Derwent London swings back to positive total return in 2021

Derwent London reported a positive total return of 5.8% in its 2021 results on Thursday, swinging from a negative return of 1.8% in 2020.

The FTSE 250 company said its EPRA net tangible assets totalled 3,959p per share, up 3.9% from 3,812p in December 2020, while its net rental income grew 2.2% year-on-year to £178.2m.

EPRA earnings came in at £122m, or 108.8p per share, which was up 9.7% from the 99.2p it recorded in 2020.

IFRS profit before tax was £252.5m, swinging from a loss of £83.0m, as the board declared a full-year dividend of 76.5p per share, up 2.8% on the prior year.

Derwent issued a £350m 10-year 1.875% green bond in November, with “strong” investor demand, while its interest cover was 464% and its loan-to-value ratio 20.8% at year-end.

The company’s undrawn facilities and cash totalled £608m, up from £476m in December 2020.

Looking at its portfolio, Derwent’s total property return was 6.3%, compared to its benchmark index of 5.9%.

Its portfolio was valued at £5.7bn, making for an underlying rise of 3.5% with development valuations up 9.2%, while its true equivalent yield tightened by 24 basis points to 4.5%.

During the year, the company made £417.5m of property acquisitions, and £405.1m of property disposals, £9.7m above the December 2020 book value.

A total of 708,000 square feet was under construction, with two major schemes completing in the first half of 2022, and 19-35 Baker Street commenced in the second half of 2021.

Derwent said it made £13.7m of new lettings and £31.9m of asset management transactions, as its EPRA vacancy rate fell to 1.6% from 1.8% at the end of 2020.

Looking ahead, the firm said its guidance was for 2022 average ERVs on its portfolio to move by 0% to 3%, with the average investment yields on its portfolio expected to remain firm.

“London is a vibrant and global city that attracts world class talent,” said chief executive officer Paul Williams.

“We are increasingly hearing from businesses across different sectors demanding modern, adaptable and environmentally responsible space.

“Our collaborative approach and our distinctively design-led product are well placed in this flight to quality and give us confidence to push ahead with our pipeline.”

At 0948 GMT, shares in Derwent London were down 0.99% at 3,094p.