REG - Derwent London PLC - Results for the Year Ended 31 December 2025
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RNS Number : 4457U Derwent London PLC 26 February 2026
Derwent London plc ("Derwent London" / "the Group")
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2025
Improving business momentum and positive outlook
Paul Williams, Chief Executive of Derwent London, said:
"We had an active 2025, with new lettings of £11.3m signed at 10% ahead of
ERV and a record year of asset management activity. 2026 has started with
strong momentum. We have completed £1.5m of new leases and are under offer on
£14.4m of rent, including all of the offices at Network W1, with negotiations
ongoing on an additional £4.4m across the portfolio. We have also exchanged
contracts on disposals totalling £33m, with a further c.£240m under offer.
The investment market recovery has continued into 2026, with liquidity
improving, particularly for larger lot sizes, and occupational dynamics remain
strong. London is the HQ capital of Europe, attracting significantly more
investment than any other European city and driving demand for offices against
the current shortage of new space. This supports expectations for sustained
rental growth, and our portfolio ERV guidance has been increased to 4% to 7%
for 2026.
In 2025, our Total Accounting Return (TAR) increased to 5.0%. Looking ahead,
we are targeting £1bn of disposals over the next three years and expect our
TAR to reach 7% to 10% per annum as we redeploy proceeds into a range of
accretive opportunities. We are forecasting 25% to 30% growth in EPRA earnings
per share by 2030, driven mainly by the capture of growing reversion and the
leasing of our developments."
Key financial highlights
2025 2024 Change 2025 2024
Income statement Leverage
Gross rental income £218.3m £214.8m 1.6% EPRA LTV 29.4% 29.9%
EPRA EPS(1) 98.4p 106.5p (7.6)% Net debt/EBITDA 9.0x 9.3x
Dividend 81.5p 80.5p 1.2% Interest cover 3.1x 3.9x
IFRS result before tax £161.5m £116.0m 39.2% Cash and undrawn debt £627m £487m
Balance sheet Dec-25 Dec-24 Valuation
EPRA NTA per share(1) 3,225p 3,149p 2.4% Valuation movement 1.7% 0.2%
Total accounting return 5.0% 3.2% - Equivalent yield 5.71% 5.73%
Net debt £1,450m £1,483m - ERV growth 4.0% 4.3%
Total property portfolio £4,915m £4,861m - Total property return 5.5% 4.1%
(1) Explanations of how EPRA figures are derived from IFRS are shown in note
26.
Operational activity
· £11.3m of new leases, 9.9% above ERV in 2025
· £1.5m of new leases YTD 2026, with £14.4m under offer
(including all of the offices at Network) and £4.4m in negotiations
· £58.9m of asset management, 6.4% uplift in rents; a record year
of activity
· £216.1m of disposals; £33m exchanged YTD 2026 with a further
c.£240m under offer
· 25 Baker Street W1 completed and offices fully pre-let, 11.3%
ungeared IRR
Financial highlights
· Increase in total accounting return to 5.0%, with NTA up 2.4% to
3,225p
· EPRA EPS of 98.4p after the effect of mid-year refinancing, but
excludes 3.7p of trading profits
Outlook
· 2026 portfolio ERV growth of 4% to 7%
· Target acceleration in disposals to £1bn over next three years
· Near-term reduction in EPRA earnings until Network income
commences, with growth anticipated in H2 2026 and into 2027; 25% to 30% growth
expected by 2030
· Total accounting return outlook of 7% to 10% over the coming
years
Webcast and conference call
There will be a live webcast together with a conference call for investors and
analysts at 10.00 GMT today.
To participate in the call or to access the webcast, please register at
www.derwentlondon.com (http://www.derwentlondon.com)
A recording of the webcast will also be made available following the event on
www.derwentlondon.com (http://www.derwentlondon.com)
For further information, please contact:
Derwent London Paul Williams, Chief Executive
Tel: +44 (0)20 3478 4217 (Robert Duncan) Damian Wisniewski, Chief Financial Officer
Robert Duncan, Head of Investor Relations
Brunswick Group Nina Coad
Tel: +44 (0)20 7404 5959 Peter Hesse
CHAIRMAN'S STATEMENT
We are targeting an acceleration in disposals now the investment market is
improving to ensure the alignment of our portfolio to evolving market trends
and to provide capital for accretive reinvestment. The Group's focus is on
delivering sustainable long-term returns for shareholders through active
portfolio management and development of high quality, design-led offices in
the most connected and vibrant parts of London.
Development is a core part of our business model which has contributed to
consistent outperformance of our benchmark, the MSCI Central London Office
Index. At a time when the sector's cost of capital is elevated, however, we
recognise the importance of balancing investment in future growth with actions
that enhance returns and shareholder value over the near-term. While
maintaining an appropriate level of leverage, disposal proceeds will be
selectively reinvested into a combination of development projects,
acquisitions where the strategic and financial rationale is clear, and share
buybacks.
Succession planning has been, and remains, an important focus throughout the
year. Shortly after year-end, Chief Executive Paul Williams announced his
decision to retire. He will remain in his role until his successor is in
place. Paul has made a substantial contribution to the business over the last
38 years, and there will be time to celebrate his many successes. A
comprehensive recruitment process is underway.
Executive Director Nigel George had previously announced his decision to
retire. Nigel steps down from the Board on 31 March 2026 and will continue as
an employee for between 12 and 24 months, supporting a number of key projects.
On behalf of the Board, I would like to thank Nigel for his dedication and
contribution to Derwent London over many years.
Together with Damian Wisniewski, Chief Financial Officer, Emily Prideaux,
Executive Director, and the senior management team, the Board is confident in
the depth of experience and is fully focused on delivering the Group's
strategy.
The Board is pleased to confirm a 0.5p per share increase in the final
dividend to 56.0p, taking the full year dividend to 81.5p, a 1.2% uplift. This
is consistent with our dividend policy and represents the 18th consecutive
year of growth. Dividend cover remains healthy at c.1.2 times based on EPRA
earnings. The final dividend will be paid on 29 May 2026 to shareholders on
the register at 24 April 2026.
The London office market continued to strengthen in 2025, and momentum has
accelerated into 2026. The business is well-positioned to benefit from this
improvement. We have strong conviction in the medium-term outlook for earnings
growth and total accounting return.
CHIEF EXECUTIVE STATEMENT
Portfolio activity - positive momentum
The London office sector faces a significant shortage of supply, particularly
for well-located, good quality buildings and demand remains strong. Rents for
these buildings have continued to grow and yields have stabilised. In
addition, investment liquidity has been improving, particularly for larger lot
sizes, supported by increasingly favourable credit conditions.
Our capital values increased by 1.7% overall in 2025, led by the West End, and
developments again made a significant contribution. We also continued to
capture the growing reversion with new leases signed nearly 10% ahead of ERV.
New leases of £11.3m completed in 2025, with open-market lettings agreed 9.9%
ahead of December 2024 ERV. This includes £2.7m of Flex lettings, where
demand remains strong. Operational momentum has stepped up into 2026. We have
completed £1.5m of new leases and are under offer on £14.4m of rent, which
includes all of the offices at Network W1. In addition, we are in negotiations
on a further £4.4m across the portfolio.
Asset management activity on £58.9m of income is almost 30% higher than the
previous peak in 2019. This included accretive major rent reviews at Brunel
Building W2 and 80 Charlotte Street W1, reflecting strong rental growth, which
we expect to continue, since the buildings completed. We also completed
several successful lease regears with longstanding occupiers such as Adobe at
White Collar Factory EC1 and Burberry at Horseferry House SW1. These
transactions are evidence of the continued strong demand for our buildings and
the quality of our occupier relationships.
We secured vacant possession at several properties ahead of project
commencement, including Holden House W1, Middlesex House W1 and Greencoat
& Gordon House SW1. Excluding these, our EPRA vacancy rate increased to
4.1% but remains low.
Overall disposal proceeds increased in 2025 to £216.1m. This included the
sales of 4 & 10 Pentonville Road N1 and Francis House SW1 for a combined
£80.1m, as well as £135.9m from trading disposals at 25 Baker Street W1.
With liquidity in the investment market improving, we are increasing the pace
of disposals with a target of £1bn over the next three years. In 2026, we
have exchanged contracts for the sale of 80-85 Tottenham Court Road W1 for
£32.6m and are under offer on a further c.£240m.
Property valuations and financial performance - ERV upgrade
Development valuations were up 7.6% at 25 Baker Street W1, Network W1 and
Holden House W1, while the standing portfolio delivered an uplift of 0.8%. ERV
growth in the year of 4.0% was in line with our guidance. Our 2026 outlook is
increased to 4% to 7%, from 3% to 6% in 2025.
The portfolio equivalent yield was stable at 5.71% (2024: 5.73%) but,
excluding 25 Baker Street, it increased by 5bp. After allowing for additional
future capex into the portfolio, underlying capital values rose by an overall
1.7% in 2025.
Our total property return of 5.5% outperformed the MSCI Central London Office
Quarterly Index by 69bp. EPRA NTA was up 2.4% to 3,225p per share resulting in
a total accounting return (TAR) of 5.0%. This is an increase from 3.2% in
2024, following the inflection in values in mid-year.
Earnings form a key component of our TAR. Positive rental performance and cost
efficiencies were offset by increased interest costs, following the
refinancing at higher rates in the middle of the year and slightly higher
average net debt levels. As a result, and in line with guidance, EPRA earnings
reduced to 98.4p per share from 106.5p in 2024. Adjusted earnings, which
include trading profits of £4.2m associated with 25 Baker Street, were 102.1p
per share.
Our approach to capital allocation
Our business model is underpinned by capital recycling. Property disposals are
currently our primary source of incremental funding and with liquidity
improving, we are targeting an acceleration in sales over the next three
years. Properties will be considered for sale where we believe the capital can
be deployed more accretively, or where our asset management plans are largely
complete. In addition, we will also look to crystallise development profits.
As the cost of capital increased across the sector during 2025, we have
reviewed our approach to capital allocation. Out of the £1bn of target
disposals, we have earmarked c.£500m for future development capex and, after
taking account of the acquisition of Old Street Quarter EC1 for £239m in
late-2027, this leaves a surplus of c.£250m for redeployment into other
opportunities. These include acquisitions where the rationale is compelling
and potential share buybacks which are an important tool to enhance both NAV
and earnings per share over the short-term.
Development has been and remains an important driver of value creation and
earnings accretion, having made a positive contribution to total accounting
return every year since 2010. By investing in locations with strong
fundamentals, we are significantly outperforming our appraisals, and our
recent projects are good examples of this. However, we have always taken a
disciplined approach and there have been several examples of projects we have
chosen to sell rather than deliver ourselves.
Project pipeline
In 2025, property yields were stable and ERV growth outperformed build cost
inflation. We started demolition works at Holden House W1 (133,500 sq ft
redevelopment) last year where future capex is £135m. Greencoat & Gordon
House SW1 (107,800 sq ft comprehensive refurbishment) and 50 Baker Street W1
(236,000 sq ft redevelopment) are proposed to commence later this year. Our
appraisals show attractive yields on completion and minimum 10% ungeared IRRs,
with rental growth expected to increase these further given the strength of
the respective sub-markets.
Old Street Quarter EC1 represents a significant long-term regeneration
opportunity. During the year we formed a strategic partnership with Related
Argent to progress a best-in-class mixed-use, living-led project. The
masterplan will be structured to provide flexibility through to delivery,
including potential joint ventures, forward funding and plot sales. We are
working towards a planning application later this year.
Strong London market
London maintains its status as Europe's business capital, and we are
optimistic about the office market outlook, which is underpinned by strong
fundamentals. We are entering a period of very low new supply while demand
remains robust, sector diverse and increasingly focused on best-in-class
space. This imbalance supports rental growth and continued improvement in
investment activity.
One of London's key economic strengths is its diverse office demand and
ability to attract both blue-chip corporates and high growth innovators,
supported by leading levels of venture capital investment, including a top
three global position for AI venture capital and Europe's largest
concentration of generative AI businesses. While we recognise the ongoing
debate around AI, we believe London's depth of talent, culture of innovation
and global connectivity will allow the city to harness AI as a net positive
for long term occupational demand and economic growth.
Confident outlook and guidance
Our underlying valuation ERV has grown by around 8% over the last two years
and our guidance for 2026 is up from 2025 to 4% to 7%.
Rental growth is expected to continue to exceed cost inflation, supported by
income from recently completed projects. We anticipate a near-term reduction
in EPRA earnings, followed by growth in H2 2026 and into 2027.
Looking ahead, we forecast 25% to 30% growth in EPRA earnings by 2030 from
2025 levels. This will be driven by project completions, capture of rental
reversion and cost efficiencies as well as disciplined capital allocation.
Assuming investment yields remain stable, we anticipate delivering a total
accounting return of 7% to 10% per annum over the coming years.
LONDON MARKET
See Appendix 1 for supporting graphs
Occupational market
Occupational activity across London continues to strengthen, reflected in
elevated levels of viewings and sustained demand from a broad range of
business sectors. Looking ahead, sentiment remains positive, with 80% of
take-up in 2025 reflecting growth/expansion moves and occupiers increasingly
focused on securing space in well-connected, central locations.
With a supply crunch anticipated in coming years and a strong level of demand,
competition for best-in-class, sustainable buildings with good amenity and
close proximity to the Elizabeth line or other transport hubs will drive
rental growth. We are already seeing this growth spreading more broadly in
respect of price point and location, reflecting a deeper, more balanced market
which we expect to continue.
Supply constraints remain a structural characteristic of the market. With
limited new stock under construction, pre-letting activity remains solid and
grade A vacancy rates across central London are sub-2%. This imbalance between
supply and demand is significant and scarcity of space of the quality the
market is looking for is expected to become more pronounced over the coming
years.
In this environment, we will see a continuation in the trend of occupiers
renewing where the space works for their businesses. For occupiers, the 'stay
put' option removes uncertainty and cost. For landlords, it supports income
security and creates opportunities to extend lease lengths, enhance occupancy
and capture rental growth.
Central London West End City
Take-up (sq ft) 11.4m 3.2m 5.2m
Relative to LTA 0% (14)% (3)%
Space under offer (sq ft) 3.5m 1.0m 1.4m
Active demand (sq ft) 9.8m - -
Relative to LTA 22% - -
Vacancy (%) 7.2 6.0 8.8
Relative to LTA +98bp +211bp +68bp
Grade A vacancy (%) 1.9 1.7 1.8
Committed development to 2030 (sq ft) 11.1m 3.3m 4.9m
% pre-let to 2030 47% 38% 52%
Source: CBRE
Investment market
Transactional activity in central London strengthened markedly during 2025,
with investment volumes rising to £7.1bn, a 46% increase year-on-year, with
improved liquidity evident across core City and West End locations.
The average lot size also increased materially, with 20 transactions in excess
of £100m, almost double the level seen in 2024. This re-emergence of demand
for larger assets has improved pricing transparency, providing additional
evidence across different sub-markets. Prime assets in the West End continue
to command sharper pricing, while good quality, income-producing buildings
outside the core are also attracting interest.
Investor sentiment was more cautious earlier in the year but improved towards
the year end. The absence of material policy changes affecting commercial
property in the Autumn Budget helped restore confidence, while ongoing
geopolitical uncertainty has further reinforced London's position as one of
the world's leading locations for long-term capital. Against this backdrop, a
broader range of investors have been active in the market.
Looking ahead, more favourable credit market conditions and continued
expectations of rental growth, combined with improving liquidity and clearer
pricing, are expected to support investment activity through 2026. Demand
remains focused on core-plus and value-add opportunities, where strong
occupational fundamentals and supply-demand imbalances offer the potential for
attractive returns.
While appetite for core income remains more selective, the gap in pricing
between core and higher-returning strategies continues to narrow. Against this
backdrop, conditions are increasingly supportive for disciplined capital
recycling and selective value realisation.
Central London West End City
Transaction volumes (£bn) 7.1 3.4 3.1
Relative to LTA (37)% (12)% (35)%
No. of deals >£100m 20 7 10
Average lot size (£m) 52 53 61
Relative to LTA (7)% 15% (8)%
Prime yields (%) - 4.0 5.5
Movement during 2025 - 0bp (25)bp
Source: CBRE
VALUATION
See Appendix 2 for supporting graphs and tables
The Group's investment portfolio was valued at £5.1bn as at 31 December 2025,
up from £5.0bn at the end of 2024. Including development properties, the
underlying portfolio valuation increased by 1.7% with a surplus for the year
of £67.5m which, after accounting adjustments of £10.8m, produced an overall
increase of £56.7m.
Portfolio ERV growth, on an EPRA basis, was 4.0% over the year, in line with
guidance. Following a period where property yields increased significantly,
the portfolio's true equivalent yield, on an EPRA basis, was stable in 2025 at
5.71% (31 December 2024: 5.73%). However, excluding the impact of 25 Baker
Street W1, which completed in H2, the equivalent yield increased marginally by
5bp. The EPRA initial yield was 4.0% (December 2024: 4.3%) which, after
allowing for the expiry of rent frees and contractual uplifts, rises to 5.1%
on a 'topped-up' basis (December 2024: 5.2%).
Our central London properties, representing 98% of the portfolio, were up
1.5%. Values in the West End increased 2.2%, outperforming the City Borders
which declined slightly, at -0.9%. While the West End remains our strongest
market, occupational demand is broadening across sub-markets, as cost and
value become more important. The balance of the portfolio, our Scottish
holdings, was up 13.1% following project completions and leasing activity.
We were on-site at three West End developments during the year. At 25 Baker
Street W1, the offices and three of the retail units were pre-let with a
further two retail units leased post-completion in Q3. At Network W1, the
offices are now under offer ahead of project completion which is expected
imminently. Remaining capital expenditure to complete these two developments
totals £19m. At Holden House W1, demolition commenced in Q3. These three
properties were valued at £709.1m as at 31 December 2025, representing 14% of
the portfolio's valuation (December 2024: 12%). Adjusting for capital
expenditure during the year, their values increased by 7.6%. Excluding these
projects, the underlying portfolio valuation increased 0.8%.
The portfolio valuation uplift of 1.7% outperformed both the MSCI Central
London Office Quarterly Index, which was up 1.1%, and the UK All Property
Quarterly Index, which increased by 1.0%.
The stabilisation in valuation yields across the London office market
contributed to a 5.5% total property return for our portfolio over the year.
This compares to 4.8% for the MSCI Central London Offices Quarterly Index and
6.0% for the UK All Property Index.
Portfolio valuation performance
Valuation Valuation movement(1) True equivalent yield(2) Yield shift(2) ERV growth(2)
Dec 2025
2025
Dec 2025
2025
2025
£m
%
%
bp
%
West End 3,801.0 2.2 5.42 (5) 4.8
City Borders 1,178.7 (0.9) 6.34 2 1.7
Central London 4,979.7 1.5 5.69 (2) 3.8
Provincial 114.2 13.1 6.97 (25) 15.9
Portfolio 5,093.9 1.7 5.71 (2) 4.0
On-site developments(3) 709.1 7.6 - - -
Investment portfolio (ex-developments) 4,384.8 0.8 - - -
(1) Underlying - properties held throughout the year. (2) On EPRA basis. (3)
Three on-site developments in 2025: 25 Baker Street W1 (completed August
2025), Network W1 (completing imminently) and Holden House W1.
Portfolio reversion
Our contracted annualised cash rent roll as of 31 December 2025 was £194.8m,
with £53.5m of contracted uplifts, primarily from rent-free expiries and
fixed uplifts. Under IFRS, these contracted uplifts are straight-lined in the
income statement. Our annualised accounting rent roll was £210.4m. With a
headline ERV of £335.3m, the components of our £87.0m valuation reversionary
potential are:
· Major projects: £40.2m of project ERV on a headline basis, or
£32.2m on an accounting basis. This comprises the two on-site developments at
Network W1 (100% of office space under offer) and Holden House W1 with an ERV
of £28.9m. In addition to the developments, there are two large West End
refurbishments at Greencoat & Gordon House SW1 and Middlesex House W1 with
a combined ERV of £11.3m.
· Refurbishment projects: £17.4m of potential headline income
from smaller projects (£13.9m accounting basis). These include rolling
refurbishments at 1-2 Stephen Street W1 and Tea Building E1, as well as 1 Page
Street SW1 where we are exploring alternative uses.
· EPRA vacancy: £11.2m of 'available to let' space (£8.9m
accounting basis). This includes recently refurbished space at 1 Oliver's Yard
EC1, 1-2 Stephen Street W1 and 90 Whitfield Street W1. Overall, this equates
to a vacancy rate of 4.1%.
· Reviews and expiries: £18.2m (£15.9m accounting basis) is from
future reviews (£6.2m) and expiries (£12.0m, of which £6.3m relates to
near-term project commencements, mainly at 50 Baker Street W1 and 20
Farringdon Road EC1), less future fixed uplifts above the current ERV.
LEASING & ASSET MANAGEMENT
See Appendix 3 for supporting graphs
Leasing
In 2025, we completed £11.3m of new lettings across 233,400 sq ft, comprising
54 transactions, with open-market rents agreed 9.9% ahead of December 2024
ERV. Demand was resilient across the portfolio, broadly split between the West
End and City Borders, and across HQ and Flex. Excluding pre-lets, leasing
volumes for the year were in line with the Group's long-term average,
demonstrating the underlying consistency of demand for the portfolio through
the cycle.
Since the start of 2026, operational momentum has stepped up. We have
completed £1.5m of new leases and are under offer on £14.4m of rent, which
includes all of the offices at Network W1. In addition, we are in negotiations
on a further £4.4m across the portfolio.
Leasing activity in 2025 to date
Let Performance vs
Dec 2024 ERV (%)
Area Income WAULT(1 Open market Overall(2)
'000 sq ft
£m pa ) Years
H1 2025 99.4 4.3 4.6 8.4 -10.9
H2 2025 134.0 7.0 6.1 10.7 9.9
2025 233.4 11.3 5.5 9.9 0.9
Of which: F+F(3) 46.2 2.7 2.4 3.6 3.6
(1) Weighted average unexpired lease term (to break). (2) Includes short-term
lettings at properties earmarked for redevelopment. (3) 'Furnished + Flexible'
Principal lettings in 2025
Property Tenant Area Rent Total annual rent Lease term Lease break Rent free equivalent
sq ft
£ psf
£m
Years
Year
Months
The White Chapel Building E1 BE Offices 23,600 48.60 1.1 9.7 - 22
90 Whitfield Street W1 Validus Risk Management 11,800 91.50 1.1 10 7 18, plus 6 if no break
230 Blackfriars Road SE1 TP Bennett(1) 14,600 49.50 0.7 3.7 1.7 0, plus 3 if no break
90 Whitfield Street W1 BMJ 6,500 86.50 0.6 6.2 4.2 10, plus 4 if no break
Morelands EC1 Ingeus(1) 8,400 67.40 0.6 2.4 - 2
Morelands EC1 Exigere 8,200 70.00 0.6 5.2 - 13
White Collar Factory EC1 Adobe 13,400 39.50 0.5 13.3 8.3 17, plus 12 if no break
1-5 Maple Place W1 Union Maritime(1) 5,900 68.20 0.4 5 3 4, plus 3 if no break
230 Blackfriars Road SE1 Quantspark 7,300 45.00 0.3 5 2 6, plus 3 if no break
25 Baker Street W1 Notto 3,300 89.90 0.3 10 - 15
1-2 Stephen Street W1 Sainsbury's 4,600 65.40 0.3 15 10 9
1 Oxford Street W1 Donutelier 900 286.40 0.3 15 10 6
(1) Space leased on a 'Furnished + Flexible' basis
Asset management activity
We had a record year of asset management in 2025 with £58.9m of completed
transactions, nearly 30% above the previous strongest year (2019). The Group's
main focus has been to capture reversion, extend income and align lease
profiles with asset strategies and future development plans. On average, the
74 transactions delivered a 6.4% uplift in rent.
This exceptional level of activity was driven by early and proactive
engagement with occupiers. Our relationship-led approach enables us to
structure transactions that balance flexibility with longer-term income
visibility, while mitigating void risk and capital expenditure.
Rent reviews totalled £37.4m and we saw strong reversion captured with
reviews settled on average 7.3% ahead of the previous rent.
Key transactions include:
· Horseferry House SW1: a lease regear was completed with Burberry,
extending the lease term from 2038 to 2043 (without breaks) and increasing the
unexpired term to 17.6 years. The 2033 open market rent review and 2038 expiry
were replaced with new five-yearly fixed uplifts, improving income visibility
and providing greater certainty over future cash flows.
· White Collar Factory EC1: a major lease regear with Adobe,
extending the lease term and increasing their total space by 25% to 67, 000 sq
ft. The transaction aligned Adobe's leases to expire in 2038, with a
tenant-only break in 2033, improving the income profile of the building,
increasing the WAULT to break to 8.3 years. This was Adobe's fourth expansion
since they first took occupation in 2017.
· 80 Charlotte Street W1: BCG's rent review across levels 4-8
(163,700 sq ft) secured an uplift of 8.4% against the previous rent and a 5.1%
premium compared to the December 2024 ERV.
· Brunel Building W2: 2025 saw the completion of the first round of
rent reviews since the building completed. The average uplift across all
occupiers was 5.1% compared to the headline rent.
Asset management
Number Area Previous rent New rent(1) Uplift New rent vs Dec 2024 ERV
'000 sq ft
£m pa
£m pa
%
%
Overall
Rent reviews 22 448.8 34.9 37.4 7.3 5.1
Lease renewals 39 157.2 5.5 5.7 3.4 -0.4
Lease regears 13 303.2 15.0 15.8 5.6 -0.6
Total 74 909.2 55.3 58.9 6.4 3.0
Activity excluding short-term development facilitation transactions
Lease renewals 37 149.0 5.4 5.6 3.5 2.1
Lease regears 11 297.1 14.8 15.7 5.9 0.1
(1) Headline rent, shown prior to lease incentives
The weighted average unexpired lease term (WAULT) to break across the
portfolio is 6.0 years and the 'topped-up' WAULT (adjusted for pre-lets and
rent-free periods) is 7.0 years.
Portfolio vacancy
The EPRA vacancy rate increased by 100bp through 2025 to 4.1% (December 2024:
3.1%), with an ERV of £11.2m. In addition, there is a further £57.6m of rent
classified as project space, split £40.2m at major projects and £17.4m at
smaller refurbishments. In total, 71% of breaks/expiries were retained or
re-let prior to the end of the year, excluding space taken back for projects
and disposals. This is below the Group's 10-year average of 83% because units
with a passing rent of £3.3m were vacated during Q4, leaving insufficient
time to complete our asset improvement plans prior to year-end.
DEVELOPMENTS AND REFURBISHMENTS
See Appendix 4 for supporting tables
We successfully completed our major development at 25 Baker Street W1 in H2
2025 and Network W1 is due to complete imminently, delivering high quality
buildings into well-connected central London locations. At Holden House W1,
which began in August 2025, good progress is being made with demolition, and
strip-out works have just commenced at Greencoat & Gordon House SW1.
Preparatory work continues for 50 Baker Street W1 with a proposed start in
2026.
Looking forward, Holden House, Greencoat & Gordon House and Middlesex
House are expected to deliver a combined ungeared IRR of >10% and a yield
on completion of >6.5%. At 50 Baker Street, we forecast an ungeared IRR of
>12%. Located in strong occupier sub-markets, we are confident that we will
outperform appraisal rents in the increasingly supply-constrained market,
driving an increase in profitability.
The timing and phasing of future commitments will be considered within the
context of our capital allocation framework, ensuring disciplined and flexible
deployment of capital.
Completed/near completion projects - 439,200 sq ft
· 25 Baker Street W1 (298,000 sq ft) - office-led scheme in
Marylebone: the office element 100% pre-let. Physical completion was achieved
on programme; practical completion was slightly delayed to August 2025 due to
timing of sign off by the Building Safety Regulator. With fit-out works
progressing the first tenants are now in occupation, following lease
commencements from September 2025. The scheme made a positive contribution to
earnings in 2025. In addition, 24 of the 41 private residential units have
been sold. Completion marks an important milestone in realising value from
this major development, with a profit on cost of 21%, yield on completion of
7.5% and ungeared IRR of 11.3%.
· Network W1 (141,200 sq ft) - office-led scheme in Fitzrovia:
completion is due imminently. All of the office space is under offer.
Major projects - 291,300 sq ft
· Holden House W1 (on-site H2 2025; 133,500 sq ft) - office-led
scheme in Fitzrovia: good progress is being made on demolition works at this
retained façade development. Kier has been appointed under a pre-construction
services agreement for the main construction works. Located opposite the Dean
Street Elizabeth line station, this scheme is well-located to benefit from
current occupational trends and we are confident in its leasing prospects.
Completion is expected in H2 2028.
· Middlesex House W1 (on-site H1 2026; 50,000 sq ft) - office-led
scheme in Fitzrovia: early strip-out works underway and the main contractor
has been appointed, with construction works commencing in H1 2026. The scheme,
where we are appraising a managed solution as part of the repositioned
product, is targeting completion in February 2027.
· Greencoat & Gordon House SW1 (proposed H1 2026 start; 107,800
sq ft) - comprehensive refurbishment: vacant possession is imminent and works
are proposed to commence on site in H1 2026. Following successful leasing
campaigns at the adjacent 6-8 Greencoat Place and Francis House, as well as
the lack of competing heritage supply in Victoria, we are confident that there
will be strong occupier demand. Completion is anticipated in H2 2027.
50 Baker Street W1 - 236,000 sq ft (proposed 2026 start)
· Office-led scheme in Marylebone: preparatory work continues for
this high quality redevelopment located adjacent to 25 Baker Street, which is
already reversionary. Detailed designs are progressing, a new long headlease
was agreed in 2025 with The Portman Estate, the freeholder, and contractors
have been engaged, as the scheme advances towards proposed commencement in the
middle of 2026. Marylebone is one of London's strongest sub-markets and there
is demonstrable demand for large floorplates which are in short supply in the
West End.
Schemes
Total Network W1 Holden House W1 Greencoat & Gordon House SW1 50 Baker Street W1
Status Imminent completion On site Proposed Proposed
Type of scheme Development Development Major refurbishment Development
Commencement H1 2022 H2 2025 H1 2026 2026
Completion Feb 2026 H2 2028 H2 2027 H2 2029
Office (sq ft) 561,100 136,300 113,000 107,800 204,000
Residential (sq ft) 14,000 - - - 14,000
Retail (sq ft) 43,400 4,900 20,500 - 18,000
Total area (sq ft) 618,500 141,200 133,500 107,800 236,000
Est. future capex(1) (£m) 9 135 52 TBC
Total cost(2) (£m) 242 290 151 TBC
ERV (c.£ psf) 100 110 80 TBC
ERV (£m pa) 13.7 15.2 9.6 TBC
Embodied carbon intensity (kgCO(2)e/sqm) - estimate(3) c.530 c.590 <250 c.530
BREEAM rating (target) Outstanding Outstanding Excellent Outstanding(4)
NABERS rating (target) 4.5 Star or above 5 Star or above - 5 Star or above(4)
Green finance Elected Elect in 2026 (target) To be elected To be elected
(1) As at 31 December 2025. (2) Comprising book value at commencement, capex,
fees and notional interest on land, voids and other costs. (3) Embodied carbon
intensity estimate as at stage 4. (4) On main commercial building.
Future development projects - Four schemes totalling c.1.2m sq ft
The Group's medium to longer-term pipeline extends to c.1.2m sq ft across four
major schemes. We are actively exploring alternative, including living-led
uses, to maximise long-term value potential at several of these properties.
Where appropriate, we will consider working with specialist partners.
· 20 Farringdon Road EC1 (167,000 sq ft) - potential to commence in
H1 2027: an office-led repositioning and comprehensive refurbishment adjacent
to Farringdon Elizabeth line station.
· Blue Star House SW9 (86,100 sq ft) - potential to commence in
2027: working with living specialist Astir, resolution to grant planning
consent was obtained in H2 2025 for a hotel-led redevelopment with supporting
workspace and public realm, designed to extend the existing structure and
optimise the site's potential.
· Old Street Quarter EC1 (750,000+ sq ft) - potential to commence
from 2028. The acquisition of this 2.5-acre island site is scheduled to
complete from late 2027 (for £239m), conditional on delivery by the vendor of
the new eye hospital at St Pancras and subsequent vacant possession. A
strategic partnership with Related Argent has been formed to masterplan a
flexible mixed-use, living-led campus-style redevelopment, targeting an
increase in floor area of approximately 80%, which can be delivered in phases.
A planning application is targeted for H1 2027.
· 230 Blackfriars Road SE1 (200,000+ sq ft) - potential to commence
from 2030. Early feasibility work indicates capacity for a substantial
mixed-use redevelopment of the existing 1970s building. There is potential to
more than triple the current floor area, subject to regearing of the
headlease.
Refurbishments
Alongside major projects, phased or rolling refurbishment is an important part
of our approach to ensuring our buildings remain competitive as occupier
requirements evolve. These projects are designed to deliver attractive rental
uplifts, enhanced amenity and improved EPC ratings. Annual capital expenditure
on rolling refurbishments is typically between
£25-50m.
· Works completed at 1 Oliver's Yard EC1 (31,000 sq ft) in 2025,
with upgrades to the courtyard, reception, workspace and amenities. The
refurbishment has significantly improved product quality and rental
performance, with space previously achieving £60 psf now targeting an ERV in
excess of £70 psf. Further works on 25,000 sq ft are expected in 2026.
· Works continue at 1-2 Stephen Street W1 (27,200 sq ft), where the
rolling refurbishment programme has driven a step-change in rental
performance, with ERVs on this space ranging from £87.50 to £97.50 psf,
compared with previous passing rents of c.£73 psf.
Lochfauld solar park, Scotland
Lochfauld solar park is a c.100-acre, 18.4 MW solar development forming part
of the Group's Scottish portfolio and is an important component of our Net
Zero Carbon Pathway. Once operational, the park is expected to generate c.40%
of the London managed portfolio's electricity requirements, materially
reducing reliance on external supplies.
During 2025, the majority of the construction and installation phases were
completed. All solar panels have been installed, together with the supporting
frames, cabling and the on-site electrical systems required for grid
connection. Associated site infrastructure, including access roads, drainage
and security systems, has also been completed. With these elements in place,
power-on and energisation is expected in H1 2026.
Based on the current development appraisal, the project is expected to deliver
an attractive yield on cost in excess of 9%, with net annual income of
c.£1.5m after operating costs. The development delivers both a compelling
financial return and long-term strategic value as part of the Group's
sustainability and decarbonisation objectives.
DISPOSALS AND ACQUISITIONS
Disposals
Disposals in 2025 totalled £216.1m. The principal transactions in the year
were:
· 4 & 10 Pentonville Road N1: sold with vacant possession for
£26.0m, broadly in line with book value;
· 25 Baker Street W1 - Residential: completion on the sale of 24 of
the 41 private residential units, plus the affordable residential for a total
of £118.1m;
· 25 Baker Street W1 - Retail: as part of our strategic
collaboration with The Portman Estate, we have completed works at the Loxton
Walk retail, with £17.8m of proceeds received in 2025; and
· Francis House SW1: sold for £54.1m (after agreed deductions),
broadly in line with the December 2024 book value, reflecting a net initial
yield of 4.9%.
Since the start of 2026, we have exchanged contracts for the disposal of 80-85
Tottenham Court Road W1 for consideration of £32.6m, a 6.5% premium to the
December 2025 book value. The property is being sold with vacant possession
and completion is scheduled for June 2026. In addition, we are under offer on
a further c.£240m of disposals.
Acquisitions
There were only £6.0m of acquisitions in 2025, principally the completion of
the headlease regear at Morelands EC1 along with the simultaneous acquisition
of the adjacent 74 Goswell Road EC1 for a combined £5.0m (before costs).
SUSTAINABILITY
9% reduction in energy intensity
Following an 8% reduction in energy intensity (EUI) in 2024, we have delivered
a further 9% reduction to 125 kWh/sqm in 2025 (2024: 137 kWh/sqm). Total
energy consumption was also down 6% to 48.7m kWh (2024: 51.8m kWh), with gas
22% lower and electricity down 1%. Gas has reduced from 37% of total energy in
2020 to 21% in 2025 following portfolio decarbonisation activity and delivery
of new all-electric developments. There are several drivers behind the
reduction in energy consumption, including the full year benefit of
initiatives implemented in 2024:
· installation of air source heat pumps at 1-2 Stephen Street W1
last year and Charlotte Building W1 in 2025, as well as removal of gas at 9-10
Rathbone Place W1;
· ongoing occupier engagement, with a focus on reducing
out-of-hours usage; and
· continued roll-out of shorter plant run-times.
We published an update to our Net Zero Carbon Pathway in December. Our
CRREM-aligned 2030 energy intensity target of 123 kWh/sqm is equivalent to a
26% reduction compared to our 2019 baseline of 166 kWh/sqm.
The Government's 2025 carbon conversion factors were released in early July.
Electricity factors are 15% lower compared to 2024 as further progress has
been made decarbonising the UK's electricity grid. Applying these factors to
our 2025 consumption, our location-based operational GHG emissions (Scopes 1,
2 and 3, excluding embodied carbon) reduced by 16% to 10,434 tCO(2)e compared
to 2024.
72% of our portfolio rated EPC A or B
To ensure compliance with evolving EPC legislation, we have a clear programme
of upgrade works phased over the coming years. With 72% of our portfolio
already rated EPC A or B (including 25 Baker Street W1 and Network W1) and a
further 16% rated EPC C, we remain very well placed ahead of potential
legislation changes in future.
Panel installation complete at Scottish solar park
See 'Developments and refurbishments' section for detailed update.
Circular economy embedded across portfolio
We have made good progress on the circular economy, in collaboration with
Material Index, to optimise re-use across our portfolio, whilst brokering or
donating opportunities to the wider circular economy market. Since we
formalised our circular economy strategy, c.500 tonnes of material have been
donated or brokered. To date, our rolling refurbishments have achieved an
average 44% retention and on-site re-use rate.
A focus on low carbon concrete
In June 2024, we led the formation of a UK developer-led, industry wide
initiative, the Accelerating Concrete-Decarbonisation Group (AC-DG), to
accelerate the adoption and commercialisation of market-ready, viable low
carbon concrete mixes. Significant progress has been made to date, with
prototyping works due to begin in 2026 on several innovative low carbon mixes.
Over the medium-term, these have the potential to reduce concrete carbon
emissions by up to 70%.
In addition, Derwent London is a founding signatory of the Advanced Market
Commitment (AMC), a government funded initiative aligned with the AC-DG. The
aim of the AMC is to signal to the supply chain that low carbon concrete is a
priority for industry. Derwent London has committed to procure at least 5% of
concrete in line with AMC requirements.
FINANCE REVIEW
Financial highlights
Dec 2025 Dec 2024
Total net assets £3,615.3m £3,539.8m
EPRA NTA per share 3,225p 3,149p
EPRA NDV per share 3,302p 3,261p
Property portfolio at fair value £5,093.9m £5,041.1m
Gross property and other income £406.3m £276.9m
Net rental income £190.0m £189.6m
IFRS profit before tax £161.5m £116.0m
EPRA earnings per share (EPS) 98.4p 106.5p
Interim and final dividend per share 81.50p 80.5p
EPRA LTV ratio 29.4% 29.9%
Net interest cover ratio 3.1x 3.9x
Net debt/EBITDA 9.0x 9.3x
Introduction
Derwent London produced a solid financial performance in 2025 amid an
increasingly encouraging backdrop for the London office sector. Our total
accounting return for the year rose to 5.0% helped by a small rise in property
income and portfolio valuations up by 1.7%. IFRS earnings per share increased
by 39% to 143.5p and administrative expenses were reduced by 4.9% compared to
2024. Our development projects continued to add value and, looking ahead, we
expect development returns and the subsequent growth from recently-completed
schemes to continue to outperform. An increased level of disposals in 2025
of £216.1m included £135.9m of trading sales, helping boost operating
cashflow strongly. It also led to reductions in borrowings and net debt with
net debt/EBITDA falling back to 9.0 times and EPRA loan-to-value ratio to
29.4%.
However, we know that there is more to do in 2026. With over £270m already
exchanged or under offer in 2026 to date, we are targeting higher disposals
into a more receptive investment market and have clear parameters for capital
allocation into development and refurbishment projects. The cost of capital
in our sector appears to have risen in 2025 and sets a high bar for real
estate investment. This demands ever more vigilant cost analysis and
discipline, meaning that some of our projects which were previously viable may
now require alternative strategies. We are also looking at other forms of
capital allocation that can bring nearer-term upside.
For 2026, we are targeting further reductions in our cost base through process
efficiencies and reducing irrecoverable property costs. Furthermore,
substantial refinancing in 2025 has prepared us for the repayment of £230m of
relatively expensive fixed rate debt in early 2026; however, the higher
interest rates post refinancing in June 2025 caused EPRA earnings to decline
in H2 2025. We now expect our average spot interest rate to fall slightly
during 2026 and then remain relatively stable until 2031.
Our well-located and amenity-rich product remains in strong demand in an
increasingly supply-constrained market and we are expecting rents to continue
outpacing costs for some time. After a dip in H1 2026 before rent at Network
W1 is recognised in the income statement, we see EPRA earnings returning to
growth in 2027 with our outlook for 2030 around 25-30% higher. The
medium-term outlook for the Group's total accounting return (TAR) is also the
strongest for some time, helped by the rental growth outlook, improving
development returns and stable investment yields.
Property and other income
Gross property and other income increased substantially to £406.3m for the
year ended 31 December 2025 from £276.9m in 2024. This was mainly due to
trading property proceeds of £118.1m (2024: £3.7m) from the sale of 24 out
of 41 apartments at George Street W1, part of our 25 Baker Street W1 scheme.
The related profit on sale was £4.2m after allowing for the cost of
affordable housing. Additional proceeds of £17.8m (2024: £nil) came from the
disposal of trading stock on retail units already passed over to the
freeholder on re-gearing of the headlease.
Gross rental income also increased, rising to £218.3m from £214.8m in 2024
with 25 Baker Street contributing £5.4m of new rent. Other lettings and
reviews were approximately matched by units becoming vacant including
Middlesex House W1, Greencoat and Gordon House SW1 and Holden House W1 where
schemes commenced or are planned. Surrender premiums fell to £0.3m from
£2.7m the year before.
Irrecoverable service charge costs were unchanged at £6.6m but other property
costs rose to £19.8m from £18.2m in 2024. Most of this increase came from
£1.5m of additional legal and letting costs plus £0.7m of marketing costs,
the latter principally at Holden House.
Impairment charges in relation to planning costs at Old Street Quarter EC1
increased to £1.4m from £0.2m in 2024 with a further charge of £0.5m (2024:
£0.2m) relating to receivables. We have seen continued strong rental and
service charge collection rates exceeding 99% through the last year.
Taking account of these costs, net rental income increased marginally to
£190.0m from £189.6m in 2024. Taking further account of surrender
premiums, the trading profits noted earlier, dilapidation receipts, other
property income and management fees, net property and other income increased
to £199.6m from £198.3m in 2024.
See Appendix 5 for graph showing movement in gross rental income
Administrative expenses and EPRA cost ratios
As noted last year, managing our costs and looking for efficiencies was a
particular focus in 2025 and will continue to be so in 2026. As a result,
the Group's administrative expenses fell to £39.1m from £41.1m a year
earlier, the 4.9% decrease coming mainly from a 4.7% drop in staff costs
despite increases averaging 5.9% for staff and 3.5% for directors. Out of
£28.3m (2024: £29.7m) of staff costs, £2.7m (2024: £2.5m) of internal
costs were capitalised in accordance with IAS16 and £2.7m (2024: £2.7m) was
recovered via service charges. Total average headcount increased by eight,
though five of these are recovered in full or in part via service charges.
Our EPRA cost ratio excluding direct vacancy costs increased to 22.4% (2024:
£21.7%) and, including direct vacancy costs, the figure increased marginally
to 27.3% from 27.0% in 2024.
Other income statement items
After accounting adjustments which mainly comprise straight-lining lease
incentives and grossing up headlease liabilities, the revaluation surplus on
investment properties which passed through the income statement increased to
£52.2m after a small deficit of £2.7m in 2024. In addition, the
revaluation surplus for our head office was £4.5m in 2025 (2024: £2.9m);
this was subject to a deferred tax adjustment of £1.1m (2024: 0.6m) as it is
outside the REIT regime with both of these amounts included within the
consolidated statement of comprehensive income rather than the income
statement.
In addition to the trading activity noted earlier, we disposed of two
investment properties during the year with combined proceeds of £80.2m.
This was split £26.0m for the freehold interest in 4&10 Pentonville Road
N1 and £54.1m for the freehold in Francis House SW1 and gave rise to a small
combined loss on disposal of £2.2m after costs. In 2024, investment
property disposal proceeds were slightly higher at £87.5m and provided a
£2.1m net profit on disposal.
The profit from operations therefore increased to £210.5m in 2025 from
£156.4m in the prior year.
The other main income statement items are finance income and costs. The net
finance cost for 2025 increased to £48.4m (2024: £39.6m) partly due to
higher average borrowings in 2025 but more impacted by the increase in our
weighted average interest rate following the mid-year refinancing. Also
included in finance costs in 2025 was a £1.2m settlement cost for an interest
rate hedge taken out in connection with the £250m bond issue in June. Given
the volatility at the time, we opted to hedge but rates fell through the
period when pricing was at risk giving rise to this charge; we will get the
benefit of slightly lower rates through the 7-year period of these 5.25%
bonds. In 2025, we capitalised interest on projects totalling £14.1m (2024:
£11.2m).
The Group's interest rate swaps also terminated in 2025 and showed a fair
value loss on derivative financial instruments of £0.6m (2024: £2.3m loss).
There was no contribution from joint ventures this year but the prior year
included a £1.5m profit from our share of the 50 Baker Street joint venture
up to the point of termination in October 2024.
IFRS profit before tax and EPRA earnings per share
The IFRS profit before tax, which includes fair value movements such as the
property revaluation passing through the income statement, increased to
£161.5m (2024: £116.0m) and IFRS diluted earnings per share rose to 143.5p
(2024: 102.9p).
EPRA earnings per share adjust for the fair value movements and certain other
items. As previously guided, they were lower in 2025 at 98.4p per share
(2024: 106.5p) largely as a result of the higher interest rates following
refinancing during the year. Note that the £4.2m trading profits on
residential apartment sales at George Street are excluded from EPRA's
definition of earnings. Providing these apartments and affordable housing
was an important and necessary part of our development activity at this mixed
use scheme and adding these profits back for 2025 takes adjusted earnings per
share to 102.1p.
A table showing a reconciliation of the IFRS and adjusted results to EPRA
earnings per share is included in note 26.
Like-for-like rental income
Like-for-like (LFL) gross rental income increased by 2.4% in 2025, showing the
impact of rental uplifts being captured on new lettings and reviews but also
reflecting slightly higher vacancy across the portfolio. LFL net rental
income was up 1.4% and LFL net property income, which takes account of
dilapidations and other property income, was up 1.2%.
Taxation
The Group's tax charge for 2025 was £0.4m (2024: £0.1m). This was due to
movements in deferred tax as a result of the utilisation of previously
recognised tax losses and a reduction in the deferred tax asset on share based
payments.
As in previous years, the majority of our income was exempt from corporation
tax as it is derived from a qualifying property rental business under the UK
REIT regime. The related requirement to pay a PID (property income
distribution) meant that £11.0m (2024: £9.8m) of withholding tax was paid to
HMRC instead.
Derwent London's principles of good governance extend to a responsible
approach to taxation. Our tax affairs are led by an experienced Head of Tax,
we have a low tax risk tolerance and continue to retain the low-risk status
which HMRC granted in the Business Risk Review in July 2023. We have an open
dialogue with HMRC in relation to our tax affairs, work collaboratively with
them to ensure that we pay the correct amount of tax on time and engage
proactively with them on proposed changes to legislation.
Our statement of tax principles is available on our website
www.derwentlondon.com/investors/governance/tax-principles
(http://www.derwentlondon.com/investors/governance/tax-principles) and is
approved by the Board in line with the Group's long-term values, culture and
strategy.
Dividend
Our policy aims for progressive annual increases but a payout well-covered by
EPRA earnings after taking account of our duties to other stakeholders. The
board is recommending another 0.5p per share increase in the final dividend to
56.0p, of which 40.0p will be a PID and the balance of 16.0p as a conventional
dividend to be paid in May 2026. The Company's ISIN reference is
GB0002652740.
Our dividend policy remains unchanged and this year's proposed final dividend
will make this the 18th year of consecutive increases in our interim/final
dividends since the formation of Derwent London plc in 2007. We also paid
special dividends in 2017 and 2018.
This will take the total dividend for the year to 81.5p, a 1.2% increase over
the previous year. Dividends paid and declared in relation to 2025 earnings
were 1.2 times covered by EPRA earnings and 1.3 times by adjusted earnings.
Net asset values and total return for the year
Derwent London's total net assets increased during 2025 to end the year at
£3,615m, up 2.1% from £3,540m in 2024. EPRA Net Tangible Assets (NTA), our
main net asset performance measure, increased to 3,225p per share on a diluted
basis from 3,149p a year earlier. The principal movements during the year
were our recurring income as measured by EPRA earnings, the revaluation
surplus and overall profit from disposals less ordinary dividends and PID paid
in the year.
2025 2024
p p
Opening EPRA NTA 3,149 3,129
Revaluation movement 51 (8)
Profit on disposals 2 2
EPRA earnings 98 106
Ordinary dividends paid (81) (80)
Other 6 -
Closing EPRA NTA 3,225 3,149
Adding back dividends paid, our total accounting return (TAR) for 2025 was
5.0%, indicating a further improvement in conditions for our sector after
several challenging years. In 2024, when valuation declines started to
reverse, our TAR was 3.2% following negative returns in both 2022 and 2023.
Most of these valuation impacts came from yield adjustments as the era of
quantitative easing ended after a sustained period of very low interest
rates. Modest rental growth continued during this time and has accelerated
for the better-quality space in which we specialise while yields have
essentially stabilised.
EPRA Net Disposal Value (NDV), which takes account of a positive £96.6m fair
value adjustment from our fixed rate debt and bonds, increased to 3,302p per
share from 3,261p at 31 December 2024.
See Appendix 5 for graph showing movement in EPRA net tangible assets per
share
Property portfolio and other fixed assets
Our property portfolio is externally valued at six-monthly intervals by Knight
Frank and, at 31 December 2025, the fair value increased to £5,094m from
£5,041m a year earlier. We are required to make adjustments from fair value
to carrying value for accounting purposes to recognise tenant incentives
through earnings on a straight-line basis. In addition, letting costs are
spread over the life of each lease and headlease liabilities are grossed up.
After these adjustments, the total property carrying value was £4,915m at 31
December 2025 (2024: £4,861m).
Property additions in 2025 totaled £178.6m (2024: £242.0m), mostly made up
of capital expenditure of £156.1m (2024: £182.1m) and capitalised interest
and overheads of £16.5m (2024: £12.9m). The majority of expenditure in
2025 was incurred on the two large development projects at 25 Baker Street W1
and Network W1, costs on these alone totaling £82.6m. As these two projects
were close to their maximum cumulative levels in 2025, capitalised interest
was relatively high at £14.1m (2024: £11.2m) and we expect it to fall back
considerably in 2026.
The combined carrying value of the property disposals noted above increased to
£186.7m from 82.9m in 2024. Other property, plant and equipment increased to
£68.1m from £52.0m in December 2024, the main reason being additions at our
Lochfauld solar park in 2025 of £9.7m plus a transfer from prepayments of
£2.5m as the costs now meet the criteria for recognition as fixed assets.
Also included in this category is the owner-occupied property comprising our
head office at 25 Savile Row W1, where the carrying value at 31 December 2025
was £53.5m (2024: £49.0m).
Old Street Quarter EC1
We are due to acquire this substantial Old Street site no earlier than
mid-2027 subject to the vendor providing vacant possession. The agreed
acquisition price is £239m less the £3m deposit paid at exchange.
Including the deposit, we have now incurred costs associated with
master-planning, design and planning application preparation totaling £12.0m
net of impairment. In 2025, after a detailed review, we impaired a further
£1.4m of these costs. At the point of acquisition, the balance of these
costs will be allocated and included within investment property at fair value
together with the remaining acquisition price paid. We are now working with
our strategic development partner, Related Argent, to optimise our plans for
this unique site. This will influence the future fair value at the point of
acquisition and beyond.
Cash flow, borrowings and net debt
The cashflow generated from our operations increased substantially in 2025 due
mainly to the sale of apartments at George Street W1, part of the 25 Baker
Street scheme. The net cash from these sales received by the Group in 2025
was £115.8m after costs but including a small affordable housing receipt.
We also received £17.8m in 2025 on the disposal of trading stock to the
freeholder in relation to the same scheme. These expected cash inflows were
explained in previous reports, offsetting the related cash outflows included
as a deduction against operating cashflow in the last few years as we built
out the trading properties and trading stock. Partly as a result, the net
cash from operating activities shown within the consolidated cash flow
statement increased from £64.6m in 2024 to £228.0m in 2025. We expect
further sales to complete in 2026 but the figure will be substantially lower
than in 2025.
Having issued new £250m unsecured bonds in June 2025, we ended 2025 with a
higher cash balance than usual at £131.7m. Of this amount, £29.3m related
to tenant rent deposits and £25.2m to service charge balances so the
unrestricted cash available to the Group was £77.2m (2024: £15.4m).
Property disposals in 2025 brought net debt down to £1.45bn from £1.48bn in
2024, with net debt to EBITDA falling to 9.0 times (2024: 9.3 times) and EPRA
loan-to-value ratio to 29.4% (2024: 29.9%). Both these 2025 year-end figures
are within our target ranges. Year-end borrowings were marginally higher
than 2024 at £1.49bn because we had no further revolving credit facilities to
pay down. However, borrowings have fallen back in early 2026 as £55m of
fixed rate private placement notes were repaid at maturity using the excess
cash. Note that borrowings shown as current liabilities at the year end
included these USPP notes and the £175m LMS bonds due in March 2026.
At 31 December 2025, available cash and undrawn facilities increased to £627m
(2024: £487m). This figure will reduce in Q1 2026 as the £230m of USPP
notes and bonds reach maturity.
See Appendix 5 for table showing debt facilities and reconciliation to
borrowings and net debt
Debt and financing
Debt markets generally continued their improving trend through most of 2025,
helped by a gradual reduction in UK base rates, moderating (but sticky)
inflation and a reasonable UK growth outlook. Business and economic
uncertainty was, however, a continuing theme through 2025 particularly in the
middle part of the year leading up to the late November budget.
Speculation remained as to where the 5- and 10-year gilt rates will eventually
settle. Volatility has continued with the range of 5-year rates around 80bp
over 2025, for example, but the general trend is modestly downwards. UK base
rates, currently 3.75%, are also expected to fall to around 3.5% by the end of
2026. At 31 December 2025, the 5-year gilt was 3.9% but the 10-year remained
stubbornly higher at 4.4%. Meanwhile, the 5-year SONIA swap continues to show
a worthwhile benefit over the equivalent gilt and was as low as 3.6% at
year-end.
Credit spreads in the bond market have also been relatively attractive and the
banking market remains competitive for borrowers of good investment-grade
credit-quality. In May, we maintained a Fitch issuer-default rating of BBB+
and A- for our senior unsecured debt rating, both with a stable outlook.
Keeping our credit rating secure is a key business priority and we now target
an EPRA LTV ratio below 30% and net debt/EBITDA below 9.5 times.
2025 was an active year for refinancing due partly to the maturity of £175m
of convertible bonds last June but also because we opted to take advantage of
the relatively favourable conditions in the bond and bank debt markets.
A new £115m unsecured term/revolving credit facility was signed with HSBC in
February 2025. It comprised an £82.5m two-year term loan with a one-year
extension option plus a £32.5m revolving component.
The next transaction was to issue £250m of 7-year unsecured bonds with a
semi-annual coupon of 5.25% in June. After a short roadshow, there was
strong demand for the bonds, the margin at issuance was a competitive 105bp
and the bonds have traded well on the secondary market. As at the year end,
the implied interest rate was 4.97% reflecting a tightening of the spread to
95bp.
Also in June, our £175m unsecured convertible bonds were repaid upon maturity
at par and the £100m unsecured term loan arranged in 2024 with NatWest was
extended by one year to a June 2028 maturity.
Refinancing activity continued in the second half. The Group's £450m
unsecured revolving credit facility (RCF) provided by our three longstanding
UK relationship banks, Barclays, HSBC and NatWest, was refinanced with a new
four-year term to July 2029 plus two one-year extension options. Pricing was
similar to the previous facility, which had been due to reach maturity in
October 2026. These banking relationships are highly valued by us.
Our environmental sustainability criteria are well established and set out in
our 'green finance framework' which was first published back in 2019. The
green agenda is now firmly embedded in our corporate culture. Following
discussions with our lenders, we decided to simplify the structure and
classify the entire £450m RCF as a conventional (ie non-green) facility.
Our £350m 2031 'green' bonds remain and we report in the section below under
our green finance framework as usual.
Following the extension of the main Group RCF, we cancelled the two £32.5m
revolving credit tranches that formed part of the bilateral facilities
arranged with Barclays and HSBC, thereby reducing future non-utilisation
fees. The two £82.5m term loans remain and, at 31 December 2025, the HSBC
loan had a maturity date of February 2027 but this was extended after the
year-end to February 2028.
In 2026 to date, we have repaid £55m of US Private Placement Notes which
matured on 31 January and will redeem the £175m LMS secured bonds in March
2026. Both were classified as current liabilities at the year end. I would
like to thank our USPP noteholders and longstanding bond holders, some of whom
have held these bonds for many years, for their support. The LMS bonds have
a coupon of 6.5% and we therefore expect our weighted average interest rate to
fall to less than 4.0% by the end of Q1 2026.
Due to the refinancing carried out in 2025, it was inevitable that our
weighted average interest rate would increase. At the year end, the rate was
4.06%, an increase from 3.53% at 31 December 2024 but slightly lower than the
4.11% at 30 June 2025. At the year end, 82% of our debt was at fixed rates
(2024: 85%) and the weighted average maturity of borrowings was 4.2 years
(2024: 4.0 years).
Internal controls, assurance and the regulatory environment
During the year, we continued to strengthen our internal control environment,
including the successful implementation of a new payroll system. We are also
more than a year into the design and build of enhanced business processes and
controls for our new finance system, scheduled to go live in late 2026. Across
both the finance transformation and wider business change initiatives, we are
increasingly leveraging advanced technologies, including AI, to streamline
processes, improve operational efficiency and further enhance financial and
operational controls.
We have maintained our approach to assurance, obtaining independent external
assurance for areas of higher risk. This includes limited assurance over
selected sustainability and health and safety data and reasonable assurance
over green finance disclosures, external audits of service charge costs and
our twice‑yearly external property valuations. We also receive useful
oversight of key business risks through our Internal Audit function.
We achieved re‑accreditation of our Cyber Essentials Plus certification
during the year, supported by independent verification of key cyber security
controls and this remains an area of elevated focus for us.
In response to the new 'failure to prevent fraud' offence introduced under the
Economic Crime and Corporate Transparency Act 2023, we have reviewed and
strengthened our anti‑fraud procedures, providing a strong foundation for
preventing and detecting fraud. Having defined and assessed our material
controls over the past two years, we are well positioned to comply with
Provision 29 of the revised UK Corporate Governance Code for the current
financial year which commenced on 1 January 2026.
Reporting under the Green Finance Framework
Derwent London's Green Finance Framework (the Framework) has been prepared to
align with the Loan Market Association (LMA) Green Loan Principles 2021 and
International Capital Market Association (ICMA) Green Bond Principles 2021
guidance document. It has previously been externally reviewed and a Second
Party Opinion (SPO) was obtained. The latest version of the Framework and the
accompanying SPO are available on our website at www.derwentlondon.com.
Out of total debt facilities of £2.0bn, Green Financing Transactions (GFTs)
now comprise only the £350m Green Bonds issued in 2021. This follows the
refinancing in July 2025 of our main £450m revolving credit facility which
previously included a £300m 'green' tranche.
In accordance with the reporting requirements set out in the Framework, we are
disclosing the Eligible Green Projects (EGPs) that have benefitted from our
GFTs, and the allocation of drawn funds to each project.
The projects eligible for funds from the GFTs are as follows:
Green project 80 Charlotte Street W1 1 Soho Place W1 The Featherstone Building EC1 25 Baker Street W1 Network W1
Expected completion date Completed in 2020 Completed in 2022 Completed in 2022 2025 2026
Category for eligibility Green building, criterion 1 of section 3.1 of the Framework (excludes Asta Green building, criterion 1 of section 3.1 of the Framework Green building, criterion 1 of section 3.1 of the Framework Green building, criterion 1 and 2 of section 3.1 of the Framework (excludes Green building, criterion 1 of section 3.1 of the Framework
House and Charlotte Apartments)
retail and refurbished residential)
Impact reporting indicator Building certification achieved (system & rating) Building certification achieved (system & rating) Building certification achieved (system & rating) Building certification achieved (system & rating) Building certification achieved (system & rating)
Green credentials(1) Achieved: Achieved: Achieved: 25 Baker Street offices(2) Achieved:
BREEAM Excellent BREEAM Outstanding BREEAM Outstanding Achieved: BREEAM Outstanding (design stage)
EPC B EPC B EPC A BREEAM Outstanding
LEED Gold LEED Gold LEED Platinum EPC A Expected:
BREEAM Outstanding (post-construction), on target
Expected: LEED Gold, on target
LEED Gold, on target EPC A, on target
30 Gloucester Place(2) offices
Achieved:
BREEAM Excellent
EPC A
Private residential
Expected:
Home Quality Mark 4 Stars, on target
(1) Green EGP credentials disclosed in accordance with the Framework and the
Green Finance Basis of Reporting, available on our website and within the
Responsibility Report. (2) The development includes 206,000 sq ft of offices
at 25 Baker Street and 12,000 sq ft of offices at 30 Gloucester Place.
Qualifying 'green' expenditure
The qualifying expenditure for each project as at 31 December 2025 is
presented in the table below. This includes a 'look back' component, capturing
capital expenditure incurred on projects prior to the point at which they
received formal designation as an EGP. It also includes capital expenditure
incurred on projects prior to October 2019, when the Group executed its first
GFT.
Costs which form part of the initial project appraisal or which are associated
with delivering the EGP through to practical completion are included within
the eligible green expenditure of the project. Costs incurred following
completion are generally excluded unless specifically elected as a green
project.
25 Baker Street, which commenced on site in 2021, reached practical completion
in H2 2025. Certain development costs were disposed of to the freeholder in
2025 and a number of the private residential units were also sold. In
accordance with section 3.3 of the Framework, the expenditure allocated to
these elements have been removed from the qualifying expenditure.
Cumulative expenditure on each EGP as at the reporting date
Subsequent expenditure
Look back Q4 2019 2025 Disposals/ Cumulative
expenditure - FY 2024 transfer expenditure
EGP £m £m £m £m £m
80 Charlotte Street W1 185.6 52.6 - - 238.2
1 Soho Place W1 57.5 167.1 - - 224.6
The Featherstone Building EC1 29.1 69.2 - - 98.3
25 Baker Street W1 26.5 219.2 46.8 (86.6) 205.9
Network W1 23.8 47.4 42.1 - 113.3
322.5 555.5 88.9 (86.6) 880.3
The total qualifying expenditure incurred in 2025 was £88.9m. As at 31
December 2025, the cumulative qualifying expenditure on the EGPs amounted to
£880.3m, after deducting £86.6m of previously eligible expenditure related
to the 25 Baker Street scheme.
In July 2025, the Group refinanced its £450m RCF, which included a £300m
'green tranche', with a new 'non-green' RCF. At the time of refinancing, the
amount drawn on the 'green tranche' was £28.5m. Following this transaction,
drawn borrowings from GFTs at 31 December 2025 comprised solely the £350m
Green Bonds issued in 2021.
In line with the requirements of the Framework, the total cumulative
qualifying expenditure on EGPs (£880.3m) therefore exceeds the amount of
drawn borrowings from all GFTs (£350m).
PRINCIPAL RISKS AND UNCERTAINTIES
RISK MANAGEMENT AND INTERNAL CONTROLS
We have identified certain principal risks and uncertainties that could
prevent the Group from achieving its strategic objectives and have assessed
how these risks could best be mitigated, where possible, through a combination
of internal controls, risk management and the purchase of insurance cover.
As a predominantly London-based Group, we are particularly sensitive to
factors which impact upon central London's growth and demand for office space.
Whilst central London continues to experience strong occupational demand,
occupiers are proceeding with caution particularly over the cost of relocation
and ongoing operating expenses. Most office values increased moderately during
the year, supported by rental growth and generally stable investment yields.
Demand for both tenant occupation and investment ownership continues to be
focused on high quality, amenity-rich, well-located buildings.
Financial risks for the Group have reduced in 2025 with the arrangement of new
£250m unsecured 7-year bonds and the refinancing of the Group's main £450m
corporate Rolling Credit Facility. During the year, the UK economy recorded
slow growth supported by the easing of interest rates and moderating
inflation. Gilt yields have continued to remain relatively high but generally
reduced in the year alongside the cost of borrowing.
The Group continues to monitor the risk of rising tariffs, global trade
tensions and ongoing uncertainty of domestic policy.
The principal risks and uncertainties facing the Group in 2026 are set out on
the following pages with the potential impact and the mitigating actions and
controls in place. These risks are reviewed and updated on a regular basis and
were last formally assessed by the Board on 24 February 2026.
The Group's approach to the management and mitigation of these risks is
included in the 2025 Report & Accounts. The Board has confirmed that its
risk appetite and key risk indicators remain appropriate.
Strategic risks
The Group's business model and/or strategy does not create the anticipated
shareholder value or fails to meet investors' and other stakeholders'
expectations.
Risk, effect and progression Controls and mitigation
1. Market impact on Group's strategy
The Group's reliance on the successful execution of its strategy and · The Board maintains a formal schedule of matters which are
maintaining its ability to respond appropriately to internal and external reserved solely for its approval. These matters include decisions relating to
factors including changing work practices, occupational demand, economic and the Group's strategy, capital structure, financing, capital allocation, major
property cycles. property acquisition or disposal, the Group's risk appetite and the
authorisation of capital expenditure above certain limits.
· An annual strategic review (including the five-year forecast) and
budget is prepared for Board approval alongside two-year rolling forecasts
which are prepared during the year.
· The Credit Committee's terms of reference have been revised
during 2025 to focus on assessing and monitoring the financial strength of
potential and existing occupiers. The Group's diverse and high quality
occupier base provides resilience against occupier default.
· The Board has an ongoing strategy to extend income through lease
renewals and regears. The Group seeks to de-risk developments through the use
of fixed price contracts prior to the commencement of works on site and
appointing contractors appropriate to the project's scale and complexity as
well as by often securing pre-lets.
· We develop properties in central locations where there is good
potential for future occupier demand and connectivity, such as along the
Elizabeth line.
· A regular review of the portfolio and identification of
opportunities to dispose of non-core assets which are not anticipated to
produce required returns.
· Maintain sufficient headroom against all key financial ratios and
covenants, with a particular focus on interest cover and net debt/EBITDA.
Financial risks
The main financial risk is that the Group becomes unable to meet its financial
obligations. The probability of this occurring is low due to our significant
covenant headroom, modest leverage and strong credit metrics. Financial risks
can arise from movements in the financial markets in which we operate and
inefficient management of capital resources.
Risk, effect and progression Controls and mitigation
2. Refinancing risks
The Group is unable to raise finance in a cost-effective manner that optimises · Continue to review market conditions for long-term fixed rate
the capital structure of the Group. debt and engage with existing and potential debt providers.
· Early and frequent engagement with existing and potential lenders
to maintain long-term relationships.
· Preparation of five-year cash flow and annual budgets support the
Group in raising finance in advance of requirements.
· The Group's financial position is reviewed at Executive Committee
and Board meetings with an update on leverage metrics and capital markets from
the CFO.
· Annual review with a credit rating agency with whom we maintain a
frequent dialogue.
· Regular updates with our advisers to understand debt market
trends. This includes looking at new forms of debt, considering whether
security should be offered and the appropriate terms.
· Recycling of capital is a key assumption in our annual budget and
is updated in each rolling forecast.
3. Income decline
· The Credit Committee, chaired by the CEO or CFO, conducts
detailed reviews of all prospective occupiers and monitors the financial
The Group's income declines due to external factors, many of which are outside strength of our existing occupiers.
of its control, including:
· The Group maintains a diverse range of occupiers. We focus on
letting our buildings to large and established businesses (headquarter spaces)
where the risk of default is lower, compared with SMEs.
· geopolitical and macroeconomic factors;
· A 'tenants on watch' register is maintained and regularly
· recession; reviewed by the Executive Directors and the Board.
· occupier default or failure; · The Leasing team monitors the vacancy rate closely with a
specific focus on upcoming vacancies.
· demand for office space;
· Ongoing dialogue is maintained with occupiers to understand their
· the 'grey' market in office space (i.e. occupier controlled concerns, requirements and future plans.
vacant space); and
· Active in-house rent collection, with regular reports to the
· current proposals by UK Government to prohibit upward only rent Executive Directors on day 1, 7, 14 and 21 of each rent collection cycle.
reviews.
· The Group's robust interest cover ratio and moderate net
debt/EBITDA reduces the likelihood that a fall in rental income has a
significant impact.
· Rent deposits or guarantees are obtained where considered
appropriate.
4. Fall in property values
· The Group's mainly unsecured financing makes management of our
financial covenants more straightforward.
The economic and geopolitical environment could have an adverse impact on
property values and heighten the risk of a fall in property values. · The Group's moderate loan-to-value ratio reduces the likelihood
that falls in property values will have a significant impact.
· The impact of valuation yield changes on the Group's financial
covenants and performance is monitored regularly and subject to sensitivity
analysis to ensure that adequate headroom is preserved.
· The impact of valuation yield changes and rent levels are
considered when potential projects are appraised.
· The Group produces a budget, five-year strategic review and three
rolling forecasts each year which contain detailed sensitivity analyses,
including the effect of changes to valuation yields.
Operational risks
The Group suffers either a financial loss or adverse consequences due to
processes being inadequate or not operating correctly, human factors or other
external events.
Risk Controls and mitigation
5. Reduced development returns
Returns from the Group's developments and refurbishments may be adversely · We use known 'Tier 1' contractors on our major projects with whom
impacted due to: we have established working relationships and regularly work with tried and
tested subcontractors.
· Prior to construction beginning on site, we conduct thorough site
· Increased construction costs investigations and surveys to reduce the risk of unidentified issues,
including investigating the building's history and adjacent buildings/sites.
· Skilled labour shortages
· Engagement with the Building Safety Regulator to mitigate time
· Movement in valuation yields required for Building Control approval.
· Contractor or subcontractor default · Adequately appraise investments, through: (a) benchmarking
development costs; (b) following a procurement process that is designed to
· Delays on delivery due to poor contractor performance minimise uncertainty around costs and includes the use of highly regarded
quantity surveyors; and (c) value engineering opportunities.
· Building Safety Regulator sign off where applicable
· We collaborate with the supply chain through the main contractor
· Unexpected 'on-site' issues and engage in pre-construction service agreements (PCSAs) as well as against
an agreed target, cost and programme.
· Adverse letting conditions
· Contractors are paid promptly and are encouraged to pay
subcontractors promptly. Payments to contractors are in place to incentivise
the achievement of project timescales, with damages agreed in the event of
delay/ cost overruns.
· Regular on-site supervision by a dedicated Project Manager who
monitors contractor performance and identifies problems at an early stage,
thereby enabling remedial action to be taken.
· Post-completion reviews are carried out for all major
developments to ensure that improvements to the Group's procedures are
identified and implemented.
6. Cyber-attack on our IT systems
· Our IT systems are protected by anti-virus software, 24/7/365
threat hunting, security incident detection and response, security anomaly
The Group may be subject to a cyber attack that results in it being unable to detection and firewalls that are frequently updated.
use its information systems and/or losing data.
· The Group's Business Continuity Plan and cyber security incident
response procedures are regularly reviewed and tested.
· Security measures are regularly reviewed by the DIT team and
during the year cyber insurance was put in place to support the strategy in
mitigating the financial impact of cyber attacks.
· Independent internal and external penetration/ vulnerability
tests and audits are regularly conducted to assess the effectiveness of the
Group's security and the Cyber Essentials Plus Certification has been
obtained.
· Multi-Factor Authentication is in place for all users with access
to our systems.
· The Group's data is regularly backed up and securely replicated
off site.
· A gap analysis of the Cyber Governance Code of Practice was
performed and enhancements were made to the Group's security posture during
the year, with additional controls implemented as required.
· Regular staff awareness and training programmes.
7. Cyber-attack on our buildings
The portfolio is exposed to potential cyber threats targeting building IT · Our IT systems are protected by advanced endpoint protection
infrastructure, Operational Technology systems, and Internet of Things software, 24/7/365 threat hunting, security incident detection and response,
devices. Such incidents could adversely affect occupiers and result in security anomaly detection, vulnerability management, firewalls and
significant operational disruption. infrastructure that is regularly updated.
· Frequent staff awareness and training programmes. Building
Managers are included in cyber security awareness training and phishing
simulations.
· Cyber security incident response procedures are regularly
reviewed and tested.
· Physical segregation between the building's core IT
infrastructure and occupiers' corporate IT networks as well as between
buildings across the portfolio.
· Multi-Factor Authentication, network segmentation and security
standardisation.
· Unlimited support by our Managed Detection and Response team is
provided in the event of a malware incident.
· Independent security penetration testing on both internal and
externally facing systems.
· A gap analysis of the Cyber Governance Code of Practice was
performed and enhancements were made to the Group's security posture with
additional controls implemented as required.
· Cyber insurance is in place to support the strategy in responding
to the risk of cyber attacks.
8. Our resilience to climate change · Our SBTi (Science Based Targets initiative) targets are aligned
to a challenging 1.5°C climate scenario in line with our net zero carbon
ambition.
The Group fails to respond appropriately, and sufficiently, to climate-related · We are progressing the construction of an 18.4 MW solar park at
risks or fails to benefit from the potential opportunities. Lochfauld (Scotland), with energisation anticipated in 2026.
· The Executive Directors receive regular updates and presentations
at both the Executive Committee and Sustainability Committee meetings on
environmental and sustainability performance and management matters, as well
as progress against our pathway to becoming net zero carbon by 2030.
· Industry leadership through both the Circular Economy initiative
and Accelerating Concrete-Decarbonisation Group.
· Periodic multi-scenario climate risk assessments (physical and
transition risks), supported by third party experts, to identify risks and
agree mitigation plans.
· Clear disclosure in Group results, Annual Report and
Responsibility Report/Data Report of key data and performance points which are
internally reviewed and subject to external assurance.
9. Health and safety (H&S)
A major incident occurs at a development scheme, a managed property or at head · Periodic review of relevant health, safety and fire management
office which leads to significant injuries, harm, or fatal consequences. policies and arrangements.
· Ensure the Group has a competent and qualified (CMIOSH) H&S
team, whose performance is monitored and reviewed by the CEO, and the H&S
and Risk Committees.
· Check the H&S competence of our main contractors and service
partners is verified by the H&S team prior to their appointment, based on
risk profile of the project and/or delivery.
· Ensure our principal designers and principal contractors submit
suitable design stage reviews, pre-construction information, construction
phase plans, site management plans (logistics, security, fire etc.) before
works commence.
· The H&S team, with the support of external advisers and
audits, ensures our Construction (Design and Management) (CDM) client duties
are executed at all project stages and are monitored on a monthly basis (on
construction sites).
· The Board, Risk Committee and Executive Directors receive
frequent updates and presentations on key H&S matters, including
'Significant Incidents', legislation updates, and H&S performance trends
across the development and managed portfolio.
· The H&S team work closely with HR on employee health and
safety proactive measures (such as the Heath & Wellbeing Strategy and
Plan) and reactive measures (such as workplace adjustments, returning to work
for new/expectant mothers and workplace assessments).
10. Non-compliance with law and regulations
The Group breaches legislation that forms the regulatory framework within · The Board and Risk Committee receive regular reports identifying
which the Group operates. upcoming legislative/regulatory changes. External advice is taken on any new
legislation, if required.
· Managing our properties to ensure they are compliant with the
proposed Minimum Energy Efficiency Standards (MEES) legislation for Energy
Performance Certificates (EPCs).
· Ongoing staff training and awareness programmes.
· Group policies and procedures dealing with all key legislation
are available on the Group's intranet.
· Quarterly review of our anti-bribery and corruption procedures by
the Risk Committee.
· A Group whistleblowing system ('Speak-up') for staff is
maintained to report wrongdoing anonymously.
· A review of our procedures against the Home Office's guide in
response to the new offence of 'failure to prevent fraud' was introduced under
the Economic Crime and Corporate Transparency Act 2023.
11. Digital transformation risk
· Project scope and objectives are clearly defined, documented,
approved and communicated to all stakeholders.
Systems fail to be implemented or do not deliver the anticipated benefits due
to: · Before project approval, the costs of implementation are
budgeted, alongside the preparation of a detailed resource plan, to ensure
adequate contingency in case of delays.
· lack of clear scope and strategic focus; · Budget contingency is monitored throughout the project and
reported to the Executive Committee and Board/ Committees, as required.
· inadequate skills, resource and transfer of knowledge;
· Project management resource is assigned to larger projects, and
· underestimation of investment; they are required to follow good governance and internal project management
processes.
· lack of project management and governance;
· Provide clear and regular communication about key projects to the
· inadequate support from management; whole business, throughout the project, with support and leadership from the
executive team.
· inadequate communication to stakeholders; or
· neglecting the impact on stakeholders and importance of change
management.
Financial instruments - risk management
The Group is exposed to a range of financial risks through its activities, in
particular credit risk, market risk and liquidity risk. These risks arise
naturally from the Group's use of financial instruments in managing a large,
London‑focused property portfolio, and the Group's framework for
identifying, assessing and managing such risks remains well established.
Further quantitative information in respect of these risks is presented
throughout these financial statements.
While the overall risk profile has not changed materially from the prior year,
the environment in which the Group operates continues to evolve. The Group's
approach therefore reflects both prevailing market conditions and its
long‑term strategic priorities.
Financial instrument risk arises mainly from the Group's use of trade
receivables, accrued income relating to lease incentives, cash deposits, trade
and other payables, floating rate bank facilities, private placement notes,
secured and unsecured bonds and interest rate derivatives. The Board is
responsible for setting the overarching risk management objectives, with
day‑to‑day monitoring and implementation delegated to the executive
management team. The objective continues to be the conservative management of
risk while maintaining the flexibility required to pursue value‑accretive
development and investment opportunities.
Credit risk
Credit risk principally arises from amounts owed by tenants, reflecting the
Group's position as a major central London landlord. It is the Group's policy
to assess the creditworthiness of prospective tenants before entering into
lease contracts. The Board's Credit Committee assesses each new tenant,
drawing on financial statements, external ratings where available and, in some
cases, forecast information and bank or trade references. Where appropriate,
the Group may seek a rent deposit or guarantee. Existing tenant exposure is
reviewed periodically, with additional focus on sectors experiencing
structural pressures or where creditworthiness may be more variable. The Group
has historically experienced low levels of tenant default, reflecting the
strength of its tenant base and the effectiveness of its credit assessment and
monitoring processes.
While the Group operates predominantly in central London and is therefore
exposed to some geographical concentration risk, this is mitigated by the
broad range of tenants across multiple industry sectors. In accordance with
IFRS 9, trade receivables are assessed using an expected credit loss model,
while lease incentive receivables are reviewed under IAS 36.
Credit risk arising from cash balances is controlled by depositing funds only
with institutions that meet minimum investment‑grade criteria and by keeping
maturities short. Across all financial assets, the carrying amounts recognised
in the balance sheet represent the maximum exposure to credit risk.
Market risk
Market risk principally reflects the Group's exposure to movements in interest
rates, given its mix of fixed and floating‑rate funding. The Group regularly
monitors its interest rate exposure and performs sensitivity analysis to
assess the potential effect of reasonably possible shifts in interest rates on
profit and net assets. A 50‑basis point shift in interest rates would result
in an increase or decrease in profit or loss and net assets of £1.3m (2024:
£1.1m).
It is the Group's policy to maintain a significant proportion of expected
borrowings at fixed rates, typically in the range of 60% to 85%, achieved
through a combination of fixed‑rate debt and floating‑to‑fixed interest
rate swaps. At 31 December 2025, 82% of the Group's debt was fixed (2024:
85%), in line with policy.
From time to time, when preparing for a public bond issuance, the Group may
also make use of gilt locks to effectively hedge movements in the underlying
gilt yield between launch and pricing, thereby providing certainty over the
coupon payable on the forthcoming issuance. This forms part of the Group's
broader interest rate risk management strategy and complements the use of
interest rate swaps and fixed‑rate funding.
All variable‑rate borrowings continued to be denominated in Sterling. When
raising new long‑term funding, the Group generally prefers fixed‑rate
structures to support cashflow predictability and capital planning.
Liquidity risk
Liquidity risk arises from the need to meet the Group's financial obligations
as they fall due, including interest payments, scheduled loan repayments and
working capital requirements of the business.
The Group manages liquidity risk by maintaining appropriate headroom on its
committed revolving bank facilities and by spreading debt maturity dates
across a range of lenders. Cash flows and projected loan balances are
monitored regularly by the executive management team as part of the Group's
forecasting process, with forward‑looking assessments covering a range of
scenarios, including downside cases.
The Group also supports liquidity stability by fixing interest rates (and
therefore cash flows) on a substantial portion of long-term borrowings. At the
balance sheet date, the Group's projections indicated that it held sufficient
liquidity to meet its obligations under all reasonably foreseeable scenarios.
Capital management
The Group's capital structure comprises equity and net debt. Consistent with
the strategy applied in recent years, the principal objectives of capital
management are to ensure the Group remains financially robust and efficient,
while being able to continue as a going concern.
Capital is monitored using key measures such as NAV gearing, loan-to-value
ratio, interest cover and net debt/EBITDA, all of which are defined within the
list of definitions at the end of this announcement and are derived in note
27.
The Group also maintains significant uncharged property, reflecting its
predominantly unsecured financing structure. At 31 December 2025, there was
£4.8bn (2024: £4.7bn) of uncharged property. This provides flexibility to
raise some future secured finance if required and supports a diversified
approach to funding. Adjustments to the capital structure are considered in
the context of market conditions, financial covenants and the Group's future
development and acquisition plans. Potential actions include varying dividend
levels (within REIT rules), returning capital to shareholders, issuing or
redeeming debt or disposing of assets to reduce gearing.
Directors' responsibilities
The Directors are responsible for preparing the 2025 Report & Accounts and
the financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the Group financial
statements in accordance with UK-adopted international accounting standards
and the Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 "Reduced Disclosure Framework", and applicable law).
Under Company law, Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Group and Company and of the profit or loss of the Group for that
period. In preparing the financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· state whether applicable UK-adopted international accounting
standards have been followed for the Group financial statements and United
Kingdom Accounting Standards, comprising FRS 101 have been followed for the
Company financial statements, subject to any material departures disclosed and
explained in the financial statements;
· make judgements and accounting estimates that are reasonable and
prudent; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company will continue
in business.
The Directors are responsible for safeguarding the assets of the Group and
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the Group's and Company's transactions
and disclose with reasonable accuracy at any time the financial position of
the Group and Company and enable them to ensure that the financial statements
and the Directors' remuneration report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
On behalf of the Board
Paul M.
Williams
Damian M.A. Wisniewski
Chief Executive
Chief Financial Officer
25 February 2026
GROUP INCOME STATEMENT
2025 2024
Note £m £m
Gross property and other income 5 406.3 276.9
Net property and other income 5 199.6 198.3
Administrative expenses (39.1) (41.1)
Revaluation surplus/(deficit) 10 52.2 (2.7)
(Loss)/profit on disposal 6 (2.2) 1.9
Profit from operations 210.5 156.4
Finance income 7 2.1 0.3
Finance costs 7 (50.5) (39.9)
Movement in fair value of derivative financial instruments (0.6) (2.3)
Share of results of joint ventures 8 - 1.5
Profit before tax 161.5 116.0
Tax charge 9 (0.4) (0.1)
Profit for the year 161.1 115.9
Basic earnings per share 26 143.53p 103.24p
Diluted earnings per share 26 143.51p 102.93p
GROUP STATEMENT OF COMPREHENSIVE INCOME
2025 2024
Note £m £m
Profit for the year 161.1 115.9
Actuarial losses on defined benefit pension scheme - (0.4)
Revaluation surplus of owner-occupied property 10 4.5 2.9
Deferred tax charge on revaluation 20 (1.1) (0.6)
Other comprehensive income that will not be reclassified to profit or loss 3.4 1.9
Total comprehensive income relating to the year 164.5 117.8
GROUP BALANCE SHEET
2025 2024
Note £m £m
Non-current assets
Investment property 10 4,828.6 4,670.1
Property, plant and equipment 11 68.1 52.0
Pension scheme surplus 1.8 1.8
Other receivables 14 203.2 201.0
5,101.7 4,924.9
Current assets
Trading property 10 32.9 115.7
Trading stock 12 - 17.5
Trade and other receivables 15 46.7 57.8
Derivative financial instruments 18 - 0.6
Corporation tax asset 0.7 0.4
Cash and cash equivalents 22 131.7 71.4
212.0 263.4
Non-current assets held for sale 16 - 25.7
Total assets 5,313.7 5,214.0
Current liabilities
Borrowings 18 231.6 194.1
Leasehold liabilities 18 0.5 0.4
Trade and other payables 17 168.0 174.7
Provisions 0.1 0.2
400.2 369.4
Non-current liabilities
Borrowings 18 1,255.0 1,269.4
Leasehold liabilities 18 40.5 34.2
Provisions 0.4 0.4
Deferred tax 20 2.3 0.8
1,298.2 1,304.8
Total liabilities 1,698.4 1,674.2
Total net assets 3,615.3 3,539.8
Equity
Share capital 5.6 5.6
Share premium 196.6 196.6
Other reserves 947.3 943.2
Retained earnings 2,465.8 2,394.4
Total equity 3,615.3 3,539.8
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to equity shareholders
Share Share Other Retained Total
capital premium reserves earnings equity
£m £m £m £m £m
At 1 January 2025 5.6 196.6 943.2 2,394.4 3,539.8
Profit for the year - - - 161.1 161.1
Other comprehensive income - - 3.4 - 3.4
Share-based payments - - 0.7 1.2 1.9
Dividends paid - - - (90.9) (90.9)
At 31 December 2025 5.6 196.6 947.3 2,465.8 3,615.3
Attributable to equity shareholders
Share Share Other Retained Total
capital premium reserves earnings equity
£m £m £m £m £m
At 1 January 2024 5.6 196.6 939.3 2,367.3 3,508.8
Profit for the year - - - 115.9 115.9
Other comprehensive income/(expense) - - 2.3 (0.4) 1.9
Share-based payments - - 1.6 1.4 3.0
Dividends paid - - - (89.8) (89.8)
At 31 December 2024 5.6 196.6 943.2 2,394.4 3,539.8
GROUP CASH FLOW STATEMENT
2025 2024
Note £m £m
Operating activities
Cash generated from operations 19 272.5 102.6
Interest received 1.3 0.3
Interest and other finance costs paid (45.5) (38.3)
Tax paid in respect of operating activities (0.3) -
Net cash from operating activities 228.0 64.6
Investing activities
Acquisition of properties (13.7) (47.0)
Capital expenditure(1) (149.1) (139.9)
Disposal of investment properties 79.1 85.5
Purchase of property, plant and equipment (10.0) (1.6)
Indirect taxes (paid)/received in respect of investing activities (3.0) 1.1
Net cash used in investing activities (96.7) (101.9)
Financing activities
Proceeds of bond issue 247.9 -
Net movement in revolving bank loans (110.5) 26.5
Drawdown of term bank loans 82.5 182.5
Payment of arrangement fees (3.9) (0.7)
Repayment of other loan (20.0) -
Repayment of secured loan - (83.0)
Repayment of unsecured convertible bond (175.0) -
Settlement of derivative (1.2) -
Dividends paid 21 (90.8) (89.6)
Net cash (used in)/from financing activities (71.0) 35.7
Increase/(decrease) in cash and cash equivalents in the year 60.3 (1.6)
Cash and cash equivalents at the beginning of the year 22 71.4 73.0
Cash and cash equivalents at the end of the year 22 131.7 71.4
1 Finance costs of £14.1m (2024: £11.2m) are included in capital expenditure
(see note 7).
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The financial information set out in this announcement has been extracted from
the audited consolidated financial statements for the year ended 31 December
2025 and does not constitute statutory accounts within the meaning of section
435 of the Companies Act 2006.
The consolidated financial statements and this announcement were approved by
the Board of Directors on 25 February 2026. The auditors have reported on the
consolidated financial statements for the year ended 31 December 2025 under
section 495 of the Companies Act 2006. The auditors' report is unqualified and
does not contain a statement under section 498(2) or (3) of the Companies Act
2006. The Company's statutory financial statements for the year ended 31
December 2024 have been filed with the Registrar of Companies and those for
the year ended 31 December 2025 will be filed following the Company's Annual
General Meeting.
The financial statements have been prepared in accordance with UK-adopted
International Accounting Standards, (the "applicable framework"), and have
been prepared in accordance with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards. The financial
statements have been prepared under the historical cost convention as modified
by the revaluation of investment properties, the revaluation of property,
plant and equipment, assets held for sale, pension scheme, and financial
assets and liabilities held at fair value through profit and loss.
These financial statements have been presented in Pounds Sterling, which is
the functional currency of the Group, to the nearest million.
As with most other UK property companies and real estate investment trusts
('REITs'), the Group presents many of its financial measures in accordance
with the guidance criteria issued by the European Public Real Estate
Association ('EPRA'). These measures, which provide consistency across the
sector, are all derived from the IFRS figures in note 26.
Going concern
The Board continues to adopt the going concern basis in preparing these
consolidated financial statements. In considering this requirement, the
Directors have taken into account the following:
· The Group's latest rolling forecast for the next two years, in
particular the cash flows, borrowings and undrawn facilities, including the
'severe but plausible' downside case.
· The headroom under the Group's financial covenants.
· The risks included on the Group's risk register that could impact
on the Group's liquidity and solvency over the 12 months from the date of
signing these financial statements.
· The risks on the Group's risk register that could be a threat to
the Group's business model and capital adequacy.
The Directors have considered the relatively long-term and predictable nature
of the income receivable under the tenant leases, the Group's year-end
loan-to-value ratio for 2025 of 29.4%, the interest cover ratio of 306%, the
£627m total of undrawn facilities and cash and the fact that the average
maturity of borrowings was 4.2 years at 31 December 2025. In the latter part
of the year, the gradual easing of cost inflation and interest rates has been
considered. The likely impact of climate change has been incorporated into the
Group's forecasts which have also taken account of a programme of EPC upgrades
across the portfolio. Based on the year end position, rental income would need
to decline by 53% and property values would need to fall by 51% before
breaching its financial covenants.
In February 2026, £55m of US private placement notes were repaid upon
maturity. These notes, together with the £175m 6.5% secured bonds maturing in
March 2026, are classified as current liabilities as at 31 December 2025. This
has resulted in the Group being in a net current liabilities position.
However, the Group has significant liquidity to fund its ongoing operations
and, as noted above, has access to £627m of available undrawn facilities and
cash as at 31 December 2025. Additionally, in January 2026, the Group's
£82.5m unsecured term loan, originally due to mature in February 2027, was
extended by one year to February 2028. This provides the Directors with a
reasonable expectation that the Group will be able to meet these current
liabilities as they fall due.
Having due regard to these matters and after making appropriate enquiries, the
Directors have a reasonable expectation that the Group has adequate resources
to continue in operational existence for a period of at least 12 months from
the date of signing of these consolidated financial statements and, therefore,
the Directors continue to adopt the going concern basis in their preparation.
2. Changes in accounting policies
The accounting policies used by the Group in these condensed financial
statements are consistent with those applied in the Group's financial
statements for the year to 31 December 2024, as amended to reflect the
adoption of new standards, amendments and interpretations which became
effective in the year as shown below.
New standards adopted during the year
The following standards, amendments and interpretations were effective for the
first time for the Group's current accounting period and had no material
impact on the financial statements.
IAS 21 (amended) - Lack of Exchangeability.
Standards in issue but not yet effective
The following standards, amendments and interpretations were in issue at the
date of approval of these financial statements but were not yet effective for
the current accounting period and have not been adopted early. Based on the
Group's current circumstances the Directors do not anticipate that their
adoption in future periods will have a material impact on the financial
statements of the Group.
IFRS 7 and IFRS 9 (amended) - Classification and Measurement of Financial
Instruments;
IFRS 7 and IFRS 9 (amended) - Contracts referencing Nature-dependent
Electricity;
IFRS 19 - Subsidiaries without Public Accountability: Disclosures.
IFRS 18 - Presentation and Disclosure in Financial Statements was in issue at
the date of approval of these financial statements but not yet effective for
the current reporting period and has not been adopted early. This standard
will impact the presentation of individual line items within the Group's
consolidated financial statements, including related disclosures. The standard
will be applied for reporting periods beginning on or after 1 January 2027 and
will also apply to comparative information. The Directors are currently
assessing the detailed implications.
3. Significant judgments, key assumptions and estimates
The preparation of financial statements in accordance with the applicable
framework requires the use of certain significant accounting estimates and
judgements. It also requires management to exercise judgement in the process
of applying the Group's accounting policies. Not all of these accounting
policies require management to make difficult, subjective or complex
judgements or estimates. Estimates and judgements are continually evaluated
and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results may differ from
those estimates. The following is intended to provide an understanding of
the policies that management consider critical because of the level of
complexity, judgement or estimation involved in their application and their
impact on these consolidated financial statements.
Significant judgement
Compliance with the REIT taxation regime
As a REIT, the Group benefits from tax advantages. Income and chargeable gains
on the qualifying property rental business are exempt from corporation tax.
Income that does not qualify as property income within the REIT rules is
subject to corporation tax in the normal way. There are a number of tests that
are applied annually, and in relation to forecasts, to ensure the Group
remains well within the limits allowed within those tests. The Group met all
the criteria in 2025 in each case, thereby ensuring its REIT status is
maintained. The Directors intend that the Group should continue as a REIT for
the foreseeable future.
Key sources of estimation uncertainty
Property portfolio valuation
The Group uses the valuation carried out by external valuers as the fair value
of its property portfolio. The valuation considers a range of assumptions
including future rental income, investment yields, anticipated outgoings and
maintenance costs, future development expenditure and appropriate discount
rates. The external valuers also make reference to market evidence of
transaction prices for similar properties and take into account the impact of
climate change and related environmental, social and governance
considerations. More information is provided in note 10, including sensitivity
disclosures.
4. Segmental information
IFRS 8 Operating Segments requires operating segments to be identified on the
basis of internal financial reports about components of the Group that are
regularly reviewed by the chief operating decision makers (which in the
Group's case are the four Executive Directors who are assisted by the other 13
members of the Executive Committee) in order to allocate resources to the
segments and to assess their performance.
The internal financial reports received by the Group's Executive Committee
contain financial information at a Group level as a whole and there are no
reconciling items between the results contained in these reports and the
amounts reported in the financial statements. These internal financial reports
include IFRS figures but also report non-IFRS figures for the EPRA earnings
and net asset value. Reconciliations of each of these figures to their
statutory equivalents are detailed in note 26. Additionally, information is
provided to the Executive Committee showing gross property income and property
valuation by individual property. Therefore, for the purposes of IFRS 8,
each individual property is considered to be a separate operating segment in
that its performance is monitored individually.
The Group's property portfolio includes investment property, owner-occupied
property and trading property and comprised 96% office buildings(1) by value
at 31 December 2025 (2024: 95%). The Directors consider that these
individual properties have similar economic characteristics and therefore have
been aggregated into a single reportable segment. The remaining 4% (2024: 5%)
represented a mixture of retail, residential and light industrial properties,
as well as land, each of which is de minimis in its own right and below the
quantitative threshold in aggregate. Therefore, in the view of the
Directors, there is one reportable segment under the provisions of IFRS 8.
All of the Group's properties are based in the UK. No geographical grouping is
contained in any of the internal financial reports provided to the Group's
Executive Committee and, therefore, no geographical segmental analysis is
required by IFRS 8. However, geographical analysis is included in the tables
below to provide users with additional information regarding the areas
contained in the strategic report. The majority of the Group's properties
are located in London (West End central, West End borders/other and City
borders), with the remainder in Scotland (Provincial).
(1) Some office buildings have an ancillary element such as retail or
residential.
Gross property income
2025 2024
Office Office
buildings Other Total buildings Other Total
£m £m £m £m £m £m
West End central 130.2 2.1 132.3 126.9 2.2 129.1
West End borders/other 14.6 - 14.6 17.0 - 17.0
City borders 66.5 0.8 67.3 66.3 0.7 67.0
Provincial - 4.4 4.4 - 4.5 4.5
Gross property income
(excl. joint venture) 211.3 7.3 218.6 210.2 7.4 217.6
Share of joint venture gross
property income(1) - - - 1.9 - 1.9
211.3 7.3 218.6 212.1 7.4 219.5
(1) See note 8 for further details.
A reconciliation of gross property income to gross property and other income
is given in note 5.
Property portfolio
2025 2024
Office Office
buildings Other Total buildings Other Total
£m £m £m £m £m £m
Carrying value
West End central 3,298.3 81.6 3,379.9 3,172.5 164.3 3,336.8
West End borders/other 262.9 - 262.9 288.8 - 288.8
City borders 1,153.0 6.2 1,159.2 1,136.5 6.1 1,142.6
Provincial - 113.0 113.0 - 92.3 92.3
4,714.2 200.8 4,915.0 4,597.8 262.7 4,860.5
Fair value
West End central 3,445.3 82.5 3,527.8 3,307.7 165.4 3,473.1
West End borders/other 273.2 - 273.2 301.7 - 301.7
City borders 1,172.5 6.2 1,178.7 1,167.3 6.1 1,173.4
Provincial - 114.2 114.2 - 92.9 92.9
4,891.0 202.9 5,093.9 4,776.7 264.4 5,041.1
A reconciliation between the fair value and carrying value of the portfolio is
set out in note 10.
5. Property and other income
2025 2024
£m £m
Gross rental income 218.3 214.8
Surrender premiums received 0.3 2.7
Other property income - 0.1
Gross property income 218.6 217.6
Trading property sales proceeds(1) 118.1 3.7
Trading stock sales proceeds(1) 17.8 -
Service charge income(1) 46.9 50.5
Other income(1) 4.9 5.1
Gross property and other income 406.3 276.9
Gross rental income 218.3 214.8
Movement in impairment of receivables (0.5) (0.2)
Movement in impairment of prepayments (1.4) (0.2)
Service charge income(1) 46.9 50.5
Service charge expenses (53.5) (57.1)
(6.6) (6.6)
Property costs (19.8) (18.2)
Net rental income 190.0 189.6
Trading property sales proceeds(1) 118.1 3.7
Trading property cost of sales (113.9) (3.7)
Profit on trading property disposals 4.2 -
Trading stock sales proceeds(1) 17.8 -
Trading stock cost of sales (17.8) -
Result on trading stock disposals - -
Other property income - 0.1
Other income(1) 4.9 5.1
Net surrender premiums received 0.3 2.7
Dilapidation receipts 0.2 0.8
Net property and other income 199.6 198.3
(1) In line with IFRS 15 Revenue from Contracts with Customers, the Group
recognised a total of £187.7m (2024: £59.3m) of other income, trading
property sales proceeds, trading stock sales proceeds and service charge
income within Gross property and other income.
Gross rental income includes £3.7m (2024: £6.3m) relating to rents
recognised in advance of cash receipts. It also includes £0.5m (2024: £0.4m)
received in relation to DL/Lounges. Other income includes £0.6m (2024:
£0.5m) received from customer services. Property costs includes £2.9m (2024:
£2.9m) in relation to DL/ Lounges and customer services. It also includes
amounts in relation to non-recoverable service charge costs associated with
vacant units during periods of refurbishment.
In 2025, the Group disposed of all its trading stock which was sold under
development agreements to the freeholder upon completion.
Trading property sales proceeds relates to the sale of 24 residential
apartments for £115.8m and the affordable residential units for £2.3m
In October 2024, the Group acquired the remaining 50% interest of the Derwent
Lazari Baker Street Limited Partnership. From that point forward, the results
were consolidated in the table above. See note 8 for further details.
6. (Loss)/profit on disposal
2025 2024
£m £m
Investment property
Gross disposal proceeds 80.2 87.5
Costs of disposal (1.6) (0.7)
Net disposal proceeds 78.6 86.8
Carrying value (76.9) (79.3)
Adjustment for lease costs and rents recognised in advance (3.9) (5.4)
(Loss)/profit on disposal of investment property (2.2) 2.1
Artwork
Gross disposal proceeds - -
Costs of disposal - (0.2)
Net disposal proceeds - (0.2)
Carrying value - -
Loss on disposal of artwork - (0.2)
(Loss)/profit on disposal of investment property and artwork (2.2) 1.9
Included within gross disposal proceeds for 2025 is £26.0m relating to the
disposal of the Group's freehold interest in 4&10 Pentonville Road N1 in
January 2025, and £54.1m relating to the disposal of the Group's freehold
interest in Francis House SW1 in October 2025.
7. Finance income and finance costs
2025 2024
£m £m
Finance income
Net interest received on defined benefit pension scheme asset 0.1 0.1
Bank interest receivable 2.0 0.2
Finance income 2.1 0.3
Finance costs
Bank loans (15.0) (6.1)
Non-utilisation fees (2.3) (1.9)
Unsecured convertible bonds (1.8) (4.0)
Unsecured green bonds (6.7) (6.7)
Unsecured bonds (7.6) -
Secured bonds (11.4) (11.4)
Unsecured private placement notes (15.6) (15.6)
Secured loan - (2.7)
Amortisation of issue and arrangement costs (2.8) (2.6)
Amortisation of the fair value of the secured bonds 1.7 1.6
Obligations under headleases (1.7) (1.3)
Settlement of derivative financial instrument (1.2) -
Other (0.2) (0.4)
Gross finance costs (64.6) (51.1)
Less: interest capitalised 14.1 11.2
Finance costs (50.5) (39.9)
Finance costs of £14.1m (2024: £11.2m) have been capitalised on development
projects including trading stock and trading properties, in accordance with
IAS 23 Borrowing Costs, using the Group's average cost of borrowings during
each quarter. Total finance costs paid to 31 December 2025 were £59.6m (2024:
£49.5m) of which £14.1m (2024: £11.2m) out of a total of £149.1m (2024:
£139.9m) was included in capital expenditure on the property portfolio in the
Group cash flow statement under investing activities.
Prior to the issue of the £250m unsecured bonds in June 2025 (see note 18 for
more information) the Group entered into derivative contracts to hedge against
movements in UK government bond yields during the period between launch and
pricing of the bond. As hedge accounting was not applied, the resulting loss
on settlement of the derivative financial instrument of £ 1.2m has been
recognised in finance costs. This is included in the Group cash flow statement
under financing activities.
8. Share of results of joint ventures
2025 2024
£m £m
Net property income - 1.9
Administrative expenses - (0.1)
Revaluation surplus - 7.3
- 9.1
Impairment of additional deferred consideration - (7.6)
- 1.5
In October 2024, the Group acquired the remaining 50% interest of the Derwent
Lazari Baker Street Limited Partnership. From this point forward, the results
were consolidated into the results of the Group.
9. Tax charge
2025 2024
£m £m
Corporation tax
UK corporation tax and income tax in respect of results for the year - -
Corporation tax charge - -
Deferred tax
Origination and reversal of temporary differences 0.4 0.1
Deferred tax charge 0.4 0.1
Tax charge 0.4 0.1
A deferred tax charge of £0.4m has passed through the Group income statement
(2024: charge of £0.1m). More information regarding deferred tax can be found
in note 20.
The main rate of corporation tax for 2025 was 25.0% (2024: 25.0%). The
difference between the main rate and the tax charge for the group are
explained below:
2025 2024
£m £m
Profit before tax 161.5 116.0
Expected tax charge based on the standard rate of
corporation tax in the UK of 25.0% (2024: 25.0%) 40.4 29.0
Difference between tax and accounting profit on disposals 1.3 (2.1)
REIT exempt income (19.4) (23.7)
Revaluation (surplus)/deficit attributable to REIT properties (13.7) 1.2
Expenses and fair value adjustments not allowable for tax purposes 1.9 3.6
Capital allowances (10.5) (8.2)
Other differences 0.4 0.3
Tax charge 0.4 0.1
10. Property portfolio
Total Owner- Assets Total
investment occupied held for Trading property
Freehold Leasehold property property sale property portfolio
£m £m £m £m £m £m £m
Carrying value
At 1 January 2025 3,209.7 1,460.4 4,670.1 49.0 25.7 115.7 4,860.5
Acquisitions 0.2 5.8 6.0 - - - 6.0
Capital expenditure 92.9 38.5 131.4 - - 24.7 156.1
Interest capitalisation and staff costs 7.4 6.8 14.2 - - 2.3 16.5
Additions 100.5 51.1 151.6 - - 27.0 178.6
Disposals (51.2) - (51.2) - (25.7) (109.8) (186.7)
Revaluation 57.3 (5.1) 52.2 4.5 - - 56.7
Movement in grossing up of
headlease liabilities - 5.9 5.9 - - - 5.9
At 31 December 2025 3,316.3 1,512.3 4,828.6 53.5 - 32.9 4,915.0
At 1 January 2024 3,280.5 1,270.9 4,551.4 46.1 - 60.0 4,657.5
Acquisitions - 47.0 47.0 - - - 47.0
Capital expenditure 82.0 42.8 124.8 - - 57.3 182.1
Interest capitalisation and staff costs 3.4 7.5 10.9 - - 2.0 12.9
Additions 85.4 97.3 182.7 - - 59.3 242.0
Disposals (78.7) (0.6) (79.3) - - (3.6) (82.9)
Transfer from joint venture - 44.4 44.4 - - - 44.4
Transfers (25.7) - (25.7) - 25.7 - -
Revaluation (51.8) 49.1 (2.7) 2.9 - - 0.2
Movement in grossing up of
headlease liabilities - (0.7) (0.7) - - - (0.7)
At 31 December 2024 3,209.7 1,460.4 4,670.1 49.0 25.7 115.7 4,860.5
Total Owner- Assets Total
investment occupied held for Trading property
Freehold Leasehold property property sale property portfolio
£m £m £m £m £m £m £m
Adjustments from fair value to carrying value
At 31 December 2025
Fair value 3,472.0 1,535.1 5,007.1 53.5 - 33.3 5,093.9
Revaluation of trading property - - - - - (0.4) (0.4)
Lease incentives and costs
included in receivables (155.7) (61.8) (217.5) - - - (217.5)
Grossing up of headlease liabilities - 39.0 39.0 - - - 39.0
Carrying value 3,316.3 1,512.3 4,828.6 53.5 - 32.9 4,915.0
At 31 December 2024
Fair value 3,374.1 1,475.7 4,849.8 49.0 26.0 116.3 5,041.1
Selling costs relating to assets
held for sale - - - - (0.3) - (0.3)
Revaluation of trading property - - - - - (0.6) (0.6)
Lease incentives and costs
included in receivables (164.4) (48.4) (212.8) - - - (212.8)
Grossing up of headlease liabilities - 33.1 33.1 - - - 33.1
Carrying value 3,209.7 1,460.4 4,670.1 49.0 25.7 115.7 4,860.5
The property portfolio is subject to semi-annual external valuations and was
revalued at 31 December 2025 by external valuers on the basis of fair value in
accordance with The RICS Valuation - Professional Standards, which takes
account of the properties' highest and best use. When considering the highest
and best use of a property, the external valuers will consider its existing
and potential uses which are physically, legally and financially viable.
Where the highest and best use differs from the existing use, the external
valuers will consider the costs and the likelihood of achieving and
implementing this change in arriving at the property valuation. There were no
such instances in either 2025 or 2024.
The external valuations for the portfolio at December 2025 were carried out by
Knight Frank LLP.
Knight Frank valued the portfolio at £5,093.9m (2024: £5,041.1m). Of the
properties revalued, £53.5m (2024: £49.0m) relating to owner-occupied
property was included within property, plant and equipment and £33.3m (2024:
£116.3m) was in relation to trading property.
The total fees, including the fee for this assignment, earned by Knight Frank
(or other companies forming part of the same group of companies within the UK)
from the Group is less than 5.0% of their total UK revenues.
Staff and associated costs directly attributable to the management of major
schemes are capitalised, based on the proportion of time spent on each
relevant scheme.
In October 2024, the Group acquired the remaining 50% interest of the Derwent
Lazari Baker Street Partnership (the 'joint venture') from Lazari Investments
Limited ('Lazari'). Following the acquisition, the Group's 50% interest in the
joint was consolidated into the Group's property portfolio.
Net zero carbon and EPC compliance
The Group published its pathway to net zero carbon in July 2020 and has set
2030 as its target date to achieve this. £88.9m (year to 31 December 2024:
£123.9m) of eligible 'green' capital expenditure, in accordance with the
Group's Green Finance Framework, was incurred in the year to 31 December 2025
on the major developments at 80 Charlotte Street W1, 1 Soho Place W1, The
Featherstone Building EC1, 25 Baker Street W1 and Network W1. In addition, the
Group continues to hold carbon credits to support certain externally validated
green projects to offset embodied carbon.
To quantify one of the impacts of climate change on the valuation, an
independent third-party assessment was carried out in 2021 to estimate the
cost of EPC upgrades across the portfolio. Following a review of the latest
scope changes in building regulation, subsequent inflation, disposals, and
work carried out to date, the estimated amount was £73.7m at the end of 2025.
Of this amount, a specific deduction of £31m was included in the 31 December
2025 external valuation. In addition, further amounts have been allowed for in
the expected costs of future refurbishment projects.
Reconciliation of revaluation surplus/(deficit)
2025 2024
£m £m
Total revaluation surplus/(deficit) 67.5 (1.8)
Less:
Lease incentives and costs (8.7) (7.2)
Assets held for sale selling costs - (0.3)
Trading property revaluation adjustment (2.0) 9.1
Other (0.1) 0.4
IFRS revaluation surplus 56.7 0.2
Reported in the:
Revaluation surplus/(deficit) 52.2 (2.7)
Group income statement 52.2 (2.7)
Group statement of comprehensive income 4.5 2.9
56.7 0.2
Historical cost
2025 2024
£m £m
Investment property 3,856.1 3,746.4
Owner-occupied property 19.6 19.6
Assets held for sale - 28.8
Trading property 42.9 132.9
Total property portfolio 3,918.6 3,927.7
Sensitivity of measurement to variations in the significant unobservable
inputs
The significant unobservable inputs used in the fair value measurement
categorised within Level 3 of the fair value hierarchy of the Group's property
portfolio, together with the impact of significant movements in these inputs
on the fair value measurement, are shown below:
Impact on fair value measurement Impact on fair value measurement
Unobservable input of significant increase in input of significant decrease in input
Gross ERV Increase Decrease
Net initial yield Decrease Increase
Reversionary yield Decrease Increase
True equivalent yield Decrease Increase
There are inter-relationships between these inputs as they are partially
determined by market conditions. An increase in the reversionary yield may
accompany an increase in gross ERV and would mitigate its impact on the fair
value measurement.
A sensitivity analysis was performed to ascertain the impact on the fair value
of a 25 basis point shift in true equivalent yield and a £2.50 per sq ft
shift in ERV on the property valuations. The Group believes this captures the
range of variations in these key valuation assumptions. The results are shown
in the tables below:
West End West End City Provincial
central borders/other borders commercial Total
At 31 December 2025 £m £m £m £m £m
True equivalent yield
+25bp (125.8) (9.6) (44.8) (2.6) (181.2)
-25bp 138.2 10.3 48.5 2.8 197.8
ERV
+£2.50 psf 116.8 13.4 51.2 10.5 197.2
-£2.50 psf (116.8) (13.4) (51.2) (10.5) (197.2)
At 31 December 2024(1)
True equivalent yield
+25bp (127.1) (10.7) (44.6) (1.8) (182.6)
-25bp 139.7 11.5 48.2 1.9 199.3
ERV
+£2.50 psf 102.9 14.4 51.6 8.9 179.2
-£2.50 psf (102.9) (14.4) (51.6) (8.9) (179.2)
(1 These amounts have been re-presented from percentages to pound sterling
(£).)
11. Property, plant and equipment
Owner-occupied Solar
property park Other Total
£m £m £m £m
At 1 January 2025 49.0 - 3.0 52.0
Additions - 9.7 0.2 9.9
Depreciation - - (0.8) (0.8)
Transfers - 2.5 - 2.5
Revaluation 4.5 - - 4.5
At 31 December 2025 53.5 12.2 2.4 68.1
At 1 January 2024 46.1 - 3.8 49.9
Additions - - 0.3 0.3
Depreciation - - (1.0) (1.0)
Revaluation 2.9 - (0.1) 2.8
At 31 December 2024 49.0 - 3.0 52.0
Net book value
Cost or valuation 53.5 12.2 9.6 75.3
Accumulated depreciation - - (7.2) (7.2)
At 31 December 2025 53.5 12.2 2.4 68.1
Net book value
Cost or valuation 49.0 - 9.4 58.4
Accumulated depreciation - - (6.4) (6.4)
At 31 December 2024 49.0 - 3.0 52.0
'Solar park' at 31 December 2025 represents £12.2m of expenditure in relation
to the Group's c.100 acre, 18.4MW solar park in Scotland. Of the total £12.2m
of costs, £2.5m was transferred in the period from prepayments as the costs
now meet the criteria for recognition within Property, plant and equipment
(see note 15). Planning consent for this project was received in June 2023
with completion anticipated in 2026.
Artwork £0.7m (2024 £0.7m) is included within 'Other' and is periodically
valued by Bonhams on the basis of fair value using their extensive market
knowledge. The latest valuation was carried out in December 2024. In
accordance with IFRS 13 Fair Value Measurement, the artwork is deemed to be
classified as Level 3.
12. Trading stock
2025 2024
£m £m
Trading stock 17.8 17.5
Disposals (see note 5) (17.8) -
- 17.5
Trading stock related to capitalised development expenditure incurred which
was due to be transferred under development agreements to the freeholder upon
completion. This was included in trading stock, as opposed to trading
property, as the Group did not have an ownership interest in the property.
In 2025, upon completion, the trading stock was disposed of to the freeholder.
13. Investments
At 31 December 2025 the Group had a 50% interest in two (2024: two) joint
venture vehicles, Dorrington Derwent Holdings Limited and Primister Limited.
In October 2024, the Group acquired the remaining 50% interest of the Derwent
Lazari Baker Street Partnership from Lazari Investments Limited, which was
accounted for as an asset acquisition. This resulted in full ownership of the
assets and liabilities of the partnership.
2025 2024
£m £m
At 1 January - 35.8
Deferred consideration and fees on initial formation of joint venture - 7.6
Revaluation surplus - 7.3
Other profit from operations - 1.8
Transfer to investment property (see note 10) - (44.4)
Transfer to assets and liabilities - (0.5)
Impairment of additional deferred consideration - (7.6)
At 31 December - -
The Group's share of its investments in joint ventures is represented by the
following amounts in the underlying joint venture entities.
2025 2024
Joint ventures Group share Joint ventures Group share
£m £m £m £m
Net property income - - 3.8 1.9
Administrative expenses - - (0.3) (0.1)
Revaluation surplus - - 14.6 7.3
Share of results of underlying joint ventures - - 18.1 9.1
Impairment of additional deferred consideration - (7.6)
Group share of results of joint ventures - 1.5
14. Other receivables (non-current)
2025 2024
£m £m
Rents recognised in advance 176.9 173.6
Initial direct letting costs 14.3 14.4
Prepayments 12.0 13.0
203.2 201.0
Other receivables includes £176.9m (2024: £173.6m) after impairments
relating to rents recognised in advance as a result of spreading tenant lease
incentives over the expected terms of their respective leases. This includes
rent-free and reduced rent periods, capital contributions in lieu of rent-free
periods and contracted rent uplifts. In addition, £14.3m (2024: £14.4m)
relates to the spreading effect of the initial direct costs of letting over
the same term. Together with £26.3m (2024: £24.8m), which was included as
accrued income within trade and other receivables (see note 15), these amounts
totalled £217.5m at 31 December 2025 (2024: £212.8m).
Prepayments represent £12.0m (2024: £13.0m) of costs incurred in relation to
Old Street Quarter EC1. This was after a £2.2m (2024: £0.8m) impairment in
accordance with IAS 36 Impairment of Assets. In May 2022, the Group entered
into a conditional contract to acquire the freehold of Old Street Quarter
island site. The site is being sold by Moorfields Eye Hospital NHS Foundation
Trust and UCL, together the Oriel joint initiative ("Oriel"). Completion is
subject to delivery by Oriel of a new hospital and subsequent vacant
possession of the site, which is anticipated no earlier than late 2027. At
that point, the site and the prepaid design and planning costs incurred will
be included in investment property, subject to semi-annual external
valuations.
The total movement in tenant lease incentives is shown below:
2025 2024
£m £m
At 1 January 195.6 194.1
Amounts taken to income statement 3.7 6.3
Capital incentives granted 5.6 -
Movement in lease incentive impairment (0.1) 0.3
Disposal of investment properties (4.2) (4.9)
Write off to bad debt (0.4) (0.2)
200.2 195.6
Amounts included in trade and other receivables (see note 15) (23.3) (22.0)
At 31 December 176.9 173.6
15. Trade and other receivables
2025 2024
£m £m
Trade receivables 4.4 13.3
Other receivables 1.0 3.2
Prepayments(1) 13.8 15.4
Accrued income
Rents recognised in advance 23.3 22.0
Initial direct letting costs 3.0 2.8
Other 1.2 1.1
46.7 57.8
(1) In 2025, £2.5m in relation to the Group's solar park on its Scottish
land, was transferred to 'Solar park' within Property, plant and equipment
(see note 11).
Trade receivables are split as follows:
2025 2024
£m £m
less than three months due 4.2 12.9
between three and six months due 0.2 0.2
between six and twelve months due - 0.2
4.4 13.3
Trade receivables are stated net of impairment.
The Group has £4.1m (2024: £4.6m) of provision for bad debts as shown below.
£1.7m (2024: £2.4m) is included in trade receivables, £0.4m (2024: £0.4m)
in accrued income and £2.0m (2024: £1.8m) in prepayments and accrued income
within other receivables (non-current) (note 14).
Provision for bad debts
2025 2024
£m £m
At 1 January 4.6 4.6
Trade receivables provision 0.1 0.7
Lease incentive provision 0.4 (0.4)
Service charge provision 0.1 (0.2)
Released (1.1) (0.1)
At 31 December 4.1 4.6
The provision for bad debts is split as follows:
2025 2024
£m £m
less than three months due 0.5 0.9
between three and six months due 0.2 0.5
between six and twelve months due 0.5 0.5
over twelve months due 2.9 2.7
4.1 4.6
16. Non-current assets held for sale
2025 2024
£m £m
Transferred from investment properties (see note 10) - 25.7
- 25.7
In January 2025, the Group completed the disposal of its freehold interest in
4 & 10 Pentonville N1, disclosed as a non-current asset held for sale as
at December 2024.
17. Trade and other payables
2025 2024
£m £m
Trade payables 8.0 0.6
Other payables 1.0 3.6
Other taxes 1.2 7.3
Accruals 56.2 57.2
Deferred income 47.0 50.0
Tenant rent deposits 29.3 27.9
Service charge balances 25.3 28.1
168.0 174.7
Deferred income primarily relates to rents received in advance.
18. Net debt and derivative financial instruments
2025 2024
Book Fair Book Fair
value value value value
£m £m £m £m
Current liabilities
Other loans - - 20.0 20.0
6.5% secured bonds 176.6 175.7 - -
2.68% unsecured private placement notes 55.0 54.9 - -
1.5% unsecured convertible bonds 2025 - - 174.1 171.6
231.6 230.6 194.1 191.6
Non-current liabilities
6.5% secured bonds 2026 - - 178.1 176.7
1.875% unsecured green bonds 2031 347.6 298.3 347.2 281.2
5.25% unsecured bonds 247.5 255.2 - -
Unsecured private placement notes 2026 - 2034 398.7 349.3 453.6 391.3
Unsecured bank loans 261.2 265.0 290.5 293.0
Borrowings 1,486.6 1,398.4 1,463.5 1,333.8
Derivative financial instruments expiring in less than one year - - (0.6) (0.6)
Total borrowings and derivative financial instruments 1,486.6 1,398.4 1,462.9 1,333.2
Reconciliation to net debt:
Borrowings and derivative financial instruments 1,486.6 1,462.9
Adjustments for:
Leasehold liabilities 41.0 34.6
Derivative financial instruments - 0.6
Cash at bank excluding restricted cash (see note 22) (77.2) (15.4)
Net debt 1,450.4 1,482.7
The fair values of the Group's bonds have been estimated on the basis of
quoted market prices, representing Level 1 fair value measurement as defined
by IFRS 13 Fair Value Measurement.
The unsecured private placement notes were determined by discounting the
contractual cash flows by the replacement rate. The replacement rate is the
sum of the current underlying Gilt rate plus the market implied margin. These
represent Level 2 fair value measurement.
At 31 December 2024, the derivative financial instruments consisted of
interest rate swaps. The fair values of the Group's outstanding interest rate
swaps were estimated using the mid-point of the yield curves prevailing on the
reporting date and represented the net present value of the differences
between the contracted rate and the valuation rate when applied to the
projected balances for the period from the reporting date to the contracted
expiry dates. These represented Level 2 fair value measurement. These were
fully settled in the year.
During 2025, the Group entered into derivative contracts to hedge against
movements in UK government bond yields in relation to the issuance of the
£250m unsecured bonds in June 2025. These were fully settled on pricing of
the bond.
The fair values of the Group's bank loans are approximately the same as their
carrying amount, after adjusting for the unamortised arrangement fees, and
also represent Level 2 fair value measurement.
The fair values of the following financial assets and liabilities are the same
as their carrying amounts:
· Cash and cash equivalents.
· Trade receivables, other receivables and accrued income included
within trade and other receivables.
· Trade payables, other payables and accruals included within trade
and other payables.
· Leasehold liabilities.
There have been no transfers between Level 1 and Level 2 or Level 2 and Level
3 in either 2025 or 2024.
In June 2024, the Group signed an agreement for an unsecured term loan
facility of £100m. The loan is for a three-year term and has two one-year
extension options. In June 2025, the Group exercised the first extension
option.
At 31 December 2024, other loans consisted of a £20m interest-free loan from
a third party providing development consultancy services on the residential
element of the 25 Baker Street W1 development. This was fully repaid in 2025.
The agreement provides for a profit share on completion of the sales which,
under IFRS 9 Financial Instruments, has been deemed to have a carrying value
of £nil at 31 December 2025 (2024: £nil). The carrying value of the loan
at 31 December 2025 was £nil (2024: £20.0m).
In December 2024, the Group signed an agreement for an unsecured facility of
£115m, consisting of an £82.5m term loan and £32.5m revolving credit
facility (RCF). The facility is for an initial two-year term and has two
one-year extension options. In December 2025, the Group exercised the first
extension option. The £32.5m RCF was cancelled in July 2025.
In February 2025, the Group signed an agreement for an unsecured facility of
£115m, consisting of an £82.5m term loan and £32.5m revolving credit
facility (RCF). The facility is for an initial two-year term and has a
one-year extension option. The £32.5m RCF was cancelled in July 2025.
In June 2025, Derwent London plc issued £250m of unsecured bonds on a 7-year
term maturing in 2032. The unsecured instrument pays a coupon of 5.25% and the
effective interest rate is 5.338%. This represents an issue discount of
£1.3m. The unsecured bonds were initially recognised at fair value, net of
the unamortised discount and issue costs of £0.8m, and are subsequently
measured at amortised cost.
In June 2025, the Group's 1.5% unsecured convertible bonds matured and were
repaid, without any conversion to equity.
In July 2025, the Group amended and extended its principal £450m unsecured
RCF, which was due to expire in October 2026. The facility, signed with the
Group's core relationship banks, is structured as an initial four-year term
with two one-year extension options. The facility is due to expire in July
2029.
As at 31 December 2025, the Group's secured bonds 2026 were secured by a
floating charge over a number of the Group's subsidiary companies which
contained £339.9m (2024: £376.3m) of the Group's properties.
The Group continue to maintain significant headroom on all financial
covenants.
Unsecured bank borrowings are accounted for at amortised cost. At 31 December
2025, there was £nil (2024: £110.5m) drawn on the RCFs, £265.0m (2024:
£182.5m) drawn on term loans and the combined unamortised arrangement fees
were £3.8m (2024: £2.5m), resulting in the carrying value being £261.2m
(2024: £290.5m).
As all main corporate facilities were refinanced or amended recently, the fair
values of the Group's bank loans are deemed to be approximately the same as
their carrying amount, after adjusting for the unamortised arrangement fees,
and represent Level 2 fair value measurement.
19. Cash generated from operations
The table below shows the reconciliation of cash generated from operations.
2025 2024
£m £m
Profit from operations 210.5 156.4
Adjustment for non-cash items:
Revaluation (surplus)/deficit (52.2) 2.7
Depreciation 0.8 1.0
Lease incentive/cost spreading (4.3) (6.8)
Share based payments 2.0 3.1
Ground rent adjustment 0.5 0.7
Adjustment for other items:
Loss/(profit) on disposal 2.2 (1.9)
Profit on disposal of trading property and trading stock (4.2) -
Changes in working capital:
Decrease/(increase) in receivables balance 7.3 (8.8)
Increase in payables balance 5.4 9.5
Decrease/(increase) in trading property and trading stock 104.5 (53.3)
Cash generated from operations 272.5 102.6
Cash generated from operations included £115.8m (2024: £3.6m) cash inflows
from disposal of trading properties and £17.8m cash inflows (2024: £nil) in
relation to disposals of trading stock. It also included £12.1m (2024:
£43.0m) cash outflows in relation to expenditure on trading properties and
£0.6m (2024: £9.8m) cash outflows in relation to expenditure on trading
stock.
20. Deferred tax
Revaluation Other Total
£m £m £m
At 1 January 2025 3.5 (2.7) 0.8
Charged to the income statement (0.1) 0.5 0.4
Charged to other comprehensive income 1.1 - 1.1
At 31 December 2025 4.5 (2.2) 2.3
At 1 January 2024 2.8 (2.7) 0.1
Charged to the income statement 0.1 - 0.1
Charged to other comprehensive income 0.6 - 0.6
At 31 December 2024 3.5 (2.7) 0.8
Deferred tax on the balance sheet revaluation is calculated on the basis of
the chargeable gains that would crystallise on the sale of the property
portfolio at each balance sheet date. The calculation takes account of any
available indexation on the historical cost of the properties. Due to the
Group's REIT status, deferred tax is only provided at each balance sheet date
on properties outside the REIT regime.
Deferred tax assets have been recognised in respect of all tax losses and
other temporary differences where the Directors believe it is probable that
these assets will be recovered.
21. Dividend
Dividend per share
Payment PID Non-PID Total 2025 2024
date p p p £m £m
Current year
2025 final dividend(1) 29 May 2026 40.00 16.00 56.00 - -
2025 interim dividend 10 October 2025 25.50 - 25.50 28.6 -
65.50 16.00 81.50
Prior year
2024 final dividend 30 May 2025 45.50 10.00 55.50 62.3 -
2024 interim dividend 11 October 2024 25.00 - 25.00 - 28.1
70.50 10.00 80.50
2023 final dividend 31 May 2024 39.00 16.00 55.00 - 61.7
Dividends as reported in the
Group statement of changes in equity 90.9 89.8
2025 interim dividend withholding tax 14 January 2026 (4.0) -
2024 interim dividend withholding tax 14 January 2025 3.9 (3.9)
2023 interim dividend withholding tax 12 January 2024 - 3.7
Dividends paid as reported in the
Consolidated cash flow statement 90.8 89.6
(1) Subject to shareholder approval at the AGM on 15 May 2026.
22. Cash and cash equivalents
2025 2024
£m £m
Cash at bank 77.2 15.4
Cash held in restricted accounts
Tenant rent deposits 29.3 27.9
Service charge balances 25.2 28.1
131.7 71.4
23. Capital commitments and contingent liabilities
Contracts for capital expenditure entered into by the Group at 31 December
2025 and not provided for in the accounts relating to the construction,
development or enhancement of the Group's investment properties amounted to
£85.5m (2024: £101.0m), whilst that relating to the Group's trading
properties amounted to £7.6m (2024: £29.3m). At 31 December 2025 and 31
December 2024, there were no material contractual obligations for the
purchase, repair or maintenance of investment or trading properties.
In May 2022, the Group entered into a conditional contract to acquire the
freehold of Old Street Quarter island site. The site is being sold by
Moorfields Eye Hospital NHS Foundation Trust and UCL, together the Oriel joint
initiative ("Oriel"). Consideration for the site has been agreed as £239m
before costs. Completion is subject to delivery by Oriel of a new hospital and
subsequent vacant possession of the site, which is anticipated no earlier than
late 2027. In addition to the note 14 disclosure of the impairment assessment
under IAS 36 Impairment of Assets for costs incurred to date, the conditional
contract has also been assessed under IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, and it has been determined that no
adjustments are required to the year-end financial statements. This will
continue to be monitored through to completion of the acquisition of the site.
24. Post balance sheet events
In January 2026, the Group exercised its option to extend the £82.5m
unsecured term loan, originally set to mature in February 2027, by one year to
February 2028.
In February 2026, £55m of US private placement notes were repaid upon
maturity.
In February 2026, the Group exchanged on the disposal of its freehold interest
in 80 Tottenham Court Road, W1 for £32.6m before costs.
25. Related parties
There have been no related party transactions for the year ended 31 December
2025 that have materially affected the financial position or performance of
the Group. All related party transactions are materially consistent with those
disclosed by the Group in its financial statements.
26. EPRA performance measures
Unaudited unless stated otherwise.
As with most other UK property companies and real estate investment trusts
('REITs'), the Group presents many of its financial measures in accordance
with the guidance criteria issued by the European Public Real Estate
Association ('EPRA'). These measures, which provide consistency across the
sector, are all derived from the IFRS figures.
Number of shares
Earnings per share Net asset value per share
Weighted average At 31 December
2025 2024 2025 2024
Audited Audited Audited Audited
'000 '000 '000 '000
For use in basic measures 112,241 112,258 112,236 112,258
Dilutive effect of share-based payments 13 342 12 323
For use in diluted measures 112,254 112,600 112,248 112,581
For the year ended 31 December 2024, the Group did not recognise the dilutive
impact of the conversion of the £175m unsecured convertible bonds 2025 ('1.5%
convertible bonds 2025') on its earnings per share (EPS) or net asset value
(NAV) per share metrics as, based on the share price at the end of that year,
the bonds were not expected to convert. In 2025, the £175m unsecured
convertible bonds 2025 ('1.5% convertible bonds 2025') were repaid in full
with no share conversion, resulting in no dilutive impact on the Group's
earnings per share (EPS) or net asset value (NAV) per share metrics.
The following tables set out reconciliations between the IFRS and EPRA
earnings for the year and earnings per share. The adjustments made between
the figures are as follows:
A - Disposal of investment and trading property (including the Group's
share in joint ventures), and associated tax.
B - Revaluation movement on investment property, in joint ventures and
other interests, write-down of trading property and associated deferred tax.
C - Fair value movement and termination income relating to derivative
financial instruments.
D - Non-operating and exceptional items.
Earnings and earnings per share (audited)
Adjustments EPRA
IFRS A B C D basis
£m £m £m £m £m £m
Year ended 31 December 2025
Net property and other income 199.6 (4.2) 1.4 - - 196.8
Total administrative expenses (39.1) - - - 0.4 (38.7)
Revaluation surplus 52.2 - (52.2) - - -
Loss on disposal (2.2) 2.2 - - - -
Net finance costs (48.4) - - 1.2 - (47.2)
Movement in fair value of derivative
financial instruments (0.6) - - 0.6 - -
Profit before tax 161.5 (2.0) (50.8) 1.8 0.4 110.9
Tax charge (0.4) - (0.1) - - (0.5)
Earnings attributable to equity shareholders 161.1 (2.0) (50.9) 1.8 0.4 110.4
Earnings per share 143.53p 98.36p
Diluted earnings per share 143.51p 98.35p
In addition to EPRA earnings per share, an adjusted earnings per share is
presented below to add back the profit from the disposal of the trading
properties (see note 5), following the sale of the residential apartments at
100 George Street W1, which are excluded from EPRA earnings.
£m
Earnings attributable to equity shareholders 110.4
Profits from the disposal of trading properties 4.2
Adjusted earnings attributable to equity shareholders 114.6
Adjusted earnings per share 102.10p
During the year, the Group commenced an IT transformation project to implement
a new finance system. In accordance with EPRA Best Practices Recommendations
(September 2024), the associated costs have been excluded from EPRA earnings
per share.
Adjustments EPRA
IFRS A B C D basis
£m £m £m £m £m £m
Year ended 31 December 2024
Net property and other income 198.3 - 0.2 - - 198.5
Total administrative expenses (41.1) - - - - (41.1)
Revaluation deficit (2.7) - 2.7 - - -
Profit on disposal 1.9 (1.9) - - - -
Net finance costs (39.6) - - - - (39.6)
Movement in fair value of derivative
financial instruments (2.3) - - 2.3 - -
Share of results of joint ventures 1.5 - 0.3 - - 1.8
Loss before tax 116.0 (1.9) 3.2 2.3 - 119.6
Tax charge (0.1) - - - - (0.1)
Earnings attributable to equity shareholders 115.9 (1.9) 3.2 2.3 - 119.5
Earnings per share 103.24p 106.45p
Diluted earnings per share 102.93p 106.13p
EPRA Net Asset Value metrics (audited)
2025 2024
£m £m
Net assets attributable to equity shareholders 3,615.3 3,539.8
Adjustment for:
Revaluation of trading properties 0.4 0.6
Deferred tax on revaluation surplus(1) 2.3 1.8
Fair value of derivative financial instruments - (0.6)
Fair value adjustment to secured bonds 1.8 3.4
EPRA Net Tangible Assets 3,619.8 3,545.0
Number of shares 112.2 112.6
Per share measure - diluted 3,225p 3,149p
Net assets attributable to equity shareholders 3,615.3 3,539.8
Adjustment for:
Revaluation of trading properties 0.4 0.6
Fair value adjustment to secured bonds 1.8 3.4
Mark-to-market of fixed rate debt 96.6 133.6
Unamortised issue and arrangement costs (7.9) (6.0)
EPRA Net Disposal Value 3,706.2 3,671.4
Number of shares 112.2 112.6
Per share measure - diluted 3,302p 3,261p
Net assets attributable to equity shareholders 3,615.3 3,539.8
Adjustment for:
Revaluation of trading properties 0.4 0.6
Deferred tax on revaluation surplus 4.5 3.5
Fair value of derivative financial instruments - (0.6)
Fair value adjustment to secured bonds 1.8 3.4
Purchasers' costs(2) 346.4 342.8
EPRA Net Reinstatement Value 3,968.4 3,889.5
Number of shares 112.2 112.6
Per share measure - diluted 3,535p 3,455p
( )
(1) Only 50% of the deferred tax on the revaluation surplus is excluded.
(2) Includes Stamp Duty Land Tax. Total costs assumed to be 6.8% of the
portfolio's fair value.
Cost ratios
2025 2024
£m £m
Administrative expenses 39.1 41.1
Write-off/impairment of receivables 0.5 0.2
Other property costs 17.9 16.7
Dilapidation receipts (0.2) (0.8)
Net service charge costs 6.6 5.3
Management fees received less estimated profit element (4.9) (5.1)
Share of joint ventures' expenses - 0.3
EPRA costs (including direct vacancy costs) (A) 59.0 57.7
Direct vacancy costs (10.5) (11.3)
EPRA costs (excluding direct vacancy costs) (B) 48.5 46.4
Gross rental income 218.3 214.8
Ground rent (1.9) (1.5)
Service charge components of rental income - (1.3)
Share of joint ventures' rental income less ground rent - 2.0
Adjusted gross rental income (C) 216.4 214.0
EPRA cost ratio (including direct vacancy costs) (A/C) 27.3% 27.0%
EPRA cost ratio (excluding direct vacancy costs) (B/C) 22.4% 21.7%
In addition to the two EPRA cost ratios, the Group has calculated an
additional cost ratio based on its property portfolio fair value to recognise
the 'total return' nature of the Group's activities.
2025
£m £m
Property portfolio at fair value (D) 5,093.9 5,041.1
Portfolio cost ratio (A/D) 1.2% 1.1%
Property-related capital expenditure
2025 2024
Group Joint Group Joint
(excl. Joint ventures Total (excl. Joint ventures Total
ventures) (50% share) Group ventures) (50% share) Group
£m £m £m £m £m £m
Acquisitions 6.0 - 6.0 47.0 - 47.0
Development 129.8 - 129.8 136.2 3.3 139.5
Investment properties
Incremental lettable space 0.3 - 0.3 2.5 - 2.5
No incremental lettable space 26.4 - 26.4 45.3 - 45.3
Tenant incentives 2.3 - 2.3 0.3 - 0.3
Capitalised interest 13.8 - 13.8 10.7 - 10.7
Total capital expenditure 178.6 - 178.6 242.0 3.3 245.3
Conversion from accrual to
cash basis 2.5 - 2.5 (12.1) - (12.1)
Total capital expenditure
on a cash basis 181.1 - 181.1 229.9 3.3 233.2
27. Gearing and interest cover
NAV gearing
2025 2024
£m £m
Net debt 1,450.4 1,482.7
Net assets 3,615.3 3,539.8
NAV gearing 40.1% 41.9%
Loan-to-value ratio
2025 2024
£m £m
Group loan-to-value ratio
Net debt 1,450.4 1,482.7
Fair value adjustment of secured bonds (1.8) (3.4)
Unamortised discount on unsecured bonds 2.3 1.3
Unamortised issue and arrangement costs 7.9 6.0
Leasehold liabilities (41.0) (34.6)
Drawn debt net of cash (A) 1,417.8 1,452.0
Fair value of property portfolio (B) 5,093.9 5,041.1
Group loan-to-value ratio (A/B) 27.8% 28.8%
EPRA loan-to-value ratio
Drawn debt net of cash (A) 1,417.8 1,452.0
Debt with equity characteristics - (20.0)
Adjustment for hybrid debt instruments - 0.6
Net payable adjustment 81.2 72.7
Adjusted debt (C) 1,499.0 1,505.3
Fair value of property portfolio (B) 5,093.9 5,041.1
EPRA loan-to-value ratio (C/B) 29.4% 29.9%
Net interest cover ratio
2025 2024
£m £m
Group net interest cover ratio
Net property and other income 199.6 198.3
Adjustments for:
Other income (4.9) (5.1)
Other property income - (0.1)
Surrender premiums received (0.3) (2.7)
Profit on disposal of trading properties (4.2) -
Adjusted net property income 190.2 190.4
Finance income (2.1) (0.3)
Finance costs 50.5 39.9
48.4 39.6
Adjustments for:
Finance income 2.1 0.3
Other finance costs (1.4) (0.4)
Amortisation of fair value adjustment to secured bonds 1.7 1.6
Amortisation of issue and arrangement costs (2.8) (2.6)
Finance costs capitalised 14.1 11.2
Net interest payable 62.1 49.7
Group net interest cover ratio 306% 383%
Proportionally consolidated net interest cover ratio
Adjusted net property income 190.2 190.4
Share of joint ventures' net property income - 1.9
Adjusted net property income including share of joint ventures 190.2 192.3
Net interest payable 62.1 49.7
Proportionally consolidated net interest cover ratio 306% 387%
Net debt to EBITDA
2025 2024
£m £m
Net debt (A) 1,450.4 1,482.7
Profit for the year 161.1 115.9
Add back: tax charge 0.4 0.1
Profit before tax 161.5 116.0
Add back: net finance charges 48.4 39.6
Add back: movement in fair value of derivative financial instruments 0.6 2.3
210.5 157.9
Add back: loss/(profit) on disposal 2.2 (1.9)
Add back: revaluation (surplus)/deficit (52.2) 2.7
Add back: share of joint venture revaluation movement/impairment (note 8) - 0.3
Add back: depreciation 0.8 1.0
Add back: IT transformation project costs 0.4 -
EBITDA (B) 161.7 160.0
Net debt to EBITDA (A/B) 9.0 9.3
28. Total accounting return
2025 2024
p p
EPRA Net Tangible Assets on a diluted basis
At end of year 3,225 3,149
At start of year (3,149) (3,129)
Increase 76 20
Dividend per share 81 80
Increase including dividend 157 100
Total accounting return 5.0% 3.2%
29. List of definitions
Building Research Establishment Environmental Assessment Method (BREEAM)
An environmental impact assessment method for non-domestic buildings.
Performance is measured across a series of ratings; Good, Very Good, Excellent
and Outstanding.
Capital return
The annual valuation movement arising on the Group's portfolio expressed as a
percentage return on the valuation at the beginning of the year adjusted for
acquisitions and capital expenditure.
Company Voluntary Arrangement (CVA)
An insolvency procedure allowing a company with debt problems or that is
insolvent to reach a voluntary agreement with its creditors to repay its debt
over a fixed period.
Diluted figures
Reported results adjusted to include the effects of potential dilutive shares
issuable under the Group's share option schemes and the convertible bonds.
Earnings/earnings per share (EPS)
Earnings represent the profit or loss for the year attributable to equity
shareholders and are divided by the weighted average number of ordinary shares
in issue during the financial year to arrive at earnings per share.
EBITDA
Earnings before interest, tax, depreciation and amortisation.
Energy Performance Certificate (EPC)
An EPC is an asset rating detailing how energy efficient a building is, rated
by carbon dioxide emission on a scale of A-G, where an A rating is the most
energy efficient. They are legally required for any building that is to be put
on the market for sale or rent.
Estimated rental value (ERV)
This is the external valuers' opinion as to the open market rent which, on the
date of valuation, could reasonably be expected to be obtained on a new
letting or rent review of a property.
European Public Real Estate Association (EPRA)
A not-for-profit association with a membership of Europe's leading property
companies, investors and consultants which strives to establish best practices
in accounting, reporting and corporate governance and to provide high-quality
information to investors. EPRA's Best Practices Recommendations includes
guidelines for the calculation of the following performance measures which the
Group has adopted.
- EPRA Earnings Per Share
Earnings from operational activities.
- EPRA Loan-to-value (LTV)
Debt divided by the property value. Debt is equal to drawn facilities less
cash, adjusted with equity characteristics, adding back the equity portion of
hybrid debt instruments and including net payables if applicable. Property
value is equal to the fair value of the property portfolio including net
receivables if applicable.
- EPRA Net Reinstatement Value (NRV) per share
NAV adjusted to reflect the value required to rebuild the entity and assuming
that entities never sell assets. Assets and liabilities, such as fair value
movements on financial derivatives are not expected to crystallise in normal
circumstances and deferred taxes on property valuation surpluses are excluded.
- EPRA Net Tangible Assets (NTA) per share
Assumes that entities buy and sell assets, thereby crystallising certain
levels of unavoidable deferred tax.
- EPRA Net Disposal Value (NDV) per share
Represent the shareholders' value under a disposal scenario, where deferred
tax, financial instruments and certain other adjustments are calculated to the
full extent of their liability, net of any resulting tax.
- EPRA capital expenditure
The total expenditure incurred on the acquisition, enhancement, and
development of investment properties. This can include amounts spent on any
investment properties under construction or related development projects, as
well as the amounts spent on the completed (operational) investment property
portfolio. Capitalised finance costs included in the financial statements are
also presented within this total. The costs are presented on both an accrual
and a cash basis, for both the Group and the proportionate share of joint
ventures.
- EPRA Cost Ratio (including direct vacancy costs)
EPRA costs as a percentage of gross rental income less ground rent (including
share of joint venture gross rental income less ground rent). EPRA costs
include administrative expenses, other property costs, net service charge
costs and the share of joint ventures' overheads and operating expenses (net
of any service charge costs), adjusted for service charge costs recovered
through rents and management fees.
- EPRA Cost Ratio (excluding direct vacancy costs)
Calculated as above, but with an adjustment to exclude direct vacancy costs.
- EPRA Net Initial Yield (NIY)
Annualised rental income based on the cash rents passing at the balance sheet
date, less non-recoverable property operating expenses, divided by the market
value of the EPRA property portfolio, increased by estimated purchasers'
costs.
- EPRA 'topped-up' Net Initial Yield
This measure incorporates an adjustment to the EPRA NIY in respect of the
expiration of rent-free periods (or other unexpired lease incentives such as
discounted rent periods and stepped rents).
- EPRA Vacancy Rate
Estimated rental value (ERV) of immediately available space divided by the ERV
of the EPRA portfolio.
In addition, the Group has adopted the following recommendation for investment
property reporting.
- EPRA like-for-like rental income growth
The growth in rental income on properties owned throughout the current and
previous year under review. This growth rate includes revenue recognition and
lease accounting adjustments but excludes properties held for development in
either year and properties acquired or disposed of in either year.
Fair value adjustment
An accounting adjustment to change the book value of an asset or liability to
its market value.
Ground rent
The rent payable by the Group for its leasehold properties. Under IFRS, a
liability is recognised using the discounted payments due. Fixed lease
payments made are allocated between the interest payable and the reduction in
the outstanding liability. Any variable payments are recognised in the income
statement in the period to which it relates.
Headroom
This is the amount left to draw under the Group's loan facilities (i.e. the
total loan facilities less amounts already drawn).
Interest rate swap
A financial instrument where two parties agree to exchange an interest rate
obligation for a predetermined amount of time. These are generally used by the
Group to convert floating rate debt to fixed rates.
Key Performance Indicators (KPIs)
Activities and behaviours, aligned to both business objectives and individual
goals, against which the performance of the Group is annually assessed.
Lease incentives
Any incentive offered to occupiers to enter into a lease. Typically the
incentive will be an initial rent-free or half rent period, stepped rents, or
a cash contribution to fit-out or similar costs.
Loan-to-value ratio (LTV)
Drawn debt net of cash divided by the fair value of the property portfolio.
Drawn debt is equal to drawn facilities less unrestricted cash and the
unamortised equity element of the convertible bonds.
Mark-to-market
The difference between the book value of an asset or liability and its market
value.
MSCI Inc. (MSCI IPD)
MSCI Inc. is a company that produces independent benchmarks of property
returns. The Group measures its performance against both the Central London
Offices Index and the UK All Property Index.
National Australian Built Environment Rating System (NABERS)
This is a building performance rating system which provides an energy
performance benchmark using a simple star rating system on a 1-6 scale. This
helps property owners understand and communicate a building's performance
versus other similar buildings to occupiers. Ratings are validated on an
annual basis.
NAV gearing
Net debt divided by net assets.
Net assets per share or net asset value (NAV)
Equity shareholders' funds divided by the number of ordinary shares in issue
at the balance sheet date.
Net debt
Borrowings plus bank overdraft less unrestricted cash and cash equivalents.
Net debt to EBITDA
Net Debt to EBITDA is the ratio of gross debt less unrestricted cash to
earnings before interest, tax, depreciation and amortisation (EBITDA).
Net effective rent
Net effective rent is the actual rental income a landlord receives after
adjusting for all concessions, incentives, and rental uplifts over the term of
the lease, spread over the full lease term. It reflects the true economic
value of a lease.
Net interest cover ratio
Net property income, excluding all non-core items divided by interest payable
on borrowings and non-utilisation fees.
Property income distribution (PID)
Dividends from profits of the Group's tax-exempt property rental business
under the REIT regulations.
Non-PID
Dividends from profits of the Group's taxable residual business.
Real Estate Investment Trust (REIT)
The UK Real Estate Investment Trust ("REIT") regime was launched on 1 January
2007. On 1 July 2007, Derwent London plc elected to convert to REIT status.
The REIT legislation was introduced to provide a structure which closely
mirrors the tax outcomes of direct ownership in property and removes tax
inequalities between different real estate investors. It provides a liquid and
publicly available vehicle which opens the property market to a wide range of
investors.
A REIT is exempt from corporation tax on qualifying income and gains of its
property rental business providing various conditions are met. It remains
subject to corporation tax on non-exempt income and gains e.g. interest
income, trading activity and development fees.
REITs must distribute at least 90% of the Group's income profits from its tax
exempt property rental business, by way of dividend, known as a property
income distribution (PID). These distributions can be subject to withholding
tax at 20%.
If the Group distributes profits from the non-tax exempt business, the
distribution will be taxed as an ordinary dividend in the hands of the
investors (non-PID).
Rent reviews
Rent reviews take place at intervals agreed in the lease (typically every five
years) and their purpose is usually to adjust the rent to the current market
level at the review date. For upwards only rent reviews, the rent will either
remain at the same level or increase (if market rents are higher) at the
review date.
Reversion
The reversion is the amount by which ERV is higher than the rent roll of a
property or portfolio. The reversion is derived from contractual rental
increases, rent reviews, lease renewals and the letting of space that is
vacant and available to occupy or under development or refurbishment.
Scrip dividend
Derwent London plc sometimes offers its shareholders the opportunity to
receive dividends in the form of shares instead of cash. This is known as a
scrip dividend.
Task Force on Climate-related Financial Disclosures (TCFD)
Set up by the Financial Stability Board (FSB) in response to the G20 Finance
Ministers and Central Bank Governors request for greater levels of
decision-useful, climate-related information; the TCFD was asked to develop
climate-related disclosures that could promote more informed investment,
credit (or lending), and insurance underwriting decisions. In turn, this would
enable stakeholders to understand better the concentrations of carbon-related
assets in the financial sector and the financial system's exposures to
climate-related risks.
'Topped-up' rent
Annualised rents generated by the portfolio plus rent contracted from expiry
of rent-free periods and uplifts agreed at the balance sheet date.
Total property return (TPR)
Total property return is a performance measure calculated by the MSCI IPD and
defined in the MSCI Global Methodology Standards for Real Estate Investment as
'the percentage value change plus net income accrual, relative to the capital
employed'.
Total accounting return (TAR)
The movement in EPRA Net Tangible Assets per share on a diluted basis between
the beginning and the end of each financial year plus the dividend per share
paid during the year expressed as a percentage of the EPRA Net Tangible Assets
per share on a diluted basis at the beginning of the year.
Total shareholder return (TSR)
The growth in the ordinary share price as quoted on the London Stock Exchange
plus dividends per share received for the year, expressed as a percentage of
the share price at the beginning of the year.
Transmission and distribution (T&D)
The emissions associated with the transmission and distribution losses in the
grid from the transportation of electricity from its generation source.
Underlying portfolio
Properties that have been held for the whole of the year (i.e. excluding any
acquisitions or disposals made during the year).
Underlying valuation increase/decrease
The valuation increase/decrease on the underlying portfolio.
Yields
- Net initial yield
Annualised rental income based on cash rents passing at the balance sheet
date, less non-recoverable property operating expenses, divided by the market
value of the property, increased by estimated purchasers' costs.
- Reversionary yield
The anticipated yield to which the net initial yield will rise once the rent
reaches the estimated rental values.
- True equivalent yield
The constant capitalisation rate which, if applied to all cash flows from the
portfolio, including current rent, reversions to valuers' estimated rental
value and such items as voids and expenditures, equates to the valuation
having taken into account notional purchasers' costs. Rent is assumed to be
received quarterly in advance.
- Yield shift
A movement in the yield of a property asset, or like-for-like portfolio, over
a given period. Yield compression is a commonly-used term for a reduction in
yields.
30. Copies of this announcement will be available on the Company's website,
www.derwentlondon.com, from the date of this statement. Copies will also be
available from the Company Secretary, Derwent London plc, 25 Savile Row,
London, W1S 2ER.
Notes to editors
Derwent London plc
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,
publishing its pathway to achieving this goal in 2020. 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 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 statements about future
outlook involve risk and uncertainty because they relate to events and depend
on circumstances that may or may not occur in the future. Actual results,
performance or outcomes may differ materially from any results, performance or
outcomes expressed or implied by such forward-looking statements.
No representation or warranty is given in relation to any forward-looking
statements made by Derwent London, including as to their completeness or
accuracy. Derwent London does not undertake to update any forward-looking
statements whether as a result of new information, future events or otherwise.
Nothing in this announcement should be construed as a profit forecast.
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