Derwent Plans to Sell Student Housing Close to the City of London District
Derwent London Plc (DLN), a developer of mid-priced office buildings in central London, said it’s likely to sell the student housing portion of a planned development near the city’s main financial district.
The site on London’s Commercial Road may become vacant next year and local officials have approved plans for 417 rooms of student accommodation together with 26,500 square feet (2,450 square meters) of offices in a 19-story building.
“We have planning consent and in all probability we’re going to sell that,” Chief Executive Officer John Burns said in an interview. The London-based company will likely put the site on the market “soon,” he said.
The number of accepted applicants for places at U.K. universities has risen every year since 2006, reaching 487,329 in 2010, according to UCAS, which manages applications for university courses. Rents for student housing in London “continued to grow throughout the recent recessionary period, marking the sector out from most others,” real-estate consulting firm Drivers Jonas Deloitte said in October.
Derwent is also in talks to refinance 375 million pounds of debt maturating in March 2013 and hopes to reach an agreement by the end of the year, according to the company’s finance director.
“We’re seeing quite attractive longer-term rates,” Derwent Finance Director Damian Wisniewski said today on a call with analysts and investors. “Although we have been very comfortable with the progress we’ve made with our banks, we would also like to put in place some longer-dated, fixed-rate debt.”
The banks are likely to “gradually” reduce the amount they have loaned to the real estate industry, meaning Derwent will have to look at other forms of debt, Wisniewski said.
Net debt was 864 million pounds at the end of the third quarter, giving a loan-to-value ratio of 32.8 percent, Derwent said in a statement today. Debt was 904.5 million pounds at the end of the second quarter, Derwent said in August.
Derwent issued a 175 million pound convertible bond in June and said in the statement today that “a proportion of our future debt requirements will come from non-bank sources.”
To contact the reporter on this story: Neil Callanan in London at firstname.lastname@example.org.