A change in consumer spending habits towards e-commerce and convenience shopping are the two areas that LondonMetric (LMP) is concentrating on, and its distribution assets now make up three-quarters of its property portfolio, up from a quarter from five years ago.
Sensibly, given the weakness in traditional retail, the company continued to decrease its exposure, making £92.5m of disposals in the six months to September and a further £39.4m after the period end. This takes its exposure to retail parks down to just five per cent of the portfolio and one per cent residential.
Acquisitions of £139m focused mostly on urban logistics, and while the net initial yield of 4.7 per cent was less than the 5.3 per cent yield on disposals, the reversionary potential of acquired assets is expected to take the yield up to 5.5 per cent over the next five years.
Occupancy levels remained high at 94.4 per cent; though a slight fall reflected its empty Wakefield distribution warehouse prior to re-letting, while the average lease length of 12 years gives greater security and visibility. Demand has also underpinned rents, with the 15 rent reviews in the period secured at a 12 per cent premium to passing rents.
Analysts at Peel Hunt have upgraded their forecasts for adjusted net asset value at the March 2019 year end to 178p, from 165.2p a year earlier.
| LONDONMETRIC (LMP) | ||||
| ORD PRICE: | 186.9p | MARKET VALUE: | £ 1.31bn | |
| TOUCH: | 186.6-187.2p | 12-MONTH HIGH: | 197p | LOW: 167p |
| DIVIDEND YIELD: | 4.3% | DEVELOPMENT PROP: | nil | |
| PREMIUM TO NAV: | 8% | |||
| INVESTMENT PROP: | £1.87bn* | NET DEBT: | 59% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
| 2017 | 154 | 79.6 | 11.5 | 3.7 |
| 2018 | 173 | 79.3 | 11.4 | 3.8 |
| % change | +12 | -0.4 | -1 | +3 |
| Ex-div: | 06 Dec | |||
| Payment: | 10 Jan | |||
| *Including joint ventures **Dividends paid quarterly. Ex-Div and Payment dates refer to 2nd quarter dividend of 1.9p a share | ||||
