LondonMetric has announced plans to raise £100m through a placing to take advantage of investment opportunities during the covid-19 pandemic.
The company, which owns a portfolio of logistics assets in the UK, said it would use the proceeds to buy an identified pipeline of long income, urban logistics properties.
The acquisitions it has lined up include: a £60m portfolio of five assets in a sale-and-leaseback deal with a convenience/online operator with 20 year, CPI-linked leases in place; a £10m sale-and-leaseback acquisition in London; and £30m on an identified pipeline of opportunities comprising an urban logistics warehouse in London and a sale-and-leaseback portfolio.
LondonMetric has also recently completed the acquisition of a £3.2m London urban logistics property let to a parcel operator.
“We are continuing to operate against an unprecedented economic and social backdrop which is accelerating a number of trends that were already disrupting established practices,” said chief executive Andrew Jones. “These uncertain times are starting to give rise to quality investment opportunities that are seldom available in a normalised market. Through our occupier relationships we have identified some excellent assets, at attractive pricing, which would further strengthen our portfolio’s long term income characteristics. Not only do we expect to see further opportunities arise but also we expect the pitch to be much less crowded than before.“
LondonMetric announced the plans at the same time as publishing a trading update. It said 92% of rental payments due by 1 April had been collected or are being collected monthly. Short term rental concessions with compensatory asset management initiatives have been agreed or being finalised on a further 4%, whilst short term rental deferrals have been agreed on another 3%
Its portfolio as at 31 March 2020 was valued at £2,347m, a fall of just 0.5% over 12 months, whilst EPRA net asset value per share fell by 1.7% to 172p, mainly attributable to a 2.5p deduction for costs relating to the A&J Mucklow acquisition last year.
EPRA earnings per share was 9.3p (2019: 8.8p), driven by a 24% increase in net rental income to £116m and its dividend per share for FY 2020 is expected to be 8.3p (2019: 8.2p), 112% covered by EPRA earnings.
The fourth quarterly dividend of 2.3p per share is expected to be declared with the FY 2020 results in June and paid in July.
[QD comment: It is a bold move to announce an equity raise in the middle of a global pandemic, but LondonMetric is clearly confident that it can raise the money, perhaps buoyed by Supermarket Income REIT’s £140m placing last week. Investor appetite exists for the right sort of income play and LondonMetric should fit the bill. It is taking advantage of the current turmoil and the majority of the acquisition pipeline it has identified is sale-and-leaseback deals with operators that want to release some capital from the real estate they own. It is no surprise that LondonMetric has performed so well during the year and been resilient throughout the covid-19 pandemic. The logistics sector, and urban logistics in particular, is playing an important role for many businesses that are still in operation during the lockdown – i.e. parcel delivery firms. QuotedData has published research piece on the logistics market that outlines the structural shift in consumer spending that is benefiting the sector. You can read it here.]
Update 16:45 – the size of the placing has been increased to £120m
LMP : LondonMetric plans £100m equity raise