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10 June 2021

Urban Logistics Results Offer Hope to Investors

At a time when traditional bricks and mortar retail is under mounting pressure from the impact of COVID-19 and changing trends, Urban Logistics Real Estate Investment Trust (SHED), has been a beacon of hope for investors looking to gain exposure to the UK property market. SHED was first established back in April 2016 as the only pure-play option for investors to gain access to a specialist sub-sector of the UK real estate market – industrial and logistics properties.

The trust focuses on investing in ‘mid-box’ logistics buildings up to 200,000 sq ft, which are located in key ‘last-mile’ urban locations. These last-mile locations are optimal for companies which operate at the final stage of the supply-chain, aiming to deliver goods from transportation hubs to the end-user as fast as possible. As the pandemic caused a drastic increase in demand for online delivery, SHED’s portfolio of strategically located warehouses left it in a perfect position to capitlise on the growing demand for e-commerce and quick delivery times.

On Wednesday, Urban Logistics published its full-year results, providing some colour on how the portfolio has fared throughout the pandemic. Net Asset Value (NAV) rose 10.5% to 152.33p, providing a total accounting return of 15.6%. Since its initial public offering (IPO), the company has produced an average annual total accounting return of 13.9%. SHED’s portfolio valuation also increased to £507.6m, with 36 logistics assets acquired for £269m, including £30.5m of forward funding across five development sites reaching practical completion. The new acquisitions were sourced off-market and in key locations, highlighting the skill and experience of the management team in landing captivating deals off-market.

As a result, net rental income for the year increased by 88% to £22.9m, with more than 99% of rental income collected during a period where most property landlords are struggling with rental arrears. One of the key areas that Urban Logistics focuses on to create value for shareholders is through strong property management, which is shown not only through high levels of rent collection, but also eight rent reviews that resulted in an average 19% income growth for those properties reviewed. The Real Estate Investment Trust (REIT) also offloaded £30m in properties in March 2021, achieving a 35.4% premium to book value, and an average total property return of 78.8%.

Net debt also came in at £141.7m, representing a loan to value of 27.9%, below SHED’s target of 30-40%.

Overall, full-year 2021 has been an exceptional year for Urban Logistics. Investors will be pleased with a 16% return from this date last year, and a 4.79% dividend of 7.6p this year. With the UK e-commerce market growing from 19% of all retail sales in the UK in January 2020 to 35% by February 2021, the continued growth of this industry will no doubt contribute to the performance of Urban Logistics portfolio in the future.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
Urban Logistics Results Offer Hope to Investors
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