RNS announcement

9 April 2020

Warehouse REIT plc

(the 'Company' or 'Warehouse REIT')

Business & COVID-19 Update

Warehouse REIT, the AIM-listed company that invests in and manages urban and 'last-mile' industrial warehouse assets in strategic locations in the UK, today provides a business update in light of the COVID-19 pandemic, ahead of its results for the year ended 31 March 2020, which are expected to be announced in late May.

Introduction

During these difficult times caused by the COVID-19 pandemic, our priority is the safety and wellbeing of all our stakeholders, especially our colleagues and occupiers. At the same time, our focus is on ensuring that the Company is well positioned to navigate any short-term market disruption in order to protect long-term shareholder value.

Rent collection

As at 7 April 2020, 74% of contracted rent due for the quarter to 24 June 2020 had been collected and this number increases to 82% where tenants we have agreed will pay monthly rather than quarterly are included. The Company has received a small number of support requests from tenants facing financial hardship and, reflecting the importance it places on its occupier relationships and the understandable impact that COVID-19 has had on the cashflow of small businesses, it has negotiated alternative payment arrangements where necessary.

Financial position

The Company has continued to exercise financial discipline in order to ensure that it is well capitalised and has balance sheet resilience. As at 31 March 2020, the Company has approximately £5.5 million of cash and £33.5 million of headroom on its undrawn facilities, providing it with substantial operational flexibility.

As part of its commitment to strengthening its balance sheet, since September 2019 the Company has undertaken a disposal programme of its non-core assets, raising a combined consideration of £17.6 million, (7.6% ahead of the 30 September 2019 valuation).  Based on net debt of £181 million as at 31 March 2020 and the latest portfolio valuation as at 31 January 2020, the Company's loan-to-value is 39.9%.

The Company further strengthened its balance sheet in January 2020, entering into a new five-year (plus one, plus one) £220 million debt facility with a club of four banks, replacing an existing HSBC facility totalling £210 million. The refinancing comprised a £157 million term loan and a £63 million Revolving Credit Facility. Based on the current drawn Company net debt, Warehouse REIT's pro forma margin has reduced from a blended 2.14% to 2.00% plus LIBOR on all of its bank debt. There are no debt maturity dates prior to January 2025.

The facilities have significant headroom on both a loan-to-value and interest coverage ratio basis: valuations would need to fall c.25% or rent would need to fall c.45% when compared to 30 September 2019 before these covenants are breached.

Portfolio & Lettings

Warehouse REIT has a highly diversified UK portfolio of 95 assets totalling 6.15m sq ft, with 560 tenants operating across a wide range of sectors including e-commerce, 3PL, manufacturing and automotive. Over the past 12 months, the Group has focused on improving the quality of its income, with established businesses including Amazon, John Lewis and Direct Wines becoming tenants.  

To date, the UK occupational market has remained strong, as a result of the structural trends that have underpinned the rise in internet shopping and investment by retailers in the 'last mile' delivery sector, which may even accelerate as a result of the current crisis. Since 21 January 2020 the Company has completed 24 new lettings and lease renewals across 129,000 sq ft of space, achieved at 3.7% ahead of 30 September 2019 ERVs, generating £803,400 per annum of contracted rent.  Highlights include an 11-year lease extension for 42,000 sq ft agreed with Tristel PLC, a manufacturer of infection prevention, contamination control and hygiene products, at Lynx Business Park, Newmarket, Cambridgeshire.

The COVID-19 pandemic has led to significant pressure being placed on the UK's logistics and distribution capabilities, and a number  of the Company's tenants are currently experiencing significantly increased trading volumes due to their involvement in the supply of critical goods and services to businesses and consumers. As a result, the Company is seeing ongoing demand for its warehouse space; since the government-imposed lockdown commenced on 23 March 2020, it has secured new lettings which are expected to generate a further £183,000 of annual rent. Furthermore, it is currently in active discussions with both existing and potential occupiers for additional space across the current portfolio.

Dividend

The Company is continuing to closely monitor the evolving COVID-19 situation and will keep shareholders and wider stakeholders updated as required. Operational and financial performance to date has been robust and the third quarter dividend of 1.6 pence per share was paid as planned on 31 March 2020. At this stage, the Company remains committed to meeting its dividend target for the financial year to 31 March 2020 of 6.2 pence per share.

Enquiries

Warehouse REIT plc                                                                                                 via FTI Consulting

Further information on Warehouse REIT is available on its website:

http://www.warehousereitplc.co.uk

Notes             

Warehouse REIT is an AIM listed UK Real Estate Investment Trust that invests in and manages urban and 'last-mile' industrial warehouse assets in strategic locations in the UK.

Occupier demand for urban warehouse space is increasing as the structural growth in e-commerce has driven the rise in internet shopping and investment by retailers in the "last mile" delivery sector, yet supply remains constrained giving rise to rental growth.

The Company is an alternative investment fund ("AIF") for the purposes of the AIFM Directive and as such is required to have an investment manager who is duly authorised to undertake the role of an alternative investment fund manager. The Investment Manager is currently G10 Capital Limited.