Earnings fall as portfolio expands at Urban Logistics

Urban Logistics reported a total property return of 17.1% in its full-year results on Wednesday, up from 10.1% in the prior year, as its net rental income advanced 88% to £22.9m.

The AIM-traded real estate investment trust said adjusted earnings per share were 11.7% weaker for the 12 months ended 31 March, at 6.76p.

It noted the raise of £92.3m of equity capital in October, adding that its portfolio grew by 145.2% over the year to £507.6m.

EPRA net tangible assets ended the year at 152.33p per share, up from 137.89p a year earlier, which the board put down to a “strong uplift” in property values.

Dividends for the year were in line with the prior year, at 7.6p, while the firm’s loan-to-value ratio stood at 27.9% at year-end.

On the operational front, Urban Logistics said more than 99% of rent due was collected during the period, as the company acquired 36 logistics assets for £264.m and a blended net initial yield of 6.2%, with “good” asset management potential.

It supplied £26.2m of forward funding across five development sites which reached practical completion during the year, and committed £39.5m to a further five sites where development work was ongoing.

Portfolio disposals totalled £30m for a 35.4% uplift to book values, representing an average total property return of 78.8% and an exit yield of 4.8%.

Urban Logistics’ weighted average unexpired lease term rose to 7.4 years at year-end, from 4.9 years at the end of 2020, while like-for-like contracted income growth across the portfolio improved to 6.5% from 3.4%.

Since the year ended, Urban Logistics had made a further £33m of acquisitions at a net initial yield of 6.3%.

“Urban Logistics continues to prosper with a portfolio focused on last mile, or last touch, logistics real estate,” said chief executive officer Richard Moffitt.

“Logistics tenants continue to invest into their real estate footplate as they respond to strengthening underlying customer demand and build out their own future, medium-to-long term, infrastructure plans.

“Whilst in any real estate cycle or class there is no room for complacency, we have a significant asset management programme in place and our longer weighted average unexpired lease term at the year-end evidences both shorter term lettings opportunities, from assets which have been in the portfolio for a while, as well as line of sight on medium to longer term potential across the portfolio as a whole.”

Moffitt said that during the year, the company took advantage of strong market conditions, realising £30m in disposals at an “attractive” 4.8% exit yield.

“High lettings levels, a shortage of supply in the market generally and a strong merger and acquisition market evidence further potential in our portfolio.

“Equally, in terms of the year ahead, we are fully invested and have a strong pipeline of attractive off market opportunities which would allow us to keep pace with our past track record of new investment.”

At 0908 BST, shares in Urban Logistics were down 1.55% at 159p.