Derwent launches GBP50 million buyback scheme after "strong" quarter

Tue, 12th May 2026 11:06

(Alliance News) - Derwent London PLC on Tuesday said it will launch a new GBP50 million buyback scheme, as it noted strong leasing activity over the first quarter.

The investor in commercial real estate sees the capital return plan supported by its balance sheet and recent disposals. Buybacks will begin on Monday, following Derwent's annual general meeting on Friday.

Derwent said it had made "good progress" towards the GBP1 billion disposal target it has set over three years, having exchanged contracts on sales worth GBP278 million in the three months to the end of March, at a blended 5.8% initial yield, and roughly 3% below December book value.

The company is currently in talks for sales worth an additional GBP120 million, and said: "While investment market conditions have been impacted by the Middle East conflict, investors remain attracted to the London office sector by the strength of the rental outlook and its 'safe haven' status."

On the development front, Derwent's Network W1 "reached practical completion" on May 5, and is expected to result in positive revaluation movement during the first half. Three development projects are currently on site, forecast to have ungeared internal return rates of more than 10%. Derwent is also redeveloping the 50 Baker Street property, where it sees ungeared IRR above 12%. Completion of 50 Baker Street is targeted in the second half of 2029, and at Holden House, Kier Group PLC has been hired for pre-construction services, with practical completion expected in the second half of 2028.

Completion of refurbishment work at Greencoat & Gordon House as well as Middlesex House is expected in 2027. Submission of a planning application for the Old Street Quarter development is expected around the end of 2026.

Derwent's net debt totalled GBP1.46 billion at the end of March, up slightly from GBP1.45 billion at December 31. EPRA loan-to-value ratio was unchanged on-quarter at 29.4%.

The company redeemed two facilities at maturity during the quarter and consequently its cash and undrawn facilities fell to GBP383 million at March 31 from GBP627 million three months prior, excluding disposals worth GBP278 million "due to complete in the next few months".

Derwent's final 2025 dividend of 56.0 pence per share will be paid May 29, of which 40.0p will be a property income distribution and 16.0p a conventional dividend.

The company's shares fell 0.6% to 1,715.00 pence on Monday morning in London.

Chief Executive Paul Williams reaffirmed earnings targets for the near and medium term, adding: "We have seen strong activity across the business driven by significant leasing, including the pre-letting of Network at rents well ahead of appraisal. Good progress has been made on disposals... This has enabled us to commit to the redevelopment of 50 Baker Street as planned, where we are seeing very strong rental growth which will further enhance profitability and future earnings, as we continue to selectively invest where we see attractive risk-adjusted returns."

By Holly Munks, Alliance News reporter

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