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(Sharecast News) - Analysts at Berenberg cut their target price on LondonMetric Property from 282p to 252p on Wednesday after trimming their net tangible asset forecasts, citing a lowerthanexpected FY26 valuation outcome and a higher costofcapital backdrop.
Even so, Berenberg reiterated its 'buy' rating on the stock, noting the shares still offer value with a dividend yield of around 7% plus growth.
Berenberg described LondonMetric's FY26 results as "mixed", with underlying earnings per share of 13.5p and a 12.45p dividend both in line with expectations, but net tangible assets per share of 200.6p coming in about 4% below consensus. Softer likeforlike valuation growth of 0.8% and around 43m of oneoff costs linked to its acquisition of Urban Logistics REIT were the main drags.
Operationally, Berenberg said LondonMetric continues to perform well, highlighting 19% rentreview uplifts, strong income visibility from contractual uplifts worth 38m over two years, 98% occupancy and a long 17year weighted average unexpired lease term. Gearing has risen, with loan-to-value at 36.7% and net debt to EBITDA at 7.5x, though Berenberg said it expects both to ease over time.
Looking ahead, Berenberg said LondonMetric still has "plenty of wood to chop", but remains well positioned to deploy capital into accretive logistics and convenience assets. It pointed to opportunities to scale Premier Inn exposure, fund M&S developments at yields "starting with a six", and reduce concentration risks in tenants such as Ramsay and Merlin. Longerterm structural support could also come from definedbenefit pension funds exiting direct real estate.
The German bank also noted progress toward a formal offer for Picton Property Income, which would add a 320m industrialheavy portfolio and 24m of net cash. Berenberg sees the deal as lowrisk, earningsaccretive and supportive of LondonMetric's logistics strategy.
Following the FY26 update, Berenberg lifted its FY27-30 EPS forecasts by up to 3% but cut NTA estimates by 4% to 5% due to the lower starting point. Despite the reduced target price, it said the valuation remains attractive given the income yield and growth prospects.
Reporting by Iain Gilbert at Sharecast.com
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