The election of a Conservative government has turned up the taps on the overseas capital flooding into the London property market. These aren't the frustrations of a Labour Party pamphlet, but one of the factors cited by management at Derwent London (DLN) for the sizeable boost in its net asset value.
Derwent's property portfolio saw a valuation uplift of 9.1 per cent in the first half, maintaining its strong upwards momentum. Once again, this was driven by central London, and particularly the so-called 'tech belt'. Properties such as the White Collar Factory development in Old Street contributed to an increase of 12 per cent in the value of Derwent's holdings in the area. Strong demand also drove gross income up 6 per cent to £72m in the first half. Notably, veteran boss John Burns raised his rental growth forecast for the year from 6-8 per cent to 8-10 per cent.
The valuation uplift help push the group's loan to asset value down to just 18.6 per cent, from 24 per cent at the year-end, helped by the conversion of some convertible bonds into share capital. Derwent has also extended its debt financing, reduced its cost of debt and increased by £390m, to £3.4bn, its pool of property assets unencumbered by bank charges.
Analysts at UBS expect year-end adjusted net assets per share of 3,423p, compared with 2,908p last December.
| DERWENT LONDON (DLN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,701p | MARKET VALUE: | £4.1bn | |
| TOUCH: | 3,701-3,707p | 12-MONTH HIGH: | 3,732p | LOW: 2,615p |
| DIVIDEND YIELD: | 1.1% | TRADING PROPERTIES: | £40.5m | |
| PREMIUM TO NAV: | 15% | NET DEBT: | 24% | |
| INVESTMENT PROPERTIES: | £38.2m | |||
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 2,578 | 371 | 356 | 11.7 |
| 2015 | 3,207 | 405 | 363 | 12.6 |
| % change | +24 | +9 | +2 | +8 |
Ex-div: 17 Sep Payment: 22 Oct | ||||
