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LondonMetric plans urban logistics boost

The logistics landlord outperformed the IPD All Property index thanks to a substantial weighting towards in-demand urban logistics
LondonMetric plans urban logistics boost
  • Soft target of 50 per cent exposure to urban logistics 
  • Distribution assets generate 18 per cent total property return

Londonmetric (LMP) is hoping to become a “dividend aristocrat”, according to chief executive Andrew Jones. Building exposure to UK real estate’s top class, the logistics sector, is a recipe for steadily growing returns. 

Distribution assets, which account for almost three-quarters of the portfolio value, delivered a total property return of more than 18 per cent during the period, vaulting the 1.2 per cent generated by the IPD All Property index. Urban logistics remained the major conviction call by management, with £124m ploughed into acquisitions versus £67m in disposals. 

That sentiment was well founded – 23 urban rent reviews were settled at 15 per cent above passing rent, with open market reviews achieving 17 per cent uplifts on average. Jones said he had a short-term “soft target” of boosting urban logistics to 50 per cent of the portfolio, from 41 per cent at present. 

House broker Peel Hunt upgraded its NAV forecasts for both the March 2022 and 2023 year-ends to 200p and 209p a share, respectively. That leaves the shares trading at a 16 per cent premium, but it is one investors might feel is worth paying given the group’s hefty exposure to long-term structural growth trends. Buy.

Last IC View: Buy, 232p, 19 Nov 2020

LONDONMETRIC PROPERTY (LMP)   
ORD PRICE:231pMARKET VALUE:£2.1bn
TOUCH:231-231.4p12-MONTH HIGH:245pLOW: 203p
DIVIDEND YIELD:3.7%TRADING PROP:£1.1m
PREMIUM TO NAV:21%  
INVESTMENT PROP:£2.56bnNET DEBT:46%
Year to 31 MarNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201714663.010.17.5
201816618626.97.9
201917512017.28.2
2020171-6.7-0.78.3
202119125828.68.65
% change+12--+4
Ex-div: 10 Jun   
Payment: 13 Jul   
Dividends paid quarterly, XD and payment dates refer to fourth-quarter dividend of 2.35p a share