REG - LondonMetric - FULL YEAR RESULTS FOR THE YEAR ENDED 31 MARCH 2025
20/05/2025 07:00
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RNS Number : 3059J LondonMetric Property PLC 20 May 2025
LONDONMETRIC PROPERTY PLC
("LondonMetric" or the "Group" or the "Company")
FULL YEAR RESULTS FOR THE YEAR ENDED 31 MARCH 2025
Our activity has driven strong earnings and dividend growth, and we are
delivering
on our aim to further consolidate our position as the UK's leading Triple Net
Lease REIT
LondonMetric today announces its full year results for the year ended 31 March
2025.
Income Statement FY 2025 FY 2024
Net rental income (£m) 390.6 175.3
EPRA earnings(1) (£m) 268.0 121.6
IFRS reported profit (£m) 347.9 118.7
EPRA earnings per share(1) (p) 13.1 10.9
IFRS earnings per share (p) 17.1 10.6
Dividend per share (p) 12.0 10.2
Balance Sheet FY 2025 FY 2024
EPRA net tangible assets(1) (NTA) (£m) 4,071.0 3,908.9
IFRS net assets (£m) 4,123.9 3,969.5
EPRA NTA per share(1) (p) 199.2 191.7
IFRS net assets per share (p) 202.4 195.2
1. Further details on alternative performance measures can be
found in the Financial Review and definitions can be found in the Glossary
Focus on winning sectors and delivering on M&A drives rents, earnings and
dividend growth
· Net rental income increased 123% to £390.6m
· EPRA earnings up 120% to £268.0m, +20.7% on a per share basis
· Sector leading EPRA cost ratio at 7.8%
· Dividend increased 17.6% to 12.0p, 109% covered by earnings,
including Q4 dividend declared today of 3.3p
· Continued dividend progression with expected 5.3% increase in Q1
2026 dividend to 3.0p (Q1 25: 2.85p)
Strong returns driven by reliable, repetitive and growing income
· Total property return of 8.3% (200bps outperformance of MSCI),
income return 5.7% and ERV growth 3%
· Like for like income growth of 4.2% drives valuation
uplift of £106.0m
· EPRA NTA per share of 199.2p (+3.9%)
· IFRS reported profit of £347.9m (2024: £118.7m)
· Total accounting return of 9.7% (2024: 1.3%)
Portfolio aligned to strongest thematics
· Portfolio value of £6.2bn (2024: £6.0bn) with logistics
weighting at 46%
· £343m acquired in year (87% logistics)
· £342m disposed (£214m were former LXi and CTPT assets), further
£63 million sold post year end
Activity continues to enhance portfolio quality, strengthening long and strong
income characteristics
· WAULT of 18.5 years, gross to net income ratio of 99% and
occupancy at 98% (99% post year end activity)
· Contractual rental uplifts on 77% of income, 40% of income
subject to annual reviews
· Occupational activity added £15.3m pa contracted income
· Rent reviews +17% on five yearly equivalent basis with market
reviews +40%
· Income uplift expected over next two years of £27m, 18% embedded
reversion on logistics assets
· 92% of portfolio EPC A-C rated (up from 85%) with 3.6MWp of solar
PV added and 2.6MWp of near-term potential
Scale delivering economies of opportunities and greater access to capital
· Unlocked M&A with Urban Logistics REIT Plc and Highcroft
Investments Plc adding £1.2bn of assets
· Extended maturity on £975m of debt and new debt facilities of
£525m (with post year end activity)
· LTV at 32.7%, debt maturity of 4.7 years and cost of debt at 4.0%
(100% hedged following £489m of hedging activity)
· BBB+ credit rating in year increases options for future
financings
Andrew Jones, Chief Executive of LondonMetric, commented:
"This has been a remarkable year for LondonMetric. Our NNN income model has
delivered exceptional earnings and dividend per share growth of 21% and 18%
respectively. We have integrated the £3 billion of assets acquired through
the LXi takeover, transacted on over £680 million of sales and acquisitions,
and delivered strong rental growth from 340 asset management initiatives.
"We have every reason to be optimistic about our relentless expansion and the
opportunities available from our highly scalable platform. In an environment
where scale is essential, our £6 billion portfolio is set to grow by a
further £1 billion through M&A activity which will add to our urban
logistics exposure, our strongest conviction call sector for rental growth."
"Our strong performance and execution reflect over ten years of building up
the right portfolio aligned to the strongest sectors, with the best team and
the strongest relationships, all underpinned by unemotional capital
allocation, overhead efficiency and a resolute focus on income and growth.
With ten years of dividend progression under our belt, our all-weather
portfolio is more capable than ever of delivering reliable, repetitive and
growing income, and we remain firmly on track to achieving dividend
aristocracy."
For further information, please contact:
LondonMetric Property Plc:
+44 (0)20 7484 9000
Andrew Jones (Chief Executive)
Martin McGann (Chief Financial Officer)
Gareth Price (Investor Relations)
FTI Consulting:
+44 (0)20 3727 1000
Dido
Laurimore
Londonmetric@fticonsulting.com (mailto:Londonmetric@fticonsulting.com)
Richard Gotla
Andrew Davis
Meeting and audio webcast
An analysts meeting will be held at 9.00am today and a live audio webcast will
be available at the below link. An on demand recording will also be available
from the same link shortly after the meeting:
https://brrmedia.news/LMP_FY_24/25 (https://brrmedia.news/LMP_FY_24/25)
Notes to editors
LondonMetric Property Plc is the UK's leading triple net lease REIT with a £6
billion portfolio aligned to structurally supported sectors of logistics,
healthcare, convenience, entertainment and leisure. It owns and manages
desirable real estate that meets occupiers' demands, delivers reliable,
repetitive and growing income-led returns and outperforms over the long term.
Further information is available at www.londonmetric.com
(http://www.londonmetric.com) .
Neither the content of LondonMetric's website nor any other website accessible
by hyperlinks from its website are incorporated in, or form part of this
announcement nor, unless previously published by means of a recognised
information service, should any such content be relied upon in reaching a
decision to acquire, continue to hold, or dispose of shares in LondonMetric.
This announcement may contain certain forward-looking statements with respect
to LondonMetric's expectations and plans, strategy, management objectives,
future developments and performance, costs, revenues and other trend
information. These statements and forecasts involve risk and uncertainty
because they relate to future events and circumstances. There are a number of
factors which could cause actual results or developments to differ materially
from those expressed or implied by these forward-looking statements and
forecasts. Certain statements have been made with reference to forecast price
changes, economic conditions and the current regulatory environment. Any
forward-looking statements made by or on behalf of LondonMetric speak only as
of the date they are made. LondonMetric does not undertake to update
forward-looking statements to reflect any changes in LondonMetric's
expectations with regard thereto or any changes in events, conditions or
circumstances on which any such statement is based. Nothing in this
announcement should be construed as a profit forecast. Past share price
performance cannot be relied on as a guide to future performance.
Alternative performance measures: The Group financial statements are prepared
in accordance with IFRS where the Group's interests in joint ventures and
non-controlling interests are shown as single line items on the income
statement and balance sheet. Management reviews the performance of the
business principally on a proportionately consolidated basis, which includes
the Group's share of joint ventures and excludes non-controlling interests on
a line by line basis. Alternative performance measures are financial measures
which are not specified under IFRS but are used by management as they
highlight the underlying performance of the Group's property rental business
and are based on the EPRA Best Practice Recommendations (BPR) reporting
framework which is widely recognised and used by public real estate
companies.
Chair's statement
It has been another exceptional year for LondonMetric having successfully
integrated the LXi and CTPT acquisitions, completed over 100 investment
transactions and 340 occupier initiatives, advanced additional M&A
opportunities and debt refinancings, and strengthened the team.
Our activity is delivering on our aim to further consolidate our position as
the UK's leading Triple Net Lease REIT. Our income metrics remain sector
leading as we strengthen and grow the portfolio's rental income and extract
efficiencies and the wider potential from our scalable platform. We continue
to reshape the portfolio to ensure that it is aligned to mission critical real
estate in structural supported sectors with attractive income growth
prospects.
Our financial results for the year to 31 March 2025 were outstanding and
reflect the first full year for the enlarged group. Net rental income was up
123% to £390.6 million, whilst our EPRA earnings per share increased by 21%
to 13.1p, a 236% increase from the 3.9p at the time of our formation in 2013
(an 11% compounded annual growth rate). This has allowed us to increase our
dividend per share for the tenth year, up 18% on 2024 to 12.0p and 109%
covered by EPRA earnings per share. We expect dividend growth to continue and
are guiding to a 5.3% increase in our first quarterly dividend for FY26 to
3.0p.
Over the year, our portfolio's valuation increased by £106 million,
reflecting our strong income performance which has enabled us to deliver an
attractive total property return of 8.3%, a 200bps outperformance of MSCI All
Property. EPRA NTA per share increased by 3.9% over the year which helped to
generate a total accounting return of 9.7%.
We have continued to strengthen and build flexibility into our debt structure.
During the year we achieved a BBB+ credit rating which, together with our
greater scale, is opening up wider sources of capital. We have put in place
new debt facilities, extended existing debt facilities and added further
hedging at attractive rates. Our debt metrics are in great shape with a debt
maturity of five years, an average cost of debt of 4.0%, significant undrawn
facilities and a conservative LTV at 33%.
Looking ahead, our exceptional team is working tirelessly to build an even
stronger business that can continue to deliver earnings and dividend growth
over the long term.
In the near term, we are hopeful of successfully concluding the acquisitions
of Urban Logistics REIT and Highcroft Investments which would add £1.2
billion of assets and bring material benefits to all shareholders. Over the
longer term, I am in no doubt that our enlarged scale and highly efficient
business model will continue to offer up a wide variety of further
opportunities for growth, both internally and externally through further
M&A.
I am very grateful to Andrew Livingston for the valuable contribution he has
made as he retires from the Board after nine years. Kitty Patmore takes on the
role of our designated workplace Non Executive Director. Whilst remaining on
the Board, Robert Fowlds hands the Remuneration Committee Chair position to
Suzy Neubert following a five year term.
Finally, having seen at first hand the enormous commitment that has been made,
I would like to thank all of our team and the Board for their hard work and
dedication over the past year. I remain genuinely excited by the prospects for
the Company.
Chief Executive Q&A
Q
How would you describe LondonMetric?
A
LondonMetric is a high conviction triple net lease ('NNN') real estate
investment trust ('REIT') invested in the strongest property sectors with the
lowest cost of operations. It is a highly efficient model that delivers
reliable, repetitive and growing income returns and allows us to pass our
collected rent onto our shareholders by way of a well covered, progressive and
quarterly dividend payment.
Q
What is your approach and key focus?
A
We focus on owning mission critical and key operating assets in the strongest
sectors benefitting from macro tailwinds and evolving consumer behaviour.
We buy smart, using our strong occupier relationships to give us a competitive
edge in asset selection to ensure income longevity and growth, alongside value
accretion. Our simple but highly effective approach has created an all weather
portfolio that can navigate short term macro volatility. This underpins our
dividend growth, which has increased this year by 18%, representing our tenth
year of progression and putting us well on the path to dividend aristocracy.
Q
What is your investment thesis?
A
Our investment thesis is predicated on aligning the portfolio to the macro
trends of digitalisation, time as a valuable commodity and experiences.
Consequently, we have pivoted our investments to the winning real estate
sectors of logistics, convenience shopping, entertainment and leisure. We look
to acquire quality assets in structurally supported sectors at reasonable
prices, with conservative leverage to amplify returns, and then we aim to hold
them for a long time. This is referred to as the three Cs - collect income,
allow it to compound and watch the yields on cost compress.
Q
Has your M&A activity delivered as expected?
A
Our transformational LXi deal in March 2024 has materially increased our scale
and continues to deliver significant operational and financial benefits. We
have successfully integrated the portfolio and the people and, alongside the
acquisition of CTPT in 2023, we have achieved significant annual cost savings,
improved our debt optionality and seen much increased liquidity in our shares.
The benefits of these deals, our focused capital allocation and our incredible
team has strengthened our portfolio, income growth prospects and sector
leading cost metrics.
Q
How are you ensuring the portfolio remains fit for purpose?
A
Our focus on NNN income compounding and strong shareholder alignment is
ensuring that we remain disciplined, rational and active, continually
improving our portfolio, financing and net operating income. Over the year, we
exchanged on £342 million of sales at above prevailing book value. These were
excellent sales and largely comprised non core LXi and CTPT assets.
We reinvested the sales proceeds into higher quality assets with better income
reliability and growth trajectory, acquiring £343 million of mainly logistics
warehousing. We will continue to monetise assets where future returns are less
certain and reinvest into quality investment opportunities with growth,
including external M&A deals and opportunities focused on urban logistics.
Q
What's happening in the world of Real Estate?
A
Sentiment in real estate continues to be adversely affected by elevated swap
and ten year gilt rates, with recent macro events adding further to
uncertainty. However, this is throwing up opportunities for well capitalised
businesses - after all, market uncertainty can be the friend of investors
looking for long term value.
Polarisation between the winning and the losing sectors remains and we do not
expect this to change for some time. The winning sectors of 'sheds, beds &
breads' continue to see good investor demand and transparent pricing, whilst
the losing sectors continue to see muted growth and structural headwinds. For
offices and shopping centres, occupancy, amenity and environmental costs will
continue to weigh on net income and valuations.
Q
How are you positioned for the next year?
A
Recent activity is expected to see us materially increase our logistics
weighting to 55%, in particular growing exposure to our key conviction sector
of urban logistics, maintain a well positioned balance sheet and strong equity
rating, and consolidate our FTSE 100 status. We will continue to capture
strong income growth and, with further external growth and consolidation
likely, we expect to further enhance our position as the leading UK NNN lease
REIT.
Chief Executive's review
As the UK's leading NNN REIT we aim to deliver reliable, repetitive and growing income
We continue to believe that income and income growth are the defining
characteristics of long term investment returns. We appreciate the true
benefit of income compounding over the longer term, focusing on the quantity,
quality and timing of when cash will be returned. Compounding is not intuitive
and is often misunderstood and under appreciated. For us, it is as easy as ABC
- always be compounding.
The introduction of the REIT regime into the UK in 2007 was a pivotal moment
that allowed the real estate sector an unbelievable advantage to compound
income. Whilst others failed to pivot their strategies, we have embraced the
REIT structure, fully understanding and appreciating the outstanding outcomes
that it can produce.
NNN income REITs that invest in quality assets in the strongest sectors and
with high occupier contentment can deliver reliable income and growth, and are
well placed to deliver long term compounded returns. This model has been
highly successful in the US and is a scalable, low cost proposition that does
not require great activity, people or risky decision making. We believe that
this is the right way to invest: low cost, high quality, reliably and
efficiently delivered.
Our portfolio has an annual net contracted rent of £340 million and very
strong income metrics with a WAULT of 18.5 years, occupancy at 98% and a gross
to net income ratio of 99% which reflects our minimal property costs. With 77%
of income subject to contractual rental uplifts and 40% subject to annual
reviews, this is providing certainty of income growth, with like for like
income growth delivered of 4.2% across the portfolio over the year.
Our strategy is to own quality assets in winning sectors underpinned by strong income
Our job is to allocate capital into sectors where it will be treated best by
supporting existing trends and looking for new ones. There is no substitute
for being aware, alert and always prepared to pivot.
We are thematic investors who invest in structurally supported sectors
benefitting from strong consumer tailwinds with high occupier contentment.
After all, when you choose real estate where the wind is at your back, you are
more likely to be a price setter than a price taker.
We also prioritise 'mission critical' assets as occupiers tend to stay longer,
invest more and pay higher rents. This approach has served us well and
improved our returns. Management's share ownership culture ensures that we
pursue quality returns over long periods, acknowledging that time is the
friend of a wonderful portfolio, and so we are happy to get rich slowly.
Our model is focused on long term compounding, rather than simply growing
assets under management. This tempers our acquisition activity, limits
speculative development exposure and frames our disposal decisions. Buying
lowly rated assets cheaply is not our strategy, as these assets tend to over
distribute, diluting equity value and creating unnecessary risk, stress and
taking up valuable thinking time.
We will exit weaker assets which have shorter leases, weakened credits and
capital expenditure requirements that are likely to grow faster than net
rents. Similarly, we have never seen the attraction of managing time and
capital intensive assets such as offices or shopping centres, where tenants
are addicted to incentives, depreciation is speeding up and occupiers are
always demanding better amenities, paid for by the owners.
Our investment activity focuses on increasing our logistics exposure
We stated our ambition to increase our logistics weighting and, over the year,
it increased from 43% to over 46% following £297 million of logistics
acquisitions. Market uncertainty and elevated debt costs created a number of
opportunities at a time where the field of competitors is quieter.
Opportunities arose from various sellers including pension funds exiting
direct real estate, motivated vendors facing refinancing challenges,
investment funds subject to investor redemptions and occupiers looking to
raise money through sale & leasebacks.
We also continued to review a number of M&A opportunities focused on urban
logistics with our takeovers of Urban Logistics REIT Plc and Highcroft
Investments Plc expected to increase our logistics weighting to approximately
55%. The logistics sector continues to be attractive with the sector's
structural tailwinds remaining strong from continued online sales growth,
investment in more efficient and resilient supply chains and increased
warehouse automation. Take up of logistics warehousing over the last year was
in line with the prior year at around 20 million sq ft. Whilst the UK
logistics vacancy rate has increased to 6%, the first quarter of 2025 has seen
speculative supply fall, take up increase by 16% and lettings under offer
increase by 11%.
We continue to believe that urban logistics remains the most attractive
sub-sector and has the greatest demand/supply tension and consequently income
growth potential. Supply continues to reduce as assets are converted into
higher value land uses. Highly granular occupier demand is further benefitting
from an ongoing need for occupiers to evolve operationally by locating closer
to the end customer, minimise delivery times, increase accuracy of delivery
and satisfy consumer demands for instant gratification.
Our logistics assets delivered a strong total property return of 7.1% in the
year and saw further ERV growth of 4%, with urban again the strongest
sub-sector. Logistics rent reviews were settled at 19% above previous passing
rents on a five yearly equivalent basis with urban logistics open market
reviews seeing a 48% uplift. Our logistics portfolio remains highly
reversionary and this is expected to provide superior future returns.
We are successfully transacting on our non core sales strategy
Our investments into logistics have been funded by the sale of 72 non core and
mature assets in the year totalling £342 million and transacted at above
prevailing book values. As with most portfolio acquisitions, you will never
love all assets and our primary focus has been the sell down of non core LXi
and CTPT assets, which totalled £214 million. We will always look to deal
from the bottom of the deck and exit weak sectors and poorer quality assets as
quickly as possible. After all, when you own secondary assets time can quite
often destroy wealth.
The sales mainly comprised two oversized Asda food stores, a number of
secondary offices and training centres, a large retail park, pubs, garden
centres, gyms and hotels. We also sold eight urban logistics assets at very
low yields of 4.6%, which is below our marginal cost of debt, and where we
felt income growth was less certain. We continue to see good liquidity for our
assets with £63 million sold post year end. Undoubtedly there will be some
non core assets from our current M&A activity which we will look to
quickly exit and recycle the proceeds.
Our long income assets are benefitting from structural tailwinds
Our long income portfolio represents 52% of our assets and provides incredible
income let to strong operators, with inflation protection and attractive
income compounding qualities which form the bedrock of our dividend. It is 99%
occupied, offers a topped up NIY of 5.5%, a WAULT of 23 years and contractual
rental uplifts on 90% of income.
The real estate is aligned to structurally supported sectors of convenience,
entertainment & leisure and healthcare. These sectors are benefitting from
changes in consumer behaviour and demographics as the population pivots
expenditure towards convenience, experiences and better healthcare. Strong
demand/supply dynamics in these sectors and attractive replacement metrics
ensure that these assets are mission critical operating assets for our
occupiers. In the year, our long income assets delivered a TPR of 8.6%. It is
crucial in real estate that income compounding from contractual uplifts does
not of itself create an over renting position. This is why our long income
assets are let at rents that are in line with market rents and/or are let to
occupiers that can pass on higher rents to their customers, thereby
maintaining a healthy earnings to rent cover.
Convenience is an area where we are looking to grow our exposure. The store
network remains integral to retailers, and our convenience assets are well
located, stand-alone or cluster properties that are fit for purpose, right
sized and right rented. These assets are let on long NNN leases to grocers,
discounters, home and DIY operators with resilient business models that are
less exposed to the migration of shopping online and offer essential goods and
omni-channel optionality in a convenient format. Roadside convenience has been
an area of focus for us, particularly drive-thrus, with a growing need to
service customers requiring electric vehicle charging. We now own a
substantial number of drive-thrus, let to national names like Costa, Burger
King, McDonalds and Starbucks.
Healthcare is underpinned by strong demand drivers from an ageing and growing
population as well as improvements in technology, and the real estate
investment market in healthcare has been particularly active over the last
year. UK private hospitals are particularly well placed and are increasingly
taking on NHS patients as a result of the growing NHS waiting lists where
seven million people are awaiting treatment. Unsurprisingly, they are seeing
good demand from patients treated through private medical insurance as well as
self-pay as they seek better and faster care. There has been strong growth in
insured patient volumes across the independent healthcare provider sector.
Ramsay Health Care, our largest occupier, continues to report strong growth in
its UK business, particularly from NHS admissions.
Entertainment & leisure continues to benefit from the trend towards
experiences and growing preference for staycations. We have continued to
improve our hotel portfolio with the sell down of smaller and weaker
performing Travelodge hotels, and targeting the selective acquisitions of well
located and strongly performing Premier Inn hotels. Our theme park investments
are benefitting from favourable trends and are proving to be non-cyclical
performers as consumers prioritise experiences over things and an
unwillingness to cut back on discretionary spend in this area. Theme parks
also have significant barriers to entry in the UK with large investment
required to maintain visitor appeal which adds to their defensive
characteristics.
We continue to grow our income and improve our asset quality
We continue to see high occupier contentment and demand across our portfolio.
During the year, occupier initiatives added £15.3 million per annum of rent
and delivered like for like income growth of 4.2%. Lettings and regears added
£5.9 million of rent and were signed on average lease lengths of 19 years,
with urban logistics assets contributing £4.0 million of uplift and seeing
income on regears increasing by 43%. Rent reviews added £9.4 million,
representing a 17% uplift on a five yearly equivalent basis with urban
logistics delivering a 24% uplift.
Looking forward, we will benefit from collecting additional income from our
highly reversionary logistics assets as well as the guaranteed uplifts on our
long income assets with an additional £27 million of rental uplift expected
over the next two years from the existing portfolio.
Our strong occupier relationships have seen us secure new pre-lets and de-risk
our development activity. In the year, we completed development of a new
36,000 sq ft logistics warehouse for Ferrari Pistons, further drive-thru/to
pods and funded the development of a new hotel for Merlin. We continue to work
closely with M&S across a number of opportunities including food stores,
general merchandise and logistics. We are developing new stores for them in
New Malden, Weymouth, Largs and Blackpool, and have let a former Homebase to
them in Luton. Including rent from our recently announced 390,000 sq ft
M&S funding development in Avonmouth, these deals account for £7 million
of rent per annum which would make M&S our fourth largest occupier,
representing c.2.3% of our total annual rent.
We continue to embed sustainability across our activities, driven by our own
aspirations as well as those of our stakeholders. We see ourselves as strong
stewards of underinvested or poorer quality assets where we can use our
expertise to materially improve buildings. Over the year, the portfolio's EPC
A-C rating increased from 85% to 92% and five solar PV projects added 3.6MWp
with a further 2.6MWp of near term projects. We completed our Net Zero Pathway
and continue to work with our occupiers to help them meet their Net Zero
objectives.
We continue to benefit from our strong team and its relationships
Our team's economic alignment to the Company's success ensures an ownership
culture and a strong conviction to make the right property and financial
decisions. We work with all stakeholders to deliver longer term benefits to
our investors, occupiers, people, local communities, contractors, suppliers
and advisors.
Our occupier survey in March 2025 again showed high contentment with an
average score of 8.7 out of 10.0 for whether our occupiers would recommend
LondonMetric as a landlord. This was particularly pleasing given that this was
the first year that LXi occupiers were included. We also received a high score
in our latest employee survey with 96% of employees saying that they enjoy
working for the Company, which is slightly higher than last year. The team has
worked incredibly hard over the year, has embraced our 'work from work'
culture and I am very grateful for their efforts.
As a larger and growing business, we recognise the importance of investing in
our people and have continued to strengthen our team with several new hires
including the appointment of Darren Richards, who joined in January, as Chief
Investment Officer. My appreciation also extends to these new colleagues who
have integrated into the team seamlessly.
Outlook
Our NNN income model is delivering strong income and elevated levels of rental
growth through a low cost and efficient platform. We believe that this is the
right way to invest. Scale and efficiency is essential in today's environment,
and we have every reason to be optimistic about our relentless expansion. Our
M&A activity continues to improve liquidity in our shares, expand access
to quality investment opportunities and enhance or exploit economies in terms
of overheads and debt optionality. Our EPRA cost ratio is the lowest in the
sector and we have a clear path to further progress our earnings per share and
covered dividend.
However, we are not in this position by accident, and it is the result of over
ten years of building the right portfolio, financial prudence, taking the hard
decisions over easy ones and a strong team. Unlike some of our peers, our
decisions have always been heavily influenced by macro trends, evolving
consumer behaviour and demand/supply dynamics. After all, no matter how great
the intelligence or how hard the work, the macro will always out run the
micro.
Therefore, to ensure that our portfolio remains fit for the future, we will
constantly refine its quality and income streams by trimming our exposure to
certain sub-sectors, ex-growth assets and individual credits. The logistics
market remains our strongest conviction for income growth and so we continue
to reinvest into this market. As owners we are fully aligned with shareholders
and remain focused on our mission, disciplined and ruthlessly efficient in how
we operate our business and allocate capital.
We have now completed ten years of dividend progression and are on the path
towards dividend aristocracy. After all, income compounding is the eighth
Wonder of the World - the secret ingredient and the rocket fuel that creates
wealth.
Our markets
Macro events continue to dictate the investment backdrop
The global economic outlook has changed significantly over recent months and
continues to set the scene for the investment market. The US president's
'Liberation Day' tariffs have created significant volatility in the global
bond and equity markets as investors have looked to assess the longer term
impact of deglobalisation and increased protectionism. How this plays out is
too difficult to predict, particularly with ongoing uncertainty from elevated
inflation and geopolitical events, but lower growth is an inevitable outcome
and a widespread global economic slowdown is being assumed by the markets.
For the UK, there are material risks to economic growth and a range of
potential outcomes for inflation. The impact of recent rises in utility
prices, national insurance costs, national living wage and above trend wage
growth continues to add to inflation pressures that have persisted for several
years. However, there is also potential for a disinflationary impact from
tariffs from factors such as weaker commodity prices, lower input costs and a
stronger currency.
For the UK consumer, what particularly matters is the impact of all this on
future interest and mortgage rates. After hitting an inflexion point during
the year and having been cut four times since, a further decline in interest
rates is widely expected which could provide some cheer to the UK consumer;
the same can't be said for the US consumer.
Liquidity and sentiment in real estate is improving
Interest rates remain the yardstick against which most investments are
measured. Consequently, sentiment in the real estate sector continues to be
largely driven by the outlook for five year swap rates and ten year gilts.
Unsurprisingly, after a recalibration of valuations over the last few years
and with five year swap rates now nearer 375bps compared to over 400bps a year
ago, sentiment has improved and valuations have moved upwards across most real
estate sectors.
Total UK real estate investment activity was over £50 billion in 2024, a 23%
increase on 2023. This increased level of activity has continued into the
first quarter of 2025 with £15 billion of transactions, reflecting a 75%
increase year on year. There has been healthy activity across the 'winning'
sectors, as well as growing popularity for warehouse assets; both distribution
and retail. There have also been signs of activity in the London office and
shopping centre markets, albeit at prices materially below previous valuations
which reflects motivated vendors, falling rental values, growing capex
requirements and expanded yields. However, the 'traditional' sectors accounted
for only 46% of all investment activity in 2024, which is the lowest on
record, and a number of high profile office and shopping centre transactions
have been pulled as bids received did not meet sellers' inflated expectations.
We continue to see significant capital sit patiently on the sidelines awaiting
greater macroeconomic and geopolitical clarity. With current swap rates
continuing to rule out many debt funded buyers, we are seeing the greatest
liquidity for smaller lots sizes. Our view remains that normal liquidity
won't return until five year swap rates fall closer to 300bps to derive an all
in cost of debt of c.5%, a level that allows most debt led real estate
transactions to work; we're a lot closer but still not close enough.
We have also seen further sector consolidation and managed liquidation of
externally managed small cap REITs where poor structures, lack of scale,
limited alignment of interest and legacy investment strategies have manifested
in material discount ratings. The days of easy money for externally managed
small cap REITs with little in the way of shareholder alignment have long
disappeared and the list of such companies is reducing by the day.
Polarisation across real estate will continue
Technological disruption continues to affect the way we communicate, travel,
work and shop with profound and permanent consequences for both winning and
losing real estate sectors. Structural tailwinds are providing strong support
for logistics, convenience and hospitality related real estate. Student
accommodation and build-to-rent have similarly benefitted from positive
tailwinds but these are highly operational sectors that do not fit our NNN
strategy. Data centres also offer exciting growth prospects aligned to the
need for a growing digital infrastructure but remain a complex sector with
availability of power a major constraint.
For the troubled office and retail sectors, prospects for some micro
sub-sectors have improved, however significant headwinds persist. In the
office market, outside of the very best locations, the headwinds are fierce
with strong parallels to the shopping centre sector ten years ago. New
technology, increasing obsolescence, new sustainability requirements and
changing workers' preferences, are disrupting demand for all but the very best
office space in the strongest markets. It's a case of returns being destroyed
by vacancy, obsolescence, tenant incentives and expanding yields.
Whilst many office owners will confidently talk about increasing occupier
demand and headline rental growth, the cost of achieving it, and expanding
valuation yields make these less profitable in reality than the perception.
The financial returns are therefore extremely marginal with investors
increasingly wary of future income growth to justify yields. After all, how
many office landlords talk positively about their accretive rent review
settlements.
Operational retail property continues to suffer as the consumer pivots further
towards an omni-channel and convenience shopping model. The shift online has
resulted in massive value erosion across many parts of physical retail, where
there is still too much space and not enough occupiers. This is less
pronounced in some of the strongest locations but, even here, passing rents
are very often still higher than true ERVs once the incentives required to
maintain occupancy are stripped out.
The adoption of omni-channel models is, however, helping retail parks which
are seeing strong occupancy, reduced supply and stronger pricing equilibrium.
This is particularly the case around the better geographies, where space is
being lost to other higher value alternatives like residential and even
warehousing. They exhibit NNN income characteristics, enjoy attractive
demand/supply metrics and asset management initiatives can add income to
enhance total returns.
The convenience grocery sector is seeing particularly strong growth, where
stores retain their important role in essential spending due to low online
penetration for food. However, performances remain polarised as larger format
supermarkets continue to fight strong competition from the smaller, right
rented, fit for purpose convenience and discount stores.
Property review
Total portfolio value
£6.2bn
Our portfolio is aligned to structurally supported assets
After doubling the size of the portfolio in 2024 to £6.0 billion, the
portfolio value increased over the year to £6.2 billion. Our investment
activity has, however, changed the weightings of our portfolio as we sold out
of non core assets and reinvested the proceeds into higher growth assets,
particularly in urban logistics, our strongest conviction call. As a result,
our logistics weighting increased from 43% to 46% of the portfolio, whilst our
long income weighting, which comprises the convenience, entertainment &
leisure and healthcare sectors, fell from 54% to 52%. The portfolio is
primarily focused on London and the Southeast (37% by value) and the Midlands
(23%). The rest of England accounts for 34%, whilst Scotland and Wales account
for just 4%. The remaining 2% relates to our theme park in Germany.
Portfolio weighting by value
1. Logistics 46.1%
2. Entertainment & leisure 21.1%
3. Convenience 15.9%
4. Healthcare (including education) 15.1%
5. Other (a retail park, offices and a life science asset) 1.8%
Our portfolio's income metrics remain very strong
The income security of the portfolio remains very strong with a WAULT of 18.5
years (17.4 years to first break) and only 5% of income expiring within the
next three years. Occupancy remained high at 98% and our gross to net income
ratio of 99% continues to reflect the portfolio's strong retention rate, very
low property costs and minimal operational requirements.
Net contracted rent increased over the year from £339.7 million to £340.4
million benefitting from strong rental growth across the portfolio but offset
by a reduction in income from divestment activity.
77% of total rent has guaranteed contractual rent reviews (40% of rent is
reviewed annually):
· 53% of rent is index linked: with 28% RPI linked, 16% CPI+ linked and 9%
CPI or CPIH linked; and
· 24% of rent is subject to fixed uplifts, with a weighted average uplift
of 2.6% per annum.
The remaining 23% of income is linked to open market rent reviews. Index
linked rent reviews are subject to a range of collars and caps which are
typically between 1% to 4% over a five year period such that:
· For RPI reviews, at 22% inflation over a five year period (equivalent to
4% per annum), 94% of inflation is captured; and
· For CPI reviews, at 16% inflation over a five year period (equivalent to
3% per annum), 99% of inflation is captured.
The portfolio delivered a strong TPR of 8.3%
The portfolio delivered a total property return of 8.3% over the year. This
represented a 200bps outperformance of the MSCI All Property UK Index. ERV
growth was 3%, and the portfolio delivered a 1.7% property valuation increase
despite 17bps of yield expansion. The portfolio's EPRA topped up net initial
yield is 5.1% and its equivalent yield is 6.3%. Over the last six years, the
Company has delivered a total property return of 52%, which is a compounded
annual growth rate of 7%.
Logistics sector
£2.8bn
Our logistics assets are spread across urban, regional and mega sub-sectors
and valued at £2,838 million, with a WAULT of 11.7 years and occupancy of
97.1%. Urban logistics has been our strongest conviction call for many years
and, reflecting our investment activity in the year, our urban portfolio grew
from £1,563 million to £1,796 million. These assets are spread across 163
locations and account for 63% of our overall logistics weighting.
Demonstrating our focus on strong geographies, 83% of our urban logistics is
located in London, the South East and the Midlands. Our regional logistics
portfolio also grew over the year to £727 million, with several regional
warehouses acquired.
As at 31 March 2025 Urban Regional Mega
Value(1) £1,796m £727m £315m
WAULT 10 years 14 years 15 years
Average rent (psf) £9.50 £7.00 £6.50
ERV (psf) £11.00 £8.40 £8.40
ERV growth 4.7% 2.5% 2.6%
Topped up NIY 4.7% 4.6% 4.6%
Contractual uplifts 47% 74% 100%
Total property return 7.6% 6.3% 6.4%
1 Including developments
Logistics continues to deliver attractive rental growth which, together with
material embedded reversion within our portfolio, is delivering strong income
growth. Average ERVs on our logistics portfolio are 18% higher than average
passing rents, with urban logistics assets at 16% and our regional and mega
assets at 25%. The higher reversion on regional and mega assets reflects their
greater exposure to index linked or fixed reviews as well as their longer
leases, which limits our ability to capture the market rental growth seen over
recent years.
Our logistics assets are valued at a topped up NIY of 4.6% and an equivalent
yield of 5.8%. Over the year, they delivered a total property return of 7.1%.
Our logistics portfolio saw a valuation uplift of 1.7%, reflecting continued
market rental growth as well as strong logistics leasing and rent review
activity, which added £9.0 million of rent and delivered like for like income
growth of 4.7%. Our logistics assets saw an outward yield shift of 5bps over
the year. ERV growth was 3.8% and urban logistics was again strongest at 4.7%,
with regional and mega achieving 2.5% and 2.6% respectively.
Long income sector
£3.2bn
Our long income assets are let on long leases to strong operators, have low
operational requirements and are in structurally supported sectors that are
benefitting from the changes in the way people live and shop. They are spread
across the convenience, entertainment & leisure and healthcare sectors. As
at year end, the value of our long income assets was broadly unchanged at
£3,207 million, representing 52% of our portfolio. These assets are 99%
occupied, let with a WAULT of 23 years and generate an attractive topped up
NIY of 5.5% with 90% of income subject to contractual rental uplifts and an
equivalent yield of 6.7%.
As at 31 March 2025 Entertainment & leisure Convenience Healthcare (& education)
Value(1) £1,298m £978m £931m
Contracted rent £81m £58m £51m
WAULT 36 years 12 years 14 years
Topped up NIY 5.8% 5.6% 5.1%
Contractual uplifts 98% 70% 100%
Total property return 8.8% 8.1% 9.9%
1 Including developments
During the year, we sold £209 million of long income assets, of which £151
million were former LXi or CTPT properties. These included large foodstores, a
number of health and education assets, pubs, garden centres and Travelodge
hotels. £46 million of the sale proceeds were reinvested into several
convenience properties, as well as a Premier Inn hotel. We expect to continue
our sell down of non core long income assets, whilst selectively growing our
convenience exposure further.
Long income generated a total property return over the year of 8.6%. It
delivered an ERV growth of 2% and a valuation increase over the year of 2%.
Convenience assets saw the strongest ERV growth at 5.4%. Like for like income
growth on long income was 3.1% over the year.
Entertainment & leisure represents 21% of the portfolio and comprises:
· Theme parks - 47% of sub-sector - Four assets at Thorpe Park,
Alton Towers, Warwick Castle and Heide Park (in Germany). These assets are let
with a WAULT of 52 years to Merlin Entertainments, with a mixture of annual
CPI+0.5% rent reviews and annual fixed rent reviews of 3.3% per annum;
· Hotels - 32% of sub-sector - 76 budget hotels, of which 66 are
let to Travelodge with a WAULT of 25 years, mainly on five yearly CPI+0.5%/RPI
linked reviews. They are located nationwide and focused on roadside locations;
and
· Other - 21% of sub-sector - Consists mainly of 23 pubs, five
cinemas, three garden centres and the AO Manchester Arena, which is mostly let
to SMG Europe for a further 20 years.
Convenience represents 16% of the portfolio and comprises:
· Foodstores - 43% of sub-sector - 46 assets let at an average rent
of £18.00 psf with key occupiers including M&S, Waitrose, Co-op, Costco,
Tesco and Aldi. These are predominantly smaller format grocery with an average
area of c.30,000 sq ft;
· NNN retail - 28% of sub-sector - 30 assets, primarily single or
cluster assets let to discount, essential, electrical and home retail
occupiers such as B&M, Currys, DFS, Dunelm, Home Bargains, Pets at Home
and The Range at an average rent of £19.50 psf. These assets typically
benefit from high alternative use values;
· Roadside - 14% of sub-sector - 69 assets, primarily convenience
stores with attached petrol filling stations, drive-thru coffee outlets and
automated car washes. Key occupiers include Co-op, IMO, BP, McDonalds, MFG and
Starbucks; and
· Other - 15% of sub-sector - 23 trade/DIY stores and autocentres
(key occupiers include Halfords, Kwik Fit, Topps Tiles and Wickes) and ten car
parks let to Q-Park with a WAULT of 26 years.
Healthcare & education represents 15% of the portfolio and comprises:
· Hospitals - 85% of sub-sector - 12 private hospitals make up this
sub-sector, of which 11 are let to Ramsay Health Care with a WAULT of 12 years
and annual fixed rent reviews of 2.75%. The two largest hospitals are in
Sawbridgeworth and Chelmsford. Ramsay is one of the leading independent
healthcare providers in England, providing a comprehensive range of clinical
specialities to private and self-insured patients, as well as patients
referred by the NHS. Ramsay has seen strong growth in both private and NHS
volumes;
· Care homes - 8% of sub-sector - Seven assets with key occupiers
comprising Bupa and Priory with a WAULT of 19 years; and
· Education - 7% of sub-sector - Comprises a number of children's
nurseries and adventure centres, and one student accommodation asset.
Acquisitions in the year
£343m
Acquisitions in the year totalled £343.1 million, representing a NIY of 6.0%
and a reversionary yield of 6.8%. They were spread across 32 assets and had a
WAULT of 14 years with 56% of income benefitting from contractual rental
uplifts. Logistics investments totalled £297.2 million, the majority of which
were urban logistics, where 23 units were acquired for £188.9 million, with
the remaining £108.3 million comprising three regional warehouses. Other
acquisition comprised £45.9 million of convenience and hotel assets.
Availability of quality acquisition opportunities have been limited in our
sectors of choice, but through our deep relationships we found attractively
priced assets with strong income growth prospects. Sale and leasebacks through
our occupier relationships represented 19% of acquisitions, whilst purchases
from developers represented 27% and the remaining 54% was sourced from
property and pension funds.
In logistics, 26 assets were acquired for £297 million:
· A 526,000 sq ft urban logistics portfolio, acquired for £78.0 million.
The six single let assets were acquired from a FTSE 100 pension fund at a
blended NIY of 5.8% which rises to 6.9% over the next two years from rent
reviews. They have a low capital value and are in good macro locations;
· A 390,000 sq ft M&S regional logistics warehouse in Avonmouth,
acquired for £74.0 million. The warehouse was acquired at a NIY of 5.65% and
a reversionary yield of 6.6% and is pre-let on a 20-year lease with five
yearly rent reviews linked to CPI. The BREEAM Excellent warehouse will be a
key facility for M&S's food distribution business and the forward funded
development is expected to complete in summer 2026 with LondonMetric receiving
a funding coupon of 5.5% during construction;
· A 182,000 sq ft regional warehouse in Avonmouth let to Farmfoods,
acquired through a sale and leaseback for £26.4 million;
· A 211,000 sq ft logistics park in Wednesbury acquired from a pension fund
for £25.0 million with a low site density of 21% and immediate asset
management opportunities through open market reviews;
· 127,000 sq ft of urban warehousing in Derby, Huntingdon, Farnham,
Colchester and Leeds acquired for £20.6 million through sale and leasebacks
with Travis Perkins;
· A 95,000 sq ft urban warehouse in Milton Keynes let to Ingram Content
Group, acquired for £18.6 million;
· 58,000 sq ft of urban warehousing in York and Reading, acquired for
£12.2 million;
· A 106,000 sq ft urban warehouse in Cardiff let to Booker, acquired for
£8.8 million;
· A 150,000 sq ft regional warehouse in Chepstow, acquired for £7.9
million;
· 45,000 sq ft of urban warehousing in Bolton and Derby let to MKM,
acquired for £6.5 million;
· A 37,000 sq ft industrial unit in Aberdeen let to Helix Well Ops,
acquired for £5.6 million;
· 41,000 sq ft of urban warehousing let to Travis Perkins in Sheffield and
Trowbridge, acquired for £5.3 million;
· 23,000 sq ft of urban warehousing in Lymington let to Travis Perkins,
Tool Station and Halfords, acquired for £4.9 million; and
· A 18,000 sq ft urban warehouse in Swindon let to Jewson, acquired for
£3.5 million.
In entertainment & leisure, one asset was acquired for £15 million:
· A 193-bedroom hotel in West Thurrock let to Premier Inn for a further ten
years, acquired for £14.8 million.
In convenience, five assets were acquired for £31 million:
· A 54,000 sq ft NNN retail asset in Andover let to Wickes and KFC,
acquired for £12.2 million;
· A 32,000 sq ft NNN retail asset in Basildon let to Pets at Home,
Farmfoods, KFC and McDonald's, acquired for £10.0 million;
· A new 22,000 sq ft M&S foodstore in Blackpool, pre-let on a 15 year
lease, and acquired at a cost of £6.8 million; and
· Two drive-thrus let to Burger King, acquired for £2.2 million.
Post year end we have acquired one asset for £5 million:
· A convenience development funding in Eastbourne pre-let to Greggs and
Starbucks, acquired for £4.8 million.
Disposals in the year
£342m
Disposals in the year totalled £341.9 million, representing a NIY of 6.9%.
Across 72 assets, they had an average transaction size of c.£5 million and a
WAULT of 15 years. Sales were transacted at 1% above the prevailing book
value. Sales largely comprised two large Asda stores as well as other
convenience assets, eight offices, a large retail park, a number of health and
education assets, pubs, garden centres, gyms and Travelodge hotels. In the
year, we also sold eight urban logistics assets at a NIY of 4.6% and where we
felt income growth was less certain. £214 million of sales related to assets
that had been previously acquired through the LXi and CTPT transactions and
which did not fit our investment strategy. On these two portfolios, we have so
far achieved sales prices that are 1.6% ahead of acquisition value.
In entertainment & leisure, 16 assets were sold for £28 million:
· Nine pubs, sold for a total consideration of £10.5 million;
· One leisure asset in Hamilton, sold for £9.0 million;
· Four Travelodge hotels in Perth, Carlisle, Stonehouse and Preston as well
as land on a Travelodge site in Nuneaton, sold for £5.2 million; and
· A garden centre in Huddersfield, sold for £3.1 million.
In logistics, eight assets were sold for £40 million:
· A 47,000 sq ft unit in Southampton, sold for £8.6 million;
· A 26,000 sq ft unit in Croydon, sold for £8.1 million;
· A 13,000 sq ft in Park Royal, sold for £7.1 million;
· A 39,000 sq ft unit in Aston, sold for £6.5 million;
· A 35,000 sq ft unit in Aberdeen, sold for £3.1 million;
· A 28,000 sq ft unit in Leicester, sold for £2.5 million;
· An 18,000 sq ft unit in Doncaster, sold for £2.5 million; and
· A 34,000 sq ft unit in Stockwell, sold for £1.4 million.
In convenience, 15 assets were sold for £108 million:
· Two large format Asda foodstores in Scotland and Halesowen, sold for
£38.5 million;
· A 51,000 sq ft NNN retail asset in Weymouth which LondonMetric developed,
sold for £14.3 million;
· A 34,000 sq ft roadside asset in York let to Vertu, sold for £10.5
million;
· A 41,000 sq ft trade/DIY asset in Ipswich, sold for £10.2 million;
· A 34,000 sq ft NNN retail asset in Basildon let to Lok'nStore, sold for
£10.0 million;
· Two Cazoo roadside assets in Edinburgh and Cardiff, sold for £6.4
million;
· A 34,000 sq ft NNN retail asset in Totton, sold for £4.7 million (value
at share);
· A 23,000 sq ft Lidl foodstore in Portsmouth, sold for £4.6 million;
· An 11,000 sq ft roadside site in Birstall, sold for £4.1 million;
· A 34,000 sq ft NNN retail asset in Stourbridge let to B&M, sold for
£2.8 million;
· A 1,400 sq ft NNN retail asset in Kingston, sold for £1.2 million;
· A Boots retail unit, sold for £0.6 million; and
· Land in Bradford, sold for £0.1 million.
In healthcare & education, 23 assets were sold for £74 million:
· A 169,000 sq ft Compass training centre in Milton Keynes, sold for £23.7
million;
· A health and education asset in Fulham, sold for £21.8 million;
· An 82,000 sq ft Compass training & conference centre in Yarnfield,
sold for £17.4 million; and
· 20 assets across the care home/assisted living sector, sold for a total
of £10.8 million.
Other assets sold totalled £93 million and comprised:
· Eight offices in England and Scotland, sold for £54.1 million;
· A 138,000 sq ft retail park in Coventry, sold for £37.3 million; and
· Land at Mucklow Office Park, sold for £1.3 million.
Post year end we have sold £63 million of assets:
· A multi-let logistics asset in Crawley, sold for £21.4 million;
· A multi-storey car park in Yorkshire let to Q-Park, sold for £16.3
million:
· A logistics asset let to Ocado in Walthamstow, sold for £15.6 million;
· A Wickes store, sold for £5.5 million; and
· Several pubs, sold for £4.3 million.
Occupier activity in the year
+£15.3m income
Asset management continues to generate attractive income growth as we work in
partnership with our occupiers. During the year, we undertook 340 occupier
initiatives adding £15.3 million per annum of rent and delivering like for
like income growth of 4.2%. Over the next two years, we expect further income
growth of £27 million from our asset management activity.
Lettings and regears
68 lettings were signed in the year with a WAULT of 19 years, adding £5.9
million of rent per annum.
Logistics lettings added £4.4 million and were signed with a WAULT of ten
years. Urban logistics added £4.0 million and included:
· 18 regears, adding £1.5 million of rent at 43% above previous passing
rent. The largest regears were in Colnbrook, Crawley, Dudley, Greenford,
Havant, Newhaven and Tyseley;
· 59,000 sq ft letting in Wednesbury, adding £0.5 million;
· 36,000 sq ft letting to Ferraris Piston Service in Cardiff of a newly
developed warehouse, adding £0.4 million;
· 54,000 sq ft letting in Luton, adding £0.4 million (83% uplift);
· 38,000 sq ft in Basildon, adding £0.2 million (74% uplift);
· 14,000 sq ft in Dulwich, adding £0.2 million;
· 31,000 sq ft in Eastleigh, adding £0.1 million (30% uplift); and
· 34,000 sq ft letting in Ashford, adding £0.1 million (27% uplift).
Two regional logistics regears added £0.4 million. At Crick, five years term
certain was added and rent increased by 26%. At Bognor Regis, a break was
removed adding five years term certain, and the occupier undertook material
environmental improvements.
Long income and other lettings added £1.5 million of rent with a WAULT of 29
years (13 years excluding Warwick Castle), including:
· M&S convenience lettings in Weymouth and Blackpool of two foodstores
currently in development, adding £1.4 million of rent;
· A regear at Warwick Castle, adding £0.8 million of rent, where we funded
a new 60-bedroom hotel and there is 52 years remaining on the lease;
· Lettings at Old Kent Road to Tapi, Burger King and Starbucks, adding
£0.4 million;
· A letting to Sainsbury's of a convenience store in Bromsgrove replacing
Homebase and adding £0.1 million of rent;
· Three EV charging lettings, adding £0.1 million of rent; and
· Lettings to British Garden Centres of three former LXi assets let to
Dobbies where the rent has fallen by £1.4 million.
At the year end, 0.7 million sq ft was vacant with an ERV of £7.1 million.
Subsequently, we have let or are under offer on 0.1 million sq ft and a
further 0.3 million sq ft has been sold or is under offer to sell, with the
remainder recently refurbished or under refurbishment. This activity would
take our portfolio occupancy to 99%.
Post year end, we have also signed two further lettings with M&S. These
include a new foodstore in New Malden and the regear of an existing store in
Luton, which add a further £0.8 million of rent. The New Malden store is
subject to planning and development is expected to start at the end of this
year.
Rent reviews
We settled 272 rent reviews in the year, adding £9.4 million per annum of
rent at an average of 17% above previous passing on a five yearly equivalent
basis with open market reviews 40% higher.
Logistics rent reviews were settled across 50 assets adding £4.6 million per
annum of income at 19% above previous passing rent, on a five yearly
equivalent basis. These reviews comprised:
· 38 urban reviews settled at 24% above passing rent on a five yearly
equivalent basis with open market urban reviews delivering a 48% uplift;
· Nine regional RPI linked reviews, predominantly annual reviews, settled
at 18% above previous passing on a five yearly equivalent basis; and
· Three contractual mega reviews settled at 12% above previous passing rent
on a five yearly equivalent basis.
Long income rent reviews were settled across 221 units, adding £4.8 million
per annum of income at 16% above previous passing rent, on a five yearly
equivalent basis.
All but seven of the reviews were inflation linked or fixed uplifts and the
deals comprised:
· 45 entertainment & leisure rent reviews, adding £2.0 million, of
which £1.0 million related to theme parks;
· 90 convenience rent reviews, adding £0.8 million; and
· 86 healthcare & education rent reviews, adding £2.0 million, of
which £1.0 million related to annual fixed reviews on our Ramsay Hospitals.
Strong and diversified income with high satisfaction
Our investment and asset management actions over a number of years have
increased the resilience of our portfolio by aligning our income to
structurally supported sectors and assets with strong occupational and
investment demand. The LXi merger in 2024 increased our income diversification
through the addition of new sectors where we believe there are strong
structural tailwinds.
Income concentration from our top occupiers increased from the LXi merger,
with Ramsay Health Care, Merlin Entertainments and Travelodge representing our
three largest occupiers and accounting for 27% of net contracted rent. Whilst
these are strong credits with robust business models occupying key operating
assets and investing materially in their estate, we expect to reduce our
exposure to these occupiers over time.
Engagement with all of LXi's top occupiers continues to be very positive and
we are developing these relationships further through our activity. Our latest
occupier survey in March 2025 again demonstrated strong contentment and this
year's survey was the first time we included LXi's occupiers. 214 occupiers
were contacted representing 94% of our rent, and we received 79 responses
representing 57% of our rent. We scored an average of 8.7 out of 10.0 for
whether occupiers would recommend us as a landlord (2024: 9.0). In terms of
satisfaction with our properties, we scored 8.6 (2024: 8.5).
Top ten occupiers (% of income)
Ramsay Health Care(1) 11.1%
Merlin Entertainments(2) 9.3%
Travelodge 6.3%
M&S(3) 2.3%
Primark 1.8%
Great Bear 1.8%
Tesco 1.8%
Amazon 1.4%
Argos 1.4%
THG 1.4%
Total 38.6%
1 Ramsay Health Care provides quality healthcare globally with 12 million
admissions and patient visits per annum in over 500 locations. Ramsay is
listed on the Australian Stock Exchange valued at £4 billion. In the UK,
Ramsay has 34 acute hospitals caring for approximately 200,000 patients per
annum and employing 7,500 people. UK revenues in the last financial year were
14% higher at £1.2 billion, driven by a strong increase in NHS admissions and
private pay patients
2 Merlin Entertainments is a global leader in branded entertainment
destinations with 62 million guests per annum. It operates 140 attractions in
over 20 countries, including Alton Towers, Thorpe Park and Warwick Castle
which are owned by LondonMetric. Merlin recorded global revenues of £2.1
billion in 2023 and is owned by the Lego family, Blackstone, Wellcome Trust
and Canada Pension Plan Investment Board
3 Includes post year end activity with M&S
ESG activity
We recognise the importance of a comprehensive ESG strategy which minimises
the environmental impact of our assets, maximises energy efficiency and
improves climate resilience. As part of our drive to upgrade our assets, we
continue to invest in high quality buildings and focus on working with our
occupiers to progress energy efficiency and clean energy initiatives, mainly
from solar PV, LED lighting upgrades, roof improvements and degasification. We
also see ourselves as strong stewards of poorer quality assets with the
necessary expertise and appetite to improve buildings.
Our alignment to NNN income assets means our Scope 1 and 2 emissions are de
minimis and the energy intensity of our portfolio is materially reduced, with
relatively straightforward interventions able to significantly improve energy
ratings and reduce carbon emissions. This is reflected in our portfolio's EPC
rating improvements over recent years and our minimal defensive capex for
environmental upgrades, with expenditure typically achieving higher rents
and/or paid for through lease incentive arrangements or by the occupier.
We continue to focus on improving our external ESG benchmarks scoring. Our
GRESB score remained above the peer average at 73, resulting in a two-star
rating. Our MSCI rating was 'A' and our ISS score remained at 'C-'. We also
maintained our Gold Award for EPRA sBPR, continued to be included in the
FTSE4Good Index and, in our second submission to CDP, we scored C+, which was
a material improvement on the prior year. On our debt facilities, we updated
our sustainability-linked targets in the year, building on previous
commitments on minimum solar installations and EPC improvements. A further
commitment was added to ensure our leasing activity promoted energy efficiency
improvements.
We are committed to aligning with the UK Government's Net Zero target by 2050.
In order to implement environmental initiatives and ultimately achieve Net
Zero Carbon on our buildings, we remain reliant on our occupiers sharing
similar environmental ambitions to us due to our full repair and insuring
('FRI')/NNN lease structures and long lease lengths. The acquisition of LXi
materially changed our portfolio and increased our reliance on occupiers'
environmental ambitions further. Over the year, we reviewed the LXi portfolio
and engaged with key occupiers to understand the ESG implications of the
acquisition and its impact on our Net Zero ambition.
Over the year, we conducted an in-depth science based portfolio carbon
analysis. Using 2023 energy data from occupiers, we calculated our portfolio
emissions baseline and categorised our properties into unique archetypes and
typologies. This allowed us to model interventions needed to reach Net Zero,
in line with the CRREM methodology. Consequently, we are targeting Net Zero by
2050 and further detail will be available in our Report and Accounts, and the
portfolio's decarbonisation pathway will be published on our website at the
same time. In the short term, we have set a target to achieve Net Zero for
Scope 1 and 2 emissions where we have direct control by 2027.
As part of our work, we have modelled a series of short, medium, and long term
carbon reduction interventions, ranging from tenant engagement to fabric
improvements. These interventions, together with grid decarbonisation, should
allow us to achieve a 51% reduction in emissions by 2030 and full
electrification of heating systems by 2040. The pathway models carbon
reductions of 97% across our portfolio by 2050 against CRREM targets, with any
residual emissions to be offset via a verified carbon programme. Our analysis
included a review of key occupiers' net zero targets. The majority of our
occupiers have comprehensive commitments to improving the sustainability of
the properties that they lease from us.
Key progress in the year is summarised below:
· EPCs - After a deterioration in our EPC score in the prior year
as a result of the LXi acquisition, our EPC ratings materially improved over
the year with 'A-C' ratings rising from 85% to 92% and 'A-B' rating improving
from 49% to 58%. Our EPC scores were helped in the year by various improvement
initiatives, new EPC assessments on 185 units across 4.5 million sq ft
(including enhanced energy assessments) and our investment activity, which saw
us sell out of poorer rated assets and acquire predominantly EPC 'A-B' rated
assets;
· Asset management and improvements - We have mandated that a
minimum 'B' EPC rating needs to be achievable on all new leases, regears and
refurbishments. We undertook a number of refurbishments in the year which have
materially improved our assets including at Eastleigh and Bicester where EPC
ratings were improved from 'C' to 'A' and 'A+' respectively;
· Occupier energy data - As part of measuring our occupiers'
emissions at our buildings (Scope 3 emissions), which represent most of our
overall emissions, we increased occupier energy data coverage from 72% last
year to 80%. Our dedicated ESG platform that we put in place in the previous
year has helped us to access a greater amount of data automatically and
provide better analysis. The data from this platform helped to inform our Net
Zero Pathway;
· Climate resilience and risk - we updated our portfolio climate
risk analysis to include the LXi portfolio. Our physical climate risk analysis
assessed our portfolio's current and future vulnerability to extreme climate
hazards affecting the UK climate, with residual risks for each property and
region. Over the next year, we will undertake more in-depth reviews of
specific assets to develop action plans where necessary; and
· Solar PV - We continue to engage with occupiers on solar
installations. A total of 3.6MWp capacity of solar was added to our portfolio
in the year. These comprised warehouses in Huntingdon (1.9MWp), Biggin Hill
(1.2MWp), Grange Park in Northampton (0.2MWp), Bicester (0.2MWp) and Eastleigh
(0.1MWp) which have increased total installed capacity from 4.5MWp last year
to 8.1MWp. We have further potential solar projects from near term initiatives
totalling 2.6MWp.
Financial review
Our focus this year has been on integration following last year's
transformational corporate acquisitions, which have positioned us as the UK's
leading Triple Net Lease REIT and led to a FTSE 100 listing in June. Our
increased scale has also helped us secure an investment grade Fitch credit
rating of BBB+, providing debt optionality for future funding and better
access to capital markets.
Significant progress has been made on the sale of weaker and non core assets
acquired through the LXi and CTPT corporate acquisitions despite the
continuing challenging market conditions. Proceeds have been reinvested into
higher quality assets in stronger sectors, predominantly logistics, where
income growth prospects are greater. In order to facilitate the sale of
charged assets in the year we successfully completed a number of asset
substitutions across four secured debt facilities. This has allowed the Group
to retain in full well priced debt taken on through corporate acquisitions.
Our strong financial results reflect the full benefit of our merger activity,
the strength of our portfolio and our focus on income growth and cost control.
EPRA earnings have grown to £268.0 million and by 20.7% on a per share basis
to 13.1p, which has allowed us to increase our dividend by 17.6% to our target
of 12.0p per share whilst maintaining EPRA earnings cover of 109% and cash
cover of 107% as set out in Supplementary note xx.
Driving this increase was a 122.8% increase in net rental income, strong rent
collection rates and exceptionally low operating costs. We have benefitted
from significant cost savings through operational synergies allowing us to
report a sector leading EPRA cost ratio of 7.8%.
IFRS net assets also increased in the year by £154.4 million or 3.9% to
£4,123.9 million. EPRA net tangible assets ('NTA') per share increased in
line by 3.9% to 199.2p, up from 191.7p last year. This increase was largely
due to a portfolio valuation gain of £106.0 million or 5.2p per share.
Our balance sheet remains robust and our financial position has been
strengthened and diversified by three new five year revolving credit
facilities totalling £525 million with new lenders ahead of our first
material debt maturity of c.£350 million this autumn relating to secured
loans acquired as part of the LXi transaction. Two of these facilities,
totalling £350 million were agreed post period end. Each facility has two,
one year extension options and reflects improved pricing which partly reflects
our recent credit rating.
During the year, we extended the maturity by one year on £975 million of our
existing revolving credit facilities to support our debt maturity, which was
4.7 years at the year end, despite the passing of a year (2024: 5.4 years).
Other debt metrics are strong, with an average cost of 4.0% (2024: 3.9%) and
loan to value of 32.7% (2024: 33.2%). Undrawn debt facilities and cash of
£912.3 million at the year end, which increase to £1.3 billion including
debt facilities agreed post year end, support our transactional activity
whilst maintaining ample headroom under banking covenants.
We acquired £339 million of current and forward starting derivatives in the
year and extended protection on a further £150 million. At the year end, our
drawn debt was fully hedged by fixed rate loans and interest rate derivatives
and we continue to be very well protected against adverse movements in
interest rates.
We will look to retain optionality going forward and continue to monitor
market conditions for windows of opportunity to lock into longer term
financing options at an attractive cost.
Presentation of financial information
The Group financial information is prepared in accordance with IFRS, where the
Group's share of its joint venture ('JV') is shown as a single line item on
the income statement and balance sheet and its subsidiaries including any
non-controlling interest ('NCI') are fully consolidated.
The Group uses alternative performance measures based on the European Public
Real Estate Association ('EPRA') Best Practice Recommendations ('BPR') to
supplement IFRS, in line with best practice in our sector, as they highlight
the underlying performance of the Group's property rental business and enhance
the transparency and comparability of financial information across public real
estate companies.
EPRA earnings and EPRA net tangible assets are key business metrics adopted in
this review and throughout this report and exclude items including fair value
movements on property, derivatives and other financial instruments, profits
and losses on disposal of properties, net gains on business combinations and
acquisition costs, all of which may fluctuate considerably from year to year.
EPRA earnings is the key support to the level of dividend payments.
The supplementary notes include other EPRA metrics and a proportionally
consolidated EPRA income statement and balance sheet. Further details,
definitions and reconciliations between EPRA measures and the IFRS financial
statements can be found in note 8 to the financial statements, Supplementary
notes i to vii and xviii, and in the Glossary.
Income statement
Group EPRA earnings are summarised in the table below.
For the year to 31 March 2025 2024
£m
£m
Gross rental income 395.5 177.0
Property costs (4.9) (1.7)
Net rental income 390.6 175.3
Management fees 1.2 1.1
Net income 391.8 176.4
Administrative costs (27.1) (19.7)
Net finance costs(1) (97.1) (37.4)
Share of joint venture and non-controlling interest(2) 1.9 2.3
Tax³ (1.5) -
EPRA earnings 268.0 121.6
1 Group net finance costs reflect net borrowing costs of £124.5 million
(2024: £45.9 million) (note 5b) and finance income of £23.7 million (2024:
£8.5 million) (note 5a) less the impact of inflation volatility relating to
the income strip of £3.7 million in the current year
2 Reflects EPRA earnings for MIPP of £3.2 million reduced by the NCI share
of EPRA earnings of £1.3 million as shown in supplementary note ii
3 UK and German current taxes as reflected in note 6 to the financial
statements. Deferred tax on our German asset of £0.7 million is also included
in IFRS reported profit
Net rental income
Sustained growth in net rental income underpins our key strategic aim as the
UK's leading NNN lease REIT to deliver income and dividend progression for our
shareholders over the long term, and we are pleased to report a 122.8%
increase in the year, primarily due to the impact of corporate acquisitions,
the largest of which LXi completed in March 2024. The detailed movements in
net rental income are set out in the table below.
£m £m
Net rental income in the year to 31 March 2024 175.3
Additional rent from existing properties and developments 3.3
Movement in surrender premium income 2.7
Additional rent from acquisitions(1) 222.9
Rent lost through disposals (7.0)
Additional rent from net acquisitions 215.9
Movement in provisions (3.4)
Movement in property costs (3.2)
Net rental income in the year to 31 March 2025 390.6
1 Includes additional rent from LXi of £207.5 million, CTPT of £5.9
million and from other acquisitions of £9.5 million
Despite the increase in property costs and rent provisions associated with an
enlarged portfolio, our cost leakage ratio remains low at 1.2% (2024: 1.0%).
Prior to our merger, LXi entered into an income strip arrangement. The
proceeds LXi received on two theme parks were matched with a corresponding
financial liability and a 30% pay away of rent. The gross rental income
receivable from the tenant is reflected in the income statement within revenue
and the 30% pay away is reflected under IFRS as interest payable on other
financial liabilities and included within finance costs. The total balance
sheet liability of £231.0 million at the year end is set out in detail in
note 14a(ii). The corresponding gross up is reflected within investment
properties in the balance sheet as the external valuation of the assets is
based on the net cash flows after deducting income strip payments.
Rent collection
Our rent collection rates continue to be very strong, reflecting the quality
of our covenants and our focus on credit control. We have collected 99.5% of
rent due in the year and trade receivables of £1.4 million that were overdue
and considered at risk at the year end have been provided for in full.
Administrative costs and EPRA cost ratio
Administrative costs have increased by 37.6% to £27.1 million (2024: £19.7
million) due to the increased headcount and higher remuneration costs,
reflecting significant changes to roles and responsibilities of certain
employees following our acquisition of LXi, along with increased advisors fees
of the enlarged group, some of which are not expected to recur.
Our sector leading EPRA cost ratio of 7.8% reflects merger synergies and a
continued focus on cost control. The ratio reflects total operating costs as a
percentage of gross rental income. The full calculation is shown in
Supplementary note iv.
31 March 31 March
2025 2024
% %
EPRA cost ratio including direct vacancy costs 7.8 11.6
EPRA cost ratio excluding direct vacancy costs 7.5 11.1
Net finance costs
Our net finance costs have increased to £97.1 million this year (2024: £37.4
million) primarily as a result of the additional debt acquired through the LXi
acquisition at the end of last year which was at a higher average borrowing
rate of 5.2%. Whilst the £700 million refinancing that we completed in March
2024 was on more favourable terms than the secured LXi facilities being
replaced, our average debt cost last year was 0.7% lower than in the current
year.
The £59.7 million increase in net finance costs in the year reflects
increased interest charges net of derivative receipts of £43.1 million,
higher commitment fees, utilisation fees and amortisation of £4.7 million,
increased interest charged on lease liabilities of £10.5 million and the
unwinding of debt fair value discounts on acquisition of £3.9 million, offset
by increases in interest receivable and capitalised interest of £2.5 million.
Further detail is provided in note 5 to the financial statements.
Taxation
As the Group is a UK REIT, any income and capital gains from our qualifying
property rental business is exempt from UK corporation tax. Any UK income that
does not qualify as property income within the REIT regulations is subject to
UK tax in the normal way. We acquired one German asset as part of the LXi
merger which is subject to German corporate income tax, and deferred tax is
provided on property revaluation gains. The tax charge of £2.2 million in the
year relates primarily to German corporate and deferred taxes and the UK
corporation tax charge attributable to the Group's non-controlling interest in
LMP Retail Warehouse JV Holdings Limited.
The Group's tax strategy is compliance oriented; to account for tax on an
accurate and timely basis and meet all REIT compliance and reporting
obligations. We seek to minimise the level of tax risk and to structure our
affairs based on sound commercial principles. We strive to maintain an open
dialogue with HMRC with a view to identifying and solving issues as they
arise. We continue to monitor and comfortably comply with the REIT balance of
business tests and distribute as a Property Income Distribution ('PID') 90% of
REIT relevant earnings to ensure our REIT status is maintained. The Group has
already paid a large part of its expected PID for the year to 31 March 2025.
IFRS reported profit
A reconciliation between EPRA earnings and the IFRS reported profit is given
in note 8(a) to the financial statements and supplementary note ii on a
proportionately consolidated basis and is summarised in the table below.
For the year to 31 March 2025 2024
£m
£m
EPRA earnings 268.0 121.6
Revaluation of property 106.0 (7.5)
Fair value of derivatives (11.1) (3.9)
Loss on disposals (13.0) (7.4)
Gain on acquisition - 49.4
Acquisition costs - (29.8)
Other movements(1) (2.0) (3.7)
IFRS reported profit 347.9 118.7
1 Includes revaluation of investments, JV and NCI (£2.4 million), impact of
inflation volatility relating to the income strip (-£3.7 million) and
deferred tax (-£0.7 million) in the year to 31 March 2025
The Group's reported profit for the year was £347.9 million (2024: £118.7
million), representing a 193% increase. As well as the increase in EPRA
earnings of £146.4 million, the movement reflects a positive revaluation
movement of £118.6 million and adverse movements in derivatives, disposals
and other movements of £35.8 million.
Balance sheet
EPRA net tangible assets ('NTA') continues to be a key performance measure
that includes both income and capital returns but excludes the fair valuation
of derivatives that are reported in IFRS net assets. A reconciliation between
IFRS and EPRA NTA is detailed in the table below and in note 8(c) to the
financial statements. The EPRA proportionally consolidated balance sheet is
shown in Supplementary note iii.
As at 31 March 31 March
2025 2024
£m £m
Investment properties 6,383.9 6,232.2
Assets held for sale 10.4 8.5
Trading properties 1.1 1.1
Group investment property 6,395.4 6,241.8
Gross debt (2,073.2) (2,087.4)
Cash 81.2 111.9
Share of joint venture and non-controlling interest(1) 42.2 41.2
Other net liabilities (374.6) (398.6)
EPRA NTA 4,071.0 3,908.9
Derivatives 23.7 32.6
Deferred tax (0.5) -
IFRS equity shareholders' funds 4,094.2 3,941.5
Share of non-controlling interest 29.7 28.0
IFRS net assets 4,123.9 3,969.5
1 Reflects share of net assets of MIPP of £71.9 million (2024: £69.2
million) reduced by the NCI share of net assets of £29.7 million (2024: £28
million) as shown in Supplementary note iii
IFRS reported net assets have increased by £154.4 million or 3.9% in the year
to £4.1 billion. Similarly, EPRA NTA has increased by £162.1 million or 3.9%
on a per share basis to 199.2p. The movement is reflected in the table below.
EPRA EPRA NTA
per share
NTA
p
£m
At 1 April 2024 3,908.9 191.7
EPRA earnings 268.0 13.1
Dividend paid(1) (181.4) (8.9)
Property revaluation 106.0 5.2
Other movements(2) (30.5) (1.9)
At 31 March 2025 4,071.0 199.2
1 Dividend charge of £203.7 million less scrip saving of £22.3 million.
Dividend per share is based on the weighted average number of shares in the
year
2 Other movements include loss on sales (-£13.0 million), share based awards
(-£13.4 million), impact of inflation volatility relating to the income strip
(-£3.7 million), cost of derivatives purchased (-£2.2 million), revaluation
of JV and NCI (£1.5 million) and other movements (£0.3 million)
EPRA earnings in the year covered dividends paid, increasing EPRA NTA per
share by 4.2p and the revaluation gain added a further 5.2p per share. The
movement in EPRA NTA per share, together with the dividend paid in the period,
results in a total accounting return of 9.7%. The full calculation can be
found in supplementary note viii.
Dividend
A sustainable, progressive and covered dividend remains a key priority for the
Board which shapes our strategy. The dividend for the year of 12.0p per share
is 109% covered by EPRA earnings and 107% covered on a cash basis as set out
in supplementary note xx. We have continued to declare quarterly dividends and
offer shareholders a scrip alternative to cash payments.
In the year to 31 March 2025, the Company paid the third and fourth quarterly
dividends for the year to 31 March 2024 and the first two quarterly dividends
for the year to 31 March 2025, at a total cost of £203.7 million or 11.1p per
share as reflected in note 7 to the financial statements.
The Company issued 11.6 million ordinary shares under the terms of the Scrip
Dividend Scheme, which reduced the cash dividend payment by £22.3 million to
£181.4 million. The first two quarterly payments for the current year of 5.7p
per share were paid as Property Income Distributions ('PIDs') in the year. The
third quarterly dividend of 3.0p per share was paid as a PID in April 2025 and
the Company has approved a fourth quarterly payment of 3.3p per share to be
paid in July 2025, of which 1.5p will be a PID. The total dividend payable for
2025 of 12.0p represents an increase of 17.6% over the previous year.
The Board took the following into account when considering its dividend
payments:
· Its REIT obligations to distribute 90% of property rental business
profits;
· Its desire to pay a sustainable, covered and progressive return to
shareholders;
· Its EPRA earnings for 2025; and
· The outlook for 2026.
At the year end, the Company had distributable reserves of £1,100.0 million
(2024: £1,164.9 million), providing substantial cover for the dividend
payable for the year. When required and at least six monthly, the Company
receives dividends from its subsidiaries which increase its distributable
reserves.
Portfolio valuation
Our property portfolio valuation including the share of joint ventures and
excluding the non-controlling interest increased in the year to £6.2 billion
as set out in the table below.
As at 31 March 31 March
2025 2024
£m £m
Group property portfolio valuation 6,123.5 5,972.7
Share of joint venture 69.9 67.1
Share of non-controlling interest (38.1) (36.4)
Total property portfolio valuation 6,155.3 6,003.4
Portfolio valuation split
A breakdown of the total property portfolio valuation by sector is reflected
in the table below.
As at 31 March 31 March 31 March 31 March
2025 2025 2024 2024
£m % £m %
Mega distribution 315.1 5.1 310.2 5.2
Regional distribution 726.8 11.8 689.7 11.5
Urban logistics 1,796.0 29.2 1,563.2 26.0
Logistics 2,837.9 46.1 2,563.1 42.7
Convenience 977.7 15.9 1,012.1 16.8
Entertainment & leisure 1,297.8 21.1 1,271.3 21.2
Healthcare 931.1 15.1 960.2 16.0
Long income 3,206.6 52.1 3,243.6 54.0
Other 110.8 1.8 196.7 3.3
Property portfolio value 6,155.3 100.0 6,003.4 100.0
Income strip gross up¹ 231.0 221.5
Head lease assets 40.9 47.6
Total portfolio value 6,427.2 6,272.5
1 Represents the gross up of the investment property balance associated with
the sale of a 65 year income strip of Alton Towers and Thorpe Park in 2022, as
reflected in note 14a(ii)
Portfolio valuation movement
As at 31 March 31 March
2025
2024
£m
£m
Group opening valuation 5,972.7 2,958.7
Acquisitions(1) 284.7 3,157.9
Developments(2) 22.8 43.9
Capital expenditure(3) 68.9 22.5
Disposals(4) (323.7) (203.6)
Revaluation 101.0 (7.5)
Foreign currency (2.9) 0.8
Group closing property portfolio valuation 6,123.5 5,972.7
Income strip gross up 231.0 221.5
Head lease assets 40.9 47.6
Group investment property(5) 6,395.4 6,241.8
Share of joint venture 69.9 67.1
Share of non-controlling interest (38.1) (36.4)
Total portfolio value 6,427.2 6,272.5
1 Group acquisitions include purchase costs and represent completed
investment properties as shown in note 9 to the financial statements
2 Group developments include acquisitions, capital expenditure and lease
incentive movements on properties under development as reflected in note 9
3 Group capital expenditure and lease incentive movements on completed
properties as reflected in note 9 to the financial statements
4 Group disposals as reflected in notes 9a and 9b to the financial
statements
5 Includes the value of assets held for sale and trading properties
The Group acquired property assets for £284.7 million and spent £91.7
million on developments and other capital expenditure. We generated net
proceeds of £322.5 million which reduced the book value of property by
£335.5 million (including the cost of lease incentives written off for the
Group of £11.8 million).
At 31 March 2025, we had exchanged to sell two assets for £10.6 million (book
value £10.4 million) and acquire one asset for £14.7 million, and these
transactions will be accounted for on completion next year. A full
reconciliation between transactions exchanged and completed in the period is
set out in Supplementary note xix.
Financing
The key performance indicators used to monitor the Group's debt and liquidity
position are shown in the table below.
As at 31 March 31 March
2025
2024
£m
£m
Gross debt 2,073.2 2,087.4
Cash 81.2 111.9
Net debt 1,992.0 1,975.5
Net debt/EBITDA 6.4 8.5
Loan to value(1) 32.7% 33.2%
Cost of debt(2) 4.0% 3.9%
Interest cover(3) (times) 4.2 4.5
Undrawn facilities 831.1 680.8
Average debt maturity 4.7 years 5.4 years
Hedging(4) 100% 100%
1 LTV includes the impact of sales and acquisitions that have exchanged and
excludes the fair value of debt as reflected in Supplementary note xviii
2 Cost of debt is based on gross debt and including amortised costs but
excluding commitment fees
3 Net income divided by net interest payable as defined by the Group's
private placement and RCF funding arrangements
4 Based on the notional amount of existing hedges and total debt drawn
Financing activity in the year
Our financial position was strengthened and diversified in the year by a new
£175 million revolving credit facility with SMBC that has two, one year
extension options. This facility allows us to draw up to €50 million to
hedge currency movements on our German asset and a margin grid that allows us
to benefit from our credit rating, which led to a 25bps margin reduction in
March. Our BBB+ investment grade credit rating also provides greater
optionality around future funding sources.
In the second half of the year, we extended the maturity by one year on £975
million revolving credit facilities enhancing our debt maturity, and post
period end, entered into another two revolving credit facilities for £350
million with new lenders. Each facility mirrors the SMBC facility in terms of
pricing and duration. We have c.£350 million of former LXi debt that matures
this autumn and now have ample coverage for its repayment within our new and
undrawn facilities.
In order to facilitate the sale of charged assets in the year, we successfully
completed a number of asset substitutions across four secured debt facilities.
This has allowed the Group to retain in full well priced debt taken on through
corporate acquisitions.
During the year we updated our sustainability-linked KPIs and targets on
£1,375 million of revolving credit facilities following the corporate
acquisitions. The targets focus on improvements in our EPC ratings, new
renewable energy and low carbon heating installations and improvements to
sustainability credentials of assets following leasing activity.
Hedging
The Group's policy continues to be to limit exposure to interest rate
volatility by entering into hedging and fixed rate arrangements. We acquired
£339 million of current and forward starting derivatives in the year and
extended protection on a further £150 million, at an average rate of 2.9% and
cost of £2.2 million, to extend our hedging and mitigate against future
interest rate movements. At the year end, our drawn debt was fully hedged by
fixed rate loans and interest rate derivatives and our floating rate debt
drawn is fully hedged until April 2027.
We received £20.6 million (2024: £6.7 million) from interest rate
derivatives in place during the year and continue to monitor our hedging
profile in light of interest rate projections.
Financial loan covenants
The Group has comfortably complied throughout the year with the financial
covenants contained in its debt funding arrangements and has substantial
levels of headroom within these. Covenant compliance is regularly stress
tested for changes in capital values and income. The Group's unsecured
facilities and private placement loan notes, which together account for 61% of
debt drawn at the year end, contain gearing and interest cover financial
covenants.
At 31 March 2025, the Group's gearing ratio as defined within these funding
arrangements was 57% which is significantly lower than the maximum limit of
125%, and its interest cover ratio was 4.2 times, comfortably higher than the
minimum level of 1.5 times. Property values would have to fall by 34% to
breach the banking gearing threshold, which would equate to an LTV ratio of
53%, and rents would have to fall by 60% or interest costs rise by 159% before
the banking interest covenant is breached.
Financial position at 31 March 2025
We have continued to strengthen and build flexibility into our debt structure.
At 31 March 2025, we had total debt facilities of £2.9 billion, undrawn debt
facilities and cash of £912.3 million and ample headroom under banking
covenants. We are in a strong financial position, with diversified sources of
funding and significant optionality to execute transactions as opportunities
arise. Our loan to value has fallen to 32.7% (2024: 33.2%) after taking
account of acquisitions and sales that have exchanged and will complete next
year. Our other debt metrics remain robust, with debt maturity at the period
end of 4.7 years (2024: 5.4 years) and an average cost of debt of 4.0% (2024:
3.9%).
Cash flow
During the year, the Group's cash balances decreased by £30.7 million as
reflected in the table below.
For the year to 31 March 2025 2024
£m
£m
Net cash from operations before changes in working capital 322.1 113.0
Working capital movements and tax paid (5.2) 10.1
Net cash from operating activities 316.9 123.1
Net cash (used in)/from investing activities (7.9) 206.1
Net cash used in financing activities (339.7) (249.9)
Net (decrease)/increase in cash and cash equivalents (30.7) 79.3
The net cash inflow from operations of £322.1 million incorporates
operational cash flows of our corporate acquisitions last year.
The Group spent £337.2 million acquiring and developing property in the year
and £19.3 million on other investments. It received £322.7 million from
property disposals, £3.4 million from joint ventures and £22.5 million in
interest.
Cash outflows from financing activities reflect dividend payments and
distributions of £182.4 million, financing costs of £121.9 million, share
purchases and awards of £18.7 million and net loan repayments of £16.7
million. Further detail is provided in the consolidated cash flow statement.
Risk management and internal controls
Managing risk
Our risk management framework ensures that risks are managed in line with our
risk appetite.
The Board
Our Board determines the risk levels it is prepared to take in pursuing its
strategic goals and is ultimately responsible for the Company's risk
management and internal controls framework.
At each meeting the Chief Executive initiates discussions on risk providing
the stimulus for debate through a market overview that includes relevant
economic themes, other external factors, evolving trends within UK real estate
and the general risk environment. Feedback from industry representatives and
stakeholders, including investors, is shared with input from the Chief
Financial Officer as required. Capital structure, asset and other Company
specific risks are also covered at meetings with the Board using a high level
dashboard to monitor material issues, track new and emerging risks and further
promote regular risk discussion.
Risk areas are also highlighted in detailed papers for the Board's
consideration and where such papers are circulated outside of regular
meetings, Directors can discuss proposals with senior management before
approval and Board ratification. Pertinent discussions between individual
Directors outside of scheduled meetings are also brought to the Board's
attention.
The macro environment continues to dominate with the UK's economic challenges
aggravated by rapidly evolving US government policy and increasing
geopolitical tensions. This year's Board discussions have included the
potential impact on tenants of heightened geopolitical, supply chain and
tariff uncertainty, rising business costs and other threats.
In addition, the Board more broadly discussed risks relating to staff
retention, persistent high debt costs, market liquidity, corporate
opportunities, non core asset sales, debt strategy, vacancies and asset
management initiatives.
Determining appropriate risk appetite levels
Our risk management framework assures the Board that inherent business risks
are being effectively identified and mitigated as much as possible. This
reduces the occurrence of undesirable outcomes and ensures that controllable
risks remain within acceptable appetite levels. Risk appetite denotes the
degree and nature of risk that the Board is willing to accept or tolerate in
pursuit of its strategic objectives.
The Board evaluates and discusses a wide range of factors, including emerging
risks, to determine the extent to which it is prepared to accept some level of
risk or adjust its existing risk appetite while delivering on its strategic
priorities. It strives to maintain a low risk appetite overall, balancing
commercial considerations within acceptable boundaries to safeguard
stakeholder interests.
Risk categories
Our principal risks remain consistent with last year. We consider risk under
the three main categories but recognise that these are often interlinked.
Risk categories Risk consideration
Corporate - Relating to the entire Group Culture, strategy, the market, political, economic, employees, Responsible
Business practices, wider stakeholders, security, systems, regulation
Property - Focusing on our core business Portfolio composition, investments, divestment, asset management,
developments, valuation, occupiers
Financing - Focusing on business funding Capital markets, investors, joint ventures, debt, cash management
LXi risk assessment update
A key focus for the Board this year has been to oversee the work undertaken to
integrate LXi into the wider business following its acquisition last March and
to ensure that all key risks were fully addressed as part of this process.
The acquisition initially raised the overall Company risk profile and the
Board's appetite in relation to certain principal risks. This was partly
connected to its timing close to our year end and LXi's externally managed
business model, particularly its heavy reliance on third party service
providers.
These risks were covered by careful management of the year end reporting
process which included LXi staff relocating to LondonMetric's office in early
April and the subsequent staged migration of the accounting functions
previously undertaken externally onto our in-house platforms. This workstream
reduced the risk of inaccuracies and delays in financial reporting and
completed before the half year. New hires were also made to ensure that the
enlarged Group is sufficiently resourced, and the Company's forecast model was
enhanced to reflect the increased requirements and complexity of the Group.
Significant progress has also been made in the year on sales of lower growth
and non core LXi assets with proceeds primarily reinvested into logistics to
support what the Board considers more optimal sector weightings and to ensure
that the portfolio remains fit for the future.
The acquisition of LXi also imported a material amount of shorter dated and
secured debt onto the Company's balance sheet. Part of this was unwound
immediately through a new £700 million unsecured facility to replace £625
million of secured debt on more favourable terms. A further £350 million of
former LXi secured debt matures this autumn. Unsecured revolving credit
facilities totalling £525 million have been completed to cover these
maturities and additional investment. The Company has also recently obtained
an investment grade credit rating which will provide further optionality
around future funding sources.
Key actions to reduce increased risk from LXi acquisition
Corporate Property Financing
· Integrated LXi property portfolio and staff · Forged relationships with tenants in new property sectors acquired · Secured debt asset substitutions to facilitate sale of non core LXi assets
· Recruited additional staff to manage larger portfolio · Prioritised sale of non core LXi assets, recycling into higher growth logistics · Signed £525 million of new unsecured facilities ahead of £350 million of upcoming secured maturities
· Brought key outsourced LXi functions in-house for greater efficiency and control · Analysed enlarged portfolio to progress Net Zero Pathway and targets · Obtained credit rating to provide greater optionality around future funding sources
· Enhanced forecast model to reflect the increased requirements and complexity of the enlarged Group
Looking ahead
Market sentiment in the real estate sector continues to be adversely affected
by elevated and volatile five year swap and ten year gilt rates, compounded by
recent geopolitical and macro events which have increased uncertainty.
These factors have dampened the positive outlook from the start of the year,
with many investors adopting a 'wait and see' approach while they take time to
consider the impact of these events. This environment can however create
opportunities for long term investors with well capitalised businesses such as
ours, with a well positioned balance sheet and strong equity rating.
We consider ourselves to be an active consolidator in the UK listed real
estate market with a management team that has deep experience in both
executing such transactions and integrating the businesses and portfolios
acquired as last year's acquisitions of CTPT and LXi demonstrate.
We are currently progressing a recommended all-share acquisition of Highcroft
Investments Plc that is expected to complete on 21 May 2025 and more recently
have agreed the terms of a recommended cash and share offer to acquire Urban
Logistics REIT Plc. These proposed acquisitions support our triple net
strategy and would create an enlarged portfolio of £7.4 billion aligned to
winning macro thematics and increase our logistics weighting to 55% to help
drive earnings accretion in the next two years. Our competitive position for
pursuing opportunities of scale and competing with large investors on
substantial transactions would also be enhanced and a consolidation of our
FTSE 100 status would provide enhanced access to capital and further increase
share liquidity.
We continue to assess similar potential opportunities while also continuing to
successfully transact on our non core sales strategy.
A review of our principal risks
Corporate risks
1. Strategy and its execution
Risk
Our asset selection or chosen sectors may not always align with the current
economic climate, market cycle or occupier needs. External factors or
ineffective implementation of strategy may prevent us from achieving our
goals.
Impact
Our financial performance and growth objectives may be negatively impacted.
Mitigation
· Our income-led approach and focus on macro trends guide our capital
allocation. We favour structurally supported sectors with assets that are
benefitting from evolving consumer behaviour.
· Our strategy and objectives are regularly assessed and adjusted in
response to evolving trends, market conditions and emerging opportunities or
threats, including potentially disruptive technologies.
· We leverage connections, research and deep occupier relationships to
gather intelligence to help guide strategy supported by a flat organisational
structure that allows us to quickly identify market changes, emerging risks
and monitor operations.
· Our portfolio is continually analysed and adjusted to take into
consideration sector weightings, tenant and geographical concentrations,
perceived threats and market changes, asset management opportunities and other
factors.
· Our highly experienced Senior Leadership Team oversees the key
operational and financial aspects important to the management of the business.
Significant share ownership within the Team ensures strong alignment with
shareholders on all major decisions.
· We maintain transactional controls and regularly update the Board on
significant activity.
Commentary
Current year
Last year's merger activity substantially increased our scale and is
delivering significant benefits that include materially higher earnings and
cost synergies to drive dividend progression. EPRA earnings have increased by
20.7% to 13.1p per share and a sector leading low EPRA cost ratio of 7.8%
reflects our efficient internalised management structure focused on cost
control alongside rental growth. This has allowed us to increase our dividend
to 12.0p per share up 17.6% on last year.
Our total return model focusing on NNN income compounding with strong
shareholder alignment ensures that we remain disciplined, rational and active,
looking to continually improve our portfolio, financing and net operating
income. This year's investment activity has prioritised sales of non core and
underperforming assets, primarily from the LXi and CTPT pool with sales of
£342 million. Reinvestment of £343 million has mainly been into logistics
where we believe the rental growth prospects are higher and where our
ambition, particularly in urban, remains undiminished.
Last June we entered the FTSE 100 index. We continue to uphold a strong equity
rating with enhanced liquidity in our shares.
Year ahead
We aim to maintain strong income growth and leverage external opportunities to
strengthen our position as the UK's top NNN lease REIT. Selling non core
former LXi assets will remain a priority, with patience exercised if market
liquidity is weak.
Appetite
Low. We succeed by owning quality assets in key sectors with reliable, growing
income that is crucial to long term investment and the delivery of superior
total returns. Our focus on macro trends in real estate has guided our success
and continues to shape our strategy.
Change in the year
Decreased risk - decrease results from the integration of corporate
acquisitions made last year and significant progress on the sale of mainly
inherited non core and underperforming assets.
2. Major event
Risk
Unexpected events on a national, regional or global scale like financial
crises, pandemics, conflicts, terrorism, political or economic issues can
cause market downturns, sector instability or major business disruption.
Impact
We may lose our competitive advantage and financial performance may suffer.
Mitigation
· We focus on the controllable aspects of our business by applying
disciplined portfolio management. This includes maintaining a broad tenant
base, low vacancy and a well located portfolio of predominantly UK assets in
structurally supported sectors.
· Strong occupier relationships provide market intelligence and help us to
better understand our tenants' businesses and needs. This helps us to identify
emerging trends and risks and enables us to provide desirable assets with
enduring occupier appeal that allow us to grow income and protect intrinsic
asset value.
· We regularly review our debt strategy and nurture relationships with new
and existing debt and equity providers. We have predominantly flexible funding
arrangements from a diverse lender pool with significant covenant headroom, a
low LTV and an investment grade credit rating.
· Our development exposure is low in the current economic climate. We have
no speculative developments.
· Our property portfolio is safeguarded with appropriate insurance cover.
Commentary
Current year
Our diversified portfolio targets winning sectors, prioritising assets that
are business critical or key to the operations of occupiers and those with
high entry barriers. It continues to boast strong income metrics, including a
sector leading 18.5 year WAULT, 98.1% occupancy and minimal cost leakage of
1.2%. Contractual rental uplifts cover 77% of income, with 40% subject to
annual reviews, resulting in a 17% uplift on reviews this year. These metrics
together with high quality occupier covenants across our portfolio help to
insulate us from shorter term macro volatility.
Our increased scale and recent investment grade credit rating provide greater
access to capital and debt optionality to help us maintain a strong balance
sheet. Since our last Annual Report we have welcomed three new lenders
providing £525 million in unsecured five year revolving credit facilities
ahead of £350 million of maturities this autumn.
Year ahead
US government policy continues to rapidly evolve leading to a high degree of
global uncertainty including on the durability and size of global tariffs
coupled with rising political rhetoric and escalating tensions between the US
and China. This is aggravating pre-existing economic challenges, driving
market sentiment and extreme turbulence in equity and bond markets. The
consequences for UK real estate are currently unknown.
Appetite
Such events are beyond the Board's control. The Board's primary focus remains
on sustaining a strong portfolio and financing strategy to mitigate potential
impacts as effectively as possible. The Board closely monitors the effects of
such events when they arise and adjusts operations as necessary.
Change in the year
Increased risk - increase led by factors including fears of a hugely damaging
global trade war and the ongoing conflicts in Ukraine and the Middle East,
together with heightening tension elsewhere in addition to increasing levels
of potentially dangerous disinformation.
3. People
Risk
Our business relies heavily on a relatively small team of highly motivated
individuals whose skills and experience are crucial to the success of the
Company. Attracting, motivating and retaining high calibre individuals
particularly in senior roles is essential to lead the business and plan and
execute strategy effectively.
Impact
We may lose our competitive advantage and financial performance may suffer.
Mitigation
· We conduct annual staff satisfaction surveys to assess employee
contentment.
· Our designated workforce Non Executive Director hosts annual round table
meetings with a cross section of staff to hear their views and any concerns,
with feedback provided to the Board.
· We offer competitive remuneration packages with most staff participating
in the LTIP which incentivises long term performance, creates an ownership
culture and a sense of togetherness aiding staff retention and providing
stability within the wider team. Staff turnover levels are low.
· The Senior Leadership Team promotes talent development below the Board.
· Annual staff appraisals provide a forum to discuss targets, progress,
prospects and training needs which can also be raised directly with line
managers at other times.
· External specialist support is contracted as required.
Commentary
Current year
This risk increased last year driven by the proximity of our merger with LXi
to the year end and the significant increase in workload created by the
doubling of the Company's size and LXi's less familiar asset classes. This was
partly addressed by carefully managing the year end reporting process and the
integration overall particularly when and how to successfully migrate LXI's
accounting functions away from a third party service provider.
To aid their integration LXi staff were relocated to our main office within
four weeks of the transaction completing with training and additional
appraisals undertaken to support and settle them into their new teams and
roles. Social events were also held to encourage team bonding.
The Group's talent pipeline has also been strengthened this year through the
recruitment of new finance and property staff where the need for additional
support was identified. This recruitment included the appointment of Darren
Richards to the newly created role of Chief Investment Officer. Darren was
also welcomed onto the Senior Leadership Team.
Our staff survey responses continue to be very positive with 96% of
respondents stating that they feel that there is a strong culture of
collaboration and teamwork at LondonMetric and that they are highly confident
in senior management's decisions. These findings are consistent with feedback
received by our designated workforce Non Executive Director following his
informal off site session with employees.
Year ahead
Resourcing will be kept under review and we will continue to implement systems
improvements which will streamline certain processes and enhance efficiency
further.
Appetite
Low. The Board believes that it is vitally important that the business has the
appropriate level of leadership, experience and expertise to deliver on its
objectives and to identify and adapt to change. The Board also believes that
it is key for the Company to maintain its culture of empowerment, inclusion,
openness and teamwork as the business grows since these have aided staff
motivation and retention, enabling the Company to flourish.
Change in the year
Decreased risk - decrease led by the successful integration of LXi and
additional recruitment throughout the year.
4. Systems, processes and financial management
Risk
Our cyber security and the integrity of our property database and financial
systems and the accuracy and timeliness of financial information which support
strategy may be poor.
Impact
Decisions may be made on inaccurate data and published information may be
misstated or delayed. Cyber threats may give rise to significant financial
losses and reputational harm and be detrimental to business continuity.
Mitigation
· We have a strong controls culture and maintain appropriate segregation of
duties and controls over financial systems. We also maintain appropriate data
capture procedures to ensure the accuracy of our property database.
· Management accounts are produced quarterly, reviewed by senior managers
then shared with the Board. Forecast variances are investigated and reported.
· Our cost management protocols guarantee that expenditure is legitimate,
duly authorised and thoroughly monitored.
· Comprehensive due diligence is conducted on corporate acquisitions to
identify differences in accounting policies, processes, controls and the
timing of financial information. On completion, additional controls and
oversight processes are implemented before integration as deemed appropriate.
· Our business continuity plan is tested and we seek to ensure the
integrity of our IT systems and cyber security through third party penetration
testing and staff training.
Commentary
Current year
As an externally managed REIT, LXi relied on third party providers for all
functions including the provision of accounting services. Surrendering
day-to-day control of accounting processes can lead to inaccuracies and delays
in financial reporting, as well as difficulties in information sharing and
issue resolution due to lack of direct access to accounting systems.
To avoid potential issues, senior finance team members met LXi's administrator
to agree amendments to ongoing procedures and reporting for the merger and the
year end to streamline it to the extent possible to minimise delays given the
proximity of the transaction to our year end. The finance team then
coordinated processes for the year end consolidation and audit of the enlarged
Group and subsequently opted to bringing those functions undertaken by LXi's
administrator in-house as soon as practicable. This, including testing,
completed well ahead of the half year.
The Company's forecast model has been enhanced, with external specialist
support, to reflect the increased requirements and complexity of the enlarged
Group. Various systems improvements have also been made throughout the year to
streamline processes and management of the financial reporting for the
enlarged Group.
Year ahead
The billing and rent collection function currently provided by third party
service providers on LXi assets will be brought in-house this year.
Management will also progress the pathway for compliance with the expanded
Provision 29 of the 2024 Code. Support is being provided by BDO LLP who have
been appointed to assist in documenting the Company's internal control
processes over principal risks where they are currently undocumented.
Appetite
Low. The Board seeks to ensure that management continually strives to monitor
and improve processes, including those relating to cyber security, so that
they remain fit for purpose. The rising use of AI, however, is fuelling an
increasing and ever-evolving risk to all businesses in terms of the frequency,
sophistication and intensity of cyber threats.
Change in the year
Decreased risk - decrease led by the successful integration of LXi including
its accounting function and the enhancement of the Group's forecasting model.
5. Responsible Business and sustainability
Risk
Failure to adhere to responsible business practices and effectively manage
climate risk.
Impact
Non-compliance can harm our reputation and relationships with key
stakeholders. It may also adversely impact occupiers' usage and satisfaction
with our buildings and asset liquidity, shareholder returns and limit access
to debt and capital markets.
Mitigation
· Aided by expert consultants, we track changes in law, stakeholder views
and best practices on sustainability, environmental issues and social impact
to inform our strategy.
· Responsibility for specific obligations sits with Senior Leadership Team
members and our Responsible Business Working group meets regularly and reports
to the Audit Committee.
· Sustainability targets are set, monitored, and reported. EPC benchmarks
comply with Minimum Energy Efficiency Standards ('MEES') to maintain asset
quality and desirability, avoiding higher voids, reduced income and liquidity
issues.
· We assess environmental and climate change risks for our assets,
commission studies and reports and provide staff training.
· High engagement levels with occupiers and shareholders seek to identify
their priorities and needs.
· We collaborate with tenants to enhance the resilience of our assets and
their business models in response to climate change risks. We also consider
our impact on local communities.
· Contractors are required to conform to our responsible development
requirements.
Commentary
Current year
Last year's merger activity reduced the Group's EPC A-C rating to 85% of the
portfolio and caused us to pause on developing our Net Zero Pathway while we
assessed the implications of the shift in our portfolio makeup. Good progress
has been made this year on analysing the enlarged portfolio with Audit
Committee consensus that the Net Zero Pathway targets which are now proposed
are suitable for the business.
Good progress has also been made on our 2025 targets which have largely been
achieved, including an increase in our EPC A-C rating to 92%. Our GRESB score
fell slightly from 76 to 73, although we still outperform our peer group and,
due to significant changes to scoring methodology, GRESB advise against direct
comparisons being made against prior year performance ratings.
We continue to have a good level of occupier engagement which has translated
into a significant number of ongoing and completed green initiatives. Green
clauses are now widely being adopted on new leases and regears.
Our occupier survey landlord recommendation score was again high at 8.7/10.0
this year reflective of 57% of the enlarged portfolio by rent. Our employee
satisfaction score was also high with 96% of employees stating they enjoy
working for LondonMetric.
Year ahead
Agree medium term Net Zero Pathway KPIs, implement and monitor Pathway.
Complete flood and climate risk analysis. Continue to improve EPC ratings on
poorer performing assets and drive green initiatives with occupiers.
Appetite
Low. The Board has a low tolerance for non-compliance with risks that
adversely impact reputation, stakeholder sentiment and asset liquidity.
Change in the year
No significant change. Significant progress made on establishing interim
milestones and Net Zero Pathway targets and updating flood and climate risk
analysis. Ongoing delivery against targets still required to mitigate risk.
Our full Responsible Business report can be found at www.londonmetric.com
6. Regulatory framework
Risk
Failure to meet legal or regulatory requirements.
Impact
There may be reputational damage, increased costs, fines, penalties or
sanctions. Access to debt and capital markets could also be reduced.
Mitigation
· We continually monitor regulatory changes that affect our business, with
the assistance of specialist support providers and evaluate the impact of
legislative changes on our strategic plans.
· Responsibility for particular obligations has been assigned to individual
members of the Senior Leadership Team.
· Staff are provided with regular training on various pertinent matters
including health and safety, cyber awareness, anti-money laundering, market
abuse, whistleblowing, conduct and ethics.
· Our health and safety handbook is regularly updated and audits are
conducted on developments to monitor compliance.
· Our procurement and supply chain policy sets standards for areas such as
labour, human rights, pollution risk and community.
Commentary
Current year
While the regulatory environment continues to evolve, no significant new
regulatory changes have impacted the business this year. Following completion
of our merger, management became aware of weaknesses in the LXi regulatory
control framework in relation to tax and subsidiary statutory account filings.
These issues have since been resolved and LondonMetric's pre-existing controls
would have prevented their occurrence.
Year ahead
We expect no significant change in this risk over the coming year. We
acknowledge the 2024 Code's mandate for a Board declaration on the
effectiveness of material controls over principal risks by 31 March 2027.
BDO LLP have been engaged to assist management in documenting the Company's
internal control procedures. In the absence of an internal audit function BDO
LLP will also test several key process flows to provide third party assurance
to the Board as to the effectiveness of the material controls over those
processes. Progress and any recommendations from this process will be fed back
to the Audit Committee who will report to the Board.
Appetite
Low. The Board has no appetite where non-compliance risks injury or damage to
its broad range of stakeholders, assets and reputation.
Change in the year
There has been no significant change in perceived risk.
7. Investment risk
Risk
We may be unable to source rationally priced investment opportunities.
Impact
Our ability to implement strategy and deploy capital into value and earnings
accretive investments is at risk.
Mitigation
· Our property team leverages extensive experience and strong relationships
to identify market insights and opportunities.
· Our Senior Leadership Team led Investment Committee meets regularly.
Short reporting lines and Team members' active participation in daily
operations lead to effective management and quick decision making.
· Management has a proven track record of executing transactions, making
good sector choices and growing income even through periods of uncertainty and
market volatility.
· We are a principal consolidator in the UK listed real estate market with
a management team that has deep experience and proven success in both
executing corporate transactions and integrating the acquired businesses.
· We have a resilient capital structure and significant undrawn headroom
under our debt facilities. Our increased scale, FTSE 100 listing and
investment grade credit rating provide better access to capital and debt.
· We have contractual rental uplifts over 77% of income and can afford to
be patient, rational investors strongly aligned with shareholders through our
significant executive share ownership.
Commentary
Current year
The market continues to be influenced by broader economic conditions and
sticky debt costs which have suppressed liquidity particularly for larger
direct property transactions for much of the year. There have been pockets of
improved sentiment throughout the period, and we have progressed well in
repositioning our portfolio towards our preferred sector weightings, finding
reasonable liquidity in smaller lot sizes. We have transacted on £685 million
of assets and increased our logistics exposure to 46% up from 43% despite the
current market conditions where accretive capital deployment remains
particularly difficult in our chosen sectors.
Year ahead
We are active supporters of further consolidation across the listed sector to
improve scale, liquidity and unlock cost efficiencies for accelerated earnings
progression as evidenced by our recent engagement with Highcroft Investments
Plc and Urban Logistics REIT Plc. These proposed acquisitions support our
triple net strategy and would create an enlarged portfolio of £7.4 billion
aligned to winning macro thematics, consolidating our FTSE 100 status and
increasing our logistics weighting to 55%. We continue to assess similar
potential opportunities.
In the direct market opportunities within the winning sectors currently remain
muted with limited supply of quality assets not helped by geopolitical
uncertainty and volatility in the bond market. We will continue to prioritise
the sale of non core former LXi assets.
Appetite
Low. The Board continues to focus on having the right people and funding in
place to seize opportunities.
Change in the year
No significant change. We continue to expect increased scale, liquidity and
our track record to confer a competitive advantage when pursuing possible
transactions including superior access to larger investment opportunities.
8. Valuation risk
Risk
Investments may fall in value.
Impact
Pressure on net asset value may have negative implications for the Group and
potentially loan to value debt covenants.
Mitigation
· Our focus remains on sustainable income and lettings to high quality
tenants within a diverse portfolio of well located assets. Fit for purpose,
modern long-let assets, low vacancy and strong tenant covenants provide
resilience and reduce the negative impact of a market downturn.
· Our portfolio is predominantly aligned to structurally supported sectors
with negligible exposure to legacy sectors and none to stranded assets.
· We constantly look to improve the quality and desirability of our assets.
We work closely with our occupiers to deliver real estate solutions that will
help their businesses thrive and that provide us with greater and longer
income certainty.
· We continually monitor trends and the property cycle with investment
decisions made strategically in anticipation of changing conditions. We are
not afraid to pivot.
· Asset performance is regularly reviewed and benchmarked on an asset by
asset basis.
· Tenant covenants and trading performance are monitored.
Commentary
Current year
Our primary focus during the year has been to sell down assets that we
consider to be non core. We successfully sold 72 assets totalling £342
million at 1% above prevailing book value. £214 million related to assets
previously acquired through the LXi and CTPT transactions which did not fit
our investment strategy. We were delighted with these sales given the poorer
quality of some of the real estate and the uncertainty over its liquidity.
We continue to see good liquidity for our assets with an average lot size of
only £5 million during the 2025 year and post year end sales of £63 million.
Proceeds of sale have been redeployed into higher quality assets with better
income reliability and growth trajectory which helps to mitigate valuation
risk. We have grown our logistics exposure by £297.2 million representing 87%
of total spend as the sector continues to benefit from continued online sales
growth, investment in more efficient and resilient supply chains and increased
warehouse automation. £188.9 million of this was into urban which remains the
most attractive sub-sector with the greatest demand/supply tension and income
growth potential. Urban supply continues to reduce as assets are converted
into higher land uses. 63% of our overall logistics exposure is in urban with
a total value of £1.8 billion and in strong geographies with 60% located in
London and the South East and 23% in the Midlands.
Year ahead
The more positive market sentiment witnessed at the start of 2025 has weakened
due to elevated levels of uncertainty resulting mainly from the impact of US
trade policy with significantly larger than anticipated global tariffs and the
economic impact of higher employment costs announced in the UK budget. Despite
this, yields remain relatively stable presently with investors adopting a
'wait and see' approach while they take time to consider the impact of the
above.
Appetite
The Board aims to keep valuation risk to a minimum through its asset selection
and accretive asset management initiatives. Property valuations are however
inherently subjective and there is no certainty that values will be realised.
Valuations are particularly sensitive to changes in interest rates.
Change in the year
No significant change. Prime yields within structurally supported real estate
sectors have stabilised over the past two years. Elevated debt costs and other
economic factors however continued to impact market liquidity and pricing
discovery for larger lot sizes.
9. Transaction and tenant risk
Risk
Acquisitions and asset management initiatives may be inconsistent with
strategy, or our due diligence may be flawed. Tenants may default or fail.
Impact
This may negatively impact our financial performance, hinder the attainment of
our growth objectives and put pressure on debt covenants.
Mitigation
· Thorough due diligence is undertaken on all investments with input from
reputable external experts.
· New initiatives undergo cost benefit analysis prior to implementation.
· Tenant concentration, covenant strength and trading performance is
considered for all investment and leasing transactions and regularly reviewed
thereafter.
· We maintain close relationships with our tenants to understand their
businesses and rent collection is monitored closely to identify potential
issues.
· We have a diversified tenant base and limited exposure to occupiers in
bespoke properties outside of the healthcare and theme park assets acquired
through last year's merger where the tenant covenants are extremely strong.
· Our experienced asset management team collaborates with tenants to offer
them real estate solutions that meet their business goals. This proactive
management approach helps to reduce vacancy
risk.
Commentary
Current year
During the year, 340 occupier initiatives added £15.3 million per annum of
rent and like for like income growth of 4.2%. Lettings and regears added £5.9
million on average lease lengths of 19 years. Rent reviews delivered £9.4
million of additional rent, representing a 17% uplift on a five yearly
equivalent basis.
The average ERVs on our logistics portfolio are 18% higher than average
passing rents with urban at 16% and our regional and mega assets at 25%. Over
the next two years, our pipeline of rent reviews alone is expected to add a
further £27 million of annualised contracted rent as we capture inbuilt
reversions.
Our long income assets which represent 52% of our portfolio generate an
attractive topped up NIY of 5.5% with 90% of income subject to contractual
uplifts and an equivalent yield of 6.7%. Operationally, the Company continues
to perform strongly with virtually full occupancy and rent recovery of 99.5%
in the year.
Year ahead
We anticipate no significant change in this risk over the next 12 months due
to the granularity of our income, our focus on business critical or key assets
for our tenants and the covenant strength of our largest tenants. We recognise
however that the current challenging economic backdrop with high levels of
uncertainty, the risk of further cost increases and supply chain disruption
are likely to increase tenant default risk more generally. We will continue to
monitor the effects of market conditions on our tenants' businesses.
Appetite
Low. The Board has no appetite for risk arising out of poor due diligence or
implementation of investment and asset management activities. A degree of
tenant covenant risk and lower unexpired lease terms are accepted on assets
where there is high occupational demand, redevelopment potential or
alternative site use.
Change in the year
No significant change. Our portfolio has remained broadly consistent with last
year in terms of the largest tenants, occupancy levels and rent recovery.
10. Capital and finance risk
Risk
The Company may have insufficient liquid funds and available credit. Exposure
to rising interest rates may be excessive.
Impact
Implementation of our property strategy may be at risk. Financial performance
may be negatively impacted.
Mitigation
· We maintain a disciplined investment approach with competition for
capital. Assets are considered for sale where we consider their future growth
prospects to be muted.
· The availability of debt and the terms on which it is available are
considered as part of our long term strategy and relationships are nurtured
with a diversified range of lenders.
· Cash flow forecasts are closely monitored by Senior Leadership Team
members.
· We maintain a modest level of gearing and monitor covenant headroom.
· Our facilities incorporate appropriate covenant headroom and cure rights.
Our unsecured arrangements offer flexibility.
· Where secured loans inherited through our merger activity cover multiple
assets, we evaluate the impact of asset disposals and collaborate with lenders
on substitutions.
· Derivatives are used to fix or cap exposure to rising rates as deemed
prudent.
Commentary
Current year
In order to facilitate the sale of charged assets in the year we successfully
completed a number of asset substitutions across four secured debt facilities.
This has allowed the Group to retain in full well priced debt taken on through
corporate acquisitions.
This year, we have welcomed three new unsecured lenders signing three five
year revolving credit facilities totalling £525 million, each with two, one
year extension options, ahead of our first material secured debt maturity of
£350 million this autumn. The facilities reflect improved pricing on a year
ago partly as a result of our recent investment grade rating.
Cash and undrawn headroom under our facilities at the year end together with
those that completed afterwards is significant at £1.3 billion. Covenant
headroom is also significant with LTV of 32.7% at the year end and interest
cover of 4.2 times.
All drawn debt is fully hedged or carries a fixed rate coupon. Additional
hedging including £339 million of current and forward starting derivatives
and extended protection on a further £150 million at an average rate of 2.9%
was acquired during the year.
Year ahead
We will look to retain optionality and continue to monitor market conditions
for windows of opportunity to lock into longer term financing options at an
attractive cost.
Appetite
Low. The Board has no appetite for imprudently low levels of available
headroom in its cash and credit lines and very limited appetite for unhedged
floating rate debt in the current interest rate environment.
Change in the year
Decreased risk. We are in a secure financial position with diversified sources
of funding. Our increased scale and FTSE 100 listing alongside our recent
assignation as an investment grade issuer provide better access to capital and
greater optionality around future funding sources.
Going concern and viability
The Directors have reviewed the Group's prospects and principal risks to
assess short term and long term viability. Based on the results of this
assessment, they believe that the Group has adequate resources to meet its
liabilities as they fall due over the three year period to 31 March 2028 and
will be able to continue in operation.
Time period of assessment
Consistent with previous years and in accordance with the 2018 UK Corporate
Governance Code, the Board has assessed the prospects of the Group over the
following time horizons:
· Short term - a period of 12 months from the date of this report as
required by the 'Going Concern' provision; and
· Longer term - a period of three years to 31 March 2028 as required by the
'Viability Statement' provision.
Short term assessment
The Directors' short term going concern assessment, as required under
provision 30 of the Code, considered the key models and metrics which the
Senior Leadership Team use to measure and monitor liquidity. These are
reviewed at their monthly meeting and at other times as required. Key metrics
and information considered include the following:
· The current financial position of the Group;
· The short term cash flow forecast, which is undertaken on a weekly basis;
· Rent collection rates, which are circulated and reviewed on a weekly
basis;
· The repayment profile of the Group's debt facilities;
· The hedging profile and forecast interest and swap rates; and
· The availability of cash and undrawn facilities.
The following key financial metrics, which are set out in the Financial review
supported their assessment:
As at 31 March 2025
Loan to value 32.7%
Cost of debt 4.0%
Interest cover (times) 4.2
Undrawn facilities £831.1m
Cash £81.2m
Average debt maturity 4.7 years
Hedging 100%
Rent collection in the year 99.5%
Occupancy 98.1%
During the year, the Group agreed three new five year revolving credit
facilities totalling £525 million with new lenders. Each facility has two,
one year extension options and reflects improved pricing, which partly
reflects our recent investment grade Fitch credit rating of BBB+ which
increases optionality around future funding sources. Two of these facilities
totalling £350 million were entered into post year end and increase cash and
available undrawn facilities to £1.3 billion.
The Directors considered the c.£350 million of debt due to mature in the
autumn relating to the secured loans acquired as part of the LXi transaction
and £400 million revolving credit facilities which mature next year and
concluded that the Group has sufficient undrawn facilities and cash resources
available and ample headroom under banking covenants ahead of the maturities.
In addition, as at 31 March 2025, the Group's gearing ratio as defined within
its unsecured facilities and private placement loan notes, which together
account for 61% of debt drawn, was 57% (maximum 125%) and interest cover was
4.2 times (minimum 1.5 times).
Going Concern Statement
On the basis of this review, together with available market information and
the Directors' experience and knowledge of the portfolio, they have a
reasonable expectation that the Company and the Group can meet its liabilities
as they fall due and has adequate resources to continue in operational
existence for at least 12 months from the date of signing these financial
statements. Accordingly, they continue to adopt the going concern basis in
preparing the financial statements for the year to 31 March 2025.
Longer term assessment
The Board reviews the viability assessment period and has determined that the
three year period to 31 March 2028 remains appropriate for assessing the
Group's viability, as in previous years for the following reasons:
· The Group's financial business plan and detailed budgets cover a rolling
three year period;
· It is a reasonable approximation of the time it takes from obtaining
planning permission for a development project to practical completion of the
property; and
· Three years is considered to be the optimum balance between long term
property investment and the difficulty in accurately forecasting ahead given
the cyclical nature of property investment.
Assessment of viability
The Board conducted this review taking account of the Group's business
strategy, principal and emerging risks, financial position and outlook as
discussed throughout the Strategic review.
The Group's three year business model is used to consider future prospects on
a quarterly basis and to stress test assumptions and consider the likely
impact of changes in the principal risks, including:
· Macroeconomic conditions and changes impacting rental income, property
values and finance costs;
· The occupier market and changes impacting occupancy levels;
· The availability of funds and interest rates; and
· The real estate market conditions impacting investment, divestment and
development opportunities.
Our transformational M&A activity last year positioned us as the UK's
leading Triple Net Lease REIT, doubling the size of the portfolio and
diversifying into a broader range of operating segments. Our strategy, which
is reviewed by the Board at each meeting and in-depth at one extended meeting
each year, continues to be to invest in mission critical assets and deliver
reliable, repetitive and growing income and dividends over the long term.
This strategy underpins the business plan and three year financial forecasting
model which incorporates transactions under offer, committed developments and
reinvestment plans. It is an integrated model that projects future earnings,
cash flows and net assets and considers capital commitments, dividend cover,
loan covenants and REIT compliance metrics.
The Senior Leadership Team provide key strategic input to the financial
forecasts covering investment, divestment and development plans which consider
their impact on earnings and liquidity. Forecasts are reviewed against actual
performance and reported quarterly to the Board. The forecast model was
enhanced at the start of the financial year with external specialist support
to reflect the increased requirements and complexity of the enlarged Group
following last year's merger activity.
The business plan was stress tested to ensure it remained resilient to adverse
movements in its principal risks including changes to macroeconomic conditions
that were considered severe but realistic scenarios, both on an individual and
collective basis. The scenarios considered the likely impact on the Group's
longer term profitability and liquidity and were consistent with previous
years as set out below:
· A 2% increase in interest rates;
· A 5% tenant default rate reducing rent by the equivalent amount; and
· A 5% decline in property valuations.
The modelling indicated that under all scenarios the Group would still be able
to execute its strategic plan and had sufficient reserves to continue in
operation and remain compliant with its debt covenants. In addition, reverse
stress testing was undertaken to determine the circumstances under which
financial covenants would be breached and considered the following scenarios:
· The amount by which property values would need to fall before the gearing
covenant was breached;
· The amount by which rent would need to fall before the interest cover
covenant was breached; and
· The amount by which interest costs would need to rise before the interest
cover covenant was breached.
Under the Group's unsecured and private placement debt facilities, that
together account for 61% of the Group's borrowing, the reverse stress testing
indicated the following:
· Property values would need to fall by 34% before the banking gearing
threshold was reached and this would equate to a loan to value ratio of 53%;
and
· Rental income would need to fall by 60% or interest payable rise by 159%
to breach the interest cover covenant.
In conjunction with the modelling undertaken, the Board is mindful of the
following points when assessing the Group's longer term prospects:
· Income certainty, with 77% of the Group's rental income benefitting from
contractual uplifts;
· Income diversity, with 38% of rent due from our top ten occupiers;
· Strong rent collection, with 99.5% of rent due in the year collected;
· Strong relationships with debt providers, evidenced by the new £525
million revolving credit facilities agreed which also diversified the pool of
lenders;
· Substantial liquidity, with undrawn debt facilities and cash of £831.1
million at the year end, mitigating refinancing risk;
· Fully hedged drawn debt as at 31 March 2025;
· The Group's proven track record of executing transactions, including
sizeable corporate acquisitions and successful subsequent integration, making
good sector choices and growing income even in uncertain, volatile and
challenging times; and
· The Group's ability to be flexible and react to changes in the
macroeconomic and property markets, including the ability to transact through
M&A opportunities.
This testing, combined with the Group's strong financial position and
mitigation actions available including deferring non committed capital
expenditure and selling assets, supports the Group's ability to weather
unexpected and adverse economic and property market conditions over the longer
term viability period.
Viability Statement
Based on the results of their assessment, the Directors have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the three year viability period to 31
March 2028.
Directors' Responsibilities Statement
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors are required to prepare the Group
financial statements in accordance with UK-adopted international accounting
standards in conformity with the requirements of the Companies Act 2006. The
financial statements also comply with International Financial Reporting
Standards ('IFRSs') as issued by the International Accounting Standards Board.
The Directors have elected to prepare the Company financial statements in
accordance with Financial Reporting Standard 101 ('FRS 101') 'Reduced
Disclosure Framework'. Under Company law the Directors must not approve the
accounts unless they are satisfied that they give a true and fair view of the
state of affairs of the Company and of the profit or loss of the Company for
that period.
In preparing the Company financial statements, the Directors are required to:
· Select suitable accounting policies and then apply them consistently;
· Make judgements and accounting estimates that are reasonable and prudent;
· State whether applicable FRS 101 'Reduced Disclosure Framework' has been
followed, subject to any material departures disclosed and explained in the
financial statements; and
· Prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
In preparing the Group financial statements, International Accounting Standard
1 requires that Directors:
· Properly select and apply accounting policies;
· Present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
· Provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the entity's
financial position and financial performance; and
· Make an assessment of the Company's ability to continue as a going
concern.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and to
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
· The financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole;
· The Strategic report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
· The Annual Report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's performance, business model and strategy.
By order of the Board
Andrew
Jones
Martin McGann
Chief
Executive
Chief Financial Officer
20 May
2025
20 May 2025
Group income statement
For the year ended 31 March
Note 2025 2024
£m
£m
Revenue 3 396.7 178.1
Cost of sales (4.9) (1.7)
Net income 391.8 176.4
Administrative costs 4a (27.1) (19.7)
Net gain on business combinations 15c - 49.4
Acquisition costs 15c - (29.8)
Profit/(loss) on revaluation of investment properties 106.0 (7.5)
Profit on revaluation of investments 0.9 -
Loss on sale of investment properties (13.0) (7.4)
Share of profits/(losses) of joint ventures 10 6.1 (0.1)
Operating profit 464.7 161.3
Finance income 5a 23.7 8.5
Finance costs 5b (135.6) (49.8)
Profit before tax 352.8 120.0
Taxation 6 (2.2) (0.1)
Profit for the year 350.6 119.9
Attributable to:
Equity shareholders 347.9 118.7
Non-controlling interest 20b 2.7 1.2
Earnings per share
Basic 8b 17.1p 10.6p
Diluted 8b 17.0p 10.6p
Group statement of comprehensive income
For the year ended 31 March
2025 2024
£m
£m
Profit for the year 350.6 119.9
(0.4) 0.5
Foreign exchange translation (loss)/gain
Other comprehensive (expense)/income for the year (0.4) 0.5
Total comprehensive income for the year 350.2 120.4
Attributable to:
Equity shareholders 347.5 119.2
Non-controlling interest 2.7 1.2
All amounts relate to continuing activities.
Group balance sheet
As at 31 March
Note 2025 2024
£m
£m
Non current assets
Investment properties 9a 6,383.9 6,232.2
Investment in equity accounted joint ventures 10 71.9 69.2
Other investments and tangible assets 21.7 1.7
Derivative financial instruments 14c 23.7 32.6
6,501.2 6,335.7
Current assets
Assets held for sale 9b 10.4 8.5
Trading properties 1.1 1.1
Trade and other receivables 11 13.7 21.4
Cash and cash equivalents 12 81.2 111.9
106.4 142.9
Total assets 6,607.6 6,478.6
Current liabilities
Trade and other payables 13 142.5 155.8
Bank borrowings 14a(i) 347.7 43.5
Other financial liabilities 14a(ii) 9.0 8.6
Lease liabilities 16 0.7 1.1
499.9 209.0
Non current liabilities
Bank borrowings 14a(i) 1,710.9 2,030.6
Other financial liabilities 14a(ii) 222.0 212.9
Lease liabilities 16 40.8 47.0
Deferred tax 6 10.1 9.6
1,983.8 2,300.1
Total liabilities 2,483.7 2,509.1
Net assets 4,123.9 3,969.5
Equity
Called up share capital 17,18 204.8 203.7
Share premium 17,18 425.9 404.7
Capital redemption reserve 18 9.6 9.6
Other reserve 18 2,317.7 2,332.4
Retained earnings 18 1,136.2 991.1
Equity shareholders' funds 4,094.2 3,941.5
Non-controlling interest 20b 29.7 28.0
Total equity 4,123.9 3,969.5
IFRS net asset value per share 8c 202.4p 195.2p
The financial statements were approved and authorised for issue by the Board
of Directors on 20 May 2025 and were signed on its behalf by:
Martin McGann
Chief Financial Officer
Registered in England and Wales, No 7124797
Group statement of changes in equity
For the year ended 31 March
Note Share Share Capital redemption Other Retained Equity Non-controlling Total
capital
premium
reserve
reserves¹
earnings
shareholders'
interest
equity
£m
£m
£m
£m
£m
funds
£m
£m
£m
At 1 April 2024 203.7 404.7 9.6 2,332.4 991.1 3,941.5 28.0 3,969.5
Profit for the year - - - - 347.9 347.9 2.7 350.6
Other comprehensive expense in the year - - - (0.4) - (0.4) - (0.4)
Total comprehensive (expense)/income for the year - - - (0.4) 347.9 347.5 2.7 350.2
Purchase of shares held in Employee Benefit Trust - - - (18.2) - (18.2) - (18.2)
Vesting of shares held in Employee Benefit Trust - - - 3.9 (4.4) (0.5) - (0.5)
Distribution to non-controlling interest 20b - - - - - - (1.0) (1.0)
Share based awards - - - - 5.3 5.3 - 5.3
Dividends 7 1.1 21.2 - - (203.7) (181.4) - (181.4)
At 31 March 2025 204.8 425.9 9.6 2,317.7 1,136.2 4,094.2 29.7 4.123.9
1 Other reserves include merger relief reserve, Employee Benefit Trust
shares and a foreign currency exchange reserve as set out in note 18
Note Share Share Capital Other Retained Equity Non-controlling Total
capital
premium
redemption
reserves(1)
earnings
shareholders'
interest
equity
£m
£m
reserve
£m
£m
funds
£m
£m
£m
£m
At 1 April 2023 98.3 395.5 9.6 490.3 973.6 1,967.3 27.9 1,995.2
Profit for the year - - - - 118.7 118.7 1.2 119.9
Other comprehensive income for the year - - - 0.5 - 0.5 - 0.5
Total comprehensive income for the year - - - 0.5 118.7 119.2 1.2 120.4
Share issue on acquisitions 17,18 104.9 - - 1,840.1 - 1,945.0 - 1,945.0
Purchase of shares held in Employee Benefit Trust - - - (2.5) - (2.5) - (2.5)
Vesting of shares held in Employee Benefit Trust - - - 4.0 (4.5) (0.5) - (0.5)
Distribution to non-controlling interest 20b - - - - - - (1.1) (1.1)
Share based awards - - - - 3.5 3.5 - 3.5
Dividends 7 0.5 9.2 - - (100.2) (90.5) - (90.5)
At 31 March 2024 203.7 404.7 9.6 2,332.4 991.1 3,941.5 28.0 3,969.5
Group cash flow statement
For the year ended 31 March
Note 2025 2024
£m
£m
Cash flows from operating activities
Profit before tax 352.8 120.0
Adjustments for non cash items:
(Profit)/loss on revaluation of investment properties (106.0) 7.5
Profit on revaluation of investments (0.9) -
Loss on sale of investment properties 13.0 7.4
Share of post tax (profit)/loss of joint ventures (6.1) 0.1
Movement in lease incentives (47.9) (17.4)
Share based payment 5.3 3.5
Net gain on business combinations - (49.4)
Net finance costs 111.9 41.3
Cash flows from operations before changes in working capital 322.1 113.0
Change in trade and other receivables 7.9 (4.1)
Change in trade and other payables (12.5) 14.8
Cash flows from operations 317.5 123.7
Tax paid (0.6) (0.6)
Cash flows from operating activities 316.9 123.1
Investing activities
Net cash acquired from the acquisition of CTPT - 26.0
Net cash acquired from the acquisition of LXi - 47.3
Purchase of investment and development properties (296.1) (57.4)
Capital expenditure on investment properties (32.9) (5.8)
Purchase of investments and tangible assets (19.3) (0.5)
Lease incentives paid (8.2) (1.7)
Sale of investment properties 322.7 198.3
Investment in joint ventures - (10.5)
Distributions from joint ventures 3.4 2.7
Interest received 22.5 7.7
Net cash (used in)/from investing activities (7.9) 206.1
Financing activities
Dividends paid (181.4) (90.5)
Distribution to non-controlling interest 20b (1.0) (1.1)
Purchase of shares held in Employee Benefit Trust (18.2) (2.5)
Vesting of shares held in Employee Benefit Trust (0.5) (0.5)
New borrowings and amounts drawn down 19 406.8 669.2
Repayment of loan facilities 19 (423.5) (769.2)
Purchase of derivative financial instruments (2.2) -
Financial arrangement fees and break costs (10.9) (10.6)
Lease liabilities and other financial liabilities paid (10.1) (1.1)
Interest paid (98.7) (43.6)
Net cash used in financing activities (339.7) (249.9)
Net (decrease)/increase in cash and cash equivalents 19 (30.7) 79.3
Opening cash and cash equivalents 111.9 32.6
Closing cash and cash equivalents 81.2 111.9
Notes forming part of the Group financial statements
1 Significant accounting policies
The financial information set out herein does not constitute the Company's
statutory accounts for the years ended 31 March 2025 or 31 March 2024 but is
derived from those accounts. Statutory accounts for the years ended 31 March
2025 and 31 March 2024 have been reported on by the independent auditor. The
independent auditor's reports on the Annual Report and financial statements
for 2025 and 2024 were unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006. Statutory accounts for the year ended 31 March 2024 have
been filed with the Registrar of Companies. The statutory accounts for the
year ended 31 March 2025 will be delivered to the Registrar following the
Company's Annual General Meeting. The financial information set out in this
results announcement has been prepared using the recognition and measurement
principles of International Accounting Standards, International Financial
Reporting Standards and Interpretations issued by the IASB. The accounting
policies adopted in this results announcement are consistent with those used
in preparing the financial statements for the year ended 31 March 2025, which
are the same as those used in the financial statements for the year ended 31
March 2024.
a) General information
LondonMetric Property Plc is a company incorporated in the United Kingdom
under the Companies Act and is registered in England. The address of the
registered office is One Curzon Street, London, W1J 6HB. The principal
activities of the Company and its subsidiaries ('the Group') and the nature of
the Group's operations are set out in the Property review.
b) Statement of compliance
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards in conformity with the
requirements of the Companies Act 2006 and with International Financial
Reporting Standards ('IFRS') as issued by the IASB.
c) Going concern
The Board has continued to pay particular attention to the appropriateness of
the going concern basis in preparing these financial statements and its
detailed assessment is set out above. Having performed a detailed assessment,
the Directors consider the going concern assumption for the Group to be
appropriate.
The assessment considers the principal risks and uncertainties facing the
Group's activities, future development and performance. A key consideration is
the Group's financial position, cash flows and liquidity, including its access
to debt facilities and headroom under financial loan covenants, which is
discussed in detail in the Financial review.
d) Basis of preparation
The financial statements are prepared on a going concern basis, as explained
above.
The functional currency of the Company and the presentational currency of the
Group is sterling. The functional currency of all subsidiaries except for the
Group's German operations is sterling. Euro denominated results of the German
operations have been converted to sterling initially at the applicable
exchange rate ruling on the transaction date.
Foreign exchange gains and losses from settling transactions are reflected in
the income statement, and from retranslating assets and liabilities held in
foreign currencies in other comprehensive income. Assets and liabilities are
retranslated at the period end rate and income and expenses are retranslated
at the average rate.
The principal exchange rate used to translate foreign currency denominated
assets and liabilities at the period end and the net income for the period was
£1= €1.19.
The financial statements are prepared on the historical cost basis except that
investment and development properties and derivative financial instruments are
stated at fair value. The accounting policies have been applied consistently
in all material respects except for the adoption of new and revised standards
as noted below.
i) Significant accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. The estimates and associated assumptions are
based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period. If the revision
affects both current and future periods, the change is recognised over those
periods. The accounting policies subject to significant judgements and
estimates are considered by the Audit Committee and are as follows:
Significant areas of estimation uncertainty
Property valuations
The valuation of the property portfolio is a critical part of the Group's
performance. The Group carries the property portfolio at fair value in the
balance sheet and engages professionally qualified external valuers to
undertake six monthly valuations.
The determination of the fair value of each property requires, to the extent
applicable, the use of estimates and assumptions in relation to factors such
as estimated rental value and current market rental yields. In addition, to
the extent possible, the valuers make reference to market evidence of
transaction prices for similar properties.
The fair value of a development property is determined by using the 'residual
method', which deducts all estimated costs necessary to complete the
development, together with an allowance for development risk, profit and
purchasers' costs, from the fair valuation of the completed property.
Note 9(c) to the financial statements includes further information on the
valuation techniques, sensitivities and inputs used to determine the fair
value of the property portfolio.
Significant areas of judgement
Significant transactions
Some property transactions are large or complex and require management to make
judgements when considering the appropriate accounting treatment. These
include acquisitions of property through corporate vehicles, which could
represent either asset acquisitions or business combinations under IFRS 3.
Other complexities include conditionality inherent in transactions and other
unusual terms and conditions. There is a risk that an inappropriate approach
could lead to a misstatement in the financial statements.
ii) Adoption of new and revised standards
Standards and interpretations effective in the current period
During the year, the following new and revised standards and interpretations
have been adopted and have not had
a material impact on the amounts reported in these financial statements.
Name Description
Amendments to IFRS 16 Lease liability in a sale and leaseback
Amendments to IAS 7 and IFRS 7 Supplier finance arrangements
Amendments to IAS 1 Non-current liabilities with covenants and classification of liabilities
Amendments to IFRS S1 General requirements for disclosure of sustainability related financial
information
Amendments to IFRS S2 Climate-related disclosures
iii) Standards and interpretations in issue not yet adopted
The IASB and the International Financial Reporting Interpretations Committee
have issued the following standards and interpretations, as at the date of
this report, that are mandatory for later accounting periods and which have
not been adopted early. The Directors do not expect that the adoption of the
standards listed below will have a material impact on the financial statements
of the Group in future periods, except in respect of IFRS 18 as noted below.
Name Description
Amendments to IAS 21 Lack of exchangeability
IFRS 18 Presentation and disclosures in financial statements
IFRS 19 Subsidiaries without public accountability: disclosures
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1
unchanged and complementing them with new requirements. In addition, some IAS
1 paragraphs have been moved to IAS 8 and IFRS 7. Furthermore, the IASB has
made minor amendments to IAS 7 and IAS 33 Earnings per Share.
IFRS 18 introduces new requirements to:
· present specified categories and defined subtotals in the statement of
profit or loss;
· provide disclosures on management-defined performance measures in the
notes to the financial statements; and
· improve aggregation and disaggregation.
An entity is required to apply IFRS 18 for annual reporting periods beginning
on or after 1 January 2027, with earlier application permitted. The amendments
to IAS 7 and IAS 33, as well as the revised IAS 8 and IFRS 7, become effective
when an entity applies IFRS 18. IFRS 18 requires retrospective application
with specific transition provisions.
The Directors of the Company anticipate that the application of these
amendments may have an impact on the Group's consolidated financial statements
in future periods.
iv) Consideration of climate change
In preparing the consolidated financial statements, the Directors have
considered the impact of climate change, particularly in the context of risk
identified in the TCFD disclosures. There has been no material impact
identified on the financial reporting judgments and estimates. In particular,
the Directors have considered the impact of climate change in respect of the
following areas:
· Going Concern and the Viability Statement;
· Impact on the carrying value and useful economic lives of property and
other tangible assets; and
· Preparation of budgets and cash flow forecasts.
Given no material risks have been identified as per the assessment outlined in
the TCFD report, no climate change related impact was identified. The
Directors are, however, aware of the changing nature of risks associated with
climate change and will regularly assess these risks against judgements and
estimates made in the preparation of the Group's financial statements.
e) Basis of consolidation
i) Subsidiaries
The consolidated financial statements include the accounts of the Company and
its subsidiaries. Subsidiaries are those entities controlled by the Group.
Control is assumed when the Group:
· Has the power over the investee;
· Is exposed, or has rights, to variable returns from its involvement with
the investee; and
· Has the ability to use its power to affect its returns.
In the consolidated balance sheet, the acquiree's identifiable assets,
liabilities and contingent liabilities are initially recognised at their fair
value at the acquisition date. The results of subsidiaries are included in the
consolidated financial statements from the date that control commences until
the date that control ceases.
ii) Joint ventures
Joint arrangements are those entities over whose activities the Group has
joint control. The Group's joint venture is a type of joint arrangement in
which the partners have rights to the net assets. Joint ventures are accounted
for under the equity method, whereby the consolidated balance sheet
incorporates the Group's share of the net assets of its joint ventures and the
consolidated income statement incorporates the Group's share of joint venture
profits after tax. The Group's joint ventures adopt the accounting policies of
the Group for inclusion in the Group financial statements. Joint venture
management fees are recognised as income in the accounting period in which the
service is rendered.
iii) Non-controlling interest
The Group's non-controlling interest ('NCI') represents a 31% shareholding in
LMP Retail Warehouse JV Holdings Limited, which owns a portfolio of retail
assets. The Group consolidates the results and net assets of its subsidiary in
these financial statements and reflects the non-controlling interests' share
within equity in the consolidated balance sheet and allocates to the
non-controlling interest their share of profit or loss for the period within
the consolidated income statement.
iv) Alternative performance measures
Our portfolio is a combination of properties that are wholly owned by the
Group and part owned through joint venture arrangements or where a third party
holds a non-controlling interest. Management reviews the performance of the
Group's proportionate share of assets and returns, and considers the
presentation of information on this basis helpful to stakeholders as it
aggregates the results of all the Group's property interests which under IFRS
are required to be presented across a number of line items in the financial
statements. The Group uses alternative performance measures based on the
European Public Real Estate Association ('EPRA') Best Practice Recommendations
('BPR') to supplement IFRS, in line with best practice in our sector, as they
highlight the underlying performance of the Group's property rental business
and enhance the transparency and comparability of financial information across
public real estate companies. These measures are alternative performance
measures as they are not defined under IFRS.
The supplementary notes include other EPRA metrics and a proportionally
consolidated EPRA income statement and balance sheet. Further details,
definitions and reconciliations between EPRA measures and the IFRS financial
statements can be found in note 8 to the financial statements, Supplementary
notes i to vii and xviii, and in the Glossary.
v) Business combinations
Where properties are acquired through corporate acquisitions and there are no
significant assets or liabilities other than property, the acquisition is
treated as an asset acquisition. Where a business acquisition reflects an
integrated set of activities and assets capable of being conducted and managed
for the purpose of providing goods or services to customers, the acquisition
accounting method is used. The cost of the acquisition is measured at the
aggregate of the fair values of assets and liabilities acquired and equity
instruments issued by the Group in exchange for control of the acquiree.
Acquisition costs are recognised in the income statement as incurred.
Any excess of the purchase price of business combinations over the fair value
of the assets, liabilities and contingent liabilities acquired is recognised
as goodwill. This is recognised as an asset and is reviewed for impairment at
least annually. Any impairment is recognised immediately in the income
statement. Any deficit of the purchase price of business combinations over the
fair value of the assets, liabilities and contingent liabilities acquired is
recognised as a gain on acquisition in the income statement.
f) Property portfolio
i) Investment properties
Investment properties are properties owned or leased by the Group which are
held for long term rental income and for capital appreciation. Investment
property includes property that is being constructed, developed or redeveloped
for future use as an investment property. Investment property is initially
recognised at cost, including related transaction costs. It is subsequently
carried at each published balance sheet date at fair value on an open market
basis as determined by professionally qualified independent external valuers.
Changes in fair value are included in the income statement.
Where a property held for investment is appropriated to development property,
it is transferred at fair value. A property ceases to be treated as a
development property on practical completion. In accordance with IAS 40
Investment Properties, no depreciation is provided in respect of investment
properties.
Investment property is recognised as an asset when:
· It is probable that the future economic benefits that are associated with
the investment property will flow to the Group; and
· The cost of the investment property can be measured reliably.
All costs directly associated with the purchase and construction of a
development property are capitalised. Capital expenditure that is directly
attributable to the redevelopment or refurbishment of investment property, up
to the point of it being completed for its intended use, is included in the
carrying value of the property.
ii) Assets held for sale
An asset is classified as held for sale if its carrying amount is expected to
be recovered through a sale transaction rather than through continuing use.
This condition is regarded as met only when the sale is highly probable, the
asset is available for sale in its present condition and management are
committed to the sale and expect it to complete within one year from the date
of classification. Assets classified as held for sale are measured at the
lower of carrying amount and the fair value less costs to sell.
iii) Tenant leases
Leases - the Group as a lessor
Rent receivable is recognised in the income statement on a straight line basis
over the term of the lease. When the Group is an intermediate lessor, it
accounts for the head lease and the sub-lease as two separate contracts. All
leases where the Group is a lessor are classified as operating leases.
Leases - the Group as lessee
Where the Group is a lessee, a right of use asset and lease liability are
recognised at the outset of the lease. The lease liability is initially
measured at the present value of the lease payments based on the Group's
expectations of the likelihood of the lease term. The lease liability is
subsequently adjusted to reflect an imputed finance charge, payments made to
the lessor and any lease modifications.
The right of use asset is initially measured at cost, which comprises the
amount of the lease liability, direct costs incurred, less any lease
incentives received by the Group. The Group has two categories of right of use
assets: those in respect of head leases related to a number of leasehold
properties and an occupational lease for its head office. All right of use
assets are classified as investment properties and added to the carrying value
of leasehold investment properties. The right of use asset in respect of the
Group's head office lease is subsequently depreciated over the length of the
lease.
iv) Net rental income
Rental income from investment property leased out under an operating lease is
recognised in the profit or loss on a straight line basis over the lease term.
Contingent rents, such as turnover rents, rent reviews and indexation, are
recorded as income in the periods in which they are earned. The uplift from
rent reviews is recognised when such reviews have been agreed with tenants.
Surrender premiums receivable are recognised on completion of the surrender.
Where a rent free period is included in a lease, the rental income foregone is
allocated evenly over the period from the date of lease commencement to the
earlier of the first break option or the lease termination date.
Lease incentives and costs associated with entering into tenant leases are
amortised over the period from the date of lease commencement to the earlier
of the first break option or the lease termination date. For leases which
contain fixed or minimum uplifts, the rental income arising from such uplifts
is recognised on a straight line basis to the earlier of the first break
option or the lease termination date.
Property operating expenses are expensed as incurred and any property
operating expenditure not recovered from tenants through service charges is
charged to the income statement.
v) Profit and loss on sale of investment properties
Profits and losses on sales of investment properties are recognised at the
date of legal completion rather than exchange of contracts and calculated by
reference to the carrying value at the previous year end valuation date,
adjusted for subsequent capital expenditure.
g) Financial assets and financial liabilities
Financial assets and financial liabilities are recognised in the balance sheet
when the Group becomes a party to the contractual terms of the instrument.
Financial instruments under IFRS 9
i) Trade and other receivables
Trade receivables are initially recognised at their transaction price and
subsequently measured at amortised cost as the Group's business model is to
collect the contractual cash flows due from tenants. An impairment provision
is created based on lifetime expected credit losses, which reflect the Group's
historical credit loss experience and an assessment of current and forecast
economic conditions at the reporting date.
ii) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks and other short term highly liquid investments with original maturities
of three months or less, measured at amortised cost. When the Group is the
principal in an underlying transaction and has the right to the cash inflows
and/or the obligation to settle a liability and directs another entity, acting
as its agent, to receive and make payments on its behalf, the Group accounts
for the transaction in the cash flow statement by reporting the underlying
cash flows as operating, investing or financing according to their nature.
iii) Trade and other payables
Trade payables and other payables are initially measured at fair value, net of
transaction costs and subsequently measured at amortised cost using the
effective interest method.
iv) Borrowings
Borrowings are recognised initially at fair value less attributable
transaction costs. Subsequently, borrowings are measured at amortised cost
with any difference between the proceeds and redemption value being recognised
in the income statement over the term of the borrowing using the effective
interest method.
v) Derivative financial instruments
The Group uses derivative financial instruments to hedge its exposure to
interest rate risks. Derivative financial instruments are recognised initially
at fair value and subsequently remeasured at each period end, with changes in
fair value being recognised in the income statement. The Group does not apply
hedge accounting under IFRS 9.
vi) Income strip
As part of the merger with LXi, the Group acquired a financial liability
associated with the sale of a 65 year income strip of Alton Towers and Thorpe
Park in 2022. The structure comprised selling the freehold of the properties
to a UK institutional investor, with 999 year leases granted back to LXi
pursuant to which was the obligation to pay rental income equivalent to 30% of
the annual rental income received from the tenant. LXi has the ability to
acquire the freehold back in 2087 for £1. The financial obligations in
relation to this transaction were fair valued on acquisition using the
prevailing market interest rate. Thereafter, the liability is measured at
amortised cost.
h) Finance costs and income
Net finance costs include interest payable on borrowings, net of interest
capitalised and finance costs amortised.
Interest is capitalised if it is directly attributable to the acquisition,
construction or redevelopment of development properties from the start of the
development work until practical completion of the property. Capitalised
interest is calculated with reference to the actual interest rate payable on
specific borrowings for the purposes of development or, for that part of the
borrowings financed out of general funds, with reference to the Group's cost
of borrowings.
Finance income includes interest receivable on funds invested at the effective
rate and notional interest receivable on forward funded developments at the
contractual rate. Finance costs and income are presented in the cash flow
statement within financing and investing activities, respectively.
i) Tax
Tax is included in profit or loss except to the extent that it relates to
items recognised directly in equity, in which case the related tax is
recognised in equity. Current tax is the expected tax payable on the taxable
income for the year, using tax rates enacted or substantively enacted at the
balance sheet date, together with any adjustment in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their tax bases. The amount
of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the balance sheet date. A deferred tax
asset is recognised only to the extent that it is probable that future taxable
profits will be available against which the asset can be utilised.
As the Group is a UK REIT there is no provision for deferred tax arising on
the revaluation of UK properties or other temporary differences. The Group
must comply with the UK REIT regulation to benefit from the favourable tax
regime.
As a result of the merger with LXi, the Group acquired one German property and
is now subject to German corporate income tax on those operations. A deferred
tax liability was recognised on acquisition and has been restated for the
revaluation and currency movement in the period.
j) Share based payments
The fair value of equity-settled share based payments to employees is
determined at the date of grant and is expensed on a straight line basis over
the vesting period based on the Group's estimate of shares that will
eventually vest.
k) Shares held in Trust
The cost of the Company's shares held by the Employee Benefit Trust is
deducted from equity in the Group balance sheet. Any shares held by the Trust
are not included in the calculation of earnings or net tangible assets per
share.
l) Dividends
Dividends on equity shares are recognised when they become legally payable. In
the case of interim dividends, this is when paid. In the case of final
dividends, this is when approved by the shareholders at the Annual General
Meeting.
2 Segmental information
As at 31 March
Property value 2025 2024
£m
£m
Logistics 2,837.9 2,563.1
Long income 3,159.7 3,199.4
Other(¹) 125.9 210.2
6,123.5 5,972.7
Income strip gross up 231.0 221.5
Head lease assets 40.9 47.6
6,395.4 6,241.8
1 Includes trading property of £1.1 million (2024: £1.1 million) and
assets held for sale of £10.4 million (2024: £8.5 million)
For the year to 31 March
Gross rental income 2025 2024
£m
£m
Logistics 143.3 115.2
Long income 241.4 53.6
Other 10.8 8.2
395.5 177.0
For the year to 31 March
Net rental income 2025 2024
£m
£m
Logistics 141.3 114.1
Long income 239.1 53.6
Other 10.2 7.6
390.6 175.3
An operating segment is a distinguishable component of the Group that engages
in business activities, earns revenue and incurs expenses, whose results are
reviewed by the Group's Chief Operating Decision Makers ('CODMs') and for
which discrete financial information is available. Gross rental income
represents the Group's revenues from its tenants and net rental income is the
principal profit measure used to determine the performance of each sector.
Total assets and liabilities are not monitored by segment. However, property
assets are reviewed on an ongoing basis. The Group operates predominantly in
the United Kingdom and no geographical split is provided in information
reported to the Board.
Included within the logistics operating segment are the sub-categories of
urban logistics, regional distribution and mega distribution and within the
long income operating segment are the sub-categories of convenience,
entertainment and leisure and healthcare. However the sub-category results are
not separately reviewed by the CODMs as they are not considered separate
operating segments. Instead the CODMs review the logistics and long income
sectors as a whole as their own operating segments.
The income strip gross up and head lease assets are not considered separate
operating segments and are included in this note for reconciliation purposes
only. This year, we have reflected development assets within each operating
segment instead of as a separate category, for both the current and prior
year.
3 Revenue
For the year to 31 March 2025 2024
£m
£m
Gross rental income 395.5 177.0
Property management fees and other income 1.2 1.1
Revenue 396.7 178.1
For the year to 31 March 2025 2024
£m
£m
Gross rental income 395.5 177.0
Cost of sales - property operating expenses (4.9) (1.7)
Net rental income 390.6 175.3
Two tenants each individually contributed more than 10% of gross rental income
in the current year. The net contracted rental income of the Group's top ten
occupiers, which is reflected net of income strip and head lease payments, is
shown in Supplementary note xvii.
4 Administrative costs
a) Total administrative costs
For the year to 31 March 2025 2024
£m
£m
Staff costs 20.7 14.9
Auditor's remuneration 0.7 0.7
Depreciation 0.6 0.7
Other administrative costs 5.1 3.4
27.1 19.7
b) Staff costs
For the year to 31 March 2025 2024
£m
£m
Employee costs, including those of Directors, comprise the following:
Wages and salaries 15.7 11.7
Less staff costs capitalised in respect of development projects (1.9) (1.5)
13.8 10.2
Social security costs 1.2 0.9
Pension costs 0.4 0.3
Share based payment 5.3 3.5
20.7 14.9
The long term share incentive plan ('LTIP') allows Executive Directors and
eligible employees to receive an award of shares, held in trust, dependent on
performance conditions based on the earnings per share, total shareholder
return and total accounting return of the Group over a three year vesting
period. The Group expenses the estimated number of shares likely to vest over
the three year period based on the market price at the date of grant. In the
current year the charge was £5.3 million (2024: £3.5 million). The cost of
acquiring the shares expected to vest under the LTIP of £18.2 million has
been charged to reserves this year (2024: £2.5 million).
Directors' emoluments are reflected in the table below. Directors received a
salary supplement in lieu of pension contributions for the current and
previous year. Details of the Directors' remuneration awards under the LTIP
are given in the Remuneration Committee report.
For the year to 31 March 2025 2024
£m
£m
Remuneration for management services 4.0 3.3
Entitlement to pension scheme contributions 0.1 0.1
4.1 3.4
The emoluments and benefits of the key management personnel of the Company,
which comprise the Directors and certain members of the Senior Leadership
Team, are set out in aggregate in the table below.
For the year to 31 March 2025 2024
£m
£m
Short term employee benefits 11.6 9.5
Share based payments 4.1 3.1
15.7 12.6
No disclosures have been made in accordance with IFRS 2 for share based
payments to employees other than those in the Remuneration Committee report on
the basis of materiality.
c) Staff numbers
The average number of employees including Executive Directors during the year
was:
2025 2024
Number
Number
Property and administration 47 35
d) Auditor's remuneration
For the year to 31 March 2025 2024
£000
£000
Audit services:
Audit of the Group and Company financial statements 572.0 580.0
Audit of the Company's subsidiaries 48.0 46.0
Other fees:
Audit related assurance services 95.0 50.0
Total fees for audit and other services 715.0 676.0
In addition to the above audit fees, £24,700 (2024: £23,500) was due to the
Group's auditor in respect of the audit of its joint venture.
5 Finance income and costs
a) Finance income
For the year to 31 March 2025 2024
£m
£m
Interest received on bank deposits 1.9 1.0
Interest receivable from interest rate derivatives 20.6 6.7
Interest receivable from forward funded developments 1.2 0.8
Total finance income 23.7 8.5
b) Finance costs
For the year to 31 March 2025 2024
£m
£m
Interest payable on bank loans 98.5 41.5
Unwinding of discount on fixed rate debt acquired 4.6 0.7
Amortisation of loan issue costs 4.3 2.0
Interest on lease and other liabilities 15.2 1.0
Commitment fees and other finance costs 5.3 2.9
Total borrowing costs 127.9 48.1
Less amounts capitalised on developments (3.4) (2.2)
Net borrowing costs 124.5 45.9
Fair value loss on derivative financial instruments 11.1 3.9
Total finance costs 135.6 49.8
Net finance costs deducted from EPRA earnings as disclosed in Supplementary
note ii exclude the fair value loss on derivatives of £11.1 million (2024:
£3.9 million) and the impact of the inflation volatility relating to the
income strip in the current year of £3.7 million.
6 Taxation
For the year to 31 March 2025 2024
£m
£m
Current tax
UK corporation tax 0.9 (0.1)
German corporate income tax 0.6 0.1
Deferred tax
Deferred tax on German asset 0.7 0.1
Total tax charge 2.2 0.1
As the Group is a UK REIT, any profits and gains arising from its property
rental business are exempt from UK corporation tax and there is no provision
for deferred tax arising on the revaluation of properties.
The UK corporation tax charge relates to tax arising on income attributable to
the Group's non-controlling interest and other residual tax. Following the
merger with LXi, the Group has one German property and is subject to German
corporate income tax at an effective rate of 15.825%, which resulted in a tax
charge of £0.6 million in the year (2024: £0.1 million). An associated
deferred tax liability was recognised on acquisition and the revaluation
movement of £0.7 million has been reflected in the year along with a
favourable currency movement of £0.2 million, resulting in a deferred tax
liability of £10.1 million at the year end (2024: £9.6 million).
The reconciliation of the total tax charge in the year to the tax assessed on
profits at the standard rate of corporation tax in the UK is set out below.
For the year to 31 March 2025 2024
£m
£m
Profit before tax 352.8 120.0
Tax charge at the standard rate of corporation tax in the UK of 25% (2024: 88.2 30.0
25%)
Effects of: (20.7) (0.2)
Items not taxable
Share of post tax profits of joint ventures (1.5) -
REIT exemption on income and gains (63.5) (29.4)
Other (0.3) (0.3)
Tax charge on profit 2.2 0.1
7 Dividends
For the year to 31 March 2025 2024
£m
£m
Ordinary dividends paid
2023 Third quarterly interim dividend 2.3p per share - 22.5
2023 Fourth quarterly interim dividend 2.6p per share - 25.5
2024 First quarterly interim dividend 2.4p per share - 26.1
2024 Second quarterly interim dividend 2.4p per share - 26.1
2024 Third quarterly interim dividend 2.4p per share 26.2 -
2024 Fourth quarterly interim dividend 3.0p per share 61.1 -
2025 First quarterly interim dividend 2.85p per share 58.1 -
2025 Second quarterly interim dividend 2.85p per share 58.3 -
203.7 100.2
Ordinary dividend payable
2025 Third quarterly interim dividend 3.0p per share 61.2
2025 Fourth quarterly interim dividend 3.3p per share 67.5
The Company paid its third quarterly interim dividend in respect of the
financial year to 31 March 2025 of 3.0p per share, wholly as a Property Income
Distribution ('PID'), on 11 April 2025 to ordinary shareholders on the
register at the close of business on 7 March 2025. The fourth quarterly
interim dividend for 2025 of 3.3p per share, of which 1.5p is payable as a
PID, will be payable on 9 July 2025 to shareholders on the register at the
close of business on 30 May 2025. A scrip dividend alternative will be offered
to shareholders as it was for the first three quarterly dividend payments.
Neither dividend has been included as a liability in these accounts. Both
dividends will be recognised as an appropriation of retained earnings in the
year to 31 March 2026. During the year, the Company issued 11.6 million
ordinary shares under the terms of the Scrip Dividend Scheme, which reduced
the cash dividend payment by £22.3 million to £181.4 million.
8 Earnings and net assets per share
Adjusted earnings and net assets per share are calculated in accordance with
the Best Practice Recommendations ('BPR') of the European Public Real Estate
Association ('EPRA'). The EPRA earnings measure highlights the underlying
performance of the property rental business.
The basic earnings per share calculation uses the weighted average number of
ordinary shares during the year and excludes the average number of shares held
by the Employee Benefit Trust for the year. The IFRS basic net asset value per
share calculation uses the number of shares in issue at the year end and
excludes the actual number of shares held by the Employee Benefit Trust at the
year end. The fully diluted calculations assume that new shares are issued in
connection with the expected vesting of the Group's long term incentive plan.
Further EPRA performance measures are reflected in the Supplementary notes.
a) EPRA earnings
EPRA earnings for the Group and its share of joint ventures is summarised in
the Financial review and on a proportionally consolidated basis in
Supplementary note ii. The reconciliation of EPRA earnings to IFRS reported
profit is set out in the table below and in supplementary note ii on a
proportionally consolidated basis.
For the year to 31 March 2025 2024
£m
£m
EPRA earnings 268.0 121.6
Revaluation of property and investments 106.9 (7.5)
Fair value of derivatives (11.1) (3.9)
Loss on disposal (13.0) (7.4)
Impact of inflation volatility relating to the income strip (3.7) -
Gain on acquisition - 49.4
Acquisition costs - (29.8)
Deferred tax (0.7) (0.1)
JV and NCI share of revaluation of property 1.5 (3.6)
IFRS reported profit 347.9 118.7
b) Earnings per ordinary share attributable to equity shareholders
For the year to 31 March 2025 2024
£m
£m
Basic and diluted earnings 347.9 118.7
EPRA adjustments above (79.9) 2.9
EPRA earnings 268.0 121.6
For the year to 31 March 2025 2024
Number of
Number of
shares
shares
(millions)
(millions)
Weighted ordinary share capital 2,044.2 1,119.5
Shares held in the Employee Benefit Trust (4.5) (2.5)
Weighted average number of ordinary shares - basic 2,039.7 1,117.0
Employee share schemes 6.2 4.7
Weighted average number of ordinary shares - fully diluted 2,045.9 1,121.7
Earnings per share
Basic 17.1p 10.6p
Diluted 17.0p 10.6p
EPRA earnings per share
Basic 13.1p 10.9p
Diluted 13.1p 10.8p
c) Net assets per share attributable to equity shareholders
The EPRA best practice recommendations for financial disclosures by public
real estate companies include three measures of net asset value: EPRA net
tangible assets ('NTA'), EPRA net reinstatement value ('NRV') and EPRA net
disposal value ('NDV').
EPRA NTA is considered to be the most relevant measure for the Group. All
three measures are calculated on a diluted basis, which assumes that new
shares are issued in connection with the expected vesting of the Group's long
term incentive plan.
As at 31 March 2025 EPRA net EPRA net EPRA net reinstatement value
tangible assets £m
disposal value
£m
£m
Equity shareholders' funds 4,094.2 4,094.2 4,094.2
Deferred tax on fair value gains of investment property 0.5 - 10.1
Fair value of Group derivatives (23.7) - (23.7)
Mark to market of fixed rate debt - 87.6 -
Purchasers' costs¹ - - 418.6
EPRA net asset value 4,071.0 4,181.8 4,499.2
1 Estimated from the portfolio's external valuation which is stated net of
purchasers' costs of 6.8%
As at 31 March 2024 EPRA net EPRA net EPRA net reinstatement value
tangible assets
disposal value
£m
£m
£m
Equity shareholders' funds 3,941.5 3,941.5 3,941.5
Deferred tax on fair value gains of investment property 9.6 - 9.6
Fair value of Group derivatives (32.6) - (32.6)
Gain on business combinations as a result of deferred tax (9.6) - (9.6)
Mark to market of fixed rate debt - 86.0 -
Purchasers' costs - - 408.2
EPRA net asset value 3,908.9 4,027.5 4,317.1
As at 31 March 2025 2024
Number Number
of shares
of shares
(millions) (millions)
Ordinary share capital 2,048.1 2,036.5
Shares held in Employee Benefit Trust (10.5) (2.6)
Number of ordinary shares - basic 2,037.6 2,033.9
Employee share schemes 6.4 4.8
Number of ordinary shares - fully diluted 2,044.0 2,038.7
IFRS net asset value per share 202.4p 195.2p
EPRA net tangible assets per share 199.2p 191.7p
EPRA net disposal value per share 204.6p 197.5p
EPRA net reinstatement value per share 220.1p 211.8p
9 Investment properties
a) Investment properties
As at 31 March Completed Under development 2025 Completed Under 2024
£m
£m
Total
£m
development
£m
£m Total
£m
Opening balance 6,146.4 38.2 6,184.6 2,905.2 32.6 2,937.8
Acquisitions 284.7 10.8 295.5 3,379.4 39.8 3,419.2
Capital expenditure 24.7 11.9 36.6 5.9 4.1 10.0
Disposals (293.8) (21.4) (315.2) (183.8) - (183.8)
Property transfers¹ 17.0 (27.4) (10.4) 28.7 (37.2) (8.5)
Revaluation movement 97.8 3.2 101.0 (6.4) (1.1) (7.5)
Foreign currency (2.9) - (2.9) 0.8 - 0.8
Movement in income strip gross up 9.5 - 9.5 - - -
Movement in tenant incentives and rent free uplifts 44.2 0.1 44.3 16.6 - 16.6
Property portfolio 6,327.6 15.4 6,343.0 6,146.4 38.2 6,184.6
Head lease assets 40.9 - 40.9 47.6 - 47.6
6,368.5 15.4 6,383.9 6,194.0 38.2 6,232.2
1 Properties totalling £10.4 million (2024: £8.5 million) have been
transferred to current assets and separately disclosed as assets held for sale
as reflected in note 9b
Investment properties are stated at fair value as at 31 March 2025 based on
external valuations performed by professionally qualified and independent
valuers CBRE Limited ('CBRE'), Savills (UK) Limited ('Savills') and Knight
Frank LLP ('Knight Frank'). The valuations have been prepared in accordance
with the RICS Valuation - Global Standards 2025 on the basis of fair value as
set out in note 1. There has been no change in the valuation technique in the
year. The total fees earned by each valuer from the Company represent less
than 5% of their total UK revenues. CBRE, Savills and Knight Frank have
continuously been the signatory of valuations for the Company since October
2007, September 2010 and March 2024 respectively.
A reconciliation of the total portfolio valuation to the valuers' reports is
provided below:
As at 31 March Note 2025 2024
£m
£m
Property portfolio valuation 9a 6,343.0 6,184.6
Assets held for sale 9b 10.4 8.5
Less income strip gross up (231.0) (221.5)
Portfolio valuation from external valuation reports 6,122.4 5,971.6
As part of the LXi merger, the Group acquired a financial liability associated
with the sale of a 65 year income strip of Alton Towers and Thorpe Park in
2022 as set out in note 14a(ii). The income strip balance included within
investment properties represents the gross up of the asset values as the
external valuation is based on net cash flows after deducting income strip
payments.
The movement in the year of £9.5 million comprises an adjustment of £4.5
million to the liability and corresponding asset to incorporate an inflation
assumption into future cash flows and a gross up of £5.0 million which is
included in the income statement within the movement in revaluation of
investment properties.
Completed properties include buildings that are occupied or are available for
occupation. Properties under development include land under development and
investment property under construction. Internal staff costs of the
development team of £1.9 million (2024: £1.5 million) have been capitalised
in the year, being directly attributable to the development projects in
progress.
Long term leasehold values included within investment properties amount to
£1,169.8 million (2024: £1,144.5 million). Over half relates to theme park
assets which are let on 999 year leases. All other properties are freehold.
The historical cost of all of the Group's investment properties at 31 March
2025 was £5,484.0 million (2024: £5,469.3 million).
Included within the investment property valuation is £156.9 million (2024:
£112.6 million) in respect of unamortised lease incentives and rent free
periods. The movement in the year reflects lease incentives paid of £8.2
million (2024: £1.7 million) and rent free and amortisation movements of
£47.9 million (2024: £17.4 million), offset by incentives written off on
disposal of £11.8 million (2024: £2.5 million). Capital commitments have
been entered into amounting to £107.2 million (2024: £27.5 million) which
have not been provided for in the financial statements.
b) Assets held for sale
As at 31 March 2025 2024
£m
£m
Opening balance 8.5 19.8
Disposals (8.5) (19.8)
Property transfers 10.4 8.5
Closing balance 10.4 8.5
The valuation of freehold and leasehold property held for sale at 31 March
2025 was £10.4 million (2024: £8.5 million), representing logistics and long
income assets which are expected to complete within the next six months.
c) Valuation technique and quantitative information
Segmental split Under development Trading Fair value Valuation ERV Net initial yield Reversionary yield
£m
assets
2025¹
technique
(note 2)
£m
£m
£m
Asset type Weighted Range Weighted Range Weighted Range
average
(£ per sq ft)
average
%
average
%
(£ per sq ft)
%
%
Logistics 2,837.9 (6.2) - 2,831.7 Yield capitalisation 9.82 2.50-37.10 4.7 2.0-12.4 5.7 4.0-11.6
Long income 3,159.7 (9.2) - 3,150.5 Yield capitalisation 20.97 3.50-191.60 5.5 1.3-13.4 4.2 3.0-30.1
Other 125.9 - (1.1) 124.8 Yield capitalisation 16.84 5.70-60.80 4.8 4.1-11.5 7.0 4.6-11.5
Development - 15.4 - 15.4 Residual 26.40 22.50-55.60 5.7 5.5-5.7 5.8 5.7-6.7
ERV Net initial yield Reversionary yield
Asset type Segmental split (note 2) Under development Trading Fair value Valuation Weighted Range Weighted Range Weighted Range
technique
average
(£ per sq ft)
average
%
average
%
£m £m assets 2024¹
(£ per sq ft)
%
%
£m £m
Logistics 2,563.1 (6.0) - 2,557.1 Yield capitalisation 9.54 2.50-35.70 4.6 2.0-11.1 5.7 4.0-11.9
Long income 3,199.4 (16.9) - 3,182.5 Yield capitalisation 22.97 3.50-191.60 5.8 3.3-51.9 5.6 3.0-45.2
Other 210.2 (15.3) (1.1) 193.8 Yield capitalisation 12.15 5.70-60.80 5.9 3.8-19.1 7.5 4.7-24.6
Development - 38.2 - 38.2 Residual 21.62 17.80-47.60 5.2 5.2-7.5 7.1 5.3-9.1
1 As reflected in notes 2 and 9 and including assets held for sale of £10.4
million (2024: £8.5 million) but excluding trading properties classified as
development of £1.1 million (2024: £1.1 million)
All of the Group's properties are categorised as Level 3 in the fair value
hierarchy as defined by IFRS 13 fair value measurement. There have been no
transfers of properties between Levels 1, 2 and 3 during the year ended 31
March 2025. The fair value at 31 March 2025 represents the highest and best
use of the properties. When considering the highest and best use, the valuers
will look at existing and potential uses which are viable.
i) Technique
The valuation techniques described below are consistent with IFRS 13 and use
significant 'unobservable' inputs such as Expected Rental Value ('ERV') and
yield. There have been no changes in valuation techniques since the prior
year.
Yield capitalisation - for commercial investment properties, market rental
values are capitalised with a market capitalisation rate. The resulting
valuations are cross-checked against the net initial yields and the fair
market values per square foot derived from recent market transactions.
Residual - for certain investment properties under development, the fair value
of the property is calculated by estimating the fair value of the completed
property using the yield capitalisation technique less estimated costs to
completion and a risk premium which includes but is not limited to
construction and letting risk.
ii) Sensitivity
A 5% increase or decrease in ERV would increase or decrease the fair value of
the Group's investment properties by £115.4 million or £114.3 million
respectively.
An increase or decrease of 25bps to the equivalent yield would decrease or
increase the fair value of the Group's investment properties by £264.4
million or £289.9 million respectively. An increase or decrease of 50bps to
the equivalent yield would decrease or increase the fair value of the Group's
investment properties by £507.6 million or £607.3 million respectively.
There are interrelationships between the valuation inputs and they are
primarily determined by market conditions. The effect of an increase in more
than one input could be to magnify the impact on the valuation. However, the
impact on the valuation could be offset by the interrelationship of two inputs
moving in opposite directions, for example an increase in rent may be offset
by a decrease in occupancy, resulting in no net impact on the valuation.
iii) Process
The valuation reports produced by CBRE, Savills and Knight Frank are based on:
· Information provided by the Group, such as current rents, lease terms,
capital expenditure and comparable sales information, which is derived from
the Group's financial and property management systems and is subject to the
Group's overall control environment
· Assumptions applied by the valuers such as ERVs and yields which are
based on market observation and their professional judgement
10 Investment in joint ventures
At 31 March 2025, the following principal property interest, being a jointly
controlled entity, has been equity accounted for in these financial
statements:
Country of incorporation Property sectors Group share
or registration1
Metric Income Plus Partnership ('MIPP') England Long income 50.0%
1 The registered address is One Curzon Street, London, W1J 5HB
The principal activity is property investment into long income assets in the
UK, which complements the Group's operations and contributes to the
achievement of its strategy.
At 31 March 2025, the freehold and leasehold investment properties were
externally valued by CBRE. The movement in the carrying value of joint venture
interests in the year is summarised as follows:
As at 31 March 2025 2024
£m
£m
Opening balance 69.2 61.5
Investment in the year - 10.5
Share of profit/(loss) for the year 6.1 (0.1)
Distributions received (3.4) (2.7)
71.9 69.2
The Group's share of the profit/(loss) after tax and net assets of its joint
ventures is as follows:
Summarised income statement Total Group Total Group
2025
share
2024
share
£m
2025
£m
2024
£m
£m
Gross rental income 7.8 3.9 8.5 4.3
Property costs (0.4) (0.2) (0.1) (0.1)
Net rental income 7.4 3.7 8.4 4.2
Administrative costs - - (0.1) -
Management fees (1.1) (0.6) (1.1) (0.6)
Revaluation gain/(loss) 5.8 2.9 (7.5) (3.7)
Net finance income 0.1 0.1 - -
Profit/(loss) after tax 12.2 6.1 (0.3) (0.1)
Group share of profit/(loss) after tax 6.1 (0.1)
EPRA adjustments:
Revaluation (gain)/loss (5.8) (2.9) 7.5 3.7
EPRA earnings 6.4 3.2 7.2 3.6
Group share of EPRA earnings 3.2 3.6
Summarised balance sheet
Investment properties 139.8 69.9 134.1 67.1
Other current assets 0.5 0.2 0.2 0.1
Cash 5.5 2.8 6.1 3.0
Current liabilities (2.1) (1.0) (2.0) (1.0)
Net assets 143.7 71.9 138.4 69.2
Group share of net assets 71.9 69.2
11 Trade and other receivables
As at 31 March 2025 2024
£m
£m
Trade receivables 3.6 10.9
Prepayments and accrued income 4.6 3.9
Other receivables 5.5 6.6
13.7 21.4
All amounts fall due for payment in less than one year. Trade receivables
comprise rental income which is due on contractual payment days with no credit
period.
At 31 March 2025, trade receivables of £1.4 million were overdue and
considered at risk and have been provided for in full (2024: £0.4 million).
In addition, an impairment provision based on the IFRS expected credit loss
model of £4.9 million (2024: £1.4 million) and a provision against tenant
incentives of £1.4 million (2024: £0.1 million) have been recognised.
12 Cash and cash equivalents
Cash and cash equivalents include £39.4 million (2024: £59.5 million)
retained in restricted accounts which are not readily available to the Group
for day-to-day commercial purposes.
13 Trade and other payables
As at 31 March 2025 2024
£m
£m
Trade payables 3.7 5.7
Amounts payable on property acquisitions and disposals 1.8 13.5
Rent received in advance 63.1 72.5
Accrued interest 4.7 4.9
Tax liabilities 16.9 19.0
Other payables 31.5 21.9
Other accruals and deferred income 20.8 18.3
142.5 155.8
The Group has financial risk management policies in place to ensure that all
payables are settled within the required credit timeframe.
14 Borrowings and financial instruments
a) Borrowings
i) Secured and unsecured loans
As at 31 March 2025 2024
£m
£m
Secured bank loans 799.3 798.2
Unsecured bank loans 1,273.9 1,289.2
2,073.2 2,087.4
Unamortised finance costs (14.6) (13.3)
2,058.6 2,074.1
Of the total borrowings of £2,058.6 million, £347.7 million are repayable
within one year (2024: £43.5 million) and are reflected separately in the
balance sheet.
As at 31 March 2025 Total debt Floating rate Fixed rate Unamortised fair value adjustments Total debt Weighted
facility
debt drawn
debt drawn
£m
£m
average
£m
£m
£m
maturity
(years)
Secured bank loans:
Scottish Widows fixed rate debt (Mucklow) 60.0 - 60.0 1.5 61.5 6.7
Canada Life fixed rate debt (CTPT) 90.0 - 90.0 (1.7) 88.3 1.6
L & G fixed rate debt (LXi) 62.5 - 62.5 (0.2) 62.3 0.4
AIG fixed rate debt (LXi) 286.2 - 286.2 (0.8) 285.4 0.5
Scottish Widows fixed rate debt (LXi) 170.0 - 170.0 (14.9) 155.1 8.7
Canada Life fixed rate debt (LXi) 148.0 - 148.0 (1.3) 146.7 14.1
Unsecured bank loans:
Revolving credit facility 2021 225.0 145.0 - - 145.0 1.1
Wells Fargo revolving credit facility 175.0 55.0 - - 55.0 1.1
Revolving credit facility 2022 275.0 135.0 - - 135.0 2.6
Revolving credit facility 2024 560.0 152.1 - - 152.1 3.8
SMBC revolving credit facility 2025 175.0 91.8 - - 91.8 4.7
Term loan 2024 140.0 140.0 - - 140.0 1.8
Private placement 2016 (syndicate) 25.0 - 25.0 - 25.0 3.5
Private placement 2018 (syndicate) 150.0 - 150.0 - 150.0 5.8
Private placement 2021 (syndicate) 380.0 - 380.0 - 380.0 7.2
2,921.7 718.9 1,371.7 (17.4) 2,073.2 4.7
As at 31 March 2024 Total debt Floating rate Fixed rate Unamortised Total debt Weighted
facility
debt drawn
debt drawn
fair value
£m
average
maturity
£m £m £m adjustments
(years)
£m
Secured bank loans:
Scottish Widows fixed rate debt (Mucklow) 60.0 - 60.0 1.8 61.8 7.7
Canada Life fixed rate debt (CTPT) 90.0 - 90.0 (2.7) 87.3 2.6
L & G fixed rate debt (LXi) 62.8 - 62.8 (0.6) 62.2 1.4
AIG fixed rate debt (LXi) 289.3 - 289.3 (2.3) 287.0 1.5
Scottish Widows fixed rate debt (LXi) 170.0 - 170.0 (16.7) 153.3 9.7
Canada Life fixed rate debt (LXi) 148.0 - 148.0 (1.4) 146.6 15.1
Unsecured bank loans:
Revolving credit facility 2021 (syndicate) 225.0 90.0 - - 90.0 2.1
Wells Fargo revolving credit facility 175.0 55.0 - - 55.0 2.1
Revolving credit facility 2022 (syndicate) 275.0 100.0 - - 100.0 2.6
Revolving credit facility 2024 (syndicate) 560.0 309.2 - - 309.2 3.8
Term loan 2024 (syndicate) 140.0 140.0 - - 140.0 1.8
Private placement 2016 (syndicate) 65.0 - 65.0 - 65.0 2.0
Private placement 2018 (syndicate) 150.0 - 150.0 - 150.0 6.8
Private placement 2021 (syndicate) 380.0 - 380.0 - 380.0 8.2
2,790.1 694.2 1,415.1 (21.9) 2,087.4 5.4
Certain bank loans at 31 March 2025 are secured by fixed charges over Group
investment properties with a carrying value of £2,191.9 million (2024:
£1,953.9 million). During the year, the Group repaid borrowings of £40.0
million relating to the 2016 Private Placement.
ii) Other financial liability
As part of the merger with LXi, the Group acquired a financial liability
associated with the sale of a 65 year income strip of Alton Towers and Thorpe
Park in 2022. The structure comprised selling the freehold of the properties
to a UK institutional investor, with 999 year leases granted back to LXi
pursuant to which was the obligation to pay rental income equivalent to 30% of
the annual rental income received from the tenant. LXi has the ability to
acquire the freehold back in 2087 for £1. The financial obligations in
relation to this transaction were fair valued on acquisition using the
prevailing market interest rate at £221.4 million. At 31 March 2025 the total
liability was £231.0 million based on amortised cost, with £9.0 million
being due in less than one year. For disclosure purposes, the fair value of
the liability at 31 March 2025 was assessed by independent experts Chatham
Financial to be £211.9 million. The corresponding gross up is reflected
within investment properties in the balance sheet as the external valuation of
the assets is based on net cash flows after deducting income strip payments.
The gross rental income receivable from the tenant is reflected in the income
statement within revenue and the 30% pay away is reflected within finance
costs.
b) Financial risk management
Financial risk factors
The Group's overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the
Group's financial performance. The Group's financial risk management
objectives are to minimise the effect of risks it is exposed to through its
operations and the use of debt financing. The principal financial risks to the
Group and the policies it has in place to manage these risks are summarised
below.
i) Credit risk
Credit risk is the risk of financial loss to the Group if a client or
counterparty to a financial instrument fails to meet its contractual
obligations.
The Group's principal financial assets are cash balances and deposits and
trade and other receivables. The Group's credit risk is primarily attributable
to its cash deposits and trade receivables.
The Group mitigates financial loss from tenant defaults by dealing with only
creditworthy tenants. Trade receivables are presented at amortised cost less a
provision for specific overdue debts. A loss allowance for expected credit
losses is also provided for in the accounts and is low relative to the scale
of the balance sheet at £4.9 million (2024: £1.4 million) as reflected in
note 11, and therefore the credit risk of trade receivables is considered to
be low. Cash is held in a diverse mix of institutions with investment grade
credit ratings. The credit ratings of the banks are monitored and changes are
made where necessary to manage risk.
The credit risk on liquid funds and derivative financial instruments is
limited due to the Group's policy of monitoring counterparty exposures with a
maximum exposure equal to the carrying amount of these instruments. The Group
has no significant concentration of credit risk, with exposure spread over a
large number of counterparties.
ii) Liquidity risk
Liquidity risk arises from the Group's management of working capital and the
finance charges and principal repayments on its debt instruments. It is the
risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
The Group actively maintains a mixture of long term and short term committed
facilities that are designed to ensure that the Group has sufficient available
funds for operations. The Group's funding sources are diversified across a
range of banks and institutions. Weekly cash flow forecasts are prepared for
the Senior Leadership Team to ensure sufficient resources of cash and undrawn
debt facilities are in place to meet liabilities as they fall due.
At 31 March 2025, the Group had cash reserves of £81.2 million (2024: £111.9
million), of which £39.4 million was retained in restricted accounts, and
available and undrawn bank loan facilities of £831.1 million (2024:
£680.8 million).
The following table shows the contractual maturity profile of the Group's bank
loans, interest payments on bank loans, other financial liabilities and
derivative financial instruments on an undiscounted cash flow basis and
assuming settlement on the earliest repayment date. Other liabilities as
disclosed in note 14c(i) include trade payables and accrued interest and are
repayable within one year. The contractual maturity profile of lease
liabilities disclosed in the balance sheet is reflected in note 16.
As at 31 March 2025 Less than One to Three months to One to Two to More than Total
one month
three months
one year
two years
five years
five years
£m
£m
£m
£m
£m
£m
£m
Bank loans 8.9 16.2 411.7 494.0 758.8 804.4 2,494.0
Other financial liabilities 0.7 1.5 6.8 9.2 29.0 1,324.6 1,371.8
Derivative financial instruments (1.4) (2.8) (12.6) (9.6) (4.9) (5.5) (36.8)
8.2 14.9 405.9 493.6 782.9 2,123.5 3,829.0
As at 31 March 2024 Less than One to Three months to One to Two to More than Total
one month
three months
one year
two years
five years
five years
£m
£m
£m
£m
£m
£m
£m
Bank loans 9.3 17.1 118.6 578.4 987.7 879.2 2,590.3
Other financial liabilities 0.7 1.4 6.5 8.7 26.8 719.5 763.6
Derivative financial instruments (1.8) (3.7) (16.4) (20.7) (7.0) - (49.6)
8.2 14.8 108.7 566.4 1,007.5 1,598.7 3,304.3
iii) Market risk - interest rate risk
The Group is exposed to interest rate risk from the use of debt financing at a
variable rate. It is the risk that future cash flows of a financial instrument
will fluctuate because of changes in interest rates.
The Group uses interest rate derivatives and fixed rates to manage its
interest rate exposure and hedge future interest rate risk for the term of the
loan. Although the Board accepts that this policy neither protects the Group
entirely from the risk of paying rates in excess of current market rates nor
eliminates fully the cash flow risk associated with interest payments, it
considers that it achieves an appropriate balance of exposure to these risks.
At 31 March 2025, all of the Group's debt drawn was hedged, through fixed
coupon debt arrangements and interest rate swaps, swaptions and caps. The
average interest rate payable by the Group on all bank borrowings at 31 March
2025 including the cost of amortising finance arrangement fees, was 4.0%
(2024: 3.9%). A 1% increase or decrease in interest rates during the year
would have increased or decreased the Group's annual profit before tax by
£1.3 million.
iv) Capital risk management
The Group's objectives when maintaining capital are to safeguard the entity's
ability to continue as a going concern so that it can provide returns to
shareholders and as such it seeks to maintain an appropriate mix of debt and
equity. The capital structure of the Group consists of debt, which includes
long term borrowings and undrawn debt facilities, and equity comprising issued
capital, reserves and retained earnings. The Group balances its overall
capital structure through the payment of dividends and new share issues as
well as the issue of new debt or the redemption of existing debt.
The Group seeks to maintain an efficient capital structure with a balance of
debt and equity as shown in the table below.
As at 31 March 2025 2024
£m
£m
Net debt 2,230.9 2,204.1
Shareholders' equity 4,094.2 3,941.5
6,325.1 6,145.6
v) Foreign currency exchange risk
The Group prepares its financial statements in sterling. However, the Group is
subject to foreign currency exchange risk as it has assets and liabilities
denominated in euros. A 10% increase or decrease in closing sterling rates
against the euro would decrease or increase net assets by £1.5 million (2024:
increase or decrease by £3.9 million).
c) Financial instruments
i) Categories of financial instruments
Measured at amortised cost Measured at fair value
As at 31 March 2025 2024 2025 2024
£m
£m
£m
£m
Non current assets
Derivative financial instruments (see 14c (iii)) - - 23.7 32.6
Current assets
Cash and cash equivalents (note 12) 81.2 111.9 - -
Trade receivables (note 11) 3.6 10.9 - -
Other receivables (note 11) 5.5 6.6 - -
90.3 129.4 23.7 32.6
Non current liabilities
Borrowings (note 14a (i)) 1,710.9 2,030.6 - -
Other financial liabilities (note 14a (ii)) 222.0 212.9 - -
Lease liabilities (note 16) 40.8 47.0 - -
Current liabilities
Borrowings (note 14a (i)) 347.7 43.5 - -
Other financial liabilities (note 14a (ii)) 9.0 8.6 - -
Lease liabilities (note 16) 0.7 1.1 - -
Contingent consideration (note 15b) - - 1.4 1.5
Trade payables (note 13) 3.7 5.7 - -
Accrued interest (note 13) 4.7 4.9 - -
2,339.5 2,354.3 1.4 1.5
ii) Fair values
To the extent financial assets and liabilities are not carried at fair value
in the consolidated balance sheet, the Directors are of the opinion that book
value approximates to fair value at 31 March 2025 with the exception of the
Group's fixed rate debt. The adjustment required to measure the fixed rate
debt at fair value is provided in note 8c. This is measured by Chatham
Financial using the equity method which discounts the difference between the
remaining contractual and market debt service payments at an equity discount
rate and represents Level 2 in the hierarchy table.
iii) Derivative financial instruments
Details of the fair value of the Company and Group's derivative financial
instruments that were in place at 31 March 2025 are provided below:
As at 31 March Average rate Notional amount Fair value
Interest rate swaps - expiry 2025 2024 2025 2024 2025 2024
%
%
£m
£m
£m
£m
One to two years 2.4 - 97.1 - (0.5) -
Two to five years 3.1 3.1 725.0 375.0 15.5 10.8
3.0 3.1 822.1 375.0 15.0 10.8
Average rate Notional amount Fair value
As at 31 March
Interest rate caps- expiry 2025 2024 2025 2024 2025 2024
%
%
£m
£m
£m
£m
Less than one year - 2.5 - 60.0 - 1.1
One to two years 2.0 - 441.8 - 8.7 -
Two to five years - 2.5 - 550.0 - 20.7
2.0 2.5 441.8 610.0 8.7 21.8
Total fair value 23.7 32.6
All derivative financial instruments are interest rate derivatives and are
carried at fair value following a valuation by Chatham Financial. In
accordance with accounting standards, fair value is estimated by calculating
the present value of future cash flows, using appropriate market discount
rates. For all derivative financial instruments this equates to a Level 2 fair
value measurement as defined by IFRS 13 Fair Value Measurement. The valuation
therefore does not reflect the cost or gain to the Group of cancelling its
interest rate protection at the balance sheet date, which is generally a
marginally higher cost (or smaller gain) than a market valuation.
15 Business combinations
a) Acquisition of LXi Limited (formerly LXi REIT plc)
On 5 March 2024, the Company acquired the entire issued share capital of LXi
Limited (formerly LXi REIT plc), a closed-ended investment company listed on
the premium listing segment of the Official List. The acquisition was
implemented by way of a Scheme of Arrangement under Part 26 of the Companies
Act which became effective on 5 March 2024 and constituted a reverse takeover
pursuant to the Listing Rules due to its size. LXi shares were delisted and
trading ceased the following morning. The merger brought together two real
estate companies, with assets aligned to structurally supported sectors with
high barriers to entry and income security, creating the UK's leading Triple
Net Lease REIT.
The all share acquisition was effected through the issue of 943 million new
ordinary shares at 185.8p per share, representing the closing share price on 5
March 2024 and totalling £1,752.0 million as consideration paid. The exchange
ratio of 0.55 LondonMetric shares for every LXi ordinary share held, was based
on an adjusted net tangible assets ('NTA') to adjusted NTA approach, taking
into account the fair value of debt and derivatives, potential liabilities in
respect of German taxation and the acquisition of LXi's investments advisor as
reflected in note 15b.
The fair value of the identifiable net assets acquired was £1,828.9 million
as reflected in the table below. The difference between the consideration paid
and the fair value of net assets acquired represents a price discount of
£76.9 million, which was recognised in the Group income statement last year
as a gain on business combination.
The price discount was largely a result of the fair value adjustments
incorporated into the exchange ratio, as well as the Company's share price on
acquisition of 185.8p trading at a discount to its 30 September 2023 net asset
value upon which the deal was based of 199.6p per share. Acquisition related
costs of £28.5 million were recognised separately in the income statement.
Acquisition of LXi Limited (formerly LXi REIT plc)
Book value as at Fair value of Fair value of Fair value of Fair value of Other fair value adjustments Fair value as at
5 March 2024
fixed rate debt
financial instruments
tax liabilities
prepaid finance costs
£m
£m
£m
£m
£m
£m 5 March 2024
£m
Investment properties 3,135.5 - (33.5) - - - 3,102.0
Right of use assets 39.0 - - - - 2.2 41.2
Property, plant and equipment 0.1 - - - - - 0.1
Derivative financial instruments 25.4 - - - - - 25.4
Trade and other receivables 10.3 - - - - (0.7) 9.6
Cash and cash equivalents 73.2 - - - - - 73.2
Total assets 3,283.5 - (33.5) - - 1.5 3,251.5
Trade and other payables (48.1) - - - - - (48.1)
Borrowings (1,104.3) 21.2 - - - - (1,083.1)
Prepaid finance costs 22.9 - - - (22.9) - -
Other financial liabilities (254.9) - 33.5 - - - (221.4)
Lease liabilities (39.0) - - - - (2.2) (41.2)
Current tax liabilities (23.5) - - 4.3 - - (19.2)
Deferred tax liabilities - - - (9.6) - - (9.6)
Total liabilities (1,446.9) 21.2 33.5 (5.3) (22.9) (2.2) (1,422.6)
Fair value of net assets acquired 1,836.6 21.2 - (5.3) (22.9) (0.7) 1,828.9
Fair value of consideration paid 1,752.0
Gain on business combination 76.9
b) Acquisition of LXi REIT Advisors Limited
On 6 March 2024, alongside the acquisition noted in 15a above, we completed
the acquisition of the LXi group's investment advisor for a total
consideration of £26.8 million which included £1.5 million of contingent
consideration at fair value. The contingent consideration is payable over four
years and is based on growth in the LondonMetric share price, capped at £1
million per annum or £4 million in aggregate.
The fair value of net liabilities acquired was £0.7 million and the resulting
goodwill generated on acquisition of £27.5 million was fully impaired to the
income statement and offset against the gain on business combination noted in
15a above. Additional transaction costs of £1.3 million were recognised
separately within the income statement last year.
c) Summary of LXi acquisition disclosures
LXi Limited (formerly LXi REIT plc) LXi REIT Total
Advisors Ltd
£m
£m
£m
Fair value of net assets/(liabilities) acquired 1,828.9 (0.7) 1,828.2
Fair value of consideration paid:
Shares 1,752.0 - 1,752.0
Cash - 26.8 26.8
Total consideration paid 1,752.0 26.8 1,778.8
Gain/(loss) on business combination 76.9 (27.5) 49.4
Acquisition costs 28.5 1.3 29.8
The cost of the LXi acquisition reflected in the Group cash flow statement
last year of £47.3 million reflected the cash acquired of £73.2 million (as
reflected in note 15a) less cash consideration paid of £25.9 million. This
reflected the total cash consideration noted above of £26.8 million less
contingent consideration payable of £1.5 million and included acquisition
costs of £0.6 million charged to reserves.
There has been no change in the overall fair value of LXi Limited assets or
LXi REIT Advisors Limited liabilities acquired in the year to 31 March 2025
and therefore no change in the resulting gain or loss on the business
combinations.
16 Leases
The Group's minimum lease rentals receivable under non cancellable leases,
excluding joint ventures, are as follows:
As at 31 March 2025 2024
£m
£m
Less than one year 346.1 332.3
Between one and five years 1,354.3 1,287.7
Between six and ten years 1,562.8 1,529.2
Between 11 and 15 years 1,184.6 1,287.9
Between 16 and 20 years 790.0 877.7
Over 20 years 2,155.2 2,270.3
7,393.0 7,585.1
In accordance with IFRS 16, the Group has recognised a right of use asset for
its head office lease and other head lease obligations. The Group's minimum
lease payments are due as follows:
As at 31 March Undiscounted minimum lease payments Interest Present value of minimum lease payments Present value of minimum lease payments
£m
£m
2025
£m 2024
£m
Less than one year 2.4 (1.7) 0.7 1.1
Between one and two years 2.4 (1.7) 0.7 0.8
Between two and five years 6.2 (4.9) 1.3 2.3
Over five years 168.3 (129.5) 38.8 43.9
179.3 (137.8) 41.5 48.1
17 Share capital
As at 31 March 2025 2025 2024 2024
Number
£m
Number
£m
Issued, called up and fully paid
Ordinary shares of 10p each 2,048,108,416 204.8 2,036,519,647 203.7
The movement in the share capital and share premium of the Company during the
current and previous year is summarised below.
Share capital issued, called up and fully paid Ordinary shares Number Ordinary shares £m Share premium £m
At 31 March 2023 982,646,261 98.3 395.5
Issued on acquisition 1,048,579,674 104.9 -
Issued under scrip share scheme 5,293,712 0.5 9.2
At 31 March 2024 2,036,519,647 203.7 404.7
Issued under scrip share scheme 11,588,769 1.1 21.2
At 31 March 2025 2,048,108,416 204.8 425.9
The Company issued 11.6 million ordinary shares under the terms of its Scrip
Dividend Scheme during the year. Post year end in April, the Company issued a
further 7.1 million ordinary shares under the terms of its Scrip Dividend
Scheme.
The movement in the shares held by the Employee Benefit Trust in the current
and previous year is summarised in the table below.
Shares held by the Employee Benefit Trust Ordinary shares Number Ordinary shares £m
At 31 March 2023 2,942,592 0.3
Shares issued under employee share schemes (1,791,027) (0.2)
Shares acquired by the Employee Benefit Trust 1,437,642 0.2
At 31 March 2024 2,589,207 0.3
Shares issued under employee share schemes (1,968,850) (0.2)
Shares acquired by the Employee Benefit Trust 9,852,125 0.9
At 31 March 2025 10,472,482 1.0
In June 2024, 1,968,850 ordinary shares in the Company that were granted to
certain Directors and employees under the Company's Long Term Incentive Plan
in 2021 vested. The average share price on vesting was 194.7p. As at 31 March
2025, the Company's Employee Benefit Trust held 10,472,482 shares in the
Company to satisfy awards under the Company's Long Term Incentive Plan.
18 Reserves
The nature and purpose of each reserve within equity is described below.
Share capital The nominal value of shares issued.
Share premium The premium paid for new ordinary shares issued above the nominal value.
Capital redemption reserve Amounts transferred from share capital on redemption of issued ordinary
shares.
Other reserve A reserve relating to the application of merger relief in the acquisition of
LondonMetric Management Limited, Metric Property Investments Plc, A&J
Mucklow Group Plc, CT Property Trust Limited and LXi REIT plc by the Company,
the cost of shares held in trust to provide for the Company's future
obligations under share award schemes and a foreign currency exchange reserve.
A breakdown of other reserves is provided for the Group below.
Retained earnings The cumulative profits and losses after the payment of dividends.
Other reserves
As at 31 March Merger Employee Foreign 2025 Merger Employee Foreign 2024
relief
Benefit Trust shares
currency exchange reserve
Total other
relief
Benefit Trust shares
reserve
£m
£m
reserves
currency exchange reserve Total other reserves
£m
£m reserve £m
£m £m
£m
Opening balance 2,337.5 (5.6) 0.5 2,332.4 497.4 (7.1) - 490.3
Share issue on acquisitions - - - - 1,840.1 - - 1,840.1
Foreign currency exchange - - (0.4) (0.4) - - 0.5 0.5
Employee share schemes:
Purchase of shares - (18.2) - (18.2) - (2.5) - (2.5)
Vesting of shares - 3.9 - 3.9 - 4.0 - 4.0
Closing balance 2,337.5 (19.9) 0.1 2,317.7 2,337.5 (5.6) 0.5 2,332.4
19 Analysis of movement in net debt
Non cash movements
1 April 2024 Financing Other Debt issue costs and foreign exchange Fair value movements Interest charge 31 March 2025
£m
cash flows
cash flows
£m
£m
and unwinding
£m
£m
£m
of discount
£m
Bank loans 2,087.4 (16.7) - (2.1) - 4.6 2,073.2
Derivative financial instruments (32.6) (2.2) - - 11.1 - (23.7)
Unamortised finance costs (13.3) (5.6) - 4.3 - - (14.6)
Other finance costs - (5.3) - 5.3 - - -
Interest payable 4.9 (98.7) - - - 98.5 4.7
Other financial liabilities 221.5 (8.5) - - 4.5 13.5 231.0
Lease liabilities 48.1 (1.6) - - (6.7) 1.7 41.5
Total liabilities from financing activities 2,316.0 (138.6) - 7.5 8.9 118.3 2,312.1
Cash and cash equivalents (111.9) - 30.7 - - - (81.2)
Net debt 2,204.1 (138.6) 30.7 7.5 8.9 118.3 2,230.9
Non cash movements
1 April 2023 Financing Other Acquisition of subsidiaries Debt issue costs and foreign exchange Fair value movements Interest charge 31 March 2024
£m
cash flows
cash flows
£m
£m
£m
and unwinding
£m
£m
£m
of discount
£m
Bank loans 1,017.0 (100.0) - 1,169.7 - - 0.7 2,087.4
Derivative financial instruments (11.1) - - (25.4) - 3.9 - (32.6)
Unamortised finance costs (7.2) (7.7) - (0.4) 2.0 - - (13.3)
Other finance costs - (2.9) - - 2.9 - - -
Interest payable 1.5 (43.6) - 5.2 0.3 - 41.5 4.9
Other financial liabilities - (0.6) - 221.4 - - 0.7 221.5
Lease liabilities 7.1 (0.5) - 41.2 - - 0.3 48.1
Total liabilities from financing activities 1,007.3 (155.3) - 1,411.7 5.2 3.9 43.2 2,316.0
Cash and cash equivalents (32.6) - (79.3) - - - - (111.9)
Net debt 974.7 (155.3) (79.3) 1,411.7 5.2 3.9 43.2 2,204.1
20 Related party transactions
a) Joint arrangements
Management fees and distributions receivable from the Group's joint
arrangements during the year were as follows:
Management fees Distributions
For the year to 31 March Group interest 2025 2024 2025 2024
£m
£m
£m
£m
Metric Income Plus Partnership 50% 1.1 1.1 3.4 2.7
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation.
b) Non-controlling interest
The Group's non-controlling interest ('NCI') represents a 31% shareholding in
LMP Retail Warehouse JV Holdings Limited, which owns a portfolio of retail
assets.
The Group's interest in LMP Retail Warehouse JV Holdings Limited is 69%,
requiring it to consolidate the results and net assets of its subsidiary in
these financial statements and reflect the non-controlling share as a
deduction in the consolidated income statement and consolidated balance sheet.
At the year end, LMP Retail Warehouse JV Holdings Limited owed £28.8 million
to the Company, which has been eliminated on consolidation.
As at the year end, the NCI's share of profits and net assets was £2.7
million (2024: £1.2 million) and £29.7 million (2024: £28 million)
respectively. Distributions to the NCI in the year totalled £1.0 million
(2024: £1.1 million).
21 Post balance sheet events
Post period end we have exchanged or completed asset acquisitions and sales
for £14.7 million and £65.0 million respectively, of which £2.0 million
sales had exchanged in the year.
On 27 March 2025, we announced that we had reached agreement with Highcroft
Investments Plc on the terms of an all share offer to acquire the entire
issued share capital for approximately £43.8 million, by way of a court
sanctioned scheme of arrangement. The acquisition was approved by c.97% of
shareholders who voted on 15 May 2025.
On 9 May 2025, we were pleased to announce that we had reached agreement with
the board of Urban Logistics REIT on the terms of a recommended cash and share
offer pursuant to which we will acquire the entire issued share capital of the
company for approximately £698.9 million. Urban Logistics REIT has a highly
complementary logistics platform, and we believe the combined Group will
benefit from further increased scale, granularity of income and synergies to
drive superior earnings growth which underpins our progressive dividend
policy.
Post period end, we completed two debt facilities for £350 million.
Supplementary information
(not audited)
i EPRA summary table
2025 2024
EPRA earnings per share 13.1p 10.9p
EPRA net tangible assets per share 199.2p 191.7p
EPRA net disposal value per share 204.6p 197.5p
EPRA net reinstatement value per share 220.1p 211.8p
EPRA vacancy rate 1.9% 0.6%
EPRA cost ratio (including vacant property costs) 7.8% 11.6%
EPRA cost ratio (excluding vacant property costs) 7.5% 11.1%
EPRA loan to value 34.7% 35.4%
EPRA net initial yield 5.0% 5.2%
EPRA 'topped up' net initial yield 5.1% 5.3%
The definition of these measures can be found in the Glossary.
ii EPRA proportionally consolidated income statement
For the year to 31 March 100% JV NCI Total 100% JV NCI Total
owned
£m
£m
2025
£m
£m
£m
£m owned 2024
£m
£m
Gross rental income 395.5 3.9 (2.4) 397.0 177.0 4.3 (2.4) 178.9
Property costs (4.9) (0.2) 0.1 (5.0) (1.7) (0.1) - (1.8)
Net rental income 390.6 3.7 (2.3) 392.0 175.3 4.2 (2.4) 177.1
Management fees and other income 1.2 (0.6) 0.1 0.7 1.1 (0.6) 0.1 0.6
Administrative costs (27.1) - - (27.1) (19.7) - - (19.7)
Net finance (costs)/income¹ (97.1) 0.1 0.5 (96.5) (37.4) - 0.6 (36.8)
Tax (1.5) - 0.4 (1.1) - - 0.4 0.4
EPRA earnings 266.1 3.2 (1.3) 268.0 119.3 3.6 (1.3) 121.6
1 Group net finance costs reflect net borrowing costs of £124.5 million
(2024: £45.9 million) (note 5b) and finance income of £23.7 million (2024:
£8.5 million) (note 5a) less the impact of inflation volatility relating to
the income strip of £3.7 million in the current year
The reconciliation of EPRA earnings to IFRS profit is set out below.
100% JV NCI Total 100% JV NCI Total
owned
£m
£m
2025
£m
£m
For the year to 31 March
£m
£m owned 2024
£m
£m
EPRA earnings 266.1 3.2 (1.3) 268.0 119.3 3.6 (1.3) 121.6
Revaluation of property 106.0 2.9 (1.4) 107.5 (7.5) (3.7) 0.1 (11.1)
Revaluation of investments 0.9 - - 0.9 - - - -
Fair value of derivatives (11.1) - - (11.1) (3.9) - - (3.9)
Loss on disposal (13.0) - - (13.0) (7.4) - - (7.4)
Impact of inflation volatility relating to the income strip (3.7) - - (3.7) - - - -
Gain on acquisition - - - - 49.4 - - 49.4
Acquisition costs - - - - (29.8) - - (29.8)
Deferred tax (0.7) - - (0.7) (0.1) - - (0.1)
IFRS reported profit/(loss) 344.5 6.1 (2.7) 347.9 120.0 (0.1) (1.2) 118.7
iii EPRA proportionally consolidated balance sheet
As at 31 March 100% JV NCI Total 100% JV NCI Total
owned
£m
£m
2025
£m
£m
£m
£m owned 2024
£m
£m
Investment property 6,383.9 69.9 (38.1) 6,415.7 6,232.2 67.1 (36.4) 6,262.9
Assets held for sale 10.4 - - 10.4 8.5 - - 8.5
Trading property 1.1 - - 1.1 1.1 - - 1.1
6,395.4 69.9 (38.1) 6,427.2 6,241.8 67.1 (36.4) 6,272.5
Gross debt (2,073.2) - - (2,073.2) (2,087.4) - - (2,087.4)
Cash 81.2 2.8 (0.8) 83.2 111.9 3.0 (0.8) 114.1
Other net liabilities (374.6) (0.8) 9.2 (366.2) (398.6) (0.9) 9.2 (390.3)
EPRA net tangible assets 4,028.8 71.9 (29.7) 4,071.0 3,867.7 69.2 (28.0) 3,908.9
Derivatives 23.7 - - 23.7 32.6 - - 32.6
Deferred tax movement (0.5) - - (0.5) - - - -
IFRS equity shareholders' funds 4,052.0 71.9 (29.7) 4,094.2 3,900.3 69.2 (28.0) 3,941.5
IFRS net assets 4,052.0 71.9 - 4,123.9 3,900.3 69.2 - 3,969.5
Loan to value 32.7% - - 32.7% 33.2% - - 33.2%
Cost of debt 4.0% - - 4.0% 3.9% - - 3.9%
Undrawn facilities 831.1 - - 831.1 680.8 - - 680.8
iv EPRA cost ratio
For the year to 31 March 2025 2024
£m
£m
Property operating expenses 4.9 1.7
Administrative costs 27.1 19.7
Share of joint venture and NCI property costs, administrative costs and 0.6 0.6
management fees
Less:
Property management fees and other income (1.2) (1.1)
Ground rents (1.3) (0.1)
Total costs including vacant property costs (A) 30.1 20.8
Group vacant property costs (1.1) (1.0)
Total costs excluding vacant property costs (B) 29.0 19.8
Gross rental income 395.5 177.0
Share of joint venture gross rental income 3.9 4.3
Share of NCI gross rental income (2.4) (2.4)
397.0 178.9
Less:
Ground rents (11.7) (0.1)
Total gross rental income (C) 385.3 178.8
Total EPRA cost ratio (including vacant property costs) (A)/(C) 7.8% 11.6%
Total EPRA cost ratio (excluding vacant property costs) (B)/(C) 7.5% 11.1%
v EPRA net initial yield and 'topped up' net initial yield
As at 31 March 2025 2024
£m
£m
Investment property - wholly owned(1) 6,122.4 5,971.6
Investment property - share of joint ventures 69.9 67.1
Trading property 1.1 1.1
Less development properties (16.5) (39.3)
Less non-controlling interest (38.1) (36.4)
Completed property portfolio 6,138.8 5,964.1
Allowance for:
Estimated purchasers' costs 417.4 405.6
Estimated costs to complete 25.3 13.7
EPRA property portfolio valuation (A) 6,581.5 6,383.4
Annualised passing rental income 326.8 329.2
Share of joint ventures 4.0 4.3
Less development properties - (3.4)
Annualised net rents (B) 330.8 330.1
Contractual rental increase across the portfolio 4.1 9.0
'Topped up' net annualised rent (C) 334.9 339.1
EPRA net initial yield (B/A) 5.0% 5.2%
EPRA 'topped up' net initial yield (C/A) 5.1% 5.3%
1 Wholly owned investment property includes assets held for sale of £10.4
million (2024: £8.5 million)
vi EPRA vacancy rate
As at 31 March 2025 2024
£m
£m
Annualised estimated rental value of vacant premises 7.1 2.2
Portfolio estimated rental value¹ 368.9 362.7
EPRA vacancy rate 1.9% 0.6%
1 Excludes development properties
vii EPRA capital expenditure analysis
As at 31 March 100% JV NCI Total 100% JV NCI Total
owned5
£m
£m
2025
£m
£m
£m
£m owned⁵ 2024
£m
£m
Opening valuation 6,241.8 67.1 (36.4) 6,272.5 2,965.8 70.8 (35.7) 3,000.9
Acquisitions(1) 284.7 - - 284.7 3,157.9 - - 3,157.9
Developments(2,4) 20.5 - - 20.5 41.7 - - 41.7
Investment properties
- incremental lettable space(3) 13.6 - - 13.6 1.9 - (0.2) 1.7
- no incremental lettable space(3) 10.0 0.2 (0.2) 10.0 4.0 - (0.3) 3.7
- tenant incentives 44.2 (0.3) (0.1) 43.8 16.6 - (0.3) 16.3
Capitalised interest(4) 3.4 - - 3.4 2.2 - - 2.2
Total EPRA capex 376.4 (0.1) (0.3) 376.0 3,224.3 - (0.8) 3,223.5
Disposals⁶ (323.7) - - (323.7) (203.6) - - (203.6)
Revaluation 101.0 2.9 (1.4) 102.5 (7.5) (3.7) 0.1 (11.1)
Foreign currency (2.9) - - (2.9) 0.8 - - 0.8
Income strip gross up 9.5 - - 9.5 221.5 - - 221.5
ROU asset (6.7) - - (6.7) 40.5 - - 40.5
Closing valuation 6,395.4 69.9 (38.1) 6,427.2 6,241.8 67.1 (36.4) 6,272.5
1 Group acquisitions in the year include completed investment properties as
reflected in note 9 to the financial statements
2 Group developments include acquisitions, capital expenditure and lease
incentive movements on properties under development as reflected in note 9
after excluding capitalised interest noted in footnote 4 below
3 Group capital expenditure on completed properties, as reflected in note 9
to the financial statements after excluding capitalised interest noted in
footnote 4 below
4 Capitalised interest on investment properties of £1.1 million (2024:
£nil million) and development properties of £2.3 million (2024: £2.2
million)
5 Including trading property of £1.1 million (2024: £1.1 million) and
assets held for sale of £10.4 million (2024: £8.5 million)
6 Group disposals include assets held for sale
viii Total accounting return
For the year to 31 March 2025 2024
pence per share
pence per share
EPRA net tangible assets per share
- at end of year 199.2 191.7
- at start of year 191.7 198.9
Increase/(decrease) in the year 7.5 (7.2)
Dividend paid 11.1 9.7
Total increase 18.6 2.5
Total accounting return 9.7% 1.3%
ix Portfolio split and valuation
As at 31 March 100% JV NCI 2025 2025 2024 2024
owned
£m
£m
£m
%
£m £m %
Mega distribution 315.1 - - 315.1 5.1 310.2 5.2
Regional distribution 726.8 - - 726.8 11.8 689.7 11.5
Urban logistics 1,796.0 - - 1,796.0 29.2 1,563.2 26.0
Logistics 2,837.9 - - 2,837.9 46.1 2,563.1 42.7
Convenience 930.8 69.9 (23.0) 977.7 15.9 1,012.1 16.8
Entertainment & leisure 1,297.8 - - 1,297.8 21.1 1,271.3 21.2
Healthcare 931.1 - - 931.1 15.1 960.2 16.0
Long income 3,159.7 69.9 (23.0) 3,206.6 52.1 3,243.6 54.0
Other 125.9 - (15.1) 110.8 1.8 196.7 3.3
Total portfolio 6,123.5 69.9 (38.1) 6,155.3 100 6,003.4 100.0
Income strip gross up¹ 231.0 - - 231.0 221.5
Head lease assets 40.9 - - 40.9 47.6
6,395.4 69.9 (38.1) 6,427.2 6,272.5
1 Represents the gross up of assets associated with the sale of a 65 year
income strip of Alton Towers and Thorpe Park in 2022, as reflected in note
14a(ii)
x Investment portfolio yields
As at 31 March EPRA NIY EPRA 2025 Equivalent EPRA NIY EPRA 2024 Equivalent
%
topped up NIY
yield
%
topped up NIY
yield
%
%
%
%
Logistics 4.6 4.6 5.8 4.5 4.7 5.7
Long income 5.5 5.5 6.7 5.7 5.8 6.6
Other 4.9 4.9 6.9 5.8 6.0 7.3
Investment portfolio 5.0 5.1 6.3 5.2 5.3 6.3
xi Investment portfolio - Key statistics
As at 31 March 2025 Area WAULT WAULT Occupancy Average rent
'000 sq ft
to expiry
to first break
%
£ per sq ft
years
years
Logistics 17,731 11.7 10.9 97.1 8.3
Long income 7,036 23.4 22.0 99.1 22.1
Other 538 18.2 17.9 96.9 11.3
Investment portfolio 25,305 18.5 17.4 98.1 12.3
Due to having minimal internal areas, car parks and theme parks have been
excluded.
xii Total property returns
For the year to 31 March All property All property
2025
2024
%
%
Capital return 2.5 (0.3)
Income return 5.7 5.0
Total return 8.3 4.7
xiii Net contracted rental income(¹)
As at 31 March 2025 2024
£m
£m
Logistics 142.7 126.4
Long income 189.5 198.4
Other 6.0 11.5
Investment portfolio 338.2 336.3
Development 2.2 3.4
Total portfolio 340.4 339.7
1 Contracted rent net of income strip and head lease payments
xiv Rent subject to expiry
As at 31 March 2025 Within Within Within Within Within Within
3 years
5 years
10 years
15 years
20 years
25 years
%
%
%
%
%
%
Logistics 8.0 15.9 44.5 69.8 91.2 96.3
Long income 2.8 5.7 12.5 43.2 57.8 66.7
Other 4.8 4.8 21.1 44.4 44.4 92.1
Investment portfolio 5.0 9.3 25.8 54.2 71.3 79.3
xv Contracted rent subject to inflationary or fixed uplifts
As at 31 March 2025 2025 2024 2024
£m
%
£m
%
Logistics 85.4 59.6 81.2 64.0
Long income 179.4 90.1 188.0 90.4
Other 4.2 70.0 5.5 47.8
Investment portfolio 269.0 77.2 274.7 79.3
xvi Top ten assets (by value)
As at 31 March 2025 Area Net contracted Occupancy WAULT WAULT
'000
rent
%
to expiry
to first break
sq ft
£m
years
years
Ramsay Rivers Hospital 193 9.9 100 12.1 12.1
Alton Towers Park n/a 9.5 100 52.3 52.3
Thorpe Park n/a 7.1 100 52.3 52.3
Bedford Link, Bedford 715 5.8 100 16.4 14.7
Primark, Islip 1,062 6.1 100 15.5 15.5
Great Bear, Dagenham 454 4.8 100 18.5 18.5
Ramsay Springfield Hospital 85 5.7 100 12.1 12.1
Argos, Bedford 658 4.8 100 9.0 9.0
Heide Park n/a 5.6 100 52.4 52.4
THG, Warrington 686 4.7 100 19.7 19.7
xvii Top ten occupiers
As at 31 March 2025 Net contracted Net contracted
rental income
rental income
£m
%
Ramsay Health Care 38.4 11.3
Merlin Entertainments 32.0 9.4
Travelodge 21.6 6.3
Primark 6.1 1.8
Great Bear 6.1 1.8
Tesco 6.1 1.8
Amazon 5.0 1.5
Argos 5.0 1.4
Q-Park 4.7 1.4
THG 4.7 1.4
Total 129.7 38.1
xviii Loan to value
As at 31 March 100% JV NCI 2025 2024
owned
£m
£m
£m
£m
£m
Gross debt 2,073.2 - - 2,073.2 2,087.4
Less: Fair value adjustments 17.4 - - 17.4 21.9
Less: Cash balances (81.2) (2.8) 0.8 (83.2) (114.1)
Net debt 2,009.4 (2.8) 0.8 2,007.4 1,995.2
Acquisitions exchanged in the year 14.7 - - 14.7 2.3
Disposals exchanged in the year (10.6) - - (10.6) (9.3)
Adjusted net debt (A) 2,013.5 (2.8) 0.8 2,011.5 1,988.2
Exclude:
Acquisitions exchanged in the year (14.7) - - (14.7) (2.3)
Disposals exchanged in the year 10.6 - - 10.6 9.3
Include: Net payables 128.8 0.8 (0.3) 129.3 135.0
EPRA net debt (B) 2,138.2 (2.0) 0.5 2,136.7 2,130.2
Investment properties at fair value 6,112.0 69.9 (38.1) 6,143.8 5,993.8
Properties held for sale 10.4 - - 10.4 8.5
Trading properties 1.1 - - 1.1 1.1
Total property portfolio 6,123.5 69.9 (38.1) 6,155.3 6,003.4
Acquisitions exchanged in the year 14.7 - - 14.7 2.3
Disposals exchanged in the year (10.4) - - (10.4) (8.5)
Adjusted property portfolio (C) 6,127.8 69.9 (38.1) 6,159.6 5,997.2
Exclude:
Acquisitions exchanged in the year (14.7) - - (14.7) (2.3)
Disposals exchanged in the year 10.4 - - 10.4 8.5
Include: Financial assets 8.9 - - 8.9 8.9
EPRA property portfolio (D) 6,132.4 69.9 (38.1) 6,164.2 6,012.3
Loan to value (A)/(C) 32.7% 33.2%
EPRA Loan to value (B)/(D) 34.7% 35.4%
xix Acquisitions and disposals
As at 31 March 100% JV NCI 2025 2024
owned
£m
£m
£m
£m £m
Acquisition costs
Completed in the year 284.7 - - 284.7 3,157.9
CTPT price discount on acquisition - - - - 23.3
Exchanged in the previous year (2.3) - - (2.3) -
Exchanged but not completed in the year 14.7 - - 14.7 -
Forward funded investments classified as developments 58.6 - - 58.6 27.2
Transaction costs and other (12.6) - - (12.6) (6.7)
Exchanged in the year 343.1 - - 343.1 3,201.7
Disposal proceeds
Completed in the year 322.5 - - 322.5 198.7
Exchanged in the previous year (9.3) - - (9.3) (19.6)
Exchanged but not completed in the year 10.6 4.7 - 15.3 9.3
Transaction costs and other 13.4 - - 13.4 (3.5)
Exchanged in the year 337.2 4.7 - 341.9 184.9
xx Cash earnings cover
For the year to 31 March Note 2025
£m
EPRA earnings 8 268.0
Rent free and amortisation adjustments 9 (47.9)
Capitalised costs(1) 4,5 (5.3)
Share based payment 4 5.3
Unwinding of discount on fixed rate debt acquired 5 4.6
Amortisation of loan issue costs 5 4.3
Movement rent provisions 11 5.8
Other 0.4
Cash earnings A 235.2
Dividend charge for the year net of scrip saving B 220.7
Cash earnings cover A/B 107%
1 Capitalised interest of £3.4 million (note 5) and staff costs of £1.9
million (note 4) on developments
Glossary
Better Building Partnership (BBP)
The BBP is a collaboration of leading property owners who are working together to improve the sustainability of commercial buildings. It aims to enable market transformation through sustainability leadership and collaboration, improve professional understanding through knowledge sharing and develop a common approach with members, stimulating the property industry to deliver buildings that perform better.
Building Research Establishment Environmental Assessment Methodology ('BREEAM')
A set of assessment methods and tools designed to help construction professionals understand and mitigate the environmental impacts of the developments they design and build.
Carbon Neutral
Companies, processes, and buildings become carbon neutral when they calculate
their carbon emissions and compensate for what they have produced via carbon
offsetting projects.
Capital Return
The valuation movement on the property portfolio adjusted for capital
expenditure and expressed as a percentage of the capital employed over the
period.
Chief Operating Decision Makers ('CODMs')
The Executive Directors, Senior Leadership Team members and other senior
managers.
CO(2)e
The universal unit of measurement to indicate the global warming potential ('GWP') of each of the six greenhouse gases, expressed in terms of the GWP of one unit of carbon dioxide. It is used to evaluate releasing (or avoiding releasing) different greenhouse gases on a common basis. This quantity is quoted in units of kilogram or tonnes of carbon dioxide equivalent (kgCO2e and tCO2e).
Code
The UK Corporate Governance Code published by the Financial Reporting Council
in July 2018, publicly available at www.frc.org.uk which sets out principles
of good corporate governance for listed companies. In January 2024, the
Financial Reporting Council published a revised UK Corporate Governance Code
(the '2024 Code'). The 2024 Code will apply to financial years beginning on or
after 1 January 2025, other than provision 29 which will apply to financial
years beginning on or after 1 January 2026.
Contracted Rent
The annualised rent excluding rent free periods.
Cost of Debt
Weighted average interest rate payable.
CRREM Modelling
The Carbon Risk Real Estate Monitor ('CRREM') tool models an asset performance
to determine the year it will become 'stranded'. Stranding is the point in
time when the asset will not meet future energy efficiency standards and whose
energy upgrade will not be financially viable.
CT Property Trust Limited ('CTPT')
CT Property Trust Limited (now LMP Bude Limited). Incorporated in Guernsey
with registration number 41870.
Debt Maturity
Weighted average period to expiry of debt drawn.
Distribution
The term is used synonymously with 'Logistics' and means the organisation and
implementation of operations to manage the flow of physical items from origin
to the point of consumption by the end user.
Embodied Carbon
Embodied carbon refers to the emissions associated with materials and
construction processes throughout the whole life cycle of a building or
infrastructure. It is typically associated with any processes, materials, or
products used to construct, maintain, repair, refurbish, and repurpose a
building. LondonMetric's Development-related emissions account only for
upfront embodied carbon, which refers to the emissions up to practical
completion before the building begins to be used by an occupier.
Energy Performance Certificate ('EPC')
Required certificate whenever a property is built, sold or rented. An EPC
gives a property an energy efficiency rating from A (most efficient) to G
(least efficient) and is valid for ten years. An EPC contains information
about a property's energy use and typical energy costs, and recommendations
about how to reduce energy use and save money.
EPRA Cost Ratio
Administrative and operating costs (including and excluding costs of direct
vacancy) as a percentage of gross rental income.
EPRA Earnings per share ('EPS')
Underlying earnings from the Group's property rental business divided by the
weighted average number of shares in issue over the period.
EPRA Loan to Value ('LTV')
Net debt and net current payables if applicable, divided by the total property
portfolio value including net current receivables if applicable and financial
assets due from the NCI.
EPRA NAV per share
Balance sheet net assets excluding fair value of derivatives, divided by the
number of shares in issue at the balance sheet date.
EPRA Net Disposal Value per share
Represents the shareholders' value under a disposal scenario, where assets are
sold and/or liabilities are not held to maturity. Therefore, this measure
includes an adjustment to mark to market the Group's fixed rate debt.
EPRA Net Reinstatement Value per share
This reflects the value of net assets required to rebuild the entity, assuming
that entities never sell assets. Assets and liabilities, such as fair value
movements on financial derivatives that are not expected to crystallise in
normal circumstances, are excluded. Investment property purchasers' costs are
included.
EPRA Net Tangible Asset Value per share
This reflects the value of net assets on a long term, ongoing basis assuming
entities buy and sell assets. Assets and liabilities, such as fair value
movements on financial derivatives that are not expected to crystallise in
normal circumstances, are excluded.
EPRA Net Initial Yield
Annualised rental income based on cash rents passing at the balance sheet
date, less non recoverable property operating expenses, expressed as a
percentage of the market value of the property, after inclusion of estimated
purchaser's costs.
EPRA Topped Up Net Initial Yield
EPRA net initial yield adjusted for expiration of rent free periods or other
lease incentives such as discounted rent periods and stepped rents.
EPRA Vacancy
The Estimated Rental Value ('ERV') of immediately available vacant space as a
percentage of the total ERV of the Investment Portfolio.
Equivalent Yield
The weighted average income return expressed as a percentage of the market
value of the property, after inclusion of estimated purchaser's costs.
Estimated Rental Value ('ERV')
The external valuers' opinion of the open market rent which, on the date of
valuation, could reasonably be expected to be obtained on a new letting or
rent review of a property.
European Public Real Estate Association ('EPRA')
EPRA is the industry body for European Real Estate Investment Trusts
('REITs').
European Single Electronic Format ('ESEF')
ESEF is the electronic reporting format required from 1 January 2021 to
facilitate access, analysis and comparison of annual financial reports.
Financial Conduct Authority ('FCA')
The Financial Conduct Authority is a regulatory body, operating independently
of the UK Government, which regulates financial firms providing services to
consumers and maintains the integrity of the financial markets in the UK.
GHG
Greenhouse gases ('GHG') are gases that contribute directly to climate change
by trapping heat in the earth's atmosphere.
Green Lease
A green lease is a standard form lease with additional clauses that provide
for the management and improvement of a building's environmental performance
by both owner and occupier(s). For LondonMetric, this includes clauses around
data sharing, EPC rating preservation, smart metering, and yielding up.
GRESB
Global Real Estate Sustainability Benchmark.
Gross Rental Income
Rental income for the period from let properties reported under IFRS, after
accounting for lease incentives and rent free periods. Gross rental income
will include, where relevant, turnover based rent, surrender premiums and car
parking income.
Group
LondonMetric Property Plc and its subsidiaries.
IFRS
The International Financial Reporting Standards issued by the International
Accounting Standards Board and adopted by the UK.
IFRS Net Assets
The Group's equity shareholders' funds at the period end including the net
assets attributable to the non-controlling interest.
IFRS Net Assets per share
IFRS net assets divided by the number of shares in issue at the balance sheet
date.
IFRS Reported Profit
The Group's equity shareholders' profit for the period excluding the profit
for the period attributable to the non-controlling interest.
Income Return
Net rental income expressed as a percentage of capital employed over the
period.
Income Strip
Through the sale of a 65 year income strip of Alton Towers and Thorpe Park in
2022, the Group has an obligation to pay rental income equivalent to 30% of
the annual rental income received from the tenant and the ability to acquire
the freehold back in 2087 for £1.
Investment Portfolio
The Group's property portfolio excluding development, land holdings and
residential properties.
Investment Property Databank ('IPD')
IPD is a wholly owned subsidiary of MSCI producing an independent benchmark of
property returns and the Group's portfolio returns.
IPCC
The Intergovernmental Panel on Climate Change ('IPCC') is the United Nations
body for assessing the science related to climate change. They developed the
Representative Concentration Pathways ('RCPs'), which describe four different
21st-century pathways of greenhouse gas ('GHG') emissions and atmospheric
concentrations, air pollutant emissions and land use.
Like for Like Income Growth ('LFL')
The movement in contracted rental income on properties owned through the
period under review, excluding properties held for development and
residential.
Listing Rules
The listing rules of the FCA made under the Financial Services and Markets Act
2000 as amended from time to time.
Loan to Value ('LTV')
Net debt expressed as a percentage of the total property portfolio value at
the period end, adjusted for deferred completions on sales and acquisitions
that exchanged in the period.
Logistics
The term is used synonymously with 'Distribution' and means the organisation
and implementation of operations to manage the flow of physical items from
origin to the point of consumption by the end user.
Low carbon heating
Low carbon heating refers to systems that reduce the reliance on fossil fuels
and their associated carbon emissions to heat properties. These include but
are not limited to heat pumps, electric boilers, biomass boilers, micro-CHP
systems, solar water heating, and other hybrid systems.
LXi Acquisition/Merger
The acquisition of the entire issued share capital of LXi REIT plc implemented
by way of a Scheme of Arrangement under Part 26 of the Companies Act 2006 and
deemed a reverse takeover and Class 1 transaction pursuant to the Listing
Rules.
LXi REIT plc ('LXi')
LXi REIT plc (now LXi Limited). Incorporated in the UK with company number
10535081.
MEES
The Minimum Energy Efficiency Standards ('MEES') Regulations establish a
minimum level of energy efficiency for rented property in England and Wales.
From April 2023, they require private rented properties to have a minimum
Energy Performance Certificate ('EPC') rating of E unless they have registered
a valid exemption. This is set to rise to EPC 'B' by 2030.
Net Debt
The Group's secured and unsecured loans net of cash balances at the period
end.
Net Rental Income
Gross rental income receivable after deduction for ground rents and other net
property outgoings including void costs and net service charge expenses.
Net Zero
Companies, processes, and buildings become Net Zero Carbon when they reduce
their absolute emissions to a minimum, with only a small amount, if any, being
offset.
NNN
NNN, or Triple Net Lease, is a type of lease agreement commonly used in
commercial real estate. In a NNN lease, the tenant is responsible for paying
key expenses in addition to the base rent.
NNN REIT
Also known as Triple Net Lease Real Estate Investment Trust, is a type of real
estate investment trust ('REIT') that specialises in properties leased to
tenants under triple net leases. In a triple net lease, the tenant agrees to
pay all ongoing operating expenses associated with the property, in addition
to rent and utilities.
Occupancy Rate
The ERV of the let units as a percentage of the total ERV of the Investment
Portfolio.
Operational Control Consolidated Approach
Under the operational control approach, a company accounts for 100% of
emissions from operations over which it or one of its subsidiaries has
operational control. It does not account for GHG emissions from operations in
which it owns an interest but has no control.
Operational Emissions
Also known as corporate emissions, are emissions associated with operations
owned or controlled by a company or that are a consequence of its operations.
For LondonMetric, this currently includes Scope 1 and 2 emissions.
Passing Rent
The gross rent payable by tenants under operating leases, less any ground rent
payable under head leases and the income strip.
Property Income Distribution ('PID')
Dividends from profits of the Group's tax-exempt property rental business
under the REIT regulations. The PID dividend is paid after deducting
withholding tax at the basic rate.
Real Estate Investment Trust ('REIT')
A listed property company which qualifies for and has elected into a tax
regime which is exempt from corporation tax on profits from property rental
income and UK capital gains on the sale of investment properties.
REGOs
Renewable Energy Guarantees of Origin Certificates ('REGOs') demonstrate that
electricity has been generated from renewable sources.
Scope 1
Direct GHG emissions from the combustion of fuel in equipment that is owned or
controlled by the Company, largely resulting from the use of natural gas,
refrigerants, and vehicle fuel. For LondonMetric, this includes
landlord-procured gas usage at our operational assets, including void units.
Scope 2
Scope 2 accounts for GHG emissions from the generation of purchased
electricity consumed by the Company. For LondonMetric, this includes
electricity usage at our head office and landlord-procured energy at our
operational assets, including void units.
Scope 3
Scope 3 emissions are all indirect emissions (not included in Scope 2) that
occur in the value chain of a company's activities, including both upstream
and downstream emissions. For LondonMetric, this relates to emissions from our
occupiers' operations and our developments.
Task Force on Climate-Related Financial Disclosures ('TCFD')
Created in 2015 to develop a framework for consistent climate-related
financial risk disclosure.
Total Accounting Return ('TAR')
The movement in EPRA Net Tangible Assets per share plus the dividend paid
during the period expressed as a percentage of the EPRA net tangible assets
per share at the beginning of the period.
Total Property Return ('TPR')
Unlevered weighted capital and income return of the property portfolio as
calculated by MSCI.
Total Shareholder Return ('TSR')
The movement in the ordinary share price as quoted on the London Stock
Exchange plus dividends per share assuming that dividends are reinvested at
the time of being paid.
Triple Net Lease
Triple Net Lease, or NNN, is a type of lease agreement commonly used in
commercial real estate. In a NNN lease, the tenant is responsible for paying
key expenses in addition to the base rent.
Triple Net Lease REIT
Also known as NNN REIT, is a type of real estate investment trust ('REIT')
that specialises in properties leased to tenants under triple net leases. In a
triple net lease, the tenant agrees to pay all ongoing operating expenses
associated with the property, in addition to rent and utilities.
Weighted Average Interest Rate
The total loan interest and derivative costs per annum (including the
amortisation of finance costs) divided by the total debt in issue at the
period end.
Weighted Average Unexpired Lease Term ('WAULT')
Average unexpired lease term across the Investment Portfolio weighted by
Contracted Rent.
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