LondonMetric Property Expands NNN Portfolio with £79 Million Acquisition

LondonMetric Property Plc (LON:LMP) announced the acquisition of £78.5 million in triple net lease (NNN) assets across five separate transactions.

The acquisitions reflect an initial net initial yield (NIY) of 5.5%, projected to increase to 6.3% over the next five years.

The company explained that the acquired portfolio comprises nine assets, generating £4.6 million annually in additional rent with a weighted average unexpired lease term (WAULT) of 23 years. These acquisitions are said to enhance LondonMetric's portfolio diversification and income stream strategically.

The largest component of the acquisition is a £44.4 million portfolio of five modern Premier Inn hotels acquired from Whitbread PLC. These hotels, located in key locations such as Chatham, Exeter St David's, Penzance, Southampton, and Witney, are let on new 30-year leases with CPI-linked five-yearly rent reviews. The portfolio totals 446 recently refurbished bedrooms.

LondonMetric is also funding an 80,000 sq ft logistics warehouse development in Malton for £10.7 million. This warehouse is pre-let to Severfield Plc on a new 20-year lease with annual CPI-linked rent reviews. Additionally, the company has acquired a recently developed 68,000 sq ft logistics warehouse in the West Midlands for £8.3 million, let to Bilco Access Solutions for a further 12 years.

The remaining acquisitions include a £7.6 million convenience development funding in Ludlow, pre-let to M&S on a new 15-year lease with five-yearly RPI-linked rent reviews, and a £7.5 million convenience asset in Tunbridge Wells, let to Booker for 14 years with five-yearly fixed rent reviews of 3% per annum.

Following the Premier Inn hotel acquisition, Whitbread now ranks as LondonMetric's sixth-largest occupier, contributing £6.4 million annually in rent, representing 1.5% of the total rent roll. This acquisition complements LondonMetric’s existing portfolio of 75 NNN budget hotels leased to Travelodge, Premier Inn, QHotels, and Leonardo.

Andrew Jones, Chief Executive of LondonMetric, stated, “The Premier Inn transaction presented a great opportunity to acquire mission-critical assets let on very long leases to a FTSE 100 credit with guaranteed rental growth. It adds to our NNN investment in budget hotels, which is benefitting from the ongoing shift in consumer spending towards experience, entertainment, and convenience.”

The company's strategic focus on NNN assets in winning sectors is expected to drive future growth. “The investments announced today all solidify and improve the granularity of our assets across our winning sectors, and we expect to execute on further, similar opportunities in the near term,” Jones added.