TIDMSHED
RNS Number : 1323J
Urban Logistics REIT PLC
08 April 2020
Urban Logistics REIT plc
("Urban Logistics" or the "Company")
Acquisitions and Covid-19 update
Urban Logistics, (AIM: SHED) the specialist UK industrial and
logistics REIT, today announces the GBP56.1 million acquisition of
nine urban logistics properties and a development site following
the successful GBP136.1 million equity capital raise which
completed in March. These properties, apart from the NHS
distribution centre in Normanton, formed part of the Advanced
Pipeline as outlined in the Circular.
Highlights
-- GBP56.1 million of acquisitions at an average net initial
yield ("NIY") of 6.3%, comprising:
-- a portfolio of seven single-let regional distribution
warehouses for GBP31.9 million at 6.8% NIY
-- an NHS distribution centre in Normanton for GBP13.0 million
at 5.2% NIY
-- a regional distribution centre in Rubery for GBP5.5 million
at 6.0% NIY
-- conditional agreement for the forward funding of a
high-quality logistics property on a 3-acre site in
Peterborough
-- Acquisitions are funded from the proceeds of March's GBP136.1
million capital raise
-- Further portfolio in the final stages of acquisition,
expected to complete in April
-- 93% of rents for the quarter to June 2020 collected as at the
date of this announcement, (compared to 91% at the same time last
year)
-- Robust balance sheet:
-- As at the date of this announcement, GBP94 million of
available cash resources
-- Current debt facility matures in December 2022
-- Significant covenant headroom
-- Advanced discussions regarding increased banking
facilities
Richard Moffitt, Chief Executive, commented:
"Covid-19 has posed challenges for business and society as
governments seek to manage the contagion and its long-term impact.
Throughout this crisis our priority has been ensuring that the
Company operates safely and in line with the government's evolving
guidance.
"The crisis has highlighted the importance of warehousing and
distribution real estate, especially scarce regional and last mile
properties focused on essential goods and consumer staples.
"Having raised GBP136 million from new and existing shareholders
in March, we are delighted to have deployed GBP56 million into
these regional logistics properties close to established urban
locations. The properties are well located and provide a good
balance of asset management opportunities and income.
"Our strong balance sheet, conservative debt and robust rent
roll performance enables the business to manage the impact of
Covid-19. We will continue to proceed cautiously and review further
acquisition opportunities and report on these when
appropriate."
Acquisitions
Portfolio acquisition
On 7 April, the Company acquired a portfolio of seven single-let
regional distribution warehouses, (the "Portfolio") from Paloma
Capital LLP for a total consideration of GBP31.9 million,
representing a NIY of 6.8%. Completion of one property, located in
Glasgow, has been delayed as a result of Scotland's Land Registry
being closed, due to Covid-19, and will take place when it
reopens.
The Portfolio, which was sourced off-market and acquired
freehold, comprises 482,012 sq ft of warehousing with a low capital
value of GBP66 per sq ft, low average passing rent of GBP4.86 per
sq ft and presents opportunities for asset management. The
properties are located in Melksham, Redditch, Telford, Ellesmere
Port, Glasgow, Tewksbury and Leeds.
The sites are all in close proximity to established regional
transport networks, have good labour availability and are located
in well-populated areas where there is strong occupier demand.
Single asset acquisitions
The Company has also completed the following acquisitions:
-- Normanton - a 153,473 sq ft property acquired for GBP13.0
million at a 5.2% NIY. The unit is let to Unipart Logistics through
to 2036, with a rent review due in 2026, and serves as an NHS
distribution hub. The 14-acre site has low site cover of 25% and a
passing rent of GBP4.70 per sq ft. There is the potential to add
c.80,000 sq ft of additional warehousing on site
-- Rubery - a 51,600 sq ft property acquired for GBP5.5 million
at a 6.0% NIY. The unit was constructed in 2016 and is let to Aqua
Pak Polymers through to 2031 with a parental guarantee from Systems
ADI Group Limited. Rent is subject to review in 2021 and 2026 and
linked to RPI with a 3.0-5.0% cap and collar
-- Peterborough - subject to planning, a commitment to acquire a
three-acre land site and forward fund a 46,500 sq ft facility on
the well-established Peterborough Gateway Logistics Park at a total
development cost to the Company of GBP5.8 million. The project is
part pre-let to DPD. Development sites remain less than 10% of the
gross asset value of the Company
M1 Agency fees
As part of some of these acquisitions, fees of GBP299,300 will
be paid to M1 Agency LLP for acting as a property agent. These fees
were incurred at arm's length and in line with standard commercial
market terms. The M1 Agency is a partnership in which Richard
Moffitt is a designated member and is considered a related party
for the purposes of the AIM Rules. In accordance with Rule 16 of
the AIM Rules, total fees paid to M1 Agency over the last 12
months, including the fees above, aggregate to a total of
GBP552,000. The independent Directors, having consulted with their
Nominated Advisor N+1 Singer Advisory LLP, are satisfied that the
aggregate fees paid to M1 Agency LLP are fair and reasonable and in
accordance with standard commercial terms insofar as the Company's
shareholders are concerned.
Pipeline
Looking ahead, the Company continues to evaluate acquisitions
across business-to-business parcel depots and last mile warehouses.
A further portfolio acquisition is in the final stages of
negotiation and is anticipated to complete in April.
Covid-19 update
A key element of the Company's acquisition strategy has been to
focus on tenants' businesses with a notable bias towards food and
pharmaceuticals, consumer staples and other essential goods.
This strategy has endowed the Company's portfolio with
resilience, as evidenced by 93% of rents for the quarter to June
2020 having been collected as at the date of this announcement,
compared to 91% at the same time last year.
Of the 38 properties in the Company's portfolio, only four are
not fully operational as a result of Covid-19 and the Manager is
currently discussing a revised payment plan with one of these
tenants.
As at today's date, after taking the acquisitions into account,
the Company is in a strong net cash position with available
resources of GBP94 million. The Company will maintain a more
cautious approach to leverage in the short term to maintain balance
sheet strength.
While existing debt facilities are not due to mature until
December 2022, the Company is currently in the process of arranging
additional facilities to cater for its increased size and
scale.
Outlook
Looking forward, it is too early to assess the full impact of
Covid-19 on the wider economy or the real estate market as a whole.
Nonetheless, the Board continues to believe that logistics assets
remain relatively well positioned in terms of value and occupier
demand with prices remaining resilient.
The Company will provide further updates as appropriate and
intends to announce its Preliminary results for the year ended 31
March 2020 in May, subject to further guidance from the Financial
Conduct Authority and Financial Reporting Council. The 31 March
2020 valuation is likely to include a statement from the
independent valuers highlighting material uncertainty, given the
current situation. Whilst the valuation is taking place at a point
in time when there is unprecedented short-term uncertainty, the
Company believes the structural resilience of the portfolio
underpins its intrinsic long-term value.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION (EU) NO 596/2014 ("MAR").
- Ends -
For further information contact:
Urban Logistics REIT plc
Richard Moffitt +44 (0)20 7591 1600
Montfort - Financial PR and IR adviser
Olly Scott +44 (0)78 1234 5205
N+1 Singer - Nominated Adviser and Broker
James Maxwell / James Moat (Corporate
Finance)
Alan Geeves / James Waterlow / Sam Greatrex
(Sales) +44 (0)20 7496 3000
Panmure Gordon (UK) Limited - Joint Broker
Chloe Ponsonby (Corporate Broking)
Emma Earl (Corporate Finance) +44 (0)20 7886 2500
About Urban Logistics REIT
Urban Logistics REIT plc is a property investment company,
quoted on the AIM market of the London Stock Exchange, (AIM:
SHED).
The Company has been established to invest in UK-based logistics
properties with the objective of generating attractive dividends
and capital returns for its shareholders. Its investment strategy
focuses on strategically located smaller single let properties
servicing high-quality tenants. Investment returns will be
generated by an experienced management team focusing on quality
stock selection and active asset management.
A number of structural and commercial factors currently support
the attractive opportunity in the last mile/regional industrial and
logistics real estate sub-sectors targeted by the Company,
including: strong occupier demand, (driven by the growth of
e-commerce and investment by retailers in their associated supply
chain) and a decline in the supply of smaller sized lettable space
in industrial and logistics real estate across the UK.
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END
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