Derwent London de-risks development programme by closing in on 164,500 sq ft of new lettings

By James Buckley - Thursday, May 10, 2018 11:06

Derwent London de-risks development programme by closing in on 164,500 sq ft of new lettings

Derwent London, the largest London-focused REIT with a £4.9bn portfolio, has closed or has under offer a further 164,500 sq ft of lettings in the first quarter.

In its first quarter update this morning, Derwent said 113,000 sq ft of lettings are under offer for c.£7.2m of rents and a further 51,500 sq ft of new lettings have closed worth £2.4m per annum, 4.9% above December 2017 estimated rental value.

Derwent has continued to de-risk its development programme with 45% pre-let across its two current schemes: 80 Charlotte Street W1 is 86% of the office space is pre-let; and 32% of net lettable space at Brunel Building W2 is under offer.

John Burns, Chief Executive, said: “We continue to make good progress with our developments. Occupier interest remains encouraging and we have a significant amount of space under offer.”

In March, Porters North N1 was sold for £48.5m, or £43.0m net of rental top-ups, disposal costs and a capital contribution to the tenant.  The 44,100 sq ft building was held in a 50:50 joint venture and was sold at a 5% premium to December 2017 book value.

Capital expenditure and properties acquired in the first three months of 2018 totalled £53.1m including £2.4m of capitalised interest.  There were no significant property acquisitions and the only disposal in the period was Porters North; at the sale date, the associated £13.5m of bank debt (Derwent share: £6.8m) was repaid.

Group net debt rose marginally during the quarter ended 31 March 2018 to £667.5m giving an unchanged LTV ratio of 13.2% based on December 2017 property valuations, and interest cover rose again to 519%. 

Subject to shareholder approval, the 2017 final dividend of 42.4p per share and the special dividend of 75.0p per share will be paid to shareholders on 8 June 2018. 

James Wallace is a freelance consultant and can be reached via Linkedin or email: jawallace32@gmail.com

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