Derwent London PLC on Thursday reported continued leasing momentum supported by strong demand for high-quality London office space.
The London office-focused real estate investment trust said new open-market leases signed so far this year were on average 10% ahead of December 2024 estimated rental values, with a total of £17.5 million in new rent completed year-to-date, including renewals and regears.
A further £4.0 million of rent is currently under offer.
The group said its EPRA vacancy rate remained low at 3.7% at the end of the third quarter, while rent reviews on £21.5 million of space were settled at an average of 6.5% above previous headline rent levels.
Chief Executive Paul Williams said the company is ‘delivering positive operational momentum across our business’ and remains ‘in active leasing discussions across the portfolio,’ including several negotiations at its Network W1 scheme ahead of completion later this year.
Derwent reaffirmed its 2025 estimated rental value growth guidance of 3% to 6%, with higher-quality assets expected to outperform.
The company said it has completed £200 million of disposals so far this year, with a further £14 million contracted, and plans to increase asset sales to recycle capital into higher-return developments.
‘We are targeting a higher level of asset sales,’ Williams said. ‘This will provide optionality to drive further value by allocating capital where we see the best returns for our shareholders.’
Projects continued to progress, including the recently completed 25 Baker Street, which delivered a 17% profit on cost and a 7.5% yield at completion.
The company said residential sales proceeds from the site have reached £102 million, with more to follow later in the fourth quarter.
Net debt fell by around £90 million during the quarter to £1.46 billion, bringing EPRA loan-to-value down to 29.6%. Derwent said cash and undrawn facilities totalled £626 million at the end of September.
Derwent shares were up 2.5% at 1,800.00 pence in London on Thursday afternoon.
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