Tritax Big Box 'well placed to capture growth' despite uncertain outlook
Tritax Big Box REIT, the FTSE 250 real estate investment trust investing in large retail distribution centres, said it was “well placed to capture growth” with growing occupier demand and constrained supply offering security to offset the uncertain economic conditions in Britain.
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During the 2016 calendar year Tritax made 10 new investments worth £524m and by the end of the year had a portfolio worth £1.88bn with investments in 35 big box assets let to 29 tenants.
The company's portfolio is 100% let with contracted annual rental income of £99.7m.
Consistent with its progressive dividend policy, the company is targeting a dividend of 6.4p per share for the year ending 31 December 2017, which is a 3.2% increase in the dividend target of 6.2p for 2016 and in excess of the rate of retail price index inflation over 2016.
Colin Godfrey, a partner at Tritax, said investment demand for logistics assets continued unabated during 2016, notwithstanding the EU referendum in June 2016, with yields buoyed by continued strong industrial rental growth, and due to the income-focused nature of the company’s portfolio its contributed to a strong share price performance during a period in which UK REIT shares came under pressure.
He said that while the economic backdrop looks uncertain for 2017, there are positive factors influencing the sector, as according to data from the e-retail industry, online retail sales on Black Friday were up 12.2% on the previous year, to £1.23bn, while technology is also creating new channels and changing how consumers interact with retailers
Godfrey added: “Big Box logistics continues to benefit from structural change in shopping habits, with the growth in e-commerce and the economies of scale offered by these assets driving strong occupational demand in the sector, whilst significant barriers to entry result in limited supply driving solid rental growth."
According to property firm Colliers, in order to keep pace with an e-commerce sector which continues to grow as a percentage of UK retail, the UK and Ireland market will need about 18m square feet of logistics space to be built annually, which is far ahead of the estimate by British estate agent Savills, that about 3.5m square feet is projected to be built yearly.
Tritax said it has "strong" pipeline of off-market investment opportunities with several properties currently under offer.