A rent-inflating clamber for West End office space helped Derwent London beat analysts' first-half expectations and there's probably more of the same to come. With the property portfolio's vacancy rate standing at just 1.1 per cent, estimated rental value for the group rose 2.8 per cent and helped drive a 4.1 per cent net asset value (NAV) increase in the six months. Although, trading at a premium to NAV, the share look up with events.
Derwent is also exploiting strong market conditions through a step-up in development activity. After starting two new schemes during the first half, total space under development has reached 550,000 square feet, 35 per cent of which is either pre-let or under offer. The active development programme is up 67 per cent since the start of the year and management plans to start work on a further 400,000 square feet in 2013, which will take total development expenditure to over £300m. Meanwhile, the value of the developments rose 6.1 per cent during the period.
Derwent is well placed to fund its development activities, too, with £410m of undrawn borrowing facilities and £595m-worth of properties that don't have any debt secured against them.
Broker Panmure Gordon forecasts full-year NAV of 1,780p.
| Derwent London (DLN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,946p | MARKET VALUE: | £2.0bn | |
| TOUCH: | 1943-1946p | 12-MONTH HIGH : | 2,036p | LOW: 1,386p |
| DIVIDEND YIELD: | 1.6% | TRADING PROPERTIES: | £93m | |
| PREMIUM TO NAV: | 10% | |||
| INVEST PROPERTIES: | £2.6bn | NET DEBT: | 49% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1,621 | 173 | 167 | 9.5 |
| 2012 | 1,770 | 102 | 99.1 | 10.0 |
| % change | +9 | -41 | -41 | +6 |
Ex-div: 26 Sep Payment: 1 Nov | ||||
