Warehouse REIT Reports Strong FY2025 Results Amid Blackstone Takeover Offer

Right then, let’s dive into Warehouse REIT’s latest results – a fascinating blend of robust operational performance and a headline-grabbing takeover bid from private equity giant Blackstone. This RNS packs a punch, so let’s unpack what it means for investors.

A Strong Operational Backdrop

First things first: the fundamentals. Warehouse REIT delivered a solid year, demonstrating resilience in the UK multi-let industrial space – an asset class the board rightly describes as “very attractive”. Key highlights:

• Portfolio Growth: Like-for-like valuation up 3.8% to £805.4m, driven by a stellar 7.1% uplift in their core multi-let assets (now 80.3% of the portfolio).
• Rental Surge: Estimated Rental Value (ERV) growth hit 6.8%, translating to £3.7m of new contracted rent added via leasing. Critically, deals were struck 24.4% above previous rents on average.
• Reversionary Goldmine: The portfolio remains highly reversionary. There’s £6.1m (14.3%) of embedded rent growth still to capture from existing leases, plus £4.6m from vacant space – a juicy 25.2% total potential uplift. This isn’t just hope; it’s quantifiable upside.
• EPRA NTA Per Share: Increased 2.9% to 128.0p, delivering a healthy total accounting return of 8.0% for shareholders.

Occupancy dipped slightly to 93.7%, but this reflects planned vacancies at a few larger units undergoing refurbishment to capture that latent value. Strip those out, and effective occupancy was a robust 97.7%.

Financial Fortitude and Strategic Shrewdness

Financially, the picture is one of improvement and proactive balance sheet management:

• Profit Power: IFRS profit after tax jumped 21.6% to £41.7m. Adjusted EPS rose 8.3% to 5.2p.
• Dividend Discipline: The dividend held steady at 6.4p per share, but crucially, coverage improved significantly to 81.3% (up from 75% in FY24). The board highlighted rebuilding cover as a key strategic focus.
• Debt Done Right: A major £300m refinancing was completed on improved terms (margin down 45bps to 1.75%), reducing the average cost of debt to 3.6% (from 4.2%). Loan-to-value (LTV) stands at a comfortable 32.4%, with 92.9% of debt hedged against rate volatility and no major refinancing due until 2028. Significant headroom (£31m cash/facilities) provides flexibility.
• Strategic Recycling: The disposal programme continued apace, with £85.7m of sales completed (0.7% ahead of book value). Since November 2022, they’ve offloaded £193.4m of assets, primarily non-core or lower-yielding stock. Proceeds funded the earnings-accretive acquisition of Ventura Retail Park, Tamworth (acquired for £38.6m on a 7.4% NIY, now valued at £43.5m).
• Cost Saving Wins: An amendment to the Investment Management Agreement links Tilstone’s fees to market cap (capped at 70% of EPRA NTA for FY26), expected to save £1.7m (£0.4p/share) this year. Combined with the refinancing saving (£1.2m/£0.3p), these initiatives materially boost earnings and dividend cover potential.

Steady ESG Progress

Sustainability isn’t an afterthought. Warehouse REIT maintained its EPRA sBPR Gold rating for the fourth year and saw its MSCI rating climb from BB to BBB. The proportion of the portfolio rated EPC A+ to C improved to 68.7% (despite selling some well-rated assets), and they’ve set clear carbon reduction targets aligned with net zero by 2050.