LondonMetric's Income Machine Keeps Grinding: Convenience Grocery and Pension Funds Are the Next Acts
LondonMetric Property has delivered another year of steady compounding, growing net rental income 16.6% to £455.3 million and EPRA earnings 13.9% to £305.3 million. The company's triple-net model continues to generate cash, and CEO Andrew Jones emphasizes that the focus on income is what makes the model resilient:
The great thing is why we focus on income is because it's real. As we say, valuations can be vanity, but income is sanity.
The Income Compounder Keeps Compounding
LondonMetric's rent roll is now at a record £455.3 million, up 16.6% year-over-year, driven by the full effects of the Urban Logistics and Highcroft acquisitions and continued like-for-like growth. The company raised its dividend for the 11th consecutive year, a 3.8% increase, and now pays out 9x its overheads—more than double the sector average. CFO Martin McGann highlighted the strength of the balance sheet: "Our loan-to-value stands at 36.7%, and our net debt-to-EBITDA stands at 7.5x, comfortably within our EPRA target of 8.5x." This is a company that has consistently traded down its cost of debt, with a new £500m public bond at 4.69% and a £150m US private placement at the tightest credit spread of any REIT globally in three years.
A Machine of Small Disposals
The standout operational story is the disposal program. Andrew Jones proudly noted, "We're selling one building every 4.5 working days... 44% of our sales went to high net worth individuals and owner occupiers." This small-lot strategy has been key to recycling capital — the company sold £318m across 57 assets in the year, nearly all under £10m each. It's a disciplined approach to noncore assets that provides liquidity in a market where bigger-ticket sales have stalled. The proceeds are being redeployed into higher-yielding sectors, particularly convenience grocery and sale-and-leaseback deals.
Convenience Grocery: The New Arbitrage
LondonMetric has been quietly building its convenience grocery exposure, and the recent £40m deal with a food-store developer signals intent. Jones made the bull case clear: "We think that this is a sector where rents are low... the average rent on our grocery assets is going to be around about maybe even just slightly less than £20... we think there's an arbitrage there." The company is buying these assets at north of 6% yields, often with CPI-linked reviews, and sees a long-term tailwind from changing consumer behavior. It's a consumer behavior trade that feels contrarian given the broader retail pessimism, but LondonMetric's track record of pivoting between sectors (from shopping malls to sheds and now convenience) gives it credibility.
Pension Fund Shake-Up: A Slow-Burn Opportunity
Perhaps the most strategic forward-looking theme is the pension fund opportunity. Jones talked about the structural shift from defined benefit to defined contribution, and how that will force pension funds to monetize their real estate: "That pension fund, that big shift... is taking place. I mean, there's a lot of money coming out of this." He noted that the pension sector owns as much commercial real estate as the entire listed sector, but the flow has been slower than expected. This is a pension funds angle that few other REITs are explicitly positioned for, and LondonMetric's scale and access to capital make it a natural consolidator. The company is also active in development fundings and sale-and-leasebacks, with returns ranging from 5.5% on high-quality credits to over 10% on riskier deals.
What Changed and Why It Matters
The narrative hasn't fundamentally changed—this is still a triple-net income compounder. But the emphasis on convenience grocery and the pension fund pipeline are new and underappreciated. Unlike many of the recent reporters we track, LondonMetric is not talking about tariff refunds or AI data centers; its themes are idiosyncratic to the UK property market. The company's ability to consistently execute on asset management and portfolio recycling, while keeping costs at a sector-leading 7.7% EPRA cost ratio, is what separates it. As Jones said, "We run our winners and we'll sell our losers. And our long-term compounding is what creates value."
The stock may not be a headline-grabbing mover, but the steady hand on the wheel—refinancing £2.7bn of debt at opportune times, selling small assets at scale, and seeding new growth areas—is worth watching. For investors, the dividend is the anchor; at today's price it yields around 5.5%, and with forward reversion of £38m by 2028, there's clear line of sight to further growth. LondonMetric is an income machine that keeps surprising, and the pension fund wave could be its next upgrade.