Central London real-estate investment trust (Reit) Derwent London is preparing to return to the development market, mulling the construction of projects that will complete in 2011-12, when it envisages property markets will be back on track.
"It's not going to happen overnight, but development is not like starting a motor car - you've got to work it all out," says chief executive John Burns.
Maintaining the dividend at its half-year results, Derwent's pre-tax loss stems from a £259m negative revaluation movement on its investment portfolio, as the property market continues to correct. Nevertheless, this is a shallower fall than the previous six months, leading Mr Burns to hope that the market is stabilising.
Derwent has put in a strong lettings performance, with new lettings in the period adding £4.6m to the annual rent roll. The lease of its 45 Whitfield Street building, announced in tandem with these results, has added a further £0.3m to this figure.
| DERWENT LONDON (DLN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,235p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 1,233-1,236p | 12M HIGH: | 1,273p | LOW: 446p |
| DIVIDEND YIELD: | 1% | TRADING STOCK: | £7.5m | |
| PREMIUM TO NAV: | 31% | |||
| INVEST PROPERTIES: | £1.7bn | NET DEBT: | 86% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1614 | -145 | -138 | 8.15 |
| 2009 | 945 | -223 | -206 | 8.15 |
| % change | -41 | - | - | - |
Ex-div: 30 Sep Payment: 6 Nov | ||||
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However, rental pressures remain - the deals have been achieved at approximately 10 per cent below estimated rental values at the December year-end valuation, though the vacancy rate for the portfolio has remained flat at 3.9 per cent.
Underlying profits rose by 72 per cent, boosted by additional rental income, renegotiated business rates liabilities and a £4.1m reduction in finance costs.
Broker KBC Peel Hunt forecasts year-end net asset value of 926p.
