Commercial property investor Derwent Valley and peer London Merchant Securities (LMS) have reached agreement on a recommended merger. The new entity will be called Derwent London and will focus on development, refurbishment and active management of properties in the Central London area. The group will have a combined portfolio valued at about £2.25 bn ((EUR 3.3 bn) and a development pipeline of 483,000 m2, of which almost a fifth is due for completion by 2008. Noting that the UK is set to introduce tax-efficient real estate investment trusts (REITS) next year, the partners said Derwent London Group would 'be well positioned to convert and become the leading dedicated Central London REIT'. No timescale was given for such a move.