Derwent London has signed a new £75m five-year unsecured revolving bank facility to replace its existing facility with Wells Fargo.
The new corporate facility frees up charges on around £400m of properties, with a significantly lower margin than the previous facility.
It has been signed on a five-year term with two one-year extensions possible.
Derwent today announced an EPRA NAV per share increase of 10.9%, from 2,908p as of 31 December 2014 to 3,226p.
The firm has seen an underlying valuation increase of 9.1%, compared with 9.8% in H1 2015 and the second half of 2014.
It also estimates rental values to have increased by 5.2% over the period, compared with 4.2% in H1 and 4.8% in H2.
Net rental income over the six months to June also increased by 5% to £66.9m from £63.7m over the same period in 2014.
EPRA profit before tax stood at £39m – a 21.9% increase from £32m in H1 2014.
EPRA earnings per share were 33.97p, up 16.5% from 29.15p in the half year to June 2014.
Finance director Damian Wisniewski said of the new facility: “It puts us in a very strong position with which to move ahead with this big pipeline of projects – having a low level of financial leverage today complements this relatively high level of operational leverage we are embarking on.”
The firm is on course to have a development pipeline of 1m sq ft started on site within 12 months, for delivery in 2016-2019.
It could also start work on a potential 250,000 sq ft development of 19-35 Baker Street, W1, in partnership with freeholder the Portman Estate, as early as 2018.
Derwent has also agreed revised terms for an agreement with Crossrail to acquire a 150-year lease on 1 Oxford Street, W1, for £55m, which has consent for a 275,000 sq ft project.
The firm added that it had reappraised options for its 25 Savile Row HQ, W1, in light of the balance of residential values and Mayfair office rents, and is now favouring an office refurbishment project rather than residential conversion.
Chief executive John Burns said: “In our areas there has been too little development, we still think there is a shortage of space. And we are finding grown up companies going into the Tech Belt areas.”
“We have raised our average portfolio ERV growth estimates for the full year to 8-10%, and expect property yields to remain firm in the second half supported by voracious demand.”
The REIT said after the completion of the White Collar Factory in 2016 its focus “returns to the West End, where the majority of our immediate development commitments and portfolio lie”.
It has major projects totalling 620,000 sq ft at 80 Charlotte Street, W1, where work will begin later this year, and the Brunel Building, W2, where work will commence in H1 2016.
However, it has also recently lodged a plan for a 170,000 sq ft scheme at Monmouth House at 58-64 City Road, EC1. The plan comes after the firm purchased 20 Farringdon Road, EC1, and Aldgate Union, E1. On the latter, Derwent is planning a “light-touch” refurbishment, aiming to achieve rents of around £40 per sq ft.
The new facility comes after the firm converted £175m of 2.75% convertible bonds in January with the issue of 7.88m new shares.
The group’s loan-to-value ratio now stands at 18.6%, down from 24% on 31 December 2014.
Derwent holds cash and undrawn committed facilities of £319m.
The firm’s total property return stood at 10.3% in the six months to June 2015, compared to an IPD Central London Offices Index of 10.1%.
Its portfolio is located 59% in the central West End and 35% in the Tech Belt.
True equivalent yields tightened by 17 basis points to 4.56%.
It will pay a dividend per share of 12.6p, up by 8.2% from 2014.
