FINANCE: Derwent London has reported a 13.6% hike in NAV to 2,572p in an impressive set of results as West End rental growth and yield compression continues.
The central London specialist’s year-on-year NAV is up 25.2% as capital growth over the last three halves has accelerated from 4.7% to 7.6% to 10.1% in the current period.
Its portfolio was valued at £3.7bn as at 30 June 2014, reflecting a net initial yield of 3.7% – making it the largest London-focused REIT.
This outperformed the IPD Capital Growth Index for central London offices at 8.7% and the IPD All Property Index of 5.6%.
Its central London portfolio – some 97% of the total – increased by 10.3%, with the West End up 9.2% and the City borders up 13.2%. The balance, comprising Scottish assets, increased by 3.1%.
During the first six months, the group’s lettings, excluding space where there was a change of use, were 8.6% above December 2013 ERV.
The developer is currently on site at seven projects totalling 626,000 sq ft, including Tottenham Court Walk, W1, which is the retail element of its refurbishment of 1-2 Stephen Street, where work has recently started.
Of the space under construction, 29% is prelet at £9.6m pa net.
Valuation uplift on the seven major projects on site was 11.9%
Derwent said it would proceed with the regeneration of 80 Charlotte Street, W1, in 2015, which will comprise 322,000 sq ft offices, 44,000 sq ft residential, and 14,000 sq ft retail, with expected further capital expenditure of £149m.
Its consented 240,000 sq ft 55-65 North Wharf Road, W2, could start in 2016, and its 275,000 sq ft mixed-use scheme at 1 Oxford Street, W1, could start in 2018.
The latter project is subject to an option agreement to acquire the site from Crossrail, which could allow the start date to be brought forward.
In addition, the firm revealed that it has just applied for consent to convert its headquarters at 25 Savile Row, W1, into a 58,000 sq ft Mayfair residential development.
EPRA profit before tax was £32m, an increase of 14.3% from the same time last year and EPRA earnings per share were up 12.3% from June 2013 to 29.15p.
The group’s loan-to-value ratio reduced to 25.7% from 28% at 31 December 2013, and it has undrawn committed facilities of £364m at June 2014, up from £283m six months earlier.
It announced an interim dividend per share of 11.65p, an increase of 8.4% from 10.75p in June 2013.
Chairman Robert Rayne said: “The group is in a strong position, with first-half performance beating expectations. London continues to attract the most innovative businesses and global capital flows.
“The group is well positioned to benefit from this through its West End focus and its developments in the Tech Belt and near Crossrail stations.”
Chief executive John Burns added: “Derwent London is set to have another good year in 2014 after an excellent first half. Our confidence in our market, the quality of our brand and our strong financial position is reflected in the group’s most substantial development programme to date.”
bridget.o’connell@estatesgazette.com
