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Tritax Big Box confident in portfolio amid coronavirus
17th Mar 2020 08:55
(Sharecast News) - Tritax Big Box reported a 3.4% improvement in its contracted annual rent roll in its full-year results on Tuesday, to ?166.6m.
The FTSE 250 real estate investment trust said its operating profit was 7.7% higher year-on-year for the 12 months ended 31 December, at ?122.5m, although its adjusted earnings per share were down 3.5% at 6.64p.
Its EPRA net asset value per share was down 1.2% at 151.06p, although the board noted it was up 1.3% when excluding transaction-related costs.
The company's total return for the year was 3.3%, down from 12.1% in 2018, while its portfolio value grew 15.2% to ?3.94bn.
Its weighted average unexpired lease term broadly in line with the prior year, at 14.1 years compared to 14.4 years, while its loan-to-value ratio was 3.1 percentage points higher than the previous period at 30.4%.
Tritax said its dividend per share for the year was 2.2% higher, at 6.85p.
Looking at its operations, Tritax said its portfolio comprised 58 assets, which were "well diversified" by building size, geography and customer, and covered more than 30.9 million square feet, up from 29.8 million square feet 12 months earlier.
A total of 53% of its contracted rental income provided for contracted fixed or minimum increases at the point of rent review, with the blended minimum level of increase standing at 1.8% per annum.
Tritax said its portfolio was 99% let or pre-let and income producing during the year, as a result of two recently-completed speculative developments.
It explained that 2.4% of total rents were from leases expiring within the next three years, with 50% of leases with more than 15 years to run.
Estimated rental value for the investment portfolio was ?179.1m at year-end, representing a 7.5% reversion, while the firm's passing rent increased by ?0.7m per annum following seven rent reviews settled in the year, equalling an annual uplift of 2.0% on the rent reviewed.
The company said plans for selective Investment asset disposals were already underway for the current year.
During the year, the group acquired an 87% economic interest in db Symmetry, which carried an enterprise value for 100% of ?370m.
It said its yield on cost target across its development portfolio was 6% to 8%, and added that it delivered 4.7 million square feet of logistics buildings during the year, which were 93% pre-let or let during construction, adding ?22.5m to its gross rental income.
Planning consent was achieved for 2.6 million square feet across its strategic land sites, with Tritax saying 3.2 million square feet of logistics assets was under construction, of which 92% was pre-let.
Its near-term development pipeline consisted of 11.5 million square feet, of which 45% had planning consent as at 31 December, with gross rental income potential of around ?65m.
"2019 was an important year in the evolution of the company - we acquired and integrated a prime logistics platform to complement our high-quality investment portfolio," said chairman Sir Richard Jewson.
"The core of our business remains unchanged, with 89% of our portfolio comprising of new, modern standing assets, strategically located in prime logistics locations.
"The occupational market remained healthy last year."
Jewson said speculative supply of larger scale logistics buildings "markedly decreased", and demand outstripped supply for Grade A logistics stock.
He added that, with a large overhang of probable lettings under offer, driven by demand for logistics space over 500,000 square feet, initial prospects for 2020 looked good.
"Early positivity in the occupational and investment markets may be tempered by coronavirus, which is already impacting global growth.
"It is impossible to know the extent to which the virus will develop, but our Investment portfolio is occupied by a diversified, high-quality customer base, let on long leases.
"We continue to monitor the situation."
Jewson added that, with renewed global economic uncertainty, the company thought it was "more important than ever" to stress the "quality and longevity" of its income stream, together with embedded income growth.
"We remain confident in our ability to continue to deliver secure and growing dividends to shareholders as part of an attractive total return over the medium term.
"As such we have increased our dividend target by 2.2% to 7.00p per share for 2020."
At 0957 GMT, shares in Tritax Big Box were down 18.3% at 81.01p.
The FTSE 250 real estate investment trust said its operating profit was 7.7% higher year-on-year for the 12 months ended 31 December, at ?122.5m, although its adjusted earnings per share were down 3.5% at 6.64p.
Its EPRA net asset value per share was down 1.2% at 151.06p, although the board noted it was up 1.3% when excluding transaction-related costs.
The company's total return for the year was 3.3%, down from 12.1% in 2018, while its portfolio value grew 15.2% to ?3.94bn.
Its weighted average unexpired lease term broadly in line with the prior year, at 14.1 years compared to 14.4 years, while its loan-to-value ratio was 3.1 percentage points higher than the previous period at 30.4%.
Tritax said its dividend per share for the year was 2.2% higher, at 6.85p.
Looking at its operations, Tritax said its portfolio comprised 58 assets, which were "well diversified" by building size, geography and customer, and covered more than 30.9 million square feet, up from 29.8 million square feet 12 months earlier.
A total of 53% of its contracted rental income provided for contracted fixed or minimum increases at the point of rent review, with the blended minimum level of increase standing at 1.8% per annum.
Tritax said its portfolio was 99% let or pre-let and income producing during the year, as a result of two recently-completed speculative developments.
It explained that 2.4% of total rents were from leases expiring within the next three years, with 50% of leases with more than 15 years to run.
Estimated rental value for the investment portfolio was ?179.1m at year-end, representing a 7.5% reversion, while the firm's passing rent increased by ?0.7m per annum following seven rent reviews settled in the year, equalling an annual uplift of 2.0% on the rent reviewed.
The company said plans for selective Investment asset disposals were already underway for the current year.
During the year, the group acquired an 87% economic interest in db Symmetry, which carried an enterprise value for 100% of ?370m.
It said its yield on cost target across its development portfolio was 6% to 8%, and added that it delivered 4.7 million square feet of logistics buildings during the year, which were 93% pre-let or let during construction, adding ?22.5m to its gross rental income.
Planning consent was achieved for 2.6 million square feet across its strategic land sites, with Tritax saying 3.2 million square feet of logistics assets was under construction, of which 92% was pre-let.
Its near-term development pipeline consisted of 11.5 million square feet, of which 45% had planning consent as at 31 December, with gross rental income potential of around ?65m.
"2019 was an important year in the evolution of the company - we acquired and integrated a prime logistics platform to complement our high-quality investment portfolio," said chairman Sir Richard Jewson.
"The core of our business remains unchanged, with 89% of our portfolio comprising of new, modern standing assets, strategically located in prime logistics locations.
"The occupational market remained healthy last year."
Jewson said speculative supply of larger scale logistics buildings "markedly decreased", and demand outstripped supply for Grade A logistics stock.
He added that, with a large overhang of probable lettings under offer, driven by demand for logistics space over 500,000 square feet, initial prospects for 2020 looked good.
"Early positivity in the occupational and investment markets may be tempered by coronavirus, which is already impacting global growth.
"It is impossible to know the extent to which the virus will develop, but our Investment portfolio is occupied by a diversified, high-quality customer base, let on long leases.
"We continue to monitor the situation."
Jewson added that, with renewed global economic uncertainty, the company thought it was "more important than ever" to stress the "quality and longevity" of its income stream, together with embedded income growth.
"We remain confident in our ability to continue to deliver secure and growing dividends to shareholders as part of an attractive total return over the medium term.
"As such we have increased our dividend target by 2.2% to 7.00p per share for 2020."
At 0957 GMT, shares in Tritax Big Box were down 18.3% at 81.01p.