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Derwent LondonAnnouncement

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RNS Number : 8675D  Derwent London PLC  12 May 2026

 Derwent London plc ("Derwent London" / "the Group")

 FIRST QUARTER BUSINESS UPDATE

 Strong leasing and capital recycling; launch of £50m share buyback

Paul Williams, Chief Executive of Derwent London, said:

"We have seen strong activity across the business driven by significant
leasing, including the pre-letting of Network at rents well ahead of
appraisal. Good progress has been made on disposals, with contracts exchanged
on £278m of properties in line with our three-year target of £1bn and we are
actively engaged in further sales.

This has enabled us to commit to the redevelopment of 50 Baker Street as
planned, where we are seeing very strong rental growth which will further
enhance profitability and future earnings, as we continue to selectively
invest where we see attractive risk-adjusted returns. Aligned with our
disciplined approach to capital allocation, we are also announcing a £50m
share buyback programme which we intend to commence on 18 May.

Our near and medium-term earnings guidance is unchanged and we remain focused
on driving income growth and returns."

Key highlights

·      £25.3m of leasing YTD, with open-market lettings 5.2% above ERV;
further £6.7m under offer

·      Network W1 offices pre-let 5% above December 2025 ERV and 22%
above appraisal ERV

·      Network W1 achieved practical completion on 5 May 2026

·      £278m of disposals exchanged YTD; actively engaged in further
potential sales

·      Commitment to redevelopment of 50 Baker Street W1 (236,000 sq
ft); targeting >12% ungeared IRR

·      £50m share buyback programme announced

·      Nominations Committee is at an advanced stage of the CEO search
process

 

Leasing activity

Leasing activity this year has been strong with £25.3m completed to date.
This comprises £20.0m of new leases, with open market transactions 5.2% ahead
of December 2025 ERV, and £5.3m of renewals/regears. A further £6.7m is
under offer.

At Network W1, we have pre-let all of the office space to Databricks for
£14.1m at an average rent of £103 psf (£125 psf on best), 5% above December
2025 ERV and 22% above our original underwriting, with the two retail units
also let or under offer. Leases are expected to commence in mid-May and,
together with 25 Baker Street W1, will add £18.9m of incremental rental
income in 2026.

The EPRA vacancy rate increased slightly during Q1 to 5.2% (December 2025:
4.1%) but has subsequently fallen during Q2 to date.

Disposals update

We are making good progress towards our target of £1bn of disposals over
three years, with contracts exchanged on £278m of disposals in Q1 at a
blended 5.8% initial yield, c.3% below December 2025 book value.

·      Horseferry House SW1: £131.8m (£129.3m net of rental top-ups),
completion due June 2026

·      90 Whitfield Street W1: £110.5m, completion due August 2026

·      80-85 Tottenham Court Road W1: £32.6m, completion due June 2026

·      25 Baker Street W1 private residential: £5.2m; total of 26 units
now sold/exchanged for £120.9m

We are also in discussions on a further c.£120m of sales and are reviewing
additional assets as part of our targeted disposal programme. While investment
market conditions have been impacted by the Middle East conflict, investors
remain attracted to the London office sector by the strength of the rental
outlook and its 'safe haven' status.

Development update

Network W1 reached practical completion on 5 May and we expect this to deliver
a positive revaluation movement in H1.

Three projects totalling c.290,000 sq ft are on site where we forecast
ungeared IRRs of >10%, based on current rents. We have also committed to
the major redevelopment of 50 Baker Street W1, where we are targeting an
ungeared IRR of >12%. These projects are in locations where we expect
occupier demand to drive significant rental growth which will further enhance
already attractive returns.

Major developments

·      Holden House W1 (133,500 sq ft): demolition is underway at this
retained façade scheme located opposite the Dean Street Elizabeth line
station, with Kier appointed under a pre-construction services agreement for
the main construction works; practical completion is anticipated in H2 2028.

·      50 Baker Street W1 (236,000 sq ft): we have recently committed to
this exciting project, which is in a sub-market with positive occupational
dynamics, where demolition works will commence over the coming months;
completion is anticipated in H2 2029.

Refurbishments

·      Greencoat & Gordon House SW1 (107,800 sq ft): following
signing of the building contract at the end of Q1, refurbishment works have
commenced; completion is anticipated in H2 2027.

·      Middlesex House W1 (50,000 sq ft): vacant possession was secured
in Q1 and refurbishment works have commenced; completion is expected in H1
2027.

 

Future projects

·      Old Street Quarter EC1: planning application being progressed
ahead of anticipated submission around the end of 2026, as we consider future
delivery options.

 

Share buyback programme

Underpinned by the strength of our balance sheet, together with recent
disposals, continued operational momentum and disciplined capital allocation,
we have identified capacity to return capital to shareholders without
compromising our growth ambitions. As a result, we are announcing a £50m
share buyback programme which we intend to commence on 18 May following our
2026 AGM on 15 May.

Financial position

Net debt was stable in Q1 at £1.46bn (December 2025: £1.45bn) reflecting
project expenditure of £23.4m and operational cashflows. EPRA LTV was
unchanged at 29.4% based on December 2025 valuations.

Two facilities were redeemed at maturity in Q1, comprising £55m of 2.68%
private placement notes and the £175m 6.5% LMS bonds originally arranged in
2001. This reduced the Group's weighted average interest rate to 3.9% at the
end of March from 4.1% at December. Consequently, cash and undrawn facilities
at the end of the quarter fell to £383m (December 2025: £627m) before taking
account of the £278m of property disposals due to complete in the next few
months.

Fitch Ratings reaffirmed on 8 May 2026 the Group's Long-Term Issuer Default
Rating at BBB+ with a stable outlook and its Senior Unsecured Debt rating at
A-.

Payment of 2025 final dividend

Our shares went ex-dividend on 23 April 2026 with the final 2025 dividend of
56.0p due to be paid on 29 May. Of this, 40.0p will be a Property Income
Distribution (PID) with the balance of 16.0p a conventional dividend.

For further information, please contact:

 Derwent London             Paul Williams, Chief Executive

 Tel: +44 (0)20 3478 4217   Damian Wisniewski, Chief Financial Officer

                            Robert Duncan, Head of Investor Relations
 Brunswick Group            Nina Coad

 Tel: +44 (0)20 7404 5959   Aoife Godfrey

Notes to editors

Derwent London plc owns a commercial real estate portfolio predominantly in
central London valued at £5.1 billion as at 31 December 2025, making it the
largest London office-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 redevelopment 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 City Borders. 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.

We are frequently recognised in industry awards for the quality, design and
innovation of our projects. Landmark buildings in our 5.3 million sq ft
portfolio include 25 Baker Street W1, 1 Soho Place W1, 80 Charlotte Street W1,
Brunel Building W2, White Collar Factory EC1, Angel Building EC1 and Tea
Building E1.

As part of our commitment to lead the industry in mitigating climate change,
Derwent London has committed to becoming a net zero carbon business by 2030,
with its updated pathway published in 2025. Our science-based carbon targets
have been validated by the Science Based Targets initiative (SBTi). In 2013,
we launched a voluntary Community Fund which to date has supported 200
community projects in central London.

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, W1S 2ER.

For further information see www.derwentlondon.com
(http://www.derwentlondon.com) or follow us on LinkedIn.

Forward-looking statements

This document contains certain forward-looking statements about the future
outlook of Derwent London. By their nature, any forward-looking statements
involve risk beyond the control of the management of Derwent London and may be
subject to significant business, economic or competitive uncertainties,
assumptions and contingencies or subjective judgments, including because they
relate to events and depend on circumstances that may or may not occur in the
future. These assumptions and judgments may or may not prove to be correct and
actual results, performance or outcomes may differ materially from any
results, performance or outcomes expressed or implied by such forward-looking
statements. Any forward-looking statements have not been independently
audited, examined or otherwise reviewed or verified.

No responsibility or liability is or will be accepted and no representation or
warranty is or is authorised to be given in relation to any forward-looking
statements made by Derwent London, including as to their completeness,
reliability, reasonableness or accuracy, or of any assumption or estimate on
the basis of which they have been given. This document speaks as of the date
hereof. Derwent London does not undertake to provide access to any additional
information or to update any forward-looking statements whether as a result of
new information, to reflect future events or circumstances that arise after
the date of this document, to correct any inaccuracies in this document which
may become apparent or otherwise. Nothing in this announcement should be
construed as a profit forecast.

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