Industrials REIT has had a record quarter after taking back control of its third largest asset.
Chief executive Paul Arenson said: “We have had a record quarter for deal volumes following several substantial leasing transactions in Ashby de la Zouch and Paddock Wood. Even without these, the volumes were in line with previous quarters, illustrating the continued depth of demand for MLI space across the UK.”
The total rental value of new leases signed during the quarter was up 90% to £2.9m across 54 new lettings and 32 lease renewals for more than 399,326 sq ft of space, a record value of deals for the REIT.
Average uplifts in rent across all new lettings and renewals averaged 22% for the quarter, with a record high of a 34% average uplift in rent on new lettings.
But the cherry on top was the reshaping of its third largest asset in Paddock Wood, Kent. While the 209,000 sq ft Dana Trading Estate is technically multi-let, fitting in with the former Stenprop’s modus operandi, it had been let on a single lease to Unipart Group for decades. Even though Unipart had not been present on the estate for many years and had sublet the entire estate to 14 tenants, it was still the REIT’s largest single tenant.
Last month, Industrials REIT negotiated an early surrender with Unipart, which included a financial settlement for outstanding repairing liabilities. This then opened the way to agreeing new lease terms with the sub-tenants.
Arenson said: “One tenant was not renewed as its line of business did not meet our ESG criteria, while another customer who makes environmentally friendly cleaning products was upsized into an additional 12,515 sq ft of space.”
The REIT has now relet 98% of the estate with the total of the rents on this space reflecting a like-for-like increase of 25% and an uplift of more than £300,000 pa in rent.
Arenson added: “The lifting of the moratorium on taking action to recover unpaid rents on 26 March 2022 has restored the balance between landlords and tenants. Rent collections on the MLI portfolio from early in the pandemic are now 97%, with more recent periods indicating a path back towards pre-Covid collection rates of 98%-plus. While Industrials REIT will continue to take a fair and reasonable approach to settling lockdown debts, we are confident that the impact of the pandemic on rent collections is now behind us.”
He added that the REIT would continue to add to its portfolio, following £21m of acquisitions in Q1, and had “a strong pipeline of opportunities”.
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