Real estate investment trust Urban Logistics (SHED), which recently changed its name from Pacific Industrial and Logistics REIT, was only floated in March 2016 but has proved successful in raising fresh funds to invest in last-mile urban logistics. And while rental income more than doubled in the year to March 2018, earnings per share (EPS) was down because the number of shares in issue increased fivefold.
The target area is warehouses of 25,000 square feet (sq ft) to 150,000 sq ft, usually with an impending break clause, rent review or vacancy that gives an opportunity to increase rents. Contracted rent rose from £3.2m to £7.6m, but the full potential is yet to be seen as some portfolio purchases were made as late as December 2017.
Demand for logistics space remains strong as consumers are increasingly shopping online, while rents are too low to justify the cost of new building. This helped to nearly double the valuation uplift on the portfolio of 32 properties to £7.2m.
Acquisitions included an off-market deal to buy a portfolio of nine logistics assets for £45.5m last September at a net initial yield of 7.3 per cent. This is an especially attractive rate considering that the one disposal it made went for an initial yield of 6 per cent.
Analysts at Canaccord are forecasting net asset value at the March 2019 year-end of 135p a share
| URBAN LOGISTICS (SHED) | ||||
| ORD PRICE: | 129p | MARKET VALUE: | £111m | |
| TOUCH: | 127-131p | 12-MONTH HIGH: | 131p | LOW: 116p |
| DIVIDEND YIELD: | 4.9% | TRADING PROPERTIES: | nil | |
| PREMIUM TO NAV: | 4% | |||
| INVESTMENT PROP: | £132m | NET DEBT: | 53% | |
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 118 | 4.9 | 46.8 | 6.23 |
| 2018 | 124 | 9.9 | 19.5 | 6.32 |
| % change | +5 | +102 | -58 | +1 |
| Ex-div: | * | |||
| Payment: | * | |||
*The company has paid four dividends over the financial year, amounting to 6.32p, of which 3.23p related to the prior financial year Third interim tranche of 3.2p a share paid on 4 May 2018 | ||||
