REIT News - May 2022

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REIT Market Overview

The month of April saw a great amount activity within the REIT industry, especially in the industrial and logistics sectors.

Custodian REIT acquired an 86,922 sqft industrial facility in Grangemouth for £7.49 million. Industrials REIT acquired four multi-let industrial estates for a total consideration of £20.86 million. LondonMetric Property announced the acquisition of six London urban logistics warehouses in separate transactions for a total investment of £26.7 million. Tritax EuroBox has entered into a development scheme to acquire 95,000 sqm of development land for €21.4 million. Warehouse REIT announced the acquisition of Bradwell Abbey Industrial Estate for £62 million.


Market Activity
(Ticker, Share Price, EPRA NAV per Share, Premium/Discount)


AEW UK REIT Plc (LON:AEWU, 127.4p, 120.6p, +5.6%)

AEW UK REIT, which directly owns a diversified portfolio of 36 regional UK commercial property assets, announced its unaudited Net Asset Value and interim dividend for the three-month period ended 31 March 2022. Key details are:

  • NAV of £191.10 million or 120.63 pence per share as at 31 March 2022 (31 December 2021: £180.94 million or 114.21 pence per share);
  • NAV total return of 7.37% for the quarter (31 December 2021 quarter: 5.63%);
  • 4.74% like-for-like valuation increase for the quarter (31 December 2021 quarter: 3.49%), driven by the office and industrial sectors (like-for-like increases of 7.32% and 4.65%, respectively);
  • EPRA earnings per share for the quarter of 1.55 pence (31 December 2021 quarter: 1.80 pence). This is expected to return to the Company's target level of two pence per quarter once the sale of Bath Street, Glasgow, completes later in the year;
  • Interim dividend of two pence per share for the three months ended 31 March 2022, in line with the targeted annual dividend of eight pence per share;
  • Acquisition of PRYZM nightclub in Cardiff for a purchase price of £3.63 million / £92 per sq. ft. The price reflects a net initial yield of circa 8%, with an anticipated reversionary yield of circa 9%;
  • Loan to NAV ratio at the quarter end was 28.26% (31 December 2021: 29.84%). The Company had a cash balance of £6.77 million and £6.0 million of its loan facility was available to draw, up to the maximum 35% Loan to NAV at drawdown;
  • Robust rental outlook, with portfolio ERV being 20% higher than current gross income.

AEW UK REIT announced that, following a marketing campaign, it has agreed terms to sell its office asset located in Eastpoint Business Park, Oxford for approximately £37 million. The agreed sale price represents a significant premium to the carrying value of the asset at 31 March 2022 and the Company received a number of offers at similar levels. For illustrative purposes only, if this valuation had been included in the 31 March 2022 NAV, it would have added approximately 11 pence to the Net Asset Value per share.


BMO Commercial Property Trust Ltd (LON:BCPT, 118.2p, 135.1p, -12.5%)

BMO Commercial Property Trust reported results for the year ended 31 December 2021. Key details are:

  • 37.8% share price total return;
  • 15.5% portfolio total return;
  • 122.2% dividend cover on a cash basis (94.6 per cent on an accounting basis);
  • 4.1% dividend yield;
  • 7.1% dividend increase;
  • Completed £199.5 million of property disposals as part of the strategy to adjust sector weightings;
  • Completed £66 million of property acquisitions as part of the strategy to adjust sector weightings;
  • In accordance with the Company’s strategy, the portfolio’s weighting to the industrial and logistics sector has increased to 30.6% as at 31 December 2021 compared to 19.1% at start of the calendar year;
  • As at 31 December the Company had 46,260,278 shares held in treasury (5.8% of ordinary shares in issue), acquired at an average discount to Net Asset Value of 22.3 per cent. Accretive to Net Asset Value by 2.2 pence per ordinary share;
  • Rent collection currently received since the onset of the pandemic in March 2020 to December 2021 is 94.4%;
  • As at 31 December 2021, the void rate was 2.0%, excluding property being developed or refurbished, which compares to a rate of 2.9 per cent at the start of the calendar year;
  • 4.6% reduction in absolute carbon emissions since 2019, the baseline year for the Company's net zero carbon pathway.


BMO Commercial Property Trust later announced a trading update and NAV. Key details are:

  • Net Asset Value total return of 7.4 per cent for the quarter ended 31 March 2022;
  • Share Price total return of 11.0 per cent for the quarter ended 31 March 2022;
  • A 6.7 per cent increase in the monthly dividend to 0.40 pence per share with effect from May 2022.


BMO Real Estate Investments Limited (LON:BREI, 96.8p, 121.0p, -20.0%)

BMO Real Estate Investments announced a trading update and NAV. Key details are:

  • Net Asset Value total return of 6.6% for the quarter ended 31 March 2022;
  • Sixth consecutive quarter of Net Asset Value appreciation;
  • Share Price total return of 11.3% for the quarter ended 31 March 2022;
  • As of 31 March 2022, the portfolio void rate was 2.7% by estimated rental value.


British Land Plc (LON:BLND, 517.8p, 681.0p, -24.0%)

British Land has exchanged on the sale of a 75% interest in the majority of its Paddington Central assets to GIC.  This transaction establishes a new joint venture with ownership split 75:25 for GIC and British Land respectively.  Completion is unconditional and will be within three months. The total consideration of £694m is 1% below September 2021 book value and represents a NIY of 4.5%.


Custodian REIT Plc (LON:CREI, 100.6p, 113.7p, -11.5%)

Custodian REIT, the UK property investment company, has acquired an 86,922 sqft industrial facility in Grangemouth, adjacent to the M9. The unit is let Thornbridge Sawmills for a further 18 years. The unit has a passing rent of £388,261 per annum, with a reversion in September 2023, linked to RPI, which is expected to reflect a net reversionary yield of 5.5%. The agreed purchase price of £7.49 million was funded from the Company's existing debt facilities, resulting in net gearing increasing to 20.9% loan to value.


Ediston Property Investment Company Plc (LON:EPIC, 77.6p, 89.6p, -13.4%)

The Ediston Property Investment Company plc confirms that it has sold its leisure asset at The Lanyard, Hartlepool, which is let to Mecca Bingo Limited. The sale price of £2,620,000 is 16.4% above the most recent valuation of the property (31 December 2021).


Helical Plc (LON:HLCL, 438.0p, 533.0p, -17.8%)

Helical provided a business and trading update for the period 1 October 2021 to 31 March 2022. Key details are:

  • The acquisition of 100 New Bridge Street, London EC4 during the Period has substantially increased the Group's development pipeline:
    • A planning application will be made shortly for a complete refurbishment of the building, including the replacement of the existing cladding and additional floor space to the existing 167,026 sqft;
    • Aligned with the approach taken across its portfolio, the Company will seek to provide a "best in class" building, maximising its ESG credentials and targeting BREEAM "Outstanding" and NABERS "5 Star" ratings on its planned delivery in early 2025.
  • The Group has identified additional potential schemes, which are at different stages of assessment and discussion and would bolster its development pipeline. Meanwhile, good progress is being made at 33 Charterhouse Street, London EC1 which is on track for completion in September 2022;
  • With effect from 1 April 2022, Helical has converted into a Real Estate Investment Trust, enhancing returns for Shareholders in future years.


Impact Healthcare REIT (LON:IHR, 123.8p, 114.9p, +7.7%)

Impact Healthcare REIT, the real estate investment trust which gives investors exposure to a diversified portfolio of UK healthcare real estate assets, in particular care homes, announced that the Group has recently exchanged contracts to acquire three purpose-built care homes in and around Glasgow with an existing Group tenant. Once completed, these transactions are expected to deliver the following benefits to the Group:

  • enable the Company to deploy £8.1 million of capital, plus transaction costs;
  • the initial annual rent has been agreed at £627,750, reflecting an accretive gross initial yield of 7.75%;
  • will add three care homes comprising 155 beds, all en-suite, to the Group's portfolio, which will then total 131 care homes and 7,129 beds (at 31 December 2021: 124 homes and 6,720 beds);
  • EPC ratings of English equivalent B on one home and English equivalent EPC C on two homes with a strategy to bring these two homes to English equivalent EPC B;
  • Silverline will enter into Impact's new improved green leases with fixed 25-year terms with no break clauses. The rents receivable under the leases will be subject to annual upward-only rent reviews linked to RPI, with a floor of 2% p.a. and a cap of 4% per annum. Silverline has committed to a minimum annual expenditure on the maintenance of the care homes.
    • Completion is subject to re-registration with the Care Inspectorate and will be operated by an existing Group tenant, Silverline, and take the Group's total care homes leased to Silverline to seven with 398 beds.


Impact Healthcare REIT provided the following business and trading update for the quarter to 31 March 2022. Key details are:

  • The unaudited NAV as at 31 March 2022 was £443.3 million, 114.93 pence per share, representing increases on the previous quarter of 12.5% and 2.22%, respectively (NAV as at 31 December 2021 of £394.2 million, 112.43 pence per share);
  • The unaudited NAV total return for the quarter was 3.6%, comprising dividends paid in the quarter of 1.6025 pence and 2.50 pence per share growth in NAV;
  • A dividend per ordinary share of 1.635 pence declared for the period, in line with the Company's annual dividend target of 6.54 pence per share for the year to 31 December 2022, an increase of 2.0% on the dividend paid in 2021 of 6.41 pence per share;
  • The Group's property portfolio was independently valued at £484.0 million as at 31 March 2021 (valuation as at 31 December 2021: £459.4 million). This represents a 2.9% increase in value on a like-for-like basis in the quarter, and a total increase of 5.3% over that period, including the acquisition of two homes:
    • The like-for-like movements in value were primarily driven from RPI uplifts from rent reviews in the quarter and the benefits of active asset management;
    • 69 rent reviews were completed in the quarter at an average uplift of 4% per annum in line with the rental increase cap on these leases;
    • The Group also completed on the acquisition of two homes in Northern Ireland with 147 beds, for £11.5 million. The homes are being operated by an existing tenant, Electus Healthcare;
    • 100% of the Group's rental income is linked to inflation, with 90% of the Group's leases linked to RPI with a floor and cap at 2% p.a. and 4% p.a., 8% linked to RPI with a floor and cap at 1% p.a. and 5% p.a. and 2% with an annual CPI uplift;
    • In addition to the Portfolio value above, the Group made an investment of £11.1 million in two homes with 107 beds by way of a loan to Welford Healthcare with an option for the Group to acquire the homes once reregistration of the operations is granted by CQC. This is in addition to the £37.5 million invested in 12 homes with 480 beds by way of a loan to Holmes Care Group last quarter with an option for the Group to acquire the homes once reregistration of the operations is granted.
  • The Portfolio EPRA 'topped up' Net Initial Yield at 31 March 2022 was 6.71% (31 December 2021 6.71%);
  • Contracted rent increased to £39.4 million at the quarter end (at 31 December 2021: £38.0 million) an increase of 3.9%.  This increase was a result of the Group's investment in a portfolio of two homes with Welford and the 69 rent reviews during the period;
  • At 31 March 2022, the Portfolio comprised 128 healthcare properties, of which 126 are care homes let to 12 tenants on fixed-term leases of 20 to 35 years (no break clauses), subject to annual upward-only Retail Price Index-linked rent reviews. In addition, the Group owns two healthcare facilities leased to the NHS with annual CPI uplift. In total, the Group had 13 tenants across its Portfolio;
  • The weighted average unexpired lease term across the Portfolio was 19.2 years as at 31 March 2022;
  • The Company successfully raised gross proceeds of £40.0 million in the period through an equity raise in February 2022;
  • The Group deployed capital of £25.6 million in the period; £22.6 million in four care homes with a total of 254 beds and a further £3.0 million in capital improvements and forward funded developments;
  • After the quarter end, the Group also exchanged contracts on three further homes in and around Glasgow with 155 beds for £8.1 million, which will be leased to Silverline, an existing tenant, on completion;
  • The Group continues to receive 100% of rent payments as they fall due with no lease variations;
  • The gross loan to value ratio was 19.4% as at 31 March 2022 (at 31 December 2021: 22.3%). The Group has total available debt facilities of £168 million, of which £107.6 million is currently drawn. Additionally, the Group has the second £38 million tranche of institutional debt, which is committed to be issued in June 2022, and the option to expand the NatWest facility by a further £24 million;
  • The Group has maintained a healthy level of cash reserves, which stood at £18.6 million at the quarter end.


Industrials REIT Plc (LON:MLI, 201.0p, 158.0p, +27.2%)

Industrials REIT, the UK multi-let industrial property company, announces that it has acquired four multi-let industrial estates, in Boston, Barnsley, Leeds and Stockton on Tees, for a total consideration of £20.86 million. The purchase price reflects a blended net initial yield of 5.7% and an average capital value of £80 per sqft. Totalling 260,000 sqft, the assets generate £1.25 million of annualised rent, which equates to a low average passing rent of £4.82 psf.

The individual assets are:

  • Haven Business Centre, Boston, acquired for £4.0 million, reflecting a NIY of 7.1% and a capital value of £69 psf. The property is 100% occupied and comprises 58,148 sqft of MLI space across 22 units, generating annual rent of £301,649, which equates to £4.98 per sqft. Haven Business Centre is a modern estate offering purpose-built units of between 1,500 and 13,000 sqft, which are highly sought after by SMEs in the local market. 
  • Twibell Street Trade Park, Barnsley, acquired for £5.85 million, reflecting a NIY of 5.25%.  The purpose-built, modern industrial estate totals 54,978 sqft across five units and is 100% occupied, generating annual rent of £327,070, which equates to £5.95 per sqft.
  • Astra Park, Leeds, acquired for £6.7 million, reflecting a NIY of 4.8% and a capital value of £93 psft 100% occupied, it offers 72,069 sqft of MLI space across 16 units and generates rent of £341,249, equating to low passing rent of £4.74 per sqft. The local area is characterised by a shortage of available units, which is expected to underpin future rental growth in addition to offering medium to long term development opportunities given the low site density.
  • Units 1-12, Primrose Hill Industrial Estate, Stockton on Tees, acquired for £4.31 million, reflecting a 6.2% NIY and a capital value of £57 per sqft. The property totals 75,270 sqft across 13 units and generates rent of £286,172, equating to £3.80 per sqft. The modern, purpose-built estate is 100% leased to 11 occupiers and benefits from its location in the centre of Stockton-on-Tees.

Industrials REIT published a trading update on its MLI portfolio for the period 1 January 2022 to 31 March 2022 and up-to-date information on transactions and rent collection across the Company's whole portfolio. Key details are:

  • Record quarter for deal volumes following several substantial leasing transactions in Ashby de la Zouch and Paddock Wood.  Even without these, the volumes were in line with previous quarters illustrating the continued depth of demand for MLI space across the UK;
  • Average uplifts in rent across all new lettings and renewals averaged 22% for the quarter, with a record high of a 34% average uplift in rent on new lettings where competitive tension is the highest; 
  • Increase in like-for-like rents of 1.5% during the quarter and income growth of 4-5% per annum.  
  • With a backdrop of strong demand and scant new supply of MLI space, coupled with the current affordability of rents, The Group sees the potential for further rental growth continuing for the foreseeable future;
  • Rent collections on the MLI portfolio from early in the pandemic are now 97%, with more recent periods indicating a path back towards pre-Covid collection rates of 98%+;
  • Good success in acquiring further MLI estates for our portfolio this quarter, with £21 million of acquisitions and a strong pipeline of opportunities.


Lok'nStore Group Plc (LON:LOK, 1,025.0p, 843.0p, +21.6%)

Lok'nStore Group Plc, the AIM listed self-storage Company announces interim results for the six months to 31 January 2022. Key details are:

  • Group revenue £13.38 million up 31.1% (31.1.2021: £10.21 million);
  • Group adjusted EBITDA  £8.12 million up 46.5% (31.1.2021: £5.5 million);
  • Achieved rate per sqft of occupied space up 18.5% vs last year;
  • Unit occupied space up 6.0% YOY with £24.22 per sqft achieved (31.1.2021 £20.44);
  • Cash available for Distribution £5.58 million up 59.6% (31.1.2021: £3.49 million);
  • Cash available for Distribution per share (annualised) 38.00 pence up 57.2% (31.1.2021: 24.17 pence);
  • Interim dividend 5.0 pence per share up 15.5% (31.1.2021: 4.33 pence per share) - Eleventh consecutive year of increase;
  • Adjusted Net Asset Value (NAV) per share up 48.4% to £8.43 (31.1.2021: £5.68) and up 15.3% from 31 July 2021 (£7.31);
  • Sale and manage back of four stores at a 22.8% premium to 31 July 2021 valuations;
  • £44.4 million cash at period-end (31.7.2021: £11.3 million);
  • Net debt (excluding lease liabilities) £22.4 million (31.7.2021: £42.6 million);
  • Loan to value ratio 8.3% (31.7.2021: 20.4%);
  • New stores currently on site will add 16.8% of new trading space by July 2023;
  • Fully funded secured store pipeline of 12 sites will add 35.5% of new space over the coming years.


LondonMetric Plc (LON:LMP, 269.6p, 213.4p, +26.3%)

LondonMetric Property announced the acquisition of six London urban logistics warehouses in separate transactions for a total investment of £26.7 million, reflecting an anticipated blended initial yield of 4.3% and a reversionary yield of more than 4.5%. Three properties in Colliers Wood, Stratford and Stockwell have been acquired with vacant possession and will be redeveloped or refurbished at an anticipated yield on cost of 4.5%. The remaining properties in Hackney, Acton and Thamesmead are fully let with a WAULT of 11.4 years and have been acquired at a NIY of 3.9% and a reversionary yield of 4.7%. The assets are expected to generate a total rent of £1.2 million p.a.

Separately, LondonMetric has sold a multi-let industrial estate in Crawley for £8.5 million, reflecting a NIY of 3.5%. The units have a WAULT of three years and have been sold at a material premium to book value.

LondonMetric Property Plc announced the acquisition of two urban logistics properties for £28.8 million, in separate transactions, reflecting an anticipated blended yield of 4.5% and a reversionary yield of 5.0%. 

The properties are expected to generate a rent of £1.4 million p.a. and comprise:

  • a 125,000 sqft urban logistics forward fund development at Crosslink 646 in Leicester, which consists of two units and is expected to complete at the start of 2023. The largest unit totalling 90,000 sqft is pre-let to EM Pharma Ltd on a new 15-year lease at a rent of £7.25 psf with RPI linked rent reviews (2%-4%). The smaller 35,000 sqft unit will be developed speculatively and is expected to deliver a yield on cost of c. 5%. The property is expected to be certified BREEAM Very Good with the benefit of a solar PV installation;
  • a nine acre site in Droitwich which is used for vehicle storage and let to Amazon for a further five years with CPI linked rent reviews (1%-3%). It is located at the front of an established industrial estate close to the A38, two miles from J5 of the M5. Amazon's investment in the parking facility includes EV charging infrastructure for 100 vans. The site has planning consent for a 200,000 sqft distribution warehouse.


LXI REIT Plc (LON:LXI, 148.2p, 139.5p, +6.2%)

LXi REIT plc, the specialist inflation-protected long income REIT, announced a series of disposals and acquisitions:

Disposal of Premier Inn anchored property:

  • Following an unsolicited approach by a UK pension fund, the Company has exchanged contracts on the sale of its property in Saffron Walden let to Premier Inn, B&M, Pure Gym, Pets at Home and Costa for £19.33 million (a 4.45% net exit yield):
    • The Company acquired the property, through a forward funding transaction, for £15.8 million (a 5.72% net initial yield) and the sale generates an attractive 19% pa IRR for the Company.

Acquisition of food store and industrial unit:

  • The Company has exchanged contracts to purchase a M&S Simply Food store and a MKM trade unit, for a combined £9.44 million (reflecting an accretive 5.25% blended net initial yield), from separate developers:
    • The Company is acquiring the food store in Largs, North Ayrshire, by means of a pre-let forward funding transaction.  The property, which will comprise 13,450 sqft, has been fully pre-let to Marks & Spencer plc on a new, unbroken 15-year lease, with five yearly rental uplifts at a fixed growth rate of 2.5% per annum compounded.  
    •  The trade unit, comprising 15,250 sq ft, is a builders' merchant facility constructed this year and fully let to MKM Building Supplies on a long lease, with 20 years unexpired to first break.  The rent increases on a five-yearly basis in line with RPI inflation (capped at 3.5% pa and collared at 1.5% pa).  MKM is the UK's largest independent builders' merchant;
    • Both acquisitions benefit from strong ESG credentials, including an EPC "A" rating and rooftop solar panelling at the MKM unit, and the M&S Simply Food development is also targeting an EPC "A" rating.


New River Plc (LON:NRR, 88.2p, 131.0p, -32.7%)

New River provided a trading update ahead of the announcement of its Full Year Results on 7 June 2022. Key details are:

  • c 2.5% capital growth in the second half of FY22. This growth has been led by retail parks, which have continued the positive momentum seen over the last 18 months, but the Group has also seen its Core and Regeneration Shopping Centres return to capital growth in the second half. Further decline in its Work Out Shopping Centre assets, but the rate of decline has slowed markedly when compared to the first half of FY22 and the Group has made good progress with its disposal and repositioning schedule;
  • Since 1 April 2021, completed £305 million of disposals. Excluding the sale of Hawthorn, New River completed £77 million of retail disposals, £69 million of which were completed in the second half of the financial year on terms in-line with last reported book value. The largest capital transaction completed in the second half was the disposal of the Regeneration Shopping Centre in Cowley, Oxford, for gross proceeds of £38.8 million;
  • Expectation being that LTV at 31 March 2022 will be less than 35%, significantly below the Group’s LTV guidance of 40%. This LTV position compares to 50.6% at 31 March 2021 and 39.4% at 30 September 2021;
  • Disposal activity has reduced net debt to c. £222 million at 31 March 2022, from £493 million at 31 March 2021;
  • Rent collection for Q1-Q4 FY22 currently stands at 95% of rent demanded and rent collection in respect of Q1 FY23, due on 25 March 2022, is currently tracking ahead of collection at the same point last year;
  • Leasing volumes have improved throughout FY22, with 367,300 sqft of new lettings and renewals secured in Q4, which compares to 383,800 sqft for the whole of H1. Long-term deals, which represented 95% of the £2.3 million of annualised rent secured in Q4, were signed on average 4.5% ahead of September 2021 ERVs. For FY22 as a whole, long-term deals were signed on terms on average 7.4% ahead of latest ERVs;
  • Occupancy remained high at 95.6% (March 2021: 95.8%), with average rent remaining affordable at £11.74 per sqft (March 2021 £11.51 per sqft).


Palace Capital Plc (LON:PCA, 277.0p, 362.0p, -23.5%)

Palace Capital announced a trading update for the period ended 31 March 2022 together with an increase in dividend. Key details are:

  • EPRA earnings and Adjusted PBT for the year to 31 March 2022 are expected to be ahead of market expectations. This is underpinned by the positive impact of asset management successes, lease activity and acquisitions;
  • Following the success of Palace Capital's disposal strategy, which to date has realised gross proceeds of £31.5 million, and the significant pick-up in sales of residential units at Hudson Quarter, York, the Group remains mindful of how and when these realised sales  proceeds are deployed. The Board is committed to maximising value for shareholders and closing the current share price discount to NAV. Accordingly, in consultation with shareholders, the Board is considering a range of strategic options, including a return of capital, to unlock further value in the business;
  • In addition to considering a range of strategic options, the Board will assess property investment opportunities. The Board is focused on acquiring high quality, income producing assets with attractive rental growth prospects and strong ESG credentials, that will enhance the Group's earnings and dividend payout:
    • Such investment opportunities will reposition the portfolio for growth in income and capital value, by pivoting the weighting towards higher quality assets. The intention is to use the Group’s core assets to provide a bedrock of sustainable income. This allows a balance for higher risk properties, which can provide stronger returns through active management, by identifying opportunities provided in the regional office and industrial sectors;
    • The Company expects to balance the portfolio with c. 50% core assets with the remainder split between value-add/asset management of c. 40% and development of c. 10%. At 30 September 2021, the portfolio comprised 30% core, 58% value add and 12% development. This realignment provides the backbone to a progressive covered dividend policy.


Primary Health Properties Plc (LON:PHP, 144.7p, 116.7p, +24.0%)

Primary Health Properties announced that it has signed agreements for its first NZC direct development, a new purpose-built facility in Eastergate, West Sussex, with a gross development value of £6.7 million. The new building will be one of the first UK healthcare buildings to achieve this status. NZC will be achieved by measuring, minimising and offsetting embodied carbon from materials used during construction as well as enabling occupiers to operate the building with NZC emissions. The building is expected to deliver high levels of health and wellbeing and achieve BREEAM Excellent standards and an EPC rating of A, with low levels of waste and water usage, and the use of responsibly sourced and sustainable materials. The site has been identified in line with PHP's strategy of addressing the increasing demand for services in an area following major local population growth and the transfer of services away from the overburdened local hospital setting.

Primary Health Properties acquired the Chiswick Medical Centre, London for a total consideration of £34.5 million. The property is fully let to HCA International Ltd with an unexpired term of just under 20 years and benefits from five yearly annually compounded RPI led rent reviews. The property has been subject to a comprehensive tenant led fit-out to create a bespoke diagnostic and private healthcare facility providing some of the best medical technology available in London. The facility provides a number of services and expert teams specialising in neurology, cardiology, orthopaedics, urology and gastroenterology as well as women's healthcare services and a dedicated children's unit.

Primary Health Properties published a trading update for the period 1 January 2022 to 31 March 2022. Key details are:

  • Progress in converting last year-end pipeline into committed deals. The Group announced the acquisition of a large, state-of-the-art diagnostic centre in Chiswick, let to HCA Healthcare, for £34.5 million and the purchase of a clinical facility in Chertsey, let to the NHS, for £6.95 million;
  • Including standing investments, direct and forward funded developments and asset management projects, PHP continues to generate and grow a strong pipeline totalling £360 million in the UK and €145 million (£122 million) in Ireland of which £65 million and €87 million (£74 million) respectively is in legal due diligence;
  • In the first quarter of 2022, PHP has generated an additional £0.9 million or 0.6% (Q1 2021: £0.8 million or 0.6%) of extra rental income from our rent review and asset management activities;
  • Improvement in growth from rent reviews with an extra £0.6 million (Q1 2021: £0.5 million) of income generated in the quarter from 99 reviews that have been settled, equivalent to 2.0% (2021: 1.7%) on an annualised basis;
  • A further £0.3 million (Q1 2021: £0.3 million) has been generated in the quarter from asset management activities completing ten projects with a further six schemes currently on site which in addition to extending lease lengths will improve the environmental performance of the buildings;
  • As at 31 March 2022 the Group's net debt stood at £1,217.3 million (31 December 2021: £1,199.5 million) and on a pro-forma basis the Loan to Value ("LTV") ratio was 43.3% (31 December 2021: 42.9%);
  • After capital commitments the Group has undrawn loan facilities and cash on deposit totalling £270 million (31 December 2021: £321 million) providing significant liquidity headroom;
  • 97% of the Group's net debt is fixed or hedged for a weighted average period of just over nine years providing significant protection from increasing interest rates;
  • On 24 March 2022, the Company declared its second quarterly interim dividend of 1.625p per Ordinary Share, which will be paid on 20 May 2022 to shareholders.


Schroder European Real Estate Investment Trust Plc (LON:SERE, 103.5p, 150.4p, -31.2%)

Schroder European Real Estate Investment Trust provided an update on the independent valuation of the property portfolio and rent collection as at 31 March 2022: Key details are: 

  • The direct property portfolio was independently valued at €211.0 million, reflecting a like for like increase over the quarter of 1.9%, or €3.93 million. In addition, the Company has a 50% interest in a joint venture in Seville, which continues to be recognised at nil interest;
  • The valuation increase over the quarter was driven by yield compression and indexation achieved across select office and logistics assets. With 100% of the portfolio leases subject to indexation, rising inflation is starting to contribute to rental growth;
  • The portfolio valuation uplift attributable to yield compression was primarily driven by:
    • Improved yield re-rating at the Rennes logistics investment, delivering a valuation increase of €1.4 million, or 7.1%;
    • Improved yield re-rating at the Hamburg office investment, delivering a valuation increase of €1.1 million, or 4.5%;
    • Improved yield re-rating at the Nantes logistics investment, delivering a valuation increase of €0.4 million, or 6.5%;
    • Improved yield re-rating at the Rumilly logistics investment, delivering a valuation increase of €0.4 million, or 4.0%;
    • Approximately 96% of rent due for the quarter ended 31 March 2022 has been collected.


Schroder European Real Estate Investment Trust announced that it has exchanged contracts to purchase a freehold car showroom property in Cannes, southern France, for €8.4 million, reflecting a net initial yield of 5.5% and a reversionary yield of 6.4%. The 4,235 sqm showroom is fully let to FCA Motor Village France, a subsidiary of the global automotive manufacturer Stellantis Corporation. Brands traded from the asset include Fiat, Alfa Romeo, Jeep, Abarth and Lancia. The remaining lease term is c. three years off an affordable and sustainable rent subject to annual indexation. Located in one of France's fastest growing regions from a GDP and population perspective, the asset serves as the tenants' primary car showroom within a broader agglomeration spanning over 20 dealerships that cannot be replicated.


SEGRO Plc (LON:SGRO, 1,342.5p, 1,137.0p, +18.1%)

Segro resleased a trading update. Key details are:

  • Strong start to the year with continued demand from a broad range of customers enabling The Group to capture further rental growth through rent reviews and the re-letting of space;
  • Significantly increased its largely pre-let development pipeline and have secured future opportunities for growth in some of the most supply-constrained urban markets through the acquisition of land, as well as income-producing assets with medium-term redevelopment potential;
  • The industrial sector continues to benefit from highly supportive and long-term structural tailwinds, which are leading to sustained strong occupier and investor demand, despite the challenges that the world is facing.


Shaftesbury Plc (LON:SHB, 598.5p, 619.0p, -3.3%)

Shaftesbury announced an update on portfolio valuation ahead of releasing its results for the half year ended 31 March 2022 on 24 May 2022. Key details are:

  • At 31 March 2022, the indicative external valuation of the wholly-owned portfolio was £3.26 billion (30.9.21: £3.01 billion). On a like-for-like basis, this represents an increase of circa 7.5%, over the six-month period since 1 October 2021, which follows a 5.2% like-for-like increase in the six months to 30 September 2021;
  • The valuation increase over the period was largely driven by like-for-like ERV growth of 6.4%, with increases across all uses, reflecting sustained occupier demand and low levels of vacancy, as footfall and trading in its locations continues to recover towards pre-pandemic levels;
  • The strength of its occupational market and improved investor sentiment has led to a tightening of the portfolio's equivalent yield of around five basis points from 3.92% at 30 September 2021.



Standard Life Investments Property Income Trust Plc (LON:SLI, 82.4p, 101.0p, -18.4%)

Standard Life Investments Property Income Trust has completed the purchase of a Motorpoint car showroom in Stockton-on-Tees for £5m, reflecting a net initial yield of 6.5%. The acquisition will be funded out of existing cash reserves and was a sale and leaseback, with Motorpoint entering into a new 25-year lease (with tenant option to end the lease after 15 and 20 years).  The c. 46,500 sqft showroom sits on a prominent 5.2-acre site, and has recently undergone a comprehensive refurbishment prior to Motorpoint taking occupation.

Standard Life Investments Property Income Trust announced its results for the year ended 31 December 2021. Key details are:

  • Financial resources of £50 million as at 31 December 2021 (2020: £55 million) available for investment to enhance earnings in the form of the Company’s low cost revolving credit facility;
  • Low Loan-to-value of 19.2% (2020: 23.0%) at the year-end with scope to increase gearing through available revolving credit facilities;
  • Dividends paid of 3.7725p in the year (2020: 3.8080p) with a further increase announced for Q4 2021 to an annualised rate of 4.0p per share. Dividends paid in 2021 equated to a yield of 4.6% based on the share price at 31 December 2021, compared to the FTSE Index yield of 3.1% and the FTSE All-Share REIT Index yield of 2.6%;
  • NAV total return of 28.6% (2020: -4.6%) as valuations recovered. NAV has outperformed the AIC peer group over the longer term delivering a total return of 188.9% compared to AIC peer group total return of 54.6% over 10 years;
  • Share price total return of 43.4% (2020: -29.8%) as sentiment improved towards the UK commercial real estate sector. The share price has delivered strong returns over the longer term with a share price total return over 10 years of 184.8% compared to the AIC peer group of 40.9%;
  • Share buybacks totalling £6m in 2020 and 2021 at significant discounts to NAV, which are accretive to both NAV performance and earnings.


Supermarket Income REIT Plc (LON:SUPR, 125.5p, 113.0p, +11.1%)

Supermarket Income REIT announced its intention to raise approximately £175 million by way of a placing pursuant to the Placing Programme:

  • Secure, inflation-protected, long income grocery property portfolio with capital appreciation potential and 85% of current portfolio rental income directly linked to inflation;
  • The proceeds from the Issue will be used to make additional investments in accordance with the Company's investment criteria, further diversifying the Group's portfolio and capitalising on its leading position in the UK supermarket real estate market;
  • The Company's investment adviser, Atrato Capital Limited has identified a number of attractive acquisition opportunities across the marketplace, including:
    • assets with an aggregate value of approximately £150 million currently under exclusivity and additional assets with an aggregate value of approximately £120 million currently in advanced due diligence;
    • a further pipeline of assets with an aggregate value of approximately £440 million that meet the Company's investment criteria.

Supermarket Income REIT announced that it has successfully raised gross proceeds of £300 million pursuant to the Issue and further £6.7 million gross proceeds pursuant to the PrimaryBid Offer. The Board determined to increase the size of the Issue from £175 million to £300 million after careful consideration of:

  • the extremely strong level of support and quality of demand from investors in the Issue, which materially exceeded the target Issue size;
  • the Investment Adviser's confidence in acquiring assets in the pipeline;
  • the increase in the availability of attractive investment opportunities since the marketing roadshow began.


The PRS REIT Plc (LON:PRSR, 108.0p, 99.0p, +9.1%)

The PRS REIT provided an update on activity for the third financial quarter ended 31 March 2022. Key details are:

  • During the quarter, 127 new rental homes were added to the Company's portfolio. This took the total number of homes added during the current financial year to 632 and the total number of completed homes in the portfolio to 4,616 as at 31 March 2022, a year-on-year increase of 29%. With fixed price design & build contracts in place, the Company continued to benefit from insulation against rising material costs;
  • The estimated rental value ("ERV") of the 4,616 completed homes in the portfolio at the end of March was £45.5m per annum, approximately 37% higher than at the same point in 2021 (31 March 2021: 3,590 homes with an ERV of £33.3m per annum);
  • A further 822 homes with an ERV of £6.2m per annum were contracted as at 31 March 2022, and are at varying stages of the construction process. The Company plans to acquire two further sites before the financial year-end, utilising debt funding, and continues to anticipate completion of the 5,000th home towards the end of calendar 2022;
  • The portfolio performed strongly, with occupancy at 98% and rent collection at 99% as at 31 March 2022. Of the total of 4,616 completed homes, 4,513 were occupied at the quarter end, and a further 40 homes were reserved for prospective applicants who had passed referencing and paid rental deposits;
  • Total arrears at 31 March 2022 were low at £0.5m (31 March 2021: £0.2m);
  • In the twelve months to 31 March 2022, like-for-like rental growth was strong at 4.8% on stabilised sites.


The Unite Group Plc (LON:UTG, 1,135.0p, 880.0p, +29.0%)

Unite Students announced an update on current trading and quarterly property valuations for the Unite UK Student Accommodation Fund ('USAF') and the London Student Accommodation Joint Venture ('LSAV') as at 31 March 2022. Key details are:

  • Strong progress in sales since preliminary results, materially closing the gap to pre-pandemic reservations level;
  • Across the Group's entire property portfolio, 77% of rooms are sold for the 2022/23 academic year (2021/22:69%, 2020/21:79%). The Group expects strong student demand for 2022/23 from both domestic and international students with UCAS applications up 7% compared to pre-pandemic levels and reduced disruption from travel restrictions and grade inflation.
    This is supportive of the target of 97% occupancy for the 2022/23 academic year and further increases confidence in achieving rental growth of 3.0-3.5%;
  • Recently received planning approval for a 595-bed Temple Quarter development in Bristol. The plan is to acquire the site in time for delivery in the 2024/25 academic year. The completed development will be fully let on a 15-year nominations agreement to the University of Bristol, further strengthening The Group’s relationship with the university;
  • In early March, planning application for the development in Paddington, London was rejected by Westminster City Council. Unite Students is currently reviewing options for the best route to securing planning consent for the site, however this delay now means that it will no longer deliver the scheme for the 2024/25 academic year;
  • The Group continues to see inflationary pressure on build costs for its development pipeline, which typically account for 50-70% of total development costs. This reflects ongoing supply chain disruption created by the pandemic as well as rising energy and materials prices, which have been exacerbated by the war in Ukraine;
  • 2022 and 2023 schemes are secured under fixed price build contracts and remain in line with budget and on track for their scheduled delivery dates. However, there have been cost increases for schemes yet to be procured for delivery in 2024 and 2025. As a result, yield on cost for these schemes are expected to be reduced by up to 20 bps, compared to initial assumptions.


Tritax EuroBox Plc (LON:EBOX, 101.8p, 135.0p, -24.6%)

Tritax EuroBox plc, which invests in high-quality, prime logistics real estate strategically located across continental Europe, has, in partnership with established Nordic developer MIGS, entered into a speculative development scheme to acquire 95,000 sqm of development land for SEK 223 million (€21.4 million).


Urban Logistics REIT Plc (LON:SHED, 187.0p, 164.3p, +13.8%)

Urban Logistics, the last mile logistics focused REIT, announced an update for the period from 1st October 2021 to 31st March 2022. The Company will report its annual results on 23rd June 2022. Key details are:

  • Deployment of a further £45 million of capital at a blended NIY of 6.7% since the announcement of 28th March 2022;
  • Total deployment since the December 2021 fundraise now stands at £184 million, at a blended NIY of 5.4%;
  • five new lettings, three rent reviews and two lease re-gears agreed in the period, covering 630,000 sqft of space;
  • Rent reviews and re-gears settled at a blended 13% increase over passing rent.

East Midlands Logistics Hub:

  • £40.7 million logistics asset acquired at a NIY of 6.8%, with strong reversionary potential and immediate asset management opportunities;
  • The property consists of a 72 acre site with four high quality units, substantial yard space and land with the potential for a further 175,000 sqft of development;
  • Located close to the A1 and A46/M1, it will benefit from planned local infrastructure improvements;
  • Three large units totalling 665,527 sqft let to Asfordby Storage and Haulage on a short term lease, with remaining unit (6,773 sq. ft.) let to Royal Mail.


  • £4.2 million logistics asset on Outer Circle Road, Lincoln, acquired at a NIY of 5.8%;
  • The property consists of a 25,924 sq. ft. unit on a two acre site;
  • Let to Wickes Building Supplies Limited for a term of 10 years.

Notable lease events in the period:

  • An agreement for lease has been signed with Master Removers Ltd for 120,218 sqft of space in a new development in Golborne, Warrington. The building is a new brownfield development, and is expected to complete in October 2022. The lease is at £7.75 psf for a term of 15 years;
  • A rent review has been settled with DHL Supply Chain on a unit of 31,410 sqft in Norwich. The rent has been agreed at £181,250, representing a 29% increase from the previous level;
  • A lease with the Unipart Group on a 122,478 sqft asset in Runcorn, resulting in a new rent of £693,500, representing a 20% increase from the previous level.


UK Commercial REIT Plc (LON:UKCM, 88.4p, 94.5p, -6.5%)

UK Commercial Property REIT Limited reported final results. Key details are:

  • NAV of £1.3 billion as at 31 December 2021 (2020: £1.1 billion) representing a NAV total return in the year of 21.5% (2020: –0.9%) as valuations recovered strongly in the sectors where the Company is strongly positioned;
  • Over the longer term (ten years) the Company has delivered a NAV total return of 114.9% (2020: 85.6%) compared to the Association of Investment Companies (“AIC”) peer group of 54.6% (2020: 32.4%);
  • EPRA Earnings per Share of 2.65p (2020: 2.71p) as earnings were impacted by the timing of transactions with rent reduced through strategic sales in late 2020 / early 2021 and reinvestment during the final third of 2021;
  • A total return of 12.5% (2020: -19.7%) as the share prices of diversified REITs improved during the year;
  • Industrial weighting of 63% (Benchmark: 34%). Portfolio strategy continues to be implemented with the portfolio well aligned to sectors which are expected to outperform;
  • Gearing of 13.5% (2020: 6.4%) following net acquisitions in the year, with additional resources available to increase gearing levels further;
  • £88 million at the year-end (2020: £218 million) to invest into the portfolio and enhance earnings, reflecting the undrawn revolving credit facilities net of development commitments;
  • IFRS Earnings per Share of 18.18p (2020: -0.79p) following the strong capital gains achieved on the portfolio;
  • Portfolio produced a total return of 21.4% (2020: 1.1%), significantly outperforming the 16.8% (2020: -0.9%) from the MSCI benchmark as the Company’s portfolio positioning provided continued outperformance;
  • £180 million (2020: £74m) of acquisitions that are accretive and will generate secure income;
  • Rent collection of 97% in 2021 (compared to 83% for 2020) as rent collection rates normalise to pre-COVID-19 levels;
  • Occupancy rate of 97.9% (2020: 93.5%), with voids a third of the prior year level and the portfolio has a stable income expiry profile. Also compares favourably to the MSCI benchmark occupancy rate of 92.3% (2020: 92.6%).


Warehouse REIT Plc (LON:WHR, 160.4p, 152.4p, +5.2%)

Warehouse REIT, the AIM-listed company that invests in e-commerce urban and last-mile industrial warehouse assets in the UK, announced that it has exchanged contracts to acquire Bradwell Abbey Industrial Estate, for £62 million excluding acquisition costs. The purchase price reflects a net initial yield of c. 4% based on day one passing / guaranteed income and continues Warehouse REIT's stated aim of acquiring assets in the Oxford-Cambridge Arc.  

The multi-let industrial estate totals 69 units across c. 335,000 sqft, ranging from c. 1,000 to 15,000 sqft in size. It is located just off the A5, providing fast access to the surrounding population of Milton Keynes and the wider motorway network, with the M1 being six miles to the East. The estate is currently 96% leased to a range of occupiers including Argos, F&F Stores and Taylor Kerr Engineering Ltd and produces a total annual income (including some rental guarantees) of over £2.6 million. The low average rent of c. £7.80 psf offers good reversionary potential, considering that prime rents in the area range from £10 to £14 per psf. 


Workspace Group Plc (LON:WKP, 667.0p, 928.0p, -28.1%)

Workspace Group provides a trading update for the fourth quarter ending 31 March 2022. Key details are:

  • Continued strong demand from SMEs demonstrates appeal of The Group’s flexible offer, with an average of 957 enquiries per month (Q4 2020/21: 910) and 127 lettings per month (Q4 2020/21: 111) in the fourth quarter;
  • Another quarter of strong growth in like-for-like occupancy, up 3.0% in the quarter to 89.6%, and up 7.8% over the year, now reaching normalised pre-Covid levels with scope for further growth;
  • Further improvement in pricing with like-for-like rent per sq. ft. up 1.3% in the quarter to £36.39;
  • Like-for-like rent roll up 4.0% in the quarter to £92.9m, with total rent roll up 3.5% to £111.0m;
  • Customer utilisation of its centres continues to improve, averaging 69% of pre-Covid levels in the week ending 1st April 2022, peaking at 73% mid-week.



Data sourced through the London Stock Exchange and RNS announcements.