Warehouse REIT weighing up fund raise

Warehouse REIT is weighing up an equity raise having identified a pipeline of acquisitions worth £352m.

The AIM-listed company, which invests in and manages urban and ‘last-mile’ industrial warehouse assets, and its investment adviser Tilstone Partners is in exclusive negotiations to buy £72m worth of assets and is in detailed negotiations on a further £280m.

The group said the assets would “further diversify the company’s income and be accretive to shareholder returns”. It is targeting an investment yield of in excess of 6%.

Any such fundraising is expected to follow the publication of a prospectus, it said, and further details will follow in due course.

The company also announced a trading update for the period 1 October 2019 to 31 January 2020, during which it completed 28 new lettings and 28 lease renewals across 209,000 sq ft of space, at 5.5% ahead of 30 September 2019 estimated rental values (ERVs) and generating £1.2m per annum.

It also completed or exchanged on the sale of 13 smaller non-core assets for a combined price of £17.6m at an average of 7.6% ahead of 30 September 2019 book values, reflecting a blended 6.7% net initial yield, and completed the acquisition of the 29-acre Midpoint Estate in October 2019 for £15.5m, representing a net initial yield of 6.6%.

Total occupancy in the portfolio rose to 92.7% from 91.5% at 30 September 2019 (with effective vacancy only 2.9% excluding units under refurbishment or under offer to let).

The company also announced a third quarterly dividend for the financial year ending 31 March 2020 of 1.6 pence per ordinary share, representing a 6.7% increase on the two interim dividends paid to date of 1.5 pence per ordinary share each. As a result the dividend target for the year ending 31 March 2020 has been increased to 6.2 pence per share from 6.0 pence per ordinary share.

[The urban, last-mile warehouse sub-sector, in which Warehouse REIT operates, is booming at the moment. Demand for warehouse space close to major towns and cities is at an all time high, driven mainly by e-commerce companies looking to fulfil online retail orders. If Warehouse REIT can execute deals at investment yields of 6% plus, expansion of its portfolio it makes perfect sense. It didn’t reveal how much it was looking to raise or any terms so all eyes will be on the prospectus if/when it comes out. QuotedData published a research note on the industrial property market that detailed the urban logistics sub-sector and profiled all the industrial-focused companies including Warehouse REIT. To read it click here.]

WHR : Warehouse REIT weighing up fund raise