Derwent London revealed a 4.1% hike in its net asset value in a widely expected strong set of interim results this week.
The central London office REIT said its net asset value had risen to 1,770p a share in the six months to the end of June, up from 1,701p at the turn of the year.
The NAV increase came on the back of strong rental growth, with the rents across its £2.7bn portfolio rising by 2.8% – the fifth successive half-year of growth – as the expanding TMT sector continues to fuel West End and City fringe activity.
Chief executive John Burns said that he is confident that, if current market conditions persist, the level of rental growth in the first half would be sustained throughout the rest of the year to meet its forecast of 5% annual rental growth.
Open-market lettings in the first half were at 9.4% above ERV, excluding the prelet of the 1 Page Street development in Victoria to Burberry, in a deal that was agreed at the end of last year.
Derwent’s portfolio increased in value by 3.3% to £2.7bn, higher than the 2.9% achieved in the second half of 2011.
The company’s West End assets rose in value by 3.2% and its City border properties increased by 4.6%.
Its five current developments – 1 Page Street, SW1; Buckley Building, EC1;Pentonville Road, N1; Turnmill, EC1 and 40 Chancery Lane, WC2 – were valued at £137m in total, reflecting a valuation uplift of 9.7% over the period.
During the period it strengthened its balance sheet, securing a £83m, 12-year facility from Cornerstone, and now has a loan-to-value ratio of 31.4% with £410m of undrawn facilities and £595m of uncharged properties.
