LondonMetric Plc – Half Year Results

LONDONMETRIC PROPERTY PLC

(“LondonMetric” or the “Group” or the “Company”)

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020

SECTOR AND ASSET CALLS UNDERPIN RESILIENT AND GROWING INCOME

 DELIVERING STRONG PORTFOLIO OUTPERFORMANCE

LondonMetric today announces its half year results for the six months ended 30 September 2020.

1.  Including share of joint ventures, excluding non-controlling interest

2.  Further details on alternative performance measures can be found in the Financial Review and definitions can be found in the Glossary

3.  EPRA net tangible assets (NTA) is a new reporting measure that replaces EPRA net asset value this year. Discussed further in the Financial Review and note 7 to the financial statements

Continued focus on resilient and growing income increases earnings and dividend

• Net rental income up 12% to £61.3m¹, on an IFRS basis net rental income increased 14%
• EPRA earnings up 20% to £42.3m, +4% on a per share basis
• Dividend progression of 5% to 4.2p, 113% covered, including Q2 dividend declared of 2.1p
• Rent collection strong with less than 1% forgiven or outstanding for the period. 98% of Q3 rents collected with 1% deferred

Sector alignment and asset selection delivering strong portfolio performance

• Total Property Return of 4.9%, outperforming IPD All Property by 650bps
• Capital return of 2.3% (IPD All Property: -3.7%), regional and urban logistics best performing sectors
• EPRA NTA per share increased by 3% to 175.5p driven by 4.8p valuation gain
• IFRS net assets increased 12% to £1,597.9m
• Total Accounting Return of 5.6%

Distribution weighting of 68.2%, including urban logistics at 35.4%, with growth in grocery exposure to 10.9% from investment activity  

• £98.5m of acquisitions let to strong credits with a WAULT of 17.6 years and 88% of rent subject to contractual uplifts
• £71.9m of disposals, largely shorter let urban logistics, where the WAULT to first break was 7.2 years
• Further £18m of assets sold post period end

75 asset management initiatives completed and strong progress on developments

• £2.8m pa income uplift and 2.9%² like for like income growth
• Lettings signed with WAULT of 13.9 years and open market rent reviews +22%
• 251,000 sq ft of developments completed and 657,000 sq ft under construction as we proceed with 350,000 sq ft at Bedford and 120,000 sq ft at Tyseley, where we expect to start construction shortly

Resilient £2.4bn portfolio focused on operationally light assets with reliable, repetitive and growing income characteristics

• WAULT of 11.5 years and occupancy of 98.5%
• Gross to net income ratio of 98.7% and contractual rental uplifts on 55.3% of income
• Income diversification and granularity improved further with top 10 occupiers accounting for 35.0% of rent

Balance sheet strengthened with further corporate efficiencies

• LTV of 32.4% with a £120m equity raise in the period
• Continued balance sheet discipline with weighted average debt maturity of 4.7 years and cost of debt at 2.5%
• EPRA cost ratio reduced further to 13.7% (-60bps)

Andrew Jones, Chief Executive of LondonMetric, commented :

“We continue to live in truly unprecedented times which are affecting many aspects of our lives. Whilst society and economies will undoubtedly recover from the pandemic, Covid-19 has accelerated a number of structural changes which are having a profound and permanent impact on real estate. Market conditions are exposing both winning and losing strategies which, combined with a continuation of low for longer interest rates, is intensifying the demand for the right real estate that can deliver a reliable, repetitive and growing income.

“Our activity and performance during the period represents a continuation and endorsement of our strategy to position ourselves firmly on the right side of structural trends.  Logistics and grocery have been clear beneficiaries of the pandemic, as businesses have sought to future proof their operations in response to the seemingly unstoppable rise in e-commerce penetration and respond to changes in the way we live and shop. With both near term and longer-term drivers underpinning our portfolio, our long held sector conviction calls continue to be reaffirmed and support our strong outperformance.

“Whilst we remain vigilant to the impact of Covid-19, our focus on owning the right assets in the winning sectors that can generate a secure and growing dividend, positions us well for the future. We will continue to assess and anticipate the wider macro changes in helping to frame the shape of our future portfolio.”