REIT News - September 2022

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REIT Market Overview

August was another month of quarter and half-year results announcements. Overall, performance and investments remained strong, within the industrial, warehousing and office sectors.

Custodian REIT announced the disposal of an industrial unit in Milton Keynes for £8.5 million. Home REIT acquired 199 additional properties located across England for an aggregate purchase price of £85.1 million. Impact Healthcare REIT exchanged contracts to acquire two care homes in Kent for £14.0 million. AEW UK REIT sold its Eastpoint Business Park in Oxford for £29.0 million and the property at Moorside Road in Swinton for £1.7 million. CLS Holdings sold two UK properties and one French property for a total of £39.8 million.


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


AEW UK REIT Plc (LON:AEWU, 111.6p, 126.5p, -11.8%)

AEW UK REIT announced the sale of its ownership at Eastpoint Business Park in Oxford for £29.0m and the sale of the property at Moorside Road in Swinton for £1.7m. Following these disposals, the Company announced that it has unconditionally exchanged contracts to acquire a high yielding asset located in Glasgow at a price of £2.6m reflecting a capital value of £99 per sqft and providing a net initial yield of 7.4%.

The Glasgow asset comprises a solus leisure and retail warehousing unit let to JD Sports Gym Ltd, which operates 74 gyms in the UK. It is located fronting the A81 Craigmont Drive, approximately 2.5 miles north-west of Glasgow city centre. The site also contains a vacant plot of land, which may be suitable for redevelopment over the medium term, subject to planning. The lease provides an unexpired lease term of 10.6 years, benefitting from five-yearly upward-only reviews.

AEW UK REIT also announced the sale of its holding at 225 Bath Street, Glasgow for the price of £9.3m. The sale realises a long-term change of use strategy for the asset with contracts for the sale having been exchanged with a subsidiary company of IQ Student Accommodation in October 2020. Planning consent has been gained by IQ for the demolition of the property and development of a 527-unit student accommodation scheme. The sale agreement required AEWU to negotiate with tenants to bring the asset to vacancy and, as a result, following its sale the occupancy rate for AEWU's remaining portfolio will increase to 91.60% from 86.97% as at 30 June 2022. Reinvestment of the sale proceeds into pipeline assets under exclusivity is expected to provide a significant boost to the Company's earnings due to both higher levels of anticipated income receipts and lower running costs.


Alternative Income REIT Plc (LON:AIRE, 84.0p, 96.4p, -12.9%)

Alternative Income REIT, the owner of a diversified portfolio of UK commercial property assets, predominantly let on long leases with inflation-linked rent reviews, provided a trading and business update for the quarter ended 30 June 2022. Key details are:

  • The Board declared an interim fourth quarterly dividend of 1.60 pps for the quarter ended 30 June 2022. This follows the first, second and third quarterly dividends for the year ended 30 June 2022 of 1.3 pps each;
  • The Adjusted EPS was 1.36p for the quarter giving a total of 5.55 pps for the year (2021: 5.07 pps). The dividend cover for the year was 100.9%, which compares favourably with the prior year's cover of 99%;
  • At 30 June 2022, the Group's property portfolio, comprising 19 assets, had a fair value of £117.91 million, representing a 2.2% increase compared with the 31 March 2022 valuation of £115.38 million of the same 19 properties;
  • At 30 June 2022, the Net Initial Yield on the Group's portfolio was 5.70%, compared with 5.72% at 31 March 2022;
  • Valuations have increased across the majority of the Group's assets in the quarter, with the best performances from those properties that are experiencing both real and anticipated income increases from index linked rent reviews. The Group's hotels, student accommodation, leisure, nursery and some car showroom and production/warehouse assets have all seen growth;
  • At 30 June 2022, the Company's unaudited NAV was £77.60 million, 96.40 pps (31 March 2022: £75.11 million, 93.30 pps) representing a 3.3% increase over the quarter, due to increases in the portfolio valuation and net income;
  • When combined with the 1.60 pps dividend paid for the quarter, this produces an unaudited NAV total return for the quarter of 5.19% (31 March 2022: 4.83%).


Capital & Counties Plc (LON:CAPC, 120.0p, 209.0p, -42.6%)

Capital & Counties reported interim results for the six months ended 31 June 2022. Key details are:

  • EPRA NTA 209 pence per share (Dec 2021: 212 pence per share);
  • Total property value increased 4.5 per cent (like-for-like) to £1.9 billion (Dec 2021: £1.8 billion);
  • Group net debt to gross assets ratio of 25 per cent (Dec 2021: 24 per cent);
  • Covent Garden loan to value ratio of 20 per cent (Dec 2021: 15 per cent);
  • Underlying earnings of 0.5 pence per share (Jun 2021: nil pence per share);
  • Proposed interim dividend of 0.8 pence per share (Jun 2021: 0.5 pence per share);
  • Covent Garden total property value of £1,817 million, 4.8% like-for-like growth since Dec 2021;
  • ERV increased by 3.9% (like-for-like) to £79.2 million (Dec 2021: £76.2 million) and inward movement in equivalent yield by 6 basis points to 3.82% (Dec 2021: 3.88%);
  • Strong leasing demand across all uses with 25 new leases and renewals agreed 9% ahead of Dec 2021 ERV representing £3.9 million contracted income with a further £3.1 million under offer;
  • Footfall continues to trend towards pre-pandemic levels, customer sales in aggregate ahead of 2019 levels;
  • Low EPRA vacancy at 2.0% (Dec 2021: 2.6%);
  • Rent collection patterns continuing to normalise with 95% of H1 2022 rent collected;
  • 11 new openings across the estate including Reformation, TAG Heuer and Chestnut Bakery;
  • Continued improvement of EPC ratings across the portfolio;
  • Repayment of £200 million drawn debt comprising £75 million of private placement notes and the £125 million loan secured against shares in Shaftesbury;
  • Liquidity of £439 million (cash of £139 million and £300 million undrawn facilities) (Dec 21: £642 million);
  • Group net debt of £605 million (Dec 2021: £599 million) and net debt to gross assets of 25 per cent (Dec 2021: 24 per cent);
  • Weighted average maturity on drawn debt of 5 years (Dec 2021: 5 years) and average cash cost of debt of 2.7 per cent (Dec 2021: 2.8 per cent);
  • Group capital commitments of £5.6 million (Dec 2021: £5.4 million);
  • Investment in Shaftesbury PLC valued at £506 million, based on share price (Dec 2021: £596 million), dividend income from Shaftesbury PLC shares of £3.9 million received in H1 2022 and a further £4.7 million in July 2022;
  • Lillie Square property value of £84 million, a decrease of 1.8 per cent (like-for-like) since Dec 2021. £35 million cash distribution from the joint venture (£17.5 million Capco share).


Capital & Regional Plc (LON:CAL, 61.0p, 118.0p, -48.3%)

Capital & Regional, the UK focused REIT with a portfolio of dominant-in-town community shopping centres, announced its half year results to 30 June 2022. Key details are:

  • 55 new lettings and renewals achieved during the year at a combined average premium of 34.1% to previous rent and 17.8% to ERV. Two key new lettings completed include a 25 year lease agreement with the NHS for a new community healthcare centre and the upsizing and relocation of TK Maxx, both at Ilford;
  • Occupancy has improved to 93.7% (December 2021: 92.7%; June 2021: 89.7%);
  • 29 million shopper visits during the six months with footfall up 58% on H1 2021;
  • Rent collection back in line with historic pre-Covid levels, with 97.3% collected for the year to date; 
  • The combined impact of transactional activity has reduced the Group's Net Loan to Value ratio from 49% at 30 December 2021 and 30 June 2022 (and 72% at 30 June 2021) to 40% on a proforma basis, adjusting for the Walthamstow residential and Blackburn sale proceeds received post the period end;
  • Debt maturity of 4.1 years with average cost of debt of 3.54% with 98% fixed;
  • In August 2022, the £40 million disposal of The Mall, Blackburn completed at a c. 5% premium to the December 2021 valuation;
  • In May 2022, the Group secured ownership of the Marlowes centre in Hemel Hempstead when it completed the buyback of the loan facility held against the asset for £11.8 million, representing a discount of 51%, which also increased Group Net Asset Value by approximately £12.3 million;
  • Signed package of amendments to the £39 million Ilford loan in May 2022, facilitating the investment of approximately £10 million for the creation of the new community healthcare centre and anchor unit for TK Maxx;
  • Proposed disposal of the majority or all of the Group's investment in The Mall, Luton remains ongoing and is expected to reach a conclusion in the next few months.  The Group's investment in Luton has now been deconsolidated resulting in an increase to Net Asset Value of £6.8 million;
  • In July 2022, the Group completed the sale of land for residential development at its 17&Central community shopping centre in Walthamstow to Long Harbour for c.£21.65 million.  The first phase of the development will see the creation of 495 Build to Rent residential apartments in two residential towers;
  • Net Rental Income (NRI) on Investment Assets increased 23% to £12.2 million (June 2021: £9.9 million) driven by improved occupancy and rent collection. Statutory revenue was £28.4 million (June 2021: £27.4 million);
  • The improvement in NRI flowed through to Adjusted Profit, which increased 87% to £5.8 million (June 2021: £3.1 million);
  • 25% growth in Adjusted earnings per share to 3.5p (June 2021: 2.8p);
  • IFRS Profit for the period of £26.8 million (June 2021: Loss of £41.3 million) due primarily to the Adjusted Profit of £5.8 million, a revaluation gain of £1.2 million and £12.3 million and £6.8 million gains from the discounted purchase of the Hemel Hempstead debt facility and deconsolidation of Luton respectively;
  • Property valuations on Investment Assets increased by 1.7% in the first half of 2022 to £358.5 million at year end (30 December 2021: £352.4 million) on a like for like basis;
  • Net Asset Value per share and EPRA NTA per share increased to 118p and 116p respectively (December 2021: 102p and 102p);
  • Reflecting the stabilisation of operating markets post Covid-19 and continued stabilisation of valuations, together with the substantial progress made in reducing debt, the Group is resuming dividend payments. Proposed Interim dividend of 2.5 pence per share.


Civitas Social Housing Plc (LON:CSH, 71.1p, 111.9p, -36.5%)

Civitas Social Housing, the UK's leading care-based and healthcare REIT, announced a quarterly update as at 30 June 2022. Key details are:

  • Financial and operational performance, in line with the Board's expectations;
  • Unaudited IFRS NAV per share increased to 111.89p (31 March 2022: 110.30p);
  • First quarterly dividend of 1.425p declared in line with full year target of at least 5.70p1 (2022: 5.55p);
  • Portfolio continues to benefit from contractual inflationary increases to rent roll;
  • Work progressing on strengthening the sector including seeking to achieve regulatory alignment through the previously announced lease clause proposal;
  • Sustained high demand for the specially adapted community-based homes that Civitas provides.


CLS Holdings Plc (LON:CLI, 187.4p, 350.1p, -46.5%)

CLS Holdings, a leading office space specialist with a c. £2.4 billion portfolio in the UK, Germany and France, announced the sale of two UK properties, Great West House, Brentford and 62 London Road, Staines and one French property, 96 Rue Nationale, Lille for a total of £39.8 million. The three properties sold for an average 3.7% above the 31 December 2021 valuations.

CLS Holdings also announced half-year results ended 30 June 2022. Key details are:

  • EPRA NTA up 0.7% primarily as a result of foreign exchange gains from weakening sterling with the portfolio valuation slightly up in local currency before lease incentives;
  • Portfolio valuation up 0.1% in local currency with increases in the UK of 0.5% and Germany of 0.3%, partly offset by declines in France of 2.1%;
  • Profit before tax down 17.8% to £20.3 million (30 June 2021: £24.7 million) from lower fair value movements on investment properties due to lease incentives (£3.1 million) and a one-off profit on disposal of equity investments in 2021 (£1.4 million);
  • EPRA EPS up 7.4% to 5.8 pence per share from lower foreign exchange losses, lower tax following REIT conversion, and higher income from its hotel and student operations, partly offset by higher expenses as 2021 included the release of pandemic bad debt provisions. Statutory EPS up 90.1% due to lower UK tax charges after the conversion to a UK REIT;
  • Interim dividend up 10.6% to 2.60 pence per share (30 June 2021: 2.35 pence per share). Increased dividend reflects the adoption of the updated dividend policy announced in May;
  • Total accounting return of 2.2% (30 June 2021: (0.8%));
  • Net rental income increased by 0.9% to £52.8 million (30 June 2021: £52.3 million) as a result of higher income from hotel and student operations and higher dilapidations income;
  • Acquired two properties for £76.9 million, which completed in April and July respectively. These properties were bought for their asset management opportunities at a combined net initial yield of 5.1% and a reversionary yield of 5.6%;
  • Completed the disposal of two smaller properties for £10.1 million, one of which had exchanged in 2021, at book value. Post period end, completed on a further three disposals for £39.8 million at an average 3.7% above book value;
  • Completed 60 lease events (30 June 2021: 53) securing £4.4 million (30 June 2021: £5.2 million) of annual rent at 4.5% above ERV with like-for-like contracted rent increasing by 0.4%;
  • Vacancy rate increased to 6.9% (31 December 2021: 5.8%; 31 March 2022: 7.2%);
  • Rent collection remained at the same, consistently high levels with 99% of first half rent collected and 98% of third quarter contracted rent due collected to date;
  • Weighted average cost of debt at 30 June 2022 up 4 basis points to 2.26% (31 December 2021: 2.22%) due to increases in SONIA on UK floating rate debt;
  • Loan-to-value at 38.9% (31 December 2021: 37.1%) reflecting net investments in the period.  Gross debt of £1,043.2 million (31 December 2021: £1,031.6 million) with cash of £110.4 million (31 December 2021: £167.4 million) and £50 million (31 December 2021: £50 million) of undrawn facilities;
  • In the first half of 2022, financed or refinanced £92.3 million of debt at 1.81% for 1.9 years.  Discussions well advanced for the remaining £93.6 million refinancings, excluding amortisation, due in 2022;
  • The loan portfolio as at 30 June 2022 had 80% at fixed rates (31 December 2021: 85%) with the reduction as a result of short-term floating rate extensions in advance of longer-term loans once the letting of the buildings has been improved or to give flexibility for potential sales.
Custodian REIT Plc (LON:CREI, 102.4p, 119.7p, -14.5%)

Custodian REIT, the UK property investment company focused on smaller lot-sized regional property, announced the disposal of an industrial unit in Milton Keynes for £8.5 million at a 73% premium to its 31 March 2022 valuation.

Custodian REIT acquired the 44,187sqft warehouse and distribution unit in January 2015 for £2.1 million and subsequently invested a further £0.9 million to refurbish the property. This refurbishment included re-cladding the exterior, replacing the roof, restoring the yard and renovating the interior which in aggregate improved the property’s energy performance certificate (“EPC”) rating from ‘E’ to ‘C’. As a result the property was let at a higher rent to Saint Gobain Building Distribution for six years before a tenant break option was exercised in June 2022. The sale of the unit to a special purchaser was then negotiated which required the property with vacant possession.

This disposal decreases the industrial weighting by valuation within the Company’s portfolio of 164 properties to 47%, with the balance comprising 21% retail warehouse, 13% office, 12% other and 7% high street retail, all of which are in strong economic areas across the UK.


Derwent London Plc (LON:DLN, 2,436.0p, 4,023.0p, -39.4%)

Derwent London published half-year results for the six-months ended 30 June 2022. Key details are:

  • Total return of 3.0%, up from 2.7% in H1 2021;
  • EPRA NTA 4,023p per share, up 1.6% from 3,959p at December 2021;
  • Net rental income £93.9m, up 4.2% from £90.1m in H1 2021;
  • EPRA earnings 53.13p per share, down 1.7% from 54.04p in H1 2021;
  • IFRS profit before tax of £137.1m, up 13.2% from £121.1m in H1 2021;
  • Interim dividend raised 4.3% to 24.0p from 23.0p in H1 2021;
  • EPRA loan-to-value ratio 23.7% (December 2021: 22.3%); interest cover 419% (FY 2021: 464%);
  • Net debt of £1.36bn (December 2021: £1.25bn);
  • Undrawn facilities and cash of £452m (December 2021: £608m);
  • Lettings of £7.1m at 9.3% above December 2021 ERV;
  • Renewals and re-gears of £6.2m, 8.0% above December 2021 ERV;
  • Reviews of £5.5m, 6.2% above December 2021 ERV;
  • Principal acquisitions of £130.2m and disposals of £65.9m (excludes post-H1 transactions);
  • Portfolio valued at £5.9bn; underlying valuation increase of 1.7% including developments up 8.5%;
  • True equivalent yield 4.46% (December 2021: 4.50%);
  • 0.9% increase in portfolio ERV;
  • EPRA vacancy rate 6.5% (December 2021: 1.6%) reflecting development completions.
Empiric Student Property Plc (LON:ESP, 96.4p, 117.8p, -18.2%)

Empiric Student Property, the owner and operator of premium student accommodation serving key UK universities,
reported its interim results for the six months ended 30 June 2022. Key details are:

  • Growth in revenue of 37% to £35.6 million (H1 2021: £25.9 million), as occupancy for the first half was 86% compared to 65% for the same period in 2021;
  • Like for like rental growth for the academic year 2021/22 was 1.5%, up from 1.3% reported previously;
  • In March, reported 84% revenue occupancy for the academic year 2021/22, which has increased to 86% since then;
  • Property costs of £10.6 million, 3% lower than the same period last year;
  • Gross margin has increased by 21%, from 57.9% to 70.2%, as a result of a £9.7 million improvement in revenue;
  • Administration expenses were £6.3 million and in line with guidance;
  • Adjusted Earnings for the period were £11.9 million (H1 2021: £3.5 million), with Adjusted earnings per share of 1.97 pence (H1 2021: 0.59 pence);
  • Sold five assets in the period for £26.7 million slightly above book value and reported a net loss on disposal of investment property (£0.1) million after deducting re-financing and sales costs;
  • The net profit from a change in the fair value of investment properties was £58.6 million (H1 2021: gain of £1.8 million);
  • Profit before tax of £70.3 million (H1 2021: £7.0 million);
  • Basic earnings per share of 11.65 pence (H1 2021: 1.16 pence); 
  • Property portfolio valued at £1,087.7 million (31 December 2021: £1,021.8 million). On a like for like basis, the investment property valuation increased by 7%. This was driven by strong yield compression and like for like rental growth and CBRE's removal of the Covid-related valuation reduction of £6.2 million;
  • Underlying valuation yield of 5.2% (31 December 2021: 5.3%) has improved, reflecting both a strengthening of yields in prime assets and improved rental growth;
  • EPRA Net Tangible Assets ("NTA") per share up 10% to 117.8 pence (31 December 2021: 107.4 pence);
  • Total accounting return, the sum of income and capital growth, increased to 10.9% (H1 2021: 1.1%).

Strong student demand for academic year 2022/23:

  • Achieved occupancy for the forthcoming academic year 2022/23 of 92%, which is ahead by 10% compared to the same time pre-pandemic;
  • Delivered revenue occupancy at the upper end of the revised guidance of 90% to 95%;
  • Bookings achieved to date for academic year 2022/23 indicate that half the customers are from the UK, up from pre-pandemic levels of a third;
  • Encouraging growth in re-bookers to 23% and the proportion of postgraduates has increased by approximately 8%;

Further enhancing the business and portfolio to provide attractive, sustainable returns and enhanced value:

  • Portfolio optimisation and recycling capital strategy is progressing well. Since March 2021, sold nine assets for £44.6 million (£26.7 million in H1 2022), and with asset disposals worth £40 million currently under offer at or around book value;
  • Secured a good pipeline of potential acquisitions and development opportunities and are under offer on a further acquisition worth £15 million within a key growth city and clustered location;
  • On track to complete two developments in September 2022 in Bristol and Edinburgh, all launched rooms for the academic year 2022/23 are fully let with waiting lists, and with yields on cost of 6.3% and 6.1% and IRRs of 10%-11% and 12%-13%, respectively.

Strong balance sheet

  • Loan to value for the Group was 32.8%, broadly in line with the 35% long-term target;
  • At 30 June 2022, before deduction of loan arrangement fees, the Group had committed investment debt facilities of £420 million, of which £400 million were drawn down. £277 million of this debt is fixed and £123 million is floating. The aggregate cost of debt was 3.3%, with a weighted average term of five years.


Home REIT Plc (LON:HOME, 117.8p, 111.2p, +5.9%)

Home REIT plc, which funds the acquisition and creation of high-quality properties across the UK that are dedicated to providing accommodation to homeless people, announced that it acquired 199 additional properties located across England for an aggregate purchase price of £85.1 million (including acquisition costs).

These acquisitions were funded by the net proceeds raised via the Company's oversubscribed £263 million equity issue in May 2022 (the "Subsequent Placing"). The Company has now deployed a total of £170 million of the proceeds of the Subsequent Placing.


Impact Healthcare REIT Plc (LON:IHR, 114.6p, 116.2p, -1.4%)

Impact Healthcare REIT, the real estate investment trust that gives investors exposure to a diversified portfolio of UK
healthcare real estate assets, announced the Company's half year results for the six months ended 30 June 2022.
Key details are:

  • The unaudited NAV at 30 June 2022 was £448.1 million (+13.7%) or 116.18 pence per share (+3.3% increase) (31 December 2021: NAV: £394.2 million; 112.43 pence per share). This increase is primarily driven by the market value uplifts received on the property portfolio, underpinned by the inflation-linked rent reviews and stable operator performance;
  • Total accounting return for the six months to 30 June 2022 was 6.21%, comprising dividends paid in the period of 3.24 pence and NAV growth of 3.75 pence per share (+3.3%) in the period;
  • Property investments were independently valued at £568.9 million as at 30 June 2022, a 14.5% increase from £496.9 million on 31 December 2021. On a like-for-like basis the portfolio increased by 4.9% (£22.6 million) between 31 December 2021 and 30 June 2022, driven mainly by the inflationary rental uplifts and capital value improvements from asset management activities;
  • The market value uplift of investment properties was £13.4 million (H1 2021: £5.0 million), contributing to profit before tax increasing by 88.2% to £27.3 million (H1 2021: £14.5 million);
  • The Company declared two quarterly dividends of 1.635 pence for the period, in line with the Company's annual dividend target of 6.54 pence per share for the year to 31 December 2022;
  • EPS increase of 64.6% to 7.26 pence per share (H1 2021: 4.41 pence per share) (basic and diluted) owing to a 24.2% increase in contracted annual rent on H1 2021 and a 2.9% uplift in the investment portfolio's value during the period, following the inflation-linked rent increases and asset management activities in the first half of 2022;
  • Adjusted EPS rise of 12.3% to 3.66 pence per share (H1 2021: 3.26 pence per share), a result of increased cash revenue from rent reviews and the use of moderate leverage to further scale property investments;
  • Annual contracted rent roll grew by 10.7% to £42.0 million (31 December 2021: £38.0 million); this consisted of:
    • Acquisition of five new properties and exchange of contracts to acquire a further three properties, contributing £3.0 million to the contracted annual rent;
    • 79 properties had rent reviews during the period adding £872k to the contracted annual rent, representing a 4.0% increase on the associated portfolio over the six months to 30 June 2022;
    • New capex commitments during the period adding a further £68k to contracted annual rent.
  • Drew down the second tranche of long-term institutional debt amounting to £38 million, maturing in June 2035 at a fixed coupon of 3.0%;
  • The Group now has £206.0 million of committed debt facilities. Drawn debt as at 30 June 2022 was £137.6 million, giving a gross LTV of 23.1%, with significant headroom to the borrowing policy cap of 35%. £75.0 million of this is long-term fixed-rate debt with a weighted average coupon of 2.967% and maturing in 2035. As at 30 June 2022, the weighted average term of debt facilities (excluding options to extend) was 6.1 years;
  • £40.0 million of gross proceeds from placing of new ordinary shares, admitted onto the main market of the London Stock Exchange on 21 February 2022. A further £22.3 million of gross proceeds was raised from a placing of new ordinary shares following the period end. These shares were admitted onto the main market of the London Stock Exchange on 8 July 2022:
    • Following the post-period equity raise, the Company has over £110 million in available funds for existing capital commitments and to fund further pipeline investment opportunities.

Impact Healthcare REIT plc also announced that the Group has recently exchanged contracts to acquire two care homes in Kent for £14.0 million plus acquisition costs. These acquisitions are with a new tenant, Belmont Healthcare ("Belmont"), the Group's 14th tenant. One home is a purpose-built, 120-bedroom property split over four units, each with 30 beds. It has strong operational cashflows and is located on a generous site, which has significant potential for future value-enhancing asset management and development opportunities. The second transaction is the sale and leaseback of a home currently owned and operated by Belmont. It has 48 bedrooms with en suite bathrooms. The home has been recently refurbished and extended. The acquisition of this home includes a potential deferred payment of up to £550k, subject to its continued strong trading performance. The deferred payment, if it becomes payable, will result in increased rental payments, ensuring that the effective purchase yield of this asset remains materially unchanged.

Lok'nStore Plc (LON:LOK, 1,015.0p, 834.0p, +21.7%)

Lok'nStore provided the following update on trading for the year to 31 July 2022. Key details are:

  • Following the unprecedented occupancy and pricing gains seen in FY2021, trading in FY2022 has remained excellent with self-storage revenue up 17.3%.  Same-store self-storage revenue was up 24.9% on the previous year;
  • Price per sqft of occupied space was up 13.0% in the year driven by continued strong demand for self-storage and good occupancy levels.  Occupancy as a percentage of lettable area was 80.3% at the end the period compared to 85.8% last year as more space was added in the new stores and following the sale and manage back of four older stores in January 2022.  Same-store pricing was up 12.3% with same-store occupied unit space level with last year;
  • Demand in the final quarter of financial year remained strong resulting in occupied unit space growth in the quarter of 55,479 sqft compared to 58,125 sqft for the corresponding quarter last year;
  • During the year the Company has opened three new Landmark stores in Warrington, Wolverhampton and Stevenage taking its total number of trading stores in the portfolio to 40.  Early trading in all three stores has been excellent;
  • Added a further development site to the Company’s secured pipeline in Bolton, Greater Manchester bringing the total secured pipeline to ten Landmark store projects. The secured pipeline will increase owned trading space by a further 44.1%;
  • Beyond the above mentioned secured pipeline, the Company has four more sites progressing with lawyers and continues to see many opportunities beyond this.  This pipeline of new stores will add considerable momentum to sales and earnings growth over the medium term.


Life Science REIT Plc (LON:LABS, 94.5p, 100.2p, -5.7%)

Life Science REIT, the real estate investment trust focused on UK life science properties, announced that it has completed a second drawdown from its existing £150m debt facility with HSBC totalling £37.2m. The drawdown is secured against the Company's acquisitions at Herbrand Street in London, Lumen House near Oxford and the Merrifield Centre in Cambridge.

The current debt facility was initially announced on 30 March 2022 and comprises a £75m three year term loan and a £75m revolving credit facility. The Company has secured additional protection against potential future interest rate rises through capping the SONIA rate at 2.0% until 31 March 2025 on the full amount of the term loan. In total, £48.7m remains available in the revolving credit facility for future use. The proceeds from this second drawdown from the debt facility will be used to progress the development and repositioning of assets within the existing portfolio as flagship life science properties following bespoke plans capitalising on their compelling locations. The anticipated works include the fitout of laboratory space at Cambourne Business Park near Cambridge and at Rolling Stock Yard in London's Knowledge Quarter.


LondonMetric Property Plc (LON:LMP, 217.2p, 261.1p, -16.8%)

LondonMetric Property announced the sale of four assets, in two separate transactions, for £25.6 million, reflecting a blended NIY of 5.3%. The properties have a WAULT of five years and comprise:

  • a portfolio of three multi-let industrial assets totalling 53 units across 235,000 sqft located in Halesowen and Aston, Birmingham. The properties have a WAULT of three years and have been sold to The Ardent Companies UK for £21.6 million, reflecting a NIY of 5.7%. They were acquired by LondonMetric in 2019 as part of the Mucklow acquisition for an allocated price of £15.8 million and have delivered an ungeared IRR of 20%;
  • a roadside asset in Stamford Hill, London, which has been sold for £4.0 million, reflecting a NIY of 3.5%. The property is let to TG convenience for a further 19 years.

The assets generate a rent of £1.5 million per annum and the transactions are subject to delayed completions, which will generate £0.3 million of additional income to LondonMetric. The sales crystallise a blended ungeared IRR of 19% and a 35% profit on cost. Since the start of the current financial year, LondonMetric has exchanged on £111 million of sales at an average premium of 8% to the 31 March 2022 book value.


Picton Property Income Ltd (LON:PCTN, 90.5p, 122.9p, -26.4%)

Picton announced the acquisition the freehold of 109-117 High Street, Cheltenham for £5.3 million. The mixed-use property comprises 7,700 sqft of ground floor retail space with 11,450 sqft of office space over two upper floors, and is located in Cheltenham’s pedestrianised town centre, adjacent to John Lewis. Comprehensively refurbished in 2020, the property has strong net zero credentials including EPC ratings of B on the office and retail elements.

It is leased to four occupiers including Tesco, Just Go Holidays and Barnardo’s with an average lease length of 12 years to expiry and eight years to break. The current annual rental income is £0.4 million, equating to £21 per sqft, with the majority of leases containing fixed rental uplifts that will increase income to £0.5 million per annum by 2026. The purchase price reflects a net initial yield of 7.2%, rising to 9.0 % by 2026. The low capital value of £277 per sqft is below its estimated replacement cost. The Company has funded the acquisition through the use of its revolving credit facilities.


SEGRO Plc (LON:SGRO, 943.0p, 1,249.0p, -24.5%)

SEGRO, in its role as venture adviser to the SEGRO European Logistics Partnership (‘SELP’) joint venture, announced the pricing of a five-year, €750 million senior unsecured Green bond issue for SELP. The order book at peak totalled approximately €2.5 billion and the bonds were priced at 245 basis points above euro mid-swaps, equating to an annual coupon of 3.75%.

The proceeds of the issue will principally be used to refinance the existing (non-green) €500 million bond expiring in 2023, which are subject to an ongoing tender offer. In due course, they will be allocated to financing and/or refinancing Eligible Green Projects as outlined in the SEGRO Green Finance Framework, including the continued development programme, as well as providing funding for general corporate purposes.


Target Healthcare REIT Ltd (LON:THRL, 110.6p, 112.3p, -1.5%)

Target Healthcare, the UK listed specialist investor in modern, purpose-built care homes, provided an update on
overall corporate results and activity, for the year ended 30 June 2022. Key details are:

  • EPRA Net Tangible Assets ('NTA') per share increased by 0.4% to 112.3 pence (31 March 2022: 111.8 pence), primarily reflecting valuation uplifts across the portfolio driven by inflation-linked annual rental uplifts;
  • NAV total return of 2.0% for the quarter (based on EPRA NTA and including dividend);
  • Low Net Loan to Value of 22.0% (31 March 2022: 20.3%) with £180 million of the £235 million of drawn debt at fixed interest rates;
  • Available investible capital comprising cash and undrawn debt facilities at 3 August 2022 of £49 million, fully allocated but not yet contractually committed to pipeline deals;
  • Rental growth from inflation-linked, annual rent reviews, with 23 rent reviews completed at an average uplift of 3.8% per annum average, contributing to a 1.0% increase in like-for-like contracted rent;
  • Diversified portfolio of 101 assets let to 34 tenants and valued at £911.6 million:
    • 0.9% like-for-like valuation increase of the operational portfolio driven primarily by rent reviews;
    • Social impact from real estate which best serves care providers and the residents they look after; strong ESG credentials - 92% of the portfolio is A or B EPC rated, and 2030 compliant with minimum energy efficiency standards;
    • Portfolio EPRA "topped-up" net initial yield of 5.82% (31 March 2022: 5.82%).
  • 2.6% overall increase in contracted rent roll, including acquisitions and asset management initiatives;
  • Weighted average unexpired lease term of 27.2 years remains one of the longest within the listed real estate sector (31 March 2022: 27.3 years);
  • Patient pipeline conversion, with two acquisitions completed totalling £24 million comprising a mature, trading asset and a development site. Continued investment in development portfolio, with one site reaching practical completion during the period;
  • Fourth interim dividend of 1.69 pence per share declared for the year ended 30 June 2022, representing an increase of 0.6% on the FY 2021 quarterly dividends.


Tritax Big Box REIT Plc (LON:BBOX, 166.5p, 194.2p, -14.3%)

Tritax Big Box REIT reported its results for the six months to 30 June 2022. Key details are:

  • 5.6% operating profit growth from strategic delivery of development completions, asset management and LFL rental growth;
  • Adjusted EPS of 3.73p (H1 2021: 4.03p) reflecting reduced development management (DMA) income partially offset by development completions and rental growth;
  • 10.5% growth in contracted annual rent primarily through development letting activity supporting future accretive earnings growth;
  • 4.7% dividend growth to 3.35p, representing 90% pay-out ratio when adjusting for additional DMA income;
  • Total accounting Return of 10.7% (H1 2021: 12.5%) driven by continued execution of strategy;
  • EPRA cost ratio of 15.2% expected to return to previous levels as Current Development Pipeline becomes income generating;
  • Strong balance sheet with low LTV, no near-term refinancing requirements and 100% of drawn debt benefiting from either fixed or capped interest rates with an average cost of debt of 2.52%;
  • Record market take-up of 22.6 million sqft in H1 2022, up 9.5% on H1 2021, as occupiers continue to enhance their supply chains;
  • Supply of logistics space remains highly constrained; 1.2% vacancy rate resulting in rapid leasing of buildings and rental growth;
  • H1 2022 investment volumes remained healthy at £4.2 billion (H1 2021: £5.2 billion) supported by structural drivers in logistics real estate;
  • During H1 2022 the Company made significant development progress, delivering:
    • 2.4 million sqft of development lettings, increasing contracted annual rent by £17.8 million or 9.1%;
    • 2.2 million sqft of construction starts, formed of:
      • 1.6 million sqft of developments pre-let or let during construction, adding £11.1 million to contracted annual rent;
      • 0.6 million sqft of developments on a speculative basis, with the potential when let to add £6.1 million to contracted annual rent, 45% of which is under offer.
    • Planning consent secured for a further 0.6 million sqft of development, across two sites.
  • Current Development Pipeline of buildings under construction (includes 2021 starts) totals 3.4 million sqft of which 1.8 million sqft (53%) has been pre-let or let during construction; a further 15% is under offer;
  • Portfolio value up 10.0% to £6.03 billion (31 December 2021: £5.48 billion), reflecting development gains, active asset management activity and strong underlying market conditions, including a LFL valuation surplus of 7.0% (net of capex);
  • The portfolio's high-quality, long-term and resilient income is reflected in:
    • WAULT of 12.8 years as at 30 June 2022 (31 December 2021: 13.0 years);
    • 0% vacancy (H1 2021: 0%). 100% rent collected;
    • Highly efficient portfolio with minimal cost leakage and low capital expenditure requirements;
    • Focused on modern, sustainable high-quality buildings critical to the supply chains of well capitalised blue-chip customers.
  • £2.7 million added to passing rent from rent reviews and lease renewal, achieving an 8.4% increase across 16.3% of the portfolio;
  • Like-for-like ERV growth of 5.8% in the period, with 14.7% portfolio rental reversion at the period end. EPRA like-for-like rental growth of 3.3% over the period.
Urban Logistics REIT Plc (LON:SHED, 170.0p, 188.8p, -10.0%)

Urban Logistics, the last mile logistics focused REIT, acquired £90 million of assets at a blended net initial yield ("NIY") of 4.5%, with significant potential for further value creation through active asset management:

  • Five properties acquired, with NIY ranging from 4.2% to 6.5%; 4.5% on a blended basis;
  • Four properties are income-producing and one property is vacant;
  • One significant property of 97,362 sq. ft. acquired in Southall, West London.


UK Commercial Property Plc (LON:UKCM, 70.8p, 112.9p, -37.3%)

UK Commercial Property REIT, which owns a portfolio of high quality and diversified real estate assets across the UK, provided a trading update for the second quarter of 2022. Key details are:

  • 1.5% increase in NAV per share to 112.9p (31 March 2022: 111.2p) resulting in NAV total return for the quarter of 2.3% (Q1: 9.8%). This brings NAV growth for the first half of 2022 to 10.7% and first half NAV total return to 12.3%;
  • 1.4% increase in like-for-like portfolio capital value, net of capital expenditure, to £1.71 billion, against the Company’s benchmark, the MSCI UK Balanced Portfolios Quarterly Property Index, which increased by 2.1% over the quarter. The portfolio has outperformed its MSCI benchmark over one, three and five years;
  • Rent collection rates have normalised to pre-pandemic levels with 99% received for the third quarter of 2022 and 99% for the year to date;
  • Quarterly dividend increased by a further 6.3% to 0.85p per share, following the increases announced in both the fourth quarter of 2021 and the first quarter of 2022. This brings the H1 2022 dividend increase to 13.3%;
  • Additional special dividend of 1.92p per share payable in August to reflect strong gains realised; 
  • 9% increase in EPRA earnings per share for the quarter to 0.83p (31 March 2022: 0.76p) giving dividend cover for the quarter of 104%.


Warehouse REIT Plc (LON:WHR, 154.8p, 173.8p, -10.9%)

Warehouse REIT, a specialist urban and 'last-mile' industrial warehouse investor, announced a trading update
covering the period 1 April 2022 to 23 August 2022. Key details are:

  • A resolution to grant outline planning permission has been secured from Cheshire East Council for a further 1,020,000 sqft warehousing at the Company's 102-acre flagship logistics park development at Radway Green, Crewe. The total consented floor area at the Company's Radway Green site now totals 1.8 million sqft, with construction due to start in early 2023;
  • 15 new lettings, nine lease renewals and nine rent reviews were completed across 198,000 sqft of space. The transactions will generate £1.5 million of annual contracted rent, 3.5% ahead of 31 March 2022 ERVs:
    • New lettings were agreed 5.0% ahead of 31 March 2022 ERVs and will generate rent of £0.7 million;
    • Lease renewals and rent reviews have continued to capture the portfolio reversionary potential, generating rent of £0.8 million at an uplift of 18.0% versus the previous rent;
    • As a result of these transactions, the portfolio like-for-like contracted rent has increased by 1.64%.
  • Portfolio occupancy has remained stable at 93.4%, with effective vacancy down to 2.7% (excluding units under refurbishment or under offer to let);
  • The Company has taken out two additional interest rate caps of £100.0 million each for three and five years respectively, which serve to cap the SONIA rate in the Company's debt facilities at 1.5%. These are in addition to the two existing £30.0 million interest rate caps the Company has in place, which expire in November 2022 and 2023 and cap SONIA at rates of 1.50% and 1.75% respectively. Following these caps, approximately 75% of the Company's debt is hedged against interest rate volatility.




Data sourced through the London Stock Exchange and RNS announcements.