LondonMetric Plc – Half Year Results For The Six Months Ended 30 September 2017

EPRA earnings up 14% to £28.8m, (up 5% on a per share basis)

·      Net rental income up 12% to £44.5m¹ reflecting deployment of equity raise and portfolio activity

·      Reported profit of £79.6m driven by £52.8m¹ revaluation surplus reflecting a 3.2% uplift

Dividend increased 3% to 3.7p, 114% dividend cover

·      Second quarterly interim dividend declared of 1.85p

EPRA NAV up 4% to 155.7p (FY 17: 149.8p)

·      Portfolio valued at £1,705m¹, topped up NIY of 5.2%

·      Total Property Return of 6.1% compared to IPD All Property of 5.0%

·      Total Accounting Return of 6.6%

Distribution weighting increased to 67.4%; targeting 75%+

·      Distribution acquisitions of £171m at 6.0% yield, further investment announced separately today

·      Regional distribution sale of £49m at 5.0% yield, further regional disposal PPE

·      Urban logistics grown to 40 assets, representing over 25% of our end to end logistics portfolio

·      Non distribution disposals of £131m, including sale of our last office

·      Long income and convenience acquisitions of £65m at 6.4% yield

Continued income growth from asset management activity

·      £2.3m pa income uplift from rent reviews and lettings. New leases signed with WAULT of 14.3 years

·      £1.8m pa of income from letting activity PPE, including £1.0m of terms agreed at our Crawley and Frimley developments

·      In H1, achieved 2.7% like for like income growth and 1.8% ERV growth, 4.9% on urban logistics

Short cycle developments creating future long income at attractive yields

·      0.8m sq ft under construction in H2 at a yield of 6.2%, 84% pre-let

·      0.7m sq ft development pipeline at a 7.0% yield, including our Bedford development

Portfolio metrics reflect our focus on long income, contractual uplifts and low operational requirements

·      Occupancy of 99.4%, WAULT of 12.4 years and only 3.5% of income expiring within three years

·      48.4% of income is subject to contractual uplifts and 98.7% gross to net income ratio

Finances strengthened and improved

·      Debt maturity increased to 5.3 years and LTV at 34% (FY 17: 30%)

·      Average cost of debt fallen to 3.0% from 3.5% with marginal cost at 1.8%

·      EPRA cost ratio reduced to 15% from 17%

Andrew Jones, Chief Executive of LondonMetric, commented:

“Our primary goal is to allocate capital into those sectors of real estate that will generate high quality, sustainable income growth from structural changes and management actions. 

“Today, almost 70% of our portfolio is allocated to the distribution sector with the balance mainly invested in long income and convenience retail; both areas that are benefiting from the changes taking place in consumer shopping habits. Our decision a number of years ago to pivot into these winning sectors was driven by the impact of technology on shopper behaviour.

“We were early movers into both these sectors and this is reflected in our strong financial numbers. We have performed across every key financial measure, increasing our income, earnings, profits, dividend and NAV whilst maintaining our strong portfolio metrics.

“The desperate search for yield globally is continuing to drive investor demand for income backed real estate. Our approach of patiently collecting and compounding our income remains front and centre of our strategy, and this is exactly what a REIT was designed to do.”