17 December 2015
The Board of Tritax Big Box REIT plc (ticker: BBOX) announces this trading update as it enters the close period for the year ending 31 December 2015. This statement provides an update on investment activity, portfolio performance and market conditions.
- £1,261m (net of acquisition costs)1 invested in 25 Big Box assets let to 21 tenants
- 20 standing assets and five pre-let forward funded developments with a combined floor space of 13.0m sq. ft. (of which 2.8 million sq. ft. is under construction)
- 11 new investments made in 2015
- 81% of assets acquired off-market with average purchase yield of 5.8%
- Current weighted average unexpired lease term across the portfolio of 16.7 years
- Portfolio 100% let with contracted annual rental income of £68.2m2 as at 16 December 2015
- All leases provide for upward only rent reviews, of which 52% are open market, 23% are fixed uplift and 25% are RPI linked
- High quality institutional grade tenant mix with strong financial covenants – 84% of tenants are listed PLCs (69% in the FTSE 100 or FTSE 250)
- Forward funded development pre-let to Rolls Royce-Motor Cars Limited at Bognor completed on schedule and on budget in September 2015
- Engaged with multiple tenants on asset management initiatives
- Market rental growth expected to remain robust in 2016
- Strong pipeline of attractively priced, off-market investment opportunities identified
1 as at 30 June 2015 valuation plus acquisition price for subsequently acquired properties
2 including forward funded assets
- 3.0p per share dividend paid for the six months ended 30 June 2015; targeting fully covered aggregate dividend of 6.0p per share for the year ending 31 December 2015
- Share price total return of 20.9% over 2015 YTD and 35.7% since IPO in December 20133
- Low cost base with 2015 target total expense ratio of 1.1%
- £569.5 million of committed debt financing in place of which £375.1 million is currently drawn (34% LTV)
- Weighted average term to maturity of debt facilities of 4.7 years, increasing to 6.4 years with extension options
- Current blended margin payable of 1.42% above three month LIBOR
- Borrowing costs on current drawn debt capped at an all-in rate of 2.94% using interest rate caps which run coterminous with each facility
- Market capitalisation of £856 million3; FTSE 250, FTSE EPRA/NAREIT and MSCI index constituent
3 Source: Bloomberg, to 16 December 2015 respectively, based on closing share price of 126.3p
The UK has one of the greatest warehouse space requirements in Europe driven by the strong economic outlook and the growth in internet sales which are expected to represent 19% of total retail sales by 2019, up from 13% in 2014 (source: eMarketer). Meanwhile, logistics availability in the UK has been decreasing since 2009 with the supply of speculatively developed Big Box assets extremely limited. As far as the Company’s investment manager is aware, no Big Box assets of 500,000 sq. ft. or above are currently being developed speculatively.
Prime logistics yields have compressed by approximately 75 basis points since the Company’s IPO in December 2013 and currently stand at approximately 5.0% with the potential for further compression in 2016 given the imbalance between supply and demand which is unlikely to be rectified in the short to medium term.
As a result of growing occupier demand and constrained occupational supply, strong rental growth has been evidenced during the last 18 months and is expected to continue through 2016 with the Company well placed to capture market rental growth given the profile of rent reviews across the portfolio.
For further information, please contact:
Tel: +44 (0) 234 720188
About Tritax Big Box REIT plc
Tritax Big Box REIT plc is a real estate investment trust to which Part 12 of the UK Corporation Tax Act 2010 applies (“REIT”). The Company invests in a portfolio of well-located, modern “Big Box” assets, typically greater than 500,000 sq. ft., let to institutional-grade tenants on long-term leases (typically at least 12 years in length) with upward-only rent reviews (giving inflation linked earnings growth), and with geographic and tenant diversification throughout the UK. The Company seeks to exploit the significant opportunity in this sub-sector of the UK logistics market owing to strong tenant demand in high growth areas of the economy and limited stock supply. The Company is the first listed vehicle to give pure exposure to the “Big Box” asset class in the UK.
Further information on Tritax Big Box REIT is available at www.tritaxbigboxreitplc.co.uk
Formed in 1995, Tritax is a market leader in originating, syndicating and managing commercial property investments for private equity capital and pension funds. It is active in both the mainstream commercial property market and in the specialist area of tax efficient property investments.
As at the January 2015 Tritax’s portfolio under management has an acquisition value of approximately £1.49bn, consisting of over 12m sq. ft. of real estate assets including Big Box distribution warehouses, industrial, office, retail and hotel properties. Since 2000, the Tritax has delivered it’s investors an average IRR across all its exited vehicles of over c.18.0% pa. Further information on Tritax is available at www.tritax.co.uk