Tritax Big Box operating profit rises, on track to meet divi target

Tritax Big Box REIT posted a jump in interim operating profit on Thursday as it said it was on track to meet its dividend target for the year.

In the six months to 30 June, operating profit before changes in fair value was up 34.7% to £57.42m, while adjusted earnings per share rose 5.3% to 3.38p and the dividend was lifted 4.7% to 3.35p a share.

EPRA net asset value per share increased 2.8% to 146.22p and the real estate investment trust said its total return for the period was 5.10% versus the company's medium-term target of at least 9% a year.

Tritax said its performance was "robust", in occupational and investment markets that remain favourable. In addition, the group said it was on track to meet its dividend target for the year of 6.70p per share, which will be the fifth consecutive year of dividend growth.

Chairman Richard Jewson said: "The group has an exceptional portfolio and is well positioned to take advantage of the changing dynamics in the logistics market, in particular technical innovation in the form of e-commerce. This is affecting fortunes on the high street with a number of well-publicised retailers having succumbed to a challenging trading environment.

"Despite the depreciation of sterling having made imports more expensive, we feel that Brexit does not yet appear to be affecting occupier demand for Big Box space significantly. We expect to see continued healthy occupier requirements for well-located logistics buildings which enable occupiers to remain competitive by delivering economies of scale benefits, cost savings and improved operational efficiencies."

George Salmon, equity analyst at Hagreaves Lansdown, said there was a lot to like about Tritax.

"UK shoppers are increasingly choosing clicks over bricks, and by owning and leasing out the warehouses that support the booming online shopping sector, Tritax provides an alternative way for investors to play that trend.

"Management’s know-how is a clear advantage. They’ve consistently proven capable of securing attractive assets off-market, meaning sites are snapped up before others even know they’re for sale.

"Tritax is structured as a REIT, meaning 90% of rental profits have to be paid out as a dividend. At present its average agreement has over 14 years to run, which provides peace of mind to income-seeking investors, while the potential for further growth means the group could deliver a steady flow of dividend increases in the future."

At 1600 BST, the shares were down 1.2% to 153.20p.