TIDMDLN
RNS Number : 7923E
Derwent London PLC
11 May 2017
11 May 2017
Derwent London plc ("Derwent London" / "the Group")
FIRST QUARTER BUSINESS UPDATE
FURTHER LETTING PROGRESS AND SIGNIFICANT DISPOSALS ABOVE BOOK
VALUE
Highlights
-- In 2017 to date we have let or pre-let 260,100 sq ft achieving rents of GBP17.0m pa:
o 48% increase from the GBP11.5m announced with the 2016 results
on 28 February
o 0.9% above December 2016 ERV
o Lettings since the end of February 4.6% above ERV
-- White Collar Factory now complete, 72% let with the majority
of the remaining space under offer
-- Three developments totalling 727,000 sq ft remain under construction, 30% pre-let
-- Property disposals agreed in the year to date total GBP327m,
6.7% above December 2016 values
-- LTV ratio 16.5% at 31 March 2017, with cash and undrawn facilities of GBP359m
John Burns, Chief Executive Officer, commented:
"Following the excellent start to the year that we announced
with our results in February, demand for our product remains strong
and our letting progress continues. In addition, our sales activity
demonstrates resilient investment demand."
Webcast and conference call
There will be a conference call for investors and analysts at
09:00 BST today.
To participate in the call, please dial the following number:
+44 (0)20 3059 8125
A recording of the conference call will also be made available
following the conclusion of the call on www.derwentlondon.com
For further information, please contact:
Derwent London John Burns, Chief Executive
Tel: +44 (0)20 7659 3000 Officer
Damian Wisniewski, Finance
Director
Quentin Freeman, Head
of Investor Relations
Brunswick Group Simon Sporborg
Tel: +44 (0)20 7404 5959 Tim Danaher
Active demand leads to further lettings (see Appendix 1)
In the year to date we have let or pre-let 260,100 sq ft at
GBP17.0m pa. This is an increase of GBP5.5m from our announcement
on 28 February. The major deals with Arup and Adobe have previously
been reported and we have now let all the available refurbished
space at 20 Farringdon Road EC1 and 78 Chamber Street E1, as well
as recently regenerated space at Greencoat & Gordon House SW1.
Following the letting of the fifth floor to Wilmington, Phase 1 of
The White Chapel Building E1 is now 93% let with the remaining
space under offer. On average our lettings have been 0.9% above
December 2016 ERV, with activity since 28 February 4.6% above. Our
EPRA vacancy rate has risen from 2.6% to 3.2%, which includes the
recently completed White Collar Factory EC1.
Good progress on developments (see Appendix 2)
The delivery of White Collar Factory has reduced our pipeline
under development by 29% to 727,000 sq ft. At The Copyright
Building W1, where the entire office element of 87,150 sq ft was
pre-let in 2016, we remain on track for delivery of the building in
H2 2017 and are now marketing the retail space. The 2019 project
deliveries, which represent 85% of our on-site programme, are
progressing well with the pre-letting in Q1 of 42% of the offices
at 80 Charlotte Street W1 on a 20-year term to Arup with fixed
annual increases of 2.25% for 15 years.
Significant disposals activity (see Appendix 3)
At the time of our 2016 results, we reported GBP327m of
disposals before costs at 6.7% above December 2016 book values. The
sale of 132-142 Hampstead Road NW1 for GBP130m completed in March
and the GBP197m sale of 8 Fitzroy Street W1 is expected to complete
in June 2017.
Finance
Capital expenditure in the first quarter totalled GBP48.1m
including GBP2.6m of capitalised interest. However, following the
sale of Hampstead Road, net debt fell to GBP829.6m from GBP904.8m
at 31 December 2016. This brought the loan-to-value ratio down to
16.5% based on December 2016 property valuations and interest cover
for the quarter rose to 408%. The weighted average debt maturity
was 7.7 years and undrawn facilities and cash totalled GBP359m. In
order to reduce our proportion of fixed and hedged debt, we
cancelled a GBP40m interest rate swap at a cost of GBP3.2m in March
but the lower level of floating rate debt caused the weighted
average interest rate payable as at 31 March 2017 to rise by 6bp to
3.71%. On an IFRS basis, the interest rate was 3.99%.
Values
Central London office values remain firm reinforced by foreign
investment and despite continuing Brexit concerns. The IPD West End
& Midtown Office monthly index for Q1 2017 reported office
rents down 0.6% but capital values up 0.3%.
Appendices
Appendix 1: Principal lettings in 2017
Min
/ fixed
uplift
at
Total first
Area Rent annual review Lease Lease Rent free
sq GBP rent GBP term break equivalent
Property Tenant ft psf GBPm psf Years Year Months
------------------ ------------ -------- ------ -------- --------- ------- ------- ------------
Q1
80 Charlotte
Street W1 Arup 133,600 72.90 9.7(1) 81.50 20 - 33
White Collar
Factory EC1 Adobe 14,900 67.50 1.0 74.50 11.5 - 22
Angel Building
EC1 Expedia 12,500 62.50 0.8 - 13.3 - 18
Greencoat
& Gordon House
SW1 VCCP 12,800 55.00 0.7 - 8.5 - 13
9, plus
9
20 Farringdon if no
Road EC1 Accenture 11,500 55.00 0.6 - 10 5 break
------------------ ------------ -------- ------ -------- --------- ------- ------- ------------
Q2
The White
Chapel Building
E1 Wilmington 27,000 52.00 1.4 - 10 - 20
9.5, plus
5
White Collar Red if no
Factory EC1(2) Badger 7,700 62.50 0.5 65.60 10 5 break
78 Whitfield Yoyo
Street W1 Wallet 4,800 63.00 0.3 - 4.5 - 8
78 Chamber
Street E1(3) NetBooster 6,700 40.00 0.3 - 10 5 10
------------------ ------------ -------- ------ -------- --------- ------- ------- ------------
(1) Annual increases of 2.25% for the first 15 years (2) Low
rise buildings (3) Joint venture - Derwent London share
Appendix 2: Major developments pipeline
Property Area Delivery Capex Comment
sq to
ft complete
GBPm(1)
------------------------- ----------- --------- ---------- -------------------------
Completed projects
White Collar Factory, 293,000 H1 - 276,000 sq ft
Old Street Yard 2017 offices, 9,000
EC1 sq ft retail,
8,000 sq ft residential
- 72% let overall
Projects on site
87,000 sq ft
offices and 20,000
The Copyright Building, sq ft retail
30 Berners Street H2 - 81% pre-let
W1 107,000 2017 24 overall
Brunel Building,
55 North Wharf Road H1
W2 240,000 2019 99 Offices
321,000 sq ft
offices, 45,000
sq ft residential
and 14,000 sq
80 Charlotte Street H2 ft retail - 35%
W1 380,000 2019 213 pre-let overall
------------------------- ----------- --------- ---------- -------------------------
727,000 336
------------------------- ----------- --------- ---------- -------------------------
Other major planning
consents
1 Oxford Street 275,000 204,000 sq ft
W1 offices, 37,000
sq ft retail
and 34,000 sq
ft theatre
Monmouth House EC1 125,000 Offices, workspaces
and retail
------------------------- ----------- --------- ---------- -------------------------
400,000
------------------------- ----------- --------- ---------- -------------------------
Planning applications
19-35 Baker Street 293,000(2) Planning application
W1 submitted for
206,000 sq ft
offices, 52,000
sq ft residential
and 35,000 sq
ft retail
------------------------- ----------- --------- ---------- -------------------------
Grand total (excluding
completed projects) 1,420,000
------------------------- ----------- --------- ---------- -------------------------
(1) As at 31 December 2016 (2) Total area - Derwent London has a 55% share of the joint venture
Appendix 3: Significant disposals 2017
Gross Gross Net
Property Date Area proceeds proceeds yield Rent
sq GBPm GBP to purchaser GBPm
ft psf % pa
------------------- ------- -------- ---------- ---------- -------------- ------
132-142 Hampstead
Road NW1 Q1 219,700 130.1 590 1.2 1.7
------------------- ------- -------- ---------- ---------- -------------- ------
Notes to editors
Derwent London plc
Derwent London plc owns a portfolio of commercial real estate
predominantly in central London valued at GBP5.0 billion (including
joint ventures) as at 31 December 2016, 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 6.0 million sq ft portfolio include
Angel Building EC1, The Buckley Building EC1, White Collar Factory
EC1, 1-2 Stephen Street W1, Horseferry House SW1 and Tea Building
E1.
In 2017 the Group won the Property Week Developer of the Year
award and was listed 12(th) out of 4,000 in the Corporate Knights
Global 100 of the world's most sustainable companies. In 2016 the
Group won Estates Gazette National Company of the Year and London
awards as well as awards from Architects' Journal, British Council
for Offices, Civic Trust and RIBA and achieved EPRA Gold for
corporate and sustainability reporting.
As part of its wider sustainability programme, in 2013 Derwent
London launched a dedicated GBP250,000 voluntary Community Fund
and, in 2016, made a further commitment of GBP300,000 for the next
three years for 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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