Tritax Big Box REIT plc (LON:BBOX), specialising in high-quality UK logistics real estate, today announced an update on its performance for the financial year ended 31 December 2023 (FY23), ahead of its results on 1 March 2024.
Colin Godfrey, Tritax Big Box CEO, commented:
“This has been another positive year demonstrating our ability to execute on all aspects of our strategy to create value. We are capturing rental growth through our asset management activities, crystalising attractive returns through our disposal programme, and carefully redeploying the proceeds into higher returning opportunities. We continue to make good development progress with ongoing rental growth and a more favourable cost environment improving our yield on cost. Our investment activity has complemented our portfolio adding a range of attractive urban logistics assets, and we are making progress in capturing their significant reversionary potential.
“Looking forward, we remain confident in our ability to continue creating value, which is likely to be enhanced by an improving market backdrop. With record rental reversion in our portfolio, an attractive development pipeline and strong balance sheet, we are well positioned to deliver further income and capital growth”.
Resilient occupational market in line with pre-Covid levels and stabilisation in investment yields
· 22.1 million sq ft of UK lettings in 2023 (2022: 38.0 million sq ft) with a further 11.1 million sq ft under offer at the year end[1]. 2023 take up in-line with the pre-Covid average.
· Ready to occupy vacant space at 5.1%[1] (2022: 2.0%) but further growth in prime headline rents which are up 7.8% in the year (2022: 12.9%)[2].
· Logistics real estate transaction market remains subdued; prime market yields for high quality rack-rented buildings with c.15 year unexpired lease terms and open market reviews are around 5.25%[1].
Ongoing development performance securing £7.8 million of additional rent
· £7.8 million of annual contracted rent added through 0.9 million sq ft of development lettings at a 6.7% yield on cost, let to a diverse range of customers, with a further 0.9 million in solicitors’ hands.
· 1.7 million sq ft of development starts in 2023 with the potential to add £15.6 million per annum to contracted rent targeting a yield on cost of approximately 7.0%.
· No Development Management Agreement (DMA) income to be recognised, this is now expected to be deferred and recognised in FY24.
· Maintaining long-term development guidance of 2-3 million sq ft per annum (£200-£250 million of capex) at a 6-8% yield on cost.
Actively managing the portfolio to optimise performance
· 6.9% like-for-like ERV growth during FY23 resulting in record 23.0% portfolio reversion.
· £4.9 million added to annual contracted rent from rent reviews and asset management initiatives.
o 9.1% increase in passing rent across 22.5% of the portfolio subject to rent reviews.
· £327 million of disposals completed at or above book value, delivering a blended Net Initial Yield of 4.3%, resulting in a £14.1 million reduction in contracted rent, rotating capital into higher returning development and investment opportunities.
· £110 million of urban logistics investment acquisitions completed at a blended Net Initial Yield of 4.2% and providing potential for significant near term rental reversion capture with a blended reversionary yield of 6.3%.
High-quality portfolio with resilient and attractive income characteristics
· 2.5% portfolio vacancy, including one recent lease expiry undergoing refurbishment.
· Stable contracted annual rent, with increases from rent reviews, investment and development activity, largely offset by heightened disposals activity.
· 0.8% reduction in like-for-like value of investment assets across the year (H2 2023: 1.7% reduction) with second half reductions offsetting gains in first half.
· Delivered our tenth year of 100% rent collection.
· Weighted average unexpired lease term (WAULT) of 11.4 years as at 31 December 2023.
Strengthened our balance sheet – significant liquidity and no near-term debt maturities
· 31.6% Loan to Value at 31 December 2023, within medium-term guidance range of 30%-35%.
· Weighted average cost of debt of 2.9%, with 96% of drawn debt hedged.
· Weighted average debt maturity of 5.2 years, total available liquidity in excess of £500 million.
· £500 million refinancing of revolving credit facility in October 2023 with an opening margin of 120bps over SONIA.
[1] CBRE
[2] JLL
Tritax Big Box REIT plc (ticker: BBOX) is the largest listed investor in high-quality logistics warehouse assets and controls the largest logistics-focused land platform in the UK. Tritax Big Box is committed to delivering attractive and sustainable returns for shareholders by investing in and actively managing existing built investments and land suitable for logistics development. The Company focuses on well-located, modern logistics assets, typically let to institutional-grade tenants on long-term leases with upward-only rent reviews and geographic and tenant diversification throughout the UK.
The Company is a real estate investment trust to which Part 12 of the UK Corporation Tax Act 2010 applies, is listed on the premium segment of the Official List of the UK Financial Conduct Authority and is a constituent of the FTSE 250, FTSE EPRA/NAREIT and MSCI indices.
