Merger and acquisition (M&A) activity has boosted rents, earnings and dividend growth at LondonMetric, as it delivers an impressive set of annual results.
Net rental income increased 123% to £390.6m in the 12 months to 31 March 2025, with EPRA earnings up 120% to £268.0m (up 20.7% on a per share basis to 13.1p), following the integration of the portfolios of LXi REIT and CT Property Trust which the company felt the full benefit having been acquired the previous year.
The company’s dividend has increased 17.6% to 12.0p (109% covered by earnings).
Like for like income growth of 4.2% has driven a valuation uplift of £106.0m to £6.2bn, and contributed to a 3.9% increase in EPRA net tangible assets (NTA) per share to 199.2p. NAV total return for the year was 10.2%.
The company is still very much in acquisitive mode, with a recommended offer for Urban Logistics REIT Plc and Highcroft Investments Plc in the works, which will add £1.2bn of assets to the portfolio.
The company recycled £342m of non-core assets from the LXi and CTPT portfolios during the year (with a further £63m sold post year end) and used the proceeds to acquire £343m assets in its preferred real estate sectors (87% of which was in the logistics sub-sector).
The company’s balance sheet is strong, with an LTV of 32.7%, debt maturity of 4.7 years and cost of debt at 4.0% (100% hedged). During the year, the company extended maturity on £975m of debt and took out new debt facilities of £525m (including post year end activity). The company’s BBB+ credit rating increases options for future financing.
Portfolio highlights
- WAULT of 18.5 years, gross to net income ratio of 99% and occupancy at 98% (99% post year end activity)
- Contractual rental uplifts on 77% of income, 40% of income subject to annual reviews
- Occupational activity added £15.3m per year contracted income
- Rent reviews were up 17% on five yearly equivalent basis with market reviews up 40%
- Income uplift expected over next two years of £27m, 18% embedded reversion on logistics assets
- 92% of portfolio EPC A-C rated (up from 85%) with 3.6MWp of solar PV added and 2.6MWp of near-term potential
Andrew Jones, chief executive, commented:
“This has been a remarkable year for LondonMetric. Our NNN income model has delivered exceptional earnings and dividend per share growth of 21% and 18% respectively. We have integrated the £3 billion of assets acquired through the LXi takeover, transacted on over £680 million of sales and acquisitions, and delivered strong rental growth from 340 asset management initiatives.
“We have every reason to be optimistic about our relentless expansion and the opportunities available from our highly scalable platform. In an environment where scale is essential, our £6 billion portfolio is set to grow by a further £1 billion through M&A activity which will add to our urban logistics exposure, our strongest conviction call sector for rental growth.”
“Our strong performance and execution reflect over ten years of building up the right portfolio aligned to the strongest sectors, with the best team and the strongest relationships, all underpinned by unemotional capital allocation, overhead efficiency and a resolute focus on income and growth. With ten years of dividend progression under our belt, our all-weather portfolio is more capable than ever of delivering reliable, repetitive and growing income, and we remain firmly on track to achieving dividend aristocracy.”
