Industrials REIT has doubled its profit as it completes its transition to a multi-let industrial specialist.
It now plans to double in size over the next four years, spending more than £100m a year on new sites.
The REIT formerly known as Stenprop made an IFRS pretax profit of £107.5m for the year to 31 March, up from 2021’s £53m. This was chiefly driven by valuation uplifts in its MLI portfolio of £89.5m, up from £26.9m the year before.
New acquisitions and a 20.8% like-for-like valuation growth have increased the portfolio value to £6533.5m – or £685.8m if you include its share in a jointly owned care homes portfolio. That is an uplift of more than £100m on last year’s £582.3m.
Chief executive Paul Arenson said: “The next phase of our strategy is to seek to enlarge our portfolio with further MLI acquisitions of approximately £100m to £125m per annum, enabling us to approximately double its size over the next four years.”
He added: “Over the last four years, acquisitions have been funded through the sale of non-MLI assets and from debt. Going forward, the funds will need to come from a combination of new equity issuance and debt. Any future equity raises will be dependent on securing a suitable pipeline of acquisition opportunities which meet our criteria.”
The REIT owns and operates a portfolio of more than 7m sq ft of MLI assets across the UK. The company also has its own digital-first operating platform, Industrials Hive. “With these two fundamental building blocks in place, we are pushing forward with delivering a differentiated customer experience, driven by operational excellence and efficiency,” Arenson said.
Rental growth over the period was 4.4%, resulting in a total accounting return for the year of 25%.
The REIT has also managed to bring its LTV down from 28% to 25.6%, with total debt at £196.2m.
Arenson said buying new space would not be easy. “A combination of land scarcity in urban areas and high build costs, even before the impact of the current high inflationary environment, continues to constrain the supply of new units,” he said.
However, the demand for space meant that he was confident that economic and geopolitical uncertainty would not hurt the “strong fundamentals” of the MLI sector.
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