Trustees Sell Derwent London Shares

Jonas Crosland, Investors Chronicle

Trustees of The Lord Rayne Will Trust, a foundation set up in 1962 by Lord Rayne to provide funds for worthy causes, have sold 15,000 shares in Derwent London, the commercial property group, whose non-executive chairman and fellow trustee is Robert Rayne.

Despite investor concerns in the wake of the EU referendum, Derwent has performed strongly, delivering 674,800 sq ft of let or pre-let space in the first nine months of 2017, and at 1.3 per cent ahead of December 2016 estimated rental value.

Of the 401,000 sq ft of developments completed, 94 per cent has been let, and of the 620,000 sq ft under construction, nearly half has already been pre-let. Capital recycling in the first nine months generated £496m; 10 per cent ahead of December 2016 values, bringing the pro-forma loan-to-value ratio down to a nominal 12.7 per cent.

In December 2017, Regional REIT had little trouble in raising £73m through an oversubscribed placing and open offer, with two directors adding to their endorsement. Chairman Kevin McGrath opened his account with the purchase of 297,030 shares, while non-executive director Daniel Taylor increased his holding by 100,000 shares to 350,000.

Proceeds from the placing have been used to fund two large property portfolios. The two acquisitions comprise regional offices and increase Regional REIT’s exposure to this sub-sector from 63 per cent to 67 per cent of its portfolio. With a 13 per cent vacancy rate and low average rents of £13 per sq ft, there is significant potential for refurbishment and rent increases too.

A new £165m 10-year facility leaves the all-in cost of debt at about 3.7 per cent, but significantly increases average debt maturity from 2.5 years to 6.2 years.

Regional REIT’s portfolio offers significant reversionary value that will be crystallised over time as leases come up for renewal. The other attraction is the dividend, which yields over 7 per cent, and is fully covered by after-tax earnings.

Source : https://www.ft.com/content/cd03fece-f78f-11e7-8715-e94187b3017e

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