Urban Logistics REIT PLC – Year End Results

Urban Logistics, (AIM: SHED) the specialist UK logistics REIT, issues its results for the year ended 31 March 2019.

Highlights	31 Mar 19 (£m)	31 Mar 18 (£m)	Change (%)
Income Statement
Rental income	10.8	5.6	+93.6
EPRA Earnings	5.9	2.5	+139.7
EPRA Earnings per share (p)	7.01p	4.91p	+42.7
Balance Sheet
EPRA NAV per share (p)	137.96p	122.49p	+12.6
Revaluation uplift on investment properties	13.4	7.2	+85.6
Net borrowing	71.4	47.7	+49.8
LTV (%)	33.7	34.4
Dividends
Total dividend per share paid or declared in respect of the financial year	7.00p	6.32p	+10.8

Financial Highlights

• EPRA net asset value (“NAV”) per share up 12.6% to 137.96p
• Portfolio valuation at 31 March 2019 of £186.4 million
• EPRA Earnings per share up 42.7% to 7.01p
• Second interim dividend declared of 4.02p per share making a total of 7.00p per share for the financial period, up 10.8%
• £20.4 million of equity capital raised from new and existing investors in April 2018
• Total Accounting Return (NAV + dividends) of 17.7%

Operational Highlights

• Seven logistics properties acquired for £48.0 million with asset management potential
• Disposals totalling £11.3 million, all at or above book value, representing average Total Property Return of 25.2%
• Portfolio fully occupied
• WAULT of 5.5 years (2018: 5.0 years)
• Low average rents of £4.83 per sq ft with significant upside potential. Rent reviews increasing rent by average 39.6% 

Market commentary 

Investor interest remains strong in the UK’s logistics real estate sub-sector, with record-breaking take-up in 2018 of 31.5 million sq ft – up 8.2% on 2017’s previous record of 29.4 million sq ft¹. E-commerce continues to drive demand, particularly online retail, which represented 32% of overall take-up.  

Forward-thinking retailers and distributors are continuing to invest in distribution centres that facilitate delivery to the consumer. The Company sees a strong market for local delivery driven by 10% expected population growth across major UK conurbations by 2038². Furthermore, supply in the 20,000-200,000 sq ft logistics space, where Urban Logistics is focused, has fallen by 36.0% since 2012 and rents are expected to continue rising².

¹CBRE H2 Logistics 2018
²Savills 

Nigel Rich, Chairman, commented:

“The Group has delivered another strong performance over the financial period. EPRA NAV per share has increased by 13% and earnings per share by 43%, enabling an increase in the dividend of 11%. 

“Three years on from the Company’s IPO we continue to build an increasingly diversified and high-quality urban logistics portfolio with secure income from our tenants. 

“We undertook a capital raise in April 2018 of £20 million and subsequently focussed on investment and asset management activity.

“The fundamentals of our market remain attractive and we are confident of continuing to deliver consistent returns for our shareholders.” 

Richard Moffitt, Chief Executive, added:

“Urban Logistics remain real estate’s top performing sub-sector. 

“We remain focused on growing our portfolio and enabling our diverse tenant base to meet the challenges of e-commerce, modern logistics and evolving infrastructure demands.  

“Growth of online retail continues to create yet more demand for distribution warehousing. Supply is not keeping pace, meaning logistics assets, especially ‘last-mile’ fulfilment centres, offer investors the opportunity for capital appreciation and rental income growth. I also note that over 80% of our tenants hold the highest possible credit rating, demonstrating the security of our income.  

“Looking ahead, we have a high-quality acquisition pipeline and continue to assess the potential for additional equity financing to grow the business. Whilst capital values are falling in the retail property sector, we are witnessing continued improvement in our sector due to both rental growth and lease activity – our focus being on quality tenants and the improvement of both rental and lease terms. This translates to value increases at the asset level and we remain confident in our ability to continue sourcing opportunities at attractive yields.”