REIT News - November 2022

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Welcome to Ince Corporate Finance’s REIT News update...

REIT Market Overview

October was an active month in terms interim trading updates. However, in contrast with previous months, several groups decreased investment activity whilst the commercial and residential property investment market in the UK adjusts downward due to rising interest rates, high inflation and an increasing risk of recession.

CLS Holdings completed the sale of a 36,711 sqft office space in Coulsdon, Greater London, for £7.0 million. MLI completed two acquisitions of units adjacent to existing holdings totalling £5.2 million. Great Portland Estates sold the freehold of 50 Finsbury Square, EC2 to a private German family office for a price of £190.0 million.


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


AEW UK REIT Plc (LON:AEWU, 89.0p, 121.9p, -27.0%)

AEW UK REIT plc, which directly owns a value-focused portfolio of 35 regional UK commercial property assets, announced its unaudited Net Asset Value and interim dividend for the three-month period ended 30 September 2022. Key details are:

  • NAV of £193.08 million or 121.88 pence per share as at 30 September 2022 (30 June 2022: £200.40 million or 126.50 pence per share);
  • NAV total return of -2.07% for the quarter (30 June 2022 quarter: 6.53%);
  • 3.71% like-for-like valuation decrease for the quarter (30 June 2022 quarter increase: 4.49%);
  • EPRA earnings per share ("EPRA EPS") for the quarter of 1.08 pence (30 June 2022 quarter: 1.50 pence);
  • Interim dividend of 2.00 pence per share for the three months ended 30 September 2022, paid for 28 consecutive quarters and in line with the targeted annual dividend of 8.00 pence per share;
  • Loan to NAV ratio at the quarter end was 31.07% (30 June 2022: 29.94%). The Company had capital available for deployment of £38.28 million and its loan facility was fully drawn; 
  • Cost of debt fixed at 2.959% in May 2022 for the next five years;
  • Share price total return of -16.89% for the quarter (30 June 2022 quarter: -2.86%);
  • Acquisition of JD Gyms, Glasgow, for a purchase price of £2.60 million, representing a capital value of £99 per sqft. The price reflects a net initial yield of circa 7.4%;
  • Completed sale of Moorside Road, Swinton, for £1.71 million, resulting in a circa 13% IRR over the hold period. The sales price reflects a net initial yield of circa 6.6% and a capital value of £75 per sqft;
  • Completed sale of Bath Street, Glasgow, for £9.30 million, following completion of a long running business plan;
  • Completed sale of Eastpoint Business Park, Oxford, for £29.0 million, producing an IRR in excess of 22%;
  • New ten-year lease to Senior Architectural Systems Ltd at Mangham Road, Rotherham, providing a rent of £410,000 per annum representing a significant uplift in income against the previous passing rent of £275,000 per annum.


Alternative Income REIT Plc (LON:AIRE, 73.5p, 96.9p, -24.2%)

Alternative Income REIT provided a business update. Key details are:

  • New target annual dividend of at least 5.7p per share, a 3.6% increase on the prior year;
  • Declared an interim quarterly dividend of 1.375pps for the quarter ended 30 September 2022;
  • Having achieved the Company's target dividend of 5.5pps last year the Board has set a new dividend target of 5.7pps for the year ending 30 June 2023. This increase reflects the Board's intention to pay a progressive dividend consistent with the Company's stated aims;
  • The Adjusted EPS was 1.45pps for the quarter (June 2022: 1.38pps), reflecting 105.07% dividend cover;
  • At 30 September 2022, the Group's property portfolio, comprising 19 assets, had a fair value of £118.6 million, representing a 0.6% increase over the quarter (30 June 2022: £117.9 million);
  • At 30 September 2022, the Net Initial Yield on the Group's portfolio was 5.73%, compared with 5.70% at 30 June 2022;
  • Against a downward trend in property investment values across the wider market, the Group's portfolio has continued to show resilience, with a slight overall increase in capital values. The portfolio continues to show strong income growth through a combination of annual and regular inflation-linked reviews, with the September 2022 annualised passing rent rising to £7.3 million per annum once agreed rent reviews are documented, an increase of 1.4% quarter on quarter;
  • At 30 September 2022, the Company's unaudited NAV was £78.06 million, 96.97pps (30 June 2022: £77.60 million, 96.40pps) representing a 0.6% increase over the quarter, due to increases in the portfolio valuation and net income;
  • When combined with the 1.375pps dividend paid for the quarter, this produces an unaudited NAV total return for
  • the quarter of 2.25% (30 June 2022: 5.19%);
  • At 30 September 2022, the Group's assets are 100% let (30 June 2022: 100%). The weighted average unexpired lease term at 30 September 2022 was 17.3 years to the earlier of break and expiry (30 June 2022: 17.5 years) and 19.1 years to expiry (30 June 2022: 19.4 years);
  • 96% (30 June 2022: 96%) of the portfolio's income stream is reviewed periodically on an upward only basis, in line with inflation (51% annually); with 69% and 27% of the portfolio inflation-linked (subject to floors and caps) to RPI and CPI, respectively. The remaining 4% of the portfolio's income stream is subject to Open Market Value reviews or expiries;
  • Over the next 12 month period, 68% of the Group's income will be reviewed (eight annual index-linked rent reviews and six periodic index-linked rent reviews (3 or 5 years since the previous reviews));
  • Rent collection remains resilient with 100% expected for the September 2022 quarter. The rents for the December 2022 quarter are split 84% payable quarterly in advance and 16% payable monthly in advance.


Assura Plc (LON:AGR, 55.9p, 57.2p, -2.2%)

Assura plc, the leading primary care property investor and developer, announced its Trading Update for the first half of the year to 30 September 2022. Key details are:

  • Portfolio currently stands at 603 properties with an annualised rent roll of £139.3 million;
  • Invested £141 million on additions during the half at an average yield on cost of 5.0%; six development completions, 13 acquisitions and three assets in co-investment arrangements, largely in the first quarter;
  • Three developments started on site, including the Group’s first net zero carbon project in Fareham;
  • Completed disposal of portfolio of 61 properties for £73 million at a small premium to book value;
  • Seven lease regears completed (£1.1 million of existing rent);
  • Completed five asset enhancement capital projects (total spend £2.2 million); on site with a further six (total spend £8.8 million);
  • Currently on site with 13 developments; total cost of £153 million (March 2022: 17, £166 million) of which £65 million has been spent to date;
  • Immediate development pipeline of 10 schemes, where it would normally be expected to be on site within 12 months; total cost of £83 million (March 2022: 20, £158 million);
  • Monitoring the extended development and acquisition pipelines as well as the immediate development pipeline in light of the current macro-economic environment;
  • 35 lease re-gears covering £6.4 million of existing rent roll in the current pipeline;
  • Pipeline of 18 capital asset enhancement projects (projected spend £10.5 million) over the next two years;
  • At 30 September 2022 net debt stood at £1,092 million with cash and undrawn facilities of £284 million;
  • All drawn facilities are unsecured with fixed interest (weighted average interest rate of 2.3%) and weighted average maturity 7.5 years.


Capital & Counties Plc (LON:CAPC, 107.1p, 209.0p, -48.8%)

Capco released a trading update in relation to the period from 30 June 2022 to 31 October 2022. Key details are:

  • 35 new leases and renewals representing £3.0 million of contracted income signed 6.2% ahead of 30 June 2022 ERV;
  • Covent Garden valuation as at 30 September 2022 of £1,785 million, representing a decline of 2.0 percent like-for-like versus 30 June 2022 driven by a 1.5 per cent increase in ERV and a 12 basis point outward movement in the equivalent yield to 3.9%;
  • Strong customer line up and new brands introduced to the estate including Mejuri and Hoka;
  • High occupancy levels maintained with 3% EPRA vacancy and positive footfall and sales metrics;
  • Access to liquidity of £421 million comprising cash of £121 million and £300 million of undrawn facilities (30 June 2022: £439 million);
  • Trading performance at Covent Garden remains resilient with positive operational indicators on footfall and sales. There is strong leasing demand ahead of ERV across all uses with a further £2.0 million of rent under offer or under negotiation. Since the beginning of the year, Capco has secured 60 leasing transactions representing £6.9 million of contracted income, 10.4% ahead of 31 December 2021 ERV;
  • EPRA vacancy is approximately 3% at 30 September 2022 (30 June 2022: 2%). A further 5.5% of ERV is in or is held for development or refurbishment (30 June 2022: 6.7%);
  • Rent collection in relation to the fourth quarter of 2022 is currently 97%;
  • As at 30 September 2022, the independent property valuation of Covent Garden was £1,785 million, representing a like-for-like decrease of 2.0% since 30 June 2022. The movement was driven by an increase of 1.5% in ERV on a like-for-like basis to £80.4 million, and an outward movement in the equivalent yield of 12 basis points to 3.94%;
  • Capco's investment in Shaftesbury shares was valued at £357 million based on a share price of 368 pence per share on 30 September 2022 (30 June 2022: £506 million based on a price of 522 pence per share);
  • Capco has a strong balance sheet and access to significant liquidity of £421 million, comprising £121 million of cash and £300 million of undrawn facilities (30 June 2022: £439 million);
  • During the period, Capco exercised a one-year extension option on its £300 million unsecured revolving credit facility for Covent Garden, taking the maturity to September 2025. The facility is undrawn and has an additional one-year extension option, subject to lender consent;
  • Net debt within Covent Garden of £371 million resulted in a loan to value ratio of 21%. Group net debt was £623 million resulting in a net debt to gross assets ratio of 27%.


CLS Holdings Plc (LON:CLI, 143.4p, 350.1p, -59.0%)

CLS Holdings announced that it has simultaneously exchanged and completed on the sale of Sentinel House in Coulsdon, Greater London, for £7.0 million excluding costs. Sentinel House was acquired by CLS in 2012 and consists of 3,211 sqm (36,711 sqft) of office space over three floors with ancillary car parking. Throughout ownership, the asset has been let on an FRI basis to IHS Global Limited that will expire at the end of 2022. The sale, at a price 4.5% above the 30 June 2022 valuation, allows CLS to crystallise the returns on the asset while releasing capital to strengthen its liquid resources.


Empiric Student Property Plc (LON:ESP, 82.0p, 117.8p, -30.4%)

Empiric Student Property provided a business update. Key details are:

  • Record high revenue occupancy of 98% achieved for academic year 2022/23;
  • Growth in like for like average weekly rent of 5.2%;
  • Adjusted EPS for financial year 2022 is expected to be broadly in-line with consensus at 3.2 pence per share;
  • Minimum like for like rental growth of 5.0% targeted for academic year 2023/24;
  • Strong performance at the start of the academic year 2022/23 having achieved a record 98% revenue occupancy across the portfolio (2021/22: 86%) and like for like average weekly rental growth of 5.2%. This is the highest revenue occupancy recorded in the Company's history, reflecting the strong demand from students for premium accommodation;
  • The Group currently has a greater proportion of UK students than in previous years, the result of targeted marketing during the period of the pandemic. UK students now represent 50% of bookings, the balance being 29% Chinese and 21% other international. This compares to pre-pandemic breakdown of approximately one third each for UK, Chinese and other international;
  • Given the current market volatility the Company has largely paused its development and acquisition pipeline;
  • Contracts were recently exchanged for the disposal of a non-core property in London for £13.0 million, which is above book value. Completion is set for mid-November;
  • Since March 2021, the Company has generated £57.6 million from the disposal of non-core assets. A further £30 million remains under offer;
  • As at 30 September 2022, LTV was 29.7% (based on 30 June 2022 valuations) with a weighted average cost of debt of 3.7%, and a weighted average term to maturity of 4.8 years. Two thirds of debt is fixed and one third floating. Cash and undrawn committed facilities totalled £100.6 million;
  • The Company is in discussion with lenders in respect of refinancing requirements. The only refinancing requirement in 2023 is in respect of a £20 million facility which falls due in March;
  • Adjusted earnings are expected to be broadly in-line with analyst consensus of 3.2 pence per share for the year ended 31 December 2022. In this context, the Board reconfirms its intention to pay a minimum 2.5 pence for the financial year to December 2022;
  • For the academic year 2023/24, the Company expects revenue occupancy to remain strong. Target like for like weekly rental growth of at least 5%, offsetting the impact of inflationary pressure;
  • St Marys, Bristol (153 bed scheme) has been completed and delivers a best in class building next to the University of Bristol, with residents having moved in on schedule in September. The property provides great student wellbeing amenities and strong sustainability credentials, with a BREEAM Excellent accreditation expected;
  • South Bridge, Edinburgh (59 bed scheme), located adjacent to University of Edinburgh, has been largely pre-let and has been extensively refurbished to deliver the Group’s first bespoke Post Graduate product with completion on target for November.
Great Portland Estates Plc (LON:GPE, 514.0p, 835.0p, -38.4%)

Great Portland Estates plc exchanged contracts on the sale of the freehold of 50 Finsbury Square, EC2 to a wholly owned subsidiary of Wirtgen Invest Holding GmbH, a private German family office. The headline price of £190.0 million reflects a topped up net initial yield of 3.85% and capital value of £1,471 per sqft and is broadly in line with the March 2022 book value after adjusting for estimated capex to complete.


Helical Plc (LON:HLCL, 330.0p, 572.0p, -42.3%)

Helical provided an update covering its trading activity for the period 1 April 2022 to 21 October 2022. Key details are:

  • Completed four new lettings totalling 19,642 sqft, delivering contracted rent of £1.3m (Helical’s share £1.2m) at a 2.2% premium to 31 March 2022 ERVs. In particular:
    • The 12th floor at The Tower, EC1, comprising 9,572 sqft, has been let to financial technology business Stenn Technologies at a rent of £80 psf, in line with 31 March 2022 ERVs, returning the building to 100% occupancy;
    • Let the ground floor at 25 Charterhouse Square, EC1, to natural stone purveyors, Solid Nature, in line with 31 March 2022 ERVs;
    • Completed a further letting at The Loom, E1, of 3,495 sqft at a rent of £60 psf representing a 9.2% premium to 31 March 2022 ERVs;
    • A retail unit of 4,695 sqft at Barts Square, EC1 has been let to Restaurant St. Barts who opened for trading in early October. Two further retail units of 2,281 sqft are currently under offer, leaving two final units of 3,400 sqft available to let.
  • Practical completion was achieved at The JJ Mack Building, EC1, on 30 September 2022, as scheduled;
  • At 100 New Bridge Street, EC4, Helical has submitted a planning application for the sustainable refurbishment of the building. Once approved, the redevelopment work is anticipated to commence in late 2023 after vacant possession has been obtained;
  • Completed the disposal of the single asset company, Farringdon East (Jersey) Limited, which owns the long leasehold interest in Kaleidoscope, EC1, to Chinachem Group. The disposal price of £158.5m reflects a capital value of £1,789 psf and a marginal premium to 31 March 2022 book value;
  • Completed the sale of Trinity in Manchester to clients of Mayfair Capital for £34.55m (£590 psf), reflecting a net initial yield of 5%. The sale represented a premium to 31 March 2022 book value of c.£2.0m, net of rental top ups, and concluded the disposal of the Manchester office portfolio;
  • At Barts Square, EC1:
    • Completed the sale of the office building, 55 Bartholomew to a private European investor for £16.5m (Helical’s share £7.6m), reflecting a net initial yield of 4.5% and a 3% premium to 31 March 2022 book value;
    • Completed the sale of the freehold of the entire residential estate to its residents for £3.7m (Helical’s share £1.7m);
    • Completed the sale of a further seven apartments leaving just eight apartments to sell in this 236-unit residential development. 
  • As at 21 October 2022, collected 97.2% of the September quarter rent (22 October 2021: 93.8%). The Company expects to collect a further 1.2% via agreed payment plans, with the remaining 1.6% subject to ongoing discussions. 

During the Period, the Group undertook the following activity with regard to its £400m Revolving Credit Facility ("RCF"):

  • Extended the RCF to July 2026 by exercising the remaining extension options on the facility;
  • Repaid £150m following the sale of Kaleidoscope, EC1;
  • Converted the RCF into a Sustainability Linked Loan ("SLL"), further demonstrating the Group's commitment to sustainability and aligning with its commitment to be Net Zero by 2030. The SLL contains three KPIs with annual targets, with the facility's margin increasing or decreasing by up to three basis points, depending on the extent towhich the targets are met;
  • As a result, at 30 September 2022, the Group had drawn £250m under the RCF with an effective interest rate of c.2.7% and a maturity of 3.8 years. The RCF benefits from interest rate swaps at an average of 0.9% plus margin on 100% of the drawn amount for the remaining term of the facility.

The Group has an undrawn £60m short term facility to December 2022. In the Company’s joint ventures, it had drawn £55.7m of the £69.9m facility with Allianz to develop The JJ Mack Building, EC1. Following practical completion of the development on 30 September 2022, the effective interest rate on the loan is 4.2%, including commitment fees on the undrawn amount. On 30 September 2022, the Group had c. £59m of cash and £234m of undrawn loan facilities with an overall weighted average cost of debt of 3.1% and an average maturity of 3.4 years.

Helical published its "Net Zero Carbon Pathway" setting out its commitment to becoming a net zero carbon business by 2030 and, further to this, has become signatory to the BPF Net Zero Pledge.

HOME REIT Plc (LON:HOME, 84.1p, 111.2p, -24.4%)

HOME REIT provided a business update. Key details are:

  • The Company has collected 100% of rents due to 31 August 2022;
  • The Company has carried out 711 index linked rent reviews since 31 August 2021 with an average annualised rental growth rate of 3.5% on the rents reviewed. This equates to like for like rental growth across the portfolio of 3.5% since 31 August 2021 and takes total annual rent to £53.9 million as of 31 August 2022;
  • Whilst the wider economic backdrop has resulted in uncertainty over recent months, the Company's independent valuer has confirmed that it has not observed any transactional activity that would imply a material change in the investment yields used to value the Company's assets as at 31 August 2022;
  • The Company benefits from a strong balance sheet with a low loan-to-value ratio, significant headroom to financial covenants and very long term maturities;
  • The Company's debt comprises two fully drawn secured term loan facilities of £120 million and £130 million, maturing in 2032 and 2036 respectively, with no amortisation. The Company's debt is 100% fixed to maturity with a very low weighted average all in cost of 2.3% pa;
  • As at 31 August 2022, the Company's portfolio consisted of 2,239 properties in total, let to 29 different tenants with a weighted average lease length of 24 years to first break. All the Company's properties benefit from fully repairing and insuring ("FRI") green leases with annual upward-only rent reviews, index-linked to the Consumer Prices Index, with an annual collar and cap of 1% and 4% respectively;
  • During the financial year to 31 August 2022, the Company acquired 1,528 investment properties, with a further 220 investment properties acquired since the year end, taking the total to 2,459 investment properties with 11,796 beds;
  • There remains an urgent need for more accommodation and the Company will continue to be highly disciplined when evaluating new investment opportunities and currently has approximately £30 million of available cash which it has not yet committed to new investments;
  • Circle Housing, a tenant of the Company representing less than 3% of the annual rent of the Company, was placed into voluntary administration in July 2022. Their rents are set at affordable levels, averaging under £61 per bed per week and rents continue to be paid by the Administrator;
  • On 4 August 2022, the Company announced a third quarterly interim dividend of 1.38 pence per share, taking the total dividends paid and declared in respect of the financial year to 4.12 pence per share to date. The Company remains on target to pay a total dividend of 5.5 pence per share for the financial year to 31 August 2022 with its fourth quarterly interim dividend, which the Board expects to announce at the time of its annual results.


Impact Healthcare REIT Plc (LON:IHR, 104.8p, 116.6p, -10.1%)

Impact Healthcare REIT plc, the real estate investment trust which gives investors exposure to a diversified portfolio of UK healthcare real estate assets, in particular care homes, provided a business and trading update for the quarter to 30 September 2022. Key details are:

  • The unaudited net asset value ("NAV") as at 30 September 2022 was £472.0 million, 116.62 pence per share, representing increases on the previous quarter of 5.3% and 0.4% respectively (NAV as at 30 June 2022 of £448.1 million, 116.18 pence per share);
  • The NAV attributable to the ordinary shares of the Company is calculated under International Financial Reporting Standards ("IFRS") and incorporates the independent portfolio valuation at 30 September 2022 and net income for the period. The EPRA Net Tangible Assets at 30 September 2022 was 116.46 pence per share; the difference to the IFRS NAV reported above is due to the value of the Group's interest rate cap;
  • The unaudited total accounting return for the quarter was 1.8%, comprising dividends paid in the quarter of 1.635 pence per share and 0.44 pence per share growth in NAV;
  • The Board declared for the period an interim dividend of 1.635 pence per ordinary share. This dividend will be paid as a Property Income Distribution ("PID"). The dividend for the quarter remains fully covered on both an EPRA earnings and adjusted earnings basis;
  • The Group's gross loan to value ratio was 21.4% as at 30 September 2022 (at 30 June 2022: 23.1%). The Group has total available debt facilities of £206 million, of which £131 million is currently drawn;
  • 77% of the Group's drawn debt at 30 September 2022 is hedged via a £75 million long term debt facility expiring in 2035 fixed at just under 3.0%, and a £25 million interest rate cap of 1% which expires in June 2023;
  • The Group's weighted average cost of drawn debt at 30 September 2022 was 3.9% and weighted average term of debt was 5.8 years;
  • The Group benefits from long-term leases with 100% of its rental income linked to inflation (with floors and caps), which will allow the Group to mitigate rising interest costs;
  • Current bank debt facilities at 30 June 2022 had a blended interest cover at the Propco level of over 900% against a blended interest cover covenant of 239% and a blended LTV of 19% against a blended LTV covenant at the Propco level of 48%. The Group also has unsecured assets and cash of £52.9 million as at 30 September 2022. The Group's maximum permitted LTV at Group level continues to be 35%;
  • The Group is in advanced discussions on refinancing its RCF facilities. In addition the Group can repay the Metro facility, which expires in June 2023, from available headroom on its remaining facilities;
  • The Company also successfully raised gross proceeds of £22.3 million in the period through an equity raise in July 2022;
  • At 30 June 2022, rent cover was 1.85x for the past 12 months, and 1.73x in the second quarter;
  • Occupancy at 30 September 2022 was 87.3%, up 1.9% on 30 June 2022 (85.4%). Occupancy was 89.2% in March 2020, at the beginning of the COVID pandemic. It hit a low point of 78.7% during the second wave of the pandemic in January 2021. Tenants report a strong level of enquiries for available beds and are more confident at being able to satisfy this demand as lockdown provisions on care homes have now mostly been lifted;
  • The Group continues to receive 100% of rent payments as they fall due with no lease variations;
  • Portfolio independently valued at £543.0 million as at 30 September 2022 (valuation as at 30 June 2022: £530.2 million). This represents a 0.8% increase in value on a like-for-like basis in the quarter, and a total increase of 2.4% over that period, including the acquisition of three homes;
  • The Group also completed on the acquisition of three homes in Scotland with 155 beds, for £8.1 million. The homes are being operated by an existing tenant, Silverline;
  • The Portfolio EPRA 'topped up' Net Initial Yield at 30 September 2022 was 6.68% (30 June 2022 6.69%);
  • The Group also announced in the quarter that it had exchanged contracts to acquire two care homes with 168 beds with a new tenant, Belmont Healthcare ("Belmont"), the Group's 14th tenant;
  • In addition to the portfolio value above, the Group has an investment by way of a loan to Holmes Care Group in 12 homes with 480 beds valued at £38.1 million;
  • Contracted rent increased to £43.2 million at the quarter end (at 30 June 2022: £42.0 million), an increase of 2.7%.
  • This increase was as a result of the Group's commitment to a portfolio of two new homes with Belmont, and the 12 rent reviews during the period, as discussed above;
  • At 30 September 2022, the Portfolio comprised 136 healthcare properties, of which 134 are care homes let to 13 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 14 tenants across its Portfolio;
  • The weighted average unexpired lease term across the Portfolio was 19.7 years as at 30 September 2022;
  • Just after the quarter end, the Group also successfully continued its active management of the portfolio with the sale of one non-core home with 68 beds for 4% above the 30 June 2022 book value.


Industrials REIT Plc (LON:MLI, 126.5p, 177.0p, -28.5%)

Industrials REIT provided a trading update for Q2 FY2023. Key details are:

  • The average passing rent increased by 30% on the aggregate of all new lettings and lease renewals, the highest growth rate achieved to date and surpassing the previous record, achieved last quarter, of 27%. The growth was driven by average uplifts of 30% and 31% for renewals and new lettings, respectively (previous quarter: 30% on renewals, 23% on new lettings);
  • Grew the number of letting transactions, with 108 completed during the quarter for a combined rent roll of £2.6 million (previous quarter: 89 lettings and £2.1 million).  This comprised 71 lease renewals and 37 new lettings across a total of 383,704 sqft (previous quarter: 62 renewals and 27 new lettings across 307,226 sqft). A further 10 lettings exchanged during the quarter across 26,000 sqft (previous quarter: 11 lettings across 19,350 sq ft), taking the total number of leases exchanged or completed during the quarter to 406,000 sqft (previous quarter: 327,000 sqft);
  • Like-for-like ERV growth across the portfolio was 1.1% over the quarter and 12.3% over the last year (previous quarter: 6.4% for the quarter and 11.4% over the year);
  • At 30 September 2022, there were 321,000 sqft of lettings under offer across 59 transactions (previous quarter: 388,000 sqft across 81 transactions), of which 160,000 sqft related to new lettings and 161,000 sqft to existing customer renewals (previous quarter: 148,000 sqft of new lettings and 240,000 sqft of lease renewals);
  • The average lease signed during the quarter was for 4.4 years with a tenant break option after 3.3 years, whilst the average leasing incentive fell to a new low of 19 days' rent free on average (previous quarter: 4.6 years, 3.4 years and 28 days, respectively);
  • 79% of leases signed included at least a 3% annual uplift in rent throughout the term of the lease (previous quarter: 76% of leases signed);
  • Occupancy across the MLI portfolio was 92.8% at 30 September (previous quarter: 93.5%2); 
  • Like-for-like passing rent over 12 months was +2.7% (previous quarter: 3.2%). During the past six months, the Group has let or renewed several of its biggest units. Due to the decrease in occupancy, the quarterly like-for-like passing rent fell 0.7% (previous quarter: +1.5%);
  • website users reached a new high this quarter, up 19% vs the previous quarter, and up 9.0% on a 12-month rolling basis. The growth in visitor numbers is down to continuous improvements to its customer facing website, including more targeted advertising through social media, optimised search terms and enhanced user experience when navigating the site;
  • Enquiry-to-lead qualification conversion rates continue to improve to 12%;
  • Total viewing/building tour numbers were 179, the best period to date, with 26% of viewings resulting in a new letting on a rolling 12-month basis (previous quarter: 172 viewings with a 27% conversion rate to letting); 
  • Completed the letting of the largest vacant space in the portfolio at Huyton Business Centre in Huyton, Liverpool. The space extends to just over 57,000 sqft and was vacated at lease expiry in September 2021. Following a full internal and external refurbishment, the unit was let to a cash'n'carry business in August 2022 on a new five-year lease with tenant only break option after two years. The new rent is in line with ERV and reflects an uplift of over 49% to the previous passing rent;
  • In aggregate, the Group has renewed or relet three of its five largest units so far in 2022, totaling 317,000 sqft and £2.3 million of annual rent (representing 4.4% by area and 6.0% by rent of the total MLI portfolio). These deals delivered an average uplift from the previous passing rent of 21% and new lease terms of 6.3 years (3.2 years to first break);
  • 88% of rents due in the quarter ended 30 September 2022 had been collected by 26 October 2022 (previous quarter: 87% of rents collects at the same point after the quarter day);
  • 96% of rents due for the financial year ended 31 March 2022 had been collected by 26 October 2022;
  • Anticipated rent collections for the financial year to 31 March 2023 are expected to be normalised at pre-Covid levels of 98%+;
  • As at close of business on 30 September 2022, Industrials REIT's loan-to-value ratio (LTV) was 29% on drawn facilities, and approximately 25% when allowing for unrestricted cash. The average cost of debt is 2.5% (based on SONIA at 2.2%). With 90% interest hedging against drawn debt, a 1% rise in SONIA increases the weighted average cost of debt by 0.10%. The average maturity of drawn debt is 3.5 years, with strong headroom across debt covenants.

Two new MLI acquisitions were completed during the quarter, totalling £5.2 million. Both transactions involved the
acquisition of units adjacent to existing holdings, hence consolidating and expanding ownership in these locations.
The acquisitions completed were:

  • An additional two terraces at Mandale Business Park in Durham. The new additions provide a further 10 units across two terraces comprising 37,218 sqft. The recently developed terraces are fully let and generate £257,582 of income. This acquisition further consolidates ownership which began in November 2020, with the estate now comprising 256,000 sqft and generating a passing rent of £1.3 million p.a;
  • A single let industrial unit of 13,600 sqft adjacent to an existing holding, Davey Close Trade Park, Colchester. The unit, which is let to a single occupier on a new five-year lease with a passing rent of £66,000 pa, allows for future sub-division and potential incorporation into the existing estate. The addition complements the existing 54,000 sqft at Davey Close Trade Park, which was originally acquired in June 2017, and now comprises 29 units totalling 68,000 sqft and generating a passing rent of £445,000 p.a.

Beyond these acquisitions, the Group has largely ceased investment activity whilst the commercial property investment market in the UK adjusts downward due to rising interest rates, high inflation and an increasing risk of recession. In the meantime, the Group is preserving capital, keeping its leverage low and waiting for an appropriate time to re-enter the market when values stabilise.


Lok'nStore Plc (LON:LOK, 960.0p, 972.0p, -1.2%)

Lok’nStore provided preliminary results for the year ended 31 July 2022. Key details are:

  • Record revenue and profits;
  • Significant increase in net asset value per share;
  • 15% increase in dividend;
  • Dynamic new store opening schedule driving future growth;
  • Low debt and LTV;
  • Group Revenue £26.9 million up 22.9% (2021: £21.9 million);
  • Group Adjusted EBITDA £16.4 million up 37.5% (2021: £11.9 million);
  • Operating Profit before non-underlying items £11.4 million up 49.8% (2021: £7.6 million);
  • Operating Profit after non-underlying items £17.2 million up 130.0% (2021: £7.5 million);
  • Achieved rate on occupied space up 13% to £25.6 per sq. ft (2021: £22.7 per sqft);
  • Managed store revenue £2.8 million up 107%;
  • Cost Ratio reduced to 38.5% (2021: 44.9%);
  • Cash Available for Distribution (CAD) per share up 36.6% to 38.7 pence (2021: 28.4 pence);
  • Annual dividend increased by 2.25 pence to 17.25 pence per share up 15% (2021: 15 pence per share) - covered 2.24 times by CAD;
  • Adjusted Net Asset Value per share up 33% to £9.72 per share (2021: £7.31 per share); 
  • Sale and manage back of four stores at a 22.8% premium to 31 July 2021 valuations delivering £37.9 million of net sale proceeds in cash;
  • £46.5 million cash at year-end (2021: £9.1 million);
  • Net debt (excluding lease liabilities and deferred finance costs) reduced to £20.3 million (2021: £56.3 million);
  • Loan to value ratio down to 6.6% (2021: 21.0%);
  • £25 million accordion executed - increases bank facility to £100 million;
  • Bank facility extended by one year to April 2026;
  • 4 new stores currently on site will add over 218,000 sqft of new trading space;
  • Secured store pipeline total of 10 sites will add 44.1% to owned new space over the coming years;
  • New store openings and rate increases will lead to further revenue and profit growth.


LondonMetric Property Plc (LON:LMP, 186.9p, 261.1p, -28.4%)

LondonMetric Property announced an update ahead of its results for the half year ended 30 September 2022. Key details are:

  • Weighted average unexpired lease term of 12 years;
  • Occupancy at 99% and only 110,000 sqft available to let. High occupancy, limited development activity as well as a strong focus on corporate and property costs is allowing to operate with a very low EPRA cost ratio;
  • The Group’s pivot away from big box logistics and operational retail parks into highly reversionary urban logistics and well located long income assets has seen it benefit from favourable demand/supply dynamics, which is underpinning good income growth;
  • Asset management activity continues to reflect these strong demand/supply dynamics with £3.7 million p.a, of rent added in the half year:
    • Lettings added £2.5 million and were signed with a WAULT of 11 years. Recent activity has focused on urban portfolio and includes 172,000 sqft of lettings in Birmingham, Fulham, Halesowen, Stratford (London) and Tottenham at rents 12% higher than initial expectations; and
    • Rent reviews added £1.2 million and were settled at a 17% uplift to previous passing on a five yearly equivalent basis, with open market reviews on urban logistics averaging 25%.


LXi REIT Plc (LON:LXI, 121.8p, 142.6p, -14.6%)

The Board of LXI REIT, the specialist inflation-protected very long income REIT, announced an update ahead of its results for the half year ended 30 September 2022. Key details are:

  • The portfolio is 100% let on very long-term leases averaging 26 years to first break. 98% of the rent is inflation-protected or contains fixed uplifts;
  • The Company's strategy focuses on relationship driven forward fundings and sale and leasebacks in structurally supported sub-sectors, with strong underlying property fundamentals and low starting rents;
  • Accretive capital recycling, inflation-protected income and a conservative, fully hedged debt pool further supports the Company's fully covered and progressive dividend; 
  • The Company has delivered a compounded dividend growth rate of 5% per annum on a fully covered basis and an average total NAV return of 10.5% per annum since IPO in 2017.


Palace Capital Plc (LON:PCA, 219.5p, 390.0p, -43.7%)

Palace Capital provided a trading update ahead of its results for the half year ended 30 September 2022. Key details are:

  • Rent collection for the first two quarters of the current financial year was 99% (31 March 2022: 98%);
  • Occupancy remains stable at 88.9% (31 March 2022: 88.5%);
  • Seven new lettings, six lease renewals and ten rent reviews were completed across 113,600 sqft of space generating £2.2m of contracted rent, 12% ahead of 31 March 2022 ERV and 12% ahead of passing rent for lease renewals and rent reviews;
  • Two new lettings at Hudson Quarter, York producing a combined gross rent of £245,000, both 10-year leases and 6.3% ahead of ERV. Occupancy is 81.5% (31 March 2022: 59.2%);
  • Two new lettings at Point 4 Avonmouth producing a combined gross rent of £147,000 with a term certain of five years and three years respectively and 6% ahead of ERV;
  • Lease renewal at The Forum Exeter, on a new 10-year lease (8,898 sqft) at £125,000 and 8% ahead of ERV;
  • Rent reviews resulting in six nil increases, three index linked reviews and one 46% uplift (against passing and ERV) at Point 4 Avonmouth;
  • Since 31 March 2022, the Company has disposed of four Investment Properties for £4.8m, 25% ahead of the 31 March 2022 book value;
  • Apartment sales at Hudson Quarter, York have continued to progress, despite the uncertain economic backdrop. A further nine apartments have been sold in the period for a total of £3.9m, with aggregate proceeds of the 89 units sold totalling £31.3m. A further seven units are under offer to the value of £3.3m, leaving 31 units remaining;
  • As at 30 September 2022, debt drawn was £88.7m (31 March 2022: £101.8m) and cash reserves totalled £12.9m, resulting in net debt of £75.8m (31 March 2022: £73.6m). Total debt facilities are £107.9m of which £19.2m are undrawn;
  • The weighted average maturity of debt facilities is 2.7 years with the earliest facility not due to expire until March 2024;
  • Measures to reduce the level of administrative expenses have been implemented and are continuing. It is estimated that annualised cost savings are c. £1.2m which include the Company relocating its head office on 1 December 2022 from St James's, London to Victoria, London;
  • The cost savings of £1.2m represent 26% of FY22 Admin expenses and 16% of FY22 EPRA earnings;
  • The Company is in the process of having its properties revalued for the purposes of its half year results by CBRE who have replaced Cushman & Wakefield as independent valuers;
  • The property investment market has seen a reduction in values since the March 2022 year end as evidenced by recent market reports and indices. It is expected that the Company's portfolio on a like-for-like basis will be valued at a lower amount than at the March year end and current indications are that the property valuation decline will be less than 7%, including Bank House, Leeds;
  • With regard to Bank House, Leeds, (valued at £10.1m as at 31 March 2022), planning permission was granted on 5 October 2022 for a three storey extension and extensive external alterations and remediation to this Grade II listed building in the heart of Leeds. A design review process will now be undertaken including a value engineering exercise with advisers in order to assess its viability. If in the event the value engineering exercise concludes that the scheme is not viable then the carrying value of the property will be reduced to take account of remediation costs. The Company will also be assessing all of its options in relation to the property;
  • Given the recent, significant volatility and uncertainty in financial markets and macro-economic environment with the consequential impact on the commercial property market, the Board has decided to pause the timing of significant disposals for the time being but continue to sell small, individual assets that lend themselves better to private buyers and special purchasers. The Company has relatively low leverage and therefore has the flexibility to do this and be able to react promptly when the market stabilises.


Primary Health Properties Plc (LON:PHP, 111.1p, 116.7p, -4.8%)

Primary Health Properties announced that the fourth quarterly interim dividend in 2022 of 1.625 pence per ordinary share of 12.5 pence each will be paid as to 0.8 pence by way of a Property Income Distribution ("PID") and as to 0.825 pence by way of an ordinary dividend to shareholders.


SEGRO Plc (LON:SGRO, 785.0p, 1,249.0p, -37.1%)

SEGRO provided a trading update. Key details are:

  • Continued strong occupier demand has supported the ability to let new space and grow rents in the standing portfolio through indexation-linked increases and capturing accumulated reversion in the portfolio;
  • Occupancy and retention have both remained high;
  • Total new headline rent signed during the period: Q3 2022 - £20m; Q3 2021 - £26m;
  • Pre-lets signed during the period: Q3 2022 - £8m; Q3 2021 - £9m;
  • Uplift on rent reviews and renewals: Q3 2022 - 22%; Q3 2021 - 13%;
  • Occupancy rate: Q3 2022 - 96.7%; Q3 2021 - 96.8%;
  • Customer retention: Q3 2022 – 76%; Q3 2021 – 76%;
  • SEGRO’s investment activity continues to focus on the development programme. Development capex for 2022, including infrastructure, still expected to be c. £700 million; 
  • Acquisitions: Q3 2022 – £424m; Q3 2021 – £140m;
  • Disposals: Q3 2022 - £109m; Q3 2021 - £98m;
  • New pre-lets signed since half year have helped to expand development pipeline with 1.3 million sqm of space, equivalent to £118 million of new rent, under construction or in advanced discussions;
  • Yield on cost for these projects is 6.3% (approximately 10% yield on new money);
  • Development completions year to date: space completed: Q3 2022 - 419,100 sqm; Q3 2021 - 450,000 sqm; potential rent (% rent secured) - Q3 2022 - £20m (92%); Q3 2021 – £25m (93%);
  • Current development pipeline potential rent (% rent secured): Q3 2022 - £86m (64%); Q3 2021 - £68m (66%);
  • Near-term development pipeline potential rent: Q3 2022 – £32m; Q3 2021 – £24m.


Shaftesbury Plc (LON:SHB, 367.6p, 619.0p, -40.6%)

Shaftesbury provided a trading update. Key details are:

  • Leasing activity remains good across all uses. Over the six months ended 30 September 2022, the Group concluded commercial lettings, renewals and rent reviews with a rental value of £15.8 million, and residential lettings totalling £6.2 million of income;
  • At 30 September 2022, the ERV of space held for, or under, refurbishment in the wholly-owned portfolio amounted to £12.1 million, representing 8.3% of portfolio ERV, down 1.0% since 1 April 2022. During the period, refurbishment schemes with a rental value of £4.8 million completed, of which 75% by rental value had been let by 30 September 2022, and new schemes with a rental value of £3.5 million were added to the pipeline;
  • At 30 September 2022, EPRA vacancy had reduced to 4.0% of portfolio ERV (31.3.2022: 4.7%; 30.6.2022: 4.1%), of which 1.6% was under offer;
  • The indicative external valuation of the wholly-owned portfolio at 30 September 2022 was £3.2 billion, down from £3.3 billion over the period since 31 March 2022. On a like-for-like basis, taking into account acquisitions and capital expenditure, this represents a decrease of c. 3.6% over the second half of the financial year. Following a 7.5% increase in the six months to 31 March 2022, full year like-for-like valuation growth was 3.6%;
  • The decrease in the valuation since 31 March 2022 predominantly reflects an increase in yields, partly offset by ERV growth and an increase in annualised current income with continued improvement in occupancy levels;
  • Over the second half of the financial year, like-for-like ERV growth was 2.4% bringing growth for the year to 30 September 2022 to 9.0%. On a like-for-like basis, portfolio ERV has now recovered to 4.6% below pre-pandemic levels, with hospitality and leisure now just 5% lower and retail down 15% overall. Office and residential ERVs are now 3% and 11% higher respectively than those at 30 September 2019;
  • At 30 September 2022, the Group’s valuers reported a 25bps outward shift in yields for commercial uses to reflect the impact on investment market sentiment of globally rising finance rates and the deterioration in the macroeconomic outlook. With central London residential capital values showing relative resilience over the period, apartments (representing 18% of the portfolio valuation) were down 0.6% over six months. Overall, the portfolio's equivalent yield increased 24 bps to 4.10% (31.3.22: 3.86%), which followed a contraction of 6 bps from 3.92% in the six months to 31 March 2022;
  • Acquisitions during the second half of the financial year amounted to £35.7 million and comprised the purchase of a 200-year ungeared leasehold interest in the lower floors of 92-104 Berwick Street, Soho for £29.2 million (including purchase costs), and two further buildings in Berwick Street for £6.5 million (inclusive of costs).
Target Healthcare REIT Plc (LON:THRL, 86.7p, 112.3p, -22.8%)

Target Healthcare REIT, the listed specialist investor in modern, purpose-built UK care homes, announced its results
for the year ended 30 June 2022. Key details are:

  • NAV total return of 8.1% (2021: 8.8%), with valuation uplifts reflecting inflation-linked leases;
  • EPRA NTA per share increased 1.7% to 112.3 pence (2021: 110.4 pence);
  • Group specific adjusted EPRA earnings per share decreased 7.5% to 5.05 pence per share (2021: 5.46 pence), partially reflecting the time lag between the oversubscribed £125 million equity issuance in September 2021 and the investment of the proceeds in December 2021; 
  • Dividend increased by 0.6% to 6.76 pence in respect of the year (2021: 6.72 pence);
  • Dividends in respect of the period 72% covered by adjusted EPRA earnings, 95% covered based on EPRA earnings;
  • Low net loan-to-value ("LTV") of 22.0% as at 30 June 2022, with an average cost of drawn debt (interest-only) of 3.1% and average term to maturity of 6.9 years. £180 million of fixed rate debt, being 77% of total drawn debt at 30 June 2022;
  • Resilient portfolio performance, with 95% of rent collected;
  • Portfolio value increased by £226.8 million, or 33%, to £911.6 million, including like-for-like valuation growth of 4.2% (2021: 3.8%);
  • Contractual rent increased by 35% to £55.5 million per annum (2021: £41.2 million), including a like-for-like increase of 4.6% from rent reviews and asset management initiatives;
  • Acquisition commitments during the year totalling £223 million, taking the portfolio to 101 properties, consisting of 97 operational care homes and four pre-let sites;
  • Resident occupancy levels across the mature portfolio continue to recover from Q1 2021 low point, with mature homes spot occupancy currently at 83%;
  • Weighted average unexpired lease term of 27.2 years (2021: 28.8 years);
  • Compelling long-term demand from ageing population supports both investor and operator activity in the sector;
  • Strong alignment of ESG principles, with continued social purpose and advocacy of minimum real estate standards across the sector:
    • Modern, purpose-built care homes; full en-suite wet-rooms account for 96% of the portfolio compared to just 29% for all UK care homes;
    • 92% of the portfolio A or B EPC rated;
    • Sector-leading average 47m2 of space per resident.
The PRS REIT Plc (LON:PRSR, 88.0p, 116.4p, -24.4%)

The PRS REIT published full-year results. Key details are:

  • Net asset value up 30% year-on-year to £639m or 116.4p per share at 30 June 2022 (2021: £490m or 99.0p per share):
    • Reflects ERV increase, underpinned by strong rental growth;
    • EPRA NTA was 116.4p per share.
  • Assets continued to perform strongly, with rent collection at 99% for FY 2022 (2021: 98%) and occupancy at 98% at 30 June 2022 (2021: 98%):
    • Gross arrears remained low at £0.6m as at 30 June 2022 (30 June 2021: £0.4m);
    • Like-for-like blended rental growth over the year was 5.1% on stabilised sites. Re-lets to new tenants achieved c. 10% rental growth;
    • Average tenant rental affordability ratio now at 25% in 2022 (2021: 29%), notwithstanding 5.1% rental growth, indicating a stronger tenant base;
    • Operating costs reduced to 18.2% from 19.5%, reflecting the benefits of scale and close management.
  • Portfolio expanded with the addition of 802 homes in the year, taking the total number of completed homes to 4,786 at 30 June 2022:
    • ERV up 27% to £49.4m p.a. as at 30 June 2022;
    • Further 693 contracted homes with an ERV of £7.2m p.a. were under way at 30 June 2022;
    • Portfolio total revised to c.5,600 homes with ERV of c.£57.5m p.a. (previously 5,700 homes, with ERV of c. £55.0m p.a.). This reflects price inflation on new sites and higher debt costs as well as significantly stronger rent.
  • Total dividends of 4.0p per share declared (2021: 4.0p):
    • Minimum dividend of 4.0p per share targeted for FY 2023.
  • Average net investment yield on the portfolio of 4.125% (30 June 2021: 4.25%);
  • Gearing on portfolio (measured as net debt vs. investment value) low at 31%, with 62.5% of the existing £400m of investment debt fixed rate at an average of 2.9%;
  • Portfolio to reach c.5,000 homes around the end of 2022 and completed assets are performing strongly:
    • Portfolio as at 30 September 2022 increased to 4,856 completed homes, with an ERV of £49.4m p.a, and a further 670 homes with an ERV of £7.3m p.a. are under way;
    • Four development sites were acquired in Q1 2023;
    • Energy efficiency of homes is high - 86% have an EPC rating of 'A' or 'B'; the balance is rated 'C',  running costs are c. 25% lower compared to homes built in 2010 according to independent survey;
    • Q1 2023 asset performance was strong, with occupancy at 98% and rent collection at 99% as a proportion of rent invoiced during the last quarter.
  • Macro-economic environment - especially rising interest rates - is increasing the numbers moving from buying to renting.


Unite Students Plc (LON:UTG, 891.0p, 940.0p, -5.2%)

Unite Students, the UK's leading owner, manager and developer of student accommodation, 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 30 September 2022. Key details are:

  • 99.0% of beds sold for the 2022/23 academic year (2021/22: 94.1%);
  • Rental growth of 3.5% for the 2022/23 academic year;
  • Increasing rental growth guidance to 4.5-5.0% for the 2023/24 academic year;
  • Expect to deliver adjusted EPS at the top end of FY2022 guidance of 40-41p;
  • Q3 like-for-like valuation increases of 0.7% and 1.8% in USAF and LSAV respectively;
  • Pro forma LTV reduced to 29% at (30 June 2022: 30%), maintaining net debt to EBITDA within the target range of 6-7x;
  • Interest rates 93% fixed at 3.4% weighted average cost of debt (30 June 2022: 3.2%) with a weighted average debt maturity of 4.4 years (30 June 2022: 4.5 years).

At 30 September 2022, USAF's property portfolio was independently valued at £2,928 million, reflecting a 0.7% increase on a like-for-like basis during the quarter. The portfolio comprises 27,924 beds in 71 properties across 19 university towns and cities in the UK.

LSAV's property portfolio was independently valued at £1,976 million, reflecting a 1.8% increase on a like-for-like basis during the quarter. LSAV's property portfolio comprises 9,716 beds across 14 properties in London and Aston Student Village in Birmingham.


Urban Logistics REIT Plc (LON:SHED, 131.5p, 188.8p, -30.3%)

Urban Logistics REIT, the last mile logistics focused REIT, announced an update for the period from 1st April 2022 to
30th September 2022. Key details are:

  • 99% of rents due and demanded collected in the period;
  • 12 new lettings in the period covering 470,000 sq. ft. of space, generating £4.0m of additional rental income;
  • 9 rent reviews or re-gears in the period, generating an additional £0.6m of rental income;
  • 59% rental uplift across all 21 lease events for the period, on a like-for-like basis;
  • 40% of the portfolio with an EPC rating of A or B, and 86% with an EPC rating A-C, up from 27% A or B and 76% A-C in March 2022;
  • Occupancy rate across the portfolio rising to 95% at period end, with 5 further leases either let post period end or in solicitors' hands;
  • Recent deployment of a further £3.3m of capital, bringing the total deployed in the period to £112m, at a blended NIY of 4.8%;
  • £122m of debt drawn in the period with Aviva Investors, fixed for 10 years at a cost of 3.8%, bringing total debt to £310m, of which 97% is hedged or fixed, and has a blended cost of 3.3% and a weighted average term of 6.4 years;
  • Built additional flexibility into the Group’s debt facilities during the period, allowing the Company to draw a further £51m on demand at a marginal rate of 3.5%, with a term until 2025.


Warehouse REIT Plc (LON:WHR, 120.0p, 173.8p, -31.0%)

Warehouse REIT, the specialist urban and 'last-mile' industrial warehouse investor, has completed two long-term lettings in Plymouth and Coventry, totalling 205,000 sqft, which will generate over £1 million of annual contracted rent. Achieved at an average 24% above ERVs and 30% above the previous passing rents, the transactions demonstrate the ongoing strength of the UK warehouse occupier market, which continues to be characterised by historically low vacancy levels:

  • At its urban warehouse in Coventry, the Company has agreed a 140,000 sqft letting of the entire building to Evtec Aluminium Ltd, a leading automotive component manufacturer, at a rent representing a 17% uplift on the 31 March
     2022 ERV and 26% uplift on the previous passing rent. The 10-year lease with no break will generate contracted rent of £623,000 per annum, equating to circa £4.50 psf;
  • At its central warehouse Plymouth, the Company has completed a 66,000 sqft letting to leading 3PL provider Hermes Parcelnet (t/a Evri), following a targeted capital expenditure programme. Serving as a key distribution centre in the southwest, Evri has signed a new 10-year lease with no break clause, at an annual rent of £460,000, reflecting an uplift of 36% on the previous passing rent. Having acquired the property in 2017, Warehouse REIT commenced a £1.7 million programme of works during 2021 on expiry of the former occupier's lease. Refurbishment works included the replacement of the building's roof, the installation of new LED lighting throughout, new EV charging points, as well as extensive internal and external redecoration. The building's EPC rating was significantly improved from a D to a high B.


Workspace Group Plc (LON:WKP, 409.4p, 988.0p, -58.6%)

Workspace Group, London's leading provider of flexible work spaces, provides a business update for the
second quarter ending 30 September 2022. Key details are:

  • Continued resilient levels of customer demand and letting activity highlighting the appeal of the Group’s flexible offer;
  • Further improvement in pricing with like-for-like rent per sqft up 1.3% in the quarter and 4.0% in the half year to £38.59;
  • Strong conversion of demand into lettings with 317 lettings completed in the quarter and 642 lettings in the first half, with a total rental value of £17.5m;
  • Like-for-like occupancy stable at 89.6%;
  • Like-for-like rent roll up 3.6% (£3.3m) in the first half to £94.5m;
  • Strong demand at recently completed projects with occupancy up 2.7% in the second quarter and 7.5% in the first half to 76.7%;
  • Operational integration of McKay substantially complete and McKay debt facilities successfully amended;
  • Expect to complete the sale of the residential component of the mixed-use redevelopment at Riverside, Wandsworth for £55m in December 2022;
  • Progressing with the planned disposal of McKay non-core assets, with timing dependent on market conditions;
  • Robust balance sheet with £263m of cash and undrawn facilities and proforma LTV of 32% before proceeds from disposal programme;
  • Average cost of debt of 3.5% with 71% at fixed rates (at current debt levels) and a weighted average drawn debt maturity of 4.1 years.



Data sourced through the London Stock Exchange and RNS announcements.