Tritax continues strong rent collection in third quarter
Tritax Big Box updated the market on its third quarter on Monday, saying it was expecting that 99% of fourth quarter rents would be collected by the end of November.
The FTSE 250 real estate investment trust said 89% of those rents had been paid to date, with 10% scheduled to be collected on a monthly basis over the rest of the quarter.
For the remaining 1% of rents, payment plans had been agreed with a “small number” of tenants seeking to defer rental payments, with recovery expected over the near-term.
In line with its expectations, Tritax said 97% of second quarter rents had now been paid, along with 99% of third quarter rents.
To date, no rent-free periods or rent reductions had been agreed across the portfolio and, with outstanding rental payments being subject to a small number of agreed deferral arrangements, the board said its overarching expectation was 100% of all rent for the 2020 year would be paid over the remainder of 2020 and into 2021.
During the third quarter, Tritax said it exchanged on the sale of four assets, achieving a total consideration of £134m, in line with its target of between £125m and £175m per annum.
The sales achieved an average levered internal rate of return of more than 12.5% per annum, net of corporate costs, and a blended sale net initial yield of 5.0% compared to an aggregated purchase net initial yield of 6.6%.
During the period, it also added £1m to passing annual rent through the settlement of six rent reviews, which amounted to an increase of 8.5% to the previous passing rent.
In the period to December 2021, the company said it had a further 40% of the portfolio that was subject to rent review.
Looking at the redeployment of its disposal proceeds, Tritax said that during the quarter it saw an uptick in interest from a range of customers requiring additional logistics capabilities, supporting its confidence in the market.
It said it made “significant” progress in the period, including successful lettings of 320,000 square feet across three speculatively developed buildings to tenants including Apple, adding £2.5m to portfolio contracted annual rent.
The company said it achieved 1.9 million square feet of outline planning consent at Rugby, and submitted planning applications across a further two million square feet.
Practical completion was reached on 2.3 million square feet of pre-let forward funded developments across its buildings let to Howdens in Raunds and Amazon in Durham.
Tritax also noted that it it was delivering one of Europe's “largest and most sustainable” logistics buildings, let to Amazon, at its Littlebrook, Dartford site, with the external structure expected to be wind and watertight by mid-November, and on track for practical completion in the summer of 2021.
The firm said it was progressing our focus on environmental, social and governance (ESG), including its recently-announced commitment to net zero carbon in the construction of new developments.
Construction had started on the 59,000 square foot asset at Bicester, pre-let to DPD, where it said it would reduce the carbon impact by 35%, and save 5,000 tonnes of construction-related embedded carbon emissions.
“This has been another strong quarter across our business with good operational and strategic progress,” said chief executive officer Colin Godfrey.
“Our focus on owning the highest-quality assets and maintaining a strong tenant roster continues to position us well to weather the worst of the pandemic and deliver on our expectation that 100% of all rent for the 2020 year will be paid.”
Godfrey said it was selling assets into a “strong” market, delivering “attractive” returns to shareholders, enabling the company to redeploy proceeds into higher-returning opportunities both within the portfolio and in the market.
“Combining a high-quality portfolio, growing development pipeline and asset management initiatives with increasing demand for logistics space, we are well positioned to continue to deliver both attractive and secure income and capital growth for investors.”
At 0825 BST, shares in Tritax Big Box REIT were up 1.98% at 164.5p.