Derwent London achieves strong start to the year

published 10 May 2013

Property group Derwent London said it made a strong start to the year as rents on open market lettings in first quarter were 3.6 per cent ahead of the previous quarter.

In the three first three months of the year, the company let 268,000 square feet (sq ft) at an annual rent of £3.5m, 1.7% above the estimated rental values (ERV) at the end of December.

The biggest letting in the quarter was 217,000 sq ft on Hampstead Road in north west London to University College London for £1.6m per annum.

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Derwent said the letting provided income, reduced void cost by £1.0m per year and preserved development options at the site until uncertainty surrounding the HS2 rail project is resolved.

In a milestone for the company during the quarter, the company completed the 85,000 sq ft regeneration of The Buckley Building and the pre-let refurbishment and extension of the top two floors at Morelands Buildings in east London.

After beginning work on 16 apartments at Queens on Bishop's Bridge Road in west London, the company is on site at five major projects totalling 404,400 sq ft.

Capital expenditure in the first quarter increased to £31.5m, including £1.6m of capitalised interest.

However, the disposal of properties, which raised £17.8m before costs, helped keep net debt from rising too much. It was up £878.8m at March-end from £874.8m at the end of 2012.

Overall gross interest cover for the three month period was 350% and the group's loan-to-value ratio remained low at 30%.

"Derwent London has made a good start to 2013 with further lettings above ERV, a high level of enquiries for space and continuing rental growth in our markets," said Chief Executive Officer, John Burns.

"Against this background we remain confident with the scale of our development programme and the prospects for our substantial stock of future projects."

Shares rose 1.33% to 2,433p at 11:03 Friday.