our customers with
the management of rising energy prices
and the support given to our communities.
The Board is satisfied that there remains a
high level of engagement with our values.
However, safeguarding our culture and
further embedding our values remains
a continuous area of focus. Following this
year’s feedback, a number of actions have
been taken to help further strengthen our
culture and drive the right behaviours
through our activities. These have
included:
– implementing initiatives within our
People Plan, an ongoing process, to
positively impact our culture through a
focus on diversity, equity and inclusion;
– updating our diversity and inclusion
policies;
– the participation by all members
of our Executive Committee in a
nine-month inclusive leadership
programme, with our next layer of
senior management now embarking
on a similar programme;
– the inclusion of diversity and inclusion
objectives within the annual bonus
measures for senior executives;
– the creation of our Race & Ethnicity,
Women’s, Health & Wellbeing and
Parents & Carer’s employee-led impact
groups, overseen by the Inclusion
Committee, aimed at making our
culture even more inclusive;
– launching our new GPE Competency
Framework and leadership training
programme to develop more inclusive
and capable leaders;
– rolling out a new GPE Legal Strategy
and framework and our new Anti-
Fraud, Bribery & Corruption Policy;
– strengthening our performance review
process to explicitly assess behaviours
and ‘how’ objectives are achieved;
– demonstrating support for wellbeing
and good mental health by sponsoring
activities throughout the year and
regularly communicating the resources
made available to colleagues; and
– rolling out a series of compulsory
all-employee workshops designed to
embed our Customer First approach
across all our operations and
business activities.
Leadership and purpose continued
88 Great Portland Estates plc Annual Report 2023
Stakeholder engagement
Understanding the views of all our stakeholders and fostering of business relationships
The Board oversees and receives regular updates throughout the year on engagement activities with our key stakeholders.
The Board develops its understanding of these key stakeholder views in a number of different ways, including the following:
Investors The Chair engages with major shareholders on matters of governance and strategy,
and Committee Chairs engage, as appropriate, on their areas of responsibility. This year,
the Remuneration Committee Chair consulted with major shareholders on the proposed
changes to our Directors’ remuneration policy. Formal and informal discussions are held
with shareholders in the context of the Company’s AGM. Shareholders are invited to attend
the AGM in person and those unable to attend in person are given the opportunity to ask
questions of the Board via e-mail. We have a comprehensive investor relations programme
with regular reporting of feedback to the Board. Members of the Board also attend investor
events to hear views and questions first-hand. Our Executive Directors and Corporate Finance
team have regular dialogue with our debt providers and report to the Board on their feedback.
Our people High levels of direct engagement are maintained throughout the year through numerous
mechanisms, including our formal programmes of Non-Executive Director breakfast
meetings and ‘An Audience with…’ employee engagement sessions, our Non-Executive
Director mentoring programme, property tours, employee presentations and other meetings
and events. The Board also receives regular reports on employee feedback, including from
employee engagement surveys, ‘Living Our Values’ meetings, ‘Listening Sessions’ hosted
by Executive Committee members with small groups of employees and the work of the
Inclusion Committee and our various employee impact groups.
Customers The Board meets customers where possible as part of its cycle of property tours.
Board papers include regular updates on our Customer First programme and customer
engagement activities, including feedback from customer meetings which are periodically
attended by Executive Directors, updates on discussions with property agents and feedback
from industry forums and events and marketing campaigns. The Board discusses Net Promoter
Scores and feedback from independent customer surveys. External presenters also present
to the Board from time to time on occupier trends and market research and developments.
Joint venture partners Frequent engagement with joint venture partners throughout the year is led by our
Executive Directors, at least one of whom serves on each joint venture board, with regular
updates and reporting of key matters to the Board.
Communities Our Social Impact Strategy, which is designed to create a lasting positive social impact
in our communities, is set by the Board, with implementation overseen by our Social Impact
Committee which is chaired by the Chief Financial & Operating Officer. The Board receives
regular updates on activities and initiatives, including the measurement of the social
value we create.
Local planning
authorities
Our relationships with key planning authorities are critical to the delivery of new spaces
in London. Our Executive Director and Development Director regularly report to the Board
on recent engagement activities, including planning discussions, community considerations
and any development consultations involving key stakeholders and local residents.
Suppliers Engagement is led through our Development, Leasing, Workplace Services, Customer
Experience, Health and Safety and Sustainability teams, with information received through
regular Board reports and presentations. The Board engages directly with contractors
during development site visits and may also receive external presentations from suppliers
such as property agents and valuers. The Audit Committee reviews GPE’s supplier payment
practices and performance twice-yearly.
Further details of our relationships and engagement with key stakeholders, how stakeholder issues have been monitored
and considered by the Board through our scheduled Board meetings, and discussion of matters between these meetings,
are explained in more detail in:
Our stakeholder relationships on pages 58 to 62
Our people and culture on pages 54 to 57
Our approach to risk on pages 64 to 77
Engaging with our investors on pages 90 and 91
Engaging with our employees on pages 92 and 93
Impact of engagement on Board decisions on page 94
What we did in 2022/23 on pages 96 and 97
Governance
89Annual Report 2023 Great Portland Estates plc
What we did in 2022/23
– Roadshow: US
– Conference:
Morgan Stanley
(London)
– Equity sales force
meetings x2
– Fireside chat:
JP Morgan (London)
– Conferences:
Citi (US), Bank of
America (London)
– Equity sales force
meetings x1
June
May
November
January
March
– Roadshows: London &
Netherlands (virtual)
– Equity sales force
meetings x1
– Roadshows: London &
Netherlands (virtual)
– Conferences:
JP Morgan (London),
UBS (London)
– Equity sales force
meetings x2
– Conference:
Barclays (London)
– Roadshow: Asia
(Tokyo and Singapore)
July
– Annual General
Meeting
– Fireside chat:
Numis (London)
– Equity sales force
meetings x1
– Conferences:
Bank of America
(New York), Goldman
Sachs (London)
– Analyst Tour:
50 Finsbury Square,
EC2
September
Institutional shareholders by geography at 31 March 2023
3%
3%
39%
31%
United Kingdom
United States
Europe
Asia Pacific
Rest of World
24%
Investor contact by method
84
48
48
12
192
meetings
Meeting
Call/virtual
Conference
Tour
2022
2023
Engaging with our investors
The Board aims to maintain an open relationship with our investors based on a clear investment case and transparent disclosure.
As a result, we maintain a regular dialogue with shareholders, potential shareholders, debt providers and analysts through a
comprehensive investor relations programme.
See more about our largest shareholders on page 148
Sustainability indices 2022/23
Given the increased focus on sustainability, the Board
believes that it is essential to provide transparent reporting.
We therefore participate in a number of sustainability indices:
– CDP
– EPRA
– MSCI
– FTSE4Good
– ISS
– GRESB
See more about our approach to sustainability on pages 37 to 53
250+
Investors met during the year
Leadership and purpose continued
– Capital Markets Day
(London)
April
90 Great Portland Estates plc Annual Report 2023
Property Tour:
50 Finsbury Square, EC2
Given our portfolio is highly concentrated in central
London, we often take the opportunity to take investors
and analysts on walking tours of a selection of assets
as part of our active engagement.
In September 2022, we hosted an analyst tour of our
development at 50 Finsbury Square, EC2. We took
the opportunity to take the analysts around the near
complete building in the short window ahead of the
property’s sale. The majority of our Executive Committee
attended to answer questions on the building, and wider
business, and our Project team explained the progress
on-site, including the complexities of the scheme.
Our approach
Our Investor Relations programme is executed across
a number of geographies, reflecting the international
nature of our share register, and through a variety
of routes including roadshows, meetings at industry
conferences, investor and analyst events, property
tours and presentations to analysts and investment
banks’ equity sales teams.
The Board is also committed to providing investors
with regular announcements of significant events
affecting the Group, including its business activity
and financial performance. These announcements
are available on the Group’s website at www.gpe.co.uk
along with results webcasts, analyst presentations,
property videos, press releases and interviews with
the management team.
The Executive Directors and the Director of Financial
Reporting and Investor Relations are the Company’s
principal representatives with investors, analysts,
fund managers, press and other interested parties,
and independent feedback on presentations by the
Executive Directors to shareholders and analysts is
provided to the Board on a regular basis.
The Executive Directors and Corporate Finance team
also have regular dialogue with our debt providers,
including relationship banks, private placement
investors and debenture holders and report back
to the Board as appropriate.
Activities during the year
Our engagement with our shareholders returned to being
primarily in person during the year and, as global travel
restrictions faded, we also hosted a large number of property
tours as investors took the opportunity to see our activities
in person.
The Executive Directors and senior management had 192
virtual and in-person meetings with over 250 shareholders,
and potential shareholders, from a broad range of institutions
during the year. This included participating in eight industry
conferences, which provided the management team with
the ability to meet a large number of investors on a formal
and informal basis. We also held five roadshows to meet
with investors from London, the Netherlands (virtual) and
the US and, for the first time since 2020, a trip to Asia to meet
investors in Tokyo and Singapore. We actively seek feedback
after every roadshow, which is provided to the Board on
a regular basis.
As part of the review of our Directors’ remuneration policy
this year, Emma Woods, our Remuneration Committee Chair,
consulted with major shareholders and proxy agencies on the
proposed changes to the policy. 19 meetings and calls were
held to seek feedback, which was incorporated into the final
policy proposed for shareholder approval at the 2023 AGM.
See more about our Directors’ remuneration on pages 114 to 146
Examples of topics raised in the year
– Our view on the markets in which we operate;
– How London has emerged from the pandemic, including
retail footfall and office occupancy;
– The impact of higher interest rates on valuations
and future returns;
– The expansion of our Flex offers, our ambition for
growth and their respective financial returns;
– The impact of sustainability on customer and investor demand;
– An understanding of the Clifford Chance LLP pre-let and the
development returns from 2 Aldermanbury Square, EC2; and
– Evolving working patterns including the impact of working
from home, technology and design.
We used these topics to shape both the content of subsequent
investor presentations and our communications to the market
to ensure that we meet their expectations.
Next steps
Following the announcement of our year-end results,
we will be embarking on our post-results IR programme over
the early summer. We will be conducting in-person roadshows
in London and the US, attending the Kempen conference
in the Netherlands and attending the Morgan Stanley
conference in London.
“The return to normal after the pandemic
has been welcome, and we used
the opportunity to have a significant
number of meetings with our investors
including a number of tours to
showcase our assets.”
Stephen Burrows Director of Financial
Reporting and Investor Relations
Governance
91Annual Report 2023 Great Portland Estates plc
An audience
with Mark
Anderson
One of our ‘Audience
with…’ sessions this year
was held with Mark
Anderson, hosted by David
O’Sullivan, our Director
of Workplace Services.
David opened the session by
exploring Mark’s career in the retail
and hospitality sectors, which led to
an engaging discussion on customer
centricity in the workplace, the
benefits this brings and how GPE
can drive further progress in this area,
also learning from other industries.
The conversation then progressed
to how everyone at GPE can make
a difference for GPE’s customers
and London’s communities.
The discussion supported the
development of GPE’s Customer First
approach and was a valuable lead
into the launch of a series of Customer
First workshops with employees to
consider how the business should
adapt to meet the evolving needs
of modern customers.
Mark talked about the Board’s view
of London as a location of critical
importance, which led to an interactive
conversation regarding the macro
environment and the opportunities
this presented for GPE in a
changing market.
Mark also provided his insights on
changing working patterns, the future
of the workplace and the increasing
role that technology and data can
play, both to support our customers
and to differentiate GPE from
its competitors.
There was an opportunity for
employees to ask questions and
share views across a broad range
of topics that affected them,
including the progress of GPE’s
diversity and inclusion agenda,
the challenges and opportunities
of business transformation, the
scaling-up of service-led operations
and the development of the GPE’s
customer proposition.
The event was well attended by
employees, with members of the
Board also present, and received
positive employee feedback.
Engaging with our employees
Being a relatively small company of approximately 140
employees operating in one location, there is a high level
of visibility of the Board by employees and vice versa.
Given this high level of visibility, the Board has decided not
to adopt any of the three specific employee engagement
methods referred to in the UK Corporate Governance Code
at this time. Instead, we have adopted the following employee
engagement arrangements, which the Board believes have
operated effectively during the year, to provide it with regular
formal and informal employee feedback for consideration
as part of the Board’s decision making process:
– a formal programme of breakfast meetings between
the Non-Executive Directors and members of the
Executive Committee and senior management.
These meetings have no fixed agenda and provide a
useful forum to discuss what is happening in day-to-day
operations and the associated challenges which might
not be significant enough individually to warrant formal
reporting at Board meetings; and
– a Non-Executive Director, on a rotational basis, presenting
to all employees in a discursive format approximately twice
yearly on a particular theme, followed by a Q&A session.
To facilitate these sessions, we have set up an online portal
for employees to raise questions, anonymously if they wish,
in advance of the event. Employees are also invited to ask
questions and to share their views on the day. These sessions
are also designed for Board members to provide the Board’s
views, as appropriate, on matters raised through employee
engagement, and feedback from the sessions is reported
to the Board. Our latest sessions were led by Mark Anderson
in November 2022 and by Emma Woods in March 2023,
each of which is described below.
In addition to these arrangements, direct Board engagement
with employees during the year has included the following:
– in September, property tours of 50 Finsbury Square,
EC2 and 6/10 St Andrew Street, EC4 as part of the
annual Board property tour involving our Development,
Project Management, Leasing, Flex and Customer
Experience teams;
Leadership and purpose continued
“The session was a
great opportunity for all
employees to hear Mark’s
views on customer centricity
in the workplace and how
GPE can evolve and make
a real difference for our
customers. It was inspiring
to hear from Mark on
a range of issues and to
engage with one of our
Non-Executive Directors.”
Anna Kharchenko
Investment Associate
92
Great Portland Estates plc Annual Report 2023
An audience
with Emma
Woods
Our latest ‘Audience
with…’ session was
held with Emma Woods,
hosted by Carrie Heiss,
our HR Director.
Carrie started the session by asking
Emma about her career path and
motivations. Emma discussed, in
particular, the importance of GPE’s
strong culture and values, and doing
the right thing by colleagues and
customers to drive business success.
In view of challenging economic
conditions, Emma discussed the need to
focus on key priorities, the importance
of long-term considerations when
making business decisions and her
confidence in the GPE team to
deliver the strategy.
Emma responded to questions
regarding diversity and inclusion
(D&I) at GPE, and in the wider
property industry, and commented
on the importance of diverse teams
to generate ideas, challenge and
superior performance. There was an
engaging conversation regarding
the results of a recent employee D&I
survey, the importance of honest
feedback and the ongoing work to
strengthen D&I at GPE in response
to the feedback received.
Emma explained and answered
questions regarding her position
as Chair of GPE’s Remuneration
Committee. Topics covered included
GPE’s principles of remuneration and
their consistent application across
the business, the rationale for the
proposed changes to the Directors’
remuneration policy, how the changes
would be cascaded to employees
and the evolution of the proposed
changes in response to internal
and shareholder feedback.
Emma also discussed and answered
questions on a range of matters
including branding and marketing,
sustainability as a differentiator for
GPE, customer service and her role
as a Non-Executive Director.
The event was well received with
high levels of employee attendance,
alongside attendance by the Chair
and other members of the Board.
– presentations made to the Board by the Executive
Committee team at scheduled Board meetings;
– Board presentations and Q&A sessions by Heads
of Department and other employees on key matters
including acquisitions and disposals, development
appraisals, our flexible office model, cyber security,
health and safety, sustainability, financing,
leasing, investor relations, diversity and inclusion
and corporate governance;
– mentoring sessions between Non-Executive Directors
and members of senior management and more junior
colleagues of GPE as part of our Non-Executive
Director Mentoring Programme;
– all-staff quarterly review meetings led by our Chief Executive
which provide an informal forum for employees to discuss
and raise questions regarding key events at GPE; and
– all employees are invited to attend a weekly update
meeting on Monday mornings, led by our Chief
Executive and other Executive Directors, to discuss key
developments and concerns.
During the year, we also adopted a number of initiatives
and activities to maintain levels of employee engagement,
wellbeing and feedback, which we continue to evolve to
further support our people.
See more on pages 54 to 57
“It was a great chance
to have an open and
engaging discussion
with Emma on key topics
including diversity
and remuneration.”
Harriet Fulford-Brown
Deputy General Counsel
Governance
93Annual Report 2023 Great Portland Estates plc
Board consideration of stakeholder interests and s.172(1) matters
Impact on decisions
Some examples of how the Board has considered stakeholder interests and s.172(1) matters in its decision making
in 2022/23 are set out below and in ‘What we did in 2022/23’ on pages 96 and 97. Further details on our stakeholder
engagement, and our response, can also be found on pages 54 to 62.
Sale of 50 Finsbury Square, EC2
1 2 5
In September 2022, having previously approved
the pre-letting of the building’s office space to
Inmarsat Global Limited, the Board approved
the sale of 50 Finsbury Square for the headline
price of £190 million.
In reviewing the proposal, the
Board considered how the sale
presented the opportunity
to recycle capital out
of a mature asset,
crystallise value and
maximise returns.
The Board assessed the
prospective returns from
the sale and the impact on
the Group’s financial metrics,
including on GPE’s forward look
NTA, EPRA cost ratio and earnings.
This was weighed against the prospect
of generating sale proceeds to further strengthen the
balance sheet and fund future development opportunities
to deliver greater value for GPE’s stakeholders in the
longer term. The use of proceeds from the sale would also
help reduce any future need to seek additional debt
or equity financing to fund the future development
pipeline or acquisitions.
From a wider stakeholder perspective, the 50 Finsbury
Square scheme created GPE’s first net zero carbon
development, and the lessons learned and proceeds
of sale could be used to create new net zero carbon
buildings for London. This in turn would also provide
future opportunities for employees who would
otherwise be minimally impacted by the sale.
The sale would be subject to practical completion
of the building, and therefore GPE’s contractors
and suppliers would continue to be engaged to the
conclusion of the project.
It was concluded, having regard to stakeholder interests,
that the sale was likely to generate long-term sustainable
value for shareholders as a whole and provide further
opportunities to work with customers, communities
and wider stakeholders to create sustainable space
for London to thrive.
See more on pages 08 and 24
Pre-letting and redevelopment
of 2 Aldermanbury Square,
EC2 (2AS)
1 2 4 5
Also in September 2022, the Board approved
the pre-letting of all the office space at 2AS to
leading international law firm, Clifford Chance LLP,
and the redevelopment of 2AS.
The Board discussed the strong business case for the
letting and development of the building and its wider
stakeholder impacts. This included the review of performance
metrics, procurement and pricing pressures in the market
following Russia’s invasion of Ukraine, the potential loss of
opportunity from not developing speculatively and waiting
to lease the building, and the prospective returns from
the transaction for GPE and its shareholders.
The Board discussed customer and agent feedback
and market analysis, which had highlighted strong
customer demand for prime office space in a location
where the future supply of space was expected to
be limited. The redevelopment of the
asset would also be necessary
to attract customers and
maintain the value of
the investment.
The Board had regard
for the positive impact
the scheme would have on
local communities through
the provision of new public
realm improvements and
amenities. The impact on the
Group’s employees was also
considered, noting that the scheme
would offer employees development, project
management and innovation opportunities.
The Board considered GPE’s sustainability agenda and
stakeholder expectations and the plans for 2AS to be GPE’s
second net zero carbon building. The Board also considered
GPE’s ongoing work with suppliers to achieve stretching
embodied carbon targets, to embrace the circular
economy and source sustainable construction materials,
and the need to partner with customers to minimise
their carbon impacts.
Having weighed up the balance of risks and potential
returns, it was concluded that the proposals aligned
with GPE’s purpose and strategy and, in view of the
value expected to be delivered to stakeholders, that
GPE should proceed with the pre-letting and, conditional
upon the exchange of contracts (which occurred in
November 2022), commit to the redevelopment of 2AS.
See more on page 28
Leadership and purpose continued
1
Denotes strategic priorities for 2022/23 as set out on pages 14 and 15.
94 Great Portland Estates plc Annual Report 2023
How we behave, human rights, supplier
stewardship and anti-corruption and
anti-bribery matters
We aspire to the highest standards of conduct based on
honesty and transparency in everything we do. Our Executive
Committee has a high level of oversight over the Group’s day-
to-day policies and procedures and carries out regular reviews
of the appointment of contractors, consultants and suppliers.
We support the principles of the UN Declaration of Human Rights
and core conventions of the International Labour Organization.
Our expectations on human rights are set out across a number
of our policies and procedures as we seek to avoid causing
or contributing to adverse human rights impacts through our
activities. In our business relationships, we look to demonstrate
a commitment to fundamental human rights through our
own behaviours and look to engage suppliers whose values
and business principles are consistent with our own. Whilst we
require all our suppliers to comply with standards and codes that
may be specific to their industry, our Supplier Code of Conduct
also sets out the additional standards that we require of our
suppliers in this regard. GPE team members regularly meet
with main contractors to share information on industry best
practice, including in relation to human rights, health and
safety and responsible sourcing.
In September 2022, we published our latest Modern Slavery
Act Statement, which can be found at www.gpe.co.uk/our-
modern-slavery-statement, setting out the steps we have
taken over the past year, and intend to take over the next
12 months, to ensure our suppliers and their supply chains
adopt similar standards to our own to prevent slavery and
human trafficking taking place within our supply chain.
Formal policies in place in relation to human rights,
anti-bribery and corruption and fraud matters include our
overarching Anti-Fraud, Bribery & Corruption (Financial
Crime) Policy, together with our Ethics, Gifts and Hospitality,
Whistleblowing, Use of GPE Suppliers, Conflicts of Interest
and our Inside Information and Share Dealing Policies.
All new employees receive training on these policies as part
of their induction process. A formal compliance statement
relating to these policies is required to be signed off by
employees annually, with any matters of concern reported
to the Audit Committee. There were no significant matters
to report to the Audit Committee in relation to these policies
in the year ended 31 March 2023. The Audit Committee also
reviews our Financial Crime, Ethics, Gifts and Hospitality
and Whistleblowing Policies annually. Our policies can be
found at www.gpe.co.uk/about-us/governance
Whilst we consider our industry to be relatively low risk
with regard to money laundering, we also have a formal
Anti-Money Laundering Policy in place and specific
training is provided to employees as appropriate.
Our conflict of interest procedures
The Company’s Articles of Association allow the Board to
authorise potential conflicts of interest that may arise and to
impose such limits or conditions as it thinks fit. The Company
has established a procedure whereby any actual or potential
conflicts of interest that may arise must be authorised by the
Board, maintained on a register and periodically reviewed,
with Directors required to update the Board with any
changes to the nature of any conflicts disclosed.
A Director who has a conflict of interest is not counted in
the quorum or entitled to vote when the Board considers
the matter in which the Director has an interest and
the Director may be excluded from the meeting where
appropriate. The Board considers these procedures to
be working effectively.
Our approach to Board induction
and development
Having joined the Board as a new Non-Executive Director this
year, Champa Magesh received a comprehensive induction
programme over a number of months which was facilitated
by the Chair and the General Counsel & Company Secretary
and tailored to Champa’s individual needs. Our induction
process is designed to develop the Director’s knowledge and
understanding of the Group, covering key areas including
GPE’s purpose, values, culture and strategy, its corporate
governance, risks and internal controls and the markets
in which it operates. Our induction programme for new
Directors is delivered through:
– meetings with the Chair, wider Board, General Counsel
& Company Secretary and relevant Committee Chairs;
– a structured programme of meetings with executives
and senior managers to provide a deeper understanding
of risks and opportunities and stakeholder interests;
– meetings with advisers, including the internal and
external auditors and brokers, to provide a valuable
external perspective;
– property tours to see assets first-hand and to learn
more about GPE’s asset and development plans;
– access to a library of reference materials covering
key areas including strategy, finance and operations,
governance, risk management and internal controls; and
– training as appropriate on key policies, statutory duties
and legal and governance requirements.
To enable the Board to discharge its duties, all Directors
receive appropriate and timely information, including briefing
papers distributed in advance of Board meetings and regular
property tours conducted by the relevant GPE teams.
The Board strongly supports the ongoing development of
its Directors. The Directors may, at the Company’s expense,
take independent professional advice and are encouraged
to continually update their professional skills and knowledge
of the business and wider industry. Senior managers and
external advisers presented to the Board during the year on
a range of subjects, including: macro-economic and political
risks along with the impacts arising from the Russia-Ukraine
war; industry themes and developments; the global and UK
real estate investment market; the flexible space market and
GPE’s flexible space offer; property innovation and technology;
health and safety; climate change and sustainability; cyber
risk; and accounting and governance developments.
Directors also individually attend seminars or conferences
associated with their expertise or areas of responsibility and
are provided each quarter with a list of relevant upcoming
seminars by various firms. Director training is reviewed by
the Nomination Committee and development areas are
discussed with individual Directors as part of the annual
performance evaluation process.
Governance
95Annual Report 2023 Great Portland Estates plc
May/June July/August September November January March
Strategy,
governance, risk
and opportunity
management
– Discussion of 2022/23 key
priorities, themes, strategic
actions and team resourcing
– Update from GPE’s corporate
brokers on the market
backdrop, macro-economic
conditions, including
inflation and interest rates,
and investment risks and
opportunities
– Discussion of real estate
trends and occupiers’ future
space requirements
– Discussed asset strategies and
potential sales and supported
the disposal of 6/10 Market
Place, W1
– Received an update on
activities being undertaken
in relation to the development
pipeline, including the impacts
of rising construction costs
and the challenging planning
environment
– Approval of the acquisitions
of 6/10 St Andrew Street, EC4
and 2 Cathedral Street, SE1
– Approval of Emma Woods
as GPE’s next Remuneration
Committee Chair
– Approval of the appointment
of Champa Magesh as a
Non-Executive Director
– Discussion of the REIT sector
and economic outlook,
the limited supply of new
space in the market and the
bifurcation between prime
and other assets
– Update on Flex activities,
including growth,
performance, resourcing
and potential acquisitions
– Noted an IT and cyber
security risk and controls
update and recommendations
arising from a ‘red team’
penetration exercise
– Update on Executive
Committee ‘Away Day’,
including discussions on
market dynamics, delivery
of a Customer First culture,
the risks and opportunities
regarding sustainability
and Flex, and leadership
in a post-pandemic world
– Update on debt markets,
GPE’s strong position to
consider potential debt
options going forward
and its relationships with
existing lenders
– Approval of PwC as GPE’s
next external auditor
for 2023/24, subject to
shareholder approval
– Received an external
presentation on the market
backdrop, the European real
estate equity market and
GPE’s positioning to drive value
creation and take advantage
of market trends
– Discussion of development,
planning, procurement, supplier
failure and construction pricing
risks and mitigating actions
– Approval of the pre-letting
of 2AS to Clifford Chance and,
conditional on the exchange
of contracts, the 2AS
redevelopment
– Approval of the 50 Finsbury
Square disposal for £190m
subject to final terms
– Discussion of the investment
market and new business
opportunities
– Received a health and safety
update and discussed progress
against KPIs
– Discussed an Innovation
Strategy update including on
the use of technology to support
GPE’s Customer First approach,
the proposed deployment of
a new customer relationship
management system and
GPE’s investment in Pi Labs
European PropTech venture
capital fund (see page 104
for further information)
– Discussion of key market
themes, macro conditions,
London’s continued
attractiveness, demand
for prime space and the
opportunities presented
– Approved in principle a
management reorganisation
to support the Customer
First approach and changing
market conditions
– Review of void rates,
potential vacancies and
void mitigation strategies
– Received an update
on Flex and discussed
product differentiation
– Discussion of the Customer
First programme including
customer journey
mapping, customer
feedback and planned
immersive workshops
for all employees
– Review of key themes and
priorities to be addressed
as part of the March 2023
strategy review
– Discussion of developments
in sustainability regulations
and practice and the
certification of 50 Finsbury
Square as GPE’s first net
zero carbon development
– Approval of the
definitive appraisal for
the 6/10 St Andrew Street
refurbishment scheme
– Discussion of the
Flex marketing strategy,
operating costs and returns
– Discussion of the
recommendations arising
from the external Board
evaluation
– Approval of the appointment
of Nick Hampton as GPE’s next
Senior Independent Director
following the retirement of
Charles Philipps
– External presentations
on (i) the economy and
the central London office
market; and (ii) the
flexible office market
– Review of our portfolio
response to customer
demands and approval
of the target to grow our
Flex office space to 1m sq ft
– Update on our three-year
IT strategy, including cyber
security governance and
actions arising from an
externally facilitated cyber-
attack simulation exercise
– Review of health and safety
activities, governance,
risks and controls, including
the implications of new
fire and building safety
legislation
– Discussion of progress
against GPE’s Innovation
Strategy and areas of
focus for 2023/24 following
a business-wide consultation
Understanding
the views of
stakeholders,
the interests of
employees and
the fostering
of business
relationships
– Review of feedback from the
Capital Markets Day in April,
including positive feedback
on the simplification of GPE’s
strategy and products
– Discussion of the Customer
First launch to strengthen
customer service and
engagement
– Discussion of recent employee
survey results and next steps
– Update on progress of diversity
and inclusion (D&I) initiatives,
including the commencement
of the Executive Committee
Inclusive Leadership
Programme
– Recommendation of the
payment of a final dividend
to shareholders
– Discussion of the social
value created by GPE
during 2021/22 and positive
feedback from the launch
of the new Social Impact
Strategy
– Update on the launch
of GPE’s new charity
partner, XLP
– Review of customer and agent
themes and insights from an
independent Customer First
research exercise identifying
opportunities to strengthen
the customer experience,
including through service-
level improvements, and to
enhance agent and broker
relationships and their
knowledge of GPE products
– Consideration of engagement
with freeholders, including
to progress the regear
of the headlease at
2 Aldermanbury Square (2AS)
– Discussion of feedback from
employee D&I workshops
and next steps to drive
further progress
– Approval of an updated
Sustainability Policy and
review of costs to upgrade
portfolio assets to an
EPC B rating
– Noted feedback from joint
venture partners regarding
management of partnership
assets and retail strategies
– Discussion of increasing
energy prices and GPE’s
creation of Energy Councils
at each building, and the
use of sesame® app data,
to support customers
with their energy use
– Received an update on the
People Plan, including D&I
activities, improvements to
GPE’s talent and development
programme and initiatives
to improve operational
processes in response to
employee feedback
– Update on planning authority
and local community
engagement regarding
development schemes,
including at New City Court
and Minerva House
– Review of investor relations
activities and analyst updates
– Supported a disability project
on inclusive spaces with
the Purple Tuesday charity
and initiatives to become a
Disability Confident Employer
– Approval of GPE’s 2022
Modern Slavery Statement
– Discussion of the refinement
of the New City Court scheme
to meet evolving customer
and sustainability needs
– Received feedback
from GPE’s successful
Community Day
– Update on sustainability
innovations and GPE’s
continued support of
industry-wide sustainability
efforts
– Update on the Executive
Committee’s Inclusive
Leadership Programme, the
work to define the practical
applications of the learnings
from the programme for
the wider business and the
setting of measurable goals
– Approval of the
interim dividend
– Discussion of progress
being made against
GPE’s Social Impact
Strategy and the social
value created to date,
including through the work
with charity partner, XLP
– Discussion of feedback from
the employee Customer First
workshops and the identified
need to define GPE’s service
proposition and standards
– Consideration of responses
to a recent employee
D&I survey highlighting
opportunities for further
progress and positive
feedback following the
communication of new
employee representation
targets and the launch
of a new D&I programme
for senior managers
– Review of feedback from an
institutional investor roadshow
in November which, despite
macro concerns, signalled
broad support for GPE’s Flex
and development strategy
and low leverage
– Update on the Customer
First programme and actions
to enhance customer
engagement
– Received an update on
sustainability developments
and progress against
targets
– Approval of GPE’s updated
Sustainability Statement
of Intent and Brief for
Creating Sustainable
Spaces
– Update on results
of the recent customer
satisfaction survey and
Net Promoter Score
and the development
of our customer service
proposition and standards
– Update on our Inclusive
Spaces Project and the
attainment of Level
Two Disability Confident
Employer accreditation
What we did in 2022/23
Leadership and purpose continued
Consideration of stakeholder engagement
2022
2 Aldermanbury
Square
96 Great Portland Estates plc Annual Report 2023
May/June July/August September November January March
Strategy,
governance, risk
and opportunity
management
– Discussion of 2022/23 key
priorities, themes, strategic
actions and team resourcing
– Update from GPE’s corporate
brokers on the market
backdrop, macro-economic
conditions, including
inflation and interest rates,
and investment risks and
opportunities
– Discussion of real estate
trends and occupiers’ future
space requirements
– Discussed asset strategies and
potential sales and supported
the disposal of 6/10 Market
Place, W1
– Received an update on
activities being undertaken
in relation to the development
pipeline, including the impacts
of rising construction costs
and the challenging planning
environment
– Approval of the acquisitions
of 6/10 St Andrew Street, EC4
and 2 Cathedral Street, SE1
– Approval of Emma Woods
as GPE’s next Remuneration
Committee Chair
– Approval of the appointment
of Champa Magesh as a
Non-Executive Director
– Discussion of the REIT sector
and economic outlook,
the limited supply of new
space in the market and the
bifurcation between prime
and other assets
– Update on Flex activities,
including growth,
performance, resourcing
and potential acquisitions
– Noted an IT and cyber
security risk and controls
update and recommendations
arising from a ‘red team’
penetration exercise
– Update on Executive
Committee ‘Away Day’,
including discussions on
market dynamics, delivery
of a Customer First culture,
the risks and opportunities
regarding sustainability
and Flex, and leadership
in a post-pandemic world
– Update on debt markets,
GPE’s strong position to
consider potential debt
options going forward
and its relationships with
existing lenders
– Approval of PwC as GPE’s
next external auditor
for 2023/24, subject to
shareholder approval
– Received an external
presentation on the market
backdrop, the European real
estate equity market and
GPE’s positioning to drive value
creation and take advantage
of market trends
– Discussion of development,
planning, procurement, supplier
failure and construction pricing
risks and mitigating actions
– Approval of the pre-letting
of 2AS to Clifford Chance and,
conditional on the exchange
of contracts, the 2AS
redevelopment
– Approval of the 50 Finsbury
Square disposal for £190m
subject to final terms
– Discussion of the investment
market and new business
opportunities
– Received a health and safety
update and discussed progress
against KPIs
– Discussed an Innovation
Strategy update including on
the use of technology to support
GPE’s Customer First approach,
the proposed deployment of
a new customer relationship
management system and
GPE’s investment in Pi Labs
European PropTech venture
capital fund (see page 104
for further information)
– Discussion of key market
themes, macro conditions,
London’s continued
attractiveness, demand
for prime space and the
opportunities presented
– Approved in principle a
management reorganisation
to support the Customer
First approach and changing
market conditions
– Review of void rates,
potential vacancies and
void mitigation strategies
– Received an update
on Flex and discussed
product differentiation
– Discussion of the Customer
First programme including
customer journey
mapping, customer
feedback and planned
immersive workshops
for all employees
– Review of key themes and
priorities to be addressed
as part of the March 2023
strategy review
– Discussion of developments
in sustainability regulations
and practice and the
certification of 50 Finsbury
Square as GPE’s first net
zero carbon development
– Approval of the
definitive appraisal for
the 6/10 St Andrew Street
refurbishment scheme
– Discussion of the
Flex marketing strategy,
operating costs and returns
– Discussion of the
recommendations arising
from the external Board
evaluation
– Approval of the appointment
of Nick Hampton as GPE’s next
Senior Independent Director
following the retirement of
Charles Philipps
– External presentations
on (i) the economy and
the central London office
market; and (ii) the
flexible office market
– Review of our portfolio
response to customer
demands and approval
of the target to grow our
Flex office space to 1m sq ft
– Update on our three-year
IT strategy, including cyber
security governance and
actions arising from an
externally facilitated cyber-
attack simulation exercise
– Review of health and safety
activities, governance,
risks and controls, including
the implications of new
fire and building safety
legislation
– Discussion of progress
against GPE’s Innovation
Strategy and areas of
focus for 2023/24 following
a business-wide consultation
Understanding
the views of
stakeholders,
the interests of
employees and
the fostering
of business
relationships
– Review of feedback from the
Capital Markets Day in April,
including positive feedback
on the simplification of GPE’s
strategy and products
– Discussion of the Customer
First launch to strengthen
customer service and
engagement
– Discussion of recent employee
survey results and next steps
– Update on progress of diversity
and inclusion (D&I) initiatives,
including the commencement
of the Executive Committee
Inclusive Leadership
Programme
– Recommendation of the
payment of a final dividend
to shareholders
– Discussion of the social
value created by GPE
during 2021/22 and positive
feedback from the launch
of the new Social Impact
Strategy
– Update on the launch
of GPE’s new charity
partner, XLP
– Review of customer and agent
themes and insights from an
independent Customer First
research exercise identifying
opportunities to strengthen
the customer experience,
including through service-
level improvements, and to
enhance agent and broker
relationships and their
knowledge of GPE products
– Consideration of engagement
with freeholders, including
to progress the regear
of the headlease at
2 Aldermanbury Square (2AS)
– Discussion of feedback from
employee D&I workshops
and next steps to drive
further progress
– Approval of an updated
Sustainability Policy and
review of costs to upgrade
portfolio assets to an
EPC B rating
– Noted feedback from joint
venture partners regarding
management of partnership
assets and retail strategies
– Discussion of increasing
energy prices and GPE’s
creation of Energy Councils
at each building, and the
use of sesame® app data,
to support customers
with their energy use
– Received an update on the
People Plan, including D&I
activities, improvements to
GPE’s talent and development
programme and initiatives
to improve operational
processes in response to
employee feedback
– Update on planning authority
and local community
engagement regarding
development schemes,
including at New City Court
and Minerva House
– Review of investor relations
activities and analyst updates
– Supported a disability project
on inclusive spaces with
the Purple Tuesday charity
and initiatives to become a
Disability Confident Employer
– Approval of GPE’s 2022
Modern Slavery Statement
– Discussion of the refinement
of the New City Court scheme
to meet evolving customer
and sustainability needs
– Received feedback
from GPE’s successful
Community Day
– Update on sustainability
innovations and GPE’s
continued support of
industry-wide sustainability
efforts
– Update on the Executive
Committee’s Inclusive
Leadership Programme, the
work to define the practical
applications of the learnings
from the programme for
the wider business and the
setting of measurable goals
– Approval of the
interim dividend
– Discussion of progress
being made against
GPE’s Social Impact
Strategy and the social
value created to date,
including through the work
with charity partner, XLP
– Discussion of feedback from
the employee Customer First
workshops and the identified
need to define GPE’s service
proposition and standards
– Consideration of responses
to a recent employee
D&I survey highlighting
opportunities for further
progress and positive
feedback following the
communication of new
employee representation
targets and the launch
of a new D&I programme
for senior managers
– Review of feedback from an
institutional investor roadshow
in November which, despite
macro concerns, signalled
broad support for GPE’s Flex
and development strategy
and low leverage
– Update on the Customer
First programme and actions
to enhance customer
engagement
– Received an update on
sustainability developments
and progress against
targets
– Approval of GPE’s updated
Sustainability Statement
of Intent and Brief for
Creating Sustainable
Spaces
– Update on results
of the recent customer
satisfaction survey and
Net Promoter Score
and the development
of our customer service
proposition and standards
– Update on our Inclusive
Spaces Project and the
attainment of Level
Two Disability Confident
Employer accreditation
The table below provides examples of our significant discussions, transactions and appointments over and above the
scheduled matters outlined on page 87, together with examples of our oversight of engagement with stakeholders
and consideration of s.172(1) matters since April 2022. You can read our s.172(1) statement on page 62.
2023
50 Finsbury
Square
St Andrew Street
Governance
97Annual Report 2023 Great Portland Estates plc
Division of responsibilities
Audit Committee
four scheduled meetings a year
oversees financial reporting
monitors risk management
and internal controls
scrutinises activities and performance
of the external auditor
conducts, as appropriate, the tender
process for the external audit contract
evaluates internal auditor
and audit plan
Remuneration Committee
five scheduled meetings a year
establishes Directors’ remuneration policy to
be proposed to shareholders for approval
sets executive remuneration schemes
reviews Executive Committee member
objectives and achievements
approves senior management
remuneration and incentive awards
approves variable remuneration targets
approves the Directors’ remuneration report
reviews wider workforce pay policies and
alignment of incentives with culture
Executive
Committee
meets fortnightly
implements the
Group’s strategy
oversees transactions
monitors risks and
opportunities
responsible for succession
planning, resourcing and
people development
Sustainability
Committee
meets four times a year
manages climate change
risk and resilience
reviews progress and
development of sustainability
strategy
monitors environmental
compliance
oversees allocation of
Decarbonisation Fund
net zero carbon development
sub-committee focuses on
innovation and opportunities of
net zero carbon development
and refurbishment
portfolio sub-committee focuses
on reducing carbon emissions
in the existing portfolio
Social Impact
Committee
meets four times a year
sets direction for the Group’s
social value creation
oversees implementation
of the Group’s Social
Impact Strategy, charitable
partnerships and donations
Inclusion Committee
meets six times a year
provides oversight of Group
diversity and inclusion initiatives
oversees the work of
Employee Impact Groups
monitors feedback and identifies
areas for improvement
Health and Safety
Committee
meets four times a year
reviews the Group’s health
and safety compliance
and performance
provides oversight on Health
and Safety Strategy
identifies and reviews
opportunities for improvement
Nomination Committee
five scheduled meetings a year
recommends Board appointments
approves senior management appointments
oversees succession planning and
development of a diverse pipeline
responsible for Board
effectiveness evaluation
six scheduled meetings a year
sets strategy
provides oversight of
purpose, culture and risk
approves major transactions
provides oversight of governance
oversees climate change risk
and sustainability strategy
The role of the Board
and its Committees
during the year
Board
Board
Committees
Management
Committees
See Nomination Committee report
on pages 100 to 105
See Our people and culture
on pages 54 to 57
See Strategic Report
on pages 02 to 78
See Strategic Report
on pages 02 to 78
See Sustainability on our
website www.gpe.co.uk/
sustainability/working-safely
See Sustainability on our
website www.gpe.co.uk/
sustainability
See Directors’ remuneration report
on pages 114 to 146
See Audit Committee report
on pages 107 to 113
See Our approach to risk
on pages 64 to 77
See Board activities on pages 87 to 97
See biographies of the current Directors on pages 84 and 85
See the division of responsibilities of the Directors on page 99
98 Great Portland Estates plc Annual Report 2023
The division of responsibilities of the Directors
The Board currently comprises the Non-Executive Chair, three Executive Directors and six independent Non-Executive
Directors and is supported by the General Counsel & Company Secretary. The Chair and the other Non-Executive Directors
meet regularly without the Executive Directors, and at least once a year the Non-Executive Directors meet without the Chair.
In addition, individual Directors meet routinely outside the formal Board meetings as part of each Director’s contribution
to the delivery of the Company’s strategy and review of operations.
The Executive Directors meet every two weeks with senior management as the Executive Committee, chaired by the
Chief Executive, to attend to the ongoing management of the Group. The Executive Committee makes decisions within
the parameters set out in the Group’s Delegated Authorities which govern the taking and escalation of significant decisions.
Significant operational and market matters are communicated to the Non-Executive Directors on a timely basis outside
of the Board meetings. All Directors have access to the advice and services of the General Counsel & Company Secretary,
who is responsible to the Chair on matters of corporate governance.
Each year the Schedule of Board Responsibilities and terms of reference for the roles of Chair, Chief Executive and Senior
Independent Director are revisited by the whole Board and are available on our website at www.gpe.co.uk/investors/governance
Roles and responsibilities of the Directors:
Chair Richard Mully
Richard is responsible for leading the Board and for its effectiveness, meeting
with shareholders as appropriate, ensuring a culture of openness, transparency
and debate and helping the Chief Executive ‘to set the tone from the top’ on the
Company’s purpose, values and culture. As part of his role in leading the Board,
he ensures that the Board provides constructive input into the development
of strategy, understands the views of the Company’s key stakeholders and
provides appropriate oversight, challenge and support.
As Chair, Richard also leads the Nomination Committee.
Chief Executive Toby Courtauld
Toby is responsible for setting the Group’s strategic direction, implementing the
agreed strategy, the operational and financial performance of the Group and the
day-to-day management of the Company, including setting the tone for, and ensuring
oversight of, the Company’s culture through ‘living our values’ and ensuring the Board
is aware of key stakeholders’ views. As part of his role, Toby is responsible for leading
the Executive and Sustainability Committees and has executive responsibility for
climate change and sustainability matters.
Chief Financial &
Operating Officer
Nick Sanderson
Nick supports the Chief Executive in developing and implementing the Group
strategy and all financial matters. As part of his operations role, Nick has
responsibility for oversight of the valuation process and the HR, IT and, following
a team reorganisation in November 2022, the Customer Experience, Flex and
Marketing functions. Nick also leads the Social Impact Committee.
Executive Director Dan Nicholson
Dan further supports the Chief Executive in developing and implementing the
Group strategy while he has specific responsibility for portfolio management
and development management matters. Following a team reorganisation in
November 2022, Dan also leads the New Business and Workplace Services teams.
As part of the team reorganisation, Board responsibility for health and safety
was transitioned from Nick Sanderson to Dan in the year, and Dan now leads the
Health and Safety Committee.
Senior
Independent
Director
1
Nick Hampton
Nick acts as a sounding board for the Chair, leads the other independent
Non-Executive Directors in the performance evaluation of the Chair and is available
to shareholders as required. As part of his role, he also acts as an intermediary for
the Non-Executive Directors if necessary and is an independent point of contact
in the Group’s whistleblowing procedure. As Senior Independent Director, Nick
is also responsible for the Chair’s succession process, working closely with the
Nomination Committee.
Non-Executive
Directors
Mark Anderson
Vicky Jarman
Champa Magesh
Alison Rose
Emma Woods
Responsible for bringing an external perspective and providing constructive
challenge and support to the Board’s deliberations and decision making, using
their broad mix of business skills, knowledge and experience acquired across
different business sectors. They are also responsible for monitoring the delivery of
the agreed strategy within the risk management framework set by the Board and
promoting high standards of integrity and corporate governance. As Committee
Chair, Emma Woods (who succeeded Wendy Becker in that role on 7 July 2022)
is responsible for leading the Remuneration Committee, while Vicky Jarman
(who succeeded Nick Hampton in that role on 7 July 2022) is responsible for leading
the Audit Committee. Each Committee Chair seeks engagement with shareholders,
as appropriate, on significant matters relating to their areas of responsibility.
1. Charles Philipps was GPE’s Senior Independent Director during the year under review, stepping down on 30 March 2023 when he was succeeded by Nick Hampton.
Governance
99Annual Report 2023 Great Portland Estates plc
Composition, succession and evaluation
Directors’ tenure (as at 31 March 2023)
’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23
Toby Courtauld 20 yrs 11 mths
Nick Sanderson 11 yrs 8 mths
Dan Nicholson 1 yr 7 mths
Richard Mully 6 yrs 5 mths
Mark Anderson 1 yr 7 mths
Nick Hampton 6 yrs 6 mths
Vicky Jarman 3 yrs 2 mths
Champa Magesh 8 mths
Alison Rose 5 yrs
Emma Woods 1 yr 2 mths
Executive Directors Non-Executive Directors
Board diversity and tenure (as at 31 March 2023 and the date of this report)
Gender
1
Male – 60%
Female – 40%
Age
40–50
51–56
57+
Ethnic group
1
White – 90%
Ethnic Minority – 10%
Board balance
Chair
Executive Directors
Independent Non-Executive Directors
1. As at 31 March 2023 and the date of this
report, GPE met the FTSE Women Leaders
Review target to have at least 40% female
representation on the Board and the Parker
Review target to have at least one Director
from an ethnic minority background. GPE’s
Board Diversity Policy, which was updated
in March 2023, can be found on our website
at www.gpe.co.uk/investors/governance.
Further information can be found on
page 103.
6
1
3
4
6
3
1
6
9
P
a
r
k
e
r
R
e
v
i
e
w
Diversity
characteristics
F
T
S
E
W
o
m
e
n
L
e
a
d
e
r
s
1
Board composition and diversity
The diagrams below show the Board’s composition, tenure and diversity characteristics.
The biographical details of the Directors can be found on pages 84 and 85 which show the breadth of their skills
and experience, why their contribution is important to the Company’s long-term sustainable success, and their
membership of the Company’s various Committees.
Further details regarding diversity and inclusion at GPE can be found on pages 56, 57 and 103.
100 Great Portland Estates plc Annual Report 2023
In making any recommendations for Board appointments,
the Nomination Committee consults with the Chief Executive
and other members of the Board as appropriate. During the
year, the Chief Executive was invited to attend Nomination
Committee meetings to provide the Committee with updates
on human resourcing, diversity and inclusion activities, talent
development and succession planning. The Chief Executive
and the Chief Financial & Operating Officer also provided
their input into Board recruitment processes.
In making recommendations to the Board on Non-Executive
Director appointments, the Nomination Committee
specifically considers the expected time commitment of the
proposed Non-Executive Director and other commitments
they already have. Agreement of the Board is also required
before a Director may accept any additional commitments
to ensure possible conflicts of interest are identified and
that the Directors will continue to have sufficient time
available to devote to the Company. During the year,
the Board carefully considered the appointment of Emma
Woods as a Non-Executive Director of Huel Limited in
May 2022 and the appointment of Alison Rose as co-chair
of the Government’s new Energy Efficiency Taskforce in
February 2023. The Board was satisfied that these changes
would not impact Emma’s or Alison’s independence or
commitment and that in each case they would continue
to be able to add significant value to their respective
roles at GPE.
Non-Executive Directors are not appointed for specific terms
but, in accordance with the UK Corporate Governance Code,
are subject to annual re-election. All proposed re-elections
to the Board are formally considered by the Nomination
Committee, taking account of each individual’s effectiveness
and commitment to the role.
The Nomination Committee also reviews the recommendations
of the Board evaluation process and progress against the
recommendations from the previous year.
Our process
The Nomination Committee Terms of Reference are
available on the Company website at www.gpe.co.uk/
investors/governance
The Nomination Committee membership generally includes
all of the Non-Executive Directors. At the start of the financial
year, the Nomination Committee comprised the Chair of the
Board, Richard Mully, and seven independent Non-Executive
Directors, namely Charles Philipps, Mark Anderson, Wendy
Becker, Nick Hampton, Vicky Jarman, Alison Rose and Emma
Woods. Wendy Becker and Charles Philipps stepped down
from the Board, and therefore the Committee, with effect
7 July 2022 and 30 March 2023 respectively. Champa Magesh
was appointed to the Committee with effect from her
appointment to the Board on 1 August 2022.
Our approach
The key objectives of the Committee are to
regularly review the skills and experience of the
Board to ensure that it is the right size, structure
and composition taking into account the skills,
experience, independence, knowledge and diversity
of Directors and the future strategy of the Group.
It is the Committee’s role to consider succession
planning for the Board and senior executives below
Board level, to oversee the development of a diverse
pipeline for succession and to lead on the process
for Board appointments.
As part of its objectives, the Committee reviews
and recommends to the Board (i) the compositions
of the Audit, Nomination and Remuneration
Committees, taking into consideration individuals’
experience, ongoing training and development
and time commitments and the benefits of diversity;
and (ii) the re-election of Directors by shareholders
at the Annual General Meeting.
Nomination
Committee
1. Wendy Becker and Charles Philipps also served as members of the
Nomination Committee during the year, stepping down from the Board
and the Committee on 7 July 2022 and 30 March 2023 respectively.
Committee members
1
Director Role
Richard Mully Chair
Nick Hampton Senior Independent Director
Mark Anderson Non-Executive Director
Vicky Jarman Non-Executive Director
Champa Magesh Non-Executive Director
Alison Rose Non-Executive Director
Emma Woods Non-Executive Director
Further details regarding Committee
memberships, meetings and attendance
can be found on page 86.
Governance
101Annual Report 2023 Great Portland Estates plc
Composition, succession and evaluation continued
Dear fellow shareholder
On behalf of the Nomination Committee, welcome to the
report of the Nomination Committee for the year ended
31 March 2023. In a busy year for the Committee, our continued
focus has been on Board recruitment and succession planning
and the progression of our diversity and inclusion agenda.
Board and Committee composition
There have been a number of changes to the Board during
the year as we have continued to focus on appropriate ongoing
succession and diversity of the Non-Executive Directors. As part
of this process, the Nomination Committee regularly reviews
the composition of the Board and its Committees to ensure
they have the requisite skills, experience, diversity and
knowledge in alignment with the Group’s strategy.
As I explained in last year’s report, the Committee had
identified the need to strengthen the Board’s technology
and data expertise. During the year, in view of Charles Philipps’
impending retirement at the end of his nine-year tenure,
the Committee also agreed to commence an additional
search process for a Non-Executive Director with strong City,
investment and capital markets experience. The Committee
instructed executive search firm, Russell Reynolds, to
support with each of these searches. Russell Reynolds has
no connection with the Company or any individual Directors
other than to assist with Executive and Non-Executive
succession planning and appointment processes.
As part of each recruitment process, the Committee reviewed
diverse longlists from which refined shortlists of candidates were
selected for interview. Following a detailed selection process for
the technology and data search, the Committee recommended
to the Board the appointment of Champa Magesh, who joined
the Board and each of its Committees from 1 August 2022.
Champa’s wealth of digital transformation, technology and
operational experience are of great value as we evolve our
strategy, products and our Customer First approach.
The search for an additional Non-Executive Director is progressing
to enhance the Board’s City, financial and transaction experience,
and with the aspiration of increasing the Board’s overall diversity,
and we hope to announce a further appointment in due course.
As planned, Wendy Becker stepped down from the Board and
as Chair of the Remuneration Committee, and Nick Hampton
stood down as Chair of the Audit Committee, each from the
conclusion of the 2022 AGM held on 7 July 2022. Emma Woods
and Vicky Jarman became the next Chairs of the Remuneration
Committee and Audit Committee respectively from that time,
and I am delighted with the smooth transition processes and the
valuable experience each is bringing to their roles. Nick Hampton
remains a member of the Audit Committee. As explained on
page 81, Charles Philipps retired from the Board on 30 March
2023 and Alison Rose will be stepping down from the Board
from the conclusion of the 2023 AGM.
Given Charles Philipps’ anticipated retirement, the Committee
considered who should succeed him as GPE’s next Senior
Independent Director (SID). The Committee discussed the
attributes required for a SID and the suitability and ongoing
responsibilities of Directors. While the FTSE Women Leaders
Review and new Listing Rule target, for at least one of the Chair,
SID, CEO and CFO positions to be held by a woman, remains an
important consideration, and the benefits of diversity are always
an important consideration when we are making appointments
to Board roles, it was unanimously agreed that Nick Hampton’s
significant experience, skills and deep knowledge of GPE would
make him an excellent SID for the next stage of our Board’s
development. Vicky Jarman and Emma Woods have recently
been appointed as Chairs of the Audit and Remuneration
Committees and continue to focus on these key responsibilities.
External candidates were not considered for the SID role at this
time as it was felt that an experienced internal candidate, with
a strong understanding of the Board and the Group, would be
best placed to support Board succession planning over the
next few years. On the recommendation of the Committee,
the Board was pleased to appoint Nick as GPE’s new SID
following Charles’ retirement on 30 March 2023.
Succession planning and talent development
During the year, in addition to the Board processes described
above, we have considered the development plans and
succession planning for Executive Directors, the Executive
Committee and senior leaders. As part of this process, the
Committee considers the depth and quality of the succession
pipeline, the skills and capabilities required for the future
strategic needs of the business, retention and succession
planning risks, personal development needs and the
strengthening of diversity and inclusion.
Recognising and developing our top talent is key to ensuring
that we have a healthy and diverse pipeline of current and
potential future leaders, and this remains a key area of focus
for the Board and Committee. We have progressed our
Non-Executive Director mentoring programme for selected
members of the GPE team and continue to oversee our wider
talent development programme. This includes our Executive
Committee Rotating Seats programme, whereby two
members of senior management join the Executive Committee
on a six-month rotating basis, helping individuals to develop
their skills and exposure whilst supporting the development
of a diverse talent pipeline.
To support the delivery of our Customer First approach
and to position GPE to take advantage of changing market
conditions, we were pleased to endorse a team reorganisation
as well as several senior management role changes and
promotions in the year. This included the rebalancing of the
responsibilities of our Executive Directors with Nick Sanderson
assuming reporting line responsibility for Marketing, Flex
and Customer Experience, and Dan Nicholson assuming
responsibility for New Business, Health and Safety and the
newly created Workplace Services function. Details of these
and other changes, promotions and appointments made
to strengthen the team can be found on page 54.
“In a busy year for the Committee,
our continued focus has been on Board
recruitment and succession planning,
and the progression of our diversity
and inclusion agenda.”
Richard Mully Chair of the Nomination Committee
102 Great Portland Estates plc Annual Report 2023
Our approach to diversity and inclusion
We recognise the strategic importance of a diverse Board
and workforce which is representative of our stakeholders
and which provides different perspectives to support the
development and delivery of our strategy.
The Board was pleased to adopt a new Board Diversity
Policy in March 2023 which specifically applies to the
Board and its Committees and supports GPE’s wider
approach to diversity. A copy of the policy can be found
on our website at www.gpe.co.uk/investors/governance.
We believe that the Board should comprise Directors with
a diverse mix of attributes including but not limited to
skills, knowledge, experience, gender, ethnicity, age and
educational, professional and socio-economic background.
Different perspectives and points of view improve decision
making, and we believe that ultimately this will benefit GPE’s
stakeholders through better business performance. The Board
also believes that the tone for diversity and inclusion at GPE
must be set from the top; having a diverse leadership team
and an open and inclusive culture where people feel safe,
respected and appreciated for who they are and what they
bring is aligned to our core values and expected behaviours.
We expect our search consultants to ensure that the
candidate pool for appointments to the Board is sufficiently
wide and includes candidates from a variety of backgrounds
with a wide range of experience and strengths to reflect
the Board’s diversity aims. This approach to recruitment is
mirrored across the business.
From a gender perspective, the Committee supports
the recommendations set out in the FTSE Women Leaders
Review. As at the date of this Report, women represented
40% of the Board, 22% of the Executive Committee (or 27%
including participants in our Executive Committee Rotating
Seats programme) and 36% of the population comprising the
Executive Committee and their direct reports. We continue
to make progress in many areas but recognise there is
much work still to do.
We have also collected data on the ethnic diversity of our
people, which we have published for the first time this year.
We are pleased to have met the Parker Review target to have
at least one Director from a minority ethnic background by
2024 and, as explained below, we are working to increase
ethnic minority representation across the organisation.
Diversity and inclusion, and the development of a diverse
management pipeline, remain a key priority and the Board,
along with the Nomination and Remuneration Committees,
continues to drive and oversee our progress in these areas under
our People Plan. To inject further pace, for 2022/23, Executive
Directors had a full one-third weighting of their personal
bonus objectives linked to improving female representation
at GPE. All Executive Committee members participated in an
impactful inclusive leadership development programme over
nine months of the year. We also launched several meaningful
Employee Impact Groups to provide a voice for colleagues
from under-represented groups. These initiatives, amongst
others, have given us all confidence in setting the following
aspirational diversity and inclusion targets which were
communicated to our colleagues in December 2022:
– for 40% of senior leadership roles (Executive and Operations
Committee roles) to be held by women by 2025;
– for 20% of all management roles to be held by colleagues
who identify with an ethnic minority category (as identified
by the ONS) by 2025; and
– reflecting our London communities, for 40% of all colleagues
to identify with an ethnic minority category by 2027.
In line with the latest Parker Review recommendations for
FTSE 350 companies, the Committee will also be considering
setting a December 2027 target regarding the percentage
of Executive Committee members and their senior manager
direct reports who identify with an ethnic minority category.
Further details regarding our diversity and inclusion initiatives
and progress can be found on pages 56 and 57.
Committee and Director effectiveness review
Milena Djurdjevic of Calibro Consult was appointed to
undertake an external evaluation for the Board and its
Committees in 2022/23. The review concluded that the Board
and its Committees, including the Nomination Committee,
continue to operate efficiently and effectively. Details of the
review and its findings can be found on pages 104 and 105.
All proposed elections and re-elections to the Board are
formally considered by the Nomination Committee, taking
account of each individual’s continued effectiveness and
commitment to the role. Following this review, I can confirm
that each of the Non-Executive Directors is considered
effective in their roles and both independent of the Executive
Management and free from any business or other relationship
which could materially interfere with their exercising of
independent judgement. The SID also met with the Directors
to appraise my own performance.
Richard Mully
Chair of the Nomination Committee
24 May 2023
Statement in accordance with Listing Rule
9.8.6R(9) on Board Diversity
As at 31 March 2023, GPE met the targets specified in Listing
Rules 9.8.6R(9)(a) and (c) with the Board comprising 40% women
and having one Director from a minority ethnic background.
Alison Rose will be stepping down from the Board from the
conclusion of the AGM 2023 on 6 July 2023, which will reduce
the percentage of women on the Board to 33% in the short
term. We currently envisage that the Board may, once again,
comprise 40% women following the planned appointment
of an additional Non-Executive Director with City, financial
and transaction experience. An announcement will be made
at the appropriate time.
While the key roles of Audit Committee Chair and Remuneration
Committee Chair are both held by women, the Board has not yet
met the target under Listing Rule 9.8.6R(9)(b) for at least one of
the Chair of the Board, Chief Executive, SID or CFO positions to
be held by a woman. All Board appointments are based on merit
and objective criteria, taking account of the benefits of diversity.
As explained on page 102, Nick Hampton was appointed as
GPE’s SID from 30 March 2023, with unanimous support from his
fellow Directors, on account of his extensive experience, skills
and deep knowledge of GPE and the continued value he brings
to the Board. It is the Board’s aspiration and intention to meet
the target specified in Listing Rule 9.8.6R(9)(b) as we refresh our
Board over time and, as set out in our Board Diversity Policy, we
aim to meet all targets set out in Listing 9.8.6(9) by no later than
the end of 2025, with gender diversity being a key consideration in
our Board succession planning. Details regarding GPE’s gender
and ethnic diversity data, including that required by Listing
Rule 9.8.6R(10), can be found on page 56.
Governance
103Annual Report 2023 Great Portland Estates plc
Composition, succession and evaluation continued
Our 2022/23 Board evaluation process
In accordance with the recommendations of the Code, we undertake a review of the effectiveness of the Board’s performance
and that of its Committees and Directors every year, with an external evaluation held at least every three years. Accordingly,
an external review of Board and Committee effectiveness was undertaken during 2023, details of which can be found below.
Our progress against the actions identified through the 2021/22 internal review is set out below:
The 2022/23 Board and Committee effectiveness review
was facilitated by Milena Djurdjevic of Calibro Consult,
an external board evaluation specialist. After considering
proposals from a number of providers, the Committee
felt that Ms Djurdjevic’s tailored approach, with particular
focus around GPE’s strategy and business transformation,
made her best placed to facilitate the external evaluation.
Neither Ms Djurdjevic nor Calibro Consult have any other
connection with GPE or any individual Director.
The aim of the review was to assess the effectiveness of
the Board and its Committees and identify any actions to
help improve how we fulfil our duties and become a more
effective Board. The review considered the performance of
the Board and its development, composition and succession
in view of its strategy, future growth ambitions, the changing
business environment and the challenges ahead. It also
considered the systems, controls, capabilities and processes
underpinning the operation of the Board and its Committees.
The process included:
– one-to-one workshops held by Ms Djurdjevic with
individual members of the Board and Executive Committee
and meetings with other stakeholders, including GPE’s
remuneration consultant;
– review of Board, Committee and other governance-
related papers;
– attendance at the November 2022 meetings of the Board
and the Audit, Nomination and Remuneration Committees;
– discussion of a draft report with the Chair of the Board
and Charles Philipps, as SID; and
– circulation of a report detailing the findings from
the evaluation, including strengths, opportunities and
recommendations, which was discussed by the full
Board at the January 2023 Board meeting.
Progress against 2021/22 Board evaluation actions in 2022/23
Actions Progress
Closer oversight of strategic
implementation and ensuring
that GPE has the right
people and skills to deliver
on its ambitions.
– Board agendas revised to allow time to consider strategy implementation.
– Further development of management packs and Board reporting.
– Development of Customer First strategy.
– Team reorganisation implemented with changes to Executive Director
and team responsibilities to support delivery of the Customer First programme.
Broadening the Board’s skill sets
in line with GPE’s technology,
data and customer objectives.
– Champa Magesh was appointed to the Board on 1 August 2022, bringing
significant digital transformation, technology and operational experience.
This followed the appointments of Mark Anderson and Emma Woods in the
prior financial year.
Continuing to enhance diversity
and inclusion across the Board,
Executive Committee and
wider organisation.
– Board gender and ethnic diversity increased.
– New Board Diversity Policy adopted.
– Executive Committee participation in a nine-month inclusive leadership programme
and clear D&I annual bonus objectives set.
– Implementation of meaningful diversity and inclusion initiatives – see pages 56,
57 and 103.
– Diversity and inclusion representation targets set for wider organisation.
Increasing Board engagement
on technology and innovation to
further develop its understanding
of the challenges and opportunities.
– Presentations received from GPE’s Director of Innovation and Head of IT.
– Board review of the Innovation Strategy and progress made.
– Discussion of the potential impacts of technology, including the Metaverse,
on real estate and how innovation and technology can support GPE’s
Customer First approach.
– Board updates on maximising the use and benefits of the sesame® app
and regarding GPE’s investment in Pi Labs European PropTech venture capital
fund, which focuses on investment in start-ups in the UK and Europe using
technology solutions to enhance the real estate value chain.
104 Great Portland Estates plc Annual Report 2023
2022
2023
The process also considered the effectiveness of individual
Directors, with feedback given to Directors by the Chair of
the Board at the end of the process (and feedback given
to the Chair of the Board by Charles Philipps, as SID).
The review concluded that the Board, its Committees
and individual Directors continue to operate effectively.
Some of the key strengths identified included:
– the strength of the Board’s composition and diversity,
which was considered well suited to helping management
achieve its strategic and broader stakeholder
objectives with appropriate levels of support and
constructive challenge;
– well-run Board and Committees meetings, with appropriate
time devoted to key issues and Board members who
are highly committed, engaged and well prepared;
– a positive and collaborative Board culture with strong
leadership from the Chair, high levels of contribution,
debate and insight and mutual respect between
Executive and Non-Executive Directors;
– the many opportunities for Directors to engage with
the business engendering a common sense of purpose
and ‘team’;
– the Board’s strong approach to strategy development; and
– GPE’s clear purpose, values and strategy which aligned
with its culture.
The review identified some recommendations and
opportunities and the key actions arising from the review
are as follows:
What we did in 2022/23
Nomination Committee
– The Committee
recommended Emma
Woods to succeed Wendy
Becker as Chair of the
Remuneration Committee
– The Committee discussed
Executive Committee talent
planning and development
– The Committee discussed
Executive Director succession
planning processes
– The Committee
recommended the
appointment of Champa
Magesh as a Non-Executive
Director and member of
the Audit, Nomination and
Remuneration Committees
Board
– The Board approved
the appointments of
Emma Woods as the next
Remuneration Committee
Chair and Champa Magesh
as a Non-Executive Director
Nomination Committee
– The Committee discussed
the findings from the 2022/23
external Board and Board
Committee evaluation
– Richard Mully and Russell
Reynolds provided the
Committee with an update
on the search for an
additional Non-Executive
Director
– The Committee reviewed
Board and Board
Committee compositions
and Board training
– The Committee received
an update on governance
and regulatory requirements,
including in relation to
diversity
– The Committee recommended
the adoption of GPE’s new
Board Diversity Policy
– The Committee approved
changes to its Terms of
Reference
Board meeting
– The Board and Committee
memberships were approved
Nomination Committee
– The Committee discussed
Executive Committee
performance and
development
– The Committee endorsed
the proposed team
reorganisation to support
the delivery of our Customer
First approach, including
the promotion of Rebecca
Bradley to Director of
Customer Experience &
Relationships, and approved
the reallocation of Executive
Director responsibilities
– The Committee discussed
the expected retirement
of Charles Philipps and
associated succession
planning
Nomination Committee
– The Committee considered
Non-Executive Director
succession planning
and recommended the
appointment of Nick
Hampton as GPE’s next Senior
Independent Director upon
Charles Philipps’ retirement
– The Committee discussed the
search for an additional Non-
Executive Director with strong
City, financial and transaction
experience to be conducted by
Russell Reynolds
– The Committee discussed
the findings from a senior
management talent
development, retention and
succession planning review
and Executive Director
succession planning
Board
– The Board approved
the appointment of Nick
Hampton as GPE’s next
Senior Independent Director
– The Board considered the
findings from the 2022/23
external Board and Board
Committee evaluation
Nomination Committee
– The Committee discussed
the outputs from an
Executive Director
succession planning
exercise
– The Committee discussed
diversity and inclusion
and the development
of a diverse pipeline
Recommendations from the
2022/23 Board evaluation
1
To consider enhancing the Board’s City,
financial and transaction experience in
view of Charles Philipps’ length of service
(and his retirement now announced).
2
To allocate additional Board time to
GPE’s strategy and transformation.
3
To further deepen the Board’s
knowledge of the developing flexible
space market and continue to ensure
that GPE has the right structure,
resourcing and oversight to deliver
its evolving strategy.
4
To further develop the Board’s
understanding of technology and
innovation threats and opportunities,
GPE’s ambitions in these areas and
the best means of achieving them.
5
Continued focus by the Board
and Nomination Committee on
talent development and Executive
Committee and Board succession
planning and diversity.
March May/June
September
November
January
February
Governance
105Annual Report 2023 Great Portland Estates plc
Audit, risks and internal controls
Together, the Audit Committee and the Board are responsible
for ensuring the Group has an effective internal control and
risk management system and that the Annual Report provides
a fair reflection of the Group’s activities during the year.
Internal controls and ongoing risk management
The Board is responsible for maintaining and monitoring
the Group’s system of internal control and, at least annually,
reviewing its effectiveness.
Such a system can only provide reasonable, and not absolute,
assurance against material misstatement or loss, as it is
designed to manage rather than eliminate the risk of failure
to achieve business objectives.
The identification and management of risks and opportunities
is part of the GPE mindset, underpinned by evolving processes
and procedures in place for identifying, evaluating and
managing the principal and emerging risks faced by the
Group. These processes and procedures have been in place
for the year under review and up to the date of this report,
are regularly reviewed by the Board and accord with the
Financial Reporting Council’s Guidance on Risk Management,
Internal Control and Related Financial and Business Reporting.
Key features of our system of internal control include:
– a comprehensive system of financial reporting and
business planning;
– a defined schedule of matters reserved for Board decision,
which is reviewed by the Board at least annually;
– an organisational structure with clearly defined levels
of authority and division of responsibilities;
– formal documentation of procedures;
– the close involvement of the Executive Directors and
the other Executive Committee members in day-to-
day operations, including regular meetings with senior
managers to review operational activities and risk
management systems;
– the Executive Committee reporting on control systems
to the Audit Committee and Board, including to annually
confirm its view on whether GPE’s internal controls,
and broader control environment, are appropriate
and operating effectively;
– regular Board review of Group strategy, including forecasts
of the Group’s future performance and progress on the
Group’s development projects;
– formal sign-off on the Group’s Ethics, Anti-Fraud, Bribery
& Corruption, Gifts and Hospitality and Whistleblowing
Policies by all employees annually; and
– review by the Audit Committee of internal audit reports
and reports from the external auditor.
Twice a year, the Audit Committee carries out, on behalf
of the Board, a review of the Group’s risk management
framework, its principal and emerging risks, key controls and
their oversight during the year. The Group’s systems of risk
management and internal controls involves the identification
of business and financial market risks including social,
ethical and environmental issues which may impact on the
Group’s objectives, together with the controls and reporting
procedures designed to minimise those risks.
As part of its review, the Audit Committee formally considers
the key controls forming the Group’s system of internal control
and whether these are considered to be operating effectively.
The Committee considers a report from management, the
work of internal audit, as described on page 110, and feedback
from the external auditor. Key control observations, exceptions
and management actions are reviewed and discussed,
and identified risk areas are considered for inclusion in the
internal audit plan where appropriate. Once complete, the
Audit Committee’s review of the Group’s risks and internal
controls is considered by the full Board. No significant control
weaknesses or failures were identified as part of this year’s
internal controls effectiveness review. During the year, the
Audit Committee has overseen actions to further enhance
controls and the efficiency of GPE’s internal control framework.
This has included:
– the continued development of GPE’s fraud risk assessment
process introduced in the prior year to more formally
document and assess GPE’s key fraud risks and controls;
– a detailed internal financial controls mapping exercise
to help identify opportunities for improvement, as well
as to streamline controls, which will continue to evolve
in readiness for expected regulatory changes;
– the implementation of additional IT controls in response
to recommendations arising from an internal audit review
of cyber security, as further detailed on page 110, and the
completion of a cyber-attack simulation exercise facilitated
by a third-party provider; and
– the review and updating of GPE’s Business Continuity Plan.
The Board and Audit Committee have also continued
to oversee the implementation and development of the
Company’s risk management framework and processes
to ensure these remain fit for purpose.
During the year, the Board and the Audit Committee have
continued to regularly review and monitor the risks, potential
impacts and controls associated with the volatile macro-
economic environment and the geopolitical tensions arising
from the war in Ukraine, including in respect of rising inflation,
interest rates and property yields, and supply chain pressures.
This has included a review of the impacts on GPE’s operations,
development delivery and costs, valuations, financial forecasts
and business plans. The Group’s business plans continue to
be prepared under a variety of market scenarios to reflect
a number of potential outcomes.
The Board and the Audit Committee have remained focused
on climate change and decarbonisation risks and the steps
being taken by GPE to mitigate these risks and their potential
impacts on our business and operations. Such steps have
included the continued implementation of our Net Zero
Carbon Roadmap and Social Impact Strategy along with
the updating of our Sustainability Statement of Intent and
Brief for Creating Sustainable Spaces to articulate our
approach to climate resiliance.
The Group’s principal risks relating to ‘Climate change and
decarbonisation’, ‘Adverse macro-economic environment’, and
‘London attractiveness’ continue to be identified as the risks
which the Board believes could have the greatest potential
impact on the Group’s viability. The Group’s viability statement
can be found on page 78.
The Group’s principal risks and the processes in place
to manage those risks are described in more detail on
pages 64 to 77.
106 Great Portland Estates plc Annual Report 2023
Audit
Committee
1. Nick Hampton was Chair of the Audit Committee until 7 July 2022,
when he was succeeded in that role by Vicky Jarman. Charles Philipps
also served as a member of the Audit Committee during the year,
stepping down from the Board and the Committee on 30 March 2023.
Our process
The Audit Committee Terms of Reference are available on the
Company website at www.gpe.co.uk/investors/governance
At the beginning of the financial year, the Committee
comprised six independent Non-Executive Directors:
Nick Hampton as Chair, Charles Philipps, Mark Anderson,
Vicky Jarman, Alison Rose and Emma Woods. Vicky Jarman
succeeded Nick Hampton as Chair of the Committee from
the conclusion of the 2022 AGM on 7 July 2022, with Nick
Hampton continuing as a member of the Committee.
Champa Magesh joined the Committee with effect from her
appointment to the Board on 1 August 2022. Charles Philipps
retired from the Board, and therefore the Committee,
on 30 March 2023.
The biographies of the current Committee members are set
out on pages 84 and 85. Vicky Jarman, Nick Hampton and
Alison Rose have recent and relevant financial experience
and are considered suitably competent in accounting and/
or auditing. The Committee, as a whole, has competence
relevant to the real estate sector.
The Audit Committee provides a forum for review of the
Group’s financial external reporting, including its accounting
policies. In respect of the Group’s half-year and year-end
results, this includes discussions with the Group’s external
valuer, CBRE, on the valuation process and conditions in
London’s real estate markets and with the Group’s external
auditor, currently Deloitte LLP (Deloitte), on any accounting
or audit matters. The Committee reviews the Company’s Task
Force on Climate-related Financial Disclosures (TCFD) in the
Annual Report and discusses sustainability assurance activities
more broadly with Deloitte. The Audit Committee also reviews
the adequacy and effectiveness of the Group’s internal
financial controls and internal control and risk management
systems and is responsible for the selection and review of
the effectiveness of the internal and external auditors.
The Chair of the Board, Richard Mully, attends the meetings
reviewing the half-year and year-end results and has a standing
invitation to attend any other meetings as appropriate. The Chief
Executive, Chief Financial & Operating Officer, Executive Director,
Director of Financial Reporting and Investor Relations, other
members of senior management and representatives from the
external auditor and internal auditor also attend Committee
meetings as appropriate.
The Committee typically meets four times a year, with the
meetings aligned with our financial reporting timetable.
Our approach
The key objectives for the Audit Committee are to
review and report to the Board and shareholders on
the Group’s financial reporting, internal control and
risk management systems, and on the independence
and effectiveness of the external auditor.
Committee members
1
Director Role
Vicky Jarman Committee Chair (from 7 July 2022)
Nick Hampton Senior Independent Director
Mark Anderson Non-Executive Director
Champa Magesh Non-Executive Director
Alison Rose Non-Executive Director
Emma Woods Non-Executive Director
Further details regarding Committee
memberships, meetings and attendance
can be found on page 86.
Governance
107Annual Report 2023 Great Portland Estates plc
This year, the Committee led the important process to
retender the external audit. Deloitte, GPE’s current external
auditor, has undertaken the audit for the financial year ending
31 March 2023, completing its permitted tenure. I would like
to thank Deloitte for its significant contribution during its time
as external auditor. Following a competitive tender process, it is
proposed to appoint PricewaterhouseCoopers LLP (PwC) as
auditor for the financial year commencing 1 April 2023, subject
to shareholder approval at the 2023 AGM. Details of the review
and selection process can be found later in this report.
The Committee also spent further time ensuring the effective
transition to the new internal auditor, Grant Thornton LLP
(Grant Thornton), which succeeded PwC as the Group’s
internal auditor from January 2022 when PwC stepped down
to enable it to participate in our external audit tender process.
Further details can be found on page 109.
In addition, the Committee has considered the implications
arising from the BEIS consultation on ‘Restoring trust in audit
and corporate governance’, the Government’s response to
the consultation and the FRC Position Paper setting out the
next steps to reform the UK’s audit and corporate governance
framework. The Committee continues to consider and monitor
developments in this area.
Valuation of the portfolio, accounting
considerations and key areas of judgement
As expected of a listed property REIT, the most significant
financial judgement in the preparation of the Group accounts
is GPE’s property valuation, which is central to the Group’s
performance and net tangible asset value and is inherently
subjective. A key responsibility of the Committee is, therefore,
to satisfy itself that the valuation process in relation to the
Group’s property portfolio has been carried out appropriately.
CBRE are the Group’s valuer having previously been reappointed
in April 2001 for a three-year term. Following a comprehensive
process, which is outlined in more detail below, the Committee
is satisfied that the valuation process is sufficiently robust.
During the year, the Committee considered a number of items
that impacted the Group’s financial statements, including:
– the methodologies and accounting policies used in the
treatment of our Flex space and the enhancement
of disclosures, including:
– disclosure of rental income broken down between
Ready to Fit, Fitted, Fully Managed and Flex
Partnership products; and
– separate disclosure of the Fully Managed
services income; and
– the sale of 50 Finsbury Square and provisions for any
latent defects given this was an extensive refurbishment
with elements of the existing building retained.
The Committee has also considered the sustainability and
TCFD disclosures in the Annual Report and the sustainability
assurance activities to support these disclosures.
Dear fellow shareholder
On behalf of the Audit Committee, I am pleased to present
my first report as Chair of the Committee for the year ended
31 March 2023, having succeeded Nick Hampton as Chair
from the conclusion of the 2022 AGM. On behalf of the
Committee, I would like to thank Nick for his chairmanship
of the Committee over the past few years and for a smooth
handover process.
During a year which was marked by the impacts of the war in
Ukraine, geopolitical tensions and macro-economic volatility,
with heightened UK political and economic instability in the
autumn, the Committee has continued to play a vital role in
providing comfort to the Board on the integrity of the Group’s
processes and procedures in relation to financial reporting,
internal control and risk management.
The Committee’s report is intended to provide insight into its
activities during the year and sets out how it has performed
against its key objectives.
As outlined on pages 106 and 113, the Committee meets
four times a year to:
– review the plan for the external audit;
– agree the internal audit plan;
– identify key accounting matters and areas of judgement
as early as possible;
– review reports from the external and internal auditors
and valuer;
– consider how risks and internal controls have operated
in the preceding six months in respect of the half-year
and year-end results;
– monitor the integrity of the Group’s financial reporting
and consider any key accounting judgements by
management; and
– review the independence and effectiveness of both
the external and internal auditors.
Audit, risks and internal controls continued
“The Committee has continued to
play a vital role in providing comfort
to the Board on the integrity of the
Group’s processes and procedures in
relation to financial reporting, internal
control and risk management.”
Vicky Jarman Chair of the Audit Committee
108 Great Portland Estates plc Annual Report 2023
Accounting and key areas of judgement
Significant matter Action taken
Valuation of the Group’s portfolio
The valuation of the Group’s property
portfolio is a key determinant of
the Group’s net tangible asset value
as well as indirectly impacting
executive and employee remuneration.
The valuation is conducted externally
by independent valuers; however,
the nature of the valuation process
is inherently subjective due to
the assumptions made on market
comparable yields, estimated rental
values, void periods and the costs
to complete development projects.
The Audit Committee, together with the Chair of the Board, meets with the valuer,
the Executive Directors and senior management involved in the valuation process along
with the external auditor in November and May to discuss the valuation included within
the half-year and year-end financial statements. This review includes the valuation
process undertaken, changes in market conditions, including higher interest rates
and property yields, recent transactions in the market and how these have impacted
our portfolio, the valuation of individual buildings and the valuer’s expectations in
relation to future rental growth and yield movement. The Committee asks the valuer
to highlight significant judgements or disagreements with management during the
valuation process.
The external auditor, Deloitte, using its real estate experts, separately meets the
valuer and provides the Audit Committee with a summary of its work as part of its
report on the half-year and year-end results.
As a result of these reviews, the Committee concluded that the valuation had been
carried out appropriately and independently and was suitable for inclusion in the
Group’s accounts.
External audit tender process
During the year, the Committee completed the process to
retender the external audit, which was conducted over a
period of 18 months. Deloitte has been GPE’s auditor since
2003 and, in view of this length of service, was not permitted
to participate in the process under applicable FRC rules.
A selection of eligible firms, including challenger firms, was
reduced to a shortlist of two which received a detailed request
for proposal. A selection committee comprising members
of the Committee, along with the Chair of the Board and
members of management, considered their written submissions
and formal presentations. Key considerations included:
– capability and competence, including understanding
of GPE and the real estate sector;
– audit methodology, scope and approach to technical
judgements (including a technical challenge);
– alignment with GPE values, firm culture and approach
to diversity and inclusion;
– innovation, use of technology and the value add
proposition from the audit; and
– quality of deliverables and the firm’s conduct during
the tender.
Following the conclusion of a comprehensive process,
the Committee selected PwC as the preferred audit firm for
recommendation to the Board. PwC’s proposed appointment
was approved by the Board in July 2022 and will be put to
a shareholder vote at the 2023 AGM. Further details can
be found in the Company’s 2023 Notice of AGM.
Subject to shareholders approving the appointment of PwC
as the Company’s external auditor, the lead audit partner
for PwC will be Saira Choudhry, who will take responsibility for
the Group’s external audit with effect from July 2023. In order
to facilitate an effective transition of the audit, PwC monitored
the FY23 half-year review process and shadowed Deloitte
through the year-end audit and it has attended Committee
meetings in an observational capacity since November 2022.
Auditor effectiveness is usually reviewed annually (see page 111
for details regarding the latest review) and PwC’s first formal
audit effectiveness review will take place in the second half
of 2024 following the FY24 audit.
Fair, balanced and understandable
The Committee considered this Annual Report and Financial
Statements 2023, taken as a whole, and concluded that the
disclosures, as well as the process and controls underlying
its production, were appropriate and recommended to
the Board that the Annual Report and Financial Statements
2023 is fair, balanced and understandable while providing
the necessary information to assess the Company’s position
and performance, business model and strategy.
Viability and going concern statements
The Committee considered the viability and going concern
statements and their underlying assumptions. This included
management’s work on assessing the potential risks to
the business and the impacts arising from the adverse
macro-economic environment (including weak UK GDP
growth, the risk of recession and political instability),
London attractiveness risks (including the rise of alternative
destinations for international trade) and climate change
and decarbonisation risks, and the appropriateness of the
Company’s choice of a three-year viability assessment
period. Following this review, the Committee was satisfied
that management had conducted robust viability and going
concern assessments and recommended the approval of
the viability and going concern statements to the Board.
Internal controls and risk management
The Audit Committee’s role in supporting the Board’s
oversight and review of the Group’s principal and emerging
risks, internal controls and risk management processes is
covered on pages 64 to 67 and page 106.
The Committee continues to consider and monitor
developments in the areas of internal controls assurance
and risk management.
Governance
109Annual Report 2023 Great Portland Estates plc
Audit, risks and internal controls continued
Internal audit
Our internal audit function, which is outsourced to Grant
Thornton, provides independent assurance as to the adequacy
and effectiveness of the Company’s internal controls and
risk management systems, and reports on its findings to the
Committee. In accordance with the FRC’s Revised Ethical
Standard 2019, PwC stepped down as the Group’s internal
auditor to allow it to participate in our external audit tender
process and was succeeded by Grant Thornton as the
Group’s internal auditor from January 2022.
During the year, Grant Thornton undertook internal audit
reviews in relation to: risk management processes and
assurance mapping; the development programme; Flex
space and technology; and cyber security. The reviews did
not identify any major causes for concern. A number of
recommendations were made to strengthen the design and
operation of certain controls and to implement ‘best practice’
alongside other opportunities for improvements. This has
included actions to increase the overall effectiveness of our
IT control environment which have since been implemented,
one of which was the execution of a simulated cyber-attack
exercise, the results of which are being used to enhance
the Group’s cyber incident and disaster recovery plans.
The Committee receives regular updates on the
implementation of agreed actions arising from internal
audit findings and is satisfied with the progress made to
date. Six-monthly reports on IT general controls and cyber
governance are also presented to the Board by the Head
of IT along with a quarterly cyber risk dashboard.
At the Audit Committee meeting in February 2023,
the Committee reviewed and agreed with Grant Thornton
the internal audit plan for 2023/24, having regard to the
Company’s risk management framework. It was concluded
that, for the current financial year, Grant Thornton should
carry out an internal audit of:
– HR operations;
– Flex space – dashboard processes and controls
and management reporting;
– information technology disaster recovery; and
– sustainability – assessment of GPE’s Transition Pathway
Initiative readiness.
The Committee believes that the process for determining
the internal audit plan is appropriate and effective with
scope for the Committee to react to events, new information
and situations which become known during the year and to
include them as necessary. The internal audit plan for 2023/24
will continue to be reviewed and adapted, if appropriate,
to meet the changing needs of the business.
Supplier payment practices
The Committee reviews the Group’s supplier payment
practices twice per year along with opportunities to
further enhance processes. For the period to 31 March 2023,
the average supplier payment period of the Group’s
largest subsidiary was 31 days (2022: 30 days).
Our Anti-Fraud, Bribery & Corruption
and Whistleblowing Policies
Each year, as part of the year-end planning meeting,
the Committee considers the Group’s Anti-Fraud, Bribery
& Corruption, Ethics, Gifts and Hospitality and Whistleblowing
Policies, which comprise the Company’s key policies on
bribery and fraud, for reporting to the Board. The Board
has a zero tolerance for bribery and corruption of any kind.
The Committee also oversees the periodic review of the
Group’s fraud risk assessment matrix.
Annually, all employees are required to confirm their
compliance with the Group’s Anti-Fraud, Bribery & Corruption,
Ethics, Gifts and Hospitality and Whistleblowing Policies as
outlined on page 95, and any non-compliance is escalated
to the Committee as appropriate. No matters were escalated
to the Committee during the year.
The Company’s whistleblowing processes include a
confidential hotline, operated by an independent third party,
through which employees can anonymously raise matters
of concern relating to suspected wrongdoings or dangers
at work. Any matters reported are investigated by the
General Counsel & Company Secretary or the Senior
Independent Director. During the year, there were no
whistleblowing incidents reported.
Committee effectiveness
I believe that the quality of discussion and level of challenge
by the Committee with management, the internal and external
audit teams and the valuer, together with the timeliness and
quality of papers received by the Committee, ensures the
Committee is able to perform its role effectively. The formal
review of the Committee’s effectiveness was covered as
part of this year’s external Board and Committee evaluation
process and I am pleased that the review confirmed that the
Committee continues to operate effectively. Further details
on the evaluation process and its broader findings can be
found on pages 104 and 105.
Vicky Jarman
Chair of the Audit Committee
24 May 2023
110
Great Portland Estates plc Annual Report 2023
The external audit and review
of its effectiveness
The Audit Committee advises the Board on the appointment
of the external auditor, negotiates and agrees its remuneration
for audit and non-audit work, reviews its effectiveness,
independence and objectivity and discusses the nature, scope
and results of the audit with the external auditor. As part of the
review of the effectiveness of the external audit undertaken by
Deloitte in respect of the financial year ended 31 March 2022,
a formal evaluation incorporating views from the Committee
and relevant members of management was considered
by the Committee. Feedback from the review undertaken
in September 2022 was provided to Deloitte as part of the
annual planning meeting.
Areas covered by the review included:
– the calibre of the external audit firm, Deloitte –
including reputation, coverage and industry presence;
– quality controls – including review processes, partner
oversight, reports on Deloitte generally from the Audit
Quality Review team and regulators and use of specialists;
– the audit team – covering quality of individuals, knowledge,
resources, partner involvement, team rotation, the audit
scope including planning and execution, scope adequacy
and specialist areas;
– audit fee – reasonableness and scope changes;
– audit communications and effectiveness – planning,
new developments and regulations, approach to critical
accounting policies, issues and risks, quality of processes,
timely resolution of issues, level of professional scepticism
and challenge of management assumptions, freedom
of communication with the Audit Committee and
feedback on management performance;
– governance and independence – internal governance
arrangements, lines of communication with the Audit
Committee, integrity of the audit team, Audit Committee
confidence in the audit team and transparency;
– ethical standards – including conflicts of interest;
– non-audit work and partner rotation; and
– potential impairment of independence by non-audit
fee income.
Overall, the Committee agreed that Deloitte remained
both effective and efficient, with strong and open
communications, high levels of engagement, appropriate
constructive challenge and professional scepticism, strong
technical and specialist knowledge and a solid understanding
of the Company, its industry and commercial risks. It was
felt that Deloitte had performed a smooth and effective
2021/22 audit.
The Committee also considered the effectiveness of the
Group’s management during the external audit process in
relation to the timely identification and resolution of areas
of accounting judgement, as well as the timely provision
of the draft results to Deloitte and the Committee for
review. Feedback was also sought from Deloitte on the
conduct and responsiveness of members of the Finance
team, which confirmed that there had remained a good
level of interaction and communication between the
GPE team and Deloitte.
The Committee requested that Deloitte continued to provide
feedback on how companies were responding to evolving
governance and best practice requirements and, in February
2023, the Deloitte Governance team provided an in-depth
update on recent corporate governance developments
and practice.
As explained above, following a competitive tender process,
PwC has been selected as the preferred audit firm for the
2023/24 audit and its appointment will be put to a shareholder
vote at the 2023 AGM. In line with best practice, the Company
intends to put the external audit out to tender at least every
ten years in the future.
The Company has complied during the year ended 31 March
2023, and up to the date of this report, with the provisions
of the Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee Responsibilities)
Order 2014.
Non-audit services
The external auditor, Deloitte, is responsible for the annual
statutory audit and also provides certain other services
which the Audit Committee believes Deloitte is best placed to
undertake due to its position as auditor. These arrangements
are governed by the Group’s policy for provision of non-
audit services by the external auditor, which is available
on the Company’s website at www.gpe.co.uk/investors/
governance. The policy, which is reviewed annually, reflects
the FRC’s Revised Ethical Standard that came into force on
15 March 2020.
The purpose of this policy is to ensure that auditor
independence and objectivity are maintained and, under
the policy, prior approval is required by the Committee for
any permitted non-statutory assignments over £50,000,
or where such an assignment would take the cumulative
total of non-audit fees paid to the external auditor over
50% of that year’s audit fees. The appointment of Deloitte
to undertake any non-audit services also requires the prior
approval of the Chief Financial & Operating Officer and,
importantly, he is required to consider whether it is in the
interests of the Company that the services are provided
by Deloitte, rather than another supplier.
Governance
111Annual Report 2023 Great Portland Estates plc
Audit, risks and internal controls continued
The policy also applies a fee cap on permitted non-audit
services, whereby such fees in any financial year must not
exceed 70% of the average statutory audit fee for the prior
three consecutive financial years. During the year, activities
undertaken by Deloitte for the Group outside of the main
audit included:
– the interim review;
– reporting on the income cover in connection with
the debenture trust deed compliance certificate; and
– limited assurance of 2022/23 sustainability and energy
consumption data.
In each case, Deloitte was considered the most appropriate
service provider due to its position as auditor and given
its detailed knowledge and understanding of our business
and industry.
Payments made by the Group for audit and non-audit fees for
the year are disclosed on page 161. The Group’s audit fees are
presented to, discussed and approved by the Audit Committee
at its February year-end planning meeting. In addition, audit
and non-audit fees paid to Deloitte in respect of joint ventures
totalled £103,000 (GPE share: £52,500) (2022: £87,000) and
£nil (2022: £nil) respectively.
The non-audit fees for the year ended 31 March 2023 as a
percentage of the prior three-year average audit fees are
38%, as set out in the table below. The percentage remained
consistent with the prior year primarily as a result of Deloitte
once again undertaking additional assurance work on our
sustainability and energy consumption data.
Audit and non-audit fees
2023
£000
2022
£000
2021
£000
Audit fees 336 341
1
286
Non-audit fees including
the interim review 112 103 83
Ratio of non-audit fees
to audit fees 38% 39% 34%
Audit fees of joint ventures
(GPE share) 53 44 42
1. The final 2022 audit fee of £341,000 was £10,000 more than stated in
the prior year Annual Report due to the inclusion of a fee for the audit
of Gresse Street Limited which was acquired in March 2022.
In addition to ensuring compliance with the Group’s policy
in respect of non-audit services, the Committee also receives
confirmation from Deloitte that it remains independent and
has maintained internal safeguards to ensure its objectivity.
Ahead of its appointment as the Group’s external auditor for
the 2023/24 audit, non-audit services provided to the Group
by PwC are being transitioned to other service providers
where considered appropriate.
Internal audit and review
of its effectiveness
An Internal Audit Charter approved by the Committee
governs the internal audit remit and provides the framework
for the conduct of the internal audit function, which
was outsourced to Grant Thornton from January 2022.
The Committee approved an updated Internal Audit
Charter in February 2023, which reflects market practice
and recommendations in the Internal Audit Code published
by the Chartered Institute of Internal Auditors in 2020.
The Committee reviews and approves the internal audit
plan annually which is closely aligned to the review by
management and the Committee of the Group’s risk
management framework. In addition, the Committee
Chair meets with the internal auditor separately from the
Committee to discuss planned internal audit activities
and the results of internal audit reviews.
The Committee meets annually with the internal auditor
without management present to discuss the effectiveness
of the internal audit function, and also to seek feedback
from the internal auditor on the conduct of members
of the GPE team during the internal audit process.
The external audit partner also meets separately with
the internal auditor at least annually.
In February 2023, the Committee conducted a formal
assessment of the effectiveness of internal audit, which was
facilitated by the Company Secretariat team. Key stakeholders
were asked to complete a questionnaire-based assessment
which was designed to evaluate internal audit’s purpose,
objectives and understanding, position, process, relationships
and communication, people and performance. The responses
were collated on an anonymous basis and the results were
shared with the Committee Chair, internal audit partner and
Chief Financial & Operating Officer prior to consideration
at the Committee’s meeting in May 2023.
The overall assessment concluded that the internal audit
function remained effective following a smooth transition
of services from PwC to Grant Thornton. The review found
that there was a clear understanding of internal audit’s
purpose and responsibilities and that the function was
trusted and respected. It was recognised that internal
audit performed effectively and efficiently in delivering
the audit plan, which focused on the right areas, and
elevated issues in a timely manner. It was also found that
internal audit worked constructively with management to
develop appropriate responses to audit findings that were
pragmatic and proportionate, leading to lasting positive
change in the business. Areas highlighted for continued
focus included opportunities for Grant Thornton to further
develop its relationships and profile within GPE and to
enhance communications with the business to maximise
the efficiency of the audit process.
Where it is proposed to appoint Grant Thornton in any
advisory role, careful consideration must first be given to
any potential conflict with its internal audit role. The Audit
Committee will also specifically consider Grant Thornton’s
independence when annually reviewing and approving
the internal audit plan to ensure that there are no conflicts
in Grant Thornton undertaking the proposed internal
audit work.
112 Great Portland Estates plc Annual Report 2023
Review of half-year results
Met with CBRE to consider the September 2022 valuation.
Met with Deloitte (shadowed by PwC) and management
to consider:
– Deloitte’s independence;
– their review of the September 2022 valuation
and the half-year results announcement;
– significant accounting and key areas of judgement,
including going concern – see page 109;
– the principal and emerging risks, monitoring of
internal controls and risk management processes;
– the half-year results announcement; and
– the relationship between Deloitte and management,
with feedback provided by Deloitte without
management present.
Other matters
Received the FRC’s 2022 Review of Corporate Reporting
and an update on supplier payment practices.
Considered the independence of PwC as incoming
external auditor and its provision of non-audit services.
What we did in relation to the financial year ended 31 March 2023
Review of year-end results
Met with CBRE to consider the March 2023 valuation –
see pages 34 to 36.
Met with Deloitte (shadowed by PwC) and management
to review:
– Deloitte’s audit of the March 2023 valuation –
see pages 34 to 36;
– significant accounting and key areas of judgement,
including going concern and viability work –
see page 109;
– an update on Group tax matters;
– an update on GPE’s supplier payment practices;
– the principal and emerging risks, monitoring of
internal controls and risk management processes –
see pages 64 to 77;
– the year-end results announcement and Annual Report;
and
– the relationship between Deloitte and GPE
management, with feedback provided by Deloitte
without management present.
Other matters
Discussed Deloitte’s sustainability and energy
consumption data assurance work.
September
February
External audit tender
Discussed the outcome of the external audit tender
process and the plans to transition the audit to PwC.
Annual planning meeting
Met with the external auditor, Deloitte, and management
to review:
– the effectiveness and independence of the external
auditor – see page 111;
– significant accounting and key areas of judgement –
see page 109; and
– Deloitte’s 2022/23 audit plan.
Internal audit
Met with the internal auditor, Grant Thornton, to discuss its
findings from its internal audit reviews on risk management
and assurance mapping, Flex space and technology and
cyber security.
Other matters
Discussed the evolution of Flex financial disclosures,
processes and controls.
Received an update regarding the Government’s response
to the BEIS consultation on ‘Restoring trust in audit and
corporate governance’ and the FRC’s Position Paper.
Internal audit
Met with the Grant Thornton and approved the 2023/24
internal audit plan and an updated internal audit charter,
and discussed its findings from the internal audit review
of development.
Year-end planning update
Met with Deloitte and management to consider/approve:
– significant accounting and key areas of judgement;
– proposed changes to disclosures planned for the
2023 Annual Report;
– developments in corporate reporting presented
by Deloitte;
– the 2022/23 audit plan update; and
– the 2022/23 audit fee – see page 112.
Other matters
Corporate governance update received from the
General Counsel & Company Secretary and Deloitte.
Review of GPE’s Anti-Fraud, Bribery & Corruption Policy
and fraud risk assessment and its Ethics, Gifts and Hospitality
and Whistleblowing Policies – see page 110.
Reviewed the Audit Committee Terms of Reference.
Reviewed the Provision of Non-Audit Services Policy.
Reviewed the Committee’s effectiveness.
2022
2023
November
May
July
External audit tender
Completed the external audit tender process and
recommended to the Board the proposed appointment
of PwC as auditor for 2023/24.
Governance
113Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report
Our process
The Committee’s Terms of Reference are available on the
Company website at www.gpe.co.uk/about-us/governance
The Committee currently comprises six independent
Non-Executive Directors, namely Emma Woods as Chair,
Nick Hampton, Mark Anderson, Vicky Jarman, Champa
Magesh and Alison Rose. Wendy Becker stepped down from
the Board and as Chair of the Committee from 7 July 2022,
from which time she was succeeded as Chair of the Committee
by Emma Woods, an experienced remuneration committee
chair. Champa Magesh joined the Board and the Committee
on 1 August 2022, whilst Charles Philipps stepped down from the
Board and the Committee on 30 March 2023. Non-Executive
Directors who are not members of the Committee have a
standing invitation to attend meetings of the Committee
as appropriate.
The Committee was advised during the year by FIT
Remuneration Consultants LLP (FIT Rem) as independent
remuneration consultants. FIT Rem, which was appointed
by the Committee in August 2014 following a review of
advisers, attends Committee meetings and provides advice
on remuneration for the Executive Directors, analysis on all
elements of the Directors’ remuneration policy and regular
market and best practice updates. Further information
on FIT Rem and other Committee adviser fees is available
on page 135.
FIT Rem reports directly to the Committee and does not
provide any other services to the Company.
At the request of the Committee, Toby Courtauld, the Chief
Executive, attends Committee meetings where appropriate
and provides input with regard to the achievement of
personal objectives for senior executives. He also attends
discussions on remuneration as considered appropriate by the
Committee, including on new appointments and promotions
and to provide his input on the development of the Directors’
remuneration policy. Carrie Heiss, HR Director, attends
Committee meetings where appropriate to present proposals
regarding Executive Director and workforce remuneration
and related policies, to discuss the alignment of remuneration
across the organisation and to voice the perspectives of
employees on relevant matters.
No Director or employee is involved in discussions on their
own pay.
Our approach
The key objectives of the Remuneration Committee
(the Committee) are to ensure that the Executive
Directors are appropriately incentivised and
remuneration arrangements are fully aligned
with the Company’s strategy to generate superior
portfolio and shareholder returns.
Our approach to pay has been largely consistent
for many years in measuring our absolute and relative
performance using a small number of key financial
performance indicators, with the incremental addition
of new measures to the Annual Bonus Plan to reflect
the Company’s evolving strategy, including its focus
on Flex, sustainability and other ESG-related metrics.
Similarly, the Long Term Incentive Plan (the LTIP) has
been linked to traditional financial measures. By failing
to recognise the impacts of economic volatility,
the LTIP has proved an ineffective tool to motivate
participants and assess their contribution to success.
Since Brexit in 2016, these incentive plans have failed
to operate as intended, and this is unlikely to change
in the short term given uncertainties arising from the
macro-economic environment. We wish to ensure
that our remuneration arrangements are suitably
aligned to GPE’s priorities over the next few years,
balancing the delivery of long-term superior returns to
shareholders and the need to incentivise management
to deliver on these priorities. Following a review of
current arrangements and a consultation with our
largest shareholders, we are proposing some changes
to our Directors’ remuneration policy, including:
(i) a redesigned Annual Bonus scorecard to focus
on relative Total Accounting Return (TAR) and key
business priorities which will drive our financial KPIs;
and (ii) the replacement of the LTIP with a restricted
share plan. Further details can be found in the
Committee Chair’s letter on pages 117 to 121 and
the proposed Directors’ remuneration policy table
on pages 136 to 146.
As well as being responsible for determining
the remuneration of the Executive Directors, the
Committee is responsible for setting the remuneration
of the Chair of the Board, the members of the
Executive Committee and other senior executives.
The Committee also reviews the broad operation
of remuneration policy and practices for
all employees.
Remuneration
Committee
Further details regarding Committee
memberships, meetings and attendance
can be found on page 86.
Committee members
1
Director Role
Emma Woods Committee Chair (from 7 July 2022)
Nick Hampton Senior Independent Director
Mark Anderson Non-Executive Director
Vicky Jarman Non-Executive Director
Champa Magesh Non-Executive Director
Alison Rose Non-Executive Director
1. Wendy Becker and Charles Philipps also served as members of the
Remuneration Committee during the year, stepping down from the
Board and the Committee (and in Wendy’s case as Committee Chair)
on 7 July 2022 and 30 March 2023 respectively.
114 Great Portland Estates plc Annual Report 2023
Compliance with the 2018 UK Corporate Governance Code
Throughout the year, the Committee has considered the provisions set out in paragraph 40 of the 2018 UK Corporate
Governance Code. In the Committee’s view, the Company’s Directors’ remuneration policy (the Policy), as approved by
shareholders in 2020, and current practices address these factors as set out below. The table below also sets out how
the proposed new Policy will address these factors going forward.
Clarity Remuneration arrangements
should be transparent and
promote effective engagement
with shareholders and the
workforce
The Committee proactively engages with shareholders and their representative
bodies as part of the Policy renewal process. As such, it engaged with shareholders
representing over 73% of the share register as part of the 2023 Policy review.
The Committee is also regularly updated on developments in market practice
and receives reports on pay and conditions across the business. In March 2023,
the Chair of the Committee invited all staff to attend an interactive event
to discuss the planned Policy revisions and broader remuneration matters.
Employees were also engaged during the year regarding changes to enhance
the annual bonus methodology and process for 2022/23.
Simplicity Remuneration structures
should avoid complexity and
their rationale and operation
should be easy to understand
The Company operates a simple pay model which comprises fixed and
variable remuneration, with the performance conditions for variable elements
clearly communicated to participants. Under the proposed new Policy, at least
80% of bonus measures will be objectively measurable.
The proposed new restricted share plan (RSP) provides a simple mechanism
for aligning Executive Director and shareholder interests. The RSP removes
the difficult challenge of setting robust and appropriately challenging
performance targets in a volatile market, thereby avoiding potentially
unintended remuneration outcomes, and significantly reduces the maximum
pay available to Executive Directors.
Risk Remuneration arrangements
should ensure reputational
and other risks from excessive
rewards, and behavioural risks
that can arise from target-
based incentive plans, are
identified and mitigated
There is broad discretion to reduce variable pay if the Committee does not
consider the formulaic outcome to be appropriate in the circumstances, and all
plans (including the proposed new RSP) include the ability to operate malus and
clawback where appropriate. A proportion of Executive Director bonuses is deferred
into shares for three years and post-cessation shareholding guidelines apply to
mitigate the risk of short-termist behaviours.
Predictability The range of possible reward
values to individual directors
and any other limits or
discretions should be identified
and explained at the time of
approving the policy
The Policy includes a scenario chart showing potential pay levels on various
assumptions, and all awards are subject to maximum grant levels as set out in
the Policy, together with the discretions set out under ‘Risk’ above. The proposed
RSP will increase the predictability of reward values subject to an overriding
discretion to reduce vesting if not considered appropriate through its underpin.
Proportionality The link between individual
awards, the delivery of strategy
and the long-term performance
of the Company should be clear.
Outcomes should not reward
poor performance
The outturn in respect of variable pay is clearly set out in this report on pages
123 to 129, with payment clearly linked to our strategic and financial priorities.
Page 121 sets out how the measures under the proposed new bonus scorecard will
be clearly linked to the Company’s strategy and KPIs. As indicated under ‘Risk’,
the outturn can be reduced by the Committee as appropriate to ensure that
outcomes do not reward poor performance.
Alignment
to culture
Incentive schemes should
drive behaviours consistent
with Company purpose,
values and strategy
Equivalent incentive plans apply to the wider workforce to engender a
high-performance culture, although the weighting on personal performance
increases as the bonus plans cascade through the workforce. All objectives are
directly linked to the Group’s strategy and KPIs, while a proportion of objectives
must be values-led. An individual’s commitment to GPE’s values and behaviours
is also reviewed as part of the personal performance assessment process.
Under the proposed 2023 Policy, the newly developed bonus scorecard will be
cascaded to all colleagues, again with a higher weighting on personal performance
for less senior colleagues (and with the colleague engagement and diversity
elements excluded for most colleagues to avoid the potential for conflicts).
The new RSP clearly aligns Executive Director interests with those of shareholders
by ensuring a focus on delivering the strategy to generate long-term value
for shareholders.
Governance
115Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Strategic alignment of pay 2022/23
As described on pages 16 and 17, GPE focuses on specific key
performance indicators, the achievement of which is driven
by our strategic priorities. During 2022/23, we remained
focused on creating value in our portfolio, generating capital
and income growth and shareholder value creation over
time. Alongside these key financial metrics, sustainability has
continued to be an important strategic priority for the Group.
Customer satisfaction is critical to our business plans, including
the expansion of our Flex product, and we believe that our
people are fundamental to the success of our business and its
long-term sustainable growth. For 2022/23, a proportion of the
annual bonus for Executive Directors was also linked to GPE’s
diversity and inclusion priorities, as explained on page 118.
The measures and targets within our 2022/23 Annual Bonus
Plan and 2022 LTIP aligned with our KPIs and strategic priorities
to ensure strong linkage between these and Executive Director
remuneration, as shown in the table below.
KPI
Long Term
Incentive Plan
1
Annual
Bonus Plan
1
TSR
TAR
TPR
2
Flex growth
3
Sustainability
Customer satisfaction
Employee engagement
(including D&I
4
component)
1. Appropriate actions also captured through Directors’ personal objectives
under the Annual Bonus Plan.
2. Capital growth element of TPR.
3. Introduced as an additional Annual Bonus financial measure for 2022/23.
4. For 2022/23, Executive Directors also had one-third of their Annual Bonus
personal objectives linked to improving female diversity at GPE.
The Committee regularly reviews pay structures and incentive
arrangements to ensure strong alignment between business
performance and remuneration arrangements. As explained,
we consider that the above mix of measures worked well in the
past but needs to be updated to ensure that our remuneration
arrangements appropriately reward all our colleagues for their
contributions in a challenging macro-economic environment
while being closely aligned to our evolving strategy and
business priorities.
The table on page 121 sets out how our proposed annual
bonus scorecard measures for 2023/24 align with our strategy
and KPIs. The new RSP aligns Executive Director interests with
shareholders’ by ensuring a focus on delivering the strategy to
generate long-term value for shareholders supported by the
inclusion of underpins designed to avoid payments for failure
and also to ensure, amongst other matters, that progress is
made in delivering our Sustainability Statement of Intent.
Employee remuneration and engagement
As explained on page 122, the Committee applies
consistent remuneration principles for employees
across the Group. As part of its responsibilities,
the Committee reviews GPE’s wider employee
remuneration policies and practices and the
alignment of incentives and rewards with
the Company’s culture.
The Committee takes into account pay and
conditions across the Group when determining the
remuneration of the Executive Directors and other
members of senior management. As part of the
annual pay review, the Committee receives a report
setting out changes to employee remuneration
levels and proposed discretionary bonus awards.
The Committee also discusses GPE’s gender pay
gap statistics alongside our D&I objectives and
related policies.
In March 2023, the Committee Chair led an
interactive all-employee event to discuss the
proposed changes to the Directors’ remuneration
policy and how these would cascade through the
organisation. GPE’s broader remuneration principles
and approach, alignment of pay and the workings
of the Committee were also discussed.
More broadly, remuneration is regularly discussed
with employees. GPE’s annual review process and how
this links to employees’ remuneration is incorporated
into our new joiner induction process, along with
an introduction to GPE’s all-employee share plan.
Briefing sessions are also held with employees from
time to time to discuss pay policies and the work
of the Committee, as well as to enable employees
to find out more about GPE’s pension scheme
and all-employee share plan offer.
116 Great Portland Estates plc Annual Report 2023
Dear shareholder
I am pleased to present my first Directors’ remuneration
report for the year ended 31 March 2023 (the Report)
on behalf of the Committee. I joined the Board of GPE in
February 2022 and became the Chair of the Remuneration
Committee in July 2022. When Wendy Becker, our previous
Remuneration Committee Chair, stepped off the Board,
I was pleased that I inherited a very experienced
and committed Remuneration Committee, including
a long-standing remuneration adviser (John Lee of
FIT Remuneration Consultants LLP). I would like to
thank Wendy for a smooth handover process and my
other Board colleagues and John for their support
with this transition.
In my statement, I set out below:
– context for the recent review of our Directors’
remuneration policy (the Policy);
– decisions relating to the year ended March 2023;
– further detail on the Policy review; and
– decisions relating to the year to March 2024.
Context for the recent Policy review
As the Policy was last renewed in 2020, it is due for
renewal at the 2023 AGM. This has coincided with one of
the biggest economic shocks in recent times, precipitated
by the Ukraine war but compounded by inflation jumping
to the highest levels in 20 years and rising interest rates,
alongside changes to patterns in working practices.
These events have led to widespread property devaluations,
and the prospect of higher levels of volatility over the
next few years makes it extremely difficult to set traditional
property valuation growth and other financial targets.
The Board anticipates this market uncertainty will remain
for a significant period of the new Policy.
We also have used the Policy review as an opportunity
to consider alternative forms of remuneration structures
with colleagues and received clear feedback that our current
long-term incentives are not perceived to be working as
intended. Retention of talent will be important to us and our
shareholders during the next few years, and so we have been
mindful of this feedback. The combination of internal and
external consultation and the uncertain macro conditions has
led the Committee to recommend two material changes in
the new Policy to ensure that our talented team (including our
senior executives) are suitably incentivised:
– a move from the current traditional LTIP to a restricted
share plan (RSP) adopting the market conventional
approach of making grants at 50% of the previous
level; and
– a move to a more target-focused operational bonus
scorecard which can support our Chief Executive, Toby,
and his full team (as the scorecard will be cascaded
through the organisation) to drive GPE’s strategy and
perform as effectively as possible over the three-year
life of the proposed Policy. Alongside a more traditional
TAR metric, the scorecard has been redesigned to ensure
that management are motivated to optimise returns for
shareholders as the economy recovers by focusing on
the Company’s clear priorities, including:
– optimising financial performance through maximising
the rent achieved on new lettings and minimising
the level of voids (both being indices which can be
negatively impacted by downturns);
– transforming our business through achieving
planning milestones, growing our committed Flex
space and maintaining industry-leading customer
Net Promoter Scores;
– fulfilling our net zero carbon commitments,
both in our current estate and ensuring that new
developments are completed on a net zero
basis; and
– continuing to pursue an industry-leading position
on employee engagement and drive forward our
diversity agenda.
GPE has a very strong collegiate ethos across its
highly regarded team of approximately 140 colleagues.
While other companies may operate different reward
schemes for different levels within their businesses, we have
taken a deliberate approach of applying the same bonus
scorecard structure across the whole company. The new
bonus scorecard will apply to all colleagues, albeit with a
higher weighting on personal performance for less senior
colleagues (save that the final elements explained above
relating to employee engagement and diversity will not
apply below senior executives to avoid the potential for
conflicts of interest).
“We have redesigned our remuneration
policy to ensure that remuneration
arrangements are suitably aligned
to business priorities, balancing
the delivery of long-term superior
returns to shareholders and the
need to incentivise management
to deliver on these priorities.”
Emma Woods Chair of the Remuneration Committee
Governance
117Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
I am really pleased to have had the opportunity to consult
with 17 of our largest shareholders on the proposed changes
to our Policy, in addition to our important proxy agencies.
This was an opportunity not only to explain our thinking and
proposals but also to obtain meaningful input which helped
shape (and improve) the overall proposal, including through
the addition of the relative TAR measure to the final bonus
scorecard. For those of you I talked to, I want to say a huge
thank you on behalf of all of us at GPE for finding the time
to discuss this with me. I hope, when you read the outcome,
you do appreciate we listened and took on board much of
your constructive feedback. For those of you not involved in
this consultation, I would like to explain that the consultation
lasted over two months and included 19 meetings and calls,
and the conclusions are set out in the report below.
As well as debating new Policy design, the Board and the
Committee have also been focused on how we can support
colleagues during the cost of living crisis and promote
strong mental health through enabling colleagues to
manage their work and home priorities. Recognising the
greater relative impact of inflationary pressure on lower-
paid colleagues and, following the implementation of
a minimum 5% salary increase for those on lower salaries
for 2022/23 (compared with a minimum increase of 3.5%
for other colleagues), we introduced a £1,500 one-time cost
of living payment (half paid in October and half in January)
for anyone paid under £70,000. We also continue to offer an
incentive reward card (a form of debit card) with rewards
linked to spending which can be used to provide enhanced
benefits compared to privately available programmes
at little or no cost to GPE. This has received consistently
positive feedback from colleagues. Similarly, our Employee
Assistance Programme, which is available to all colleagues,
enables them to obtain free mental health, legal and
financial management support.
Finally, one of the things that has impressed me most since
joining GPE (and which I have asked the Committee to
consciously support) is GPE’s commitment to improving
its diversity and inclusion standing. Toby and the team are
committed to tackling this, and they know this is about a
multitude of deliberate small steps. For 2022/23, Executive
Directors had a full one-third weighting of their personal
bonus objectives linked to improving diversity and female
representation at GPE. An inclusion component was also
incorporated into the Employee Engagement measure
under the ESG/strategic measures. The team has made
good progress in implementing our diversity and inclusion
agenda and related initiatives, and the Board was pleased
to endorse our new diversity and inclusion representation
targets for the business, which were communicated to
our colleagues in December 2022. Further details can be
found on pages 56, 57 and 103.
In summary, this is a business that, I feel, is facing into the
current economic uncertainty with the right strategy and
the determination to build the right leadership for the future.
Therefore, I am very pleased to recommend this Report,
and the proposed new Policy, to all shareholders.
To help you understand how to read this Report, it will start
by reviewing last year’s outturns but move on to the new
Policy design and Executive Director salary recommendations
for the coming year.
Key decisions
The Committee has had regard to business performance
alongside the wider context explained above (including
the measures to support colleagues across the business)
when considering reward and incentive outcomes.
Key Committee decisions for the year, as more fully
described in this Report, include:
– approving the proposed 2023 Policy, including a
new annual bonus scorecard and the introduction of
RSP awards, to ensure that remuneration arrangements
are suitably aligned to business priorities, balancing the
delivery of long-term superior returns to shareholders
and the need to incentivise employees;
– determining annual bonus and LTIP outcomes;
– agreeing salary and fee increases for the Executive
Directors and the Chair of the Board below the
all-colleague average increase; and
– setting suitably stretching targets for the 2023/24
annual bonus.
Remuneration outcomes in respect
of the year ended 31 March 2023
Despite the macro-economic challenges during the year,
GPE has continued to progress its strategy and delivered strong
operational performance, while maintaining our financial
strength and capital discipline. During the year, we delivered
record volumes of leasing, including pre-letting all the offices at
our 2 Aldermanbury Square, EC2 development. We completed
our 50 Finsbury Square, EC2 development and sold the building
for the headline price of £190.0 million. We also completed our
second Flex acquisition of St Andrew Street and progressed
our near-term development programme.
We look at success in both absolute and relative terms.
While the absolute TAR for the year was negative and,
therefore, this element of the bonus was not achieved, our
leasing success, combined with our portfolio performance,
delivered superior relative performance with our portfolio
capital growth (while negative in absolute terms) exceeding
the MSCI Capital Growth Index by 4.8%.
The like-for-like property valuation across our portfolio
was down 6.6% over the year, ahead of our central London
benchmarks. Shareholder returns were down across the
real estate sector, with GPE delivering a TSR of -27.3%,
marginally outperforming the FTSE 350 Real Estate Index.
118 Great Portland Estates plc Annual Report 2023
We have continued to innovate and evolve our strategy
in response to market trends and the changing needs
and aspirations of our customers, people and wider
stakeholders as we focus our business priorities to
position GPE for success as it emerges from the uncertain
economic climate. During the year, we strengthened our
Customer First approach with the roll-out of our Customer
First programme, further developed our Flex product,
adopted our revised Sustainability Statement of Intent and
Our Brief for Creating Sustainable Spaces and progressed
our diversity and inclusion agenda.
Moreover, we have maintained our financial strength,
with our loan-to-property value ratio being only 19.8%.
Our liquidity position remains strong, with £457 million
of available cash and undrawn facilities. We have also
maintained the payment of our ordinary dividends.
Taken as a whole, we continue to be well positioned
to deliver both our purpose and long-term
shareholder value.
Against the backdrop of this business performance,
the Company’s variable pay was assessed as set out
in the following sections.
Salaries
As explained in last year’s report, for the year commencing
1 April 2022, the average like-for-like salary increase was
6.1% with all employees receiving a minimum increase
of 3.5%. The Committee adopted a market-leading position
in focusing increases on the lowest-paid colleagues and
increased Toby Courtauld’s, Nick Sanderson’s and Dan
Nicholson’s salaries by 3.5% in line with that minimum level.
Pensions
From 1 January 2023, all Executive Directors’ pension
contribution allowances were reduced to 15% of salary
to be aligned with the level available to colleagues
generally. Dan Nicholson’s employer pension contribution
was set at 15%, in line with the wider workforce, from his
appointment date.
Annual Bonus Plan
Under our 2022/23 Annual Bonus Plan, we delivered a
TAR of -7.8% in the financial year ended 31 March 2023,
as explained above, and therefore the TAR target was not
met, resulting in a zero payout for this measure. However,
the Group’s portfolio capital growth has performed
above the MSCI Capital Growth Index resulting in a
100% payout for that measure. This is a commendable
outcome reflecting our record leasing success and
strong operational performance.
The business made excellent progress with the growth
of its Flex offer, growing the amount of portfolio space
committed to Flex to 414,000 sq ft at the year end, resulting
in a full payout for the Flex measure. Similarly, the business
exceeded its sustainability target to reduce energy
consumption across our occupied buildings. The Company
also performed well against the customer satisfaction and
employee engagement metrics in the ESG/strategic measures.
Each of the Executive Directors performed very well against
their personal objectives, making a significant contribution
to the development and implementation of the Group’s
strategic priorities. Once again, in line with the Policy
approved by shareholders at the 2020 AGM, the Committee
applied a tougher stance to performance assessment
than in previous years and awarded the Chief Executive,
Chief Financial & Operating Officer and Executive Director
an outturn of 75%, 80% and 65% respectively. See pages
124 and 125 for further details.
The formulaic outturn, therefore, was felt to be
appropriate and was approved without the exercise of
further discretion. The 2022/23 annual bonus outturn was
65%, 65.75% and 63.5% of the maximum (97.5%, 98.63% and
95.25% of eligible salary) respectively for the Chief Executive,
Chief Financial & Operating Officer and Executive Director.
In accordance with the Policy, 40% of Executive Directors’
annual bonuses will be deferred into shares for three
years through the Company’s Deferred Share Bonus Plan.
Please refer to page 129 of this Report for further details.
2020 LTIP vesting
The performance under the 2020 LTIP was significantly
impacted by the onset of COVID-19 in early 2020, followed
by geopolitical and market uncertainties and challenging
economic conditions, particularly in the UK. The economic
impact impaired property values in the performance period,
which resulted in an 111 pence per share EPRA NTA decline
over the three years, equating to a TAR of -8.4% or -2.9% p.a.
and a nil vesting of the TAR measure for the Group’s three-year
2020 LTIP award.
Against this challenging backdrop, our relative share price
performance has underperformed against the FTSE 350
Real Estate Index, with many of the constituents investing
in other asset classes which outperformed London offices,
including logistics and self-storage space. As a result,
we expect a 0% vesting of the TSR measure based on the
information available as at 31 March 2023. This is expected
to lead to no vesting for the 2020 LTIP grants.
Governance
119Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Impact of Policy review
As explained above, it is anticipated that real estate
values may be more volatile than historic norms over the
three-year life of the proposed new Policy and, therefore,
the proposed Policy has been developed to recognise this.
The key architecture (other than the proposed introduction
of the RSP) is largely unchanged, including various ‘best
practice’ features introduced as part of the 2020 Policy:
– bonus deferral;
– broad discretion to reduce the formulaic outturn if the
Committee does not consider it to reflect a fair outcome;
– strengthening of clawback provisions; and
– a commitment to align pension contributions.
The principal change in the proposed 2023 Policy is to replace
the long-standing LTIP with the proposed RSP. The key
elements of the proposed RSP are as follows:
– we plan to convert using the standard ‘1 share for 2’
conversion rate, i.e. the previous Policy provided for the
grant of shares under the LTIP worth 300% of salary
each year and the proposed Policy provides for a grant
worth 150%;
– while the inherent nature of RSPs is to exchange quantum
for greater certainty and, therefore, there is a default
of vesting, the Committee will ensure that payments
for failure are avoided through the operation of a robust
underpin allowing the Committee to reduce the vesting
in whatever circumstances it considers to be appropriate –
we consider this to be the main underpin; and
– there is an additional underpin whereby the Committee
will consider reducing vesting levels if any of the following
occur (which does not limit the broader underpin):
– breach of the financial covenants of the Group’s
principal debt facilities;
– failing to make satisfactory progress in delivering
our Sustainability Statement of Intent; or
– there being material damage to the reputation
of the Company.
The RSP is felt to better reflect the current position given
the challenge of setting robust performance targets in
a volatile environment. There are a limited number of listed
companies focusing on central London assets, making relative
assessment more problematic (although, following feedback
from our largest shareholders, we have included a relative
TAR measure within the annual bonus scorecard). At the
same time, absolute measures can quickly prove too easy to
achieve (and therefore potentially lead to over-reward) or
too difficult to achieve (and therefore have neither retention
nor motivational impact). As seen last year, unexpected
and dramatic changes in interest rates negated the strong
performance of management, demonstrating the potential
for such misalignment.
We recognise that some shareholders (and particularly
proxy advisory firms) are wary of simply changing reward
structures at different points in the economic cycle,
and we confirm that this is a thoughtful and long-term
decision applied not only to the Executive Directors but
also consistently applied to other colleagues. There are
no current plans to revert back to a more traditional LTIP.
The other key change is to redesign the bonus scorecard
to create better alignment with our strategic priorities.
While this is more about the application of the Policy –
the detailed scorecard relating to our pay decisions for
the next financial year is set out on the following page
– some minor changes to the existing Policy relating to
the weighting of different elements of the scorecard
are included in the proposed new Policy.
Decisions relating to the year to March 2024
Assuming the proposed new Policy and associated resolution
to adopt the new RSP are approved by shareholders at the
2023 AGM, we shall adopt the new bonus scorecard and
make the first grants under the RSP shortly after the AGM.
Salaries
For the year commencing 1 April 2023, the average
all-colleague salary increase will be 5.7%. The Committee
increased Toby Courtauld’s, Nick Sanderson’s and Dan
Nicholson’s salaries by 5%, below the employee average.
Annual Bonus
The Executive Directors’ bonus opportunity will remain
unchanged at 150% of salary, with 40% of any bonus earned
deferred into shares for three years through the Company’s
Deferred Share Bonus Plan. However, the scorecard used
to determine bonus entitlement has been redesigned to
include a scorecard much more focused on our strategic
priorities, both to determine how management (and the
wider workforce) have performed but also to ensure they
have taken the right steps to ensure we optimise returns
for shareholders in the longer term. We believe that each
of the measures chosen should, directly or indirectly,
lead to the creation of shareholder value.
120 Great Portland Estates plc Annual Report 2023
The new scorecard comprises:
Revised Remuneration Proposal: Bonus
Bonus
scorecard
1
Total
weighting Measure Link to strategy or KPIs Financial
Quantifiable
and objective
Market
performance
1 2 3 4 5 6
20% GPE Relative TAR
2
(EPRA NTA
growth + dividend) per share vs
FTSE 350 real estate companies
excluding agencies
Measure of property
valuation growth
Optimising
financial
performance
(during downturn)
1 2 3 4 5
30%
(10% each)
1. Rent achieved on market
lettings during year vs ERV
(as per CBRE at start of year) –
‘% beat to market rent’
Will enhance property valuations
and maximise income
(impacts TPR, TAR & TSR)
2. Vacancy rate at year end
(including completed
development/refurbished
space during year)
Will enhance property valuations
and maximise income
(impacts TPR, TAR & TSR)
3. Maintain appropriate liquidity
Underpins ability to acquire
and invest in assets to drive
capital and income returns
(impacts TPR, TAR & TSR)
Transforming
the business
and putting
customers first
2 3 4 5 6
15%
(5% each)
1. Hitting planning milestones in
year (combination of planning
submissions and planning
approvals across entire portfolio)
Enhance property valuations
(impacts TPR, TAR & TSR)
2. Commitments to new Flex space
over the year
Underpins strategy to expand Flex
space in line with disclosed targets
3. Market leading Customer NPS
Underpins strategy, aids
customer retention and enhances
property valuations
(impacts TPR, TAR & TSR)
Delivering our
Net Zero Carbon
Roadmap
1 5 6
15%
(7.5% each)
1. Reduction in energy
consumption (targets set
each year against Roadmap)
Increases attraction of GPE
space driving rents and enhancing
property valuations
(impacts TPR & TAR)
2. All new developments to be
net zero or on track to be
net zero
Underpins HQ repositioning
strategy, customer demand,
capital and income returns
(impacts TPR, TAR & TSR)
Personal
and business
culture
20% 1. 10% – Personal objectives
(reduced from historic 15%)
Set annually based
on strategic priorities
2. 5% – Maintaining and nurturing
a positive and inclusive culture
(measured through employee
engagement index survey scores)
Retaining and attracting key
talent critical to support growth
3. 5% – Achievement against
gender and diversity targets
Ensuring diverse talent to
develop and deliver strategy
1.
1
Denotes strategic priorities for 2023/24 as set out on pages 14 and 15.
2. As with the current arrangements, any dividends will be deducted from the base figure from the point of distribution (as it is not realistic to deliver growth
after capital has been repaid to shareholders), except where reflected in some other way such as through a share consolidation.
Restricted Share Plan
Assuming the proposed Policy and RSP rules are approved
by shareholders at the 2023 AGM, no further grants will
be made under the LTIP and, instead, the first grant under
the RSP will be made shortly following the AGM. Under this
grant, the Executive Directors will each receive an award
over shares worth 150% of salary, which will be subject to
assessment against a performance underpin following
the third anniversary of grant and then subject to a
further two-year holding period.
I hope you find this Report clear and informative and
I look forward to receiving your support for the resolutions
approving both this Report, and the revised Directors’
remuneration policy, at the 2023 AGM.
Emma Woods
Chair of the Remuneration Committee
24 May 2023
Governance
121Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Our overarching remuneration policy principles
and a fair and consistent approach
The Executive Directors’ total pay is analysed by looking
at each of the different elements of remuneration, including
salary, benefits, pension, the Annual Bonus Plan and long-
term incentives, to provide the Committee with a view of
total remuneration rather than just the competitiveness
of the individual elements. It is important that the Group’s
remuneration policy reinforces the Company’s purpose,
culture and values, providing effective incentives for
exceptional Group and individual performance. As well as
providing motivation to perform, remuneration plays an
important retention role and needs to be appropriately
competitive without being excessive.
To achieve the aims of the Company’s remuneration policy,
the Committee generally seeks to position fixed remuneration,
including benefits and pension, around mid-market,
taking into account the size and complexity of the business
as compared with other peer companies in the sector,
and, using a significant proportion of variable reward,
offers the ability to increase total potential remuneration
for superior performance through the Annual Bonus Plan
and long-term incentives.
The Committee seeks to apply consistent principles
to remuneration across the organisation. Our approach
to salary reviews is to consider each employee’s level
of responsibility, experience, individual performance,
salary levels in comparable companies and the Company’s
ability to pay. Remuneration surveys and meetings
with sector specialists are used, where appropriate,
to establish market rates.
The weighting of the different components of an
employee’s remuneration will vary depending on their
role, responsibilities and seniority, with senior employees
having a higher proportion of their remuneration linked
to variable reward and Company performance. However,
we apply our overarching remuneration principles,
and provide a competitive and consistent remuneration
and benefits package, as appropriate, throughout GPE.
This is made up of the following key components:
All employees Executive Directors
All employees receive a market-competitive
base salary reflective of the individual’s role,
responsibilities and experience, which is subject
to an annual external benchmarking review
for approximately 90% of our roles.
Salary
Executive Directors receive a market-
competitive base salary reflective of their
responsibilities, which is subject to an annual
external benchmarking review to ensure
salaries remain at an appropriate level to
attract and retain talent in our industry.
All employees receive market-competitive
benefits, including private medical insurance.
Benefits
Executive Directors receive market-competitive
benefits, including private medical insurance.
No car allowance is provided.
All employees are eligible and encouraged to
join the GPE pension scheme to save for their
retirement, with an employer contribution of 15%.
Pension
Executive Directors’ contribution levels have
been aligned with the wider workforce at 15%.
All employees can join the Company’s Share
Incentive Plan, allowing employees to purchase
Company shares in a tax-efficient way and to
receive matching shares, thereby encouraging
employee share ownership. 71% of GPE’s
employees participate in the Share Incentive Plan.
All-
employee
share
plans
The Executive Directors are also eligible
to participate in the Company’s Share
Incentive Plan.
All employees participate in the Annual
Bonus Plan. Under the proposed 2023 Policy,
all employees will be subject to the same
measures with the exception of the employee
engagement and diversity measures which
will not apply to most colleagues to avoid
conflicts of interest.
Annual
Bonus
Plan
The maximum bonus potential for Executive
Directors is 150% of base salary. At least 40%
of any bonus outcome will be deferred into
shares, typically through the Deferred Share
Bonus Plan, to provide further alignment
with the shareholder experience.
Those able to influence long-term performance,
generate significant sustainable returns or
managing major capital budgets may participate
in the RSP under the 2023 Policy in place of the
Company’s LTIP. RSP awards (like prior LTIP
awards) will vest after three years.
Restricted
Share Plan
(RSP)*
The Executive Directors have a larger
potential maximum opportunity under
the RSP, being eligible to receive an award of
up to 150% of base salary (reduced from 300%
under the LTIP). As was the case under the LTIP,
RSP awards are subject to a five-year release
period (in the case of the RSP comprising
a three-year underpin period followed
by a two-year holding period).
* Replacing Long Term Incentive Plan (LTIP).
122 Great Portland Estates plc Annual Report 2023
The Annual Remuneration Report sets out how the Directors’ remuneration policy was applied in 2022/23 and how it will be
applied for the forthcoming year. It is divided into four sections:
Section of Report Page numbers
Executive Directors’ remuneration for the year ended 31 March 2023 See pages 123 to 129
Executive Directors’ remuneration for the year ending 31 March 2024 See page 130
Chair and Non-Executive Directors’ remuneration See page 131
Other disclosures See pages 132 to 135
The Company’s auditor has reported on specific sections of this Report and stated, where applicable, that in its opinion those
sections have been properly prepared in accordance with the Companies Act 2006. The sections that have been subject to
audit are marked with an asterisk (*).
The Directors’ remuneration policy was approved by shareholders at the 2020 AGM and is available on the Company’s website
at www.gpe.co.uk/investors. The proposed Directors’ remuneration policy can be found on pages 136 to 146 of this Report.
Executive Directors’ remuneration for the year ended 31 March 2023
Executive Directors’ single figure table*
Base
salary
1
Benefits Pension
3
SIP
4
Fixed
Total
Annual
Bonus
5
LTIP
Variable
Total Total
8,9
Executive
Directors
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
2023
6
£000
2022
7
£000
2023
£000
2022
£000
2023
£000
2022
£000
Toby
Courtauld 646 624 16 16 121 125 4 4 787 769 630 527 – 129 630 656 1,417 1,425
Nick
Sanderson 445 430 18 14 83 86 4 4 550 534 439 363 – 89 439 452 989 986
Dan
Nicholson
2
362 201 6 3 54 30 4 – 426 234 345 135 – – 345 135 771 369
1. Please refer to the ‘Salary’ table on page 130 for details of Executive Directors’ annual salaries.
2. Dan Nicholson joined the Board on 6 September 2021. He was entitled to a pro-rated bonus for his period of service from 4 October 2021 to 31 March 2022.
3. Toby Courtauld and Nick Sanderson received a pension allowance of 20% of their basic salary between 1 April 2022 and 31 December 2022 which was
reduced to 15% of their basic salary with effect from 1 January 2023 in line with the wider workforce. Dan Nicholson has received a mix of employer pension
contributions and pension allowance of 15% of his basic salary in aggregate from his appointment date.
4. The value of the matching shares awarded under the SIP are calculated using the share price on the date the shares were purchased.
5. 40% of the annual bonus will be deferred into shares for three years under the Deferred Share Bonus Plan. Deferred bonus shares are not subject to any
further performance conditions.
6. A nil vesting of the 2020 LTIP awards has been assumed based on the information available as at 22 May 2023.
7. The figures disclosed in the 2022 Annual Report for the 2019 LTIP vesting were based on an estimated share price, an estimated 22.1% TPR performance
outcome and an estimated TSR performance outcome of 0%. The actual TPR vested at 22.24% and the TSR element vested at 0%. This resulted in a 7.41%
vesting for the 2019 LTIP awards. Figures are stated using the share price on the third anniversary of the date of grant of £6.510. The 2019 LTIP award remains
subject to a two-year holding period and becomes exercisable on the fifth anniversary of the date of grant.
8. The single figure for the total remuneration due to the Directors for the year ended 31 March 2023.
9. The aggregate emoluments (being salary/fees, benefits, cash allowances in lieu of pension and bonus) of all Directors for the year ended 31 March 2023
was £3,929,000 (2022: £3,208,000).
Fixed pay:
Taxable benefits
Benefits principally comprise private medical insurance, membership subscriptions, travel expenses, luncheon vouchers,
the Employee Assistance Programme and entertainment. No individual benefit provided has a value which is significant
enough to warrant separate disclosure.
Pensions
None of the Executive Directors participate in the Group’s defined benefit final salary pension plan, which was closed to new
entrants in 2002. Toby Courtauld’s and Nick Sanderson’s employer pension contribution rates were reduced from 20% to 15%,
being the average rate available to all employees, from the end of the 2022 calendar year. Dan Nicholson’s employer pension
contribution was set at 15%, in line with the wider workforce, from his appointment date.
All-employee Share Incentive Plan
In line with the wider workforce, Executive Directors may participate in the GPE Share Incentive Plan, which is an HMRC
tax-advantaged plan. Participants may save up to £150 from their monthly pre-tax salary to purchase shares. For every
share purchased, GPE grants two matching shares. Shares acquired attract dividends paid by the Company, typically at
the half-year and year end.
Governance
123Annual Report 2023 Great Portland Estates plc
Variable pay:
Executive Directors’ 2023 bonus outcome
The financial, ESG/strategic and personal objectives targets for the bonus for the year ended 31 March 2023, and the extent to
which they were achieved, are set out in the table below. The Committee did not exercise discretion in respect of any elements
of the outturn.
Key elements
of strategy
Maximum
percentage
of salary Measured by
Threshold
performance
target
Maximum
performance
target
(100% payout)
Actual
performance
achieved
Actual
performance
level as a
percentage
of maximum
Bonus receivable (£000)
Toby
Courtauld
Nick
Sanderson
Dan
Nicholson
Market
competitiveness
(30% weighting)
45% Growth of
the Group’s
property
portfolio
against MSCI’s
relevant
Capital Growth
Index (for the
year to 31
March 2022) –
on a straight-
line basis
Annual
percentage
rate of portfolio
capital growth
to meet annual
percentage
rate of capital
growth of the
central London
MSCI Index
(16.67%
payout)
Annual
percentage
rate of portfolio
capital growth
to exceed annual
percentage
rate of capital
growth of the
central London
MSCI Index
by 2%
Index +4.8% 100% £290,854 £200,110 £163,013
Absolute
performance
(30% weighting)
45% Achievement
of TAR targets
(for the year
to 31 March
2023) – on a
straight-line
basis
TAR: +3%
(20% payout)
TAR: +7% -7.8% 0% £0 £0 £0
Flex growth
(10% weighting)
15% Growth of
committed
flex space in
the portfolio –
on a straight-
line basis
300,000 sq ft
(20% payout)
340,000 sq ft 414,000 sq ft 100% £96,951 £66,703 £54,338
ESG/strategic
measures
(15% weighting):
Sustainability 7.5% Reduce energy
consumption –
on a straight-
line basis %
199 kWh/m
2
(20% payout)
181 kWh/m
2
or lower
158.5 kWh/m
2
100% £48,476 £33,352 £27,169
Customer
satisfaction
7.5% Industry
Average Net
Promoter
Score – on a
straight-line
basis
Industry
Average
(20% payout)
Above
Industry
Average
by 10 points
or more
Industry
Average
+ 40.2 points
100% £48,476 £33,352 £27,169
Employee
engagement
7.5% Achieve a
blended
Employee
Engagement
Index (EEI) and
Inclusion Index
score of at
least 65%
Score between
65% and 69%
(20% payout)
Score
above 80%
78% 75% £36,356 £25,013 £20,376
Personal
objectives
(15% weighting)
22.5% Achievement
against
personal
objectives
(for the year
to 31 March
2023)
Partial
achievement
of personal
objectives
Exceeding
personal
objectives
See pages
125 and 126
Toby Courtauld
75%
Nick Sanderson
80%
Dan Nicholson
65%
£109,070 £80,044 £52,979
Total £630,183 £438,574 £345,043
Directors’ remuneration report continued
124 Great Portland Estates plc Annual Report 2023
Executive Directors’ personal objectives
The Executive Directors’ personal objectives, approved by the Committee, are designed to focus on the delivery of the
strategic priorities and the successful management of risk for both 2022/23 and the longer term. Following consideration
of achievement against the Executive Directors’ personal objectives set at the beginning of the year as listed below,
the Committee awarded Toby Courtauld, Nick Sanderson and Dan Nicholson 75%, 80% and 65% respectively of the
full potential bonus for their personal objectives.
Measure Score Key achievements
Implement
strategic change
CEO
24%/35%
CF&OO
10%/15%
ED
3%/7%
Shared
– Customer First programme launched with implementation on track.
– EPC strategy launched with implementation on track.
– Innovation strategy updated and two awards won, including Most Innovative Property Company.
– Strong communication of strategy amidst heightened macro and political uncertainty.
CEO
– Role model with clear vision.
– Reorganised structure and reallocated responsibilities amongst the Executive Directors
to support strategic objectives.
– Led implementation of Sustainability Strategy; new Statement of Intent and Sustainable Spaces
Brief adopted, clarifying approach to climate resilience.
CF&OO
– Assumed leadership of Flex activities; rollout successfully progressed, with management
information and organisational/delivery processes further developed.
ED
– Developed acquisitions pipeline and strategy.
– In his first full year at GPE, Dan’s focus was on delivery of operational excellence rather than
setting strategy hence the lower weighting on this element.
Operational
excellence
CEO
15%/20%
CF&OO
30%/40%
ED
39%/55%
Shared
– Completed development and sale of 50 Finsbury Square, GPE’s first net zero carbon
development, and its sale for a market-beating topped-up initial yield.
– Pre-let 2 Aldermanbury Square, EC2 to Clifford Chance.
– Exceeded growth of committed Flex space targets to 414,000 sq ft.
– Record leasing achieved, exceeding prior year.
– Launch and development of Customer First programme, customer service proposition
and standards. Strong customer experience with above industry average Net Promoter Score.
CEO
– Led negotiation of pre-letting of 2 Aldermanbury Square, EC2.
– Innovation programme progressed; data warehouse built; phase 1 of Customer Relationship
Management system rolled out.
– Numerous awards won, including Developer of the Year.
– Corporate communications plan progressed; nominated for Britain’s Most Admired
Company (Property).
CF&OO
– Leading transition of new business processes including H&S, cyber and overseeing
(with Audit Committee) appointment of new auditors.
– Particular focus on delivering acquisitions; good progress given external environment.
Completed acquisitions of 6/10 St Andrew Street, EC4 and 2 Cathedral Street, SE1.
– Maintained one of the lowest loan-to-property value ratios in the UK REIT sector.
– Social Impact Strategy implemented and launched new charity partnership relationship (XLP).
ED
– Oversaw new planning permissions obtained at French Railways House & 50 Jermyn Street, SW1.
– Secured new headleases at 6/10 St Andrew Street, EC4 and 2 Aldermanbury Square, EC2.
– Completed disposal of 6/10 Market Place, W1.
– Oversaw new capital allocations.
Governance
125Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Executive Directors’ personal objectives continued
Measure Score Key achievements
Develop the team
(which was expanded
for FY23 to ensure all
three executives had
a 33% weighting on
diversity)
CEO
36%/45%
CF&OO
40%/45%
ED
23%/38%
Shared
– Diversity and Inclusion initiatives progressed. Particular focus on diversity, with 50%
of senior hires women (only 1 person short of stretch target); ensured that all shortlists
are both gender and ethnicity balanced.
– Diversity representation targets set and communicated to all colleagues.
– Significant effort expended in internal mentoring of high-potential talent, with a particular
focus on women and ethnic minorities.
CEO
– Enhanced the team with good new hires and led restructuring of senior management roles.
– Sponsored participation in a highly impactful inclusive leadership programme (with Arrival)
for the Executive Committee.
CF&OO
– Took over Marketing, Customer Experience and Flex leadership.
– Board lead on Inclusion Committee; internally regarded as a strong role model for D&I.
ED
– Fully onboarded after his first full year at GPE.
– Executive sponsor for the Women’s Impact Group.
– Mentored and supported New Business team; assumed responsibility for Health and Safety
and Workplace Services.
Total CEO
75%/100%
CF&OO
80%/100%
ED
65%/100%
While each of the Executive Directors was separately assessed, they inevitably had a number of common objectives so the
above table identifies both individual and shared objectives. In each case, their contribution to the delivery of those objectives
was considered.
126 Great Portland Estates plc Annual Report 2023
Executive Directors’ LTIPs
Anticipated vesting of 2020 LTIP awards
The tables below set out the alignment of LTIP awards with Company strategy and the anticipated vesting for those awards in
July 2023, together with indicative payouts for the Executive Directors. The anticipated value of these awards at vesting reflects
the disclosure in the single figure table on page 123.
Anticipated vesting of LTIP awards granted in the year ended 31 March 2021, vesting in the year ending 31 March 2024, is included
in the 2023 single figure table.
Key elements
of strategy % of award Measured by
Threshold
performance
target (20%)
Maximum
performance
target (100%)
Estimated
performance
Estimated
vesting level as at
22 May 2023
as a percentage
of maximum by
vesting date
1
Shareholder
value
33.33% Total Shareholder Return
(based on a three-year
performance period)
Median Upper
quartile
40.1
st
percentile
0%
Absolute
performance
33.33% Total Accounting Return
(based on a three-year
performance period)
868p 925p 795p
(actual)
0%
Total (estimated) 0%
1. Toby Courtauld and Nick Sanderson’s 2020 LTIP is due to vest on 29 July 2023. For the TAR target, the performance period for the 2020 awards is the
three-year period to 31 March 2023. For the TSR element, the vesting period is the three-year period from the award date (29 July 2020) and compares
the Company’s TSR to that of the constituents, at the date of grant, of the FTSE 350 Real Estate Index excluding agencies.
Confirmed vesting of 2019 LTIP awards
The figures provided in last year’s Annual Report for the 2019 LTIP awards were disclosed on an estimated basis. The table below
sets out the confirmed performance outcomes of the 2019 LTIP awards that resulted in a 7.41% vesting following the expiry of the
three-year performance period on 3 June 2022.
Key elements
of strategy % of award Measured by
Threshold
performance
target (20%)
Maximum
performance
target (100%) Performance
Confirmed
percentage
of maximum
at end of
performance
period
(3 June 2021)
Shareholder
value
33.33% Total Shareholder Return
(based on a three-year
performance period)
Median Upper
quartile
36
th
percentile
0%
Absolute
performance
33.33% Total Accounting Return
(based on a three-year
performance period)
4% p.a. 10% p.a. 0.8% p.a. 0%
Portfolio
performance
33.33% Total Property Return against IPD
(central London Index) (based on
a three-year performance period)
Index Index +
1.5% p.a.
Index plus
0.04% p.a.
7.41%
Total 7.41%
Number of shares at the end of the performance period for 2019 LTIP awards
No. of shares awarded
as nil cost options % overall vesting
No. of shares under
option at the end of the
performance period
1
Toby Courtauld 252,072 7.41 18,686
Nick Sanderson 173,225 7.41 12,856
1. The LTIP awards made in 2019 are subject to a five-year release period, comprising a three-year performance period (to 3 June 2022) followed by a further
two-year holding period. The nil cost share options will become exercisable on the fifth anniversary of the date of award and will continue to accrue dividend
equivalents until that time.
Governance
127Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Unvested share awards
The following tables provide details of outstanding share awards under the LTIP and the performance measures that apply
to the awards. All awards were granted in the form of nil cost options.
Executive Director Date of grant Basis of award
Face value
of award
made
£000
Number
of shares
under
award
1,2
Percentage
of award
receivable for
threshold
performance
End of
performance
period
Performance
measures
Toby Courtauld 29 July 2020
3
300% of salary 1,846 317, 9 0 6 20% 28 July 2023 TSR – 50%
TAR Target – 50%
7 June 2021 300% of salary 1,873 255,587 20% 6 June 2024 TSR – 50%
TAR Target – 50%
27 May 2022 300% of salary 1,939 300,391 20% 26 May 2025 TSR – 50%
TAR Target – 50%
Total 873,884
Nick Sanderson 29 July 2020
3
300% of salary 1,270 218,722 20% 28 July 2023 TSR – 50%
TAR Target – 50%
7 June 2021 300% of salary 1,289 175,845 20% 6 June 2024 TSR – 50%
TAR Target – 50%
27 May 2022 300% of salary 1,334 206,671 20% 26 May 2025 TSR – 50%
TAR Target – 50%
Total 601,238
Dan Nicholson
4
27 May 2022 300% of salary 1,087 168,357 20% 26 May 2025 TSR – 50%
TAR Target – 50%
Total 168,357
1. For the 2020,2021 and 2022 LTIP awards, the face value is calculated on the five-day average share price prior to the date of grant of the LTIP award.
For the 2020 LTIP, this was up to and including 28 July 2020, being £5.81. For the 2021 LTIP, this was up to and including 4 June 2021, being £7.33. For the
2022 LTIP, this was up to and including 26 May 2022, being £6.46.
2. In addition, a cash sum equivalent to the value of dividends on the number of plan shares which vest in respect of the period from the award date
to the expiry of the applicable two-year holding period will be payable at the end of that period.
3. The estimated overall outcome for the 29 July 2020 LTIP as at 22 May 2023 is 0%. This would equate to nil shares vesting for each of Toby Courtauld
and Nick Sanderson.
4. Dan Nicholson joined the Board on 6 September 2021 and was entitled to his first LTIP award in 2022.
2020, 2021 and 2022 LTIP awards – performance measures
Performance measure over three years % of award
Vesting
level
Start of
measurement period
20% Straight-line vesting
between these points
100%
2020 LTIP Award
Total Accounting Return 50% 868p 925p 1 April prior to grant date
TSR against constituents of FTSE 350
Real Estate Sector (excluding agencies)
50% Median Upper
quartile
Grant date
2021 LTIP Award
Total Accounting Return 50% 3% p.a. 7% p.a. 1 April prior to grant date
TSR against constituents of FTSE 350
Real Estate Sector (excluding agencies)
50% Median Upper
quartile
Grant date
2022 LTIP Award
Total Accounting Return 50% 3% p.a. 8% p.a. 1 April prior to grant date
TSR against constituents of FTSE 350
Real Estate Sector (excluding agencies)
50% Median Upper
quartile
Grant date
Payment to past Directors*
No payments to past Directors were made during the year.
Payment for loss of office*
No payments were made to Directors during the year for loss of office.
128 Great Portland Estates plc Annual Report 2023
Executive Director remuneration from other roles
Executive Directors are able to accept external Board appointments with the consent of the Board. Any fees received by
an Executive Director for such an external appointment can be retained by the individual. Toby Courtauld is a Non-Executive
Director of Liv-ex Limited, for which he received no remuneration during the year. He also received no remuneration for
serving as a Director of the New West End Company.
Nick Sanderson is a Trustee of the Outward Bound Trust, for which he received no remuneration during the year. Dan Nicholson
is a Non-Executive Director of Bioregional Homes Limited, for which he also received no remuneration during the year.
Statement of Executive Directors’ shareholdings and share interests*
Executive Directors are required to hold a minimum of 300% of base salary in shares. The table below sets out their holdings
against the requirement and their beneficial and conditional ownership as at 31 March 2023. Dan Nicholson joined the Board
on 6 September 2021. As with the other Executive Directors, Dan will be required to build up a shareholding of 300% of base
salary and to retain all shares that are vested to him, net of any tax liabilities, until the requirement is satisfied.
Director
Beneficial ownership Conditional ownership
6
Shareholding
requirement
met
9,10
Comparator
to 2022
Number
of shares
owned
1
SIP
Matching
shares
subject to
forfeiture
Total
beneficial
ownership
2,3,4,5
LTIP
subject to
performance
conditions
LTIP not
subject to
performance
conditions
7
Deferred
Share
Bonus
Plan
8
Total
beneficial
and
conditional
ownership
as at
31 March
2023
Total
beneficial
and
conditional
ownership
as at
31 March
2022
Toby
Courtauld 1,398,027 1,720 1,399,747 873,884 18,686 45,062 2,337,379 2,275,999 1,112% – Yes 1,599%
Nick
Sanderson 280,537 1,720 282,257 601,238 12,856 31,540 927,891 884,057 326% – Yes 470%
Dan
Nicholson 351 702 1,053 168,357 – 8,377 177,787 60 1%
11
–
1. Excludes SIP shares that are subject to forfeiture.
2. Holdings are calculated based on the share price as at 31 March 2023 of £5.07.
3. Beneficial interests include shares held directly or indirectly by connected persons.
4. During the year, Toby Courtauld exercised 83,551 nil cost share options and Nick Sanderson exercised 54,730 nil cost share options. Of these, 39,270
and 25,724 shares respectively were sold at a price of 532.6545p each to cover tax and national insurance liabilities.
5. Between 1 April 2023 and 22 May 2023, Toby Courtauld, Nick Sanderson and Dan Nicholson each acquired 28 Partnership shares and 56 conditional
Matching shares respectively under the SIP. In addition, under the SIP, 44 Matching shares vested to each of Toby Courtauld and Nick Sanderson.
Otherwise there were no changes in their shareholdings during that period.
6. 40% of the Executive Directors’ annual bonuses for the year ended 31 March 2023 will be deferred into shares for three years under the Deferred
Share Bonus Plan (DSBP). The number of shares awarded will be disclosed following the awards, in the 2024 Annual Report. In respect of their annual
bonuses for the year ended 31 March 2022, Toby Courtauld, Nick Sanderson and Dan Nicholson were granted DSBP awards over 32,652, 22,465 and
8,377 shares respectively.
7. Consistent with best practice, estimated after-tax shares that will be retained after the cessation of the two-year holding period are included in the
shareholding requirement (53% of shares retained).
8. Consistent with best practice, estimated after-tax shares retained are included in the shareholding requirement (53% of shares retained).
9. Post-cessation shareholding guidelines came into effect following the approval of the Policy at the 2020 AGM. Executive Directors are expected to
retain the lower of actual shares held at cessation and shares equal to 300% of salary for two years post-cessation. Shares retained following vesting
of LTIP, RSP and/or DSBP awards granted after the 2020 AGM will be held in escrow to enable enforcement of the post-cessation guidelines.
10. Executive Directors are required to hold 300% of their base salary and are expected to retain the after-tax shares received on the vesting of awards
until they have acquired the necessary shares to meet their shareholding requirement.
11. Dan Nicholson joined the Board with effect from 6 September 2021 and is working towards his minimum shareholding requirement.
Governance
129Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Executive Directors’ remuneration for the year ending 31 March 2024
Statement of implementation of Directors’ remuneration policy for the year ending 31 March 2024
The Policy and its implementation for the Executive Directors for the forthcoming financial year is summarised below.
For information on the Chair of the Board and Non-Executive Directors, please refer to page 131.
Salary
Executive Director
Year ending
31 March 2024
£000
1
Year ended
31 March 2023
£000
1
Base salary
increase
Toby Courtauld 679 646 5%
Nick Sanderson 467 445 5%
Dan Nicholson 380 362 5%
1. Rounded to the nearest £1,000.
Executive Directors have received an increase in salary below the all-colleague average increase of 5.7%. In reviewing the
salaries of the Executive Directors, the Committee has also taken account of both the individual’s and the Company’s performance
and the employment conditions and salary increases awarded to employees across the Group.
Pension and benefits
There have been no changes to the benefits and pension provision for the Executive Directors save that Toby Courtauld
and Nick Sanderson’s pension contribution rates were aligned with the average rate available to all employees (being 15%
of base salary) from 1 January 2023. Dan Nicholson’s employer pension contributions were set at this rate on his appointment.
Bonus for the year ending 31 March 2024
The target and maximum annual bonus potentials will remain unchanged at 75% and 150% of salary respectively for the
Executive Directors. As with the existing Policy, under the proposed new Policy, 40% of any annual bonus outcome will be
deferred into shares for three years under the Deferred Share Bonus Plan.
The table on page 121 sets out the performance measures and their respective weightings for the year ending 31 March 2024,
together with how the measures are linked to the Group’s strategy and KPIs. The Committee is of the opinion that, given the
commercial sensitivity around GPE’s business, disclosing precise targets for the Annual Bonus Plan in advance would not be
in the best interests of shareholders or the Company. Objectives, performance achieved and awards made will be published
at the end of the performance period so shareholders can fully assess the basis for any payouts.
Restricted Share Plan Awards for the year ending 31 March 2024
Performance measure over three years
Award as %
of base salary
Subject to underpins as described in full in the Remuneration Policy 150%
The maximum potential award for the 2023 Restricted Share Plan Award is 150% of base salary, being 50% of the 300% of base
salary awarded under historic LTIPs. This conversion rate is reflective of common market practice. The awards, granted in the
form of nil cost options, will be subject to the underpins set out in the proposed new Policy. Alongside the operation of a robust
underpin allowing the Committee to reduce the vesting of awards in whatever circumstances it considers to be appropriate,
the Committee will also specifically consider reducing vesting levels in the event of a breach of the financial covenants of
the Group’s principal debt facilities; failure to make satisfactory progress in delivering our Sustainability Statement of Intent;
or there being material damage to the reputation of the Company. Following a three-year vesting period, the 2023 RSP awards
will be subject to a two-year holding period, whereby participants will not be permitted to exercise any performance-vested
awards until the fifth anniversary of the award date. The holding period will generally continue to operate post-cessation
of employment.
130 Great Portland Estates plc Annual Report 2023
Chair and Non-Executive Directors’ remuneration
Single figure table annual fees for year ended 31 March 2023*
This section of the Report contains details of how the Policy for the Chair and Non-Executive Directors was implemented
during the financial year ended 31 March 2023.
Name
Fees Benefits Totals
2023 2022 2023 2022 2023 2022
Richard Mully 244 235 2
1
1
1
246 236
Charles Philipps
2
82 80 – – 82 80
Mark Anderson 72 41 – – 72 41
Wendy Becker
3
20 72 – – 20 72
Nick Hampton
4
74 75 – – 74 75
Vicky Jarman
4
77 70 – – 77 70
Champa Magesh
5
48 – – – 48 –
Alison Rose 72 70 – – 72 70
Emma Woods
6
77 12 – – 77 12
Total 766 655 2 1 768 656
1. Richard Mully’s benefits of less than £2,000 related to reimbursed travel (and related tax) for GPE meetings.
2. Charles Philipps stepped down from the Board on 30 March 2023 and was succeeded as Senior Independent Director by Nick Hampton.
3. Wendy Becker stepped down from the Board on 7 July 2022.
4. Vicky Jarman succeeded Nick Hampton as Chair of the Audit Committee from 7 July 2022.
5. Champa Magesh joined the Board and each of its Committees on 1 August 2022.
6. Emma Woods succeeded Wendy Becker as Chair of the Remuneration Committee from 7 July 2022.
Shareholdings*
31 March 2023 31 March 2022
Richard Mully 31,379 26,379
Charles Philipps 4,094 4,094
Mark Anderson 2,451 –
Wendy Becker 8,277 8,277
Nick Hampton 2,500 2,500
Vicky Jarman 2,708 2,708
Champa Magesh – –
Alison Rose – –
Emma Woods – –
There were no changes in the shareholdings of the Chair and Non-Executive Directors in office between 1 April 2023 and 24 May 2023.
The reported figures reflect the position at the stated dates or date of appointment if later/date of retirement if earlier.
Annual fees for year ending 31 March 2024
The table below sets out the fee rates for the Chair of the Board and Non-Executive Directors for the year ending 31 March 2024.
The fees of the Chair and the base fees of the Non-Executive Directors have been increased by approximately 5%, being below
the average of 5.7% awarded to colleagues. Fee levels for the Chair and Non-Executive Directors are assessed having regard
to individual responsibility and fees paid to Non-Executive Directors in the wider FTSE 250.
1 April 2022 to
31 March 2023
£
From
1 April 2023
(per annum)
£
Chair fee 243,500 256,000
Non-Executive Director base fee 58,500 61,500
Senior Independent Director fee 10,000 10,000
Audit or Remuneration Committee Chair 12,500 12,500
Audit or Remuneration Committee Member 5,000 5,000
Nomination Committee Member 3,350 3,350
Governance
131Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Other disclosures
Percentage change in Board remuneration vs Group employees
The table below shows the percentage change in remuneration/fees for the years ended 31 March 2021, 31 March 2022 and
31 March 2023 for each of the Directors who served during the year (including salary, taxable benefits and annual bonus)
compared to that for an average Group employee.
Name
Base salary/fees Taxable benefits
8
Bonus
9
Change Change Change
2020/21 2021/22 2022/23 2020/21 2021/22 2022/23 2020/21 2021/22 2022/23
Average employee
1
+5.1% +3.2% +6.2% +4.1% -20.1% -0.3% -17. 5% +71.3%
8
+13.5%
Executive Directors
Toby Courtauld +1.5% +1.5% +3.5% -3.6% -38.5% 0% -20.6% +139.5% +19.5%
Nick Sanderson +1.5% +1.5% +3.5% -22.7% -12.5% +18.6% -15.7% +125.5% +20.9%
Dan Nicholson
2
n/a n/a +80.1% n/a n/a +100.0% n/a n/a +155.6%
Non-Executive Directors
Richard Mully (Chair) -5.0% 0% +3.8% -100% +100% +100% n/a n/a n/a
Charles Philipps
3
-2.6% 0% +2.5% – – – n/a n/a n/a
Mark Anderson
4
n/a n/a +75.6% n/a – – n/a n/a n/a
Wendy Becker
5
-9.2% 0% -72.2% – – – n/a n/a n/a
Nick Hampton
6
-4.2% 0% -1.3% -100% – – n/a n/a n/a
Vicky Jarman
6
-2.9% 0% +10.0% – – – n/a n/a n/a
Champa Magesh
7
– – 0.0% – – – n/a n/a n/a
Alison Rose -2.9% 0% +2.9% – – – n/a n/a n/a
Emma Woods
4
n/a n/a +541.7% n/a – – n/a n/a n/a
1. Based on all employees who were employed for the full consecutive financial years being compared. Average employee pay has been calculated
on a full-time equivalent basis.
2. Dan Nicholson joined the Group in September 2021, part-way through the financial year. His remuneration in 2021/22 reflected this period of service,
whereas his remuneration for 2022/23 was for a full year’s service, explaining his large percentage increase over the two years.
3. Charles Philipps stepped down from the Board on 30 March 2023.
4. Mark Anderson and Emma Woods joined the Board on 1 September 2021 and 1 February 2022 respectively. Emma Woods succeeded Wendy Becker
as Chair of the Remuneration Committee from 7 July 2022.
5. Wendy Becker stepped down from the Board on 7 July 2022.
6. Nick Hampton succeeded Charles Philipps as Senior Independent Director on 31 March 2023 and was succeeded by Vicky Jarman as Chair of the Audit
Committee from 7 July 2022.
7. Champa Magesh joined the Board on 1 August 2022.
8. Taxable benefits from 31 March 2022, in line with the single figure table on page 123, have been updated to include: private medical insurance, membership
subscriptions, travel expenses, luncheon vouchers, Employee Assistance Programme and entertainment. Prior years included death in service, life assurance
and permanent health insurance which are not taxable benefits in line with HMRC guidelines.
9. Executive Directors have a higher proportion of their remuneration linked to variable pay and Company performance for greater alignment with shareholders.
The percentage change in bonus payments will therefore fluctuate according to variable pay outcomes each year. The payout for the 2020/21 annual bonus
financial measures was nil, resulting in the higher percentage change in bonuses for 2021/22.
Ten-year Chief Executive remuneration package
The table below shows the Chief Executive’s remuneration package over the past ten years, together with incentive payout/vesting
as compared to the maximum opportunity.
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Single figure of total remuneration (£000) 3,409 3,689 2,650 1,402 1,174 905 1,599 984 1,425
1
1,417
Bonus payout (as % of
maximum opportunity) 100% 48% 100% 20% 37% 19% 31% 23.9% 56.3% 65%
Long-term incentive vesting rates
(as % of maximum opportunity) 86% 81% 58% 33% 10% 0% 28.8% 0% 7.4 %
1
0%
2
1. Re-stated to reflect the actual LTIP performance outcome of 7.41% as referred to in the single figure table on page 123. The figure provided in last year’s
Annual Report was disclosed on an estimated basis.
2. Based on estimated performance as at 22 May 2023.
132 Great Portland Estates plc Annual Report 2023
Total shareholder return performance
The following graph shows the total shareholder returns for the Company for each of the last ten financial years compared
to the FTSE 350 Real Estate Index (excluding agencies). The Company is a constituent of the FTSE 350 Real Estate Index and
the Committee considers this benchmark to be the most appropriate for illustrating the Company’s performance.
Total shareholder return over ten years (indexed)
31 March
2013
31 March
2014
31 March
2015
31 March
2016
31 March
2017
31 March
2018
31 March
2019
31 March
2023
31 March
2022
31 March
2021
31 March
2020
Great Portland Estates plc
Source: Refinitiv Datastream.
FTSE 350 Real Estate – Sector (Excluding Agencies)
300
250
200
150
100
CEO pay ratio
Although the Company has fewer than 250 employees and is not, therefore, subject to any legal requirement to include
such ratios, the Committee considers inclusion of the ratio to be reflective of best practice and includes this on a voluntary
basis. The Committee notes the general preference of institutional shareholders for companies to use statutory Method A
and prepared the calculations on that basis. However, for a company with a relatively small number of employees (139 as at
31 March 2023), the ratios can be unduly impacted by joiners and leavers who may not participate in the full suite of remuneration
arrangements in the year of joining or leaving. Accordingly, the Committee modified the statutory basis to exclude any employee
not employed throughout the financial year. In all other respects, Method A was followed so the following tables refer to
modified Method A being adopted.
The Company believes that a bias towards variable pay for senior executives is the most appropriate means of both incentivising
the senior executives and aligning them with shareholders. The ratios will therefore fluctuate according to variable pay outcomes
each year. An estimated nil vesting of the 2020 LTIP in 2022/23 compared with a 7.41% vesting of the 2019 LTIP in 2021/22 has
reduced the ratios for 2022/23.
Ratio of the pay of the Chief Executive to that of the UK lower quartile, median and upper quartile employees
Year Method
Pay ratio
25th percentile 50th percentile (median) 75th percentile
31 March 2023 Modified Method A 18.0:1 12.6:1 6.7:1
31 March 2022 Modified Method A 19.9:1 15.4:1 7. 2:1
31 March 2021
1
Modified Method A 15.1:1 11.2:1 5.8:1
31 March 2020 Modified Method A 24.1:1 18.2:1 8.7:1
31 March 2019 Modified Method A 14.2:1 9.3:1 5.7:1
1. The 2022 ratios have been updated to reflect the actual vesting outcome of the 2019 LTIP awards at 7.41%.
Additional information on the ratio of the pay of the Chief Executive to that of employees
– Employee pay data is based on full-time equivalent pay for UK employees as at 31 March 2023. For each employee,
total pay is calculated in line with the single figure methodology (i.e. fixed pay accrued during the financial year
and the value of performance-based incentive awards vesting in relation to the performance year).
– Employee pay data excludes leavers and joiners to help ensure data is on a like-for-like basis. No other calculation
adjustments or assumptions have been made.
– Chief Executive pay is as per the single total figure of remuneration for 2023, as disclosed on page 123.
– The 2023 ratio will be re-stated in the 2024 Directors’ remuneration report to take account of the final LTIP vesting
data for eligible employees and for the Chief Executive.
Governance
133Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
The Committee has considered the pay data for the three individuals identified for 2023 and believes that it fairly reflects pay
at the relevant quartiles among the UK employee population. Each of the individuals identified was a full-time employee during
the year and received remuneration in line with the Policy.
Salary and total remuneration used to calculate the pay ratio
Chief Executive
£000
25th percentile
£000
50th percentile (median)
£000
75th percentile
£000
Total salary 646 56 77 120
Total remuneration (single figure) 1,417 79 113 212
Employee Share Trust
Upon the vesting of share awards, shares used to satisfy awards under the LTIP and Deferred Share Bonus Plan are transferred
out of the Great Portland Estates plc LTIP Employee Share Trust (the Trust), a discretionary trust established to facilitate the
operation of the Company’s share plans. The shares to satisfy vested awards have been purchased by the Trustees of the Trust
in the open market. The number of shares held by the Trust as at 31 March 2023 was 877,159 (2022: 877,335).
Dilution
The Company currently funds the Trustees to purchase all of the shares required to satisfy awards under the Company’s share
plans and no shares have been issued to satisfy any grants made in the last ten years. However, if the Company decided to issue
new shares to meet these awards, the Company would operate all of its share incentive arrangements within The Investment
Association (IA) Guidelines on dilution. The following table sets out the level of dilution against the IA limits for all share plans
and discretionary plans in respect of the outstanding awards should the Company issue shares rather than use purchased
shares held in Trust.
Maximum As at 31 March 2023
1
10% dilution in ten years (all plans) 2.03%
5% dilution in ten years (discretionary plans) 1.99%
1. This figure shows the number of shares required to satisfy all outstanding awards as at 31 March 2023 as a percentage of the Company’s issued share
capital were these to be satisfied by the issue of new shares. This does not include vested awards that have been satisfied using market purchased shares.
Relative importance of spend on pay
The table below sets out the relative importance of spend on pay in 2022 and 2023:
Relative importance of spend on pay £m
Overall spend on pay Overall spend on dividend
2022 20232022 2023
+8.7%
25.3
27.5
0%
31.9 31.9
35
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
134 Great Portland Estates plc Annual Report 2023
Committee advisers
The Committee is satisfied that the advice received from FIT Rem is independent and objective as FIT Rem complies with
the Code of Conduct for Remuneration Consultants (which can be found at www.remunerationconsultantsgroup.com)
and provides no other advice to the Group. FIT Rem’s fees for the year to 31 March 2023 were £112,056 (2022: £68,137)
which were charged on its normal terms.
Independent and objective performance certificates are provided to the Committee by:
– Aon Hewitt on measurement of TSR performance targets for the LTIP and 2022/23 Annual Bonus Plan awards together
with IFRS 2 calculations. Fees paid to Aon Hewitt in respect of this were £12,500. Aon Hewitt also provides gender pay
gap assistance to the Group and fees paid in relation to this totalled £8,000; and
– Morgan Stanley Capital International (MSCI) on measurement against its property benchmark, for the Executive and Employee
Annual Bonus Plan and measurement of TPR performance targets for the LTIP awards as part of its MSCI membership.
Fees paid in relation to this membership totalled £41,949.
Statement of voting at the AGM
The following table shows the results of:
– the advisory vote on the Directors’ remuneration report at the 7 July 2022 AGM; and
– the binding vote on the Directors’ remuneration policy commencing from the 24 July 2020 AGM.
It is the Committee’s policy to consult with major shareholders prior to any major changes to its Executive remuneration.
For Against Abstentions
2022 Directors’ remuneration report 190,081,568 (94.56%) 10,945,612 (5.44%) 1,438,293
2020 Directors’ remuneration policy 200,319,758 (98.77%) 2,493,248 (1.23%) 7,0 4 9
Governance
135Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Executive Director remuneration
Purpose and link to strategy Operation and process Maximum opportunity Performance metrics
Key changes to last
approved policy
Fixed
remuneration
Base salary
To provide a market-competitive
salary which takes into account
individual responsibilities and
attracts and retains talent in
the labour market in which the
Executive Director is employed.
Reviewed by the Remuneration Committee (the Committee) at least
annually and assessed having regard to Company performance, individual
responsibilities, inflation, as well as salary levels in comparable organisations
(particularly within the listed property sector) and taking account of salary
policy and annual increases within the rest of the Group.
Base salary increases will be in applied in line with
the outcome of the review.
In the normal course of events, increases in the
base salaries will not exceed the average increase
for employees. Increases may be made above this
level to take account of market alignment to around
mid-market levels of comparable organisations
(particularly within the listed property sector)
and individual circumstances such as:
– increase in scope and responsibility; and/or
– to reflect the individual’s development and
performance in the role (e.g. for a new appointment
where base salary may be increased over time
rather than set directly at the level of the previous
incumbent or market level).
The Committee is, however, mindful of the need to
treat comparisons with caution to avoid an upward
ratchet of remuneration levels.
The salary maximum will be £650,000 (as increased
by RPI from July 2017, currently c. £874,600).
Individual and Company performances
are considerations in setting base salary.
No change.
Benefits
To provide cost-effective benefits
that are valued by the recipient
and are appropriately competitive.
Benefits principally comprise life insurance, health insurance, private
healthcare subscriptions, travel expenses and membership subscriptions.
A company car or company car allowance may be provided, although
it is not the Company’s current practice to provide either to current
Executive Directors. Other benefits may be introduced from time to time
to ensure the benefits package is appropriately competitive and reflects
individual circumstances. Benefits are reviewed annually and their value
is not pensionable.
Set at a level which the Committee considers:
– is appropriately positioned against comparable
roles in companies of a similar size and complexity
(particularly within the listed property sector); and
– provides a sufficient level of benefits based on
the role or an individual’s circumstances such
as relocation.
Benefit values vary year on year depending on
premiums and, therefore, the maximum value is the
cost of the provision of these benefits. However, the
aggregate value of contractual and non-contractual
benefits received by each Executive Director (based
on the value included in the individual’s annual
P11D tax calculation) shall not exceed £100,000 p.a.
(with this maximum increasing annually at the rate
of RPI from 1 April 2014).
Not applicable. No change.
Pension
To provide a framework to
save for retirement that is
appropriately competitive.
All Executive Directors receive a contribution to their personal pension
plan and/or receive a cash equivalent. This cash equivalent is not treated
as salary for the purposes of determining bonus or incentive awards.
The current Executive Directors receive a contribution
or cash equivalent equal to 15% of base salary which
is aligned with the average rate for all employees.
Any new Executive Directors that are recruited will
receive a contribution at no more than the same level
as the average all-employee rate (as at the date
of recruitment). The contribution rate for Executive
Directors may change in line with increases for
employees generally.
Not applicable. Updated to reflect
alignment of pension
rates with employees
generally.
Directors’ remuneration policy
This section of the Directors’ remuneration report contains details of the Directors’ remuneration policy that will govern
the Company’s future remuneration payments.
The policy below sets out the remuneration policy we intend to apply, subject to shareholder approval, from 6 July 2023, the date
of the next AGM. Until such approval, the current remuneration policy, which was approved by shareholders at the 2020 AGM,
will apply. It is the intention that the new policy will apply for a period of three years from approval. Any key changes in policy
have been highlighted in the proposed new policy. The policy part of the remuneration report, if approved, will be displayed
on the Company’s website, at www.gpe.co.uk/investors, immediately after the 2023 AGM.
136 Great Portland Estates plc Annual Report 2023
Executive Director remuneration
Purpose and link to strategy Operation and process Maximum opportunity Performance metrics
Key changes to last
approved policy
Fixed
remuneration
Base salary
To provide a market-competitive
salary which takes into account
individual responsibilities and
attracts and retains talent in
the labour market in which the
Executive Director is employed.
Reviewed by the Remuneration Committee (the Committee) at least
annually and assessed having regard to Company performance, individual
responsibilities, inflation, as well as salary levels in comparable organisations
(particularly within the listed property sector) and taking account of salary
policy and annual increases within the rest of the Group.
Base salary increases will be in applied in line with
the outcome of the review.
In the normal course of events, increases in the
base salaries will not exceed the average increase
for employees. Increases may be made above this
level to take account of market alignment to around
mid-market levels of comparable organisations
(particularly within the listed property sector)
and individual circumstances such as:
– increase in scope and responsibility; and/or
– to reflect the individual’s development and
performance in the role (e.g. for a new appointment
where base salary may be increased over time
rather than set directly at the level of the previous
incumbent or market level).
The Committee is, however, mindful of the need to
treat comparisons with caution to avoid an upward
ratchet of remuneration levels.
The salary maximum will be £650,000 (as increased
by RPI from July 2017, currently c. £874,600).
Individual and Company performances
are considerations in setting base salary.
No change.
Benefits
To provide cost-effective benefits
that are valued by the recipient
and are appropriately competitive.
Benefits principally comprise life insurance, health insurance, private
healthcare subscriptions, travel expenses and membership subscriptions.
A company car or company car allowance may be provided, although
it is not the Company’s current practice to provide either to current
Executive Directors. Other benefits may be introduced from time to time
to ensure the benefits package is appropriately competitive and reflects
individual circumstances. Benefits are reviewed annually and their value
is not pensionable.
Set at a level which the Committee considers:
– is appropriately positioned against comparable
roles in companies of a similar size and complexity
(particularly within the listed property sector); and
– provides a sufficient level of benefits based on
the role or an individual’s circumstances such
as relocation.
Benefit values vary year on year depending on
premiums and, therefore, the maximum value is the
cost of the provision of these benefits. However, the
aggregate value of contractual and non-contractual
benefits received by each Executive Director (based
on the value included in the individual’s annual
P11D tax calculation) shall not exceed £100,000 p.a.
(with this maximum increasing annually at the rate
of RPI from 1 April 2014).
Not applicable. No change.
Pension
To provide a framework to
save for retirement that is
appropriately competitive.
All Executive Directors receive a contribution to their personal pension
plan and/or receive a cash equivalent. This cash equivalent is not treated
as salary for the purposes of determining bonus or incentive awards.
The current Executive Directors receive a contribution
or cash equivalent equal to 15% of base salary which
is aligned with the average rate for all employees.
Any new Executive Directors that are recruited will
receive a contribution at no more than the same level
as the average all-employee rate (as at the date
of recruitment). The contribution rate for Executive
Directors may change in line with increases for
employees generally.
Not applicable. Updated to reflect
alignment of pension
rates with employees
generally.
The Company’s policy is to provide remuneration packages that fairly reward the Executive Directors for the contribution
they have made to the business and to ensure that the packages are appropriately competitive to promote the long-term
success of the Company. The policy is to align the Directors’ interests with those of shareholders and to incentivise the
Directors to meet the Company’s financial and strategic priorities by making a significant proportion of remuneration
performance-related. The Company’s strategic objectives are set out in the Strategic Report on pages 01 to 78.
The Rumeneration Committee is satisfied that the remuneration policy outlined in the table below is in the best interests
of shareholders, does not raise any environmental, social or governance issues and does not promote excessive risk-taking.
The key changes are highlighted in the final column in the table. In addition, the good leaver provisions for the annual
bonus have been adjusted to reflect normal practice and the malus provisions updated to include corporate solvency,
administration or failure.
Governance
137Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Purpose and link to strategy Operation and process Maximum opportunity Performance metrics
Key changes to last
approved policy
Variable
remuneration
Annual Bonus Plan
Links reward to the annual
performance targets, which are
set on or about the beginning
of the financial year in line with
the Company’s strategy.
Ensures an alignment between
the operation of the Directors’
remuneration policy and financial
measures whilst also ensuring
additional operational measures
are targeted to drive and encourage
a holistic approach to performance.
The Annual Bonus Plan is reviewed annually at the start of the financial
year to ensure bonus opportunity, performance measures and weightings
are appropriate and continue to support the Company’s strategy.
Bonuses are paid in cash and shares. Up to 60% of any bonus will be paid
in cash following the end of the financial year. At least 40% of any bonus
outcome will be deferred into shares, typically through the Deferred Share
Bonus Plan (the DSBP) and normally for three years.
Subject to clawback and malus provisions in situations of personal misconduct
and/or where accounts or information relevant to performance are shown
to be materially wrong and the bonus paid was higher than should have been
the case; and malus only where there are sufficiently exceptional circumstances
which impact the reputation of the Company, where there was a material
error in determining the grant, size or nature of an award or in the event
of corporate insolvency, administration or failure.
The target bonus is 50% of maximum (i.e. 75% of base salary). Threshold
bonus is not more than 30% of base salary with 0% payable if the threshold
is not met.
The maximum bonus is 150% of base salary. At least 50% of the bonus will be linked to financial
measures. The balance will be linked to personal or
strategic objectives (including ESG factors). In addition,
at least 80% of the total bonus opportunity will be
objectively measurable.
The performance metrics are set by the Committee
each year. The performance period for the Annual
Bonus Plan targets is linked to the Company’s
financial year.
The Committee may reduce formulaic bonus outcomes
if it considers them to be inconsistent with the
performance of the Company, business or individual
during the year.
The Committee retains the ability to adjust the
targets and/or set different measures if events occur
which cause it to determine that the conditions are
no longer appropriate and the amendment is required
so that the conditions achieve their original purpose
and are not, in the view of the Committee, materially
less difficult to satisfy.
Further details on the measures for the financial year
2023/24 are set out on page 121.
Changed the weightings
of the bonus measures
to better align with
the evolution of the
Company’s strategic
priorities.
Grants under
the Restricted
Share Plan (RSP)
Rewards and retains Executives,
aligning them with shareholder
interests over a longer timeframe.
Ensures an alignment between
the operation of the Company’s
remuneration policy and the
Company’s KPI of achieving
sustained share price growth
through ensuring that a significant
proportion of executive reward is
delivered in shares, thereby aligning
their reward with shareholder returns.
The Company is seeking shareholder approval for the RSP at the 2023 AGM.
If approved, initial grants will be made shortly following the AGM in July 2023.
The RSP will have an initial ten-year term.
Participants are eligible to receive a conditional annual allocation of shares
or nil price options (restricted shares).
General terms
Awards may be adjusted to reflect the impact of any variation of share capital.
An award may, at the discretion of the Committee, include the right to
receive cash or shares on vesting equal in value to the dividends payable
on such number of shares subject to the award which vest, for the period
between grant and vesting.
A two-year holding period will apply to awards following the end of a
three-year underpin period. Awards will typically be structured as nil cost
options exercisable from the end of the holding period although the plan
may permit earlier exercise following the third anniversary of grant if the
resulting (net of tax) shares are similarly locked up for the holding period.
Subject to clawback and malus provisions, for all employees in situations
of personal misconduct and/or where accounts or information relevant
to performance are shown to be materially wrong and vesting was higher
than should have been the case; and malus only where there are sufficiently
exceptional circumstances which impact the reputation of the Company,
where there was a material error in determining the grant, size or nature of
an award or in the event of corporate insolvency, administration or failure.
Awards under the RSP may be adjusted to reflect the impact of any
variation of share capital.
Quantum
The Committee reviews the quantum of awards annually.
Up to 150% of salary. The nature of RSPs is to deliver a lesser level of award
(150% of salary compared with historic grant levels
of 300%) in return for the greater likelihood of vesting.
There is, therefore, a clear default to vesting.
Nonetheless, the Committee is keen to avoid payments
for failure and will consider the application of an underpin
at the third anniversary of grant whereby it may reduce
vesting levels (including to zero) where it considers that
to be appropriate in all the circumstances (the underpin).
Without limitation, it may reduce vesting levels where
any of the following occur:
– breach of the financial covenants of the Group’s
principal debt facilities;
– failing to make satisfactory progress in delivering
our Sustainability Statement of Intent; and
– there being material damage to the reputation
of the Company.
The Committee retains the ability to adjust the
underpin if events occur which cause it to determine
that the conditions are no longer appropriate and
the amendment is required so that the conditions
achieve their original purpose and are not materially
less difficult to satisfy.
Introduction of RSP.
Directors’ remuneration policy continued
Executive Director remuneration continued
138 Great Portland Estates plc Annual Report 2023
Purpose and link to strategy Operation and process Maximum opportunity Performance metrics
Key changes to last
approved policy
Variable
remuneration
Annual Bonus Plan
Links reward to the annual
performance targets, which are
set on or about the beginning
of the financial year in line with
the Company’s strategy.
Ensures an alignment between
the operation of the Directors’
remuneration policy and financial
measures whilst also ensuring
additional operational measures
are targeted to drive and encourage
a holistic approach to performance.
The Annual Bonus Plan is reviewed annually at the start of the financial
year to ensure bonus opportunity, performance measures and weightings
are appropriate and continue to support the Company’s strategy.
Bonuses are paid in cash and shares. Up to 60% of any bonus will be paid
in cash following the end of the financial year. At least 40% of any bonus
outcome will be deferred into shares, typically through the Deferred Share
Bonus Plan (the DSBP) and normally for three years.
Subject to clawback and malus provisions in situations of personal misconduct
and/or where accounts or information relevant to performance are shown
to be materially wrong and the bonus paid was higher than should have been
the case; and malus only where there are sufficiently exceptional circumstances
which impact the reputation of the Company, where there was a material
error in determining the grant, size or nature of an award or in the event
of corporate insolvency, administration or failure.
The target bonus is 50% of maximum (i.e. 75% of base salary). Threshold
bonus is not more than 30% of base salary with 0% payable if the threshold
is not met.
The maximum bonus is 150% of base salary. At least 50% of the bonus will be linked to financial
measures. The balance will be linked to personal or
strategic objectives (including ESG factors). In addition,
at least 80% of the total bonus opportunity will be
objectively measurable.
The performance metrics are set by the Committee
each year. The performance period for the Annual
Bonus Plan targets is linked to the Company’s
financial year.
The Committee may reduce formulaic bonus outcomes
if it considers them to be inconsistent with the
performance of the Company, business or individual
during the year.
The Committee retains the ability to adjust the
targets and/or set different measures if events occur
which cause it to determine that the conditions are
no longer appropriate and the amendment is required
so that the conditions achieve their original purpose
and are not, in the view of the Committee, materially
less difficult to satisfy.
Further details on the measures for the financial year
2023/24 are set out on page 121.
Changed the weightings
of the bonus measures
to better align with
the evolution of the
Company’s strategic
priorities.
Grants under
the Restricted
Share Plan (RSP)
Rewards and retains Executives,
aligning them with shareholder
interests over a longer timeframe.
Ensures an alignment between
the operation of the Company’s
remuneration policy and the
Company’s KPI of achieving
sustained share price growth
through ensuring that a significant
proportion of executive reward is
delivered in shares, thereby aligning
their reward with shareholder returns.
The Company is seeking shareholder approval for the RSP at the 2023 AGM.
If approved, initial grants will be made shortly following the AGM in July 2023.
The RSP will have an initial ten-year term.
Participants are eligible to receive a conditional annual allocation of shares
or nil price options (restricted shares).
General terms
Awards may be adjusted to reflect the impact of any variation of share capital.
An award may, at the discretion of the Committee, include the right to
receive cash or shares on vesting equal in value to the dividends payable
on such number of shares subject to the award which vest, for the period
between grant and vesting.
A two-year holding period will apply to awards following the end of a
three-year underpin period. Awards will typically be structured as nil cost
options exercisable from the end of the holding period although the plan
may permit earlier exercise following the third anniversary of grant if the
resulting (net of tax) shares are similarly locked up for the holding period.
Subject to clawback and malus provisions, for all employees in situations
of personal misconduct and/or where accounts or information relevant
to performance are shown to be materially wrong and vesting was higher
than should have been the case; and malus only where there are sufficiently
exceptional circumstances which impact the reputation of the Company,
where there was a material error in determining the grant, size or nature of
an award or in the event of corporate insolvency, administration or failure.
Awards under the RSP may be adjusted to reflect the impact of any
variation of share capital.
Quantum
The Committee reviews the quantum of awards annually.
Up to 150% of salary. The nature of RSPs is to deliver a lesser level of award
(150% of salary compared with historic grant levels
of 300%) in return for the greater likelihood of vesting.
There is, therefore, a clear default to vesting.
Nonetheless, the Committee is keen to avoid payments
for failure and will consider the application of an underpin
at the third anniversary of grant whereby it may reduce
vesting levels (including to zero) where it considers that
to be appropriate in all the circumstances (the underpin).
Without limitation, it may reduce vesting levels where
any of the following occur:
– breach of the financial covenants of the Group’s
principal debt facilities;
– failing to make satisfactory progress in delivering
our Sustainability Statement of Intent; and
– there being material damage to the reputation
of the Company.
The Committee retains the ability to adjust the
underpin if events occur which cause it to determine
that the conditions are no longer appropriate and
the amendment is required so that the conditions
achieve their original purpose and are not materially
less difficult to satisfy.
Introduction of RSP.
Governance
139Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Purpose and link to strategy Operation and process Maximum opportunity Performance metrics
Key changes to last
approved policy
All-employee
share plans
Encourages Executive Directors
and employees to acquire shares
in order to increase the alignment
of interests with shareholders
over the longer term.
The Company operates a Share Incentive Plan (SIP) under which all employees,
including Executive Directors, may be awarded free shares and may purchase
shares which can be matched on up to a two for one basis. The Company’s
current practice is to operate partnership and matching shares only. If the
shares are held in a trust for at least three years and the employee does
not leave the Company during that period, then the matched shares may
be retained by the individual subject to some relief against income tax
and National Insurance contributions.
Dividends are also paid directly to participants on all SIP shares.
Shareholders have also approved a Save As You Earn Scheme (SAYE) for all
employees which is not currently operated but which might be utilised in the
future. Under the SAYE, participants (which may include Executive Directors)
may make monthly contributions over a savings period linked to the grant
of an option with an exercise price which may be at a discount of up to
20% of the market value of the underlying shares at grant.
Awards under the SIP and SAYE may be adjusted to reflect the impact
of any variation of share capital.
Under the SIP, maximum participation will be in line
with the prevailing maximum limits set by HMRC
under the relevant legislation.
Under the SAYE, maximum participation will be in line
with the prevailing maximum limits set by HMRC
under the relevant legislation.
As is typical under HMRC tax-advantaged
all-employee plans, there are no performance
conditions attached to awards.
No changes.
Shareholding
policy
To ensure that Executive Directors’
interests are aligned with those
of shareholders over a longer
time horizon.
Executive Directors are expected to accumulate and maintain a holding in
shares in the Company equivalent in value to no less than 300% of base salary.
Executive Directors are expected to retain the lower of actual shares held
at cessation and shares equal to 300% of salary for two years post-cessation.
This guideline will apply in respect of any vested shares which vest from DSBP,
LTIP and RSP awards granted after the 2020 AGM (unless the Committee
no longer considers it necessary).
Shares retained following vesting of LTIP and/or DSBP and/or RSP awards
granted after the 2020 AGM will be held in escrow to enable enforcement
of post-cessation share ownership guidelines.
Not applicable. Not applicable. No changes.
Notes to the future policy table
1. Performance measures and targets
Short- and long-term performance measures will be selected
by the Committee in order to provide a direct connection
to the Company’s strategy or key performance indicators
at the time. Relative measures will be assessed against
appropriate comparators.
Absolute measures are set following a robust budget setting
process which takes into account internal financial indicators
as well as a broader view of the market environment.
The targets for the Annual Bonus are commercially sensitive
and will be reported in the subsequent Directors’ remuneration
report. The measures applicable to the 2023/24 financial
year are set out on page 121. As referred to in the Committee
Chair’s statement, it is intended that appropriate targets
will be set for each award cycle. The awards are also subject
to an underpin under which the level of vesting may be
reduced in certain circumstances.
The Committee is of the opinion that, given the commercial
sensitivity around GPE’s business, disclosing individuals’
targets for the Annual Bonus Plan in advance would not
be in the best interests of shareholders or the Company.
Actual targets, performance achieved and awards made
will be published at the end of performance periods so
shareholders can fully assess the basis for any payouts.
2. Differences in remuneration policy for all employees
All employees of GPE are entitled to base salary and
benefits on the same basis, with quantum of awards being
set at levels commensurate with their role. All employees
participate in an employee Annual Bonus Plan, with quantum
of awards being set at levels commensurate with their role
and with performance measures, similar to the executive
scheme, based on Group performance and against personal
objectives. Senior managers will receive RSP awards with
quantum of awards being set at levels commensurate with
their role. All employees are eligible to participate in the SIP
and the SAYE on the same terms as the Executive Directors.
Employees who joined the Company before April 2002 are
members of the Company’s defined benefit pension plan,
and all other employees are eligible to join the Company’s
defined contribution pension plan and receive a contribution
of up to (currently) 15% of salary.
Directors’ remuneration policy continued
Executive Director remuneration continued
140 Great Portland Estates plc Annual Report 2023
Purpose and link to strategy Operation and process Maximum opportunity Performance metrics
Key changes to last
approved policy
All-employee
share plans
Encourages Executive Directors
and employees to acquire shares
in order to increase the alignment
of interests with shareholders
over the longer term.
The Company operates a Share Incentive Plan (SIP) under which all employees,
including Executive Directors, may be awarded free shares and may purchase
shares which can be matched on up to a two for one basis. The Company’s
current practice is to operate partnership and matching shares only. If the
shares are held in a trust for at least three years and the employee does
not leave the Company during that period, then the matched shares may
be retained by the individual subject to some relief against income tax
and National Insurance contributions.
Dividends are also paid directly to participants on all SIP shares.
Shareholders have also approved a Save As You Earn Scheme (SAYE) for all
employees which is not currently operated but which might be utilised in the
future. Under the SAYE, participants (which may include Executive Directors)
may make monthly contributions over a savings period linked to the grant
of an option with an exercise price which may be at a discount of up to
20% of the market value of the underlying shares at grant.
Awards under the SIP and SAYE may be adjusted to reflect the impact
of any variation of share capital.
Under the SIP, maximum participation will be in line
with the prevailing maximum limits set by HMRC
under the relevant legislation.
Under the SAYE, maximum participation will be in line
with the prevailing maximum limits set by HMRC
under the relevant legislation.
As is typical under HMRC tax-advantaged
all-employee plans, there are no performance
conditions attached to awards.
No changes.
Shareholding
policy
To ensure that Executive Directors’
interests are aligned with those
of shareholders over a longer
time horizon.
Executive Directors are expected to accumulate and maintain a holding in
shares in the Company equivalent in value to no less than 300% of base salary.
Executive Directors are expected to retain the lower of actual shares held
at cessation and shares equal to 300% of salary for two years post-cessation.
This guideline will apply in respect of any vested shares which vest from DSBP,
LTIP and RSP awards granted after the 2020 AGM (unless the Committee
no longer considers it necessary).
Shares retained following vesting of LTIP and/or DSBP and/or RSP awards
granted after the 2020 AGM will be held in escrow to enable enforcement
of post-cessation share ownership guidelines.
Not applicable. Not applicable. No changes.
3. Changes to remuneration policy from previous policy
The changes to previous policy have been noted in the
table above. The inclusion of caps does not represent
any aspiration.
4. Discretion
The Committee will operate the Annual Bonus Plan,
RSP (and deal with legacy LTIP awards) and DSBP awards
according to their respective rules and ancillary documents
and in accordance with the Listing Rules where relevant.
The Committee retains discretion, consistent with market
practice, in a number of regards as to the operation and
administration of these plans as noted in the policy table
and in the recruitment remuneration and payments
for loss of office sections as relevant. Any use of these
discretions would, where relevant, be explained in the
Directors’ remuneration report and may, as appropriate,
be the subject of consultations with the Company’s
major shareholders.
The all-employee tax-advantaged share plans will be
operated in accordance with HMRC guidance and their
respective rules.
In addition, the Committee has the discretion to amend
the policy with regard to minor or administrative matters
where it would be, in the opinion of the Committee,
disproportionate to seek or wait for shareholder approval.
Details of share awards granted to existing Executive
Directors are set out on page 128 of the Directors’
remuneration report. These remain eligible to vest based
on their original award terms, in line with the policy
set out in the policy table or under the authority of the
previously approved remuneration policy (as will other
legacy arrangements, including those awarded prior
to promotion to the Board).
Governance
141Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Element Purpose and link to strategy Operation and process Maximum opportunity Performance metrics
Fees Provide an appropriate
reward to attract individuals
with appropriate knowledge
and experience to review and
support the implementation
of the Company’s strategy.
The Chair of the Board
and the Executive Directors
are responsible for setting
the remuneration of the
Non-Executive Directors,
other than the Chair whose
remuneration is determined
by the Committee.
Non-Executive Directors
are paid a base fee
and additional fees for
membership or chairmanship
of Committees and for the
role of Senior Independent
Director.
Fees are usually reviewed
annually with changes
effective from 1 April.
Non-Executive Directors
do not participate in any
of the Company’s incentive
arrangements. Other
benefits include travel,
accommodation and
membership subscriptions
related to the Company’s
business. Reasonable
business-related expenses
will be reimbursed
(including any tax due
thereon).
Fees will be in line
with market rates for
Non-Executive Directors
at FTSE 250 companies.
The aggregate maximum
will be the limit approved
by shareholders in
accordance with the
Articles of Association,
which is currently
£1,000,000.
In the normal course,
the Committee would
generally consider awarding
the Chair (and the other
Directors would generally
consider awarding the
Non-Executive Directors)
an annual increase in line
with the rate of inflation
for staff generally. However,
this is not automatic and
any decisions will be taken
in the round.
The 2023/24 fee levels are
set out on page 131.
Not applicable.
Approach to recruitment remuneration
The Committee’s approach to recruitment remuneration is to pay no more than is necessary to attract appropriate
candidates to the role, and our principle is that the pay of any new recruit would be assessed following the same principles
as for the Directors and the policy previously summarised.
Executive Director recruitment
Component Policy
Base salary
and benefits
The salary level will be set taking into account relevant market data, the experience and skills of the individual,
responsibilities of the individual and the salaries paid to similar roles in comparable companies in line with the
current process undertaken by the Committee when setting the salary levels for its existing Directors. Whilst it is
not envisaged that it will be required, as provided for in the relevant regulations, the Committee reserves the right
to exceed the fixed pay limits set out in the policy table, in exceptional circumstances, to secure the appointment
of a high calibre individual.
Executive Directors shall be eligible to receive benefits in line with the Company’s benefits policy, as set out in
the remuneration policy table.
Pension Executive Directors will be able to receive a pension contribution or receive a supplement in lieu of pension
contributions in line with the Company’s pension policy as set out in the remuneration policy table.
Annual bonus Executive Directors will be eligible to participate in the Annual Bonus Plan with at least 40% of the bonus outcome
normally subject to deferral under the DSBP, as set out in the remuneration policy table. For Executive Directors
joining part way through a year, awards would be pro-rated. Different performance measures may be set initially
for the Annual Bonus Plan, taking into account the responsibilities of the individual, and the point in the financial
year that they joined.
The annual maximum potential opportunity under this plan is 150% of salary.
Long-term
incentives
Executive Directors will be eligible to participate in the RSP set out in the remuneration policy table. Awards may
be granted up to the maximum opportunity allowable under plan rules at the Committee’s discretion of 150%
of salary under the RSP. An award may be made on or shortly following an appointment assuming the Company
is not in a prohibited period.
Directors’ remuneration policy continued
Non-Executive Director remuneration
142 Great Portland Estates plc Annual Report 2023
Component Policy
Share buyouts/
replacement
awards
Awards may be granted to replace those forfeited by the Executive Director from a previous employer on taking up
the appointment where considered necessary by the Committee.
The Committee will seek to structure any replacement awards such that overall they are no more generous in
terms of quantum or vesting period than the awards due to be forfeited. Where the Company compensates new
Executive Directors in this way, it will seek to do so under the terms of the Company’s existing variable remuneration
arrangements, but may compensate on terms that are more bespoke than the existing arrangements, including awards
granted under Listing Rule 9.4.2, where the Committee considers this to be appropriate. In such instances, the Company
will disclose a full explanation of the detail and rationale for such recruitment-related compensation. In making such
awards, the Committee will seek to take into account the nature (including whether awards are cash or share-based),
vesting period and performance measures and/or conditions for any remuneration forfeited by the individual in
leaving a previous employer. Where such awards had outstanding performance or service conditions (which are not
significantly completed), the Company will generally impose equivalent conditions. In exceptional cases, the Committee
may relax those requirements where it considers this to be in the interest of the shareholders, for example through
applying a significant discount to the face value of the replacement awards.
Relocation
policies
In instances where the new Executive Director is non-UK domiciled or needs to be relocated, the Company may provide
one-off or ongoing compensation as part of the Executive Director’s relocation benefits to reflect the cost of relocation
for the Executive in cases where they are expected to spend significant time away from their country of domicile.
The level of the relocation package will be assessed on a case-by-case basis and may take into consideration any
cost of living differences, housing allowance and/or schooling.
Legacy
arrangements
Where an Executive Director is appointed from within the organisation, the normal policy of the Company is that
any legacy arrangements would be honoured in line with the original terms and conditions on a pro rata basis.
Similarly, if an Executive Director is appointed following the Company’s acquisition or merger with another company,
legacy terms and conditions on a pro rata basis would be honoured.
Non-Executive Director recruitment
Component Policy
Fees Newly appointed Non-Executive Directors will be paid fees consistent with existing Non-Executive Directors.
Service agreements and payments for loss of office
The policy of the Company is to have service contracts for Executive Directors with notice periods of one year. It is sometimes
necessary when recruiting a new Executive Director to give a service contract with an initial term of up to 18 months, in which
case a 12-month notice period may be given no earlier than six months from the start date of the contract.
Non-Executive Directors, who have letters of appointment, are subject to annual re-election under the Company’s Articles
of Association and have a notice period of three months by either party. They are not eligible for payment in lieu of notice
or any other payment on termination.
The following table sets out the dates of each of the Executive Directors’ service agreements and their unexpired term,
the dates of the Non-Executive Directors’ letters of appointment and the date on which the Non-Executive Director is
next subject to reappointment or re-election.
Executive Date of service agreement Unexpired term (months)
Toby Courtauld 18 March 2002 (amended 2017) 12
Nick Sanderson 7 June 2011 (amended 2017) 12
Dan Nicholson 30 July 2021 12
Non-Executive Date of appointment letter Date when next subject to appointment or re-election
Richard Mully 12 October 2016 6 July 2023
Nick Hampton 28 September 2016 6 July 2023
Alison Rose 4 April 2018 6 July 2023
Vicky Jarman 22 January 2020 6 July 2023
Mark Anderson 30 July 2021 6 July 2023
Emma Woods 25 January 2022 6 July 2023
Champa Magesh
1
6 June 2022 6 July 2023
1. Champa Magesh was appointed to the Board on 1 August 2022 and will be subject to election at the next AGM on 6 July 2023.
2. Alison Rose will be stepping down from the Board from the conclusion of the 2023 AGM and will not be putting herself forward for re-election.
Governance
143Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Directors’ remuneration policy continued
Executive Directors may, with the consent of the Committee, retain fees paid to them for acting as a Non-Executive
Director of a company outside the Group, except where the directorship is as a representative of the Group.
The Company’s policy on termination payments for Executive Directors is to consider the circumstances on a case-by-case basis,
taking into account the relevant contractual terms, the circumstances of the termination and any applicable duty to mitigate.
It is the Committee’s policy not to reward poor performance. The Committee will always seek to minimise the cost to the
Company whilst seeking to reflect the circumstances in place at the time. The Committee will honour Executive Directors’
contractual entitlements. Service contracts do not contain liquidated damages clauses. If a contract is to be terminated,
the Committee will determine such mitigation as it considers fair and reasonable in each case. There are no contractual
arrangements that would guarantee a pension with limited or no abatement on severance or early retirement. There is no
agreement between the Company and its Directors or employees providing for compensation for loss of office or employment
that occurs because of a takeover bid. The Company reserves the right to make additional payments where such payments
are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation),
or by way of settlement or compromise of any claim arising in connection with the termination of an Executive Director’s
office or employment. The Company may also deem it appropriate to pay on behalf of a departing Executive modest legal,
outplacement or other fees.
Contracts include a right for the Company to achieve mitigation through payment on a monthly phased basis with payments
reducing/ceasing if an alternative role is found during the balance of any notice period.
Base salary, benefits and pension
Toby Courtauld’s compensation in lieu of notice payable at the Company’s discretion is 12 months’ basic salary. Compensation
in lieu of notice to Nick Sanderson, payable at the Company’s discretion, is 12 months’ basic salary, pension allowance and
the value of benefits in kind provided in the previous year, or the actual provision of those benefits. Compensation in lieu of
notice to Dan Nicholson, payable at the Company’s discretion, is 12 months’ basic salary and the value of contractual benefits
that would have been payable during the shorter of the minimum applicable notice period and any unexpired period of notice.
In each case, the Company may elect to pay the compensation in lieu of notice in equal monthly instalments. Each individual
is under a duty to mitigate against any payment in lieu of notice by seeking alternative employment or engagement and the
Company has the right to reduce any payment in lieu of notice in given circumstances.
Approach to other remuneration payments on termination of employment and change of control
In addition to the payment of base salary, benefits and pension as set out above, the Group’s Annual Bonus Plan, LTIP, RSP,
DSBP, SIP and SAYE contain provisions for the termination of employment.
Component Good Leaver* Bad Leaver** Change of control
Annual Bonus
Plan
Where an Executive Director’s
employment is terminated after
the end of a performance year
but before the payment is made,
the Executive will be eligible for
an annual bonus award for that
performance year subject to an
assessment based on performance
achieved over the period.
Where an Executive Director’s
employment is terminated during a
performance year, a pro rata annual
bonus for the period worked in that
performance year may be payable
in relation to that year’s bonus.
Outstanding award is forfeited. An Executive Director may receive
a bonus, the amount of which will
be determined by the Committee,
taking into account such factors
as it considers relevant, including
the proportion of the elapsed
performance period at the
date of change of control and
performance to that point.
Deferred Share
Bonus Plan
(DSBP)
Awards may be retained until
the normal vesting date. In
exceptional circumstances the
Committee may accelerate
vesting at the date of cessation.
Outstanding awards lapse. In accordance with the rules of
the DSBP, outstanding awards will
normally vest in full on a change
of control.
144
Great Portland Estates plc Annual Report 2023
Component Good Leaver* Bad Leaver** Change of control
Long Term
Incentive Plan
(LTIP) and
Restricted Share
Plan (RSP)
Awards may vest at the date
of cessation of employment or
the normal vesting date (including
any applicable holding period) at
the discretion of the Committee.
Awards will vest based on the
performance achieved up to the
date of cessation/normal vesting
date at the discretion of the
Committee and be pro¬rated to
reflect the amount of time elapsed
since the award date. The Committee
retains the discretion to disregard
time when determining the level of
vesting. This would only be considered
in exceptional circumstances and,
where considered, the Committee
would take into account the
circumstances of the cessation
of employment.
Upon death, all long-term incentive
awards vest immediately in full.
Outstanding awards lapse. In accordance with the rules of the
LTIP and RSP, on a change of control,
vesting will occur immediately.
Performance against targets and/
or the underpin will be assessed
by the Committee on a change of
control. The number of shares vesting
will normally be reduced pro rata to
reflect the amount of time elapsed
from the award date until the change
of control as a proportion of the original
vesting period. The Committee retains
the discretion to disregard time when
determining the level of vesting. This
would only be considered in exceptional
circumstances and, where considered,
the Committee would take into account
the overall context of the deal and the
actual value.
Share Incentive
Plan (SIP)
All shares can be sold or transferred
out of the SIP. Free, matching and
partnership shares may be removed
tax-free. If dividend shares are taken
out of the SIP within three years of
being awarded, the dividend used
to buy them is subject to income
tax at the dividend rate.
On resignation, matched shares
held for less than three years will
be forfeited.
Free shares and matched shares
held for less than three years will be
forfeited. Partnership and matched
shares held for more than three years
but less than five years will be liable
to tax depending on time held in the
SIP. If dividend shares are taken out
of the SIP within three years of being
awarded, the dividend used to buy
them is subject to income tax at the
dividend rate.
All shares can be sold or transferred
out of the SIP. Free, matching and
partnership shares may be removed
tax-free. If dividend shares are taken
out of the SIP within three years of
being awarded, the dividend used
to buy them is subject to income
tax at the dividend rate.
Save As You Earn
Scheme (SAYE)
Options may be exercised
during a period of six months
following cessation of employment
(or 12 months following cessation
in the event of death).
Options held for less than three years
will lapse on cessation. Options held
for more than three years may be
exercised during a period of six months
following cessation, except where the
reason for cessation is misconduct.
Options may be exercised in the event
of a change of control of the Company.
* Good leavers under each of the Annual Bonus Plan, LTIP, RSP, DSBP, SIP and SAYE are those leaving under specified conditions as set out below.
Annual Bonus Plan, LTIP and RSP:
– death;
– ill-health, injury or disability (evidenced to the satisfaction of the Committee);
– redundancy;
– retirement;
– the award holder’s employing company or business being transferred out of the Group; or
– any other circumstances at the discretion of the Committee, including where appropriate (and exceptionally), resignation. The Committee will only
use its general discretion where it considers this to be appropriate, taking into account the circumstances of the termination and the performance
in the context of each plan and will provide a full explanation to shareholders of the basis of its determination. The exercise of the Committee’s
discretion under one plan will not predetermine the exercise of its discretion under another.
Under the DSBP, all leavers will be considered ‘good’, except where the employee is dismissed for misconduct.
Good leavers under the SIP and SAYE are those participants leaving in certain circumstances as under applicable legislation, including death, injury,
disability, retirement and redundancy.
** Bad leavers are those leavers who are not good leavers.
Governance
145Annual Report 2023 Great Portland Estates plc
Directors’ remuneration report continued
Directors’ remuneration policy continued
Executive Director remuneration scenarios
based on performance
The charts below set out the potential remuneration receivable
by Executive Directors for minimum (where performance is
below threshold for variable awards), on-target and maximum
performance. Potential reward opportunities are based on
the remuneration policy and applied to salaries for the year
ending 31 March 2024. It should be noted that the projected
values exclude the impact of any dividend accrual.
Chief Executive £000
801
(28%)
801
(34%)
801
(100%)
801
Fixed Annual bonus RSP
1,019
(36%)
2,839
510
(22%)
1,019
(44%)
2,330
1,019
(36%)
2,500
0
1,000
500
1,500
2,000
3,000
3,500
MaximumOn targetMinimum
801
(24%)
1,528
(46%)
3,348
1,019
(30%)
Maximum with 50%
share price increase
Chief Financial & Operating Officer £000
2,500
0
1,000
500
1,500
2,000
3,000
3,500
Fixed Annual bonus RSP
Maximum with 50%
share price increase
559
(28%)
559
(35%)
559
(100%)
559
701
(36%)
1,961
351
(22%)
701
(43%)
1,611
701
(36%)
559
(24%)
1,051
(46%)
2,311
701
(30%)
MaximumOn targetMinimum
Executive Director £000
2,500
0
1,000
500
1,500
2,000
3,000
3,500
Fixed Annual bonus RSP
Maximum with 50%
share price increase
447
(28%)
447
(34%)
447
(100%)
447
570
(36%)
1,587
285
(22%)
570
(44%)
1,302
570
(36%)
447
(24%)
855
(46%)
1,872
570
(30%)
MaximumOn targetMinimum
Consideration of remuneration of other employees
The Committee seeks to apply consistent principles of
remuneration across the organisation and takes into account
wider employee pay and conditions when determining the
remuneration of the Executive Directors. As part of the annual
pay review, the Committee receives a report setting out
changes to all employee remuneration levels and proposed
discretionary bonus awards. The Company also discusses
gender pay gap statistics alongside its diversity and
inclusion objectives. Details regarding the broad operation
of the Company’s remuneration policy and principles for
all employees and the Executive Directors can be found
on pages 116 and 122.
The Company engages with employees on remuneration
generally, including executive remuneration. As part of the
new Policy review, the Remuneration Committee Chair held
an interactive all-employee session in March 2023 to discuss
the proposed changes to the Policy. Further details regarding
employee engagement on remuneration matters can be
found on page 116. The Committee is advised of pay levels
throughout the Group and specifically approves the packages
of more senior colleagues. In considering the position, it is
advised of benchmark pay levels for most roles.
Consideration of shareholder views
When determining remuneration, the Committee takes into
account the guidelines of investor bodies and shareholder
views. The Committee is always open to feedback from
shareholders on remuneration policy and arrangements,
and commits to undertaking shareholder consultation
in advance of any significant changes to the
remuneration policy.
The proposed 2023 remuneration policy has been subject
to thorough consultation with our major shareholders and
the main proxy voting advisers.
Deliberation and process
The Committee ensures it seeks independent advice as
appropriate, and the Committee also has access to the HR
Director and General Counsel & Company Secretary without
the executives present. Consistent with good practice, any
decisions are taken without the affected individual present.
This Report will be submitted to shareholders for approval
at the AGM to be held on 6 July 2023.
Approved by the Board on 24 May 2023 and signed on
its behalf by:
Emma Woods
Chair of the Remuneration Committee
24 May 2023
146
Great Portland Estates plc Annual Report 2023
Report of the Directors
Strategic Report
The Group’s Strategic Report on pages 01 to 78 includes
the Company’s business model and strategy, the principal
risks and uncertainties facing the Group and how these
are managed and mitigated, an indication of likely future
developments in the Company and details of important
events since the year ended 31 March 2023.
The purpose of the Annual Report is to provide information
to the members of the Company, as a body. The Company,
its Directors, employees, agents or advisers do not accept
or assume responsibility to any other person to whom this
document is shown or into whose hands it may come and
any such responsibility or liability is expressly disclaimed.
The Annual Report contains certain forward-looking
statements with respect to the operations, performance
and financial condition of the Group. By their nature,
these statements involve uncertainty since future events
and circumstances can cause results and developments
to differ from those anticipated. The forward-looking
statements reflect knowledge and information available
at the date of preparation of this Annual Report. Nothing in
this Annual Report should be construed as a profit forecast.
Results and dividends for the year
The Group’s results for the year are set out on pages 152 to 178.
An interim dividend of 4.7 pence per share (2022: 4.7 pence)
was paid on 4 January 2023, and the Directors propose to
pay a final dividend of 7.9 pence per share on 10 July 2023
to shareholders on the register of members as at the close
of business on 2 June 2023. This makes a total of 12 .6 pence
per share (2022: 12.6 pence) for the year ended 31 March 2023.
Directors
Biographical details of the current Directors of the
Company are shown on pages 84 and 85. Charles Philipps
stepped down from the Board on 30 March 2023 and was
succeeded as Senior Independent Director by Nick Hampton.
Wendy Becker also served as a Director during the year
under review, stepping down from the Board on 7 July 2022.
In accordance with the UK Corporate Governance Code,
all the current Directors will retire, and those who wish
to continue to serve will offer themselves for election or
re-election at the forthcoming Annual General Meeting
(AGM). Alison Rose will be stepping down from the
Board from the conclusion of the AGM to focus on her
other commitments.
Directors’ shareholdings
The interests of the Directors of the Company (and of their
connected persons) in the shares of the Company, which
have been notified to the Company in accordance with
the UK Market Abuse Regulation, are set out in the Directors’
remuneration report on pages 129 and 131. The Directors’
remuneration report also sets out details of any changes
in those interests between 31 March 2023 and 22 May 2023.
Directors’ indemnities and insurance
On 14 September 2007, an indemnity was given by the
Company to the Directors in terms which comply with
company law. The indemnity was in force during the
year and remains in force at the date of this Report
of the Directors.
The Company maintains directors’ and officers’ liability
insurance and pension trustee liability insurance, both
of which are reviewed annually.
Directors’ powers
The powers of the Directors are contained in the Company’s
Articles of Association. These include powers, subject to
relevant legislation, to authorise the issue and buyback
of the Company’s shares by the Company, subject to
authority being given to the Directors by the shareholders
in a general meeting.
Appointment and replacement of Directors
The rules about the appointment and replacement of Directors
are contained in the Company’s Articles of Association.
Under the Articles of Association, every Director who held office
on the date seven days before the date of notice of the AGM
shall retire from office. A retiring Director shall be eligible for
re-election at the AGM, and a Director who is re-elected will
be treated as continuing in office without a break. This is in line
with the UK Corporate Governance Code, which recommends
that all Directors should be subject to annual re-election.
Changes to the Articles of Association must be approved
by the Company’s shareholders in accordance with
legislation in force from time to time.
Corporate governance statement
The information fulfilling the requirements of the corporate
governance statement can be found in this Report of the
Directors and on pages 79 to 146, all of which are incorporated
into this Report of the Directors by reference.
Political donations
It is the Company’s policy not to make political donations
or undertake any activities incurring political expenditure.
Annual General Meeting
Details of the Company’s AGM can be found in the
Notice of AGM 2023, which will be made available on
the Company’s website at www.gpe.co.uk/investors/
shareholder-information/agmgm
Governance
147Annual Report 2023 Great Portland Estates plc
Additional disclosures
Disclosures required by Schedule 7, Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations
2008 (as amended), to the extent not already disclosed
or referred to in this Report of the Directors, can be found
on the following pages, all of which are incorporated into
this Report of the Directors by reference:
Page/s
Financial instruments 159, 172 to 174
Greenhouse gas emissions,
energy consumption and
energy efficiency action
37 to 53
Engagement with suppliers,
customers and others
38, 40, 42, 43, 58 to 62
89 to 93
Research and development 01, 10, 14, 22 to 24, 26, 27
38 to 42, 45, 58 to 59
Disclosures required by the Financial Conduct Authority’s
Listing Rule 9.8.4R can be found on the following pages:
Page/s
Capitalised interest 161 and 166
Waiver of dividends 148
The Directors’ responsibilities statement is on page 150 and is
incorporated into this Report of the Directors by reference.
The ‘Other information’ found on pages 196 to 204 is also
incorporated into this Report of the Directors by reference.
Significant shareholdings
As at 31 March 2023, the Company had been notified, in
accordance with the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules (DTR 5), of the following
interests in the voting rights in its ordinary share capital:
Number of
voting rights
1
%
1
Nature of
holding
1
Norges Bank
Investment
Management
38,089,719 15.00 Direct
T. Rowe Price
Associates, Inc.
33,008,070 13.00 Indirect
BlackRock Inc. 22,925,274
2,464,078
9.03
0.97
Indirect
Financial
instruments
KKR Investment
Management LLC
13,579,569 5.35 Indirect
1. As at date of notification.
In the period from 31 March 2023 to 22 May 2023, the
Company received a further notification from T. Rowe Price
Associates, Inc. disclosing that its indirect holding had
decreased to 32,997,865 ordinary shares (12.99% of the total
voting rights in the Company).
Information provided to the Company under the Financial
Conduct Authority’s Disclosure Guidance and Transparency
Rules is publicly available via the regulatory information
service and on the Company’s website.
Share capital and control
As at 31 March 2023, the issued share capital of the Company
was 253,867,911 (2022: 253,867,911) ordinary shares of 15
5
/
19
pence each, all fully paid up and listed on the London
Stock Exchange.
At the 2022 AGM, shareholders authorised the Company to
make market purchases of up to 38,054,799 ordinary shares
of 15
5
/
19
pence each, representing 14.99% of the issued share
capital of the Company as at 26 May 2022, such authority
to expire at the earlier of the conclusion of the 2023 AGM
or 1 October 2023. No shares were purchased under that
authority during the financial year. The Company is seeking
to renew the authority at the forthcoming AGM, within the
limits set out in the Company’s Notice of AGM 2023.
There are no restrictions on transfer or limitations on the
holding of the ordinary shares. None of the shares carry
any special rights with regard to the control of the Company.
There are no known arrangements under which financial
rights are held by a person other than the holder of the
shares and no known agreements on restrictions on share
transfers and voting rights. The Great Portland Estates plc
LTIP Employee Share Trust (the Trust) is an employee share
scheme which holds ordinary shares in the Company on trust
for the benefit of employees within the Group. The Trustee of
the Trust has the power to exercise all the rights and powers
(including rights with regard to control of the Company)
incidental to, and to generally act in relation to, the ordinary
shares subject to the Trust in such manner as the Trustee in
its absolute discretion thinks fit as if it were absolutely entitled
to those ordinary shares. The Trustee has waived the right
to receive dividends on the shares held in the Company.
Change of control
The Company has a number of unsecured borrowing
facilities provided by various lenders. These facilities generally
include provisions that may require any outstanding borrowings
to be repaid or the alteration or termination of the facilities
upon the occurrence of a change of control of the Company.
The Company’s Long Term Incentive Plan, Deferred Share
Bonus Plan and Annual Bonus Plan contain provisions relating
to the vesting of awards in the event of a change of control.
Report of the Directors continued
148 Great Portland Estates plc Annual Report 2023
Going concern
The Group’s business activities, together with the factors
affecting its performance, the impact of recent macro-
economic uncertainty and weak UK growth, are set out in
the Strategic Report on pages 01 to 78. Details of the finances
of the Group, including its strong liquidity position, attractively
priced borrowing facilities and favourable debt maturity
profile, are set out in ‘Our financial results’ on pages 30 to 33,
including ‘Our capital strength’ on page 32 and in notes 8,
15 and 16 of the financial statements on pages 156 to 178.
The Directors have reviewed the current and projected
financial position of the Group, making reasonable
assumptions about future trading performance, with
particular focus on macro-economic conditions in which
the Group is operating, including weak UK growth, the
ongoing economic disruption from geopolitical tensions,
a high inflationary environment and elevated interest rates.
This included a going concern scenario to consider the
impact of market disruption on the Group’s cash balances,
its capital commitments, its debt maturity profile, including
undrawn facilities and the long-term nature of customer
leases. The Directors also conducted extensive stress testing,
including sensitising significant increases in the cost of
development to meet sustainability requirements as detailed
further in the viability statement. Further information on
the assumptions contained in the going concern scenario
is on page 78. On the basis of this review, and after making
due enquiries, the Directors have a reasonable expectation
that the Company and the Group have adequate resources
to continue in operational existence for a period of at
least 12 months from the date of approval of the financial
statements. Accordingly, they continue to adopt the
going concern basis in preparing the Annual Report and
financial statements.
Viability statement
The Company’s viability statement is on page 78.
Statement as to disclosure of information
to the auditor
So far as the Directors who held office at the date
of approval of this Report of the Directors are aware,
there is no relevant audit information of which the auditor
is unaware and each Director has taken all steps that he
or she ought to have taken as a Director to make himself
or herself aware of any relevant audit information and
to establish that the auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act 2006.
By order of the Board
Darren Lennark
General Counsel & Company Secretary
Great Portland Estates plc
Company number: 596137
24 May 2023
Governance
149Annual Report 2023 Great Portland Estates plc
Directors’ responsibilities statement
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
are required to prepare the Group financial statements in
conformity with the requirements of the Companies Act 2006
and UK adopted international accounting standards, and have
elected to prepare the parent company financial statements
in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards
and applicable law), including FRS 101 ‘Reduced Disclosure
Framework’. Under company law, the Directors must not
approve the accounts unless they are satisfied that they give
a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for that period.
In preparing the parent company financial statements,
the Directors are required to:
– select suitable accounting policies and then apply
them consistently;
– make judgements and accounting estimates that are
reasonable and prudent;
– state whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements; and
– prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that directors:
– properly select and apply accounting policies;
– present information, including accounting policies, in
a manner that provides relevant, reliable, comparable
and understandable information;
– provide additional disclosures when compliance with
the specific requirements in IFRSs is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the entity’s financial
position and financial performance; and
– make an assessment of the Company’s ability to continue
as a going concern.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
– the financial statements, prepared in accordance with
the relevant financial reporting framework, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole;
– the Strategic Report includes a fair review of the
development and performance of the business and the
position of the Company and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face; and
– the Annual Report and financial statements, taken as
a whole, are fair, balanced and understandable and
provide the information necessary for shareholders
to assess the Company’s position, performance,
business model and strategy.
This responsibility statement was approved by the Board
of Directors and is signed on its behalf by:
Toby Courtauld Nick Sanderson
Chief Executive Chief Financial & Operating Officer
24 May 2023 24 May 2023
150
Great Portland Estates plc Annual Report 2023
In this section:
152 Group income statement
152 Group statement of comprehensive income
153 Group balance sheet
154 Group statement of cash flows
155 Group statement of changes in equity
156 Notes forming part of the
Group financial statements
179 Independent auditor’s report
189 Company balance sheet
190 Company statement of changes in equity
191 Notes forming part of the
Company financial statements
Financial
statements
GPE Future London Photography
Award Winner
www.nicofroehlich.com
#gpephotographyaward
Financial statements
151Annual Report 2023 Great Portland Estates plc
Notes
2023
£m
2022
£m
Revenue 2 91.2 84.2
Cost of sales 3 (32.2 ) (30.1 )
Administration expenses 4 (38.3 ) (35.0 )
Expected credit losses 13 (0.8 ) (4.1 )
Development management losses (0.1 ) (0.4 )
Operating profit before (deficit)/surplus from property and results of joint ventures 19.8 14.6
(Deficit)/surplus from investment property 9 (145.0 ) 107.9
Surplus on revaluation of other investments 12 0.1 –
Share of results of joint ventures 10 (33.4 ) 45.9
Operating (loss)/profit (158.5 ) 168.4
Finance income 5 6.0 7.4
Finance costs 6 (11.5 ) (9.1 )
(Loss)/profit before tax (164.0 ) 166.7
Tax 7 0.1 0.5
(Loss)/profit for the year (163.9 ) 167.2
Basic (loss)/earnings per share 8 (64.8 p) 66.1 p
Diluted (loss)/earnings per share 8 (64.8 p) 66.0 p
Basic EPRA earnings per share 8 9.5 p 10.8 p
Diluted EPRA earnings per share 8 9.5 p 10.8 p
All results are derived from continuing operations in the UK and are attributable to ordinary equity holders.
Group statement of comprehensive income
For the year ended 31 March 2023
Notes
2023
£m
2022
£m
(Loss)/profit for the year (163.9 ) 167.2
Items that will not be reclassified subsequently to profit and loss
Actuarial gain on defined benefit scheme 25 0.3 2.6
Deferred tax on actuarial gain on defined benefit scheme 7 (0.1 ) (0.5 )
Total comprehensive (expense)/income for the year (163.7 ) 169.3
Group income statement
For the year ended 31 March 2023
152 Great Portland Estates plc Annual Report 2023
Notes
2023
£m
Restated*
2022
£m
Non-current assets
Investment property 9 1,922.2 2,144.4
Investment in joint ventures 10 538.8 582.8
Property, plant and equipment 11 3.5 5.0
Pension asset 25 4.1 3.5
Other investments 12 1.8 1.0
Current assets
Trade and other receivables 13 15.8 21.1
Cash and cash equivalents 21 19.4 16.7
Total assets 2,505.6 2,774.5
Current liabilities
Interest-bearing loans and borrowings – (0.2 )
Trade and other payables 14 (56.8 ) (71.9 )
(56.8 ) (72.1 )
Non-current liabilities
Interest-bearing loans and borrowings 15 (458.5 ) (531.0 )
Head lease obligations 17 (66.7 ) (55.6 )
Occupational lease obligations 18 (2.0 ) (2.9 )
Provisions in respect of warranties on sold buildings (3.0 ) –
Deferred tax 7 – –
(530.2 ) (589.5 )
Total liabilities (587.0 ) (661.6 )
Net assets 1,918.6 2,112.9
Equity
Share capital 19 38.7 38.7
Share premium account 46.0 46.0
Capital redemption reserve 326.7 326.7
Retained earnings 1,504.4 1,697.9
Investment in own shares 20 2.8 3.6
Total equity 1,918.6 2,112.9
Basic net assets per share (diluted) 8 757 p 835 p
EPRA NTA (diluted) 8 757 p 835 p
* Cash and cash equivalents and monies held in trade and other payables have been restated as at 31 March 2022 following clarification
by IFRIC on classification of funds with externally imposed restrictions, see note 1 for further details.
Group balance sheet
At 31 March 2023
Financial statements
153Annual Report 2023 Great Portland Estates plc
Notes
2023
£m
Restated*
2022
£m
Operating activities
Operating (loss)/profit (158.5 ) 168.4
Adjustments for non-cash items 22 175.1 (149.7 )
Decrease in receivables 5.3 0.5
(Decrease)/increase in payables (6.1 ) 3.1
Cash generated from operations 15.8 22.3
Interest paid (17.6 ) (13.9 )
Interest received 0.1 0.1
Tax repaid – 0.4
Cash flows from operating activities (1.7 ) 8.9
Investing activities
Distributions from joint ventures 7.5 7.3
Funds from joint ventures 9.0 89.5
Purchase of other investments (0.7 ) –
Purchase and development of property (120.4 ) (120.6 )
Purchase of plant and equipment (0.2 ) (0.3 )
Sale of properties 217.4 –
Cash flows from/(used in) investing activities 112.6 (24.1 )
Financing activities
Revolving credit facility repaid 15 (387.0 ) (202.5 )
Revolving credit facility drawn 15 314.0 244.5
Payment of lease obligations (3.3 ) (3.0 )
Dividends paid 23 (31.9 ) (32.7 )
Cash flows (used in)/from financing activities (108.2 ) 6.3
Net increase/(decrease) in cash and cash equivalents 2.7 (8.9 )
Cash and cash equivalents at 1 April 16.7 25.6
Cash and cash equivalents at 31 March 19.4 16.7
* Cash and cash equivalents and payables in respect of customer deposits have been restated as at 1 April 2021 and 31 March 2022 following clarification
by IFRIC on classification of funds with externally imposed restrictions. As a result, the previously reported cash flows from operating activities for the year
ended 31 March 2022 increased from £6.7m to £8.9m There was no impact on the other components of the statement of cash flows for the year ended
31 March 2022. See note 1 for further details.
Group statement of cash flows
For the year ended 31 March 2023
154 Great Portland Estates plc Annual Report 2023
Group statement of changes in equity
For the year ended 31 March 2023
Notes
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Investment
in own
shares
£m
Total
equity
£m
Total equity at 1 April 2022 38.7 46.0 326.7 1,697.9 3.6 2,112.9
Loss for the year – – – (163.9 ) – (163.9 )
Actuarial gain on defined benefit scheme 25 – – – 0.3 – 0.3
Deferred tax on defined benefit scheme – – – (0.1 ) – (0.1 )
Total comprehensive expense for the year – – – (163.7 ) – (163.7 )
Employee Incentive plan charges 20 – – – – 1.3 1.3
Dividends to shareholders 23 – – – (31.9 ) – (31.9 )
Transfer to retained earnings 20 – – – 2.1 (2.1 ) –
Total equity at 31 March 2023 38.7 46.0 326.7 1,504.4 2.8 1,918.6
Notes
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Investment
in own
shares
£m
Total
equity
£m
Total equity at 1 April 2021 38.7 46.0 326.7 1,560.0 0.2 1,971.6
Profit for the year – – – 167.2 – 167.2
Actuarial gain on defined benefit scheme 25 – – – 2.6 – 2.6
Deferred tax on defined benefit scheme – – – (0.5 ) – (0.5 )
Total comprehensive income for the year – – – 169.3 – 169.3
Employee Long-Term Incentive Plan charge 20 – – – – 3.9 3.9
Dividends to shareholders 23 – – – (31.9 ) – (31.9 )
Transfer to retained earnings 20 – – – 0.5 (0.5 ) –
Total equity at 31 March 2022 38.7 46.0 326.7 1,697.9 3.6 2,112.9
Group statement of changes in equity
For the year ended 31 March 2022
Financial statements
155Annual Report 2023 Great Portland Estates plc
156 Great Portland Estates plc Annual Report 2023
Financial statements
157Annual Report 2023 Great Portland Estates plc
158 Great Portland Estates plc Annual Report 2023
Financial statements
159Annual Report 2023 Great Portland Estates plc
160 Great Portland Estates plc Annual Report 2023
Financial statements
161Annual Report 2023 Great Portland Estates plc
162 Great Portland Estates plc Annual Report 2023
Financial statements
163Annual Report 2023 Great Portland Estates plc
164 Great Portland Estates plc Annual Report 2023
Financial statements
165Annual Report 2023 Great Portland Estates plc
Notes forming part of the Group financial statements continued
166 Great Portland Estates plc Annual Report 2023
Financial statements
167Annual Report 2023 Great Portland Estates plc
168 Great Portland Estates plc Annual Report 2023
Financial statements
169Annual Report 2023 Great Portland Estates plc
170 Great Portland Estates plc Annual Report 2023
Financial statements
171Annual Report 2023 Great Portland Estates plc
172 Great Portland Estates plc Annual Report 2023
Financial statements
173Annual Report 2023 Great Portland Estates plc
174 Great Portland Estates plc Annual Report 2023
Financial statements
175Annual Report 2023 Great Portland Estates plc
Notes forming part of the Group financial statements continued
176 Great Portland Estates plc Annual Report 2023
Financial statements
177Annual Report 2023 Great Portland Estates plc
Notes forming part of the Group financial statements continued
178 Great Portland Estates plc Annual Report 2023
Independent auditor’s report
to the members of Great Portland Estates plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
– the financial statements of Great Portland Estates plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give a true
and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2023 and of the Group’s loss
for the year then ended;
– the Group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
– the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
– the Group income statement;
– the Group statement of comprehensive income;
– the Group and Parent Company balance sheets;
– the Group and Parent Company statements of changes in equity;
– the Group cash flow statement; and
– the related notes 1 to 26 for the Group financial statements and i to vi for the Parent Company financial statements.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable
law and United Kingdom adopted international accounting standards. The financial reporting framework that has been applied
in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied
to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services provided to the Group and Parent Company for the year are disclosed in note 4 to the financial statements.
We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the
Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters The key audit matter that we identified in the current year was the valuation of the property portfolio.
The key audit matter has a similar level of risk as in the prior year.
Materiality The materiality that we used for the Group financial statements was £26.0m which was determined
based on approximately 1% of net assets.
Scoping Our Group audit scope comprises the audit of Great Portland Estates plc as well as the Group’s
subsidiaries and joint ventures.
The Group audit team performs full scope audits of all of the subsidiaries and joint ventures which are
subject to statutory audit requirements. Those entities not subject to an underlying statutory audit
are audited based on component materiality. 100% of Group revenue, profit before tax and net assets
are covered by auditing these entities.
Significant changes
in our approach
There are no significant changes in our audit approach for the current year.
Financial statements
179Annual Report 2023 Great Portland Estates plc
Independent auditor’s report continued
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going
concern basis of accounting included:
– Obtaining an understanding of the relevant controls relating to the going concern process;
– Understanding the financing facilities available to the Group and Parent Company, including the associated covenants;
– Assessing all bank covenants and facility expiry dates, and recalculating current and forecast covenant compliance;
– Obtaining an understanding of the going concern forecast prepared by management and approved by the board
including changes from the FY22 scenario as well as evaluating any plans for future actions;
– Testing the mathematical accuracy of the model used to prepare the going concern forecast;
– Challenging the key assumptions, including forecast valuation movements, rental income and financing cash flows,
on which the assessment is based, and evaluating the consistency of assumptions with other assumptions within the
going concern assessment as well as related assumptions used in other areas;
– Evaluating management’s assessment of the impact of climate change within the forecast, including consideration of the
forecast expenditure to meet the future required energy performance standards and the potential impact on valuations
when considering forecast covenant compliance assessment;
– Assessing the level of headroom in the forecast (with regard to both liquidity and debt covenant tests);
– Assessing the outcome of the reverse stress testing;
– Assessing whether any additional facts or information has become available since the date management made its
assessment; and
– Evaluating the appropriateness of the going concern disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
180 Great Portland Estates plc Annual Report 2023
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
5.1 Valuation of property portfolio
Key audit matter
description
The Group owns a portfolio of property assets in central London. The portfolio is valued
at £2,380 million (2022: £2,647 million), comprising £1,855 million of wholly owned properties
(2022: £2,089 million), and the Group’s share of Joint Venture properties of £1,049 million
(2022: £1,118 million) being £524.5 million (2022: £559 million), as at 31 March 2023.
The valuation of the investment and development property portfolio is a key source of estimation
uncertainty and includes a number of assumptions including capitalisation yields and estimated
rental values as well as forecast cost to complete, the level of developer’s profit and financing
costs in relation to development properties. Due to the high level of estimation required in
determining the valuation, we have determined that there is a potential fraud risk in the balance.
The Group uses a professionally qualified external valuer to fair value the Group’s wholly-owned
portfolio bi-annually and the joint venture portfolio quarterly. The valuer is engaged by the
directors and performs their work in accordance with the Royal Institution of Chartered Surveyors
(‘RICS’) Valuation – Professional Standards.
In addition to this, and consistent with the market conditions observed in the prior year,
there continued to be a higher level of estimation associated with certain asset valuations,
notably those with a significant retail element, those held under short leaseholds and those
where the Group is increasing their flex offering.
Through our risk assessment procedures, we have identified the valuation of the property portfolio
as the area on which climate change would have the greatest impact, specifically the capital
expenditure that will be required to bring buildings up to required energy efficiency standards,
and the valuer’s approach to including future capital expenditure relating to climate change
in the valuation.
Please see key source of estimation uncertainty on page 156, accounting policy on pages 156 to 159,
note 9 to the financial statements and discussion in the report of the Audit Committee on page 108.
Financial statements
181Annual Report 2023 Great Portland Estates plc
Independent auditor’s report continued
How the scope
of our audit
responded to the
key audit matter
Our procedures in relation to the valuation of property portfolio involved the following:
Understanding of the process and relevant controls
We inquired and gained an understanding of management’s processes and controls
relating to the valuation estimate and the oversight and governance of those processes.
We met with key management to enhance our knowledge of the portfolio and to enable
us to identify specific key assumptions for certain properties including property vacancies,
leases nearing maturity or break clauses, and significant ongoing tenant negotiations
with existing and prospective tenants.
Data provided to the valuer
We assessed management’s process for providing data to the external valuer and the process
for evaluating the output.
We tested the integrity of a sample of the data provided to the external valuer. This included
tracing a sample of information provided to the external valuer to underlying lease agreements,
and for development properties, testing costs to complete through reviewing the movement in
the year and agreeing a sample of accruals to appropriate support.
We assessed the Group’s development appraisal process through meeting with project managers,
testing management’s process to forecast costs to complete and inspecting commitments
of key developments.
External valuation
We assessed the competence, capability and objectivity of the external valuer.
We obtained the external valuation reports, and agreed these to the financial statements. We met
with the external valuer to discuss the results of their work on a sample of properties. With the
assistance of an expert member of the audit team, who is a chartered surveyor, we met with the
external valuer and discussed and challenged the valuation process, performance of the portfolio
and significant judgements and assumptions applied in their valuation model, including yields,
estimated rental values, occupancy rates, lease incentives and break clauses. Our challenge
included benchmarking the key assumptions to external market data and comparable property
transactions, in particular the yield.
We challenged management and the valuer in relation to assumptions made about climate change,
in particular the capital expenditure that will be required to bring buildings up to required energy
efficiency standards. In addition, we challenged the valuer’s approach to including future capital
expenditure in relation to climate change in the valuation and whether this was reasonable.
We assessed the valuation methodology being used and considered any departures from the
Red Book guidance. We have also tested the integrity of the model used by the external valuer.
We compared the property specific assumptions made to assess whether there is consistency
within the portfolio as well as consistency with related assumptions used in other estimates.
Disclosures
We assessed the appropriateness of the disclosures included in the financial statements and
considered if the specific disclosures in relation to the estimate are considered reasonable.
Key observations We considered the assumptions applied in arriving at the fair value of the Group’s investment
and development property portfolio to be reasonable and the valuations to be suitable for
inclusion in the financial statements at 31 March 2023.
5. Key audit matters continued
182 Great Portland Estates plc Annual Report 2023
6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Parent company financial statements
Materiality £26.0 million (2022: £29.0 million) £16.1 million (2022: £17.9 million)
Basis for
determining
materiality
We determined materiality for the Group
based on approximately 1% of net assets
(2022: approximately 1% of net assets).
We determined materiality for the Parent
Company based on 3% of net assets
(2022: 3% of net assets).
Rationale for
the benchmark
applied
We consider net assets to be a critical
financial performance measure for the
Group on the basis that it is a key metric
used by management, investors, analysts
and lenders.
We consider net assets to be a critical financial
performance measure on the basis that the Parent
Company holds all the investments therefore making
the balance sheet the relevant primary statement
for management and lenders.
In addition to net assets, we consider EPRA earnings to be a critical financial performance measure for the Group and we
applied a lower threshold of £1.2 million (2022: £1.4 million) based on 5% of EPRA earnings (2022: 5%) for testing of all balances
impacting this financial performance measure.
Performance measures (£m)
Net Assets Group materiality
Group materiality
£26m
Audit Committee
reporting threshold
£1m
Highest component
materiality
£23m
Net Assets
£1,918.6m
6.2 Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements Parent company financial statements
Performance
materiality
70% (2022: 70%) of Group materiality 70% (2022: 70%) of Parent Company materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the following factors:
– our risk assessment, including our assessment of the Group’s overall control environment
and that we consider it appropriate to rely on controls over a number of business processes; and
– our past experience of the audit, which has indicated a low number of corrected and uncorrected
misstatements identified in prior periods.
6.3 Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £1.0 million
(2022: £1.0 million), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation
of the financial statements.
Financial statements
183Annual Report 2023 Great Portland Estates plc
Independent auditor’s report continued
7. An overview of the scope of our audit
7.1 Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls,
and assessing the risks of material misstatement at the Group level.
One audit team, led by the Senior Statutory Auditor, audits the Group. The audit is performed centrally, as the books and records
for each entity within the Group are maintained at head office.
We have also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there
were no significant risks of material misstatement of the aggregated financial information.
We perform full scope audits for all of the Group’s subsidiaries and joint ventures which are subject to statutory audit requirements
at company specific materiality levels which are lower than Group materiality, these materiality levels range from £61,000
to £23.4 million (2022: £2,000 to £26 million). Those entities not subject to an underlying statutory audit are audited based on
component materiality. Our audit scope covers 100% (2022: 100%) of the Group’s revenue and loss (2022: profit) before tax
and 100% (2022: 100%) of net assets.
7.2 Our consideration of the control environment
Working with our IT specialists, we obtained an understanding of the general IT control environment.
From our understanding of the entity and after testing relevant controls, we relied on controls in performing our audit of:
– Rental income;
– Operating expenses;
– Payroll;
– Pension assets;
– Capital expenditure; and
– Service charge and property expenditure.
There were no areas where we had planned to rely on controls, other than the balances above.
In addition, we have obtained an understanding of the relevant controls such as those relating to the financial reporting cycle,
and those in relation to our key audit matter.
7.3. Our consideration of climate-related risks
As part of our audit we have made enquiries of management to understand the process they have adopted to assess the
potential impact of climate change on the financial statements. Management consider climate change to be a principal
risk within the business which particularly impacts the cost of retrofitting buildings to improve their sustainability credentials
and comply with future regulations, the ability to deliver new buildings, and the risk that they are left with a stranded asset.
These risks are consistent with those identified through our own risk assessment process.
As part of our identification of key audit matters, we therefore assessed there to be an element of risk in relation to climate
change as part of the valuation of the property portfolio.
As detailed in our procedures in section 5.1 above, we challenged the valuer and management as to the assumptions included,
and considered their reasonableness with the assistance of our real estate specialists. We have reviewed the disclosures in
the principal risk section and Note 9 of the financial statements and concur that they appropriately disclose the current risk
that management has identified.
184 Great Portland Estates plc Annual Report 2023
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and
our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1 Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
– the nature of the industry and sector, control environment and business performance including the design of the Group’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
– the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error;
– results of our enquiries of management, internal audit, the directors and the Audit Committee about their own identification
and assessment of the risks of irregularities, including those that are specific to the Group’s sector;
– any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances
of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
– the matters discussed among the audit engagement team and relevant internal specialists, including tax, IT and real estate
valuation specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
Financial statements
185Annual Report 2023 Great Portland Estates plc
Independent auditor’s report continued
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for
fraud and identified the greatest potential for fraud in the valuation of the property portfolio. In common with all audits
under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules as well as
relevant provisions of tax legislation, including the REIT rules.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements
but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty, most notably
health and safety regulations.
11.2 Audit response to risks identified
As a result of performing the above, we identified valuation of the property portfolio as a key audit matter related to
the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes
the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
– enquiring of management, the Audit Committee and external legal counsel concerning actual and potential litigation
and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
– reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing
correspondence with HMRC; and
– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias;
and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in
the course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud continued
186 Great Portland Estates plc Annual Report 2023
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of
the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
– the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting
and any material uncertainties identified set out on page 149;
– the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why
the period is appropriate set out on page 78;
– the directors’ statement on fair, balanced and understandable set out on page 150;
– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 64;
– the section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 106; and
– the section describing the work of the audit committee set out on pages 107 to 113.
14. Matters on which we are required to report by exception
14.1 Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
– the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2 Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration
have not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1 Auditor tenure
Following the recommendation of the audit committee, we were appointed by the shareholders on 15 July 2003 to audit the
financial statements for the year ending 31 March 2004 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the firm is 20 years, covering the years ending 31 March 2004
to 31 March 2023. The year ended 31 March 2023 will be the last year of our appointment as auditor.
15.2 Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance
with ISAs (UK).
Financial statements
187Annual Report 2023 Great Portland Estates plc
Independent auditor’s report continued
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these financial
statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National
Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s
report provides no assurance over whether the annual financial report has been prepared using the single electronic format
specified in the ESEF RTS.
Judith Tacon
FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
24 May 2023
188
Great Portland Estates plc Annual Report 2023
Notes
2023
£m
2022
£m
Non-current assets
Fixed asset investments iii 1,240.9 1,243.2
Amounts owed by subsidiary undertakings 548.4 497.2
Amounts owed by joint ventures 214.4 217.5
2,003.7 1,957.9
Current assets
Other debtors 1.3 2.1
Deferred tax vi 1.2 0.7
Cash at bank and short-term deposits 9.2 7.9
11.7 10.7
Total assets 2,015.4 1,968.6
Current liabilities iv (1,023.2) (848.3)
Non-current liabilities
Interest-bearing loans and borrowings v (458.5) (531.0)
(458.5) (531.0)
Total liabilities (1,481.7) (1,379.3)
Net assets 533.7 589.3
Capital and reserves
Share capital 19 38.7 38.7
Share premium account 46.0 46.0
Capital redemption reserve 326.7 326.7
Retained earnings 119.5 174.3
Investment in own shares 20 2.8 3.6
Shareholders’ funds 533.7 589.3
Notes: The loss within the Company financial statements was £25.0 million (2022: £20.7 million). References in roman numerals refer
to the notes to the Company financial statements, references in numbers refer to the notes to the Group financial statements.
The financial statements of Great Portland Estates plc (registered number: 00596137) were approved by the Board on
24 May 2023 and signed on its behalf by:
Toby Courtauld Nick Sanderson
Chief Executive Chief Financial & Operating Officer
Company balance sheet
At 31 March 2023
Financial statements
189Annual Report 2023 Great Portland Estates plc
Notes
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Investment
in own
shares
£m
Total
equity
£m
Total equity at 1 April 2022 38.7 46.0 326.7 174.3 3.6 589.3
Loss for the year and total
comprehensive expense – – – (25.0) – (25.0)
Dividends to shareholders 23 – – – (31.9) – (31.9)
Employee Long-Term Incentive Plan charge 20 – – – – 1.3 1.3
Transfer to retained earnings 20 – – – 2.1 (2.1) –
Total equity at 31 March 2023 38.7 46.0 326.7 119.5 2.8 533.7
At 31 March 2023, the Company had realised profits available for distribution in excess of £108 million.
Company statement of changes in equity
For the year ended 31 March 2022
Notes
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Investment
in own
shares
£m
Total
equity
£m
Total equity at 1 April 2021 38.7 46.0 326.7 226.4 0.2 638.0
Loss for the year and total
comprehensive expense – – – (20.7) – (20.7)
Dividends to shareholders 23 – – – (31.9) – (31.9)
Employee Long-Term Incentive Plan charge 20 – – – – 3.9 3.9
Transfer to retained earnings 20 – – – 0.5 (0.5) –
Total equity at 31 March 2022 38.7 46.0 326.7 174.3 3.6 589.3
Company statement of changes in equity
For the year ended 31 March 2023
190 Great Portland Estates plc Annual Report 2023
Notes forming part of the Company financial statements
i Accounting policies
Accounting convention
Great Portland Estates plc is a public company limited by shares incorporated and domiciled in the United Kingdom
(England and Wales). The address of the registered office is given on page 202. The financial statements have been prepared
on the historical cost basis except for the remeasurement of certain financial instruments to fair value. Historical cost is
generally based on the fair value of the consideration given in exchange for the goods and services. There were no significant
judgements made or critical estimates applied in the preparation of the financial statements.
Disclosure exemptions adopted
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets
the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council.
Accordingly, the financial statements have therefore been prepared in accordance with FRS 101 (Financial Reporting Standard
101) Reduced Disclosure Framework as issued by the Financial Reporting Council incorporating the Amendments to FRS 101
issued by the FRC in July 2015 and July 2016.
In preparing these financial statements, Great Portland Estates plc has taken advantage of all disclosure exemptions conferred
by FRS 101. Therefore these financial statements do not include:
– certain comparative information as otherwise required by EU endorsed IFRS;
– certain disclosures regarding the Company’s capital;
– a statement of cash flows;
– certain disclosures in respect of financial instruments;
– the effect of future accounting standards not yet adopted; and
– disclosure of related party transactions with wholly-owned members of the Group.
The above disclosure exemptions have been adopted because equivalent disclosures are included in the consolidated Group
accounts into which Great Portland Estates plc is consolidated.
Subsidiary undertakings and joint ventures
The Company is a holding and financing company for the Great Portland Estates plc Group. Shares in subsidiary undertakings
and joint ventures are carried at amounts equal to their original cost less any provision for impairment.
Amounts owed by subsidiary undertakings and joint ventures are stated at amortised cost including a provision for expected
credit losses. For the purposes of impairment assessment, amounts to subsidiary undertakings and joint ventures are considered
low credit risk and, therefore, the Company measures the provision at an amount equal to 12-month expected credit losses.
Provision for expected credit losses in the current year is immaterial.
Other
Accounting policies for share-based payments, other investment, deferred tax and financial instruments are the same as those
of the Group and are set out on pages 156 to 159.
The Company participates in a Group defined benefit scheme which is the legal responsibility of Great Portland Estates Services
Limited as the sponsoring employer. There is no contractual agreement or stated policy for charging the net defined benefit
cost. In accordance with IAS 19 (Revised 2011), the Company accounts for the contributions to the scheme as if it were a defined
contribution scheme. Details of the Group’s pension plan can be found on pages 177 to 178.
The auditor’s remuneration for audit and other services is disclosed in note 4 to the Group accounts.
ii Profit attributable to members of the parent undertaking
As permitted by section 408 of the Companies Act 2006, the Company has not presented its own profit and loss account.
The loss dealt within the financial statements of the Company was £25.0 million (2022: £20.7 million). The employees of the
Company are the Directors and the Company Secretary. Full disclosure of the Directors’ remuneration can be found on
pages 114 to 146.
Financial statements
191Annual Report 2023 Great Portland Estates plc
Notes forming part of the Company financial statements continued
iii Fixed asset investments
Investment in
joint ventures
£m
Shares in
subsidiary
undertakings
£m
Total
£m
At 31 March 2022 0.2 1,243.0 1,243.2
Additions – – –
Impairment (0.1) (2.2) (2.3)
31 March 2023 0.1 1,240.8 1,240.9
Shares in subsidiary undertakings and joint ventures are carried at cost less any provision for impairment. The historical cost
of the shares in subsidiary undertakings and joint ventures at 31 March 2023 was £1,240.9 million (2022: £1,243.2 million).
The subsidiaries of the Company at 31 March 2023 were:
Direct subsidiaries
The Company has a 100% interest in the ordinary share capital of the following entities:
Principal activity Principal activity
Great Portland Estates
Services Limited
Property management G.P.E. (St Thomas Street) Limited Property investment
Collin Estates Limited* Property investment J.L.P. Investment Company Limited Property investment
Courtana Investments Limited Property investment Knighton Estates Limited Property investment
G.P.E. (Bermondsey Street) Limited* Property investment Pontsarn Investments Limited Property investment
73/77 Oxford Street Limited Property investment Portman Square Properties
Holdings Limited
Holding company
GPE (Brook Street) Limited* Property investment GPE Pension Trustee Limited Corporate trustee
GPE (GHS) Limited* Property investment G.P.E. (Marcol House) Limited Holding company
Gresse Street Limited* Property investment G.P.E. (Rathbone Place 1) Limited Property investment
GPE (Dufour’s Place) Limited* Property investment GPE St Andrew Street Limited* Property investment
G.P.E. Construction Limited* Development
management
G.P.E. (Rathbone Place 2) Limited Property investment
The Rathbone Place Partnership
(G.P. 1) Limited
Property investment G.P.E. (Rathbone Place 3) Limited Property investment
* Great Portland Estates plc has guaranteed the liabilities of these subsidiaries under section 479A and C of the Companies Act 2006 (as amended).
As such, these subsidiaries will take advantage of the audit exemption set out within section 479A for the year ended 31 March 2023.
192 Great Portland Estates plc Annual Report 2023
iii Fixed asset investments continued
Indirect subsidiaries
Principal activity Principal activity
The Rathbone Place Partnership
(G.P. 2) Limited
Holding company Portman Square Properties Limited Property investment
The Rathbone Place
Limited Partnership**
Property investment G.P.E. (Newman Street) Limited Property investment
Rathbone Square No. 1 Limited Property investment Rathbone Square No.2 Limited Property investment
The Newman Street Unit Trust Property investment Marcol House Jersey Limited Property investment
** The Group has taken advantage of the exemption, which is conferred by The Partnerships (Accounts) Regulations 2008, for preparing financial statements
for The Rathbone Place Limited Partnership.
Directly held joint venture entities
Principal activity Principal activity
The Great Victoria Partnership
(G.P.) Limited
Property investment The Great Victoria Partnership
(G.P.) (No. 2) Limited
Property investment
Great Ropemaker Partnership
(G.P.) Limited
Property investment GHS (GP) Limited Property investment
Indirectly held joint venture entities
Principal activity Principal activity
Great Victoria Property Limited Property investment The Great Victoria Partnership Property investment
The Great Victoria Partnership (No. 2) Property investment Great Victoria Property (No. 2) Limited Property investment
Great Ropemaker Property Limited Property investment The Great Ropemaker Partnership Property investment
Great Ropemaker Property
(Nominee 1) Limited
Property investment Great Ropemaker Property
(Nominee 2) Limited
Property investment
The GHS Limited Partnership Property investment GPE (Hanover Square) Limited Property investment
14 Brook Street Management
Company Limited
Property investment GHS (Nominee) Limited Property investment
All of the above companies are registered at 33 Cavendish Square, London, W1G 0PW and operate in England and Wales
except for: Marcol House Jersey Limited, GHS (GP) Limited, GHS (Nominee) Limited and The GHS Limited Partnership, which are
registered at 44 Esplanade, St Helier, Jersey, JE4 9WG and The Newman Street Unit Trust, which is registered at 11 Old Jewry,
London, EC2R 8DU. Great Portland Estates plc is the ultimate parent undertaking of the GPE Group.
Financial statements
193Annual Report 2023 Great Portland Estates plc
Notes forming part of the Company financial statements continued
iv Current liabilities
2023
£m
2022
£m
Amounts owed to subsidiary undertakings 1,014.0 836.2
Other creditors 1.0 2.0
Accruals 8.2 10.1
1,023.2 848.3
v Interest-bearing loans and borrowings
2023
£m
2022
£m
Bank loans 12.8 85.4
Debentures 22.0 22.0
Private placement notes 423.7 423.6
458.5 531.0
At 31 March 2023, property with a carrying value of £111.0 million (2022: £119.5 million) was secured under the first mortgage
debenture stock. Further details of the Company’s loans and borrowings can be found on notes 15 and 16 of the Group accounts.
vi Deferred tax
1 April
2022
£m
Recognised in
the income
statement
£m
Recognised
in equity
£m
31 March
2023
£m
Net deferred tax asset in respect of other temporary differences 0.7 0.5 – 1.2
0.7 0.5 – 1.2
A further deferred tax asset of £4.6 million (2022: £3.5 million) relating to revenue losses and contingent share awards was
not recognised because it is uncertain whether future taxable profits will arise against which this asset can be utilised.
194 Great Portland Estates plc Annual Report 2023
GPE Future London Photography
Award Winner
www.nicofroehlich.com
#gpephotographyaward
In this section:
196 Five-year record
197 Our properties and customers
199 Portfolio statistics
200 Glossary
202 Shareholders’ information
204 Financial calendar
Other
information
Other information
195Annual Report 2023 Great Portland Estates plc
Based on the Group financial statements for the years ended 31 March
Balance sheet
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Property portfolio 2,025.0 1,987.1 1,894.5 2,144.4 1,922.2
Joint ventures 511.9 647.0 626.4 582.8 538.8
Trading property 5.6 – – – –
Loans and borrowings (296.0) (444.3) (488.6) (531.2) (458.5)
Other assets/(liabilities) 63.2 13.3 (60.7) (83.1) (83.9)
Net assets 2,309.7 2,203.1 1,971.6 2,112.9 1,918.6
Financed by
£m £m £m £m £m
Issued share capital 41.4 38.7 38.7 38.7 38.7
Reserves 2,268.3 2,164.4 1,932.9 2,074.2 1,879.9
Total equity 2,309.7 2,203.1 1,971.6 2,112.9 1,918.6
Net assets per share 851p 868p 779p 835p 757p
EPRA NTA 853p 868p 779p 835p 757p
Income statement
£m £m £m £m £m
Revenue 112.7 102.5 88.5 84.2 91.2
Cost of sales (49.7) (27.7) (24.7) (30.1) (32.2)
63.0 74.8 63.8 54.1 59.0
Administration expenses (25.1) (29.0) (25.2) (35.0) (38.3)
Estimated credit loss (0.3) (0.1) (7.7) (4.1) (0.8)
Development management losses (0.3) (0.2) (0.1) (0.4) (0.1)
Operating profit before (deficit)/surplus from property
and results of joint ventures
37.3 45.5 30.8 14.6 19.8
(Deficit)/surplus on investment property 7.3 (52.6) (156.8) 107.9 (145.0)
Surplus on revaluation of investments – – – – 0.1
Share of results of joint ventures 10.0 57.9 (76.2) 45.9 (33.4)
Operating (loss)/profit 54.6 50.8 (202.2) 168.4 (158.5)
Finance income 8.3 7.3 8.0 7.4 6.0
Finance costs (8.1) (6.5) (7.8) (9.1) (11.5)
Fair value movement on convertible bond 1.3 – – – –
(Loss)/profit before tax 56.1 51.6 (202.0) 166.7 (164.0)
Tax (6.6) 0.2 0.1 0.5 0.1
(Loss)/profit for the year 49.5 51.8 (201.9) 167.2 (163.9)
(Loss)/earnings per share – basic 17.9p 20.0p (79.8)p 66.1p (64.8)p
(Loss)/earnings per share – diluted 17.1p 20.0p (79.8)p 66.0p (64.8)p
EPRA earnings per share – diluted 19.4p 22.0p 15.8p 10.8p 9.5p
Dividend per share 12.2p 12.6p 12.6p 12.6p 12.6p
Five-year record
196 Great Portland Estates plc Annual Report 2023
Our properties and customers
In value order (GPE share)
Location Tenure
Rent roll
(GPE share)
£
Net
internal area
sq ftOwnership Property name
£200 million plus
50% Hanover Square Rest of West End FH/LH 12,396,400 220,500
100% 1 Newman Street & 70/88 Oxford Street Noho FH 8,427,100 122,700
100% The Piccadilly Buildings Rest of West End LH 12,002,600 187,900
£100 million – £200 million
100% Wells & More Noho FH 6,673,300 122,200
100% Kent House Noho FH 5,310,500 59,100
100% Elsley House Noho FH 5,052,200 65,000
100% City Tower City LH 7,013,600 140,900
£75 million – £100 million
50% 200 & 214 Gray’s Inn Road Midtown LH 5,993,400 287,900
1005 Walmar House Noho LH 4,450,000 56,500
100% 2 Aldermanbury Square City LH – 322,600
£50 million – £75 million
100% The Hickman City FH 1,338,700 74,900
100% New City Court, 14/20 St Thomas Street Southwark FH 3,933,700 98,000
100% 35 Portman Square Noho LH 4,753,800 73,400
100% Minerva House Southwark FH 1,478,400 106,000
100% Carrington House, 126/130 Regent Street Rest of West End LH 3,225,500 30,900
£30 million – £50 million
100% Woolyard Southwark FH 3,038,000 46,300
100% Challenger House City FH 2,112,800 59,200
100% 31/34 Alfred Place Noho LH 1,095,700 42,700
100% 48/54 Broadwick Street and 16 Dufour’s Place Rest of West End FH 3,276,500 24,500
50% Mount Royal, 508/540 Oxford Street Noho LH 2,980,300 92,100
100% 7/15 Gresse Street Noho LH 2,490,000 43,100
100% Orchard Court Noho LH 1,103,100 47,900
100% Pollen House Rest of West End LH 1,754,800 21,300
£10 million – £30 million
100% 6/10 St Andrew Street Midtown FH – 46,200
50% 103/113 Regent Street Rest of West End LH 2,394,800 56,900
50% Elm Yard Midtown FH 1,659,200 49,400
100% 95/96 New Bond Street Rest of West End LH 188,000 9,000
100% Kingsland House, 122/124 Regent Street Rest of West End LH 1,059,300 8,700
Below £10 million
100% 6 Brook Street Rest of West End LH 195,300 3,600
100% Cathedral Street Southbank LH 332,000 6,400
100% Poland Street Rest of West End FH 257,600 5,000
100% 183/190 Tottenham Court Road Noho LH 422,500 12,000
100% 23/24 Newman Street Noho LH 7,900 25,100
FH = Freehold or Virtual Freehold.
LH = Leasehold.
197Annual Report 2023 Great Portland Estates plc
Other information
Top ten customers
Customer Use
Rent roll
(our share)
£m
% of rent roll
(our share)
1 Kohlberg Kravis Roberts LLP Office 4.4 4.1
2 Runway East Office 3.5 3.3
3 Glencore UK Limited Office 3.1 3.0
4 Exane SA Office 2.8 2.6
5 New Look Office 2.7 2.5
6 Richemont UK Limited Office 2.7 2.5
7 Fashion Retail Academy Office 2.5 2.3
8 Uniqlo Retail 2.4 2.3
9 Carlton Communications Limited Office 2.2 2.1
10 RBH Group Retail 2.1 2.0
Total 28.4 26.7
Our properties and customers continued
198 Great Portland Estates plc Annual Report 2023
Rental income
Wholly-owned Share of joint ventures
Rent roll
£m
Reversionary
potential
£m
Rental
values
£m
Rent roll
£m
Reversionary
potential
£m
Rental
values
£m
Total rental
values
£m
London North of Oxford Street Office 34.5 3.1 37.6 – – – 37.6
Retail 5.2 (0.3) 4.9 3.0 0.3 3.3 8.2
Rest of West End Office 15.2 0.5 15.7 9.7 0.7 10.4 26.1
Retail 6.8 2.0 8.8 5.1 0.1 5.2 14.0
Total West End 61.7 5.3 67.0 17.8 1.1 18.9 85.9
City, Midtown and Southwark Office 16.8 3.3 20.1 7.7 0.9 8.6 28.7
Retail 2.4 (0.7) 1.7 – – – 1.7
Total City, Midtown and Southwark 19.2 2.6 21.8 7.7 0.9 8.6 30.4
Total let portfolio 80.9 7.9 88.8 25.5 2.0 27.5 116.3
Voids (A) 3.3 0.9 4.2
Premises under refurbishment and development 50.4 – 50.4
Total portfolio (B) 142.5 28.4 170.9
Vacancy rate % (A/B) 2.3 3.2 2.5
EPRA vacancy
Wholly-
owned
£m
Joint
ventures
£m
Total
£m
Voids and premises under refurbishment excluding development (A) 28.9 0.9 29.8
Total portfolio 142.5 28.4 170.9
Less: premises under development (24.8) – (24.8)
Total (B) 117.7 28.4 146.1
EPRA vacancy rate % (A/B) 24.6 3.2 20.4
Rent roll security, lease lengths and voids
Wholly-owned Joint ventures
Rent roll
secure for
five years
%
Weighted
average
lease length
Years
Void
%
Rent roll
secure for
five years
%
Weighted
average
lease length
Years
Void
%
London North of Oxford Street Office 25.5 4.4 0.6 – – –
Retail 47.5 5.5 8.6 13.2 2.6 16.7
Rest of West End Office 15.0 1.7 7.2 89.1 12.3 –
Retail 14.7 3.4 1.1 38.1 6.3 0.9
Total West End 23.6 3.7 3.3 61.8 8.9 3.6
City, Midtown and Southwark Office 6.7 1.8 1.9 – 1.4 2.1
Retail 12.8 1.6 – – – –
Total City, Midtown and Southwark 7.5 1.7 1.1 – 1.4 2.1
Total portfolio 19.8 3.2 2.3 43.2 6.7 3.2
Rental values and yields
Wholly-owned Joint ventures Wholly-owned Joint ventures
Average
rent
£psf
Average
ERV
£psf
Average
rent
£psf
Average
ERV
£psf
Initial
yield
%
True
equivalent
yield
%
Initial
yield
%
True
equivalent
yield
%
London North of Oxford Street Office 79 88 – – 3.3 4.8 – –
Retail 54 63 83 86 2.4 4.5 4.9 5.7
Rest of West End Office 101 101 116 124 4.1 5.4 – 4.2
Retail 75 96 105 109 3.8 4.7 2.4 3.8
Total West End 80 84 106 106 3.4 4.9 1.2 4.2
City, Midtown and Southwark Office 52 73 46 52 3.4 5.0 5.8 5.3
Retail 35 24 – – 2.9 5.5 – –
Total City, Midtown and Southwark 49 69 46 52 3.4 5.0 5.8 5.3
Total portfolio 69 77 76 81 3.4 4.9 2.3 4.5
Portfolio statistics at 31 March 2023
199Annual Report 2023 Great Portland Estates plc
Other information
Building Research Establishment Environmental
Assessment Methodology (BREEAM)
Building Research Establishment method of assessing,
rating and certifying the sustainability of buildings.
Cash EPS
EPRA EPS adjusted for certain non-cash items (including our
share of joint ventures): lease incentives, capitalised interest
and charges for share-based payments.
Core West End
Areas of London with W1 and SW1 postcodes.
Development profit on cost
The value of the development at completion, less the value
of the land at the point of development commencement and
costs to construct (including finance charges, letting fees,
void costs and marketing expenses).
Development profit on cost %
The development profit on cost divided by the land value
at the point of development commencement together
with the costs to construct.
Earnings Per Share (EPS)
Profit after tax divided by the weighted average number
of ordinary shares in issue.
EPRA metrics
Standard calculation methods for adjusted EPS and NAV
and other operating metrics as set out by the European
Public Real Estate Association (EPRA) in their Best Practice
and Policy Recommendations.
EPRA Net Disposal Value (NDV)
Represents the shareholders’ value under a disposal scenario,
where deferred tax, financial instruments and certain other
adjustments are calculated to the full extent of their liability,
net of any resulting tax. Diluted net assets per share adjusted
to remove the impact of goodwill arising as a result of
deferred tax and fixed interest rate debt.
EPRA Net Reinstatement Value (NRV)
Represents the value of net assets on a long-term basis.
Assets and liabilities that are not expected to crystallise in
normal circumstances, such as the fair value movements on
financial derivatives, real estate transfer taxes and deferred
taxes on property valuation surpluses, are therefore excluded.
EPRA Net Tangible Assets (NTA)
Assumes that entities buy and sell assets, thereby crystallising
certain levels of unavoidable deferred tax. Diluted net assets
per share adjusted to remove the cumulative fair value
movements on interest-rate swaps and similar instruments,
the carrying value of goodwill arising as a result of deferred
tax and other intangible assets.
Estimated rental value (ERV)
The market rental value of lettable space as estimated
by the Group’s valuers at each balance sheet date.
Fair value – investment property
The amount as estimated by the Group’s valuers for
which a property should exchange on the date of valuation
between a willing buyer and a willing seller in an arm’s-length
transaction after proper marketing wherein the parties
had each acted knowledgeably, prudently and without
compulsion. In line with market practice, values are stated
net of purchasers’ costs.
Ready to fit
For businesses typically taking larger spaces on longer leases
who want to fit out the space themselves.
Fitted spaces
Where businesses can move into fully furnished, well designed
workspaces, with their own front door, furniture, meeting
rooms, kitchen and branding.
Fully Managed
Fitted space where GPE handles all day-to-day services
and running of the workplace in one monthly bill.
Flex space partnerships
Revenue share agreements with flexible space operators;
these are typically structured via lease arrangements with
the revenue share recognised within rental income.
Full repairing and Insuring (FRI) lease
In an FRI lease, the customer is responsible for managing
the space they occupy, including all costs associated
with repairing and maintaining the property, as well as
obtaining insurance coverage.
Internal rate of return (IRR)
The rate of return that if used as a discount rate and applied
to the projected cash flows that would result in a net present
value of zero.
MSCI
Morgan Stanley Capital International (MSCI) is a company
that produces an independent benchmark of property returns.
MSCI central London
An index, compiled by MSCI, of the central and inner London
properties in their March annual valued universes.
Like-for-like (Lfl)
The element of the portfolio that has been held for the whole
of the period of account.
EPRA Loan-to-Value (LTV)
The nominal value of total bank loans, private placement notes,
debenture stock and any net liabilities/assets, net of cash
(including our share of joint ventures balances), expressed
as a percentage of the market value of the property portfolio
(including our share of joint ventures).
Glossary
200 Great Portland Estates plc Annual Report 2023
Net assets per share or net asset value (NAV)
Equity shareholders’ funds divided by the number
of ordinary shares at the balance sheet date.
Net debt
The book value of the Group’s bank and loan facilities,
private placement notes and debenture loans plus the nominal
value of the convertible bond less cash and cash equivalents.
Net gearing
Total Group borrowings at nominal value plus obligations
under occupational leases less short-term deposits and
cash as a percentage of equity shareholders’ funds adjusted
for value of the Group’s pension scheme, calculated in
accordance with our bank covenants.
Net initial yield
Annual net rents on investment properties as a percentage
of the investment property valuation having added notional
purchasers’ costs.
Net rental income
Gross rental income adjusted for the spreading of lease
incentives less expected credit losses and ground rents.
Non-PIDs
Dividends from profits of the Group’s taxable residual business.
Property costs
Service charge income less service charge costs plus other
property expenses.
Property Income Distributions (PIDs)
Dividends from profits of the Group’s tax-exempt
property rental business.
REIT
UK Real Estate Investment Trust.
Rent roll
The annual contracted rental income.
Reversionary potential
The percentage by which ERV exceeds rent roll on let space.
Topped-up initial yield
Annual net rents on investment properties as a percentage
of the investment property valuation having added
notional purchasers’ costs and contracted uplifts from
tenant incentives.
Total potential future growth
Portfolio rent roll plus the ERV of void space, space under
refurbishment and the committed development schemes,
expressed as a percentage uplift on the rent roll at the
end of the period.
Total Accounting Return (TAR)
The growth in EPRA NTA per share plus ordinary dividends
paid, expressed as a percentage of EPRA NTA per share
at the beginning of the period.
Total Property Return (TPR)
Capital growth in the portfolio plus net rental income
derived from holding these properties plus profit on sale
of disposals expressed as a percentage return on the
period’s opening value.
Total Shareholder Return (TSR)
The growth in the ordinary share price as quoted on the
London Stock Exchange, plus dividends per share received
for the period expressed as a percentage of the share
price at the beginning of the period.
True equivalent yield
The constant capitalisation rate which, if applied to all
cash flows from an investment property, including current
rent, reversions to current market rent and such items as
voids and expenditures, equates to the market value having
taken into account notional purchasers’ costs. Assumes
rent is received quarterly in advance.
Ungeared IRR
The ungeared internal rate of return (IRR) is the interest
rate at which the net present value of all the cash flows
(both positive and negative) from a project or investment
equal zero, without the benefit of financing. The internal
rate of return is used to evaluate the attractiveness of
a project or investment.
EPRA vacancy rate
The element of a property which is unoccupied, expressed
as the ERV of the vacant space divided by the ERV of the
total portfolio, excluding committed developments.
Weighted Average Unexpired Lease Term (WAULT)
The Weighted Average Unexpired Lease Term expressed
in years.
Whole life surplus
The value of the development at completion, less the
value of the land at the point of acquisition and costs
to construct (including finance charges, letting fees,
void costs and marketing expenses), plus any income
earned over the period.
201Annual Report 2023 Great Portland Estates plc
Other information
Shareholder enquiries
Enquiries relating to shareholdings, such as the transfer
of shares, change of name or address, lost share certificates
or dividend cheques, should be referred to the Company’s
Registrar at:
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Tel: +44 (0) 371 384 2030
(Lines are open 8.30am to 5.30pm, Monday to Friday,
excluding bank holidays in England and Wales).
See help.shareview.co.uk for additional information.
Managing your shares online
Shareholders and employees can manage their
Great Portland Estates plc holdings online by registering
with Shareview, a secure online platform provided by
Equiniti Limited. Registration is a straightforward process
and allows shareholders to:
– access information on their shareholdings, including
share balance and dividend information;
– sign up for electronic shareholder communications;
– buy and sell shares;
– update their records following a change of address;
– have dividends paid into their bank account; and
– vote by proxy online in advance of general meetings
of the Company.
Electronic communication
Shareholders are encouraged to elect to receive all
shareholder documentation electronically by registering
with Shareview at www.shareview.co.uk. Shareholders
who have registered for this option will receive an email
notification when shareholder documents are available
on the Company’s website and a link will be provided
to that information.
When registering, shareholders will need their shareholder
reference number, which can be found on their share
certificate or proxy form.
Equiniti Limited offers a range of shareholder information
and services online at www.shareview.co.uk
For deaf and speech impaired customers, Equiniti welcomes
calls via Relay UK. Please see www.relayuk.bt.com for
more information.
Unsolicited telephone calls – boiler room scams
In recent years, some of our shareholders have received
unsolicited telephone calls or correspondence concerning
investment matters from organisations or persons
claiming or implying that they have some connection
with the Company.
These are typically from overseas based ‘brokers’ who target
UK shareholders offering to sell them shares that often turn
out to be worthless or non-existent, or an inflated price for
shares they own. These operations are commonly known as
‘boiler rooms’. Shareholders are advised to be very wary of
any offers of unsolicited advice, discounted shares, premium
prices for shares they own or free reports into the Company.
If you receive any unsolicited investment advice:
– ensure you get the correct name of the person and firm;
– check that the firm is on the Financial Conduct Authority
(FCA) Register to ensure they are authorised at
https://register.fca.org.uk;
– use the details on the FCA Register to contact the firm;
– call the FCA Consumer Helpline (0800 111 6768) if there
are no contact details in the Register or you are told
they are out of date; and
– if the calls persist, hang up.
If you use an unauthorised firm to buy or sell shares, you will
not have access to the Financial Ombudsman Service or the
Financial Services Compensation Scheme.
Dividends
Dividends can be paid by BACS directly into a UK bank
account, with the dividend confirmation being sent to the
shareholder’s address. This is the easiest way for shareholders
to receive dividend payments and avoids the risk of lost or
out-of-date cheques. A dividend mandate form is available
from Equiniti Limited or online at www.shareview.co.uk/info/
directdividends
Dividends payable in foreign currencies
Equiniti is able to pay dividends to shareholder bank accounts
in over 83 currencies worldwide through the Overseas Payment
Service. An administrative fee will be deducted from each
dividend payment. Further details can be obtained from
Equiniti or online at www.shareview.co.uk/info/ops
Dividend Reinvestment Plan
Our Dividend Reinvestment Plan (DRIP) enables shareholders
to use their dividends to buy further Great Portland Estates plc
shares. Full details of the DRIP can be obtained from Equiniti
Limited or online at www.shareview.co.uk/info/drip
Shareholders’ information
202 Great Portland Estates plc Annual Report 2023
Tax consequences of REIT status
As a REIT, dividend payments may be split between PIDs and
non-PIDs. Information in respect of the tax consequences
for shareholders of receiving dividends can be found on
the Company’s website at www.gpe.co.uk/investors/
shareholder-information/reits
Share dealing
Great Portland Estates plc shares can be traded through
most banks, building societies or stockbrokers. Equiniti Limited
offers a telephone and internet dealing service. Terms and
conditions and details of the commission charges are
available on request.
For telephone dealing, please telephone 0345 603 7037
between 8.00am and 4.30pm, Monday to Friday (excluding
bank holidays in England and Wales), and for internet dealing
visit www.shareview.co.uk/dealing
Shareholders will need their reference number, which can
be found on their share certificate.
Website
The Company has a corporate website, which holds, amongst
other information, a copy of our latest Annual Report and
financial statements, a list of properties held by the Group
and copies of all press announcements released over the
last 12 months. The site can be found at www.gpe.co.uk
General Counsel & Company Secretary
Darren Lennark
Registered office
33 Cavendish Square
London W1G 0PW
Tel: 020 7647 3000
Registered number: 596137
203Annual Report 2023 Great Portland Estates plc
Other information
2023
1 June
Ex-dividend date for 2022/23 final dividend
2 June
Registration qualifying date for 2022/23 final dividend
6 July
Annual General Meeting
10 July
2022/23 final dividend payable
16 November
Announcement of 2023/24 interim results
23 November
Ex-dividend date for 2023/24 interim dividend (provisional)
1
24 November
Registration qualifying date for 2023/24
interim dividend (provisional)
1
2024
4 January
2023/24 interim dividend payable (provisional)
1
22 May
Announcement of 2023/24 full-year results (provisional)
1, 2
1. Provisional dates will be confirmed in the half-year results announcement
2023. All dividends are subject to the Board’s recommendation (and also,
in the case of the final dividend, to shareholder approval) at the
appropriate time.
2. The timetable for the potential final dividend will be confirmed
in the 2024 Annual Report.
Financial calendar
204 Great Portland Estates plc Annual Report 2023
Design and production by Radley Yeldar | ry.com
Key photography by Edward Hill, Steve Bates,
and Andy Wilson.
Printed by Pureprint Group, using
pureprint environmental print technology,
a CarbonNeutral® company certified to
FSC® and IS0 14001.
This Annual Report is printed on TREE FREE
and uses 25% cotton linters and 75% bamboo.
Both are renewable annual crops which yield
high quality fibres giving a smooth, natural
and soft to the touch finish to the paper and
high performance in printing.
To complete the story of sustainability
it is recyclable, biodegradable and made
using EKOenergy from our own hydroelectric
power station. The emissions generated
during production of this eco-friendly paper
are fully offset through Carbon Credits used
to finance activities that can absorb CO
2
in the atmosphere.
Needless to say Tree Free carries the FSC®
certification, even though like the name
implies it has no impact on forests.
If after reading, you no longer wish to
retain this report, please pass it on to other
interested readers or dispose of it in your
recycled paper waste.
For more information on how we are working to
decarbonise our business, please visit our website:
www.gpe.co.uk/sustainability
Great Portland Estates plc
33 Cavendish Square, London W1G 0PW
Tel: 020 7647 3000
www.gpe.co.uk