LondonMetric said its "ruthless" focus on creating what it calls the UK's "leading triple net lease REIT" was enabling it to do exactly what a real estate investment trust should be doing, delivering reliable, growing income and passing that to shareholders.
In a characteristically confident update on its full-year results to end of March 2026, chief executive Andrew Jones told CoStar News: "Income growth is 4.2% through rent reviews and lease renewals and not through leasing up speculative development. We won't have spectacular new leasing as there is no vacancy in our portfolio. We are passing income from our customers to shareholders, and growing rents across a very efficient platform. That is doing what REITs should do. We have proof of concept in our business now. We have explained triple net compounding REITs are an incredible medium for people wanting to invest in real estate. It is very simple. what we do. We have to invest in great sectors, invest in great assets and let the cash flow and grow."
LondonMetric, which has grown to be the UK's third-largest REIT by market capitalisation behind Segro and Landsec, after a busy period of merger and acquisitions takeovers of listed peers, posted net rental income up 16.6% to £455.3 million, with nine months' contribution from its Urban Logistics REIT takeover.
The long income urban logistics and retail parks-focused REIT flagged a "sector-leading European Public Real Estate Association cost ratio down a further 10 basis points to 7.7%".
EPRA earnings were up 13.9% to £305.3 million, or 2.4% on a per share basis to 13.5p (plus 24% over two years). The dividend is up 3.8% to 12.45p, 108% covered by earnings and including a further quarter dividend declared today of 3.3p.
International Financial Reporting Standards reported profit was £295.7 million, in from £347.9 million in full-year 2025. EPRA net tangible assets lifted from £4.071 billion to £4,698.1 billion.
It reported a total property return of 7.1%, and like-for-like income growth of 4.2%, contributing to a valuation uplift of £68 million in its £7.6 billion portfolio.
LondonMetric again pointed to its carefully assembled portfolio being aligned to the "strongest thematics and mission critical assets" in real estate. The logistics weighting increased from 46% to 53%, with urban logistics 38% of the portfolio (2025: 29%). There was £1,549 million acquired in the year (80% logistics) primarily through the takeover of Urban Logistics REIT. There was £318 million disposed of in the year (54% former merger and acquisitions assets) through 57 disposals.
Post-year end it has bought four convenience food prelet developments anchored by M&S for £40 million and sold £49 million of assets.
Rent reviews in the year equated to 19% increases on a five-yearly equivalent basis, with urban logistics market reviews at plus 38%. Asset management added £17 million a year of net contracted rent.
The weighted average unexpired lease term across the portfolio is 17 years, with a gross to net income ratio of 99% and occupancy at 98%. Its top three occupiers represent 22% of rent, down from 27%.
LondonMetric added that scale is allowing it to benefit from greater debt optionality and has enhanced its debt structure. It flagged a low cost of debt maintained at 4%, 99.8% hedged and loan to value at 36.7%.
In terms of the ability to sustain its rapid expansion,given the number of mergers that have happened among the REITs, Jones told CoStar News: "There are still opportunities out there for external growth. There are huge opportunities in the shake-out of the pension industry, in development funding, and in sale and leasebacks as the cost of capital becomes higher for businesses. So there are four key areas and M&A is one of them, but it is not the only one. Today we announced £40 million invested across four sites to develop. We bought on margins of a yield of 6.1% on an average lease term of 18 years. The growth has happened thanks to the compounding model."
Speaking about the market's current state, given macroeconomic uncertainty, Jones said: "We have elevated gilts and swap rates today and that makes liquidity in real estate more challenging. We did 57 sales in the period and 50 was on assets less than £10 million, on only two was it more than £30 million. If you have big assets to sell it is more difficult. But what it means is to deploy capital the pitch is less crowded. You embrace the opportunities."
In terms of the opportunity created by AI and advances in technology, Jones said: "Anything that takes operational costs out of a business is great. Our ability to become more efficient must be good. AI is an incredible assistance in taking cost out. I think time is the friend of the wonderful company and the enemy of the mediocre one."
In a statement with the results Jones said: “Our results today reflect the progress that we have made over the last few years to create the UK's largest and most efficient NNN [triple-net] REIT. Despite macro uncertainty, our relentless focus on income and ongoing rental growth, has again delivered.
“Our investment activity through further M&A and direct transactions has maintained our strategy of owning high quality assets in winning sectors. This has helped to propel our rental income to a new record which has allowed us to progress our dividend for the 11th consecutive year and put us a step closer to dividend aristocracy. We are grounded in the belief that income compounding is one of the true wonders of investing – the essential ingredient and rocket fuel of long-term wealth creation.
“As owners of the business, our interests are fully aligned with our investors and we remain focused on our mission to operate, execute and allocate capital with discipline, experience and ruthless efficiency. We believe this represents the right way to invest. In today’s environment, scale and efficiency are essential, and our relentless expansion has put us in a strong position with every reason to be optimistic. After all market uncertainty will undoubtedly throw up new opportunities."