Tritax Big Box pleased with progress, earnings see slight decline

The FTSE 250 real estate investment trust said its EPRA net asset value per share increased 10.3% to 142.24p as at 31 December, while its total return - being the increase in EPRA net asset value plus dividends paid - for the year was 15.2%, compared to its target of at least 9% per annum over the medium term.

Adjusted earnings per share totalled 6.37p per share, down 2.2% year-on-year.

Tritax had a market capitalisation of £2.03bn as at 31 December.

Its portfolio was independently valued at £2.61bn at year-end, across 46 assets plus 114 acres of strategic land.

The portfolio's contracted annual rent roll improved to £125.95m from £99.66m at the end of 2016, which the board said included all forward funded commitments.

Tritax further diversified its sources of borrowing during the year, with its debut unsecured loan notes totalling £500m.

The company’s weighted average unexpired debt term extended to 8.9 years from 4.8 years over the period, with its loan-to-value ratio as at 31 December sitting at 26.8%.

A reducing EPRA cost ratio of 13.1% was reported, from 15.8%, which Tritax said reflected the benefits of increased scale.

The firm raised £350m of equity during 2017, through a substantially-oversubscribed share issue.

On the operational front, the company acquired 11 big box assets during the year, with an aggregate purchase price of £434.99m, further diversifying its portfolio by geography and tenant.

As at year-end, its portfolio comprised 46 assets, covering more than 22.7 million square feet of logistics space.

A total of 114 acres of strategic land was also acquired at Littlebrook, Dartford for £62.5m.

The firm’s average net initial yield of the portfolio at acquisition was 5.7%, against the board’s year-end valuation of 4.6%.

Its portfolio was fully let, or pre-let and income producing, during the year.

At year-end, the weighted average unexpired lease term was 13.9 years, against the board’s target of at least 12 years.

Since 31 December, the board announced a progressive dividend target of 6.70p for 2018. And acquired a further three big box assets, totalling £139.81m.

One pre-let forward funded asset was also conditionally exchanged, totalling £81.8m.

“We have a sector-leading portfolio of UK big box assets that are benefiting from structural change driven by increasing e-commerce penetration, and the operational and financial benefits which they can provide to our customers,” said Tritax Big Box chairman Richard Jewson.

“The fundamentals of our market remain positive and are largely unaffected by current geopolitical and economic uncertainties.

“Despite the uncertainties it brings, Brexit may provide a silver lining, since with increased border controls our customers will require more warehousing domestically, further supporting our business case.”

Jewson said that, through the “excellent relationships” enjoyed by the company’s manager, the board saw opportunities to acquire high-quality assets and forward-funded developments to further diversify its portfolio.

“The continued imbalance between occupational supply and demand means that we expect rental growth and values to remain robust in 2018.

“The assets we acquired towards the end of 2017 will add to our rental income in 2018.

“Coupled with our largely fixed cost base, this will contribute to earnings growth and support our progressive dividend target of 6.70p for 2018.”

Tritax Big Box declares 1.6p interim dividend

The company declared an interim dividend for the period from 1 October to 31 December on Wednesday, of 1.60p per ordinary share.

Tritax said the dividend would payable on or around 29 March to shareholders on the register on 16 March.

It said the ex-dividend date would be 15 March, with the dividend being a property income distribution.

“Following the payment of this dividend, the company will have paid, in aggregate, 6.40p per share in dividends in respect of the year to 31 December, in line with its stated target,” the Tritax board said in its statement.

“The company is targeting an aggregate dividend of 6.70p per ordinary share for the year ending 31 December 2018 - an increase of 4.7% over the aggregate dividend paid for 2017.”