Before MIPIM, Savills’ affable boss Mark Ridley introduced LondonMetric’s chief executive Andrew Jones at an event held at the agent’s HQ north of Oxford Circus. ‘So, Andrew, how was Miami,’ smiled Ridley, referring to a trip Jones had made to drum up investor interest for the £6.2bn propco he set up in 2013. Jones looked rueful: “We are not big enough to bother with.” Indeed not: the top five US REITs have a combined market valuation of £340bn. The UK top five? £30bn. LondonMetric? £3.7bn. What’s a guy gotta do? What Jones told Estates Gazette in November: “Buy more companies.”
Last Friday, came the disclosure that the 56-year-old ex-British Land director has made a cash and shares offer to buy Urban Logistics REIT, which owns £1.14b of last-mile sheds. A move that may disjoint the bargain-sensitive noses of Robert Naylor and Christopher Mills, grandson of circus owner Bertram. The pair have corralled 8.8% of shareholders to demand the heads of chairman Nigel Rich, on £100,000 a year, and director, Richard Moffitt, paid £622,000 in fees in 2024.
Naylor and Mills set up the well-named Achilles fund in February to take control of firms with assets valued at more than the shares. Urban Logistics’ net assets are valued at £720m, the shares £600m. Their Achilles heel is the “EPRA ratio”. The percentage of net overheads and operating expenses against gross rental income is 18.8%, boosted by external management fees of £6.77m in 2024. LondonMetric’s ratio is 7.6%. Lowered by the “triple net” model. The occupier pays all taxes, insurances and maintenance costs.
Shareholders have two choices. Wait and take what Achilles makes in a sell-off. Naylor and Mills are doing just that with PRS REIT, founded in 2017 by another BL alumni, Steve Smith, whose views on the duo are unprintable. The financials are similar, but the difference is that Smith belongs to the old school of developers who like to make things in order to make money, not just make money from already made things. He built 5,400 family homes for rent before being forced out in December.
Jones will likely lure shareholders with solid dividends from an expanding business with the lowest overheads in the sector. A promise from an astute trader with a growth track record unparalleled since the day Sir John Ritblat bought moribund British Land for £1m from Jim Slater in 1970.
Peter Bill is a former editor of Estates Gazette
