Warehouse REIT reports double-digit rental growth as race for space heats up
Warehouse REIT was able to push through average rent hikes of more than 15 per cent over the last quarter, but the trust’s stock price has failed to keep up.
In a quarterly trading update, the trust said it had inked 12 new lettings during the second quarter of this year, bringing in £515,000, a 37 per cent increase over the previous rent.
Meanwhile, 10 rent renewals were made for £740,000, a 26 per cent increase on previous rents, while five rent reviews were agreed at rates 9.9 per cent higher than previously agreed.
Notable transactions for Warehouse REIT included a new letting to an online grocery store in Luton, which was 38 per cent higher than the previous rent.
Altogether, the company’s rental income rose 15.1 per cent during the quarter to £4.1m.
Despite the boost in rent, the trust’s stock continues to trade on a deep discount to its underlying assets of over 30 per cent, having not traded at a premium since April 2022.
Meanwhile, the trust’s disposal plan continued to progress. Warehouse REIT sold off another asset at the end of last month in Skelmersdale, Lancashire, for £4.1m, or 22 per cent above its March 2024 valuation.
This followed the sale of £57.5m of assets earlier in the month, leaving around 90 per cent of the trust’s leases by contracted rent on an open market basis.
Overall, £169.3m of assets have now been sold since the trust unveiled its disposal plan in November 2022.
Simon Hope, manager of Warehouse REIT, said: “We have a well-established track record of capturing reversion and have seen momentum continuing this quarter, supporting our overall goal of increasing dividend coverage by the year end. Looking forward, we see further upside in our portfolio with £7m of embedded reversion as at 31 March 2024.
“Recycling capital out of low yielding or non-core assets where we have delivered our asset management plan, can secure a premium price, and reinvest the capital into well-located, attractively priced warehouse assets where we can capture rental growth through strong asset management, has always been central to our strategy. The sale announced today is an excellent example of that approach and further optimises the portfolio.”