13th Aug 2015 09:44
LONDON (Alliance News) - Derwent London PLC on Thursday raised its guidance for estimated rental value growth in 2015 due to "very good" demand from occupiers, and said it expects "voracious" investment demand to support firm property yields in the second half.
The FTSE 250 real estate investment trust said it has the potential to deliver more than one million square feet of developments between 2016 and 2019.
Derwent London is known for buying properties in central London with the aim of improving them, making them bigger or regenerating them. It has become prominent in London's so-called Tech Belt, which is centred around the 'Silicon Roundabout' at Old Street and acts as a hub for media agencies and tech companies.
With the "strong" London office market, the company lifted its average portfolio ERV growth assumption to 8-10% for 2015 from previous guidance of 6-8% due to "very good" occupier demand.
"Investment demand remains voracious pushing yields to new lows. The London market is cyclical but, with meaningful rental growth and no marked change in economic expectations, we expect yields to remain firm," Derwent London said.
Net rental income amounted to GBP66.9 million in the six months to the end of June, compared with GBP63.7 million in the corresponding period the prior year, helping to drive net profit attributable to equity shareholders to GBP397.2 million from GBP365.0 million.
The net profit figure takes into account fair value movements, driven primarily by property revaluations.
Net asset value, measured on a European Public Real Estate Association basis, increased by 10.9% to 3,226p over the course of the half, driven by a strong rise in property values and improved recurring earnings.
EPRA pretax profit increased by 21.9% to GBP39.0 million in the half, compared with GBP32.0 million in the corresponding half the prior year.
"We believe that 2015 will continue to be a very good year for Derwent London based on strong occupational demand, the quality of our product, our clear-cut strategy and our effective financing," Chairman Robert Rayne said in a statement.
Derwent London increased its interim dividend by 8.2% to 12.6 pence per share.
Shares in the company were up 1.1% at 3,705.00 pence on Thursday morning in London.
By Samuel Agini; [email protected]; @samuelagini
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