TIDMDLN
RNS Number : 6960X
Derwent London PLC
06 May 2021
Derwent London plc ("Derwent London" / "the Group")
FIRST QUARTER BUSINESS UPDATE
Summary
-- Portfolio update:
o GBP1.3m of new lettings achieved year to date, together with
another GBP4.3m under offer
o 93% of March 2021 quarter day rent collected, up from 87% on
13 April with another 4% expected later in the quarter
o 95% of office rents collected with a further 4% expected later
in the quarter
o Vacancy rate of 2.3% remains low, up from 1.8% in December
2020
-- On-site developments on track for delivery in H1 2022:
o Soho Place W1: 285,000 sq ft - 87% pre-let or forward sold
o The Featherstone Building EC1: 125,000 sq ft
-- Currently procuring the main contractor at 19-35 Baker Street
W1, a 297,000 sq ft scheme, with demolition to start in H2 2021
-- Planning decisions expected in June 2021 on Network Building W1 for up to 130,000 sq ft
-- Creating future potential at Holford Works WC1 after
acquisition of long leasehold interest for GBP22.6m before costs
where we already own the freehold
-- Strong finances:
o LTV 16.0%(1)
o Undrawn facilities and cash GBP621m
(1) LTV based on 31 December 2020 property values
Paul Williams, Chief Executive of Derwent London, said:
"We are seeing a marked increase in activity across our
portfolio as London is emerging from lockdown and we now have
GBP5.6m of lettings completed or under offer. Our occupiers are
telling us that they are keen to return to their offices as the
economy bounces back."
For further information, please contact:
Derwent London Paul Williams, Chief Executive
Tel: +44 (0)20 7659 3000 Damian Wisniewski, Chief Financial
Officer
Quentin Freeman, Head of Investor
Relations
Brunswick Group Nina Coad
Tel: +44 (0)20 7404 5959 Emily Trapnell
Webcast and conference call
There will be a webcast and conference call for investors and
analysts at 09:00 BST today.
To participate in the call, please use the following link:
https://webcasts.derwentlondon.com/derwent058
A recording of the conference call will also be made available
following the conclusion of the call on www.derwentlondon.com .
PORTFOLIO ACTIVITY
In the year to date we have completed GBP1.3m of new lettings
with another GBP4.3m under offer. On average, levels are 3.1% below
December 2020 estimated rental value (ERV). Although this
represents only a small proportion of our portfolio, new space is
letting above ERV and older unimproved space is letting at a
discount.
We have now collected 93% of our total March 2021 quarter rent,
up from 87% from when we last reported 13 April 2021, with a
further 4% expected to be received this quarter. We have now
collected 95% of office rents for the March quarter with another 4%
due later in the quarter. These are the strongest rent collection
numbers since the start of the pandemic with office collection
rates close to pre-pandemic levels.
DEVELOPMENTS
Our two next net zero carbon developments at Soho Place W1 and
The Featherstone Building EC1 are due for completion in the first
half of 2022 and are progressing well. The former is largely
pre-let or forward sold with 36,000 sq ft of retail to let. We
continue to see early interest in a significant part of the office
space at The Featherstone Building.
Major developments pipeline
Property Area Capex to complete Comment
sq ft GBPm(1)
On-site projects completing H1 2022
Soho Place W1 285,000 152(2) 209,000 sq ft offices, 36,000 sq ft retail
and 40,000 sq ft theatre - 87% pre-let /
forward
sold.
The Featherstone Building EC1 125,000 37 110,000 sq ft offices, 13,000 sq ft
workspaces and 2,000 sq ft retail.
----------- ------------------ ---------------------------------------------
410,000 189
----------- ------------------ ---------------------------------------------
Forthcoming projects completing 2025
19-35 Baker Street W1 297,000(3) 265 Consented. 217,000 sq ft offices, 52,000 sq
ft residential and 28,000 sq ft retail.
----------- ------------------ ---------------------------------------------
Planning
Holden House W1 150,000 Consented. Office and retail scheme.
Network Building W1 130,000 Planning application submitted. Potential to
increase floorspace from 70,000 sq ft.
----------- ------------------ ---------------------------------------------
280,000 -
----------- ------------------ ---------------------------------------------
Total 987,000 454
----------- ------------------ ---------------------------------------------
(1) As at 31 December 2020 (2) Includes remaining site
acquisition cost and profit share to Crossrail
(3) Total area - Derwent London currently has a 55% share of the
joint venture
Our next major development 19-35 Baker Street W1 is on track to
start in the second half of this year. We are expecting a decision
on our planning application at Network Building W1 in June 2021. We
have applied to develop either a Life Sciences or an offices option
of 100,000 sq ft or 130,000 sq ft, respectively. If successful,
construction should start in 2022.
ACQUISITION
In May the Group completed the acquisition of the 65-year
leasehold interest in Holford Works, Cruickshank Street WC1 for
GBP22.6m before costs, where Derwent London already owns the
freehold. The property comprises 41,600 sq ft of former industrial
space used as offices. The principal occupiers are Barbour and
Vidya Health. The combined interest is estimated to produce a net
initial yield of c.6% with a capital value of c.GBP630 per sq ft.
This Tech Belt property, located between Angel and King's Cross,
will provide medium term income as well as longer term
opportunities.
FINANCE
Net debt fell to GBP905m at 31 March 2021 from GBP1,049m at 31
December 2020 while undrawn facilities and cash increased to
GBP621m. The main factors were the receipt of GBP166m from the
disposal of Johnson Building EC1 in January 2021 and capital
expenditure on projects during the quarter of GBP42m. The
loan-to-value ratio was 16.0% at 31 March 2021 compared to 18.4% on
31 December 2020 and interest cover for the first three months of
2021 increased to 4.7 times from 4.5 times for the whole of
2020.
Notes to editors
Derwent London plc
Derwent London plc owns 83 buildings in a commercial real estate
portfolio predominantly in central London valued at GBP5.4 billion
(including joint ventures) as at 31 December 2020, making it the
largest London-focused real estate investment trust (REIT).
Our experienced team has a long track record of creating value
throughout the property cycle by regenerating our buildings via
development or refurbishment, effective asset management and
capital recycling.
We typically acquire central London properties off-market with
low capital values and modest rents in improving locations, most of
which are either in the West End or the Tech Belt. We capitalise on
the unique qualities of each of our properties - taking a fresh
approach to the regeneration of every building with a focus on
anticipating tenant requirements and an emphasis on design.
Reflecting and supporting our long-term success, the business
has a strong balance sheet with modest leverage, a robust income
stream and flexible financing.
As part of our commitment to lead the industry in mitigating
climate change, Derwent London has committed to becoming a net zero
carbon business by 2030, publishing its pathway to achieving this
goal in July 2020. In 2019 the Group became the first UK REIT to
sign a Revolving Credit Facility with a "green' tranche. At the
same time, we also launched our Green Finance Framework and signed
the Better Buildings Partnership's climate change commitment. The
Group is a member of the 'RE100' which recognises Derwent London as
an influential company, committed to 100% renewable power by
purchasing renewable energy, a key step in becoming a net zero
carbon business. Derwent London is one of only a few property
companies worldwide to have science-based carbon targets validated
by the Science Based Targets initiative (SBTi).
Landmark schemes in our 5.6 million sq ft portfolio include 80
Charlotte Street W1, Brunel Building W2, White Collar Factory EC1,
Angel Building EC1, 1-2 Stephen Street W1, Horseferry House SW1 and
Tea Building E1.
In January 2021, Derwent London came top of the Property Sector
and 10th position overall in Management Today's Britain's Most
Admired Companies awards 2020. In the year the Group has won
several awards for Brunel Building with the most prominent being
the BCO Best Commercial Workplace award. In 2019 the Group won EG
Offices Company of the Year, the CoStar West End Deal of the Year
for Brunel Building and Westminster Business Council's Best
Achievement in Sustainability award. In 2013 the Company launched a
voluntary Community Fund and has to date supported well over 100
community projects in the West End and the Tech Belt.
The Company is a public limited company, which is listed on the
London Stock Exchange and incorporated and domiciled in the UK. The
address of its registered office is 25 Savile Row, London, W1S
2ER.
For further information see www.derwentlondon.com or follow us
on Twitter at @derwentlondon
Forward-looking statements
This document contains certain forward-looking statements about
the future outlook of Derwent London. By their nature, any
statements about future outlook involve risk and uncertainty
because they relate to events and depend on circumstances that may
or may not occur in the future. Actual results, performance or
outcomes may differ materially from any results, performance or
outcomes expressed or implied by such forward-looking
statements.
No representation or warranty is given in relation to any
forward-looking statements made by Derwent London, including as to
their completeness or accuracy. Derwent London does not undertake
to update any forward-looking statements whether as a result of new
information, future events or otherwise. Nothing in this
announcement should be construed as a profit forecast.
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