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Warehouse REIT PLC swung to a loss in its first half amid a difficult backdrop, but remains confident that its portfolio can withstand a downturn, it said on Tuesday.
In the six months ended September 30, the industrial warehouse investor swung to a pretax loss of £46.4 million from a profit of £86.4 million in the previous year.
This came as the Exeter-based real estate investment trust recorded a £73.4 million loss on the revaluation of its investment properties, compared to a £73.2 million gain a year prior.
The portfolio was valued at £1.006 billion at September 30, down 0.6% from £1.012 billion at March 31. On a like-for-like basis, the decline was 6.9%.
Chair Neil Kirton commented that it had been "apparent for some time" that the yield compression in the firm's asset class was "making it progressively more challenging to deploy capital into new acquisitions". As a result, he said, the company's transactional activity has slowed.
"This has accelerated in the first six months of the reporting period but has started to reverse in the period since," he continued, "resulting in very few notable direct transactions taking place in the industrial market.
"This reinforces our strategic view that the nature of our returns is gradually shifting from an income orientated bias to a more mature total returns bias being more evenly balanced between income and capital appreciation."
Warehouse REIT's gross property income rose to £24.1 million from £23.4 million a year before, while its service charge income inched up to £1.4 million from £1.3 million. Total net property income was £23.9 million, up 3.5% against £23.1 million the previous year.
Warehouse REIT declared a dividend of 3.2 pence per share for the half-year, up from 3.1p a year previous and in-line with the firm's full-year target of at least 6.4p.
Looking ahead, Warehouse REIT said the current environment is "without doubt" more challenging. Nonetheless, the firm said it is confident that it owns "attractive and well-located assets" and that demand for its properties will "withstand a downturn".
Shares in Warehouse REIT were down 1.3% at 121.80 pence on Tuesday morning in London.
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