Tritax shares were down 2.2% to 217.8p in early morning trading on Wednesday after the real estate fund manager said complications from cost inflation were impacting the company’s nearer term development pipeline.
The firm reported that it was mitigating some of the cost inflation by its approach to procurement, the use of fixed price construction costs and its ability to capture rental growth.
The company confirmed that low availability and diversified occupier demand had driven growth across its portfolio, with nationwide vacancy rates at 1.6%, spurring occupiers towards commit faster to new build to suit projects and lease speculative buildings under construction.
The group added that its development pipeline included 1.8 million sq ft of construction started, with 56% pre-let, resulting in £6 million of contracted secured rent.
The company currently has 3.1 million sq ft of developments under construction with 1.3 million sq ft pre-let or let, accounting for £8.4 million in contracted rent.
Tritax confirmed that the remaining units held the potential for an additional £15.2 million in contracted rent.
The property fund manager said it remained on-track to deliver an accelerated level of 3-4 million sq ft of development starts across FY 2022 within 6-8% yield on cost target range, with the earnings impact delivered through FY 2023 and FY2024.
The group reported a strong balance sheet, including an extended £50.9 million loan facility with Helaba by three years to a maturity of July 2028, alongside a loan to value in Q1 of 24.2%.
The company added that its current weighted average cost of debt was 2.27%, with 69% fixed and benefiting from an average 6.5 year maturity.
