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Derwent London hones development focus

The London office developer and landlord is progressing with another two schemes
August 8, 2019

Derwent London (DLN) continued to sweat its development portfolio during the first half, as a valuation uplift to the Brunel Building in West London helped boost overall adjusted net asset value almost 2 per cent, ahead of the 0.1 per cent return posted by the MSCI IPD Quarterly Index for central London Offices.

IC TIP: Buy at 2918p

Net rental income was 7 per cent higher, with new lettings totalling £18.1m and agreed ahead of December 2018 estimated rental values by 7.5 per cent. The London office landlord was on site with two major developments at the end of June – the aforementioned Brunel and 80 Charlotte Street – but has since added another two, Soho Place and the Featherstone Building. In aggregate those four schemes were valued at just under £900m, benefiting from a 13.6 per cent valuation increase. Those developments meant rental income could potentially be boosted by a further 22 per cent. 

Contracts were also exchanged to sell The Buckley Building in EC1 for £103m, 4.8 per cent ahead of December 2018 values, as part of efforts to recycle capital back into developments.  

Analysts at Panmure Gordon expect adjusted NAV of 3,848p at the December 2019 year-end, up from 3,776p at the same time last year. 

DERWENT LONDON (DLN)   
ORD PRICE:2,918pMARKET VALUE:£ 3.26bn
TOUCH:2,914-2,920p12-MONTH HIGH:3,352pLOW: 2,745p
DIVIDEND YIELD:2.3%TRADING PROP:£41m
DISCOUNT TO NAV:-24%  
INVESTMENT PROP:£5.18bnNET DEBT:23%
Half-year to 30 JunNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20183,70613412019.1
20193,84313011821.0
% change+4-3-2+10
Ex-div: 12 Sep   
Payment: 18 Oct