10th Nov 2016 08:27
LONDON (Alliance News) - Derwent London PLC on Thursday said its portfolio valuation is "unlikely to have been immune" from general market weakness, but reported strong lettings since the start of 2016.
The property developer said it has achieved 495,300 square feet of lettings in the year-to-date, securing GBP28.3 million per annum of rental income. On average, Derwent said its lettings have been secured at 6.9% ahead of the December 2015 estimated rental value.
Of these, GBP11.6 million of lettings have been secured in its second half to date, since the end of June, at an average level of 2.8% ahead of the June 2016 estimated rental value.
Derwent said its EPRA vacancy rate remains low at 3.3%.
Meanwhile there has been "continued progress" with its major development programme under construction, Derwent said, and 400,000 square feet of space is due for completion of the second half of 2017 from four principle projects. Of this, 66% is already pre-let.
Derwent has completed GBP135.0 million of disposals since the start of 2016, the group said, in line with book values at the end of December, with GBP130.0 million of this completed in the second half to date.
However, Derwent noted that the result of the Brexit vote had introduced "considerable market uncertainty", alongside with the rise in UK stamp duty in March and the recent confirmation of higher business rates applicable from April 2017.
This, Derwent said, has led to a reduction in London commercial property values.
Its valuers have indicated the valuation performance of its portfolio is "unlikely to have been immune from the general weakness demonstrated by the IPD Central London Office Quarterly Index despite our high levels of lettings", Derwent said.
"The central London office market faces a number of challenges, including heightened global uncertainty, and business activity is likely to slow. It is times like these that demonstrate the benefits of the core elements of our business model: the provision of good quality space at mid-market rental levels founded on a conservative financial structure," said Derwent.
"We are very encouraged by our letting progress, especially since June, and remain committed to our two major projects completing in 2019 where we believe that the risk/reward profile is attractive," the group added.
Shares in Derwent were up 2.0% at 2,490.00 pence on Thursday.
By Hannah Boland; [email protected]; @Hannaheboland
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