LondonMetric Property has published its first annual results since the acquisition of LXi REIT, resulting in a 20.3% boost in earnings.
Net contracted rent increased over the year from £145m to £340m as a result of the merger, with EPRA earnings growing to £121.6m – up 5.4% on a per share basis.
EPRA cost ratio improved to 11.6%, with the company guiding a further fall to 8% for 2025 due to the cost reductions associated with the merger.
The company’s dividend increased 7.4% to 10.2p, which is 107% covered by earnings. The company is targeting a dividend of 12p for 2025.
EPRA net tangible assets (NTA) per share was down 3.6% to 191.7p, largely due to the one-off merger transaction costs. Portfolio valuation was flat, with estimated rental value growth of 5.7% offsetting yield expansion of 26 basis points (bps – 0.26%).
Following the acquisition of LXi (and the smaller acquisition of CT Property Trust) during the year, the portfolio value doubled to £6.0bn.
The company sold £185m of assets in the year (at a 1% discount to prevailing book value) and post year end has sold a further £75m of non-core assets from the LXi and CTPT portfolios – mainly retail and offices.
Post year end, it has also acquired £51m of urban logistics assets. Logistics now represents 43% of the portfolio and is expected to rise to above 50% over the next year.
Portfolio highlights
- Strong occupational activity delivered £7.5m per annum contracted income, 5.5% like for like income growth
- Rent reviews up 19% on a five yearly equivalent basis, urban logistics open market reviews up 40%
- Regears achieved rental uplift of 23% with urban logistics regears up 37%
- Income uplift expected over next two years of £23m from rent reviews and regears
- Portfolio occupancy of 99.4%
- WAULT of 19.4 years (31 March 2023: 11.9 years)
- Gross to net income ratio of 99.0%
- Contractual rental uplifts on 79% of income, embedded reversion on logistics with ERVs 26% ahead of passing rent
- 85% of portfolio EPC A-C rated and 0.8 MWp of solar PV added in year, with further 3.1MWp completed since
- LTV of 33.2% with weighted average debt maturity of 5.4 years and cost of debt at 3.9% (100% hedged)
Andrew Jones, chief executive, commented:
“This has been a transformational period for our Company with the successful execution of two M&A transactions. We have doubled the size of our portfolio to £6 billion, creating the UK’s leading triple net lease REIT and the third largest UK REIT by market capitalisation. Scale and income granularity are increasingly important and our activity has further enhanced our sector leading income metrics with reliable, predictable and exceptional income growth.
“Our financial performance again reflects our sectorial focus, strength of our portfolio and the efficiency with which it is run. Our material earnings growth allowed us to again increase our covered dividend by 7.4% and gives us confidence to increase our Q1 dividend for FY 2025 by 19%. This will be our tenth year of dividend progression; a performance that allows us to be called a dividend achiever.
“We are a thematic triple net income investor in structurally supported sectors with high quality assets that enjoy strong occupier contentment. Logistics remains our strongest conviction call for accelerated rental growth, particularly urban logistics, and this weighting is expected to increase materially as we reinvest proceeds from non core and ex-growth asset sales, with approximately £180 million already sold or under offer since year end.
“We are fully aligned to shareholders with a shared mission and will be ruthlessly efficient in how we operate our business and how we allocate capital in our quest towards dividend aristocracy.”