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Warehouse REIT growing fast

Demand for good warehouse space continues to outstrip supply
November 12, 2018

Warehouse REIT (WHR) floated as recently as September 2017, but since then analysts at Peel Hunt have upgraded their net asset value (NAV) forecasts three times. The multi-let warehouse space landlord has certainly hit the ground running, securing 37 new lettings of vacant space in the six months to September 2018.

IC TIP: Buy at 97.4p

These generated additional rental income of £1.2m and were achieved at a 6.9 per cent premium to March 2017 estimated rental value. Existing tenants have also been paying more, with 12 lease renewals bringing in an additional £0.5m, reflecting a 7.8 per cent gain in headline rents.

And with replacement costs still higher than existing capital values, further rental growth is expected. The company has also been busy recycling assets, making four disposals, generating £19m. What’s more, these were achieved at a net initial yield of 5.1 per cent, representing a 27 per cent premium to book value. These disposals also allowed debt repayment of £15m, bringing the loan-to-value ratio down to 37.1 per cent, well within the long-term target of 30-40 per cent.

Analysts at Peel Hunt are forecasting adjusted NAV at the March 2019 year-end of 109p a share, from 102p in 2018.

WAREHOUSE REIT (WHR)  
ORD PRICE:97.4pMARKET VALUE:£162m
TOUCH:97.2-98p12-MONTH HIGH:105pLOW: 91p
DIVIDEND YIELD:5.6%DEVELOPMENT PROP:nil
DISCOUNT TO NAV:8.1%   
INVESTMENT PROP:£288mNET DEBT:62%
Half-year to 30 SepNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)*
2017**1028.4nana
201810611.06.63
% change+4+31--
Ex-div:29 Nov   
Payment:28 Dec   
*Interims paid quarterly. Ex-div and pay dates refer to second interim of 1.5p per share **Initial public offering September 2017. Comparative figures are for the period 1 Aug 2017 to 31 Mar 2018