Derwent London hikes dividend as landlord expects resilient office demand
Property firm Derwent London this morning said it expects demand for office space to be resilient despite the coronavirus pandemic, saying there is “no substitute” for face-to-face collaboration.
The landlord hiked its dividend for the first half of the year as it said it is confident about the future of the role of the office, despite the home-working boom sparked by the Covid-19 crisis.
The figures
Gross rental income reached £97.8m in the first six months of 2020, up five per cent from £93.1m in the first half of last year.
However the impact of Covid-related costs and impairments saw net rental income fall to £84.4m.
The company swung to a loss of £13.2m, down from profit of £129.6m last year.
EPRA earnings were £54.7m or 48.9p per share compared to 51.3p last year.
The company suffered an underlying valuation decline of 0.9 per cent, compared to a 1.9 per cent uplift over the second half of 2019.
Derwent increased its dividend by 4.8 per cent to 22p per share.
The company has received 81 per cent of the rents due for the March quarter plus 11 per cent due under agreed payment plans.
For the June quarter, 78 per cent of rents have been received, with another six per cent due later in the quarter and nine per cent under agreed deferrals.
Why it’s interesting
The commercial property landlord said this morning that workers are gradually returning to their London offices.
However it said changing work patterns, such as working remotely, that were happening before the pandemic have now been accelerated.
Derwent will focus on flexible office spaces, with larger common areas, higher ceilings and better air-quality and ventilation.
“Companies still need to bring their staff together, for the collaboration that social interaction brings, to build culture, to attract and retain talent and to have a physical embodiment of their brand,” Derwent said.
“There is no substitute for building relationships with colleagues and clients in person. That is fundamental to the recovery of the economy and to our wellbeing.”
What Derwent said
Chief executive Paul Williams said: “Recent events have highlighted the importance of offices for enhancing collaboration, social interaction and wellbeing to build business culture and attract and develop talent.
“Derwent London’s design-led and adaptable space will support our occupiers returning to their offices, an essential part of getting London back to full strength.
“Derwent London has a strong financial base with built-in growth from its developments and we have increased the interim dividend 4.8 per cent to 22p per share.”