Urban Logistics REIT boosts rental income after failed Abrdn trust bid

Real estate investment trust Urban Logistics has seen rents jump significantly across its properties, as the warehouse owner recovers from its failed Abrdn M&A bid earlier this year.

In the first quarter of 2024, the trust saw an average like-for-like rental uplift of 23 per cent across three rent reviews and three new lettings.

Given a standardised five year term between revisions, this would mean a 4.5 per cent annual market growth, calculated Panmure Gordon analysts Tim Leckie and Charlotte Adolpho.

These rent reviews and new lettings covered 374,000 square feet of space, including one vacant asset, bringing in £1.3m in new income for the investment trust.

This has left the investment trust with an occupancy ratee of 94.2 per cent, up from 93.2 per cent at the end of 2023, with further leases under offer in the last couple of weeks.

This year, Urban Logistics became embroiled in a bidding war from the Abrdn Property Income Trust, eventually failing to make a firm counteroffer to Custodian Property Income’s bid.

However, since Custodian’s bid was ultimately rejected by the Abrdn shareholders, and the Abrdn trust has now begun the process of selling off its portfolio, Urban Logistics may now be eyeing some of the properties up for sale.

“Urban Logistics has reminded the market that while it was engaging with M&A potential activity, it hasn’t taken its eye off its day-to-day management,” said Leckie and Adolpho.

Despite this, the trust’s share price is down 23.5 per cent over the last year, though the analysts argued that this was “not necessarily a result of a change in outlook for the company’s operational effectiveness, nor a change in view for the structural condition of the underlying real estate”.

Instead, they said that some investors have sold off their Urban Logistics shares due to it being seen as a takeover target, rather than any problems with the fundamentals or management.

Meanwhile, the trust said today that in the last couple of weeks, it had also sold off one of its properties in Bedford for £3.8m, a 1.9 per cent premium to net book value, and would be using the proceeds to pay back its debt.

The trust will hold a site visit and capital markets presentation on 15 May.

Richard Moffitt, CEO of Urban Logistics, added that the figures provided “evidence that valuations are stabilising and rents improving in our sector, as tenants continue to localise their distribution networks to be closer to their end customers, and demand for our mid-size, single-let assets continues to increase”.