Any thoughts that the London property market was in terminal decline following the referendum vote were brushed aside, as Derwent London (DLN) delivered a record six months of letting in the six months to June. Concerns on rents were also sidelined for now, with lettings 0.5 per cent ahead of end-December estimated rental values.
Underlining the resilient nature of the market, Derwent registered a £66.7m revaluation surplus on its portfolio; managing to beat the prior period's £64.5m boost. Net rental income rose by 9.2 per cent to £79.3m and the vacancy rate fell from 2.6 per cent to 1.9 per cent. Adjusted net asset value (NAV) was a touch higher at 3,582p per share.
New lettings and disposals have significantly derisked the development programme. Following the completion of the White Collar Factory by London's so-called Silicon Roundabout, there are three developments under construction with an estimated rental value of £47.9m. To complete these projects will cost a further £286m. Recycling capital through disposals generated £327m, secured 6 per cent ahead of December 2016 values, and disposals already agreed in the second half will take the total up to £492m.
Analysts at Peel Hunt have revised their forecast for adjusted NAV from 3,410p to 3,550p at the year ending December 2017 (from 3,551p in 2016).
| DERWENT LONDON (DLN) | ||||
| ORD PRICE: | 2,794p | MARKET VALUE: | £3.12bn | |
| TOUCH: | 2,792-2,795p | 12-MONTH HIGH: | 2,967p | LOW: 2,299p |
| DIVIDEND YIELD: | 2.0% | TRADING PROP: | £14.1m | |
| DISCOUNT TO NAV: | 22% | |||
| INVESTMENT PROP: | £4.51bn | NET DEBT: | 18% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 3,583 | 99 | 89 | 13.86 |
| 2017 | 3,568 | 146 | 131 | 17.33 |
| % change | - | +48 | +48 | +25 |
| Ex-div: | 14 Sep | |||
| Payment: | 20 Oct |
