Derwent London (DLN) H1 2024 earnings summary

Executive summary

• Achieved planning permission for 50 Baker Street, a major West End project, and delivered the highest half-year rental growth since 2016, with £10.8m new lettings YTD, 9–10% above ERV, and a 3.2% vacancy rate.

• Upgraded 2024 ERV/rental growth guidance to 3%–6% due to strong demand, limited supply, and outperforming best-in-class assets.

• Portfolio value at £4.8bn, with two major West End developments (25 Baker Street and Network W1) progressing, 84% pre-let at 14.6–15% above appraisal ERV.

• Balance sheet remains robust with £566m cash and undrawn facilities, 98% of debt fixed or hedged, and Fitch credit ratings at BBB+ (issuer) and A- (senior unsecured).

• Sustainability progress includes 8% energy reduction and 70% of portfolio ERV 2030 EPC compliant.

Financial highlights

• EPRA NTA per share fell 2.7% to 3,044p; EPRA earnings per share up 6.5% to 52.7p; interim dividend up 2% to 25.0p per share.

• Gross rental income rose 1.5% to £107.5m; net rental income up 4.5% to £95.0m.

• Total return for H1 was -1.0%, with IFRS loss for the period at £27.2m due to revaluation deficit.

• Project/capital expenditure in H1 reached £108.6m, including £75.8m green capex.

• EPRA loan-to-value ratio at 29.0%; net debt/EBITDA at 8.4x.

Outlook and guidance

• Upgraded ERV/rental growth guidance for 2024 to 3%–6% on strong leasing and limited supply.

• Expecting positive total return in H2 and for the full year, with attractive returns in coming years supported by stable yields and growing rents.

• London market seen at a turning point, with stabilised yields and improving economic backdrop.