MLI trading update Q4 FY22

(Formerly Stenprop Limited)
(Registered in Guernsey with registration number 64865)
LSE share code: MLI  JSE share code: MLI
("Industrials REIT" or the "Company")

29 April 2022

MLI trading update Q4 FY22
Continued strong demand for affordable MLI space drives a record quarter of lettings

Industrials REIT Limited, the UK multi-let industrial (“MLI”) property company, today publishes a
trading update on its MLI portfolio for the period 1 January 2022 to 31 March 2022 and up-to-date
information on transactions and rent collection across the Company's whole portfolio.

Commenting on the trading update Paul Arenson, CEO of Industrials REIT, said:

“We have had a record quarter for deal volumes following several substantial leasing transactions in
Ashby de la Zouch and Paddock Wood. Even without these, the volumes were in line with previous
quarters illustrating the continued depth of demand for MLI space across the UK. Average uplifts in
rent across all new lettings and renewals averaged 22% for the quarter, with a record high of a 34%
average uplift in rent on new lettings where competitive tension is the highest.

“Correspondingly we have seen an increase in like-for-like rents of 1.5% during the quarter and
delivered our target income growth of 4-5% per annum. With a backdrop of strong demand and scant
new supply of MLI space, coupled with the affordability of our rents as a proportion of our typical SME
client’s operating costs, we see the potential for further rental growth continuing for the foreseeable

“Elsewhere, the lifting of the moratorium on taking action to recover unpaid rents on 26 March 2022
has restored the balance between landlords and tenants. Rent collections on the MLI portfolio from
early in the pandemic are now 97%, with more recent periods indicating a path back towards pre-
Covid collection rates of 98% . Whilst Industrials REIT will continue to take a fair and reasonable
approach to settling lockdown debts, we are confident that the impact of the pandemic upon rent
collections is now behind us.

“We have had good success in acquiring further MLI estates for our portfolio this quarter, with £21
million of acquisitions and a strong pipeline of opportunities. We continue to buy assets at well below
replacement cost with attractive cash flows and prospects for further rental growth and accretive
asset management.”

Record quarter for transactions volumes

 -     The total rental value of new leases signed during the quarter was up 90% to £2.9 million
       across 54 new lettings and 32 lease renewals over 399,326 sq ft, a record value of deals as the
       asset management team completed on the strong pipeline of under offer transactions that
       were under offer at the start of 2022 (previous quarter: up 31% to £1.54 million of new income
       over 43 new lettings and 17 renewals on 238,009 sq ft). In addition, a further 17 lettings or
       renewals across 54,044 sq ft of space had exchanged by the quarter end (previous
       quarter: 11 deals over 21,889 sq ft), taking the total amount of space upon which new leases
       were completed or exchanged to 453,000 sq ft (previous quarter: 260,000 sq ft).
 -     At 31 March 2022, there were a further 436,000 sq ft of new lettings and renewals under offer
       across 89 transactions (previous quarter: 518,000 sq ft of space over 91 transactions), of
       which 142,000 sq ft relates to new lettings and 294,000 sq ft to existing customers renewing
       their leases (previous quarter: 283,000 sq ft and 235,000 sq ft respectively).
 -     22% average uplifts in passing rent of 22% upon letting or renewal, driven by particularly strong
       results on new lettings with average uplifts of 34% (previous quarter: 22% overall, 22% on new
       lettings). Renewals averaged uplifts of 16% over the previous passing rent (previous quarter:
       21%). This is the sixth successive quarter where average uplifts on new lettings have been over
       20%, whilst on average lettings and renewals were completed at a 8.3% premium to Estimated
       Rental Value (ERV).
 -     The reversionary potential in the portfolio remains high, with like-for-like ERV growth of
        4.3% in the 12 months to 31 March 2022, resulting in a premium between passing rent and
       ERV of 12.4% (previous quarter:  8.0% like-for like growth and a 13% premium to passing rent).
 -     Rents continue to track towards the top end of expectations, with like-for-like passing rent  up
       1.5% and  4.3% during the quarter and over 12 months (previous quarter: 0.7% and  4.8%)
 -     Passing rent across the portfolio remains highly affordable at £5.72/sq ft (previous quarter:
       £5.68/sq ft).
 -     The average lease term granted increased to 4.9 years to expiry and 3.7 years to first break,
       with a nominal average rent-free incentive of 1.2 months on each new lease signed (previous
       quarter: 4.2 years, 3.1 years and 1.0 months respectively).
 -     Occupancy across the MLI portfolio remains stable at 93.8% (31 December 2021: 93.8%, 30
       September 2021: 93.9%, 30 June 2021: 94.7%, 31 March 2021: 93.7%).
 -     53% of completed leases were contracted through Industrials REIT’s short-form
       digital ‘Smart Leases’, whilst 65% of leases signed included at least a 3% annual uplift in rent
       throughout the term of the lease (previous quarter: 58% of new leases were Smart Leases,
       whilst 80% of leases signed contained 3% fixed uplifts).

Letting enquiry levels and pipeline remain robust

 - web users were up over 10% over the quarter and up over 8% year-on-year as
       the level of direct leasing enquiries, and not via third party agents or portals, continues to grow
       (previous quarter: -9% over the quarter and up 6% year on year).
 -     Leasing enquiries were up 13% during the quarter, as the market came back into life after the
       Christmas period (previous quarter: -20%), but remain 20% below the peak levels seen in March
       2021. However, the work undertaken over the last year to improve enquiry quality and
       conversion rates in the leasing process is bearing fruit, with viewings up 20% during the quarter
       and total transaction volumes at record highs.

Asset management highlight

Dana Trading Estate in Paddock Wood comprises a 209,000 sq ft MLI estate in Kent and is the 3 rd
largest asset in our MLI portfolio by value. Until March 2022 the whole estate was let on a single FRI
lease to Unipart Group, the largest single tenant in the portfolio, although they had not been in
occupation of the property for many years and had sub-let the entire estate to 14 sub-tenants on co-
terminus lease terms.

An early lease surrender was negotiated with Unipart, which included a financial settlement for
outstanding repairing liabilities. This opened the way to engaging with the sub-tenants directly and
agreeing new lease terms with them directly. As part of this the lease to one tenant was not renewed
as their line of business did not meet our ESG criteria, whilst another customer who makes
environmentally friendly cleaning products was upsized into an additional 12,515 sq ft of space.

98% of the estate has now been re-let or is under offer, with the total of the rents on this space
reflecting a like-for-like increase of 25% from the previous passing rent and an uplift of over £300,000
per annum in rent. The new leases averaged over 6 years in term (3.5 years to first break), with an
average rent-free incentive of 2.3 months.

Rent collections continue to improve

Industrials REIT can report the following rent collection statistics as at close of business on 25 April
                                           Rent collected vs billed (%)

                                   2020                        2021                2022

 County /     Portfolio     Apr-   Jun-    Sep-    Dec-    Mar-    Jun-    Sep-    Dec -   Weighted
  Sector      Weighting     Jun    Sep     Dec     Mar     Jun     Sep     Dec     Mar     average

 UK MLI          95%        97%    97%     97%     96%     96%     95%     92%     85%       94%

 Germany          5%        94%    98%     97%     83%     98%     100%    96%     97%       95%

                100%        97%    98%     98%     94%     96%     95%     92%     86%       94%

On 1 April 2022, we went live on a new finance and operating platform which coincided with the date
that we in-sourced all accounting and credit collection activities from 3rd party suppliers. In addition,
on 26 March 2022 the Government lifted the moratorium on taking recovery action for overdue debts
outside the protected period (c. March 2020 to July 2021 in England & Wales), and in the three weeks
since we have successfully collected over £300,000 of historic arrears. Whilst Industrials REIT will
always take a fair and reasonable approach to settling arrears accrued during periods of lockdown, we
are confident that the return of ordinary course debt collection measures will deliver continued
success in recovering a significant proportion of historic debts.

Going forward we expect rent collections to return to pre-covid levels of around 98% or above of rent
billed in a timely manner. This will, however, require a period of adjustment for customers and we
will work with them to ensure their behaviour reverts to paying rents when they fall due or face the
risk of enforcement action.

Four more MLI estates acquired during the quarter

Four new MLI estates totalling 260,465 sq ft and £20.86 million1 were acquired this quarter as follows:

 -     Primrose Hill Industrial Estate in Stockton-on-Tees was acquired on 18 January 2022 for
       £4,310,000, reflecting a net initial yield of 6.2% and a capital value of £57 psf.
 -     Haven Business Centre in Boston was acquired on 15 February 2022 for £4,000,000, reflecting
       a NIY of 7.1% and a capital value of £69 psf.
 -     Twibell Street Trade Park in Barnsley was acquired on 29 March 2022 for £5,850,000, reflecting
       a NIY of 5.25% and a capital value of £106 psf.
 -     Astra Park in Leeds was acquired on 24 March 2022 for £6,700,000 million, reflecting a NIY of
       4.8% and a capital value of £93 psf.

Since the quarter end we have also completed on the following acquisition:

 -     Units 14-28 at the Primrose Hill Industrial Estate in Stockton-on-Tees were acquired on 20
       April 2022 for £3,100,000, reflecting a net initial yield of 5.2% and a capital value of £104 psf.
       This 29,717 sq ft estate across 15 units comprises the second phase of Primrose Hill Industrial
       Estate, the remainder of which was acquired in January 2022, taking the total ownership in the
       location to 105,000 sq ft across 27 MLI units. The latest acquisition is let to 12 tenants at an
       average rent of £6.00 psf and offers units of 720 to 7,300 sq ft, with two vacant units totalling
       1,550 sq ft providing immediate potential to enhance value and income through the Industrials
       Hive platform. The vendor was a private property company, and the transaction was concluded
       on an off-market basis.

In addition to the above transactions, at the time of this announcement we have a further two
industrial estates under offer with a combined value of £7.2 million and a strong pipeline of other
potential opportunities.

As at close of business on 31 March 2022, Industrials REIT’s loan-to-value ratio (LTV) was 31% on
drawn facilities, and approximately 28% when allowing for unrestricted cash2.


The financial information on which this trading update is based has not been reviewed or reported on
by the Company's external auditors.

1) These transactions have already been announced in a previous RNS and SENS or Trading Update. For
   full details please visit:

2) Calculated as gross borrowing less unrestricted cash, divided by gross asset value based on our 30
   September 2021 valuations adjusted for subsequent acquisitions and disposals and changes in foreign
   exchange rates. Unrestricted cash is cash and cash equivalents after deducting amounts for service
   charge, tenant deposits and cash held in debt service accounts.

To receive details of all future announcements made by Industrials REIT, please add your name and
email address to our Investor News email list at

For further information:
Industrials REIT Limited                                                         44(0)20 3918 6600
Paul Arenson (
Julian Carey (
James Beaumont (

Numis Securities Limited (Financial Adviser)                                     44(0)20 7260 1000
Hugh Jonathan 
Vicki Paine

FTI Consulting (PR Adviser)                                                      44(0)20 3727 1000
Richard Sunderland
Richard Gotla
Neel Bose

Java Capital                                                                     27 (0)11 722 3050
(JSE Sponsor)

About Industrials REIT:
Industrials REIT is a UK REIT listed on the LSE and the JSE. The objective of the Company is to deliver
sustainable growing income to its investors. Industrials REIT invests in a diversified portfolio of UK
multi-let industrial (MLI) properties with the strategic goal of becoming the leading MLI business in
the UK. For further information, go to

Date: 29-04-2022 08:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.