Derwent shares fall on uncertain outlook post Brexit

Derwent London shares fell on Thursday after the real estate investment trust said the outcome of the European Union referendum may lower activity.

In the company’s first half results, Derwent said the latest portfolio valuation timed seven days after Brexit showed capital growth slowing to 1.6% in the first six months. Letting activity also slowed marginally in the second quarter.

“Understandably our focus is now on the outlook for the UK economy and the London office market,” the group said in a statement.

“We recognise that, in the short term, political and economic uncertainty is likely to lower demand and that the long term ramifications of this significant vote are unlikely to be known for some time."

However, with limited office space available, Derwent believes its middle market rental offering is well positioned for a more cautious market.

Derwent reported a 1.8% increase in EPRA net asset value to 3,598p at the end of the first half period from 3,535p at 31 December 2015.

First half adjusted pre-tax profit gained 14.9% to £44.8m as net rental income rose 8.5% to £72.6m.

Adjusted earnings per share was 37.13p, up 9.3% on the previous year.

The interim dividend per share was raised by 10% to 13.86p.

The group said the first six months of letting activity was the highest ever half year with 267,700 sq ft generating £16.7m per annum. In the second half, 112,600 sq ft has been let since June.

"It is early days since the EU referendum but London remains a major global city with significant attractions and potential for the future,” said chairman Robbie Rayne.

“Derwent London has a flexible and dynamic business model and a strong balance sheet with low leverage which enables us to respond to changing economic conditions."

Shares dropped 3.26% to 2,727p at 0936 BST.