TIDMBBOX
RNS Number : 6607B
Tritax Big Box REIT plc
03 February 2020
3 February 2020
TRITAX BIG BOX REIT PLC
(the "Company" or "Tritax Big Box" or, together with its
subsidiaries, the "Group")
TRADING UPDATE
Well-positioned to continue delivering strong, growing and
sustainable long-term income
The Board of Tritax Big Box REIT plc (ticker: BBOX) is pleased
to provide the following trading update ahead of the publication of
the Company's results for the year ended 31 December 2019, which
are expected to be published on 17 March 2020.
Colin Godfrey, CEO, Fund Management, said:
"The market for very large Big Box logistics assets continues to
display strong fundamentals for 2020 and the longer term.
Structural tailwinds are supportive as occupiers upscale the size
of their logistics assets(1) to further increase efficiency, reduce
costs and rationalise their supply chains, in the face of the rapid
transition to omni-channel purchasing by consumers.
This year, we see the potential for further sectoral yield
compression after a largely static 2019, which was impacted by the
uncertainty of Brexit and the general election. Investment volumes
have the potential to increase, driven by activity from overseas
investors and institutions continuing to re-weight their
portfolios. The all-property yield gap versus 10-year Gilts is wide
at nearly 400bps.
Occupier take-up looks promising for 2020 with over 10 million
sq ft of lettings reported to be under offer and carried over from
2019. Speculative supply has slightly decreased from 2018, but
importantly reduced by c.50% for buildings over 500,000 sq ft,
where demand continues to outstrip supply. Attractive levels of
rental growth are therefore expected to continue, which when
combined with 53% of our contracted rental income receiving fixed
or minimum increases will support the Group's progressive dividend
policy.
Following the acquisition of db symmetry (since rebranded Tritax
Symmetry), Development Assets represent c.11% of our GAV and we now
control one of the UK's largest logistics landbanks, providing the
opportunity for internal growth at attractive yields. In 2020, our
primary focus will be on delivering value to our shareholders
through our in-house pre-let developments which we expect to fund
primarily by recycling capital from the sale of specific Investment
Assets, and disposal plans for the current year are already
underway. We continue to identify opportunities to add further
value through acquiring new Investment Assets and forward funded
developments."
HIGH QUALITY, MODERN PORTFOLIO DELIVERING STRONG, LONG-TERM
INCOME
-- An unaudited total portfolio value, comprising Investment
Assets(2) and Development Assets(3) , (the "Portfolio") of GBP3.94
billion as at 31 December 2019 (30 June 2019: GBP3.85 billion),
including all forward funded development commitments(4)
o Like-for-like valuation uplift across the Portfolio of 1.8%
during the 12-month period to 31 December 2019 (0.9% during the
six-month period to 31 December 2019)
o Weighted average purchase yield since inception of 5.5%(5) ,
against a valuation yield of 4.5% as at 31 December 2019
o Weighted average unexpired lease term across the Portfolio as
at 31 December 2019 of 14.1 years(5,6)
-- 58 Investment Assets let or pre-let to 40 institutional
quality tenants with contracted annual rental income of GBP166.6
million as at 31 December 2019
o As at 31 December 2019, the Company's largest tenant exposure
was to Amazon, representing 13.1% of the Company's total contracted
rental income (30 June 2019: 13.2%)
o All leases provide for upward only rent reviews, of which 50%
are RPI/CPI-linked, 37% are open market, 11% are fixed and 2% are
hybrid(7)
o Within the different types of rent review, 53% have rental
income which provides for a contracted fixed or minimum level of
increase at the point of rent review
o The blended fixed or minimum level of increase across this 53%
of contracted rental income is 1.8% per annum
o A low portfolio vacancy rate of 1.3% as at 31 December 2019
(as a result of the recent completion of two speculatively
developed assets)
GOOD PROGRESS ON DEVELOPMENT AND PRE-LET DEVELOPMENT
PROGRAMME
-- The Company continues to target an average yield on cost of
6-8% across its entire portfolio of Development Assets, well above
the Group's current Portfolio valuation yield of 4.5% at the year
end
-- Plans for selective Investment Asset disposals are already
underway for the current year, with a view to recycling capital
efficiently into the Company's development portfolio
-- Good levels of occupational interest, active discussions are
ongoing with prospective occupiers across a number of schemes
within the near-term pipeline
-- At Littlebrook in Dartford, the Group's distribution
development site on the edge of London and inside the M25, the
demolition and clearance of Phases 1 and 2 has been completed, with
demolition of the remainder of the site on track to complete in Q2
2020. A healthy level of occupational interest has been received
for both Phases 1 and 2. The Company is also in advanced
discussions with a potential occupier on Phase 2, on a subject to
planning basis
-- During 2019, the Company completed five pre-let forward
funded developments totalling 4.3 million sq ft, along with three
Tritax Symmetry developments totalling 0.4 million sq ft
-- As at the year end, the current development pipeline of
assets under construction, which consists of projects expected to
reach practical completion within the next 12 months, includes:
o Two pre-let forward funded developments totalling 2.3 million
sq ft
o Three Tritax Symmetry developments totalling 0.8 million sq
ft
o 92% of the above developments are pre-let
-- Strong progress with Near term development pipeline,
consisting of sites with either planning consent received or
planning applications submitted prior to 31 December 2019,
comprising 11.5 million sq ft. 2019 highlights include:
o Land held or controlled with planning consent now totals 5.3
million sq ft. This includes planning consent received during the
year for 2.3 million sq ft of high-quality logistics space at
Kettering
o Land held or controlled with planning applications submitted
to Local Planning Authorities totals 6.2 million sq ft, of which
2.9 million sq ft was submitted during the year
ACTIVE ASSET MANAGEMENT
-- The Group settled seven rent reviews during 2019, comprising
15.4% of the Group's total contracted annual rental income. This
added GBP0.7 million to the contracted annual rent, at an average
annual like-for-like increase of 2.0%
-- The Group concluded two lease extensions during 2019,
including an 18-year lease extension with Sainsbury's to create a
25-year term, and a lease extension of five years with Whirlpool to
create a six-year term
-- Committed to a sustainable development programme, with an
objective of developing net zero carbon logistics facilities,
starting with a pilot net zero development in 2020
FINANCE
-- Successful, significantly oversubscribed c.GBP250 million equity issue in February 2019
-- GBP1.7 billion of committed debt financing in place, of which
GBP1.2 billion was drawn as at 31 December 2019. 87% of committed
debt is financed on an unsecured basis
-- 30% LTV as at 31 December 2019. An additional GBP130 million
is allocated against existing development commitments as at the
same date
-- Weighted average term to maturity of debt facilities of 7.5
years as at 31 December 2019 (7.8 years as at 30 June 2019)
-- Weighted average capped cost of debt of 2.68%(8) , primarily
comprising fixed rate debt (2.68% as at 30 June 2019)
PROGRESSIVE DIVID POLICY
-- The Company continues to target an aggregate dividend of 6.85
pence per share for the year ended 31 December 2019(9) (of which
5.1375 pence per share has already been paid for the nine months
ended 30 September 2019)
-- The Company intends to maintain its progressive dividend policy during 2020, and thereafter
Notes
1) Based on Take-Up during the period and Under Offer at the
period end for buildings of over 500,000 sq ft
2) The Group's "Investment Assets" comprise let or pre-let (in
the case of forward funded developments) assets which are income
generating, as well as any speculative development assets which
have reached practical completion but remain unlet
3) The Group's "Development Assets" comprise its property assets
which are not Investment Assets, including land and options over
land as well as any assets under construction on a speculative
basis
4) The Portfolio value includes investment property, other
property assets (including development management agreements), land
options (at cost), shares of joint ventures and remaining forward
funded development commitments
5) Excludes development site at Littlebrook, Dartford and Tritax Symmetry land assets
6) To the earlier of lease expiry or break option
7) Based on contracted annual rental income as at 31 December 2019
8) Based on gross debt, excluding commitment fees
9) The target dividend is a target only and not a forecast.
There can be no assurance that the target will be met and it should
not be taken as an indication of the Company's actual or expected
future results
For further information, please contact:
Tritax Group via Maitland/AMO below
Colin Godfrey (CEO, Fund Management)
Frankie Whitehead (Finance Director)
Maitland/AMO (Communications Adviser) Tel: 020 7379 5151
James Benjamin tritax-maitland@maitland.co.uk
Jefferies International Limited Tel: 020 7029 8000
Gary Gould
Stuart Klein
Akur Limited Tel: 020 7493 3631
Anthony Richardson
Tom Frost
Siobhan Sergeant
The Company's LEI is: 213800L6X88MIYPVR714
NOTES:
Tritax Big Box REIT plc is the only listed vehicle dedicated to
investing in very large logistics warehouse assets ("Big Boxes") in
the UK and is committed to delivering attractive and sustainable
returns for shareholders. Investing in and actively managing
existing built investments, land suitable for Big Box development
and developments predominantly delivered through pre-let forward
funded basis, the Company focuses on large, well-located, modern
Big Box logistics assets, 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 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
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END
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