Recurring earnings up, reported profits slashed at LondonMetric

Real estate investment trust LondonMetric reported a 19% increase in recurring profits on Wednesday, with its EPRA earnings for the year to 31 March hitting £48.5m, compared with £40.9m a year ago.

The FTSE 250 company’s reported profit was practically half what it was last year, however, at £82.7m against £159.5m.

Its EPRA earnings per share were 7.8p, compared with 6.6p, and its EPRA net asset value per share creeped up yo 147.7p from 140.6p.

EPRA net asset value per share of 147.7p was up 7% after excluding the special 2p dividend during the year.

“Our focus on growing our income has delivered a substantial increase in EPRA earnings during the year and we will continue to grow our repetitive and predictable income further,” said LondonMetric chief executive Andrew Jones.

“As yield tranquillity sets in, the compounding impact of this repetitive effect is becoming increasingly attractive.”

During the year, the firm added £11.7m of new rental income from 1.9 million square feet of completed developments, and £3.5m from asset management transactions.

LondonMetric reported 2.6% like-for-like income growth and 6.4% ERV growth.

The company described development activity as “significant”, with 1.1 million square feet of on-site development representing £6.4m new rent per annum at a 7.1% yield on cost, and 1.1 million square feet in the pipeline representing £7.7m new rent per annum at a 6.9% yield on cost.

“Distribution is the best performing retail sub sector driven by rapidly changing consumer shopping patterns and the need for retailers to continually invest in their distribution capabilities to remain competitive,” Jones explained.

“Since merger, we have consciously increased our distribution exposure from 20% to 54% of the portfolio by value, and this is set to grow further, capitalising on this trend and building on our retailer relationships.”

Its portfolio was worth £1.5bn at year-end, with an EPRA topped up net initial yield of 5.4%.

Occupancy was reported at 99.3%, with a weighted average unexpired lease term of 12.8 years, and 49% of contracted rental income subject to uplifts.

Only 6% of the company’s income was due to expire within the next five years, the board pointed out.

“We continue to experience strong structural demand/supply dynamics in this sub sector and our 2.0 million sq ft distribution development programme will help to deliver sustainable earnings and income growth as well as incremental returns,” Jones added.

Its net debt position at year-end position stood at £591.2m, with its loan-to-value ratio moving to 38% from 36%.

Debt maturity stood at 5.6 years, compared with 4.2 years last year, and its average cost of debt was 3.5% against 3.7% last year.

LondonMetric retained undrawn facilities of £69.9m.

“Our portfolio metrics are as strong as ever and we remain highly disciplined in our investment approach,” Jones concluded.

LondonMetric’s full-year dividend was 7.25p, 107% covered, with the company now changing to quarterly dividends starting with an expected 1.8p distribution in October.

In a separate announcement on Wednesday, LondonMetric revealed that Screwfix CEO Andrew Livingston was joining the board as an independent non-executive director, with senior independent director Charles Cayzer retiring on 30 September.