Highlights
· Proposed Placing to raise approximately £97 million of gross proceeds (based on the closing share price on 22 March 2017). The Placing will enable the Company to accelerate its portfolio alignment towards distribution by:
o increasing its exposure to the attractive returns available from last mile distribution; and
o building out three new developments following material progress on pre-lettings, as announced separately today.
· The Net Proceeds will be used to fund committed and potential investments and new developments that amount to c.£100 million:
o £42 million to fund distribution developments at Dagenham, Stoke and Crawley, totalling 560,000 sq ft, at an anticipated yield on cost of 6.2%
o £28 million to fund recently completed distribution investments acquired at a blended net initial yield of 5.9% and a reversionary yield of 6.4%
o £30 million to fund a pipeline of last mile and regional distribution investments.
· The Company expects to deploy c.75% of the Net Proceeds within six months. The Placing is expected to be earnings per share accretive following completion of the three developments, which is expected to occur over a 9 to 12 month period.
· The Company's progressive and covered quarterly dividend policy remains unchanged, and the Placing is complementary to its unsecured credit facility where the marginal cost on further debt drawn is 1.5%.
Andrew Jones, Chief Executive Officer of LondonMetric, commented:
“Our increased commitment to last mile acquisitions and short cycle distribution developments, together with a healthy pipeline of further opportunities, will support our plans to grow our distribution exposure to at least 70% within a year. Earlier this week, we secured two further last mile acquisitions and today we have announced major pre-lettings to Eddie Stobart and Michelin, alongside the letting to Amazon. These transactions highlight the compelling market opportunities that exist and we expect to deploy raised funds at pace, leading to accretive earnings whilst maintaining a progressive and fully covered dividend.
“Structural trends in consumer behaviour and shopping patterns are continuing to drive demand for distribution, from last mile facilities to mega sheds, but supply remains constrained. For those with market access and knowledge, investments in the sector are able to create long-term, reliable income. At LondonMetric, we have 99.6% occupancy and our assets are backed by some of the biggest retailers and logistics groups.”
Introduction
The Placing is being conducted, subject to the satisfaction of certain conditions, through an accelerated bookbuild which will be launched immediately following this placing announcement (the “Announcement”) and will be subject to the terms and conditions set out in the Appendix. J.P. Morgan Cazenove and Peel Hunt have been appointed joint bookrunners in respect of the Placing.