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Derwent hikes interim dividend as gross rental income rises

By Josh White

Date: Tuesday 11 Aug 2020

Derwent hikes interim dividend as gross rental income rises

(Sharecast News) - Derwent London reported a negative total return of 0.1% in its interim results on Tuesday, as its EPRA net tangible assets fell 1.4% from the end of December, to 3,900p per share.
The FTSE 250 commercial landlord said its gross rental income rose 5% year-on-year to £97.8m for the six months ended 30 June.

EPRA earnings totalled £54.7m, or 48.9p per share, down from 51.3p a year earlier, with £6.5m of costs, or 5.8p per share, linked to the Covid-19 pandemic.

The board still hiked the company's interim dividend by 4.8% to 22.0p per share.

Net debt stood at £992.8m at period end, widening from £981.6m on 31 December, as its interest cover fell to 435% from 462%.

Derwent said its loan-to-value ratio stood at 17.3%, up from 16.9% at the end of 2019, while undrawn facilities and cash slipped to £502m from £511m.

Looking at its portfolio, Derwent confirmed the completion of 377,000 square feet at 80 Charlotte Street, W1 in June, with 91% of it let.

The firm said it had two remaining on-site developments totalling 410,000 square feet, with 60% pre-let or forward sold.

Property disposal proceeds of £129.4m were sold above book value, the board reported, with the company also acquiring Blue Star House in Brixton for £38.1m before costs.

Its portfolio was valued at £5.4bn, making for an underlying valuation decrease of 0.9%, although there was a valuation uplift of 4% on developments.

The company said its true equivalent yield was unchanged from December at 4.77%, as its total property return stood at 0.7%, ahead of its benchmark index of -0.7%.

Derwent's EPRA vacancy rate rose to 1.1%, from 0.8% in December, while its estimated rental value movement was a negative 0.7% in the first half.

"Recent events have highlighted the importance of offices for enhancing collaboration, social interaction and wellbeing to build business culture and attract and develop talent," said chief executive officer Paul Williams.

"Derwent London's design-led and adaptable space will support our occupiers returning to their offices, an essential part of getting London back to full strength.

"Derwent London has a strong financial base with built-in growth from its developments and we have increased the interim dividend 4.8% to 22p per share."

In a separate announcement on Tuesday, Derwent also announced that executive director Simon Silver would be retiring from the board on 26 February.

It said that he would still continue to support the business as a consultant until 31 December 2022.

Silver is the co-founder of Derwent London, and has been a director since 1986.

At 0829 BST, shares in Derwent London were up 0.4% at 2,976p.

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