Derwent London has delivered a punchy quarterly trading update, demonstrating the continued strength of the West End office market.
The REIT said it concluded 14 lettings during the three months to the end of March including the prelet of the entire 127,000 sq ft 1 Page Street, SW1, to Burberry for £5.3m pa.
It added that it has concluded a further eight lettings since the quarter end at a rent of £1.2m, taking the year-to-date total to 23 deals, with a rental income of £8m covering 210,300 sq ft.
Excluding the Burberry deal, the lettings were agreed at 6.7% above estimated rental values at 31 December, dropping to 1.7% when the Burberry letting, which was under offer at the year end, is included.
The West End specialist’s vacancy rate is now 0.8%, down from 1.3% at the start of the year.
Chief executive John Burns said: “The rental levels achieved endorse our positive rental growth expectations for 2012. A sizeable proportion of our tenant enquiries and completed lettings continues to come from the growing TMT and other creative sectors.”
Derwent London’s pipeline of consented schemes stood at 1.8m sq ft at the end of the quarter after winning a number of “very significant” planning approvals this year.
Highlights include permission for a 275,000 sq ft mixed-use scheme at 1 Oxford Street, W1, and 121 flats at Riverwalk House, SW1.
Current projects total 455,300 sq ft, including the group’s redevelopment of former night spot Turnmills, at 63 Clerkenwell Road, EC1, which commenced in April.
Although the REIT did not update on valuations, it said its valuer, CBRE, believes that, given the lettings and planning permissions, its portfolio will have outperformed the IPD Central London office value index, which was up 0.8% over the quarter.
As a results of £60m received from Grosvenor as part of the pair’s joint venture to develop a mixed-use scheme at Grosvenor Place, SW1, the group’s net debt fell to £810.6m at the 2011 year end.
This reduced the group’s loan-to-value ratio from 32% to 30.6% and increased its total secured but undrawn bank facilites to £474m as at 31 March.
Capital expenditure in Q1 totalled £13.2m, and it sold the 75,500 sq ft Triangle Shopping Centre in Glasgow for £16.8m – 6.8% above book value.
bridget.o’connell@estatesgazette.com
