Urban Logistics REIT – Fundamentals strong as market stabilises

The industrial and logistics sector suffered its largest fall in value on record in the second half of 2022, even eclipsing that of the global financial crisis, as investment yields moved out rapidly to keep pace with interest rates. The re-rating of Urban Logistics REIT’s (SHED’s) share price was at an even greater velocity, putting it on a wide discount. However, evidence that values have bottomed out is building, with MSCI reporting uplifts in March for the first time in months. Whilst SHED h

Urban Logistics REIT – ‘Fundamentals strong’ as values stabilise

The industrial and logistics sector suffered its largest fall in value on record in the second half of 2022, even eclipsing that of the global financial crisis, as investment yields moved out rapidly to keep pace with interest rates. The re-rating of Urban Logistics REIT’s (SHED’s) share price was at an even greater velocity, putting it on a wide discount. However, evidence that values may have bottomed out appears to be building, with MSCI reporting uplifts in March for the first time in months

Active asset management delivers >£2m rental uplift

Urban Logistics REIT (“ULR”) has announced 19 letting events across >500k sqft space which has delivered >£2m incremental rental income. Lfl rental income on new lettings was +24%; further demonstrating scope for rent reversion delivered through active asset management (and selection). We leave forecasts unchanged, with FY23 finals expected in late June (22/6). We reiterate our BUY recommendation and 190p 12m Target Price, set with reference to our EPRA NAV forecast, noting a 25% discount which

Manager continuity preserved, small saving on fees

Upon review, the board has opted to retain the existing external management team. There are some structural changes, but none which impact ULR’s investment strategy. This secures continuity with the team which has originated and grown a £1.1bn+ portfolio of small/mid-box assets, which continue to perform. There will be a small reduction in the investment adviser fee from FY25e onwards. Trading at a ~35% discount to our EPRA NTA, we see value given the quality of the income stream from non-cyclic

Hybridan Small Cap Feast - 23 Jan 23

23 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

Sustained execution drives value opportunity

Urban Logistics REIT (ULR) has deployed a further £48m selectively into attractively priced assets (~6% NIY) with strong covenants and rent reversion opportunities. Further asset management efforts enhanced passing rents and WAULTs. Development activity has also bolstered the rental base. MSCI has made a material upward rerating (A from CCC) on enhanced disclosure. We make no changes to forecasts. We continue to see attractive value here with the shares trading on a 30% discount to EPRA NAV with

QuotedData’s Real Estate Monthly Roundup – January 2023

Performance - 2022 ended with another difficult month for property companies as the sector continues to get to grips with the impact of higher interest rates. There were several funds that performed well during December, however, with secondary shopping centre landlord Capital & Regional top of the pile. For a second month on the trot Home REIT saw its share price tank after it came under attack from a short seller in November. Valuation moves - It was a mixed bag for valuations, with six-month

QuotedData’s Real Estate Monthly Roundup – January 2023

Performance - 2022 ended with another difficult month for property companies as the sector continues to get to grips with the impact of higher interest rates. There were several funds that performed well during December, however, with secondary shopping centre landlord Capital & Regional top of the pile. For a second month on the trot Home REIT saw its share price tank after it came under attack from a short seller in November. Valuation moves - It was a mixed bag for valuations, with six-month

Solid interims, macro headwinds not helpful

The manager has developed a “through the cycle” approach. This is being evidenced here. Fundamental strength is evident in these interims and operational KPIs. Headwinds come from a more challenging macro backdrop in terms of capital deployment and valuations with a 10bps widening in yields. We exercise caution in our forecasting around deployment and valuation which drives a reduction in both our EPRA EPS (-13%) and NAV (-10%) forecasts. We continue to see an attractive rental growth profile in

Industrial property market - What the logistics is going on?

If one looks through the current interest rate cycle and trusts that inflation will be brought under control at some point within an investable timescale, then the hope is that as the cost of capital reduces real estate values will rise again. Our worst-case scenario of a 200bps move in yields and no rental growth would see valuations fall by a third. Many of the discounts that industrial and logistics property companies are trading on are currently wider than this. Couple this with the strong o

Urban Logistics REIT - Long-term dynamics remain strong

Recently, Urban Logistics REIT (SHED) has fallen to a wide discount rating, as the rising cost of debt and concerns over a protracted recession have hit sentiment towards the logistics property sector. However, the long-term trends that have characterised growth in the sector remain and are even more acute in the ‘last mile’ sub-sector that SHED operates. Supply of logistics space is at record lows, while demand is robust, with take-up for the first half of the year at record highs. The strength

Urban Logistics REIT - Long-term dynamics remain strong

Recently, Urban Logistics REIT (SHED) has fallen to a wide discount rating, as the rising cost of debt and concerns over a protracted recession appear to have hit sentiment towards the logistics property sector. However, the manager states that the long-term trends that have characterised growth in the sector remain and are even more acute in the ‘last mile’ sub-sector that SHED operates. It says that supply of logistics space is at record lows, while demand is robust, with take-up for the first

£90m acquisitions as deployment progresses

Urban Logistics REIT (“ULR”) has announced it has acquired a further £90m assets – at a 4.5% blended net initial yield – across five properties, four of which are currently let and income-producing. The five new assets include a significant warehouse of 97k sqft in West London with attractive reversion potential. We leave forecasts unchanged and note ULR currently trades at an 18% discount to FY23E EPRA NAV, which in our view fails to reflect the value and potential inherent in the current portf

Earnings in line, NAV ahead, caution being exercised

Urban Logistics REIT (“ULR”) has delivered a solid FY22 performance – deploying capital apace and driving strong returns through active asset management. Earnings and dividend are both in line vs SCMe. EPRA NAV is 190p (+7% vs SCMe); as yield compression came as a bonus. Caution is being exercised in deploying remaining capital, which impacts FY23e earnings only. We upgrade EPRA NAV by 14-20% incorporating some (but not all) recent yield compression. We increase our Target Price to 210p (FY23e E

£45m of acquisitions, full deployment in sight

Urban Logistics REIT (URL) has acquired a further £45m of assets at a blended NIY of 6.7%, taking total deployment since the December 2021 £250m fund raise to £184m at a blended yield of 5.4%. URL disclosed that they are on track to be fully deployed on a geared basis by the end of June and that they “are optimistic that we can continue to source attractive value accretive acquisitions that are strategically positioned in current and emerging logistics hubs.” URL will report its annual results t

CMD - Broadening & deepening client relationships

A dose of morosity

No change in the narrative. Aviva’s ship sails on as usual. The PRT business is still going well, inflation remains an impediment to a strong P&C improvement, retail customers seem more interested in the rising cost of living than savings’ products and Aviva investors see no real signs of an improvement. This is the same story as in recent quarters and, in that context, our thesis remains the same.

FLASH: In-line trading update

'Airlines will be shocked when Covid leases run out and rates go up’

The Opportunity in Short-Termism

Fears vs Fundamentals (again) For 2 years, European banks have enjoyed potent earnings upgrades. For 2 years, valuations have been trapped between ''unease'' and ''outright panic'' multiples. This note looks at the latest fears and fundamentals behind this ongoing struggle. We extract lasting lessons from Q1, a record profit quarter, and extend our work on the fears of the moment: ''peak NIM'', CRE and credit contraction. Peak NIM - no, not yet We refresh our top-down margin work for the late

In the Flow

Industry flows - bond funds remain preferred over equities Risk appetite for equity funds remained subdued with last week seeing $4bn net outflows (negative in 8 of the last 9 weeks). Flows worsened sequentially for Asia/EM categories, but improved for US and European equities. Bond funds saw inflows for a 10th straight week (c.$8bn) with broad based inflows across US government, IG and HY funds. Listed asset managers flows - inflows into ETFs, outflows from mutual funds ETFs net inflows contin

Morning Note – 30 May 2023

NAHL Group plc: AGM update: Continued progress in scaling the business for future growth

NAHL’s AGM statement released today, is encouraging as management continues to scale the businesses for further growth. As a result, the Board’s expectations for the full year remain unchanged and we make no alterations to our forecasts. As a reminder, these still call for a c.13% increase in adjusted PBT in 2023, c.170% in FY24 and a further c.70% in FY25. Our current fair value remains at 65p but this is likely to rise as the Group delivers on its significant potential.

WH Ireland: Avation - Market tailwinds highlighted in Bloomberg Intelligence event

Avation is a lessor of 35 commercial aircraft to a diversified client base of 17 airlines. Yesterday's Bloomberg Intelligence webinar event entitled ‘Aircraft Lessor Recovery and Innovation' reaffirmed a number of positive market trends for aircraft lessors at the present time. Key points included: i) structural deficits in the supply of turboprop aircraft in the coming years, with aircraft retirements expected to outpace limited production of new aircraft; ii) the strong recovery in air travel

GenAI: How to Use It

You''ve been here before, right? Blockchain, the Metaverse - and now GenAI. Could this time really be different and the hype justified? The answer to this question is rooted in how GenAI can be used in the real world. In this report we thus challenge our sector teams to identify GenAI use-cases within their industries - and those companies likely to pioneer them. The result is perhaps the broadest consideration yet of how GenAI can diffuse through the economy. Efficiency is the common theme, pr

Early Mover in UK Lab-grown Meat

BSF Enterprise Plc (BSF) is a biotechnology company focused on acquiring, combining, and building businesses in the lab-grown tissue space. It aims to achieve this through an acquisition-led growth strategy and has already acquired the tissue engineering and cellular agriculture company, 3D Bio Tissues.

Very strong CY22 - CY23 upgraded 10%

Trading update indicates strong FY23 performance

An Asian exploration

We spent last week with HSBC and STAN in Hong Kong and Singapore, delving into the detail of structural drivers for Asia. Both banks have a good story to tell, with business models that are well positioned and being enhanced further. In isolation we did not learn enough to warrant a change in recommendation but tailwinds from the region are not to be overlooked. A deep dive into a core part of the investment case Asia sits at the core of the investment case for both HSBC and STAN given its share

c.60% discount to NAV... Can deep value prevail?

Petershill (PHP) reported a Q1-23 double digit % headline miss on FRE/DE mostly driven by cyclical factors. However, fundraising was resilient including more closings after quarter end and PHP reiterated FY2023 guidance ($220-250m FRE). We remain outperform, 250p target price. Weakness on headline earnings amid a muted industry backdrop Private markets are being tested in 2023 with private equity deal activity down c.50-80% y/y. In this context, the headline Q1 miss was mostly driven by cyclica