Derwent London plc REIT (DLN) AI Stock Analysis

• Market Cap: £2.06B
• Dividend Yield: 4.36%
• Average Volume (3M): 301.01K
• Price to Earnings (P/E): 17.8
• Beta (1Y): 1.06
• Revenue Growth: 3.73%
• EPS Growth: N/A
• Country: UK
• Employees: 199
• Sector: Real Estate
• Sector Strength: 74
• Industry: REIT - Office
• EPS (TTM): 1.03
• Shares Outstanding: 112,290,930
• 10 Day Avg. Volume: 201,731
• 30 Day Avg. Volume: 301,008
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 7.57
• Price to Cash Flow (P/CF): 23.80
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: 2,243.25p
• Price Target Upside: 29.67% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

Derwent London plc shows financial stability with strong gross profit margins and a healthy balance sheet, though it faces challenges in consistent income growth. The stock is currently trading below key moving averages, indicating a bearish sentiment, but the valuation is attractive with a solid dividend yield. Recent corporate events highlight strong rental growth and strategic developments, contributing positively to the outlook. Overall, the stock demonstrates a balanced mix of strengths and risks, resulting in a moderately positive score.

Positive Factors

Debt Management

With 25 Baker Street offices now 84% pre-let, and 100% of the debt fixed or hedged, the earnings forecast is substantially de-risked in our view.

Leasing Progress

Leasing progress continues with £13.3m of lettings during the first nine months at an aggregate 8.5% premium to ERV.

Negative Factors

Stock Performance

Derwent's shares have sold-off markedly, down 17%, since mid-September.

Derwent London plc REIT Business Overview & Revenue Model

Company Description

Derwent London plc owns 83 buildings in a commercial real estate portfolio predominantly in central London valued at £5.4 billion (including joint ventures) as at 30 June 2020, making it the largest London-focused real estate investment trust (REIT). Our experienced team has a long track record of creating value throughout the property cycle by regenerating our buildings via development or refurbishment, effective asset management and capital recycling. We typically acquire central London properties off-market with low capital values and modest rents in improving locations, most of which are either in the West End or the Tech Belt. We capitalise on the unique qualities of each of our properties - taking a fresh approach to the regeneration of every building with a focus on anticipating tenant requirements and an emphasis on design. Reflecting and supporting our long-term success, the business has a strong balance sheet with modest leverage, a robust income stream and flexible financing. As part of our commitment to lead the industry in mitigating climate change, in October 2019, Derwent London became the first UK REIT to sign a Green Revolving Credit Facility. At the same time, we also launched our Green Finance Framework and signed the Better Buildings Partnership's climate change commitment. The Group is a member of the 'RE100' which recognises Derwent London as an influential company, committed to 100% renewable power by purchasing renewable energy, a key step in becoming a net zero carbon business. Derwent London is one of only a few property companies worldwide to have science-based carbon targets validated by the Science Based Targets initiative (SBTi). Landmark schemes in our 5.6 million sq ft portfolio include 80 Charlotte Street W1, Brunel Building W2, White Collar Factory EC1, Angel Building EC1, 1-2 Stephen Street W1, Horseferry House SW1 and Tea Building E1. In 2019, the Group won several awards including EG Offices Company of the Year, the CoStar West End Deal of the Year for Brunel Building, Westminster Business Council's Best Achievement in Sustainability award and topped the real estate sector and was placed ninth overall in the Management Today 2019 awards for 'Britain's Most Admired Companies'. In 2013 the Company launched a voluntary Community Fund and has to date supported over 100 community projects in the West End and the Tech Belt. The Company is a public limited company, which is listed on the London Stock Exchange and incorporated and domiciled in the UK. The address of its registered office is 25 Savile Row, London,

How the Company Makes Money

Derwent London plc generates revenue primarily through rental income from its extensive portfolio of commercial properties. The company focuses on acquiring, developing, and managing office buildings in prime Central London locations, attracting a diverse tenant base across various industries. Revenue is derived from long-term lease agreements, with rental income providing a consistent cash flow. Additionally, Derwent London plc benefits from property value appreciation, which can lead to capital gains upon the sale of assets. Strategic partnerships with architects, designers, and construction firms enhance the value of their developments, contributing to higher rental rates and occupancy levels. The company's emphasis on sustainability and innovative design also plays a crucial role in attracting premium tenants willing to pay higher rents for modern, environmentally responsible workspaces.

Derwent London plc REIT Financial Statement Overview

Summary

Income Statement

Balance Sheet

Cash Flow

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
278.40M	267.80M	249.00M	240.30M	266.90M	227.60M
	Gross Profit
201.60M	195.30M	192.50M	188.00M	196.60M	179.20M
	EBIT
67.50M	-428.90M	163.70M	153.00M	145.70M	142.80M
	EBITDA
153.40M	-438.00M	-242.40M	277.10M	-55.50M	311.70M
	Net Income Common Stockholders
-360.70M	-476.40M	-280.50M	252.30M	-77.60M	283.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
73.00M	73.00M	76.60M	105.50M	50.70M	54.50M
	Total Assets
5.03B	5.03B	5.51B	5.91B	5.53B	5.63B
	Total Debt
1.37B	1.37B	1.28B	1.32B	1.10B	1.04B
	Net Debt
1.30B	1.30B	1.21B	1.21B	1.05B	981.60M
	Total Liabilities
1.52B	1.52B	1.43B	1.47B	1.22B	1.16B
	Stockholders Equity
3.51B	3.51B	4.08B	4.44B	4.26B	4.42B
Cash Flow		Free Cash Flow
96.10M	96.30M	109.40M	127.30M	85.40M	127.10M
	Operating Cash Flow
96.60M	97.00M	111.40M	128.90M	85.80M	127.40M
	Investing Cash Flow
-99.10M	-98.00M	-51.70M	-240.00M	-62.40M	-74.60M
	Financing Cash Flow
-12.70M	-2.60M	-88.60M	128.10M	-27.20M	-16.60M

Derwent London plc REIT Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DLN	73 Outperform	£2.06B	17.76	3.29%	4.36%	3.73%	―
SGRO	71 Outperform	£8.89B	14.70	5.18%	4.46%	-9.88%	―
BLND	65 Neutral	£3.59B	19.75	3.17%	6.34%	-30.83%	―
Sector *	61 Neutral	$4.43B	16.22	-3.23%	11.37%	6.25%	-21.19%
LAND	54 Neutral	£4.00B	37.90	1.61%	7.42%	-1.73%	―
HMSO	50 Neutral	£1.14B	―	-2.09%	6.57%	6.08%	―

Derwent London plc REIT Corporate Events

Derwent London Announces Share Capital and Voting Rights Update

Derwent London plc has announced that its issued share capital consists of 112,290,929 ordinary shares, each with voting rights, and the company holds no treasury shares. This information is crucial for shareholders to calculate their interests in compliance with the FCA’s Disclosure and Transparency Rules, impacting how they manage their investments in the company.

Derwent London to Release Q1 2025 Business Update

Derwent London plc announced it will release its Q1 2025 Business Update on May 8, 2025. The company will not hold a webcast or conference call but will have management available for inquiries throughout the day. This update is part of Derwent London’s ongoing efforts to keep stakeholders informed about its operations and strategic direction, reflecting its strong market position and commitment to transparency.

Derwent London Announces Director Share Awards Under Bonus Plan

Derwent London plc has announced changes to the interests of its directors in the company’s ordinary shares, as part of its Annual Bonus Plan. The plan involves deferring a portion of the 2024 annual bonus into shares, which will be released after three years, contingent on continued employment. This move aligns with Market Abuse Regulations and aims to incentivize and retain key personnel, potentially impacting the company’s operational stability and stakeholder confidence.

Derwent London Grants Share-Based Awards to Directors

Derwent London plc announced changes to the interests of its directors through the granting of share-based awards under the Derwent London Performance Share Plan 2014. These awards, structured as nil cost options, are set to vest in 2028 contingent upon meeting specific performance conditions by the end of 2027. This move is part of the company’s strategy to align management incentives with long-term performance goals, potentially impacting the company’s operational focus and stakeholder interests.

Derwent London Announces Current Share Capital and Voting Rights

Derwent London plc announced its current issued share capital, consisting of 112,290,929 ordinary shares with voting rights, as part of its compliance with the Disclosure and Transparency Rule 5.6.1. This announcement is significant for shareholders as it provides the necessary information for them to assess their interests in the company, ensuring transparency and regulatory compliance.

Derwent London Reports Strong 2024 Results with Record Rental Growth

Derwent London plc reported strong financial results for the year ending December 2024, driven by significant rental growth and strategic portfolio reshaping. The company achieved a 4.3% increase in rental values, the highest since 2016, and a positive total return of 3.2%. Key developments included the acquisition of a joint venture partner’s stake at 50 Baker Street and full pre-letting of office space at 25 Baker Street. The company anticipates continued growth with a projected portfolio ERV increase of 3% to 6% in 2025, supported by its extensive development pipeline and London’s robust office demand.

Derwent London Announces Current Voting Rights and Share Capital

Derwent London plc has announced that its issued share capital comprises 112,290,929 ordinary shares with voting rights, as of the current date. This information is crucial for shareholders to determine their notification obligations under the FCA’s Disclosure and Transparency Rules, indicating the company’s compliance with regulatory requirements and maintaining transparency with its stakeholders.

Norges Bank Adjusts Holdings in Derwent London plc

Norges Bank has adjusted its holdings in Derwent London plc, resulting in a decrease in voting rights from 6.693940% to 5.876160%. This change was triggered by an acquisition or disposal of shares, marking a slight shift in the bank’s influence within the company. Such adjustments could have implications for Derwent London’s shareholder dynamics and strategic decisions.

Derwent London’s 25 Baker Street Offices Fully Pre-Let Ahead of Completion

Derwent London announced that its 25 Baker Street W1 office development is fully pre-let ahead of its completion in the first half of 2025, indicating strong demand for high-quality, sustainable office space in London’s West End. The office space has been leased to five tenants, with an average rent premium of 16.5% over the expected value, setting a new benchmark for the area. This development aligns with positive market trends and includes long-term leases with established financial and professional firms, enhancing Derwent London’s position in the market. Additionally, there is significant interest in the retail and F&B units of the project, with some units already under offer, further demonstrating the area’s attractiveness.