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The Board of Tritax Big Box REIT plc (ticker: BBOX) is pleased to announce the following update ahead of the publication of the Company’s results for the year ended 31 December 2016 (currently expected to be released on or around 8 March 2017).
* valuation as at 30 June 2016 plus acquisition price for subsequently acquired properties
† by asset value; based on listed parent company
# including developer licence fees
**Source: Bloomberg, as at 31 December 2016, based on closing share price of 139.5p
‡ Source: Bloomberg, from 1 January 2016 to 31 December 2016 and 17 October 2016 to 31 December 2016 respectively, based on closing share price of 139.5p
Colin Godfrey, Partner of Tritax, said:
“Investment demand for high quality logistics assets continued unabated during 2016, notwithstanding the EU Referendum in June 2016, with yields buoyed by continued strong industrial rental growth. The high-quality, income-focused nature of our portfolio contributed to strong share price performance during a period in which UK REIT shares came under considerable pressure.
Whilst the economic backdrop looks uncertain for 2017, there are positive factors influencing our sector. According to IMRG, online retail sales on Black Friday 2016 were up 12.2% on the previous year, to £1.23 billion. New technology is also creating new channels and changing how consumers interact with retailers, with some omnichannel retailers having a need for physical, online, mobile and telephone sales ordering capabilities. Big Box logistics continues to benefit from structural change in shopping habits, with the growth in e-commerce and the economies of scale offered by these assets driving strong occupational demand in the sector, whilst significant barriers to entry result in limited supply driving solid rental growth.”
Consistent with the progressive dividend policy adopted in 2016, the Directors confirm a dividend target of 6.4 pence per Ordinary Share for the year ending 31 December 2017, representing a 3.2% increase in the dividend target of 6.2 pence per Ordinary Share for 2016 and in excess of the rate of RPI inflation over the 12-month period to 31 December 2016. Dividends are expected to be fully covered by adjusted earnings from the Company’s portfolio. From 1 January 2017, dividends are payable on a quarterly basis.
Market conditions and outlook
According to estimates, to keep pace with an e-commerce sector which continues to grow as a percentage of UK retail, the UK/Ireland market will require c.18 million sq ft of logistics space to be built annually (source: Colliers), which is far ahead of the Savills estimate that c.3.5 million sq ft is projected to be built annually. Meanwhile, logistics availability in the UK has been decreasing since 2009 with the supply of speculatively developed Big Box assets extremely limited.
With growing occupier demand and constrained occupational supply, strong rental growth has been evidenced during the last 18 months and is expected to continue through 2017, with the Company well placed to capture this growth given the profile of rent reviews across its portfolio.
For further information, please contact:
Colin Godfrey (Partner, Fund Manager) via Newgate (below)
Newgate (PR Adviser)
Tel: 020 7680 6550
Jefferies International Limited
Tel: 020 7029 8000
Tel: 020 7493 3631
Tritax Big Box REIT plc is the only listed vehicle to give pure exposure to the “Big Box” logistics asset class in the UK and is committed to delivering attractive and sustainable returns for shareholders. Investing in and managing both standing and pre-let forward funded development assets, the Company focuses on well-located, modern “Big Box” logistics 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 and 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 and limited stock supply.
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