REG - Warehouse REIT PLC - Pipeline Update and Potential Equity Raise

Warehouse ReitAnnouncement

17/02/2020 07:00

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RNS Number : 1347D  Warehouse REIT PLC  17 February 2020

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION ((EU) 596/2014)

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
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REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT
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JURISDICTION

17 February 2020

Warehouse REIT plc

(the "Company" or "Warehouse REIT")

Pipeline Update and Potential Equity Raise

Warehouse REIT, the AIM-listed company that invests in and manages urban and
'last-mile' industrial warehouse assets in strategic locations in the UK,
announces a pipeline update and a potential equity raise.

Driven by structural demand from the rise in e-commerce, occupational take-up
remains robust. The Company has recently completed a number of successful
portfolio initiatives and continues to extract strong operational performance
from the Company's portfolio. In the period from 1 October 2019 to 31 January
2020 Warehouse REIT has:

·    Completed 28 new lettings and 28 lease renewals across 209,000 sq ft
of space, achieved at 5.5% ahead of 30 September 2019 ERVs and generating
£1.2 million per annum of contracted rent, reflecting the reversionary nature
of the portfolio;

·    Completed or exchanged on the sale of 13 smaller non-core assets for
a combined price of £17.6 million at an average of 7.6% ahead of 30 September
2019 book values and 10.1% ahead of cost, reflecting a blended 6.7% net
initial yield; and

·    Increased total occupancy in the portfolio to 92.7% from 91.5% at 30
September 2019 (with effective vacancy only 2.9% excluding units under
refurbishment or under offer to let).

These portfolio initiatives follow the acquisition of the 29-acre Midpoint
Estate in October 2019 for a purchase price of £15.5 million, representing a
net initial yield of 6.6%.

Furthermore, as announced on 24 January 2020, Warehouse REIT has entered into
a new five year £220 million debt facility to replace the existing £210
million HSBC facility. The new facility extends the term of the debt and
reduces the margin by 14 basis points from a blended 2.14% above LIBOR to
2.00% above LIBOR, and reflects the positive impact that Warehouse REIT's
increasing scale has when accessing debt markets.

Following the successful deployment of the funds raised in April 2019 and its
positive outlook on earnings, the Company announced a third quarterly dividend
for the financial year ending 31 March 2020 of 1.6 pence per ordinary share,
representing a 6.7% increase on the two interim dividends paid to date of 1.5
pence per ordinary share each. As a result the dividend target for the year
ending 31 March 2020 has been increased to 6.2 pence per share from 6.0 pence
per ordinary share.

Tilstone Partners Limited (the "Investment Adviser") continues to see good
opportunities to purchase assets at prices below replacement value, with the
potential to secure robust and growing income streams, which can be
distributed to shareholders through the Company's quarterly dividend
programme.

The Investment Adviser currently has in advanced negotiations, or has
identified, a pipeline of investment opportunities with a target investment
yield in excess of 6% amounting to approximately £352 million, of which
approximately £72 million are in exclusive or final negotiations or have
solicitors instructed and approximately a further £280 million are in
detailed negotiations.

The Company believes that the acquisition of assets identified in this
pipeline would further diversify the Company's income and be accretive to
shareholder returns, in addition to continuing to strengthen the portfolio's
sustainability, quality and prospects for growth.

With limited capital resources available to complete acquisitions, the Company
is contemplating an equity fundraising to benefit from this pipeline of near
term opportunities, which it will seek to deploy, together with debt finance
where appropriate, in line with its investment strategy.  Any such
fundraising is expected to follow the publication of a prospectus and further
details will follow in due course.

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.

 Enquiries:

 Warehouse REIT plc (via FTI Consulting)

 Tilstone Partners Limited                                      +44 (0) 1244 470 090
 Andrew Bird, Peter Greenslade, Paul Makin

 G10 Capital Limited (part of the Lawson Conner Group), AIFM    +44 (0) 20 3696 1302
 Maria Glew, Gerhard Grueter

 Peel Hunt (Nominated Adviser and Broker)                       +44 (0) 20 7418 8900
 Capel Irwin, Carl Gough, Harry Nicholas

 FTI Consulting (Financial PR & IR Adviser to the Company)      +44 (0) 20 3727 1000
 Dido Laurimore, Ellie Sweeney, Richard Gotla

Notes to editors:

Warehouse REIT is an AIM listed UK Real Estate Investment Trust that invests
in and manages urban and 'last-mile' industrial warehouse assets in strategic
locations in the UK.

Occupier demand for urban warehouse space is increasing as the structural
growth in e-commerce has driven the rise in internet shopping and investment
by retailers in the "last mile" delivery sector, yet supply remains
constrained giving rise to rental growth.

The Company 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.

The contents of this announcement do not constitute or form part of an offer
of or invitation to purchase or subscribe for, or any solicitation of any
offer to purchase or subscribe for, any securities for sale in any
jurisdiction.

 

Forward-looking statements

 

This announcement contains forward-looking statements, including, without
limitation, statements containing the words "believes", "expects", "intends",
"may", "will", or "would" or in each case, their negative or other variations
or similar expressions. Such forward-looking statements involve unknown risk,
uncertainties and other factors, which may cause the actual results of
operations, performance or achievement of the Group, or industry results, to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.

 

Given these uncertainties, prospective investors and shareholders are
cautioned not to place any undue reliance on such forward-looking statements.
These forward-looking statements speak only as at the date of this
announcement. Subject to its compliance with its legal and regulatory
obligations (including under the Listing Rules, the Disclosure Guidance and
Transparency Rules, the Market Abuse Regulation and the Prospectus Rules), the
Company undertakes no obligation to update or revise any forward-looking
statement contained herein to reflect any change in expectations with regard
thereto or any change in events, conditions or circumstances on which any
statement is based.

 

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