LondonMetric has reported a £243.4m loss after earlier valuations proved “too bullish”.
The first-half results for the urban logistics specialist showed a strong increase in rental income, up 13.5% to £72m, but valuation shifts hammered profit.
The REIT reported a fall in net tangible assets of £308.8m to £2.25bn in the six months to the end of September.
Total property returns fell to -6.3%, while capital returns were down to -8.1%. EPRA NTA per share fell by 12% to 229.3p.
Chief executive Andrew Jones said: “We continue to operate in a volatile environment with a number of challenges facing both the economy and the consumer. Sharp movements in both bond yields and interest rates have brought to an end the era of cheap money and is having a material impact on real estate valuations.”
But he was confident LondonMetric’s “all-weather portfolio” would weather the storm.
“Our real estate strategy is less concerned with short-term volatility and periods of dislocation. Instead, we focus on wider macro trends and longer-term performance periods, with a continued preference for real estate that benefits from evolving consumer behaviour as a result of technological advancement and changing economic conditions.”
He said the REIT would continue to benefit from its “significant weighting to well-located urban logistics”, thanks to the “broad and deep occupational market”, as well as its investment in grocery-led long-income assets.
Jones added: “The real estate market is currently paralysed by a distinct lack of liquidity and therefore valuations will take time to find their pricing equilibrium. With the benefit of hindsight, it is clear now that investor sentiment was too bullish in the first half of 2022 and valuation yields had compressed too far.”
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