Urban Logistics REIT plans to cash in on increasing demand for warehouses that can serve cities, as shopping habits continue to shift online.
The company has announced plans to kick off a £100 million fundraising in a bid to raise the money it needs to buy £146 million of assets.
The business, which invests in properties in England, specialises in so-called last-mile logistics, making its warehouses the final port of call for a product before it reaches customers’ homes.
These mid-box sites, between 20,000 and 200,000 square feet, are a vital part of getting goods to customers.
“Mid-box logistics assets at the end of evolving logistics chains are in short supply and offer excellent opportunities for investors seeking exposure to this high-growth sub-sector of the real estate market.
“With greater scale, we are confident that we can continue to grow the company and deliver attractive shareholder returns,” said Richard Moffitt, the chief executive.
Urban Logistics REIT (real estate investment trust) invests in warehouses, manages and upgrades them, and then sell the sites on for a profit.
Its northernmost warehouse is currently outside Newcastle, while it also owns a space outside Plymouth, according to property platform LandTech. The business says it has a pipeline of almost £300 million.
The company avoids letting to fashion retailers, preferring low-risk tenants. Shares in Urban Logistics fell by 5p, or 3.36%, to 144p on Monday.
The final mile is a vital part of most online retailers’ distribution network, and can make or break a business. In July last year fashion retailer Asos warned on profits after its warehouses struggled to keep up with demand.
According to figures from Savills, supplied by Urban Logistics, every £1 billion that is spent online requires 1.1 million square feet of new last-mile retail space.
“Since listing in 2016, we have built a portfolio focused on income generation and total returns that exploits the opportunities created by the growing shift towards e-commerce,” said Nigel Rich, Urban Logistics’ chairman.
“Our sector-leading performance reflects careful stock selection and proactive asset management. Having proven our model and assembled a high-quality pipeline of new opportunities, we believe the time is right to increase the scale of our portfolio.”