TIDMDLN
RNS Number : 4233Y
Derwent London PLC
09 May 2019
Derwent London plc ("Derwent London" / "the Group")
FIRST QUARTER BUSINESS UPDATE
STRONG OCCUPIER DEMAND ADDS GBP17M TO RENTAL INCOME
Highlights
-- Lettings year to date total GBP17.2m on 217,600 sq ft, on
average 6.2% above December 2018 ERV
-- Over one million sq ft under construction with 64% pre-let:
o Brunel Building W2 - 98% pre-let, completion H1 2019
o 80 Charlotte Street W1 - 80% of commercial space pre-let,
completion H1 2020
o Soho Place W1 - 42% of commercial space pre-let, completion H1
2022
o The Featherstone Building EC1 - demolition under way,
completion H1 2022
-- EPRA vacancy rate 1.7%, down from 1.8% in December 2018
-- Sale contracts exchanged on Premier House SW1 and 9 Prescot
Street E1 for a previously announced Group share of GBP76.9m
-- LTV ratio at 31 March 2019 was 17.5%* with undrawn facilities and cash of GBP500m
John Burns, Chief Executive of Derwent London, said:
"Demand for Derwent London's space remains strong. We have now
pre-let over 600,000 sq ft of our one million sq ft development
programme. These lettings combined with our financial strength put
the Group in a very good position to pursue new opportunities."
*LTV based on December 2018 property values
Webcast and conference call
There will be a live webcast together with a conference call for
investors and analysts at 09:00 BST today. The audio webcast can be
accessed via www.derwentlondon.com.
To participate in the call, please register at
www.derwentlondon.com
For further information, please contact:
Derwent London John Burns, Chief Executive
Tel: +44 (0)20 7659 3000 Paul Williams, Director
Damian Wisniewski, Finance Director
Quentin Freeman, Head of Investor
Relations
Brunswick Group Nina Coad
Tel: +44 (0)20 7404 5959 Emily Trapnell
LETTING ACTIVITY (see Appendix 1)
During the quarter we completed the letting of the remaining
office space at Brunel Building W2 with two transactions totalling
82,600 sq ft. The offices, comprising 98% of the 243,200 sq ft
building, were pre-let in under a year. More recently we achieved
our first office pre-let at Soho Place W1 with G-Research taking a
15-year lease on 102,600 sq ft at GBP9.7m pa. This transaction,
achieved at such an early stage of construction, reflects the
demand for well-designed buildings in good locations. In addition,
the EPRA vacancy rate has reduced to 1.7% from 1.8% in December
2018.
DEVELOPMENT PROGRESS (see Appendix 2)
Brunel Building is expected to complete in the first half of
2019 and 80 Charlotte Street remains on track to complete in the
first half of 2020. In the first quarter we have added Soho Place
and The Featherstone Building to our on-site developments taking
our space under construction to over one million sq ft, of which
64% is pre-let. In February 2019 we signed the main building
contract on Soho Place with Laing O'Rourke for GBP195m. The two new
projects are due for completion in the first half of 2022.
DISPOSALS (see Appendix 3)
In the year to date we have exchanged contracts to sell Premier
House SW1 and 9 Prescot Street E1. The latter was held in a 50:50
joint venture. Both transactions have been previously announced and
the Group's share of the gross proceeds was GBP76.9m which, after
deducting costs, is on average 6.9% above December 2018 book
values.
FINANCE
Net debt increased in the quarter ended 31 March 2019 by
GBP23.8m to GBP980.7m after capital expenditure incurred of
GBP48.1m. This marginally increased the loan-to-value ratio to
17.5%, based on 31 December 2018 property values, from 17.2% at the
year end. Interest cover for the quarter was 460%.
Following the drawdown on 31 January 2019 of GBP250m of new
senior unsecured US private placement notes, undrawn facilities and
cash increased to GBP500m at 31 March and the weighted average
maturity of borrowings was extended to 7.5 years. The Group's
weighted average interest rate also increased slightly to 3.54% on
a cash basis and 3.78% on an IFRS basis.
Subject to shareholder approval, the 2018 final dividend of
46.75p per share will be paid to shareholders on 7 June 2019, the
shares having become ex-dividend on 2 May. These dividends have
given rise to an adjustment in the conversion price of the Group's
GBP150m 1.125% convertible bonds due 24 July 2019 from GBP31.78 per
share to GBP31.43.
PROPERTY VALUES
In Q1 2019 MSCI IPD's central London office index reported
virtually flat capital and rental growth, both up 0.2%.
Appendix 1: Principal lettings in 2019 to date
Office Total Rent
Area rent annual Lease Lease free
sq GBP rent term break equivalent
Property Tenant ft psf GBPm Years Year Months
1 Soho Place
W1 G-Research 102,600 94.70 9.7 15 - 32
Brunel Building
W2 Splunk 49,600 75.00 3.7 12 - 20
20, plus
Brunel Building 6 if
W2 Paymentsense 33,000 77.50 2.6 15 10 no break
185,200 86.40 16.0 - - -
Appendix 2: Major developments pipeline
Property Area Capex to complete Comment
sq ft GBPm(1)
On-site projects
Brunel Building, 2 Canalside Walk W2 243,200 16 Offices and retail - 98% pre-let
80 Charlotte Street W1 380,000 117 321,000 sq ft offices, 45,000 sq ft
residential and 14,000 sq ft retail - 74%
pre-let / pre-sold
overall
Soho Place W1 285,000 283(4) 209,000 sq ft offices, 36,000 sq ft retail
and 40,000 sq ft theatre - 42% commercial
space
pre-let(5)
The Featherstone Building EC1 125,000 76 110,000 sq ft offices, 13,000 sq ft
workspaces and 2,000 sq ft retail
----------- ------------------ ---------------------------------------------
1,033,200 492
----------- ------------------ ---------------------------------------------
Other major planning consents
19-35 Baker Street W1(2) 293,000(3) 206,000 sq ft offices, 52,000 sq ft
residential and 35,000 sq ft retail
Holden House W1 150,000 Retail flagship or retail and office scheme
----------- ------------------ ---------------------------------------------
443,000
----------- ------------------ ---------------------------------------------
Total 1,476,200
----------- ------------------ ---------------------------------------------
(1) As at 31 Dec 2018 (2 ') Resolution to grant' planning
permission (3) Total area - Derwent London has a 55% share of the
joint venture
(4) Includes remaining site acquisition cost and profit share to
Crossrail (5) In addition 40,000 sq ft theatre is pre-let
Appendix 3: Major disposals exchanged in 2019 to date
Gross Gross Net yield
Property Date Area proceeds proceeds to purchaser Rent
sq ft GBPm GBP psf % GBPm
pa
Premier House SW1 Q1 60,700 50.0 820 - -
9 Prescot Street E1
(50%) Q1 48,500 26.9 560 4.5 1.3
------- -------- ---------- ---------- -------------- ------
Total 109,200 76.9 705 - 1.3
-------- ---------- ---------- -------------- ------
Notes to editors
Derwent London plc
Derwent London plc owns 86 buildings in a commercial real estate
portfolio predominantly in central London valued at GBP5.2 billion
(including joint ventures) as at 31 December 2018, making it the
largest London-focused real estate investment trust (REIT).
Our experienced team has a long track record of creating value
throughout the property cycle by regenerating our buildings via
development or refurbishment, effective asset management and
capital recycling.
We typically acquire central London properties off-market with
low capital values and modest rents in improving locations, most of
which are either in the West End or the Tech Belt. We capitalise on
the unique qualities of each of our properties - taking a fresh
approach to the regeneration of every building with a focus on
anticipating tenant requirements and an emphasis on design.
Reflecting and supporting our long-term success, the business
has a strong balance sheet with modest leverage, a robust income
stream and flexible financing.
Landmark schemes in our 5.4 million sq ft portfolio include
White Collar Factory EC1, Angel Building EC1, The Buckley Building
EC1, 1-2 Stephen Street W1, Horseferry House SW1 and Tea Building
E1.
In 2019 to date, the Group has won the CoStar West End Deal of
the Year for Brunel Building. In 2018, we won EG Offices Company of
the Year, whilst White Collar Factory scooped RIBA National and
London awards, RICS National and London awards, two BCO awards for
Commercial Workplace and Innovation, an EG Creative Places award
and an NLA Wellbeing award. 25 Savile Row also won RIBA National
and London awards and SKA Gold for the fit-out. In 2013 Derwent
London launched a voluntary Community Fund and has to date
supported 76 community projects in Fitzrovia and the Tech Belt.
The Company is a public limited company, which is listed on the
London Stock Exchange and incorporated and domiciled in the UK. The
address of its registered office is 25 Savile Row, London, W1S
2ER.
For further information see www.derwentlondon.com or follow us
on Twitter at @derwentlondon
Forward-looking statements
This document contains certain forward-looking statements about
the future outlook of Derwent London. By their nature, any
statements about future outlook involve risk and uncertainty
because they relate to events and depend on circumstances that may
or may not occur in the future. Actual results, performance or
outcomes may differ materially from any results, performance or
outcomes expressed or implied by such forward-looking
statements.
No representation or warranty is given in relation to any
forward-looking statements made by Derwent London, including as to
their completeness or accuracy. Derwent London does not undertake
to update any forward-looking statements whether as a result of new
information, future events or otherwise. Nothing in this
announcement should be construed as a profit forecast.
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END
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