LondonMetric Property has boosted its rental income in its first annual results following its mergers with LXi and CTPT.
Portfolio value doubled to £6bn during the year ending 31 March, £2.9bn of which was added through its merger with LXi during the period, along with a further £300m from its merger with CTPT. The deals mean that LondonMetric has become the third largest UK REIT by market capitalisation.
Net contracted rent increased over the year to £340m from £145m, as a result of merger activity. Net rental income jumped by 20.6% to £177.1m, and by 21.7% on an IFRS basis.
EPRA NTA per share fell by 3.6% to 191.7p, owing to one-off merger transaction costs. EPRA earnings were up 20.3% to £121.6m, while IFRS reported profit reached £118.7m, compared with a £506.3m loss in the year before.
During the year, the investor sold £185m of properties at 1% below book values, mostly consisting of non-core offices, retail and multi-let industrial. Since the year end it has sold £75m of assets, with a further £107m under offer.
Post year-end, it has exchanged contracts to sell two former LXi-owned offices in Scotland to a single buyer for £36.6m, reflecting a 7% net initial yield.
Those are an 85,000 sq ft office in Dundee let to BT on a 17.5-year lease with CPI linked rent reviews; and a 60,000 sq ft office in Glasgow let to STV for a further 17 years, with five-yearly compounded fixed reviews of 1.5% per annum. LondonMetric also sold a former LXi care home in the West Midlands for £500,000.
Andrew Jones, chief executive at LondonMetric, said: “As with most portfolios, you can never love all of the assets and we have quickly set to work on selling some of the non-core assets from both portfolios.”
Jones added that urban logistics remains its “strongest conviction call for accelerated rental growth”, and will be its main sector focus as it reinvests proceeds from non-core and ex-growth asset sales.
With regards to acquisitions, Jones said increased scale had given the business a “larger platform to leverage”.
“With swap rates remaining high, significant amounts of real estate debt requiring refinancing, highly restricted availability of debt and material REIT discounts, we expect further attractive investment opportunities to present themselves,” he said. “We remain active, interested and open-minded.”
As part of the LXi transaction, the business took on secured debt that exceeded the maximum amount permitted under its existing unsecured facilities. Post merger completion, it refinanced £625m of LXi’s secured facilities with a new £700m unsecured facility on “more favourable” terms with lenders, with scope to draw up to £100m in euros.
The business also increased the permissible secured debt basket on its unsecured facilities to provide headroom.
At the year end, loan-to-value ratio stood at 33.2%, slightly up on 32.8% in 2023. It had available debt facilities and cash of £794.9m.
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