Warehouse REIT : Trading Update and Increased Dividend

RNS Number : 2400A

Warehouse REIT PLC

20 January 2020

20 January 2020

Warehouse REIT plc

(the 'Company' or 'Warehouse REIT')

Trading Update and Increased Dividend

Warehouse REIT, (the "Company"), the AIM-listed specialist warehouse investor, announces a trading update covering the period since 1 October 2019.

During the period the Company completed 24 new le ngs and 20 lease renewals across 189,000 sq of space, achieved at 6.4% ahead of 30 September 2019 ERVs, genera ng £1.1 million per annum of contracted rent. The por olio's total occupancy increased to 92.6% from 91.5% (30 September 2019) with effec ve vacancy only 3.1% excluding units under refurbishment or under offer to let. The Company also completed the disposal of five smaller non-core assets for a combined price of £4.4 million, at an average of 5.6% ahead of 30 September 2019 book values and 12.4% ahead of cost.

Andrew Bird, Managing Director of Tilstone Partners Ltd, the investment advisor of Warehouse REIT, commented: "Alongside Warehouse REIT's disciplined deployment of shareholders' funds from our most recent fundraise, we con nue to extract strong opera onal performance from the Company's diversified por olio of UK warehouse assets. The Company has achieved both rents and strategic disposals in excess of valua ons, while compe on for space from an ongoing broad range of tenants has translated into increased occupancy levels. Furthermore, the current rent roll does not reflect a number of income and value enhancing projects which we are confident will be delivered in the near term.

"We con nue to see a rac ve acquisi on opportuni es that meet Warehouse REIT's investment criteria, at both an individual asset and por olio level, underpinned by solid occupa onal demand. We are confident that our convic on call on the well-located mul -let urban warehouse space - where rents are forecast to outperform - will allow the Company to deliver its shareholders with an attractive, progressive and well covered dividend.

"Underpinned by our confidence in the ongoing asset management and with the benefit of the recent deployment of capital ahead of target, the Company is today pleased to declare a quarterly dividend of 1.6p per share, reflec ng a 6.7% increase on the previous quarterly dividend."

Asset management

The 24 new le ngs represent 143,000 sq of floor space, genera ng rental income in excess of £811,000 per annum, 7.5% ahead of the 30 September 2019 ERV. The Company has con nued to capture reversionary poten al from the por olio, with 20 lease renewals genera ng a combined annual rent of £300,000, an upli of 9.2% as compared to the previous rent.

Highlights during the period include:

∙	A new 10-year lease with no break, to a building materials manufacturer and distributor, on a 20,000 sq unit
	at Gawsworth Court, Warrington. The rent of £137,000 per annum represents an 11.8% premium to the 30
	September 2019 ERV.
∙	A 5,600 sq le	ng to a sports charity, at Yale Business Park, Ipswich, on a ten-year lease with a break at year
	six, at £43,000 per annum, 18.5% ahead of the 30 September 2019 ERV.
∙	The renewal of a 2,500 sq unit at Smeed Dean Centre, Si ngbourne on a new seven-year lease. The
	average rent over the lease term represents a 63.6% premium to the previous rent.
∙	An 11,400 sq	unit at Goodridge Business Park, Gloucester has been re-let on a four-year term, to a fluid

technology company, at 18.9% ahead of the previous rent.

In the period since 30 September 2019, the total por olio occupancy has increased from 91.5% to 92.6%, with the effec ve vacancy only 3.1% as 3.0% of the por olio ERV is under refurbishment and a further 1.3% is under offer to let. The space under offer will deliver approximately £389,000 per annum of rent, with le ngs 5.3% ahead of 30 September ERVs. Occupancy excluding units under offer and units undergoing refurbishment stands at 96.9%.

Contracted rent for proper es owned throughout the period since 30 September 2019 has increased by 1.0%, reflec ng the posi ve impact of new le ngs as well as rent reviews and renewals which more than offset space returned. Total contracted rent is now £31.5 million.

Alongside ongoing asset management ac vity, in October 2019 planning permission was secured on 4.2 acres of surplus land at Warehouse REIT's exis ng Nexus estate in Knowsley for 35,000 sq of warehouse space, a petrol

filling sta on with associated ancillary uses of 5,000 sq and a 2,200 sq drive-through. The exis ng estate comprises 12 units totalling 184,800 sq and has strong transport links being situated on Junc on 4 of the M57, approximately seven miles from Liverpool city centre. Discussions with poten al occupiers are progressing well. Progress is also being made working up value-accre ve proposals on other schemes within the por olio. For example, the Company's most recent purchase prior to this quarter (being the Echelon Por olio acquired at an

• rac ve 7% NIY on 27th September 2019) has already yielded meaningful lease renewal nego a ons and a planning application has been submitted for a 27,000 sq ft warehouse extension.

Acquisitions and disposals

In October the Company completed the acquisi on of the 29-acre Midpoint Estate in Middlewich, Cheshire. The 182,500 sq mul -let estate comprises 20 high quality warehouse units in a strategic loca on within two miles of Junction 18 of the M6 motorway and approximately twenty-six miles south of Manchester. The purchase price of £15.5 million represented a net ini al yield of 6.6%. Since the acquisi on the Company has already increased overall passing rents by 3.7% increasing the running yield to 6.8% and also extended the WAULT to expiry by 1.2 years to 6.5 years.

The disposals of five smaller assets totalling 82,517 sq were completed during the period for a combined price of £4.4 million, an average of 5.6% above 30 September 2019 book values, reflec ng a blended 4.2% net ini al yield. The sales are part of the ongoing strategy to dispose of non-core assets; Bangor has a retail tenant, Redditch and Swindon are offices, Wardley was vacant and like Blackburn, was sold to an owner occupier.

Dividend

The Company has today declared its third quarterly interim dividend for the financial year ending 31 March 2020 of 1.6 pence per ordinary share payable on 31 March 2019 to shareholders on the register on 28 February 2020. This represents an increase of 6.7% on the two interim dividends paid to date of 1.5 pence per ordinary share totalling 3.0 pence per ordinary share.

The increase reflects the Company successfully deploying the proceeds of the capital raise (April 2019), ahead of programme, by 30 September 2019 and the posi ve outlook for earnings. The dividend target for the year has been increased to 6.2 pence per share from the previous target to pay dividends totalling at least 6.0 pence per share. Thereafter, the Company will adopt a progressive dividend policy, in line with anticipated growth in earnings.

The ex-dividend date will be 27 February 2020. The dividend of 1.6 pence per ordinary share will be paid in full as a Property Income Distribution.

Enquiries

Warehouse REIT plc

via FTI Consulting

Tilstone Partners Limited	[phone]
Andrew Bird

G10 Capital Limited (part of the Lawson Conner Group),	[phone]
AIFM
Maria Glew, Gerhard Grueter
Peel Hunt (Financial Adviser, Nominated Adviser and	[phone]
Broker)

Capel Irwin, Harry Nicholas, Carl Gough

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

Dido Laurimore, Ellie Sweeney, Richard Gotla

Further information on Warehouse REIT is available on its website:

http://www.warehousereitplc.co.uk

Notes

Warehouse REIT plc owns and manages a diversified portfolio of warehouse real estate assets in UK urban areas.

This is a compelling market. The structural rise in e-commerce and investment in 'last-mile' delivery contribute to high tenant demand, while limited vacant space and our active asset management lead to growing rents. Capturing this income allows us to offer our shareholders an attractive dividend and the prospect of capital and further dividend growth.

Our portfolio of well-located assets is let to occupiers ranging from pure e-commerce to traditional light industrial. As we expand, our vision is for Warehouse REIT to become the warehouse provider of choice across the UK.

The Company's shares were admitted to trading on AIM in September 2017.

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