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The warehouse
provider of choice
Annual Report and
Financial Statements 2023
Warehouse REIT is an investor in UK warehouse
assets, focused on multi-let industrial space
Contents
Strategic report
Pages 1 to 66
Financial highlights 1
Operational highlights 2
Our assets 3
Our locations 4
Investment case 5
Chairman’s statement 6
Q&A with Simon Hope 9
Market overview 11
Business model 13
Stakeholders 14
Section 172(1) statement 17
Objectives and strategy 20
Key performance indicators 22
Strategy in action
Growing our presence in a keylocation
24
Swift Valley Industrial Estate, Rugby 26
Investment Advisor’s report 27
Sustainability report 36
Principal risks and uncertainties 54
Going concern and
viability statement 65
Corporate governance
Pages 67 to 100
Chairman’s introduction
to governance 67
Board of Directors 70
Investment Advisor 72
Corporate governance statement 73
Nomination Committee report 83
Audit and Risk Committee report 86
Management Engagement
Committee report 90
Sustainability Committee report 92
Directors’ remuneration report 94
Directors’ report 97
Financial statements
Pages 101 to 143
Statement of Directors’
responsibilities 101
Independent Auditor’s report 102
Consolidated statement
of comprehensive income 110
Consolidated statement
of financial position 111
Consolidated statement
of changes in equity 112
Consolidated statement
of cash flows 113
Notes to the consolidated
financial statements 114
Company statement
of financial position 139
Company statement
of changes in equity 140
Company statement
of cash flows 141
Notes to the Company
financial statements 142
Additional information
Pages 144 to 160
Unaudited supplementary
notes not part of the consolidated
financial information 144
Property portfolio 151
Shareholder information 154
Glossary 156
Contact details of the advisors 159
Financial calendar 160
Our purpose Financial highlights
Year ended 31 March
Our vision
Our purpose is to provide the well-connected,
high-quality and sustainable warehouse space our
occupiers need to thrive and, by doing this responsibly,
we generate positive outcomes for all our stakeholders.
What we do
We provide a range of warehouse accommodation in
key locations which meets the needs of a broad range
of occupiers. Our focus on multi-let assets means we
provide occupiers with greater flexibility so we can
continue to match their requirements as their businesses
evolve, encouraging them to stay with us for longer.
We invest in our business by selectively acquiring assets
with potential and by developing opportunities we have
created. Through pro-active asset management we
unlock the value inherent in our portfolio, helping to
capture rising rents and driving an increase in capital
values to deliver strong returns for our investors over
thelong term.
Sustainability is embedded throughout our business,
helping us meet the expectations of our stakeholders
today and futureproofing our business for tomorrow.
As we grow, our vision is to become the UK’s
warehouse provider of choice.
Gross property
income
£47.8m
Operating profit before change
invalue of investment properties
£32.2m
2023 £47.8m
2022 £48.7m
2021 £35.8m
2023 £32.2m
2022 £35.4m
2021 £24.8m
IFRS (loss)/profit before tax
£(182.8)m
IFRS earnings per share
(43.0)p
2023 (43.0)p
2022 45.0p
2021 35.2p
EPRA earnings per share
3.9p
Adjusted earnings per share
4.7p
2023
3.9p
2022 6.4p
2021 5.3p
2023 4.7p
2022 6.4p
2021 5.3p
Dividends per share
6.4p
Total accounting return
(25.7)%
2023 6.4p
2022 6.4p
2021 6.2p
2023 (25.7)%
2022 33.2%
2021 27.7%
Total cost ratio
28.4%
EPRA Net Tangible Assets
122.6p
2023 28.4%
2022 27.1%
2021 29.5%
2023 122.6p
2022 173.8p
2021 135.1p
2023 £(182.8)m
2022 £191.2m
2021 £123.1m
1 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Operational highlights
Macro headwinds
impact valuation but
underlying rental
growth resilient
18.5%
decline in like-for-like portfolio
value to £828.8 million driven by
sector-wide asset repricing
6.5%
equivalent yield; 131bps yield
expansion
6.2%
like-for-like growth in estimated
rental values
(2022: 6.0%)
Progressing our ESG
agenda
60.2%
of the portfolio EPC A toC rated
following targeted investment in
our assets
(2022: 60.4%)
Pathway to
netzero
advanced, including a target
annual reduction of 4.2% in our
Scope 1 and 2 emissions on a like
for like basis
Reporting
TCFD disclosure, including our
climate change impact assessment
EPRA sBPR Gold award for the
second year
Strong operational
performance
£3.5 million
new rent generated
(2022: £3.3 million)
£45.3 million
contracted rent (2022: £44.0 million)
23.4%
new rent 23.4% ahead of prior
contracted rent
5.3%
like-for-like growth in
contracted rents
(2022: 3.0%)
95.8%
occupancy
(2022: 93.7%)
Targeted capital activity
£59.6 million
asset disposals, delivering on our
strategy following a sharp increase
in borrowing costs
£64.0 million
acquisitions, including Bradwell
Abbey, a highly reversionary,
multi-let estate
£29.9 million
sales completing post period end,
17.2% ahead of book value
33.9%
LTV at 31 March 2023
(2022: 25.1%)
1. Based on lettings on the investment portfolio.
2 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Our assets
Key statistics at 31 March 2023
We own 8.2 million sq ft of
high-quality, industrial warehouse
spaceacross the UK.
Our primary focus is on multi‑let estates, which offer the
greatest flexibility for occupiers. Weoffer a range of units by
size, enabling occupiers to take one or more to meet their
needs and to scale up or down as their businesses evolve.
We balance this with a high‑quality single‑let estate,
comprising our Regional Distribution portfolio, which covers
1.4 million sq ft of big box assets, typically located on major
transport routes, and 0.9 million sq ft of Last‑mile assets,
which are close to major urban centres. These assets are
typically let on longer leases, providing a solid incomestream.
We recognise that the sustainability credentials are
increasingly important to our occupiers and are working with
them to minimise their carbon footprint.
833
units
76
estates
490
occupiers
35.8%
rent roll accounted for by
top 15 occupiers
5.5
years – average lease
lengthtoexpiry
99.0%
of assets within two
miles of a town centre,
transport hub or
motorway junction
11%
single-let –
Last-mile
18%
single-let –
regional
71%
Multi-let
Focus on multi-let
1
1. Investment portfolio only; excludes development land.
3 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Our assets
Our locations
Our assets are located in strategically important places, such
as the industrial hubs in the Midlands, North West and the
Arc centred on Milton Keynes, providing occupiers with the
access they need for their businesses to be successful and
ensuring demand for our space remains strong. Supply in
these locations is constrained due to a restrictive planning
environment, creating favourable market dynamics from
which we can drive rental growth.
Middlewich
1 Estate £5.23 Rent per sq ft
725,000
Area (sq ft)
£5.92 ERV per sq ft
4.4 WAULT to expiry
Milton Keynes
2 Estates £6.86 Rent per sq ft
482,000
Area (sq ft)
£9.43 ERV per sq ft
5.5 WAULT to expiry
Birmingham
1 Estate £6.84 Rent per sq ft
220,000
Area (sq ft)
£7.42 ERV per sq ft
2.9 WAULT to expiry
Key:
Northern England Midlands South England The Arc Rest of the UK
Location is key for our occupiers because transport is a significant
component of their operating costs, meaning proximity to major
transport routes or the end customer directly impacts profitability.
4 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Investment case
We operate in a growth market with significant opportunities for long-term value
creation through active asset management and development. This drives rental income
and supports values, delivering attractive, sustainable returns for our shareholders.
Compelling,
long-term
market trends
Occupier demand is underpinned
by strong and enduring structural
themes including the growth of
e‑commerce and supply chain
resilience which have accelerated
due to the pandemic, Brexit and
the war in Ukraine. Location is key
for occupiers and supply of the
right type of space in economically
attractive places is constrained due
to planning restrictions. Together,
these dynamics support long‑term
rental growth.
Read more
on pages 11 and 12
Total returns
focused
strategy
We target an average total
accounting return of at least 10.0%
per annum through a combination
of dividends and NAV growth
(average of 10.8% since IPO). We
drive like‑for‑like income growth
through active asset management
across our portfolio, which is highly
reversionary. We deliver future
income growth through the selective
development of opportunities we
have created, and these activities
support long‑term value creation.
Read more
on pages 20 and 21
Sound financial
position
Our LTV is at the lower end of our
range at 33.9% and we benefit
from a range of funding sources
and significant headroom to our
covenants, providing the flexibility
to pursue opportunities in the
market and on our portfolio to
drivereturns.
Read more
on page 23
Experienced
management
team
We have an experienced Board and
a highly knowledgeable Investment
Advisor in Tilstone, which gives us
a deep understanding of the sector
and a wide network of industry
contacts through which we can
source investments.
Read more
on pages 70 to 72
Attractive
and resilient
portfolio
Our portfolio is primarily focused
on multi‑let assets where we
have the flexibility to attract a
wider mix of occupiers to create
enhanced performance through
asset management. Our assets
are close to urban centres and
major transport routes and we
have a significant presence in key
industrialhubs in the Midlands,
North West and the Arc centred
onMilton Keynes.
Read more
on pages 3 and 4
5 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Chairman’s statement
The operational fundamentals of our business remained
strong throughout the year, but this robust performance has
been overshadowed by macro events which resulted in a
step change in interest rates, driving property yields higher
and impacting valuations across thesector.
Amid this volatility, we have maintained our focus on driving
the value of our portfolio through active asset management.
The long‑term trends which have underpinned occupier
demand in recent years continue tosupport our leasing
activity, which this year delivered an additional £3.5 million
in rent, bringing contracted rent to £45.3 million as at
31March2023.
We continue to let space significantly ahead of previous rent,
demonstrating the reversionary potential of our portfolio and
that occupiers are prepared to pay higher rents for the right
space in the right locations. Our activity drove a like‑for‑like
increase in contracted rents of 5.3%, with the like‑for‑like
estimated rental value of our space up 6.2% reflecting sound
underlying market fundamentals. In addition, building on
our strategic focus on multi‑let industrial space, we acquired
Bradwell Abbey, a multi‑let estate near the gateway city of
Milton Keynes. Multi‑let assets allow greater flexibility for
occupiers because they can take multiple or different‑sized
units and more easily scale up or down according to their
needs, accelerating our ability to capture rental growth.
This also means we are well placed to appeal to a broader
range of occupier as demand diversifies in newdirections.
This year alone we have let space to a software provider
to the healthcare industry, an electronic bike and scooter
company and an automotive parts. Our multi‑let bias also
means we can create our own increased rental tone through
targeted capital expenditure helping to capture reversion at
lease events.
Following the market correction in the second half, we
successfully executed on our strategy to reduce the level
of variable‑rate debt through targeted asset disposals
of non‑core properties. These totalled £59.6 million
over the year and crystallised an unlevered IRR of 8.0%.
Encouragingly, there are clear signs that liquidity is
returning to the investment markets, with the majority
of these transactions completing towards the end of the
second half and post year end we have exchanged a further
£29.3million of sales, on average 17.2% ahead of book value.
This activity further focuses the portfolio on our core assets,
enabling Tilstone Partners – our Investment Advisor –
toconcentrate on opportunities which best drive value for
shareholders.
We continue to let space significantly ahead of previous rent,
demonstrating that occupiers are prepared to pay a premium
for the right space in the right locations.
Neil Kirton
Chairman
6 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Radway 16 in Crewe is the best example of this and an
excellent case study of Tilstone’s expertise in site assembly.
Initially, it comprised a 250,000 sq ft multi‑let estate with
surplus land. It was acquired within a portfolio purchase
and has grown through careful acquisition of adjacent sites
from just 25 acres to be an exciting development site of over
100 acres, strategically located on Junction 16 of the M6.
Inevitably, macro conditions have impacted its valuation,
but its combination of best‑in‑class, sustainable space and
superb connectivity make it highly attractive to a wide
range of occupiers. We are pleased that discussions for a
significant pre‑let on the first phase of this scheme are well
advanced and only subject to legal documentation. We will
update stakeholders on any developments in due course.
Financial performance and returns
The dramatic increase in interest rates over the course of the
financial year to address levels of inflation not seen since the
1980s significantly reduced liquidity in investment markets.
Valuers reacted quickly, increasing yields to reflect the new
funding environment, and significantly reducing property
valuations across all commercial real estate markets. We
have not been immune and as a result of significant yield
expansion, the value of the portfolio declined by 18.5% on a
like‑for‑like basis over the 12 months. This was partially offset
by an increase in ERV of 6.2% contributing to a fall in EPRA
NTA to 122.6 pence per share at the year end (31March2022:
173.8 pence) and a negative total accounting return of
(25.7%) (31March 2022: 33.2%). However, reflecting our very
strong performance in the years following IPO our five‑year
total accounting return is 10.8%.
When it became clear that interest rates would trend
upwards, in July 2022, two additional interest rate caps of
£100.0million each were acquired for a total premium payable
of £10.9million ahead of significant rate rises.
These cap the variable SONIA rate at 1.5% until July 2025
and July 2027 respectively. 75.2% of our total debt of
£306.0million is fixed with the remaining 24.8% subject
tovariable rates.
However, the increased cost of our variable rate debt had
a negative impact on earnings. While we met our target
dividend of 6.4 pence per share, adjusted earnings of
4.7pence per share meant that for the full year, the dividend
was uncovered. Following the disposals undertaken during
the period, our efforts are now focused on continuing to
capture the reversion embedded within the portfolio and
reduce the variable rate component of our debt.
As at 31 March 2023, the Group’s loan to value remains
within our target range of 30% to 40%, at 33.9% as at year
end, with £14.0 million of headroom within our new facilities
and with additional headroom created following further
asset disposals that have exchanged, but not yet completed.
Environmental, social and governance matters
We continued to make significant progress with our ESG
agenda under the leadership of my colleague Aimée Pitman,
who chairs our Sustainability Committee. We have further
strengthened how we integrate ESG factors in everyday
decisions, modelled our climate‑related risks and formulated a
pathway to net zero for our Scope 1 and 2 emissions by 2030.
We continued to improve Energy Performance Certificate
(“EPC”) ratings across the portfolio. We have eradicated
non‑compliant F and G ratings ahead of statutory
requirements and have a capital expenditure programme
aimed at improving the ratings of all D and E rated units in
England and Wales to progress meeting expected future
legislative requirements for all commercial properties.
In July 2022, the Company transferred from AIM to
the Main Market. Given our already robust approach to
corporate governance and our comprehensive disclosure,
compliance with the requirements of the Listing Rules and
related guidance has been straightforward and we now
benefit from access to a wider pool of shareholder capital.
We continue to follow and comply with the AIC Code of
Corporate Governance.
In May 2023, Tilstone Partners Limited, the Investment
Advisor, appointed Simon Hope, one of its co‑founders,
asExecutive Chairman and Co‑Managing Director alongside
Andrew Bird. This follows Simon’s move to an executive role
at Tilstone.
In a separate announcement today Martin Meech has
indicated that he will not stand for re‑election at the AGM
this September. Martin has served on the Board since
2017 as the Senior Independent Director and has been a
hardworking, respected and valued colleague having served
on the Audit, Management Engagement and more recently
the Sustainability Committees. I would like to thank him for
all his efforts on our behalf and wish him well as he takes up
an executive position in the real estate industry.
As reported in elsewhere, this year the Board underwent
an externally facilitated Board evaluation. It is envisaged
that the outputs of that evaluation will be able to assist the
Nomination Committee in identifying Martin’s successor.
TheBoard have already commenced the process using
external consultants to find a successor.
Chairman’s statement continued
7 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Chairman’s statement continued
Outlook
Based on the performance of industry benchmarks and our
own experience, there are clear signs that the investment
market is stabilising and investors are returning, reflecting
the very favourable supply‑demand dynamics in our markets.
However, as an industry, we are highly sensitive to the future
path of interest rates and the outlook remains uncertain, so
the Board will continue to manage the business diligently and
carefully.
In this context, the ability to drive growth organically is key
to delivering returns. Occupier demand for space remains
robust and our sector continues to benefit from strong
tailwinds, including the growth of online retail and heightened
focus on supply chain resilience. In addition, our strong bias
towards multi‑let space in economically relevant locations
means we are well placed to capture demand and drive rents.
Selected development opportunities provide further upside
and we will commit to these as and when the time is right.
I am confident that the business is well placed to deliver on
behalf of shareholders moving forward. Our primary focus in
the near term is continuing to optimise the portfolio earnings
growth through active asset management. It should be clear
that the Board remain very focused on total shareholder
returns. As we pay down more variable rate debt, further
capture the significant reversionary potential in the portfolio
and continue the value creation process at Radway Green we
believe we have a clear path to further growth in our adjusted
earnings per share and therefore our dividend cover.
Neil Kirton
Chairman
5 June 2023
Daimler Green, Coventry
138,500 sq ft let to an automotive parts manufacturer
8 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Q
What’s behind your conviction in multi-let?
A
It’s really about flexibility. Multi‑let assets give
occupiers more choice over the size of unit
they want, and they can take more than one,
which means we’re well placed to match their
requirements. It also means we can attract a
broader range of occupier. The average unit
size across the Group’s multi‑let portfolio is just
under 9,000 sq ft but we also have units up to
500,000sqft in our Regional portfolio. That
means we can appeal to small and local businesses
as well as global corporations and also keep
satisfying occupiers’ requirements as theygrow.
It is also easier to drive rental growth on multi‑let
assets. Because we are churning space all the time,
there’s more evidence that rents are rising and that
raises the tone across the asset which can then be
captured through lease events.
Simon Hope, Co Managing-Director of our Investment Advisor,
Tilstone Partners Limited, shares his thoughts on the market,
ourstrategy and the Group’s performance and financial position.
Q&A with Simon Hope
9 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Q&A with Simon Hope continued
Q
What’s next at Radway? Is now the right time to
commit to new development?
A
Radway is a hugely exciting scheme for us and
one that offers a lot of optionality. We would never
develop it all in one go and we would not do any
of it speculatively so we’re very measured in our
approach.
At the moment we’re in advanced negotiations
for a significant pre‑let. This is for c.350,000 sq ft
and we’re relocating an existing occupier which is
around 20,000 sq ft, so together, that would be
the first phase. It isn’t a done deal yet so we’re not
committing to this today, but we’re very well placed
to progress this over the coming year.
This is also just the first phase. The scheme has
potential for a further 1.4 million sq ft. It is modern,
best in class warehouse space with excellent
sustainability credentials. We’re targeting a
BREEAM Excellent rating, the base build is all
electric and it has the capacity for 100% PV loading
on the roof. It is well located on Junction 16 of M6
in the north west, where rents for prime logistics
space are growing faster than in any other region of
the UK. It is also one of the few schemes in the UK
with the capacity to accommodate a 800,000 sq ft
requirement, so we’re very confident it will attract a
lot of occupier interest.
We have outline consent for the wider scheme, so
we still have the ability to evolve our plans to meet
occupier demand and we have full optionality over
how we progress and fund the build out.
Q
How confident are you of driving rent in the
current environment?
A
We absolutely recognise that we’re operating in
uncertain times but we’re very confident of our
ability to drive rents, and that’s for a few reasons:
Taking the macro points first, our markets are
underpinned by a supply‑demand imbalance. There
are some strong structural drivers behind demand
growth, such as online retail and the growing focus
on supply chain resilience. At the same time, the
challenging planning environment in the UK means
supply is constrained and with input prices still
elevated, construction is likely to tail off. Gerald Eve
reported speculative development starts of prime
logistics space of 3.3 million sq ft in Q1 2023, down
from over 6 million sq ft in Q4 2022.
Second, rents are actually a pretty small percentage
of occupiers’ operating costs. Savills/Hatmill estimate
between 8‑16% for a range of operators. Whereas
transport can be up to 75% for a parcel operator.
That means location is key to profitability and it’s
worth paying a premium to be inthe right place.
And third, we have the right portfolio. We are over
70% multi‑let, with a range of unit sizes; we focus
on key gateway cities and our space is affordable.
Importantly, we have flexibility when it comes to rent
reviews and renewals. Index linked rent reviews are
almost always capped and collared, whereas the
vast majority of our leases have open market rent
reviews/lease renewals which are unfettered meaning
we can drive rents ahead of capped inflation.
Lessthan 9% of our leases are capped or collared.
Radway 16, Crewe
1.8m sq ft development opportunity
10 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Market overview
The UK economic environment
became more challenging over the
course of the year, with the steep
rise in borrowing costs impacting
the investment markets while
inflation, and in particular the rapid
rise in energy costs, put pressure
on occupiers.
In this context, the occupier market has remained resilient
and the longer‑term outlook is favourable, given strong
structural drivers set out below:
• Continued growth of online retail. While online retail in
the UK has fallen back from its Covid‑induced peak, it
still accounted for 26.5% of total retail sales in the UK in
March2023, up from around 19% before the pandemic.
• Focus on supply chain resilience. External events
such as the pandemic, Brexit and the Ukraine war are
encouraging companies to manufacture closer to home
and hold more stock as a buffer. At the same time, speed
of delivery to the customer is increasingly important,
putting a premium on well‑located space.
• Drive towards sustainability and efficiency. Larger
occupiers increasingly want buildings that support their
sustainability objectives and are more energy efficient,
particularly in the context of higher energy costs.
UK take-up by size band (m sq ft)
30
70
80
50
60
Mid Box
(50k-99k)
Large
(100k-250k)
X Large
(>250k)
0
10
20
40
10 year average
Source: LSH
90
2012
2013
2020
2018
2019
2015
2014
2021
2022
2016
2017
Strong occupier
demand
Take‑up was down across the market in 2022 following a
record year in 2021, but the most resilient sector was the
mid‑box sub‑sector (50k – 99k sq ft) which saw drops of
around 15% and take up was still 7% above the ten‑year
average. Demand was broad based, particularly for
mid‑boxes which offer greater flexibility. In this sub‑sector,
manufacturers accounted for 29% of take‑up, retailers and
wholesalers for28% and 3PLs 23%. (All data: LSH).
UK availability by size-band (sq ft)
140
100
120
60
80
0
20
40
2012
2013
2020
2018
2019
2015
2014
2021
2022
2016
2017
Mid Box
(50k-99k)
Large
(100k-250k)
X Large
(>250k)
9%
7%
8%
5%
6%
0%
3%
4%
1%
2%
Availability
Supply remains
constrained
While the volume of available space increased at the
end of 2022, vacancy was low by historical standards, at
3.5%, with supply equivalent to only 1.1 years of average
take‑up. For the mid‑box sub‑sector, supply rose by just 2%.
(Alldata:LSH).
Recent data from Gerald Eve showed that construction
starts were at their lowest in Q1 2023 at 3.3 million sq ft,
down 50% on the prior quarter, reflecting the higher cost
ofraw materials as well as development finance.
11 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Prime multi-let rents and average annual growth 2023-25
(£ per sq ft)
80
60
70
40
50
Inner London
North West
West Midlands
East Midlands
South West
Scotland
2021 2022
Wales
North East
0
20
30
Greater
London
South East
Yorks &
Humber
Eastern
2025
10
2.6%
2.7%
2.6%
2.4%
2.4%
2.2%
2.1%
2.0%
1.9%
3.6%
2.2%
3.2%
Source: Gerald Eve
Rental outlook for prime
multi-letindustrial
The outlook for rental growth in the industrial sector is
positive, reflecting the strong, long‑term structural trends
which are driving demand. Multi‑let assets in particular have
a broad appeal, because their flexibility means occupiers
can scale up or down according to their needs. The
frequency of lettings at a single site also provides stronger
evidence on which to base ERVs, making it easier to raise
the rental tone. Looking forward, Gerald Eve expect the
strongest rental growth for 2023‑25 to be in the North West,
at 3.6%, where rents are expected to approach £15 per sq ft
by 2025.
All UK average prime logistics yield (%)
6.0
4.5
5.0
3.5
4.0
2.0
2.5
3.0
5.5
Q1 2016
Q3 2016
Q1 2021
Q1 2020
Q3 2020
Q3 2018
Q3 2017
Q1 2022
Q1 2023
Q1 2019
Q3 2019
Q1 2017
Q1 2018
Q3 2021
Q3 2022
Source: Gerald Eve
Investment market
stabilising
Investment markets were severely affected by the rapid
increase in borrowing costs in the second half of 2022 with
volumes for the year of £11.5 billion down 24.0% on 2021’s
recordyear.
Prime logistics yields reached levels not seen since 2017
at 5.5% but early evidence suggests that this is starting to
pull back as investors returned to the market. This reflects
the favourable supply‑demand characteristics of the sector
although investor appetite is increasingly focused on
good‑quality assets and, in particular, those with excellent
ESG credentials.
Responding to market conditions
Organic rental growth: benefiting from resilient demand,
we are driving rental growth by capturing the reversionary
potential of our portfolio through active asset management.
Focusing on multi-let: currently 71% of our portfolio
comprises multi‑let assets and future sales will target
non‑core properties, building our presence in this resilient
part of the market.
Selective development: progressing the development of
best‑in‑class space which meets the highest sustainability
standards but managing our risks appropriately through
pre‑letting, for example at Radway 16, Crewe.
Market overview continued
Valley Point, Rugby
38,600 sq ft let to PWR Europe
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Annual Report and Financial Statements 2023
Strategic report
Inputs
Our portfolio
• Multi let warehouses
• Strategically located
• Attractive opportunities for
development
People and relationships
• Experienced Board
• Dedicated Investment Advisor with
extensive real estate expertise and
strong industry relationships
Financial
• Sound financial position
• Access to a range of funding
sources and significant headroom
tocovenants
How we create value Creating long-term value
Financial
We aim to deliver an average total
accounting return of over 10% per
annum for our shareholders. For our
lenders, we are an attractive covenant
with high‑quality assets and a robust
interest cover.
Occupiers
We provide high‑quality, well‑located
space and our effective retention rate
1
of 82.2% is a strong endorsement of
ouroffer.
Environmental and social
Our asset management initiatives are
improving the environmental credentials
of our buildings. 60.2% of the portfolio
is now EPC A to C rated and introducing
green clauses to all new leases.
Business model
Our business model is designed to create both economic and social value for our
stakeholders. Tosupportthis, we have integrated ESG considerations in every step.
Operating sustainably
Creating a
resilient portfolio
Reducing our
footprint
Supporting our
occupiers
Responsible
business foundations
Read more
on page 37
Recycle capital
Asset management
and development
Investment
Investment
We benefit from
Tilstone’s extensive
network to identify
attractive opportunities
for investment and
development which can
enable us to secure deals
off‑market, potentially on
better terms.
Asset management
and development
We actively manage
our assets to drive
rental growth and keep
occupancy high. We
invest in our properties
to ensure they meet the
needs of occupiers and we
develop into markets with
potential.
Recycle capital
We are long‑term holders
of our properties but
regularly review our
portfolio and look to
crystallise value through
asset disposals and recycle
capital where future returns
are lower than target or to
pay downdebt.
1. Including vacant units re‑let during the period.
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Annual Report and Financial Statements 2023
Strategic report
Understanding our stakeholders’
views and interests is essential
for meeting our responsibilities
and creating economic and
socialvalue.
Our approach to stakeholder engagement
Tilstone is responsible for most of our day‑to‑day
stakeholder engagement, with the Board receiving regular
updates. In addition, the Management Engagement
Committee (“MEC”) reviews service provider performance
each year, including their policies and procedures around
ethics and culture and their engagement with our other
service providers. The MEC’s report can be found on page
90. Further information on ESG‑related engagement can
also be found in the sustainability section on page 36.
Our stakeholder engagement
Occupiers
Our occupiers are at the heart of our value creation
model. Tilstone’s approach to building occupier
relationships ensures a robust understanding of current
and potential occupiers and their needs.
Stakeholders
Their material issues
• The size, quality and location of our warehouses
• Rental levels
• Lease length and terms
• Flexibility and the ability to scale‑up their operations
• Support for their sustainability targets, including renewable
energy sources, energy use/costs, carbon emissions,
sustainable transport, climate change adaptation and
employee wellbeing
How we engage
• Occupier engagement is a key part of our business model (see
page 13)
• Regular communication with existing occupiers via the Tilstone
and property management teams
• Occupier surveys, for example on ESG matters (see page 42 in
the sustainability section)
• The Board receives regular updates on occupiers from the
Tilstoneteam
Outcomes
• Ongoing engagement with occupiers to determine their
strategies and meet their requirements, supporting 22 lease
renewals across 0.2 million sq ft
• Agreed 40 new leases across 0.5 million sq ft
• Further developed understanding of occupiers’ approach
toESG and our role as a landlord (see page 42) and integration
into asset management
Bradwell Abbey, Milton Keynes
Acquired April 2022
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Annual Report and Financial Statements 2023
Strategic report
Our stakeholder engagement continued
Shareholders
A growing group of supportive and informed
shareholders is vital to our business, in particular our
ability in the future to raise equity to expand the portfolio
and fund developments.
Lenders
Employing an appropriate level of debt is a key part of
generating financial returns. We therefore need strong
relationships with lenders, who are committed to providing
the lending facilities we need on appropriate terms.
The Investment Advisor
Tilstone implements our strategy and is responsible for
the day‑to‑day operation of the business, making it a
critical stakeholder for the Group.
Stakeholders continued
Their material issues
• Market drivers
• Strategy and business model
• Operational and financial performance
• Balance sheet strength
• ESG strategy, compliance and performance
• Climate risk
• Dividends and total returns
How we engage
• Shareholder meetings and roadshows undertaken by Tilstone
• The Board receives regular shareholder updates from Tilstone
and our corporate brokers
• All shareholders encouraged to vote at the AGM, during
which the Board and the Tilstone team are available to answer
questions
• Website/Regulatory News Service (“RNS”)
See the shareholder relations section on page 82 for more
information.
Outcomes
• Maintained the dividend at 6.4 pence per share
• Completed transfer to the Main Market of the London Stock
Exchange
• Continued to develop and communicate our ESG strategy and
enhance reporting, including under TCFD, reflecting strong
shareholder interest in ESG matters
Their material issues
• Quality of security
• Compliance with covenants
• Good working relationships
• Ability to provide the accordion facility when required
• Hedging of interest rates where appropriate
How we engage
• Tilstone engages with lenders through regular meetings to
support our relationships
• The Board is kept informed of lender views by Tilstone
• Regular portfolio updates via compliance reporting
• Quarterly reviews of hedging and other funding matters with
lenders and advisors
Outcomes
• Agreed two interest rate caps of £100.0 million each (see
page34)
• Refinancing completed with new club of lenders with improved
reporting covenants for an additional five years
Their material issues
• The Investment Management Agreement
• Transparency of fee calculations and prompt payment
• Clear investment strategy
• Day‑to‑day asset management
• Code of conduct and Group policies
• Management of other suppliers
• Open communication and alignment of values
How we engage
• Open, regular and transparent discussions with Tilstone,
including attendance at Board meetings
• Tilstone representatives have been appointed to the Board
• Tilstone can draw on Board members’ experience to support
its work
See the MEC report on page 90 for more information.
Outcomes
• Tilstone continued to execute the Company’s strategy in line
with the Board’s expectations
• The Board has approved Tilstone’s continued appointment,
ontheMEC’s recommendation
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Annual Report and Financial Statements 2023
Strategic report
Our stakeholder engagement continued
Other third-party service providers
Under our business model, third parties provide key
services to us. These include G10 (Investment Manager),
Savills and Rapleys (Aston Rose) (Property Managers),
Link (Administrator, Registrar and Company Secretary),
AuditR (risk management and internal audit advisor),
BDO (Auditor), Peel Hunt and Jeffries (Corporate
Brokers), FTI Consulting (financial PR and IR advisor) and
Crestbridge Property Partnerships (Depositary).
Local communities
We are aware of our wider responsibilities to the local
communities affected by the Company’s investments.
Stakeholders continued
Their material issues
• Clear terms of reference
• Clarity of fees
• Open two‑way communications and information flow
How we engage
• Quarterly service calls between Tilstone and service providers
• Monthly monitoring calls with the Investment Manager
• The Board maintains regular contact with key service providers
via Tilstone, with the aim of building long‑term relationships.
See the MEC report on page 90 for more information
Outcomes
• Service providers’ advice, needs and views are routinely taken
into account
• Commitment to prompt payment
• All suppliers with spend over £100k and with higher risk have a
Modern Slavery Statement or signed declaration
• Supplier code of conduct developed
• Checklist for appointment of third parties
Their material issues
• Noise and traffic
• Health and safety
• Environmental performance
• Employment opportunities
How we engage
• The Board ensures that any key decisions take into account the
impact on local communities and the environment
• The Company is pro‑active in meeting health and safety
requirements, local environmental standards on waste and
other regulatory obligations
Outcomes
• Commitment to EPRA sustainability reporting
• Consideration of local government ESG targets
• New lettings/renewals providing additional employment
opportunities
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The Directors have had regard for the matters set out in
section 172(1)(a)‑(f) of the Companies Act 2006 when
performing their duty under section 172. They consider that
they have acted in good faith in the way that would be most
likely to promote the success of the Company for the benefit
of its members as a whole, while also considering the broad
range of stakeholders who interact with and are affected by
our business, especially with regard to major decisions.
On this page are the matters the Board is required to take
into account under section 172(1).
Taking account of stakeholder views
Information on stakeholder engagement, including how the
Board is kept informed about stakeholder views, can be
found on pages 14 to 16. This engagement is an important
input to the Board’s decision‑making. The Directors keep
the methods for engaging with stakeholders under review,
to ensure they remain effective.
Key Board decisions
The Board’s key decisions during the year included
approving:
• the four interim dividends in respect of the year, totalling
6.4 pence per share;
• the purchase of two £100.0 million interest rate
derivatives, capping SONIA at 1.5%;
• the asset disposal programme, which raised £54.7 million
in the second half of the year;
• the Company’s plans to reach net zero carbon for Scope 1
and 2 emissions by 2030; and
• the refinancing of the Company’s debt facilities, which
completed after the year end.
Section 172(1) statement
Case study
Asset disposal programme
Background
The Group has regularly disposed of properties that are or have
become non‑core, where returns are likely to be below average,
or the asset no longer meets income or ESG requirements
without significant further capital expenditure. In September
2022, the Board reviewed the Group’s strategy and the
Investment Advisor, Tilstone, asked the Board to approve a larger
asset disposal programme, as part of its plan to reduce the level
of variable‑rate debt, given the higher interest rate environment.
Stakeholder considerations
In making its decision, the Board considered the impact on the
following stakeholders:
• Shareholders. The financial benefit of the disposals is the
crystallisation of valuation gains accrued over a number of years
which will be returned to shareholders via dividends declared
during the year and is key to ensuring that the dividend will be
covered by adjusted earnings by the end of FY 2024.
Although asset disposals reduce the Group’s short‑term rental
income, there is a significant saving in interest costs. The
Group also saves the capital expenditure that the assets would
otherwise require.
• Occupiers. To protect occupiers’ interests, the decision to sell an
asset is discussed with occupiers and in some instances there is
the potential to sell some assets to our occupiers.
• Lenders. By reducing the level of variable rate debt, keeping
total debt at a prudent amount and improving the Group’s
overall financial performance, the Board considered the
disposals would give increased comfort to lenders.
• Service providers. The targets are carefully chosen by the
Investment Advisor with some input from Property Managers
to give time to conclude any ongoing value creating asset
management.
• Local community.
The disposal provided a local charity in
Staffordshire with new space to occupy as their headquarters.
Impact of the decision in the long term
The Board noted that as well as improving the Group’s financial
position and performance in the short term, the disposals would
improve the overall quality of the portfolio and reduce future
outflows on capital expenditure. Significantly, by assisting with the
return to a covered dividend, the disposals would help to protect
the Group’s long‑term relationships with its shareholders.
Conclusion
The Board concluded that the disposals were in the best interests
of the Group and its stakeholders, and the programme should
go ahead. This resulted in the further disposal of 14 assets for an
aggregate consideration of £54.7 million in the second half of the
year and two further sales for £29.9 million due to complete post
year end.
Recycle
capital
Link to business model
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Annual Report and Financial Statements 2023
Strategic report
Case study
Adoption of net zeropathway
Background
The logistics industry is a significant contributor to global
greenhouse gas emissions. The Group needs to play its part in
reducing emissions, to help limit the impact of climate change,
attract and retain high‑quality occupiers and safeguard the
portfolio’s long‑term value. The Board was asked to approve the
Group’s plan to achieve net zero for its Scope 1 and 2 emissions
by 2030. See page 38 in the sustainability report for details on
our pathway.
Stakeholder considerations
In making its decision, the Board considered the impact on the
following stakeholders:
• Shareholders. Occupiers are increasingly focused on the
sustainability credentials and energy efficiency of their
buildings. Following the pathway to net zero will help the
Group to continue to attract occupiers, maintain or improve
rental levels and support capital values, all of which benefit
shareholders.
• Occupiers. Occupiers benefit from potential savings on their
energy bills and by reducing the environmental impact of their
occupation of the building.
• Communities. Communities will benefit from a reduction in
carbon emissions, helping to mitigate the impact of climate
change.
Section 172(1) statement continued
Impact of the decision in the long term
In addition to the long‑term environmental benefits, the Board
noted the necessity of adopting carbon reduction strategies
to protect the Group’s future financial performance and the
value of its assets, as described above.
Conclusion
The Board concluded that the plan was in the best interests of
the Group and its stakeholders and approved its adoption.
18 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Matter Response
a) The likely
consequence of any
decision in the long
term.
All Board decisions involve careful consideration of the
longer‑term consequences and their implications for stakeholders.
For example, during the year the Board approved the programme
of asset disposals and the adoption of the net zero pathway
(seecase studies on pages 17 to 18) both of which have important
longer‑term benefits.
b) The interests of the
Company’s employees.
The Company is externally managed and therefore does not have
any employees.
c) The need to foster
the Company’s business
relationships with
suppliers, customers
and others.
As described on page 29, the Group’s relationships with its
occupiers are managed day‑to‑day by the Investment Advisor,
Tilstone, with the Board kept regularly updated.
The Board oversees the Group’s relationships with all its principal
service providers through the Management Engagement
Committee. As a result of its oversight and review, during the year
the Committee recommended the continuing appointment of
Tilstone and the other key service providers.
d) The impact of the
Company’s operations
on the community and
environment.
The Board takes a keen interest in the Group’s environmental
performance and the energy efficiency of its assets, as reflected in
the portfolio’s EPC ratings. The Sustainability Committee provides
a dedicated forum for overseeing and directing our ESG activities,
and the Committee Chair Aimée Pitman has been closely involved
in the key activities this year, such as the development of our net
zero pathway and analysis of climate‑related risks. The Board
approved the net zero plan at its meeting in January.
Matter Response
e) The desirability of the
Company maintaining
a reputation for high
standards of business
conduct.
The Board has a culture statement, setting out its commitment
to ethics and high standards of business conduct. All of the key
service providers are expected to abide by these standards.
Reputational risks are also considered as part of the Group’s risk
management framework, as described in the risk management and
principal risks section on pages 54 to 64.
As part of the Board’s ongoing review of corporate governance,
the Board reviewed and approved updates to the following
policies:
• anti‑bribery and corruption;
• health and safety;
• anti‑money laundering;
• whistleblowing;
• supplier code of conduct; and
• business code of conduct.
f) The need to act fairly
between members of
the Company.
The Board is aware of the need to treat all shareholders equally.
Nodecisions arose in the year where shareholders could be treated
differently.
In addition, Board members and members of Tilstone’s senior
management own a total of 28.6 million shares in the Company
between them, aligning their interests with the outcomes delivered
for shareholders as a whole.
Section 172(1) statement continued
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Investment strategy
We look for:
• sites close to major transport links and large conurbations, with high occupier demand and a
suitable workforce;
• buildings or land with a range of uses and long‑term flexibility, including the potential to change
permitted use;
• assets that match occupiers’ current and future needs, including their ESG objectives; and
• multi‑let estates spread risk and offer more asset management opportunities than single‑let
assets. Rental increases can also be reflected across the estate. We generally target buildings of
less than 100,000 sq ft and have an average size of 12,000 sq ft.
Risks:
• poor performance of the Investment Advisor, Tilstone;
• poor returns on portfolio; and
• acquisition of inappropriate assets or unrecognised liabilities, or a breach of the investment
strategy.
What we achieved:
• acquired one asset totalling c.335,000 sq ft in the highly attractive location of Milton Keynes
(seecase study on page 24); and
• disposed of 16 assets for £59.6million, generating an internal rate of return of 8.0%.
Progress measured by:
• like‑for‑like valuation change;
• EPRA NAV;
• dividend per share; and
• Total accounting return.
Post year end activity:
• exchanged on a further £29.3m of sales.
Objectives and strategy
We aim to create value through a top-down approach to investment, hands-on asset
management with best-in-class processes, and an appropriate mix of financing.
Our objectives
We aim to provide shareholders with an attractive total return, underpinned by secure income.
Total accounting return
Our target is 10% per annum, through a combination of dividends and growth in NAV.
Outcome in 2022/23 – Not achieved.
The total accounting return for the year was (25.7%) (see page 1), reflecting the impact
of adverse interest rates and market conditions on the portfolio valuation, partially offset
by improvements in occupancy during the year and interest rate caps. Our average total
accounting return since IPO is on track at 10.8%.
Plan for 2023/24
We continue to target an average return of 10% per annum.
Dividends
Our target for this year was a total dividend of at least 6.4 pence per share.
Outcome in 2022/23 – Achieved.
We declared total dividends of 6.4 pence per share.
Plan for 2023/24
Our target for 2023/24 is to maintain the dividend at 6.4 pence per share.
Sustainability
Our new environmental performance target is a 4.2% annual reduction in our like for like
scope 1 and 2 emissions.
Our strategy
To achieve our objectives, we follow the strategy set out below:
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Annual Report and Financial Statements 2023
Strategic report
Objectives and strategy continued
Asset management strategy
We budget to spend 0.75% of our gross asset value (“GAV”) on capital expenditure each year, with a
target return of at least 10%. We also target a vacancy level of 5‑7%, since vacant properties allow us
tocarry out asset management activities.
Improving the sustainability performance of our assets, for example by improving their energy
efficiency, is an important part of maintaining property values and occupier appeal.
Risks:
• poor performance of Tilstone.
During the year we:
• invested £5.0 million, or 0.5% of GAV, in capital expenditure;
• completed 40 new lettings, at rents 13.0% ahead of ERV;
• completed 22 lease renewals, with a 15.8% increase in headline rents;
• completed 21 rent reviews with a 21.5% increase in headline rents;
• continued to progress our development project at Radway 16, Crewe; and
• 18 EV chargers installed.
Progress measured by:
• occupancy;
• like‑for‑like rental income growth;
• rental increases agreed versus valuer’s ERV;
• number of energy efficient initiatives; and
• portfolio EPC performance.
Post year end activity:
• eight new lettings and three renewals, 39.5% ahead of prior rents and 1.6% above March 2023
ERV;and
• two rent reviews, 22.5% ahead of prior rent, 19.5% ahead of ERV at the time of the rent review.
Financial strategy
We fund the business through shareholders’ equity, bankdebt and any disposal proceeds we generate.
We look to raise equity at times when we can make investments that are accretive to shareholders.
Our strategy for debt financing is to maintain a prudent level of debt, with an LTV range of 30‑40%
in the longer term. We look to hedge the interest on a significant proportion of our debt, to provide
greater certainty overour financing costs.
Risks:
• significant volatility in interest rates;
• inability to attract investors; and
• breach of borrowing policy or loan covenants.
During the year we:
• moved the Company’s listing to the Premium Segment of the Main Market of the London Stock
Exchange, thereby increasing the number of potential investors in the Company’s shares, in the UK
and overseas;
• took out two interest rate caps of £100.0 million each, for three and five years, capping the SONIA
rate in the debt facilities at 1.5%;
• reduced leverage through the disposal programme described above; and
• maintained the LTV ratio in line withour target of c.35%.
Measured by:
• LTV ratio.
Post year end activity:
• refinancing with new club of lenders agreed with improved reporting covenants for a further five years.
Our strategy continued
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Strategic report
Occupancy
(%)
Like-for-like rental income
growth (%)
Rental increases agreed
versusvaluer’s ERV (%)
Like-for-like valuation change
(%)
95.8% 5.3% 10.2% (18.5)%
2023 95.8%
2022 93.7%
2021 95.6%
2020 93.4%
2019 92.0%
2023 5.3%
2022 3.0%
2021 2.9%
2020 2.0%
2019 2.1%
2023 10.2%
2022 6.0%
2021 4.3%
2020 5.1%
2019 10.0%
(18.5)%
2022 19.4%
2021 18.8%
2020 2.5%
2019 4.3%
2023
Description
Total open market rental value of the units
leased divided by total open market rental
value, excluding development property and
land, and equivalent to one minus the EPRA
vacancy rate.
Why is this important?
Shows our ability to retain occupiers at
renewal and to let vacant space, which in turn
underpins our income and dividend payments.
How we performed
Active asset management, asset disposals and
the robust occupational market helped us to
increase occupancy during the year to 95.8%.
Description
The increase in contracted rent of units
owned throughout the period, expressed as a
percentage of the contracted rent at the start
of the period, excluding development property,
land and units undergoing refurbishment.
Why is this important?
Shows our ability to identify and acquire
attractive properties and grow average rents
over time.
How we performed
We delivered further good rental growth, as
we continued to capture the reversionary
potential in the portfolio through active asset
management.
Description
The difference between the rent achieved
on new lettings and renewals and the ERV
assessed by the external valuer, expressed as
a percentage above the ERV at the start of the
period.
Why is this important?
Shows our ability to achieve rental growth
ahead of ERV through asset management and
the attractiveness of our assets to potential
occupiers.
How we performed
We maintained our track record of achieving
rental levels ahead of ERV.
Description
The change in the valuation of properties
owned throughout the period under review,
expressed as a percentage of the valuation
at the start of the period, and net of capital
expenditure.
Why is this important?
Shows our ability to acquire the right quality
of assets at attractive valuations, add value
through asset management and drive increased
capital values by capturing rental growth.
How we performed
After two years of exceptionally strong valuation
increases, investment market conditions led to an
18.5% fall in the like‑for‑like valuation.
Link to strategy Link to strategy Link to strategy

Link to strategy

Key performance indicators
We use the following key performance indicators (“KPIs”)
to monitor our performance and strategic progress.
Link to strategy key:
Investment Asset management Financial
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Strategic report
Key performance indicators continued
Link to strategy key:
Investment Asset management Financial
Total cost ratio
(%)
EPRA NTA
(p)
Dividends per share
(p)
Loan to value ratio
(%)
28.4% 122.6p 6.4p 33.9%
2023 28.4%
2022 27.1%
2021 29.5%
2020 27.1%
2019 29.4%
2023 122.6p
2022 173.8p
2021 135.1p
2020 109.5p
2019 109.7p
2023 6.4p
2022 6.4p
2021 6.2p
2020 6.2p
2019 6.0p
2023 33.9%
2022 25.1%
2021 24.6%
2020 40.2%
2019 39.7%
Description
EPRA cost ratio including direct vacancy costs
but excluding one‑off costs. The EPRA cost
ratio is the sum of property expenses and
administration expenses, as a percentage of
gross rental income. (See table 6 on page 147
for detail.)
Why is this important?
Shows our ability to effectively control our
cost base, which in turn supports dividend
payments to shareholders.
How we performed
The total cost ratio increased in the year due to
non‑recoverable holding costs on larger vacant
buildings. Excluding vacancy costs, the EPRA
cost ratio was 26.8%.
Description
This net asset value measure assumes entities
buy and sell assets, thereby crystallising certain
levels of deferred tax liability. The measure
excludes the fair value of financial instruments
that are used for hedging purposes where
the Company has the intention of keeping the
hedge position until the end of the contract
duration (this is regardless of whether hedge
accounting under IFRS is applied). (See table 6
on page 147 for detail.)
Why is this important?
Shows our ability to acquire well and to
increase capital values through active asset
management.
How we performed
The decline in capital values relative to the
market contributed to a 29.5% reduction in
EPRA NTA per share.
Description
The total amount of dividends paid or declared
in respect of the financial year, divided by the
number of shares in issue in the period.
Why is this important?
Shows our ability to construct a portfolio that
delivers a secure and growing income, which
underpins progressive dividend payments to
shareholders.
How we performed
We achieved our dividend target for the year of
at least 6.4 pence per share.
Description
Gross debt less cash, short‑term deposits and
liquid investments, divided by the aggregate
value of properties and investments. (See table
10 on page 149 for detail.)
Why is this important?
Shows our ability to balance the additional
portfolio diversification and returns that come
from using debt, with the need to manage risk
through prudent financing.
How we performed
The increase in the LTV primarily reflects our
acquisition in the year and the reduction in
the value of the portfolio, partially offset by
proceeds from asset disposals.
Link to strategy
Not applicable
Link to strategy

Link to strategy Link to strategy
23 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Strategy in action
Growing our
presence in a
keylocation
In line with our purpose (see page 1) we look to own
assets in economically vibrant areas with access to major
arterialroutes.
One of the UK’s fastest-growing cities
Milton Keynes is an excellent example of our approach. Itis
one of the UK’s premier distribution and logistics locations.
Prime rents in the area range from £10.50 to £11.50 per
sq ft and residential growth is putting further pressure on
demand, underpinning prospects for higher rents.
Strengthening our presence
The Group has owned Granby Trade Park in Milton Keynes
since December 2020. The asset comprises 24 units and has
a total area of 147,000 sq ft. In April 2022, we announced the
acquisition of Bradwell Abbey Industrial Estate, which has
69 units across 335,000 sq ft (see page 25). This gives us
nearly 0.5 million sq ft of space in this key location. With low
average rents at Bradwell Abbey of c.£7.83 per sq ft there is
good reversionary potential compared to an ERV of £9.89
per sq ft. We see considerable scope to grow income from
our Milton Keynes assets.
In December 2022, we announced a new ten‑year lease
with no break on 20,200 sq ft at Granby Trade Park.
Thisfollowed a comprehensive refurbishment of the unit,
including significant roof works, installing electric vehicle
charging points and a lighting upgrade to LED, improving
the building’s EPC rating from a D to a B. The new occupier,
Superbike Factory Ltd, is a large motorbike retailer and will
primarily use the unit for its “click and collect” sales. The
contracted rent of £201,800 per annum equates to £10.00
per sq ft, 6.6% ahead of the 31 March 2022 ERV.
Our new estate at Bradwell Abbey sets a precedent for
the future pipeline of assets as we continuously improve
the estate beyond energy efficiency initiatives to create a
desirable and sustainable working environment.
To support occupier wellbeing, the Group intends to provide
amenities and further landscape the grounds with biodiversity
net gain in mind.
24 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Strategy in action continued
Net zero pathway and MEES regulation aligned works completed
at Bradwell Abbey to date:
• LED lighting upgrades;
• installation of efficient mechanical ventilation and air conditioning;
• electrification of hot water and heat;
• air source heat pump;
• provision of disabled toilet facilities;
• fabric improvements including improved insulation and door replacements; and
• EPC ratings improved.
Acquiring Bradwell Abbey in July 2022, a 335,000 sq
ft industrial estate, provides us with an opportunity to
showcase the sustainability policies and procedures we
have been developing over the past few years, most
notably our EPC improvement activities and Environmental
Refurbishment and Development Standards. We have
since put asset refurbishment plans in place to improve the
estate beyond just energy efficiency to create a desirable,
sustainable and pioneering working environment.
The current phase is due to be completed in June 2023
and future phases will continue following lease events and
through pro‑active occupier engagement. Bradwell Abbey
will set a precedent for the future pipeline of assets.
We have completed a programme of external repairs
and refurbishment for over 100,000 sq ft of the site,
which follows the Group’s sustainable asset management
approach of transforming and repositioning existing
buildings. The EPC upgrades completed in 2022/23 apply
to three units and consist of LED lighting upgrades, the
installation of efficient mechanical ventilation and air
conditioning, and the electrification of hot water and heat.
It is expected that these measures should improve the three
units’ EPC ratings to a B and are in line with our net zero
carbon pathway. Another five buildings on the estate are
currently being refurbished with similar EPC improvement
aspirations. Themain estate lighting for c.40 units has been
replaced with LEDs, with an estimated payback period of
less than threeyears and cost and energy savings of 79%.
For a smaller number of units, we provided disabled toilets
and decarbonised larger units by installing air source heat
pumps to power air conditioning and hot water. We also
realised fabric improvements by installing insulated sectional
goods doors.
In addition to energy efficiency improvements, the
refurbishment works will include the development of public
amenities such as a gym and a coffee shop as well as a
more strategic approach to the public realm beyond basic
landscaping through the introduction of native species.
25 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Strategy in action continuedStrategy in action
Swift Valley
Industrial Estate,
Rugby
What is it?
We acquired Valley Point in December 2020 as part of a
portfolio of four single and multi‑let distribution warehouse
assets. The 39,000 sq ft property is in an excellent strategic
location on the Swift Valley Industrial Estate, a prime West
Midlands industrial hub in the UK’s ‘Golden Triangle’. The M6
and M1 can be reached in under ten minutes and 80% of the
UK’s population is within a four‑hour drive time.
How have we added value since purchase?
Following the expiry of the previous occupier’s lease,
we undertook various improvement works to the unit to
strengthen its marketability and energy efficiency.
We invested £0.3 million of capital expenditure, including
installing LED lighting across the asset, as well as efficient
mechanical ventilation and heat recovery systems,
electrifying hot water and heat, and improving the building
fabric through increased insulation and air tightness.
What was the outcome?
The refurbishment programme increased the EPC rating
from B to A.
In December 2022, we announced that we had completed
a 20 year lease to a leading developer and manufacturer of
cooling solutions to sectors such as motorsport, renewable
energy and aerospace. The unit will serve as its new
European headquarters. The contracted rent of £332,400
per annum equates to c.£8.60 per sq ft, 4.3% ahead of
previous passing rent and 11.0% above the 31 March 2022
ERV and is subject to five‑yearly upward‑only rent reviews,
to the higher of open market rent or indexation.
26 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
The UK occupational market remains robust and strong
occupier demand has helped us to continue to capture the
inbuilt reversion in the portfolio.
Tilstone Partners Limited
Investment Advisor
Investment Advisor’s report
The Group performed well from an operational perspective,
as we continued to successfully implement the strategy,
with a particular focus on driving value from the portfolio
through active asset management and progressing the
development opportunities, notably at Radway 16, Crewe.
On a statutory basis, the Group’s earnings per share
of (43.0) pence reflected the loss on revaluation of the
investment properties at the year end of £193.4 million, as a
result of the conditions in the investment market described
on page 11. The Group had recognised gains on revaluation
of £163.7 million and £105.0 million in the previous two
financial years.
On an adjusted basis the Group’s results were affected by
the increased cost of debt in the year, as a result of rising
interest rates, and to a lesser extent by higher vacancy costs
during the year. As a result, adjusted earnings per share of
4.7 pence were 26.6% lower than the previous financial year,
resulting in dividend coverage of 73.4%.
Investment portfolio
During the year, the Group acquired two assets and
disposed of a number of other properties.
Acquisition
The Group acquired Bradwell Abbey Industrial Estate in
Milton Keynes for £62.0 million, excluding acquisition costs.
The multi‑let industrial asset comprises 69 units across
c.335,000 sq ft and is let to occupiers including Argos,
F&F Stores and Taylor Kerr Engineering. The current rent
of c.£7.83 per sq ft offers good reversionary potential
compared to an ERV of £9.89 per sq ft. We see clear
opportunities to generate upside through strategic capital
expenditure, working with the existing occupiers and
improving the estate’s sustainability credentials, and we
have made good progress with our asset management plan
since purchase.
For more information on the attractions of Milton Keynes
asa location, see the case study on page 24.
27 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Investment Advisor’s report continued
Investment portfolio continued
Disposals
The Group’s asset management strategy includes an ongoing
programme of disposing of mature or non‑core assets, so it
can redeploy the capital or use the proceeds to pay down
debt. We keep the portfolio under constant review to identify
assets that are candidates for disposal.
During the first half, the Group disposed of two assets,
for gross proceeds of £4.8 million. In the second half, we
progressed the Group’s short‑term strategy to reduce the
levelof variable‑rate debt with the disposal of 14 assets, for
headline consideration of £54.7 million, crystallising a profit
on cost of £3.3 million and generating an ungeared IRR of
8.9%. This brought the aggregate proceeds for the year to
£59.6million. On a statutory basis, due to the high watermark
of March 2022 valuations, a £13.1 million loss was realised for
the year ended 31 March 2023.
The sale of the assets demonstrate the liquidity of the
portfolio and include:
• Exeter Way, Theale, a vacant 92,000 sq ft warehouse with
a high office component, sold to an owner‑occupier for
£15.0 million; and
• Temple House, Harlow, for £14.5 million. The asset was
sold ahead of a potential vacancy and capital expenditure
costs, following the receipt of notice to break from the
main occupier in March 2023.
The other assets disposed of included a range of smaller
properties for £25.2 million with a net initial yield of 6.5%
and generating an ungeared IRR of 15.4%. These are assets
we had identified as being non‑core.
Occupier % contracted
rent
Amazon UK Services Ltd 6.66
John Lewis plc 4.23
Wincanton Holdings Limited 4.17
DFS Ltd 2.94
Direct Wines Ltd 2.54
Argos Ltd 2.23
Alliance Healthcare (Distribution) Ltd 2.08
Magna Exteriors (Liverpool) Limited 1.84
International Automotive
Components Limited
1.80
Evtec Aluminium Technologies Ltd 1.38
Emerson Process Management Ltd 1.36
Iron Mountain (UK) Plc 1.36
Colormatrix Europe Ltd 1.09
Magna Exteriors (Banbury) Ltd 1.07
Selco Trade Centres Ltd 1.02
28 Warehouse REIT plc
Annual Report and Financial Statements 2023
Top 15 tenants by contracted rent
Strategic report
Investment Advisor’s report continued
Asset management
Working with occupiers
The Group has a diverse base of 490 occupiers, with the
top 15 occupiers accounting for 35.8% of the contracted
rent roll from the investment portfolio. The spread of the
Group’s occupiers across different industries and business
sizes means it is not reliant on any one occupier or industry.
This increases the Group’s resilience and helps to mitigate
financial and leasing risks.
We continue to actively monitor the strength of the
occupiers’ covenants using credit software such as Dun &
Bradstreet, enabling us to keep abreast of the impact of the
current economic environment on the Group’s occupiers,
in particular those where energy is a high proportion of
their costs. However, we have not identified an increase in
corporate failures, as reflected in the Group’s rent collection
performance and bad debts (see the financial review for
more information). As at 2 June 2023, we had collected
c.99.0% of the rent due in respect of the year and we expect
this to increase as we work with occupiers to collect the
outstanding amounts.
Leasing activity
As described on page 11, the UK occupational market
remains robust and strong occupier demand has helped
us to continue to capture the inbuilt reversion in the
portfolio through lease renewals and new lettings. New
leases continue to exceed ERVs, while lease renewals and
rent reviews are achieving strong average uplifts against
previous rental levels. As a result, like‑for‑like contracted
rent increased by5.3% year on year and ERVs by 6.2%,
providing significant opportunities to capture the portfolio
reversion infuture periods.
New leases
The Group completed 40 new leases on 0.5 million sq ft of
space during the year, which will generate annual rent of
£3.0 million, 29.1% ahead of previous contracted rent and
13.0% ahead of 31 March 2022 ERV. The level of incentives
remains steady on all multi‑let estates.
Highlights included new leases for:
• 23,700 sq ft at Midpoint 18, Middlewich, to a leading
software provider to the UK healthcare sector, on a
ten‑year lease with a five‑year break, at a rent of £237,000
per annum, 97.5% ahead of previous contracted rent and
in line with the 31 March 2022 ERV;
• 138,500 sq ft at Daimler Green, Coventry, to an
automotive parts manufacturer, on a ten‑year term at a
rent of £623,000, 25.9% ahead of previous contracted
rent and 16.9% above the 31 March 2022 ERV;
• 38,600 sq ft at Swift Valley Industrial Estate, Rugby, on a
20‑year lease at £8.60 per sq ft, 11.0% ahead of ERV (see
the case study on page 26);
• 20,200 sq ft at Granby Trade Park, Milton Keynes, on a
ten‑year lease with no break at £10.00 per sq ft (see the
case study on page 24);
• 15,200 sq ft at Gateway Park, Birmingham, to an electronic
bike and scooter company, on a five‑year term at a rent of
£7.65 per sq ft, and 17.7% above the 31 March 2022 ERV; and
• 36,100 sq ft at Carisbrooke Industrial Estate, Isle of Wight,
for a headline rent of £185,000 per annum for ten years
with a break at five years, equivalent to £5.12 per sq ft,
54.2% above previous contracted rent and 7.7% ahead
of the 31 March 2022 ERV. The occupier is a leading
manufacturing business.
Lease renewals
The Group continues to retain the majority of its occupiers,
with 59.0% remaining in occupation at lease expiry and
67.6% with a break arising in the year, including units that
were vacated and re‑let in the period, this increased the
Group’s effective retention rate on lease renewals to 88.2%.
There were 22 lease renewals on 0.2 million sq ft of space
during the year, with an average uplift of 15.8% above the
previous passing rent and 2.7% above the ERV.
Highlights included:
• 31,900 sq ft of lease renewals at Queenslie Park, Queenslie,
across nine units, securing £196,500 at an average of
22.8% ahead of previous contracted rent and 10.6% ahead
of 31 March 2022 ERV;
• a five‑year renewal at Linkway Industrial Estate,
Middleton. The new lease generates total rent of £67,200
per annum and is c.11.0% ahead of both the previous rent
and 31March2022 ERV;
and
• 22,000 sq ft lease renewal at Gateway Park, Birmingham,
securing £176,700, 22.5% ahead of previous contracted
rent and 6.6% ahead of 31 March 2022 ERV.
29 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Investment Advisor’s report continued
Asset management continued
Leasing activity continued
Rent reviews
During the year 21 rent reviews were completed, generating
an additional £0.3 million per annum, 21.5% ahead of
previous rent and 5.2% ahead of the 31 March 2022 ERV.
Highlights included:
• rent reviews on two leases at Air Cargo Centre, Glasgow,
which were settled at £440,000, 25.9% ahead of
the previous contracted rent and 11.8% ahead of the
31March2022 ERV;
• settled a rent review at Tewkesbury Business Park,
Tewkesbury, for £330,000, 20.0% ahead of the previous
contracted rent and 9.8% ahead of the 31 March 2022
ERV;
• settled a rent review at Austin Drive, Coventry, for
£275,000, 14.6% ahead of the previous contracted rent
and the ERV at the date of the rent review; and
• rent reviews on two leases at Chittening Industrial Estate,
Bristol, which were settled at £210,000, 22.0% ahead of
the previous contracted rent and 4.8% ahead of the ERV
at the date of the rent review.
Development activity
Since 2017, we have assembled land for a flagship multi‑let
logistics park development at Radway 16, Crewe. The Group
now owns 112 acres in this premier logistics location in the
North West, market characterised by low vacancy rates and
high take up in the region providing strong opportunities
for above‑average rental growth. Radway 16 will provide
state‑of‑the‑art, sustainable warehouse space that is
suitable for a diverse range of occupiers.
As previously reported, the Group has planning approval
for more than 1.8 million sq ft of warehousing at Radway
16, having secured unanimous committee approval in
July2022 on phase 2 (1.02million sq ft), to add to the
phase 1 consent for 0.8million sq ft secured in 2021. Since
securing the approval on phase 2, we have now satisfied
the pre‑commencement planning conditions on phase 1 to
enable a start on site.
In Q4 2022, we launched a marketing campaign, generating
significant occupier interest. We have also finalised the
marketing for phase 2, which can be configured in a number
of ways to provide a single 1 million sq ft unit or a number of
smaller units.
We continue to make progress with the Group’s other
development projects, where we will only commence
development once a pre‑let agreement has been signed.
Capital expenditure
We deploy carefully targeted capital expenditure to increase
rents and capital values and improve the assets’ ESG
performance. On average, the Group aims to invest around
0.75% of its gross asset value (“GAV”) in capital expenditure
each year. This excludes development projects and is
therefore based on GAV excluding developments.
Total capital expenditure in the year was £5.0 million,
equivalent to 0.5% of GAV excluding developments.
Attheyear end, approximately 1.3% of the portfolio’s ERV
was under refurbishment (31 March 2022: 1.6%). In line with
the Group’s ESG strategy, all capital expenditure projects
have long‑term sustainable features which target an
improvement in the Group’s overall EPC rating.
30 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Investment Advisor’s report continued
Portfolio analysis
At the year end, the Group’s portfolio comprised 833 units across 8.2 million sq ft of space (31 March 2022: 867 units across 8.5 million sq ft). The table below analyses the portfolio as at
31March2023:
Value
(£m)
Occupancy
by ERV (%) NIY (%) NRY (%)
WAULT to
expiry (years)
WAULT to
break (years)
Average rent
(£ per sq ft)
Capital value
(£ per sq ft)
Multi‑let more than 100k sq ft 384.0 95.2 5.5 6.5 4.6 3.6 5.88 92.13
Multi‑let less than 100k sq ft 153.9 92.3 6.4 7.4 5.4 4.0 6.63 89.95
Single let – regional 131.9 100.0 5.1 5.8 7.8 7.6 5.22 95.55
Single let – last‑mile 83.3 100.0 5.6 6.9 6.2 5.2 5.74 89.64
Total 753.1 95.8 5.6 6.6 5.5 4.5 5.90 91.97
Development land 75.7
Total portfolio 828.8
At the year end, the contracted rent roll for the investment portfolio (excluding developments) was £45.3 million, with the ERV of £53.3 million showing the reversionary potential in the
portfolio. Total contracted rents increased by 5.3% on a like‑for‑like basis during the year.
The NIY of the investment portfolio was 5.6% at 31 March 2023, with an equivalent yield of 6.5% and a reversionary yield of 6.6%. The WAULT for the investment portfolio stood at 5.5 years
at 31 March 2023 (31 March 2022: 5.6 years).
Occupancy improved across the investment portfolio and was 95.8% at the year end (31 March 2022: 93.7%). Effective occupancy, which excludes units under offer to let or undergoing
refurbishment, was 98.4% at the year end (31 March 2022: 95.8%), with 1.1% of the investment portfolio under offer to let and a further 1.5% undergoing refurbishment at that date.
31 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Investment Advisor’s report continued
Financial review
Performance
Rental income for the year was £45.8 million (year ended
31March 2022: £44.0 million), with the movement reflecting
like‑for‑like rental growth and the initial contribution from
the acquisition of Bradwell Abbey Industrial Estate, less
revenue foregone from the assets disposed of during the
year. EPRA like‑for‑like rental growth was 6.0%.
The Group’s operating costs include its running costs
(primarily the management, audit, company secretarial,
other professional and Directors’ fees), and property‑related
costs (including legal expenses, void costs and repairs).
Total operating costs for the year were £18.9 million (year
ended 31 March 2022: £16.0 million). The Investment Advisor
fee for the year increased by £0.5 million, primarily as a
result of the significant net asset growth in the second half
of the previous financial year. The reduced valuation at
31 March 2023 will result in savings for the Group on the
Investment Advisor fee in FY 2024 as this is calculated on
netassets.
The Company incurred one‑off costs in the year of
£1.1million, in relation to its move from trading on AIM to
the Main Market of London Stock Exchange. There were
noone‑off costs in the period to 31 March 2022.
The net increase in the expected credit loss allowance was
£0.2 million (year ended 31 March 2022: £0.3 million). This
modest change reflects the diversity and quality of the
Group’s occupiers and our close relationships with them.
The Group also often has rent deposits, giving it additional
protection from bad debts.
The total cost ratio, which is the adjusted cost ratio
includingdirect vacancy costs, was 28.4% (year ended
31March 2022: 27.1%), with the increase driven by holding
costs relating to non‑recoverable property expenses.
Excluding void costs, the adjusted cost ratio is 24.4% (year
ended 31 March 2022: 24.3%). Theongoing charges ratio,
representing the costs of running the REIT as a percentage
of NAV, was 1.3% (year ended 30March2022:1.2%).
The Group disposed of 16 assets in the year, resulting in a net
loss on disposal of £13.1 million due to the strong revaluation
uplifts since the assets were acquired. Againstthe assets’
purchase price, the Group recorded an internal rate of return
of 8.0%. There were no disposals in the prior year.
At 31 March 2023, the Group recognised a loss of
£193.4million on the revaluation of its investment properties
(year ended 31 March 2022: gain of £163.7 million).
Financing income in the year was £6.9 million (year ended
31 March 2022: £0.3 million), including £2.0 million interest
receipts (year ended 31 March 2022: £nil) from interest rate
derivatives held by the Company and £4.9 million change
in fair value of interest rate derivatives as at 31 March 2023
(year ended 31 March 2022: £nil).
Financing costs include the interest and fees on the
Group’srevolving credit facility (“RCF”) and term loan
(see debt financing and hedging). Total finance expenses
were £15.5 million (year ended 31 March 2022: £8.2 million).
The increase reflects the higher average debt in the year
following the acquisition of Bradwell Abbey and the
higher weighted average cost of debt, which was partly
mitigatedby the interest rate caps taken out in the first half.
Granby Trade Park, Milton Keynes
20,200 sq ft let to Superbike Factory Ltd
32 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Investment Advisor’s report continued
Financial review continued
Performance continued
The all‑in cost of debt for the year was 4.3% (year ended 31 March 2022: 2.6%). We expect
interest costs to reduce in FY 2024, as a result of the reduction in variable‑rate debt
following the asset disposals in the second half of the year.
The statutory loss before tax was £182.9 million (year ended 31 March 2022: £191.2 million
profit).
The Group has continued to comply with its obligations as a REIT and the profits and capital
gains from its property investment business are therefore exempt from corporation tax.
Thecorporation tax charge for the year was therefore £nil (year ended 31 March 2022: £nil).
Earnings per share (“EPS”) under IFRS was (43.0) pence (year ended 31 March 2022:
45.0pence). EPRA EPS was 3.9 pence (year ended 31 March 2022: 6.4 pence). Adjusted
earnings per share was 4.7 pence (year ended 31 March 2022: 6.4 pence).
Dividends
The Company has declared the following interim dividends in respect of the financial year:
Quarter to Declared Paid Amount (pence)
30 June 2022 17 August 2022 3 October 2022 1.60
30 September 2022 8 November 2022 30 December 2022 1.60
31 December 2022 28 February 2023 3 April 2023 1.60
31 March 2023 6 June 2023 7 July 2023 1.60
Total 6.40
The total dividend of 6.40 pence per share met the Group’s target for the year and
was 72.9% covered by adjusted EPS. All four interim dividends were property income
distributions. The cash cost of the total dividend paid during the year was £27.6 million
(yearended 31March 2022: £26.3 million).
Valuation and net asset value
The portfolio was independently valued by CBRE as at 31 March 2023, in accordance
with the internationally accepted RICS Valuation – Global Standards 2020 (incorporating
the International Valuation Standards) (the “Red Book”), and the RICS Valuation – Global
Standards 2017 – UK national supplement.
The portfolio valuation was £828.8 million (31 March 2022: £1,012.0 million). This represented
an 18.5% like‑for‑like valuation decline, after taking account of capital expenditure of
£13.3million, with the outward yield shift in the year being only partly offset by rising rental
values. The EPRA NIY was 5.0% (31 March 2022: 4.0%) and the EPRA topped‑up NIY was
5.5% (31 March 2022: 4.4%).
The valuation resulted in an EPRA NTA of 122.6 pence per share at the year end
(31March2022: 173.8 pence per share).
33 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Investment Advisor’s report continued
Financial review continued
Debt financing and hedging
At the year end, the Group had a debt facility with a club of
four banks: HSBC, Bank of Ireland, Royal Bank of Canada
and Barclays. The facility runs until January 2025, with an
option to extend for a further two years, and comprises an
RCF of £138.0 million and a term loan of £182.0 million, to
give a total facility of £320.0 million.
At 31 March 2023, £124.0 million was drawn against the
RCF and £182.0 million against the term loan. This gave
total debt of £306.0 million (31 March 2022: £271.0million),
with the Group also holding cash balances of £25.1 million
(31 March2022: £16.7 million); the Group’s net debt
as at 31March 2023 is £280.9 million (31 March2022:
£254.3million). The LTV ratio at 31 March 2023 was
therefore 33.9% (31 March 2022: 25.1%), with the increase
reflecting the acquisition in the year and the lower portfolio
valuation, partially offset by the asset disposals.
The Group remains substantially within its covenants in the
debt facilities, which place a limit on the LTV of 55% and
require minimum interest cover of 2.0 times. Interest cover
for the year was 2.9 times.
The Group’s debt facilities carry the cost of SONIA plus a
lending margin. During the first half of the year, the Group
took out two interest rate caps of £100.0 million each, for
three and five years respectively at a cost of £10.9 million
payable over the term, which cap the SONIA rate in the debt
facilities at 1.5%. The Group also has an interest rate cap of
£30.0million, which expires in November 2023 and caps
SONIA at 1.75%. A further interest rate cap of £30.0million
expired in November 2022. TheGroup had hedged
approximately 75.0% of its year‑end debt against interest
ratevolatility.
We continue to explore opportunities to diversify the
Group’s sources of debt funding, hedging requirements,
extend the average maturity of its debt and further reduce
the average cost of debt.
Post year end activity
Post‑year end, the Group entered into a new five‑year debt
facility totalling £320.0 million, replacing the existing facility.
The refinancing consists of £220.0 million term loan and an
RCF of £100.0 million, with a club of lenders consisting of
HSBC, Bank of Ireland, NatWest and Santander.
The new facility extends the tenure of the of the Group’s
debt and with improved reporting covenants.
In addition, the Group has exchanged on two further
disposals for an aggregate of £29.3 million.
Compliance with the investment policy
The Group’s investment policy is summarised below.
The Group continued to comply in full with this policy
throughout the year.
34 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Investment Advisor’s report continued
Investment policy Status Performance
The Group will only invest in warehouse assets in the UK. All of the Group’s assets are UK‑based urban warehouses.
No individual warehouse will represent more than 20% of the Group’s last published gross asset value (“GAV”), at the
time it invests.
The largest individual warehouse represents 6.2% of GAV.
The Group will target a portfolio with no one occupier accounting for more than 20% of its gross contracted rents at
the time of purchase. No more than 20% of its gross assets will be exposed to the creditworthiness of a single occupier
at the time of purchase.
The largest occupier accounts for 6.7% of gross contracted
rents and 7.1% of gross assets.
The Group will diversify the portfolio across the UK, with a focus on areas with strong underlying investment
fundamentals.
The portfolio is well balanced across the UK.
The Group can invest no more than 10% of gross assets in other listed closed‑ended investment funds.
The Group held no investments in other funds during the year.
The Group will consider where appropriate an element of speculative development, provided the exposure to these
assets, assessed on a cost basis, shall not exceed 10% of the gross assets of the Company.
Other than refurbishing vacant units, the Group did not
undertake any speculative development in the period.
The Group may invest directly, or through forward funding agreements or forward commitments (provided within the
overall exposure limited stated above), in developments (including pre‑developed land), where:
• the structure provides us with investment risk rather than development risk;
• the development is at least partially pre‑let, sold or de‑risked in a similar way; and
• we intend to hold the completed development as an investment asset.
The Group’s exposure to developments at the year end was
9.1% of GAV.
The Group views an LTV of between 30% and 40% as optimal over the longer term but can temporarily increase
gearing up to a maximum of LTV of 50% at the time of an arrangement, to finance value enhancing opportunities.
The LTV at 31 March 2023 was 33.9%.
The Company’s full investment objective and policy are set out on page 154.
Investment Manager
The Company is an alternative investment fund for the purposes of the Alternative Investment Fund Managers Directive (“AIFMD”) and, as such, is required to have an Investment Manager
who is duly authorised to undertake that role. G10 Capital Limited (“G10”) is the Company’s AIFMand Investment Manager and is authorised and regulated by the Financial Conduct Authority.
Investment Advisor
Tilstone Partners Limited is Investment Advisor to the Company and the Investment Manager.
Tilstone Partners Limited
5 June 2023
35 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
In recent years, we have spent considerable time and effort
laying the groundwork for our approach to sustainability,
understanding what is required to manage ESG matters
effectively and building capabilities, strategies and
measurement frameworks into our operations. This includes
ensuring accountability and governance are in place,
determining our risk exposures and mitigation plans, as well
as understanding opportunities.
Through this work, we have been able to take a
progressively more holistic approach to ESG issues,
moving from achieving compliance to looking to create the
most value through each action we take. This is just good
business sense. Having a rigorous sustainability strategy is
essential for protecting the Group’s commercial interests,
supporting our ability to attract high‑quality occupiers and
capitalise on the green premium for sustainable properties,
for both rental levels and asset values.
One of our important workstreams this year was developing
our net zero carbon pathway to 2030 for our Scope 1 and
2 emissions. We have committed to an annual reduction
in Scope 1 and 2 emissions of 4.2% on a like for like basis.
This has wide‑ranging implications for us, helping to guide
our actions across areas such as energy efficiency and
supply on the assets we control, asset refurbishments, the
sustainability credentials of our developments and the green
clauses we incorporate into our leases. As part of this, the
Tilstone team has been trained on our new standards for
refurbishments and developments so these standards are
reflected on our sites. More information on our pathway can
be found on page 18.
Our EPC improvement programme is another major focus
and the Group continued to drive rating improvements this
year, through its ongoing capital expenditure on refurbishing
and enhancing its assets. This work is critical to reducing
the risks posed by increasingly stringent regulations, which
in the coming years are proposed to require each asset
to meet minimum EPC standards of C rating by 2027 and
Brating by 2030.
We have also modelled our climate‑related risks under
different scenarios. This insight allows us to reduce the
portfolio’s exposure through capital expenditure, for
example by improving drainage to prevent flooding,
and support our evaluation of potential acquisitions and
disposals. We know that having insight into climate risk
and our response is important to our shareholders and we
are therefore voluntarily reporting under the Task Force on
Climate‑related Financial Disclosures (“TCFD”) – see pages
44 to 50. This is part of our commitment to transparent
reporting and benchmarking.
As a priority, we will continue to progress our work on
climate risk, understanding the impact on the portfolio
and upskilling team members. We will also continue our
engagement with occupiers, promoting information sharing
and working with them to measure and report our Scope 3
emissions. We will continue on our journey towards GRESB
participation.
Aimée Pitman
Chair of the Sustainability Committee
5 June 2023
Sustainability report
36 Warehouse REIT plc
Annual Report and Financial Statements 2023
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Our vision is to be an industry-leading sustainable warehouse
investor and, ultimately, the UK’s warehouse provider of choice.
Aimée Pitman
Chair of the Sustainability Committee
Our sustainability strategy
Integrating environmental, social and governance (“ESG”)
risks and opportunities into how we do business is
increasingly important across our stakeholder groups, in
particular helping us attract and retain occupiers and appeal
to a broader range of investors. To inform our approach, in
2020 we undertook a materiality assessment to identify the
key risks and opportunities most important to our business
and our stakeholders and this is set out on our website
(www.warehousereit.co.uk).
To further structure our approach and deliver on our
vision to be the warehouse provider of choice, we have
established a clear framework which includes interim and
long‑term goals, as set out below:
Sustainability report continued
Creating a resilient portfolio Reducing our footprint
Creating a resilient portfolio reduces our risk exposure
to current and future legislation, transitional and
physical climate risks and changing occupier demand.
Read more on page 38
Reducing our environmental footprint ensures our assets
are aligned to a net zero carbon future, while reducing
operating costs by minimising utilities consumption
including water, energy and waste removal.
Read more on page 40
Supporting our occupiers Responsible business foundations
Supporting our occupiers strengthens our relationship
with them, encourages sustainability knowledge
sharing and helps drive the sustainability and broader
ESG agenda across thesector.
Read more on page 42
Being a responsible business is critical to managing our
sustainability risks while also clearly communicating
our ambitions and actions to our investors and wider
stakeholders.
Read more on page 43
Our vision
Our vision is to create environmental, social and economic value for our shareholders and wider stakeholders by integrating
sustainability into the way we grow and manage our portfolio.
37 Warehouse REIT plc
Annual Report and Financial Statements 2023
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Our journey to net zero
During the 2022 calendar year, we engaged a third‑party
consultant to review Warehouse REIT’s carbon footprint and
formalise a pathway to net zero carbon. This involved setting
our baseline performance, identifying key decarbonisation
measures and quantifying their impact on the energy
and carbon performance of the portfolio. Our pathway is
aligned to the UK Green Building Council’s (“UKGBC”) Net
Zero Carbon Framework and includes our Scope 1, 2 and
building‑related Scope 3 emissions.
Based on the analysis, we have committed to achieve net
zero carbon for our Scope 1 and 2 emissions by the 2030
calendar year. In advance of setting long‑term climate
targets we target a 4.2% annual reduction in our Scope 1
and 2 emissions.
To achieve these targets, our pathway includes eight
decarbonisation commitments:
Net zero pathway commitments
2030 net zero for GHG Scope 1 and 2 (UKGBC Net Zero
Carbon Framework aligned)
Via the Environmental Refurbishment and Development
Standards:
• develop refurbishment plan for each asset assigned
capital expenditure, including building fabric, systems,
controls and PV deployment;
• remove fossil fuels from landlord‑controlled
commonparts;
• optimise deployment of PV panels on all new
developments and major refurbishments; and
• use asset level scorecards to enable progress to be
tracked and reported.
100% of directly procured electricity from renewable
sources
Engage with occupiers to reduce energy consumption,
collect and monitor energy usage across the portfolio
Target 100% of all new leases and amended leases to
include green clauses
Conduct energy‑related due diligence for new
acquisitions
For new developments, target a BREEAM rating of
'Excellent', achieving a minimum rating of 'VeryGood’
Monitor and report progress on annual basis
Sustainability report continued
Creating a resilient portfolio
Long-term goals
• Targeting green building certifications
• Reducing EPC risk
• Reducing climate‑related risks in the portfolio
• Defining and implementing net zero carbon pathway
2023 highlights
• Undertook climate risk modelling to better understand
our exposure to physical climate hazards
• Developed our net zero carbon pathway
• Continued the roll‑out of an EPC improvement
programme, with 92% of units now A‑D rated across all
countries
2024 targets
• All developments to target EPC B or above
• All developments >50,000 sq ft to target BREEAM
Excellent/Very Good
• EPC improvement programme to ensure all in‑scope
properties have a valid EPC and target 25% reduction
of D or E rated properties
• Build mitigation plans for assets identified as higher risk
of climate change
• Regular Board ESG training on future legislation,
occupier demands and climaterisk
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Annual Report and Financial Statements 2023
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Assessing our climate-related risks
In recent years, there has been a significant legislative push
for companies to mitigate against climate‑related risks and
transition to a low‑carbon economy. Most notably, in the
UK, the Companies Regulations 2022 place requirements
on large private companies to incorporate Task Force on
Climate‑related Financial Disclosures (“TCFD”) in their
annualreports.
The Group reports annually in line with the TCFD despite no
obligation to do so, with this year’s disclosure available on
page 44. We commissioned an independent third party to
conduct a physical climate hazard scenario analysis across
three time horizons which found that 61% of our assets have
low exposure to physical climate hazards even under the
most severe climate scenarios, with 11% of assets that may be
at high risk from at least one physical climate hazard by 2050
under an intermediate emissions scenario.
We have extended our existing risk register to include
climate‑related risks, set a formal process for reviewing
climate‑related legislation and regulation and improved our
internal knowledge of climate risk management. See our
TCFD response on page 49 for further details.
Improving the EPC performance of
ourportfolio
An EPC rating is a regulatory requirement demonstrating
the energy efficiency of a building. Currently, all
non‑domestic rented buildings should be a minimum E
rating but MEES (Minimum Energy Efficiency Standard)
legislation is expected to become more stringent by 2030,
requiring a minimum ‘B’ rating. In addition, environmental
credentials are increasingly important to our occupiers so
improving the EPC ratings of our portfolio is essential.
We continued our portfolio‑wide EPC improvement
programme in the year ending 31March2023, with 64% of
our units in England and Wales (by sq ft) holding an EPC
rating of A to C (2022: 51%). In England and Wales, we no
longer have any units with an EPC belowE.
In Scotland, where the EPC rating system is different,
70% of our units (by sq ft) have an EPC rating of A to
D as of 31March 2023, a 5% increase from 65% in the
previous year. EPC ratings cannot be compared between
Scotland and England and Wales due to differences in the
methodologiesapplied.
The improvement to the portfolio’s EPC ratings in the year
ending 31 March 2023 reflects the benefits of our investment
activity where we have acquired higher‑rated assets and
disposed of poorer‑quality buildings, as well as LED lighting
replacements and upgraded heating systems.
Looking forward to the year ending 31 March 2024, we have
set several targets to drive energy efficiency improvements:
zero properties are to have an expired EPC or <2 years to
expiry
1
, a 25% reduction in D and E‑rated properties.
Sustainability report continued
Creating a resilient portfolio continued
F G No
Rating
EPC Rating by floor area 1 April 2023
A B C D E
England and Wales %
Scotland %
0.76%
1.92%
9.38%
50.97%
53.19%
35.37%
28.54%
1.94%
7.39%
2.78%
0.00%
0.72%
0.00%
7.03%
0.74%
0.00%
1. This does not include units exempt from having an EPC or units where different Scottish requirements apply.
39 Warehouse REIT plc
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Sustainability report continued
Environmental Refurbishment and
Development Standards
Wherever possible, we seek to deliver sustainability
improvements through refurbishing existing assets.
Toestablish a consistent, effective and value‑for‑money
approach, in the year ended 31March2022 we developed
the Environmental Refurbishment and Development
Standards for our design teams, ensuring allprojects are
delivered to a high performing standard.
Thestandards set requirements including:
• Internal fit-out – LED lighting throughout, office heating
via air source heat pumps and point‑of‑use water heaters
that provide the immediate production of hot water. Other
considerations include aerated taps and dual flush toilets
to reduce water use as well as carbon neutral carpeting;
• Renewable energy – consider the installation of
photovoltaicpanels when refurbishing assets of more than
30,000sq ft;
• Sustainable drainage – to increase natural surface
water drainage, we consider the use of block paving and
permeable tarmac in parking areas;
• EV charging – all refurbishments above 10,000 sq ft must
include the installation of a dual EV charging post, with
additional posts depending on the refurbishment size; and
• Ecology and trees – we look to install bird, bat and
hedgehog boxes as well as log piles and native tree
species to support wildlife and improve air quality.
During the year ended 31 March 2023, we completed
training with all team members involved in refurbishment
and development projects and in the second half, started to
integrate these new standards across refurbishment projects.
Our ambition this year is to conduct a photovoltaic panels
feasibility study on our portfolio to assist the drive towards
renewable power.
Improving energy efficiency
Landlord‑obtained electricity consumption on a like‑for‑like
basis decreased by 7% and fuels consumption decreased
by 51% compared to the year ended March 2022, resulting
in a 20% decrease in the energy intensity of our like‑for‑like
portfolio.
We drive this reduction through our EPC improvement
programme, landlord green tariffs and wider energy saving
initiatives. Improvements have been achieved through LED
lighting upgrades, efficient mechanical ventilation and
heat recovery, fabric improvement insulations, efficient air
conditioning and electrification of hot water and heat across
our assets.
Reducing our footprint
Long-term goals
• Increasing energy and resource efficiency (landlord
and occupier)
• Reducing waste and resource consumption
• 2030 net zero carbon for Scope 1 and 2 carbon
emissions
• Disclose Scope 3 carbon emissions
2023 highlights
• All landlord utilities converted to green tariffs (except
those under tender)
• 18 EV chargers installed to date
• Applied our Environmental Refurbishment
Development Standards to assets
2024 targets
• All new utility contracts to be renewables based
• All landlord‑sourced utilities to be on renewable tariffs
• All developments to have a sustainability plan
• All refurbishments to align with TPL ESG
Refurbishment Standards
• Occupier/unit scorecard to be developed
• Developments >50,000 sq ft to be BREEAM
Excellent/Very Good
• 4.2% reduction in Scope 1 and 2 emissions
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Annual Report and Financial Statements 2023
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Sustainability report continued
Improving energy efficiency continued
We have now converted all our landlord‑paid utilities to green
tariffs, except those under tender, with plans to make all
tariffs green in the year ending 31 March 2024.
Occupier engagement is an important part of our approach
given that most of our assets are owner‑operated and
controlled. Working to enhance our data collection practices
is a priority and we are engaging with them to ensure we
install features and report our ESG performance in line with
their own stakeholders’ requirements.
Reducing resource consumption
We are working towards adopting circular economy
principles throughout the life cycle of a building. Our
Environmental Refurbishment and Development Standards
provides guidelines on reducing the proportion of waste
sent to landfill and we are looking to develop a guidance
handbook for occupiers. To support occupiers to improve
their consumption practices, we have added criteria within
lease renewals that promote responsible consumption (see
page 29).
Reducing our footprint continued
Embedding green clauses into new leases
During the year ended 31 March 2023, we embedded
green clauses into all new leases to ensure the effective
management and improvement of the portfolio’s
environmental performance. The clauses seek to
achieve five principles:
1. Co-operation and data sharing: this will improve our
insight into occupiers’ environmental data and therefore
our Scope 3 emissions as well as our ability to carry
out works to improve the building’s environmental
performance
2. Building management: we want to collaborate with
our occupiers to identify and implement appropriate
environmental performance strategies
3. Occupier alterations: this will protect the building
from alterations that could adversely impact its
performance
4. Compliance with regulation and permits: this will
safeguard against non‑compliance with legislation and
the landlord’s reasonable regulations
5. EPC maintenance and improvement: this will ensure
co‑operation from occupiers to support our large‑scale
EPC improvement programme
Carisbrook, Isle of Wight
The refurbishment of Unit 3 – a 36,000 sq ft factory
in Carisbrook, Isle of Wight – included a c.£200,000
investment to strip back the asset to its core, upgrade
the lighting and install electric heating and hot water.
The works resulted in an EPC upgrade from an E to a
B. Following this, the Group obtained planning consent
for the unit’s use as a warehouse and has let the
building to a major occupier on a ten‑year lease.
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Sustainability report continued
Engaging occupiers
We engage occupiers on a whole spectrum of sustainability
aspects from health and wellbeing to energy and carbon
and sustainable connectivity. As we progress our own net
zero carbon pathway, we will place an increased focus
on their environmental data. Occupier emissions account
for the majority of our Scope 3 emissions, so collecting
and monitoring their emissions and collaborating on
decarbonisation measures will be essential for reducing
ourown carbon footprint.
Following on from last year’s occupier survey, we rolled
out our annual questionnaire to gain insight into occupiers’
outlook on their industry, key challenges and space
requirements. Importantly, we sought to understand the
environmental initiatives that they have implemented as
wellas the key drivers for doing so.
The responses covered a range of business sizes from micro
(less than ten employees) to larger companies with over 250
employees. Unsurprisingly, some of the biggest challenges
facing occupiers emerged as rising supply costs and labour
supply. Regarding environmental initiatives, of the occupiers
who responded, LED lighting was the mostly widely adopted
environmental measure, followed by EV chargers and other
transport initiatives such as cycle racks and carpooling.
The themes that emerged as the main drivers behind
adoption of environmental initiatives were regulation and
compliance, cost saving, business reputation, wider business
strategy/ethos and improving the working environment.
These results will help shape our agenda for the next
financial year.
Responsible business foundations are essential to the
Group’s success and underpin our sustainability strategy.
Supporting our occupiers
Long-term goals
• Engagement to understand occupier net zero carbon
goals and support wellbeing
• Support occupiers’ wellbeing and provide a safe
environment for all building users
• Integrating sustainability criteria into lease clauses
2023 highlights
• Rolled out an occupier engagement survey to
understand the key drivers behind their environmental
initiatives
• Green clauses embedded into all newleases
• Continued our pro‑active approach to asset
management and occupier engagement
2024 targets
• Launch portfolio‑wide occupier engagement, target
20% response rate, to identify:
• occupier ESG agenda;
• energy data sharing appetite; and
• energy efficient knowledge and WHR ESG priorities.
• Implement plan from 2023 occupier survey results
• Inclusion of green clause principles in all new leases
Roman Way
At Roman Way, we carried out the refurbishment of
two units, 3 and 19, which were originally re‑assessed
at EPC E rating. Following MEES recommendations,
we undertook improvement works, including:
• installation of extractor fans within restroom facilities;
• LED lighting upgrades;
• new double‑glazed doors for each unit; and
• removing the heating from the warehouse, Unit 19.
As a result of these upgrades, we achieved an EPC C
for Unit 19 and secured an occupier, and an EPC B for
Unit 3.
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Strategic report
Sustainability report continued
Governing responsibly
The Sustainability Committee, which was formed two years
ago, consists of three Non‑Executive Directors, who meet a
minimum of three times a year, providing a forum to address
critical issues and opportunities. For detailed information on
the role of the committee, see page 92 in the Sustainability
Committee report.
Our sustainability strategy was strengthened this year to
further support our suite of policies that enforce the highest
standards of ethical behaviour regarding whistleblowing,
anti‑money laundering, anti‑bribery and corruption and
health and safety. Our new Business Code of Conduct
applies to all employees and contractors working on behalf
of the Investment Advisor and sets expectations regarding
bribery and corruption, harassment and discrimination,
diversity, sustainability and governance, data and conflicts
of interest.
Our Supplier Code of Conduct, published in May 2022,
outlines the standards that we expect within our supply
chain, encompassing the suppliers, partners and contractors
we work with. When selecting third parties to work with, we
operate a checklist to ensure that we are working with those
that share and uphold the same values and responsible
business foundations as us.
Enhancing our disclosures
We report our ESG performance in line with the European
Public Real Estate Association (“EPRA”) Sustainability Best
Practices Recommendations (“sBPR”) being awarded an
EPRA Gold award for the second year (see page 51 for this
year’s EPRA disclosure).
Despite no obligation to do so, we have also been reporting
our climate disclosures in line with the Task Force on
Climate‑related Financial Disclosures (“TCFD”) for three
years, enhancing the breadth of our response year‑on‑year.
Recognising GRESB’s value as a widely acknowledged ESG
benchmarking tool for real estate, in 2022, with the help
of JLL, we completed a gap analysis to identify a series
of actions to put in place this year to align our business
methods further with the GRESB benchmark.
Responsible business foundations
Long-term goals
• Robust governance and oversight of ESGrisks
• Transparent disclosure and participation ininvestor
benchmarks and indices
2023 highlights
• Gold award achieved from the EPRA sBPR for the
second year
• Gap analysis and improvement plan created to support
our journey towards GRESB participation in2024
• Stand‑alone climate risk register created to ensure
these risks receive due attention
2024 targets
• Identify data solution for ESG management
• Retain EPRA sBPR Gold award
• Progress on reporting alignment with TCFD
recommendations for 2024
• ESOS phase 3 compliance
• Implement recommendations to align with GRESB
benchmark
43 Warehouse REIT plc
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Strategic report
Sustainability report continuedSustainability report continued
Introduction
As part of our vision to be an industry‑leading sustainable
warehouse investor, we are dedicated to pro‑actively
managing climate‑related risks and publicly reporting
climate‑related financial information to our stakeholders.
Here we disclose the climate‑related risks we have
identified to the business and set out our overarching risk
management approach in line with the recommendations
of the TCFD. We are exempt from the amendments to the
Listing Rules published by the FCA in 2022 and therefore
make our disclosures on a voluntary basis in order to
demonstrate our dedication to this highly important topic.
2022 TCFD disclosure
Pillar Recommended disclosure Consistency note
Board oversight
Climate‑related metrics
Consistent
Governance
Identified climate‑related risks and opportunities
Strategy
Process for identifying and assessing climate‑related risks Consistent
Risk
management
Metrics
and targets
In line with the recommendations of TCFD dated June 2017, this report complies with nine of the eleven TCFD
recommendations and recommended disclosures and partially compliant with recommendation 2b. The Group
is developing our quantitative approach to assessing the impact of climate related risks and opportunities on the
organisation’s business, strategy and financial planning. Furthermore, we have not yet reported our Scope 3 emissions
under TCFD Recommended Disclosure – Metrics and Targets b), due to limited data availability.
Management role Consistent
Consistent
Impact of climate‑related risks and opportunities Developing quantitative
approach to impact of risks
and opportunities
Resilience of the Group’sstrategy Consistent
Process for managing climate‑related risks
How the processes are integrated into risk management
Consistent
Consistent
Scope 1, 2 and 3 GHG emissions
Climate‑related targets
Consistent
Developing approach to
disclose scope 3
Consistent
44 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Sustainability report continued
1. Governance
1a. The Board’s oversight of climate-related
risks and opportunities
The Board is ultimately responsible for the Group’s approach
to risk management and internal control process, including
setting the Group’s risk appetite, identifying principal risks
and determining mitigating controls via regular risk reviews.
The Board has fundamental responsibility over wider
sustainability matters, including the Group’s sustainability
strategy. Climate change has been identified as a principal
risk to the business in the corporate risk register and is a key
component of our sustainability strategy.
The Audit and Risk Committee provides additional oversight
of the Group’s risk management framework and is involved
in identifying, assessing and managing risks. The committee
meets twice a year to review the effectiveness of the
overall risk management strategy and reviews the impact
and related business mitigation strategies of principal
risks across the risk register, including the climate‑related
principal risk.
The Sustainability Committee, chaired by Board member
Aimée Pitman, is responsible for developing and
implementing the Group’s responsible business agenda,
sustainability strategy and external ESG reporting. Following
the climate risk scenario modelling undertaken this year,
the Sustainability Committee will review the Group’s
climate‑related risks and mitigation strategies via the newly
formed additional ESG risk register and recommend any
required updates to the Audit and Risk Committee. This ESG
risk register enables the Sustainability Committee to review
climate related risks at a more granular level. The Audit and
Risk Committee reviews and monitors the risk management
framework.
The Chair of the Sustainability Committee reports to the
Board on a quarterly basis and the Sustainability Committee
makes recommendations to the Board, as appropriate, to
ensure that any material climate‑driven macroeconomic,
financial and regulatory market changes are escalated and
integrated into strategic decision‑making. The Sustainability
Committee is also responsible for setting and overseeing
performance towards climate‑related targets and long‑term
goals, available on page 92. The implementation roadmap
and actions towards achieving these goals are then
overseen by the Investment Advisor.
1b. Management’s role in assessing and
managing climate-related risksand
opportunities
The Investment Advisor supports the Board and Audit
and Risk Committee in identifying and evaluating risks and
is responsible for forming and implementing the Group’s
risk management strategy. The Investment Advisor is also
responsible for co‑ordinating with stakeholders and engaging
with occupiers to identify risk and implement mitigating
controls at the asset level. The Investment Advisor sits on
the Sustainability Committee, alongside Board members,
enabling the communication of climate‑related risks between
operational, management and Board levels.
The Investment Advisor is responsible for day‑to‑day
operational activities and the application of the risk
management strategy, including climate risk management.
The Investment Advisor, with support from the Property
Manager, is responsible for collecting and reporting
environmental and climate‑related data, enabling Board
committees and the Investment Advisor to monitor
performance against strategic long‑term goals and targets.
The Investment Advisor is well briefed on the Group’s
sustainability and climate‑related ambitions and
reports significant risks at the property level to Board
committees onan ad‑hoc basis, ensuring that there is clear
communication between occupiers and the Board.
A detailed overview of our governance structure can be
found below.
Overview of roles and responsibilities
2022 TCFD disclosure continued
Target
setting and
decision‑making
preparations,
progress report
Decisions and objectives
Identifies, assesses
and manages risks and
mitigation strategies
Recommends climate‑
related risks and mitigation
actions
Strategic guidance
and support during
implementation
Warehouse REIT Board
Audit Committee
Sustainability Committee
Report on progress at
segments and departments
Reports
on
progress
TPL Sustainability Team
45 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
2. Strategy
2a. Climate-related risks and opportunities
identified over the short, medium and
longterm
We recognise that climate‑related risks materialise over
the medium to longer term and that the assets we acquire
and occupy now will still be here far in the future. Without
appropriate risk management, these risks could have
severe financial and reputational implications. As such,
we conducted climate risk scenario modelling to assess
the exposure of our portfolio to physical climate‑related
risks across the three Intergovernmental Panel on Climate
Change (“IPCC”) climate scenarios – RCP 2.6, RCP 4.5
and RCP 8.5 – over the short term (present day), medium
term (2050) and long term (2080). The time horizons
align with the 2050 net zero carbon deadline set by the
UK Climate Change Act as well as the associated risks and
capture a range of climate‑related risks that are expected to
materialise in the near and long term.
The climate risk scenario modelling covered a total of five
climate‑related hazards, covering coastal flooding, river
flooding, flash (surface water) flooding, subsidence and
coastal erosion and assessed the likelihood of these hazards
impacting a total of 803 units within our portfolio across
three climate scenarios and time horizons. The assessment
was based on trusted climate and natural hazard databases,
such as JBA Floodability Index, British Geological Survey
and National Coastal Erosion Risk Mapping.
The exposure level to each hazard was ranked across
low, moderate and high‑risk likelihood bands, based on
a simplified classification of the results generated by
each risk model, which had individual likelihood ratings.
Theassessment also revealed the number of assets exposed
to each risk level and provided hazard exposure profiles of
our top ten largest estates. This provided a clear overview
of the impact likelihood that modelled hazards pose to the
portfolio, enabling us to make strategic decisions on where
to focus mitigation actions and harness opportunities.
The assessment found that 61% of units have a very good
resilience to physical climate hazards, continuing to have
low exposure to all physical climate hazards even under the
most severe climate scenarios. For the units at risk from
physical climate hazards, flooding is the most likely risk; 5%
of assets exposed to high risk under best‑case scenario by
mid‑century withup to 6% of modelled units found to be at
a moderate to high risk in a late century scenario. Up to 11%
of assets are exposed to a subsidence hazard in a severe,
late century scenario, whereas our portfolio is not exposed
to coastal erosion. As expected, the likelihood of flooding
and subsidence increases across emission scenarios and
time horizons.
Following this, we are planning on enhancing our climate risk
assessment by assessing the possible business and portfolio
impacts of the likely climate hazards as well as further
asset‑level climate risk assessments to assess and assign
adaptation solutions necessary for mitigating onsite risk,
starting with assets identified to have the highest exposure.
Overall, the business plans to integrate the findings of the
climate risk scenario modelling within the risk management
approach under the climate change principal risk.
In addition, we recognise that transition risks are expected
to be the most impactful in the short term and likely across
scenarios associated with significant policy action and
market shifts towards decarbonisation. Transition risks that
we have identified which should all be considered relevant
for the current time horizon (up to c.2028) include:
• regulatory risks regarding the costs for compliance, as well
as costs arising from breach of environmental regulation
such as the MEES regulations;
• increasing costs of supplies or disruption to supplies for
maintenance and development;
• increasing cost of utilities;
• properties not meeting occupier requirements relating to
energy efficiency or logistics;
• impact on property values/rents if assets are not
developed or maintained to appropriate modern standards;
• impact on investor interest and our reputation compared
to our peers; and
• inability to access funding through green bonds or similar.
Additionally, we have identified opportunities in our
sustainability strategy that are climate mitigation actions and
improve our resilience. These include improving our energy
and carbon data management and investment in low‑carbon
solutions to increase energy and resource efficiency, with
the aim of achieving long‑term savings, green building
certifications and our net zero carbon ambitions. We believe
these initiatives improve our reputation and attract premium
occupiers.
2022 TCFD disclosure continued
Sustainability report continued
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2. Strategy continued
2b. Impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy and financial planning
Climate‑related risks and building resilience are embedded
into our business strategy under the creating a resilient
portfolio pillar and as an independent principal risk in
our risk register. Energy, water and carbon efficiency
opportunities are also identified within our sustainability
strategy under the reducing our footprint, supporting
our occupiers and responsible business foundation
pillars. To enable us to mitigate climate risks and harness
opportunities, we have included a sustainability budget in
our financial modelling processes, informing our investment
strategy across the whole property life cycle.
Throughout the acquisition process our investments
are informed by energy‑related due diligence, ensuring
that potential acquisitions align with our net zero carbon
pathway and preliminary climate risk assessments assessing
flood risk. We are planning on integrating a broader range
of climate‑related risks into our acquisitions protocol.
Ouroverall investment strategy of recycling and upgrading
assets by improving their energy efficiency and building
fabric also helps extend the life expectancies of our
buildings and reduce our carbon emissions.
Throughout the operational life cycle of assets, we engage
with occupiers to understand their ESG needs and
aspirations, reduce their energy consumption and collect
and monitor energy consumption across the portfolio. We
also maintain 100% of electricity procured from renewable
sources and ensure all new and amended leases include
green clauses in line with our net zero carbon pathway and
climate risk management efforts.
We have also developed Environmental Refurbishment
and Development Standards covering several sustainability
topics including ecology, EV charging, sustainable drainage,
onsite renewable energy (solar PV panels), sustainable
travel and resource and energy efficient internal fit‑outs
for all large‑scale refurbishments and new developments.
The standards help us manage flood, subsidence and
erosion risk, as well as transition risks associated with
decarbonisation. We are also targeting a BREEAM rating
of Excellent where possible, with a minimum rating of
Very Good to minimise the embodied carbon emissions
associated with our developments and refurbishments.
Additionally, while EPC ratings have been integrated into
our business already, we are accelerating the process of
improving ratings and making sure all buildings have been
rated whilst considering the MEES proposed regulations for
2027 and 2030 where all non‑domestic rented buildings
must hold a ‘C’ and ‘B’ EPC rating respectively.
Having conducted physical climate risk scenario modelling,
we understand the exposure of our assets to selected
climate risks in the UK across the IPCC’s RCP 2.6, RCP
4.5 and RCP 8.5 climate scenarios. Throughout our risk
review processes, we have also identified transition risks
associated with climate change and have developed risk
mitigation measures in terms of minimum certification
standards, compliance and decarbonisation. While resilience
is inherently integrated into our business strategy, we are
currently in the process of integrating the results of the
recently conducted climate risk assessment into our risk
management framework and decision‑making, further
improving our understanding of the business impacts of
physical climate‑related risks and mitigation actions to
improve our resilience.
2022 TCFD disclosure continued
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2022 TCFD disclosure continued
2. Strategy continued
2c. Resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C
orlower scenario
The climate scenarios RCP 2.6, RCP 4.5 and RCP 8.5 were
selected for our assessment, as they cover a range of
possible emissions scenarios.
The RCP 2.6 climate scenario represents a pathway where
greenhouse gas emissions are greatly reduced by immediate
policy action and market forces, to decarbonise and meet
the Paris Agreement. RCP4.5 is a more moderate climate
scenario where emissions peak in 2040 followed by
significant decarbonisation policy and market action. The
RCP 8.5 scenario is characterised by a large increase in GHG
emissions contributing to high temperature rises, significant
changes in weather patterns and severe physical risks.
Our resilience to scenarios associated with transition risks
is secured by our net zero carbon pathway and related
activities described in TCFD Recommended Disclosure
– Strategy b). Our resilience against risks associated with
the RCP 8.5 climate scenario is currently secured by our
Environmental Refurbishment and Development Standards
and our pro‑active approach to assessing risks.
We are planning on furthering our resilience with additional
climate‑related KPIs and risk management measures, such
as regular legislation and regulation reviews and climate
riskupskilling.
Climate scenarios:
Scenario Average temperature rise Transition Impact
Scenario 1
Low emissions scenario:
RCP 2.6
1.2 – 1.6°C by 2100 Low emissions scenario where there is
immediate policy action to meet the Paris
Agreement. Transition risks dominate.
Economic: Immediate globally co‑ordinated decarbonisation efforts
to achieve net zero by 2050, associated with significant costs to meet
these demands.
Environmental: Low physical risk.
Scenario 2
Moderate emissions
scenario: RCP 4.5
1.6 – 3.2°C by 2100 Moderate emissions scenario where there is
significant policy action in 2040. Transition
risks dominate, but physical risks are still
present.
Economic: Delayed transition requiring more substantial regulatory
and market pressures to decarbonise in the medium term.
Environmental: Less physical risk, although up to 3.2°C warming still
presents substantial physical climate risks.
Scenario 3
High emissions scenario:
RCP 8.5
3.2 – 5.4°C by 2100 High emissions, business‑as‑usual scenario
where policy action is negligible and global
warming rises drastically. Physical risks
dominate.
Economic: Permanently stunted GDP growth and severe economic
and social shifts.
Environmental: Chronic changes to weather patterns and ecosystems
causing severe impacts on a global scale.
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2022 TCFD disclosure continued
3. Risk management
3a. Describe the organisation’s processes for
identifying and assessing climate-related risks
Our risk framework includes four actions to identify,
assess and manage risks to the business: identify, evaluate
and mitigate and monitor. Our primary tool within the
risk framework is the risk register used to record our
key corporate risks, including climate‑related risks and
opportunities, and communicate these to the Board.
Principal risks on the risk register are scored on probability
and impact and are assessed based on the severity of
financial, environmental and brand impacts, pertaining
to the underlying value of the assets and the returns for
shareholders. These are reviewed throughout the year by
the Investment Advisor, with the Audit and Risk Committee
reviewing the risk register at each meeting and conducting
an overall review of the risk management process annually.
The Investment Advisor also assists in the implementation
and measurement of climate‑related activities at the
operational level, and monitors the business’s and portfolio’s
compliance with those activities. A third‑party consultant
supports the Investment Advisor with the identification and
assessment of risks. The Investment Advisor also reviews
emerging and existing regulation requirements, including in
relation to climate‑related risks.
The Sustainability Committee has more specific
responsibilities for overseeing the newly formed separate
ESG risk register and makes recommendations to the Audit
and Risk Committee regarding inclusion in the Group’s risk
management practices.
Moving forward, we aim to further integrate the findings
of our climate risk scenario modelling into our risk
management framework under the climate related risks and
use this to enhance mitigation strategies. The Group has also
committed to annually reporting against TCFD and regularly
conducting climate risk assessments in line with TCFD
best practice recommendations, ensuring climate‑related
risks are consistently integrated into our risk management
framework.
3b. Describe the organisation’s processes
formanaging climate-related risks
To manage climate‑related risks, the impact of climate
change on our portfolio has been recognised as a principal
risk in our risk register and risk management process. Wealso
recognise compliance risks associated with climate change
in our risk register. Thisensures that climate‑related risks
and opportunities are actively monitored and mitigated by
the Board and committees. The risk management process,
as well asadditional insights gained from third‑party
consultants, such as the climate risk scenario modelling we
conducted this year, help us prioritise climate‑related risks
and controlmeasures.
Processes for managing climate‑related risks and
opportunities at a portfolio and asset level are described
inTCFD Recommended Disclosure – Strategy b).
3c. Describe how processes for identifying,
assessing and managing climate-related risks
are integrated into the organisation’s overall
risk management
All principal risks captured in our corporate risk register,
including climate change, are a priority. The corporate
risk register lists the material impacts of principal risks,
related risk mitigation activities and changes in risk profile.
Additionally, each risk is given a probability and impact
score based on the impact on asset values and shareholder
returns. The corporate risk register is regularly reviewed
by the Board, Audit and Risk Committee and Investment
Advisor, with the Board having overarching responsibility for
determining the most material risks. In the review process,
the Audit and Risk Committee reviews corporate risks and
risks that the Board considers to be principal. Bycapturing
climate change as a principal risk, it has been fully integrated
into our risk management framework.
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2022 TCFD disclosure continued
4. Metrics and targets
4a. Disclose the metrics used by the
organisation to assess climate-related risks
andopportunities in line with its strategy and
risk management process
We publicly report on our environmental performance in
line with EPRA sBPR for sustainability reporting. Our EPRA
tables are available on pages 52 to 53. We use a range
of metrics to assess our resource consumption, energy
and carbon emissions and determine our exposure to
climate‑related risks and opportunities. These include:
• scope 1 and 2 carbon emissions in tCO
2
e;
• energy consumption in kWh in absolute and like‑for‑like
terms;
• energy intensities for Scope 1 and 2 emissions in
kgCO
2
e/m
2
/year;
• water consumption in m
3
, including building water
intensity in m
3
/m
2
/year; and
• EPC ratings and building certifications as a holistic
indicator of the portfolio’s performance.
4b. Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas (“GHG”)
emissions and the related risks
We report our Scope 1 and 2 GHG emissions data in our
EPRA disclosure available on pages 51 to 53. These have
been calculated and reported in alignment with the GHG
Protocol Corporate Accounting and Reporting Standard.
Wehave yet to disclose our Scope 3 emissions and set
related targets due to limited data availability, but plan
to improve our data collection to enable disclosure in the
coming years in line with our net zero carbon pathway.
4c. Describe the targets used by the
organisation to manage climate-related
risksand opportunities and performance
against targets
As a business we have set the target of reaching net zero
carbon for our Scope 1 and 2 emissions by 2030. To help
achieve these targets, we developed our net zero carbon
pathway in 2022. Under our sustainability strategy we have
also set long‑term goals for creating a resilient portfolio,
targeting green building certifications, reducing EPC risk
and reducing climate‑related impacts at the portfolio
level. These are supported by short‑term targets for 2024,
whichinclude:
• all developments to target EPC B;
• all developments >50,000 sq ft to target BREEAM
Excellent/Very Good;
• roll out EPC improvement programme to ensure all
properties in scope have a valid EPC and reduction of D
and E rated units;
• apply new Environmental Refurbishment and
Development Standards to all new refurbishments;
• assess potential for on‑site renewables across the
portfolio;
• undertake energy efficiency audits as part of Phase 3
ESOS compliance;
• all new utility contracts and landlord‑paid utilities to be on
renewable tariffs; and
• continue to roll out EV charging installation.
Having conducted a physical climate risk assessment
and developed our net zero carbon pathway this year,
we are currently in the process of setting additional
decarbonisation and climate‑related metrics and targets.
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1. Overarching recommendations
Organisational boundaries
Our EPRA sBPR reporting covers the Group’s assets
for which we exercise operational control. This totalled
30 out of 76 estates across the United Kingdom as at
31 March 2023. The remaining properties are single or
multiple occupancy assets with no utilities purchased by
the landlord. Theactions of our Investment Advisor, who
oversees all management and administrative duties, are not
covered by this report because it is a separate legal entity
from theGroup.
Coverage
All absolute performance measures relating to electricity,
fuels and associated GHG emissions apply to assets for
which we as landlord procure utilities for the common areas,
shared services, occupier areas as well as vacant properties,
unless indicated otherwise. At 31 March 2023, these account
for 30 estates within our portfolio, with 97% coverage,
based on 29 assets with available consumption data.
Like‑for‑like performance indicators include properties
within this scope for which we collected data for two
consecutive years and excludes properties sold, acquired
or under development during 2021/22. Our like‑for‑like
portfolio includes 19 assets with 94% data coverage
for these properties, based on 18 assets with available
consumption data.
Boundaries
Electricity and fuel consumption which we purchase as
landlords for common areas, shared services and occupier
areas is what comprises the energy and associated GHG
emissions data. Utilities purchased directly by the occupier
fall outside of our operational control and are excluded from
this data.
Estimation of landlord-obtained
utilityconsumption
Where possible, the data is collected from invoices
and/or meter readings. If invoices were not available at the
time of publication, consumption estimates were made.
These estimates are based on the most recent invoices for
the corresponding time period. On this basis, for the year
ending 31 March 2023, the following proportion of data was
estimated: electricity 42%, gas 14% and water 40%.
Analysis – normalisation
Our calculations for energy and emissions intensity
indicators are calculated using floor area (m²) for whole
estates. As our utilities consumption data in certain buildings
is limited to common spaces exclusively while in others it
includes shared services, outside space and occupier areas
where there are no sub‑meters, we are aware of mismatches
this causes between the numerator and denominator.
Weare working to better track our consumption as it relates
to the space and organisational boundaries at a unit level.
Analysis – segmental analysis
(bypropertytype,geography)
The property classification utilised in our financial reporting
guides our segmental analysis, classifying our investment
portfolio as urban warehouse assets. As all assets are
located in the United Kingdom, further segmental analysis
by geography is not applicable.
Reporting period
While we report on absolute performance measures and
intensity metrics for the most recent reporting year (ending
31 March 2023), the like‑for‑like performance measures
are reported for the last two consecutive years (ending
31March2022 and 2023).
Disclosure on own offices
Our Investment Advisor has their own office, and their
consumption and employee‑related performance measures
are outside the scope of our organisational boundaries and
are therefore excluded.
Data verification and assurance
Before being entered into the Company reporting
database, all generated data is checked for consistency
and coherence. A third party does not currently conduct
external verification or assurance.
EPRA sBPR
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1. Overarching recommendations
continued
Materiality
In this report we focus on EPRA sBPR measures that are
material to our business. Therefore, in accordance with our
materiality assessment, we have excluded the following
performance measures from our reporting: DH&C‑Abs
and DH&C‑LfL as no district heating or cooling is procured
across our portfolio.
Diversity‑Emp, Diversity‑Pay, Emp‑Training, Emp‑Dev,
Emp‑Turnover and H&S‑Emp have been excluded as
Warehouse REIT plc has no direct employees. The
Investment Advisor handles all administrative duties related
to the asset management of the portfolio; however, it is a
separate legal identity and therefore falls outside the scope
of this report.
Waste‑Abs and Waste‑LfL have been excluded as we have
no control over operational waste, which is generated solely
by our occupiers. The EPRA sBPR does not apply to waste
created by our development operations. Nonetheless, as
part of our sustainability strategy, we have set a long‑term
goal of reducing waste from developments.
Narrative on performance
During the year ended 31 March 2023, absolute
landlord‑obtained electricity consumption was 2,155 MWh
and fuel consumption (natural gas) for the same time period
was 791 MWh, equating to an energy intensity (electricity
and gas) of 11.17 kWh per m
2
across all included properties.
Landlord‑obtained electricity consumption on a like‑for‑like
basis increased by 8% and fuels consumption decreased by
29% compared to the year ended March 2022, resulting in
a 0.4% decrease in the energy intensity of our like‑for‑like
portfolio.
The total absolute Scope 1 and 2 emissions from building
energy consumption were 604 tonnes of CO2e, resulting in
a 2.29 kg/CO
2
e/m
2
/year intensity. For this reporting period,
green tariffs for electricity supply accounted for 99.97% of
the reported consumption. Like‑for‑like Scope 1 decreased
by 29% and while Scope 2 increased by 8%.
Absolute water consumption for the year ended
31March2023 was 14,052 m
3
, representing a water intensity
of 0.13 m
3
per m
2
. Like‑for‑like water consumption fell
by92%.
Consumption data from previous reporting periods has
been updated as we received more accurate figures from
invoices and meter readings that were received after
publication of our last report.
Our analysis of Energy Performance Certificates is available
on page 7. For the year ended 31 March 2023 there were no
properties in our portfolio with green building certification
(BREEAM, LEED or similar).
EPRA sBPR continued
2. Environmental performance measures
EPRA code Performance measure Unit Scope
Absolute
2021/22
Absolute
2022/23
Like-for-like
2021/22
Like-for-like
2022/23
Like-for-like
change (%)
Elec‑Abs, Elec‑LfL Total electricity consumption kWh Total landlord‑obtained electricity 2,509,462 2,155,013 1,190,279 1,286,494 8
Fuels‑Abs, Fuels‑LfL Fuel consumption kWh Total landlord‑obtained fuels 1,172,754 791,033 350,768 249,143 ‑29
Energy‑Int Building energy intensity kWh/m²/year Building energy intensity 17.96 11.17 8.74 8.71 ‑0.4
GHG‑Dir‑Abs Total direct GHG emissions tCO₂e Direct – Scope 1 214 145 64 46 ‑29
GHG‑Indir‑Abs Total indirect GHG emissions tCO₂e Indirect – Scope 2 (location‑based) 533 459 253 274 8
GHG‑Int GHG emissions intensity from building
energy consumption
kgCO₂e/m²/year Scopes 1 & 2 GHG emissions 3.64 2.29 1.80 1.81 1
Water‑Abs, Water‑LfL Water consumption (mains supply) m
3
Total landlord‑obtained water 39,143 14,052 35,294 2,654 ‑92
Water‑Int Building water intensity m
3
/m²/year Building water intensity 0.61 0.13 0.25 0.02 ‑92
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3. Social and governance
performance measures
Health and safety
The health and safety assessment of the assets conducted
by our managing agents on an annual basis covers:
• general hazards and risk assessment;
• fire safety;
• water hygiene;
• progress on existing hazards identified; and
• any specific risks related to a particular site.
Community engagement
By meeting health and safety requirements, conducting
impact assessments and undertaking wider consultations
required as part of the planning approval process for new
developments, we ensure that key decisions relating to
the portfolio consider our impact on local communities.
Asthere were no new developments for the year ended
31March 2023, the performance measure Comty‑Eng
is notapplicable. For more information refer to the
stakeholder engagement section on page 14.
Governance
Governance performance measures relate to the Board.
Onpage 73 we outline the full background information
including the Board profile, the nomination procedures and
the process for managing potential conflicts of interest.
EPRA sBPR continued
EPRA code Performance metric Unit of measure FY2023
H&S‑Asset
Asset health and safety assessment
% 100%
H&S‑Comp % 100%
Comty‑Eng Community engagement, impact assessments and development
programmes
% N/A
Gov‑Board Composition of the highest governance body Number of non‑executive Board members 6
Number of independent non‑executive Board members 4
Average tenure on the governance body (years) 5
Number of independent/non‑executive Board members with
competencies relating to environmental and social topics
2
Gov‑Select Nominating and selecting the highest governance body Please see the Nomination Committee report on pages 83
Gov‑Col Process for managing conflicts of interest Please see the corporate governance statement on page 79
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Principal risks and uncertainties
Our approach and culture
Our understanding of the potential risks associated with
our business activities, and our ability to implement robust
management arrangements linked to our risk appetite, are
essential for a successful business. Our risk management
activities enable us to identify and manage risks arising
internally – from our decision‑making and strategy; and
from external risks – which arise when we are impacted by
changes in the external market and environment.
Our culture of practical, pragmatic risk awareness and
management has been particularly important during the
economic challenges of the last financial year, which include
increasing interest rates, rising inflation, and significant
increases in energy and utility costs. These financial
challenges in particular had an impact on our occupiers
and the population of potential occupiers, leading to some
changes in our risk profile and risk mitigation plans.
Risk management framework
Our strong culture is underpinned by a structured approach
to the understanding and management of risk, with a risk
management framework which is reviewed and approved by
the Board, via the Audit and Risk Committee, each year.
The framework is clear and focused, setting out the Board’s
risk appetite, with defined responsibilities; processes for
the regular review of risk and consideration of emerging
risk; and reporting arrangements. This clarity is designed to
enable the Group’s Investment Advisor to take advantage of
opportunities and make effective business decisions, whilst
staying within an agreed set of parameters.
During the year, the risk framework and risk appetite
were enhanced to reflect our growing focus on ESG and
climate‑related risks. We also took the decision to review
ourrisk evaluation matrix, to reflect the increasing size of
thebusiness, and our move from AIM to the Main Market.
Risk appetite
Risk management is embedded in our decision‑making
processes, supported by robust systems, policies, leadership
and governance. Our business uses an outsourced model,
and we rely on our service providers to make decisions and
take risks within agreed parameters in the delivery of our
objectives. Those parameters are summarised in our stated
risk appetite.
The level of risk considered appropriate to accept in
achieving business objectives is determined by the Board:
• the Group has no appetite for risk in areas relating to
regulatory compliance, and the health, safety and welfare
of our occupiers, stakeholders, and the wider community
in which we work;
• appetite for risk relating to climate change is low, and
the Group is actively focusing on the identification
and mitigation of physical and transitional risks for its
portfolio;and
• we have a moderate appetite for risk in relation to
activities which are directed towards driving revenues
andincreased financial returns for its investors.
Our ability to identify, understand and manage our risks and uncertainties
is key to delivering our strategy and generating returns for investors.
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Risk appetite continued Responsibilities
• Approves the risk framework
• Articulates the REIT’s appetite for risk
• Receives reports and information, via the Audit Committee, onthe
business key risks and issues
• Receives and reviews risk information, including a detailed assessment
ofthe corporate risk register at each meeting
• Receives assurance from a range of sources, including the Investment
Advisor, Investment Manager, valuers and externalaudit
• Considers any significant risk issues arising, and agrees the approach
tomanagement of the outcome
• Assesses the effectiveness of the risk management process
• Reviews business activities and operations to identify, document and
evaluate current and emerging risks
• Determines and develops appropriate mitigation strategies to ensure
thatrisks remain within the Board’s agreed risk appetite
• Works with other third‑party providers to ensure that mitigations
andcontrols are operating effectively
• Provides reports to the Audit Committee and Board
Business
Low
Willingness to accept risk
Category Medium High
Compliance
Financial
Operational
Climate change
Board
Audit
Committee
Investment
Advisor
Principal risks and uncertainties continued
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Principal risks and uncertainties continued
The Board
The Board has overall responsibility for the Group’s
approach to risk management and internal control,
including:
• the design and implementation of risk management and
internal control systems which identify the risks facing the
business and enable the Board to make an assessment of
principal risks;
• determining the nature and extent of the principal risks
faced, and those risks which the Group is willing to take;
• agreeing how principal risks are managed or mitigated to
reduce their likelihood or impact; and
• ensuring that there is sufficient relevant, reliable and valid
assurance about the mitigation of risk.
The Audit and Risk Committee
The majority of the operations of the Group are outsourced,
and the Audit and Risk Committee relies on risk information
from its service providers, primarily the Investment Advisor.
To fulfil its responsibilities, the Audit and Risk Committee:
• monitors key risks and changes in risk throughout the year;
• seeks to identify and consider potential emerging risks to
the Group, arising both externally and internally;
• considers each of the principal risks, the business’s
mitigation strategies, and assurances from both
management and independent sources;
• undertakes an annual review of the effectiveness of the
risk management process, including:
• the operation of risk management and control systems;
• integration of risk management and internal control with
strategy and business planning;
• changes in the nature, likelihood and impact of principal
risks;
• the quality of risk reporting;
• any issues dealt with in reports reviewed during the
year, in particular the incidence of significant control
failings or weaknesses that have been identified, and
the extent of the impact which they had or could have
had;
• the effectiveness of the Company’s public reporting
processes; and
• takes advice from the Sustainability Committee with
respect to updating climate‑related risks and mitigations.
The Sustainability Committee
The Sustainability Committee has oversight of the Group’s
approach to the management of climate‑related risks. It
provides the Audit and Risk Committee and Board with
updates and information in relation to climate risk generally,
and progress with the strategy agreed for the Group to
manage risks in this area.
The Investment Advisor
The Investment Advisor supports the Audit and Risk
Committee and Board, and is responsible for risk
identification, documentation and evaluation, including
both current and emerging risks;for the implementation of
appropriatecontrols; and for meaningful reporting to the
Audit and Risk Committee.
Documentation and reporting
The corporate risk register is the core of the risk
management process. It contains an assessment of the risks
faced by the Group together with the controls established
to reduce those risks to an acceptable level. It is maintained
and reviewed regularly by the Investment Advisor, and
formally reviewed at each meeting of the Audit and Risk
Committee.
A standard evaluation matrix is used to assess the exposure
to risks, and that is reviewed and approved as part of the
risk management framework at least annually.
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Principal risks and uncertainties continued
Audit CommitteeSustainability Committee
Investment Manager
Investment Advisor
Risk Identification Activities Control ActivitiesRisk Register
Management Engagement Committee
reports
Management reports – Investment Advisor,
Investment Manager, Company Secretary
External reports – external audit reports,
valuations, Depositary reports
Incident analysis reports, Whistleblowing
reports
Risk mitigation planning controls design,
managementoversight andcontrol
Controls compliance, monitoring,
recording, reporting
Changes in regulation, changesin
competitors
New and emerging risks
Changes in activities, processes, systems,
projects
Market changes – changes in market,
financing, economy
Reportable incidents includingfraud
Board
Documentation and reporting continued
Risks are categorised into:
• Business risk – the risk of making poor business decisions,
implementing decisions ineffectively, or being unable to
adapt to changes in its environment. Inparticular, this
includes our property investment risk, and our acquisition,
disposal and tenancy decision‑making processes;
• Compliance risk – the risk of legal or regulatory
sanctions, financial loss, or loss to reputation a regulated
business may suffer as a result of its failure to comply
with all applicable laws, regulations, codes of conduct
andstandards of good practice;
• Climate-related risk – risks to the business from
the impact of climate change. This includes direct
physical impacts such as flooding, or excessive indoor
temperatures during periods of extreme heat; and
transitional risks such as changes in demand from
occupiers, or the cost of complying with changes in
building standards;
• Financial risk – the risk of financial loss resulting from
risks such as market, credit and liquidity risks:
• Market risk – economic losses resulting from price
changes in the capital markets;
• Credit risk – change in the financial situation of a
counterparty, such as an issuer of securities or other
debtor with liabilities or arising out of investments and
payment transactions with investors;
• Liquidity risk – not meeting the criteria of the borrowing
policy and payment obligations at all times; and
• Operational risk – the risk of a loss resulting from
inadequate processes, technical failure, human error
orexternal events.
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Principal risks and uncertainties continued
Emerging risk
The regular risk reviews undertaken by the Investment
Advisor specifically include review of emerging risks, and
this is also part of the review by and discussions with the
Audit and Risk Committee. The assessment considers
internal changes, and external changes trends, and
incidents, and considers:
• is this risk relevant to the Group’s business activities?
• what is the potential impact, if the risk crystallises?
• what are our potential strategies for the management
andmitigation of the risk?
• how could we get assurance that these strategies are
effective in practice?
• is this a risk that we should continue to pro‑actively
monitor?
During the year, we have made some changes to the risks on
the register, enhancing risk definitions and the evaluation of
some risks, to reflect the challenges being presented by the
current cost of financing, and more difficult economic and
market conditions.
One new principal risk was agreed during the year, relating
to the Group’s ability to raise funding – be that equity, loan
financing or through asset disposals.
Environmental, social and governance
(“ESG”) risk
We have continued to invest in and develop our knowledge
and plans to manage risk exposure around our sustainable
ambitions and climate‑related risks. The associated risks
are integrated in the Group’s risk management process
and corporate risk register, and we have also developed an
additional, more granular ESG risk register. Climate change
risk remains one of the Group’s principal risks.
Our governance framework has been enhanced with a
Sustainability Committee (asub‑committee of the Board/
Investment Advisor), having regular oversight of the Group’s
responsible business agenda, sustainability strategy and
external ESG reporting plus being provided with regular
updates on regulatory requirements and general market
expectations. Following the climate risk scenario modelling
undertaken this year, the Sustainability Committee will
review the Group’s climate‑related risks and mitigation
strategies in detail via the focused ESG risk register and
recommend any required updates to the Audit and Risk
Committee.
Climate‑related risks, particularly physical risks, are
incorporated in our decision‑making protocols for portfolio
changes and capital developments. Costs associated with
the Group’s sustainability and climate‑related ambitions
e.g. minimum energy efficiency standards ahead of
legislative requirements for properties and net zero carbon
pathway, are included in our financial modelling and
budgeting. Capital project planning also includes a focus
on energy usage reduction and implementing building
efficiency measures such as building management systems,
replacement of high emission fittings, reduction of water
usage and support of sustainable transport initiatives. A
climate risk scenario modelling has been completed, to
enable us to assess the exposure of our portfolio to physical
climate‑related risks across certain climate scenarios; see
pages 44 to 50 in the TCFD reporting for more detail on
the methodology and results. The assessment provided
a clear overview of the impact likelihood that modelled
hazards pose to the portfolio, enabling us to make strategic
decisions on where to focus mitigation actions and harness
opportunities. We are introducing targeted surveys of
occupiers to understand their challenges and requirements,
to enable us to work together to reduce risk and further
understand our energy consumption baseline.
Change in risk over time
2023
Incorrect, inaccurate
data reporting
Cost of compliance
Extreme weather events
Inability to access green
finance options
 Loss of occupiers and
revenues – as they move
to more sustainable
buildings
 Cost of decarbonisation
plans/achieving net zero
 Flooding – impacting on
occupiers, and asset
values
2024 2025 2026 2027
Further information on our sustainability strategy and
progress is included in the sustainability report on pages 37.
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Principal risks and uncertainties continued
Our assessment of the changes in key risks over the medium
term is summarised below.
Principal risks
Principal risks are those which are considered material to
the Group’s development, performance, position or future
prospects. The principal risks are captured in the corporate
risk register and are reviewed by the Board and Audit and
Risk Committee, who consider:
• any substantial changes to principal risks;
• material changes to control frameworks in place;
• changes in risk scores; and
• any significant risk incidents arising.
Changes in principal risks during the year
One new principal risk was agreed during the year, relating
to the Group’s ability to raise funding – be that equity,
loan financing or through asset disposals. Previously, risks
covering this area were included in the risk register, but were
not considered to be significant principal risks. However,
the combination of a hardening market for asset disposals,
market uncertainties impacting on our share price, the
timing of our refinancing, and the increasing cost of capital
have all combined to result in an increased exposure.
In some cases the evaluation of principal risks has changed
during the year, and the detailed risks section on the
following pages shows those changes, with additional
information setting out the reasons for changes and risk
mitigation plans.
Principal risk heat map as at 31 March 2023
All risks are evaluated on a consistent basis across the Group, which includes both the likelihood of the risk crystallising
and the potential impact. Our model evaluates both inherent exposure (i.e. before any mitigating controls or actions) and
residual, or current, exposure (i.e. after controls and mitigations). This assessment allows us to see the areas of highest gross
risk, and to recognise the positive impact of control on the underlying inherent risk.
Key:
New Decrease No change Increase
Identify assets
to acquire
Review and approve
transactions
Monitor and
manage investments
Create value through
asset management
Recycle
capital
12
12
15
15
16
16
16
20
16
9
9
3
5
4
12
9
9
8
Poor returns on portfolio
Poor performance of
Investment Advisor or Manager
Business risks
Compliance
risks
Financial
risks
Operational
risks
Impact of climate change
REIT status lost
Unable to raise funding
Breach of loan covenants/
borrowing policy
Interest rate changes
Inappropriate acquisition,
breach of investment policy
Significant bad debt
Low risk Medium risk High risk
Reduction of inherent risk to residual risk through mitigating controls
Inherent risk
Residual risk
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Principal risks and uncertainties continued
Financial risks
A
 Interest rate changes
B
 Unable to raise funding through equity, debt or asset disposals
sufficient to raise capital and finance the Group’s activities
Changes in interest rates could directly
impact on our cost of capital, and
indirectly may impact on market
stability.
Interest rates continued to increase
during2022/23.
Risk mitigation:
Increases in interest rates are not completely within
our control, and our focus is therefore primarily on
mitigation of the impact. Interest rate caps are in place,
and we are revising and renegotiating our funding
arrangements.
The Investment Advisor maintains detailed records of
the property portfolio, and financial scenario testing is
undertaken to assess the potential impact of changes in
financing costs.
Whilst we remain comfortable that appropriate new
funding arrangements will be put in place, changes
in interest rates could have an impact on returns and
profitability.
There are three areas of potential risk:
• inability to attract additional equity
investment;
• difficulty in securing new loan funding
for the business, at an affordable
rate;and
• our ability to raise funds through
the disposal of assets could be
impacted by a hardening market if
the economic outlook deteriorates
further.
Risk mitigation:
The downturn in the economy during the year has had
an impact on each of these potential risk areas. We have
a framework of mitigations in place, designed to address
the risks, but recognise that market conditions are more
challenging.
We have regular investor communications and
performance reporting against our strategy, and have
the benefit of an enlarged investor base following
previous fundraises.
The Investment Advisor completed the refinance of the
Group’s financing arrangements.
The Investment Advisor maintains close contact with
agents to ensure that disposal proceeds and the timing
of sales are optimised. The monitoring of financial
covenants also enables efficient disposal planning.
Change and commentary
Interest rates have increased significantly over the last 12
months, and there is still the risk of further increases.
However, during the year we have reduced our exposure,
by increasing hedging and reducing debt levels, and our
plans and forecasts have taken the current high interest
rates into account.
Overall, we consider that the level of risk is therefore
unchanged from previous years.
Change and commentary
This is the first year this has been considered a
principal risk, and this decision has been driven bythe
combination of pressures on each of the three areas.
Business model link: Business model link:
Link to strategy: Link to strategy:
Financial Financial
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Principal risks and uncertainties continued
Business risks
C
 Poor portfolio returns
D
 Poor performance of the Investment Advisor or
InvestmentManager
There is a risk that the returns generated
by the portfolio may not be in line with
our plans and forecasts. There are many
factors that could drive this, including:
• inappropriate investment strategy set
by the Board;
• poor delivery of the strategy by the
Investment Advisor; and
• poor yields from the property
portfolio because of reduced capital
valuations or rental income.
This would have an impact on the
financial performance of the REIT, and
returns for our investors.
Risk mitigation:
The investment strategy is set by the Board, and
performance against key targets and KPIs is reviewed
and reported to the Board on an ongoing basis.
Significant decisions, relating to assets or occupiers,
follow established protocols, ensuring there is proper
assessment, at the right levels.
The Group outsources it activities
and is reliant on the performance of
third‑party service providers.
In particular, poor performance of
the Investment Advisor could have a
significant impact on the performance
of the Group, as it is fundamental to the
management and delivery of all aspects
of the business.
Risk mitigation:
There are contracts in place between the Company, the
Investment Advisor and the Investment Manager, setting
out responsibilities.
Both provide regular quarterly reports to the Board,
which include key performance targets and KPIs.
The Management Engagement Committee carries out
an annual service review, which is reported to the Board.
Members of the Investment Advisor team have
investments in the Group, which reduces the risk of
reduced or poor service levels.
Change and commentary
The external economic environment has increased the
potential for occupier defaults and liquidations, which
in turn may impact both rental income and portfolio
valuations.
Change and commentary
Business model link: Business model link:
Link to strategy: Link to strategy:
Investment Investment
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Principal risks and uncertainties continued
Business risks continued
E
 Impact of climate change on our portfolio
Climate change is likely to have an increasing impact across the
business, which could include:
• extreme weather events impacting on properties;
• increasing costs of suppliers/disruption to supplies for
maintenance and development;
• properties not meeting regulatory/occupier requirements relating
to energy efficiency, building standards, or location for logistics;
• increasing costs of compliance as requirements around energy
efficient solutions and building standards continue to strengthen.
There is also a potentially significant resource requirement for
the collection and maintenance of the different data required for
reporting (e.g. carbon emissions), because of the size and make
up of the portfolio; and
• a reduction in property values and achievable rents, if assets are
not developed/maintained to appropriate standards.
It may also impact on investor interest, our reputation compared to
our peers, and our ability to access green funding options.
Risk mitigation:
We have a Sustainability Committee, which challenges, approves and monitors our sustainability strategy and progress. Thecommittee
members have received training on climate‑related risks from MEES, and this training will be rolled out to the Investment Advisor.
During the year we have obtained support from external specialists to assist us with defining our ambitions, including our
decarbonisation pathway, climate‑related governance and the resulting TCFD reporting.
An environmental specialist completed a climate risk scenario modelling to assess the exposure of our portfolio to physical hazards.
Wecontinue to invest in resource and expertise in this area, as we recognise the importance and the challenges ahead.
Our Investment Advisor, along with our Property Managers, are working with occupiers to understand their energy usage, and how we
can support them to meet their sustainability objectives and net zero plans.
Capital development and refurbishment works include detailed consideration of energy efficient solutions, emissions management, and
options to reduce waste and resource usage through the use of existing or low carbon material.
Although the challenges in this area are increasing, we have made good progress this year towards understanding our climate‑related
risk and consider the results highlighted to date and our approach to investments and improvements made this year have resulted in no
overall change to the current level of risk.
More details of our plans and progress are included in the sustainability report, see pages 36 to 43 and the TCFD reporting on pages 44
to 50.
Change and commentary
Business model link:
Link to strategy:
Asset management
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Principal risks and uncertainties continued
Operational risks
F
 Significant rent arrears/irrecoverable bad debt
G
 Inappropriate acquisitions, breach of the investment policy
A substantial increase in our bad debt,
or the level of arrears and slow payment,
could have a direct impact on cash flow
and profitability, and could also have an
impact on average lease lengths, and
void levels and costs.
Furthermore, poor payment
performance would increase the
focus required from the Property
Managers and Investment Advisor
Asset Managers, impacting on resource
availability to manage other aspects of
the business.
Risk mitigation:
Our diverse portfolio of assets, and wide range of
occupiers, is key to maintaining a low risk profile in
relation to bad debts.
We have approximately 490 occupiers across our
portfolio of around 76 estates, and our top ten occupiers
generate less than 30% of our rent roll. This is closely
monitored to ensure that we are not at significant risk
from any individual tenant.
At an operational level, we have robust processes in place
across our tenancy management activities, ensuring that
we accurately record, invoice and collect amounts due.
There is a rigorous due diligence process prior to
the acceptance of occupiers, with rent guarantees
or rent deposits taken where appropriate. Occupier
management routines include credit control processes
to identify any potential arrears problems and ensure
that debt is recovered or actions taken at an early
stage. Enhanced automated monitoring on the occupier
portfolio has been implemented during the year through
subscriptions to credit management software.
In addition, disposals in 2022 targeted those more
granular assets with exposure to smaller SMEs, which
has also reduced our risk.
Inappropriate acquisitions could
increase risk in relation to portfolio
returns, as properties may be harder
to let, may not generate appropriate
revenues, or may require additional
costs to support.
Risk mitigation:
We have comprehensive governance procedures
supporting acquisition decisions, including an acquisition
protocol which is linked to the matters reserved for the
Board and the delegated authority matrix.
The protocol sets out detailed due diligence steps
which must be completed and fully evidenced as part
of the decision‑making process. Acquisition decisions
are approved by the Investment Advisor Investment
Committee and the Investment Manager Investment
Committee, and any higher risk acquisition decisions
(byvalue or complexity) are escalated to the Board.
The REIT’s Depositary, Crestbridge, is also required to
approve acquisition decisions.
Change and commentary
We consider it sensible to increase our assessment
of risk in these areas, as whilst our rent collection
performance remains good, with bad debts consistently
below our level of provisioning, the current economic
challenges and high inflation increase the likelihood that
some occupier businesses will fail.
Change and commentary
Business model link: Business model link:
Link to strategy: Link to strategy:
Investment Investment
63 Warehouse REIT plc
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Principal risks and uncertainties continued
Compliance risks
H
 Loss of REIT status
I
 Breach of loan covenants or our borrowing policy
Loss of our REIT status, through failing
to meet regulatory requirements or the
Listing Rules would have a significant
impact on our reputation and the
financial returns for our investors.
Risk mitigation:
The Board has approved a clear governance framework
which incorporates the matters reserved for the Board
and delegated authorities, which are further supported
by the clear, contracted allocation of responsibilities to
our third‑party service providers.
The Investment Advisor reviews the position against
REIT legislation with Link quarterly, and this is reported
to the Audit and Risk Committee and Board. We are
further supported by Deloitte, who complete our PID
tracker.
Dividend cover and cash is continuously monitored and
forecast forward, and the position reported to the Audit
and Risk Committee and Board.
Our loan funding is subject to
conditions, and breach of those could
result in restrictions to funding and
activities going forward. In addition to
the loan covenants, the Board approved
and communicated our borrowing
policy, and breach of those limits may
risk financial and reputation damage.
Risk mitigation:
Our financial position is closely and regularly monitored,
and in particular the Investment Advisor monitors LTV
% against our loan covenant and borrowing policy on an
ongoing basis.
In addition, forward forecasts are prepared and reviewed
both to assess the business’s position, and to ensure that
any acquisition decisions include consideration of the
cash and funding impact.
The Board receives a formal update each quarter, and
there is a quarterly compliance letter prepared for the
bank.
Change and commentary Change and commentary
Business model link: Business model link:
Link to strategy: Link to strategy:
Financial Financial
64 Warehouse REIT plc
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Strategic report
Going concern
The Board monitors the Group’s ability to continue as a
going concern. Specifically, at quarterly Board meetings, the
Board reviews summaries of the Group’s liquidity position
and compliance with loan covenants, as well as forecast
financial performance and cash flows. Throughout the year,
the Board met, in conjunction with the Investment Advisor,
Tilstone, to review the uncertainties created by geopolitical
tensions and rising inflation and interest rates, and
specifically their potential impact on rent collection, cash
resources, loan facility headroom, covenant compliance,
acquisitions and disposals of investment properties,
discretionary and committed capital expenditure and
dividend distributions.
The Group ended the year with £19.0 million of unrestricted
cash and £14.0 million of headroom readily available under
its facilities. Disposals are an important part of our approach
to portfolio optimisation and we continually review the
portfolio to identify opportunities to increase efficiency
and dispose of any assets that are considered ex‑growth or
non‑core, recycling that capital into accretive acquisitions
or to reduce debt. The Group made disposals totalling
£59.5million during the year and exchanged on two further
disposal for £29.3 million post year end.
The Group has completed a new five year £320.0 million
facility with a club of lenders extending the tenure of the
previous financing arrangements past 2025. In making
this an assessment on going concern, the Board have
considered covenant compliance based on the new terms of
the facility.
The Group is operating significantly within its covenants
and a sensitivity analysis has been performed to identify the
decrease in valuations and rental income that would result
in a breach of the LTV, market value covenants or interest
cover covenants. Valuations would need to fall by 32.9%
or rents by 30.5%, when compared with 31 March 2023,
before these covenants would be breached, which, based
onavailable market data, is considered unlikely.
As at 5 June 2023, c.99.0% of rents invoiced in relation
to the year ended 31 March 2023 have been received.
Furthermore, current debt and associated covenants are
summarised in note 28, with no covenant breaches during
the period.
Tilstone has prepared projections for the Group covering
the going concern period to 30 June 2024, which have been
reviewed by the Directors. As part of the going concern
assessment, and taking the above into consideration, the
Directors reviewed a number of scenarios which included
extreme downside sensitivities in relation to rental cash
collection, making no discretionary capital expenditure,
adverse refinancing conditions and minimum dividend
distributions under the REIT rules.
Accordingly, based on this information, and in light of
mitigating actions available and the recent refinancing, the
Directors have a reasonable expectation that the Group
and the Company have adequate resources to continue in
business for a period of at least 12 months from the date of
approval of the Annual Report and Financial Statements.
Assessment of viability
In accordance with the AIC Code of Corporate Governance,
the Directors have assessed the Group’s prospects over a
period greater than the 12 months considered by the going
concern provision.
The Directors have conducted their assessment over a
three‑year period to June 2026, allowing a reasonable level
of accuracy given typical lease terms and the cyclical nature
of the UK property market.
The principal risks detailed on pages 54 to 64 summarise
the matters that could prevent the Group from delivering
its strategy. The Board seeks to ensure that risks are kept
to a minimum at all times and, where appropriate, the
potential impact of such risks is modelled within its viability
assessment.
The nature of the Group’s business as the owner of a diverse
portfolio of UK warehouses, principally located close to
urban centres or major highways and let to a wide variety
of occupiers, reduces the impact of adverse changes in
the general economic environment or market conditions,
particularly as the properties are typically flexible spaces,
adaptable to changes in occupational demands.
Going concern and viability statement
65 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Going concern and viability statement continued
Assessment of viability continued
The Directors’ assessment takes into account forecast
cash flows, debt maturity and renewal prospects,
forecast covenant compliance, dividend cover and REIT
compliance. The model is then stress tested for severe
but plausible scenarios, individually and in aggregate,
along with consideration of potential mitigating factors.
The key sensitivities applied to the model are a downturn
in economic outlook and restricted availability of finance,
specifically:
(i) increased occupier churn and occupier defaults;
(ii) increased void periods following break or expiry;
(iii) decreased rental income;
(iv) decrease in property valuation; and
(v) increased interest rates.
The sensitivity analysis identifies the decrease in valuations
and rental income that would result in a breach of the
LTV, market value covenants as set out in the Going
Concern section above. Taking into account mitigating
actions, the results of the sensitivity analysis and stress
testing demonstrated that the Group would have sufficient
liquidity to meet its ongoing liabilities as they fall due,
maintain compliance with banking covenants and maintain
compliance with the REIT regime over the period of the
assessment.
Furthermore, the Board, in conjunction with the Audit and
Risk Committee, carried out a robust assessment of the
principal risks and uncertainties facing the Group, including
those that would threaten its business model, strategy,
future performance, solvency or liquidity over the three‑year
period. The risk review process provided the Board with
assurance that the mitigations and management systems
are operating as intended. The Board believes that the
Group is well positioned to manage its principal risks and
uncertainties successfully, taking into account the current
economic and political environment.
The Board’s expectation is further supported by regular
briefings provided by Tilstone. These briefings consider
market conditions, opportunities, changes in the regulatory
landscape and the current economic and political risks
and uncertainties. Additionally, the trend for increased
warehouse space driven by online sales and the need to
reinforce supply chains, combined with the shortage of
supply nationally, is seen as mitigation. These risks, and
other potential risks which may arise, continue to be closely
monitored by the Board.
Viability statement
The period over which the Directors consider it is feasible
and appropriate to report on the Group’s viability is a
three‑year period to June 2026. This period has been
selected because it is the period that is used for the Group’s
medium‑term business plans. Underpinning this plan is an
assessment of each individual unit’s performance, driving
theoverall letting assumptions and corresponding forecast
cash flows.
Having made an assessment of each individual unit’s
performance, the forecast cash flows, covenant compliance
and the impact of sensitivities in combination, the Directors
confirm that, taking account of the Group’s current position,
the principal risks and in light of the current economic
uncertainty, they have a reasonable expectation that the
Group will be able to continue in operation and meet its
liabilities as they fall due over the three‑year period of their
assessment.
The strategic report on pages 1 to 66 is approved and
signed on behalf of the Board.
Neil Kirton
Chairman
5 June 2023
66 Warehouse REIT plc
Annual Report and Financial Statements 2023
Strategic report
Both the independent Directors and Tilstone have worked
hard to ensure that we consider all our stakeholders in our
decision-making, as we continue to mature as a public company.
Neil Kirton
Chairman
As Chairman of Warehouse REIT, I am pleased to present
the governance report for our financial year ended
31March2023.
Our operational results reflect both the experience and
decision‑making around the opportunities sourced by
Tilstone, as well as thestrong and cohesive sense of purpose
that all the Board have shared since our IPO in 2017.
In addition to the contractual arrangement that exists
between the Company and Tilstone, the spirit of this
arrangement has been very strong. I am committed to a
transparent and open culture and we have constructive and
probing dialogue with Tilstone. Both parties have a common
agenda, strengthened by the level of equity ownership within
the boardroom, which has again grown during the year.
The Board
The Board met regularly during the year, as we transitioned
where possible from a virtual or screen‑based format to
more regular face‑to‑face interaction, which we have all
enjoyed as the Covid‑19 related restrictions started to
reduce.
In addition to our Board sessions, members of the Board
committed significant time to Warehouse REIT business
either via their various committee responsibilities, or
less formally through dialogue outside the boardroom
environment, where we regularly exchange views on
many areas of our development, strategy and stakeholder
interests.
Strategy day
One particularly important occasion for the Board is the
strategy day that we undertake annually, usually in the
second quarter of the financial year. The structure of the day
entails a detailed set of preparatory notes and a discussion
focused on a small number of agreed items with Tilstone.
The core areas from the 2022 day included:
• a review of the market for urban warehousing in the UK
and its impact on our strategy;
• a detailed discussion of various options to maximise
thepotential and manage the risks to shareholders of
theRadway 16 site in particular;
• the move to a Main Market listing; and
• our capital markets strategy.
Chairman’s introduction to governance
67 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Strategy day continued
Although the strategy day is not a formal Board meeting,
we find it useful to minute this session as a record of our
discussions and decision‑making. We also find it beneficial
from time to time to call upon external professional advisors
and ahead of this session we reviewed two reports compiled
for the Board on items above.
Board Committees
We made no changes to the Board in personnel terms during
the year, but the Nomination Committee – which I continue
to chair – regularly reviews the skill sets required to ensure
robust governance over the Company. For example, as our
marketplace evolves and existing assets continue to be
aggressively sought after by many investors, it is likely that
development will play an increased role in our future returns.
We conducted a further review of the Group’s arrangements
with our Investment Advisor, which are enshrined in both
the investment policy and the Investment Management
Agreement. In so doing, the independent Directors
commissioned advice from Reed Smith, Jefferies and Peel
Hunt to ensure that any proposed changes were both
‘fair and reasonable’ and continue to be compliant from
aregulatory perspective.
The Sustainability Committee completed its first full year
of operation. The Board as a whole fully understands and
endorses the importance of ESG to our existing investors,
potential shareholders and other stakeholders including
occupiers. We discuss ESG in more detail elsewhere but our
experience is that the great majority of our stakeholders are
continually elevating the importance of ESG.
Our strategy continues to focus on creating a resilient
portfolio, reducing our footprint, being able to measure our
progress and reinforce that with independent validation,
and supporting our occupiers. During 2021, we engaged
a number of occupiers in a survey on their views and
approaches to ESG, which has been particularly useful in
terms of understanding our customers and responding to
their needs. This is a cornerstone of what we do.
More generally, the Board continues to take a keen interest
in stakeholder views and we ensure we have robust
reporting from Tilstone on their day‑to‑day interactions
with stakeholders. Members of the Board are also available
to hold discussions with shareholders as necessary. More
information on the Group’s stakeholder engagement can be
found in the strategic report on pages 14 to 16.
Neil Kirton
Chairman
5 June 2023
Chairman’s introduction to governance continued
Statement of compliance
The Board recognises the importance of sound
corporate governance, commensurate with the
Group’s size and nature and the interests of its
shareholders. The Board is therefore committed to
maintaining high standards of corporate governance.
The Board undertakes an annual review of its
compliance with the principles and recommendations
of the AIC Code of Corporate Governance (the “AIC
Code”). A copy of the AIC Code, which was last
updated in 2019, can be obtained via the AIC website,
www.theaic.co.uk.
During the year ended 31 March 2023, the Company
has complied with the AIC Code throughout the
year, except where the Board has concluded that
adherence or compliance with any particular principle
or provision would not have been appropriate to the
Company’s circumstances, in which case the reasons
are fully explained in this statement.
68 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Board leadership and purpose
Principle Where it is in this report
Principle A Strategic report
Board of Directors
Business model
pages 1 to 66
pages 70 and 71
page 13
Principle B Strategic report
Our culture
Our purpose
pages 1 to 66
page 75
page 1 and 75
Principle C Sustainability report
Principal risks and
uncertainties
Risk management and
internalcontrols
pages 36 to 53
pages 54 to 64
page 87
Principle D Stakeholders
Section 172 statement
Shareholder engagement
pages 14 to 16
pages 17 to 19
page 82
Division of responsibilities
Principle Where it is in this report
Principle F Role of the Chairman
The Board
pages 74 and 75
page 67
Principle G Board of Directors
Board Committees
pages 70 and 71
pages 68 and 79
Principle H Board composition and
succession
Management Engagement
Committee report
pages 74 to 77
pages 90 and 91
Principle I The Board
Section 172 statement
Induction of new Directors
page 67
pages 17 to 19
N/A
Composition, succession and evaluation
Principle Where it is in this report
Principle J Diversity
Nomination Committee report
Board composition and
succession
pages 84 and 85
pages 83 to 85
pages 74 to 77
Principle K Board of Directors
Nomination Committee report
Board Committees
Board composition and
succession
pages 70 and 71
pages 83 to 85
pages 68 and 79
pages 74 to 77
Principle L Board evaluation page 76
Audit, risk and internal control
Principle Where it is in this report
Principle M Risk management and
internalcontrols
Audit and Risk
Committeereport
page 87
pages 86 to 89
Principle N Fair, balanced and
understandable reporting
Strategic report
Audit and Risk
Committeereport
Independent Auditor’s report
Financial Statements
page 89
pages 1 to 66
pages 86 to 89
pages 102 to 109
pages 101 to 143
Principle O Principal risks and
uncertainties
Viability statement
Audit and Risk
Committeereport
Management Engagement
Committee report
Risk management and
internalcontrols
pages 54 to 64
page 66
pages 86 to 89
pages 90 and 91
page 87
Remuneration
Principle Where it is in this report
Principle P Strategic report
Directors’ remuneration policy
Directors’ remuneration report
pages 1 to 66
pages 94 and 95
pages 94 to 96
Principle Q Directors’ remuneration report pages 94 to 96
Principle R Directors’ remuneration report pages 94 to 96
Chairman’s introduction to governance continued
69 Warehouse REIT plc
Annual Report and Financial Statements 2023
With regards to Principle E, the AIC and FRC do not require investment trusts
to report against this principle.
Corporate governance
Board of Directors
Membership of the Board was unchanged during the year. All the Directors are
non-executive and the majority are independent of the Investment Advisor.
Date of appointment
1 August 2017
Skills and experience
Neil has over 25 years of experience working in the securities and
investment banking industries, giving him a deep understanding
ofcapital markets and investor needs.
Other current appointments
Neil is also a non‑executive director of Ingenta plc and Senior
Advisor at Smith Square Partners.
Past appointments
Until December 2021, Neil was a managing director and co‑regional
head, EMEA, Forensic Investigations and Intelligence at Kroll.
Neilwas formerly global head of equity distribution at ABN AMRO
Bank NV and a member of ABN AMRO’s Global Equity Directorate.
He was head of UK equity sales and deputy chief executive at Hoare
Govett, head of equities at Bridgewell Securities, head of corporate
finance and CEO at Arbuthnot Securities and an executive director
of Arbuthnot Banking Group plc.
Date of appointment
1 August 2017
Skills and experience
Aimée has over 30 years’ experience in strategy development across
various sectors, most notably real estate, travel and leisure, and
financial services.
Other current appointments
Aimée runs her own strategy consulting business, Pitman & Co.
Consulting. As an independent consultant, she works as a client
director with Eden McCallum LLP, a London‑based consultancy
firm. Sheis also a non‑executive director of Native Holdings
Ltd and sits on the Advisory Board of McArthurGlen and has
recently been appointed a Fellow of Chapter Zero, a not‑for‑profit
organisation focused on helping UK organisations achieve net zero
transitionplans.
Past appointments
Aimée was a Vice President within MAC Group/Gemini Consulting’s
strategy practice and went on to work over a number of years with
European travel group TUI, supporting it on strategy, distribution
and operational excellence.
Date of appointment
15 November 2018
Skills and experience
Lynette is a chartered accountant and experienced non‑executive
director. She has considerable knowledge of financial matters and
ofthe real estate sector.
Other current appointments
Lynette is also a non‑executive director of Centaurea Investment
Limited and a member of council at the London Chamber of
Commerce & Industry. She is also a partner in her business advisory
firm one5two LLP, focused on growing businesses.
Past appointments
Lynette was until recently a non‑executive director of Places for
People group and chair of its regulated board. She was previously
the senior independent director and chair of the group audit and risk
committee of the group board.
Lynette was a partner of BDO LLP for ten years, where she was
responsible for a portfolio of real estate investor and developer
clients. She is a former partner in Greenside Real Estate Solutions,
aswell as the chair of the Association of Women in Property.
She also served on the boards and as chair of the audit and risk
committees of the London Chamber of Commerce & Industry and
Land Aid Charitable Trust.
Neil Kirton
Non-Executive Chairman
Aimée Pitman
Non-Executive Director
Lynette Lackey
Non-Executive Director
70 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Board of Directors continued
Date of appointment
1 August 2017
Skills and experience
Martin has more than 30 years’ operational experience as a
propertydirector, gained in a range of major companies. Martin is a
Fellow of the Royal Institution of Chartered Surveyors.
Other current appointments
Martin was recently appointed as senior advisor to the Dominvs
Group’s Board.
Past appointments
Prior to his retirement in December 2021, Martin was the group
property director of Travis Perkins plc, the largest supplier of
building materials in the UK, and chief executive officer of Travis
Perkins (Properties) Ltd. He oversaw the group’s freehold portfolio,
with a market value in excess of £700 million.
Martin is a former non‑executive director of Quintain Estates and
Development plc, chairman of the BRC Property Advisory Group
and member of the Bank of England Property Forum.
Date of appointment
24 July 2017
Skills and experience
Simon has over 35 years’ experience in the real estate sector, gained
during his career at Savills, one of the world’s leading property
agents. During this period he was Global Head of Capital Markets.
Other current appointments
Simon is the Non‑Executive Chairman of Tilstone and represents
Tilstone on the Board. He is the Vice‑Chairman of Ironstone Asset
Management Limited, the Investment Advisor to Life Science REIT
plc, a UK listed company which invests in a diversified portfolio of
properties across the UK which typically provide benefit to the life
science sector. Simon is also a Senior Advisor at Savills UK ltd.
Simon owns a thoroughbred stud farm called Aston Mullins and is
a director of a number of bloodstock syndicates and other horse
racing organisations. He is a governor of Magdalen College, Oxford.
Past appointments
Simon was on the Savills Group and plc boards from 1999 to 2021
and led the real estate investment teams until December 2022.
As Chairman of Savills Investment Management, he led Savills UK
Limited’s proprietary trading arm, Grosvenor Hill Ventures Limited,
during a five‑year period up to 2006, when this fund delivered
an internal rate of return in excess of 35%. Simon also chaired the
Charities Property Fund from 2002 until 2007.
Date of appointment
24 July 2017
Skills and experience
Stephen is an experienced global equity investor, giving him
an in‑depth understanding of capital markets and institutional
investors.
Other current appointments
Stephen is a member of the advisory board of Glia Ecosystems
Limited and a non‑employee partner of Absolute Return Partners,
where he manages his own portfolio. Stephen is Chairman of
Ironstone Asset Management Limited, the Investment Advisor to Life
Science REIT plc, a UK listed company which invests in a diversified
portfolio of properties across the UK which typically provide benefit
to the life science sector.
Past appointments
In his former roles as chief investment officer at IronBridge
International and head of global equities at Deutsche Asset
Management, Stephen managed over £5 billion of assets for a wide
variety of clients, including many large global institutions.
Martin Meech
Non-Executive Director
Simon Hope
Non-Executive Director
(non-independent)
Stephen Barrow
Non-Executive Director
(non-independent)
71 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Investment Advisor
Simon has been Chairman of Tilstone since its
formation in 2010 and was a founding investor.
Prior to that he worked with Andrew Bird whilst
Andrew was property director at Barlows Plc,
trading a number of portfolios including a sale to
Westbury Fund Management.
Simon’s biography can be found on page 71.
Andrew founded the Tilstone brand in 2010 to
focus on commercial property investment and
development. After identifying opportunities
within the warehouse sector, the focus moved
in August 2013 to creating the Tilstone Property
Portfolio, which the Company acquired as its seed
portfolio as part of the September 2017 initial
public offering. As Managing Director of Tilstone,
Andrew takes overall responsibility for strategy,
direction and business performance.
Prior to founding Tilstone, Andrew was appointed
as property director to the board of Barlows
plc in 1994, a north‑west focused commercial
property company with a listing on the Main
Market of the London Stock Exchange. He was
subsequently part of a consortium that took
the company private in 2001. The business
created a separate asset management company
through which Andrew served on the investment
committee of Westbury plc, a quoted property
fund (2002‑2007). Andrew has also served as a
non‑executive director of Dee Valley Group plc, at
that time a London Stock Exchange quoted water
utility company.
Paul joined Tilstone in 2013 and was part of the
original team creating the Tilstone property
portfolio and was a co‑founder of Tilstone
Partners Limited. Paul is Tilstone’s Investment
Director and is responsible for the sourcing of
investment opportunities, asset management and
creating positive occupier relationships.
He has extensive investment consultancy
experience through his work at CBRE Limited
and subsequently at Mapeley Estates Limited (a
previously listed property company), where he
was head of investment and investment asset
management, tasked with extracting value from
outsourcing contracts and new acquisitions. Paul
expanded his horizons with a senior investment
asset management role at Moorfield Group
Limited, a real estate private equity company.
There he took a key role in the purchase and asset
management of projects such as the UK Logistics
Fund, in a joint venture with SEGRO plc.
Peter has significant experience in company
management, control, reporting and corporate
activity, especially in the private equity arena. He
qualified as a chartered accountant with Binder
Hamlyn, before working in a variety of finance
roles for blue chip companies including Grand
Metropolitan (Diageo plc), De La Rue plc and ICL
plc. During his time as group finance director of
Robert Walters plc, the company successfully
floated on the Main Market of the London Stock
Exchange. While he was at Spectron Group
Limited, the company was restructured and
eventually sold to a trade buyer.
As part of the management team of Axiom
Consulting Limited, Peter was involved in a
management buyout from Aon Limited, funded by
private equity, and later its trade sale to Charles
Taylor plc. He was also part of the team at Kane
Group Limited which undertook the private
equity‑backed acquisition of HSBC Insurance
Services Limited. Peter also stood on the board of
Leander Club Limited for ten years, stepping down
in 2022.
Simon Hope
Non-Executive Chairman/Joint Fund
Manager
Andrew Bird
Managing Director/Joint Fund Manager
Paul Makin
Investment Director
Peter Greenslade
Finance Director
The Board has appointed Tilstone Partners Limited to provide day-to-day
asset management and advisory services to the Group.
72 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
The Board of Directors
Under the leadership of the Chairman, the Board of
Directors is collectively responsible for the long‑term
sustainable success of the Company, generating value
for shareholders and contributing to wider society. Each
Director recognises that they have a statutory duty to
consider and represent the Company’s various stakeholders
in deliberations and decision‑making. More details can be
found about how the Directors have fulfilled their duties
under section 172 of the Companies Act 2006 on page 17
of this report. The Board establishes the purpose, values
and strategic aims of the whole Group and satisfies itself
that these and its culture are aligned and ensures that the
necessary resources are in place for the Group to meet its
objectives and fulfil its obligations to shareholders, within a
framework of high standards of corporate governance and
effective internal controls. The Directors are responsible
for the determination of the Group’s investment policy and
strategy and have the overallresponsibility for the Group’s
activities, including the control and supervision of the
Investment Manager andInvestment Advisor.
The Board consists entirely of six Non‑Executive Directors,
with no individual having unfettered powers of decision.
TheDirectors hold, or have held, senior positions in industry
and commerce and possess a wide range of relevant
business and financial expertise, and brief biographies,
including details of their significant commitments, can
be found on pages 70 to 71. During the year, the Board
was satisfied that all the Directors were able to commit
sufficient time to the Group’s affairs and discharge their
responsibilities effectively having given due consideration
tothe Directors’ external appointments.
Each Director was appointed for an initial three‑year term,
subject to re‑election annually at each AGM (see page
77). The Board has not stipulated a maximum term of any
directorship, except that, subject to ensuring business
continuity, the Chairman will remain on the Board for a
maximum period of nine years.
None of the Directors has a service contract. Letters
of appointment set out the terms of their appointment
and copies are available on request from the Company
Secretaryand will be available at the AGM. The Directors
were advised on appointment of the expected time required
to fulfil their roles and have confirmed that they remain able
to make that commitment.
All material changes in any Director’s commitments outside
the Group are required to be, and have been, disclosed prior
to the acceptance of any such appointment.
Director induction
The Group has established an induction procedure for
new Directors, including the provision of an induction pack
containing information about the Group, its processes and
procedures. New appointees also meet the Chairman and
relevant Investment Advisor personnel.
Corporate governance statement
This report explains the key features of
the Group’s governance structure.
73 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Director induction continued
Structure of the Board during the year
Audit and Risk
Committee
Management
Engagement
Committee
Nomination
Committee
Sustainability
Committee
Independent/
Non‑independent Male/Female
Neil Kirton¹ Independent Male
Aimée Pitman²
Independent Female
Lynette Lackey³
Independent Female
Martin Meech
4
Independent Male
Simon Hope
Non‑independent Male
Stephen Barrow
Non‑independent Male
1. Chairman of the Nomination Committee.
2. Chair of the Sustainability Committee.
3. Chair of the Audit and Risk Committee.
4. Chairman of the Management Engagement Committee.
Board size and composition
We consider that a diversity of skills, backgrounds,
knowledge, experience, geographic location, nationalities
and gender is important to effectively govern the business.
The Board and its Nomination Committee will work to
ensure that the Board continues to have the right balance of
skills, experience, knowledge and independence necessary
to discharge its responsibilities in accordance with the
highest standards of governance.
As Warehouse REIT plc is now a FTSE 250 company, the
Board is mindful of developing diversity at Board level in
the Group. Female representation on the Board is at 33%.
The Board is also aware of the aims of the Parker Review,
for companies to have at least one director from an ethnic
minority background by 2024.
As part of the ongoing succession cycle, the Board will take
into consideration the need to improve the ethnic diversity
of the Board when recruiting new Non‑Executive Directors.
It is anticipated that this process will satisfy the Parker
Review requirements. Our approach to diversity is balanced
with the need to appoint directors who can best serve the
interests of the Company, having the relevant experience,
and its shareholders.
Martin Meech will not be seeking re‑election to the Board
at the forthcoming AGM and therefore will cease to be a
Director of the Company from the conclusion of the AGM.
More information on the Company’s Diversity Policy, its
objectives, implementation and results can be found on
page 84.
Chairman and Senior Independent Director
The independent non‑executive Chairman, Neil Kirton,
isdeemed to have no conflicting relationships. He
considers himself to have sufficient time to commit to the
Company’saffairs.
The Board has appointed Martin Meech as the Senior
Independent Director. Martin Meech shall continue to serve
as the Senior Independent Director until the upcoming AGM.
A replacement for the role of Senior Independent Director is
currently under consideration by the Nomination Committee.
The Senior Independent Director provides a channel for any
shareholder with concerns regarding the Chairman and leads
the independent Directors’ annual evaluation of the Chairman.
The Senior Independent Director would consult when
necessary with the other Non‑Executive Directors without the
Chairman being present, if required, for example to consider
the Chairman’s performance.
The roles and responsibilities of the Chairman and the Senior
Independent Director are clearly defined and set out in writing,
a copy of which is available on the Company’s website at
www.warehousereit.co.uk.
Corporate governance statement continued
74 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Corporate governance statement continued
Board size and composition continued
Purpose and culture
Investment
Asset management
Financial
CulturePurpose
The Group’s purpose is to provide the well‑connected,
high‑quality and sustainable space our occupiers need to
thrive and by doing this responsibly, we generate positive
outcomes for all our stakeholders.
The Chairman leads the Board and is responsible for
its overall effectiveness in directing the Group. He
demonstrates objective judgement, promotes a culture of
openness and debate, and facilitates effective contributions
by all Directors. In liaison with the Company Secretary,
he ensures that the Directors receive accurate, timely
and clear information to enable them to discharge their
responsibilities.
The Board believes that it has a responsibility to set and
demonstrate high standards of ethics and behaviour. We are
strongly committed to an ethos and culture that balances
both our shareholders’ need and desire for financial returns
and the process and environment within which we achieve
those returns. This obligation begins with the Board of
Directors but extends into our engagement with Tilstone.
Both parties operate with complete mutuality of trust and
transparency embedded in the relationship.
As an externally managed Group we expect all our external
service providers, including Tilstone, to fully endorse these
values and exercise commercial judgement with due and
full consideration of the impact of those decisions on their
employees, our customers, the communities in which we
operate, and our wider stakeholder base.
Annually, the Management Engagement Committee
analyses and systematically reviews all our service
providers, including Tilstone – a review which includes an
understanding of their policies, procedures and actions
around behaviour, ethics and culture and consideration
of their own engagement with other third‑party service
providers. This includes assessing their approach to
significant ethical issues such as modern slavery. The
Company’s Modern Slavery Statement, reviewed by the
Board each May, is available from its website
www.warehousereit.co.uk.
The Group has policies and procedures to assist with
maintaining a culture of good governance, including those
relating to delegated authorities, diversity and related
parties. The Board assesses and monitors compliance with
these policies regularly through Board meetings.
Engaging with our stakeholders
Details of how we engaged with our key stakeholders during
the year ended 31 March 2023 are set out in the strategic
report on pages 14 to 16.
Board operation
The Directors meet at regular Board meetings, held at least four times a year, with additional meetings arranged as necessary. The table below sets out the Directors’ attendance at both
regular and ad‑hoc Board and Committee meetings during the year ended 31 March 2023, against the number of meetings each Board member was eligible to attend:
Board
Audit and Risk
Committee
Management
Engagement Committee
Nomination
Committee
Sustainability
Committee
Neil Kirton — —
Aimée Pitman
—
Lynette Lackey —
Martin Meech
—
Simon Hope — — —
Stephen Barrow
— — —
75 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Corporate governance statement continued
Board size and composition continued
Board operation continued
As noted above, additional ad‑hoc Board meetings were
held during the period to discuss strategic matters and
approve the release of the annual and half‑year results.
The Board has formal arrangements for the Directors, in the
furtherance of their duties, to take independent professional
advice at the Company’s expense. The Company has
also taken out a Directors’ and Officers’ liability insurance
policy, which includes cover for legal expenses. In addition,
the Company has specific Public Offering of Securities
insurance, which began on 20 September 2017 with a
six‑year run‑off period.
Subject to the provisions of UK law, the Company has
provided each Director with an indemnity in respect of
liabilities which they may incur when discharging their duties
as a Director. There are no other qualifying third‑party
indemnity provisions in place.
Board evaluation
Fidelio Partners, an independent Board Advisory firm,
conducted an external Board evaluation of the Warehouse
REIT Board in line with the Corporate Governance Code 2018.
Fidelio worked with the Chairman to define the scope
and objectives of the evaluation, which focused on
providing comfort to shareholders and also enhancing the
effectiveness of the Board.
The evaluation included:
• A tailored questionnaire which was completed by Board
members and selected executives, comprising both a
qualitative survey and a quantitative component. The
questionnaire focused on overall Board effectiveness,
including accountability, risk oversight, strategy,
dynamic, composition, Board materials, key Board roles
and Committees and shareholder and stakeholder
engagement. It also provided a deep dive into three key
priorities for the Board and the business. (Fidelio did not
have the opportunity to interview Board members but did
speak with two external advisors.);
• A workshop with the Board in which Fidelio shared
initial findings and explored potential next steps and
recommendations. This also afforded the opportunity for
Fidelio to observe Board dynamic;
• A review of Board and Committee materials as well as
overall governance; and
• A report including key findings and recommendations
as well as supporting analysis. This was shared initially
with the Chairman and will also subsequently be shared
with the Board as a whole.
The evaluation afforded Board members the opportunity
to provide open and constructive input and resulted in
practical findings and recommendations.
The Board was seen to take its responsibilities and duties
seriously. Board members were open to challenge and
able to consider both what is working well and also how to
increase effectiveness.
Looking ahead, key areas of focus included:
i. Ensuring that the Board continues to contribute fully
and effectively to strategy and also to oversee its
implementation
ii. Active and forward‑looking consideration of Board
composition taking account of strategic priorities,
diversity and tenure
iii. Maintaining effective shareholder and stakeholder
engagement
The Board is adopting and prioritising practical
recommendations with a view to further developing its
effectiveness, in particular regarding the key areas of focus
above. Fidelio remains available as a sounding board to
the Chairman and the Board over the year ahead, as the
recommendations arising from the evaluation are adopted.
76 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Corporate governance statement continued
Independence of Directors
The Board has reviewed the independence of each Director
and the Board as a whole in line with principle G of the
AIC Code and is of the opinion that over half the Board
members, are considered independent. Most of the Board
is independent of the Investment Advisor and free from any
business or other relationships that could materially interfere
with the exercise of the Directors’ independent judgement.
Simon Hope is the Non‑Executive Chairman of the
Investment Advisor and an ex‑employee of Savills (one of the
Company’s Property Managers); he is therefore considered
to be a non‑independent Director. Stephen Barrow is also on
the Tilstone Board of Directors and is therefore considered
to be a non‑independent Director. Both Simon Hope and
Stephen Barrow have cross‑directorships in Tilstone Partners
Limited and are both LLP members of Tilstone Investments
LLP, Tilstone Halifax LLP and Somersham Coventry LLP.
The Board considers that all other Directors are independent
of the Investment Advisor in both character and judgement.
Election/re-election of Directors
Under the Company’s Articles of Association, Directors
arerequired to stand for election at the first AGM after
theirappointment. Thereafter, at each AGM any Director
who hasnot stood for appointment or re‑election at either
of the two preceding AGMs is required to retire and offer
him/herself for re‑election, as is any Director who has held
office for a continuous period of nine years or more.
Beyond these requirements, and in line with corporate
governance best practice, the Board has determined that
all Directors will seek annual re‑election at the Company’s
AGMs. Notwithstanding Martin Meech’s directorship ceasing
at the close of the 2023 AGM, all other Directors will stand
for re‑election at the forthcoming AGM. The Board considers
that, during the year ended 31 March 2023, each Director has
performed effectively and demonstrated commitment to
the role. It therefore believes that it is in the best interests of
shareholders that each Director is re‑elected at the AGM.
Board responsibilities and relationship
withthe Investment Advisor
The Board’s main roles are to lead the Group and ensure
its long‑term sustainable success, generating value for
shareholders and contributing to wider society, and to
approve the Group’s purpose, values and strategic objectives
and satisfy itself that these and its culture arealigned.
The Board has adopted a schedule of matters reserved
for its decision, which is reviewed annually. Thesespecific
responsibilities include:
• approving the Company’s investment and business strategy;
• approving the gearing policy;
• overseeing cash management;
• approving the Annual and Half‑yearly Reports and Financial
Statements and accounting policies, prospectuses, circulars
and other shareholder communications;
• approving acquisitions and disposals which are within the
investment policy but have a value of 20% or more ofgross
asset value (“GAV”) of the Company’s portfolio,and any
acquisitions or disposals outside the investment policy;
• raising new capital and approving major financing facilities;
• approving the valuation of the Group’s portfolio;
• approving and recommending dividends;
• approving Board appointments and removals;
• approving the Company’s sustainability strategy;
• appointing or removing the Investment Manager,
Investment Advisor, Depositary, Auditor and Company
Secretary; and
• ensuring a satisfactory dialogue with shareholders
andother key stakeholders.
A copy of the schedule of matters reserved for the
Board’sdecision is available on the Company’s website at
www.warehousereit.co.uk.
The Company has sub‑contracted its day‑to‑day functions
to service providers, each engaged under separate legal
agreements. For example, portfolio management and risk
management of the Group’s assets has been delegated to
the Investment Manager. The Investment Advisor provides
recommendations to the Investment Manager’s investment
committee.
These recommendations cover acquisitions and sales
of Group assets (where this would be in line with the
Company’s objectives and investment policy) and
recommendations on where the Group should incur
borrowings and give guarantees and securities (subject to
certain investment restrictions imposed by the Board and
the Board’s overall control and supervision). The Board, the
Investment Manager and the Investment Advisor operate in
a fully supportive, co‑operative and open environment.
At each Board meeting, the Directors follow a formal
agenda, which is circulated in advance by the Company
Secretary. The Company Secretary and Investment Advisor
regularly provide financial information, together with
briefing notes and papers in relation to changes in the
Group’s economic and financial environment, statutory
and regulatory changes and corporate governance best
practice. Representatives from the Investment Advisor and
the Investment Manager attend each Board meeting and
communicate with the Board between formal meetings.
77 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Corporate governance statement continued
Key Board activities during the year
A report from the Investment Advisor is reviewed at each meeting, which includes relevant matters to highlight since the previous meeting and details of portfolio activity, the pipeline
andhealth and safety matters. A quarterly report from the Investment Manager is presented at each scheduled Board meeting. The Board also receives and reviews a quarterly share
register analysis, as well as a report from the Company Secretary including regulatory and governance updates. In addition to these regular agenda items, the Board dealt with the
following matters during the year:
• Updates from Management Engagement
Committee, Nomination Committee and
Audit and Risk Committee Chairs
• Approval of preliminary results for the year
ended 31March 2022 and fourth interim
dividend for the 2022 financial year
• Review of going concern and long‑term
viability statements
• Approval of Annual Report and Financial
Statements for the year ended 31 March 2022
• Review of Directors’ performance evaluation
for the year ended 31 March 2022
• Annual review of Modern Slavery Statement
• Review of Sustainability Policy
May 2022 September 2022
• Annual General Meeting
July 2022
• Approval of first interim dividend for the
2023 financialyear
• Approval of the Notice of Annual General
Meeting
• Release of the circular to shareholders
in respect of themove from AIM to
MainMarket
• Review of Directors’ fees
January 2023
• Updates from Sustainability Committee and
Audit and Risk Committee Chairs
• Approval of third interim dividend for the
2023 financialyear
• Review of Board Diversity Policy and
Diversity andInclusion Policy
• Reviewed matters reserved for the Board
October 2022
• Board strategy meeting
November 2022
• Update from Sustainability Committee and
Audit and Risk Committee Chairs
• Approval of Half‑yearly Report and second
interim dividend for the 2023 financial year
• Reviewed performance against revised
short‑term strategy
March 2023
• Approval of the financial budget and capital
expenditure programme for the financial
year to 31March 2024
• Review of the Company’s compliance with
the AICCode
• Annual review of the investment policy
• Annual review of the Board, Committees
and Chairmanthrough an externally
facilitated independentevaluation
78 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Corporate governance statement continued
Conflicts of interest
In accordance with the Companies Act 2006, the Articles
of Association permit the Board to consider and, if it sees
fit, to authorise situations where a Director has an interest
that conflicts, or may possibly conflict, with the Group’s
interests. The Board has a formal system to consider such
conflicts, with the Directors who have no interest in the
matter deciding whether to authorise the conflict and any
conditions to attach to such authorisation.
Board Committees
The Board has four Committees: the Nomination
Committee, the Audit and Risk Committee, the Management
Engagement Committee and the Sustainability Committee.
Given the Board’s size, it is not felt appropriate for the
Company to have a separate remuneration committee and
the full Board deals with the functions that this committee
would normally carry out.
The Committees’ terms of reference are available on the
Company’s website at www.warehousereit.co.uk.
Nomination Committee
During the year, the Nomination Committee comprised of
Neil Kirton, Lynette Lackey and Simon Hope. The Chairman
of the Board is a member of, and chairs, the Nomination
Committee. A majority of the members of the Nomination
Committee are independent Non‑Executive Directors.
A report from the Chair of the Nomination Committee is set
out on pages 83 to 85.
Audit and Risk Committee
The members of the Audit and Risk Committee are Lynette
Lackey (Chair), Aimée Pitman and Martin Meech. The
Chairman of the Board is not a member of the Committee.
The members of the Audit and Risk Committee consider
that they collectively have the requisite skills and experience
to fulfil the Audit and Risk Committee’s responsibilities and
competence relevant to the REIT sector. Lynette Lackey is a
qualified Chartered Accountant with audit experience in the
real estate investor and developer industry.
A report from the Chair of the Audit and Risk Committee is
set out onpages 86 to 89.
Management Engagement Committee
During the year, the Management Engagement Committee
comprised of Martin Meech (Chairman), Neil Kirton and
Lynette Lackey, all of whom are independent Non‑Executive
Directors. The Chairman of the Board is a member of the
Committee.
A report from the Chairman of the Management Engagement
Committee is set out on pages 90 to 91.
Sustainability Committee
The Sustainability Committee is comprised of Aimée Pitman
(Chair), Martin Meech and Stephen Barrow. Representatives
of the Investment Advisor also attend the Committee.
A report from the Chair of the Sustainability Committee is
set out on pages 92 to 93.
Company Secretary
The Board has direct access to the advice and services of the
Company Secretary, Link Company Matters Limited, which
is responsible for ensuring that the Board and Committee
procedures are followed and that applicable regulations are
complied with. The Company Secretary is also responsible
to the Board for ensuring timely delivery of information and
reports and for ensuring that the Group meets its statutory
obligations.
79 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Corporate governance statement continued
How governance supported the delivery of the Group’s strategy during the year ended 31March 2023
As noted on page 73, approving the strategy and overseeing its implementation is one of the Board’s core responsibilities. Set out below are the Board’s activities in respect of each
element of the strategy set out on pages 20 to 21 of this report. In addition, during the year the Board held a strategy day, which is a key event allowing the Board to examine the strategy
and the market context for it. More information can be found in the Chairman’s statement on pages 6 to 8.
Strategy Board governance role Key activities during the year
Investment strategy
• Overseeing the selection of acquisitions, against the backdrop of
current market and economic conditions
• Approving acquisitions which are within the investment policy but
have a value of 20% or more of the Company’sGAV
• Approving any acquisitions outside the investment policy
During the year, the Board:
• reviewed an acquisition pipeline tracker at each quarterly meeting;
• reviewed the details of all acquisitions at its quarterly meetings; and
• assessed in detail the ongoing availability of quality stock that could be acquired at the strategy day
held during the year (see the Chairman’s introduction to governance on pages 67 to 69 for more
information).
Read more about the acquisitions in the year in the Investment Advisor’s report on pages 27 to 35.
Asset management
strategy
• Overseeing the portfolio
• Overseeing the Investment Advisor’s asset management activities
• Approving disposals which are within the investment policy
but have a value of 20% or more of the GAV of theCompany’s
portfolio
• Approving any disposals outside the investment policy
During the year, the Board:
• reviewed quarterly portfolio updates from the Investment Advisor, including details of occupancy levels,
lease events, rental values and rent collection;
• monitored the Investment Advisor’s and Investment Manager’s adherence to the capital expenditure
budget, through quarterly reports from the Investment Advisor; and
• approved the annual budget (including capital expenditure) for the year to 31March2024.
Read more about asset management during the year in the Investment Advisor’s report onpages 27 to35.
Financial strategy
• Approving any changes to the Group’s capital structure
• Approving the Group’s gearing policy, dividend policy and
treasury policy
During the year, the Board:
• monitored the Group’s debt levels and reviewed the hedging strategy.
Read more about financing activity during the year in the Investment Advisor’s report onpage 32.
Sustainability
strategy
• Approval of policy, strategy and targets.
• Approval of governance policies.
During the year the Board:
• reviewed and oversaw progress made against the strategy with particular focus on the key projects;
• Set and approved 2023 targets;
• Reviewed and oversaw the net zero carbon pathway project through to approving our eight
decarbonisation commitments; and
• Participated in training on climate risks and received information on ESG legislation, peer reviews,
green bonds, benchmarking to enable informed decisions.
Read more
on pages 20 to 21
80 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Corporate governance statement continued
Internal control review
The Board is responsible for the systems of internal
controls relating to the Group, including the reliability of the
financial reporting process and for reviewing their systems’
effectiveness.
The Directors have reviewed and considered the
Financial Reporting Council’s (“FRC’s”) guidance on risk
management, internal control and related finance and
business reporting and have established an ongoing process
for identifying, evaluating and managing the principal
risks faced by the Group. This process, together with key
procedures established to provide effective financial control,
was in place during the period under review and at the date
of the signing of this report. The internal control systems
are designed to ensure that proper accounting records are
maintained, that the financial information on which business
decisions are made and which is issued for publication
is reliable, and that the Group’s assets are safeguarded.
The risk management process and the Group’s systems
of internal control are designed to manage rather than
eliminate the risk of failure to achieve the Group’s objectives.
It should be recognised that such systems can only provide
reasonable, not absolute, assurance against material
misstatement or loss.
The Directors have reviewed the effectiveness of the
Group’s risk management and internal control systems as
they have operated over the period and up to the date of
approval of the Annual Report and Financial Statements.
There were no matters arising from this review that
required further investigation and no significant failings or
weaknesses wereidentified.
Internal control assessment process
The Board undertakes regular robust risk assessments and
reviews of internal controls, in the context of the Group’s
overall investment objective. The Board, through the Audit
and Risk Committee, has categorised risk management
controls under the following headings:
• business risk;
• operational risk;
• reputational risk;
• compliance risk; and
• financial risk.
In arriving at its judgement of what risks the Group faces,
the Board has considered the Group’s operations mindful of
the following factors:
• the nature and extent of risks which the Board regards
as acceptable for the Group to bear, within its overall
business strategy;
• the threat of such risks becoming reality;
• the Group’s ability to reduce the incidence and impact of
risk on its performance; and
• the cost to the Group and the benefits related to the
Group and third parties operating the relevant controls.
One of the key internal controls which the Group has in
place is a corporate risk register, which is maintained by the
Investment Advisor, against which the Group monitors the
risks identified, the impact of such risks and the controls in
place to mitigate them. It also considers and monitors both
current and emerging risks to ensure meaningful reporting
to the Audit and Risk Committee. Other key internal
controls, which the Group has in place during the year,
include a procedure to monitor the compliance status of
the Company to ensure that it can continue to be approved
as a REIT; and the Investment Advisor prepares forecasts
and management accounts which allow the Board to assess
performance. The risks are assessed based on the likelihood
of them happening, the impact on the business if they were
to occur and the effectiveness of the controls. The Audit and
Risk Committee reviews the risk matrix at least twice in each
financial year and at other times as necessary.
The principal and emerging risks that the Board has
identified are set out on pages 54 to 64.
Most functions for the Group’s day‑to‑day management are
sub‑contracted and the Directors therefore obtain regular
assurances and information from key third‑party suppliers
regarding their internal systems and controls.
81 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Corporate governance statement continued
Shareholder engagement
The Investment Advisor, the Company’s Joint Brokers
(Peel Hunt LLP and Jefferies International Limited) and
Nominated Advisor (Peel Hunt LLP) are in regular contact
with the major institutional investors and report the results
of meetings and the views of those shareholders to the
Board. The Chairman and the other Directors are available
to attend these meetings withshareholders if required.
All shareholders are encouraged to attend, either in person
when able to or by proxy, and vote at the AGM, during
whichthe Board and representatives of the Investment
Advisor are available to discuss issues affecting the
Group and answer any questions. Shareholders wishing to
communicate directly with the Board or to lodge a question
in advance of the AGM should contact the Company
Secretary at the address on page 159.
The Company always responds to letters from shareholders.
Shareholders are also invited to submit questions ahead of
the AGM by email and responses are provided ahead of the
proxy voting deadline where practicable.
All resolutions proposed at the 2023 AGM will be voted
on separately and the voting results will be announced
to the London Stock Exchange and made available on
the Company’s website as soon as practicable after the
meeting. These will include all votes cast for and against
andthose withheld, together with all proxies lodged prior
tothe meeting.
The Company is committed to ongoing shareholder
dialogue and takes an active interest in voting outcomes.
If there are substantial votes against any resolutions, the
Company will consult with shareholders to understand the
reasons for any such vote. The Company will provide an
update on the views received from shareholders and any
resulting action will be detailed in the next Annual Report.
The Board and its advisors will prepare the Group’s
Annualand Half‑yearly Reports to present a full and
readily understandable review of the Group’s performance.
Copies will be released through the Regulatory News
Service, dispatched to shareholders depending on their
communication preference and made available from the
Company Secretary or by downloading from the Company’s
website at www.warehousereit.co.uk.
See pages 14 to 16 for further information on shareholder
and stakeholder engagement.
Communication with shareholders is a high priority for both the Board and
the Investment Advisor, and the Directors are available to discuss the Group’s
progress and performance with shareholders.
82 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Nomination Committee report
Dear shareholders
I am pleased to present the report on the activities of the
Nomination Committee.
The Board undertook an externally facilitated evaluation of
its composition, succession planning, expertise, dynamics,
management and focus of meetings, support, culture, and
risk management and oversight.
The Nomination Committee has spent time this year
considering future appointments and looking at the skills and
experience across existing Board members, possible gaps to
what we see as necessary for the future development of the
business, and other matters includingdiversity.
We continue to be mindful of the gender diversity on the
Board and, to that end, we are looking at opportunities to
meet the targets set by the FTSE Women Leaders Review
and the Parker Review. We have 33% representation of
women on the Board.
The Nomination Committee is responsible for maintaining a
balance of skills, experience and perspectives on the Board.
Role of the Nomination Committee
The role of the Nomination Committee is to assist in
ensuring that the Board comprises individuals who are
bestable to discharge the responsibilities of Directors,
having regard to the highest standards of governance, the
strategic direction of the Group and ambitions of the Board
in respect of diversity and inclusion.
In summary, the Committee’s primary responsibilities are to:
• keep under review the Board’s structure, size and
composition, including diversity and the balance of
independent and non‑independent Non‑Executive
Directors, and make recommendations to the Board
withregard to any changes required;
• consider and formulate succession plans for Directors,
giving consideration to the length of service of the Board
as a whole and the need for membership to be regularly
refreshed;
• identify and nominate candidates to fill any Board
vacancies for the Board’s approval, giving due regard to
the current and recommended future balance of skills,
knowledge, experience, independence, diversity and
cognitive and personal strengths on the Board;
• review the results of the Board performance evaluation
that relate to the Board’s composition;
• review annually the time required from Non‑Executive
Directors;
• make recommendations to the Board regarding
membership of the Board’s Committees, in consultation
with the Chair of each Committee;
• make recommendations to the Board concerning the
re‑appointment of Non‑Executive Directors, at the
conclusion of their specified term of office; and
• make recommendations to the Board regarding the
re‑election of Directors at AGMs.
The Nomination Committee operates within defined terms
of reference, which are regularly reviewed and updated
as necessary. The terms of reference are available on the
Group’s website.
83 Warehouse REIT plc
Annual Report and Financial Statements 2023
The Nomination Committee is
responsible for maintaining a
balance of skills, experience and
perspectives on the Board.
Neil Kirton
Chairman of the Nomination Committee
Corporate governance
Nomination Committee report continued
Composition and meeting attendance
The composition of the Nomination Committee and the
meeting attendance for the year are set out in the Board
and Committee meeting attendance table on page 75.
Activities
The Nomination Committee met once during the year ended
31 March 2023 and once between the year end and the
date of this report. The main activities of the Nomination
Committee are set out below.
Re-election of Directors at the AGM
The Nomination Committee considered the re‑election of
each Director at the AGM. Following consideration of a
range of factors, including Directors’ other commitments
and the results of the recent Board evaluation, the
Nomination Committee concluded that each Director on
the Board standing for re‑election at the AGM continues
to demonstrate the necessary skills, experience and
commitment to contribute effectively and add value to
theBoard.
Biographies of each Director are available on pages 70 to 72.
It is the Committee’s and the Board’s view that the Directors’
biographies illustrate why each Director’s contribution is,
and continues to be, important to the Group’s long‑term
sustainable success.
Size, structure and composition of the
Boardand Committees
During the year, the Committee reviewed the size, structure
and composition of the Board and its Committees and
agreed that these were appropriate for the Company,
including the balance of independent and non‑independent
Directors. It is the Committee’s view that all members of the
Board bring differing perspectives and contribute to the
overall success of Board meetings and the Group.
When considering the appointment of new Directors, the
Committee will actively consider a range of factors including
the expertise and experience required in a prospective
candidate and the diversity of the Board, as set out in the
Company’s diversity policy.
Diversity
There have been no appointments to the Board during the
year. However, before any appointment is made to the Board,
the Committee evaluates the current and recommended
future balance of skills, knowledge, experience,
independence, diversity and cognitive and personal strengths
on the Board. The appointment of any new Director is made
on the candidate’s merits, measuring his or her skills and
experience against the criteria identified by the Board as
being desirable to complement the Board’s composition and
qualifications.
The Board reviewed and approved its diversity policy in
January 2023, which mirrors best practice and acknowledges
the benefits of greater diversity, including diversity of gender,
social and ethnic backgrounds, cognitive and personal
strengths, and remains committed to ensuring that the
Directors bring a wide range of skills, knowledge, experience,
backgrounds and perspectives to the Board.
Whilst the Board does not feel that it would be appropriate
to set targets as all appointments are made on merit, the
following objectives for the appointment of Directors have
been established:
• all Board appointments will be made on merit, in the
context of the skills, knowledge and experience that are
needed for the Board to be effective; and
• long lists of potential Non‑Executive Directors should
include diverse candidates of appropriate merit.
As a Board, we are supportive of the ambition shown in
recent reviews on diversity, including the FTSE Women
Leaders Review (formerly the Hampton‑Alexander –
gender diversity) and the Parker Review (ethnic diversity).
TheNomination Committee will continue to examine ways in
which we can become an increasingly diverse Board. Thisis
appropriate as the Board considers diversity in all its forms
to be important for the future development of thebusiness.
The Company is not yet compliant with LR 9.8.6(9) and shall
endeavour to meet the requirements of this listing rule at the
nearest opportunity. Accordingly, the Committee is focused
on the new gender and diversity recommendations and
FCA rules on diversity and inclusion, effective for financial
years beginning on or after 1 April 2022. In accordance
with these requirements, the Committee is continuing to
develop succession plans to increase diversity on the Board
and will consider such recommendations in all future Board
appointments and succession planning discussions. As
a result of the outputs of the recent externally facilitated
board evaluation and the process to be undergone to recruit
a successor to Martin Meech, the FCA requirements will be
a significant factor in any selection process. The Board will
strive to ensure that it continues to comprise individuals with
diverse and complementary skills and experience to meet
the Company’s objectives.
84 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Nomination Committee report continued
Activities continued
Diversity continued
The following tables, in the prescribed format, show the gender and ethnic background of
the Directors as of the date of this report, in accordance with Listing Rule 9 Annex 2.1.
Gender identity or sex
Number of
independent
Board members
1
Number of
non‑independent
Board members
Percentage
on the Board
Number of
senior positions
on the Board
Men 2 2 66.6 2
Women 2 0 33.3 0
2
Not specified/prefer not to say
0 0 0 0
1. The Company does not disclose the number of Directors in executive management as this is not applicable for an
externally managed Real Estate Investment Trust.
2. Although not forming part of the FCA’s definition of ‘senior positions on the Board’, Lynette Lackey is Chair of the
Audit and Risk Committee and Aimée Pitman is Chair of the Sustainability Committee.
Ethnic background
Number of
Board members
Percentage on
the Board
Number of
senior positions
on the Board
White British or other White (including
minority white groups)
6 100 2
Mixed/multiple ethnic groups 0 0 0
Asian/Asian British 0 0 0
Black/African/Caribbean/Black British 0 0 0
Other ethnic group, including Arab 0 0 0
Not specified/prefer not to say 0 0 0
The data in the above tables was collected through self‑reporting by the Directors.
External appointments
Prior to accepting any external appointments, Directors are required to seek the Board’s
approval. The Board believes that other external directorships and positions help provide
the Directors with valuable expertise which enhances their ability to act as a Non‑Executive
Director of the Company. The number of external directorships and positions should,
however, be limited, to ensure that Directors are able to dedicate the amount of time
necessary to contribute effectively to the Board.
Looking ahead to 2024
In the coming year, the Nomination Committee will spend time on reviewing succession
planning and diversity at Board level.
As reported elsewhere, Martin Meech is not putting himself forward for re‑election at the
2023 AGM. Accordingly, the Committee is currently considering the composition of the
Audit and Risk Committee and the Sustainability Committee following the 2023 AGM.
The Committee is also considering a replacement Chair of the Management Engagement
Committee and a designated Senior Independent Director. Martin joined the Board in
2017 and his advice and counsel has been highly valued, in particular his chairmanship of
the Management Engagement Committee. It is anticipated that the results of the recently
conducted external Board evaluation will be able to inform the Committee of the future
structure for the Board and its Committees.
Neil Kirton
Chairman of the Nomination Committee
5 June 2023
85 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
The Audit Committee
is responsible for the
effectiveness ofinternal
control, riskmanagement
andauditingprocesses.
Lynette Lackey
Chair of the Audit Committee
Audit and Risk Committee report
Dear shareholders
One of the Committee’s key roles is to recommend the
financial statements to the Board and review the Group’s
financial reporting and accounting policies. We also oversee
the relationship with BDO LLP (“BDO”), the Group’s
externalAuditor.
The ongoing economic uncertainty for the UK economy
and related challenges remained a focus area of the Audit
and Risk Committee and the Board during 2022. We have
reviewed and challenged the Company’s Valuers, CBRE LLP,
during the financial year.
The Committee has also continued to focus on the key
issues relevant to the Group’s financial reporting and worked
with the Investment Advisor and the external Auditor to
review any changes required in response to the introduction
of new accounting or regulatory guidance.
Martin Meech will not be seeking re‑election at the 2023
AGM and the composition of the Committee from that
date is under consideration by the Nomination Committee.
I would like to thank Martin for his invaluable help as a
member of this Committee.
Role of the Audit and Risk Committee
The Audit and Risk Committee safeguards high standards
of integrity and oversees conduct in financial reporting,
internal control and risk management.
The Committee’s primary responsibilities are to:
• monitor the integrity of the Group’s financial statements
and review its financial reporting process and accounting
policies;
• keep under review the effectiveness of the Group’s internal
control environment and risk management systems;
• make recommendations to the Board in relation to the
appointment, re‑appointment or removal of the external
Auditor and to approve its remuneration and terms of
engagement, including the provision of any non‑audit
services;
• review the effectiveness of the audit process;
• review and monitor the Auditor’s independence and
objectivity;
• review assurances from the Group’s service providers
regarding their systems and controls for the detection of
fraud and the prevention of bribery and receive reports
onnon‑compliance; and
• review the adequacy and security of the Group’s
arrangements for its contractors, suppliers and other
stakeholders (as applicable) to raise concerns, in
confidence, about possible wrongdoing in financial
reporting or other matters.
The Audit and Risk Committee has direct access to the
Group’s Auditor, BDO LLP, and provides a forum through
which the Auditor reports to the Board. Representatives of
the Auditor attend Audit and Risk Committee meetings at
least annually.
The Audit and Risk Committee operates within defined
terms of reference, which are regularly reviewed and
updated as necessary. The terms of reference are available
on the Group’s website.
86 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Audit and Risk Committee report continued
Composition and meeting attendance
The composition of the Audit and Risk Committee and the
meeting attendance for the year are set out in the Board
and Committee meeting attendance table on page 75.
The composition of the Audit and Risk Committee complies
with the AIC Code, which provides that the Audit and Risk
Committee should comprise at least three independent
Non‑Executive Directors, where all the Audit and Risk
Committee members are independent. The Board is
satisfied that at least one member of the Audit and Risk
Committee has recent and relevant financial experience and
believes the Audit and Risk Committee has competence
relevant to the sector in which the Company operates and
holds the relevant combination of skills and experience to
discharge its responsibilities.
The Company Secretary is secretary to the Audit and
Risk Committee and attends all meetings. The meetings
are also attended by representatives of the Investment
Advisor, BDO, the third‑party portfolio valuers (CBRE LLP)
and the external risk consultants. In addition to the formal
meetings of the Audit and Risk Committee, the Audit and
Risk Committee members also met throughout the year
to discuss the external audit process. In addition, they met
ad‑hoc to attend an externally facilitated risk workshop.
The Chair of the Audit and Risk Committee will be available
at the AGM to respond to any shareholder questions that
may be raised on the Audit and Risk Committee’s activities.
Meetings with the Auditor
During the year, the Audit and Risk Committee Chair met
privately, without the Investment Advisor present, with
BDO. The focus of these private meetings was to encourage
discussion of any issues of concern in more detail and
directly with the external Auditor.
Activities
The Audit and Risk Committee met three times during the
year ended 31 March 2023 and twice following the year end.
Atthe meetings, the Committee has:
• reviewed the internal controls and risk management
systems of the Group and its third‑party service providers;
• agreed the audit plan with the Group’s Auditor, BDO LLP,
including the principal areas of focus, and agreed the
audit fee;
• reviewed the Annual Report and Accounts content and
advised the Board on whether the Annual Report was fair,
balanced and understandable;
• reviewed the Group’s financial statements and discussed
the appropriateness of the accounting policies adopted;
and
• reviewed the valuation of the Group’s investment
properties and recommended this to the Board.
Risk management and internal controls
Although the Board assumes the ultimate responsibility
for the Group’s risk management and internal control
framework, its work is supported by the Audit and Risk
Committee.
The Audit and Risk Committee assists the Board in fulfilling
its responsibility to review the adequacy and effectiveness
of the controls over financial reporting and operational risk.
During the year, the Audit and Risk Committee received
updates on UK Corporate Governance reform, including
on the consultation paper entitled ‘Restoring trust in audit
and corporate governance’ which would apply to all UK
Premium‑listed entities. The output from the consultation
process was expected in spring 2023.
An effective date for compliance was anticipated to be
2024. The Audit and Risk Committee has begun to consider
the preparations that would be required and will carefully
monitor progress of the consultation paper.
With respect to external assurance, the Audit and Risk
Committee reviews the external Auditor’s reports presented
to the Audit and Risk Committee, which include the external
Auditor’s observations on risk management and internal
financial controls identified as part of its audit.
The Audit and Risk Committee has also reviewed and
updated, whereappropriate, the corporate risk register.
The Audit and Risk Committee reviewed the requirement
for an internal audit function and concluded that this
would provide minimal added comfort at considerable
extra cost to the Group. The Audit and Risk Committee
receives reports on internal control and compliance from
the Investment Advisor in conjunction with third‑party risk
and internal audit advisor, AuditR, and discusses these with
the Investment Advisor. This report also covers the internal
controls of the Group’s other key service providers, including
the Administrator. No significant matters of concern were
identified during the year.
87 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Audit and Risk Committee report continued
Review of external audit effectiveness
The Audit and Risk Committee monitors and reviews the effectiveness of the external
audit process for the Annual Report, including: a detailed review of the audit plan, regular
communications with the external Auditor, and with the Investment Advisor (without BDO
present), to discuss the external audit process and the audit results report and noting key
areas of auditor judgement and the reasoning behind the conclusions reached, a formal
questionnaire issued to all Audit and Risk Committee members and to the Investment
Advisor which covers – among other items – the quality of the audit and audit team,
the audit planning approach and execution, the presence and capabilities of the lead
audit partner, the audit team’s communication with the Audit and Risk Committee and
management and the Auditor’s independence and objectivity. This review considers the
experience and tenure of the audit partner and team, the nature and level of services
provided, and confirmation that the Auditor has complied with independence standards.
Any concerns with the effectiveness of the external audit process would be reported to the
Board.
The Audit and Risk Committee is satisfied that the relationship between the external
Auditorand the Investment Advisor allows for scrutiny of views on both sides and it is
pleased that the evaluation paid testament to the ability and willingness of the external
Auditor to challengethe Audit and Risk Committee’s and Investment Advisor’s views in
aconstructive and proportionate manner.
AIC statement of compliance
For the audit of the Financial Statements in this Annual Report, the Company complied
with the mandatory audit processes, including The Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2014 (“CMA Order”), and the Committee complied
with the responsibility provisions set out in the CMA Order relating to: (a) putting the audit
services engagement on tender every ten years; and (b) strengthening the accountability
of the external auditors to the Committee, including: requiring that only the Committee
is permitted to agree to the external auditors’ fees and scope of services; influence the
appointment of the audit engagement partner; make recommendations regarding the
appointment of auditors; and authorise the auditors to carry out non‑audit services.
Significant issues
The Audit and Risk Committee considered the following key issues in relation to the Group’s
financial statements during the year:
Valuation of property assets
The Audit and Risk Committee considered and discussed
the valuation of the Group’s investment properties as at
31March2023. To enable a full discussion of the valuation, and
to enable the Directors to challenge the valuations and the
underlying assumptions, as appropriate, the Valuer attended the
Audit and Risk Committee meeting in May 2023.
Maintenance of REIT status
The UK REIT regime affords the Group a beneficial tax treatment
for income and capital gains, provided certain criteria are met.
Thereis a risk that these REIT conditions may not be met and
additional tax becomes payable by the Group. The Audit and Risk
Committee therefore monitored the Group’s compliance status
and considered each of the requirements for the maintenance of
REIT status throughout the year ended 31 March 2023.
Going concern and
long-term viability of
theCompany
The Audit and Risk Committee considered the Group’s
financial requirements for the next 12 months and concluded
that it has sufficient resources to meet its commitments and
any outstanding loan covenants. Consequently, the financial
statements have been prepared on a going concern basis.
The Audit and Risk Committee also considered the longer‑term
viability statement within the Annual Report, for the three‑year
period to June 2026, and the underlying factors and assumptions
which contributed to the Committee deciding that three years
was an appropriate length of time to consider the Group’s
long‑term viability.
The Group’s going concern and viability statement, as well as full
details of the assessment carried out by the Directors, can be
found on pages 65 and 66.
Governance
• Reviewed governance processes
• Reviewed the terms of reference of the Audit and Risk
Committee
• Undertook an externally facilitated effectiveness evaluation
88 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Audit and Risk Committee report continued
Compliance, whistleblowing and fraud
The Audit and Risk Committee ensures that there are
effective procedures relating to whistleblowing. The
Whistleblowing Policy, which is reviewed annually, allows
employees to confidentially raise any concerns about
business practices.
Responsibility for the whistleblowing process sits with
the Board. The Audit and Risk Committee continues to
monitor the whistleblowing processes, procedures and any
respective updates.
Audit fees and non-audit services
An audit fee of £191,500 has been agreed in respect of the
audit for the year ended 31 March 2023. This incorporates
a fee of £170,000 for auditing the Annual Report and
consolidated financial statements for the period and
£21,500 for auditing the accounts of the Company’s
subsidiaries for the period.
The Audit and Risk Committee reviews the scope and nature
of all proposed non‑audit services before engagement, to
safeguard auditor independence and objectivity. During the
period, BDO non‑audit services totalled £110,000, relating
to the review of the Company’s statement of working capital
and Financial Position and Prospects Procedures in relation
to the move to the Premium Segment of the Main Market.
We continue to believe that, in some circumstances,
the external Auditor’s understanding of the Company’s
business can be beneficial in improving the efficiency and
effectiveness of advisory work. The Non‑Audit Services
Policy requires approval by the Committee before the
external Auditor is engaged to provide any permitted
non‑audit services.
Auditor independence and objectivity
The Audit and Risk Committee has considered the
Auditor’s independence and objectivity. The Audit and Risk
Committee will pre‑approve all non‑audit services prior to
any work commencing and considers safeguards in place,
such as the use of separate teams to mitigate the risk of any
self‑review. The Audit and Risk Committee also receives an
annual assurance from the Auditor that its independence is
not compromised by the provision of any non‑audit services.
The Audit and Risk Committee is satisfied that the Auditor’s
objectivity and independence is not impaired by performing
non‑audit services and that the Auditor has fulfilled its
obligations to the Group and its shareholders.
Re-appointment of the Auditor
BDO LLP was appointed as Auditor to the Company with
effect from 1 April 2021 and Richard Levy has been the
Group Engagement Partner since that time. Following
a review of the service provided by BDO LLP during
the year and a review of value for money, the Audit and
Risk Committee has recommended to the Board the
re‑appointment of BDO LLP as Auditor to the Company.
Anordinary resolution for BDO’s re‑appointment will be
putto shareholders at this year’s AGM.
The Audit and Risk Committee will regularly consider the
need to put the audit out to tender, the Auditor’s fees and
independence, and the matters raised during each audit.
Fair, balanced and understandable reporting
The Audit and Risk Committee reviewed drafts of this
Annual Report and Financial Statements to consider
whether it is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Group’s performance, business model and strategy. We also
gained assurance that there is a robust process of review
and challenge at different levels within the Group to ensure
balance and consistency.
Following the consideration of the above matters and its
detailed review, the Audit and Risk Committee was of the
opinion that the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position
and performance, business model and strategy.
Looking ahead
The Audit and Risk Committee has agreed several areas of
focus, including:
1. ensuring continued integrity and balance in the Group’s
financial reporting;
2. monitoring proposals for UK Corporate Governance
reform and considering appropriate processes;
3. consideration of new and emerging risks; and
4. looking at specific implications of the current UK
economic downturn on the Group’s portfolio value
including macro and regional‑specific impacts and
assessing financial impacts.
Lynette Lackey
Chair of the Audit and Risk Committee
5 June 2023
89 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
The Management Engagement
Committee ensures that
third-party appointments are
conducted in shareholders’
bestinterests.
Martin Meech
Chairman of the Management Engagement Committee
Management Engagement Committee report
I am pleased to present the Management Engagement
Committee report on behalf of the Board and to provide
details on how the Committee discharged its responsibilities
throughout the year ended 31 March 2023.
The Management Engagement Committee is central to the
Company’s investment process and is also a key part of the
Company’s corporate governance framework. The Board
has delegated the day‑to‑day running of the Company
to the Investment Advisor pursuant to the terms of the
Investment Management Agreement (“IMA”). TheIMA
is reviewed and amended when necessary to ensure
it reflectsthe relationship between the Board and the
Investment Advisor.
The Board continues to review all investment and
divestment decisions established by the Investment
Advisor and remains responsible for ensuring that these
decisions are made in accordance with the Company’s
investmentpolicy.
The Management Engagement Committee ensures that
third‑party appointments are conducted in shareholders’
best interests.
I will not be seeking re‑election at the 2023 AGM and the
composition of the Management Engagement Committee
from that date is under consideration by the Nomination
Committee.
Role of the Management
EngagementCommittee
The Committee’s primary responsibilities are to:
• satisfy itself that the terms of the Investment Management
Agreement between the Group, the Investment Manager
and the Investment Advisor remain fair, competitive
and sensible for shareholders, and review and make
recommendations on any proposed amendment to the
Investment Management Agreement;
• satisfy itself that systems put in place by the Investment
Advisor, Administrator and Depositary are adequate
to meet relevant legal and regulatory requirements,
including the AIFMD;
• satisfy itself that any compliance matters are under
proper review;
• consider whether the continuing appointment of the
Investment Advisor is in the interests of shareholders as
a whole and make recommendations to the Board in this
regard;
• keep under review the Investment Advisor’s performance
and the level of the investment advisory fee; and
• keep under review the performance of other service
providers, including compliance with the terms of their
respective agreements and their internal controls and
policies.
The Management Engagement Committee operates within
defined terms of reference, which are regularly reviewed and
updated as necessary. The terms of reference are available
on the Group’s website.
90 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Management Engagement Committee report continued
Composition and meeting attendance
The composition of the Management Engagement
Committee and the meeting attendance for the year are set
out in the Board and Committee meeting attendance table
on page 75.
To ensure open and regular communication between
the Investment Advisor and the Board, certain key
representatives of the Investment Advisor are invited to
attend all Board meetings to update the Board on the
Company’s portfolio activity and discuss the general market
conditions and the financial performance and strategy of
the Company.
Activities
The Committee met once during the year ended
31March2023 and once following the year end. At these
meetings, the Committee has:
• considered the performance of the Investment
Advisor against its obligations under the Investment
Management Agreement during the year. The
Committee’s recommendation regarding the continuing
appointment of the Investment Advisor is set out on
page 15. In reaching its recommendation to the Board,
the Committee’s deliberations included consideration
of the basis of the investment management fee and the
execution of the Group’s investment strategy by the
Investment Advisor during the year. The Board delegates
the execution of its investment strategy and business
model to the Investment Advisor, subject to the Board
being kept informed of all material property acquisitions
and disposals, including development projects;
• reviewed the ongoing performance and the continuing
appointment of the Group’s other key service providers.
The review comprised open and closed‑ended questions
and included a review of the quality of their services and
fees to ensure they remained competitive and a review
of each service provider’s policies and procedures to
ensure each service provider had adequate controls and
procedures in place. The Committee has concluded that
the services provided to the Group were satisfactory and
that the contractual relationships with them are operating
in the best interests of the shareholders and that each be
retained until the next review; and
• reviewed the systems put in place by the Investment
Advisor (including both the investment policy and
Investment Management Agreement), Administrator and
Depositary to meet legal and regulatory requirements,
particularly the AIFMD, and concluded that these remain
adequate.
Looking ahead
Given the Company’s recent admission to the Main Market,
the Management Engagement Committee’s focus will be to
keep all service providers under increased scrutiny, including
their terms of engagement and performances, to ensure
that they are in the best interests of the Company.
Martin Meech
Chairman of the Management Engagement Committee
5 June 2023
91 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
The landscape for this topic is
rapidly changing with respect
to legal obligations and market
expectation, therefore a key part
of the Committee’s focus has been
to stay educated as well as driving
our strategy.
Aimée Pitman
Chair of the Sustainability Committee
Sustainability Committee report
The Sustainability Committee has completed its first full
year of operation, meeting four times during the year.
Role of the Sustainability Committee
The Committee’s primary responsibilities are to:
• oversee the formulation and implementation of the Group’s
sustainability strategy, review updates on any regulatory
changes affecting the strategy and make recommendations
to the Board regarding changes to strategy;
• review annually the key sustainability‑related policies,
ensuring compliance across external reporting;
• review the Group’s efficacy in relation to its sustainability
reporting;
• review climate‑related risk and make recommendations to
the Audit and Risk Committee regarding inclusion in the
Group’s risk management practices; and
• approve the budget provided for sustainability purposes.
Governance
The Board is responsible for approving the Group’s
sustainability strategy, long‑term goals and actively
monitoring portfolio performance. In conjunction with the
Investment Advisor, the Sustainability Committee oversees
the management of the Group’s climate‑related risks and
opportunities.
Risk management
With a growing focus on sustainability, the Board has
recognised the importance of identifying the impact of
climate change to the Group’s business. During the year,
the Committee identified the key risks with input from our
consultant and added them to the Group’s risk register so
they are monitored as part of our wider risk management
process.
The Board and Investment Advisor are continually developing
their understanding of the potential physical impact of
climate change and the wider implications associated with
increased regulation, occupier requirements and increased
focus on sustainable assets.
Activities undertaken during the year
The Committee was established during the year ended
31March2021 and met four times in the current year to
undertake the following activities:
• review and approve the Group’s targets, challenging
the Group to report against measurable targets and
ensure the focus is prioritised according to the Group’s
materiality matrix;
• drive progress and provide direction on four key projects:
climate change risk, EPC improvement programme,
GRESB gap analysis and TCFD improvements;
• receive training and information to inform decisions,
examples of topics covered are climate change risks,
occupier questionnaire insights, refurbishment standards,
green bonds, peer review and EPC proposed regulations;
• recommend a separate risk register is maintained for
ESG risks and identification of climate change risks and
opportunities plus recommend to the Audit and Risk
Committee any updates as they were required;
• constructively consider the merits of market benchmarks
and direct our actions accordingly;
• review and approve the Committee’s terms of reference
and the Committee’s composition; and
• ensure transparency and accurate reporting through the
Annual Report, RNS, and website.
92 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Sustainability Committee report continued
Our ESG commitments
The Group’s commitment to ESG is to ensure its assets
are attractive to occupiers in the long term. The Board is
committed to driving towards net zero carbon by reviewing
current developments and refurbishment standards versus
green building certificates standards, as well as reducing
EPC risk. The Board will continue to engage with its key
occupiers to understand occupiers’ decarbonisation
priorities, appetite to share data and share vital guidance on
energy efficiency.
Aimée Pitman
Chair of the Sustainability Committee
5 June 2023
93 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Given the size of the Board,
it is not considered appropriate
for the Company to have a
separate remuneration committee
and the functions of this
committee are therefore carried
out by the Board as a whole.
Neil Kirton
Chairman
Directors’ remuneration report
The Board has prepared this report in partial and
proportionate compliance with the requirements of the
Large and Medium‑sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013.
The Board was not advised by remuneration consultants
during the financial year.
Statement from the Chairman
Given the size of the Board, it is not considered appropriate
for the Company to have a separate remuneration
committee and the functions of this committee are
thereforecarried out by the Board as a whole. The Board
consists entirely of Non‑Executive Directors and the
Company has no employees. We have not, therefore,
reported on those aspects of remuneration that relate
to Executive Directors. The remuneration report will
be presented at the AGM on 12 September 2023 for
shareholder consideration and approval.
Following a review of Directors’ remuneration during the
year and, in recognition of the Company’s performance
over the period, the Board resolved to maintain Directors’
remuneration at the current levels. As a result, fees are set
at a level of £48,375 per annum (2022: £48,375) for the
Chairman and £37,625 per annum (2022: £37,625) for the
independent Non‑Executive Directors. No fees are payable
to Stephen Barrow or Simon Hope as non‑independent
Non‑Executive Directors.
Directors’ remuneration policy
A resolution to approve the Directors’ remuneration policy
was proposed and passed at the Company’s first AGM in
2018. As a binding vote on the policy is necessary every three
years, an ordinary resolution to approve the policy was also
put to shareholders at the 2021 AGM. There were no changes
made to the policy, which is set out below, in advance of the
shareholder vote in 2021.
The next time it is intended that shareholders will be asked
to approve the Directors’ remuneration policy will be at
the Company’s AGM in 2024 and the remuneration policy
approved at the Company’s 2021 AGM will continue to apply
until such time.
The Company follows the recommendation of the AIC Code
that Non‑Executive Directors’ remuneration should reflect
the time commitment and responsibilities of their role. The
Board’s policy is that the remuneration of Non‑Executive
Directors should reflect the experience of the Board as a
whole, and be determined with reference to comparable
organisations and appointments.
All Directors are non‑executive, appointed under the terms of
letters of appointment that set out the terms and conditions
of their directorship, including the fees payable and the
expected time commitment. There are no service contracts
in place. The terms of their appointment provide that
Directors shall retire and be subject to election at the first
AGM after their appointment. Thereafter, at each AGM, any
Director who has not stood for appointment or re‑election
at either of the two preceding AGMs is required to retire and
offer themselves for re‑election. Any Director who has held
office for more than nine years is required to retire and offer
themselves for re‑election on an annual basis. Beyond these
requirements, it has been agreed that all Directors will seek
annual re‑election at the Company’s AGMs. The Directors are
not entitled to any compensation for loss of office.
The fees for the Non‑Executive Directors are determined
within the limits (not to exceed in aggregate £300,000 per
annum) set out in the Company’s Articles of Association,
or any greater sum that may be determined by ordinary
resolution of the Company. Directors are not eligible for
bonuses, share options or long‑term incentive schemes or
other performance‑related benefits, as the Board does not
believe that this is appropriate for Non‑Executive Directors.
There are no pension arrangements in place for the Directors.
94 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Directors’ remuneration policy continued
The Board has set two levels of fees: £48,375 per annum for the Chairman and £37,625
per annum for the independent Non‑Executive Directors. No additional fees are payable
for membership of the Board’s Committees or for appointment as a Director to any Group
subsidiary. The fee for any new Director appointed to the Board will be determined on the
same basis, whilst fees in respect of subsequent periods will be determined following an
annual review. The Board would consider any views expressed by shareholders on the fees
being paid to Directors.
Under the Company’s Articles of Association, if any Director is called upon to perform extra
or special services of any kind, he/she may be paid such extra remuneration as the Directors
may determine. Directors are also entitled to be paid all expenses properly incurred in
attending Board or shareholder meetings or otherwise in the performance of their duties.
Under the Company’s Articles of Association, all Directors are entitled to the remuneration
determined by the Board. There were no revisions to the policy during the period and there
were no deviations from the procedure for the implementation of the remuneration policy.
Statement of implementation of remuneration policy in respect of the
financial year ending 31March 2024
The Board will, as usual, review Directors’ fees during the 2023 financial year, including the
time required to be committed to the business of the Group, and will consider whether any
further changes to remuneration are required.
Remuneration report
Directors’ fees for the year
There are no variable elements to the remuneration for the Directors. The Directors who
served in the year to 31 March 2023 received the following emoluments:
Year ended 31 March 2023 Year ended 31 March 2022
Fees
£’000
Total
£’000
Fees
£’000
Total
£’000
Neil Kirton 48.4 48.4 47.5 47.5
Aimée Pitman 37.6 37.6 36.9 36.9
Lynette Lackey 37.6 37.6 36.9 36.9
Martin Meech 37.6 37.6 36.9 36.9
Simon Hope — — — —
Stephen Barrow — — — —
161.2 161.2 158.2 158.2
Annual change in remuneration
Year ended
31 March 2023
Year ended
31 March 2022
Neil Kirton 1.8% 7. 5%
Aimée Pitman 1.8% 7. 5%
Lynette Lackey 1.8% 7. 5%
Martin Meech 1.8% 7. 5%
Simon Hope 1.8% 7. 5%
Stephen Barrow 1.8% 7. 5%
Total shareholder return
The graph below shows the total shareholder return (as required by company law) of the
Company’s ordinary shares relative to a return on a hypothetical holding over the same
period in the FTSE 250 and the FTSE All‑Share REIT Index.
250
100
150
50
0
200
Sep 2017
Jan 2018
May 2018
Sep 2018
Jan 2019
May 2019
Sep 2019
Jan 2020
May 2020
Sep 2020
Jan 2021
May 2021
Sep 2021
Jan 2022
May 2022
Sep 2022
Jan 2023
May 2023
Warehouse REIT: +39%
Source: Morningstar
Past performance is not a reliable indicator of future results
FTSE EPRA REIT: -5%
Monthly Index: 18 Sept 2017 = 100 As at 26 May 2023
FTSE All share: +30%
Directors’ remuneration report continued
95 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Directors’ remuneration report continued
Remuneration report continued
Directors’ beneficial and family interests
There is no requirement under the Company’s Articles of Association for Directors to hold
shares in the Company.
The Company has adopted a share dealing code in relation to the Company’s shares, which
is based on the requirements of the Listing Rules and Market Abuse Regulations.
None of the Directors or any persons connected with them had a material interest in the
Company’s transactions, arrangements or agreements during the year. The Board will
continue to monitor the interests of each individual Director.
The interests of the Directors and any connected persons in the ordinary shares of the
Company are set out below:
As at 31 March 2023 As at 31 March 2022
Number
of shares
Percentage of
issued share
capital
Number
of shares
Percentage of
issued share
capital
Neil Kirton
1
390,909 0.09 390,909 0.09
Aimée Pitman
2
734,908 0.17 689,543 0.16
Lynette Lackey 51,603 0.01 51,603 0.01
Martin Meech
3
290,909 0.07 290,909 0.07
Simon Hope
4
12 ,407,697 2.92 12,407,697 2.92
Stephen Barrow
5
10,120,307 2.38 10,103,050 2.38
1. 190,909 of these shares are held by Mr Kirton’s spouse.
2. 349,080 of these shares are held by Ms Pitman’s spouse, whilst 23,487 are held by her children.
3. 190,909 of these shares are held by Mr Meech’s spouse.
4. 3,551,971 of these shares are held by Mr Hope’s spouse, whilst 391,899 are held by his children.
5. 4,481,525 of these shares are held by Mr Barrow’s spouse and 350,000 are held by his child.
Relative importance of spend on pay (unaudited)
The table below sets out significant use of profit and cash in respect of the years ended
31March 2022 and 31 March 2023:
2023
£m
2022
£m
Change
%
Directors’ remuneration 0.18 0.18 0.0
Investment management fees 6.97 6.5 7. 2
Voting at Annual General Meeting
The Directors’ remuneration report for the year ended 31 March 2022 and the
Directors’ remuneration policy were approved by shareholders at the AGM held on
13September2022. The votes cast by proxy were as follows:
Directors’ remuneration report
(2022 AGM voting figures)
Directors’ remuneration policy
(2021 AGM voting figures)
Number of votes % of votes cast Number of votes % of votes cast
For 220,336,218 99.97 203,532,620 99.96
Against 66,906 0.03 77, 8 4 8 0.04
At Chairman’s discretion — — 3,102 —
Total votes cast 220,403,124 100.00 203,613,570 100.00
Number of votes withheld 131,891 108,118
Shareholders who wish to see a full copy of the remuneration policy are advised to contact
the Company Secretary.
Approval
The Directors’ remuneration report was approved by the Board on 5 June 2023.
Neil Kirton
Chairman
5 June 2023
96 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Directors’ report
Corporate governance
The corporate governance statement on pages 67 to 100
forms part of the Directors’ report.
Directors
The Directors in office during the year and at the date of
thisreport and their biographical details are shown on
pages 70 and 71.
Details of the Directors’ terms of appointment can be found
in the corporate governance statement and the Directors’
remuneration report. Details of indemnities provided to the
Directors can also be found in the corporate governance
statement.
Status of Warehouse REIT plc
The Company is an investment company, as defined in
section 833 of the Companies Act 2006, and qualifies as a
UK Real Estate Investment Trust (“REIT”) as defined under
section 527(2) of the Corporation Tax Act 2010.
Information about securities carrying
votingrights
The following information is disclosed in accordance with
The Large and Medium‑sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013 and
DTR 7.2.6 of the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules:
• the Company’s capital structure and voting rights and
details of the substantial shareholders in the Company are
set out on page 98;
• the giving of powers to issue or buy back the Company’s
shares requires an appropriate resolution to be passed by
shareholders; and
• there are no restrictions concerning the transfer of
securities in the Company or on voting rights, no special
rights with regard to control attached to securities, and no
agreements between holders of securities regarding their
transfer known to the Company.
Share capital
Share issues
At the AGM held on 12 September 2022, the Directors
were granted: (i) the authority to allot ordinary shares on a
non‑pre‑emptive basis up to an aggregate nominal amount
of £2,832,410 (being 66% of the issued ordinary share
capital at the date of the notice) by way of a rights issue;
and (ii) in any other case, the authority to allot ordinary
shares up to an aggregate nominal amount of £1,416,205
(being 33% of the issued ordinary share capital at the date
of the notice). The Directors were also granted the authority
to disapply pre‑emption rights in respect of the allotment
of shares or treasury shares up to 5% of the issued ordinary
share capital at the date of the notice and a further 5% of
the issued ordinary share capital where the allotment and
issue of such shares is for the sole purpose of financing (or
refinancing) an acquisition or other capital investment of a
kind contemplated by the Pre‑Emption Group’s Statement
of Principles.
These existing authorities will expire at the Company’s AGM
to be held in September 2023.
The Directors present their report and the audited
financial statements for the year ended 31 March 2023.
97 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Directors’ report continued
Share capital continued
Purchase of own shares
At the AGM held on 12 September 2022, the Company was authorised to purchase up to
42,486,165 of its own shares (being 10% of the Company’s issued ordinary share capital
at the date of the notice). No ordinary shares have been bought back under this authority,
which will expire at the AGM to be held in September 2023 where a resolution for its renewal
will be proposed.
The Directors will consider repurchasing ordinary shares in the market if they believe it to be
in shareholders’ interests as a whole and as a means of correcting any imbalance between
supply of and demand for the ordinary shares. They will have regard to the Company’s
REIT status when making any repurchase and will only make such repurchases through the
market at prices (after allowing for costs) below the relevant prevailing NAV per ordinary
share and otherwise in accordance with guidelines established from time to time by the
Board.
Current share capital
As at 31 March 2023 and the date of this report, there were 424,861,650 ordinary shares
of £0.01 each in issue, all of which are fully paid up and are quoted on the London Stock
Exchange, and none of which are held in treasury. Each ordinary share has one voting right
attached to it. The total number of voting rights in the Group at this date was therefore
424,861,650.
At the Company’s general meeting held on 11 July 2022, the Company was granted
authority to issue up to 175 million ordinary shares on a non‑pre‑emptive basis with effect
from the Company’s admission to the Premium Segment of the London Stock Exchange’s
Main Market.
Further details regarding the Company’s issued share capital are set out in note 21 of the
financial statements.
Results and dividends
A summary of the Group’s performance during the period and the outlook for the
forthcoming year is set out in the strategic report on page 20.
Dividends totalling 6.4 pence per ordinary share have been paid or declared in respect
of the year ended 31 March 2023, further details of which can be found in the Investment
Advisor’s report on page 33.
No final dividend is being proposed.
The Company’s dividend policy is set out on page 20 in the strategic report.
Substantial shareholdings
As at 31 March 2023, the following held voting rights greater than 3% in the Company (in
accordance with DTR 5 (concerning notification of “major shareholdings” or “voting rights
arising from the holding of certain financial instruments”):
Number
of ordinary
shares held
% of total
voting rights at
31 March 2023
Investec Wealth & Investment 82,018,122 19.3
Evelyn Partners 28,812,043 6.78
BlackRock 22,539,133 5.31
Columbia Threadneedle Investments 20,033,111 4.72
Hargreaves Lansdown 17,920, 552 4.22
98 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Directors’ report continued
Management arrangements
The Company is an alternative investment fund for the
purposes of the AIFMD and, as such, is required to have an
Investment Manager who is duly authorised to undertake
that role. G10 Capital Limited is authorised and regulated
bythe Financial Conduct Authority (“FCA”) as the AIFM of
the Company under an agreement dated 22 August 2017
(the “Investment Management Agreement”). The Investment
Manager is responsible for overall portfolio management,
risk management and compliance with the Group’s
investment policy and the requirements of the AIFMD that
apply to the Group.
The Investment Advisor is an appointed representative of
the Investment Manager. As an appointed representative,
Tilstone is responsible for working with and advising
the Group and the Investment Manager in respect of
sourcing investment opportunities which meet the Group’s
investment policy. As an appointed representative of
the Investment Manager, Tilstone is exempt from the
requirement to be authorised by the FCA as a pre‑requisite
to giving investment advice and arranging deals in
investments. Tilstone is also responsible for managing
the underlying real estate assets within the Group’s
investment portfolio, which does not constitute a regulated
activity. TheInvestment Manager has, and shall maintain,
the necessary expertise and resource to supervise the
delegated tasks effectively.
The Investment Advisor receives an annual fee (payable
quarterly in arrears) equal to 1.1% of the NAV of the Group’s
portfolio on the basis of funds being fully invested up to
£500 million and 0.9% thereafter. The fee is payable to the
Investment Advisor, which pays a quarterly fee of £15,000 to
the Investment Manager for the duration of its appointment,
in addition to other one‑off fees in relation to regulatory
reporting services (Annex IV), compliance services and
investment committee services. No performance fee or
acquisition fee is payable.
In the event that the Investment Management Agreement
is terminated following a third party (or third parties acting
in concert) acquiring a majority of the Company’s ordinary
shares, the Investment Advisor would be entitled to receive
an exit fee equal to 15% of the total shareholder returns
(defined as the price per share paid by such third party
plus dividends and other distributions paid) generated
since Admission, above a hurdle rate of 10% per annum
on a compound basis since Admission. The exit fee will be
capped at the amount of the annual management fee paid
in the immediately preceding financial year.
Following the expiry of the initial three‑year term on
22August 2020, the Investment Management Agreement
isterminable on 24 months’ notice in writing by either party.
In addition, it is terminable on 30 days’ notice by either party
in writing in the event of a material breach or insolvency of
the other party. The Company is also entitled to terminate
the agreement forthwith by notice in writing in the event
that the Investment Manager ceases to be able to fulfil its
obligations as a result of a change of the FCA’s rules.
Continuing appointment of the
InvestmentAdvisor
The Board keeps the performance of the Investment Advisor
under continual review. The Management Engagement
Committee conducts an annual appraisal of the Investment
Advisor’s performance and makes a recommendation to the
Board about the continuing appointment of the Investment
Advisor. It is the opinion of the Directors that the continuing
appointment of the Investment Advisor is in the interests
of shareholders as a whole. The reasons for this view are
that the Investment Advisor has continued to execute the
investment strategy according to the Board’s expectations
and on terms which the Board is of the view continue to
remain commercial and reasonable.
Auditor
The Directors holding office at the date of this Annual
Report confirm that, so far as they are each aware, there
is no relevant audit information of which the Company’s
Auditor is unaware. Each Director has taken all the steps that
they ought to have taken as a Director to make themselves
aware of any relevant audit information and to establish that
the Company’s Auditor is aware of that information.
BDO LLP has expressed its willingness to continue as
Auditor of the Company and resolutions for its re‑election
and to authorise the Audit and Risk Committee to determine
its remuneration will be proposed at the forthcoming AGM.
99 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Directors’ report continued
Financial risk management
Information about the nature of these risks and the
Company’s financial risk management objectives and
policies is set out in note 26 to the financial statements.
Thework of the Audit and Risk Committee in respect of
riskmanagement is described on page 87.
Information to be disclosed in accordance
withthe Listing Rule 9.8.4R
The following information required to be disclosed in
accordance with Listing Rule 9.8.4R is not applicable unless
stated otherwise:
1. information in relation to the publication of unaudited
financial information;
2. any arrangements under which a Director has waived
emoluments, or agreed to waive any future emoluments,
from the Group;
3. details of any non‑pre‑emptive issues of equity for cash
by the Group;
4. any non‑pre‑emptive issues of equity for cash by the
Group or by any unlisted major subsidiary undertaking;
5. parent participation in a placing by a listed subsidiary;
6. any contract of significance in which a Director of the
Company is or was materially interested;
7. any waiver of dividends by a shareholder; and
8. details of any long‑term incentive schemes.
Political donations
No political donations were made by the Company or its
subsidiaries during the year or prior year.
Miscellaneous
Further information regarding the future developments and
relevant research activities of the Company can be found
within the strategic report.
The Company does not have any registered overseas
branches.
Post balance sheet events
Post‑year end, the Group entered into a new five‑year debt
facility totalling £320.0 million, replacing the existing facility.
The refinancing consists of £220.0 million term loan and an
RCF of £100.0 million, with a club of lenders consisting of
HSBC, Bank of Ireland, NatWest and Santander.
The new facility extends the tenure of the of the Group’s
debt and with improved reporting covenants.
In addition, the Group has exchanged on two further
disposals for an aggregate of £29.3 million.
Climate-related matters
Information about the Group’s greenhouse gas emissions
and the Company’s voluntary reporting against the Task
Force on Climate‑related Financial Disclosures (“TCFD”)
recommendations is set out in the strategic report.
Articles of Association
The Articles of Association of the Company may only be
amended by a special resolution at a general meeting of the
shareholders.
Powers of Directors
The Directors may exercise all powers of the Company
subject to applicable legislation and regulations and the
Company’s Articles of Association.
Significant agreements
The Company is not party to any significant agreements
that take effect, alter or terminate upon a change of
control of the Company. The Company is not aware of any
agreements between holders of its ordinary shares that may
result in restrictions on the transfer of its ordinary shares or
on voting rights.
Further details regarding the principal agreements between
the Company and its service providers, including the
Investment Advisor, are set out in note 29 to the financial
statements and on page 16.
Financial instruments
Details of the financial instruments used by the Group and
financial risk management policies can be found in notes 18
and 26 of the financial statements and in the principal risks
and uncertainties section on pages 54 to 64.
Directors’ indemnities and Directors’
andOfficers’ liability insurance
The Company’s agreement to indemnify each Director
against any liability incurred during their tenure, to the
extent permitted by law, remains in place. The Directors
were covered throughout the period.
Annual General Meeting (“AGM”)
The Company’s AGM will be held on 12 September 2023.
The Notice of the AGM will be circulated to shareholders
separately.
Link Company Matters Limited
Company Secretary
5 June 2023
Company Number 10880317
100 Warehouse REIT plc
Annual Report and Financial Statements 2023
Corporate governance
Statement of Directors’ responsibilities
in respect of the Annual Report and Financial Statements
The Directors are responsible for preparing the Annual Report and Financial Statements in
accordance with UK adopted international accounting standards and applicable law and
regulations. Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have elected to prepare the financial statements
of the Group and the Company in accordance with UK adopted international accounting
standards. Additionally, the Directors must not approve the financial statements unless they
are satisfied that they present fairly the financial position, financial performance and cash
flows of the Group and Company for that year.
In preparing the financial statements, the Directors are required to:
• select suitable accounting policies in accordance with IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors and apply them consistently;
• present information, including accounting policies, in a manner that provides relevant,
reliable, comparable and understandable information;
• provide additional disclosures when compliance with specific requirements in IFRS is
insufficient to enable users to understand the impact of particular transactions, other
events and conditions on the Group’s financial position and financial performance;
• state that the Group has complied with UK adopted international accounting standards,
subject to any material departures disclosed and explained in the financial statements;
• make judgements and estimates that are reasonable and prudent;
• prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Group and the Company will continue in business; and
• prepare a Directors’ report, a strategic report and Directors’ remuneration report which
comply with the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are sufficient
to show and explain the Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and
financial information included on the Company’s website, including ensuring the Annual
Report and Financial Statements are made available. The work carried out by the Auditor
does not involve consideration of the maintenance and integrity of this website and,
accordingly, the Auditor accepts no responsibility for any changes that have occurred to
the financial statements since they were initially presented on the website. As such, the
Directors’ responsibility also extends to the ongoing integrity of the financial statements
contained therein. Financial statements are published on the Company’s website in
accordance with legislation in the United Kingdom governing the preparation and
dissemination of financial statements and visitors to the website need to be aware that
legislation in the UK covering the preparation and dissemination of the financial statements
may differ from legislation in their jurisdiction.
The Directors confirm that, pursuant to their responsibilities under DTR 4, to the best of
their knowledge:
• the financial statements, prepared in accordance with UK adopted international
accounting standards and in conformity with the requirements of the Companies Act
2006, give a true and fair view of the assets, liabilities, financial position and profit of the
Company (and Group as a whole); and
• this Annual Report includes a fair review of the development and performance of the
business and the position of the Company (and Group as a whole), together with a
description of the principal risks and uncertainties that it faces.
Having taken advice from the Audit Committee, the Directors consider that the Annual
Report and Financial Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess the Company’s position
and performance, business model and strategy.
On behalf of the Board
Neil Kirton
Chairman
5 June 2023
101 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 March 2023 and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted
international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with
UK adopted international accounting standards and as applied in accordance with the
provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of Warehouse REIT plc (the ”Parent Company” or
the “Company”) and its subsidiaries (the “Group”) for the year ended 31 March 2023 which
comprise the consolidated statement of comprehensive income, the consolidated statement
of financial position, the consolidated statement of changes in equity, the consolidated
statement of cash flows, the Company statement of financial position, the Company
statement of changes in equity, the Company statement of cash flows and notes to the
financial statements, including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and UK
adopted international accounting standards and as regards the Parent Company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK)
(“ISAs (UK)”) and applicable law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion. Our audit opinion is consistent with the
additional report to the Audit Committee.
Independence
Following the recommendation of the Audit Committee, we were appointed by the
Directors in March 2021 to audit the financial statements for the year ended 31 March 2022
and subsequent financial periods.
The period of total uninterrupted engagement including retenders and re‑appointments
is two years, covering the years ended 31 March 2022 to 31 March 2023. We remain
independent of the Group and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. The non‑audit services
prohibited by that standard were not provided to the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability
to continue to adopt the going concern basis of accounting included:
• using our knowledge of the Group and its market sector together with the current
general economic environment to assess the Directors’ identification of the inherent risks
to the Group’s business and how these might impact the Group’s ability to remain a going
concern for the going concern period, being the period to 31 May 2024, which is at least
12 months from when the financial statements are authorised for issue;
• obtaining an understanding of the Directors’ process for assessing going concern
including an understanding of the key assumptions used;
• obtaining the Directors’ going concern assessment and:
• assessing the Group’s forecast cash flows with reference to historic performance
and challenging the Directors’ forecast assumptions in comparison to the current
performance of the Group;
• testing the inputs into the forecasts for reasonableness based on historic activity and
corroboration to contractual agreements; and
• agreeing the Group’s available borrowing facilities and the related terms and covenants
to loan agreements;
• obtaining forecast covenant calculations to check for any potential future covenant
breaches. We also considered the covenant compliance headroom for sensitivity to both
future changes in property valuations and the Group’s future financial performance;
• reviewing the documentation relating to the loan refinancing and assessing the
implication of the refinancing on the Group’s forecasts and going concern status;
Independent Auditor’s report
to the members of Warehouse REIT plc
102 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Conclusions relating to going concern continued
• considering Board minutes, and evidence obtained through the audit, and challenging
the Directors on the identification of any contradictory information in the forecasts and
the impact on the going concern assessment;
• analysing the Directors’ stress testing calculations and challenging the assumptions made
using our knowledge of the business and of the current economic climate, to assess
the reasonableness of the downside scenarios selected and the appropriateness of the
Directors’ mitigating actions; and
• reviewing the disclosures in the financial statements relating to going concern to check
that the disclosure is consistent with the circumstances.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt
on the Group and the Parent Company’s ability to continue as a going concern for a period
of at least 12 months from when the financial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in relation to the
Directors’ statement in the financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern
are described in the relevant sections of this report.
Overview
Coverage 100% (2022: 100%) of Group profit before tax
100% (2022: 100%) of Group revenue
100% (2022: 100%) of Group total assets
Key audit matters 2023 2022
Valuation of investment properties
✔ ✔
Revenue recognition – rental income
✔ ✔
Materiality Group financial statements as a whole
£8.9m (2022: £10.5m) based on 1% (2022: 1%) total assets
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group’s system of internal control, and assessing the risks
of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence
of bias by the Directors that may have represented a risk of material misstatement.
The Group operates in one segment, investment property, structured through a number of
subsidiary entities and therefore we treated the Group as one significant component. The
Group audit engagement team performed all the work necessary to issue the Group and
Parent Company audit opinion, including undertaking all of the audit work on the risks of
material misstatement identified in the key audit matters section below.
Climate change
Our work on the assessment of potential impacts on climate‑related risks on the Group’s
operations and financial statements included:
• enquiries and challenge of management to understand the actions they have taken to
identify climate‑related risks and their potential impacts on the financial statements and
adequately disclose climate‑related risks within the Annual Report;
• our own qualitative risk assessment taking into consideration the sector in which the
Group operates and how climate change affects the real estate sector; and
• review of the minutes of Board, Sustainability Committee and Audit Committee meetings
and other papers related to climate change and performed a risk assessment as to how
the impact of the Group’s commitment as set out in the sustainability report on pages
36to 53 may affect the financial statements and our audit.
We challenged the extent to which climate‑related considerations, including the expected
cash flows from the initiatives and commitments, have been reflected, where appropriate,
inmanagement’s going concern assessment and viability assessment.
We also assessed the consistency of management’s disclosures included as statutory other
information on pages 44 to 50 with the financial statements and with our knowledge
obtained from the audit.
Based on our risk assessment procedures, we did not identify there to be any key audit
matters materially impacted by climate‑related risks and related commitments.
Independent Auditor’s report continued
to the members of Warehouse REIT plc
103 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
An overview of the scope of our audit continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole,
andin forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How the scope of our audit addressed the key auditmatter
Valuation of
investment
properties
As detailed in note 13
to the consolidated
financial statements,
the Group owns
a portfolio of
investment properties
which are held at their
fair value.
The Group’s
accounting policy for
these properties is
described in note 13
to the consolidated
financial statements.
The key judgements
and estimates in
arriving at the fair
values are set out in
notes 2.2, 13 and 25
to the consolidated
financial statements.
The Group has an investment property portfolio of
warehouses and light industrial assets located across
the United Kingdom. The properties are independently,
externally valued in accordance with RICS
methodology and IFRS 13 Fair Value Measurement,
This includes completed investment property which is
let, or available to let, and is valued using the income
capitalisation method; and development property
and land which is valued using the comparable
method supported, where appropriate, by a residual
development appraisal (which estimates the gross
development value of the completed project less
estimated costs to completion and an appropriate
developer’s margin).
The valuation of investment property requires
significant judgement and estimates by the Directors
and their independent valuer and is therefore
considered a significant risk due to the subjective
nature of certain assumptions inherent in each
valuation.
Any input inaccuracies or unreasonable bases used
in the valuation judgements (such as in respect of
estimated rental value and yield profile applied) could
result in a material misstatement of the Group financial
statements.
Our audit procedures included, but was not restricted to, the following:
Experience of the valuer and relevance of its work
We assessed the valuer’s competence and capabilities and read their terms of engagement with the
Group, to identify any matters that could have affected their independence and objectivity or imposed
scope limitations upon them.
With the assistance of our real estate specialists, we read the valuation reports and assessed whether
the valuations had been prepared in accordance with applicable valuation guidelines and IFRS 13 and
they were appropriate for determining the carrying value in the Group’s financial statements.
Data provided to the valuer
We checked that the data provided to the valuer by the Investment Advisor was consistent with the
information provided to, and tested by, us. This data included inputs such as current rent and lease
term, which we have agreed on a sample basis to executed lease agreements.
Assumptions and estimates used by the valuer
We developed yield expectations for each property using available independent industry data, reports
and details of relevant comparable transactions in the market around the year‑end date.
We compared the key valuation assumptions used by the valuers against our independently formed
market expectations and challenged the external valuers where significant variances from these
expectations were identified. We corroborated their responses to supporting documentation
where appropriate. The key valuation assumptions were the equivalent yields, which we evaluated
by reference to market data based on the location and specifics of each property. Additionally for
development property and land, the key valuation assumptions included land value comparables,
construction and other development costs and a developer’s margin which were compared to
comparable market benchmarks where available and assessed for reasonableness where not readily
comparable with published benchmarks.
Independent Auditor’s report continued
to the members of Warehouse REIT plc
104 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Key audit matter How the scope of our audit addressed the key auditmatter
Valuation of
investment
properties continued
There is also a risk that management may influence
the judgements and estimates in respect of property
valuations in order to achieve property valuations
and other performance targets to meet market
expectations.
The valuation of investment properties was therefore
considered to be a key audit matter.
Assumptions and estimates used by the valuer continued
Alongside our real estate specialists, we met with the Group’s external valuers to discuss and challenge
the valuation methodology and key assumptions and considered if there were any indicators of undue
Directors’ influence on the valuations.
Key observations:
Based on the procedures performed, we did not identify any indicators to suggest that the judgements
and estimates made in the valuation of the Group’s investment properties were inappropriate.
Revenue recognition
– rental income
Refer to note 3 for
details of the Group’s
revenue, including the
accounting policy.
The Group has multiple occupiers across its property
portfolio.
Rental income is recognised on a straight‑line basis
over the lease term for the Group’s properties based
upon rental agreements that are in place. Judgement
is required to determine the term over which incentives
should be recognised.
There is a risk that rental income is not supported by
underlying tenancy agreements or is inappropriately
recognised as a result of errors in recording lease
details in the tenancy schedules or inappropriate
judgements being applied by management.
For these reasons we consider the recognition of
revenue from rental income to be a key audit matter.
We obtained the tenancy schedule and the Investment Advisor’s analysis of revenue recognised for
each property and performed the following:
• for a sample of occupiers we reviewed the underlying leases to confirm the accuracy of the tenancy
schedule inputs. We also agreed one rental receipt for each of those occupiers to bank statements;
• we developed an expectation of rental income to be invoiced for the year in respect of each property
based on the tenancy schedule and compared this to the Investment Advisor’s analysis of the rental
income recognised prior to lease incentive adjustments, corroborating explanations provided by the
Investment Advisor in respect of variances identified; and
• we obtained the Investment Advisor’s schedule of lease incentive adjustments, including rent‑free
periods and other rent concessions, and, for a sample, we recalculated the adjustment and agreed
the inputs to the underlying lease documentation. We considered the completeness of the schedule
based on information included in the tenancy schedule and the underlying lease information
obtained. Where applicable we assessed the Investment Advisor’s judgements against past and
current occupier behaviour in respect of the lease term over which the incentives are recognised.
Key observations:
We did not identify any indicators to suggest that revenue has been recognised inappropriately.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Independent Auditor’s report continued
to the members of Warehouse REIT plc
An overview of the scope of our audit continued
Key audit matters continued
105 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Independent Auditor’s report continued
to the members of Warehouse REIT plc
Specific materiality
We also determined that for any items that could affect the calculation of the Group’s
European Public Real Estate (“EPRA”) earnings, a misstatement of less than materiality
for the financial statements as a whole, specific materiality, could influence the economic
decisions of users. We consider EPRA earnings to be a key performance measure of the
Group. EPRA earnings excludes the impact of the net surplus on revaluation of investment
properties, profit on disposal of investment properties and changes in the fair value of
interest rate derivatives. As a result, we determined materiality for these items based on
5% of EPRA earnings, amounting to £0.83 million (2022: £1.38 million) for the Group. We
further applied a performance materiality level of 75% (2022: 70%) of specific materiality to
ensure that the risk of errors exceeding specific materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit and Risk Committee that we would report to them all individual
audit differences in excess of £445,000 (2022: £525,000) for items audited to financial
statement materiality, and £40,000 (2022: £70,000) for items audited to specific
materiality. We also agreed to report differences below these thresholds that, in our view,
warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises
the information included in the Annual Report and Financial Statements other than
the financial statements and our Auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Our application of materiality continued
Based on our professional judgement, we determined materiality for the financial
statements as a whole and performance materiality as follows:
Group financial
statements
Parent company financial
statements
2023
£m
2022
£m
2023
£m
2022
£m
Materiality 8.9 10.5 3.4 3.7
Basis for
determining
materiality
1% of total assets
Rationale for
the benchmark
applied
We determined that total assets would be the most appropriate basis
for determining overall materiality as we consider it to be one of the
principal considerations for users of the financial statements in assessing
the financial performance of the Group and the Parent Company.
Performance
materiality
6.7 7.35 2.5 2.59
Basis for
determining
performance
materiality
Overall performance materiality for the Group and Parent Company
has been set at 75% (2022: 70%) of materiality. This was on the basis
of our risk assessment, together with our assessment of the Group’s
and Parent Company’s overall control environment and our past
experience of the audit which has indicated a low number of corrected
and uncorrected misstatements in the prior period and management’s
willingness to investigate and correct these.
106 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Independent Auditor’s report continued
to the members of Warehouse REIT plc
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern,
longer‑term viability and that part of the corporate governance statement relating to the
Parent Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the corporate governance statement is materially consistent with the
financial statements or our knowledge obtained during the audit.
Going concern
and longer-
term viability
• The Directors’ statement with regard to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified (set out on page 65)
• The Directors’ explanation as to their assessment of the Group’s
prospects, the period this assessment covers and why the period is
appropriate (set out on page 65 and 66)
Other Code
provisions
• The Directors’ statement on fair, balanced and understandable (set
out on page 101)
• The Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks (set out on page 81)
• The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems (set
out on page 81)
• The section describing the work of the Audit and Risk Committee
(set out on page 86 to 89)
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course
of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on
certain opinions and matters as described below.
Strategic
report and
Directors’
report
In our opinion, based on the work undertaken in the course of the
audit:
• the information given in the strategic report and the Directors’
report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
• the strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and
Parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic
report or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Matters on
which we
are required
to report by
exception
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to you
if, in our opinion:
• adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the Parent Company financial statements and the part of the
Directors’ remuneration report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we require
for our audit.
107 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Independent Auditor’s report continued
to the members of Warehouse REIT plc
Responsibilities of Directors
As explained more fully in the statement of Directors’ responsibilities, the Directors are
responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the
Group’s and the Parent Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the parent company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Extent to which the audit was capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non‑compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below:
• through our knowledge of the Company and the Group and its sector we gained an
understanding of the legal and regulatory framework applicable to the Company and the
Group and the industry in which it operates, and considered the risk of acts by the Group
that were contrary to applicable laws and regulations, including fraud;
• we considered the Company’s and the Group’s compliance with laws and regulations
that have a direct impact on the financial statements, including UK company law,
the applicable accounting framework, tax legislation (including the UK REIT regime
requirements) and the relevant Listing Rules, and we considered the extent to which
non‑compliance might have a material effect on the Group financial statements;
• we designed audit procedures to identify instances of non‑compliance with such
laws and regulations. Our procedures included reviewing the financial statement
disclosures and accounting policies to identify instances of management bias, and
agreeing to underlying supporting documentation where necessary. We reviewed
minutes of Board meetings held during and subsequent to the year for any indicators of
non‑compliance and made enquiries of management and of the Directors as to the risks
of non‑compliance and any instances thereof;
• we assessed the susceptibility of the financial statements to material misstatement,
including fraud, and considered the fraud risk areas to be investment property valuations,
revenue recognition and management override of controls. Our responses to the
valuation of investment properties and revenue recognition risks are set out in the key
audit matters section above;
• we addressed the risk of management override of internal controls by testing a sample
of journal entries processed during the year, agreeing to supporting documentation and
evaluating whether there was evidence of bias by management or the Directors that
represented a risk of material misstatement due to fraud; and
• we communicated relevant identified laws and regulations and potential fraud risks
to all engagement team members and remained alert to any indications of fraud or
non‑compliance with laws and regulations throughout the audit.
108 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Independent Auditor’s report continued
to the members of Warehouse REIT plc
Auditor’s responsibilities for the audit of the financial
statementscontinued
Extent to which the audit was capable of detecting irregularities,
including fraud continued
The engagement partner has assessed and confirmed that the engagement team
collectively had the appropriate competence and capabilities to identify or recognise
non‑compliance with laws and regulations.
Our audit procedures were designed to respond to risks of material misstatement in the
financial statements, recognising that the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery, misrepresentations or through
collusion. There are inherent limitations in the audit procedures performed and the further
removed non‑compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken
so that we might state to the Parent Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the
Parent Company and the Parent Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Richard Levy (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
5 June 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
109 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
The accompanying notes on pages 114 to
138 form an integral part of these financial
statements.
Consolidated statement
ofcomprehensive income
For the year ended 31 March 2023
Continuing operations Notes
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Gross property income 3 47, 8 4 5 4 8 ,7 1 4
Service charge income 3 3,3 40 2,6 82
Service charge expenses 4 (3 , 767) (3 ,011)
Net property income 4 7, 4 1 8 48 ,385
Property operating expenses 4 (5 ,454) (4, 789)
Gross profit 41 , 9 6 4 43, 59 6
Administration expenses 4 (9,7 1 6) (8 , 24 4)
Operating profit before (losses)/gains on investment properties 32 , 248 35, 352
Fair value (losses)/gains on investment properties 13 (19 3 , 3 67) 163,685
Realised (loss) on disposal of investment properties 13 (1 3 ,1 05) —
Operating (loss)/profit (1 74 , 2 2 4) 19 9,037
Finance income 7 2 , 039 32 1
Finance expenses 8 (15,528) (8 ,1 5 4)
Changes in fair value of interest rate derivatives 18 4, 850 —
(Loss)/profit before tax (1 82 , 863) 191 ,20 4
Taxation 9 — —
Total comprehensive (loss)/income for the period (1 82 , 863) 191 ,20 4
(Loss)/Earnings per share (basic and diluted) (pence) 12 (4 3 . 0) 45.0
All items in the statement derive from
continuing operations. No operations were
acquired or discontinued during the year.
There is no other comprehensive income and
therefore the profit for the year after tax is
alsothe total comprehensive income.
110 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
The accompanying notes on pages 114 to
138 form an integral part of these financial
statements.
Consolidated statement
offinancial position
As at 31 March 2023
These financial statements were approved by
the Board of Directors of Warehouse REIT plc
on 5 June 2023 and signed on its behalf by:
Neil Kirton
Company number: 10880317
Notes
31 March
2023
£’000
31 March
2022
£’000
Assets
Non-current assets
Investment property 13 842 , 2 69 1 ,026 ,06 6
Interest rate derivatives 18 11 , 22 8 337
85 3 ,4 97 1 ,02 6 ,4 03
Current assets
Investment property held for sale 14 625 —
Cash and cash equivalents 15 2 5,053 16 ,70 6
Trade and other receivables 16 9, 258 9, 8 49
34 ,93 6 26,555
Total assets 888,43 3 1,05 2,958
Liabilities
Non-current liabilities
Interest‑bearing loans and borrowings 17 (3 04 ,093) (2 6 8 , 2 1 6)
Other payables and accrued expenses 20 (1 1,300) (1 6 , 5 5 0)
Head lease liability 19 (1 4 , 32 0) (1 4 , 2 0 0)
(329,7 13) (2 9 8 , 9 6 6)
Current liabilities
Interest rate derivatives 18 (3 , 8 41) —
Other payables and accrued expenses 20 (18, 584) (6 , 8 5 5)
Deferred income 20 (7, 1 1 5) (7, 4 87)
Head lease liability 19 (70 5) (6 9 6)
(30, 245) (1 5 , 03 8)
Total liabilities (359,958) (31 4,004)
Net assets 52 8 , 47 5 738,9 54
Equity
Share capital 21 4 , 249 4 , 24 9
Share premium 22 275 ,6 4 8 275, 6 4 8
Retained earnings 23 2 4 8 , 57 8 459,057
Total equity 52 8 , 47 5 738,9 54
Number of shares in issue (thousands) 424, 8 62 424 , 8 6 2
Net asset value per share (basic and diluted) (pence) 24 124. 4 173 . 9
111 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
The accompanying notes on pages 114 to
138 form an integral part of these financial
statements.
Consolidated statement
ofchanges in equity
For the year ended 31 March 2023
Notes
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
Total
£’000
Balance at 31 March 2021 4, 24 9 275 , 64 8 294,194 5 74 , 0 9 1
Total comprehensive income — — 191 , 204 1 91, 204
Dividends paid 11 — — (26,341) (26,341)
Balance at 31 March 2022 4, 249 275 ,6 4 8 459,05 7 738 ,9 54
Total comprehensive income — — (18 2 ,8 63) (1 82 , 863)
Dividends paid 11 — — (2 7 ,616) (27,616)
Balance at 31 March 2023 4, 249 275 ,6 4 8 2 4 8 , 57 8 52 8 , 47 5
Further details of retained earnings are
presented in note 23.
112 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
The accompanying notes on pages 114 to
138 form an integral part of these financial
statements.
Consolidated statement
ofcash flows
For the year ended 31 March 2023
Notes
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Cash flows from operating activities
Operating (loss)/profit (1 74 , 2 2 4) 19 9,037
Adjustments to reconcile profit for the period to net cash flows:
Losses/(gains) from change in fair value of investment properties 13 1 93 , 3 67 (163 ,6 85)
Realised loss on disposal of investment properties 13 13 ,1 0 5 —
Head lease movement in asset value (4 2) 181
Operating cash flows before movements in working capital 32 , 20 6 35,53 3
Decrease/(increase) in other receivables and prepayments 329 (6 , 3 1 8)
Increase/(decrease) in other payables and accrued expenses 2 ,78 8 (970)
Net cash flow generated from operating activities 35, 32 3 28 , 24 5
Cash flows from investing activities
Acquisition of investment properties (6 6 , 05 3) (4 5 , 1 7 8)
Capital expenditure (4 , 6 2 8) (7, 5 3 6)
Development expenditure (7,141) (1 ,1 33)
Purchase of interest rate caps (2 , 2 0 0) —
Interest received 989 —
Disposal of investment properties 5 8 ,1 01 —
Net cash flow used in investing activities (22 , 932) (5 3 , 8 47)
Cash flows from financing activities
Bank loans drawn down 17 65,000 49,0 00
Bank loans repaid 17 (30,0 00) —
Loan interest and other finance expenses paid (11,8 10) (5 , 2 8 8)
Other finance expenses paid (3 9 0) (7 9 9)
Recurrent loan fees (396) (392)
Head lease payments (832) (1 ,057)
Dividends paid in the period 11 (2 7 ,616) (26,341)
Net cash flow (used in)/generated from financing activities (5 ,6 4 8) 1 5 ,123
Net increase/(decrease) in cash and cash equivalents 8 , 3 47 (1 0 , 47 9)
Cash and cash equivalents at start of the period 16,7 06 2 7, 1 8 5
Cash and cash equivalents at end of the period 15 2 5,053 1 6 ,70 6
113 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements
For the year ended 31 March 2023
Accordingly, based on this information, and in light of mitigating actions available and
the recent refinancing, the Directors have a reasonable expectation that the Group and
the Company have adequate resources to continue in business for a period of at least
12 months from the date of approval of the Annual Report and Financial Statements.
Furthermore, the Directors are not aware of any material uncertainties that may cast
significant doubt upon the Group’s ability to continue as a going concern. Therefore,
the financial statements have been prepared on the going concern basis.
2.1 Changes to accounting standards and interpretations
New standards and interpretations effective in the current period
There were a number of new standards and amendments to existing standards which are
required for the Group’s accounting period beginning on 1 April 2022, which have been
considered and applied as follows:
• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
• Annual Improvements to IFRS Standards 2018‑2020 (Amendments to IFRS 1, IFRS 9,
IFRS 16 and IAS 41); and
• References to Conceptual Framework (Amendments to IFRS 3).
There was no material effect from the adoption of the above‑mentioned amendments to
IFRS effective in the period. They have no significant impact to the Group as they are either
not relevant to the Group’s activities or require accounting which is already consistent with
the Group’s current accounting policies.
1. General information
Warehouse REIT plc is a closed‑ended Real Estate Investment Trust (“REIT”) with an
indefinite life incorporated in England and Wales on 24 July 2017. The Company began
trading on 20 September 2017. The registered office of the Company is located at
65 Gresham Street, London EC2V 7NQ. The Company’s shares are admitted to trading on
the Premium Listing Segment of the Main Market, a market operated by the London Stock
Exchange.
The Group’s consolidated financial statements for the year ended 31 March 2023 comprise
the results of the Company and its subsidiaries (together constituting the “Group”) and
were approved by the Board and authorised for issue on 5 June 2023. The nature of the
Group’s operations and its principal activities are set out in the strategic report on pages
1 to 66.
2. Basis of preparation
These financial statements are prepared in accordance with UK adopted international
accounting standards and in conformity with the requirements of the Companies Act 2006.
The financial statements have been prepared under the historical cost convention, except
for the revaluation of investment properties and financial instruments that are measured
at revalued amounts or fair values at the end of each reporting period, as explained in
the accounting policies below. Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services. The audited financial statements
are presented in Pound Sterling and all values are rounded to the nearest thousand pounds
(£’000), except when otherwise indicated.
Going concern
The Directors have made an assessment of the Group’s ability to continue as a going
concern. They carefully considered areas of potential financial risk and reviewed cash flow
forecasts, evaluating a number of scenarios which included extreme downside sensitivities
in relation to rental cash collection, making no acquisitions or discretionary capital
expenditure and minimum dividend distributions under the REIT rules.
114 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
2. Basis of preparation continued
2.1 Changes to accounting standards and interpretations continued
New and revised accounting standards not yet effective
There are a number of new standards and amendments to existing standards which have
been published and are mandatory for the Group’s accounting periods beginning on or
after 1 April 2023 or later. The Group is not adopting these standards early. The following
are the most relevant to the Group:
Amendments to IAS 1 Presentation of Financial Statements clarifies that liabilities are
classified as either current or non‑current, depending on the rights that exist at the end
of the reporting period and not expectations of, or actual events after, the reporting date.
The amendments also give clarification to the definition of settlement of a liability.
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
clarifies the distinction between accounting policies and accounting estimates and also
replaces the definition of accounting estimates. Under the new definition, estimates are
“monetary amounts in financial statements that are subject to measurement uncertainty”.
The amendments are not expected to have a significant impact on the preparation of the
financial statements.
2.2 Significant accounting judgements and estimates
The preparation of these financial statements in accordance with IFRS requires the
Directors of the Company to make judgements, estimates and assumptions that affect the
reported amounts recognised in the financial statements. However, uncertainty about these
assumptions and estimates could result in outcomes that require a material adjustment to
the carrying amount of the asset or liability in the future.
Judgements
In the course of preparing the financial statements, no judgements have been made in the
process of applying the Group’s accounting policies, other than those involving estimations
detailed below, that have had a significant effect on the amounts recognised in the financial
statements.
Estimates
In the process of applying the Group’s accounting policies, the Investment Advisor has
made the following estimates which have the most significant risk of material change to
the carrying value of assets recognised in the consolidated financial statements:
Valuation of property
The valuations of the Group’s investment property are at fair value as determined
by the external independent valuer on the basis of market value in accordance with
the internationally accepted RICS Valuation – Professional Standards January 2020
(incorporating the International Valuation Standards) and in accordance with IFRS 13.
The key estimates made by the valuer are the ERV and equivalent yields of each investment
property and land values per acre for development properties. The valuers have considered
the impact of climate change and that this has not had a material impact on the valuation at
the current time. See notes 13 and 25 for further details.
2.3 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements
are stated in the notes to the financial statements.
a) Basis of consolidation
The Company does not meet the definition of an investment entity and therefore does
not qualify for the consolidation exemption under IFRS 10. The consolidated financial
statements comprise the financial statements of the Group and its subsidiaries as at
31 March 2023. Subsidiaries are consolidated from the date of acquisition, being the date on
which the Group obtained control, and will continue to be consolidated until the date that
such control ceases. An investor controls an investee when the investor is exposed, or has
rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. In preparing these financial statements,
intra‑group balances, transactions and unrealised gains or losses have been eliminated
in full. All subsidiaries have the same year end as the Company. Uniform accounting
policies are adopted in the financial statements for like transactions and events in similar
circumstances.
115 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
Accounting policy
Rental income arising from operating leases on investment property is accounted for on
a straight‑line basis over the lease term and is included in gross property income in the
Group statement of comprehensive income. Initial direct costs incurred in negotiating
and arranging an operating lease are recognised as an expense over the lease term on
the same basis as the lease income. Rental income is invoiced in advance and for all
rental income that relates to a future period, this is deferred and appears with current
liabilities on the Group statement of financial position.
For leases which contain fixed or minimum uplifts, the rental income arising from such
uplifts is recognised on a straight‑line basis over the lease term. A rental adjustment
is recognised from the rent review date in relation to unsettled rent reviews, once the
rental uplifts are agreed.
Occupier lease incentives are recognised as an adjustment of rental revenue on a
straight‑line basis over the term of the lease. The lease term is the non‑cancellable
period of the lease together with any further term for which the occupier has the option
to continue the lease where, at the inception of the lease, the Directors are reasonably
certain that the occupier will exercise that option.
Insurance income is recognised in the accounting period in which the services are
rendered.
Amounts received from occupiers to terminate leases or to compensate for dilapidations
are recognised in the Group statement of comprehensive income when the right to
receive them arises, typically at the cessation of the lease.
Service charge income is recognised when the related recoverable expenses are incurred.
The Group acts as the principal in service charge transactions as it directly controls the
delivery of the services at the point at which they are provided to the occupier.
2. Basis of preparation continued
2.3 Summary of significant accounting policies continued
b) Functional and presentation currency
The overall objective of the Group is to generate returns in Pound Sterling and the
Group’s performance is evaluated in Pound Sterling. Therefore, the Directors consider
Pound Sterling as the currency that most faithfully represents the economic effects of
the underlying transactions, events and conditions and have therefore adopted it as the
functional and presentation currency.
c) Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment of business,
being the investment in, and provision of, UK urban warehouses.
3. Property income
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Rental income 45,750 44,020
Insurance recharged 1,592 1,507
Dilapidation income 503 3,187
Gross property income 47,845 48,714
Service charge income 3,340 2,682
Total property income 51,185 51,396
No occupier accounts for more than 10% of rental income.
116 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
4. Property operating and administration expenses
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Service charge expenses 3,767 3,011
Premises expenses 2,481 2,313
Insurance 1,735 1,558
Rates 716 490
Utilities 335 87
Loss allowance on trade receivables 187 341
Property operating expenses 5,454 4,789
Investment Advisor fees 6,970 6,484
Costs associated with the transfer to the Main Market 1,069 —
Directors’ remuneration (including social security costs) 179 175
Head lease asset depreciation 189 181
Other administration expenses 1,309 1,404
Administration expenses 9,716 8,244
Total 18,937 16,044
Main Market expenses are costs associated with the transfer to the Premium Segment
of the Main Market of the London Stock Exchange. On 12 July 2022, Warehouse REIT
transferred the trading of its ordinary shares to the Premium Segment of the Main Market
of the London Stock Exchange.
Details of how the Investment Advisor fees are calculated are disclosed in note 29.
Accounting policy
All property operating expenses and administration expenses are charged to the
consolidated statement of comprehensive income and are accounted for on an accruals
basis.
Property expenses are costs incurred by the Group that are not directly recoverable
from an occupier, as well as professional fees relating to the letting of our estates .
5. Directors’ remuneration
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Neil Kirton 48 47
Lynette Lackey 38 37
Martin Meech 38 37
Aimée Pitman 38 37
Total 162 158
A summary of the Directors’ emoluments, including the disclosures required by the
Companies Act 2006, is set out in the Directors’ remuneration report. The Group had no
employees in either period.
6. Auditor’s remuneration
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Audit fee 192 148
Total 192 148
The Group reviews the scope and nature of all proposed non‑audit services before
engagement, to ensure that the independence and objectivity of the Auditor are
safeguarded. Audit fees are comprised of the following items:
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Group year‑end Annual Report and Financial Statements 172 130
Subsidiary accounts 20 18
Total 192 148
117 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
8. Finance expenses
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Loan interest 14,057 5,816
Head lease interest 961 1,030
Loan arrangement fees amortised 1,052 898
Recurrent loan fees 607 392
Bank charges 5 18
16,682 8,154
Less: amounts capitalised on the development
of properties (1,154) —
Total 15,528 8,154
The interest capitalisation rates for the year ended 31 March 2023 ranged from 3.2% to 4.3%
(31 March 2022: £nil).
Accounting policy
Any finance costs that are separately identifiable and directly attributable to an asset
which takes a period of time to complete are capitalised as part of the cost of the
asset. Ongoing services fees relating to the maintenance of the loan are expensed
in the period in which they occur. All other finance costs are expensed in the period
in which they occur. Finance costs consist of interest and other costs that the Group
incurs in connection with bank and other borrowings. Fair value movements on
derivatives are recorded in finance expenses or in finance income depending on the fair
value movement during the year. See note 19 for the accounting policy on head lease
interest expensed.
6. Auditor’s remuneration continued
Non‑audit fees payable to the Group’s Auditor comprised of the following:
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Services as reporting accountant relating to Main Market move
110 —
Total 110 —
There were no non‑audit services provided by the Auditor in the year to 31 March 2022.
The Audit Committee receives assurance from the Auditor that its independence is not
compromised. The Group’s Auditor for the year ended 31 March 2023 was BDO LLP.
7. Finance income
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Interest from cash and short‑term deposits 12 —
Interest from derivatives 2,027 —
Total 2,039 —
Accounting policy
Interest income is recognised on an effective interest rate basis and shown within the
Group statement of comprehensive income as finance income. See note 18 for details
on the accounting policy for interest rate derivatives.
118 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
9. Taxation
Corporation tax has arisen as follows:
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Corporation tax on residual income — —
Total — —
Reconciliation of tax charge to profit before tax:
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
(Loss)/profit before tax (182,863) 191,204
Corporation tax at 19.0% (2022: 19.0%) (34,744) 36,329
Change in value of investment properties 36,740 (31,092)
Realised loss on disposal of investment properties 2,490 —
Tax‑exempt property rental business (4,486) (5,237)
Total — —
Accounting policy
Corporation tax is recognised in the consolidated statement of comprehensive income
except where in certain circumstances corporation tax may be recognised in other
comprehensive income.
As a REIT, the Group is exempt from corporation tax on the profits and gains from its
property rental business, provided it continues to meet certain conditions as per the
REIT regulations.
Non‑qualifying profits and gains of the Group continue to be subject to corporation tax.
Therefore, current tax is the expected tax payable on the non‑qualifying taxable income
for the period, if applicable, using tax rates enacted or substantively enacted at the
balance sheet date.
The United Kingdom Government has announced an increase to the main rate of
corporation tax from 19% to 25% from April 2023. As the Company is a REIT, it is not
anticipated that the change in the corporate tax rate will have a material impact on the
Group, however tax charges on any non‑property income will increase.
10. Operating leases
Operating lease commitments – as lessor
The Group has entered into commercial property leases on its investment property
portfolio. These non‑cancellable leases have a remaining term of up to 15 years.
Future minimum rentals receivable under non‑cancellable operating leases as at
31 March 2023 are as follows:
31 March
2023
£’000
31 March
2022
£’000
Within one year 42,033 42,364
Between one and two years 33,340 35,838
Between two and three years 26,998 27,0 02
Between three and four years 22,360 21,154
Between four and five years 18,457 17,058
Between five and ten years 34,394 35,641
More than ten years 19,607 22,578
Total 197,189 201,635
119 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
A third interim property income dividend for the year ended 31 March 2023 of 1.60 pence
per share was declared on 28 February 2023 and paid on 3 April 2023.
Accounting policy
Dividends due to the Company’s shareholders are recognised when they become payable.
12. Earnings per share
Basic EPS is calculated by dividing profit for the period attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares during
the period. As there are no dilutive instruments in issue, basic and diluted EPS are identical.
The European Public Real Estate Association (‘EPRA’) publishes guidelines for calculating
adjusted earnings on a comparable basis. EPRA EPS is a measure of EPS designed by
EPRA to enable entities to present underlying earnings from core operating activities,
which excludes fair value movements on investment properties.
The Company has also included an additional earnings measure called “Adjusted Earnings”
and “Adjusted EPS.” Adjusted Earnings and Adjusted EPS is based on EPRA’s Best
Practices Recommendations and recognises finance income earned from derivatives held
at fair value through profit and loss used to hedge the Company’s floating interest rate
exposure. Also included in adjusted earnings is the add back of the costs associated with
the transfer to the Premium Segment of the Main Market of the London Stock exchange, as
these costs will not be reoccurring.
The Board deems this a more relevant indicator of core earnings as it reflects our ability to
generate earnings from our portfolio.
11. Dividends
For the year ended 31 March 2023
Pence
per share £’000
Third interim dividend for year ended 31 March 2022
paid on 1 April 2022 1.55 6,585
Fourth interim dividend for year ended 31 March 2022
paid on 30 June 2022 1.75 7,435
First interim dividend for year ended 31 March 2023
paid on 3 October 2022 1.60 6,798
Second interim dividend for year ended 31 March 2023
paid on 30 December 2022 1.60 6,798
Total dividends paid during the year 6.50 27,616
Paid as:
Property income distributions 6.50 27,616
Non‑property income distributions — —
Total 6.50 27,616
For the year ended 31 March 2022
Pence
per share £’000
Third interim dividend for year ended 31 March 2021
paid on 1 April 2021 1.55 6,585
Fourth interim dividend for year ended 31 March 2021
paid on 30 June 2021 1.55 6,586
First interim dividend for year ended 31 March 2022
paid on 1 October 2021 1.55 6,585
Second interim dividend for year ended 31 March 2022
paid on 30 December 2021 1.55 6,585
Total dividends paid during the year 6.20 26,341
Paid as:
Property income distributions 6.20 26,341
Non‑property income distributions — —
Total 6.20 26,341
As a REIT, the Group is required to pay property income distributions (“PIDs”) equal to at
least 90% of the property rental business profits of the Group.
120 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
12. Earnings per share continued
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
IFRS earnings (182,863) 191,204
EPRA earnings adjustments:
Loss on disposal of investment properties 13,105 —
Fair value losses/(gains) on investment properties 193,367 (163,685)
Interest from derivatives (2,027) —
Changes in fair value of interest rate derivatives (4,850) (321)
EPRA earnings 16,732 27,198
Group‑specific earnings adjustments:
Interest from derivatives 2,027 —
Costs associated with the transfer to the Premium Segment
of the Main Market of the London Stock Exchange 1,069 —
Adjusted earnings 19,828 27,198
Year ended
31 March
2023
pence
Year ended
31 March
2022
pence
Basic IFRS EPS (43.0) 45.0
Diluted IFRS EPS (43.0) 45.0
EPRA EPS 3.9 6.4
Adjusted EPS 4.7 6.4
Year ended
31 March
2023
Number
of shares
Year ended
31 March
2022
Number
of shares
Weighted average number of shares in issue (thousands) 424,862 424,862
13. UK investment property
Completed
investment
property
£’000
Development
property
and land
£’000
Total
investment
property
£’000
Investment property valuation brought
forward as at 1 April 2022 913,035 98,950 1,011,985
Transferred in the period 5,449 (5,449) —
Acquisition of properties 64,512 2,216 66,728
Capital expenditure 5,035 8,295 13,330
Movement in rent incentives 1,272 28 1,300
Disposal of properties (71,206) — (71,206)
Assets transferred to held for sale (625) — (625)
Fair value losses on revaluation of
investment property (164,987) (28,380) (193,367)
Total portfolio valuation per
valuer’s report 752,485 75,660 828,145
Adjustment for head lease obligations 14,124 — 14,124
Carrying value at 31 March 2023 766,609 75,660 842,269
Completed
investment
property
£’000
Development
property
and land
£’000
Total
investment
property
£’000
Investment property valuation brought
forward as at 1 April 2021 751,930 40,870 792,800
Acquisition of properties 30,027 13,364 43,391
Capital expenditure 6,467 1,103 7,570
Movement in rent incentives 4,545 (6) 4,539
Fair value gains on revaluation of
investment property 120,066 43,619 163,685
Total portfolio valuation per
valuer’s report 913,035 98,950 1,011,985
Adjustment for head lease obligations 14,081 — 14,081
Carrying value at 31 March 2022 927,116 98,950 1,026,066
121 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
Accounting policy
Investment property comprises property held to earn rental income or for capital
appreciation, or both. Investment properties are recognised upon legal completion of
the contract, where costs are reliably measured and future economic benefits that are
associated with the property flow to the entity. Investment properties are measured
initially at cost including transaction costs. Transaction costs include transfer taxes and
professional fees to bring the property to the condition necessary for it to be capable
of operating. The carrying amount also includes the cost of replacing part of an existing
investment property at the time that cost is incurred, if the recognition criteria are met.
Development property and land is where the whole or a material part of an estate
is identified as having potential for development. Assets are classified as such until
development is completed and they have the potential to be fully income‑generating.
Development property and land is measured at fair value if the fair value is considered
to be reliably determinable. Where the fair value cannot be determined reliably but
where it is expected that the fair value of the property will be reliably determined when
construction is completed, the property is measured at cost less any impairment until
the fair value becomes reliably determinable or construction is completed, whichever
is earlier. It is the Group’s policy not to capitalise overheads or operating expenses
for assets with approved planning permission. In addition, it is the Group’s policy
to capitalise finance costs relating to the development of the assets with planning
permission, see note 8 for details.
Subsequent to initial recognition, investment property is stated at fair value (see
note 25). Gains or losses arising from changes in the fair values are included in the
consolidated statement of comprehensive income in the period in which they arise
under IAS 40 Investment Property.
Investment properties cease to be recognised when they have been disposed of or
withdrawn permanently from use and no future economic benefit is expected. Gains or
losses on the disposal of investment property are determined as the difference between
net disposal proceeds and the carrying value of the asset.
Movements in rent incentives are presented within the total portfolio valuation.
Where an investment property is held under a leasehold interest, the headlease is initially
recognised as an asset at cost plus the present value of minimum ground rent payments
and is subsequently measured at fair value. The corresponding rental liability to the head
leaseholder is included in the balance sheet as a finance lease obligation (see note 19).
13. UK investment property continued
Included within the carrying value of investment properties as at 31 March 2023 is
£10.4 million (31 March 2022: £9.1 million) in respect to rent incentives as a result of the IFRS
treatment of leases with rent‑free periods, which require recognition on a straight‑line basis
over the lease term. The difference between this and cash receipts change the carrying
value of the property on which revaluations are measured.
During March 2023, the Group reached practical completion of the development at Valley
Court, Middlewich, at which point the asset became income‑producing. The transfer
between development property and land and completed investment property reflects the
completion of this development.
During the period the Group capitalised £1.2 million (31 March 2022: nil) of interest paid in
development properties. Please see note 8 for details on the capitalisation rate used.
Realised loss on disposal of investment properties
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Net proceeds from disposals of investment property
during the year 58,101 —
Carrying value of disposals (71,206) —
Realised loss on disposal of investment properties (13,105) —
122 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
14. Investment properties held for sale
Completed
investment
property
£’000
Development
property
and land
£’000
Total
investment
property
£’000
Investment property held for sale 625 — 625
Carrying value at 31 March 2023 625 — 625
Carrying value at 31 March 2022 — — —
As at 31 March 2023, Ellesmere Port, Burnell Road is designated as held for sale, as sales
contracts were exchanged on 3 March 2023 and will be completed during the year ended
31 March 2024.
Accounting policy
An asset will be classified as held for sale in line with IFRS 5 Non‑Current Assets Held
for Sale and Discontinued Operations if its carrying value is expected to be recovered
through a sale transaction rather than continuing use. An asset will be classified in this
way only when a sale is highly probable, management are committed to selling the asset
at the year‑end date, the asset is available for immediate sale in its current condition
and the asset is expected to be disposed of within 12 months after the date of the
consolidated statement of financial position.
15. Cash and cash equivalents
31 March
2023
£’000
31 March
2022
£’000
Unrestricted cash and cash equivalents 18,990 10,787
Restricted cash and cash equivalents 6,063 5,919
Total 25,053 16,706
Restricted cash comprises £6.1 million (31 March 2022: £5.9 million) of cash held by the
Company’s Registrar to fund the shareholder dividend, less withholding tax, which was paid
on 3 April 2023 as disclosed in note 11.
Accounting policy
Cash and cash equivalents comprise cash at bank and short‑term deposits with banks
and other financial institutions, with an initial maturity of three months or less.
16. Trade and other receivables
31 March
2023
£’000
31 March
2022
£’000
Rent and insurance receivables 3,952 5,445
Payments in advance of property completion 2,080 2,090
Interest receivable on derivatives 1,050 —
Occupier deposits 698 535
Prepayments 191 198
Other receivables 1,287 1,581
Total 9,258 9,849
The rent and insurance receivables balance represents gross receivables of £4.2 million
(31 March 2022: £6.2 million), net of a provision for doubtful debts of £0.2 million
(31 March 2022: £0.8 million).
Payments in advance of property completion represent the deposits paid to vendors upon
exchange of purchase contracts.
Accounting policy
Rent and other receivables are recognised at their original invoiced value and become
due based on the terms of the underlying lease or at the date of invoice.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivables. To measure
expected credit losses on a collective basis, trade receivables are grouped based on
similar credit risk and ageing.
The expected loss rates are based on the Group’s historical credit losses experienced
over the two‑year period prior to the year end. The historical loss rates are then adjusted
for current and forward‑looking information on macroeconomic factors affecting the
Group’s customers.
123 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
The debt facility includes interest cover and market value covenants that are measured at a
Group level. The Group has complied with all covenants throughout the financial period.
Accounting policy
Loans and borrowings are initially recognised at the proceeds received net of directly
attributable transaction costs. Loans and borrowings are subsequently measured at
amortised cost with interest charged to the consolidated statement of comprehensive
income at the effective interest rate, and shown within finance costs. Transaction costs
are spread over the term of the loan.
18. Interest rate derivatives
31 March
2023
£’000
31 March
2022
£’000
At the start of the period 337 16
Additional premiums paid and accrued 10,926 —
Changes in fair value of interest rate derivatives 4,850 321
Interest rate derivative premium payable (8,726) —
Balance at the end of the period 7,387 337
Current (3,841) —
Non‑current 11,228 337
Balance at the end of the period 7,387 337
On 20 July 2022, the Group entered into interest rate caps with a premium of £2.2 million
paid in the year ending 31 March 2023. The remaining premium of £8.7 million is due in
quarterly instalments with the final payment due in January 2025.
This isn’t recognised as a separate liability because together with the derivative asset it is
considered to be one instrument.
The instruments have a combined notional value of £230.0 million with £200.0 million
at a strike rate of 1.50% and the remaining £30.0 million at a strike rate of 1.75%. The
£30.0 million instrument has a termination date of 20 November 2023, £100.0 million has a
termination date of 20 July 2025 and £100.0 million has a termination date of 20 July 2027.
17. Interest-bearing loans and borrowings
31 March
2023
£’000
31 March
2022
£’000
At the beginning of the year 271,000 222,000
Drawn in the year 65,000 49,000
Repaid in the year (30,000) —
Interest-bearing loans and borrowings 306,000 271,000
Unamortised fees at the beginning of the year (2,784) (2,901)
Loan arrangement fees paid in the year (175) (781)
Amortisation charge for the year 1,052 898
Unamortised loan arrangement fees (1,907) (2,784)
Loan balance less unamortised loan arrangement fees 304,093 268,216
At the year end, the Group had a debt facility with a club of four banks: HSBC, Bank of
Ireland, Royal Bank of Canada and Barclays. The facility runs until January 2025, with an
option to extend for a further two years (subject to lender consent), and comprises an RCF
of £138.0 million and a term loan of £182.0 million, to give a total facility of £320.0 million.
At 31 March 2023, £124.0 million was drawn against the RCF and £182.0 million against
the term loan. This gave total debt of £306.0 million (31 March 2022: £271.0 million); with
the Group also holding cash balances of £25.1 million (31 March 2022: £16.7 million), the
Group’s net debt as at 31 March 2023 is £280.9 million (31 March 2022: £254.3 million). The
LTV ratio at 31 March 2023 was therefore 33.9% (31 March 2022: 25.1%), with the increase
reflecting the acquisition in the year and the lower portfolio valuation, partially offset by the
asset disposals. All borrowings under these agreements attract a margin of 2.0% – 2.2% per
annum above SONIA, plus a credit adjustment spread equal to 11.93 bps.
As at 31 March 2023, there is £14.0 million (31 March 2022: £49.0 million) available to draw.
124 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
18. Interest rate derivatives continued
Accounting policy
Interest rate derivatives are initially recognised at fair value and are subsequently
measured at fair value, being the estimated amount that the Group would receive or pay
to terminate the agreement at the period end date, taking into account current interest
rate expectations and the current credit rating of the Group and its counterparties.
Premiums paid are recognised within the fair value of the derivative in the Statement of
Financial Position.
The Group uses valuation techniques that are appropriate in the circumstances and for
which sufficient data is available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs significant to the fair
value measurement as a whole. Changes in fair value of interest rate derivatives are
recognised within finance expenses in profit or loss in the period in which they occur.
All receipts of income from the instrument are recognised as finance income in note 8 of
the financial statements separate from the fair value measurement recorded.
19. Head lease obligations
The following table analyses the present value of minimum lease payments under
non‑cancellable head leases using an average discount rate of 6.91% for each of the
following periods:
31 March
2023
£’000
31 March
2022
£’000
Current liabilities
Within one year 705 696
Non-current liabilities
After one year but not more than five years 2,975 2,931
Later than five years 11,345 11,269
14,320 14,200
Total head lease obligations 15,025 14,896
No discounting is applied to deferred consideration on the grounds of materiality.
31 March
2023
£’000
31 March
2022
£’000
Head lease liability – opening balance 14,896 14,897
Cash flows
Non-cash movements (832) (1,057)
Interest 961 1,030
Head lease accrual — 26
Head lease obligations – closing balance 15,025 14,896
The following table analyses the minimum undiscounted lease payments under
non‑cancellable head leases for each of the following periods:
31 March
2023
£’000
31 March
2022
£’000
Current liabilities
Within one year 1,052 1,053
Non-current liabilities
After one year but not more than five years 4,219 4,211
Later than five years 85,530 85,526
Total 90,801 90,790
The fair value of the Group’s lease obligations is estimated to be equal to its carrying value.
Accounting policy
At the commencement date, head lease obligations are recognised at the present value
of future lease payments using the discount rate implicit in the lease, if determinable, or,
if not, the property‑specific incremental borrowing rate.
125 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
31 March
2023
£’000
31 March
2022
£’000
Total deferred income 7,115 7,4 87
Deferred income is rental income received in advance during the accounting period.
The income is deferred and is unwound to revenue on a straight‑line basis over the period
in which it is earned.
21. Share capital
Share capital is the nominal amount of the Company’s ordinary shares in issue.
31 March 2023 31 March 2022
Ordinary shares of
£0.01 each Number £’000 Number £’000
Authorised, issued
and fully paid:
At the start of
the period 424,861,650 4,249 424,861,650 4,249
Shares issued — — — —
Balance at the end
of the period 424,861,650 4,249 424,861,650 4,249
The share capital comprises one class of ordinary shares. At general meetings of the
Company, ordinary shareholders are entitled to one vote on a show of hands and on a poll,
to one vote for every share held. There are no restrictions on the size of a shareholding or
the transfer of shares, except for the UK REIT restrictions.
20. Other liabilities – other payables and accrued expenses,
provisions and deferred income
31 March
2023
£’000
31 March
2022
£’000
Administration expenses payable 2,170 2,576
Deferred consideration payable 4,500 —
Capital expenses payable 3,864 2,042
Loan interest payable 3,691 1,444
Property operating expenses payable 855 465
Other expenses payable 3,504 328
Total other payables and accrued expenses – current 18,584 6,855
Other payables and accrued expenses are initially recognised at fair value and subsequently
held at amortised cost.
31 March
2023
£’000
31 March
2022
£’000
Capital expenses payable 11,300 16,550
Total other payables and accrued expenses –
non-current 11,300 16,550
During the year ended 31 March 2021, the Group exchanged contracts to acquire land
for £15.0 million. The first three instalments were paid for a total of £2.5 million to the
year ended 31 March 2022 with an additional £1.5 million paid during the year ended
31 March 2023. The final instalment of £11.3 million is due to be paid on 1 September 2024.
Deferred consideration payable of £4.5 million is in relation to a property acquired during
the year ended 31 March 2020. The deferred consideration is due in September 2023, or
earlier if the property is sold before that date. The consideration is secured on a second
ranking charge over the asset.
126 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
22. Share premium
Share premium comprises the following amounts:
31 March
2023
£’000
31 March
2022
£’000
At the start of the period 275,648 275,648
Shares issued — —
Share premium 275,648 275,648
Share premium represents the excess over nominal value of the fair value of the
consideration received for equity shares net of direct issue costs .
23. Retained earnings
Retained earnings comprise the following cumulative amounts:
31 March
2023
£’000
31 March
2022
£’000
Capital reduction reserve 161,149 161,149
Total unrealised gains on investment properties 96,011 289,378
Total unrealised gain on interest rate caps 5,046 196
Total realised profits 82,208 76,554
Dividends paid from revenue profits (95,836) (68,220)
Retained earnings 248,578 459,057
Retained earnings represent the profits of the Group less dividends paid from revenue
profits to date. Unrealised gains on the revaluation of investment properties and interest
rate caps contained within this reserve are not distributable until any gains crystallise on
the sale of the investment property and settlement of the interest rate caps. The capital
reduction reserve is a distributable reserve established upon cancellation of the share
premium of the Company on 17 November 2017.
As at 31 March 2023, the Group had distributable reserves available of £147,521,000
(31 March 2022: £169,483,000).
24. Net asset value per share
Basic NAV per share amounts are calculated by dividing net assets attributable to
ordinary equity holders of the Company in the statement of financial position by the
number of ordinary shares outstanding at the end of the period. As there are no dilutive
instruments in issue, basic and diluted NAV per share are identical.
31 March
2023
£’000
31 March
2022
£’000
IFRS net assets attributable to ordinary shareholders 528,475 738,954
IFRS net assets for calculation of NAV 528,475 738,954
Adjustment to net assets:
Fair value of interest rate derivatives (note 18) (7,387) (337)
EPRA NTA 521,088 738,617
31 March
2023
Pence
31 March
2022
Pence
IFRS basic and diluted NAV per share (pence) 124.4 173.9
EPRA NTA per share (pence) 122.6 173.8
31 March
2023
Number
of shares
31 March
2022
Number
of shares
Number of shares in issue (thousands) 424,862 424,862
127 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
Development property and land has been valued by adopting the ‘comparable method’
of valuation and where appropriate supported by a ‘residual development appraisal’. The
comparable method involves applying a sales rate per acre to relevant sites supported by
comparable land sales. Residual development appraisals have been completed where there
is sufficient clarity regarding planning and an identified or indicative scheme. In a similar
manner to ‘income capitalisation’, development inputs include the capitalisation of future
rental streams with an appropriate yield to ascertain a gross development value. The costs
associated with bringing a scheme to the market are then deducted, including construction
costs, professional fees, finance and developer’s profit, to provide a residual site value.
The following tables show an analysis of the fair values of investment properties and
interest rate derivatives recognised in the statement of financial position by level of the fair
value hierarchy
1
:
31 March 2023
Assets and liabilities
measured at fair value
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Investment properties
and assets held for sale — — 828,770 828,770
Interest rate derivatives — 7,387 — 7, 3 87
Total — 7, 387 828,770 836,157
31 March 2022
Assets and liabilities
measured at fair value
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Investment properties — — 1,011,985 1,011,985
Interest rate derivatives — 337 — 337
Total — 337 1,011,985 1,012,322
1. Explanation of the fair value hierarchy:
• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access
at the measurement date;
• Level 2 – use of a model with inputs (other than quoted prices included in Level 1) that are directly or indirectly
observable market data; and
• Level 3 – use of a model with inputs that are not based on observable market data.
25. Fair value
IFRS 13 defines fair value as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement
date. The following methods and assumptions were used to estimate the fair values.
The fair value of cash and short‑term deposits, trade receivables, trade payables and other
current liabilities approximate their carrying amounts due to the short‑term maturities of
these instruments. Interest‑bearing loans and borrowings are disclosed at amortised cost.
The carrying value of the loans and borrowings approximate their fair value due to the
contractual terms and conditions of the loan. The loans are at variable interest rates of 2.0%
to 2.2% above SONIA.
Interest rate derivatives
The fair value of the interest rate cap contracts is recorded in the statement of financial
position and is revalued quarterly by an independent valuations specialist, Chatham Financial.
The fair value is determined by forming an expectation that interest rates will exceed
strike rates and discounting these future cash flows at the prevailing market rates as at the
year end.
Investment properties
Six‑monthly valuations of investment property are performed by CBRE, accredited
independent external valuers with recognised and relevant professional qualifications and
recent experience of the location and category of the investment property being valued.
The valuations are the ultimate responsibility of the Directors however, who appraise these
every six months.
The valuation of the Group’s investment property at fair value is determined by the
independent external valuer on the basis of market value in accordance with the
internationally accepted RICS Valuation – Professional Standards January 2020
(incorporating the International Valuation Standards).
Completed investment properties are valued by adopting the ‘income capitalisation’
method of valuation. This approach involves applying capitalisation yields to current and
future rental streams, net of income voids arising from vacancies or rent‑free periods and
associated running costs. These capitalisation yields and future rental values are based on
comparable property and leasing transactions in the market using the valuer’s professional
judgement and market observations. Other factors taken into account in the valuations
include the tenure of the property, tenancy details and ground and structural conditions.
128 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
25. Fair value continued
Sensitivity analysis to significant changes in unobservable inputs within the valuation of investment properties
The following table analyses:
• the fair value measurements at the end of the reporting period;
• a description of the valuation techniques applied;
• the inputs used in the fair value measurement, including the ranges of rent charged to different units within the same building; and
• for Level 3 fair value measurements, quantitative information about significant unobservable inputs used in the fair value measurement.
31 March 2023
Fair value
£’000
Valuation
technique
Key
unobservable
inputs Range
Completed investment property 753,110 Income capitalisation
ERV
Equivalent yield
£2.38 per sq ft – £17.50 per sq ft
5.03% – 19.77%
Development property and land 75,660 Comparable method Sales rate per acre £200,000 – £925,000
828,770
31 March 2022
Fair value
£’000
Valuation
technique
Key
unobservable
inputs Range
Completed investment property 913,035 Income capitalisation
ERV
Equivalent yield
£3.00 per sq ft – £17.50 per sq ft
3.5% – 13.23%
Development property and land 98,950 Comparable method £300,000 – £1,750,000
1,011,985
The weighted average ERV and equivalent yield for completed investment property is 6.8% and £7.26 per sq ft respectively (31 March 2022: 5.3% and £6.49 per sq ft). The weighted
average sales rate per acre for development property and land is £622,000 (31 March 2022: £846,000).
Significant increases/decreases in the ERV (per sq ft per annum) and rental growth per annum in isolation would result in a significantly higher/lower fair value measurement. Significant
increases/decreases in the long–term vacancy rate and discount rate (and equivalent yield) in isolation would result in a significantly higher/lower fair value measurement.
129 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
25. Fair value continued
Sensitivity analysis to significant changes in unobservable inputs
within the valuation of investment properties continued
Generally, a change in the assumption made for the ERV is accompanied by:
• a similar change in the rent growth per annum and discount rate (and exit yield); and
• an opposite change in the long‑term vacancy rate.
The table below sets out a sensitivity analysis for each of the key sources of estimation
uncertainty with the resulting increase/(decrease) in the fair value of completed
investment property and derivatives:
As at 31 March 2023
Completed investment property
Increase in
sensitivity
£’000
Decrease in
sensitivity
£’000
Change in ERV of 5% 37,656 (37,656)
Change in net equivalent yields of 25 basis points 28,012 (30,341)
Development property and land
Increase in
sensitivity
£’000
Decrease in
sensitivity
£’000
Change in sales rate per acre of 5% 3,756 (3,756)
As at 31 March 2022
Completed investment property
Increase in
sensitivity
£’000
Decrease in
sensitivity
£’000
Change in ERV of 5% 45,652 (45,652)
Change in net equivalent yields of 25 basis points (48, 513) 43,630
Development property and land
Increase in
sensitivity
£’000
Decrease in
sensitivity
£’000
Change in sales rate per acre of 5% 4,751 (4,751)
Interest rate derivatives
Increase in
sensitivity
£’000
Decrease in
sensitivity
£’000
Change in SONIA by 50 basis points 1,359 (1,360)
The sensitivity analysis for a change in SONIA has not been prepared for the year ended
31 March 2022 on the basis that the movements are immaterial.
Losses recorded in profit or loss for recurring fair value measurements categorised
within Level 3 of the fair value hierarchy amount to £193,367,000 (31 March 2022: gain of
£163,685,000) and are presented in the consolidated statement of comprehensive income
in line item ‘fair value (losses)/gains on investment properties’.
All gains and losses recorded in profit or loss for recurring fair value measurements
categorised within Level 3 of the fair value hierarchy are attributable to changes
in unrealised gains or losses relating to investment property held at the end of the
reporting period.
The carrying amount of the Group’s assets and liabilities is considered to be the same as
their fair value.
130 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
Changes in interest rates may have an impact on consolidated earnings over the longer
term. The table below provides indicative sensitivity data.
2023 2022
Effect on profit before tax:
Increase in
interest rates
by 1%
£’000
Decrease in
interest rates
by 1%
£’000
Increase in
interest rates
by 1%
£’000
Decrease in
interest rates
by 1%
£’000
Increase/(decrease) (760) 760 (2,498) 2,498
Credit risk
Credit risk is the risk that a counterparty or occupier will cause a financial loss to the Group
by failing to meet a commitment it has entered into with the Group.
All cash deposits are placed with approved counterparties, currently HSBC Bank plc. In
respect of property investments, in the event of a default by a occupier, the Group will
suffer a shortfall and additional costs concerning re‑letting of the property. The Investment
Advisor monitors the occupier arrears in order to anticipate and minimise the impact of
defaults by occupational occupiers.
Credit risk is not considered material due to the diverse number of occupiers in the
investment property portfolio.
The following table analyses the Group’s exposure to credit risk:
31 March
2023
£’000
31 March
2022
£’000
Cash and cash equivalents 18,990 10,787
Restricted cash 6,063 5,919
Trade and other receivables
1
6,987 7,561
Total 32,040 24,267
1. Excludes prepayments .
26. Financial risk management objectives and policies
The Group’s principal financial liabilities are loans and borrowings. The main purpose of
the Group’s loans and borrowings is to finance the acquisition of the Group’s property
portfolio. The Group has trade and other receivables, trade and other payables and cash
and short‑term deposits that arise directly from its operations.
The Group is exposed to market risk, interest rate risk, credit risk and liquidity risk.
The Board of Directors reviews and agrees policies for managing each of these risks,
which are summarised below.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in interest rates.
The Group enters into a variety of derivative financial instruments to manage its exposure
to interest rate risk. There has been no change to the Group’s exposure to market risks or
the manner in which these risks are managed and measured.
Interest rate risk
Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Group’s exposure to the risk of changes in
market interest rates relates to its variable rate bank loans. In order to address interest rate
risk, the Group has entered into interest rate cap instruments.
The instruments have a combined notional value of £230.0 million, with £200.0 million
at a strike rate of 1.50% and the remaining £30.0 million at a strike rate of 1.75%.
The £30.0 million instrument has a termination date of 20 November 2023, £100.0 million
has a termination date of 20 July 2025 and £100.0 million has a termination date of
20 July 2027.
As at 31 March 2023, the unhedged exposure to changes in interest rates is £76.0 million
(31 March 2022: £211.0 million).
131 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
26. Financial risk management objectives and policies continued
Liquidity risk
Liquidity risk is defined as the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial
asset. Exposure to liquidity risk arises because of the possibility that the Group could be required to pay its liabilities earlier than expected. The Group’s objective is to maintain a balance
between continuity of funding and flexibility through the use of bank deposits and loans.
Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments that are carried in the financial statements:
2023 2022
Fair value
hierarchy
Carrying
value
£’000
Fair value
£’000
Carrying
value
£’000
Fair value
£’000
Held at amortised cost
Cash and cash equivalents n/a 18,990 18,990 10,787 10,787
Restricted cash n/a 6,063 6,063 5,919 5,919
Trade and other receivables
1
n/a 6,987 6,987 7, 561 7,561
Other payables and accrued expenses
2
n/a (26,629) (26,629) (23,209) (23,209)
Head lease liabilities n/a (15,025) (15,025) (14,896) (14,896)
Interest‑bearing loans and borrowings n/a (304,093) (304,093) (268,216) (268,216)
Held at fair value
Interest rate derivatives (assets) 2 7,387 7,387 337 337
1. Excludes prepayments and payments in advance of completion.
2. Excludes VAT liability and deferred income.
132 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
26. Financial risk management objectives and policies continued
Liquidity risk continued
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
Year ended 31 March 2023
Less
than three
months
£’000
Three
to 12
months
£’000
One to
two years
£’000
Two to
five years
£’000
More than
five years
£’000
Total
£’000
Interest‑bearing loans and borrowings — 13,993 321,112 — — 335,105
Other payables and accrued expenses 10,829 4,500 11,300 — — 26,629
Head lease obligations 263 789 1,055 3,164 85,530 90,801
Total 11,092 19,282 333,467 3,164 85,530 452,535
Year ended 31 March 2022
Less
than three
months
£’000
Three
to 12
months
£’000
One to
two years
£’000
Two to
five years
£’000
More than
five years
£’000
Total
£’000
Interest‑bearing loans and borrowings — 5,329 7,09 8 276,776 — 289,203
Other payables and accrued expenses 6,159 500 4,875 11,675 — 23,209
Head lease obligations 263 790 1,052 3,159 85,526 90,790
Total 6,422 6,619 13,025 291,610 85,526 403,202
133 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
27. Subsidiaries
Company
Country of
incorporation
and operation
Number and class
of share held
by the Group
Group
holding
Tilstone Holdings Limited UK 63,872 ordinary shares 100%
Tilstone Warehouse Holdco Limited UK 94,400 ordinary shares 100%
Tilstone Property Holdings Limited UK 9,102 ordinary shares 100%
Tilstone Industrial Warehouse Limited
1
UK 23,600 ordinary shares 100%
Tilstone Retail Warehouse Limited
1
UK 20,000 ordinary shares 100%
Tilstone Industrial Limited
1
UK 20,000 ordinary shares 100%
Tilstone Retail Limited
1
UK 200 ordinary shares 100%
Tilstone Trade Limited
1
UK 20,004 ordinary shares 100%
Tilstone Basingstoke Limited
1
UK 1,000 ordinary shares 100%
Tilstone Glasgow Limited
1
UK 1 ordinary share 100%
Tilstone Radway Limited
1
UK 100 ordinary shares 100%
Tilstone Oxford Limited
1
UK 1,000 ordinary shares 100%
Tilstone Liverpool Limited
1
UK 100 ordinary shares 100%
Warehouse 1234 Limited
1
UK 100 ordinary shares 100%
Tilstone Chesterfield Limited
1
UK 15,000,001 ordinary shares 100%
1. Indirect subsidiaries.
The registered office of all subsidiaries is located at 65 Gresham Street, London EC2V 7NQ.
134 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
27. Subsidiaries continued
Accounting policy
Where property is acquired, via corporate acquisitions or otherwise, management considers the substance of the assets and activities of the acquired entity in determining whether
the acquisition represents the acquisition of a business.
Under the Definition of a Business (Amendments to IFRS 3 Business Combinations), to be considered a business an acquired set of activities and assets must include, at a minimum,
an input and a substantive process that together significantly contribute to the ability to create outputs. The optional ‘concentration test’ is also applied; where substantially all of the fair
value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business.
The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the property. Where an acquisition is considered to be
a business combination the consolidated financial statements incorporate the results of business combinations using the acquisition method.
In the Group statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date.
Any excess of the cost of a business combination over the Group’s interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired is treated as goodwill.
Where the fair value of identifiable assets, liabilities and contingent liabilities acquired exceeds the fair value of the purchase consideration, the difference is treated as a gain on bargain
purchase and credited to the Group profit or loss.
The results of acquired operations are included in the Group profit or loss from the date on which control is obtained until the date on which control ceases.
Where such acquisitions are not judged to be the acquisition of a business, they are not treated as business combinations. Rather, the cost to acquire the corporate entity is allocated
between the identifiable assets and liabilities of the entity based upon their relative fair values at the acquisition date. Accordingly, no goodwill or additional deferred tax arises.
Contingent consideration is deemed to be equity or a liability in accordance with IAS 32. If the contingent consideration is classified as equity, it is not re‑measured and its subsequent
settlement shall be accounted for within equity. If the contingent consideration is classified as a liability, subsequent changes to the fair value are recognised either in profit or loss or as
a change to other comprehensive income.
135 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
28. Capital management
The Group’s capital is represented by share capital, reserves and borrowings.
The primary objective of the Group’s capital management is to ensure that it remains within
its quantitative banking covenants and maintains a strong credit rating. The Group’s capital
policies are as follows:
• the Group will keep sufficient cash for working capital purposes with excess cash, should
there be any, deposited at the best interest rate available whilst maintaining flexibility to
fund the Group’s investment programme;
• borrowings will be managed in accordance with the loan agreements and covenants will
be tested quarterly and reported to the Directors. Additionally, quarterly lender reporting
will be undertaken in line with the loan agreement; and
• new borrowings are subject to Director approval. Such borrowings will support the
Group’s investment programme but be subject to a maximum 50% LTV. The intention is
to maintain borrowings at an LTV of between 30% and 40%.
The Group is subject to banking covenants in regard to its debt facility and these include a
prescribed methodology for interest cover and market value covenants that are measured
at a Group level.
The Group has complied with all covenants on its borrowings up to the date of this report.
All of the targets mentioned above sit comfortably within the Group’s covenant levels,
which include loan to value (“LTV”), interest cover ratio and loan to projected project
cost ratio. The Group LTV at the year end was 33.9% (2021: 25.1%) and there is substantial
headroom within existing covenants.
29. Related party transactions
Directors
The Directors (all Non‑Executive Directors) of the Company and its subsidiaries are
considered to be the key management personnel of the Group. Directors’ remuneration
(including social security costs) for the period totalled £179,000 (31 March 2022: £175,000)
and at 31 March 2023, a balance of £nil (31 March 2022: £nil) was outstanding. During the
year the Directors who served during the year received £1.6 million in dividend payments
(31 March 2022: £1.5 million). Further information is given in note 5 and in the Directors’
remuneration report on pages 94 to 96.
Investment Advisor
The Company is party to an Investment Management Agreement with the Investment
Manager and the Investment Advisor, pursuant to which the Company has appointed the
Investment Advisor to provide investment advisory services relating to the respective
assets on a day‑to‑day basis in accordance with their respective investment objectives and
policies, subject to the overall supervision and direction by the Investment Manager and the
Board of Directors.
For its services to the Company, the Investment Advisor receives an annual fee at the rate
of 1.1% of the NAV of the Company up to £500 million and at a lower rate of 0.9% thereafter.
Refer to page 99 of the Directors’ report for further information.
During the year, the Group incurred £6,970,000 (31 March 2022: £6,484,000) in respect of
investment management fees. As at 31 March 2023, £1,529,000 (31 March 2022: £1,715,000)
was outstanding.
During the year, the Group reimbursed £86,900 (31 March 2022: £nil) in respect of direct
costs incurred by the Investment Advisor relating to the movement to the Premium
Segment of the Main Market, as well as £16,665 (31 March 2022: £16,192) of incidental travel
related costs.
30. Ultimate controlling party
It is the view of the Directors that there is no ultimate controlling party .
136 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
31. Notes to the statement of cash flows
Reconciliation of changes in liabilities to cash flows generated from financing activities
Interest
payable
£’000
Interest-bearing
loans and
borrowings
£’000
Head lease
liability
£’000
Total
£’000
Balance as at 1 April 2022 1,444 268,216 14,896 284,556
Changes from financing cash flows:
Bank loans drawn down — 65,000 — 65,000
Bank loans repaid — (30,000) — (30,000)
Loan arrangement fees paid in the year — (175) — (175)
Loan interest paid (11,810) — — (11,810)
Head lease payments — — (832) (832)
Total changes from financing cash flows (11,810) 34,825 (832) 22,183
Amortisation charge for the year — 1,052 — 1,052
Head lease interest — — 961 961
Interest and commitment fee 14,057 — — 14,057
Accrued head lease expense — — — —
Balance as at 31 March 2023 3,691 304,093 15,025 322,809
137 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
31. Notes to the statement of cash flows continued
Reconciliation of changes in liabilities to cash flows generated from financing activities continued
Interest
payable
£’000
Interest‑bearing
loans and
borrowings
£’000
Head lease
liability
£’000
Total
£’000
Balance as at 1 April 2021 916 219,099 14,897 234,912
Changes from financing cash flows:
Bank loans drawn down — 49,000 — 49,000
Bank loans repaid — — — —
Loan arrangement fees paid in the year — (781) — (781)
Interest and commitment fees paid (5,288) — — (5,288)
Head lease payments — — (1,057) (1,057)
Total changes from financing cash flows (5,288) 48,219 (1,057) 41,874
Amortisation charge for the year — 898 — 898
Head lease interest — — 1,030 1,030
Interest and commitment fee 5,816 — — 5,816
Accrued head lease expense — — 26 26
Balance as at 31 March 2022 1,444 268,216 14,896 284,556
32. Post balance sheet events
A third interim dividend in respect of the year ended 31 March 2023 of 1.6 pence per share was paid to shareholders on 3 April 2023.
A fourth interim dividend in respect of the year ended 31 March 2023 of 1.6 pence per share will be payable to shareholders on the register on 16 June 2023. The ex‑dividend date
will be 15 June 2023.
On 2 June 2023, the Group entered into a new five‑year debt facility totalling £320.0 million, replacing the existing facility. The refinancing consists of £220.0 million term loan and an RCF
of £100.0 million, with a club of lenders consisting of HSBC, Bank of Ireland, NatWest and Santander.
The new facility extends the tenure of the of the Group’s debt and with improved reporting covenants.
In addition, the Group has exchanged on two further disposals for an aggregate of £29.3 million.
138 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Company statement
offinancial position
As at 31 March 2023
The accompanying notes on pages 142 to
143 form an integral part of these Company
financial statements.
The Company reported a profit for the year
ended 31 March 2023 of £2,495,000 (year
ended 31 March 2022: loss of £1,515,000).
These financial statements were approved by
the Board of Directors of Warehouse REIT plc
on 5 June 2023 and signed on its behalf by:
Neil Kirton
Company number: 10880317
Notes
31 March
2023
£’000
31 March
2022
£’000
Assets
Non-current assets
Investment in subsidiary companies 35 66,477 66,477
Amount due from subsidiaries 37 242,750 268,323
309,227 334,800
Current assets
Cash and cash equivalents 36 6,245 5,945
Amount due from subsidiaries 37 27,000 27,000
Trade and other receivables 37 697 1,053
33,942 33,998
Total assets 343,169 368,798
Liabilities
Current liabilities
Other payables and accrued expenses 38 (1,793) (2,353)
Amount due to subsidiaries 38 (5,042) —
Total liabilities (6,835) (2,353)
Net assets 336,334 366,445
Equity
Share capital 4,249 4,249
Share premium 275,648 275,648
Retained earnings 56,437 86,548
Total equity 336,334 366,445
Number of shares in issue (thousands) 424,862 424,862
Net asset value per share (basic and diluted) (pence) 79.2 86.3
139 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
The accompanying notes on pages 142 to
143 form an integral part of these Company
financial statements.
Company statement
ofchanges in equity
For the year ended 31 March 2023
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
Total
£’000
Balance at 31 March 2021 4,249 275,648 114,404 394,301
Total comprehensive expense — — (1,515) (1,515)
Dividends paid — — (26,341) (26,341)
Balance at 31 March 2022 4,249 275,648 86,548 366,445
Total comprehensive expense — — (2,495) (2,495)
Dividends paid — — (27,616) (27,616)
Balance at 31 March 2023 4,249 275,648 56,437 336,334
Retained earnings represent distributable
profits available to the members of the
Company.
140 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
The accompanying notes on pages 142 to
143 form an integral part of these Company
financial statements.
Company statement
ofcashflows
For the year ended 31 March 2023
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Cash flows from operating activities
Operating loss (2,495) (1,515)
Adjustments to reconcile profit for the period to net cash flows:
Decrease/(increase) in other receivables and prepayments 356 (336)
Increase in amounts due from subsidiary companies (12,365) (6,432)
(Decrease)/increase in other payables (560) 535
Net cash flow used in operating activities (15,064) (7,748)
Cash flows from investing activities
Loans repaid by subsidiary companies 43,780 34,252
Loans advanced to subsidiary companies (800) (5,701)
Net cash flow generated from investing activities 42,980 28,551
Cash flows from financing activities
Dividends paid in the period (27,616) (26,341)
Net cash flow utilised in financing activities (27,616) (26,341)
Net increase/(decrease) in cash and cash equivalents 300 (5,538)
Cash and cash equivalents at the start of the period 5,945 11,483
Cash and cash equivalents at the end of the period 6,245 5,945
141 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the Company financial statements
For the year ended 31 March 2023
33. General information
Warehouse REIT plc is a closed‑ended REIT incorporated in England and Wales on
24July2017. The Company began trading on 20 September 2017. The registered office of
the Company is located at 6th Floor, 65 Gresham Street, London, England, EC2V 7NQ. The
Company’s shares are admitted to trading on the Premium Segment of the Main Market,
amarket operated by the London Stock Exchange.
34. Basis of preparation
These financial statements are prepared in accordance with UK adopted international
accounting standards in conformity with the requirements of the Companies Act 2006. The
financial statements have been prepared under the historical cost convention. The audited
financial statements are presented in Pound Sterling and all values are rounded to the
nearest thousand pounds (£’000), except when otherwise indicated.
The Company has taken advantage of the exemption in section 408 of the Companies Act
2006 not to present its own statement of comprehensive income.
The financial statements of the Company follow the accounting policies laid out on pages
114 to 143.
In the course of preparing the financial statements, no judgements or estimates have been
made in the process of applying the accounting policies that have had a significant effect
on the amounts recognised in the financial statements.
35. Investment in subsidiary companies
31 March
2023
£’000
31 March
2022
£’000
Investment in subsidiary companies
Total carrying value 66,477 66,477
Total 66,477 66,477
31 March
2023
£’000
31 March
2022
£’000
Investments in subsidiary companies
Tilstone Holdings Limited 21,017 21,017
Tilstone Warehouse Holdco Limited 4,227 4,227
Tilstone Property Holdings Limited 41,233 41,233
66,477 66,477
Accounting policy
Investments in subsidiary companies are included in the statement of financial position
at cost less impairment.
Where the carrying value of the investment exceeds its recoverable amount (the higher
of value‑in‑use and fair value less costs to sell), the investment is impaired accordingly.
Impairment charges are included in Company profit or loss.
142 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Notes to the Company financial statements continued
For the year ended 31 March 2023
36. Cash and cash equivalents
31 March
2023
£’000
31 March
2022
£’000
Cash and cash equivalents 182 26
Restricted cash 6,063 5,919
Total 6,245 5,945
Restricted cash comprises £6.1 million (31 March 2022: £5.9 million) of cash held by the
Company’s Registrar to fund the shareholder dividend, less withholding tax, which was
paidon 3 April 2023 as disclosed in note 11.
37. Trade and other receivables
31 March
2023
£’000
31 March
2022
£’000
Prepayments 22 37
Other receivables 675 1,016
Amount due from subsidiaries 27,000 27,000
Current receivables 27,697 28,053
Amount due from subsidiaries 242,750 268,323
Non-current receivables 242,750 268,323
Loans due from subsidiary companies are unsecured, interest free and repayable on
demand. The Directors have reviewed the Company’s cash flow forecast and presented the
amount expected to fall due within 12 months as current. The Directors do not expect any
further amounts to be paid within 12 months and as such the remaining balance has been
classified as non‑current assets.
The amounts due from subsidiaries are not considered to carry any material credit risk,
being from related parties that remain trading in their normal capacity.
38. Other payables and accrued expenses
31 March
2023
£’000
31 March
2022
£’000
Other expenses payable 1,793 2,353
Amounts due to subsidiaries 5,042 —
Total 6,835 2,353
143 Warehouse REIT plc
Annual Report and Financial Statements 2023
Financial statements
Unaudited supplementary notes not part of the consolidated financial information
For the year ended 31 March 2023
Table 2: EPRA income statement
Notes
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
Total property income 3 51,185 51,396
Less: service charge income 3 (3,340) (2,682)
Less: dilapidation income 3 (503) (3,187)
Less: insurance recharged 3 (1,592) (1,507)
Rental income 45,750 44,020
Property operating expenses 4 (5,454) (4,789)
Service charge expenses 4 (3,767) (3,011)
Add back: service charge income 3 3,340 2,682
Add back: dilapidation income 3 503 3,187
Add back: insurance recharged 3 1,592 1,507
Gross profit 41,964 43,596
Administration expenses 4 (9,716) (8,244)
Operating profit before interest and tax 32,248 35,352
Interest from cash and short‑term deposits 7 12 —
Finance expenses 8 (15,528) (8,154)
Profit before tax 16,732 27,198
Tax on adjusted profit — —
EPRA earnings 16,732 27,198
Weighted average number of shares inissue
(thousands) 424,862 424,862
EPRA EPS (pence) 3.9 6.4
The Group is a member of the European Public Real Estate Association (“EPRA”). EPRA
has developed and defined performance measures to give transparency, comparability
and relevance of financial reporting across entities which may use different accounting
standards.
The Group presents adjusted earnings per share (“EPS”), dividends per share, total
accounting return, total cost ratio, LTV ratio and EPRA Best Practices Recommendations,
calculated in accordance with EPRA guidance, as Alternative Performance Measures
(“APMs”) to assist stakeholders in assessing performance alongside the Group’s statutory
results reported under IFRS. APMs are among the key performance indicators used
by theBoard to assess the Group’s performance and are used by research analysts
coveringthe Group.
EPRA Best Practices Recommendations have been disclosed to facilitate comparison with
the Group’s peers through consistent reporting of key real estate specific performance
measures. Certain other APMs may not be directly comparable with other companies’
adjusted measures and are not intended to be a substitute for, or superior to, any IFRS
measures of performance.
Table 1: EPRA performance measures summary
Notes 2023 2022
EPRA EPS (pence) Table 2 3.9 6.4
EPRA cost ratio (including direct
vacancy cost) Table 6 30.8% 27.1%
EPRA cost ratio (excluding direct
vacancy cost) Table 6 26.8% 24.3%
EPRA NDV per share (pence) Table 3 124.4 173.9
EPRA NRV per share (pence) Table 3 135.9 190.0
EPRA NTA per share (pence) Table 3 122.6 173.8
EPRA NIY Table 4 5.0% 4.0%
EPRA ‘topped‑up’ net initial yield Table 4 5.5% 4.4%
EPRA vacancy rate Table 5 5.0% 6.3%
EPRA LTV Table 10 36.1% 26.8%
144 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Unaudited supplementary notes not part of the consolidated financial information continued
For the year ended 31 March 2023
Table 2: EPRA income statement continued
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
EPRA earnings 16,732 27,198
Add: interest from derivatives 2,027 —
Add: costs associated with the transfer to the
PremiumSegment of the Main Market of the
LondonStock Exchange 1,069 —
Adjusted earnings 19,828 27,198
Weighted average number of shares in issue (thousands) 424,862 424,862
Adjusted EPS (pence) 4.7 6.4
The Company has also included an additional earnings measure called “Adjusted Earnings”
and “Adjusted EPS.” Adjusted Earnings and Adjusted EPS is based on EPRA’s Best
Practices Recommendations and recognises finance income earned from derivatives held
at fair value through profit and loss used to hedge the Company’s floating interest rate
exposure. Also included in adjusted earnings is the add back of the costs associated with
the transfer to the Premium Segment of the Main Market of the London Stock exchange,
as these costs will not be reoccurring and has been adjusted for as a ‘company‑specific
adjustment’.
The Board deems this a more relevant indicator of core earnings as it reflects our ability to
generate earnings from our portfolio.
Table 3: EPRA balance sheet and net asset value performance
measures
In line with the European Public Real Estate Association (“EPRA”) published Best Practice
Recommendations (“BPR”) for financial disclosures by public real estate companies, the
Group presents three measures of net asset value: EPRA net disposal value (“NDV”), EPRA
net reinstatement value (“NRV”) and EPRA net tangible assets (“NTA”).
EPRA NTA is considered to be the most relevant measure for Warehouse REIT’s operating
activities.
As at 31 March 2023
EPRA NDV
£’000
EPRA NRV
£’000
EPRA NTA
£’000
Total properties
1
828,770 828,770 828,770
Net borrowings
2
(280,947) (280,947) (280,947)
Other net liabilities (19,348) (19,348) (19,348)
IFRS NAV 528,475 528,475 528,475
Exclude: fair value of interest rate
derivatives — (7,387) (7,387)
Include: real estate transfer tax
3
— 56,356 —
NAV used in per share calculations 528,475 577,444 521,089
Number of shares in issue (thousands) 424,862 424,862 424,862
NAV per share (pence) 124.4 135.9 122.6
As at 31 March 2022
EPRA NDV
£’000
EPRA NRV
£’000
EPRA NTA
£’000
Total properties
1
1,011,985 1,011,985 1,011,985
Net borrowings
2
(254,294) (254,294) (254,294)
Other net liabilities (18,737) (18,737) (18,737)
IFRS NAV 738,954 738,954 738,954
Exclude: fair value of interest rate
derivatives — (337) (337)
Include: real estate transfer tax
3
— 68,815 —
NAV used in per share calculations 738,954 807,432 738,617
Number of shares in issue (thousands) 424,862 424,862 424,862
NAV per share (pence) 173.9 190.0 173.8
1. Professional valuation of investment property (including assets held for sale).
2. Comprising interest‑bearing loans and borrowings (excluding unamortised loan arrangement fees) of £306,000,000
(31 March 2022: £271,000,000) net of cash of £25,053,000 (31 March 2022: £16,706,000).
3. EPRA NTA and EPRA NDV reflect IFRS values which are net of real estate transfer tax. Real estate transfer tax is
added back when calculating EPRA NRV.
145 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Unaudited supplementary notes not part of the consolidated financial information continued
For the year ended 31 March 2023
31 March 2023
£’000
31 March 2022
£’000
Add notional rent on expiry of rent‑free periods or
otherlease incentives
6
4,068 3,376
‘Topped-up’ net annualised rents (C) 44,030 42,503
EPRA NIY (B/A) 5.0% 4.0%
EPRA ‘topped-up’ net initial yield (C/A) 5.5% 4.4%
4. Estimated purchasers’ costs estimated at 6.8%.
5. Gross passing rents and irrecoverable property costs assessed as at the balance sheet date for completed investment
properties excluding development property and land.
6. Adjustment for unexpired lease incentives such as rent‑free periods, discounted rent period and step rents. The
adjustment includes the annualised cash rent that will apply at the expiry of the lease incentive. Rent‑frees expire over
a weighted average period of three months’ passing rents. Irrecoverable property costs assessed as at the balance
sheet date for completed investment properties excluding development property and land.
EPRA NIY represents annualised rental income based on the cash rents passing at the
balance sheet date, less non‑recoverable property operating expenses, divided by
the market value of the property, increased with (estimated) purchasers’ costs. It is a
comparable measure for portfolio valuations designed to make it easier for investors to
judge for themselves how the valuation of portfolio X compares with portfolio Y.
EPRA ‘topped‑up’ NIY incorporates an adjustment to the EPRA NIY in respect of the
expiration of rent‑free periods (or other unexpired lease incentives such as discounted rent
periods and step rents).
NIY as stated in the Investment Advisor’s report calculates net initial yield on topped‑up
annualised rents but does not deduct non‑recoverable property costs.
Table 5: EPRA vacancy rate
31 March 2023
£’000
31 March 2022
£’000
Annualised ERV of vacant premises (D) 2,537 3,241
Annualised ERV for the investment portfolio (E) 50,736 51,479
EPRA vacancy rate (D/E) 5.0% 6.3%
EPRA vacancy rate represents ERV of vacant space divided by ERV of the completed
investment portfolio, excluding development property and land. It is a pure measure of
investment property space that is vacant, based on ERV.
Table 3: EPRA balance sheet and net asset value performance
measures continued
EPRA NDV details the full extent of liabilities and resulting shareholder value if company
assets are sold and/or if liabilities are not held until maturity. Deferred tax and financial
instruments are calculated as to the full extent of their liability, including tax exposure not
reflected in the statement of financial position, net of any resulting tax.
EPRA NTA assumes entities buy and sell assets, thereby crystallising certain levels of
deferred tax liability.
EPRA NRV highlights the value of net assets on a long‑term basis and reflects what would
be needed to recreate the Company through the investment markets based on its current
capital and financing structure. Assets and liabilities that are not expected to crystallise
in normal circumstances, such as the fair value movements on financial derivatives and
deferred taxes on property valuation surpluses, are excluded. Costs such as real estate
transfer taxes are included.
Table 4: EPRA net initial yield
31 March 2023
£’000
31 March 2022
£’000
Total properties per external valuers’ report 828,770 1,011,985
Less development property and land (75,660) (98,950)
Net valuation of completed investment property 753,110 913,035
Add estimated purchasers’ costs
4
51,211 62,086
Gross valuation of completed property including
estimated purchasers’ costs (A) 804,321 975,121
Gross passing rents
5
(annualised) 41,241 40,605
Less irrecoverable property costs
5
(1,279) (1,478)
Net annualised rents (B) 39,962 39,127
146 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Unaudited supplementary notes not part of the consolidated financial information continued
For the year ended 31 March 2023
Table 6: Total cost ratio/EPRA cost ratio
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
Property operating expenses 5,454 4,789
Service charge expenses 3,767 3,011
Add back service charge income (3,340) (2,682)
Add back insurance recharged (1,592) (1,507)
Net property operating expenses 4,289 3,611
Administration expenses 9,716 8,244
Costs associated with the transfer to the Premium Segment
of the Main Market of the London Stock Exchange
(1,069) —
Less ground rents
7
(189) (181)
Total cost including direct vacancy cost (F) 12,747 11,674
Direct vacancy cost (1,774) (1,224)
Total cost excluding direct vacancy cost (G) 10,973 10,450
Rental income 45,750 44,020
Less ground rents paid (832) (1,058)
Gross rental income less ground rents (H) 44,918 42,962
Less direct vacancy cost (1,774) (1,224)
Net rental income less ground rents 43,144 41,738
Total cost ratio including direct vacancy cost (F/H) 28.4% 27.1%
Total cost ratio excluding direct vacancy cost (G/H) 24.4% 24.3%
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
Total cost including direct vacancy cost (F) 12,745, 11,674
Costs associated with the transfer to the Premium
Segment of the Main Market of the London Stock
Exchange 1,069 —
EPRA total cost (I) 13,814 11,674
Direct vacancy cost (1,774) (1,224)
EPRA total cost excluding direct vacancy cost (J) 12,040 10,450
EPRA cost ratio including direct vacancy cost (I/H) 30.8% 27.1%
EPRA cost ratio excluding direct vacancy cost (J/H) 26.8% 24.3%
7. Ground rent expenses included within administration expenses such as depreciation of head lease assets.
EPRA cost ratios represent administrative and operating costs (including and excluding
costs of direct vacancy) divided by gross rental income less ground rents. They are a key
measure to enable meaningful measurement of the changes in the Group’s operating costs.
It is the Group’s policy not to capitalise overheads or operating expenses and no such costs
were capitalised in either the year ended 31 March 2023 or the year ended 31 March 2022.
147 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Unaudited supplementary notes not part of the consolidated financial information continued
For the year ended 31 March 2023
Table 7: Lease data
As at 31 March 2023
Year 1
£’000
Year 2
£’000
Years
3-10
£’000
Year 10+
£’000
Head rents
payable
£’000
Total
£’000
Passing rent of leases expiring in: 5,812 4,327 27, 533 4,773 (1,204) 41,241
ERV of leases expiring in: 9,239 5,062 33,716 6,460 (1,204) 53,273
Passing rent subject to review in: 15,782 8,522 18,139 2 (1,204) 41,241
ERV subject to review in: 21,055 10,280 23,140 2 (1,204) 53,273
WAULT to expiry is 5.5 years and to break is 4.5 years.
As at 31 March 2022
Year 1
£’000
Year 2
£’000
Years
3‑10
£’000
Year 10+
£’000
Head rents
payable
£’000
Total
£’000
Passing rent of leases expiring in: 2,725 5,380 28,818 4,873 (1,191) 40,605
ERV of leases expiring in: 10,529 6,018 30,600 5,523 (1,191) 51,479
Passing rent subject to review in: 5,960 5,176 25,828 4,832 (1,191) 40,605
ERV subject to review in: 10,529 6,018 30,600 5,523 (1,191) 51,479
WAULT to expiry is 5.6 years and to break is 4.5 years.
Table 8: EPRA capital expenditure
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
Acquisitions
8
66,728 43,391
Development spend
9
8,295 1,103
Completed investment properties:
10
No incremental lettable space – like‑for‑like portfolio 5,035 6,467
No incremental lettable space – other — —
Occupier incentives — —
Total capital expenditure 80,058 50,961
Conversion from accruals to cash basis (1,082) 2,886
Total capital expenditure on a cash basis 78,976 53,847
8. Acquisitions include £64,512,000 completed investment property and £2,216,000 development property and land (2022: £30,027,000 and £13,364,000 respectively).
9. Expenditure on development property and land.
10. Expenditure on completed investment properties.
148 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Unaudited supplementary notes not part of the consolidated financial information continued
For the year ended 31 March 2023
Table 9: EPRA like-for-like rental income
Note
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000 % change
EPRA like-for-like
rental income
11
40,722 38,400 6.1
Other
12
(815) —
Adjusted like-for-like
rental income 39,907 38,400 3.9
Development lettings 306 483
Properties acquired 3,155 863
Properties sold 2,382 4,274
Rental income 45,750 44,020
Service charge income 3,340 2,682
Dilapidation income 503 3,187
Insurance recharged 1,592 1,507
Total property income 3 51,185 51,396
11. Like‑for‑like portfolio valuation as at 31 March 2023: £679.9 million (31 March 2022: £814.1 million).
12. Includes rent surrender premiums, back rent and other items.
Table 10: Loan to value (“LTV”) ratio and EPRA LTV
Gross debt less cash, short‑term deposits and liquid investments, divided by the aggregate
value of properties and investments. The Group has also opted to present the EPRA loan
to value, which is defined as net debt divided by total property market value. This measure
was included as a new measure in EPRA’s Best Practices Recommendations (issued in
February 2022). The year ended 31 March 2023 is the first year this measure has been
adopted and published.
Note
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
Interest‑bearing loans and borrowings 17 306,000 271,000
Cash 15 (25,053) (16,706)
Net debt (A) 280,947 254,294
Total portfolio valuation per valuer’s
report (B) 13,14 828,770 1,011,985
LTV ratio (A/B) 33.9% 25.1%
EPRA LTV
Note
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
Interest‑bearing loans and borrowings
13
17 306,000 271,000
Net payables
14
29,352 21,044
Cash 15 (25,053) (16,706)
Net borrowings (A) 310,299 275,338
Investment properties at fair value 13,14 828,770 1,011,985
Interest rate derivatives 18 7,387 337
Head lease obligation 14,124 14,081
Total property value (B) 850,281 1,026,403
EPRA LTV (A/B) 36.5% 26.8%
13. Excludes unamortised loan arrangement fees asset of £1.9 million (2022: £2.8 million) (see note 17).
14. Net payables includes trade and other receivables, and other payables and accrued expenses.
149 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Unaudited supplementary notes not part of the consolidated financial information continued
For the year ended 31 March 2023
Table 11: Total accounting return
The movement in EPRA NTA over a period plus dividends paid in the period, expressed as a
percentage of the EPRA NTA at the start of the period.
Note
Year ended
31 March 2023
Pence per share
Year ended
31 March 2022
Pence per share
Opening EPRA NTA (A) 173.8 135.1
Movement (B) (51.2) 38.7
Closing EPRA NTA 24 122.6 173.8
Dividends per share (C) 11 6.5 6.2
Total accounting return (B+C)/A (25.7%) 33.2%
Table 12: Ongoing charges ratio
Ongoing charges ratio represents the costs of running the REIT as a percentage of NAV as
prescribed by the Association of Investment Companies.
Note
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
Administration expenses 4 9,716 8,244
Less: costs associated with moving to
Main Market (1,069) —
Less: head lease asset depreciation (189) (181)
Annualised ongoing charges (A) 8,458 8,063
Opening NAV as at 1 April 738,954 574,091
NAV as at 30 September 678,578 647, 366
Closing NAV as at 31 March 528,475 738,954
Average undiluted NAV during the
period (B) 648,669 653,470
Ongoing charges ratio (A/B) 1.3% 1.2%
150 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Property portfolio
As at 31 March 2023
Estate Town Postcode Area
Air Cargo Centre Glasgow PA3 2AY 149,000
Ashmead Industrial Estate Keynsham BS31 1TU 38,000
Austin Drive Coventry CV6 7NS 33,000
Barlborough Links Chesterfield S43 4PZ 501,000
Birkenshaw Retail Park Uddingston G71 5PR 67,000
Boulevard Industrial Park Speke L24 9PL 390,000
Brackmills Industrial Estate Northampton NN4 7PN 335,000
Bradwell Abbey Milton Keynes MK13 9HA 335,000
Cairn Court East Kilbride G74 4NB 87,000
Carisbrooke Retail Park Newport PO30 5LG 54,000
Celtic Business Park Newport NP19 4QZ 48,000
Chittening Industrial Estate Bristol BS11 0YB 199,000
Crown Street Carlisle CA2 5AB 26,000
Daimler Green Coventry CV6 3LT 139,000
Dales Manor Business Park Cambridge CB22 3FG 130,000
Daneshill Industrial Estate Basingstoke RG24 8PD 113,000
Delta Court Industrial Estate Doncaster DN9 3GN 58,000
Evolution 27 Nottingham NG15 0DJ 217,000
Falcon Business Park Burton on Trent DE14 1SG 30,000
Farthing Road Industrial Estate Ipswich IP1 5AP 101,000
Festival Drive Ebbw Vale NP23 8XF 54,000
Gateway Park Birmingham B26 3QD 220,000
Gawsworth Court Warrington WA3 6NJ 95,000
Glasgow Airport Business Park Glasgow PA3 2SJ 53,000
Gloucester Business Park Gloucester GL3 4AQ 188,000
Granby Industrial Estate Milton Keynes MK1 1NL 147,000
Great Grimsby Business Park Grimsby DN37 9TW 139,000
151 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Property portfolio continued
As at 31 March 2023
Estate Town Postcode Area
Groundwell Industrial Estate Swindon SN25 5AW 91,000
Halebank Industrial Estate Widnes WA8 8TZ 49,000
Howley Park Industrial Estate Morley LS27 0BN 62,000
Ikon Trading Estate Hartlebury DY10 4EU 160,000
Jensen Court Runcorn WA7 1PJ 60,000
Kendal House Burgess Hill RH15 9NF 27,000
Kingsditch Trading Estate Cheltenham GL51 9PL 40,000
Kingsland Grange Warrington WA1 4SR 71,000
Knowsley Business Park Knowsley L34 9GT 301,000
Leanne Business Centre Wareham BH20 4DY 13,000
Lincoln Park Preston PR5 8NA 33,000
Linkway Industrial Estate Middleton M24 2AE 48,000
Lynx Business Park Newmarket CB8 7NY 42,000
Matrix Park Chorley PR7 7NA 47,000
Maxwell Road Industrial Estate Peterborough PE2 7JE 128,000
Meridian Business Park Leicester LE19 1UX 114,000
Midpoint 18 Middlewich CW10 0HS 725,000
Milner Street Warrington WA5 1AD 42,000
Murcar Industrial Estate Aberdeen AB23 8JW 126,000
New England Industrial Estate Hoddesdon EN11 0BZ 22,000
Newport Road Cardiff CF23 9AE 49,000
Nightingale Road Industrial Estate Horsham RH12 2NW 22,000
Oldbury Point Oldbury B69 4HT 96,000
Parkway Industrial Estate Plymouth PL6 8LH 66,000
Pellon Lane Retail Park Halifax HX1 5RA 20,000
Pikelaw Place Skelmersdale WN8 9PP 124,000
Queenslie Park Glasgow G33 4DZ 395,000
Radway 16 Crewe CW2 5PR 21,000
Ransomes Europark Ipswich IP3 9RR 30,000
Roman Way Industrial Estate Godmanchester PE29 2LN 53,000
152 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Property portfolio continued
As at 31 March 2023
Estate Town Postcode Area
Roseville Business Park Leeds LS8 5DR 29,000
Ryan Business Park Wareham BH20 4DY 31,000
Shaw Lane Industrial Estate Doncaster DN2 4SQ 66,000
South Fort Trade Park Edinburgh EH6 5PE 26,000
South Gyle Industrial Estate Edinburgh EH12 9EB 48,000
St James Mill Business Park Northampton NN5 5JF 42,000
Stadium Industrial Estate Luton LU4 0JF 66,000
Stonebridge Cross Business Park Droitwich Spa WR9 0 LW 48,000
Sussex Avenue Leeds LS10 2LF 30,000
Swift Valley Industrial Estate Rugby CV21 1TN 39,000
Tewkesbury Business Park Tewkesbury GL20 8JF 114,000
Thornton Road Industrial Estate Ellesmere Port CH65 5EP 32,000
Tramway Industrial Estate Banbury OX16 5TU 151,000
Viables Business Park Basingstoke RG22 4BS 49,000
Wakefield 41 Industrial Estate Wakefield WF2 0XW 53,000
Walton Road Industrial Estate Stone ST 15 0LT 57,000
Warrington South Industrial Estate Warrington WA4 4TQ 106,000
Webb Ellis Business Park Rugby CV21 2NP 45,000
Witan Park Industrial Estate Witney OX28 4YQ 112,000
153 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Shareholder information
The Company was incorporated on 24 July 2017. This Annual Report and Financial
Statements covers the period from 1 April 2022 to 31 March 2023.
The Company’s ordinary shares were admitted to trading on AIM on 20 September 2017
following IPO and the Group’s operations therefore commenced on this date.
Capital structure
The Company’s share capital consists of ordinary shares of £0.01 each. At shareholder
meetings, members present in person or by proxy have one vote on a show of hands and
on a poll have one vote for each ordinary share held. Shareholders are entitled to receive
such dividends as the Directors resolve to pay out of the assets attributable to ordinary
shares. Holders of ordinary shares are entitled to participate in the assets of the Company
attributable to the ordinary shares in a winding up of the Company. The ordinary shares are
not redeemable.
As at the date of this report, there were 424,861,650 ordinary shares in issue, none of which
are held in treasury.
Investment objective
The Company’s investment objective is to provide shareholders with an attractive level
of income together with the potential for income and capital growth by investing in a
diversified portfolio of UK commercial property warehouse assets.
Investment policy
The Company may acquire property interests either directly or through corporate
structures (whether onshore UK or offshore) and also through joint venture or other shared
ownership or co‑investment arrangements.
The Company invests and manages its portfolio with an objective of spreading risk and, in
doing so, maintains the following investment restrictions:
• the Company will only invest, directly or indirectly, in warehouse assets located in the UK;
• no individual warehouse property will represent more than 20% of the last published GAV
of the Company at the time of investment;
• the Company will target a portfolio with no one occupier accounting for more than 15% of
the gross contracted rents of the Company at the time of purchase. In any event, no more
than 20% of the gross assets of the Company will be exposed to the creditworthiness of
any one occupier at the time of purchase;
• the portfolio will be diversified by location across the UK with a focus on areas with
strong underlying investment fundamentals; and
• the Company will not invest more than 10% of its gross assets in other listed
closed‑ended investment funds.
The Company considers investments where there is potential for active asset management,
including general refurbishment works.
The Company will not undertake speculative development (that is, development of
property which has not been at least partially leased or pre‑leased or de‑risked in a similar
way), save for refurbishment and/or extension of existing holdings. The Company may,
provided that the exposure to these assets at the time of purchase shall not exceed 15% of
the gross assets of the Company, invest directly, or via forward funding agreements
or forward commitments, in developments including pre‑developed land, where the
structure is:
(i) designed to provide the Company with investment rather than development risk;
(ii) where the development has been at least partially pre‑let or sold or de‑risked in a
similar way; and
(iii) where the Company intends to hold the completed development as an investment
asset.
154 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Shareholder information continued
Investment policy continued
The Company is permitted to invest cash, held by it for working capital purposes and
awaiting investment, in cash deposits and gilts. The Company may also invest in derivatives
for the purpose of efficient portfolio management. In particular, the Company may engage
in interest rate hedging or otherwise seek to mitigate the risk of interest rate increases as
part of the Company’s efficient portfolio management strategy.
It is envisaged that an LTV ratio of between 30% and 40% would be the optimal capital
structure for the Company over the longer term. However, in order to finance value
enhancing opportunities, the Company may temporarily incur additional gearing, subject to
a maximum LTV ratio of 50%, at the time of an arrangement.
In the event of a breach of the investment guidelines and restrictions set out above, the
Investment Manager shall inform the Directors upon becoming aware of the breach and if
the Directors consider the breach to be material, notification will be made to a Regulatory
Information Service. Any material change to the investment policy of the Company may
only be made with the approval of shareholders.
Share dealing and share prices
Shares can be traded through your usual stockbroker. The Company’s shares are admitted
to trading on the premium segment of the London Stock Exchange’s Main Market.
Share register enquiries
The register for the ordinary shares is maintained by Link Group. In the event of queries
regarding your holding, please contact the Registrar on 0371 664 0300. You can also email
enquiries@linkgroup.co.uk.
Changes of address and mandate details can be made over the telephone, but all other
changes to the register must be notified in writing to the Registrar: Link Group, Shareholder
Services, 10th Floor, Central Square, 29 Wellington Street, Leeds, LS1 4DL.
Electronic communications from the Company
Shareholders now have the opportunity to be notified by email when the Company’s
Annual Report, Half‑yearly Report and other formal communications are available on the
Company’s website, instead of receiving printed copies by post. This has environmental
benefits in the reduction of paper, printing, energy and water usage, as well as reducing
costs to the Company.
If you have not already elected to receive electronic communications from the Company
and wish to do so, please contact the Registrar using the details shown on page 159.
Pleasehave your investor code to hand.
Share capital and net asset value information
Ordinary 1p shares 424,861,650
SEDOL Number BD2NCM3
ISIN Number GB00BD2NCM38
Sources of further information
Copies of the Company’s Annual and Half‑yearly Reports are available from the Company
Secretary who can be contacted on 01392 477500 and, together with stock exchange
announcements and further information on the Company, are also available on the
Company’s website, www.warehousereit.co.uk.
Association of Investment Companies
The Company is a member of the AIC.
155 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Glossary
Adjusted earnings per share (“Adjusted EPS”)
EPRA EPS adjusted to exclude one‑off costs, divided by
the weighted average number of shares in issue during the
year, which ultimately underpins our dividend payments
Admission
The admission of Warehouse REIT plc onto the Premium
List of the London Stock Exchange on 12July2022
AGM
Annual General Meeting
AIC
The Association of Investment Companies
AIFM
Alternative Investment Fund Manager
AIFMD
The Alternative Investment Fund Managers Regulations
2013 (as amended by The Alternative Investment Fund
Managers (Amendment etc.) (EU Exit) Regulations 2019)
and the Investment Funds Sourcebook forming part of the
FCAHandbook
AIM
A market operated by the London Stock Exchange
APM
An Alternative Performance Measure is a numerical
measure of the Company’s current, historical or future
financial performance, financial position or cash flows,
other than a financial measure defined or specified in
the applicable financial framework. In selecting these
APMs, the Directors considered the key objectives and
expectations of typical investors
BREEAM
A BREEAM certified rating reflects the sustainability
performance achieved by a project and its stakeholders as
well as comparability between projects and assurance on
performance, quality and value of the asset
Company
Warehouse REIT plc
Contracted rent
Gross annual rental income currently receivable on a
property plus rent contracted from expiry of rent‑free
periods and uplifts agreed at the balance sheet date less
any ground rents payable under head leases
Development property and land
Whole or a material part of an estate identified as having
potential for development. Such assets are classified as
development property and land until development is
completed and they have the potential to be fully income
generating
Effective occupancy
Total open market rental value of the units leased divided
by total open market rental value excluding assets under
development, units undergoing refurbishment and units
under offer to let
EPC
Energy Performance Certificates are a requirement for
properties. An EPC contains information about a property’s
energy use, typical energy costs and recommendations
about how to reduce energy use and save money. An EPC
gives a property an energy efficiency rating from A (most
efficient) to G (least efficient) and is valid for ten years
EPRA
The European Public Real Estate Association, the industry
body for European REITs
EPRA cost ratio
The sum of property expenses and administration expenses
as a percentage of gross rental income less ground rents,
calculated both including and excluding direct vacancy
cost
EPRA earnings
IFRS profit after tax excluding movements relating to
changes in fair value of investment properties, gains/losses
on property disposals, changes in fair value of financial
instruments and the related tax effects
EPRA earnings per share (“EPRAEPS”)
A measure of EPS on EPRA earnings designed to present
underlying earnings from core operating activities based
onthe weighted average number of shares in issue during
the year
EPRA guidelines
The EPRA Best Practices Recommendations Guidelines
October 2019
EPRA like-for-like rental income growth
The growth in rental income on properties owned
throughout the current and previous year under review.
This growth rate includes revenue recognition and lease
accounting adjustments but excludes development
property and land in either year and properties acquired or
disposed of in either year
EPRA NDV / EPRA NRV / EPRA NTA per share
The EPRA net asset value measures figures divided by the
number of shares outstanding at the balance sheet date
156 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Glossary continued
EPRA net disposal value (“EPRANDV”)
The net asset value measure detailing the full extent of
liabilities and resulting shareholder value if company assets
are sold and/or if liabilities are not held until maturity.
Deferred tax and financial instruments are calculated as to
the full extent of their liability, including tax exposure not
reflected in the statement of financial position, net of any
resulting tax
EPRA net initial yield (“EPRANIY”)
The annualised passing rent generated by the portfolio, less
estimated non‑recoverable property operating expenses,
expressed as a percentage of the portfolio valuation
(adding notional purchasers’ costs), excluding development
property and land
EPRA net reinstatement value (“EPRA NRV”)
The net asset value measure to highlight the value of net
assets on a long‑term basis and reflect what would be
needed to recreate the Company through the investment
markets based on its current capital and financing
structure. Assets and liabilities that are not expected to
crystallise in normal circumstances, such as the fair value
movements on financial derivatives and deferred taxes on
property valuation surpluses, are excluded. Costs such as
real estate transfer taxes are included
EPRA net tangible assets (“EPRA NTA”)
The net asset value measure assuming entities buy and sell
assets, thereby crystallising certain levels of deferred tax
liability
EPRA vacancy rate
Total open market rental value of vacant units divided by
total open market rental value of the portfolio excluding
development property andland
EPS
Earnings per share
Equivalent yield
The weighted average rental income return expressed as
a percentage of the investment property valuation, plus
purchasers’ costs, excluding development property and
land
ERV
The estimated annual open market rental value of lettable
space as assessed by the external valuer
FCA
Financial Conduct Authority
GAV
Gross asset value
Group
Warehouse REIT plc and its subsidiaries
IFRS
International Financial Reporting Standards
IFRS earnings per share (“EPS”)
IFRS earnings after tax for the year divided by the
weighted average number of shares in issue during the year
IFRS NAV per share
IFRS net asset value divided by the number of shares
outstanding at the balance sheet date
Interest cover
Adjusted operating profit before gains on investment
properties, interest (net of interest received) and tax,
divided by the underlying net interest expense
Investment portfolio
Completed buildings and excluding development property
and land
IPO
Initial public offering
Like-for-like rental income growth
The increase in contracted rent of properties owned
throughout the period under review, expressed as a
percentage of the contracted rent at the start of the
period, excluding development property and land and units
undergoing refurbishment
Like-for-like valuation increase
The increase in the valuation of properties owned
throughout the period under review, expressed as a
percentage of the valuation at the start of the period, net
ofcapital expenditure
Loan to value ratio (“LTV”)
Gross debt less cash, short‑term deposits and liquid
investments, divided by the aggregate value of properties
and investments
Main Market
The Premium Segment of the London Stock Exchange’s
Main Market
NAV
Net asset value
Net initial yield (“NIY”)
Contracted rent at the balance sheet date, expressed as
a percentage of the investment property valuation, plus
purchasers’ costs, excluding development property and
land
157 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Glossary continued
Net rental income
Gross annual rental income receivable after deduction of
ground rents and other net property outgoings including
void costs and net service charge expenses
Occupancy
Total open market rental value of the units leased divided
by total open market rental value excluding development
property and land, equivalent to one minus the EPRA
vacancy rate
Ongoing charges ratio
Ongoing charges ratio represents the costs of running
the REIT as a percentage of NAV as prescribed by the
Association of Investment Companies
Passing rent
Gross annual rental income currently receivable on a
property as at the balance sheet date less any ground rents
payable under head leases
Property income distribution (“PID”)
Profits distributed to shareholders which are subject to tax
in the hands of the shareholders as property income. PIDs
are usually paid net of withholding tax (except for certain
types of tax‑exempt shareholders). REITs also pay out
normal dividends called non‑PIDs
RCF
Revolving credit facility
Real Estate Investment Trust (“REIT”)
A listed property company which qualifies for, and has
elected into, a tax regime which is exempt from corporation
tax on profits from property rental income and UK capital
gains on the sale of investment properties
SONIA
Sterling Overnight Index Average
Total accounting return
The movement in EPRA NTA over a period plus dividends
paid in the period, expressed as a percentage of the EPRA
NTA at the start of the period
Total cost ratio
EPRA cost ratio excluding one‑off costs calculated both
including and excluding vacant property costs
Weighted average unexpired lease term
(“WAULT”)
Average unexpired lease term to first break or expiry
weighted by contracted rent across the portfolio, excluding
development property andland
158 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
Investment Manager
G10 Capital Limited
(part of IQ‑EQ)
4th Floor,
3 More London Riverside
London SE1 2AQ
Telephone: 020 3696 1306
Investment Advisor
Tilstone Partners Limited
Chester office
Gorse Stacks House
George Street
Chester CH1 3EQ
Telephone: 01244 470 090
London office
55 Wells Street
London W1 3PT
Telephone: 020 3102 9465
Company website
www.warehousereit.co.uk
Administrator
Link Alternative Fund Administrators Limited
(trading as Link Asset Services)
Broadwalk House
Southernhay West
Exeter EX1 1TS
Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Corporate Brokers
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
United Kingdom
Depositary
Crestbridge Property Partnerships Limited
8 Sackville Street
London W1S 3DG
Financial PR and IR Advisor
FTI Consulting
200 Aldersgate
Aldersgate Street
London EC1A 4HD
Legal Advisors
Reed Smith LLP
The Broadgate Tower
20 Primrose Street
London EC2A 2RS
Osborne Clarke LLP
One London Wall
London EC2Y 5EB
Shepherd and Wedderburn LLP
1 Exchange Crescent
Conference Square
Edinburgh EH3 8UL
Temple Bright LLP
81 Rivington Street
London EC2A 3AY
Property Managers
Rapleys Aston Rose Ltd
4 Tenterden Street
London W1S 1TE
Savills plc
33 Margaret Street
London W1G 0JD
Registrar
Link Asset Services
Shareholder Services Department
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Telephone: 0371 664 0300
(or +44 (0)371 664 0300 from outside the UK)
Email: enquiries@linkgroup.co.uk
Website: www.linkgroup.com
Company Secretary and registered office
Link Company Matters Limited
6th Floor,
65 Gresham Street
London EC2V 7NQ
Telephone: 01392 477500
Valuer
CBRE Limited
Henrietta House
Henrietta Place
London W1G 0NB
Contact details of the advisors
159 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
June 2023
Announcement of final results
Payment of fourth interim dividend
September 2023
Annual General Meeting
Half‑year end
November 2023
Announcement of half‑yearly results
March 2024
Year end
Financial calendar
160 Warehouse REIT plc
Annual Report and Financial Statements 2023
Additional information
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Warehouse REIT plc
55 Wells Street
London
W1T 3PT
020 3011 2160
www.warehousereit.co.uk
Warehouse REIT plc Annual Report and Financial Statements 2023