LondonMetric Property Plc - Final Results

ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2019

Structurally supported portfolio continues to deliver attractive returns

and support a progressive dividend

 

LondonMetric today announces its annual results for the year ended 31 March 2019.

 

Income Statement

31 March 2019

31 March 2018

Net rental income (£m)1,2

93.8

90.6

EPRA Earnings (£m) 2

61.0

59.1

EPRA EPS (p) 2

8.8

8.5

Dividend per share (p)

8.2

7.9

Reported Profit (£m)

119.7

186.0

IFRS EPS (p)

17.2

26.9

Balance Sheet

 

 

EPRA NAV per share (p) 2

174.9

165.2

IFRS NAV per share (p)

174.7

165.7

IFRS net assets (£m)

1,216.8

1,149.5

LTV (%)1,2,3

32

35

1.        Including share of Joint Ventures

2.        Further details on Alternative Performance Measures and the presentation of financial information can be found in the Financial Review and definitions can be found in the Glossary

3.        Including deferred consideration receivable on transactions that have exchanged in the year

Continued income growth increases earnings and dividends

·       Net rental income up 3.5% to £93.8m1

·       EPRA EPS up 3.5% to 8.8p

·       Dividend increased 3.8% to 8.2p, 107% covered by EPRA EPS, including Q4 dividend declared today of 2.5p

·       Reported profit of £119.7m

Sector alignment and asset selection delivers further valuation gains, contributing to total returns

·       EPRA NAV per share up 5.9% to 174.9p, IFRS NAV per share up 5.4% to 174.7p

·       Driven by a revaluation surplus of £64.4m1, a 3.6% uplift on the portfolio with distribution increasing by 6.8%

·       Equivalent yield compression on portfolio of 10bps and ERV growth of 0.9%

·       Total Accounting Return of 10.7% and Property Return of 9.0%, outperforming IPD All Property by 440bps

Investment activity increases distribution weighting to 72.5%, further improving portfolio quality

·       £163.3m acquired, predominantly urban logistics which has grown to represent 27.3% of the portfolio

-    WAULT of 14 years, with 63% of income acquired subject to contractual uplifts

·       £238.2m disposed, predominantly mega and regional distribution as well as retail parks which represents just 4.7% of the portfolio

-    WAULT of 9 years, generally in weaker geographies and over 30% was vacant

50 occupier transactions contributing to like for like income growth of 5.7% (2.9% excluding one off gains)

·       £2.0m pa income uplift from lettings, signed with a WAULT of 11 years

-    Distribution regears increased WAULT from four to 11 years with 17% rental uplift on urban regears

·       £1.2m pa income uplift from rent reviews, 12% uplift above passing on a five yearly equivalent basis

-    28% uplifts on urban, 18% on long Income, 8% on mega and regional

0.9m sq ft of short cycle developments underway or planned creating future income at a yield of 6.7%

·       At Bedford, 73% of the 188,000 sq ft development was pre-let post year end and construction of 500,000 sq ft under phase 2 remains subject to occupier commitments  

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

·       WAULT of 12.5 years with only 3.5% of income expiring within three years

·       63% of income subject to contractual uplifts and gross to net income ratio remains above 98%

Conservative financing continues to enhance income

·       LTV of 32% and debt maturity increased from 4.8 years to 6.4 years following two new debt arrangements 

Recommended Offer for A&J Mucklow Group plc

·       LondonMetric has today separately announced a £414.7 million recommended offer for A&J Mucklow Group plc ('Mucklow'), a distribution and industrial REIT with a portfolio located predominantly in the West Midlands.

Andrew Jones, Chief Executive of LondonMetric, commented:

"These results again demonstrate that our pivot into distribution was the right strategy to ensure that we could deliver reliable, repetitive and growing income-led returns that will outperform over the long term.  Over the six years since our merger, we have delivered a total shareholder return of 156% and significantly outperformed the FTSE 350 Real Estate Super Sector of 57%.

"We believe that today's announcement of the recommended offer for Mucklow is a natural next step for the Company. With a highly complementary portfolio focused on the outperforming urban logistics sector along with asset management opportunities, which play to LondonMetric's strengths and experience, we believe this transaction creates a compelling combination, which will offer attractive shareholder returns both today and in the years to come."