Industrials Reit, formerly Stenprop, says it has now seen five-consecutive quarters of rental uplift above 20% on renewal or new letting, continuing to benefit from strong demand and constrained supply of multi-let industrial (MLI) assets in the UK.
Rent on leasing renewals rose an average of 21% in the three months to end-December, the group said in an update on Friday, however occupancy decreased to 93.8%, from 93.9% previously.
Leasing enquiries were also 20% lower compared to the previous quarter, with Industrials saying this was due to the Christmas period. However, enquiries were up 8.6% when compared to the same period in 2020, while average weekly enquiries for the whole of 2021 were 45% higher than in 2020
The company has been pushing to become specialist UK-focused group that provides work spaces for small and medium businesses, or MLI estates, and it expects to be a pure MLI play by the end of March 2022.
MLI assets in the UK have fared well in spite of Covid-19 and issues such as Brexit, with Covid-19 driving demand for warehousing space and giving a boost to e-commerce.
The group had portfolio valued at £574m (R11.9bn) at the end of September, its half year, encompassing 95 MLI estates in the UK with about 560,000m2 of lettable space. The group had assets held for sale of £43m, including four-care homes in Germany and a leisure asset in Switzerland, the latter disposed of during the quarter to end-December.
During the quarter to end-December, the group had also acquired six new MLI estates for £40.26m, saying on Friday it had three industrial estates under offer with a combined value of £11.2m, and a “strong pipeline” of other potential opportunities.
“Despite the onset of the Omicron variant at the end of 2021, we successfully completed one of the busiest periods for new lettings and renewals in the last quarter,” CEO Paul Arenson said in a statement.
“This is the fifth successive quarter that we have achieved average uplifts in rent of more than 20% at lease expiry or renewal, illustrating the continued strength of the MLI market, which remains characterised by affordable rents and low levels of supply,” he said.
During the quarter, Industrials had also moved its listing from the specialist fund segment of the main market of the London Stock Exchange to its premium segment, which the group expects will broaden its access to potential investors.
In morning trade on Friday, Industrials’ shares were down 0.26% to R38.90, having fallen almost 10% so far in 2022, but having risen 2.64% from the end of September.
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