Derwent London reports second-best first half for lettings

Property investor and developer Derwent London said on Thursday that in the first half of 2023, it secured lettings amounting to £19.3m, covering a total space of 228,000 square feet.

The company said the second half had thus far seen lettings of £7m, spanning 81,200 square feet.

Year-to-date figures revealed a promising 8.3% increase above its estimated rental value (ERV) as of last December.

Prominent transactions in the year so far included agreements with Pimco and Moelis at 25 Baker Street W1, leading to the commercial space being 76% pre-let.

The Featherstone Building EC1 had meanwhile seen leases with Buro Happold and Tide, achieving a 70% letting rate.

Additionally, fashion brand Uniqlo occupied 22,200 square feet at One Oxford Street W1, pushing the retail space to a 70% let rate.

The company’s EPRA net tangible assets decreased in the first half to 3,444p per share - a dip of 5.2% from 3,632p as at 31 December.

Its gross rental income rose to £105.9m, making for a 3.9% improvement from the £101.9m reported in the first six months of 2022.

The first half dividend totalled 24.5p, making for growth of 2.1% from 24p.

However, the company recorded a loss of £143.1m before tax, which was a drastic shift from the £137.1m profit it noted in the first half of 2022.

It said its interest cover remained sturdy at 411%, with an EPRA loan-to-value ratio of 25.0%.

A slight increase in net debt was noted, with the figure standing at £1.27bn, up from £1.26bn at the end of 2022.

Looking ahead, Derwent said it was optimistic about its portfolio.

Its guidance was kept consistent, with average ERV growth set to range between 0% and 3%.

With a high-quality portfolio in its arsenal, the firm said it anticipated its yield to demonstrate greater resilience compared to the broader London office market.

“We delivered our second-highest first-half lettings on record with momentum maintained into the second half as businesses continue to commit to our distinctive central London buildings and brand,” said chief executive officer Paul Williams.

“With our strong balance sheet, we are well-positioned with the right product and pipeline to capture London's diverse demand, despite the uncertain economic outlook.”

Reporting by Josh White for Sharecast.com.