Derwent London plans to kick off a clutch of central London development projects, believing that nascent rental recovery offers better returns than buying overpriced investment assets.
The only FTSE 350 Real estate investment trust not to undertake a rights issue in 2009, Derwent's finances provide a firm foundation for securing development finance in due course. With low gearing and banking lines of £425m, it has earmarked £200m for development starts and £37m for refurbishing space. "In the next two to three years we'd like to spend a couple of hundred million on schemes planned for Hampstead and City Road," says chief executive John Burns. The company's redevelopment of Islington's Angel centre, which is 53 per cent pre-let, completes this summer.
The strong recovery in central London property markets was evidenced in the full-year results, with an 18 per cent boost to net asset value (NAV) in the second half of the year, and a £178m revaluation surplus. Demand for good value mid-market office space in central London translated into over 100 lettings in the year, boosting net rental income by 20 per cent to £115m.
Broker Nomura forecasts NAV of 1,295p in 2010.
DERWENT LONDON (DLN) | ||||
---|---|---|---|---|
ORD PRICE: | 1,322p | MARKET VALUE: | £1.3bn | |
TOUCH: | 1,322-1,323p | 12-MONTH HIGH: | 1,418p | LOW: 581p |
DIVIDEND YIELD: | 2% | TRADING STOCK: | £1m | |
PREMIUM TO NAV: | 13% | |||
INVESTMENT PROPERTIES: | £1.89bn | NET DEBT: | 62% |
Year to 31 Dec | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2005 | 1,335 | 150 | 219 | 13.65 |
2006 | 1,770 | 243 | 340 | 14.75 |
2007 | 1,801 | -100 | 101 | 22.50 |
2008 | 1,226 | -607 | -582 | 24.50 |
2009 | 1,168 | -35 | -27 | 27.00 |
% change | -5 | - | - | +10 |
Ex-div: 19 May Payment: 17 Jun *Adjusted NAV |
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