Chancellor Philip Hammond may make courageous efforts to save Britain's main roads, but consumer habits are not on his side. According to the latest forecasts, online shopping will account for 32 percent of retail sales over the next five years, compared to around 16 percent today. The shift does not just mean that giants like Amazon are getting bigger, while small businesses are suffering. Many thrive on the e-commerce boom.
One of these companies sold garden furniture primarily to businesses such as B & Q, Homebase and Garden Center. The boss was forced to fight for prizes and wait months to get paid. The boss was subject to the whims and wishes of the large retail customers and in 2010 he was almost broke.
Today, he sells beanbags on Amazon and eBay directly to consumers. He gets payment before shipping orders, he does not have to bargain with the price and the business is booming.
Successful: Warehouse REIT's websites include hundreds of tenants – including Amazon
This story is repeated throughout the country and these newly successful companies need space to manufacture, store and distribute their goods. Warehouse REIT offers this place.
The shares have a value of 96.5 pence and are expected to rise over the next five years and beyond, accompanied by generous dividend payments.
Warehouse REIT specializes in municipal warehouses that are located near city centers and typically split into multiple units. Tenants include hundreds of small, emerging e-commerce companies, as well as large retailers such as Boots, Asda and even Amazon.
Warehouse has a total of 92 locations and more than 850 tenants. The properties are scattered throughout the country and most are slightly larger than a football field. These goods are not the huge out-of-town distribution centers – three or four stories high and ten pitches – used by retail giants to store, stack and process online merchandise.
Instead, Warehouse REIT's locations are primarily used to transport goods directly to consumers – known in the trade as last-mile delivery.
This is a fast-growing market area as online shoppers increasingly expect their parcels to be delivered within 24 hours of purchase.
For example, a site in Newport is rented to Amazon. Every night, lorries break out of the Big Box distribution centers, unloading their goods in white vans before dawn. These vans drive through South Wales, making sure local customers get their Amazon shopping at dusk. However, some tenants work in very different areas, including Edinburgh University, which uses a deposit to store works of art.
Warehouse is run by Andrew Bird, a real estate expert with 25 years of experience. Bird believes smaller, centralized camps have particularly good growth potential and statistics support him. The demand for space is growing, supply is limited and there are relatively few specialists in this sector. Encouragingly, Bird has put a lot of money into the business.
Warehouse traded on Aim in September 2017 and raised £ 150mn at 100% per share. Today, he and his team have invested more than 17 million pounds of cash in the company and are determined to drive that growth.
The group did well in the first few months. They bought new real estate and the stock price rose. However, last summer, a major transaction they had worked on, worth more than £ 400 million, leaked to the stock market. The camp shares were closed for six weeks, and Bird eventually went back from the deal.
The story shocked some shareholders and the stock fell to 92 pence. Since then, however, it has made progress and should continue to gain ground.
For the year ended March 31, a 6 pence dividend is forecasted, with equities yielding 6.25 percent and the payout expected to increase steadily over the next few years.
MIDAS VERDICT: Bird and his team are determined to create a business with assets in excess of £ 500 million over the next five years. However, they are only willing to buy real estate when the numbers pile up, as the recent leaked transaction shows. Ambition and caution are a good combination, especially since Warehouse REIT operates in an industry with real long-term growth prospects. At 96.5 pence is a purchase.
Traded on: aim Ticker: WHR Contact: warehousereit.co.uk or 020 3102 9465