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Industrials REIT sees a surge of new multi-let industrial property deals in fourth quarter

AVERAGE uplifts in rent across new lettings and renewals averaged 22 percent for the quarter.

AVERAGE uplifts in rent across new lettings and renewals averaged 22 percent for the quarter.

Published May 3, 2022

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INDUSTRIALS REIT Limited, a UK multi-let industrial (MLI) property company also listed on the JSE, had a record fourth quarter to March 31 in terms of deal volumes following several leasing transactions in Ashby de la Zouch and Paddock Wood.

“Even without these, the volumes were in line with previous quarters,” CEO Paul Arenson said in a trading update on Friday.

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Average uplifts in rent across new lettings and renewals averaged 22 percent for the quarter.

“Correspondingly we have seen an increase in like-for-like rents of 1.5 percent during the quarter and delivered our target income growth of 4-5 percent per annum,” he said.

Strong demand and scant new supply of MLI space, coupled with the affordability of the rents as a proportion of the company’s typical SME client’s operating costs, meant that “we see the potential for further rental growth continuing for the foreseeable future”, he said.

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Rent collections on the MLI portfolio from early in the pandemic were now 97 percent, with more recent periods indicating a path back towards pre-Covid collection rates of 98 percent.

“Whilst Industrials REIT will continue to take a fair and reasonable approach to settling lockdown debts, we are confident the impact of the pandemic upon rent collections is now behind us,” said Arenson.

Good progress had been made in acquiring further MLI estates through the quarter, with £21 million (R416.8m) of acquisitions and a strong pipeline of opportunities.

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The rental value of new leases signed in the quarter was up 90 percent to £2.9M across 54 new lettings and 32 lease renewals, a record value of deals.

It was the sixth successive quarter where average uplifts on new lettings were over 20 percent, while on average, lettings and renewals were completed at a 8.3 percent premium to Estimated Rental Value.

Occupancy across the MLI portfolio was 93.8 percent. Letting enquiry levels and pipeline remain robust, Arenson said.

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On April 1, 2022, the company went live on a new finance and operating platform.

Four more MLI estates were acquired in the quarter: Primrose Hill Industrial Estate in Stockton-on-Tees, Haven Business Centre in Boston, Twibell Street Trade Park in Barnsley and Astra Park in Leeds.

Since quarter-end, units 14-28 at the Primrose Hill Industrial Estate in Stockton-on-Tees were acquired.

Industrials REIT’s loan-to-value ratio was 31 percent on drawn facilities, and about 28 percent allowing for unrestricted cash, the trading update said.

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