LondonMetric buoyed by urban logistics demand

Demand for urban logistics assets was reflected in the rents commanded upon lease review – one rent review was completed on the open market at 16 per cent above previous passing rent and a further four have been completed since the period-end at 33 per cent higher. That compared with an 8 per cent uplift agreed on a big-box distribution asset since September in the face of increased supply. 

The weighted average unexpired lease term (WAULT) of the Mucklow assets was 6.5 years, compared with 12.5 on the group’s existing portfolio, but management expects the overall portfolio’s WAULT to revert back towards the longer-term average over time. 

“We like having long leases,'' said Mr Jones. “We will approach customers much earlier in the process and ask if they want to stay.” If they do not, selling the building can be an option, as was the case with the 84,000 square foot warehouse that was let to Croda, who had plans to move into one of LondonMetric’s larger warehouses in two years’ time.  

Beyond logistics, the group also boosted its so-called ‘long income’ portfolio, investing £49m in assets with a WAULT of 16 years, including several Co-Op convenience stores and a package of 10 IMO car washes. Rent reviews for the portfolio were settled at 14 per cent above previous passing rents. 

Broker Panmure Gordon forecasts adjusted net asset value (NAV) of 179p at the March 2020 year-end, rising to 184p in FY2021.