Londonmetric to spend hundreds of millions buying warehouses

Londonmetric is to spend hundreds of millions of pounds buying more warehouses next year, but it will continue to avoid shops and offices.
Andrew Jones, chief executive of the FTSE 100 landlord, has in recent years pivoted Londonmetric’s portfolio towards what he thinks are “winning sectors”; namely industrial and logistics, private hospitals, theme parks and convenience stores.
So far in 2024, the group has sold £234 million of buildings, mostly unwanted offices, supermarkets and car showrooms it inherited when it bought LXi Reit back in January.
Jones, 56, estimates that there is another £300 million or so of buildings that he wants to dispose of in 2025, with the bulk of any sale proceeds being spent on acquiring more warehouses.
Londonmetric owns £6.2 billion of commercial property around the UK, about 45 per cent of which is warehouses. The ambition is to take that proportion up to 50 per cent next year.
“They’re low energy, have strong supply-demand dynamics and almost guaranteed revenue growth,” he said. “If you’ve got logistics delivering five-year rental growth at 44 per cent, why wouldn’t you want more of those?”
Across its portfolio, Londonmetric’s warehouses are seeing the biggest rental growth as rising demand from online shopping businesses and “near-shoring” has met with very little availability. The group’s portfolio is 99 per cent occupied.
As it stands, if the group were to re-let all of its warehouses today, it would be collecting an extra 21 per cent in rent. That rental growth is why Jones wants to continue adding more warehouses to the portfolio. He is not, though, as optimistic about the outlook for offices and shops.
“I’m out of offices and shopping malls because people are spending less time in offices and they’re spending more time [shopping] on the internet,” he explained. “The current portfolio is fit for purpose for another three or four years without any major dramatic U-turns or pivots.”
Londonmetric’s net rental income more than doubled to £193.1 million between April and September, the first half of its financial year, up from £76 million in the same period of 2023.
Most of that growth came from its acquisition of LXi Reit, which owned the freeholds to amusement parks Alton Towers and Thorpe Park, at the beginning of this year. Excluding the impact of that acquisition, the group’s like-for-like income increased by 1.7 per cent.
Pre-tax profits doubled to £165.9 million from £81.6 million, boosted by a small increase in the valuation of its portfolio. Net tangible assets, a key metric for property companies, rose to 6.6p per share from 5.3p.
The interim dividend was lifted by a fifth to 5.7p per share. The second quarterly pay-out of 2.85p per share will be paid in January. Londonmetric shares closed down 0.3 per cent to 190p on Tuesday.