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Industrials Reit expects to migrate to the premium segment of the London Stock Exchange (LSE) in early 2022, after revamping its portfolio to focus on multi-let industrial (MLI) parks, which have been resilient throughout the Covid-19 pandemic.
Demand for industrial storage space and warehousing has risen as more people bought goods online throughout the UK. Retailers want to store their goods in these parks that are often located near densely populated cities and towns.
Small industrial groups are also renting MLI units, which they use as hybrid office, manufacturing and assembly space. This is as opposed to renting an office at one building and a factory at another.
Releasing its trading update for the three months to end-September, CEO Paul Arenson said there had been another strong period of rental growth across the portfolio, resulting in a fourth successive quarter of above 20% average rental uplifts at renewal or reletting.
“This growth continues to be driven by a combination of strong tenant demand and a lack of available product in the market, leading to customers competing for space when good quality units become available,” Arenson said in a statement.
Equites Property Fund, another JSE-listed, industrial-focused real estate investment trust (Reit), said in early October it was looking to build scale in the top end of the logistics market in the UK, in partnership with UK property investor Newland, underscoring the potential opportunities the UK market offers in this sector.
Equites said at the time that the ferocious demand for warehousing space in the UK had driven supply to decrease at its fastest pace on record, fuelling an increase in market rental growth.
Arenson said occupancy levels remained “strong” and the underlying estimated rental levels were now showing an underlying growth rate of 6.5% year on year.
“We also made good progress transactionally, successfully completing the £55m disposal of our largest remaining non-MLI asset during the quarter, taking our total MLI percentage to 92% having also deployed £36.5m into seven new MLI estates,” Arenson said.
Formerly known as Stenprop, the company aims to finish the transition to become 100% exposed to MLI properties by 2022.
Occupancy across the MLI portfolio slipped 0.8% to 93.9% as at September 30. Two large lease expiries in September were accountable for 1.3% of the fall in occupancy, meaning that over the remainder of the portfolio occupancy improved by 0.5% during the period.
Industrials Reit shares ended 1% higher at R39 on the JSE on Friday, valuing the company at R11.6bn.
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