Release Date: November 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The portfolio value increased by 2.3% on a like-for-like basis, with multi-let assets up by 5%.
- Warehouse REIT PLC (LSE:WHR, Financial) secured £5.5 million in rent, boosting operating profits by 8%.
- The company added £1.4 million in new rent and captured £0.6 million in reversion during the half-year.
- The acquisition of Ventura Retail Park in Tamworth resulted in a 9.6% valuation uplift in just three months.
- Warehouse REIT PLC (LSE:WHR) maintained a 99% rent collection rate, indicating strong tenant relationships and income stability.
Negative Points
- The Radway Green development saw a 13.4% like-for-like valuation decrease due to macroeconomic factors and offers below book value.
- Weighted average unexpired lease term decreased, partly due to the sale of a large single asset.
- The cost ratio increased to 26.3%, driven by higher void costs.
- Interest rates remain elevated, impacting earnings and delaying some strategic initiatives.
- The planned joint venture for Ventura Retail Park did not materialize, limiting expected strategic growth.
Q & A Highlights
Q: Have you experienced any tenant failures or issues with smaller 3PL companies in your portfolio?
A: We have a 99% rent collection rate, and while we occasionally encounter smaller occupiers facing difficulties, our diverse unit sizes allow us to work with other occupiers. Often, neighboring occupiers express interest in taking over spaces, providing us with opportunities to manage these situations effectively. (Unidentified_2)
Q: What is your strategy for non-core asset sales, and which parts of the portfolio are likely to be sold?
A: We are focusing on selling the bottom 10% of our portfolio by lot size, geography, and depreciation. We've already sold £74 million worth of assets from our £811 million portfolio. Radway is a significant non-core asset due to its lack of income, and its sale will greatly impact our dividend coverage. (Unidentified_1)
Q: How much of the reversionary potential in your portfolio can be captured with existing tenants, and will there be significant CapEx required?
A: We have about 100,000 square feet of vacancy in Swindon, Leicester, and Peterborough, with ongoing negotiations that could yield significant reversion. Dilapidations often cover refurbishment costs, and we're seeing unprecedented rental growth, particularly in the multi-let sector. Our strategic asset acquisitions ensure we can capture reversion effectively. (Unidentified_1)
Q: Can you provide more details on the Radway Phase Two development and its marketability?
A: Radway Phase Two has an outline planning consent for a million square feet, with potential expansion to 1.2 million. We are working on detailed planning and have secured power, which is critical for development. The sale of Phase One will enhance the site's marketability, and we anticipate liquidity events in 2025. (Unidentified_1)
Q: Why is the retail warehouse joint venture no longer proceeding, and will you make further retail warehouse acquisitions?
A: The retail warehousing market moved quickly, and Tamworth's value increased by 9.6% in three months. We decided against further acquisitions at elevated levels, focusing instead on our core multi-let industrial sector. We are pleased with Tamworth's performance but will not pursue additional retail warehouse investments. (Unidentified_1)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
