Derwent London (DLN) delivered another flawless half-year performance. Adjusted book value rose 8.9 per cent to 2,054p over the six months - an acceleration of the previous trend - driven by a couple of exceptionally lucrative deals. "This is one of the strongest lettings markets I can remember," says John Burns, Derwent London's veteran chief executive.
One deal was a pre-let agreement with Publicis on two separate office projects on Turnmill Street and Chancery Lane. The French advertising giant, which will move Saatchi & Saatchi into one of the developments, agreed to pay 9.6 per cent more than surveyors' estimates of year-end rental levels. The second deal was the sale of a stalled hotel project at Grosvenor Place for £132.5m, compared with book value of £78m. These helped to boost the six-month valuation surplus to 6.3 per cent - more than double the wider market growth rate of 3.1 per cent.
Derwent's design-conscious development approach and footprint on the City's borders - areas such as Clerkenwell and Shoreditch - could hardly be better calculated to appeal to trendy technology and media companies. These are currently the property industry's chief source of growth, accounting for over a third of office demand in the first half.
Following upgrades to reflect the faster underlying rate of portfolio growth, broker Investec Securities expects year-end adjusted net asset value (NAV) of 2,206p a share (from 1,886p in 2012) and 2,406p for 2014.
DERWENT LONDON (DLN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,356p | MARKET VALUE: | £2.41bn | |
| TOUCH: | 2,352-2,362p | 12-MONTH HIGH: | 2,550p | LOW: 1,885p |
| DIVIDEND YIELD: | 1.5% | TRADING PROPERTIES: | £11.2m | |
| PREMIUM TO NAV: | 18% | NET DEBT: | 44% | |
| INVESTMENT PROPERTIES: | £2.89bn | |||
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1,697 | 102 | 99.1 | 9.95 |
| 2013 | 1,999 | 220 | 210.2 | 10.75 |
| % change | +18 | +116 | +112 | +8 |
Ex-div: 18 Sep Payment: 24 Oct | ||||
