Want a dividend share that’s paying over twice the average for the FTSE 100? And one that’s trading below its book value? Well, this real estate investment trust (REIT) fits the bill.
But let’s see if the stock’s really as attractive as it sounds.
Delving deeper
LondonMetric Property‘s (LSE:LMP) a relative newcomer to the index of the UK’s largest listed companies. Following a significant acquisition, it joined the elite in June 2024. The group owns a portfolio of properties valued at £7.6bn (at 30 September 2025).
It specialises in “mission critical and key operating assets” in the “strongest sectors”. According to the group, these comprise logistics (experiencing strong demand from “e-commerce expansion”), entertainment and leisure (“high barriers to entry”), convenience stores (“defensive, income stable”), and healthcare (“attractive to investors seeking resilience”).
The trust claims it’s built an “all weather portfolio that can navigate short term macro volatility”. This could make it attractive to investors given the turbulent times in which we live.
The REIT also focuses on triple net leases in which the tenant pays rent plus all property taxes, insurance, and maintenance costs. This transfers more of the operational risk associated with commercial property to the tenant.
Despite its name, only 40% of its portfolio valuation comes from properties located in London and the South East.
Great for income
To retain certain tax privileges, a REIT must return at least 90% of its annual rental property to shareholders via dividends each year.
This helps explain its yield of 7%, compared to 2.8% for the FTSE 100 as a whole. However, savvy investors know that income shares don’t come with any guarantees. Indeed, 90% of zero is nil.
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But LondonMetric has increased its annual payout for 10 successive years. Although this still doesn’t provide any future certainty, it gives some comfort that it offers a better chance than most of raising its dividend.
In cash terms, its payout over the past four quarters was 34.6% higher than for its March 2022 financial year.
And there’s more…
However, this is only half the story. At 30 September 2025, the group reported net assets per share of 202.1p. This is around 13% more than its current (31 March) share price. This means there should be some capital growth for new shareholders as — in theory — rational investors seek out undervalued companies.
However, discounts in the REIT sector are common. As with its peers, LondonMetric’s vulnerable to a higher interest rate environment – it had bank borrowings of £2.8bn at 30 September – which seems increasingly likely given events in the Middle East.
Not only would this lead to increased borrowing costs and, potentially, restrict its ability to take on more debt and expand, it also makes alternative less-risky investments more attractive to investors. This could dent its share price.
With its emphasis on the rapidly-growing urban logistics sector (54% of its portfolio value), an occupancy rate of 98.1%, a weighted-average unexpired lease term of 16.4 years, and many blue-chip tenants, including Amazon and Tesco, I think the group’s dividend looks secure for now. And some capital growth could be the icing on the cake.
For those looking to take a stake in the UK property market, without wanting the hassle of becoming a landlord, I think LondonMetric Property could be a REIT to consider.
