Key Performance Indicators
Our objective is to provide above average long-term returns to shareholders through the execution of our strategy. In order to assess the effectiveness of the different strands of this strategy, we measure our performance in a number of different ways.
We have established a set of Key Performance Indicators (KPIs) which are measured against relevant external and internal benchmarks. These are
Our total return, which reflects the combined effectiveness of all the strands of our strategy, equates to the combination of NAV growth plus dividends paid during the year. We aim to exceed our benchmark which is the average of other major real estate companies.
Total property return
Our total property return gives an indication of the effectiveness of all the property related strands of our strategy. We aim to exceed the IPD Central London Offices Index on an annual basis and the IPD All UK Property Index on a three-year rolling basis.
To optimise our rental income we plan to minimise the space immediately available for letting. We plan that this should not exceed 10% of the portfolio’s estimated rental value.
To maximise our cash flow and minimise any potential bad debts we aim to collect more than 95% of rent invoiced within 14 days of the due date.
Interest cover ratio
We aim for our interest payable to be covered at least 1.5 times by net rents. The basis of calculation is similar to the covenant included in the loan documentation for our unsecured bank facilities.
Sustainability has always been at the heart of Derwent London’s business model. It is important that our buildings are attractive to tenants and that they are also environmentally sound and efficient. BREEAM is an environmental impact assessment method for non-domestic buildings. Performance is measured across a series of ratings; Pass, Good, Very good, Excellent and Outstanding. We target that all of our major new developments in excess of 5,000m² should obtain a minimum BREEAM rating of ‘Excellent’ and all major refurbishments a minimum rating of ‘Very good’.