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LondonMetric moves with the times

LondonMetric Property is exploiting a change in consumer habits together with a shortage of distribution warehouses
November 27, 2015

LondonMetric (LMP) chief executive Andrew Jones may not have an up-to-date mobile phone, but under his stewardship the commercial property landlord has made great strides in embracing consumer changes. Clicks are eroding bricks, Mr Jones volunteered, as larger retail sites face the growing challenge of internet shopping. In the first half, a combination of growing rental income and a revaluation uplift helped to push adjusted net asset value ahead by nearly 14 per cent to 146.6p a share.

IC TIP: Buy at 164.1p

And demand for purpose-built distribution centres has continued to grow. A total of 1.9m sq ft of developments was completed by LondonMetric, generating annualised rental income of £11.7m, and there is a further 1.4m sq ft in the pipeline. Heading the list of tenants is Primark, which moved into a new 1.1m sq ft distribution centre. Rental growth has also been underpinned by the chronic lack of supply. In 2009, there was 94m sq ft of commercial property available, but a moratorium on new construction has brought this down to 22m sq ft, against an annual take-up of 32m sq ft.

Reported profits were restrained by a lower revaluation gain. Analysts at Peel Hunt forecast adjusted net asset value at the March 2016 year-end of 154p, from 141p in 2014.

LONDONMETRIC PROPERTY (LMP)
ORD PRICE:164.1pMARKET VALUE:£1.03bn
TOUCH:164,1-164.6p12-MONTH HIGH:172pLOW: 142p
DIVIDEND YIELD:4.3%TRADING PROPERTIES:nil
PREMIUM TO NAV:14%
INVESTMENT PROPERTIES:£1.4bn*NET DEBT:67%

Half-year to 30 SepNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201412970.411.23.5
201514464.310.33.5
% change+12-9-8-

Ex-div: 3 Dec

Payment: 21 Dec

*Includes joint ventures