Urban Logistics swings to full-year loss

22nd Jun 2023 10:19

(Sharecast News) - Urban Logistics Reit said on Thursday that it has swung to a full-year loss, as inflation and rising interest rates led to a repricing of assets across the sector.

The real estate investment trust said net rental income in the year to 31 March rose 45% to £53m, while adjusted earnings per share sparked 3.3% to 6.93p. The FTSE 250 firm, which specialises in last mile logistics assets, said it had continued to benefit from a "fundamental mismatch" in supply and demand.

The full-year dividend was 7.6p per share, unchanged on the previous year.

However, the like-for-like portfolio valuation fell 9.8%, while pre-tax losses came in at £82.7m, from pre-tax profits of £171.8m a year previously.

Richard Moffitt, chief executive of the firm's investment advisor, said: "The portfolio has proved to be resilient against a backdrop of challenging market conditions, with persistently high inflation and rising interest rates leading to repricing of assets across commercial real estate.

"Despite these challenges, our active asset management strategy of moving rents on, improving tenant covenants and increasing lease lengths has allowed us to add value to the assets and shield the company against the impact of a negative yield shield."

Looking to the current year, Urban Logistics chair Nigel Rich said: "The current stock market volatility and related difficulties, such as companies being unable to raise money through follow-on fundraises, means it is unlikely we will be able to fund a pipeline of acquisitions in the immediate future.

"We will therefore look to recycle assets where we have maximised the income, and replace them with properties offering lease events.

"These actions of recycling and asset management allow us to add to shareholder value in uncertain times. We would expect to maintain the same level of dividend in 2023/24."

Andrew Saunders, analyst at Shore Capital, said: "In Urban Logistics investment case, continued rental income growth in a supply-constrained market, with limited debt maturities and low loan-to-value (29%), give further strong opportunistic acquisition potential from distressed sellers, all of which should help drive further growth in earnings and dividends.

"The investment market for industrial and logistics assets is regaining momentum, with more investors returning to the market, with yields having stabilised end yield."

As at 1000 BST, shares in Urban Logistics were down 1% at 118.4p.