Warehouse Reit Share Discussion Threads

[igoe104] 28/8/2021 12:24

Share magazine writeup.

[makinbuks] 25/8/2021 10:33

Excellent update. Particularly like the rent increases agreed 7% ahead of estimate and the new acquisition initial yield of 5%. These stats will drive an increase in NAV in due course, starting with the next update for the end of September

[igoe104] 25/8/2021 07:26

Already in my watch list, Skinny.

[skinny] 25/8/2021 07:21

You might like PHP.

[igoe104] 25/8/2021 07:11

Excellent stuff, this will continue to be a great sector to be invested in as online shopping continues to increase, the demand for warehouse space is only going increase significantly...

I also like the care home sector, as the number of 85 year old plus is going to double over the next 20 years . So I've started buying THRL....

[skinny] 25/8/2021 07:03

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Trading Update

New acquisitions take portfolio past 8.5 million sq ft whilst post-lockdown occupier demand drives 20 new leasing transactions achieving an average uplift of 7% on March 21 ERVs

Warehouse REIT, (the "Company"), the AIM-listed specialist warehouse investor, announces a trading update covering the period since 25 May 2021.

During the period the Company completed four acquisitions, in separate transactions of which the majority were off-market, for a total consideration of GBP13.1 million, reflecting a blended net initial yield of 5.0%. Generating GBP0.7 million per annum of contracted rent (with an ERV of GBP0.9 million), the acquisitions take Warehouse REIT's portfolio past 8.5 million sq ft and have increased its holdings in two existing key locations - in South Cambridge, one of the UK's fastest growing employment and innovation centres, and Midpoint-18, Cheshire. In addition, contracts have been exchanged to acquire a further 16 acres of land immediately adjoining the existing Radway Green multi-let estate located at junction 16, M6 motorway, outside Crewe.

The Company also completed 20 new lettings, achieved at 7.0% ahead of 31 March 2021 ERVs, totalling 112,000 sq ft and generating GBP0.7 million of contracted rent. 13 lease renewals also completed, achieving an uplift of 20.2% compared to the previous rent. Totalling 87,000 sq ft of space, these transactions generate GBP0.6 million per annum of contracted rent[1]. The portfolio's total occupancy decreased slightly to 94.2% (as at 31 July 2021) from 95.6%, however effective vacancy has reduced to just 2.0%, excluding units under refurbishment or under offer to let.

Andrew Bird, Managing Director of Tilstone Partners Ltd, the investment advisor of Warehouse REIT, commented:

"We continue to witness strong occupier demand across the portfolio from a range of both e-commerce related businesses as well as more traditional national operators and SMEs, allowing us to capture the significant reversionary potential as we continue to experience strong rental collection, in line with previous quarters. With lockdown restrictions easing, and H1 2021 take up 82% above long term take up (Savills July 2021), the chronic demand supply imbalance of modern industrial space, in economically relevant locations, will continue to underpin attractive rental growth, which the Company is ideally placed to capture given its increasing scale and asset management expertise.

"The sector's compelling fundamentals continue to attract new entrants into the market, which is driving yield compression and underpinning strong valuations. Despite this increased competition, with nearly a decade of experience investing in the space, we have been able to curate excellent relationships with prospective vendors, allowing the Company to continue making accretive acquisitions deliberately focusing on adjoining ownerships to existing assets. Whist our strategic priority is improving the quality of the income, we believe we can drive even stronger returns by complementing this approach through select tactical acquisitions with a value-add angle, as well as strategic development initiatives."

Market overview

The industrial and warehouse sector has continued to outperform the UK property market, reflecting its favourable structural drivers and growing appetite from investors attracted by secure income with rental growth, which is putting downward pressure on yields. According to the CBRE UK Monthly Index, industrial capital values increased by 7.7% in the four months to 31 July 2021, with rental growth of 0.5% month-on-month. The next valuation date for the Company's portfolio will be 30 September 2021.

Asset management

The 20 new lettings represent 112,000 sq ft of floor space, generating rental income in excess of GBP0.7 million per annum, 7.0% ahead of the 31 March 2021 ERV. The Company has continued to capture reversionary potential from the portfolio, with 13 lease renewals generating a combined annual rent of GBP0.6 million, an uplift of 20.2% as compared to the previous rent.

Highlights during the period include:

-- The letting of unit 5 (12,200sqft) at Midpoint-18 to an international manufacturing business for a new 15 year term at a rent of GBP7.00psf, as well as simultaneously acquiring the freehold of their existing adjoining premises with the occupier taking a lease back on similar terms.

-- In Sheffield, 5,100sqft have been let for a term of 10 years at a rent equating to GBP5.65psf, reflecting 88% above the valuer's ERV.

In the period since 1 April 2021, the total portfolio occupancy fell slightly from 95.6% to 94.2%, whilst the effective vacancy fell to 2.0%, with 1.8% of the portfolio ERV under refurbishment and a further 2.0% under offer to let (as at 31 July 2021). The space under offer will deliver approximately GBP1.0 million per annum of rent. New lettings, renewals and vacancy will now exclude short-term temporary lettings of assets classified as development land, in particular for leases completed during the period 1 April 2021 to 31 July 2021 at Radway Green.

Rent collection has remained strong, with 94.5% of the total rent due on the June quarter date collected as at 17 August 2021. This is expected to continue to increase, in line with previous quarters.

Acquisitions

During the period the Company has completed the acquisition of four properties totalling 100,500 sq ft, for a combined consideration of GBP13.1 million before costs, reflecting a blended net initial yield of 5.0%. These comprise:

-- In two separate transactions the Company has increased its holding at Dales Manor Industrial Estate, Sawston South Cambridge by a further 62,200 sqft which, following the acquisition announced on 18th May 2021, takes the holding to over 130,000 sqft plus further development land in this key location seven miles south of Cambridge City Centre

-- Two further transactions have increased the Company's holding at Midpoint-18, Cheshire by a further 38,300 sq ft. Our overall holding now extends beyond 600,000 sq ft in this strategically important NW location, situated just 2 miles from J18 of the M6.

Warehouse REIT has also exchanged contracts to acquire a further 16 acres of land immediately adjoining the north and eastern boundary of its existing Radway Green multi-let estate in Crewe. Earlier this year the Company announced that it had secured planning consent, submitted in collaboration with the adjoining landowner, for a combined 803,000 sq ft across six new high-bay warehouse units, ranging from 22,000 sq ft to 340,000 sq ft. This acquisition provides the Company with control over the whole site required to implement the proposed scheme which it will pursue on the back of occupier requirements.

[earwacks] 24/8/2021 15:37

I should think its normal market moves, a bit of profit taking. Aug26th ex div thursday.They pay quarterly so hardly worth the faff buying and selling. For me the payment amounts to about 6% on my original investment. I'd be surprised if they were to do another fund raise after only 8 months. They mentioned about possibility to build on existing sites if they need more space. Its not just about the yield its also about the increase in asset value.

[nimbo1] 24/8/2021 13:18

fundraise ahoy? or just normal market moves

[ec2] 12/8/2021 11:06

Just sold some more. Well managed company, nice clear financials, but with premium now pushing 19% and yield at 3.8% I felt I needed to reduce further.

[keyno] 03/8/2021 10:28

RBC RAISES WAREHOUSE REIT PRICE TARGET TO 170 (135) PENCE - 'OUTPERFORM' (their caps)

From II.

[nimbo1] 28/7/2021 14:58

The weight of capital looking for a home in this sector will continue to push down yields (chat to any specialist market participant) while the space race for tenants to secure what they require will continue to push up rents. The combination will increase values again. Could be 10% in H1 this year?

I bought back in here at 151 having reduced shed, which was 20% of my portfolio. Just for diversification purposes although WHR and SHED should ride the same wave together or come unstuck at the same time so not sure the diversification will do much : ).

[skinny] 28/7/2021 14:15

"have taken a few more profits at 256.188p" - now that would be a profit worth taking! :-)

[ec2] 28/7/2021 14:13

Premium just gone above 15% and yield below 4% so have taken a few more profits at 156.188p.

[skyship] 26/7/2021 11:54

So, one month on (see P. No. 536 above) - WHR down c3%; BREI up c7% after today's excellent numbers. Hopefully others also hold BREI...

[makinbuks] 14/7/2021 10:30

I found two arguments particularly compelling:

The rebuilding cost is £103 psf but the NAV valuation is based on £90, so the land is there for free!

The current rent is £38m, but contracted is £43m and estimated £47m. Since inception when they have actually renewed they have exceeded estimated by 9%.

So positives ahead for both valuation and rent receivable. Somewhat regretting my topslice now!

[petewy] 14/7/2021 09:43

If no top-slicing (I too was considering) then what's the forecast

[makinbuks] 14/7/2021 09:38

Really interesting presentation, thanks for the link Earwacks

[18bt] 14/7/2021 07:55

earwacks - thanks for posting that video; highly informative and like you I had been thinking of top slicing, but will continue to hold.

[skyship] 13/7/2021 20:54

Roger - actually neither! 4.05% & 6.2p.

[igoe104] 13/7/2021 19:36

I'm happy to hold, WHR, Bbox and Shed for many years to come and pick up the dividends along the way.

[earwacks] 13/7/2021 12:56

Recorded last week and out today.
Had been considering selling a few but not after watching this. In a difficult market this looks as secure a anywhere with plenty of growth potential and 6% dividend

[skyship] 30/6/2021 08:17

I admit I was wrong. Urban Logistics (SHED) the next of these ilk to go for another equity issue - 70m new shares at 155p.

[skyship] 24/6/2021 21:09

Sleepy - no, not irrelevant if you held 3yrs ago; but I deal in the now, not the past. Now BREI are clearly worth considering on valuation grounds.

This morning WHR were 155.5p & BREI 71.2p.....we'll see where we are in 1month, 3months, 6months...Diary notated to return & consider...