Londonmetric suffers £100m rates-fuelled blow to property portfolio value
Londonmetric Property has emerged as the latest real estate investment trust to suffer an interest rates-fuelled hit to its portfolio.
The portfolio, which still stands at £3.5bn, has shed £100m in value since March, as the company’s property and capital returns dwindle.
Rising interest rates has eroded the value of several of the UK’s largest property portfolios, including British Land.
“Sharp movements in both bond yields and interest rates have brought to an end the era of cheap money and is having a material impact on real estate valuations,” Londonmetric chief executive Andrew Jones said in a statement today.
“Stability has partially returned, with a moderation in expectations for future rate increases, however we are expecting interest rates to remain higher for longer.”
While the cocktail of bond yields and rates hit is bruising, and unlikely to heal anytime soon, Londonmetric’s rental income has spiked in the six months to the end of September.
Rental increases are of no surprise to London folk and businesses, as inflation grips the capital.
The London-listed trust’s rental income has jumped by more than £8.5m to £72.1m in the six-month period, in comparison with the same period a year prior.
Rental reviews have also risen, with the company expected an £8m boost from reviews on its distribution assets over the next 18 months.