LondonMetric Properties Plc – Annual Results

LONDONMETRIC PROPERTY PLC

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

ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2020

SECTOR AND ASSET CALLS CONTINUE TO DELIVER INCOME GROWTH

AND PORTFOLIO OUTPERFORMANCE

LondonMetric today announces its annual results for the year ended 31 March 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.  Comprising £48.3m of goodwill impairment and £8.9m of acquisition costs relating to the Mucklow acquisition

Continued focus on income growth increases earnings and dividend

• Contracted income up 37% to £123.3m
• Net rental income up 24% to £115.9m¹, on an IFRS basis net rental income increased 32%
• EPRA earnings up 22% to £74.5m, +6% on a per share basis
• Dividend progression of 1% to 8.3p, 112% covered, including Q4 dividend declared of 2.3p
• Rent collection strong at 93% with c. 1% rent forgiven

Sector alignment and asset selection delivering resilient portfolio performance

• Total Property Return of 5.1%, outperforming IPD All Property by 560bps
• Capital return flat (IPD All Property: -4.8%), regional and urban logistics best performing sectors
• EPRA NAV per share of 171.7p (2019: 174.9p) after 2.5p of costs incurred from Mucklow acquisition
• IFRS net assets increased 18% to £1,431.8m
• Total Accounting Return of 3.0%

Investment activity increases urban logistics weighting to 35% and reduces big box exposure to 15%

• £455m Mucklow acquisition underpinned increase in urban logistics portfolio to £831m (2019: £504m)
• £159m of additional logistics and long income acquisitions with a WAULT of 17 years
• £179m of disposals, largely mega and regional distribution, as well as two Mucklow offices and 26 flats
• PPE: long income and urban acquisitions of £15m with further £82m in legals/terms agreed

130 asset management initiatives completed

• Like for like income growth of 3.8%²
• £5.2m pa income uplift: lettings signed with WAULT of 11.6 years, urban logistics open market rent reviews +32%
• PPE: deals signed add £1.6m p.a. of income, including a 141,000 sq ft letting to Pets at Home as announced separately

Resilient £2.3bn portfolio focused on long income and operationally light assets that can deliver income growth 

• WAULT of 11.2 years and occupancy increased to 98.6% (+80bps) 
• Gross to net income ratio improved to 98.8% (+60bps) and contractual rental uplifts on 54.5% of income
• Greater income diversification and granularity with top 10 occupiers accounting for 36% of rent (2019: 51%)

Balance sheet strengthened with further corporate efficiencies

• LTV of 35.9% reduced to 30.9% on proforma basis following £120m equity raise post year end, providing firepower
• Continued balance sheet discipline with weighted average debt maturity of 5 years and 1.5% marginal debt cost
• EPRA cost ratio reduced further to 14.2% (-80bps)

Andrew Jones, Chief Executive of LondonMetric, commented:

“These are challenging times for everyone. At LondonMetric our near-term focus has been on protecting the existing portfolio, engaging with occupiers and enhancing the strength of our balance sheet.

“Whilst the timing and suddenness of the pandemic were unforeseeable, many trends that we are seeing play out were already in the system and are being accelerated as temporary behaviours become more permanent. We are seeing events that were expected to take years to emerge now happening in months or even weeks. As a result, real estate performances continue to polarise, with many distressed sectors being severely damaged whilst the winning sectors are likely to see a wider margin of victory.

“Our focus on owning the right assets in the winning sectors is delivering continued outperformance. Reliable, repetitive and growing income returns are the bedrock of future returns and underpin our progressive dividend. Our portfolio was materially enhanced by our activity in the year, particularly through the Mucklow acquisition which significantly grew our urban logistics platform. Notwithstanding the uncertainty from COVID-19, we remain excited by the outlook for the portfolio. Quality investment opportunities that are seldom available in a normalised market are presenting themselves and, thanks to the support for our recent equity raise, we are approaching this environment from a position of strength and transacting on a number of excellent opportunities.”