Interim results for the six months ended 30 June 2012
GOOD MOMENTUM IN LONDON'S OLYMPIC YEAR
Financial highlights
- EPRA net asset value per share increased by 4.1% to 1,770p from 1,701p at 31 December 2011
- EPRA profit before tax was £26.5m (H1 2011: £26.6m)
- Interim dividend per share of 9.95p (H1 2011: 9.45p), an increase of 5.3%
- Balance sheet strengthened further - loan-to-value ratio reduced to 31.4% (31 December 2011: 32.0%)
- New £83m 12-year facility drawn in August 2012, completing the refinancing of facilities due to expire in 2013
- £410m undrawn facilities and £595m of uncharged properties as at 30 June 2012
Property performance
- Valuation rose 3.3% in H1 2012 (H2 2011: 2.9%)
- Rental values rose 2.8% in H1 2012, the fifth successive half year of growth
- EPRA net initial yield 4.5% (31 December 2011: 4.4%), 'topped up' yield 5.1% (31 December 2011: 5.2%) and true equivalent yield 5.58% (31 December 2011: 5.61%)
- Developments and major refurbishments rose 6.1% in value
Portfolio management
- Strong momentum maintained with £8.9m of lettings on 229,100 sq ft (21,280m2) concluded in the first half
- 1 Page Street SW1 pre-let to Burberry, the largest letting in the West End in the year to date
- Vacancy rate remains low at 1.1% (31 December 2011: 1.3%) reflecting strong demand particularly from the TMT sector
- New open market lettings achieved 3.0% above December 2011 ERV
- Excluding Page Street, which was agreed in 2011 but completed in the first quarter of 2012, open market lettings were 9.4% above December 2011 ERV
- £51.6m of reversionary income potential, an increase of 9.1% over the period
Projects
- Two new projects now on site: active programme increased 67% since the year end to seven projects comprising 0.55 million sq ft (51,100m2), of which 35% is pre-let or under offer
- Further 0.4 million sq ft (39,190m2) to start in 2013, which will increase future development expenditure to over £300m
- Four major planning consents obtained
- o 50% already on site or sold
- o Remainder increases reservoir of future consented projects by nearly 25% to 1.5 million sq ft (138,000m2)
- Grosvenor Place SW1 - joint venture with Grosvenor enables prime mixed-use development with planning submission due next year
- Acquisitions and disposals
- Acquired Francis House SW1 for £29.1m on a 5.1% net initial yield
- Sold three properties and a 50% stake in 1-5 Grosvenor Place SW1 in the year to date for £161.5m on a disposal yield of 2.9%, and 4.5% surplus over 31 December 2011 values
Robert Rayne, Chairman, commented:
"London has a number of characteristics that makes its real estate market particularly attractive. Investment and tenant demand remain strong and supply of good quality office space is restricted by the constraints of planning and the general limited availability of finance. Furthermore, the events of this year, the Diamond Jubilee celebrations and the Olympics, have enhanced London's global status as a premier capital city."
John Burns, Chief Executive Officer, commented:
"Derwent London remains a well-financed business, with regeneration opportunities both in the short term and over the years to come. We remain confident that, if current market conditions persist, the level of rental growth experienced in our portfolio in the first half will be sustained throughout the rest of the year. Given the favourable balance of occupier demand and supply we are pushing forward with the execution of our development pipeline."
