Derwent reports strong momentum, positive leasing trends
By Josh White
Date: Thursday 06 Nov 2025
(Sharecast News) - Derwent London reported strong operational momentum and positive leasing trends across its portfolio in an update on Thursday, supported by firm demand for high-quality office space in the capital.
The FTSE 250 group said it had signed new leases 10% ahead of estimated rental value (ERV) so far this year, and remained on track to deliver further growth as key developments reach completion.
"We are delivering positive operational momentum across our business," said chief executive Paul Williams.
"Since the start of the year, we have signed new leases 10% ahead of ERV and are in active leasing discussions across the portfolio.
"This includes negotiations with several potential occupiers at Network W1 ahead of practical completion expected around the end of the year."
He added that disposals exceeding £200m in 2025 had "strengthened our financial capacity for reinvestment into accretive development projects," noting that the group was targeting a higher level of asset sales to "provide optionality to drive further value by allocating capital where we see the best returns for our shareholders".
Derwent said it had completed £17.5m of new rent so far this year, including renewals and regears, and had a further £4m under offer.
Rent reviews covering £21.5m were settled on average 6.5% above previous headline rents, while the group's EPRA vacancy rate remained low at 3.7%.
Major projects were progressing well, led by the completion of 25 Baker Street in August, which delivered a 7.5% yield, 17% profit on cost and an ungeared internal rate of return of 11.3%.
Residential sales from the scheme had generated £102m so far in the second half, with an additional £14m due before year-end.
At Network W1, completion was expected around December, with active discussions under way with multiple prospective tenants.
Derwent said it was advancing nearly 500,000 square feet of new development across its next phase of projects, targeting a profit on cost of 15% to 25% and an ungeared internal rate of return above 10%.
That included Holden House in the West End, Greencoat & Gordon House in Westminster, and 50 Baker Street, where construction was expected to start between 2026 and 2028.
The company also formed a strategic partnership with Related Argent to redevelop Old Street Quarter in EC1 into a mixed-use, living-led scheme.
It said asset sales had bolstered its balance sheet, with net debt reduced by around £90m in the third quarter to £1.46bn and EPRA loan-to-value falling to 29.6%.
Cash and undrawn facilities rose to £626m at the end of September.
Since the start of the fourth quarter, Derwent said it had received an additional £60.9m in disposal proceeds, and paid an interim dividend of £24.6m.
Williams said the company remained confident in the strength of London's office market and reiterated full-year portfolio ERV growth guidance of 3% to 6%, with top-grade assets expected to outperform.
"Our leasing and asset management performance, alongside wider market trends, supports our ongoing confidence in the strength of the London office occupational market," he said.
At 0918 GMT, shares in Derwent London were up 1.78% at 1,787.27p.
Reporting by Josh White for Sharecast.com.
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