9th May 2024 15:47
(Alliance News) - Derwent London PLC on Thursday said it struck new lettings agreements in the first-quarter of the year, and Shore Capital Markets backed it as one of the players to benefit most from an uptick in rental demand in London's West End.
The London-based property investor and developer said it inked new leases totalling GBP5.4 million since the start of 2024, and said a further GBP4.3 million is under offer.
For the first quarter alone, Derwent London reported GBP2.4 million in lettings, at an average of 9.2% above the December estimated rental value. In the second quarter so far, there has been GBP3.0 million of lettings.
Derwent said the EPRA vacancy rate improved to 3.7% as of the end of March from 4.0% at the end of 2023.
It added: "58% of space available to occupy at December 2023 has either been leased or is under offer, with good ongoing interest in the balance."
Chief Executive Paul Williams added: "We are seeing further strengthening in occupational demand for our well-located, design-led buildings. Rental growth has increased as demonstrated by our leasing performance against [estimated rental value]. As part of our strategy of capital recycling, we were pleased to agree the sale of Turnmill above book value, with proceeds to be re-invested into our higher returning West End regeneration pipeline."
Derwent last month announced the sale of the Turnmill building in the Clerkenwell area of central London for GBP77.4 million before costs to investment manager Titan Investors.
Shares in the company traded 0.7% lower at 2,202.00 pence each in London on Thursday morning.
Shore analyst Andrew Saunders commented: "We believe that Derwent London looks to be one of the best placed listed-operators to benefit from the recovery in West End offices and we like its award-winning, design-led development pipeline north of Oxford St. The shares currently trade on an undemanding rating among UK REITs - on a 29% discount to our net tangible assets forecast for 2024 but offer strong potential for outperformance driven by upside potential and development returns as the property cycle moves into the upswing."
Shore rates Derwent at 'buy'.
By Eric Cunha, Alliance News news editor
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