Shares in Derwent London (DLN) were hammered in the aftermath of the EU referendum, but the headline figures for the half-year to June don't really tell the whole story. They reflect a sharp decline in the revaluation surplus from £361m to £64.5m, but crucially, net rental income rose by 8.5 per cent to £72.6m.
And while there is a significant degree of uncertainty over what will happen to the London property market, Derwent London has a number of positive metrics that have supported a 21 per cent recovery in the share price since the post-referendum low. It's also worth noting that its exposure to the London financial sector is a nominal 2.3 per cent of June rental income.
And while rental growth is expected to slow, there remains a significant reversionary element within the portfolio, so that if all rents were marked to market income would be £151m higher. Future expenditure on current developments due for completion within the next 18 months will require around £125m to complete, while two developments due for completion in 2019 will soak up a further £338m. The near-term schemes are already 58 per cent pre-let. Finances remain in good shape, with a very modest loan-to-value ratio of 19.1 per cent.
Analysts at Peel Hunt are forecasting adjusted net asset value at the December 2016 year-end of 3,369p (from 3,535p in 2015).
| DERWENT LONDON (DLN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,731p | MARKET VALUE: | £3.04bn | |
| TOUCH: | 2,727-2,731p | 12-MONTH HIGH: | 3,891p | LOW: 2,230p |
| DIVIDEND YIELD: | 1.6% | TRADING PROP: | £9.6m | |
| DISCOUNT TO NAV: | 24% | |||
| INVESTMENT PROP: | £5bn | NET DEBT: | 25% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 3207 | 405 | 363 | 12.6 |
| 2016 | 3583 | 99 | 89 | 13.86 |
| % change | +12 | -76 | -76 | +10 |
Ex-div: 15 Sep Payment: 21 Oct | ||||
