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LondonMetric Property PLC on Wednesday said its portfolio has maintained its ‘high-quality metrics’ in a trading update ahead of its half-year results.
The London-based property investor said its occupancy rate is at 99% leaving only 110,000 square feet available to let. This, combined with limited development activity and a strong focus on property costs, is allowing the company to operate with a very low earnings from operational activities cost ratio.
LondonMetric said its pivot from big box logistics and operational retail parks towards ‘highly reversionary’ urban logistics and ‘well located’ long income assets has seen it benefit from favourable supply and demand dynamics. This has underpinned ‘good income growth.’
Reversion in property is the future interest retained by the company. It means that the property will 'revert' to the company after the lease expires.
£3.7 million per annum of rent was added in the half year. Of this, £2.5 million came from lettings, with a particular focus on urban properties in Birmingham, Fulham and Tottenham. The remaining £1.2 million came from rent reviews.
The company noted that while the investment market has softened since the its year end, it still disposed of £120.4 million worth of assets over the half year.
Having restructured its debt to provide for ‘long term certainty with flexibility, LondonMetric said its debt maturity is six years and its weighted average cost of debt is 3.2%. A 100 basis point rise in benchmark rates would only increase its cost of debt by 20bps. It said ’the portfolio's reversionary potential and high level of inflation-linked rent reviews will allow us to mitigate rising interest costs.‘
Looking forward, the company said: ’our strong portfolio metrics, growing income, well managed debt position and high shareholder alignment of interest gives us confidence in our ability to maintain our covered and progressive dividend policy.‘
Shares in LondonMetric were trading 2.8% lower at 172.90 pence each in London on Wednesday morning.
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