Acquisitions and interim dividend declaration

RNS Number : 2514A

Pacific Industrial & Log REIT PLC

22 December 2017

 

Pacific Industrial & Logistics REIT plc

("Pacific Industrial & Logistics" or the "Company")

Portfolio acquisition, asset acquisition and declaration of interim dividend

Portfolio Acquisition

Pacific Industrial & Logistics, (AIM: PILR), the specialist UK industrial and logistics REIT, has completed the off-market acquisition of a portfolio of six logistics assets from Oxenwood YPL Limited for a total consideration of £31.5m. The purchase price represents a net initial yield of 7.1%.

The acquired portfolio is in line with the Company's investment policy of focusing on well-located single-let assets across the UK close to established regional transport hubs in urban or last-mile locations where there is strong occupier demand. Current occupiers of the portfolio include DHL, which has let three of the sites. One of the sites, located in Leigh, is newly refurbished and currently void but comes with a year's rental guarantee and with interest from several potential occupiers.

The acquisition price reflects an average capital value of £81 per sq. ft. which is well below replacement cost. The portfolio has an attractive 7.1% net initial yield, low average warehouse rents of £4.46 per sq. ft., reflecting significant reversionary potential, and a weighted average unexpired lease term of 5.4 years. The sites average 65,204 sq. ft. in size.

Asset Acquisition

The Company has also completed the acquisition of a site in Northampton for £3.0m at a net initial yield of 6.4%.

The site located at Moulton Park, Northampton is well located close to the A43. It is a 43,694 sq. ft. logistics unit let to Panther Logistics. The unit is let on a five-year lease through to August 2022 and the rent is £4.75 per sq. ft.

Company Portfolio

Proceeds from the August 2017 placing have now been fully invested and the capital returned from the sale of a site located in Bedford, announced on 17 November 2017, reinvested.

The acquisitions bring the total value of the Company's portfolio to £125m based on combining the acquisitions with the Leeds site purchased in November 2017 and the Company's existing assets at their 30 September 2017 valuation. Following completion of the Acquisitions, the loan-to-value across the Company's portfolio is 39%.

Funding

The acquisitions have been financed with the remaining proceeds of the August 2017 placing, sales proceeds of Hammond Road, Bedford and from the Company's existing debt facility with Santander. The Leeds site purchased in November has also been refinanced. This facility has now been extended to a five-year term at a margin of 210bps. The Company has fixed 70% of the drawn balance for five years, representing an all-in cost to Shareholders of c.3.3%.  

The Company remains ambitious to build a bigger business and, with a strong pipeline of opportunities, continues to discuss potential additional equity and debt financing for further acquisitions.

Special Interim Dividend

On 17 November 2017, the Company announced the sale of a property located at Hammond Road, Bedford for a consideration of £5.8m. The disposal consideration reflected a profit of £2.2m on the asset's acquisition price, and an IRR of approximately 43%.

Subsequent to the disposal, the Company has now reinvested a substantial amount of the capital which was initially invested in Hammond Road and, given the attractions of income to its underlying shareholder base, has assessed the potential to return an element of the disposal profit to shareholders by way of a special interim dividend. In making this assessment, the Company is seeking to balance, on one hand, the future requirements of growing the business and, on the other hand, the potential to mitigate the impact on dividends arising from the investment period following the capital raise.

The Company is today declaring an interim dividend of 2.10 pence per share. This dividend, which totals £1.4m in aggregate, is being paid out of part of the profits of the sale of the Hammond Road asset. The dividend will be paid to shareholders as a Property Income Distribution, with a record date of 5 January 2018 and an ex-dividend date of 4 January 2018.

The interim dividend of 2.10 pence per share will take the total dividend paid or declared to date in respect of the financial year to 31 March 2018 to 3.33 pence per share. The Company has now paid or declared a total of 6.33 pence per share during the 2017 calendar year by way of dividend reflecting the strong cashflow characteristics of its portfolio.

- Ends -

For further information contact: 

Pacific Industrial & Logistics REIT plc Richard Moffitt	[phone]
Canaccord Genuity - Nominated Adviser and Joint Financial Adviser Simon Bridges Charlie Foster	[phone]
Montfort - Financial PR and IR adviser Nick Miles Olly Scott	[phone]

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

About Pacific Industrial & Logistics REIT

Pacific Industrial & Logistics REIT plc is a property investment company, quoted on the AIM market of the London Stock Exchange, (AIM: PILR).

The Company has been established to invest in UK based industrial and logistics properties with the objective of generating attractive dividends and capital returns for its shareholders. Its investment strategy focuses on strategically located smaller single let industrial and logistics properties servicing high-quality tenants. Investment returns will be generated by an experienced management team focusing on quality stock selection and active asset management.

A number of structural and commercial factors currently support the attractive opportunity in the last mile/regional industrial and logistics real estate sub-sectors targeted by the Company, including: strong occupier demand, (driven by the growth of e-commerce and investment by retailers in their associated supply chain) and a decline in the supply of lettable space in industrial and logistics real estate across the UK (being more than one third lower than the most recent peak of 2009).

Acquisitions are targeted in the 6.5-7.5% net initial yield bracket, (with affordable underlying rents in the region of £4.50-£5.50 per sq ft.), on an overall LTV of 35-40% and a significant margin over financing costs, thus presenting attractive income, capital growth and total return opportunities.

 

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