Derwent London Plc · LSE:DLN
Derwent London — FY2023 Earnings Presentation
101 slides from Derwent London's earnings presentation, Feb 28, 2024
Slide 1: Annual Results 2023
Annual Results 2023
Slide 2: Contents
Contents Presenters Contents Paul Williams Introduction and overview 01 Damian Wisniewski Results and financial review 06 Nigel George Valuation and investment 17 Emily Prideaux Sustainability 24 Leasing and asset management 27 Regeneration pipeline 35 Summary 44 Appendices 46 Executive Committee an
Slide 3: Introduction and overview
Introduction and overview Paul Williams 1
Slide 4: Setting the scene
Setting the scene OUR BUSINESS OUR MARKET Long-term strategic approach Positive growth outlook • High quality, differentiated and well-located portfolio • Businesses increasingly strategic on real estate planning • Strong leasing year (£28.4m), 8% above ERV • Prioritising quality, but limited supply
Slide 5: Differentiating Derwent
Differentiating Derwent Intentionally weighted to West End 72% West End, 26% City Borders Constrained supply and high demand leading to rental growth Near and medium-term development pipelines exclusively West End Relationship-driven and occupier focused Challenging the norm Portfolio-wide and asset
Slide 6: Differentiating London
Differentiating London A leading global city with a broad and deep occupier base Well-connected and high quality public transport London is growing: network Economy Jobs Population A series of sub-markets: Diversity of requirements A tale of three cities by size and type Prime vs Secondary Derwent L
Slide 7: Developing & retaining quality
Developing & retaining quality Our well-executed strategy 1) Significant investment in asset regeneration Core income On-site developments 2) Reduced exposure to non-core properties 3) Pipeline rich with value-add opportunity 25 Baker Street W1 Future 80 Charlotte Street W1 appraisal 22% With potent
Slide 8: Results and financial review
Results and financial review Damian Wisniewski 6
Slide 9: Financial highlights
Financial highlights EPRA NTA per share1, 2 EPRA earnings per share2 Cash and undrawn facilities3 3,129p 102.0p £480m Dec 2022: 3,632p 2022: 106.6p Dec 2022: £577m -13.8% -4.4% Gross rental income Net rental income Interest cover ratio4 £212.8m £186.2m 4.1x 2022: £207.0m 2022: £188.5m 2022: 4.2x +2.
Slide 10: EPRA NTA movement
EPRA NTA movement Pence 4,000 1 3,750 102 (79) 3,632 3,500 3,250 (516) -13.8% (8) (3) 3,129 3,000 Investment properties (£581.5m) (517p) Trading properties £4.6m 4p Owner-occupied property (£3.9m) (3p) Total (£580.8m) (516p) 2,750 2,500 31 Dec EPRA Profit Dividends Revaluation Revaluation Other 31 D
Slide 11: EPRA earnings
EPRA earnings £m 250 Slide Slide 10 11 4.6 212.8 (24.0) 200 (39.1) 150 (39.5) 2.7 (2.6) (0.4) 114.5 100 102.0p per share H1: 49.5p per share 50 H2: 52.5p per share 0 Gross Premiums Property Admin Net Waivers Tax JVs/other EPRA rental & other expenditure expenses finance & charge earnings income inco
Slide 12: Gross rental income
Gross rental income £m Like-for-like 300 Soho Place W1 £4.1m The Featherstone Bldg EC1 £2.0m 19 Charterhouse St EC1 (£2.4m) Gross Francis House SW1 £1.9m Other Total (£1.6m) (£4.0m) rental income Total £8.0m 250 7.5 2023: 1.7% 8.0 (5.7) (4.0) 2022: 1.1% 207.0 212.8 200 CY lettings and asset mgmt The
Slide 13: Property expenditure
Property expenditure H1 2022 H2 2022 FY 2022 H1 2023 H2 2023 FY 2023 £m £m £m £m £m £m Service charges Voids 0.6 2.8 3.4 2.1 1.8 3.9 Inclusive leases 0.3 0.4 0.7 0.3 0.2 0.5 Caps 0.3 0.3 0.6 1.0 0.1 1.1 Balancing charges/other 0.3 0.1 0.4 1.1 - 1.1 1.5 3.6 5.1 4.5 2.1 6.6 Property costs Legal and le
Slide 14: 2023 project expenditure
2023 project expenditure Investment Trading Trading property property1 stock2 Investments Other Total 25 Baker Street W1 67.9 20.0 6.4 - - 94.3 Network W1 23.1 - - - - 23.1 On-site major projects 91.0 20.0 6.4 - - 117.4 Completed major projects 3.7 - - - - 3.7 Old Street Quarter EC13 - - - - 3.5 3.5
Slide 15: Estimated future capex
Estimated future capex 1 EPC upgrades • £95m estimated cost to upgrade to EPC ‘B’ 2024 5 101 38 35 57 12 222 by 2030 • £48m specifically provided for in the Dec 2023 external valuation, plus further allowance for 2025 38 44 4 33 4 123 general upgrades • Portfolio by ERV 68.4% 2030 compliant, up 3.1%
Slide 16: Proforma impact of major projects
Proforma impact of major projects • Assumes no further lettings, acquisitions or disposals other than those already contracted • Shows impact of estimated remaining capex on major projects, both completed and on-site • Excludes design fees and smaller refurbishment projects Proforma impact of comple
Slide 17: Debt markets and refinancing
Debt markets and refinancing Yield on our £350m Green Bonds 2031 • Yield on our bonds peaked at 7.0% in Jul 2023 before reducing to 5.0% at Dec 2023 % 8 Yield Credit spread1 7 6 5 4 3 2 1 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 2023 2024 The Featherstone Building EC1 Near-term refi
Slide 18: Debt summary
Debt summary Maturity profile of debt facilities Cash and undrawn Weighted average £m 0 100 200 300 400 500 600 700 800 facilities1 maturity of borrowings £480m 5.0 years 2024 83 2025 175 2026 230 66.5 383.5 Dec 2022: £577m Dec 2022: 6.2 years 2027 17.5 82.5 2028 30 2029 118 EPRA loan-to-value Inter
Slide 19: Valuation and investment
Valuation and investment Nigel George 17
Slide 20: Valuation - performance and themes
Valuation - performance and themes Investment portfolio valued at £4.9bn Total property return in 2023 • Underlying valuation -10.6% (2022: -6.8%) • Derwent London -7.3% • West End -8.6% (2022: -5.8%) • MSCI Central London Offices1 -7.9% • City Borders -15.8% (2022: -9.2%) • MSCI UK All Property1 -1
Slide 21: Valuation - performance and themes
Valuation - performance and themes • Developments – good progress, positive returns Valuation movement by capital value Valuation movement (%) 10 • Rents – higher demand for best in class 8.1 • Location and product 5 • Yields – continued outward movement 0 • Impact greater on larger lot sizes • Resi
Slide 22: Rental value and yields
Rental value and yields Rental value growth Rental values Rental growth (%) 15 • Rental values increased 2.1% in 2023 • Offices: 93% of portfolio1 +2.0% 10 • Retail: 7% of portfolio +3.5% 1 5 • Average office passing rent £50.46 psf2 0 (Dec 2022: £48.37 psf) • Average ‘topped-up’ office rent £62.79
Slide 23: Build-up of portfolio ERV
Build-up of portfolio ERV • Contracted rent of £206.5m £m Build-up of ERV3 • Portfolio reversion of £103.1m1 350 7.14 • £60.2m or 58% contracted, including 7.5 10.9 309.6 300 • 25 Baker Street W1 £15.6m2 17.4 15.6 • 80 Charlotte Street W1 £11.7m 250 44.64 • Soho Place W1 £5.9m 200 206.5 • £42.9m of
Slide 24: Investment market overview
Investment market overview 2023 Outlook Themes Themes • Higher cost of debt – significant impact on activity • Cost and availability of debt improving • Debt not accretive to returns • Inflation has reduced and moving lower • Equity buyers dominant • Investor confidence returning • Rising volume of
Slide 25: Capital recycling
Capital recycling Disposal activity Total Net rental Area after costs Net yield income Property Date sq ft £m % £m pa 19 Charterhouse Street EC1 Q1 63,200 53.6 4.6 2.6 12-16 Fitzroy Street W1 Q2 8,600 6.7 6.9 0.5 Other - 2,200 5.3 - - Total 74,000 65.6 4.4 3.1 • £65.6m of disposals at an average £89
Slide 26: Sustainability
Sustainability Nigel George 24
Slide 27: Key milestones
Key milestones Scottish land opportunity Targets rebased to 1.50C pathway • Solar park planning consent received • Near-term target – verified in 2023 • 100 acre, 18.4 MW • 42% reduction in Scope 1 & 2 carbon emissions by 2030 from 2022 baseline • >40% of London managed portfolio electricity • Long-
Slide 28: Progress on our journey to net zero
Progress on our journey to net zero Energy intensity Operational carbon1 EPC ratings 149 kWh/sqm 14,370 tCO2e 68% ‘A’ or ‘B’ • 5% increase compared to 2022 • Landlord/occupier allocation • 88% ‘A’ to ‘C’ amended – Scope 1 & 2 impact • Soho Place W1 and The • Upgrade strategy incorporated Featherston
Slide 29: Leasing and asset management
Leasing and asset management Emily Prideaux 27
Slide 30: Occupational market demand
Occupational market demand • Take-up 10.5m sq ft (10YA: 12.1m sq ft) • West End 3.6m sq ft (-9% vs 10YA) Corporate requirements • City 5.3m sq ft (+2% vs 10YA) • Pre-lets 23% of take-up • Space under offer up 19% to 3.0m sq ft 250,000+ sq ft 140-170,000 sq ft 150,000+ sq ft • Active demand 9.9m sq f
Slide 31: Occupational market themes
Occupational market themes Quality Location & connectivity • Product • Public transport system • Service & amenity • Recentralisation • Landlord Re-evaluation of London’s appeal purpose of office • Covid blinkers removed • Global city & appeal • Real estate as long-term • Diversity – sector & strate
Slide 32: Recentralisation map
Recentralisation map • Occupiers moving into core London locations • 20,000+ sq ft lettings • 2022 & 2023 transactions • Smaller occupiers also recentralising 195,000 sq ft 41,000 sq ft 39,000 sq ft From: New location From: Finchley From: Haggerston 141,000 sq ft New location 326,000 sq ft From: Doc
Slide 33: Occupational market supply
Occupational market supply Vacancy by sub-market Vacancy Vacancy rate (%) 18 West End City • London vacancy high at 9.1%; reality more nuanced 16 Docklands Central London • West End (4.4%) < City (11.9%) < Docklands (16.7%) 14 12 • Secondhand 69% of total 10 • Tenant-controlled (‘grey’) 26% of total
Slide 34: Derwent London leasing activity
Derwent London leasing activity Strong leasing activity Highlights • £28.4m of new rent on 340,500 sq ft • Average 8% above Dec 2022 ERV 75% pre-let (offices) • Considerably higher than 2022 (£9.8m) • 155,500 sq ft to PIMCO and Moelis • 13.4 year WAULT (to break) • 77% West End, 23% City Borders • £
Slide 35: Derwent London asset management activity
Derwent London asset management activity Overview Key transactions • Businesses planning requirements earlier Brunel Building W2 • Already engaged on 2026/27 expiries • WAULT extended by 5.8 years • DL/ Lounges having positive impact on five floors to 12.7 years • Increased floor area 150% Activity
Slide 36: The Derwent London offer
The Derwent London offer Amenity & Service ‘Furnished & Flexible’ • Meeting needs of small occupiers • Dec 2023: 144,400 sq ft • Up 127% since Dec 2022 • 3% of floor area • 21,500 sq ft planned Sustainability Design Innovative architecture and engineering Derwent London plc - Annual Results 2023 34
Slide 37: Regeneration pipeline
Regeneration pipeline Paul Williams 35
Slide 38: On-site projects - 437,000 sq ft
On-site projects - 437,000 sq ft 25 Baker Street W1 – completion H1 2025 Network W1 – completion H2 2025 13% profit on cost 5.8% yield on cost 298,000 sq ft 139,000 sq ft Offices Offices • 206,000 sq ft at 25 Baker Street – 75% pre-let • 134,000 sq ft – speculative • 12,000 sq ft at Gloucester Place
Slide 39: 25 Baker Street W1
25 Baker Street W1 • ERV £20.4m (net) • Office ERV £95 psf • 75% of 25 Baker Street offices pre-let • Average pre-let rent £103 psf • Capex to complete £139m • Embodied carbon intensity c.600 kgCO2e/sqm Derwent London plc - Annual Results 2023 • Appendices 41 to 42 37
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Slide 41: Network W1
Network W1 • ERV £12.6m • Office ERV £90 psf • Capex to complete £84m • Embodied carbon intensity c.530 kgCO2e/sqm Derwent London plc - Annual Results 2023 • Appendices 41 to 42 39
Slide 42: 40
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Slide 43: Medium-term future pipeline - c.390,000 sq ft
Medium-term future pipeline - c.390,000 sq ft Proposed Proposed Holden House W1 50 Baker Street W1 (50:50 JV) Target: c.150,000 sq ft Target: c.240,000 sq ft Start date: Mid-2025 Start date: Early 2026 Existing: 90,600 sq ft Existing: 122,300 sq ft Planning: Consented Planning: Consent expected H1 2
Slide 44: Longer-term future pipeline - 950,000+ sq ft
Longer-term future pipeline - 950,000+ sq ft Old Street Quarter EC1 230 Blackfriars Road SE1 Target: 750,000+ sq ft Target: 200,000+ sq ft Start date: 2028+ Start date: 2030+ Existing: c.400,000 sq ft Existing: 60,100 sq ft Planning: Mixed-use campus Derwent London plc - Annual Results 2023 • Append
Slide 45: Refurbishments
Refurbishments • Expect greater weighting to refurbishments • Upgrade multi-let buildings into next generation of prime • Reposition and improve amenity • Ensure compliance with EPC legislation • Unlocking rental growth 1-2 Stephen Street Greencoat & Middlesex House 20 Farringdon Road W1 Gordon Hous
Slide 46: Summary
Summary Paul Williams 44
Slide 47: Summary
Summary Market • London a global city with diverse occupier base and appeal • Occupier expansion outweighs contraction • Lack of high quality supply • Investment market stabilising Derwent London • The right product in the right location • Key differentiators – portfolio amenity and relationships •
Slide 48: Appendices
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Slide 49: Appendices
Appendices Financials 48 Valuation 61 Portfolio income profile 68 Sustainability 77 London office market 81 Developments & refurbishments 92 47
Slide 50: Financials
Financials Appendices 01. Headline numbers 49 02. Group balance sheet 50 03. EPRA net asset value metrics 51 04. Group income statement 52 05. IFRS loss and EPRA earnings 53 06. Explanation of EPRA adjustments 54 07. Group cash flow 55 08. Like-for-like income reconciliation 56 09. Green debt facili
Slide 51: Appendix 1 - Headline numbers
Appendix 1 - Headline numbers Dec 2023 Dec 2022 % change Net asset value (NAV) £3,508.8m £4,075.5m (13.9) EPRA net tangible assets per share1,2 3,129p 3,632p (13.8) EPRA net disposal value per share1,2 3,243p 3,768p (14.0) EPRA total return -11.7% -6.3% n/a Gross rental income £212.8m £207.0m 2.8 Ne
Slide 52: Appendix 2 - Group balance sheet
Appendix 2 - Group balance sheet Dec 2023 Dec 2022 £m £m Investment property 4,551.4 5,002.0 Owner-occupied property 46.1 50.0 Investment in joint ventures 35.8 43.9 Other non-current assets 209.7 198.6 4,843.0 5,294.5 Non-current assets held for sale - 54.2 Other current assets and liabilities (105
Slide 53: Appendix 3 - EPRA net asset value metrics
Appendix 3 - EPRA net asset value metrics Dec 2023 Dec 2022 EPRA NTA1 EPRA NDV2 EPRA NRV3 EPRA NTA1 EPRA NDV2 EPRA NRV3 £m £m £m £m £m £m Net assets attributable to equity shareholders 3,508.8 3,508.8 3,508.8 4,075.5 4,075.5 4,075.5 Revaluation of trading properties 9.8 9.8 9.8 4.8 4.8 4.8 Deferred
Slide 54: Appendix 4 - Group income statement
Appendix 4 - Group income statement Year ended Year ended Dec 2023 Dec 2022 £m £m Gross property income 212.9 208.4 Profit on disposal of trading properties - 0.2 Write-down of trading property (0.4) (0.2) Other income 4.5 4.2 Waivers and impairment (2.6) 1.0 Other property outgoings (23.9) (19.0) N
Slide 55: Appendix 5 - IFRS loss and EPRA earnings
Appendix 5 - IFRS loss and EPRA earnings Year ended Year ended Dec 2023 Dec 2022 £m £m IFRS loss for the year attributable to shareholders (476.4) (280.5) Revaluation deficit 581.5 422.1 Joint venture revaluation deficit 9.2 9.3 Profit on disposal of investment property (1.2) (25.6) Profit on dispos
Slide 56: Appendix 6 - Explanation of EPRA adjustments
Appendix 6 - Explanation of EPRA adjustments Adjustments 2023 2022 2023 A B C EPRA EPRA IFRS basis basis £m £m £m £m £m £m Net property and other income 190.5 - 1.0 - 191.5 194.6 Administrative expenses (39.1) - - - (39.1) (36.4) Revaluation deficit (581.5) - 581.5 - - - Profit on disposal 1.2 (1.2)
Slide 57: Appendix 7 - Group cash flow
Appendix 7 - Group cash flow Year ended Year ended Dec 2023 Dec 2022 £m £m Cash generated from operations 135.3 148.71 Interest received 0.8 0.31 Interest and other finance costs paid (38.1) (37.1)1 Distributions from joint ventures 0.3 - Tax in respect of operating activities (1.3) (0.5)1 Net cash
Slide 58: Appendix 8 - Like-for-like income reconciliation
Appendix 8 - Like-for-like income reconciliation Like-for-like Development Acquisitions portfolio property & disposals Total £m £m £m £m 2023 Gross rental income 190.3 20.5 2.0 212.8 Other property expenditure (18.2) (5.0) (0.8) (24.0) Write-off/impairment of receivables (1.3) (0.6) (0.1) (2.0) Impa
Slide 59: Appendix 9 - Green debt facilities and expenditure
Appendix 9 - Green debt facilities and expenditure Green debt facilities Green borrowings and qualifying expenditure £m • £300m green tranche within £450m revolving credit facility 900 Green RCF Available green headroom Green expenditure • £350m green bond Green bond Drawn green facilities • Proceed
Slide 60: Appendix 10 - Debt summary
Appendix 10 - Debt summary Maturity profile of fixed rates and hedging Dec 2023 Dec 2022 £m 0 50 100 150 200 250 300 350 400 450 500 Bank facilities drawn £84m - 2024 83 Fixed rate Hedged Fixed rates borrowings £1,238m £1,238m 2025 175 55 Drawn facilities £1,322m £1,238m 2026 230 Unutilised faciliti
Slide 61: Appendix 11 - Debt facilities
Appendix 11 - Debt facilities Drawn Undrawn Total Maturity £m £m £m 1.5% unsecured convertible bonds 175.0 - 175.0 June 2025 6.5% secured bonds 175.0 - 175.0 March 2026 1.875% unsecured green bonds 350.0 - 350.0 November 2031 2.68% unsecured private placement notes 55.0 - 55.0 January 2026 3.46% uns
Slide 62: Appendix 12 - Net debt
Appendix 12 - Net debt Dec 2023 Dec 2022 £m £m Borrowings – current 102.9 19.7 Borrowings – non-current 1,233.2 1,229.4 Acquired fair value of secured bonds less amortisation (5.0) (6.5) Unamortised discount on unsecured green bonds 1.5 1.7 Equity component of convertible bonds 7.7 7.7 Unwinding of
Slide 63: Valuation
Valuation Appendices 13. Property return 62 14. Valuation performance by village 63 15. Rental value growth and average rents 64 16. Valuation yields 65 17. Context to yield movement 66 18. Portfolio statistics by village 67 61 61
Slide 64: Appendix 13 - Property return
Appendix 13 - Property return • Derwent London total property return -7.3% • MSCI Central London Offices1 -7.9% • Since 2007 cumulative total property return +172% • Cumulative total property return +110% Total property return Cumulative total property return Total return (%) Index (31 Dec 2007=100)
Slide 65: Appendix 14 - Valuation performance by village
Appendix 14 - Valuation performance by village Valuation Valuation Weighting movement Dec 2023 Dec 2023 20231 £m % % West End Central Fitzrovia 1,655.0 34 (8.3) Victoria 425.3 9 (14.2) Soho/Covent Garden 366.5 7 (7.2) Marylebone 335.3 7 6.8 Paddington 331.2 7 (11.1) Mayfair 98.2 2 (6.5) 3,211.5 66 (
Slide 66: Appendix 15 - Rental value growth and average rents
Appendix 15 - Rental value growth and average rents Rental value growth1 2022 H1 2023 H2 2023 2023 % % % % West End 1.2 1.0 0.9 1.9 City Borders 1.6 1.0 1.7 2.7 Central London 1.4 1.0 1.1 2.1 Provincial 0.1 0.0 2.7 2.7 Underlying 1.3 0.9 1.2 2.1 Average rents - Central London offices ‘Topped-up’ Por
Slide 67: Appendix 16 - Valuation yields
Appendix 16 - Valuation yields Yield profile1 Initial yields2 Yield (%) 8 Net initial ‘Topped-up’ Reversionary yield True equivalent yield yield initial yield Initial yield % % 7 West End 4.1 5.1 6 City Borders 4.4 5.3 Central London 4.2 5.2 5 Provincial 8.8 9.3 4 EPRA portfolio 4.3 5.2 3 2 2007 200
Slide 68: Appendix 17 - Context to yield movement
Appendix 17 - Context to yield movement • As at 31 December 2023 Valuation yields1 % • Derwent London true equivalent yield 5.55% 12 Derwent London true equivalent yield UK 10-year Gilt (67bp in 2023 split +25bp in H1, +42bp in H2) BBB yield 10 • BBB yield 5.41% (-76bp in 2023) • UK 10-year Gilt yie
Slide 69: Appendix 18 - Portfolio statistics by village
Appendix 18 - Portfolio statistics by village Vacant Net Vacant Floor floor contracted Average space Estimated area1 area rental rental rental Lease Total rental Valuation Weighting ‘000 ‘000 income income value reversion2 reversion value £m % sq ft sq ft £m pa £ psf £m pa £m pa £m pa £m pa West End
Slide 70: Portfolio income profile
Portfolio income profile Appendices 19. Build-up of portfolio ERV 69 20. Available space and projects 70 21. Vacancy rate and lease expiry analysis 71 22. Lease expiry profile and lease length 72 23. Timing of the reversion 73 24. Portfolio summary 74 25. Major tenants 75 26. Rent and tenant banding
Slide 71: Appendix 19 - Build-up of portfolio ERV
Appendix 19 - Build-up of portfolio ERV Rent uplift pa Rent pa £m £m £m Contracted rental income, net of ground rents 206.5 Contractual rental uplifts 80 Charlotte Street W1 11.7 Soho Place W1 5.9 Brunel Building W2 5.5 The Featherstone Building EC1 4.8 Tea Building E1 2.1 White Collar Factory EC1 1
Slide 72: Appendix 20 - Available space and projects
Appendix 20 - Available space and projects Pre-let/ Pre-let Vacant sold Total Gross Net net area area area vacant Ground vacant rent Total ‘000 ‘000 ‘000 ERV rent ERV ERV net ERV sq ft sq ft sq ft £m pa £m pa £m pa £m pa £m pa Comment Available to occupy 22,300 sq ft let in Q1 at £1.1m The White Cha
Slide 73: Appendix 21 - Vacancy rate and lease expiry analysis
Appendix 21 - Vacancy rate and lease expiry analysis Vacancy rate (%) Vacancy rates • Derwent London EPRA vacancy rate1 4.0% at Dec 2023 10 Derwent London (by rental value) CBRE central London offices (by floorspace) • 4.5% in Jun 2023; 6.4% in Dec 2022 9 CBRE West End offices (floorspace) 8 • CBRE
Slide 74: Appendix 22 - Lease expiry profile and lease length
Appendix 22 - Lease expiry profile and lease length Expiries and breaks as a percentage of portfolio income1 West City End Borders Provincial 2024 2025 2026 2027 2028 Total Expiries 2 2 1 5 11 4 7 7 34 Rolling breaks 1 - - 1 1 - - - 2 Single breaks 2 2 - 4 5 2 2 2 15 Total 5 4 1 10 17 6 9 9 51 Profi
Slide 75: Appendix 23 - Timing of the reversion
6 10.3 10.0 5.4 Appendix 23 - Timing of the reversion 4 2 5.1 2.4 1.2 1.5 0 2024 2025 2026 Contracted uplifts and pre-lets: £60.2m Reviews2027 2028 and expiries: 2029+ £7.1m £m £m 20 3.0 Expiries Pre-let developments Reviews 18 2.4 Contracted uplifts and pre-lets 2.5 16 2.0 14 5.4 0.5 1.0 1.9 1.5 12
Slide 76: Appendix 24 - Portfolio summary
Appendix 24 - Portfolio summary Proforma Pipeline Future for Old Street 47% Core Quarter EC1 appraisal income acquisition⁵ 22% 53% Floor area: 1.16m sq ft Rental income: £40.1m WAULT: 5.7 yrs Rent2: £49.21 ERV: £48.88 Core 56% 5.39m sq ft1 Floor area: 0.55m sq ft Potential projects Floor area: 1.91m
Slide 77: Appendix 25 - Major tenants
Appendix 25 - Major tenants ‘Topped-up’ Passing rent % rent % 01 Expedia 5.9 7.6 02 Public sector1 5.9 6.0 03 Burberry 5.5 6.7 04 Boston Consulting Group 5.1 3.3 05 PIMCO (pre-let) 4.1 - 06 G-Research 3.6 4.7 07 Arup 3.6 2.5 08 Fora (including The Office Group) 3.0 3.1 09 Apollo 3.0 1.9 10 Paymentse
Slide 78: Appendix 26 - Rent and tenant banding
Appendix 26 - Rent and tenant banding Central London ‘topped-up’ Profile of tenants’ office rent banding1 business sector2 £0-£30 psf Other 4% Flexible office providers 5% £80+ psf £30-£40 psf 4% Media 18% 8% Public sector 20% 6% £40-£50 psf 11% Technology 6% Retail & hospitality £70-£80 psf 5.39m s
Slide 79: Sustainability
Sustainability Appendices 27. Portfolio EPC profile 78 28. EPC rating progression 79 29. Embodied carbon 80 77 77
Slide 80: Appendix 27 - Portfolio EPC profile
Appendix 27 - Portfolio EPC profile Exempt Project A B C D E 0.3 ERV 11.3 9.8 47.0 19.1 7.7 4.8 2030 compliant: 68.4% 1.1 Floorspace 8.0 8.7 45.3 21.3 8.4 7.2 2030 compliant: 63.1% 0 10 20 30 40 50 60 70 80 90 100 London commercial portfolio (%) Derwent London plc - Annual Results 2023 78
Slide 81: Appendix 28 - EPC rating progression
Appendix 28 - EPC rating progression 1 London commercial portfolio by ERV (%) 100 99.9 100.0 100.0 Dec 2021 Dec 2022 Dec 2023 90 85.7 87.5 80 78.9 70 68.4 65.3 60 61.0 50 40 30 20 10 0 2023 compliant 2027 compliant 2030 compliant 1 London commercial portfolio and assumes projects have completed Derw
Slide 82: Appendix 29 - Embodied carbon
Appendix 29 - Embodied carbon Embodied Embodied carbon carbon intensity footprint kgCO2e/ Year Scheme tCO2e sqm 2020 80 Charlotte Street W1 19,790 506 2021 6-8 Greencoat Place SW1 763 191 Small refurbishments (three) 273 128 2022 1 Soho Place W1 16,401 550 The Featherstone Building EC1 8,603 539 Fra
Slide 83: London office market
London office market Appendices 30. Demand 82 31. Take-up by type 83 32. Space under offer 84 33. Active demand 85 34. Availability 86 35. Supply 87 36. New construction starts 88 37. Prime office rents 89 38. Investment market 90 39. Investment demand 91 81 81
Slide 84: Appendix 30 - Demand
Appendix 30 - Demand Market statistics Office take-up Take-up (million sq ft) • Central London 20 Central London 18 • 10.5m sq ft of take-up in 2023 16 • 14% below the LTA (12.3m sq ft) 14 Average • 16% below 2022 12 10 • Pre-lets accounted for 23% of take-up 8 • Active Q4 with 3.4m sq ft let 6 4 •
Slide 85: Appendix 31 - Take-up by type
Appendix 31 - Take-up by type Central London office take-up (million sq ft) 16 Pre-let New completed Secondhand Grade B/C 14 Secondhand Grade A Average 12 10 8 6 4 2 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: CBRE Derwent London plc - Annual Results 2023 83
Slide 86: Appendix 32 - Space under offer
Appendix 32 - Space under offer Floorspace (million sq ft) 5.0 West End City Docklands Midtown Southbank 4.5 4.0 Average 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: CBRE Derwent London plc - Annual Results 2023 84
Slide 87: Appendix 33 - Active demand
Appendix 33 - Active demand Active demand (million sq ft) 12 10 8 Average 6 4 2 0 2016 2017 2018 2019 2020 2021 2022 2023 Source: CBRE Derwent London plc - Annual Results 2023 85
Slide 88: Appendix 34 - Availability
Appendix 34 - Availability Available space (million sq ft) % 27 90 West End Tenant controlled % City Secondhand % 24 80 Docklands, Midtown & Southbank 21 70 18 60 15 50 12 40 9 30 6 20 3 10 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 Source: CBRE Derwent London plc
Slide 89: Appendix 35 - Supply
Appendix 35 - Supply Existing supply Office development pipeline Floorspace (million sq ft) Vacancy rate (%) • Central London vacancy rate 9.1% at year-end 12 Under construction available 12 Central London Under construction let/under offer • Up from 7.4% a year earlier Completed 10 10 Completed ave
Slide 90: Appendix 36 - New construction starts
Appendix 36 - New construction starts Central London office construction starts (million sq ft) 3.0 Construction starts 4-quarter rolling average 2.5 2.0 1.5 1.0 0.5 0.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: CBRE Derwent London plc - Annual Results 2023 88
Slide 91: Appendix 37 - Prime office rents
Appendix 37 - Prime office rents Prime offfice rent (£ psf) 160 Q2 2016 (EU referendum) Q4 2019 (pre-pandemic) 150 Q4 2023 140 120 120 110 110 102.50 100 100 90 90 90 90 87.50 87.50 85 85 82.50 82.50 82.50 80 80 77.50 77.50 75 73 70 67.50 60 40 20 0 Mayfair Soho North of North of Midtown Victoria Pa
Slide 92: Appendix 38 - Investment market
Appendix 38 - Investment market Central London office investment • £5.2bn of investment transactions in 2023 Investment transactions (£bn) 22 • Lowest level since 1999 20 • 55% below the LTA of £11.6bn 18 16 • 53% less than 2022 14 12 Average 10 8 6 4 2 0 2001 2003 2005 2007 2009 2011 2013 2015 2017
Slide 93: Appendix 39 - Investment demand
Appendix 39 - Investment demand Sources of investment Central London office yields Prime office yield (%) 7.0 West End City 6.5 Middle East 6.0 11% 5.5 North UK & America Europe 5.0 14% 35% 4.5 £20.2bn 4.0 3.5 SE Asia 3.0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 19% Source: CBRE E
Slide 94: Developments & refurbishments
Developments & refurbishments Appendices 40. Our pipeline 93 41. Developments on site: profit on cost 94 42. Project summary: current projects 95 43. Project summary: future projects 96 44. Portfolio map 97 92
Slide 95: Appendix 40 - Our pipeline
Appendix 40 - Our pipeline 1. 25 Baker Street 2. Network 3. Holden House 4. 50 Baker Street On-site On-site Medium-term Medium-term 5 2 9 10 4 1 7 3 6 8. Greencoat & 5. Old St Quarter 6. 230 Blackfriars Rd 7. 1-2 Stephen Street 9. Middlesex House 10. 20 Farringdon Rd Gordon House Longer-term Longer-
Slide 96: Appendix 41 - Developments on site: profit on cost
Appendix 41 - Developments on site: profit on cost Summary £m End value 828 Less: Total cost1 734 Project surplus 94 Less: Booked to Dec 23 27 Surplus to come 67 Profit on total cost 13% Yield on cost2 5.8% Completion H1 2025 H2 2025 Commercial area (sq ft) 385,000 246,0003 139,000 Residential area
Slide 97: Appendix 42 - Project summary: current projects
Appendix 42 - Project summary: current projects Current Pre Total Current net scheme Proposed 2024 2025 2026+ capex to office income area area capex capex capex complete Delivery c.ERV Property £m pa ‘000 sq ft ‘000 sq ft £m £m £m £m date psf On-site/completed major projects 25 Baker Street W11 - 14
Slide 98: Appendix 43 - Project summary: future projects
Appendix 43 - Project summary: future projects Current Pre- net scheme Proposed Earliest income area area possession Property £m pa ‘000 sq ft ‘000 sq ft year Comment Consented Holden House W1 4.4 91 150 2025 Strathkelvin Retail Park (Scotland) 0.9 108 130 2024 B&Q unit sub-division 5.3 199 280 Unde
Slide 99: Appendix 44 - Portfolio map
Caledonian Road Camden Road Appendix 44 - Portfolio map Essex Road London Fields Camden Town Primrose Hill Carnegie St Islington The Knowledge Kings Cross Wharfdale Rd Angel TECH BEL T Quarter Albany Regent’s Park St Pancras Hoxton St International Th Maida Vale am es lin k Euston Up pe rW ob Old St
Slide 100: Executive Committee and senior management
Executive Committee and senior management Executive Committee Senior Management Paul Williams Chief Executive Lesley Bufton Head of Marketing Damian Wisniewski Chief Financial Officer Tim Hyman Group Architect Nigel George Executive Director Benjy Lesser Head of Design & Innovation Emily Prideaux Ex
Slide 101: Disclaimer
Disclaimer This presentation has been prepared by Derwent London plc (the apparent. Past performance is not indicative of future results “Company”). No representation or warranty (express or implied) and forward-looking statements are not guarantees of future of any nature is given nor is any respon