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UPDATE: LondonMetric prioritises logistics as other sectors falter

4th Jun 2024 13:44

(Alliance News) - LondonMetric Property PLC on Tuesday reported positive earnings amid a shift in strategic focus.

The London-based real estate investment trust swung to GBP120.0 million pretax profit in the year ended March 31, from a GBP507.5 pretax loss the previous year.

It reported a GBP7.5 million loss on revaluation of investment properties, significantly improving from GBP577.4 million.

Rental Income rose 22% to GBP175.3 million from GBP144.1 million, leading the company to declare final dividend of 3.00 pence per share, up 15% from 2.60p.

The total dividend for the year stands at 10.20p, improving by 7.4% from 9.50p.

The company's strengthened its cash position to GBP114.1 million from GBP36.5 million.

In the last year, financial markets were defined by elevated interest rates, which peaked during summer, as well as higher borrowing costs. These higher levels persist with markets now not pricing in a rate cut until later this year.

Due to this economic environment, LondonMetric is seeing a shift in consumer behaviour within the office sector and some parts of retail.

Overall portfolio value doubled to GBP6.0 billion from GBP3.0 billion as a result of merger activity with the company reorienting its focus towards structurally supported sectors with greater price stability including logistics, convenience, healthcare and entertainment.

Such activity, including the merger with LXi REIT PLC and CT Property Trust Ltd, have made LondonMetric the third largest property REIT in the UK based on market capitalisation.

Chief Executive Andrew Jones commented: "We are a thematic triple net income investor in structurally supported sectors with high quality assets that enjoy strong occupier contentment. Logistics remains our strongest conviction call for accelerated rental growth, particularly urban logistics, and this weighting is expected to increase materially as we reinvest proceeds from non core and ex-growth asset sales."

Post year end, GBP51 million of urban logistics were acquired and GBP75 million of mainly retail and office assets were sold.

Further, on Tuesday it was announced that contracts were exchanged pertaining to the sale of two office assets in Glasgow and Dundee to a single buyer in a transaction worth GBP36.6 million.

"These are good, well-let assets. However, we continue to exit non-core sectors and geographies and reinvest in sectors where we have a competitive edge and which are enjoying a structural tailwind," Jones said.

Furthermore, with material earnings growth expected following the LXi transaction, management indicated that the first quarterly dividend of the current financial year will comparatively increase 19%.

This would fall in line with the company's 12.00p per share dividend target for the year and represent the tenth year of dividend progression.

LondonMetric shares were down 1.4% to 205.00 pence each in London on Tuesday afternoon.

By Elijah Dale, Alliance News reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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