LondonMetric reports strong rental, dividend growth

(Sharecast News) - LondonMetric Property reported strong rental and dividend growth in a trading update ahead of its full-year results on Thursday, as the group pointed to continued momentum across its £7.6bn triple net lease portfolio following the integration of Urban Logistics REIT. For the year ended 31 March, net rental income rose by around 16% to more than £450m, with occupancy at 98% and an average lease length of 17 years.

Like-for-like income growth was 4.2%, while rent reviews delivered an average uplift of 19%, including a 38% uplift on logistics open market reviews.

The EPRA cost ratio fell to 7.7%, with further reductions expected.

LondonMetric said it expected to report a 4% increase in full-year dividend per share to 12.45p, marking its eleventh consecutive year of growth.

Investment activity remained active, with £318m of disposals completed across 57 assets at a blended net initial yield of 5.7%, in line with book values.

They included 41 former LXi REIT and Urban Logistics REIT assets.

Since the last update, a further 20 assets were sold for £57m, including urban logistics, Travelodge hotels and convenience and DIY assets.

Over the full year, the company also made 35 direct investments totalling £333m at a blended NIY of 5.5%, rising to around 6.1% over five years, in addition to £1.2bn of assets acquired through M&A.

More recently, LondonMetric acquired 10 assets for £79m, including four Premier Inn hotels for £47.8m with a 22-year weighted average unexpired lease term and CPI-linked rents guaranteed by Whitbread, alongside a logistics unit in Greater Manchester and additional assets including a Crowne Plaza hotel at Manchester Airport.

Asset management activity added around £16.5m of annual rent through 327 initiatives, including £11m from 258 rent reviews and £6m from 69 lettings and regears.

The latter delivered an average rental uplift of 23% and a weighted average lease length of 10 years.

On the financing side, the company refinanced £1.5bn of debt, raised £1.2bn of new debt and repaid £1.1bn over the year.

That included a £500m debut senior unsecured bond issued in December at 4.69%, rated A- by Fitch, and the refinancing of £1.5bn of bank facilities in March on improved terms.

At year-end, average drawn debt maturity stood at 4.4 years, with only £0.2bn maturing over the next two years, which the company said could be covered by asset sales or around £0.5bn of undrawn facilities.

"Despite macro uncertainty, volatile bond yields and reduced liquidity, we have continued to improve the quality of the portfolio with some excellent disposals and acquisitions," said chief executive Andrew Jones.

"Our all-weather portfolio continues to deliver excellent income growth as we benefit from our alignment to the winning sectors.

"We are reaping the rewards of this strategy, and it is wonderfully comforting to see our rental income flowing and growing to record levels.

"This continued income compounding is enabling us to deliver our eleventh consecutive year of dividend progression."

At 0941 BST, shares in LondonMetric Property were up 1.3% at 194.3p.

Reporting by Josh White for Sharecast.com.

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