LondonMetric Property has announced a placing of up to 62,804,390 new shares (approximately 9.9% of its issued share capital). They intend to use the net proceeds of the placing to fund the acquisition of predominantly “last mile” distribution assets and to finance newly committed distribution developments.
The cash will be used to fund committed and potential investments and new developments that amount to c.GBP100 million:
- GBP42 million to fund distribution developments at Dagenham, Stoke and Crawley, totalling 560,000 sq ft, at an anticipated yield on cost of 6.2%
- GBP28 million to fund recently completed distribution investments acquired at a blended net initial yield of 5.9% and a reversionary yield of 6.4%
- GBP30 million to fund a pipeline of last mile and regional distribution investments.
They expect to deploy c.75% of the cash within six months. The placing is expected to be earnings per share accretive following completion of the three developments, which is expected to occur over a 9 to 12 month period. The progressive and covered quarterly dividend policy remains unchanged, and the placing is complementary to its unsecured credit facility where the marginal cost on further debt drawn is 1.5%.
Andrew Jones, Chief Executive Officer of LondonMetric, commented: “Our increased commitment to last mile acquisitions and short cycle distribution developments, together with a healthy pipeline of further opportunities, will support our plans to grow our distribution exposure to at least 70% within a year. Earlier this week, we secured two further last mile acquisitions and today we have announced major pre-lettings to Eddie Stobart and Michelin, alongside the letting to Amazon. These transactions highlight the compelling market opportunities that exist and we expect to deploy raised funds at pace, leading to accretive earnings whilst maintaining a progressive and fully covered dividend.
Structural trends in consumer behaviour and shopping patterns are continuing to drive demand for distribution, from last mile facilities to mega sheds, but supply remains constrained. For those with market access and knowledge, investments in the sector are able to create long-term, reliable income. At LondonMetric, we have 99.6% occupancy and our assets are backed by some of the biggest retailers and logistics groups.”
LMP : LondonMetric raising cash to fund expansion