TIDMWHR
RNS Number : 6573J
Warehouse REIT PLC
25 August 2021
25 August 2021
Warehouse REIT plc
(the 'Company' or 'Warehouse REIT')
Trading Update
New acquisitions take portfolio past 8.5 million sq ft whilst
post-lockdown occupier demand drives 20 new leasing transactions
achieving an average uplift of 7% on March 21 ERVs
Warehouse REIT, (the "Company"), the AIM-listed specialist
warehouse investor, announces a trading update covering the period
since 25 May 2021.
During the period the Company completed four acquisitions, in
separate transactions of which the majority were off-market, for a
total consideration of GBP13.1 million, reflecting a blended net
initial yield of 5.0%. Generating GBP0.7 million per annum of
contracted rent (with an ERV of GBP0.9 million), the acquisitions
take Warehouse REIT's portfolio past 8.5 million sq ft and have
increased its holdings in two existing key locations - in South
Cambridge, one of the UK's fastest growing employment and
innovation centres, and Midpoint-18, Cheshire. In addition,
contracts have been exchanged to acquire a further 16 acres of land
immediately adjoining the existing Radway Green multi-let estate
located at junction 16, M6 motorway, outside Crewe.
The Company also completed 20 new lettings, achieved at 7.0%
ahead of 31 March 2021 ERVs, totalling 112,000 sq ft and generating
GBP0.7 million of contracted rent. 13 lease renewals also
completed, achieving an uplift of 20.2% compared to the previous
rent. Totalling 87,000 sq ft of space, these transactions generate
GBP0.6 million per annum of contracted rent[1]. The portfolio's
total occupancy decreased slightly to 94.2% (as at 31 July 2021)
from 95.6%, however effective vacancy has reduced to just 2.0%,
excluding units under refurbishment or under offer to let.
Andrew Bird, Managing Director of Tilstone Partners Ltd, the
investment advisor of Warehouse REIT, commented:
"We continue to witness strong occupier demand across the
portfolio from a range of both e-commerce related businesses as
well as more traditional national operators and SMEs, allowing us
to capture the significant reversionary potential as we continue to
experience strong rental collection, in line with previous
quarters. With lockdown restrictions easing, and H1 2021 take up
82% above long term take up (Savills July 2021), the chronic demand
supply imbalance of modern industrial space, in economically
relevant locations, will continue to underpin attractive rental
growth, which the Company is ideally placed to capture given its
increasing scale and asset management expertise.
"The sector's compelling fundamentals continue to attract new
entrants into the market, which is driving yield compression and
underpinning strong valuations. Despite this increased competition,
with nearly a decade of experience investing in the space, we have
been able to curate excellent relationships with prospective
vendors, allowing the Company to continue making accretive
acquisitions deliberately focusing on adjoining ownerships to
existing assets. Whist our strategic priority is improving the
quality of the income, we believe we can drive even stronger
returns by complementing this approach through select tactical
acquisitions with a value-add angle, as well as strategic
development initiatives."
Market overview
The industrial and warehouse sector has continued to outperform
the UK property market, reflecting its favourable structural
drivers and growing appetite from investors attracted by secure
income with rental growth, which is putting downward pressure on
yields. According to the CBRE UK Monthly Index, industrial capital
values increased by 7.7% in the four months to 31 July 2021, with
rental growth of 0.5% month-on-month. The next valuation date for
the Company's portfolio will be 30 September 2021.
Asset management
The 20 new lettings represent 112,000 sq ft of floor space,
generating rental income in excess of GBP0.7 million per annum,
7.0% ahead of the 31 March 2021 ERV. The Company has continued to
capture reversionary potential from the portfolio, with 13 lease
renewals generating a combined annual rent of GBP0.6 million, an
uplift of 20.2% as compared to the previous rent.
Highlights during the period include:
-- The letting of unit 5 (12,200sqft) at Midpoint-18 to an
international manufacturing business for a new 15 year term at a
rent of GBP7.00psf, as well as simultaneously acquiring the
freehold of their existing adjoining premises with the occupier
taking a lease back on similar terms.
-- In Sheffield, 5,100sqft have been let for a term of 10 years
at a rent equating to GBP5.65psf, reflecting 88% above the valuer's
ERV.
In the period since 1 April 2021, the total portfolio occupancy
fell slightly from 95.6% to 94.2%, whilst the effective vacancy
fell to 2.0%, with 1.8% of the portfolio ERV under refurbishment
and a further 2.0% under offer to let (as at 31 July 2021). The
space under offer will deliver approximately GBP1.0 million per
annum of rent. New lettings, renewals and vacancy will now exclude
short-term temporary lettings of assets classified as development
land, in particular for leases completed during the period 1 April
2021 to 31 July 2021 at Radway Green.
Rent collection has remained strong, with 94.5% of the total
rent due on the June quarter date collected as at 17 August 2021.
This is expected to continue to increase, in line with previous
quarters.
Acquisitions
During the period the Company has completed the acquisition of
four properties totalling 100,500 sq ft, for a combined
consideration of GBP13.1 million before costs, reflecting a blended
net initial yield of 5.0%. These comprise:
-- In two separate transactions the Company has increased its
holding at Dales Manor Industrial Estate, Sawston South Cambridge
by a further 62,200 sqft which, following the acquisition announced
on 18th May 2021, takes the holding to over 130,000 sqft plus
further development land in this key location seven miles south of
Cambridge City Centre
-- Two further transactions have increased the Company's holding
at Midpoint-18, Cheshire by a further 38,300 sq ft. Our overall
holding now extends beyond 600,000 sq ft in this strategically
important NW location, situated just 2 miles from J18 of the
M6.
Warehouse REIT has also exchanged contracts to acquire a further
16 acres of land immediately adjoining the north and eastern
boundary of its existing Radway Green multi-let estate in Crewe.
Earlier this year the Company announced that it had secured
planning consent, submitted in collaboration with the adjoining
landowner, for a combined 803,000 sq ft across six new high-bay
warehouse units, ranging from 22,000 sq ft to 340,000 sq ft. This
acquisition provides the Company with control over the whole site
required to implement the proposed scheme which it will pursue on
the back of occupier requirements.
Enquiries
Warehouse REIT plc via FTI Consulting
Tilstone Partners Limited +44 (0) 1244 470
Andrew Bird 090
G10 Capital Limited (part of the Lawson
Conner Group), AIFM +44 (0) 20 3696
Maria Glew 1302
Peel Hunt (Financial Adviser, Nominated
Adviser and Broker) +44 (0) 20 7418
Capel Irwin, Henry Nicholls, Carl Gough 8900
FTI Consulting (Financial PR & IR Adviser
to the Company) +44 (0) 20 3727
Dido Laurimore, Richard Gotla, Ellie Perham-Marchant 1000
Further information on Warehouse REIT is available on its
website:
http://www.warehousereitplc.co.uk
Notes
Warehouse REIT is an AIM listed UK Real Estate Investment Trust
that invests in and manages e-commerce urban and 'last-mile'
industrial warehouse assets in strategic locations in the UK.
Occupier demand for urban warehouse space is increasing as the
structural growth in e-commerce has driven the rise in internet
shopping and investment by retailers in the "last mile" delivery
sector, yet supply remains constrained giving rise to rental
growth.
The Company is an alternative investment fund ("AIF") for the
purposes of the AIFM Directive and as such is required to have an
investment manager who is duly authorised to undertake the role of
an alternative investment fund manager. The Investment Manager is
currently G10 Capital Limited.
[1] New lettings and renewals will now exclude deals for assets
classified as development land, in particular for deals completed
during the period 1 April 2021 to 31 July 2021 at Radway Green
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