Tritax Big Box REIT build from August update as portfolio continues to...

Tritax Big Box REIT build from August update as portfolio continues to expand

Tritax Big Box REIT PLC (LON:BBOX) have told the market that they expect strong trading across 2020, which has seen them build on an impressive update in August.

Tritax Big Box said that it expects a year of growth, as the value of its warehouse portfolio rose in 2019 due to growth in the market for large logistics assets.

Colin Godfrey, CEO, Fund Management, said:

“The market for very large Big Box logistics assets continues to display strong fundamentals for 2020 and the longer term. Structural tailwinds are supportive as occupiers upscale the size of their logistics assets1 to further increase efficiency, reduce costs and rationalise their supply chains, in the face of the rapid transition to omni-channel purchasing by consumers.

This year, we see the potential for further sectoral yield compression after a largely static 2019, which was impacted by the uncertainty of Brexit and the general election. Investment volumes have the potential to increase, driven by activity from overseas investors and institutions continuing to re-weight their portfolios. The all-property yield gap versus 10-year Gilts is wide at nearly 400bps.”

The real estate investment firm said that its portfolio was valued at £3.94 billion up till December 31, which saw a notable rise from the 2018 figure of £3.42 billion.

Six months into 2019, in June the portfolio value stood at £3.85 million, and on a like for like basis the firm saw a 1.8% lift in value across 2019.

Tritax Big Box added that it is targeting an aggregate dividend of 6.7 pence for 2019, which shareholders will be pleased about as this sees progress across the year.

For the first nine months of 2019, the firm paid out a total of 5.025p and on a sweeter note for shareholders Tritax Big Box said it intends to pursue its progressive dividend policy across 2020.

Tritax said it has £1.7 billion of committed debt financing in place, of which £1.2 billion was drawn as at the end of December, adding that 87% of its committed debt is financed on an unsecured basis.

Godfrey concluded by saying:

“Occupier take-up looks promising for 2020 with over 10 million sq ft of lettings reported to be under offer and carried over from 2019. Speculative supply has slightly decreased from 2018, but importantly reduced by c.50% for buildings over 500,000 sq ft, where demand continues to outstrip supply. Attractive levels of rental growth are therefore expected to continue, which when combined with 53% of our contracted rental income receiving fixed or minimum increases will support the Group’s progressive dividend policy.

Following the acquisition of db symmetry (since rebranded Tritax Symmetry), Development Assets represent c.11% of our GAV and we now control one of the UK’s largest logistics landbanks, providing the opportunity for internal growth at attractive yields. In 2020, our primary focus will be on delivering value to our shareholders through our in-house pre-let developments which we expect to fund primarily by recycling capital from the sale of specific Investment Assets, and disposal plans for the current year are already underway. We continue to identify opportunities to add further value through acquiring new Investment Assets and forward funded developments.”

Tritax Big Box build from August

In August the Company told investors that operating profit before changes in fair value had extended 5.7% on a year-on-year basis, to £60.7 million for H1 2019.

Its portfolio value also grew 12.6% in an on-year comparison, up to £3.85 billion, with rent roll also rising 3.5% to £166.8 million.

Notably, the company declaring a dividend for the period of 3.425p per share, up 2.2% on-year. Similarly, adjusted EPS lifted modestly, up 0.9% to 3.41p a share.

Tritax Big Box total return for the six month period was down by 4.68 points to 0.42%, and EPRA net asset value per share dipped 1.8% to 150.08p.

“The long-term fundamentals of our market are positive. The sector continues to benefit from the structural change in shopping habits, as consumers switch from the high street to buying online, creating ongoing demand for logistics space to fulfil these orders.”

Shares in Tritax Big Box REIT trade at 139p (-0.29%). 3/2/20 12:02BST.