Derwent London has released a positive trading update revealing strong letting progress and rental growth across its West End portfolio.
The REIT said it completed 27 transactions totalling 137,300 sq ft in the third quarter, generating a rental income of £4.8m pa.
It said open market lettings in the quarter were 8.8% above estimated rental values as at the end of December last year, demonstrating the strong performance of the West End market despite fragile national and global economies.
For the nine months under review the group has completed 90 lettings at £16.1m pa on 475,700 sq ft and its vacancy rate is now a low 0.8%, compared with 5.9% at the start of the year and 4.0% at June 2011.
The group’s portfolio was not formally valued in the period but it expects “the performance of its central London office focused assets to have closely tracked the IPD central London office index.
This recorded a total return of 10.1% with rental growth of 6.1% and equivalent yield compression of 15 basis points leading to capital growth of 1.7%.
Derwent won three key planning consents totalling 460,000 sq ft I the third quarter and is on site at four schemes,
Its net debt decreased to £864m at 30 September, reflecting an overall loan to value ration of 32.8%. Undrawn committed bank facilities total £449m and uncharged properties total £530m.
Chief executive John Burns said: “Although the national and global economies remain fragile, the central London office market has continued to perform well and this is demonstrated by our excellent letting achievements and our low vacancy rate.
“We are very pleased to have obtained a number of important planning consents that enable us to progress our central London development pipeline. These diverse and exciting schemes, mostly located close to new Crossrail hubs, enhance our future development options.”
bridget.o’connell@estatesgazette.com
