(Bloomberg) -- LondonMetric Property Plc said the value of its UK warehouses grew as rents continued to rise and interest rates began to fall.
The landlord’s net assets per share rose 2.1% during the six months through September, according to a statement Tuesday. The landlord’s like-for-like income grew 1.7% in the six months through September, helping push values up by £40.9 million.
“Interest rates have hit the inflexion point with central banks cutting interest rates on the back of falling inflation,” LondonMetric said in the statement. “This has supported global equity markets and interest rate sensitive real assets.”
Sustained rental growth, supported by a dearth of new development, has helped warehouse values recover more rapidly from the correction unleashed by higher rates that began in 2022. Still, renewed inflationary pressures have more recently pushed borrowing costs higher, raising concern about the sustainability of the real estate recovery.
“Whilst the market has largely looked beyond geopolitical uncertainty, ongoing conflicts in the Middle East and Ukraine as well as the US election result and the UK budget have caused uncertainty and still pose ongoing risks,” the company said.
LondonMetric’s portfolio was valued at £6.2 billion ($7.8 billion) at the end of September, up from £6 billion in March. That was helped by a 154% increase in net rental income in the period, primarily as a result of corporate acquisitions that completed in the second half.
The firm, which transformed itself to capitalize on the boom in online shopping roughly a decade ago, said it continues to look for acquisitions after taking over rival UK landlord LXI REIT Plc in a deal valuing the target company at £1.9 billion earlier this year.
“Compared to a REIT sector that has been bruised by rising interest rates, putting downward pressure on earnings and property valuations, LondonMetric remains a rare persistent bright spot, delivering shareholder value through corporate activity,” Stifel analyst John Cahill wrote in a note.
Shares opened 2% higher.
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