Strategically aligned with long-term structural growth drivers
Tritax Big Box REIT plc (the Group) reports its results for the 12 months from 1 January to 31 December 2020.
Delivering strong income and capital growth in an accelerating market
- 0% increase in Adjusted EPS to 7.17p (2019: 6.64p) driven by development completions, active asset management and development management income, net of disposals. Excluding the impact of development management income in excess of our anticipated run-rate, Adjusted EPS was 6.91p, an increase of 4.1%.
- Q4 dividend declared of 1.7125p, resulting in FY 2020 DPS of 6.40p (2019: 6.85p), a pay-out ratio of 90% or 93% when adjusting for development management income.
- Total Accounting Return of 19.9% (2019: 3.8%) driven by strategy implementation coupled with positive market backdrop.
- Strong balance sheet with 30.0% LTV, providing firepower to support strategy.
- Sustainability initiatives increasing ESG ratings - GRESB from 1 star to 3 stars and MSCI ESG from B to BB.
Strategically aligned with favourable long-term structural growth drivers
- Record demand in 2020 for logistics space driven by an acceleration of structural changes to facilitate the ongoing growth in e-commerce and the increasing need for modern, efficient and resilient supply chains, which the pandemic and the impact of Brexit reinforce.
- Supply of prime large-scale logistics real estate remains constrained by planning process and development timelines.
- High levels of investment in logistics real estate attracted to long-term resilient income and increasing capital values.
High-quality portfolio delivering strong performance
- Portfolio value increased to £4.41 billion driven by development gains, asset management and the strength of our market (31 December 2019: £3.94 billion), including a capital valuation surplus of 9.5%, net of capex.
- Strong rent collection, with 99.4% of 2020 rent collected and all arrears expected to be received in 2021.
- WAULT of 13.8 years as at 31 December 2020 (31 December 2019: 14.1 years), with 65% of rent generated by leases having an unexpired term of more than 10 years.
Adding further value through direct and active management
- Grew contracted annual rent roll by £13.9 million (8.4%) to £180.6 million (31 December 2019 £166.6 million) driven by asset management and letting of development assets, net of disposals:
- 7% of the portfolio was subject to rent review or variation in FY2020 achieving a 5.4% increase and adding £2.0 million to contracted rent.
- Lettings of development assets added £16.9 million to contracted rent roll.
- Realising value created in the portfolio through the disposal of four assets for £134 million, delivering a weighted levered IRR of 12.9% per annum (net of corporate costs).
- Redeploying disposal proceeds into higher returning development opportunities and acquisition of a prime 325,000 sq ft South Coast distribution logistics building with significant value-add potential.
Targeting long-term outperformance through development of the UK’s largest logistics focused land bank
- Let 2.9 million sq ft of development assets increasing contracted annual rent roll by £16.9 million.
- Achieved 2.4 millon sq ft of pre-lets growing contracted annual rent by £13.0 million.
- Let four buildings, including two to Apple and recent 20 year lease to Ocado adding £3.9 million to rent.
- Planning consent received on a further 5.4 million sq ft of prime logistics space during 2020.
- Near-term development pipeline of 10.2 million sq ft across 12 sites, of which 74% had planning consent at 31 December 2020.
- New ESG strategy launched, including commitment to build net zero carbon buildings in the Symmetry portfolio, supported by first sterling Green Bond issued by a UK REIT.
Sir Richard Jewson, Chairman of Tritax Big Box REIT plc, commented:
“Despite the challenges presented by Covid-19, Tritax Big Box built significant momentum in 2020 as the benefits of complementing our strong investment portfolio with our development land bank begin to crystalise. This progress was evidenced in the Group’s strong performance during the year, with extensive letting activity on our development portfolio, increasing values through asset management and the successful recycling of capital. In addition to these active steps that the Manager has taken, we have seen a strengthening in the UK logistics market driven by heightened occupier and investor demand, which we are well placed to capitalise upon in the coming years.”
“We believe the positive structural drivers currently being experienced in the UK logistics sector are at an early stage, and these trends will continue to have a favourable lasting impact on our market over the long-term. As a business we have the necessary capabilities and resources to capture this opportunity to deliver long-term sustainable income and capital growth for our shareholders. Progress is expected to continue in 2021, as we drive income and enhance value from the existing portfolio through asset management and rent reviews, and as our development portfolio increasingly contributes to our financial performance. We have seen significant and increasing levels of occupational interest in our development pipeline giving us confidence in our ability to deliver further long-term sustainable growth. We expect to continue to pay an attractive dividend to shareholders, while ensuring we have the capacity to invest in the opportunities that will drive earnings and dividend growth over the coming years.”
A replay of the webcast is available at www.tritaxbigbox.co.uk/investors/results-centre/