Financial:
Profit adjusted for exceptional items of £50.9 million (September 2012: £28.0 million)
Revaluation surplus of £35.6 million, a portfolio uplift of 3.5%
Interim dividend of 3.5p to be paid on 20 December 2013 (September 2012: 3.5p)
On target to cover dividend, on an annualised basis, for next financial year, 86% achieved at today's contracted rents
EPRA net asset value per share of 112p, an increase of 2.8% over March 2013
EPRA EPS of 1.9p (September 2012: 2.5p) driven by the repositioning of the portfolio
Net debt £322.8 million (March 2013: £527.2 million)
Loan to value ratio of 30% (March 2013: 43%)
Weighted average cost of debt 4.2% (March 2013: 3.6%)
On target to achieve merger cost synergies of £3 million (£2.5 million projected at merger).
Operational:
Focus on portfolio repositioning capitalising on 310bps of positive yield arbitrage between acquisitions and disposals:
- Acquisitions totalling £160.4 million (£135.6 million LondonMetric share) at an average NIY of 7.2%, unexpired lease terms 11.4 years
- Disposal proceeds of £456.7 million (£347.6 million LondonMetric share) at an average NIY of 4.1%, unexpired lease terms 9.7 years
Wholly-owned residential divestment programme on target releasing £109.4 million (81%) of equity to date, with a further £25.6 million expected to crystallise over the remaining half year
Post period end investment activity comprises £92.9 million of acquisitions and £80.6 million of disposals
7.8% rise in annualised rent roll to £67.4 million, post period (March 2013: £62.5 million) driven by acquisitions funded by residential sales proceeds and underpinned by 1.6% increase in like-for-like rental growth over the last six months
190bps outperformance of IPD All Property Quarterly Index. Total property returns for the six month period on the like-for-like portfolio of 6.5% (IPD: 4.6%)
- Revaluation surplus of £35.6 million contributing to a capital return of 4.0% compared to IPD All Property Quarterly Index of 1.7%
- 25bps inward yield shift driven primarily by offices and distribution from both market movements and asset management initiatives
Investment portfolio continues to exhibit long and strong income with high occupier contentment:
- 22 occupier transactions across 659,000 sq ft, securing an additional £4.8 million of rental income over previous passing rentals, at average lease lengths of 15.2 years (13.9 years to first break)
- Long unexpired leases averaging 11.3 years (10.6 years to first break); post period end 12.5 years (11.8 years to first break)
MIPP joint venture grown to £133.9 million of assets under management at period end following net acquisitions of £37.0 million (£12.2 million at share) during the period and a further £9.6 million (£3.2 million at share) of acquisitions made post period end
Patrick Vaughan, Chairman of LondonMetric, commented:
"The LondonMetric team has worked diligently in their first half year together. Their principal focus has been on evolving the portfolio to focus on areas where we believe we can deliver strong long term returns as well as securing an income run rate that exceeds the dividend. Their efforts to date have achieved excellent operational results, which puts a solid foundation in place for an exciting second half to the year.
"Since the merger we have released £205.7 of equity from our office, legacy distribution and residential portfolio which has been redeployed on acquisitions in our preferred sectors of out of town and retail distribution. We have secured 310bps higher yields on the equity used for our purchases than was contributed by the assets we sold. This has given rise to an increase in our annual rent roll of 7.8% to £67.4 million, whilst also materially improving the lease lengths. We still have significant resources available to deploy which will add to our rental income.
"One of our objectives of covering the current dividend of 7p per annum with sustainable annualised income by the year-end has already been 86% achieved at today's contracted rents. We expect to continue our current pace of strategic acquisitions to further improve the portfolio and capitalise on our strong occupier and financial relationships.
"I should like to extend my thanks on your behalf to our occupiers, advisers, financiers and the home team for all that they have contributed to the half year."
