Derwent London has opened 2026 with the sort of update shareholders usually like to see: strong leasing, meaningful asset sales, a new £50 million share buyback, and enough confidence to press ahead with a major West End redevelopment.
The headline message is pretty clear. Trading in the underlying property business looks healthy, management is recycling capital at pace, and the balance sheet still appears solid enough to fund growth while returning cash to investors.
Derwent London Q1 2026 results: the key numbers investors need to know
| Metric | Figure |
|---|---|
| Leasing completed year to date | £25.3 million |
| Open-market lettings vs December 2025 ERV | 5.2% above |
| Further leasing under offer | £6.7 million |
| Network W1 office pre-let | £14.1 million |
| Network W1 average rent | £103 psf |
| Disposals exchanged in Q1 | £278 million |
| Disposals target over three years | £1 billion |
| Share buyback programme | £50 million |
| Net debt | £1.46 billion |
| EPRA LTV | 29.4% |
| Portfolio value at 31 December 2025 | £5.1 billion |
Strong Derwent London leasing shows London office demand is still very real
The standout feature here is leasing. Derwent London has completed £25.3 million of leasing so far this year, including £20.0 million of new leases and £5.3 million of renewals and regears.
What matters most is pricing. Open-market deals were signed at 5.2% above ERV, with ERV meaning estimated rental value – essentially what the company thought the space should be worth. Beating that benchmark suggests demand is stronger than valuers had pencilled in.
That is especially encouraging in a market where investors still debate how much office demand has permanently shifted since hybrid working took hold. Derwent’s update suggests good quality central London space is still commanding premium rents.
Network W1 pre-let is the star of the quarter
The biggest individual win is at Network W1, where all office space has been pre-let to Databricks for £14.1 million at an average rent of £103 psf, with the best space achieving £125 psf.
That is 5% above December 2025 ERV and 22% above appraisal ERV. In plain English, it is better than the company expected and well ahead of the assumptions used when the project was underwritten.
This matters because pre-letting reduces risk. Rather than finishing a building and hoping tenants show up, Derwent has effectively locked in income before the dust has settled. Network W1 reached practical completion on 5 May 2026, and leases are expected to commence in mid-May.
Together with 25 Baker Street W1, Network W1 is expected to add £18.9 million of incremental rental income in 2026. That is a chunky addition and should support earnings momentum.
£278 million of disposals shows Derwent London is serious about capital recycling
The second big theme is disposals. Derwent has exchanged contracts on £278 million of sales in Q1, putting it well on the way towards its £1 billion three-year target.
- Horseferry House SW1 – £131.8 million, or £129.3 million net of rental top-ups
- 90 Whitfield Street W1 – £110.5 million
- 80-85 Tottenham Court Road W1 – £32.6 million
- 25 Baker Street W1 private residential – £5.2 million
There is a mild sting in the tail: these disposals were done at around 3% below December 2025 book value. That is not a disaster, but it does tell you the investment market is not completely frictionless.
Even so, I would still file this section under positive. Selling nearly £278 million of assets in this environment gives Derwent firepower. It helps fund developments, supports the buyback, and proves there is still liquidity for well-located London assets.
Management also says it is in discussions on a further c.£120 million of sales. If that converts, the capital recycling story gets even stronger.
50 Baker Street redevelopment commitment could drive future earnings growth
The most strategic part of the update is the decision to commit to the redevelopment of 50 Baker Street W1, a 236,000 sq ft project. Derwent is targeting an ungeared IRR of more than 12%, with ungeared IRR meaning the expected annual return before the impact of debt financing.
That is an attractive target on paper, and it tells you management sees genuine rental upside in this part of the West End. The company says it is seeing very strong rental growth in the sub-market, which helps explain why it is willing to push on now.
There are, of course, risks. A project due for completion in H2 2029 is a long-dated commitment, and property developments can always run into delays, cost inflation or softer letting markets by the time they finish. None of those extra detail points are disclosed here, but the timeline alone tells you this is a medium-term bet rather than a quick win.
Alongside 50 Baker Street, Derwent has three projects on site totalling around 290,000 sq ft where it forecasts ungeared IRRs of more than 10%. That supports the broader investment case: management is selling mature assets and redeploying capital into higher-return opportunities.
£50 million Derwent London share buyback looks shareholder-friendly and disciplined
The new £50 million share buyback is another clear positive for investors. It is due to commence on 18 May following the company’s AGM on 15 May.
A buyback can boost shareholder value if shares are bought below intrinsic value, because it reduces the share count and leaves remaining investors owning a slightly bigger slice of the business. The number of shares expected to be repurchased is not disclosed, as that will depend on the market price paid.
What I like here is the framing. Derwent is not presenting the buyback as a reckless splash of cash. It is tying it to recent disposals, operational momentum and balance sheet capacity, which feels measured rather than flashy.
Balance sheet still looks solid despite lower cash pile
Net debt was broadly stable at £1.46 billion, versus £1.45 billion at December 2025. EPRA LTV – a property sector loan-to-value metric – stayed at 29.4%, which looks manageable.
Cash and undrawn facilities fell to £383 million from £627 million, but that was before factoring in the £278 million of disposals due to complete in the coming months. So the raw drop looks worse than the underlying position probably is.
There was also a nice financing detail. Derwent redeemed £55 million of 2.68% private placement notes and £175 million of 6.5% LMS bonds, helping reduce the weighted average interest rate to 3.9% from 4.1%. Lower financing costs are never a bad thing.
Dividend, vacancy and CEO search: the smaller points that still matter
The final 2025 dividend of 56.0p is due to be paid on 29 May. Of that, 40.0p will be a Property Income Distribution, or PID, and 16.0p will be a conventional dividend.
Vacancy did tick up during Q1, with the EPRA vacancy rate moving to 5.2% from 4.1% in December 2025. That is a small negative, although the company says it has already fallen during Q2 to date.
One final governance note: the Nominations Committee is at an advanced stage of the CEO search process. There is no further detail on candidates or timing, so for now investors simply know the process is moving along.
What this Derwent London Q1 update means for retail investors
Overall, this is a strong update. Leasing is ahead of expectations, a flagship development has been substantially de-risked through pre-letting, asset sales are progressing, and the business is confident enough to launch a £50 million buyback without changing earnings guidance.
The main negatives are relatively modest: some disposals are below book value, vacancy rose briefly in Q1, and the company is taking on long-duration development risk at 50 Baker Street. There is also a reminder that the wider investment market has been affected by the Middle East conflict.
Still, the bigger picture is favourable. Derwent London looks like a landlord with pricing power in the right parts of London, a decent balance sheet, and a management team still willing to be selective rather than simply chase volume. For shareholders, that is a pretty decent mix.
