LONDONMETRIC PROPERTY PLC
(“LondonMetric” or the “Group” or the “Company”)
ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2018
Alignment with modern shopping habits continues to
generate strong and growing returns
LondonMetric today announces its annual results for the year ended 31 March 2018.
|
Income Statement |
31 March 2018 |
31 March 2017 |
|
Net rental income (£m)1 |
90.6 |
81.8 |
|
Reported Profit (£m) |
186.0 |
63.0 |
|
EPRA Earnings (£m) |
59.1 |
51.0 |
|
EPRA EPS (p) |
8.5 |
8.2 |
|
Dividend per share (p) |
7.9 |
7.5 |
|
Balance Sheet |
31 March 2018 |
31 March 2017 |
|
IFRS net assets (£m) |
1,149.5 |
1,006.9 |
|
EPRA net assets |
1,146.6 |
1,030.5 |
|
EPRA NAV per share (p) |
165.2 |
149.8 |
|
LTV (%)1,2 |
35 |
30 |
1 Including share of Joint Ventures. Further details on Alternative Performance Measures and the presentation of financial information can be found in the Financial Review and definitions can be found in the Glossary.
2 Including cash from deferred sales that completed post year end
Income Statement
· EPRA earnings up 15.9% to £59.1m, up 3.7% on a per share basis
· Net rental income up 10.8% to £90.6m1, reflecting full benefit of equity raise and portfolio activity
· Reported profit of £186.0m driven by £121.6m1 revaluation surplus, reflecting a 7.1% valuation uplift
Dividend increased 5.3% to 7.9p, 108% dividend cover
· Fourth quarterly interim dividend declared of 2.35p
Balance Sheet
· EPRA NAV per share up 10.3% to 165.2p (2017: 149.8p)
· Portfolio valued at £1,842.0m1 with a 28bps equivalent yield compression
· Total Property Return of 13.7% against IPD All Property of 10.1%
· Total Accounting Return of 15.5%
Distribution weighting increased to 69%
· Distribution acquisitions of £306.4m at 5.9% yield
· Regional distribution sales of £88.2m at 5.3% yield
· Urban logistics grown to 45 assets, representing 29% of our end to end logistics portfolio
· Non distribution disposals of £163.4m, including sale of our last office investment
· Long income, convenience and leisure acquisitions of £78.5m at 6.2% yield
Income growth from asset management
· £3.1m pa income uplift from rent reviews and lettings. New leases signed with WAULT of 15.2 years
· £1.3m pa income uplift PPE, including four distribution rent reviews and lettings at 28% above passing
· 4.3% LFL income growth and 3.1% ERV growth
Short cycle developments creating future long income at attractive yields
· 1.0m sq ft in construction or pipeline at 6.5% yield on cost, of which 0.3m sq ft completed post year end
· Detailed terms on 350,000 sq ft at our Bedford development, underwriting a 7.0% yield on cost
Portfolio metrics reflect our focus on long income, contractual uplifts and low operational requirements
· WAULT of 12.4 years with only 6% of income expiring within three years
· 50.3% of income subject to contractual uplifts, 98.7% gross to net income ratio
Finances strengthened and improved
· Debt maturity of 4.8 years
· Average cost of debt fallen from 3.5% to 2.8%
· Cancellation and recouponing of interest rate swaps with short payback period
· EPRA cost ratio reduced to 15%
Andrew Jones, Chief Executive of LondonMetric, commented:
“Our objective of generating a repetitive and growing income stream continues to deliver strong returns, aided by our purposeful alignment towards modern shopping habits.
“Today's world is complex and increasingly dynamic. The impact of digital evolution and ongoing shifts in consumer shopping habits is being felt more than ever in the retail sector. Whilst the virtual tills are ringing, the physical ones are not. Many will tell you that we are entering the final act. We are not and there will be value destruction in parts of retail.
“Our early anticipation of these shifts and the global search for income led to our pivot towards distribution and long income assets which more accurately cater for modern shoppers' needs. Five years on from the merger that created LondonMetric, the Company and its shareholders continue to see the benefits of this focused strategy.
“Economic compounding is the essence of long term value creation. Our adoption of this principle, together with our occupier intelligence and property relationships has been instrumental in our success. Whilst we can never be totally immune, we believe that this approach gives us a competitive advantage to navigate these changing times, allows us to increase our earnings and, in turn, grow our dividends.”
For further information, please contact:
LONDONMETRIC PROPERTY PLC: +44 (0)20 7484 9000
Andrew Jones (Chief Executive)
Martin McGann (Finance Director)
Gareth Price (Investor Relations)
FTI CONSULTING: +44 (0)20 3727 1000
Dido Laurimore /Tom Gough /Richard Gotla
Meeting and audio webcast
A meeting for investors and analysts will be held at 9.00 am today at FTI Consulting. A conference call dial-in is available for the meeting: +44 (0)330 336 9105 (Participant Passcode: 6058260). For the live webcast see: https://webcasting.brrmedia.co.uk/broadcast/5ada026c7264e840320a5eef
An on demand recording will be available shortly after the meeting from the same link and also from: http://www.londonmetric.com/investors/reports-and-presentations
Notes to editors
LondonMetric is a FTSE 250 REIT (ticker: LMP) that specialises in distribution, convenience and long income property. It focuses on strong and growing income and adding value through asset management initiatives and short cycle developments. LondonMetric has 14 million sq ft under management. Further information is available at www.londonmetric.com
Neither the content of LondonMetric's website nor any other website accessible by hyperlinks from LondonMetric's 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 as to whether or not to acquire, continue to hold, or dispose of shares in LondonMetric.
Forward looking statements: 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 events and depend upon circumstances that may occur in the future. 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 are shown as a single line item 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 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.
Chairman's statement
This year marked LondonMetric's fifth anniversary since its merger in 2013 and I am extremely proud of its progress and achievements. Over this period, we have doubled net rental income and EPRA earnings per share and delivered a total shareholder return of 119%, of which 43% was generated from dividends.
The Company has delivered a particularly strong financial performance in the year, resulting in a record reported profit of £186.0 million. On a per share basis, EPRA earnings were 3.7% higher, dividends increased by 5.3%, our third year of progression, and EPRA NAV rose by 10.3%, benefiting from a £121.6 million revaluation surplus. Total accounting return was 15.5%.
Critical to our long term success is our alignment to sectors supported by structural changes in shopping habits, which have been profound and, in our view, permanent. Distribution continues to benefit significantly from these changes and is one of the best performing real estate sectors. Over the year, our distribution assets increased by over £300 million to represent 69% of the portfolio, compared to 21% in 2013. They have delivered another strong performance which, together with a good performance from our convenience, leisure and long income assets, helped to deliver a total property return of 13.7% for the year, a 360 bps outperformance of IPD All Property.
As a REIT, our priority is to generate income returns and pass onto our shareholders in the form of a covered and progressive dividend. The portfolio's alignment to strong sectors, assets and tenants and its unexpired lease term of 12 years provides highly reliable and repetitive income. Our disposal activity in the year, particularly the sale of shorter let and older distribution assets, reflects our disciplined approach to portfolio management and the value we attach to reliable income.
We firmly believe that income will be an increasingly important component of total returns. Therefore, our focus is on owning assets that can also generate rental growth. Through a combination of contractual and open market rent reviews as well as our asset management, we increased like for like income by 4.3% in the year. With half of the portfolio subject to contractual rental increases and strong prospects for organic rental growth, particularly from our growing urban logistics portfolio, we are confident in our ability to grow our earnings and continue to progress the dividend.
Our people remain fundamental to the ongoing success of the Company and I would like to take this opportunity to thank the Board and all of our employees for their hard work. I should also like to welcome Suzanne Avery as a Non Executive Director and to thank Andrew Varley for his contribution and dedication to LondonMetric following his retirement earlier in the year.
Our combined occupier and property relationships continue to provide us with a competitive advantage and put LondonMetric in a strong position for the future.
I look forward to the next year with confidence.
Patrick Vaughan
Chairman
30 May 2018