LondonMetric Property H2 2025 Earnings Report

LondonMetric Property EPS Results

• Actual EPS: GBX 15.73
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

LondonMetric Property Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

LondonMetric Property Announcement Details

• Quarter: H2 2025
• Date: 5/20/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 20, 2025
• Conference Call Time: 4:00AM ET

LondonMetric is a FTSE 100 REIT that owns and manages desirable real estate that meets occupiers demands and delivers reliable, repetitive and growing income-led returns and outperforms over the long term. As a real estate owner, we look to help occupiers, communities and stakeholders grow, thrive and revitalise in an evolving and complex world.

LondonMetric Property H2 2025 Earnings Call Transcript

Key Takeaways

• Net rental income rose to £390m (+123% year-on-year), driving EPS up 21% to 13.1p and enabling an 18% dividend increase to 12p for FY2025.
• Asset management initiatives delivered £15m of new income with like-for-like growth of 4.2% and a 3.1% ERV increase, and the company targets a further £27m of rental uplifts.
• Executed £685m of disposals and acquisitions across 104 assets, expanding the portfolio to just under £6.2bn of triple net income properties.
• Achieved a sector-leading EPRA cost ratio of 7.8% and secured a BBB+ credit rating, supporting diverse debt facilities, a 4% debt cost and a conservative 32.7% LTV.
• Recommended offer for Urban Logistics REIT values it at £700m (22% premium), would boost market cap to ~£4.5bn and raise logistics exposure from 46% to 55%.

Presentation

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Morning, ladies and gentlemen, and welcome to London Metrics full year results for the period ending the 03/31/2025.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Usual arrangement this morning, I'm going to start with an overview of the year gone, go through some of the highlights of the financials. I'll get all the good numbers out of the way. And I'll pass over to Martin, and he can take you through the detail and hopefully keep you interested. And then I'll come back with the exciting And then I'll come back and talk about the market and the activity that we've executed before finishing up with our thoughts for the period ahead, both at a sector level, but also at a portfolio level. We'll then open up for Q and A, both in the room and on the phones.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

So if we start with an overview of the last twelve months, the company has continued to build a leading portfolio of triple net income assets. The portfolio is up at just under GBP 6,200,000,000.0 and continues to demonstrate exceptional income characteristics. Some strong numbers with an earnings per share up 21%. This allowed us to progress our dividend for the tenth year in succession, which is now up 18. And we continued to capture the cost synergies that we said we would this time last year as we were closing the LXI takeover.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And that has allowed us a sector leading EPRA cost ratio of 7.8%. Martin will come on to talk about that in little bit more detail and our ambitions to reduce that even further. Our portfolio continues to be aligned to the strongest thematics, logistics, convenience, groceries, healthcare and entertainment. And again, I'll go on to talk about those four key sectors later on in the presentation. Over the year, we've continued to add new income through rent reviews, lease renewals, asset management initiatives.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

So GBP 15,000,000 of new income in the year, like for like income growth of 4.2% and an increase in our ERV of 3.1%. The portfolio continues to be reversionary, and we remain confident that we will capture at least GBP 27,000,000 of further rental uplifts through those three various initiatives over the next couple of years. Our scale is continuing to drive economies of opportunities. We said at the time of the LXI takeover that actually getting bigger was not only going to deliver cost economies, it was also going to deliver opportunities too. And we are unlocking those external opportunities with further M and A activity.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

I'll come on to talk about that in limited detail later on, because I can't actually talk about anything else that isn't already public. And we've had, as you can see, over the last twelve months executed on £685,000,000 of investment activity across 104 assets. And that's been equally balanced between sales and acquisitions. And again, I'll come on to talk about that further. And our recently assigned BBB plus credit rating is giving us greater capital market optionality as and that again is something that Martin will come to talk about later on in the presentation as we talk about our refinancing options in the years ahead.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Turning to the financial numbers or the highlights, these are all the good ones. Net rental income at GBP $390,000,000 is up from GBP 175,000,000 12 months ago. That's driven our earnings up to £268,000,000 that's an increase of 120%, which has driven our earnings per share up, as I said, 21% to 13.1p and has allowed us to declare this morning a final dividend of 3.3p, which brings 12p for the year, an increase of 17.6%. We've also announced this morning an intention to pay a Q1 dividend of 3p a share, which is an increase of just over 5% on our Q1 last year. I've already referenced the portfolio value, which is up 2.5%.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

That's helped drive an NTA increase of 3.9 to 199.2%. And our activity, both in terms of both M and A and also investment activity, both sales and purchases, has meant that we've retained an extremely conservative LTV at just under 33%, at 32.7. So what can I tell you about our recommended offer for Urban Logistics REIT? This is all in the public domain. So I'm maybe not telling you anything that you haven't already read.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

It's a offer that values the company at £700,000,000 It's a mixture of shares and cash. And it represents a 22% premium to their undisturbed share price. We think that this is an excellent transaction for both shareholders, and it will consolidate our position as The UK's leading triple net REIT and increases our market capitalization to circa GBP 4,500,000,000.0. The combined portfolio of GBP 7,300,000,000.0 will continue to be aligned to the, what caused, structurally supported sectors. And it increases our logistics exposure from 46% to 55%, absent sales obviously, but that will be the spot headline number.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And it offers us potential for cost and operating synergies through increased economies of scale. And as I've already intimated, we actually think that there is more to shoot for in reducing our EPRA cost ratio with a target of 7.5% or lower. We also believe that our more active asset management approach will capture embedded reversions as it has done within our own portfolio. And we expect to be able to use those skill sets across a wider portfolio in the coming periods. The offer has been structured to ensure that we retain our conservative balance sheet with the LTV at 35% and an all in cost of debt at 4%.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

So looking at how the portfolio will evolve, pie chart, come on to talk about the left hand one in a little bit more detail later on in the presentation. But that's our current portfolio today, see the urban logistics pie chart in the middle, and then this is what the pro form a would look like, 7,300,000,000.0 of gross assets. And as I said, Logistics, fifty five percent. Urban Logistics would be actually at 40%. And that is our, as you know, our strongest conviction call.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

As well as that the portfolio will increase not only our income, but also the asset and geographical granularity of portfolio, which is also important to us. Average lot size, you can see if you do the sums on the right hand column, you know, only £11,000,000 which actually is quite important. I'll come on to talk about it later. It's quite important in today's investment market, where actually we're seeing more liquidity for smaller lot sizes than we offer bigger lot sizes. And that is all a factor of the debt markets, despite bankers efforts to give us the tightest possible margins that they were able to.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Thank you. I really appreciate it. The swap rate is more elevated than it has been for a while, albeit it is off its peak, which is great news, but it's not as low as I'd like it to be. And so look, average smaller average lot sizes is a distinct positive. I can't say any more.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And before I get into trouble, I will forward hand over to Martin.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

Good morning. Thank you, Andrew. I think when I stood here last year and I made a little mental note to myself, don't do an M and A transaction three weeks before the year end. So my little mental note to myself this year is don't do two M and A transactions around the year end. But our focus this year has been on integration, following last year's very transformational corporate acquisitions.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

And these results reflect the full benefit of our activity. We've delivered very significant earnings growth and dividend progression. I'm pleased to report that our net rental income is GBP 390,600,000.0, an increase of 123% over last year. In addition to GBP 207,500,000.0 of additional rent from LXI, we've included just under GBP 6,000,000 of additional rent from CTPT and rent from our other acquisitions of GBP 9,500,000.0. Our rent collection remains exceptionally strong.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

We've collected 99.5% of rents during the year. Our gross to net income leakage remains very low at 1.2%, and our administrative overhead for the year is GBP 27,100,000.0. But our EPRA cost ratio continues to be sector leading at 7.8%, a little better than our forecast this time last year as we have taken significant economies out of LXI and the CTPT business that we acquired. The increase in overheads in the year reflects increased headcount and remuneration costs. Our headcount is now 48, up from 35 prior to the LXI acquisition.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

That is a combination of employees coming to us from LXI, but also new recruits to ensure that we have the right level of resource and the right skills for managing the enlarged group. Our net finance costs have increased to GBP 97,100,000.0 compared to GBP 37,400,000.0 last year. We acquired an additional GBP 1,200,000,000.0 of debt from LXI at an average rate of 5.2% compared to LNP's cost of debt at that time of 3.3%. So this, together with costs attributed to the income strip liability, are the main contributory factors to the increase in finance costs. So despite this increase in finance costs, the tighter cost control and our focus on rental income growth has driven net debt per earnings to £268,000,000 or 13.1p per share, an increase of 20.7% over last year, and that supports the increase to the dividend for the year to 12p a share, providing very strong 109% dividend cover and full cash cover for the dividend.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

The trading performance has been strong, with portfolio valuations increasing by £106,000,000 in the year, allowing us to report IFRS profits of $348,000,000 compared to GBP 119,000,000 last year. So whilst the income statement this year demonstrates the significant impact of last year's acquisitions, the balance sheet already reflected that increased scale of the enlarged group, the LXI deal having happened on the March 5. The value of the portfolio is now GBP 6,200,000,000.0. And whilst much of our focus this year has been on the disposal of noncore assets, the combination of acquisitions, development expenditure and accretive CapEx has actually exceeded our disposals by GBP 50,000,000. So that, together with the revaluation uplift to GBP 106,000,000, has contributed to that increase in the portfolio value.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

Gross debt, which I'll come on to in a moment, is £2,070,000,000 and the cash balance is £81,000,000 The other net liability position at the period at year end is £93,000,000 Rents in advance of GBP 63,000,000 are the main component of that number. So in summary, our EPRA net tangible assets at the year end were GBP 4,070,000,000.00 or 199.2p per share, an increase of 3.9% on last year, comprising surplus earnings and revaluation uplifts, providing a 9.7% total accounting return. So as I said a moment ago, our gross debt balance is now GBP 2,070,000,000.00. The GBP 1,200,000,000.0 of debt added to our balance sheet through the LXI acquisition was both shorter dated and more expensive than the existing LNP debt. The GBP 700,000,000 refinancing undertaken at the point of acquisition was on more favorable terms of longer maturity and cheaper.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

And since that time, our increased scale has helped us to secure an investment grade credit rating with Fitch of BBB plus Our financial position has been further strengthened and diversified in the year. We have entered into a new GBP 175,000,000 revolving credit facility with SMBC, a new lender to us, on terms ahead of our existing arrangements in terms of maturity and price. We have extended the maturity by one year on GBP $975,000,000 of our revolving credit facilities. And consequently, and despite the passing of one year, our debt maturity now stands at four point seven years compared with five point four years last year. And our average cost of debt, as Andrew said, is 4% compared to 3.9% last year.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

Our interest cover ratio is 4.2x, and our net debt to EBITDA stands at 6.4x, comfortably within the Fitch upper target of 8.5x. Our policy continues to be to limit our exposure to interest rate volatility by entering to hedging and fixed rate arrangements. We retained all of LXI's hedging on acquisition and have required $339,000,000 of current and forward starting derivatives in the year and extended protection on a further GBP 150,000,000 of debt at an average rate of 2.9%. So our drawn debt, therefore, is fully hedged at the year end and through until April 2027. And we expect floating rate debt to remain substantially covered until its maturity.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

And our LTV, as Andrew said, is slightly better than last year at 32.7 compared to 33.2%. Looking forward, we'll continue to manage our debt arrangements to ensure that refinancing risk is mitigated and that we are able to take advantage of that increased scale to diversify our funding sources. Since year end, we've entered into two further facilities for GBP 150,000,000 with JPMorgan and GBP 200,000,000 with Lloyd's. These facilities mirror the SMBC facilities in terms of price and duration that I mentioned earlier. We have GBP $350,000,000 of FormRel XI debt, which matures this autumn, and we have ample resources to cover its repayment.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

We have prioritized the sale of weaker and noncore assets acquired through our corporate acquisitions and have successfully substituted approximately £600,000,000 of assets held in secure facilities to facilitate that disposal program. Further to that, our successful credit rating now allows us to plan for possible future debt capital market activity in the form of a public bond issue and further private placement activity as we plan for debt maturities coming at us in finance year 'twenty seven and finance year 'twenty eight. Continuing to look forward, our contracted rent roll at the year end stands at £340,400,000 which will grow with the inclusion of rent on the Highcroft acquisition and reversion within the existing LNP portfolio to £373,500,000 Looking further forward, the Urban Logistics acquisition is expected to add £63,000,000 of contracted rent and short term reversion within that portfolio of £14,400,000 The rent roll will increase as a result of that to over £450,000,000 This will generate significant earnings growth, which supports our confidence that we will continue to be able to grow our dividend. And Andrew mentioned earlier, we've announced our intention to increase our Q1 dividend for FY 2026 to 3p per share, which is an increase of 5.3% on the same period last year.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

And finally, a look back, which puts the increase in the rent roll into context, clearly demonstrates that in the last eleven years now, we've been able to increase earnings per share more than threefold, and we're in the tenth year of dividend progression with excellent dividend cover. In particular, this year has marked a material step up both in earnings and in dividend. Our total property return is strong with an eleven year CAGR at 9%. And a shareholder return driven both by share price appreciation, but most significantly by dividends, equates to a compound annual growth rate in excess of 10%. And on that note, I'll hand back to Andrew.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Thanks, Martin. Just a brief comment upon the investment strategy, just to remind you the key the four key subsectors that we're invested in. The portfolio continues to be aligned to the strongest thematics and owning mission critical assets within those led to strong occupiers. Logistics remains our strongest conviction call, particularly urban logistics with incredible rent reviews, capturing reversions, which I'll come on to talk about later. Our entertainment and leisure investments continue to benefit from the shift from material to experience.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And convenience, retail and grocery builds on the thematic that time is an increasingly more valuable commodity. And our healthcare investments continue to enjoy a strong demographic tailwind. So diving down into the numbers in a bit more detail. You can see that total assets of GBP 6,155,000,000.000, Net initial yield of GBP 5,100,000,000.0, capital value appreciation of 2,500,000,000.0 helped deliver a total property return across the portfolio of GBP 8,300,000,000.0. Strong performances across all four key sectors: Logistics, 7.1% driven by a 7.6 total property return across the urban logistics investments.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And then strong returns both from entertainment and convenience, which enjoy slightly higher starting yields than our logistics investments. And our healthcare delivered a 9.9% return, where we've seen some small yield compression allied to guaranteed rental growth. I've touched on our investment activity. So if we start with disposals first, as I've already referenced, the investment markets continue to be influenced by the five year swap on the overall cost of debt. There is however healthy activity across the winning sectors.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And as I mentioned earlier, we are seeing greater liquidity the greatest liquidity for the slightly smaller lot sizes with owner occupiers, private businesses, family offices, all active across the investment market. In the year, we sold $342,000,072 assets that works out an average lot size of about 4,750,000. And as the pie chart shows you at the bottom, you know, we have been active in disposing of assets and exiting sectors, you know, whether or not it's assisted living, hotels, car dealerships, offices, training centers, large format food stores, etc. I mean, Will and the team have been incredibly active in getting out of what we consider to be non core sectors or non core assets. In the year, as well as selling $342,000,000, that included GBP $2.00 2,000,000 worth of LXI assets that across 54 individual properties.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And that is roughly about 7.5% of the total portfolio that we acquired a year earlier. And as you can see there, bang in line with the prevailing book values. Looking at acquisition activity. Again, as I've already intimated, we remain a thematic investor, allocating our capital to the structurally supported sectors. With 32 assets acquired for a total of £343,000,000 in the year, 87% of which were invested in the logistics sector.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

We're continuing to see five pockets of opportunities, as again, as highlighted here on the pie chart, whether or it's pension funds increasingly looking to exit direct ownership of real estate. Sale and leasebacks with some of our key operators is a great source of opportunity for us, as indeed our forward fundings from developers who are finding it difficult to get development finance from lending banks. We've also benefited from open ended funds receiving redemptions and the need to monetize assets quickly. And obviously, our activity in the M and A arena has allowed us access to around £1,200,000,000 worth of properties, which we remain hopeful of securing. You can see then the average acquisition yields of 6% net initial with a reversionary yield of just under 7%, six point eight % to be precise.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Asset management, this is probably one of my favorite slides. Our activity reinforces, you know, one of the best asset management teams in the industry with three forty initiatives. That's effectively one a day and certainly demonstrates the effectiveness of being in the office five days a week at least five days a week. Like for like income growth, 4.2%. Portfolio occupancy post period end is up at 99%.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

We've already referenced the reversion that we expect to capture over the next couple of years of £27,000,000 And we've continued to improve our properties, which we always do. I mean, I always find it quite amusing when people say worry about, know, what are gonna do about your EPC ratings? I mean, the best money we allocate is to our own properties. Okay? And that's evidenced by not only our investment activity, but also the fact, you know, the CapEx program that commit to some of our older assets to improve their letting and rental potential, but also their EPC ratings.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

A to C are up to 92%, our A to Bs are up to 58%. The £15,000,000 of additional income that we secured, 9,400,000.0 from rent reviews, that's an average uplift on a five year period of 17%, with open market reviews being settled on an average uplift of 40%. We've highlighted the performance of the urban portfolio with an average uplift across that portfolio of 24% and open market reviews settled on average at 48% above previous passing rents. That is why it is our strongest conviction call. Our asset management has continued to look at lease rig years and lettings, adding amenities, 68 lettings, 5,900,000.0 on an average uplift on previous passing rents of 25% and a very impressive waltz of nineteen years.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

So last two slides. First of all, the outlook. We have assembled a £6,000,000,000 portfolio that is well let, is all weather and enjoys triple net income characteristics. As I've already touched on, macro events will continue to influence investor sentiment across the real estate sector with gilt and swap rates having a massive impact on investment markets. However, we are optimistic that continued interest rate cuts, decelerating inflation, wage growth will continue to bring more confidence.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

The UK consumer remains incredibly resilient with full employment and real wage growth. In the real estate sector, we think polarization will continue, and that the sectors with the strongest fundamentals will continue to win out. To take a phrase from Mike, it's all about beds, sheds and breads. Disruptive sectors are seeing CapEx, OpEx and letting incentives continuing to dilute returns. And we remain convinced that there are opportunities for external growth, both at an asset level, a portfolio level, a funding level and obviously future M and A.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

The market dynamic is continuing to create further opportunities. There will be more consolidation in the listed markets. There's also ongoing structural shifts in how pension funds and institutions hold their direct real estate that will create opportunities for us. And scale provides, as Martin has already touched on, better access to cheaper and more diverse debt. So finally, our focus for 2026 as we look at the current financial year and twelve months ahead.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Full occupancy, exceptional income with longevity and certainty of income growth underpins our triple net portfolio. We continue to invest in the winning sectors. We will look to own mission critical, high quality assets that fit with our triple net strategy. We enjoy exceptional income and growth, and we'll continue to capture the embedded reversion and the value enhancement opportunities through our active asset management program. We will look to improve our efficient and scalable platform with a wider range of opportunities that will continue to propel our earnings and grow our dividend for the foreseeable future.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

So thank you very much. That's the end of the formal presentation. Thank you for listening. Thank you for attending. So I'm very, very happy to open up to Q and A.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

If we start in the room and then maybe we can go to the screens later, assuming there is anybody on the screen. So any questions? Max? He's finished his sandwiches.

[Max Nimmo, Director - Real Estate Equity Research at Deutsche Numis]

Thank you very much for the sandwiches. Max Nemo at Deutsche Numisst. I've got a couple of questions, if I can. Talked, obviously, about the urban logistics strategy. But can you maybe talk a little bit about regional and the mega box strategy and kind of where that sits in your thinking and as part of this kind of enlarged portfolio?

[Max Nimmo, Director - Real Estate Equity Research at Deutsche Numis]

Second question, if I can, is on swap rates. You mentioned just in the past that you that they're not quite where you'd want them to be. And I think in the past, you've kind of said around 3.5% was where you'd like things to be.

[Max Nimmo, Director - Real Estate Equity Research at Deutsche Numis]

But do you I guess the question is, do values need to sorry, does the property market need to kind of adjust its assumptions on where that should be and do values need to adjust further on that front? And then final question, I may

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Stop, stop, stop, I'm going forget all the questions. You're kidding me. I'm a real estate guy, yeah? What was the first one?

[Max Nimmo, Director - Real Estate Equity Research at Deutsche Numis]

Yes. I even remember myself. No. Regional boxes.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

All right. Okay. Okay. Look look, we we we like them. Know, we we think that regional and and mega have a place in our portfolio.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

They don't enjoy the same organic rental growth dynamics that you get in urban, generally because a lot of the lease structures are indexed as opposed to open market. And so therefore, it's difficult to capture the real pizzazz that we're seeing in the urban logistics space. So but we're very, very happy to own them. I mean, in the period, we announced a £74,000,000 funding of a 400,000 square foot box in Avonmouth that's led to Marks and Spencer's, which is actually has the best rent review you can ever have, which is the higher of open market or indexation sort of thing. So we quite like those.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

But that's fine. But it's just the fact that we like to get greater exposure to organic rental growth as opposed contractual. I mean, I think contractual rents in the portfolio today are around about mid 70%. Obviously, with the urban transaction that will fall, and that would be one of the attractions. So it's not that we don't like them, it's just that we want to get greater access to the market dynamics. So the second question, swap rates, wasn't it?

[Max Nimmo, Director - Real Estate Equity Research at Deutsche Numis]

Yeah. Just do property values need to correct more?

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

No. Think look. I think that property values, you know, you have to reflect interest rates because I think interest rates are the yardstick by which all investments should be assessed. Now I think that if you've got if you're invested in a great sector, if you've got a great asset, where you've got organic income growth, and I think that, you know, the yields look pretty well set. I mean, you know, we've talked about buying off an initial yield of six with a with a reversion to 6.8 and maybe with further growth, we get to seven.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

You know, you compare that against our current what would be our marginal cost of debt today. If you take the swap rate, say, at $3.80, you add a margin of one thirty in, you're at five one, you add in a few undeserved fees.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

Did you get that guy at one thirty?

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

One 30. You know, you're in at five I actually can't believe I can go lower, but anyway, keep the audience. You know, you're in it just over 5, just over 5, you're buying an asset of 6, think that's fine. You you do I think my views on some of the ex growth legacy sectors are pretty well known where there is no growth and actually, know, your values are just gonna melt away.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

So I think that it's there's nothing wrong. And by the way, I've lived in a period where we've had probably years way below the cost of debt, but then we've had unbelievable confidence in growth that will break through that. I think for the wider sector is is what I talk about. I think that for the wider sector, I think you will see more liquidity when swap rates get to three and a half and preferably below. And when you say my preference is for three and a half, my preference is for two and a half.

[Max Nimmo, Director - Real Estate Equity Research at Deutsche Numis]

Great. Thank you.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

What's the third question? Yes.

[Max Nimmo, Director - Real Estate Equity Research at Deutsche Numis]

No. No. You've answered it.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Oh, have I? Oh, great. Thank you. Clever. Rob?

[Analyst]

Great. It's Rob James, BNP Paribas. Just following on for Max's question. Martin, obviously, you've got a credit rating now, BBB plus Any kind of color you can give in terms of plans to utilize that going forward?

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

Rob, we are his requirement of my team is optionality. And so when you look at that debt maturity in the autumn, we were always concerned. If sitting here last year, if rates had fallen by now, we would probably refinance it. Today, we probably wouldn't refinance it. The new facilities we put in since the year end have given us the ability we've got the money to do that, but we are also preparing the paperwork for a public bond issue and for a private placement because I think we need to be in a position that when rates if rates do come in and it's good to go, we want to be able to go.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

We don't want to say, look, give us two weeks while we sort the paperwork out. So it's in play. Public bond pricing is not quite where Andrew was talking about, but it's not so far off now. Private placement is still more expensive.

[Analyst]

Okay, understood. And then Andrew, if you put on a kind of small Buffett hat momentarily. One of your comments that you made earlier today was talking about time is an increasingly valuable commodity. And obviously, that plays in nicely to some of the subsectors that you want to grow, like convenience, for example. If I think about the value of time, I think about it in two ways.

[Analyst]

One, I could think that it would increase broadly in line with wage growth because it affects for you value a time when you're not having to work at roughly similar kind of value per hour, but also the availability of time, right? And if we go back fifty, one hundred years, availability of time previously was very, very low because people didn't have things like washing machines, whatever it might be. Roll forward to today, the driver of increased availability of time is things like AI or productivity benefiting measures, whatever it might be. So when you say time is increasingly valuable commodity, I don't disagree with the value point, but I wonder if there's a debate around the availability of it and then how that links into your strategy going forwards?

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Well, I referenced it with our investments in groceries and a view that twenty years ago, to your point, you might have spent an hour and a half or something going around your 130,000 square foot, well, yours wouldn't have been an absolute superstore, but mine was. And that would take you an hour and half and that's time you're not going to get back. The chances of my children spending more than thirty minutes doing a grocery shop is pretty low. And therefore, you know, there is an increasing view that, know, it is convenience therefore, trumps experience in a grocery shop. So that's why we're not big format food stores, why we're convenience food stores.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

But that also goes to why we actually would rather invest in out of town retail parks than we would in the wider shopping center market. You don't want me to get onto offices and the fact that people are demanding more optionality about where they want to work and whether or not they need to actually arrive in their office. Fortunately, we're five what's our strap line, five together, two wherever. But that will have an impact on offices as well, probably. But the offices doesn't fit the triple net strategy anyway, so we don't have to get into that.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

I don't want to offend any more people than I already have.

[Analyst]

Thank you very much.

[Sam Knott, Equity Analyst at Kolytics]

Hi, Sam Knott from Colytics. Thanks for the presentation. First one, maybe a simple one. You talk about reducing your EPRA cost ratio. Is the plan there to reduce absolute costs or sort of purely naturally by scaling up the size of the company, the rent roll?

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Well, hopefully both. So let's deal with the first bit. I mean, we will benefit from a full year of the savings that we've already printed or we've already executed from, for example, the LXI integration. You don't make savings, they don't all come through immediately. So we'll be able to see the annualized impact of that in the current financial year.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And obviously, as the rent roll gets bigger, then obviously, we're able to push that through. Headbook cost ratio is an important metric for our business strategy. I know some people don't think it's that important, but we do. That's why we only have actually 47.4 people, not 48 in our business. So that's because somebody works two days a week, so I've down pro rata this.

[Sam Knott, Equity Analyst at Kolytics]

Thanks. And then on the point around you've been very clear on the sort of growth embedded in the portfolio over the next couple of years. When we're looking at more long term growth rates, do you see and maybe between your sectors, it's different. Where do you see those long term growth rates? Are they sort of inflation plus a bit?

[Sam Knott, Equity Analyst at Kolytics]

Or do you think they're sort of more in line?

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Well, look, we have a portfolio that is exposed to both inflation and to wider market. We think that I think the organic rental growth in the wider real estate market is actually hard to identify. I think it is around bed sheds and breads to gain quote Mike, and that we think will give us better than inflation. But we're very happy to have an inflation floor too. As I indicated in my answer to Max, is we wouldn't would be quite happy to have a little bit more of the market in certain market exposure in certain subsectors.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

But I don't think organic rental growth is universal across the wider real estate market.

[Sam Knott, Equity Analyst at Kolytics]

Thank you.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

We're probably limited on questions because so many of the team are actually offside with so many advisers involved in the M and A transactions. That's probably why we're not allowed anymore, is it? Matthew, you must have a question.

[Matthew Norris, Head of Real Estate Securities Research at Gravis]

Matt Norris from Gravis. Just looking at to the future and drawing on from this question about rental growth and cost of debt. So as you look to the future, as you look to 2027, '20 '20 '8 and the repricing of debt, what gives you confidence that you can grow rents faster than your cost of debt increases and that we continue to see future dividend growth?

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Yeah, I mean, growth or income growth is a factor of two things. It's obviously organic rental growth, there's inflation, obviously, heavily linked. But the big bit for us is actually going to be asset management, how we can add value, we can create new opportunities. Mean, when you look at our activity, where's my slide gone? If I go to Slide 20, you look at the rent reviews have delivered £9,000,000 of rental growth, which is what you would all maybe could have predicted that.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Actually extending leases, adding amenities, carrying out lease three years has actually added 25% uplifts. Okay. And that's the bit is very difficult to identify here today is what that looks like. What I do know is we have an incredible team, and they just do it year in, year out. And and I have deep confidence that, you know, of the 15,000,000, you know, six actually came from initiatives that we didn't even know about maybe a year or two ago.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And that and that's that, you know, it's great when you're in a winning set. You get some incredible tailwinds. You know, if you own great buildings, your tenants wanna stay with you. Tenants wanna stay with you, guess what happens? They invest more money in your buildings.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

They invest more money in your buildings. They wanna stay longer. They wanna stay longer. They, over time, will come around to the idea of paying you more rent. Okay?

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

That is what's great. You know, there's there's nothing so wonderful as being a, you know, winning sector, and owning the great buildings with wonderful occupiers.

[Matthew Norris, Head of Real Estate Securities Research at Gravis]

Thanks very much.

[Edoardo Gili, Senior Analyst at Green Street Advisors, LLC]

Eduardo Gille from Green Street. Just a conceptual question around sort of your net lease positioning. So you're mentioning you want to reduce your contractual rent exposure and reduce walls potentially as well. Isn't that antithetic with being a net lease REIT today? And then also, how do you think about your cost of capital between being a net lease REIT and being an industrial exposed company as well?

[Edoardo Gili, Senior Analyst at Green Street Advisors, LLC]

Because obviously, you're trading stronger cost of capital than a lot of other industrial REITs in the market today. So I'm just curious to know how you square that.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Let's go with the first one first. Look, I mean, reducing your WALT allows you to capture the reversions a little bit quicker. There's actually not a lot I can do about that. I mean actually, that's a first world problem in some ways. It just means we know we're going to get rich.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

We've just got to be a bit more patient. And again, that's sort like I said, it's a first world dilemma. But and some of the in an ideal world, if you reducing our percentage of exposure to inflation for more open market is fine, but it has to be open market in the right sectors with the right buildings, and that's what we're doing with our M and A. And again, the ideal scenario is that you have rent review clauses that is the higher of an inflation or an open market. Unfortunately, they are very, very rare.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

But we it doesn't stop us trying to find more of them. I mean in terms of the your second question around, look, we are a triple net. It's a triple net thematic. We want to be aligned to the winning sectors. And that might be a logistics transaction, but it equally might be a sale and leaseback with a grocery occupier as well.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And it might be if we could find some more theme parks, we might do that too. But we can only play what's on the pitch. But we're not it's not about, oh, I've got to get my logistics now from 55 to 65 because I've already gone to 50. You know, it'll happen. But equally, I'm very happy if we were able to execute a same leaseback on a grocery REIT portfolio, you know, in the next few weeks.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

That would be wonderful too, as long as the pricing is right too. But the net lease bid is important because costs can have an incredible impact on your returns. Again, to put my Munger hat or Buffett hat on, compounding is just an incredible calculation. Those who earn it understand it. Those who don't will pay it.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And that's why our EPIC cost ratio, despite some people thinking it's not that important, maybe if I had an EPIC cost ratio in the 20s, I'd probably think it wasn't that important. But that's why it is important. Has an incredible dilutive impact on your returns. I actually can't find any questions on the screen. I probably messed this up a bit.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Are there any other? Do you want to ask it? Sorry.

[Executive]

Yes. There's one coming from Charles Vaughan at Waverton about income concentration from the top occupiers and whether this will be reduced through the course of FY 2026.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Well, it's definitely going to be reduced simply because actually, as I said, some of the M and A transactions that we're going through at the moment will have that and will improve the income granularity. So it will come down on that. If you look at our top customer, Ramses, that portfolio is actually is in a relatively solid state at the moment because it's got some debt financing on it that prevents us doing anything with it until October year.

[Martin McGann, Finance Director & Executive Director at Londonmetric Property]

Yes. The GBP $350,000,000 that matures in autumn is the hospital is secured against it. So it would be too expensive to break that debt today, but it will give us optionality in the autumn if we wanted to change the tenant mix.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

And then the Travelodge, think, which is our third highest customer. I mean that exposure is now down will be down at circa 5% going forward. And we've got a little bit of trimming to do, but not a huge amount. We've done a huge amount of heavy lifting on that portfolio and feel very, very comfortable with where we are. I mean, I think eighteen months ago, I think that we had about we would have had effectively 146 travel lodges.

[Andrew Jones, CEO & Executive Director at Londonmetric Property]

Think we're down to about 64, 60 five today and with a few more in the departure lounge. Okay. No more questions on the line. No more questions in the room. So thank you ever so much for your time and your interest. Have a great day.

Participants

Analysts

• Andrew Jones, CEO & Executive Director at Londonmetric Property
• Martin McGann, Finance Director & Executive Director at Londonmetric Property
• Max Nimmo, Director - Real Estate Equity Research at Deutsche Numis
• Analyst
• Sam Knott, Equity Analyst at Kolytics
• Matthew Norris, Head of Real Estate Securities Research at Gravis
• Edoardo Gili, Senior Analyst at Green Street Advisors, LLC
• Executive