Derwent sees strong letting activity, shares spark

Updating on trading, the landlord said lettings in the year to date now totalled £27.8m, up 8.1% on December 2022's estimated rental value (ERV).

Key lets include 25,300 sq ft of space in the Featherstone Building in EC1, let to Tide and Avalere Health, while 25 Baker Street, W1, has been pre-let to Moelis & Company.

The vacancy rate stood at 3.7% as at 30 September, down from 4.5% as at 30 June.

The loan to value ratio was 25.2%, compared to 25.0% as at 30 June, with an unchanged average interest rate of 3.19%.

Paul Williams, chief executive, said: "London’s diverse occupier base continues to prioritise quality, amenity and location. Our distinctive portfolio has benefitted from these trends with ongoing strong letting activating.

"The investment market remains subdued, but our strong balance sheet positions us well for the opportunities ahead."

As at 0935 GMT, shares in the FTSE 250 firm were up 9% at 2,012p.

Andrew Saunders, analyst at Shore Capital, said: "The broader outlook appears cautiously optimistic, consistent with our own views. However, we suspect outward yield movement has continued in the second half.

"We like the geographical positioning of Derwent’s London portfolio and lack of exposure to the core City and Docklands market. We also believe that the current development pipeline will ultimately help drive uplifts to net tangible assets, once the London office cycle regains upward momentum – although in our minds that is likely to take some time to affect."

Shore Capital has a ‘hold’ rating on Derwent, which owns 66 buildings mainly in central London valued at £5.2bn.