Campus leasing activity rebounded strongly with 819,000 sq ft of lettings and renewals, 6.1% ahead of ERV
In Retail & Fulfilment, we delivered more than 1m sq ft of leasing activity including 632,000 sq ft of long term deals. Encouragingly, we are letting ahead of ERV on Retail Parks (+1.8%) whilst on Shopping Centres, deals were 2.7% below ERV.
We have identified three key themes in urban logistics and have made good progress against each: ... Including the opportunities identified above and those on our portfolio, the estimated gross development value of our urban logistics opportunities is c.£600m with a blended forecast IRR from acquisition of c.15%
We have sold £196m of assets since April 2021, 6.0% ahead of book value and expect to make further disposals this year
Outlook
Current market trends reinforce the conviction we have in our strategy. The trend towards more flexible working has clearly accelerated during Covid and office demand is more firmly polarising towards the highest quality most sustainable space. This is exactly what we deliver at all our Campuses, where we also benefit from strong demand from innovative growth sectors. Over the next 12 months, our central case is for rental growth on our Campuses of 0-3% with yield compression likely.
We expect the value play opportunity in retail parks to continue, driven by reducing yields and rent stabilisation including some rental growth for small, well located parks. In Shopping Centres, valuation decline has slowed, and we expect to see continued yield stabilisation with the rate of ERV decline also slowing. The market for urban logistics assets to support last mile delivery in London remains excellent and we expect continued strong rental growth with further yield compression possible.
Plenty more to read in the RNS, and in particular I like the development opportunities in Southwark and other campuses. Logistic developments at Meadowhall and elsewhere mentioned too look interesting.
As is usual the share price is trading (but up) at a significant discount to NAV. However, this time NAV is rising, whilst in the past in could be argued the share price was pricing in, and ahead of, further NAV falls. Somewhat less credible to be arguing this now with prices and inflation rising.