Derwent PLC said on Thursday it had swung to profit in 2021, as Londoners returned to the office, and it boosted its portfolio.

The FTSE-250 listed real estate investment trust focused on central London offices swung to a profit in 2021, reporting pretax profit at £252.5 million, compared to a loss of £83.0 million in 2020.

Derwent had a total return for the year of 5.8%, up from a loss of 1.8% the year before. Its property portfolio outperformed the 5.9% return MSCI benchmark index for central London offices, with a return of 6.3%.

Derwent said its ‘significant recovery’ was aided by an improvement in occupational and investment markets, with rental collection nearing pre-pandemic levels.

Net rental income for the year was £178.2 million, up 2.2% from £174.3 million in 2020. It made £417.5 million worth of property acquisitions in the year to focus on sites with higher potential, and sold £405.1 million worth of property, at £9.7 million above book value as of December 2020.

The company proposed a final dividend of 53.5 pence, up from 52.0p in 2020. This brings the total dividend for the year to 76.5p, up 2.8% on the prior year.

For 2022, it is guiding an increase in the estimated rental values of its portfolio between 0% and 3%, with average investment yields ‘to remain firm’.

Derwent’s share price was down 1.4% at 3,081.00 pence each in London on Thursday morning.

‘London is firmly coming back to life. It continues to attract global talent as a leading city where people want to live and work. Our ’long-life, loose-fit, low carbon’ approach, combined with the delivery of distinctive next generation developments, puts us in an excellent position to benefit from the emergence of rental growth for the best properties,’ said Chief Executive Paul Williams.

‘Our buildings are getting busier. Hybrid working is here to stay, but our occupiers are planning for peak occupancy as daily utilisation varies through the week.’

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