- Pre-tax profits hit £172 million from £48 million

- Value of the portfolio has doubled in a year

- Demand far exceeds supply meaning rents can keep rising

The past year has been a transformational one for investor in mid-size industrial property Urban Logistics (SHED) resulting in pre-tax earnings more than tripling to £172 million.

The firm’s portfolio has doubled in value to over £1 billion, while its shares have moved from AIM to the main market and are now included in the FTSE 250 index.


Key to the firm’s success is its focus on high-quality, last-mile property in the 100,000 square foot to 300,000 square foot market where a lack of supply and growing demand from companies wanting to build more resilient supply chains continues to drive up rents and values.

The firm is able to buy well, typically in off-market transactions, and is able to push through significant rent increases on new leases and renewals.

Despite the market turmoil, the company was able to raise £358 million in new equity which it invested at a blended net initial yield of 5.3% against a 4.3% yield on its existing portfolio, giving the management team scope to unlock value in the future.

Net tangible assets per share increased by 24% from 152.3p to 188.8p, largely thanks to the revaluation of the existing portfolio and action by management to upgrade some of its assets so as to charge higher rents.


Just as important as the quality of the assets and an active approach to developing them is the quality of the firm’s tenants.

One of investment manager Richard Moffitt’s cardinal rules is that the firm has no fast-fashion clients on its books due to the vagaries of the market and the high number of firms falling into insolvency.

Instead, major clients include logistics firms Unipart, which supplies the NHS, XPO (XPO:NYSE), DHL and Hermes, parcel delivery group Royal Mail (RMG), healthcare retailer Boots, wholesaler Booker, owned by Tesco (TSCO), and supermarket chain Sainsbury’s (SBRY).

As a result, vacancy rates are low at under 7% and rent collections are almost 100%.

With a blue-chip customer base and affordable rents (on average £5.59 per square foot), the firm has no problem pushing through higher costs.

‘We are well-positioned for an inflationary world’, says Moffitt. ‘As an active manager with strong tenant engagement we are able to capture inflationary uplifts in rental incomes quickly.

‘With our focus on strong covenants and occupiers delivering essential goods, we believe our tenants will be in a good position to pass along inflationary price increases’, he adds.


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Issue Date: 23 Jun 2022