Warehouse REIT PLC — Earnings Release 2022

Jul 28, 2022

National Storage Mechanism | Additional information

RNS Number : 9901T

M7 Regional E-Warehouse REIT PLC

28 July 2022

M7 Regional E-Warehouse REIT plc

("M7 Regional E-Warehouse REIT" or the "Company")

27 July 2022

Q2 BUSINESS UPDATE SHOWS NAV GROWTH AND STRONG RENT COLLECTION WITH DIVIDEND IN LINE WITH 8% ANNUAL TARGET

The Board of Directors of M7 Regional E-Warehouse REIT, which owns a diversified portfolio of e- warehouses across the UK (ticker: REW), provides a trading and business update and declares an interim dividend for the second quarter ended 30 June 2022.

James Max, Non-Executive Chairman of M7 Regional E-Warehouse REIT plc, commented:

"Our performance in the second quarter of the year underlines the benefits of the stabilised and geographically diversified nature of the Company's portfolio. The continued strong cash generation and increase in valuation supports the attractive 8% pa dividend yield.  Although the comparative figures were distorted by an extended first period, which commenced on the date of admission to IPSX in December 2021 and included a number of one-off cash items related to the listing, we expect that the dividend will be fully covered going forward. While we are aware of the current economic headwinds, we believe the prospects for the enhanced warehouse asset class and our portfolio in particular remain good. The portfolio is underpinned by strong fundamentals of continued occupier demand driven by structural changes to consumer behaviour and an increased focus from businesses on their supply chain."

Financial and operational highlights (unaudited)

	Period ended  31 March 2022	Quarter ended  30 June 2022	Change
Net Asset Value (unaudited)	£41.71 million	£42.19 million	+1.2%
Net Asset Value per share (unaudited)	109.31 p	110.56 p	+1.2%
Share price	100 p	100 p	-
Operating profit	£2.03 million1	£1.76 million	-13.3%
Profit before tax	£3.99 million1	£1.11 million	-72.2%
EPRA EPS 2	2.80 p	1.55 p	-44.6%
Dividend cover based on EPRA EPS	130.32%	77.42%	-40.6%
Adjusted EPS 2	2.17 p	1.71 p	-21.2%
Dividend cover based on Adjusted EPS 2	101.09%	85.54%	-15.4%
Dividend (per share)	2.15 p	2.00 p	-7.0%

1 Presented for the period from the date of Admission and ended on 31 March 2022. 

2 Considered to be an Alternative Performance Measure.  

•      Interim dividend of 2.00 pence per share declared for the quarter ended 30 June 2022 in line with the annual 8 pence, or 8%, target dividend stated in the Company's Admission document.

•      Net Asset Value ("NAV") increased 1.15% to £42.19 million during the quarter or 110.56 pence per share (31 March 2022: £41.71 million, 109.31 pence per share).

•      Increase in portfolio valuation of 0.28% to £114.17 million in the quarter to 30 June 2022, reflecting a net initial yield of 7.32% 3.

•      £1.76 million operating profit for the second quarter compared to £2.03 million for the previous extended period since admission to IPSX of three months and 10 days.

•      EPRA Earnings per share ("EPS") of 1.55 pence per share, reflecting 77.42% dividend cover for the quarter (extended period ended 31 March 2022: 2.80 pence per share, 130.32% dividend cover).

•      Adjusted EPS was 1.71p, reflecting 85.54% cash dividend cover for the quarter (extended period ended 31 March 2022: 2.17 pence per share, 101.09% dividend cover).

•      Senior loan facility of £54.34 million and an unsecured loan note balance of £19.70 million, totalling £74.04 million, reflecting a loan to value ratio of 64.86% as at 30 June 2022 (31 March 2022: 65.05%).

•      £2.08 million of rent recognised during the quarter in line with passing rent (extended quarter ended 31 March 2022: £2.41 million).

•      As at 30 June 2022, there were 54 tenants with a weighted average unexpired lease term of 5.12 years to break and 5.98 years to expiry (31 March 2022: 5.25 years to break and 6.10 years to expiry).

•      Occupancy across the portfolio was 98.8% at 30 June2022 (31 March 2022: 98.8%) with no lease events falling due during the period and 2.7% of the portfolio by rent up for renewal the second half of the year.

3 Including purchaser's costs of 6.65%.

The table below sets out the movement in NAV during the quarter: 

	Pence per share	£ million
NAV at 1 April 2022	109.31	41.71
Adjustment of issuance cost	0.50	0.19
Valuation movement in property portfolio	0.81	0.31
Income earned for the period	5.46	2.08
Expenses for the period	(1.04)	(0.39)
Net finance costs for the period	(2.33)	(0.89)
Interim dividend paid	(2.15)	(0.82)
NAV at 30 June 2022	110.56	42.19

The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards as adopted by the United Kingdom and incorporates both the Group's property portfolio individually valued on a 'Red Book' basis at 30 June 2022 and net income for the quarter, but does not include a provision for the interim dividend declared today (see below) for the quarter ended 30 June 2022. 

Dividend

The Board declared on 26 July 2022 an interim dividend of 2.00 pence per share for the quarter ended 30 June 2022 (extended period ended 31 March 2022: 2.15 pence per share). On a pro-rata basis, the dividend is in line with the annual 8 pence target, or 8% target dividend yield, as stated in the Company's Admission document. The dividend, which will be a Property Income Distribution, will be paid on or around 26 August 2022. The ex-dividend date will be 4 August 2022 and the record date will be 5 August 2022.

Debt Covenant

There continues to be significant headroom in the debt covenants. The senior debt loan to value is 49.09% (default level is greater than 70%) and the interest cover ratio is 435.73% (default level is less than 225%). The Group has therefore complied with the above covenants in the latest interest payment date.

ENQUIRIES

M7 Regional E-Warehouse REIT plc
James Max - Chairman	via FTI Consulting below
M7 Real Estate Ltd Richard Croft	+44 (0) 20 3657 5500
Dickson Minto (Lead Adviser)	+44 (0) 131 2254455
FTI Consulting (Communications Adviser)	+44 (0) 20 3727 1000
Richard Sunderland Eve Kirmatzis	M7regionale-warehousereit@FTIConsulting.com
Alter Domus (UK) Limited (Company Secretary)	+44 (0) 207 645 4800

The Company's ISIN is GB00BLN7H037.

Further information on M7 Regional E-Warehouse REIT plc is available at www.rewreit.co.uk1.

NOTES

M7 Regional E-Warehouse REIT plc is a property investment company, listed on the International Property Securities Exchange offering shareholders with a sustainable level of income together with the potential for income and capital growth by investing in diversified portfolio of enhanced warehouse (e-warehouse) properties across the United Kingdom.

The Company's asset manager is M7 Real Estate Limited ("M7"), a leading specialist in the pan-European, regional, multi-tenanted real estate market. M7 has over 230 employees in 14 countries across Europe. The team manages over 600 properties with a value of circa €5.7 billion.

1   Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website or any other website, is incorporated into, or forms part of, this announcement nor, unless previously published on a Regulatory Information Service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.

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