It is rare for a set of property company results to impress analysts in today's gloomy times, but central London real estate investment trust Derwent London has achieved such a feat.
"We have kept our heads down and got on with it," is how chief executive John Burns sums up the group's full-year performance. New lettings and rent reviews increased gross property income by 6.5 per cent to £119m in the period, vacancy levels decreased from 4.5 to 3.8 per cent and the (profitable) disposal of non-core assets raised £73m.
in the commercial property market produced a 32 per cent drop in Derwent's net asset value (NAV), and a 22.2 per cent decline in the value of its property portfolio. However, this outperformed the industry benchmark IPD Central London Offices Index, which registered a decline of 27 per cent for the period.
Profits were wiped out by a £602m revaluation deficit, £8.3m foreign-exchange loss and a separate £8.3m sum paid to a tenant to surrender a lease to facilitate a new development. However, underlying profits rose 6 per cent to £39.9m and Derwent operates comfortably within its banking covenants and could theoretically withstand a further 44 per cent drop in property values. The board is "committed to at least maintaining the current level of dividend."
Broker Cazenove forecasts 2009 NAV of between 990-1,040p.
| DERWENT LONDON (DLN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 604p | MARKET VALUE: | £609m | |
| TOUCH: | 601-605p | 12-MONTH HIGH: | 1,615p | LOW: 446p |
| DIVIDEND YIELD: | 4.1% | TRADING STOCK: | £7.5m | |
| DISCOUNT TO NAV: | 51% | |||
| INVESTMENT PROPERTIES: | £2.07bn | NET DEBT: | 71% | |
| 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 |
| % change | -32 | - | - | +9 |
Ex-div: 20 May Payment: 19 Jun *Adjusted NAV | ||||
