LondonMetric has launched a share placing in a bid to raise £175m for expansion.
The fund raising comes as the firm announced a positive set of results for the six months ended 30 September.
Net rental income increased to £61.8m, up from £59.6m for the same period last year, with profit up by 199% to £254.1m.
The group’s total property return was 10.4%, outperforming the IPD All Property return of 7.6%.
The value of the portfolio increased from £2.5bn to £2.9bn with the weighted average unexpired lease term increasing from 11.4 years to 11.6 years, and just 10.1% of income expiring within three years. Occupancy across the portfolio stood at 98.9% at the end of the period and the firm has collected 95.5% of rent due.
Chief executive Andrew Jones said: “As we cautiously embrace a post-pandemic landscape, we believe that our conviction sector calls of logistics and long income will continue to maintain their wide margin of victory.
“Despite the challenging backdrop, we have enjoyed another very strong period. Our exceptionally high rent collection levels, continued rental growth and strong valuation uplifts reflect the strong tailwinds supporting our sector calls and the continued investor liquidity accessing these types of assets, alongside an active asset management approach.
“Our portfolio is now firmly placed on the right side of structural change having redeployed significant capital into our chosen sectors,” he added. “We were early in recognising these trends and have now tactically shifted away from the legacy real estate sectors of general merchandise retailing and offices into logistics and grocery-led long-income assets which are aligned to technological advancement and changing consumer patterns. These sectors now account for 74% and 23% of our portfolio respectively.
“Generating reliable, repetitive and growing income remains central to our strategy,” said Jones. “We will continue to buy right, build right and manage right, knowing that we have built up a collection of great assets let on long leases to high-quality occupiers in great geographies, which should support a progressive and covered dividend for many years to come.”
He added: “We continue to believe that income will be the defining characteristic of this decade’s investing environment and that real estate strategies focused on income-led total returns will deliver future outperformance. Collecting income is the bedrock of successful long-term investing and, while many will focus on short-term riches with higher-risk strategies, we appreciate the true benefit of compounding lower-risk and longer-term returns. Let’s not forget that investing focuses on the quantity, quality and timing of when cash will be returned, whereas speculating is worrying about what someone else will pay for your assets.”
During the period under review, LondonMetric acquired some £161m of assets largely in urban logistics and sold £168m of non-core or mature assets. Since the period end, it has bought a further £144m of logistics assets and through the proposed share placing plans to continue its acquisition spree.
Funds raised through the placing will be used to acquire £282m of identified assets and developments, including a portfolio of 15 assets in the South East for £122m, around £120m for logistics development projects and £22m for a grocery and logistics sale-and-leaseback portfolio.
Jones said: “The performance of our favoured sectors, logistics and grocery-led long income, continue to benefit from structural tailwinds that show no sign of abating. As we look to scale our platform further, we have identified an attractive pipeline of opportunities which are underpinned by the technological and demographic shifts that support our investment strategy.”
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