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Q3 2020 Update: Strong Portfolio Performance and Continuing Strategic Progress
In addition to our 61 Investment Assets, we own a portfolio of land and options over land that make up the Symmetry Portfolio and Littlebrook site, which combined have the potential to develop c.41 million sq ft of logistics property. Our Portfolio is well diversified by size, geography and tenant.
We believe these factors give us one of the best portfolios in the UK quoted real estate sector. This underpins our objective of delivering attractive, low-risk and growing income whilst delivering capital growth primarily through asset management, pre-let developments and a modest amount of speculative development. As at 30 June 2019, our Land Assets extended to c.2,800 acres in total, comprised of a combination of owned and optioned land and other economic interests, such as development management agreements.
Future Pipeline at a Glance
Land Assets under control
c.2,800 acres
Target yield on cost for the Development Portfolio
6-8%
Target profit on cost
30%
Investing for future performance
In February 2019, the Group acquired one of the UK’s largest and most geographically diverse land portfolios for the development of Big Box assets and related logistics facilities.
The 26 sites making up the Symmetry Portfolio have the potential to add c.38 million sq ft of well-located Big Box and other logistics assets to the Group’s Portfolio, which totalled c.30 million sq ft prior to the db symmetry acquisition. The extent of development will depend upon many factors, including planning, whether new sites are added, tenant demand, investment demand and general economic conditions.
CAD image of the Pre-let facility for The Co-op Group at Biggleswade, Bedfordshire. This was the first asset to be added to the Group’s Investment portfolio following the acquisition of db symmetry in February 2019.
The Symmetry Portfolio is concentrated around the core logistics locations of the M1, the M40 and the North West’s prime M6 and M62 corridors, plus sites in the North East and South East. It was independently valued by Colliers International at £372.75 million as at 31 December 2018, supporting the total enterprise value attributed to db symmetry of £370 million, subject to certain working capital adjustments at completion.
The Symmetry Portfolio offers an estimated 8-10-year pipeline of opportunities:
The ability to deliver over c.38 million sq ft of Big Box and other logistics assets, complementing the Group’s existing Portfolio.
The potential to boost gross rental income to over £300 million per annum which would be accretive to both earnings and dividends.
Targeted average yield on cost of 7-8%, well above the Group’s current Portfolio Valuation yield of 4.5% at the period end, resulting in significant potential valuation gains, and NAV growth.
For more information on the Symmetry Portfolio see db symmetry.
Littlebrook, Dartford
The Littlebrook development project, formerly the site of a decommissioned power station, is adjacent to the QE2 Bridge, Dartford Tunnel and on the south bank of the River Thames and has the potential to become one of London’s largest Big Box logistics parks in a critical “last journey” location inside the M25. This is a rare asset so close to the heart of London, benefiting from exceptional transport connectivity via motorway, rail and water, excellent infrastructure, significant power provision and a robust labour market.
Marketing is under way and there has been good occupational interest for the planned first-phase development of 450,000 sq ft, for which planning consent was received at the end of 2018. Branded 450 at The Powerhouse, London. For more information see https://www.thepowerhouse.london/
In June 2020, the Company, together with its development partner, Bericote Properties secured planning consent* and exchanged contracts with a world leading on-line retailer to pre-let a new c.2.3 million sq ft Mega Box logistics building. The pre-let and planning consent covers the Phase 2 and part of Phase 3 plots of the Company’s c.97 net acres of development land, which was acquired in July 2017.
In line with its strategy, Tritax Big Box worked closely with the Customer, an existing tenant of other Big Box assets of the Company, to understand their current and future requirements and develop an optimal logistics solution. The site will play a key role in the Customer’s local and national distribution and fulfilment network in addition to delivering economic and employment benefits to the area. Following completion, the Customer will occupy over 7 million sq ft of high-quality Big Box logistics space within the Company’s portfolio representing c.19% of total contracted rent roll.
Practical completion of this highly sustainable building is expected in Summer 2021, it will target an Excellent BREEAM and EPC A ratings, with key features including:
Gross internal floor area of c.2.3 million sq ft, including three structural mezzanine floors
Clear internal height of 20 metres
High levels of automation through capital investment by the Customer
Substantial 3.5 MW solar PV scheme
The Project development will deliver attractive returns to investors based upon:
A new 20-year lease, subject to annual upward only rent reviews indexed to the Consumer Prices Index (collared at 1% pa and capped at 3% pa) with the first review in Summer 2022.
The Company will benefit from a licence fee from the Developer during the construction period equivalent to the annual rent payable by the Customer following completion of the building.
The total development cost for the delivery of this project, including land and demolition, is expected to be £205 million. This development has been committed to using existing credit facilities, with a further £164 million costs to completion. In total, this Project delivers a yield on cost which is in-line with the stated development target for the site and enhances the Company’s income.
The completion of this Project is expected to achieve the Company’s original expectations for the overall development profit on the Littlebrook site.
*Subject to expiry of a six-week Judicial Review period and conditions which need to be complied with for the consent to be validated.
In addition to our 61 Investment Assets, we own a portfolio of land and options over land that make up the Symmetry Portfolio and Littlebrook site, which combined have the potential to develop c.41 million sq ft of logistics property. Our Portfolio is well diversified by size, geography and tenant.
