Derwent London Plc · LSE:DLN
Derwent London — Derwent Valley Holdings — H1 2006 Earnings Presentation
40 slides from Derwent London's earnings presentation, 2006
Slide 1: Interim results 2006
Derwent Valley Holdings plc Interim results 2006
Slide 2: Contents
Contents Derwent Valley Holdings plc Page Highlights 1 Financial review 2 Portfolio statistics • Valuation performance 5 • Portfolio yields 7 • Lettings and vacant accommodation 8 • Portfolio reversion 11 Acquisitions and disposals 13 Projects update • Project pipeline 20 • Completed project 22 • Cu
Slide 3: Highlights
Highlights Derwent Valley Holdings plc • Adjusted net asset value 1,540p per share - 15.4% increase. • Adjusted profit before tax £9.7 million - 11.5% increase. • Dividend 4.225p per share - 7.6% increase on the interim last year. • Total return for the half year 16.1%. • Significant letting progres
Slide 4: Key figures and influences: Group income statement
Interim results 2006 Derwent Valley Holdings plc Key figures and influences Group income statement • Adjusted profit before taxation. • Rose £1.0 million to £9.7 million. • Growth in gross property income matched by that in property outgoings. • Reduction in finance costs of £1.0 million. • IFRS pro
Slide 5: Key figures and influences: Group income statement
Interim results 2006 Derwent Valley Holdings plc Key figures and influences Group income statement • Gross property income rose £1.3 million compared with equivalent period. • Lettings £1.2 million. • Holden House £0.5 million; Tea Building £0.3 million; Oliver’s Yard £0.1 million. • Voids £(0.9) mi
Slide 6: Group balance sheet and cash flow
Interim results 2006 Derwent Valley Holdings plc Key figures and influences Group balance sheet and cash flow • Net debt. • Rose £23.1 million to £327.0 million. • Cash outflow of £24.5 million; inflow June 2005 £49.9 million. • Year on year turn around due to higher acquisition spend and reduced di
Slide 7: Valuation performance: Key points
Valuation performance Derwent Valley Holdings plc Key points Portfolio Valuation valuation surplus £m1 £m1 • Valuation Investment properties 1,037.7 95.3 Development properties2 68.4 2.6 Acquisitions 33.5 1.7 1,139.6 99.6 • Performance from: • Yield compression £57.2 million. • Rental growth and man
Slide 8: Valuation performance by location
Valuation performance Derwent Valley Holdings plc By location Weighting Valuation Valuation Comment movement surplus H1 20061 H1 2006 % % £m West End Mayfair 4 25.4 10.2 Savile Row - prime asset, 11.9% rental value growth. Soho/Covent Garden 21 10.5 21.2 Yield shift on quality assets - Davidson, Tow
Slide 9: Portfolio yields
Portfolio yields Derwent Valley Holdings plc Yield profile1 Initial Reversionary Yield • Yield profile yield yield spread % % % • Important rental reversion to come through. West End 4.3 5.8 1.5 • City yields due to The Johnson Building being vacant at half year. City 4.1 7.1 3.0 June 2006 4.2 6.2 2
Slide 10: Lettings and vacant accommodation: Key points
Lettings and vacant accommodation Derwent Valley Holdings plc Key points • Telstar - 107,000 sq ft, pre-let to Rio Tinto on a 20 year lease at £4.95 million per annum - £46 per sq ft - a new rental level for Paddington. • Letting activity in the first half - 67,000 sq ft - £1.3 million per annum - a
Slide 11: Lettings and vacant accommodation: Vacancy rates
Lettings and vacant accommodation Derwent Valley Holdings plc Vacancy rates Vacant accommodation by rental value 18.0 December June1 Current 2005 2006 position 16.0 % % % 14.0 Portfolio rental value % Available 2.7 10.2 5.5 12.0 10.0 Projects 11.7 9.1 15.5 8.0 14.4 19.3 21.0 6.0 4.0 2.0 • Delivering
Slide 12: Vacant accommodation at June 2006
Lettings and vacant accommodation Derwent Valley Holdings plc Vacant accommodation at June 2006 Property Area Rental value Rental value Comment sq ft £ per sq ft £m pa Available The Johnson Building, EC1 150,000 35/39.50 5.2 £3.1 million of lettings since half year. 26 King Street, WC2 10,200 30 0.3
Slide 13: Portfolio reversion: Key points
Portfolio reversion Derwent Valley Holdings plc Key points • A central London portfolio assembled with low rents. • Average rent - £24.79 per sq ft. • 39% of floor area let at £20 per sq ft or less. • 28% of floor area let between £20 - £30 per sq ft. • Reversionary potential at June 2006 £22.4 mill
Slide 14: Portfolio reversion: Reversionary summary
Portfolio reversion Derwent Valley Holdings plc Reversionary summary Floor Contracted Rental Vacant Reviews/ Total area rental1 value rental value renewals reversion m sq ft £m pa £m pa £m pa £m pa £m pa West End Central 1.3 33.9 44.6 4.1 6.6 10.7 Outer 0.3 2.2 4.6 2.4 0.0 2.4 1.6 36.1 49.2 6.5 6.6
Slide 15: Acquisitions and disposals: Key points
Acquisitions and disposals Derwent Valley Holdings plc Key points Acquisitions • Off-market transactions. • £34.1 million of acquisitions after costs. • The Astoria, 157-165 Charing Cross Road, WC2 and 17 Oxford Street, W1 - redevelopment prospects. • 35 Kentish Town Road, NW1 - planning potential.
Slide 16: Acquisitions: The Astoria and 17 Oxford Street
Acquisitions Derwent Valley Holdings plc The Astoria, 157-165 Charing Cross Road, WC2 and 17 Oxford Street W1 The Astoria • Building - entertainment venue. • Area - 42,350 sq ft. • Income - £1.1 million per annum. • Tenant - Clear Channel. • Expiry - December 2008. 17 Oxford Street • Building - reta
Slide 17: Acquisitions: The Astoria initial studies
Acquisitions Derwent Valley Holdings plc The Astoria, 157-165 Charing Cross Road, WC2 and 17 Oxford Street W1 Initial studies Key Office Retail/restaurant B A Residential Oxford Street Goslett Yard Sutton Row Entertainment Existing buildings B A Derwent ownership Balance of the site Oxford Street Go
Slide 18: Acquisitions: Kentish Town Road, Camden
Acquisitions Derwent Valley Holdings plc 35 Kentish Town Road, Camden, NW1 • Building - courtyard offices. • Area - 15,400 sq ft. • Income - majority vacant. 16 Acquisitions and disposals • Freehold acquired for £2.25 million, plus costs. • Previously held a long lease at a 30% ground rent gearing.
Slide 19: The Crown transaction: Riverwalk House
The Crown transaction Derwent Valley Holdings plc Riverwalk House, 157-166 Millbank, SW1 • 2004 - acquired medium-term leasehold from Chelsfield. • Building - riverside offices. • 2006 - acquired freehold interest for £13.0 million from The • Area - 74,700 sq ft. Crown Estate as part of a property s
Slide 20: The Crown transaction: Argosy House
The Crown transaction Derwent Valley Holdings plc Argosy House, 215-217 Great Portland Street, W1 • Building - offices with parking. • Area - 30,800 sq ft. • Income - £841,250 per annum. • Tenant - Grey Advertising. • Expiry - December 2006. 18 Acquisitions and disposals • 1997 - acquired medium-ter
Slide 21: Disposals
Disposals Derwent Valley Holdings plc Sweeps, 32-34 Leather Lane, EC1 • Our first residential project. • 14 contemporary style apartments. • Net proceeds £5.7 million. • Achieved 15% above book value. Islington portfolio: • Three properties. • Net proceeds £6.3 million. • Vacant possession obtained
Slide 22: Project pipeline: Key points
Project pipeline Derwent Valley Holdings plc Key points • An active project pipeline of over 1 million sq ft. • For the longer term: Grosvenor Place, Riverwalk House, Charing Cross Road, Henry Wood House. • Our market - the mid-market. • A focus on new and improving areas. • A design led product. •
Slide 23: Project pipeline: Summary
Project pipeline Derwent Valley Holdings plc Summary Property Proposed Practical or Estimated Rental Comment floor expected capital tone area completion expenditure 000’s sq ft £m £ per sq ft Completed The Johnson Building, Hatton Garden 150 Feb 06 37 38.50 58% let and strong interest in the balance
Slide 24: Completed project: The Johnson Building
Completed project Derwent Valley Holdings plc The Johnson Building, Hatton Garden, EC1 • 150,000 sq ft of offices. • Completed February 2006. • £37 million capital expenditure. • Rental value £5.2 million per annum. • 87,000 sq ft let: • Grey Advertising - 50,000 sq ft - £1.8 million per annum. • Fa
Slide 25: Current projects: Horseferry House
Current projects Derwent Valley Holdings plc Horseferry House, Horseferry Road, SW1 • Acquired June 2005. • Vacant possession June 2006. • Opportunity to rejuvenate the building’s character. • Building design finalised. • Existing floor area - 150,000 sq ft. • Proposed floor area - 163,000 sq ft. •
Slide 26: Current projects: Horseferry House
Current projects Derwent Valley Holdings plc Horseferry House, Horseferry Road, SW1 • Complete rebuild of circulation core. • New and exciting atrium with bridged links. • Create a dynamic identity with double height retail units. • Flexible floor plates - 19,000 sq ft. • Capital expenditure circa £
Slide 27: Current projects: Telstar, Gresse Street, Portobello Dock
Current projects Derwent Valley Holdings plc Telstar, Paddington, W2 • 107,000 sq ft office development with Prudential. • Pre-let to Rio Tinto - £4.95 million per annum, 20 year term. • Initial profit share of £6.3 million in first half 2006. • Completion autumn 2007. 16-19 Gresse Street, W1 • 47,3
Slide 28: Current and imminent projects
Current projects Derwent Valley Holdings plc 186-188 City Road, EC1 • 39,000 sq ft office refurbishment. • Improving location. • Rental value £25+ per sq ft. • Completion early 2007. Imminent projects 20-26 Rosebery Avenue, EC1 • 33,000 sq ft office refurbishment. • Planning obtained and includes a
Slide 29: Imminent projects: Leonard Street
Imminent projects Derwent Valley Holdings plc 20 Leonard Street, EC2 • A cleared site adjacent to Oliver’s Yard. • Planning permission obtained July 2006. • 56,000 sq ft development • 22,000 sq ft offices. • 47 private apartments. • Affordable housing negotiated off site. • Completion early 2008. •
Slide 30: Planning: Wedge House
Planning Derwent Valley Holdings plc Wedge House, 30-40 Blackfriars Road, SE1 • Planning permission granted July 2006. • 87,800 sq ft office development. • To replace 39,000 sq ft 1960’s building. • Lease expiry June 2008. • Current income £0.7 million. • No affordable housing requirement. • Improvi
Slide 31: Planning: 40-43 Chancery Lane
Planning Derwent Valley Holdings plc 40-43 Chancery Lane, WC2 • Building - multi-let offices. • Area - 61,600 sq ft (existing). • Income - £1.2 million per annum. • Tenant - multi-let. • Tenure - part freehold, part leasehold (expires 2029). • Planning application submitted for a 106,000 sq ft offic
Slide 32: Market summary: Occupational market
Occupational market Derwent Valley Holdings plc City and West End vacancy rates 25 West End 20 • Vacancy rate 4.1% (December 4.9%) - further downward movement. 15 % • Lowest level since 2001. 10 • First half take up at 2.4 m sq ft (full year 2005 - 4.3 m sq ft). 5 • Set for another year of buoyant t
Slide 33: Market summary: Investment market
Investment market Derwent Valley Holdings plc Central London • First half turnover at £7.4 billion (full year 2005 total - £13.5 billion, record levels). • A continued “chase” for central London office investments. • Particularly from the institutions - equity buyers. • UK institutions accounted for
Slide 34: Prospects
Prospects Derwent Valley Holdings plc • An active pipeline of 1 million sq ft - an important driver of returns over the next few years. • A number of valuable longer-term development opportunities - Charing Cross Road, Riverwalk House, Grosvenor Place, Henry Wood House - irreplaceable assets. • Stra
Slide 35: Appendices
Appendices Derwent Valley Holdings plc 1. Capital expenditure. 2. Summary of first half 2006 lettings. 3. The pipeline - current, imminent and future. 4. The pipeline - longer term development opportunities and rolling refurbishments. 33 Appendices
Slide 36: Capital expenditure
Appendix 1 Derwent Valley Holdings plc Capital expenditure Summary by property 2005 2006 2007 2008 & beyond1 Actual Budget Budget Budget Johnson Building 18.1 5.9 0.3 - Portobello Dock 0.4 5.2 5.5 - Horseferry House 0.3 4.6 11.0 0.8 Leonard Street - 3.5 7.3 - Gresse Street 0.1 3.2 9.4 1.6 St Cross S
Slide 37: Summary of first half 2006 lettings
Appendix 2 Derwent Valley Holdings plc Summary of first half 2006 lettings Property Area Rental Rental Tenant sq ft £’000 pa £ per sq ft 1-9 Market Road, N7 Whole 18,150 150 8 PJ Johnson 19-26 Floral Street, WC2 Residential 2,470 105 - Various 6/7 St Cross Street, EC1 5th floor 3,520 106 30 TwoFour
Slide 38: The pipeline - Current, imminent and future
Appendix 3 Derwent Valley Holdings plc The pipeline - Current, imminent and future 36 Appendices
Slide 39: The pipeline - Longer term development opportunities
Appendix 4 Derwent Valley Holdings plc The pipeline - Longer term development opportunities and rolling refurbishments 37 Appendices
Slide 40: Disclaimer
Disclaimer Derwent Valley Holdings plc This presentation includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Derwent Valley Holdings plc
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