Tritax EuroBox annualised rent shrinks after disposals

Logistics-focussed property investor Tritax EuroBox reported a 10.1% increase in IFRS rental income to €35.9m (£30.8m) on Thursday, driven by rent indexations, asset management initiatives, and the conversion of rental guarantees into income.

The London-listed company said annualised rental income, however, declined 2.6% year-on-year to €74.3m for the six months ended 31 March, primarily due to its sales programme.

Like-for-like rental income showed a marginal decrease of 0.3% over the six-month period.

Financially, Tritax EuroBox said it maintained a robust position with an adjusted EPRA cost ratio of 24.1%, well within its target range of 20% to 25%, and adjusted earnings per share of 2.62 euro cents, down 3%, again primarily due to disposals.

The board said its dividend per share remained well covered at 104.7% by adjusted earnings per share for the period.

It said its investment portfolio, though experiencing a reduction in value to €1.47bn, remained strong, leased to reputable customers on long-term, inflation-linked leases.

Portfolio reversion stood at 21.3%, reflecting a like-for-like increase in portfolio estimated rental value of 4%.

Tritax EuroBox said its asset management efforts yielded positive results, with asset management and indexation contributing €1.8m to annualised rental income.

Three new leases were signed, and additional short-term leases were secured post-period end.

The disposal programme also progressed, reaching €173m, in line with book value.

Tritax said it continued to integrate environmental, social and governance (ESG) objectives into its operations, with advancements made in German solar photovoltaic projects expected to double installed capacity to 21.5MWp.

Financially, the company’s balance sheet remained robust, benefiting from a low cost of debt and no near-term refinancing requirements.

Fitch re-affirmed its investment-grade rating with a ‘Stable’ outlook, while the loan-to-value ratio stood at 44.5%, above the preferred range, but mitigated by disposal proceeds and capital expenditure.

“Over the past six months, we have continued to build on the good progress made on delivering the strategic priorities we outlined 18 months ago,” said chairman Robert Orr.

“A solid operational performance is reflected in the cost ratio within our target range, the dividend remaining fully covered, and the further advancement of our planned disposal programme that continues to lower balance sheet leverage.

“Asset sales have now reached €173m, and we expect to complete the disposal programme and move our debt metrics towards target levels by the end of 2024.”

Orr said that in total, the these transactions were completed broadly in line with book values, demonstrating the attractiveness of the firm’s portfolio in what was a challenging period in investment markets.

“Reflecting this uncertain market backdrop, investment yields have continued to soften leading to our portfolio valuation declining marginally over the period.

“We remain confident our high-quality portfolio and customer base continues to place the company in a strong position to benefit from the supportive structural drivers and market dynamics in the European logistics sector.”

However, despite the progress with its strategic priorities and portfolio, Robert Orr said the board remained “acutely aware” of the “significant” share price discount to net asset value.

“The board is in regular dialogue with the manager and the board's advisers about how to address this issue, and there is a clear alignment and focus to deliver value for all shareholders in an effective and efficient manner.”

At 0826 BST, Tritax EuroBox’s sterling-denominated shares were down 0.93% in London, at 61.42p.

Reporting by Josh White for Sharecast.com.