The FTSE 250 real estate group reported net rental income in the first half had risen 1.6% to £80.6mln compared to the first half of last year, however pre-tax profit for the period was down to £134mln from £145.8mln the same time last year.
Interim dividend upped but further capex expected
The company also upped its interim dividend 10.2% to 19.1p, adding that its portfolio value had increased by 1.3% over the period to £5bn.
In its outlook for the rest of the year, the company said its letting and development momentum had continued from the first half, saying it already secured £3.4mln in further lettings in the period as well as 60% of its on-site developments at the pre-let stage, up from 45% at the end of 2017.
Derwent also said that due to the modest rental growth rates and flat property yields, it was “essential” that the group create internal growth, adding that it expected a £28.5mln boost to its estimated rental value from two new developments at Soho Place and The Featherstone Building, which would incur capital expenditure and site costs of £369mln.
In a note to clients, analysts at Liberum Capital commented that the company’s results displayed “the continued resilience of the London office market”, adding that Derwent remained “in a good position to navigate market uncertainty, with low financial risk and an office portfolio less exposed to new supply and financial services occupier risk”.
In a separate announcement, Derwent said it had appointed Lucinda Bell as an independent non-executive director with effect from 1 January 2019.
Bell was previously chief financial officer of The British Land Company PLC (LON:BLND) from May 2011 to January 2018 and is also a non-executive director at Crest Nicholson Holdings PLC (LON:CRST) and Rotork PLC (LON:ROR).
In early morning trading, Derwent shares were down 0.5% at 3,100p.