Pacific plans £110m share placing

By Paul Norman - Friday, July 14, 2017 8:48

Pacific Industrial & Logistics REIT (PILR), the AIM-listed company backed by Sir John Beckwith that invests in urban logistics properties in the UK, has announced a proposed placing to raise up to £110m to buy an identified pipeline of assets, which includes three portfolios of regional and last-mile logistics assets.

Pacific's Board includes a number of veterans of the UK industrial market including Richard Moffitt, former head of industrial at CBRE, Nigel Rich, formerly of SEGRO, and property director Christopher Turner.

The portfolios have been sourced off market and are expected to have an aggregate gross acquisition cost of approximately £170m, reflecting a blended net initial yield of 7.2%.

Pacific said they will provide significant potential to grow rents and lengthen leases over the medium term, in line with the company’s strategy and supported by market and sub-sector fundamentals including the growth of e-commerce in the UK.

They are fully occupied with a WAULT of 5.6 years and a strong tenant base.

The placing and acquisitions will support the company’s near-term growth, diluting certain operating costs and reducing the total expense ratio, further enhancing its capacity to deliver a targeted net dividend yield in excess of 6 per cent per annum and a total return over the medium term of 10 to 15 per cent per annum by reference to the IPO price.

Since listing in April 2016, Pacific REIT has built up a portfolio of 15 assets, with an average lot size of under £10m, which are located in established logistics zones, taking advantage of the "supportive sector structural factors, primarily the rapid growth of e-commerce activity in the UK".

It is targeting deployment of the net proceeds of the Placing within three months of admission.

Nigel Rich, non-executive chairman of Pacific Industrial & Logistics REIT, said: "Since listing in April 2016, we have delivered on our objectives by establishing a strong platform of assets that is delivering significant capital and income growth. Having successfully deployed the monies raised at IPO and at the subsequent equity raise, we see a compelling opportunity to significantly expand the scale of our business through a pipeline of off-market acquisitions, enhancing the Company's ability to deliver target returns whilst benefitting Shareholders by reducing the total expense ratio."

The company was formed for the purposes of investing in last mile and regional logistics properties in the UK with an average lot size of under £10m, which are located in established logistics zones and which display, inter alia, the potential for rental growth and other asset management opportunities.

At IPO, the company targeted a net dividend yield of 6% pa and a total return over the medium term of between 10% and 15% per annum by reference to the IPO issue price.

The Group has raised a total of £23.3m of equity capital from its IPO and a subsequent capital raise in November 2016. The net proceeds of these capital raises have been deployed, together with debt finance at an average interest cost of 3.3% in the first period of trading, into assets yielding on average 7.9% (excluding purchaser costs).

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