Tritax Big Box REIT (BBOX) has a simple strategy: invest in supermarket distribution centres and the industrial warehouses of the booming online retail market. Since listing in December 2013, the company has deployed £480m in equity and about £200m in bank loans to buy 14 sites in the supply chains of retailers including Sainsbury (SBRY), Tesco (TSCO) and Morrisons (MRW).
Annual rent for the properties stood at £36.2m at 31 December, giving a yield of 6.4 per cent on their aggregate acquisition cost of £567m. Most of the deals have been struck off-market, helping Tritax bank a 9.3 per cent increase in the portfolio value (excluding acquisition costs).
Fund manager Colin Godfrey dismisses suggestions that the pressures facing the supermarket sector could negatively impact Tritax's portfolio. "We’re not unduly concerned by this," he says. "There will be some store losses, but they need to refocus and rationalise core brands. They have their challenges but they will be strong partners going forward."
Nonetheless, the portfolio will diversify as Tritax makes new investments and pursues its medium-to-long-term aim of growing net assets to more than £1bn. The relative scarcity of big-box assets, whose owners pass on all maintenance and insurance costs to the tenant, should keep rents buoyant.
Prior to these results, analysts at Jefferies forecast full year earnings per share of 6.56p, giving a forward earnings yield of 5.9 per cent.
| TRITAX BIG BOX REIT (BBOX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 111p | MARKET VALUE: | £523m | |
| TOUCH: | 111.25-111.75p | 12-MONTH HIGH: | 112p | LOW: 103p |
| DIVIDEND YIELD: | 3.7% | TRADING PROP: | nil | |
| PREMIUM TO NAV | 4% | |||
| INVESTMENT PROP: | £586m | NET DEBT: | 20% | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 98 | - | - | - |
| 2014* | 107 | 41.8 | 15.1 | 4.15 |
| % change | +9 | - | - | - |
Ex-div: 5 Mar** Payment: 18 Mar *For the period 1 November 2013 - 31 December 2014 **Third interim dividend payment of 0.8p per share | ||||
