TIDMBBOX
RNS Number : 5546U
Tritax Big Box REIT plc
19 January 2017
19 January 2017
TRITAX BIG BOX REIT PLC
(the "Company")
TRADING UPDATE
The Board of Tritax Big Box REIT plc (ticker: BBOX) is pleased
to announce the following update ahead of the publication of the
Company's results for the year ended 31 December 2016 (currently
expected to be released on or around 8 March 2017).
PORTFOLIO HIGHLIGHTS
-- A portfolio of GBP1,877 million (including forward funded
commitments)(1) invested in 35 Big Box assets let to 29 tenants
-- 33 standing assets and two pre-let forward funded
developments, with a combined floor space of 18.2 million sq. ft.
(of which 1.1 million sq. ft. is under construction)
-- Ten new investments made in 2016, with an aggregate purchase price of GBP524 million
-- Contracts exchanged on 23 December 2016 for two forward
funded developments totalling GBP102 million, both pre-let to
Howdens Joinery Group Plc, conditional on receiving planning
consent. Planning consent is expected to be obtained in March 2017,
which will further enhance the portfolio value
-- 80% of assets acquired off-market since inception with average purchase yield of 5.7%
-- Current weighted average unexpired lease term across the portfolio of 15.3 years(2)
-- Portfolio 100% let with contracted annual rental income of
GBP99.7 million as at 31 December 2016
-- All leases provide for upward only rent reviews, of which 44%
are open market, 35% are fixed uplift, 14% are RPI/CPI-linked and
7% are hybrid
-- High quality institutional grade tenant mix with strong
financial covenants - 81% of tenants are listed PLCs (61% in the
FTSE 100 or FTSE 250)(3)
-- Strong price resilience observed in the industrial logistics
sector with modest capital value improvement during H2 2016
-- Strong pipeline of attractively priced, off-market investment
opportunities identified with several properties currently under
offer
FINANCIAL HIGHLIGHTS
-- Progressive dividend policy with target dividend of 6.2p per
share for the year ended 31 December 2016, of which 4.65p per share
has been paid for the nine months ended 30 September 2016
-- Share price total return of 15.1% over 2016 compared to 10.2%
for the FTSE EPRA/NAREIT UK Index over the same period(4)
-- Extension of the Investment Management Agreement ("IMA")
(earliest termination date of 31 December 2021), between the
Company and the Manager, Tritax Management LLP, has resulted in a
reduction of the management fee at new upper bands and lowers the
Company's total expense ratio.
-- Successful oversubscribed GBP350 million equity issue in October 2016
-- GBP691.5 million of committed debt financing in place of
which GBP541.5 million is currently drawn (30% LTV)
-- Weighted average term to maturity of debt facilities of 4.8
years as at 31 December 2016, increasing to 5.6 years with
extension options
-- Current blended margin payable of 1.43% above three month
LIBOR or the referenced GILT rate and a weighted average capped
cost of borrowing of 2.82%
-- Market capitalisation of GBP1,542 million(4) ; FTSE 250, FTSE
EPRA/NAREIT and MSCI index constituent
-- GBP3.5 million average daily traded value in 2016; GBP5.2
million average daily traded value post the October 2016 equity
raise(5)
Notes
(1) valuation as at 30 June 2016 plus acquisition price for
subsequently acquired properties
(2) by asset value; based on listed parent company
(3) including developer licence fees
(4) Source: Bloomberg, as at 31 December 2016, based on closing
share price of 139.5 p
(5) Source: Bloomberg, from 1 January 2016 to 31 December 2016
and 17 October 2016 to 31 December 2016 respectively, based on
closing share price of 139.5 p
Colin Godfrey, Partner of Tritax, said:
"Investment demand for high quality logistics assets continued
unabated during 2016, notwithstanding the EU Referendum in June
2016, with yields buoyed by continued strong industrial rental
growth. The high-quality, income-focused nature of our portfolio
contributed to strong share price performance during a period in
which UK REIT shares came under considerable pressure.
Whilst the economic backdrop looks uncertain for 2017, there are
positive factors influencing our sector. According to IMRG, online
retail sales on Black Friday 2016 were up 12.2% on the previous
year, to GBP1.23 billion. New technology is also creating new
channels and changing how consumers interact with retailers, with
some omnichannel retailers having a need for physical, online,
mobile and telephone sales ordering capabilities. 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."
DIVIDEND POLICY
Consistent with the progressive dividend policy adopted in 2016,
the Directors confirm a dividend target of 6.4 pence per Ordinary
Share for the year ending 31 December 2017, representing a 3.2%
increase in the dividend target of 6.2 pence per Ordinary Share for
2016 and in excess of the rate of RPI inflation over the 12 month
period to 31 December 2016. Dividends are expected to be fully
covered by adjusted earnings from the Company's portfolio. From 1
January 2017, dividends are payable on a quarterly basis.
MARKET CONDITIONS AND OUTLOOK
According to estimates, to keep pace with an e-commerce sector
which continues to grow as a percentage of UK retail, the
UK/Ireland market will require c.18 million sq ft of logistics
space to be built annually (source: Colliers), which is far ahead
of the Savills estimate that c.3.5 million sq ft is projected to be
built annually. Meanwhile, logistics availability in the UK has
been decreasing since 2009 with the supply of speculatively
developed Big Box assets extremely limited.
With growing occupier demand and constrained occupational
supply, strong rental growth has been evidenced during the last 18
months and is expected to continue through 2017, with the Company
well placed to capture this growth given the profile of rent
reviews across its portfolio.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Tritax Group via Newgate (below)
Colin Godfrey (Partner,
Fund Manager)
Newgate (PR Adviser) Tel: 020 7680 6550
James Benjamin Email: tritax@newgatecomms.com
Zoe Pocock
Lydia Thompson
Jefferies International Tel: 020 7029 8000
Limited
Gary Gould
Stuart Klein
Akur Limited Tel: 020 7493 3631
Anthony Richardson
Tom Frost
Siobhan Sergeant
NOTES:
Tritax Big Box REIT plc is the only listed vehicle to give pure
exposure to the "Big Box" logistics asset class in the UK and is
committed to delivering attractive and sustainable returns for
shareholders. Investing in and managing both standing and pre-let
forward funded development assets, the Company focuses on
well-located, modern "Big Box" logistics 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 and 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 and limited stock supply.
The Company is a real estate investment trust to which Part 12
of the UK Corporation Tax Act 2010 applies ("REIT"), is listed on
the premium segment of the Official List of the UK Financial
Conduct Authority and is a constituent of the FTSE 250, FTSE
EPRA/NAREIT and MSCI indices.
Further information on Tritax Big Box REIT is available at
www.tritaxbigbox.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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