Derwent London has upgraded its 2026 earnings growth guidance to 0% to -3%, from -3% to -5%’ previously, in its interim results for the six months to the end of June, despite swinging to a half-year loss of £18.6m, compared to a £94.5m profit a year earlier.
Paul Williams will leave Derwent after 38 years at the company
The firm’s unaudited results revealed a 2% dip in gross rental income, at £106.9m, compared to H1 2025, while net rental income fell 1.2% to £92.9m.
The fall were largely driven by a £45.8m provision related to its planned £239m purchase of Old Street Quarter and a £19m valuation deficit. However, its t debt fell to £1.38bn, from £1.43bn.
The firm reported £30.4m of leasing and asset management deals in the year to date, including £22.1m of new lettings. Open-market deals were struck at an average 5.1% above estimated rental value (ERV), while assets set to bring in a further £5.3m of rent are under offer.
The company’s portfolio vacancy rate stands at 4.4%.
Derwent London chief executive Paul Williams, who is set to retire next month, said the firm had made strong progress against strategic priorities such as its target of selling £1bn of assets by 2028, having completed £168.8m of sales in the first half and exchanged on a further £110.5m, at a 3% discount to book value. It is targeting £400m of disposals this year.
During the period the company also fully pre-let its Network office development in the West End, which was completed in May, committed to its next phase of developments and launched a £50m share buyback programme.
“We remain focused on driving earnings growth over the coming years through disciplined capital allocation,” Williams said. “London’s occupational market is robust, with the strongest demand focused on high-quality buildings in well-connected locations. Against a supply constrained backdrop, rents continue to grow and the West End is outperforming.”
“Operationally, the business is performing well and we upgrade our EPRA earnings growth guidance for 2026. Leasing activity, rental growth and progress on capital allocation give us confidence in delivering our medium-term earnings growth and total accounting return objectives.”
The firm has four major West End projects totalling 527,300 sq ft under development and is forecasting double digit internal rates of returns for the projects.
Former Assura CEO Jonathon Murphy will join as Derwent’s chief executive and executive director of the board from 1 September.
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