RNS announcement

25 August 2022

Warehouse REIT plc

(the 'Company' or 'Warehouse REIT')

Trading Update

Resilient tenant demand driving new leasing activity 3.5% ahead of 31 March 2022 ERVs

Warehouse REIT, (the "Company"), a specialist urban and 'last-mile' industrial warehouse investor, announces a trading update covering the period 1 April 2022 to 23 August 2022.

Highlights:

·   A resolution to grant outline planning permission has been secured from Cheshire East Council for a further 1,020,000 sq ft warehousing at the Company's 102-acre flagship logistics park development at Radway Green, Crewe. The total consented floor area at the Company's Radway Green site now totals 1.8 million sq ft, with construction due to start in early 2023.

·    15 new lettings, 9 lease renewals and 9 rent reviews were completed across 198,000 sq ft of space. The transactions will generate £1.5 million of annual contracted rent, 3.5% ahead of 31 March 2022 ERVs:

o  New lettings were agreed 5.0% ahead of 31 March 2022 ERVs and will generate rent of £0.7 million.

o  Lease renewals and rent reviews have continued to capture the portfolio reversionary potential, generating rent of £0.8 million at an uplift of 18.0% versus the previous rent.

o  As a result of these transactions, the portfolio like-for-like contracted rent has increased by 1.64%.

·   Portfolio occupancy has remained stable at 93.4%, with effective vacancy down to 2.7% (excluding units under refurbishment or under offer to let).

·   The Company has taken out two additional interest rate caps of £100.0 million each for three and five years respectively, which serve to cap the SONIA rate in the Company's debt facilities at 1.5%. These are in addition to the two existing £30.0 million interest rate caps the Company has in place, which expire in November 2022 and 2023 and cap SONIA at rates of 1.50% and 1.75% respectively. Following these caps, approximately 75% of the Company's debt is now hedged against interest rate volatility.

Andrew Bird, Managing Director of Tilstone Partners Ltd, the investment advisor of Warehouse REIT, commented:  

"This has been another busy period for the Company, as we continue to successfully execute on our asset management and value add strategies. In particular, securing planning at Radway Green was a major milestone, and in partnership with a leading global developer, will see us deliver a much-needed state of the art logistics hub in the North West, one of our high conviction regional markets. Additionally, we have significantly strengthened the Company's financial position by growing rents, maintaining occupancy and further hedging our balance sheet, whilst also completing the Company's move to the main market of the London Stock Exchange."

"Whilst we remain alert to the increasingly challenging macroeconomic backdrop, our confidence in the warehouse and logistics sector remains strong. Underpinned by chronic undersupply and supply chain reconfiguration demands, H1 2022 take up reached a record 30.8 million sq ft, a 10% increase on H1 2021. At a portfolio level, demand for tenant critical assets which account for a fraction of an occupiers' costs, in commercially relevant locations, is enabling the Company to continue to capture reversionary potential, as well as materially grow ERV's and contracted rent."

Market overview

According to CBRE's monthly index, rental growth in the industrial and warehouse sector continues to outperform the UK property market, achieving 2.2% during the quarter to June 30 2022, versus 1.0% for all properties. This trend has continued into the current quarter, with the most recent July statistics showing 0.7% month-on-month rental growth, versus 0.3% for all properties.

Acquisition and disposals

During the period, the Company completed on the previously announced acquisition at Bradwell Abbey, Milton Keynes, for £62.0 million (before acquisition costs), as well an adjoining plot at Radway Green, Crewe for £2.0 million (before acquisition costs).

The Company has continued its programme of recycling non-core assets with the disposal of properties in Ballymena and Deeside, for £4.8 million, 15.6% ahead of 31 March 2022 book value.

Asset management

Highlights during the period included:

·    The letting of unit 23 (15,200 sq ft), at Gateway Park, Birmingham, to an electronic bike and scooter company, on a new 5-year term, at a rent of £7.65 per sq ft, at 17.7% above the 31 March 20022 ERV.

·    Settled an outstanding rent review with an online sales and print manufacturer at Groundwell Industrial Estate Swindon, for £117,200, 35% ahead of previous contracted rent.

Debt financing

The two additional interest rate caps of £100 million each for three and five years respectively serve to cap the SONIA rate in the Company's debt facilities at 1.5%.  Following these caps, the Company has total drawn debt of £336 million, with a low loan to value ratio of approximately 30% (calculated on 31 March 2022 valuations) and interest caps in place on over £260 million.  The maturity and quantum of hedging will be kept under constant review.

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 plc invests in and manages urban and 'last-mile' industrial warehouse assets.

Our purpose is to own and manage warehouses in economically vibrant urban areas across the UK, providing the space our occupiers need for their businesses to thrive.

As we grow, our vision is to become the UK's warehouse provider of choice.

The Company is listed on the Main Market of the London Stock Exchange and 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.