Company Announcements

Retail space comprises 22% of our portfolio by value. During the year, UK retail has continued to suffer from a

combination of lower retail sales and a structural shift, further accelerated by COVID-19, as increasing volumes of sales move online. Central London retail has been more significantly impacted as tourists have been absent and consumers have avoided busy locations during the pandemic, particularly where reliant on public transport. This has impaired our retail rent collection rate and the performance of our retail assets, with rental values falling by 27.3% across the portfolio.

Our retail focus is to deliver high quality, modern retail units into locations with enduring appeal, with the bulk of our activities centred on the prime shopping streets of Oxford Street, Regent Street, Bond Street and Piccadilly. We anticipate that the continued progress of the vaccination programme will allow for a gradual reopening of the UK economy, and with it a re-population of city centres, including the return of international tourists and office workers who are crucial to supporting London's retail trade.

Our current focus is on leasing the retail space in our developments at Oxford House, at the eastern end of

Oxford Street, and Hanover Square, at the northern end of New Bond Street. In both cases we aim to deliver new retail experiences into locations that will benefit from the planned opening of Crossrail in 2022 and we will continue to be creative in our leasing strategy, including considering alternative uses where appropriate as supported by the government's recent changes to the 'Use Classes' system.

We continue to proactively monitor individual asset plans and our exposure to any underperforming

retail assets.

With the built environment contributing approximately 40% of the UK's carbon footprint and the climate change debate moving from the periphery to now being both a moral and economic imperative, particularly for our occupiers and other stakeholders, we have been further expanding our sustainability commitments and activities. Having

announced in 2020 our Sustainability Statement of Intent 'The Time is Now', this year we created our Roadmap to Net Zero, setting out how we will address the first pillar of the statement to decarbonise our business to become net zero carbon by 2030. The mitigating actions we are taking have supported a reduction in our overall net risk assessment for this risk.

In early 2020, we incorporated our energy intensity target into our ESG-linked revolving credit facility, along with 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. As a result, the rate of interest we pay on this facility will depend on our performance against these targets. Furthermore, these 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 2020/21 annual targets, as set out on page 21 of the 2021 Annual Report.

We continue to work to improve the number of our buildings rated for their sustainability credentials. Further to existing requirements for most commercial buildings to have at least an EPC 'E' rating by 1 April 2023, in December 2020, the UK government 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 are compiling individual asset plans to proactively improve 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.

During the year, the uncertainties, disruption and challenges of the COVID-19 pandemic have continued to evolve and impact the global economy, our markets and operations. The closure of offices and shops, and reduced tourism, have increased occupier failures, impacted rent collection and reduced occupational demand and property valuations, especially in relation to retail, hospitality and leisure assets. The ongoing vaccination programme and government roadmap to easing lockdown restrictions is currently supporting renewed optimism and market activity, however we remain mindful of the risk of further waves of the pandemic and the emergence of

new variants.

The Board, Audit and Executive Committees have overseen the Company's response to the pandemic throughout the year. We have engaged extensively with all our stakeholders, including offering financial assistance to our occupiers on a case-by-case basis, extended our community activities, including through the deployment of our Community Fund, and worked hard to ensure the safety and wellbeing of our employees, occupiers and contractors.

All our office properties have remained open throughout the year, operating to government guidelines.

We have also issued bespoke 'Return to the Workplace' playbooks to all occupiers to assist them in managing their phased repopulation of their offices as the lockdown eases. None of our employees have been furloughed and the Group has no current plans to access any UK government COVID-19 funding.

London generates around 24% of UK GDP, with the largest economy of any city in Europe, and is one of the world's leading commercial, creative and financial centres, with a deep pool of talent.

The closure of many offices and shops, reduced tourism and a greater reliance on public transport have meant that London has been disproportionately impacted by COVID-19. Whilst activity levels remain low, we fully anticipate that London will be reinvigorated as the world returns to normal. Moreover, improving infrastructure, including extensions of the tube network and the expected opening of Crossrail in 2022, will bring more people within central London's reach.

Central London 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 occupiers and property investors, many from

overseas. London's markets are also highly liquid and remain one of the leading global destinations for real estate investment. Its combination of relative value, strong legal system, time zone advantages, international

connectivity and a welcoming attitude to global businesses has resulted in London being the number one city for cross border office investment for  seven out of the last ten years as measured by Real Capital Analytics.

Whilst we continue to monitor for changes in government policies as a result of COVID-19 and the UK's global trading relationships post-Brexit, London has a long history of reinvention and innovation, and we anticipate that as confidence returns, London's economy will bounce back and its magnetism as a global cultural and business centre will be undiminished.

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 2021, our property LTV was 18.4%, net gearing was 24.6% and interest cover not measurable. As a result, we have substantial headroom above our Group debt covenants. We estimate property values could fall around 56% before Group debt covenants could be endangered, even before factoring in mitigating management actions.

The risk of a property market dislocation resulting in a breach of our banking covenants has reduced following the prepayment of the non-recourse debt facility in our Great Victoria Partnership joint venture and the diversification of risk through GPE's £150 million USPP issue during the year. The Group also has significant financial capacity with liquidity of £443 million, comprising cash of £38 million and undrawn committed facilities of £405 million. In addition, the Group's weighted average interest rate remains low at only 2.5% (falling to 2.0% on a fully drawn basis), with an attractive debt maturity ladder and diverse funding sources, predominantly borrowing on an unsecured basis.

Despite the economic impact and uncertainties arising from COVID-19, the Group has been active in its key markets and has completed two development schemes at Hanover Square, W1 and The Hickman, E1, totalling 296,800 sq ft of prime Grade A space. We also commenced the substantial repositioning of 50 Finsbury Square, EC2 which is due for completion in mid-2022.

We continue to assess potential acquisition opportunities across central London. However, the type of assets we typically look to buy, in particular, assets with repositioning and/or development opportunities at prices that, in our view, fairly reflect their risk adjusted returns, continue to be limited. However, we do expect opportunities to emerge in the second half of 2021 as investment volumes recover, COVID-19 restrictions lift and the market reopens.

We currently have two committed schemes on-site, set to deliver 250,800 sq ft of high quality space, both near Crossrail stations and targeting BREEAM 'Excellent'. These schemes are 23.2% pre-let, with one of the schemes due for completion shortly.

Beyond this, the Group is preparing a further eight schemes set to deliver more than 1.3 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.

To successfully deliver our developments, we work closely with both the local authorities and communities to secure planning consents to create great new spaces, helping London to thrive. The London Plan is now policy and includes a number of further challenging requirements. Moreover, our substantial and flexible pipeline of eight uncommitted schemes totals 1.3 million sq ft across four London boroughs, all of which will likely be subject to planning approval requirements.

Overall, we consider that the net risk arising from the planning environment has reduced during the year following regulatory and local policy changes, including reforms to the 'Use Classes Order' and a relaxation of affordable housing requirements in some boroughs, and the strengthening of our understanding of the evolving planning landscape and our ability to engage with key planning authorities.

We aim to engage with local authorities in an open, transparent and non-adversarial manner to enable us to secure planning consents that are both beneficial to us and the local communities in which they are built. In

line with our social value guidelines, 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. During the year, we have continued to work with community groups in the London Bridge area, including Bankside Open Spaces Trust where, with our funding, they were able to bring their parks team back from furlough to maintain green spaces and provide much needed support for local volunteers. Our air quality, urban greening and apprenticeship initiatives will extend to our proposals for New City Court, SE1 to enhance

the work already being undertaken by community groups in the area. Our social value guidelines ensure that we monitor the social impact from our development activities to deliver targeted outcomes. Urban greening

and biodiversity projects are currently being supported in Islington as part of early engagement for our 50 Finsbury Square, EC2 scheme and were implemented for 1 Newman Street, W1.

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'.

The motivation of our people and maintaining our strong collaborative culture remains fundamental to the

delivery of our strategic priorities. During the year, the strength of our values and appeal of our culture was highlighted with our most recent employee pulse survey showing 95% of our people would "recommend GPE as a great place to work". We continue to develop our talent from within and we were delighted to promote Janine Cole to the Executive Committee this year, in addition to making several other internal promotions to the Senior Management Team.

Following our achievement of the National Equality Standard accreditation in April 2020, we continue to implement initiatives to progress our Inclusion and Diversity strategy, with valuable participation from our Non-Executive Directors. In November 2020, the Nomination Committee approved our Inclusion and Diversity Roadmap which sets a clear priority to improve the diversity of the Executive Committee.

During a challenging year, the physical and mental wellbeing of our people has been a key priority. Accordingly, we took the opportunity to formally review the wellbeing programme, which we launched in 2019, to focus on the physical and mental health, work-life balance and financial wellbeing of our people. We have also 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.

Our employee retention remains high at 91% and we continue to focus on growing the breadth, depth and

diversity of our talent, providing focused development support where needed.

We have had another busy year of leasing, completing 27 new lettings and securing £12.9 million of rent at

a 2.4% premium to March 2020 ERVs, whilst continuing the successful roll-out of our flexible space offering.

Over the past 12 months, our flexible office space has increased from 219,600 sq ft to 266,700 sq ft, or 13.2% of our office portfolio, and we are also currently appraising a further 134,100 sq ft of flexible space across the portfolio. This year we also delivered 16,300 sq ft of new Flex+ space at 16 Dufour's Place, W1, which provides occupiers with added service provision as well as communal facilities such as a courtyard and ground floor café.

To date the building is already 71% let or under offer.

Based on our successes to date at 16 Dufour's Place, we are rolling out our Flex+ offer to a further six buildings

to capture the growing demand for this innovative offer in prime locations.

We continue to design and innovate in the areas of sustainability, technology, wellbeing and service provision to meet evolving occupier needs. We were very encouraged by this year's independent customer satisfaction survey which updated our understanding of how our occupiers view their buildings and the services we provide. Encouragingly, our Net Promoter Score increased from +25.3 in 2020 to +42.0 in 2021, materially ahead of our peer group average of minus 6.1.

Capital allocation risk has increased in view of uncertain and potentially volatile market conditions. With limited availability of attractively priced acquisition opportunities and the depth of opportunity in our existing portfolio, we made no acquisitions in the year. However, taking advantage of strong investor demand, we made sales of £16.0 million in the year.

We also committed to the substantial repositioning of 50 Finsbury Square, EC2 which is due for completion in mid-2022.

We continue to focus on ensuring that we have a best-in-class and proactive health and safety culture. During the year, considerable focus has been given to ensure that our buildings and development sites have remained 'COVID-19 Secure' for our occupiers, suppliers and employees. Cleaning and air quality processes were strengthened and twice weekly lateral flow testing was introduced for employees, and strongly recommended for visitors, to further support the health and safety of all those using our buildings and head

office.

Employee mental health and wellbeing remains a key focus. Recognising the potential impact of the pandemic across our workforce, we continued our roll-out of mental health first aider training and wellbeing webinars in addition to home ergonomic work station assessments.

During the year we refreshed our Health and Safety Committee to ensure there was senior representation from across all areas of the business. We improved reporting on asset level compliance, with consultants assigning risk ratings to all assets, allowing us to better pinpoint where proactive health and safety interventions were required.

With the Grenfell Tower Inquiry still in progress, and the likely legislative changes to be implemented through the Building Safety Bill and Fire Safety Bill, we are actively monitoring developments and are proactively reviewing our own fire safety practices and procedures.

The Group had no reportable accidents 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. In our most recent employee pulse survey, 93% of respondents agreed or strongly agreed that the organisation takes health and safety seriously, whilst 88% felt that they had received the necessary health and safety training to do their jobs.

Given the increased incidence of attempted cyber attacks on UK businesses, we have continued to invest time and resource into our cyber security measures, both in our head office and across our portfolio.