Derwent London delivers NAV growth despite Brexit – Derwent London has published results for the year ended 31 December 2018. Highlights are:
- Derwent London delivered a total return of 5.3%
- EPRA NAV 3,776p per share, up 1.6%
- EPRA earnings of 113.1p per share, up 20.0% from 94.2p in 2017 (but these include some one-off items, underlying earnings were 99.1p per share, up 5.1% from 94.2p).
- Net property and other income GBP185.9m, up 12.8% from GBP164.8m in 2017
- Full year dividend of 65.85p per share from 59.73p, up 10.2% – they say “We expect the 2019 dividend to grow at a similar rate“
- Net debt increased to GBP956.9m from GBP657.9m in December 2017 to give a loan-to-value ratio of 17.2% – Derwent still had cash and undrawn facilities of GBP274m at the year end, before it drew down a GBP250m US private placement drawn in January 2019. Derwent has been sssigned Fitch corporate credit rating of A- in August 2018 with senior unsecured debt rating of A.
Activity and opportunities
- New lettings totalling GBP26.8m, achieving 4.1% above December 2017 estimated rental value (ERV)
- Two on-site developments totalling 623,000 sq ft – now 75% pre-let, up from 45% one year ago
- Brunel Building W2 – 64% pre-let at December 2018 (now 77% with balance under offer)
- 80 Charlotte Street W1 – 74% pre-let
- Potential GBP59.6m to contribute to income after additional capex of GBP133m
- Two new developments could add GBP30m to ERV on completion 2022, with expected capex of GBP359m
- Soho Place W1 construction contract signed February 2019 [The building that will sit on top of the new Tottenham Court Road station]
- Demolition started at the site of The Featherstone Building EC1
- Another 1.6m sq ft of space in the portfolio has regeneration potential, 14% with planning consent
Portfolio update
- Portfolio valued at GBP5.2bn – an underlying valuation increase of 2.2%
- Underlying valuation uplift on developments was 18.0%
- True equivalent yield of 4.73% – unchanged from December 2017
- Total property return of 6.0%, ahead of benchmark index return of 5.3%
- EPRA vacancy rate rose to 1.8% from 1.3% in December 2017, down from 4.2% in June 2018
- ERV growth of 1.1% in 2018 and ERV guidance for 2019 +1% to -2%
Robbie Rayne, chairman, commented: “Derwent London made good progress last year achieving GBP26.8m of new lettings, a 5.1% increase in underlying earnings and a 20.0% increase in EPRA EPS, despite continuing political and economic uncertainty. We propose raising the final dividend 10.3% to 46.75p per share.”
John Burns, chief executive, commented: “Demand for Central London offices remains very active and we have been able to outperform the market through our development activities. Our brand of well-designed office space remains attractive to tenants. With its strong financial position, high quality portfolio and pipeline of exciting opportunities, this positions the Group for continued success.”
DLN : Derwent London delivers NAV growth despite Brexit