Warehouse REIT achieves hefty premium on non-core asset disposals

UK-focused real estate group Warehouse REIT saw shares rise strongly on Tuesday morning after the company managed to sell two assets at 30% ahead of their latest valuation.

The company, which invests in multi-let warehouses in industrial hubs across the UK, said it has sold one asset in Carisbrooke on the Isle of Wight for £3.1m, and another on Newport Road in Cardiff for £6.4m.

These assets have been held for six and three years, respectively, but are no longer considered a core part of the business.

Warehouse REIT said it raised £9.5m from the sales, some 30% ahead of the book value as of 31 March 2023, reflecting an average net initial yield on passing rents of 6%.

Simon Hope, co-managing director of Warehouse REIT's investment advisor, Tilstone, said that the disposals "demonstrate good progress on the plan Warehouse REIT set out in June".

The company is continuing its plan of "capital recycling" of assets considered ex-growth or non-core, and has sold £39.6m of such assets since April, and £94.3m over the past 12 months – proceeds of which will be used to pay down debt and support earnings.

"Since [June], its successful capital recycling has strengthened the company's balance sheet and earnings position, whilst refining the portfolio and allowing the company to focus on assets with the strongest opportunities," Hope said.

"The premium to book value achieved across these sales provides further evidence that liquidity for well-let warehouse assets remains and illustrates Warehouse REIT's ability to create and crystallise value for shareholders through asset management despite the difficult macro-economic conditions."

The stock was up over 4% at 81.19p by 1000 BST.