Pacific Industrial & Logistics REIT is seeking £110m from a share placing to help fund a series of acquisitions that will lead to a five-fold leap in the value of its assets.
The AIM-listed urban logistics group is targeting assets, including three portfolios of regional and last-mile logistics assets. The assets have been sourced off market, and are expected cost around £170m, reflecting a blended net initial yield of 7.2%. The assets are fully occupied with a weighted average unexpired lease term of 5.6 years.
The deals are expected to be geared at around 40% loan-to-value.
Nigel Rich, non-executive chairman of Pacific, 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 group said the placing and acquisitions will support the its near-term growth, diluting certain operating costs and reducing the total expense ratio, enhancing its capacity to deliver a targeted net dividend yield in excess of 6% a year and a total return over the medium term of 10% to 15% a year compared to its float price.
Pacific’s results for the period from its float on 13 April 2016 to 31 March 2017 showed its portfolio value rose 9.8% to £43.4m, with net asset value per share up 16% to 116.1p, and a total shareholder return of 22.6%.
Since raising £23.3m at the time of listing, Pacific has built a portfolio of 15 assets, with an average lot size of under £10m.