REG - Warehouse REIT PLC - Trading Update

Warehouse ReitAnnouncement

25/08/2022 07:00

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RNS Number : 1417X  Warehouse REIT PLC  25 August 2022

25 August 2022

 

Warehouse REIT plc

 

(the 'Company' or 'Warehouse REIT')

 

Trading Update

 

Resilient tenant demand driving new leasing activity 3.5% ahead of 31 March
2022 ERVs

 

Warehouse REIT, (the "Company"), a specialist urban and 'last-mile' industrial
warehouse investor, announces a trading update covering the period 1 April
2022 to 23 August 2022.

 

Highlights:

 

·   A resolution to grant outline planning permission has been secured
from Cheshire East Council for a further 1,020,000 sq ft warehousing at the
Company's 102-acre flagship logistics park development at Radway Green, Crewe.
The total consented floor area at the Company's Radway Green site now totals
1.8 million sq ft, with construction due to start in early 2023.

 

·    15 new lettings, 9 lease renewals and 9 rent reviews were completed
across 198,000 sq ft of space. The transactions will generate £1.5 million of
annual contracted rent, 3.5% ahead of 31 March 2022 ERVs:

 

o  New lettings were agreed 5.0% ahead of 31 March 2022 ERVs and will
generate rent of £0.7 million.

o  Lease renewals and rent reviews have continued to capture the portfolio
reversionary potential, generating rent of £0.8 million at an uplift of 18.0%
versus the previous rent.

o  As a result of these transactions, the portfolio like-for-like contracted
rent has increased by 1.64%.

 

·   Portfolio occupancy has remained stable at 93.4%, with effective
vacancy down to 2.7% (excluding units under refurbishment or under offer to
let).

 

·   The Company has taken out two additional interest rate caps of £100.0
million each for three and five years respectively, which serve to cap the
SONIA rate in the Company's debt facilities at 1.5%. These are in addition to
the two existing £30.0 million interest rate caps the Company has in place,
which expire in November 2022 and 2023 and cap SONIA at rates of 1.50% and
1.75% respectively. Following these caps, approximately 75% of the Company's
debt is now hedged against interest rate volatility.

 

 

Andrew Bird, Managing Director of Tilstone Partners Ltd, the investment
advisor of Warehouse REIT, commented:

"This has been another busy period for the Company, as we continue to
successfully execute on our asset management and value add strategies. In
particular, securing planning at Radway Green was a major milestone, and in
partnership with a leading global developer, will see us deliver a much-needed
state of the art logistics hub in the North West, one of our high conviction
regional markets. Additionally, we have significantly strengthened the
Company's financial position by growing rents, maintaining occupancy and
further hedging our balance sheet, whilst also completing the Company's move
to the main market of the London Stock Exchange."

 

"Whilst we remain alert to the increasingly challenging macroeconomic
backdrop, our confidence in the warehouse and logistics sector remains strong.
Underpinned by chronic undersupply and supply chain reconfiguration demands,
H1 2022 take up reached a record 30.8 million sq ft, a 10% increase on H1
2021. At a portfolio level, demand for tenant critical assets which account
for a fraction of an occupiers' costs, in commercially relevant locations, is
enabling the Company to continue to capture reversionary potential, as well as
materially grow ERV's and contracted rent."

 

Market overview

According to CBRE's monthly index, rental growth in the industrial and
warehouse sector continues to outperform the UK property market, achieving
2.2% during the quarter to June 30 2022, versus 1.0% for all properties. This
trend has continued into the current quarter, with the most recent July
statistics showing 0.7% month-on-month rental growth, versus 0.3% for all
properties.

 

Acquisition and disposals

During the period, the Company completed on the previously announced
acquisition at Bradwell Abbey, Milton Keynes, for £62.0 million (before
acquisition costs), as well an adjoining plot at Radway Green, Crewe for £2.0
million (before acquisition costs).

 

The Company has continued its programme of recycling non-core assets with the
disposal of properties in Ballymena and Deeside, for £4.8 million, 15.6%
ahead of 31 March 2022 book value.

 

Asset management

Highlights during the period included:

·    The letting of unit 23 (15,200 sq ft), at Gateway Park, Birmingham,
to an electronic bike and scooter company, on a new 5-year term, at a rent of
£7.65 per sq ft, at 17.7% above the 31 March 20022 ERV.

·    Settled an outstanding rent review with an online sales and print
manufacturer at Groundwell Industrial Estate Swindon, for £117,200, 35% ahead
of previous contracted rent.

 

Debt financing

The two additional interest rate caps of £100 million each for three and five
years respectively serve to cap the SONIA rate in the Company's debt
facilities at 1.5%.  Following these caps, the Company has total drawn debt
of £336 million, with a low loan to value ratio of approximately 30%
(calculated on 31 March 2022 valuations) and interest caps in place on over
£260 million.  The maturity and quantum of hedging will be kept under
constant review.

Enquiries

 

Warehouse REIT
plc                                                                                 via
FTI Consulting

 Tilstone Partners Limited                                        +44 (0) 1244 470 090

 Andrew Bird, Peter Greenslade

 G10 Capital Limited (part of the IQEQ Group), AIFM                +44 (0) 20 7397 5450

 Maria Glew

  FTI Consulting (Financial PR & IR Adviser to the Company)

 Dido Laurimore, Richard Gotla, Ellie Perham-Marchant             +44 (0) 20 3727 1000

 

Further information on Warehouse REIT is available on its website:

http://www.warehousereitplc.co.uk (http://www.warehousereitplc.co.uk/)

 

Notes

Warehouse REIT plc invests in and manages urban and 'last-mile' industrial
warehouse assets.

 

Our purpose is to own and manage warehouses in economically vibrant urban
areas across the UK, providing the space our occupiers need for their
businesses to thrive.

 

As we grow, our vision is to become the UK's warehouse provider of choice.

 

The Company is listed on the Main Market of the London Stock Exchange and is
an alternative investment fund ("AIF") for the purposes of the AIFM Directive
and as such is required to have an investment manager who is duly authorised
to undertake the role of an alternative investment fund manager. The
Investment Manager is currently G10 Capital Limited.

 

 

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