Brexit won’t derail distribution market says big shed specialist

A typical Tritax Big Box development

Big shed specialist Tritax Big Box is predicting further success after stating that the fundamentals of its sector remained largely undisturbed by the current economic uncertainty generated by Brexit.

The news was delivered in a trading update ahead of the publication of the company’s full year results for the year ended December 31, 2017.

During 2017, the company – which has been active in the West Midlands owing to its strategic location – acquired 11 new sites, including one pre-let forward-funded development, with an aggregate purchase price of £435m. It also secured 124 acres of prime London distribution development land for a total consideration of £62.5m (excluding purchaser’s costs).

In addition, four pre-let forward-funded developments, totalling 2.0 million sq ft, reached practical completion in 2017.

By year-end, £2.46bn (including forward funded commitments) had been invested in a portfolio of 46 Big Box assets, as well as the 124 acres of development land at Littlebrook, Dartford.

The portfolio is 100% let or pre-let to 36 institutional quality tenants with contracted annual rental income of £124.6m. All leases provide for upward only rent reviews.

Since year-end, a further three Big Box assets have been acquired with an aggregate purchase price of £139.8m.

The year also saw the debut issue of £500m of senior unsecured loan notes, while the group also secured a new five-year £350m unsecured revolving credit facility, with an uncommitted £200m option.

The company said it was targeting an aggregate dividend of 6.4p per share for the year ended December 31, 2017, payable quarterly, of which 4.8p per share has been paid for the nine months to September 30, 2017.

Consistent with its progressive dividend policy, the company said it was targeting an aggregate dividend of 6.7p per ordinary share for the current financial year.

Colin Godfrey, partner of Tritax, said: “We continue to implement the company’s strategy, further diversifying our portfolio by geography and tenant whilst remaining patient and disciplined in our approach.

“Our increased scale brought further strategic benefits including the issuance of our £500m debut unsecured loan notes, which nearly doubled our average term to maturity at an attractive fixed cost of debt.

“The compelling fundamentals of our market remain largely undisturbed by the ongoing uncertainties associated with the economic and geopolitical backdrop. The weight of occupier and investor demand for Big Box logistics assets, coupled with a lack of meaningful supply, ensured that values and rental growth remained robust during 2017, with evidence suggesting that such attractive dynamics are likely to continue to support the performance of the sector into 2018.”

The company will publish its full year results on March 7, 2018.