Derwent London plc REIT (DLN) AI Stock Analysis

• Market Cap: £1.90B
• Dividend Yield: 3.95%
• Average Volume (3M): 283.47K
• Price to Earnings (P/E): 8.0
• Beta (1Y): 0.87
• Revenue Growth: 2.30%
• EPS Growth: N/A
• Country: UK
• Employees: 201
• Sector: Real Estate
• Sector Strength: 53
• Industry: REIT - Office
• EPS (TTM): 0.52
• Shares Outstanding: 112,290,930
• 10 Day Avg. Volume: 223,379
• 30 Day Avg. Volume: 283,473
• PEG Ratio: -0.15
• Price to Book (P/B): 0.62
• Price to Sales (P/S): 8.12
• P/FCF Ratio: -28.68
• 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: £2,159.20
• Price Target Upside: 27.84% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: 1,845.00p ▲(9.24% Upside)

Derwent London plc's strong valuation and positive corporate events are the primary drivers of its score. Despite a bearish technical outlook, the company's financial stability and strategic initiatives in the real estate market support a cautiously optimistic view.

Positive Factors

Business Model Strength

Derwent London's focus on rental income from a diverse property portfolio ensures stable cash flow, supporting long-term financial health.

Balance Sheet Health

A strong balance sheet with a reasonable debt-to-equity ratio provides financial stability and flexibility for future investments.

Sustainable Development

Commitment to sustainable development aligns with industry trends and regulatory demands, enhancing long-term competitiveness.

Negative Factors

Inconsistent Net Income

Inconsistent net income growth can hinder long-term profitability and investor confidence, impacting financial planning.

Free Cash Flow Variability

Variability in free cash flow indicates potential challenges in funding operations and growth initiatives without external financing.

Net Profit Margin Volatility

Volatile net profit margins suggest operational challenges and external pressures, affecting long-term earnings predictability.

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 generates revenue primarily through rental income from its diverse portfolio of commercial properties, which include office spaces, retail units, and mixed-use developments. The company leases its properties to a range of tenants, from large corporations to smaller businesses, ensuring a steady cash flow. Additionally, revenue is supplemented through property sales and development gains, particularly when properties are sold at a premium following successful redevelopment or refurbishment. The company also benefits from strategic partnerships with key stakeholders, enhancing its market position and operational efficiency. Factors contributing to earnings include the demand for high-quality office space in prime locations, effective asset management, and the ability to adapt to changing market trends.

Derwent London plc REIT Financial Statement Overview

Summary

Derwent London plc REIT demonstrates financial stability and resilience with strong gross profit margins and a healthy balance sheet. However, the company faces challenges in maintaining consistent net income and free cash flow growth, likely due to external market conditions affecting the real estate sector. The overall outlook is cautiously optimistic, with strengths in operational management and financial stability.

Income Statement

The company shows signs of revenue stability with a modest growth rate in recent years. Gross profit margins have remained strong, although net profit margins have seen volatility due to significant swings in net income, likely driven by external factors impacting the real estate sector. The EBIT margin is improving, indicating better operational management, but historical losses create a mixed outlook.

Balance Sheet

The balance sheet is healthy with a reasonable debt-to-equity ratio, indicating a balanced approach to leveraging. The equity ratio is strong, suggesting that the company is not overly reliant on debt financing, which is a positive for stability. However, the return on equity has been inconsistent, impacted by fluctuating net incomes over the years.

Cash Flow

Operating cash flows have been positive, which is a good sign of core business strength. However, free cash flow growth has been inconsistent, reflecting capital investments and variable financing activities. The ratios of cash flow to net income are healthy, but the variability in net income suggests caution.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	267.80M	271.70M	267.80M	249.00M	240.30M	266.90M
Gross Profit	186.70M	192.70M	195.30M	192.50M	188.00M	196.60M
EBITDA	148.90M	152.50M	-438.00M	-242.40M	277.10M	-55.50M
Net Income	237.90M	115.90M	-476.40M	-280.50M	252.30M	-77.60M
Balance Sheet
Total Assets	5.33B	5.21B	5.03B	5.51B	5.91B	5.53B
Cash, Cash Equivalents and Short-Term Investments	91.70M	71.40M	73.00M	76.60M	105.50M	50.70M
Total Debt	1.59B	1.50B	1.37B	1.28B	1.32B	1.10B
Total Liabilities	1.76B	1.67B	1.52B	1.43B	1.47B	1.22B
Stockholders Equity	3.58B	3.54B	3.51B	4.08B	4.44B	4.26B
Cash Flow
Free Cash Flow	80.00M	-76.90M	96.30M	109.40M	127.30M	85.40M
Operating Cash Flow	80.00M	64.60M	97.00M	111.40M	128.90M	85.80M
Investing Cash Flow	-173.30M	-101.90M	-98.00M	-51.70M	-240.00M	-62.40M
Financing Cash Flow	101.80M	35.70M	-2.60M	-88.60M	128.10M	-27.20M

Derwent London plc REIT Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1689.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:DLN, the sentiment is Neutral. The current price of 1689 is above the 20-day moving average (MA) of 1661.85, below the 50-day MA of 1722.58, and below the 200-day MA of 1802.66, indicating a neutral trend. The MACD of -9.93 indicates Negative momentum. The RSI at 53.28 is Neutral, neither overbought nor oversold. The STOCH value of 83.93 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:DLN.

Derwent London plc REIT Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SGRO	75 Outperform	£9.49B	15.33	5.20%	4.25%	-4.77%	―
BLND	75 Outperform	£3.91B	11.13	6.14%	5.85%	-20.83%	―
LAND	73 Outperform	£4.48B	18.07	3.85%	6.34%	10.69%	135.58%
DLN	72 Outperform	£1.90B	7.97	6.80%	3.95%	2.30%	―
SHC	68 Neutral	£2.77B	8.50	8.66%	2.60%	-0.04%	655.16%
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
GPE	64 Neutral	£1.26B	8.63	7.31%	2.54%	12.73%	―

Derwent London plc REIT Corporate Events

Derwent London Announces Current Share Capital and Voting Rights

Derwent London plc announced that its issued share capital comprises 112,290,929 ordinary shares, each with voting rights. This figure is crucial for shareholders to determine their notification requirements under the FCA’s Disclosure and Transparency Rules, impacting how they manage their investments in the company.

Derwent London Reports Strong Q3 Momentum and Positive Outlook

Derwent London plc reports strong operational momentum in its third-quarter update, with new leases signed at 10% above estimated rental value (ERV) and a low vacancy rate of 3.7%. The company has completed over £200 million in disposals, enhancing its financial capacity for reinvestment into development projects, and is targeting further asset sales to optimize shareholder returns. Major projects like 25 Baker Street and Network W1 are progressing well, with significant leasing activity and development milestones achieved. The company’s strategic focus on capital recycling and asset management supports its confidence in the London office market’s strength, aiming for a 3-6% ERV growth in 2025.

Derwent London Announces Share Capital and Voting Rights Update

Derwent London plc has announced that its issued share capital comprises 112,290,929 ordinary shares, each with voting rights, and the company holds no treasury shares. This information is crucial for shareholders as it serves as the denominator for calculating their interest in the company under the FCA’s Disclosure and Transparency Rules.

Derwent London Partners with Related Argent for Old Street Quarter Development

Derwent London plc has entered a strategic partnership with Related Argent to develop the Old Street Quarter site in central London, expected to be acquired in late 2027. This collaboration aims to create a mixed-use campus, including residential, office, and hotel spaces, leveraging Related Argent’s expertise in urban regeneration and Derwent London’s innovative development approach. The partnership is expected to enhance Derwent London’s market position by maximizing the site’s value and delivering long-term value to London.

Derwent London Completes 25 Baker Street Development

Derwent London has successfully completed its 25 Baker Street development, marking a significant milestone with a yield on completion of 7.5% and an ungeared IRR of 11.3%. The project enhances the company’s income profile with long-term leases and demonstrates strong market appeal, contributing positively to 2025 earnings. Additionally, sales of private residential units at 100 George Street have further improved financial flexibility. The project aligns with sustainability targets, setting a benchmark for responsible development.

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 holds no treasury shares. This information is crucial for shareholders to determine their notification requirements under the FCA’s Disclosure and Transparency Rules, impacting how they manage their interests in the company.

Derwent London Director Appointed CEO Designate of Hammerson

Derwent London plc has announced that its Non-Executive Director, Robert Wilkinson, has been appointed as the Director and Chief Executive Officer Designate of Hammerson plc, effective December 15, 2025. This leadership transition is significant as it may influence Derwent London’s strategic direction and stakeholder relationships, given Wilkinson’s new role at a major real estate company.