Real estate investment trust (Reit) Urban Logistics (SHED) plans to take advantage of demand for warehouses driven by the shift to online shopping with a £100m equity raise.
Real estate investment trust (Reit) Urban Logistics (SHED ) plans to take advantage of demand for warehouses driven by the shift to online shopping with a £100m equity raise.
The £131m Alternative Investment Market (AIM) listed trust has set itself a £100m fundraising target and will look to raise an additional £6.7m through an open offer to existing shareholders to pay for the £146m of assets it plans to buy.
It specialises in last-mile logistics properties in urban areas, such as mid-sized warehouses between 20,000 and 30,000 square feet, which are used as distributions points for online purchases.
Fund manager Richard Moffitt said: ‘Mid-box logistics assets at the end of evolving logistics chains are in short supply and offer excellent opportunities for investors seeking exposure to this high-growth sub-sector of the real estate market.’
The shares will be offered at 137.5p each, a discount of 7.7% to the closing mid-market price on 7 February but equal to the EPRA net asset value (NAV) of the shares as of 30 September. The shares currently trade at 149p, a 5.3% premium to NAV.
The money raised will be used to purchase three portfolios and 12 single assets with a total value of £146m and an initial yield of 6.8%.
Moffitt said the purchases provided ‘opportunities to grow income and through active asset management create value for shareholders’.
The trust is also in ‘preliminary discussions’ to acquire another £150m of assets.
Nigel Rich, independent non-executive chairman of the trust, said the portfolio ‘exploits the opportunities created by the growing shift towards e-commerce’ and the time was right to build the scale of the trust.
The trust, which launched in 2016, invests in smaller single-let urban logistics properties that are strategically located. It has raised £95m since IPO and currently has 38 logistics properties and four development properties in the portfolio, with a total value of £195m and rent roll of £12.2m a year, equal to a 6.2% yield.
The manager believes structural changes in the way people shop and ‘continuing development of modern technology’ will continue to drive demand for logistics warehousing.
‘The company believe that current supply cannot meet the changing patterns of consumer demand and has therefore constructed a portfolio to benefit from this secular growth,’ said Moffitt.