Derwent London delivers a strong set of results – Derwent London (DLN), the REIT focused on central London offices with a particular focus on the West End and City fringes, released its final results to 31st December 2017
Highlights
- EPRA net asset value per share increased 4.6% to 3,716p from 3,551p and a 3.7% increase from 3,582p at 30 June 2017
- The total return was 7.7% including dividends paid of 107.8p per share
- Net rental income increased 10.4% to £161.1m from £145.9m
- EPRA earnings rose 22.5% to £105.0m from £85.7m
- EPRA earnings per share increased 22.4% to 94.2p per share from 77.0p
- Final dividend raised 10.1% to 42.4p to give full year dividend of 59.73p, an increase of 14.1%
- Proposed special dividend of 75p per share to be paid in June 2018
Operational performance
- Record new lettings achieving £41.5m, on average 1.3% above December 2016 estimated recovery value (ERV)
- Investment property disposals (sales) totalled £482.8m, 11.8% above December 2016 values
- Capital expenditure of £165.0m in 2017 including capitalised interest of £9.4m
- 623,000 sq ft under construction for delivery in 2019 now 45% pre-let
- Required capital expenditure of £265.0m to complete major year end projects
- Potential surplus of c.£140m still to come on the two developments for delivery in 2019
- Work started at Soho Place W1, above the new Crossrail station
Portfolio update
- Portfolio valued at £4.9bn, an underlying valuation increase of 3.9% (4.9% including disposals)
- Underlying valuation uplift on developments was 16.0%
- Total property return 8.0% versus the MSCI Investment Property Databank (IPD) Central London Offices Quarterly Index of 7.1%
- True equivalent yield was 4.7%, tightening by 10bp since December 2016
- The portfolio’s EPRA vacancy rate fell from 2.6% to 1.3%
- Consented future pipeline increased 108% to 853,000 sq ft with two new West End developments
- Estimated rental values (ERV) on an EPRA basis increased by 1.7%
- Year end portfolio cash rental reversion estimated at £110m
- 2018 ERV guidance of +2% to -3%
Financial position
- Interest cover 454%, and loan-to-value ratio 13.2%
- Net debt down to £657.9m from £904.8m at 31 December 2016
- Cash and undrawn facilities up to £523m
DLN : Derwent London delivers a strong set of results