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Tritax Management goes European

Tritax Management looks to set up a big box operation in Europe
June 28, 2018

Tritax Management, the investment manager of Tritax Big Box REIT (BBOX), will act as the alternative investment fund manager for Tritax EuroBox, which earlier this month announced its intention to float on London’s main market. The initial public offering is expected to raise £300m through a placing, an offer for subscription and an intermediaries offer. The minimum subscription is £1,000 and the offer closes at 1pm on 3 July, with trading starting on 9 July.

The near-term pipeline of logistics space is worth over £600m, mainly with tenants that Tritax already has relationships with, and all the funds raised from the offering are expected to be deployed in the first nine months. Over the longer term, the pipeline extends to assets totalling over €1.8bn (£1.59bn), with a majority of these through existing relationships and on an off-market basis.

The supply picture in mainland Europe is broadly similar to that in the UK, with demand for purpose-built distribution warehouses far exceeding the number of assets available. Online retailing in Europe is growing quickly, with online retail sales from 2016 to 2021 forecast to nearly double. As well as large distribution warehousing facilities, the company will also invest in smaller last-mile assets, and as well as targeting existing assets it will also construct new boxes, but only on a pre-let basis.  

Tritax has created a full-service European logistics asset management operation to include local asset and property managers including Logistics Capital Partners and Dietz Asset Management. There are no performance fees applicable, although management fees are higher in mainland Europe. So, whereas fees charged on Tritax Big Box range from 1 per cent on net asset value of up to £500m (excluding cash) to 0.5 per cent above £1.5bn; at Tritax EuroBox, fees will range from 1.3 per cent on the first €1bn to 1 per cent above €2bn (excluding cash). The company has a fully independent board of non-executive directors and will be externally managed by Tritax, with a core fund management team distinct from Tritax Big Box.

On a fully invested basis, the company is targeting a dividend yield of 4.75 per cent on the offer price to be paid quarterly in either euros or sterling, with a total return of 9 per cent. Gearing is set to reach a maximum of 45 per cent of the gross asset value of the portfolio.