Twin Midland mega-boxes set to complete this year pledges REIT

Two massive commercial developments in the West Midlands will be completed to schedule later this year, the property trust behind them has said.

REIT Tritax Big Box has said the practical completion dates for its Gestamp facility in Staffordshire will be July, while the Screwfix warehouse in Fradley will follow in October.

Both schemes are currently running to budget and timescale, the company said in its annual results statement.

The trust acquired the Gestamp site in Four Ashes, near Wolverhampton, last August in a deal worth more than £56m.

The 543,692 sq ft warehouse has been pre-let to automotive component manufacturer Gestamp Tallent.

Upon completion, the property will be let on a new 25-year lease subject to five yearly upward only rent reviews indexed to RPI, providing a minimum 2% pa rental growth (capped at 4% pa).

The German-owned firm is looking to relocate operations from its site in Cannock to the larger facility in order to meet demand from its major automotive customers.

The site includes an addition 101,139 sq ft to accommodate future expansion.

The Screwfix site was acquired in December for £52.7m and 561,767 sq ft unit under development has been pre-let to Screwfix Direct, the UK’s largest retailer of trade tools, accessories and hardware products, whose ultimate parent is Kingfisher.

The high specification distribution facility will be Screwfix’s fourth UK distribution centre. It is situated in a key Midlands logistics location, adjacent to the A38, providing good connectivity to the M6 Toll, M42 and M1 motorways, and with close proximity to rail and air links.

Once completed, the property will be let on a 10-year lease, subject to five yearly upward only open market rent reviews.

In its results, Tritax said that while capital growth had, the value of prime logistics assets had remained resilient. Its portfolio valuation grew 2.74% in H1 and by 0.76% in H2 2016 on a like-for-like basis; 3.45% like-for-like for the year.

It said it expected the trend would continue during 2017, buoyed by demand from domestic and overseas investors.
“Subject to shareholder support, we believe that there remain compelling reasons to grow the company through raising further equity and debt,” it said.

“This would allow us to acquire additional high quality assets from our strong identified pipeline of opportunities. The investment market for prime quality logistics assets is competitive but we believe that we can continue to acquire off-market and for value.

“Pre-let forward funded developments are likely to feature at a similar level to 2016 in order to capture the new buildings, long leases and price advantages afforded by these schemes.”

The group’s operating profit before changes in fair value of investment properties grew by 75%, to £62.87m (2015: £35.94m). It said the increase reflected the growth of its portfolio, with the contracted rent roll increasing to £99.66m across 35 assets (2015: £68.37m across 25 assets).

Total pre-tax profit for the year was £91.90m (2015: £133.98m), which resulted in basic earnings per share of 10.52p (2015: 21.56p).