Tritax Big Box confident in portfolio ahead of Brexit
Tritax Big Box reported an 8% uplift in its adjusted earnings per share to 6.88p in its full-year results on Wednesday, as its EPRA net asset value per share increased by 7.4% year-on-year to 152.83p as at 31 December.
FTSE 250
19,758.54
15:35 23/04/24
FTSE 350
4,420.33
15:35 23/04/24
FTSE All-Share
4,374.79
15:35 23/04/24
Real Estate Investment Trusts
2,255.89
15:35 23/04/24
Tritax Big Box Reit
150.00p
15:35 23/04/24
The FTSE 250 real estate investment trust said dividends declared in relation to 2018 totalled 6.70p per share, which was 4.7% higher year-on-year and in line with its target.
Its total return, being the increase in EPRA net asset value plus dividends paid, for the year was 12.1%, compared to its target of at least 9% per annum over the medium term.
The Tritax portfolio was independently valued at £3.42bn as at 31 December, across 54 assets, plus 114 acres of strategic land including forward-funded development commitments.
It said the portfolio's contracted annual rent roll had increased to £161.12m from £125.95m at the end of the prior year.
During the period, it further diversified its sources of borrowing, with its debut unsecured loan notes totalling £400m.
Tritax’s weighted average unexpired debt term was maintained at 8.7 years, down slightly from 8.9 years, while its loan-to-value ratio as at 31 December was 27.3%.
It claimed to have a low EPRA cost ratio of 13.7%, up slightly from 13.1%, which the board said reflected the benefits of increased scale.
The company raised £156m of equity during 2018, through an oversubscribed share issue.
On the operational front, it acquired eight big boxes during the year with an aggregate purchase price of £641.45m, which Tritax said further diversified the portfolio by geography and tenant.
It completed a 10-year lease extension with Kellogg's at its distribution centre at Trafford Park in Manchester, reflecting an increase in annual rent of 20.0% from the previous passing level.
Tritax also completed a new 15-year lease at the company's distribution centre at Barlborough Links, Chesterfield, following the successful negotiation of a lease surrender with the previous tenant, reflecting an increase in annual rent of 25.4% from the previous passing level.
As at year-end, the company’s portfolio comprised 54 assets, covering more than 29.8 million square feet of logistics space, while its weighted average unexpired lease term was 14.4 years, against its target of at least 12 years.
Detailed planning consent was achieved for 450,000 square feet on the first phase of the company’s 114 acre strategic land site at Littlebrook in Dartford during the period, the board added.
The average net initial yield of the portfolio at acquisition was 5.5%, against Tritax’s year-end valuation of 4.4%, with its portfolio being fully let, or pre-let and income producing during the year.
Since period-end, the board of Tritax Big Box announced a progressive dividend target of 6.85p per share for 2019, and raised £250m of equity to fund the acquisition of db symmetry.
An 87% economic interest had been acquired in db symmetry - one of the UK's largest strategic land portfolios for logistics property - which the directors said had the potential to deliver 38.2 million square feet of logistics assets.
“The quality of the group's portfolio and customer base mean that we are confident of continuing to deliver secure dividends to shareholders, resulting in attractive returns in a low interest rate environment,” said chairman Sir Richard Jewson.
“While the continued delays and lack of clarity over Brexit presents a substantial uncertainty for the UK economy, our market has remained robust.
“Since the referendum in June 2016, occupiers have continued to search for space, rents have risen and yields have hardened.”
Sir Richard said Brexit was also encouraging manufacturers and retailers to hold additional stock domestically, increasing occupational requirements for UK warehouse space while supply constraints continued.
“This reinforces the favourable dynamics for landlords.
“Nonetheless, Brexit does present significant risk for the UK economy which could impinge upon the current positive attributes of our market.”
The board saw “good opportunities” to continue to add assets to the portfolio at prices that created value at the point of purchase, Sir Richard Jewson added.
“Following the db symmetry acquisition, we now have the ability to bring through our own developments which are expected to contribute materially to earnings growth and our progressive dividend policy over the medium term.”