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Boom in last mile boosts Urban Logistics REIT

Urban Logistics REIT has posted a 7.9% increase in EPRA net tangible assets (NTA) in interim results, boosted by strong demand for last mile logistics facilities.

In the six months to September 2021, the group’s EPRA NTA leapt from 152.33p to 164.30p per share. This was mainly due to portfolio like-for-like valuation growth of 11.3% to £660.5m.

Financial highlights include:

  • IFRS net assets of £533.6m, +37.7% increase (March 2021: £387.5m)
  • Dividend per share 3.25 pence (H1 2020: 3.25 pence)
  • Net rental income £16.0m, +69.6% increase (H1 2020: £9.4m)
  • Profit before tax £50.3m, +412.8% increase (H1 2020: £9.8m)
  • Adjusted earnings per share of 3.46 pence, +8.5% increase (H1 2020: 3.19 pence)
  • Total Property Return of 11.8% (H1 2020: 8.0%)
  • Total Accounting Return of 10.7% (H1 2020: 5.5%)
  • £108m of equity raised in July 2021

Operational Highlights

  • 99.7% of rents demanded collected in the period to 30 September 2021
  • Portfolio valuation £660.5m, +91% increase (H1 2020: £345.9m)
  • EPRA vacancy rate of 0.6% (H1 2020: 3.0%)
  • Gross to net rental income ratio 96.0% (H1 2020: 98.4%)
  • WAULT of 7.9 years (H1 2020: 5.5 years)
  • EPC ratings of A-C across 80.1% portfolio (H1 2020: 72.8%)
  • 11 logistics properties acquired
  • Committed to forward fund the development of six new assets during the period
  • Total portfolio of 91 assets, covering 5.8 million sq ft

Post-period end activity

The company has entered into the following transactions post period end:

  • A forward funding agreement to redevelop a 120,750 sq ft property for a total cost of £13.3 million. The target net initial yield (NIY) is 6.2%
  • A 121,078 sq ft vacant property near Andover. The property was purchased for £12.0 million, at a target NIY of 5.8%
  • A 239,867 sq ft warehouse near Spennymoor, Durham. The property was purchased for £8.7 million, at a NIY of 8.2%
  • A 137,962 sq ft warehouse in Driffield. The property was purchased for £8.4 million, at a NIY of 6.4%
  • A 27,366 sq ft property in Ashton in Makerfield, Wigan. The property was purchased for £2.7 million, at a NIY of 5.0%

It has committed or deployed £134m of capital following its July equity raise and has identified a substantial pipeline of around £400m of new assets.

It has also proposed moving its listing from the AIM market to the premium segment of the Main Market.

Chief executive comments

Richard Moffitt said: “We continue to see extremely strong tenant demand for mid-sized ‘last mile/last touch’ logistics assets across the country, intensified by the structural shift towards e-commerce and the need for more resilient supply chains as a result of both Covid and Brexit. This is supporting strong rental growth albeit with an average rent of £5.87 psf across our portfolio overall occupancy costs remain affordable in the context of an essential part of the supply chain.

“These sector tailwinds help propel a strategy of investing in, off-market acquisitions of ‘last mile/last touch’ assets, and driving value through active asset management. With our portfolio value now £661 million, we have grown to be a major player in the last mile/last touch logistics real estate business.

“It has been a very successful first half for the Group, with significant growth across the portfolio, over 99% occupancy at the period end and over 99% of rents demanded collected in the period. Additionally, we completed an oversubscribed fundraise in July, deploying the capital swiftly across eleven value accretive logistics assets, providing additional income for shareholders.

“We now look with confidence towards the future, with the Company moving from AIM to the Premium Segment of the Main Market, a considerable pipeline of high-quality assets which will help keep up the continued pace of our progress.”

SHED : Boom in last mile boosts Urban Logistics REIT

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