Warehouse REIT reports solid full-year performance

(Sharecast News) - Warehouse REIT reported a solid full-year performance on Wednesday, supported by strong leasing activity and strategic progress, including a portfolio valuation uplift and improved earnings. For the year ended 31 March, the company posted a 3.8% like-for-like increase in portfolio value to £805.4m, driven by a 7.1% rise in the value of its multi-let assets, which now comprised over 80% of the portfolio.

Estimated rental values rose 6.8% year-on-year, underpinned by leasing deals completed at significant premiums to previous rents.

Across 105 lease events covering 1.9 million square feet, contracted rent of £14.1m was secured - 24.4% above prior passing rents - highlighting robust demand for well-located industrial space.

The portfolio's reversionary potential stood at 25.2%, with £6.1m of rental uplift available from current leases and a further £4.6m from vacant units.

Occupancy declined to 93.7%, reflecting planned vacancies at a few larger units, though effective occupancy stood at 97.7% once units under offer or refurbishment were excluded.

Adjusted earnings per share increased 8.3% to 5.2p, while IFRS profit after tax rose 21.6% to £41.7m.

Operating profit was stable at £35m.

The London-listed company said it successfully completed a £300m debt refinancing on improved terms, and had 92.9% of its borrowings hedged against rate volatility.

Loan-to-value remained in line with target at 32.4%, with £31m in cash and undrawn facilities.

Capital recycling efforts continued, with £85.7m of asset sales completed during the year - 0.7% ahead of book value - and £193.4m sold since the disposal programme began in late 2022.

Warehouse REIT also acquired Ventura Retail Park in Tamworth for £38.6m, now valued at £43.5m, and recently exchanged contracts to acquire the Rycote Lane industrial estate for £34.75m.

The group added that it continued to advance its sustainability agenda, with 68.7% of the portfolio now rated EPC A+ to C.

It also retained its EPRA sBPR Gold accreditation for a fourth consecutive year and improved its MSCI rating from BB to BBB.

On 4 June, the board announced it had agreed a recommended all-cash offer from Blackstone at 109p per share, valuing Warehouse REIT at £477m.

"Throughout the financial year the board has focused on the continued execution of our strategic plan - the key objectives being to reduce debt and move towards dividend cover," said chairman Neil Kirton.

"In a day-to-day sense, our occupational markets have continued to be resilient, and well-located, quality space has continued to be in short supply

"We have driven rental growth through our active asset management, and our portfolio continues to provide attractive opportunities to capture reversion over time."

Kirton said that, despite the company's strong operational performance and the board's continued conviction that we are invested in a "very attractive" asset class, given its size, the low liquidity of its shares, and with other risk-free asset classes offering attractive returns, it had traded at a significant discount to net asset value for some time.

"It is in that context that the board has evaluated an offer for the company."

At 1040 BST, shares in Warehouse REIT were down 0.19% at 106.6p.

Reporting by Josh White for Sharecast.com.