LondonMetric Property Plc Reports 16% Rental Income Growth and 4% Dividend Increase in Trading Update

LondonMetric’s income engine fires: 16% rental income growth and 4% dividend lift

LondonMetric Property has posted a punchy trading update ahead of full year results on 21 May 2026. The triple-net lease REIT says net rental income rose by around 16% to over £450 million, helped by high occupancy, long leases and strong rent reviews. Shareholders are set for an eleventh consecutive year of dividend growth, with a 4% increase to 12.45 pence per share.

The business has been busy: pruning non-core assets, buying long-dated income at attractive yields, and tightening its already low cost base. Funding has been reshaped too, with a debut A- rated bond and extended bank facilities to keep finance costs under control.

Key numbers from the trading update

Portfolio scale	£7.6 billion NNN portfolio (company “About” cites £8 billion)
Net rental income	c.+16% to over £450 million
Occupancy	98%
Average lease length	17 years
Like-for-like income growth	4.2%
Rent review uplift	Average +19% (logistics open market +38%)
EPRA cost ratio	7.7% (expected to fall further)
Dividend per share	12.45 pence, up 4%
Disposals (FY26)	57 assets for £318 million at 5.7% NIY; WAULT 12.5 years
Direct investments (FY26)	35 assets for £333 million at 5.5% NIY; WAULT 33 years (rising to c.6.1% over 5 years)
M&A acquired assets	£1.2 billion
Debt maturity	Average drawn maturity 4.4 years; £0.2 billion maturities in next 2 years
Undrawn facilities	c.£0.5 billion

Income quality: long leases, full buildings, and hefty rent reviews

The operational picture is strong. Occupancy sits at 98% and the average lease length is 17 years – that’s a lot of contracted rent. Like-for-like income rose 4.2%, while rent reviews added £11 million per annum with a weighted average uplift of 19% across the board.

Logistics continues to shine. Open market reviews there delivered a 38% uplift, with logistics averaging 21% overall. Add in 69 lettings and regears adding £6 million per annum (with an average 23% uplift on regears), and you can see why rental income has pushed to a record level.

Costs remain impressively low. The EPRA cost ratio fell to 7.7% and management expects more progress. For a REIT of this scale, that’s a competitive advantage that drops straight to the bottom line.

Portfolio moves: pruning non-core, planting long-dated CPI-linked income

Disposals broadly in line with book value

LondonMetric sold 57 assets for £318 million at a blended net initial yield (NIY) of 5.7% and a WAULT of 12.5 years. Crucially, sales were in line with prevailing book values, which helps support confidence in valuations.

Since the last update alone, 20 assets were sold for £57 million, including 11 urban logistics assets (£31.0 million), five Travelodge hotels (£17.2 million), and four convenience/DIY assets (£9.0 million), with one drive-thru achieving a 4.2% NIY. Post-integration cleanup continues: 72 former LXi REIT assets have now been sold for £298 million (11% of the original portfolio) and 17 ULR assets for £55 million (5%).

Buying better: longer WAULTs at similar yields

On the buy side, 35 direct investments totalled £333 million at a 5.5% NIY and a seriously long 33-year WAULT, with returns guided to rise to around 6.1% over five years. That’s a neat arbitrage: recycling capital from mid-teens WAULT assets at c.5.7% yields into three-decade WAULT assets at similar or better yields, often CPI-linked.

Recently, LondonMetric acquired ten assets for £79 million, headlined by four modern Premier Inn hotels (570 bedrooms) for £47.8 million at a blended 5.6% NIY and a 22-year WAULT, backed by Whitbread PLC and CPI-linked rent reviews. It also bought a 106,000 sq ft logistics unit in Irlam, Greater Manchester, for £12.1 million, plus around £19.1 million of additional assets including the circa 300-bedroom Crowne Plaza at Manchester Airport.

Asset management: squeezing more from the same bricks

The team executed 327 asset initiatives, adding about £16.5 million per annum of contracted rent. The bulk came from rent reviews, but lettings and regears played a big part, too – including 16 former ULR assets that contributed £2 million per annum.

The takeaway: LondonMetric is not just buying income; it is actively growing income from existing holdings. In a market still wrestling with yield volatility, that hands-on uplift matters.

Funding: longer, broader, and aiming to hold the line on costs

Financing was a highlight. LondonMetric refinanced £1.5 billion of debt, raised £1.2 billion of new debt, and repaid £1.1 billion. The company issued a £500 million debut senior unsecured bond in December 2025, rated A- by Fitch, at 4.69%, opening up the public bond market at a sensible price.

In March 2026, £1.5 billion of unsecured bank facilities were refinanced, introducing longer-dated term loans and revolving credit facilities, while reducing margins and commitment fees. At year end, average drawn debt maturity stood at 4.4 years, with just £0.2 billion maturing over the next two years – expected to be covered by sales and/or around £0.5 billion of undrawn facilities.

Management guidance is clear: they remain confident finance costs will not increase materially over the next few years. In a world of choppy bond yields, that’s reassuring.

Why this update matters for shareholders

• Income compounding is working: rent reviews and regears are feeding through to cash, not just paper growth.
• Recycling capital smartly: selling non-core at in-line valuations and buying long, CPI-linked income at comparable yields improves resilience.
• Costs under control: a 7.7% EPRA cost ratio, with further reductions expected, boosts operating leverage.
• Funding risk reduced: an A- rated bond, extended bank lines and limited near-term maturities help protect dividends.

Watch-fors: hotel exposure has ticked up with Premier Inn and Crowne Plaza buys, albeit with strong covenants and CPI linkage. Valuation metrics (such as EPRA NAV) are not disclosed here, so we will need the May results to see how yields and bond moves have flowed through to the balance sheet.

What to look for on 21 May 2026

• EPRA NAV and yield movement: not disclosed in the update.
• Further guidance on finance costs and hedging: management expects no material increase.
• Progress on EPRA cost ratio: already 7.7%, with ambition to reduce further.
• Disposals pipeline and pricing versus book value.
• Breakdown of like-for-like rental growth by sector, especially logistics.

Quick jargon buster

• Triple net lease (NNN): tenants cover most property outgoings (tax, insurance, maintenance), leaving landlords with “net” rent.
• NIY (net initial yield): annual rent divided by purchase price – a snapshot yield at acquisition or sale.
• WAULT: weighted average unexpired lease term – longer WAULT means more contracted income certainty.
• EPRA cost ratio: industry measure of cost efficiency; lower is better.
• CPI-linked rent reviews: rents increase in line with consumer price inflation.
• Open market rent review: rent reset to the going market rate at review.

Josh’s take

This is a confident update. LondonMetric is doing the boring-but-beautiful things well: keep buildings full, grow rents, recycle into longer, inflation-linked income, and lock in funding. The 4% dividend lift to 12.45 pence looks solidly underpinned by that 16% jump in net rental income and low costs.

It’s not all one-way traffic – hotels add a touch more cyclical exposure, and we still need to see what happens to valuations. But the direction of travel is clear: higher quality, longer income, and a safer balance sheet. For income-focused investors, that’s exactly what you want to see in a market that’s still finding its feet.