A strong rebound in valuations in the multi-let industrial sector saw Warehouse REIT post a 2.9% uplift in EPRA net tangible assets (NTA) to 128.0p in annual results to 31 March 2025. This comes after the company last week recommended a reduced cash offer for the company from Blackstone at 109.0p.
[QD comment: That now looks far too cheap in our view, especially given that the sector is emerging from the bottom of the market and the rental reversion (and therefore valuation uplift potential if it is captured) that exists in the portfolio. The company has battled a significant discount to NAV for three years (since interests rates rocketed) and the board could perhaps be forgiven for throwing in the towel, but to accept a measly offer at a 14.8% discount to the value of the company does shareholders no justice.]
Like-for-like portfolio valuation was up 3.8% over the year to £805.4m, driven by multi-let assets, which comprise 80.3% of the portfolio, that was up 7.1%. Like-for-like growth in estimated rental values (ERVs) of 6.8% was driven by strong leasing activity.
During the year the company executed 105 lease events (over 1.9 million sq ft of space), which secured £14.1m of contracted rent, 24.4% ahead of previous rents.
The portfolio has a total reversionary potential of 25.2% (current rental income 25.2% below the ERV).
The company sold £85.7m of assets in the year, 0.7% ahead of book value and has now sold £193.4m since its disposal plan was announced in November 2022. It acquired Ventura Retail Park, Tamworth, for £38.6m during the year which was now valued at £43.5m, and post period end exchanged on the acquisition of Rycote Lane, a multi-let industrial estate near Thame, for £34.75m.
The group’s LTV was 32.4%, with 92.9% of debt hedged against interest rate volatility with no major refinancing until 2028. In the year the company refinanced £300m of debt on improved terms.
Chairman Neil Kirton commented: “Throughout the financial year the Board has focused on the continued execution of our strategic plan – the key objectives being to reduce debt and move towards dividend cover. In a day-to-day sense, our occupational markets have continued to be resilient, and well-located, quality space has continued to be in short supply. We have driven rental growth through our active asset management, and our portfolio continues to provide attractive opportunities to capture reversion over time.
“Despite the Company’s strong operational performance and the Board’s continued conviction that we are invested in a very attractive asset class, given our size, the low liquidity of our shares, and with other, risk-free asset classes offering attractive returns, we have traded at a significant discount to net asset value for some time. It is in that context that the Board has evaluated an offer for the Company.”
