Trading Statement

RNS Number : 3358J

Tritax Big Box REIT plc

17 December 2015

 

17 December 2015

TRITAX BIG BOX REIT PLC

(the "Company")

PRE-CLOSE UPDATE

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.

PORTFOLIO HIGHLIGHTS

·      £1,261 million (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 13.0 million 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 £68.2 million² 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

FINANCIAL HIGHLIGHTS

·      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

Colin Godfrey, Partner of Tritax, said:

"2015 has been another significant year of development for the Company with 11 new investments creating an increasingly diversified and high quality portfolio, a new five year £500 million debt facility secured on attractive terms and offering substantial operational flexibility and strong share price performance underpinned by the long term, income-focused nature of the Company's real estate assets.

As we look forward to 2016, we believe the imbalance between supply and demand of Big Box assets is a theme which will continue to dominate the logistics sector driving further market rental growth."

DIVIDEND POLICY

Since the IPO, the Board has targeted an initial annual dividend yield (on a fully invested and geared basis) of 6% by reference to the IPO issue price of 100 pence. With effect from 1 January 2016 the Directors intend to adopt a progressive dividend policy and expect to provide guidance to investors in this regard during Q1 2016. Dividends are expected to be fully covered by earnings from the Company's portfolio.

MARKET CONDITIONS AND OUTLOOK

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:

Tritax Group Colin Godfrey (Partner, Fund Manager)	via Newgate (below)
Newgate (PR Adviser) James Benjamin Alex Shilov Lydia Thompson	Tel: [phone] Email: [e-mail]
Jefferies International Limited Gary Gould Stuart Klein	Tel: [phone]
Akur Limited Anthony Richardson Tom Frost Siobhan Sergeant	Tel: [phone]

NOTES:

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 only 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.tritaxbigbox.co.uk 

 

END

 

 

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