LondonMetric Property has announced its interim results for the half-year ended 30 September 2015. During the period, the company’s EPRA NAV has increased by 4.3% to 146.6p per share (31 March 2015: 140.6p). The company says that Valuation gains have been driven by development activity and market yield compression. During the period, EPRA earnings have increased by 12% to £23.4 million or 3.7p per share whilst rental income has increased by 10% to £31.7 million (HY15: £28.9 million). Contracted income is reportedly up to £86.7 million pa (HY15: £83.0 million) with like for like income growth of 2.1% and ERV growth of 2.7%. The company’s interim dividend of 3.5p per share is 107% covered and the company says it expects to see dividend progression at the full year.
In terms of portfolio activity during the period, the company has made £87.8 million of acquisitions and £120.0 million of disposals. There have been two acquisitions post period end totalling £58.8 million, including the forward funding of a distribution warehouse in Warrington. Development capex expended during the first half was £59.3 million, which the company says represents a 7.2% yield on cost on key developments. During the period, the company says that 1.9 million sq ft of developments have been completed representing £11.7 million pa of rental income and that they have a further 1.4 million sq ft of pipeline developments. At the end of the period, the portfolio was valued at £1.5 billion with an increase in WAULT during the to 13.4 years from 13.1 years at the 31 March 2015. The company says it has a 99.9% occupancy rate with 48% of contracted rental income subject to uplifts.
The company says that, in their view, strengthening demand dynamics for well-located distribution space continues to soak up constrained market supply, which is leading to rental growth. This has supported the company move into retail logistics which they say is fast becoming the strongest sub-sector of the retail property market. However, the company also says that many legacy retail assets look increasingly challenged, which continues to expose over rented and over-sized store portfolios. They also say that, in their view, Market yield compression is slowing and assets across all sectors will need to demonstrate sustainability of income and growth to benefit from further valuation uplifts. They say their focus therefore, continues to be centred on owning quality real estate with deep occupier appeal that can deliver future income and capital growth from increasing demand, as well as asset management and development opportunities.
LondonMetric NAV growth driven development activity and yield compression : LMP