Londonmetric Property (LMP) Shares Declined on a £21m Acquisition

The Londonmetric Property PLC (LON: LMP) share price declined by 1.60% after announcing the successful completion of the acquisition of a strategically positioned long-let distribution warehouse in Doncaster. 

The acquisition, valued at £21.2 million, showcases LondonMetric's strategic approach to bolstering its property portfolio. The Net Initial Yield (NIY) for this transaction stands at an impressive 6.3%, reflecting the attractiveness and viability of this investment.

The newly acquired regional logistics warehouse spans an expansive 264,000 square feet and is currently leased to Next, a reputable tenant, for an additional 13 years. The current rent agreement, amounting to £1.42 million per annum, translates to a remarkably low £5.37 per square foot.

Notably, the lease incorporates annual fixed rental uplifts of 2.5%, strategically designed to enhance the investment's yield. Within three years, these planned rental increases are anticipated to elevate the Purchase NIY to an even more robust 7.1%, underscoring the potential for increased returns on this strategic asset.

In addition to the acquisition, LondonMetric has demonstrated its proactive portfolio management approach by divesting a property in Chiswick. The sale of an 18,000 square feet office investment, realising £7.4 million, showcases LondonMetric's agility in optimising its property holdings. 

The multi-let office, acquired as part of the A&J Mucklow takeover in 2019, was 59% occupied at the time of sale, with a Weighted Average Unexpired Lease Term (WAULT) of 1.5 years. This strategic divestment aligns with LondonMetric's commitment to fine-tuning its portfolio for optimal performance and return on investment.

These recent transactions exemplify LondonMetric's dynamic approach to property investment, balancing strategic acquisitions with timely divestments to enhance overall portfolio quality.

Andrew Jones, the CEO of LondonMetric, commented: “As the UK economy reaches an inflection point on both inflation and interest rates, we are increasingly attracted to triple net leased assets that have strong income compounding characteristics and certainty of growth. We have continued to successfully exit non-core assets and reinvest into sectors that benefit from structural tailwinds. We have now, based on purchase value, disposed of 39% of the Mucklow portfolio.”

Londonmetric Property (LMP) share price. 

The Londonmetric Property (LMP) share price declined 1.60% to trade at 181.20p from Friday’s closing price of 184.15p.