LondonMetric plans urban logistics boost

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