REIT News - November 2021
REIT Market Overview
The month of October witnessed an incredibly strong level of investment activity across all industries. The most active sectors were: logistics, warehousing and industrials.
BMO Real Estate Investments announced an acquisition of an industrial asset in Colnbrook, Heathrow, for £12.1m and a retail warehousing scheme in Banbury, Oxfordshire, for £7.3m. Custodian REIT completed an acquisition of a28,601sf industrial unit on Clifton Moor Industrial Estate, York, for £3.0m. LondonMetric Property has announced the acquisition of two last mile logistics assets in Fulham and Tottenham for a combined purchase price of £20.2m. SEGRO and Schroders have completed a property swap transaction in which SEGRO acquired an urban warehouse estate in West London for £140m and Schroders acquired a portfolio of UK big box and urban assets for £205m.
M&A also featured with the Land Securities recommended all cash offer for U+I and the recommended cash offer for GCP Student Living.
(Ticker, Share Price, EPRA NAV per Share, Premium/Discount)
AEW UK REIT Plc (LON:AEWU, 107.0p, 110.1p, -2.8%)
AEW UK REIT has announced its recent results for the three-month period to 30 September 2021. Key details are:
- NAV of £174.29m or 110.01p per share (30 June 2021: £169.69m or 107.11p per share);
- NAV total return of 4.58% (30 June 2021 quarter: 10.04%);
- Sales of Langthwaite Industrial Estate, South Kirkby for £10.84m and Wella Warehouse, Basingstoke for £5.86m. The sales prices achieved were 1.9x and 1.7x the purchase prices respectively;
- Loan to NAV ratio of 28.97% (30 June 2021: 29.76%);
- Cash balance of £15.16m and £9.50m of its loan facility available to draw up to the maximum 35% Loan to NAV at drawdown;
- Following completion of the sale of Wella Warehouse, Basingstoke, on 15 October 2021, AEWUK had a cash balance is £20.06;
- 89% of that quarter rent has been collected or is expected to be received under monthly payment plans prior to quarter end. The remainder of rents owed will continue to be pursued.
Assura Plc (LON:AGR, 72.9p, 57.2p, +27.4%)
Assura has issued a trading update for its H1 to 30 September 2021. Key details are:
- Growing portfolio of 625 properties with current annualised rent roll of £127.5m;
- 27 property additions (seven development completions and 20 acquisitions) for total cost of £117m over the period;
- Three development schemes moved onto site (including the West Midlands Ambulance Hub announced in June 2021);
- 11 disposals completed, above March 2021 book value, for cash proceeds of £15m;
- Five lease regears completed (representing £0.2m of existing rent);
- Currently on site with five capital asset enhancement projects with total spend of £3.7m;
- On site with 12 developments with a total cost of £72m (31 March 2021: 16, £72m) following the seven completions in the period;
- Immediate development pipeline of 20 schemes - expect to be on site within 12 months, totalling a further £145m (31 March 2021: 17, £111 m);
- Extended development pipeline of £263m - schemes on which appointed exclusive development partner but currently awaiting NHS approval;
- Total development pipeline of £480m (on site, immediate and extended);
- Immediate acquisitions pipeline of £102m - expect to complete in 3-6 months (31 March 2021: £46m);
- 56 lease re-gears covering £6.7m of existing rent roll in the current pipeline;
- Pipeline of 19 capital asset enhancement projects (projected spend £15m) over the next two years;
- 12-year 1.625% £300m Sustainability Bond issued in June 2021;
- At 30 September 2021, net debt stood at £1,015m with a weighted average interest rate of 2.3%.
Big Yellow Group Plc (LON:BYG, 1,479.0p, 889.2p, +66.3%)
Big Yellow Group has announced an increase of £100m in its loan facilities with Aviva Investors and M&G Investments.
- Aviva loan facility: the group has secured an additional £50m seven year debt facility. As part of this refinancing the expiry of the existing loan has been extended from April 2027 to September 2028. This has reduced the fixed cost of the total loan facility from 4.0% to 3.5%. Sustainability KPIs have been incorporated into this additional borrowing. These include the continued installation of solar panels across the stores, which will reduce emissions and running costs, and the business being on-track to achieve 'Net Renewable Energy Positive' status by 2030. The group will benefit from a margin reduction on the new £50m loan, conditional on achieving these targets. The total debt facilities from Aviva are now £163.4m of which £18.4m amortises to nil by April 2027;
- M&G loan facility: the group has increased the facilities by £50m to a total facility of £120m. £35m of the total M&G loan is fixed by a way of swap, with the balance floating. The average cost of the loan is now 2.4%, with the loan expiring in June 2023. The group intends to commence discussions on refinancing this loan next year.
Big Yellow has also announced that is has secured a resolution to grant planning consent for an approximately 90,000sf store at its site in on the Bath Road in Slough. Construction will commence in summer 2022 and it is expected that the store will open in winter 2023.
BMO Commercial Property Trust Limited (LON:BCPT, 102.7p, 130.0p, -21.0%)
BMO Commercial Property Trust has issued a trading update at 30 September 2021. Key details are:
- NAV up 4.2% to 130.0p (30 June 2021: 124.8p);
- Net asset total return of 5.0% (YTD: 13.5%);
- 7.1% increase in the monthly dividend to 0.375pps with effect from November 2021;
- Rent collection currently received since the onset of the pandemic in April 2020 to September 2021 is at 92.4%;
- Void rate of 2.4%;
- Completed £180.5m of property disposals as part of the strategy to adjust sector weightings.
BMO Real Estate Investments Limited (LON:BREI, 85.2p, 110.5p, -22.9%)
BMO Real Estate Investments has announced that it has acquired two freehold properties for a total of £19.4m, secured off-market and at an accretive combined yield. The first property, an industrial asset in Colnbrook, Heathrow, was acquired in September for £12.1m and is highly reversionary with a NIY of 4.0%. The asset is fully let to a vehicle-servicing centre for a further three years in a market that is characterised by very tight supply dynamics, offering opportunity for value creation through near term asset management. The second property, also acquired in September, comprises a retail warehousing scheme in Banbury, Oxfordshire, occupied by home-improvement tenants Wickes and Topps Tiles for a further 4.2 years. The property was acquired for £7.3m, reflecting a NIY of 6.3%. These acquisitions follow the successful disposal of the office property Marlborough House, St Albans, in July 2021, which was sold at a premium of 8% to the Q2 2021 valuation, and at an opportune time in advance of the lease expiry in early 2022.
BMO Real Estate Investments has issued a recent update at 30 September 2021. Key details are:
- NAV per share 8.2% to 110.5p (30 June 2021: 102.1p);
- NAV total return of 9.2p for the quarter;
- Rent collection: April 2020 to September 2021 is 96.7% and 98.8% for the latest quarter;
- Void rate at 4.0%;
- Two new property acquisitions for a combined cost of £19.4m.
Capital & Regional Plc (LON:CAL, 55.5p, 113.0p, -50.9%)
Capital & Regional has announced that it has reached an agreement with its lenders to restructure and reduce the debt secured over its four Mall assets, including the launch of a fully underwritten open offer to raise £30.0m by way of the issue of new shares. Key details are:
- The Mall facility currently comprises a £265m debt facility with RBS and TIAA secured over the four Mall assets, being the Mall Blackburn, the Mall Maidstone, the Mall Wood Green and the Mall Walthamstow. TIAA currently has a balance outstanding of £165m and RBS has a balance outstanding of £100m;
- Under the terms of the debt restructuring, Capital & Regional has agreed to acquire the £100m of debt outstanding with RBS for a principal amount of £81m, representing a discount of £19m or 19%;
- The proposed Mall debt restructuring will be funded through a combination of:
- TIAA agreeing to acquire from the purchaser £35m of the RBS Debt increasing its lending secured over the four Mall assets from the current £165m to £200m;
- The raising of £30.0m through the Open Offer at an issue price of 56p on the pro rata basis of 23 Open Offer shares for every 48 existing ordinary shares held;
- Approx. £16.9m of cash currently held on the Company's balance sheet.
- The effect of the Mall Debt restructuring combined with the capital raising would be to reduce the Group's pro forma net LTV as at 30 September 2021 from 61% to approx. 50% based on the Group's investment assets and central operations or from 72% to 63% on a total Group basis.
The Open Offer closed for acceptances on 29 October 2021. The Company has received valid acceptances representing approx. 73.26% of the Open Offer Shares. Following these acceptances, Growthpoint, the Company's largest shareholder has subscribed for the remaining Open Offer Shares, which has taken its participation to approx. 78.84% of the Open Offer Shares available. Following admission Growthpoint's resultant holding in the Company will be 60.76%.
Capital & Regional has also issued an update on trading and rent collections. Key details are:
- Footfall has continued to outperform the national index by 5.4%, with 32.4m visits across the portfolio in the nine months to September 2021. September 2021 represented the best month on month comparison versus 2019, following the end of the government lockdown in April 2021;
- Confident rent collection will ultimately grow beyond the 90% of contracted rent collected or agreed payment plans for 2020;
- In the three months to the end September 2021, completed 57 new lettings and renewals for a combined value of £2.1, in aggregate above the previous rent and ERV;
- Occupancy increased to 90.2%, at the end of September 2021;
- 41 new leases or lease renewals currently in solicitors' hands or with terms agreed representing a combined annualised rent of £2.15m. These transactions are scheduled to complete over the coming months and assuming all progress, occupancy will increase by 0.8% to 91.0%. This reflects a 1% increase in the 8 weeks since interim results;
- On 21st October, secured formal planning consent for the 538 apartment residential development at Walthamstow;
- Snozone has made solid progress consistent with the wider rebound in the leisure sector. The UK venues have seen a week on week increase in trade since the schools returned in September and at the start of this peak season, October half term pre-bookings were ahead of 2019 levels. Snozone Madrid continues to trade with restrictions;
- At 30 September 2021, Investment Assets (incorporating the shopping centres at Blackburn, Ilford, Maidstone, Walthamstow and Wood Green) increased in value to £386.5m from £384.7m at 30 June 2021. Managed Assets (incorporating the shopping centres at Hemel Hempstead and Luton) declined from £98.0m to £93.0m;
- Total cash on balance sheet of £78.0m as at 30 September, which is equivalent to more than one year's gross revenue. Of this approx. £54.2m was held centrally, outside of the collateral of any of the debt facilities.
Custodian REIT Plc (LON:CREI, 93.9p, 101.7p, -7.7%)
Custodian REIT has announced that it has acquired a 28,601sf industrial unit on Clifton Moor Industrial Estate, York, adjacent to York's northern bypass that connects to both the A1(M) and M62. Menzies Distribution Limited occupies the unit with a weighted average unexpired term to first break or expiry of 2.8 years. The unit has a passing rent of £186,000 pa, reflecting a NIY of 5.90%. The agreed purchase price of £2.962m was funded from existing debt facilities, resulting in net gearing increasing to 20.8% LTV.
Custodian REIT as announced that it has sold a 42,289sf car showroom in Stockport for £9.0m, £1.4m (18%) ahead of the 30 June 2021 valuation, representing a NIY of 6.7%. The property is let to Williams BMW and Mini and was purchased in July 2017 for £8.8. Following the disposal, net gearing has decreased to 19.5%.
Derwent London Plc (LON:DLN, 3,382.0p, 3,864.0p, -12.5%)
Derwent London has issued an update on rent collection for the September 2021 Quarter Day. Key details are:
- Collection rates continue to strengthen and are higher than for the preceding six quarters at the equivalent time;
- To date, 96% of September 2021 Quarter Day office rents were received which is above the 93% figure seen at June 2021 and which compares to 83% reported on 13 October 2020 for the equivalent quarter in 2020
- 94% of total rents due for the Quarter had been received with at least a further 3% expected later in the Quarter;
- 3% of the Quarter's rent remains outstanding;
- September 2021 Quarter Day receipts did not draw down any rent deposits;
- 90% of service charges for the Quarter have been received to date.
GCP Student Living Plc (LON:DIGS, 210.5p, 195.1p, +7.9%)
GCP Student Living has announced full year results to 30 June 2021. Key details are:
- Total NAV return of 15.0% and annualised total NAV return since IPO of 13.1%;
- EPRA NTA per share of 195.05p (30 June 2020: 171.78p);
- Total rental income for the year of £36.3m (30 June 2020: £47.8m) - rental income continues to be materially adversely impacted as a result of the disruption caused by the Covid-19 pandemic;
- Portfolio of 11assets with 4,116 beds located primarily in and around London, with a valuation of over £1.1bn;
- Bookings across the portfolio for the 2020/21 academic year were c.68% with the majority (c.64%) of rooms booked being occupied or subject to nominations arrangements;
- Blended NIY of operational portfolio of 4.30% (30 June 2020: 4.44%);
- At 15 October 2021, 80% of rooms across the portfolio of student accommodation had been booked for the 2021/22 academic year, and of these rooms 83% had been occupied by residents;
- Post period end, received a cash offer to acquire the Company, which was recommended to shareholders by the Board. On 6 September 2021, shareholders approved the acquisition, which if completed, is expected to occur in the coming months, subject to satisfaction of conditions.
Great Portland Estates Plc (LON:GPOR, 746.0p, 779.0p, -4.2%)
Great Portland Estates has issued a trading update for the quarter to 30 September 2021. Key details are:
- £14.3m of new annual rent signed in the Quarter, market lettings 10.4% ahead of March 2021 ERV, including £8.5m pre-let;
- £3.3m of further lettings under offer, 7.3% ahead of March 2021 ERV;
- c.£38 m of new annual rent in negotiation, demonstrating demand for prime offices and best in class flexible spaces;
- First fully fitted and managed space at 16 Dufour's Place fully let, average rent £191psf;
- Improved September quarter rent collection; strongest quarterly performance since December 2019.
The Great Ropemaker Partnership (GRP), the 50:50 joint venture between Great Portland Estates plc (GPE) and Ropemaker Properties Ltd (the property nominee of the BP Pension Fund) announced that it has sold 160 Old Street, EC1 to a fund advised by J.P. Morgan Global Alternatives. The headline price of £181.50m reflected a 5% premium to the March 2021 valuation. The building was comprehensively refurbished by GRP completing in 2018 to provide 166,300sf of high-quality accommodation arranged over lower ground, ground and eight upper floors. The office space is 70% let to Turner Broadcasting to 2034. The balance of the office and retail space is let to a variety of occupiers including Robert Bosch Limited, Pusher Limited and Sensat Surveying Limited together with a small amount of vacant space.
Hammerson Plc (LON:HMSO, 32.2p, 69.0p, -53.4%)
Hammerson has announced that since its half year results on 5 August, occupiers have been able to operate in all areas with minimal COVID-related restrictions. Overall, footfall in all territories now stands at c.15-20% below 2019 levels, although some centres in the UK exceeded 2019 comparable levels around the key August Bank holiday weekend and have continued to perform strongly since. . Rent collection rates have improved with 70% of total rents collected for Q4 to date, significantly ahead of any equivalent point in a quarter since Q1 2020. As with Q3, the UK continues to be the strongest performer, with 74% of rent collected, Ireland stands at 71%, with France at 65%. FY 2020 collections now stand at 94% and FY 2021 YTD at 78%.
Hibernia REIT Plc (LON:HBRN, 107.2p, 172.7p, -37.9%)
Hibernia REIT has announced that it has exchanged contracts and simultaneous completion of the sale of One and Two Dockland Central to Commerz Real AG for its open-ended real estate fund, hausInvest, for €152.3m. The price is marginally ahead of the March 2021 book value and reflects a NIY of c. 4.75% and a capital value of €1,032psf. for the office accommodation. The property was constructed in 2000 and is situated on Guild Street in Dublin's North Docks. It consists of 147,500sf of office accommodation across two adjoining blocks with parking spaces for 144 cars and 167 bikes. It is fully let to a range of occupiers, primarily from the technology, banking & capital markets and state agency sectors, with contracted rental income of €8.0m pa (average office rent of €51psf), an average of two years to next rent review and more than seven years term certain remaining. Hibernia purchased One and Two Dockland Central in July 2014 for €90.8m, equating to a net initial yield of 6.6% and a capital value of €629psf for the office space. A further €21m was invested in refurbishing and expanding the office accommodation and facilities and the Property was re-let. The sale price gives Hibernia an ungeared IRR on its investment in excess of 12%.
Home REIT Plc (LON:HOME, 115.0p, 104.6p, +9.9%)
Home REIT has announced that it has deployed £166.4m of the proceeds raised in its £350m equity issue in September 2021. It has acquired 23 portfolios comprising 366 high quality properties located across England and Wales for an aggregate purchase price of £166.4m (including acquisition costs). The properties have added a further 1,850 beds to the portfolio bringing the total to just under 5,700, whilst further growing the geographic diversification of the portfolio across every region of England and including the first acquisition in Wales. The properties are let on an average lease length of 25 years at low and sustainable rents, on new, unbroken, long term, full repairing and insuring leases to 12 different specialist registered homeless charities, including three that are new to the tenant base. The leases are subject to annual upward-only rent reviews, index-linked to the CPI, with an annual collar and cap of 1% and 4% respectively.
Impact Healthcare REIT Plc (LON:IHR 118.2p, 111.8p, +5.7%)
Impact Healthcare REIT has issued a business and trading update for the quarter to 30 September 2021. Key details are:
- NAV as at 30 September 2021 of £392.1m, 111.82p per share (30 June 2021: £388.0m, 110.66p);
- Dividend per share of 1.6025p declared today for the period;
- Portfolio valued at £447.7m (30 June 2021: £432.4m) - represents a 1.4% increase in value on a like for like basis and a total increase of 3.5% including an acquisition and a disposal;
- Average rental growth level of 3.79% on assets which were reviewed during the period;
- 100% of rental income is linked directly to inflation: 87.4% RPI (with a floor and cap at 2% p.a. and 4% p.a.), 11.5% RPI (with a floor and cap at 1% p.a. and 5% p.a.) and 1.1% annual CPI uplift;
- EPRA 'topped up' NIY was 6.67% (30 June 2021 6.75%);
- Continues to receive 100% of rent payments as they fall due;
- Gross LTV was 14.5% (30 June 2021: 13.7%).
Impact Healthcare REIT has announced that it has completed on the sale of Heeley Bank a 67-bed care home in Sheffield, acquired as part of a portfolio of four homes leased to MMCG in March 2020. The home was not a long-term strategic asset for Impact or MMCG, and as part of the Group's active portfolio management strategy, was jointly marketed post acquisition. The sale at £1.68m was 29% above the purchase cost of the home and 12% above the carrying value at 30 June 2021. Impact has also exchanged contracts to acquire a purpose-built 83-bed care home situated in a small coastal town in the South West of England. Impact considers it benefits from an affluent catchment area with supportive age demographics and limited competition. All the home's bedrooms are en-suite and Impact advises that the home has a good reputation locally with a well-established trading history. The rent has been set at a sustainable level to produce an initial rent cover on the home in excess of 2x. The Group has appointed one of its existing tenants, Minster Care Management, who introduced this opportunity to the Group, as the new tenant of this home at an initial rent of £414,000, reflecting a NIY of 7.2%. The property benefits from a new, unbroken 20-year lease, with rent subject to an annual upward-only review linked to the Retail Price Index, with a floor of 2% pa and a cap of 4% pa.
Industrials REIT Ltd - Formerly Stenprop - (LON:MLI, 188.0p, 147.0p, +27.9%)
Industrials REIT (formerly Stenrop) s issued a trading update for the period 1 July to 30 September 2021. Key details are:
- Recorded a 27% weighted average uplift on the previous passing rent on new lettings and 17% on lease renewals, averaging 21% across all leasing transactions (previous quarter: 18% and 25% respectively, averaging 21% across all transactions);
- Rental incentives remain low on new lettings and renewals with average rent-free incentives of 1.1 months on an average lease term of 4.2 years and 3.6 years to earliest break (previous quarter: 1.6 month rent free on an average term of 4.4 years and 2.7 years to earliest break);
- Like-for-like passing rent was stable (previous quarter: +2.50%) and up 6.70% over the past 12 months. The average passing rent of £5.57psf has been diluted down marginally during the quarter due to new acquisitions with lower than average passing rents (previous quarter: £5.60psf);
- Like-for-like ERV increased to 6.5% in the 12 months to 30 September 2021, resulting in a 9.8% premium to the average passing rent (previous quarter: 5.5% like-for like growth and a 10.1% premium to passing rent);
- Occupancy decreased by 0.8% to 93.9% (30 June 2021: 94.7%, 31 March 2021: 93.7%, 31 December 2020: 93.1%). Two leases expiries in September were accountable for 1.3% of the fall in occupancy, meaning that over the remainder of the portfolio occupancy improved by 0.5% during the period;
- £1.18m pa of rental income was contracted through 26 new lettings and 27 lease renewals over 170,081sf (previous quarter: £1.44m of new income over 39 new lettings and 27 renewals on 213,519sf). In addition, a further 13 lettings across 72,963sf of space had exchanged by the quarter end (previous quarter: four deals over 30,000sf), taking the total amount of space upon which new leases were completed or exchanged to 243,000sf (previous quarter: 243,500sf);
- 7% of completed leases were contracted through Industrials REIT's short-form digital 'Smart Leases', whilst 70% of leases signed included at least a 3% annual uplift in rent throughout the term of the lease (previous quarter: 75% of new leases were Smart Leases, whilst 71% of leases signed contained 3% fixed uplifts);
- At quarter end there were 86 leasing transactions under offer on over 415,980sf of space (previous quarter: 76 transactions over 286,000sf of space), of which 254,814sf related to new lettings and 161,166sf to existing customer renewals (previous quarter: 113,000sf and 173,000sf respectively);
- Rent collections for all periods in 2020 are now ahead of our target of 95% of rent collected vs originally billed, while 2021 is trending towards similar levels as tenants are paying faster and bad debts have continued to reduce;
Seven new MLI estates totalling £36.5m were acquired this quarter as well as the significant disposal of Trafalgar Court in Guernsey.
Land Securities Group Plc (LON:LAND, 683.4p, 985.0p, -30.6%)
Land Securities Group has announced that its rent collection rates continue to improve. As at 12 October 2021 - collection day 10 - 85% of the net rent due on 29 September had been paid, this compares with 81% for the June quarter date. Of the £13m of rent outstanding, £5m relates to customers who have withheld payment pending documentation of agreed concessions.
U+I Group and LS Development Holdings, a newly formed wholly-owned indirect subsidiary of Land Securities Group, have announced that they have reached agreement on the terms of a recommended all cash offer by Landsec Development for U+I. Key details are:
- Under the terms of the acquisition, U+I Shareholders will be entitled to receive:
- 149p in cash for each U+I Share
- The acquisition values U+I at approx. £190m on a fully diluted basis and the price of 149p per U+I share represents a premium of approximately:
- 73% to the closing price of 86.0p per U+I Share on 29 October 2021
- 71% to the volume-weighted average price of 87.2p for the one-month period ended 29 October 2021
- 70% to the volume-weighted average price of 87.8p for the three-month period ended 29 October 2021
· It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.
Lok'nStore Plc (LON:LOK, 888.0p, 556.0p, +59.7%)
Lok'nStore has announced that it has exercised the £25m accordion and one-year term extension options within its RCF. This increased facility will provide additional headroom to underpin the funding for Lok'nStore's new landmark store pipeline of 13 stores which, when developed, will add 38% to existing trading space. Current facility utilisation stands at £65.4m and combined with cash balances the £100m facility provides over £43m of available headroom. The facility is a joint agreement with ABN AMRO and NatWest Bank participating equally and is closely aligned to the terms of the Group's previous facility. ABN Amro replaced Lloyds Bank in June 2021 as one of the Group's strategic banking partners. The principal bank covenants and margin are unaffected by the increased facility. With a margin rate of 1.50% currently the Group's average cost of debt over the last 12 months has been 1.54%.
Lok'nStore Group has announced full year results to 31 July 2021. Key details are:
- Group revenue of £21.9m up 21.3% (FY 2020: £18.04m);
- Operating profit of £7.46 m up 29.0% (FY 2020: £5.79 m);
- Total occupied space up 35.3% (31 July 2020: 5.9%);
- Occupancy up from 69.6% to 85.8%;
- Pricing up 8.7% year-on-year;
- Cash available for distribution of 3p per share up 33.3% to 28.4p (2020: 21.3 p);
- LTV ratio of 21.0% (31 July 2020: 19.3%);
- Average cost of debt of 1.54% (31 July 2020: 1.69%);
- £26.9 m invested in new stores;
- Pipeline of 14 new stores will take total to 518;
Pipeline will add 38% more trading space.
LondonMetric Property Plc (LON:LMP, 262.0p, 190.3p, +37.7%)
LondonMetric Property has announced the acquisition of two last mile logistics assets in Fulham and Tottenham for a combined purchase price of £20.2m. The assets total 44,000sf and have been acquired with vacant possession in two separate transactions. LondonMetric will refurbish both properties at a cost of £1.4m which, once fully let, is expected to deliver a blended yield on cost of 4.5%. At the 21,000sf warehouse in Fulham, terms have already been agreed with Jacuna Kitchens, a dark kitchens operator, to pre-let c. 60% of the space. These assets complement LondonMetric's other recent London last mile logistics acquisitions in Brent Cross and Streatham, which were acquired earlier in the year.
LXI REIT Plc (LON:LXI, 146.0p, 133.5p, +9.4%)
LXi REIT has issued an update ahead its half-year results to 30 September 2021. Key details are:
- Property portfolio valuation, as at 30 September 2021, of £1.22bn, representing a 4.9% like-for-like increase over the six-month period since 31 March 2021 and a total increase of 29.7% over that period, including acquisitions and disposals;
- Like-for-like movements, resulting from both yield compression and rental growth, were spread across the main sub-sectors as follows: Foodstores +5%, Industrial +7%, Budget Hotels +2%, Healthcare +3%, Pubs +7%, Garden Centres +4%, Car Parks +3% and Drive-thru Coffee +2%;
- Expects to announce a NAV per share of approx.133.5p, reflecting growth of approx. 6.2% over the six-month period;
- Inclusive of dividends paid during the six-month period, expects to deliver a total NAV return of approx. 8.6% for the half-year;
- Average rental growth was 2.9% pa on assets which were reviewed during the six-month period from 1 April 2021;
- Collected 100% of the rent due for Q4 2021.
LXi REIT has announced the following long-let forward funding acquisitions for a total cost of £19.5m, reflecting an accretive 5.1% average NIY:
- the Company has exchanged contracts on the pre-let forward funding of a Lidl foodstore and a Lok’nStore self-storage facility in Basildon, Essex;
- the foodstore has been fully pre-let to Lidl on an unbroken 20-year lease, with five yearly RPI inflation-linked uplifts (collared at 1% pa and capped at 3% pa);
- the self-storage facility has been fully pre-let to Lok’nStore on an unbroken 25-year lease, with five yearly rental uplifts at a fixed growth rate of 2.5% pa; and
the acquisitions will be funded using the Company's revolving credit facility and the Company will receive an income during the construction periods.
McKay Securities Plc (LON:MCKS, 219.0p, 309.0p, -29.1%)
McKay Securities as announced the acquisition of Evergreen Studios, a fully refurbished office asset in central Richmond, for £14.75m, representing a NIY of 5.8%. The property was acquired from Sheen Lane Developments, which has taken a two-year leaseback of the property. Totalling 17,325sf, Evergreen Studios offers Grade-A open plan office space spread across five floors ranging from 3,300 to 3,600sf. The entire building has been refurbished to a high standard, incorporating wellness focused amenities to meet post-covid workplace trends, including high-quality air conditioning, access to outside space via rooftop terraces, private kitchens, car and cycle parking and shower facilities. In line with McKay's ESG strategy, the building also includes a range of energy saving measures, including LED lighting and double glazing, and has an EPC rating of B. On completion of the sale, Sheen Lane Developments has entered into a two-year lease of the whole building, at a rent payable from commencement of £0.92m pa (£53.00psf).
Palace Capital Plc (LON:PCA, 240.8p, 350.0p, -31.2%)
Palace Capital has issued a trading update for the six months to September 2021. Key details are:
- 97% of rents collected for the June quarter, with 84% of rents due for the September quarter at the time of the announcement, a higher proportion than at the equivalent stage of the September 2020 quarter;
- 29 lease events, including nine new lettings, delivering an additional £0.6m of annual rent;
- Further 28 apartments at Hudson Quarter, York sold at a total value of £9.9m, with an additional eight currently under offer to the value of £3.0m;
- Terms agreed to let an additional 11,280sf of new office space at Hudson Quarter;
- £26.5m development facility from Barclays Bank for Hudson Quarter reduced to £1.6m and expected to be fully repaid next month, ahead of schedule;
- £30m disposal strategy on track with sales already completed or exchanged to the value of £12m;
- Cash reserves of £13.7m as at 30 September, with a further £5.0m available from the revolving credit facility;
LTV of c. 36% as at 30 September.
Picton Property Income Limited (LON:PCTN, 98.5p, 99.9p, -1.4%)
Picton Property Income has announced that it has completed the freehold acquisition of Madleaze Trading Estate, located in central Gloucester for £13.1m. Adjacent to Gloucester Quays Retail Park and the Gloucester and Sharpness canal, the property comprises 18 industrial units totalling 304,000sf on a 10.3 acre site. The estate is let to eight occupiers and currently includes two vacant units, which are to be refurbished prior to re-leasing. The total rental income is £0.75m pa, equating to only £2.74psf. This is expected to rise to £0.86m pa once the estate is fully let and has the potential to increase further as rents are reset to current market levels. The purchase price reflects a NIY of 6.1% and a low capital value of £44psf, which is below the estimated reinstatement cost. The Company has funded the acquisition using its RCF and the proforma LTV will increase to 22% post acquisition (June 2021: 21%).
Picton Property Income has issued a portfolio update. Key details are:
- In the quarter to 30 September 2021, completed several asset management initiatives and lettings adding £0.8m pa to the annualised rent roll, either in line or ahead of ERV;
- In Barking, pre-let a 45,000sf warehouse on a 15-year term, subject to landlord enabling works, which are due to complete this year. The new rent of £0.6m pa is 43% ahead of the previous passing rent and in line with the June ERV. The unit became vacant during the quarter;
- In Bury, secured planning permission on a former retail warehouse unit to enable a pre-letting to JD Gyms on a ten-year term, subject to landlord enabling works. The rent of £0.15m pa is in line with the June ERV. Following the completion, the retail warehouse portfolio will be fully let;
- In Huddersfield, it completed the sale of a non-core retail asset for £0.75m, 7% ahead of the June valuation;
- In Glasgow, completed the letting of the first floor at 180 West George Street for £0.2m pa, 4% ahead of the June ERV, for a term of five years;
- In Chatham, completed the letting of all the remaining space at 50 Pembroke Court to NatWest at £0.27m pa, 7% ahead of the June ERV, for a term of five years, subject to break.
Primary Health Properties Plc (LON:PHP, 153.0p, 115.4p, +32.6%)
Primary Health Properties has announced that it has refinanced a number of legacy loan facilities with Aviva Investors, with a new £200m facility for a 15-year term at a fixed rate of 2.52% and renewed its existing £100m facility with NatWest. In total, these arrangements reduce the Group's current average cost of debt from 3.4% to 2.9%, the marginal cost of debt remains at 1.7%, and results in interest cost savings of approximately £5m pa, extending the weighted average debt maturity to 7.0 years. It continues to have significant headroom, after capital commitments, with cash and undrawn loan facilities of £237m.
Regional REIT Limited (LON:RGL, 89.0p, 99.1p, -10.2%)
Regional REIT has announced that, at 21 October 2021, it had collected 91.3% of the rent due for Q3 2021. This comprised: (i) rent received of 87.5%, (ii) monthly rents of 2.1% and (iii) receipts under agreed collection plans of 1.7%.
Schroder European Real Estate Investment Trust Plc (LON:SERE, 102.4p, 148.5p, -31.0%)
Schroder European Real Estate Investment Trust has issued an update on the valuation of the property portfolio and rent collection as at 30 September 2021. Key details are:
- Direct property portfolio valued at €201.1m, reflecting a like for like increase over the quarter, excluding the impact of the two recently announced acquisitions in Nantes and St Cloud, of 1.1%, or €2.2m;
- SEREIT advises that the Valuation increase was primarily driven by:
- improved yield re-rating at the Hamburg office investment, delivering a valuation increase of €1.2m, or 5.5%; and
- improved ERV growth and yield re-rating at the Stuttgart office investment, delivering a valuation increase of €1.1m, or 5.6%.
- · 95% of rent due for the quarter ended 30 September 2021 had been collected. This is an increase on the March (92%) and June (94%) 2021 quarters.
Secure Income REIT Plc (LON:SIR, 404.0p, 391.1p, +3.3%)
Secure Income REIT has announced that 100% of the £44.2m of rent that fell due between 8 July 2021 and 7 October 2021 had been collected. Included within the £44.2m of total rents receivable is £17.6m of rent, which represents the total amount due from Merlin Entertainments Limited, which was deferred from June and September 2020. The deferred rents were received in full by the due date. Only 0.04% of the annualised gross rent roll is outstanding for the current and any prior rent due dates.
SEGRO Plc (LON:SGRO, 1,294.5p, 909.0p, +42.4%)
SEGRO and Schroders have completed a property swap transaction in which SEGRO has acquired from Schroders a 256,000sf urban warehouse estate in West London for £140m and Schroders has acquired from SEGRO a portfolio of UK big box and urban assets totalling 880,000sf for £205m. Schroders have paid the balance of £65m to SEGRO. SEGRO has acquired Matrix Park, a fully let urban warehouse estate in Park Royal, West London, close to existing SEGRO assets and the A40. The estate also includes a 1.4 acre development site. Based on current passing rent and lease reviews and renewals under discussion the estate generates a passing rent of £4.1m and has an average WAULT of five years. The portfolio acquired by Schroders consists of two stand-alone, fully let big box assets in Hams Hall, Birmingham and Brackmills, Northampton as well as four urban assets including multi-level warehouse X2 close to Heathrow Airport, Oakwood in Park Royal, Advent Way in North London and a cross-dock warehouse in Radlett. Based on current passing rent and lease reviews and renewals under discussion the portfolio generates a passing rent of £7.5m and has an average WAULT of six years.
SEGRO has issued a trading update for the period 1 July to 19 October 2021. Key details are:
- £26m (Q3 2020: £16 m) of new headline rent signed during the quarter, taking the total for the nine months to 30 September 2021 to £64m (9M 2020: £50m). This includes £9m (Q3 2020: £6m) of new, unconditional pre-let agreements and lettings of speculative developments prior to completion, taking the nine-month figure to £30m (9M 2020: £25m);
- New headline rents on review and renewal up more than 13% (UK: 18 %, CE: 2%) on previous passing rent in the nine months to 30 September 2021 as ongoing asset management continues to capture reversionary potential from our existing portfolio;
- Vacancy rate reduced further to 3.2% (30 June 2021: 4.3%);
- Customer retention is 76% for 2021;
- Potential to increase annualised rent roll by 20% (£92m) from the pipeline of space under construction and in advanced discussions;
- So far in 2021, completed 450,000sqm (9M 2020: 695,800sqm) of new developments, capable of generating £25m (9M 2020: £38m) of headline rent, 93 % which has been let. Developments capable of generating a further £31 m of rent are expected to complete in the fourth quarter, £26 m of which has been secured;
- At 30 September 2021, over 998,000sqm of space was under construction, equating to potential future headline rent of £68m (30 June 2021: 1.1m sqm, £67m) of which 66 % has been secured (30 June 2021: 66 %). Once complete and fully let, the pipeline is expected to generate a yield on total development cost of approx. 6.8 %;
- Additional pre-let projects in advanced discussions equating to 196,000sqm of space with potential capex of £211m and associated rent of £24m are expected to commence in the coming months;
- In 2021 so far, acquired over £260m of land to top up the land bank and provide further growth opportunities. During the third quarter, acquired £66m of land for future development, including sites in Italy and Poland, as well as two further plots of land in London acquired in early October;
- Sold £98m of assets including a portfolio of urban warehouses in Italy and a stand-alone big box warehouse in Spain;
- Issued the first SEGRO Green bond, a ten-year €500m senior unsecured bond with a coupon of 0.5%;
- Net debt (including our share of debt in joint ventures) at 30 September 2021 increased to £3.3bn (30 June 2021: £3.1bn);
Pro forma look-through LTV of 23% (30 June 2021: 21%).
Supermarket Income REIT Plc (LON:SUPR, 119.0p, 108.0p, +10.2%)
Supermarket Income REIT has announced that it has raised gross proceeds of £200m through a significantly oversubscribed issue of 173,913,043 New Ordinary Shares at 115p per New Ordinary Share.
The PRS REIT Plc (LON:PRSR, 102.0p, 99.0p, +3.0%)
PRS REIT has announced full year results to 30 June 2021. Key details are:
- Revenue up 106% to £26.6m( FY 2020: £12.9m);
- Net rental income up 111% to £21.5m (FY 2020: £10.2m);
- Operating profit up 170% to £53.7m (FY 2020: £19.9m);
- Profit after tax up 169% to £44.1m (FY 2020: £16.4m);
- Basic EPS up 170% to 8.9p (FY 2020: 3.3p;
- Net assets up 4% to £490m (30 June 2020: £471m);
- IFRS and EPRA NTA per share were 99.0p (31 Dec 2020: 96.2p: 30 Jun 2020: 95.1p);
- Total dividends per share declared, 4.0p (2020: 4.0p);
- In Q1 2022, a further 307 homes were added, taking the portfolio to 4,291 completed homes, with an ERV of £41.0m pa. A further 764 homes were under way at 30 September 2021;
- Rental demand remains strong at 30 September 2021, 98% of 4,291 completed homes were occupied, and a further 52 homes reserved for qualified applicants with rental deposits paid.
The Unite Group Plc (LON:UTG, 1,101.0p, 837.0p, +31.5%)
The Unite Group has issued an update on current trading and provided quarterly property valuations for the Unite UK Student Accommodation Fund ('USAF') and the London Student Accommodation Joint Venture ('LSAV') as at 30 September 2021. Key details are:
- 94% of bed spaces for the 2021/22 academic year are now let across the total portfolio (2020/21: 88%, 2019/20: 98%), slightly below management's previous expectations for 95-98% occupancy;
- UK direct-let sales have been particularly strong, accounting for 21% of available beds (2020/21: 16%);
- International travel restrictions have continued to have an effect on demand from China, where record numbers of new undergraduate students have not yet translated into bookings;
- Pricing activity remains disciplined in the market with only limited discounting in specific markets with higher availability. As a result, expects to deliver rental growth of 2.3% for the 2021/22 academic year;
- Reduction in occupancy and rental income for the 2021/22 academic year expected to result in EPRA EPS at the lower end of guidance for FY2021 of 27-30p (excluding the LSAV performance fee). The impact of lower rental income in terms two and three of 2021/22 will also reduce rental income for the 2022 financial year by £8-10m (Unite share) compared to management's previous expectations, equivalent to around 2p of EPRA EPS;
- Collected 96% of rent due for the 2020/21 academic year, excluding the impact of the ten-week rental discount offered to customers for the second semester. There remains 1% of rent still to be billed for the 2020/21 academic year;
- At 30 September 2021, USAF's property portfolio was valued at £2,825m, reflecting a 1.1% increase on a like-for-like basis during the quarter;
- LSAV's property portfolio was valued at £1,764m, reflecting a 3.7% increase on a like-for-like basis during the quarter;
- Valuation increase driven by increased occupancy for the 2021/22 academic year and rental growth. In addition, the USAF and LSAV portfolios have seen two bps and eight bps of yield compression respectively during the quarter. The USAF and LSAV portfolios are valued at weighted average yields of 5.2% and 4.2% respectively.
Tritax EuroBox Plc (LON:EBOX, 113.2p, 105.2p, +7.6%)
Tritax EuroBox has announced that it has agreed the acquisition of a €32.1m asset in the Rhine-Ruhr region in Germany. The asset, held freehold, has a total gross internal area of 16,632 sqm and comprises three purpose-built logistics facilities located in the heart of the prime logistics location in the Rhine-Ruhr region. Unit 1 is expected to be completed in December 2021 whilst units 2 and 3 will be delivered in January-February 2022. Of the building's three units, Tritax EuroBox believes Units 1 and 2 are let to strong tenants with robust covenants, whilst Unit 3 is currently vacant with the benefit of a rental guarantee. The asset will generate a total annual rent of €1.21m on leases with WAULT of six years. The acquisition price reflects a NIY of 3.7% based on the income from the existing leases and rental guarantee, with the opportunity to capture upside from the letting of the vacant unit under rental guarantee.
Urban Logistics REIT Plc (LON:SHED, 179.0p, 149.8p, +19.5%)
Urban Logistics REIT has issued a trading update for the half year to 30 September 2021. Key details are:
- 99.4% occupancy across 91 logistics properties;
- rent collection over 99% for the half year ended 30 September 2021;
- deployment or commitment of capital from July 2021 fundraising across eight transactions for an aggregate consideration of £103m (5.5% weighted NIY);
- C. £50 of further investments are in advanced stages of contractual progress and are expected to be completed in the near term at a weighted average 6.2% NIY;
- new pipeline of over £400m of high-quality logistics properties identified; and
completed 15 new lease events across the portfolio, totalling 813,939sf generating an uplift of £1.6m in contracted rent. These events comprise 11 new lettings, three regears and an open market rent review.
Workspace Group Plc (LON:WKP, 815.5p, 938.0p, -13.1%)
Workspace Group has issued a trading update for the second quarter of its 2021/22 financial year. Key details are:
- Customer demand improved through the second quarter, with a strong pick-up in activity in September. There was an average of 935 enquiries and 138 lettings per month in the quarter;
- Like-for-like rent roll was up 2.1% in the first six months to £87.3m, with occupancy improving and pricing stabilising;
- Like-for-like occupancy was up 2.7% in the quarter to 85.6%, and up 3.7% in the half year from a low of 81.9% at 31 March 2021;
- Pricing has stabilised, with like-for-like average rent per sq. ft. up 0.3% in the second quarter to £35.50, after a 2.3% fall in the first quarter;
- Significant increase in customers returning to their offices over the second quarter, with utilisation of centres by the end of September peaking at 56% of pre-Covid levels mid-week, and 52% over the week as a whole;
- 97% of rent due for the second quarter collected to date, ahead of the level of rents collected at the same point in the previous quarter;
- Strategic recycling of capital with the disposal of 13-17 Fitzroy Street for £92m and the acquisition of The Old Dairy in Shoreditch for £43.4m;
- £318m of cash and undrawn facilities and proforma LTV of 23%.