Derwent London has said it is moving into the second half of the year with increased activity and confidence as it bolsters its development pipeline.
Delivering its half-year results, the London-based developer and landlord also announced a clutch of new deals and a joint venture with Lazari Investments to unlock a 240,000 sq ft development site on Baker Street, NW1.
Chief executive Paul Williams said: “Sentiment is improving as the year progresses, which has been reflected in our results and encouraged us to raise our ERV guidance.”
The group’s investment portfolio valuation climbed by 1.4% to £5.4bn, a strong reversal on the 2.1% fall for the second half of 2020. The bulk of its portfolio – 99% of which is in the West End of London and the City borders – rose by 1.4%, while its small Scottish outpost rose by 7.4% after getting residential planning consent.
Rent collection is nearly back to pre-Covid levels, with office tenants paying 95% of the £38.4m due for the June quarter day. However, just 59% of rent due from its small proportion of retail and hospitality tenants had been paid, with 6% written off and 12% due later in the quarter. In total, 93% of rent has been paid.
Lettings were also up, at 101800 sq ft for the year to date, but still well behind normal levels.
Including the deals announced today, Derwent has bought 327,400 sq ft of space over the past six months for a total of £252.9m. It has sold 318,900 sq ft for £256.5m, including the Johnson Building and Angel Square in EC1.
But it is in the development pipeline that Derwent sees the most promise. The 285,000 sq ft Soho Place, W1, and the 125,000 sq ft Featherstone Building are due to complete in H1 2022, while the 300,000 sq ft 19-35 Baker Street, NW1, is due in 2025. A further 287,000sq ft at Holden House and the Network Building, W1, has consent. Further into the future Derwent believes it recent deal with Lazari could unlock a 240,000 sq ft development, while changes to Bush House, WC2, could yield a further 130,000 sq ft.
Derwent London said it was raising its dividend by 4.5% to 23p per share.
Williams added: “We are well positioned to invest and are moving forward with our next phase of net zero carbon developments and today’s acquisitions have added to our extensive pipeline.”
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