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Online shopping is booming - try firm that earns cash on deliveries

"Clarita Lightner" (2020-05-06)


Chancellor Philip Hammond may be making a brave effort to save Britain's high streets but consumer habits are not on his side. 

According to recent forecasts, online shopping will account for 32 per cent of retail sales within the next five years, compared with around 16 per cent today. 

The shift does not just mean that giants such as Amazon are growing bigger, while small firms suffer. Many are thriving from the e-commerce boom.






Thriving: Warehouse REIT's sites have hundreds of tenants - including Amazon


One such company used to sell garden furniture, primarily to stores such as B&Q, Homebase and garden centres. 

Forced to fight over prices and wait months to be paid, the boss was subject to the whims and wishes of big retail customers and, in 2010, he almost went bust.






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Today, he sells bean bags on Amazon and eBay directly to consumers. He receives payment before shipping orders, he does not have to haggle over price and business is booming.

This story is repeated across the country and these newly successful firms need space to make, store and distribute their goods. Warehouse REIT provides that space.

The shares are 96.5p and are likely to rise over the next five years and beyond, accompanied by generous dividend payments.

Warehouse REIT specialises in urban warehouses, located close to city centres and i love tshirt generally split into a number of units. Tenants include hundreds of small, up-and-coming e-commerce firms, as well as major retailers such as Boots, Asda and indeed Amazon.





Warehouse has 92 sites in total and more than 850 tenants. The properties are dotted round the country and most are little larger than a football pitch. 

These estates are nothing like the huge out-of-town distribution centres - three or four storeys high and the size of ten pitches - used by retail giants to store, stack and process online goods.

Instead, Warehouse REIT's sites are primarily used to transport goods directly to consumers - known in the trade as last-mile delivery.

This is a fast-growing sector of the market, as online shoppers increasingly expect their parcels to be delivered within 24 hours of purchase.

One site in Newport, for example, is let to Amazon. Every night, lorries pitch up from the big box distribution centres, their goods are unloaded and piled into white vans before dawn. 

These vans drive round South Wales, ensuring that local customers receive their Amazon purchases by nightfall. Some tenants operate in completely different fields, however, including Edinburgh University, which uses a Warehouse site to store artwork.













Warehouse is run by Andrew Bird, a property expert with 25 years' experience under his belt. Bird believes that smaller, centrally located warehouses have particularly good growth potential and the statistics back him up. 

Demand for space is growing, supply is limited and there are relatively few specialists in this sector. Encouragingly too, Bird has put serious money into the business.

Warehouse floated on Aim in September 2017, raising £150 million at 100p a share. Today, he and his team have more than £17 million of their own cash invested in the business and they are determined to make it grow.





The group did well in the first few months. They acquired new properties and the share price rose. Last summer, however, a major transaction that they were working on - valued at more than £400 million - was leaked to the stock market. 

Warehouse shares were suspended for six weeks and ultimately, Bird walked away from the deal.

The saga spooked some shareholders and the stock fell to 92p. However, it has been moving ahead since then and should continue to gain ground.

A dividend of 6p is forecast for the year to March 31, so the shares are yielding 6.25 per cent and the payout is expected to rise steadily over the next few years.

MIDAS VERDICT: Bird and his team are determined to create a business with assets of more than £500 million over the next five years. However, they are only prepared to buy properties if the numbers stack up, as the recent leaked transaction proves. Ambition and caution are a good combination, particularly as Warehouse REIT operates in a sector with real, long-term growth prospects. At 96.5p, the shares are a buy.

Traded on: Aim Ticker: WHR Contact: warehousereit.co.uk or 020 3102 9465










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