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LondonMetric Plc - Half-year Report September 2019

 

LONDONMETRIC PROPERTY PLC

("LondonMetric" or the "Group" or the "Company")

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019

SIGNIFICANTLY INCREASED WEIGHTING TO URBAN LOGISTICS FROM A&J MUCKLOW ACQUISITION ENHANCING PORTFOLIO'S INCOME, EARNINGS & DIVIDEND GROWTH PROSPECTS  

LondonMetric today announces its half year results for the six months ended 30 September 2019

Continued focus on income growth increases earnings and dividend

  • Net rental income up 16.6% to £54.9m1, including three months of income from the Mucklow acquisition
  • Contracted income up 39% to £124.7m in the period
  • EPRA earnings up 13.9% to £35.2m, 2.9% on a per share basis
  • Dividend up 5.3% to 4.0p, 114% covered, including a Q2 interim dividend declared today of 2.0p

Sector alignment and asset selection delivering resilient portfolio performance

  • Total Property Return of 3.5%, outperforming IPD All Property by 270bps
  • Capital return of 1.0% (IPD All Property: -1.4%) with regional and urban logistics strongly outperforming
  • EPRA NAV per share of 174.9p (March 2019: 174.9p) including 2.2p of revaluation surplus but after 2.5p of costs incurred from the Mucklow acquisition

Investment activity increases urban logistics weighting to 35% and reduces big box exposure to 18%

  • £454.7m Mucklow acquisition helped to increase urban logistics portfolio value to £826m (March 2019: £504m)
  • £109.0m of other logistics and long income acquisitions with a WAULT of 17 years at a NIY of 6.6%   
  • £14.1m of disposals at a NIY of 3.6%, including one Mucklow office and 22 flats with 9 flats remaining

52 asset management initiatives completed, including 14 relating to Mucklow assets

  • Like for like income growth of 3.0%2
  • £3.1m pa income uplift from lettings, regears and rent reviews
  • PPE: 38 deals signed or agreed, adding £1.7m of income, with our last developed warehouse at Bedford under offer

Resilient portfolio focused on long income and operationally light assets that can deliver income growth 

  • WAULT of 11.3 years (12.5 years ex-Mucklow portfolio) and occupancy increased to 98.2% (+40bps)  
  • Gross to net income ratio improved to 98.7% (+50bps)
  • Contractual rental uplifts on 52.3% of contracted income (62.4% ex-Mucklow portfolio)   
  • Greater income diversification and granularity with top 10 occupiers accounting for 39% of rent, down from 51%

Financing & Corporate

  • EPRA cost ratio reduced further to 14.3% (March 2019: 15.0%)
  • Integration of Mucklow proceeding well
  • LTV at 37.9% and weighted average debt maturity of 5.3 years

Andrew Jones, Chief Executive of LondonMetric, commented:

"Against a backdrop of continued uncertainty and disruption, we have again delivered strong financial and operational outperformance, underpinned by a further realignment of our portfolio in response to macro trends that continue to impact direct real estate. We believe that these are profound and permanent shifts.

 "The acquisition of A&J Mucklow was a significant milestone and accelerated our conviction call to increase our weighting to the urban logistics sector where rents are rising to reflect growing consumer demand for quicker and more efficient deliveries. We call it the Amazon race.  This transaction, together with our other long income acquisitions, reflect the ongoing focus on improving our portfolio to benefit from the evolving consumer revolution and a global search for yield.

 "We will therefore look to allocate further capital into these sectors and assets where the income is reliable, repetitive and which we expect to grow over time. After all, we expect income and income growth to be the defining characteristics of the next decade's investment environment. We remain convinced that this strategy will allow us to continue to outperform and to deliver our shareholders an attractive, progressive and well covered dividend."