Excellent results
EPRA NAV per share up 20.0% to 2,264p
Underlying valuation uplift of 12.6%
Value of City borders properties rose 20.3% and West End properties 10.8% in 2013
Development projects rose 25.1% in value
EPRA profit before tax increased by 10.1% to £57.8m
Final dividend raised by 8.4% to 25.75p, giving total dividend for the year of 36.50p
Record year for lettings
Record new lettings of £21.8m pa (before deducting ground rent of £1.0m) on 643,200 sq ft (59,750m2) at 8.4% premium to December 2012 ERV
Pre-let of 155,600 sq ft (14,460m2) at 40 Chancery Lane WC2 and Turnmill EC1 to Publicis Groupe for £7.8m pa net
The Buckley Building EC1 let within six months of completion at rents over 30% ahead of original expectations
Committed to development with extensive pipeline of future opportunities
Development activity accelerating:
o 248,100 sq ft (23,050m2) of major projects completed during 2013 and 100% let
o 586,000 sq ft (54,450m2) under construction, including White Collar Factory EC1
o Further 1.0 million sq ft (94,000m2) with planning permission
o 0.9 million sq ft (84,000m2) under active appraisal
Total capital expenditure for next two years estimated at around £280m
Highly reversionary portfolio
Low contracted office rents averaging £25.79 psf (£278 per m2) rising to £32.65 psf (£351 per m2) on a 'topped-up' basis
Potential reversion of £71.0m (2012: £55.4m) giving a portfolio ERV of £197.0m at December 2013 (2012: £175.0m), an uplift of 56% on current passing rent
Effective capital recycling
Acquired 216,800 sq ft (20,140m2) of income-generating assets let off modest rents, in improving locations, for £130m
£149.8m of disposals in the year generating a profit of £53.5m
1-5 Grosvenor Place SW1 sold for net proceeds of £131.4m, a 70% premium to December 2012 valuation
Debt costs down and maturity increased
£800m of loans refinanced:
o £150m of 1.125% convertible bonds due in 2019
o £550m five-year unsecured revolving bank facility
o £100m US private placement loan with average maturity of 18.75 years
Proportion of unsecured debt increased from 20% to 63%
Average debt maturity rose from 6.1 years to 6.3 years (7.7 years taking into account the £100m USPP loan in January 2014)
Cash cost of debt at end of 2013 was 3.64% (2012: 4.63%) and on an IFRS basis was 4.10% (2012: 4.88%)
Robert Rayne, Chairman, commented:
"Derwent London had an excellent 2013, delivering a net asset value increase of £453m, more than double that in 2012, and a total return of 21.9%. Letting and asset management initiatives over the last two years are being reflected in growing earnings and £800m of debt refinancing has further improved the resilience and flexibility of our strong balance sheet."
John Burns, Chief Executive Officer, commented:
"The demand for our brand of well-located, mid-market office space is strong and investor appetite for London's commercial real estate remains high. Against this background, we expect our rental values to rise by around 5% to 7% in 2014 and overall property yields to remain stable.
Whilst we continue to look ahead for any changes to the current favourable market environment, we are moving ahead with our expanding development pipeline. We have started construction of the White Collar Factory in the heart of the Tech Belt and expect to commence an additional major project in each of the next two years. Our portfolio contains a wealth of future opportunities supported by a strong financial base. Together these give us the capacity and flexibility to implement our plans with confidence."
