Derwent London (DLN) Q3 2024 TU earnings summary

Executive summary

• Year-to-date leasing totals £13.3 million, with £4.5 million signed in H2 at 8.5%-9.8% above ERV and £5.7 million under offer.

• Strong occupier demand for high-quality, design-led space in supply-constrained London sub-markets.

• Major on-site projects progressing well, with 53% pre-let or pre-sold and next phase of West End schemes to commence from mid-2025.

• Vacancy rate reduced to 3% at Q3, down from 4% at the start of the year.

Financial highlights

• Net debt increased slightly to £1.39 billion at 30 September 2024, mainly due to £145 million project expenditure.

• EPRA LTV at 28.9% (30 June 2024: 29.0%), interest cover at 4.0x, and cash/undrawn facilities of £547 million at Q3 end.

• Drew down a new £100 million unsecured debt facility and repaid an £83 million secured facility, releasing c.£240 million of charged properties.

• Interim dividend of 25.0p per share paid in October.

• Exchanged contracts for the sale of 25 Baker Street for £26 million, a 3% discount to June book value.

Outlook and guidance

• Upgraded 2024 ERV guidance to 3%-6% in August, with confidence in achieving the top end, supported by ongoing rental growth and strong demand.

• Investment market activity anticipated to pick up in 2025, with potential for yield compression.

• Longer-term pipeline extends to 1.1 million sq ft from 2027, with further refurbishments planned.