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(Sharecast News) - Property development firm Derwent London raised full-year expectations for rental growth on Tuesday as demand for new office space across London began to rebound, driven by the UK's vaccine rollout efforts.
Derwent London upped its rental growth forecasts for the coming months as the value of its investment portfolio increased 1.4% to £5.4bn during the first half of 2021, and raised its average portfolio ERV guidance to between -2.0% and 2.0% for the year ending 31 December.
"The pandemic continues to impact the London office market, but there are signs that its grip is starting to loosen as the economy recovers and London's business confidence improves," said Derwent.
The FTSE 250-listed firm reported a total return of 2.7% for the half, with a net rental income of £90.1m, up from £84.4m a year earlier, and EPRA earnings of £60.6m, up 10.5% year-on-year.
Derwent also hiked its interim dividend 4.5% to 23.0p after both the London office market and its portfolio performed "near the upper end of expectations".
"Our business model should also gain from the increasing focus on making cities climate resilient. Risks remain and international travel is still limited but our strong activity levels are supported by our skill sets, financial strength and well established relationships," said Derwent.
Separately, Derwent exchanged contracts to acquire two properties in London's Knowledge Quarter, totalling 182,100 square feet for £214.6m, and also signed a detailed memorandum of understanding with Lazari Investments to establish a new joint venture to acquire three properties in Baker Street for £64.4m
As of 0855 BST, Derwent London shares were up 1.43% at 3,764.0p.
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