Tritax Big Box (BBOX) added four properties to its roster over its first half, bolstering its relationship with Co-op through its Biggleswade development and separately agreeing deals for three smaller, more speculative warehouses. The Tritax portfolio, which focuses on large-scale, low-risk UK industrial logistics assets, now holds 58 assets and is worth £3.85bn. The rise of e-commerce continues to underpin Tritax’s growth. But Brexit hangs over the UK property market, although Tritax management recognised that the prospect of a hard Brexit has incentivised some occupiers to find additional space for stockpiling, which has created additional demand.
Tritax partner Colin Godrey flagged the possibility of an improvement in yield compression - where yields on assets fall due to high demand - as this came to a halt at Tritax’s year end after a few years of strength. “We haven’t seen prime compression since that point in time,” he said.
“There are arguments being made that suggest that we could see further yield compression,” he added, “which would enhance capital values. But I think that that will require a resolution to Brexit.” With slowing yields, a static portfolio’s capital growth would therefore be mainly derived from rental growth, prudent asset management and Tritax’s ability to buy and sell effectively.
Acquisitions could offer another path to capital growth. During the period, Tritax acquired an 87 per cent interest in db symmetry, which has one of the UK’s largest land portfolios for logistics development and could potentially take Tritax’s rental income to over £300m a year. Tritax secured £166.84m in contracted rental income over its first half.
Panmure Gordon forecasts a year-end NAV of 155p a share, rising to 162p in 2020.
| TRITAX BIG BOX (BBOX) | ||||
| ORD PRICE: | 145p | MARKET VALUE: | £ 2.48bn | |
| TOUCH: | 144.8-145p | 12-MONTH HIGH: | 163p | LOW: 128p |
| DIVIDEND YIELD: | 4.7% | TRADING PROP: | nil | |
| PREMIUM TO NAV: | -3% | |||
| INVESTMENT PROP: | £3.59bn | NET DEBT: | 36% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 145 | 107.1 | 7.62 | 3.35 |
| 2019 | 149 | 67.8 | 4.08 | 3.425 |
| % change | +3 | -37 | -46 | +2 |
| Ex-div: | 25 Jul | |||
| Payment: | 15 Aug | |||
| *Dividends paid quarterly. Ex-div and payment dates refer to second-quarter dividend of 1.7125p | ||||
