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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Tritax Big Box Reit Plc | LSE:BBOX | London | Ordinary Share | GB00BG49KP99 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.40 | -0.27% | 146.40 | 146.20 | 146.50 | 148.00 | 145.70 | 148.00 | 6,410,937 | 15:17:12 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Agents & Mgrs | 222.1M | 70M | 0.0368 | 39.78 | 2.79B |
From Apr 2019 to Apr 2024
TIDMBBOX
RNS Number : 6861W
Tritax Big Box REIT plc
21 August 2015
21 August 2015
Tritax Big Box REIT plc
(the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015
Tritax Big Box REIT plc (ticker: BBOX), the only real estate investment trust giving pure exposure to very large logistics warehouse assets ("Big Boxes") in the UK, is today reporting its interim results for the Group for the six months ended 30 June 2015.
Hot Features
Premium
As at As at
30 June 2015 30 June 2014 Change
---------------------------------- -------------- -------------- ---------
Portfolio valuation GBP1.09bn GBP0.36bn 202.8%
Contracted rent roll pa GBP58.87m GBP20.84m 182.5%
EPRA NAV per share 117.06p 102.01p 14.8%
Dividend declared per share 3.00p 1.85p 62.2%
Weighted average unexpired lease
term (years) 15.77 16.10 (2.0)%
Operating profit GBP73.79m GBP8.21m 798.8%
Total comprehensive income GBP70.98m GBP7.56m 838.9%
EPRA earnings per share 2.30p 2.02p 13.9%
---------------------------------- -------------- -------------- ---------
Financial highlights
-- Our investment properties were independently valued at GBP1.09 billion as at 30 June 2015 (including forward funded commitments), representing an increase of GBP114.80 million or 11.7% over the aggregate acquisition price (excluding acquisition costs).
-- The portfolio's contracted rental income has increased to GBP58.87 million per annum (30 June 2014: GBP20.84 million), including forward funded assets.
-- Dividends declared in relation to the six months ending 30 June 2015 (the "period") totalled 3.0 pence per share, putting us on track to meet our stated 6.0 pence per share target for 2015.
-- Total return for the six month period of 10.71% compared to our target of 9% per annum for the medium term.
-- We raised an additional GBP229 million of equity during the period, issuing 159.09 million new shares at an issue price of 110 pence per share in March 2015, and a further 47.79 million new shares at an issue price of 113 pence per share in June 2015, pursuant to the Company's share issuance programme which expired on 7 July 2015.
Operational highlights
-- We acquired eight Big Boxes during the period, three of which were forward funded pre-let investments, expanding the portfolio to 22 assets. The acquisitions further diversified the portfolio both by geography and by tenant.
-- The weighted average unexpired lease term across the portfolio is 15.77 years, which compares well to our target of at least 12 years.
-- The average net initial yield of the portfolio at acquisition is 5.8% against our period end valuation of 5.1% net initial yield.
-- The total expense ratio for the period was 0.50%, down from 0.71% for the period from 1 January 2014 to 30 June 2014, which compares favourably with our real estate peers.
-- Our portfolio was fully let or pre-let and income producing during the period.
-- The Company's shares were included in the FTSE EPRA/ NAREIT Global Developed Index from 23 March 2015 and the FTSE 250 Index from 8 June 2015, helping to attract new investors and support liquidity in the shares.
-- Growth of the portfolio to provide a total of over 11 million sq ft of logistics space forming the portfolio.
Post Balance Sheet highlights
-- In July 2015 a new five year loan facility totalling GBP50.87 million was agreed with Landesbank Hessen- Thüringen Girozentrale ("Helaba") to finance the forward funded investment pre-let to Ocado in Erith.
Richard Jewson, Chairman of Tritax Big Box REIT plc, commented:
"Our investment manager continues to identify and negotiate good opportunities to buy assets and create capital value enhancement for our shareholders, both at the point of purchase and through a variety of asset management initiatives. We will continue to build an increasingly diversified and high quality portfolio, as we deploy the equity and debt financing raised during the period.
We see the potential for further yield compression in our sub-sector and logistics more generally, especially when viewed against current gilt yields. Big Boxes are becoming increasingly central to retail fulfilment, suggesting that yields have the potential to move towards the levels historically applied to prime retail assets.
The profile of rent reviews across the portfolio means we are well placed to capture rental growth in the market. We believe that the balance of occupational supply and demand should remain favourable for landlords, leading the Group to continue to be confident of strong rental growth in the near term.
The outlook for the remainder of 2015 remains strong and the Company anticipates achieving the dividend target of 6.0 pence per share for the full year."
For further information, please contact:
Tritax Group via Newgate (below) Colin Godfrey (Partner, Fund Manager) Newgate (PR Adviser) Tel: 020 7680 6550 James Benjamin Email: tritax@newgatecomms.com Alex Shilov Andre Hamlyn Jefferies International Limited Tel: 020 7029 8000 Gary Gould Stuart Klein Alex Collins Akur Limited Tel: 020 7493 3631 Anthony Richardson Tom Frost Siobhan Sergeant
Meeting for investors and analysts and audio recording of results available
A meeting for investors and analysts will be held at 9.30am today at:
Newgate
Sky Light City Tower
50 Basinghall Street
London, EC2V 5DE
In addition, later in the day an audio recording of this meeting and the presentation will also be available to download from the Company's website below.
NOTES:
Tritax Big Box REIT plc is a real estate investment trust to which Part 12 of the UK Corporation Tax Act 2010 applies ("REIT"). The Company invests in and asset manages a portfolio of well-located, modern "Big Box" assets, typically targeting buildings greater than 500,000 sq. ft., let to institutional-grade tenants on long-term leases (typically between 12 and 25 years in length) with upward-only rent reviews (providing the potential for inflation linked earnings growth), and with geographic and tenant diversification throughout the UK. The Company seeks to exploit the significant opportunity in this sub-sector of the UK logistics market owing to strong tenant demand in high growth areas of the economy and limited stock supply. The Company is the first listed vehicle to give pure exposure to the "Big Box" asset class in the UK.
Further information on Tritax Big Box REIT is available at www.tritaxbigbox.co.uk
CHAIRMAN'S STATEMENT
Tritax Big Box REIT plc is the only real estate investment trust dedicated to investing in and managing very large logistics warehouses in the UK, known as "Big Boxes". We believe Big Boxes are currently one of the most exciting sectors in the UK property market. We invest in Big Boxes to provide an attractive, secure and growing income stream for our shareholders, together with the opportunity for capital appreciation.
Since listing in December 2013, we have rapidly built a high-quality portfolio as we successfully implement our investment policy. At 30 June 2015, we owned and managed 22 modern and well-located Big Boxes, let or pre-let to institutional-grade tenants. This growth has resulted in a portfolio valued at more than GBP1 billion and our inclusion in the FTSE 250 index.
We will continue to exploit the significant opportunities in this sub-sector of the UK logistics market. There is strong tenant demand in high-growth areas of the economy and modern stock available to let is very limited. Through our reputation, experience and established network of contacts, we believe we are well placed to continue sourcing attractive opportunities, while remaining disciplined in our investment approach. The portfolio also offers attractive asset management opportunities, which have the potential to provide income growth and capital appreciation.
I am pleased to present the Group's unaudited interim results for the six months to 30 June 2015. Comparative figures throughout this report are for the six months to 30 June 2014.
This was another excellent six months for the Group, during which we have further strengthened the portfolio and secured the funding necessary for the next phase of growth. Market conditions remain favourable for landlords and we are confident of delivering further value for shareholders.
Overview
This has been another rewarding period for our shareholders and a very active period for the Company. As at the period end the portfolio comprised 22 assets, which provide a high quality, sustainable and growing income stream for our shareholders. We have declared dividends totalling 3.0 pence per share in respect of the half year and we remain on track to meet our 6.0 pence per share target for the full year. Strong occupier demand is driving up rents in the sector and the balanced profile of rent review dates across the portfolio should ensure that we can grow income year on year, to support future growth in the dividend.
Our investment manager, Tritax Management LLP (the "Manager") has continued to identify a pipeline of high-quality Big Box assets, drawing on its market intelligence and its excellent relationships with vendors, agents and developers. During the first half of the year, we acquired eight Big Boxes, further diversifying the portfolio by tenant, geography and by range of building sizes.
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
At 30 June 2015, the portfolio was independently valued at GBP1.09 billion, including forward funded commitments. This represents a valuation uplift of GBP114.80 million or 11.7% over the aggregate acquisition price (excluding acquisition costs). We believe this is a strong performance, particularly given the relatively short time the Group has owned some of these assets. Our performance has been enhanced by the Manager's ability to identify and negotiate attractive off-market deals, which offer good value for shareholders and give vendors the speed and certainty of execution of the sale they desire. To date, approximately 79% of the portfolio has been acquired through off-market transactions.
The attractiveness of Big Boxes, which are increasingly central to retailers' business models, has contributed to a further compression of yields in the sector. Despite this, we have maintained the average net initial yield across the portfolio at 5.8%, again reflecting the Manager's ability to source investments at attractive prices and the Group's discipline in not pursuing overpriced assets. Moreover, at the period end the weighted average unexpired lease term across the portfolio was 15.77 years, (30 June 2014: 16.10 years), which compares well to our target of at least 12 years.
Three of the assets we acquired during the period are forward funded, pre-let investments, where we work with a developer to deliver a new logistics facility for a tenant. This brings the total of forward funded assets in the portfolio to four at the period end. The shortage of existing Big Box assets available to let means that these forward funded investments are often the only way for occupiers to secure a building that meets their needs. In recognition of the opportunities in this area, we amended our investment policy during the period, to remove the 25% limit on exposure to forward funded investments. We were encouraged that shareholders recognised the opportunity and supported our proposals by approving this change at the Extraordinary General Meeting held on 15 April 2015.
We raised a further GBP229 million of equity under our share issuance programme. This was achieved through a placing and offer for subscription in March 2015, which generated gross proceeds of GBP175 million, and a further placing in June 2015 which raised gross proceeds of GBP54 million. Both share issuances were at prices above our published NAV at the time. The June placing was the final tranche of the 12 month share issuance programme which closed on 7 July 2015 and raised total gross proceeds of GBP339 million.
Two additional milestones during the period were the inclusion of the Company's shares in the FTSE EPRA/NAREIT Global Developed Index in March and in the FTSE 250 Index in June. This reflects the Group's increasing scale and is helping us to attract a broader shareholder base. It also contributes to robust liquidity in the shares, with daily trading averaging around two million shares each day towards the period end.
Financial Results
The growth in the portfolio, our specialist knowledge of the Big Box sector, attractive market conditions and the continued successful implementation of our investment policy have all contributed to producing strong financial results for the period.
Under International Financial Reporting Standards ("IFRS") as adopted by the European Union, our operating profit for the period was GBP73.79 million (30 June 2014: GBP8.21 million), with total comprehensive income of GBP70.98 million (30 June 2014: GBP7.56 million). Basic and diluted earnings per share ("EPS") for the period were 12.58 pence (30 June 2014: 3.73 pence), which includes the net valuation gain of GBP57.98 million we recognised as a result of revaluing our investment properties and derivative interest rate instruments.
The NAV per share at 30 June 2015 was 116.68 pence. This represents an increase of 9.02%, compared with the audited NAV per share of 107.02 pence at 31 December 2014.
The total return for the six month period, measuring the increase in net asset value over the period and dividends paid, amounted to 10.71%.
Under European Public Real Estate Association ("EPRA") methodology, EPS for the period was 2.30 pence (30 June 2014: 2.02 pence). The EPRA NAV per share at 30 June 2015 was 117.06 pence, representing an increase of 8.82% compared with the audited EPRA NAV per share of 107.57 pence at 31 December 2014.
The Group has a low and transparent cost base, with a reduced total expense ratio of 0.50% for the six month period (30 June 2014: 0.71%) which continues to compare favourably with our real estate peers.
Dividends
We have paid two interim dividends in respect of the first half of the financial year. The first dividend of 1.0 pence per share was paid on 22 April 2015 and was in respect of the two months from 1 January to 28 February 2015. The second dividend of 1.5 pence per share was paid on 15 July 2015 and was in respect of the three months from 1 March to 31 May 2015.
On 21 August 2015, the Board declared a third interim dividend of 0.5 pence per share, in respect of the period from 1 June to 30 June 2015. This dividend will be paid on 23 September 2015 to shareholders on the register as at 4 September 2015.
In total, this will take declared dividends to 3.0 pence per share for the half year.
Loan financing and hedging
During the period, we agreed and drew down a further three senior debt facilities provided by Barclays Bank PLC, totalling GBP68.36 million. As at 30 June 2015, we had drawn down total debt of GBP272.00 million (31 December 2014: GBP203.64 million). This reflects an LTV ratio of 29%.
We are currently in discussions to reduce the Company's overall cost of borrowings with gearing levels expected to increase towards the 40% medium term target as set out in the Company's investment policy.
We have protected the Group from a significant increases in interest rates by using derivative instruments which either fix or limit the interest rates on 10 of the senior loan facilities drawn at the period end. They comprise one swap and nine cap instruments, which run coterminous with each respective loan term.
These provide an all-in running capped rate of borrowing on hedged debt of 3.81%. The actual average interest rate payable on our debt was however, 2.35% per annum as at 30 June 2015.
New loan facility
On 14 July 2015, we agreed a new five year term facility provided by Helaba for GBP50.87 million. This debt was secured against our forward funded investment asset pre-let to Ocado in Erith.
Outlook
Our investment manager continues to identify and negotiate good opportunities to buy assets and create capital value enhancement for our shareholders, both at the point of purchase and through a variety of asset management initiatives. We will continue to build an increasingly diversified and high quality portfolio, as we deploy the equity and debt financing raised during the period.
We see the potential for further yield compression in our sub-sector and logistics more generally, especially when viewed against current gilt yields. Big Boxes are becoming increasingly central to retail fulfilment, suggesting that yields have the potential to move towards the levels historically applied to prime retail assets.
The profile of rent reviews across the portfolio means we are well placed to capture rental growth in the market. We believe that the balance of occupational supply and demand should remain favourable for landlords, leading the Group to continue to be confident of strong rental growth in the near term.
The outlook for the remainder of 2015 remains strong and the Company anticipates achieving the dividend target of 6.0 pence per share for the full year.
Richard Jewson Chairman
21 August 2015
TRITAX BIG BOX AT A GLANCE
We invest in Big Box logistics assets, which are the backbone of the UK's retail and e-commerce markets.
Investment objectives and strategy
We have a clear set of objectives, which reflect our key aim of creating value for our shareholders. By building and asset managing a diversified portfolio of Big Box assets, let or pre-let to high-calibre, institutional grade tenants, we look to provide shareholders with long-term, secure and increasing income streams together with the opportunity for generating attractive capital returns.
We aim to deliver:
-- a dividend of 6.0 pence per share for the year ending 31 December 2015, with the opportunity to grow the dividend thereafter through our long-term, upward only lease agreements; and
-- a total return (dividends paid plus growth in net asset value) in excess of 9% a year, over the medium term.
Highly diversified portfolio
We have a three-pillar investment focus:
Foundation assets (70% of the portfolio) provide our core, low-risk income. They are usually let on long leases to tenants with excellent financial covenant strength. The buildings are typically new or modern and in prime locations, and the leases have regular upward-only rent reviews, which are either to open market, fixed or linked to the CPI or RPI indices.
Value add assets (17% of the portfolio) are typically let to tenants with strong financial covenants and offer the opportunity to grow the assets' capital value or rental income. We achieve this through asset management and our understanding of occupiers' requirements. These assets are usually highly re-lettable.
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
Growth covenant assets (13% of the portfolio) are often situated in good locations and let to tenants which we perceive to be undervalued and have the opportunity to improve their financial strength. Examples include young e-retailers or companies that have strong growth prospects as the UK economy continues its recovery, offering value enhancement through yield compression.
Portfolio by asset
value
Foundation assets
Sainsburys 5%
M&S 9%
Tesco, Didcot 3%
Morrisons 11%
DHL, Skelmersdale 3%
DHL, Langley Mill 2%
Rolls-Royce Motor Cars Ltd 4%
Kuehne & Nagel 4%
Ocado 10%
Brakes 3%
Argos 3%
B&Q 8%
Tesco, Goole 5%
------------------------------ ---------------------
Total Foundation assets 70%
------------------------------ ---------------------
Value-add assets
Tesco, Chesterfield 3%
Next 6%
Tesco, Middleton 2%
L'Oréal 3%
New Look 3%
------------------------------ ---------------------
Total Value-add assets 17%
------------------------------ ---------------------
Growth covenant assets
Wolseley 1%
The Range 5%
Nice-Pak 3%
Dunelm 4%
------------------------------ ---------------------
Total Growth covenant assets 13%
------------------------------ ---------------------
Tenant Type by Sector
Food Retail 45%
Retail 45%
Logistics 5%
Manufacturing 5%
------------------------ -----
100%
------------------------ -----
Portfolio by Geography
North East 34%
North West 14%
Midlands 21%
South East 31%
100%
------------------------ -----
Portfolio by Size
<300k sq ft 9%
300k-499k sq ft 26%
500k-700k sq ft 20%
>700k sq ft 45%
100%
------------------------ -----
Our portfolio
Valuation Purchase
Tenant Location (GBPm) NIY (%)
--------------------------------- ---------------------- ---------- ---------
Foundation Assets
Sainsburys Supermarket
Ltd Leeds 59.33 6.65
Marks & Spencer plc Castle Donington 96.78 5.20
Tesco Stores Ltd Didcot 32.995 6.90
Wm Morrison Supermarkets
Ltd Sittingbourne 116.45 5.20
DHL Supply Chain Ltd Langley Mill 20.875 6.50
DHL Supply Chain Ltd Skelmersdale 33.75 6.50
Rolls-Royce Motor Cars
Ltd Bognor Regis 40.90 6.25
Kuehne & Nagel Ltd Derby 31.95 6.00
Ocado Holdings Ltd Erith 109.25 5.25
Brake Bros Ltd Harlow 38.56 5.00
Argos Ltd Heywood 35.39 5.31
B&Q plc Worksop 94.40 5.13
Tesco Stores Ltd Goole 49.615 5.67
Value-add assets
Tesco Stores Ltd Chesterfield 32.85 6.60
Next Group Plc Doncaster 67.45 6.07
Tesco Stores Ltd Middleton 23.875 8.25
L'Oréal (UK) Ltd Manchester 28.30 7.13
New Look Retailers Ltd Newcastle-under-Lyme 31.425 5.90
Growth Covenant assets
Wolseley UK Ltd Ripon 14.41 6.73
CDS (Superstores International)
Ltd (trading as The Range) Thorne 59.04 6.10
Nice-Pak International
Ltd Wigan 32.27 6.42
Dunelm(Soft Furnishings)
Ltd Stoke 43.60 5.47
--------------------------------- ---------------------- ---------- ---------
1,093.465 5.84
-------------------------------------------------------- ---------- ---------
Six months in brief
29 January
Acquired the forward funded investment of a new logistics facility pre-let to Ocado at Erith, inside the M25, for a total consideration of GBP101.73 million including license fee.
2 February
Announced debt financing of GBP13.20 million with Barclays Bank PLC, secured on the distribution centre at Dove Valley Park, Derby, let to Kuehne & Nagel Ltd.
6 March
Declared an interim dividend of 1.00 pence per share, in respect of the period from 1 January 2015 to 28 February 2015.
19 March
Raised gross proceeds of GBP175 million through a Placing and Offer for Subscription of 159.09 million new Ordinary Shares, at an issue price of 110 pence per share.
23 March
The Company's shares were included in the FTSE EPRA/NAREIT Global Developed Index.
10 April
Acquired the Brake Bros Ltd Distribution Centre at Flex Meadow, Harlow, for GBP37.20 million.
15 April
Shareholders voted at an Extraordinary General Meeting to amend the Company's investment policy and cancel its share premium account.
20 April
Acquired the Argos Regional Distribution Centre at Heywood, Manchester, for GBP34.10 million.
28 April
Acquired the B&Q Core Products National Distribution Centre at Worksop, Nottinghamshire, for GBP89.75 million.
30 April
Announced debt financing of GBP14.80 million with Barclays Bank PLC, secured on a new logistics asset near Bognor Regis, pre-let to Rolls-Royce Motor Cars Ltd.
1 May
Acquired the New Look Retailers Ltd National and European Distribution Centre at Lymedale Business Park, Newcastle-under-Lyme, for GBP30.05 million.
13 May
Acquired the forwarded funded investment of a distribution and production facility at Wigan, Greater Manchester, pre-let to Nice-Pak International, for an investment price of GBP28.66 million.
Announced debt financing of GBP40.38 million with Barclays Bank PLC, secured on the B&Q Core Products National Distribution Centre at Worksop, Nottinghamshire.
1 June
Acquired the Tesco Regional Distribution Centre at Capitol Park, Goole, for GBP47.10 million.
8 June
Declared an interim dividend of 1.50 pence per share, in respect of the period from 1 March 2015 to 31 May 2015.
The Company's shares were included in the FTSE 250 Index.
Acquired the forwarded funded investment of a distribution facility in Prologis Park, Sideway, Stoke on Trent, pre-let to Dunelm (Soft Furnishings) Ltd, for an investment price of GBP43.43 million.
18 June
Placed 47.79 million new Ordinary Shares at a price of 113 pence per share, raising gross proceeds of GBP54 million.
MANAGER'S REPORT
This was a successful period during which the Group continued to implement its investment and financing strategies, leaving the Group well positioned for further success.
Occupational market
Market conditions remained favourable for landlords during the period. Big Box assets are increasingly important to retailers' business models, enabling them to fulfil efficiently online orders, distribute stock quickly and reliably to stores, and achieve cost savings and economies of scale. They are also strategic assets for other companies, such as logistics providers and manufacturers. As a result, occupier demand for Big Boxes remains strong.
There is, however, very limited occupational supply, with only one modern Big Box of more than 500,000 sq ft available to let in the UK at Sherburn (created by joining two previously developed units together). There is also no current speculative development of units over 500,000 sq ft and the Manager is not aware of any which are planned. This, coupled with the restrictive planning framework, means that there is unlikely to be a significant increase in supply in the near term. As a result strong rental growth has been evidenced during the last 18 months (see table below) and the Manger expects this trend to continue for the remainder of 2015 and beyond.
Prime Logistics headline rents - selected locations
June 2015
----------------------------------------------------------
Location Prime rent (per sq Annual growth
ft)
-------------------- -------------------- --------------
M25 West GBP14.00 12.00%
M25 North GBP10.00 14.30%
M25 East GBP9.00 16.10%
Milton Keynes GBP6.75 3.80%
Birmingham GBP6.35 10.40%
M1/M6 Interchange GBP6.25 4.20%
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
Warrington GBP5.50 0.00% Wakefield GBP5.25 10.50% -------------------- -------------------- --------------
Source: CBRE
At present, the only way for occupiers to secure a new or very modern Big Box asset is to pre-let a forward funded development. Sites for new developments, in locations suitable for servicing an occupier's target market, are however difficult to locate and secure. These conditions have resulted in Big Boxes becoming one of the only areas of the property market where tenants are willing to sign leases of 20 years or more, without break clauses, to ensure they can initially secure and then retain use of the asset over the long term, thus benefitting from their own substantial investment within the building which increasingly takes the form of mechanisation and computerisation.
Investment market
Since the Company's IPO, there has been strong investment demand for logistics assets and this remains the case. Supply of investment products has been constrained and this has contributed to yield compression in the sector. According to CBRE, yields for a 15 year lease to an institutional-grade tenant at a market rent for a modern building have reduced from 6.5% in January 2013 to 5.0% as at 30 June 2015. Despite the importance of these assets to retailers, however, prime logistics yields still remain above that of prime retail, which are yielding 4.25%. The current very low gilt yields also offer scope for further yield compression in prime logistics investments.
Despite a backdrop of constrained investment supply, the Manager continues to draw on its network of contacts with vendors, agents and developers, to source selective off-market deals that create value for shareholders, having maintained an attractive average net initial yield across the portfolio of 5.8%. The current low cost of debt also means that the Manager is able to maintain an attractive positive yield gap on the assets it acquires for the benefit of the Group.
Whilst a shortage of new Big Box stock is likely to remain acute for occupiers, the development of new Big Boxes created from pre-lets should deliver a controlled stream of investment opportunities for those with close developer relationships.
Investment policy and activity
The Company has an investment policy, which ensures that it typically invests in assets that:
-- are let or pre-let. The Company does not invest in speculative developments and will only forward fund investments where a tenant is already contracted;
-- have institutional-grade tenants, with sound businesses and/or good growth potential;
-- are in the right locations in the UK, with good transport connections and workforce availability;
-- are of the right size, age and expansion potential to meet the requirements of major occupiers;
-- have leases to institutional standards, with regular upward-only rent reviews and a typical unexpired lease length on purchase of over 12 years, to provide long-term and secure income flows; and
-- are strategically important to the tenant. This may be evidenced by extensive investment in fitting out the unit or proximity to the tenant's market and/or other key assets.
During the period, the Manager continued to implement successfully the Company's investment policy, acquiring a further eight assets to bring the total in the portfolio to 22.
The acquired assets, which are described in further detail in the following section, increased the diversification of the Group's portfolio by geography, tenant and size of asset. Of the newly acquired assets, five are foundation assets, one is a value add asset and two are growth covenant assets.
Three of the acquired assets are forward funded investments, pre-let to institutional-grade tenants. This brings the total of forward funded investments in the portfolio to four. Forward funding is an attractive method of obtaining new, long-lease assets at a discount to the value of the completed and let investment. As at 30 June 2015 the company had over 1.8 million sq ft contracted under forward funding arrangements.
The average size of the properties in the portfolio at 30 June 2015 was 500,112 sq ft. The weighted average unexpired lease term at the same date was 15.77 years.
Summary of Portfolio
Rent
Net Annual per Next
Month Purchase passing Size sq rent
of price Purchase rent (sq ft review
Tenant Location acquisition (GBPm) NIY (%) (GBP) ft) Yen (GBP) date
-------------------------- ---------------------- ------------- --------- --------- ----------- ----------- ------ ------------
Sainsburys Supermarket
Ltd Leeds Dec 2013 48.75 6.65 3,295,716 571,522 5.77 May 2018
Marks & Spencer
plc Castle Donington Dec 2013 82.58 5.20 4,351,723 906,240 4.80 Dec 2016
Tesco Stores
Ltd Chesterfield Mar 2014 28.64 6.60 1,999,804 501,751 3.99 May 2020
Tesco Stores
Ltd Didcot Apr 2014 27.20 6.90 1,920,000 288,295 6.66 Aug 2019
Next Group Plc Doncaster Jun 2014 60.00 6.07 3,854,857 755,055 5.11 Mar 2018
Wm Morrison Supermarkets
Ltd Sittingbourne Jun 2014 97.80 5.20 5,419,974 919,443 5.89 Jun 2015
DHL Supply Chain Langley
Ltd Mill Aug 2014 17.53 6.50 1,214,480 255,680 4.75 Aug 2019
DHL Supply Chain
Ltd Skelmersdale Aug 2014 28.87 6.50 2,000,000 470,385 4.25 Aug 2019
Wolseley UK Ltd Ripon Aug 2014 12.24 6.73 838,500 221,763 3.78 Sep 2016
Rolls-Royce Motor
Cars Ltd Bognor Regis Oct 2014 36.98 6.25 2,379,481 313,220 7.23 Oct 2020
CDS (Superstores
International)
Ltd (trading
as The Range) Thorne Nov 2014 48.50 6.10 3,122,994 750,431 4.16 Oct 2017
Tesco Stores
Ltd Middleton Dec 2014 22.45 8.25 1,959,767 302,111 6.49 Dec 2017
Kuehne & Nagel
Ltd* Derby Dec 2014 29.27 6.00 1,858,000 343,248 5.41 Apr 2017
L'Oréal
(UK) Ltd Manchester Dec 2014 25.83 7.13 1,947,231 261,959 7.45 Aug 2015
Ocado Holdings
Ltd Erith Jan 2015 101.73 5.25 5,490,254 563,103 9.75 2021˚
Brake Bros Ltd Harlow Apr 2015 37.18 5.00 1,817,000 268,335 7.04 Apr 2017
Argos Ltd Heywood Apr 2015 34.10 5.31 1,900,000 395,186 4.81 Mar 2018
B&Q plc Worksop Apr 2015 89.75 5.13 4,693,937 878,245 5.34 Nov 2016
New Look Retailers
Ltd Newcastle-under-Lyme May 2015 30.05 5.90 1,795,170 398,618 4.50 Apr 2017
Nice- Pak International
Ltd Wigan May 2015 28.66 6.42 1,780,781 399,519 4.70 2021˚
Tesco Stores
Ltd Goole Jun 2015 47.10 5.67 2,808,384 711,933 3.94 Oct 2017
Dunelm(Soft Furnishings)
Ltd Stoke-on-Trent Jun 2015 43.43 5.47 2,421,560 526,426 4.60 2021˚
-------------------------- ---------------------- ------------- --------- --------- ----------- ----------- ------ ------------
Total 978.64 5.84 58,869,613 11,002,468
----------------------------------------------------------------- --------- --------- ----------- ----------- ------ ------------
* Guaranteed by Hays Plc
Guaranteed by Ocado Group plc
˚ Estimate based on practical completion date of forward funded asset
Yen CBRE measured floor area
Acquisitions in the period
Standing assets
B&Q, Worksop
Location Worksop, Nottinghamshire Acquisition date April 2015 Acquisition price GBP89.8 million Size 878,245 sq ft Lease 16.5 years; inflation linked five year review Net initial purchase yield 5.13% Eaves height 14-24m On/off market Off market
In April 2015, the Group acquired the freehold interest of the B&Q Core Products National Distribution Centre at Worksop, Nottinghamshire, for GBP89.8 million (net of corporate acquisition costs). This represented a net initial yield of 5.13%.
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The high-specification property was purpose built in 2005 for B&Q. It incorporates modern design features such as cross docking, an eaves height of between 14 and 24 metres and a fully automated racking system. The facility benefits from very significant capital investment by the tenant and provides opportunities for potential building expansion and connection to a rail freight distribution network. The facility is well located in the East Midlands, adjacent to the A57 which links directly to both the A1 to the East and M1 to the West.
The current total floor area extends to 878,245 sq ft, representing an exceptionally low site cover of 26.4%. Planning consent is in place to increase the facility to a total of 1.1 million sq ft. An extension to the building could therefore be constructed subject to the tenant requirement.
The asset was acquired with an unexpired lease term of approximately 16.5 years. It is currently let at a rent of approximately GBP4.7 million per annum (GBP5.34 per sq ft), which is subject to five-yearly rent reviews to the higher of the open market rent or RPI, capped at 5% per annum. The next review is due in November 2016.
Brake Bros, Harlow
Acquisition price GBP37.18m Net initial purchase yield 5.00% GIA 268,335 sq ft Eaves 11m Built 1989 Lease expiry July 2039
-- One of Brake Bros' main UK regional distribution centres, in a core location close to the M11, the M25 and central London, providing distribution across the South East
-- New 25-year lease taken by Brake Bros in July 2014 -- Five-yearly upward only rent reviews linked to annual RPI, with a cap of 5% pa -- Currently undergoing comprehensive refurbishment, funded by the tenant -- Low site cover of c.35% offers expansion possibilities.
Argos, Heywood
Acquisition price GBP34.10m Net initial purchase yield 5.31% GIA 395,186 sq ft Eaves 13.5m Built 1998 Lease expiry March 2028 -- One of four main regional distribution centres for Argos' supply chain
-- A high specification facility, incorporating modern design features including cross docking
-- Strategically located on the A58 trunk road linking Leeds and Manchester, approximately seven miles north of Manchester city centre, with the M62 approximately two miles to the south, providing good access to the North West and the wider motorway network
-- Five-yearly upward only open market rent reviews -- Low site cover of c.37% offers expansion possibilities.
New Look, Newcastle-under-Lyme
Acquisition price GBP30.05m Net initial purchase yield 5.90% GIA 398,618 sq ft Eaves 12m & 15m Built 2007, extended 2011 Lease expiry January 2025 -- One of two National and European Distribution Centres occupied by New Look
-- A modern and highly specified facility, with multiple mezzanine floors. The tenant has invested significantly in the property, creating one of the UK's most advanced automated clothing distribution centres
-- Situated in a major UK distribution location close to the M6, broadly equidistant from Manchester and Birmingham International Airports and around 52 miles from the Port of Liverpool
-- Subject to five-yearly upward only rent reviews to open market rental value, with the next reviews due in April 2017 and 2022 expected to benefit from limited occupational availability and high demand for Big Box assets in the area.
Tesco, Goole
Acquisition price GBP47.10m Net initial purchase yield 5.67% GIA 711,933 sq ft Eaves 14m Built 2007 Lease expiry September 2032
-- One of Tesco's principal regional distribution centres and a main hub for distributing general merchandise, ambient food and beverages
-- A high specification unit, incorporating modern design features such as cross docking, and a low site density of c.32%, potentially allowing for up to 150,000 sq ft of additional space within the site
-- The location enjoys excellent road, rail and port connectivity. The M62 is within two miles, providing easy access to the North East. The asset is close to the port of Goole's dedicated rail freight terminal and has the potential to be directly connected to the national rail network
-- The asset is subject to five-yearly, upward-only open market rent reviews.
Forward funded pre-let investments
Ocado, Erith
Location Erith, South East London
Acquisition date January 2015
Acquisition price GBP101.7 million
Size 563,103 sq ft
Lease 30 years from practical completion, rent review
five yearly to RPI (minimum 1%, maximum 3%
pa)
Net initial purchase yield 5.25%
Eaves height 10m
On/off market Off market
In May 2015, the Group completed the land purchase and proceeded to forward fund a new warehouse facility at Erith. The facility is pre-let to Ocado Holdings Limited and guaranteed by Ocado Group plc. The investment price was GBP101.73 million, reflecting a yield of 5.25% (net of purchase costs).
The building will have a gross internal area of approximately 563,103 sq ft, equating to a low site cover of c.35%. Construction began in May 2015, with practical completion of the developer's base build targeted for the summer of 2016.
The site is in a core South East location inside the M25, with central London approximately 12 miles to the West and Tilbury Docks and the DP World container port to the East. The location benefits from excellent motorway connections, providing access to Greater London and the Home Counties.
Since Morrisons did not take up the option to become joint guarantor, Ocado has signed a 30-year lease, without a break. The initial rent will be approximately GBP5.5 million pa (GBP9.75 per sq ft), subject to five-yearly rent reviews indexed to RPI (capped and collared at 3% and 1% per annum respectively). During the construction phase, the Group will receive an income return from the developer equivalent to the initial passing rent, providing an effective income term of 31 years.
Nice-Pak, Wigan
Acquisition price GBP28.66m Net initial purchase yield 6.42% GIA 399,519 sq ft Eaves c.11m Practical completion Spring 2016 Lease expiry 25 years from practical completion of the building
-- Located in Westwood Park, just south of Wigan town centre and approximately two miles from the M6, with good motorway connectivity to the rest of the UK and the West coast ports
-- Pre-let on a new 25-year lease from practical completion, without break, subject to five-yearly upward only rent reviews indexed to RPI (collared at 2% per annum and capped at 4% per annum)
-- The tenant intends to commit significant capital into the property through machinery and automation, in order to enhance production and distribution efficiency.
Dunelm, Stoke-on-Trent
Acquisition price GBP43.43m
Net initial purchase yield 5.47%
GIA 526,426 sq ft
Eaves 15m
Practical completion early 2016
Lease expiry ten years from practical completion of the
building
-- Strategically located approximately two miles from the M6 on the A500 dual carriageway, which connects to the A50 and A52, providing a key East-West link between the M6 and M1. The site has good access to the Port of Liverpool and Manchester and Birmingham Airports
-- Dunelm intends to commit significant capital into this property. Dunelm already occupies two smaller units at nearby Prologis Park, Stoke, together totalling approximately 500,000 sq ft. When combined with this new site, these three buildings will form Dunelm's national distribution hub.
Valuation and portfolio value growth
CBRE independently valued the portfolio as at 30 June 2015 in accordance with the RICS Valuation - Professional Standards January 2014. The properties were valued individually, without applying a premium or discount to the portfolio as a whole.
The portfolio was independently valued at GBP1.09 billion, including forward funded commitments, compared with the assets' aggregate purchase price of GBP978.64 million, excluding purchase costs. This represents a valuation increase of GBP114.80 million or 11.7%, when compared to the property purchase prices excluding acquisition costs.
The valuation increase reflects strong investment demand and the hardened yields discussed in the Investment Market section above, but also the ability of the Manager to source investments at attractive prices.
30 June 30 June
2015 2014
GBP'm GBP'm
----------------------------------------------- -------- --------
Investment properties per the Condensed Group
Statement of Financial Position 964.1 360.7
Cost to complete forward funded
assets 115.7 -
Licence fees receivable 9.6 -
Restricted cash 4.1 -
------------------------------------------------ -------- --------
Total Portfolio Valuation 1,093.5 360.7
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------------------------------------------------ -------- --------
Financial results
Operating profit under IFRS was GBP73.79 million for the period (30 June 2014: GBP8.21 million). This reflected:
-- the portfolio's strong rental income, which equates to a yield based on book cost of 5.8%; and
-- the gain over the period of GBP57.95 million (30 June 2014: GBP4.01 million) recognised on revaluing the Group's investment properties at the period end. This gain was after accounting for all costs associated with asset purchases during the period.
Administrative and other expenses, which include the Manager's fee and other costs of running the Group, were GBP3.23 million (30 June 2014: GBP1.48 million), equivalent to 0.34% (30 June 2014: 0.41%) of the portfolio's gross asset value at 30 June 2015. Our total expense ratio for the period was 0.50%. This continues to compare very favourably with the expenses of the Company's peers.
Net financing costs for the period were GBP2.83 million (30 June 2014: GBP0.10 million), excluding the change in the fair value of interest rate derivatives of GBP0.03 million (30 June 2014: GBP0.55 million). Further information on financing and hedging is provided below.
Total profit before tax for the period was GBP70.98 million (30 June 2014: GBP7.56 million), which resulted in earnings per share (basic and diluted) of 12.58 pence (30 June 2014: 3.73 pence).
The Group's EPRA earnings per share for the period were 2.30 pence (30 June 2014: 2.02 pence). The unaudited EPRA NAV per share at 30 June 2015 was 117.06 pence (31 December 2014: 107.57 pence). A full list of EPRA performance measures is provided on below.
Loan financing and hedging
During the period, the Group drew down three senior debt facilities totalling GBP68.36 million, resulting in total long-term bank borrowings at 30 June 2015 of GBP272.00 million (31 December 2014: GBP203.64 million). The weighted average margin payable across all loans was 1.77% over 3-month LIBOR.
The table below summarises the Group's senior debt facilities that were drawn at 30 June 2015:
Long-term debt drawn
Asset Lender Expiry date (GBP)
----------------------------------- ----------- ------------------- -----------------------
Sainsburys Leeds Barclays June 2018(1) 23,500,000
Marks & Spencer, Castle Donington Barclays June 2019(2) 49,275,000
Tesco, Didcot Barclays June 2018(1) 12,240,000
Next, Doncaster Barclays June 2018(1) 16,429,250
Morrisons, Sittingbourne Barclays June 2019(2) 53,790,000
DHL, Langley Mill Helaba November 2019 7,060,000
DHL, Skelmersdale Helaba November 2019 11,600,000
Santander
Wolseley Ripon UK December 2019 5,500,000
The Range, Thorne Barclays November 2019(1) 24,250,000
Kuehne & Nagel, Derby Barclays December 2018(1) 13,171,500
Rolls-Royce, Bognor Regis Barclays April 2020 14,800,000
B&Q, Worksop Barclays May 2020(1) 40,387,500
Total 272,003,250
--------------------------------------------------------------------- ---------------------
(1) 12 month extension option available
(2) Extension option available of up to 24 months
The Group's stated medium term target LTV ratio is 40%. The LTV ratio, based on long-term debt drawn as at 30 June 2015 was 29%. This lower level reflects the timing of our equity fundraising and subsequent property investment purchases, as well as the phasing of debt drawn down to finance the construction of forward funded developments.
The Company continues to undertake discussions with the objective of reducing the overall cost of borrowings in support of shareholder dividends and expects to increase the LTV broadly in line with the 40% target in the medium term as set out in the Company's investment policy. Such arrangements could include an element of cross collateralisation of the Group's property assets.
The Group has used derivative instruments to protect against a significant rise in interest rates by entering into nine interest rate caps and a swap. The weighted average strike rate for these instruments was 2.04%, which when combined with the average margin at the period end, equated to a capped all-in rate of borrowing of 3.81% for the Company's hedged debt. While this is the maximum rate payable under our existing loans, the average margin of 1.77% over 3-month LIBOR gave an all-in rate payable at the period end of approximately 2.35% pa. By using these interest rate instruments the Group had effectively hedged 78% of its long-term debt as at 30 June 2015.
New loan facility
On 14 July 2015, the Group agreed a new five year term facility provided by Helaba for GBP50.87 million. This debt was secured against our forward funded investment asset pre-let to Ocado in Erith and will be drawn over the remainder of the construction phase of the building.
Dividends
The Company declared an interim dividend of 1.0 pence per share on 6 March 2015, which it paid on 22 April 2015. This dividend was in respect of the period from 1 January to 28 February 2015.
A second interim dividend of 1.5 pence per share was declared on 8 June 2015, in respect of the period from 1 March to 31 May 2015. This dividend was paid on 15 July 2015.
On 21 August 2015, the Board declared a third interim dividend of 0.5 pence per share, in respect of the month of June 2015. This will be paid on 23 September 2015, to shareholders on the register as at 4 September 2015.
Asset management
The potential for capital value enhancement from asset management is a key consideration when selecting assets for purchase. However, not all properties are purchased with asset management as an immediate strategic focus; often these will materialise over time from changes in the circumstances of the tenant. Opportunities may be identified prior to purchase or subsequently. Within the context of the Company's three pillar asset categorisation, opportunities for asset management may be vested within "foundation assets", "growth covenant assets" but are more likely from "value add assets".
Prior to acquisition, the strategic plan for each asset is drafted and agreed between the management team. This incorporates information gleaned from legal due diligence, technical surveys, inspections and directly from the tenant. The initial plan is predominantly linked to lease event, pricing or rental growth opportunities, however, following direct contact with both "on site" and "head office" representatives of each occupier, the plan is expanded so as to incorporate further asset management opportunities linking with operational improvements and efficiencies. Such opportunities can be led directly by a requirement specified by the tenant or as a result of observations and recommendations from the Manager.
Over the past 18 months, meetings, discussions and inspections have been pursued actively with each occupier. This has enabled the Manager to be more informed about both the macro corporate strategy for the business of each tenant (and therefore on how the property fits into that strategy) and on a micro level in assessing the efficiency of the property. Understanding these areas is crucial in assessing how we can help the tenant meet its business objectives by either enhancing the existing property or expand through an adjacent site or in another location.
A number of occupiers in our portfolio have indicated a requirement for future expansion space, some of which may be incorporated within the existing site areas, or alternatively through further land acquisition or in collaboration with neighbouring developers. Timescales for delivery of potential building extensions vary, but the Manager believes that there are some promising opportunities for the Company.
Significant projects, such as building extensions may offer the potential for the Company to commit capital expenditure in return for increased and potentially enhanced rent or in some cases, initiating a re-gear of the lease to extend for a longer term.
During the period, one open market rent review date has been triggered in respect of the property at Chesterfield, let to Tesco. Specialist rent review surveyors have been appointed to negotiate on behalf of the Company. It is anticipated that an increase in rent will be achieved. The annual fixed rental uplift at the Sittingbourne logistics facility, let to Morrisons, is subject to RPI, capped at 2% per annum. This has resulted in a rental uplift of over 1%, which took effect from 14 June 2015.
A number of tenants have completed or applied for the Company's consent to undertake building alterations. These works have included the installation of sophisticated computer-controlled automation systems and the construction of a link bridge to an adjoining new property. A number of these tenant funded projects represent a significant capital commitment by the tenant, thereby endorsing the importance of the property to the tenant's distribution network. Where such alterations improve the investment credentials of the property, the Manager will typically offer to fund the works in return for variations to the lease, so as to further enhance value for the Company and its shareholders.
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Each property has been reviewed for the potential inclusion of roof mounted solar panels. This initiative enables the Company to improve the environmental EPC rating of the property and offers power to tenants at reduced rates, thereby reducing operational costs whilst supporting their CSR commitments. If the Company is able to fund these works then this produces an additional income stream and improves the quality of the property.
Investor relations
During the period, the Manager has devoted time to meeting with existing shareholders and prospective new investors in the UK, US and the Netherlands in particular. The Manager has also hosted several "Big Box" site visits for existing and prospective investors since launch, with the latest event in July 2015 visiting the asset at Castle Donington, let to M&S and Worksop, let to B&Q.
We also continue to strive to improve the scope and clarity of the Company's reporting to shareholders, both in the interim and annual report, the regular market announcements and the website.
Alternative Investment Fund Manager ("AIFM")
The Manager is authorised and regulated by the Financial Conduct Authority as a full-scope AIFM. The Manager is therefore authorised to provide its services to the Group and the Group benefits from the rigorous reporting and ongoing compliance regime applicable to AIFMs in the UK.
As part of this regulatory process, Langham Hall UK Depositary LLP ("Langham Hall") is responsible for cash monitoring, asset verification and oversight of the Company and the Manager. In performing its function, Langham Hall conducts a quarterly review during which it monitors and verifies all new acquisitions, share issues, loan facilities and other key events, together with shareholder distributions, the quarterly management accounts, bank reconciliations and the Company's general controls and processes. Langham Hall provides a written report of its findings to the Company and the Manager and to date it has not identified any issues. The Company therefore benefits from a continuous 'real time' audit check on its processes and controls.
Company Secretary
On 7 May 2015, the Company announced the appointment of the Manager as Company Secretary, replacing Taylor Wessing Secretaries Limited.
Tritax Management LLP Manager
21 August 2015
Key Performance Indicators
KPI and Definition Performance
---------------------------------------------- --------------------------------------
1. Total return (TR) 10.71%
In relation to our investment objective, Group's TR for the period to 30
TR measures the change in the net asset June 2015
value over the period plus dividends
paid. As explained, we are targeting
a TR in excess of 9% per annum over
the medium-term.
2. EPRA NAV per share* 117.06 pence
The value of our assets (based on an EPRA NAV per share at 30 June
independent valuation) less the book 2015
value of our liabilities, attributable An 8.8% increase against the EPRA
to shareholders and calculated in accordance NAV at 31 December 2014 (107.57
with EPRA guidelines. pence)
* EPRA earnings, EPRA NAV and EPRA
EPS are alternate metrics to their
IFRS equivalents that are calculated
in accordance with the Best Practices
Recommendations of the European Public
Real Estate Association (EPRA). The
Company uses these alternative metrics
as they provide a transparent and consistent
basis to enable a comparison between
European property companies
3. Loan to value ratio (LTV) 29%
The proportion of the Group's property LTV at 30 June 2015
portfolio that is funded by borrowings. We are in active discussions with
Our initial target LTV was 45% of the a view to introducing new banking
Group's gross assets, with a medium-term facilities in the near term, to
target of 40%. The LTV will be subject increase the Group's LTV ratio
to a maximum of 50% of the Group's in line with its 40% target.
gross assets at the time of drawdown.
4. Dividend against target 3.00 pence per share
Dividends paid and declared to shareholders Dividend per share in respect
in relation to the period. of the period to 30 June 2015
We are on track to meet our targeted
dividend for 2015 of 6.00 pence
per share
5. EPRA EPS* 2.30 pence per share
Post-tax earnings that are attributable EPRA EPS for the period to 30
to shareholders, calculated in accordance June 2015
with EPRA guidelines.
6. Total expense ratio (TER) 0.50%
The ratio of total administration and TER for the half year to 30 June
property operating costs expressed 2015
as a percentage of average net asset This ratio is set to decrease
value throughout the period. Over the further as the NAV of the Group
medium-term the Group is targeting grows and associated overheads
a TER of 1% or below per annum. reduce relatively through the
remainder of 2015
7. Weighted average unexpired lease 15.77 years
term (WAULT) WAULT at 30 June 2015
The average unexpired lease term of This compares well to our target
the property portfolio, weighted by of at least 12 years
annual passing rents.
---------------------------------------------- --------------------------------------
EPRA Performance Indicators
Measure and definition Purpose Performance
---------------------------------- ----------------------------- -------------------------
1. EPRA Earnings A key measure of a GBP13.01 million/2.30
Earnings from operational company's underlying pps
activities. operating results and EPRA earnings as at
an indication of the 30 June 2015
extent to which current
dividend payments are
supported by earnings.
2. EPRA NAV Makes adjustments to GBP793.12 million/117.06
Net asset value adjusted IFRS NAV to provide pps
to include properties and stakeholders with the EPRA NAV as at 30 June
other investment interests most relevant information 2015
at fair value and to exclude on the fair value of
certain items not expected the assets and liabilities
to crystallise in a long-term within a true real
investment property business. estate investment company
with a long-term investment
strategy.
3. EPRA NNNAV Makes adjustments to GBP790.56 million/116.68
EPRA NAV adjusted to include EPRA NAV to provide pps
the fair values of: stakeholders with the EPRA NNNAV 30 June
(i) financial instruments; most relevant information 2015
(ii) debt and; on the current fair
(iii) deferred taxes. value of all the assets All debt as at 30 June
and liabilities within 2015 is floating rate
a real estate company. debt, which has been
valued at par
4.1 EPRA Net Initial Yield A comparable measure 5.10%
(NIY) for portfolio valuations. EPRA NIY as at 30 June
Annualised rental income This measure should 2015
based on the cash rents passing make it easier for
at the balance sheet date, investors to judge
less non-recoverable property themselves, how the
operating expenses, divided valuation of two portfolios
by the market value of the compare.
property, increased with
(estimated) purchasers' costs.
4.2 EPRA 'Topped-Up' NIY A comparable measure 5.12%
This measure incorporates for portfolio valuations. EPRA 'Topped-Up' NIY
an adjustment to the EPRA This measure should as at 30 June 2015
NIY in respect of the expiration make it easier for
of rent-free periods (or investors to judge
other unexpired lease incentives themselves, how the
such as discounted rent periods valuation of two portfolios
and step rents). compare.
5. EPRA Vacancy A "pure" (%) measure 0.0%
Estimated Market Rental Value of investment property EPRA Vacancy as at
(ERV) of vacant space divided space that is vacant, 30 June 2015
by ERV of the whole portfolio. based on ERV.
6. EPRA Cost Ratio A key measure to enable 16.9%
Administrative and operating meaningful measurement EPRA cost ratio as
costs (including and excluding of the changes in a at 30 June 2015
costs of direct vacancy) company's operating This ratio is both
divided by gross rental income. costs. inclusive and exclusive
vacancy costs
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---------------------------------- ----------------------------- -------------------------
Principal Risks
The principal risk and uncertainties the Group faces are described in detail on pages 31 to 33 of the 2014 Annual Report, and are summarised below. The Audit Committee, which assists the Board with its responsibilities for managing risk, considers that the principal risks and uncertainties were unchanged during the period
Property Risk
-- Our property performance will depend on general real estate market conditions.
-- Our ability to grow the portfolio may be affected by competition for investment properties in the Big Box sector.
-- Our property performance will depend on the performance of the UK retail sector and the continued growth of online retail.
Financial Risk
-- Our use of floating rate debt will expose the business to underlying interest rate movements.
-- Our ability to raise equity and debt finance may restrict our ability to grow.
Corporate Risk
-- There can be no guarantee that we will achieve our investment objectives. -- As an externally managed company, we are reliant on the continuance of the Manager.
Taxation Risk
-- We operate as a UK REIT and have a tax-efficient corporate structure, with advantageous consequences for UK shareholders. Any change to our tax status or in UK tax legislation could affect our ability to achieve our investment objectives and provide favourable returns to shareholders.
Directors' Responsibility Statement
The Directors confirm that to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the operating and financial review herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency rules of the United Kingdom's Financial Conduct Authority namely:
-- an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related party transactions in the first six months of the financial year and any material changes in the related party transactions disclosed in the 2014 Annual Report.
Shareholder information is as disclosed on the Tritax Big Box REIT plc website:
http://tritaxbigbox.co.uk/investors/#shareholder-information
For and on behalf of the Board
Richard Jewson Chairman
21 August 2015
INDEPENDENT REVIEW REPORT TO
TRITAX BIG BOX REIT PLC
Introduction
We have been engaged by the company to review the condensed set of financial statements in the interim financial report for the six months ended 30 June 2015 which comprises the Condensed Group Statement of Comprehensive Income, the Condensed Group Statement of Financial Position, the Condensed Group Cash Flow Statement, the Condensed Group Statement of Changes in Equity and related notes.
We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The interim financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting its responsibilities in respect of interim financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
BDO LLP
Chartered Accountants and Registered Auditors
London, United Kingdom
21 August 2015
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127)
Condensed Group Statement of Comprehensive Income
Six Six Fourteen
months ended months ended months ended
30 June
2015 30 June 31 December
2014
(unaudited) 2014 (audited)
GBP'000 (unaudited) GBP'000
GBP'000
Note
--------------------------------- ------ -------------- --------------- ---------------
Gross rental income 19,067 5,669 18,603
Service charge income 608 125 511
Service charge expense (608) (125) (511)
--------------------------------- ------ -------------- --------------- ---------------
Net rental income 19,067 5,669 18,603
--------------------------------- ------ -------------- --------------- ---------------
Administrative and other
expenses (3,227) (1,476) (3,603)
--------------------------------- ------ -------------- --------------- ---------------
Operating profit before
changes in fair value of
investment properties and
interest rate derivatives 15,840 4,193 15,000
--------------------------------- ------ -------------- --------------- ---------------
Changes in fair value of
investment properties 10 57,948 4,014 31,668
--------------------------------- ------ -------------- --------------- ---------------
Operating profit 73,788 8,207 46,668
Finance income 4 124 39 205
Finance expense 5 (2,958) (141) (2,452)
Changes in fair value of
interest rate derivatives 29 (546) (2,577)
--------------------------------- ------ -------------- --------------- ---------------
Profit before taxation 70,983 7,559 41,844
--------------------------------- ------ -------------- --------------- ---------------
Tax credit/(charge) on profit
for the period 6 - - -
--------------------------------- ------ -------------- --------------- ---------------
Total comprehensive income
(attributable to shareholders) 70,983 7,559 41,844
--------------------------------- ------ -------------- --------------- ---------------
Earnings per share -
basic and diluted (pence) 7 12.58p 3.73p 15.10p
--------------------------------- ------ -------------- --------------- ---------------
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Condensed Group Statement of Financial Position
30 June 30 June 31 December
2014
2015 2014 (audited)
(unaudited) (unaudited) GBP'000
GBP'000
GBP'000
---------------------------------- --- ------------- ------------- ------------
Non-current assets
Investment property 10 964,060 360,740 586,179
Interest rate derivatives 12 2,408 3,008 2,379
Total non-current assets 966,468 363,748 588,558
Current assets
Trade and other receivables 26,807 20,140 30,668
Cash and cash equivalents 9 93,891 13,974 98,616
Total current assets 120,698 34,114 129,284
---------------------------------- --- ------------- ------------- ------------
Total assets 1,087,166 397,862 717,842
---------------------------------- --- ------------- ------------- ------------
Current liabilities
Deferred rental income (10,151) (4,855) (7,332)
Trade and other payables (17,636) (4,194) (6,048)
Bank borrowings 11 - (11,452) -
---------------------------------- --- ------------- ------------- ------------
Total current liabilities (27,787) (20,501) (13,380)
Non-current liabilities
Bank borrowings 11 (268,821) (153,310) (200,933)
---------------------------------- --- ------------- ------------- ------------
Total non-current liabilities (268,821) (153,310) (200,933)
---------------------------------- --- ------------- ------------- ------------
Total liabilities (296,608) (173,811) (214,313)
---------------------------------- --- ------------- ------------- ------------
Total net assets 790,558 244,051 503,529
---------------------------------- --- ------------- ------------- ------------
Equity
Share capital 13 6,775 2,200 4,705
Share premium reserve 14 52,364 214,292 272,536
Capital reduction reserve 618,592 - 184,444
Retained earnings 112,827 7,559 41,844
---------------------------------- --- ------------- ------------- ------------
Total equity 790,558 224,051 503,529
---------------------------------- --- ------------- ------------- ------------
Net Asset Value per share
basic and diluted 16 116.68p 101.85p 107.02p
EPRA Net Asset Value per share
basic and diluted 16 117.06p 102.10p 107.57p
---------------------------------- --- ------------- ------------- ------------
Condensed Group Cash Flow Statement
Six Six Fourteen months
ended 31 December
2014
months ended months (audited)
30 June
2015 ended 30 GBP'000
June
(unaudited) 2014
GBP'000 (unaudited)
GBP'000
------------------------ ------------------------ -------------- ------------- -------------------
Cash flows from operating activities
Profit for the period (attributable
to equity shareholders) 70,983 7,559 41,844
Less: changes in fair value of
investment properties (57,948) (4,014) (31,668)
(Less)/add: changes in fair value
of interest rate derivatives (29) 546 2,577
Less: finance income (124) (39) (205)
Add: finance expense 2,958 141 2,452
Accretion of tenant lease incentive (945) (401) (937)
Increase in trade and other receivables (116) (20,176) (1,787)
Increase in trade and other payables 1,796 5,822 10,526
Cash paid for working capital
on asset acquisitions (1,442) - -
Cash received as part of asset
acquisitions 1,363 - -
-------------------------------------------------- -------------- ------------- -------------------
Cash generated from/(used in)
operations 16,496 (10,562) 22,802
Taxation paid (70) - -
-------------------------------------------------- -------------- ------------- -------------------
Net cash flow generated from/(used
in) operating activities 16,426 (10,562) 22,802
-------------------------------------------------- -------------- ------------- -------------------
Investing activities
Purchase of investment properties (308,490) (222,490) (555,696)
Forward funded payment - - (27,204)
Licence fees received 6,371 - 1,514
Interest received 214 39 115
Long-term restricted cash receipts/(deposits) 212 - (4,310)
-------------------------------------------------- -------------- ------------- -------------------
Net cash flow used in investing
activities (301,693) (222,451) (585,581)
-------------------------------------------------- -------------- ------------- -------------------
Financing activities
Proceeds from issue of Ordinary
Share Capital 229,186 20,779 480,901
Cost of share issues (4,653) (287) (9,594)
Bank borrowings drawn 68,359 166,734 215,144
Bank borrowings repaid - - (11,500)
Loan arrangement fees paid (1,187) (1,935) (2,658)
Bank interest paid (2,368) - (1,418)
Interest rate cap premium paid - (1,893) (4,956)
Dividends paid to equity holders (8,583) - (8,834)
-------------------------------------------------- -------------- ------------- -------------------
Net cash flow generated from financing
activities 280,754 183,398 657,085
-------------------------------------------------- -------------- ------------- -------------------
Net (decrease)/increase in cash
and cash equivalents for the period (4,513) (49,615) 94,306
-------------------------------------------------- -------------- ------------- -------------------
Cash and cash equivalents at start
of period 94,306 63,589 -
-------------------------------------------------- -------------- ------------- -------------------
Cash and cash equivalents at end
of period 89,793 13,974 94,306
-------------------------------------------------- -------------- ------------- -------------------
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Condensed Group Statement of Changes in Equity
Capital
Share Share reduction Retained
Six months ended 30 capital premium reserve earnings Total
June 2015 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ---------- ----------- ----------- ----------
1 January 2015 4,705 272,536 184,444 41,844 503,529
------------------------------ ---------- ---------- ----------- ----------- ----------
Total comprehensive
income - - - 70,983 70,983
------------------------------ ---------- ---------- ----------- ----------- ----------
Issue of Ordinary Shares 2,069 226,931 - - 229,000
Share issue costs - (4,669) - - (4,669)
Shares issued in relation
to management contract 1 185 - - 186
Share based payments - - - 346 346
Transfer of share based
payments to liabilities
to reflect settlement - - - (346) (346)
Cancellation of share
premium account - (442,619) 442,619 - -
Dividends paid:
Third interim dividend
for the period ended
31 December 2014 (0.80p) - - (3,764) - (3,764)
First interim dividend
for the period ended
31 December 2015 (1.00p) - - (4,707) - (4,707)
------------------------------ ---------- ---------- ----------- ----------- ----------
30 June 2015 6,775 52,364 618,592 112,827 790,558
------------------------------ ---------- ---------- ----------- ----------- ----------
Six months ended 30
June 2014 (unaudited)
1 January 2014 2,000 194,000 - - 196,000
------------------------------ ---------- ---------- ----------- ----------- ----------
Total comprehensive
income - - - 7,559 7,559
------------------------------ ---------- ---------- ----------- ----------- ----------
Issue of Ordinary Shares 200 20,579 - - 20,779
Share issue costs - (287) - - (287)
------------------------------ ---------- ---------- ----------- ----------- ----------
30 June 2014 2,200 214,292 - 7,559 224,051
------------------------------ ---------- ---------- ----------- ----------- ----------
Fourteen months ended
31 December 2014 (audited)
1 November 2013 50 - - - 50
------------------------------ ---------- ---------- ----------- ----------- ----------
Total comprehensive
income - - - 41,844 41,844
------------------------------ ---------- ---------- ----------- ----------- ----------
Issue of Ordinary Shares 4,654 476,075 - - 480,729
Share issue costs - (9,660) - - (9,660)
Shares issued in relation
to management contract 1 121 - - 122
Share based payments - - - 320 320
Transfer of share based
payments to liabilities
to reflect settlement - - - (320) (320)
Cancellation of share
premium account - (194,000) 194,000 - -
Dividends paid:
First interim dividend
for the period ended
31 December 2014 (1.85p) - - (4,070) - (4,070)
Second interim dividend
for the period ended
31 December 2014 (1.50p) - - (5,486) - (5,486)
------------------------------ ---------- ---------- ----------- ----------- ----------
31 December 2014 4,705 272,536 184,444 41,844 503,529
------------------------------ ---------- ---------- ----------- ----------- ----------
Notes to the Financial Statements
1. Basis of preparation
The condensed interim financial statements for the six months ended 30 June 2015 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously the Financial Services Authority) and with IAS 34, Interim Financial Reporting, as adopted by the European Union.
The condensed consolidated financial statements for the six months ended 30 June 2015 have been reviewed by the Company's Auditor, BDO LLP, in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity and were approved for issue on 21 August 2015. The condensed consolidated financial statements are unaudited and do not constitute statutory accounts for the purposes of the Companies Act 2006.
The comparative financial information presented herein for the year to 31 December 2014 does not constitute full statutory accounts within the meaning of Section 434 of the Companies Act 2006. The Group's annual report and accounts for the year to 31 December 2014 have been delivered to the Registrar of Companies. The Group's independent auditor's report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.
Basis of preparation
The Group's financial information has been prepared on a historical cost basis, except for investment properties and interest rate derivatives which have been measured at fair value.
Convention
The consolidated financial information is presented in Sterling which is also the Group's functional currency and all values are rounded to the nearest thousand (GBP'000), except where otherwise indicated.
Going concern
The Group's portfolio is all either let or pre-let to tenants that have excellent covenant strength as well as all leases being subject to upward only rent reviews. During the period the Group has raised GBP229 million from the issue of new equity and raised a further GBP68 million through securing additional senior debt facilities. At the period end date the Group's loan to value ratio stood at 29%, with an average maturity term of over four years. At the period end date, the loan to value covenant testing is set at 65% for an income sweep and 70% for a hard default on all loans with the exception of that secured against the asset let to Wolseley, which has a cash sweep level set at 55% and hard default level set at 60%. There is significant headroom across all covenants.
The Manager is in discussions with a consortium of banks regarding the introduction of new banking facilities to the Group. It is intended that this reduces the Group's overall cost of borrowing whilst providing the necessary finance to fulfil any obligations under its forward funding agreements.
The Directors are therefore satisfied that the Group is in a position to continue in operation for the foreseeable future.
2. Significant accounting judgements, estimates and assumptions
The preparation of the Group's financial information requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
2.1. Judgements
In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial information:
Business combinations
The Group acquires subsidiaries that own property. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. The Group would account for an acquisition as a business combination if an integrated set of activities is acquired in addition to the property. Where such acquisitions are not judged to be the acquisition of a business, they are not treated as business combinations, rather the cost to acquire the corporate entity is allocated between the identifiable assets and liabilities of the entity based upon their relative fair values at the acquisition date. Accordingly, no goodwill or deferred tax arises.
Operating lease contracts - the Group as lessor
The Group has acquired investment properties that are subject to commercial property leases with tenants. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms and minimum lease payments, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.
Fair valuation of investment property
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The market value of investment property is determined by an independent property valuation expert (see Note 10) to be the estimated amount for which a property should exchange on the date of the valuation in an arm's length transaction. Properties have been valued on an individual basis. The valuation expert uses recognised valuation techniques and the principles of both IAS 40 and IFRS 13.
The valuations have been prepared in accordance with the RICS Valuation - Professional Standards January 2014 ("the Red Book"). Factors reflected include current market conditions, annual rentals, lease lengths, and location.
3. Summary of significant accounting policies
The accounting policies adopted in this report are consistent with those applied in the Group's statutory accounts for the period ending 31 December 2014 and are expected to be consistently applied during the year ending 31 December 2015, other than those implemented in the period as a result of the new transactions.
3.1. Borrowing costs
Borrowing costs in relation to interest charged on bank borrowings are expensed in the periods to which they relate, unless they are incurred directly against an investment property under construction, whereby they are capitalised against the cost of the asset until the building reaches practical completion.
Fees incurred in relation to the arrangement of bank borrowings are capitalised and expensed on a straight line basis over the term of the loan.
3.2 Rental income
The Group is the lessor in operating leases. Rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease terms and is included in gross rental income in the Condensed Group Statement of Comprehensive Income due to its operating nature.
A rent adjustment based on the estimated open market rental value is recognised from the rent review date in relation to unsettled rent reviews. Initial direct costs incurred in negotiating and arranging an operating lease are recognised as an expense over the lease term on the same basis as the lease income.
Tenant lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease. The lease term is the non-cancellable period of the lease together with any further term for which the tenant has the option to continue the lease, where, at the inception of the lease, the directors are reasonably certain that the tenant will exercise that option.
Amounts received from tenants to terminate leases or to compensate for dilapidations are recognised in the income statement when the right to receive them arises.
4. Finance income
Six Six Fourteen
months ended months ended months ended
30 June
2015 30 June 31 December
2014
(unaudited) 2014 (audited)
GBP'000 (unaudited) GBP'000
GBP'000
--------------------------- ---- -------------- --------------- ---------------
Interest received on bank
deposits 124 39 205
--------------------------------- -------------- --------------- ---------------
5. Finance expense
Six Six Fourteen
months ended months ended months ended
30 June
2015 30 June 31 December
2014
(unaudited) 2014 (audited)
GBP'000 (unaudited) GBP'000
GBP'000
---------------------------------- ---- -------------- --------------- ---------------
Interest payable on bank
borrowings 2,573 113 2,136
Other bank charges 2 3 6
Interest payable under hedging
arrangements 34 - -
Amortisation of loan arrangement
fees 349 25 310
---------------------------------------- -------------- --------------- ---------------
2,958 141 2,452
--------------------------------------- -------------- --------------- ---------------
6. Taxation
Tax charge in the Group Statement of Comprehensive Income
Six Six Fourteen
months ended months ended months ended
30 June
2015 30 June 31 December
2014
(unaudited) 2014 (audited)
GBP'000 (unaudited) GBP'000
GBP'000
------------------- --- -------------- --------------- ---------------
UK corporation tax - - -
------------------- --- -------------- --------------- ---------------
As a REIT, the Group is exempt from corporation tax on the profits and gains arising from its property investment business, provided it continues to meet certain conditions under the REIT regulations. For the period ending 30 June 2015, the Group did not have any non-qualifying profits subject to corporation tax and accordingly there is no tax charge in the period. All non-qualifying profits and gains will continue to be subject to corporation tax.
7. Earnings per share
Earnings per share (EPS) are calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period. As there are no dilutive instruments outstanding, basic and diluted earnings per share are identical. The calculation of basic and diluted earnings per share is based on the following:
Six Six Fourteen months
ended 31 December
2014
months ended months ended (audited)
30 June 30 June
2015 2014
(unaudited) (unaudited)
-------------------- ------------------- -------------- -------------- -------------------
Net attributable to Ordinary
Shareholders
Total comprehensive income (GBP'000) 70,983 7,559 41,844
Number of Ordinary Shares(1) 564,384,653 202,664,412 277,169,193
----------------------------------------- -------------- -------------- -------------------
Basic and diluted earnings per
share(2) (pence) 12.58p 3.73p 15.10p
----------------------------------------- -------------- -------------- -------------------
Adjustments to remove:
Changes in fair value of investment
properties (GBP'000) (57,948) (4,014) (31,668)
Changes in fair value of interest
rate derivatives (GBP'000) (29) 546 2,577
----------------------------------------- -------------- -------------- -------------------
EPRA earnings (GBP'000) 13,006 4,091 12,753
Number of Ordinary Shares(1) 564,382,653 202,644,412 277,169,193
----------------------------------------- -------------- -------------- -------------------
EPRA basic and diluted earnings
per share(2) (pence) 2.30p 2.02p 4.60p
----------------------------------------- -------------- -------------- -------------------
Adjusted to include:
EPRA earnings (GBP'000) 13,006 4,091 12,753
Licence fee receivable on forward
fund investments (GBP'000) 2,410 - 710
----------------------------------------- -------------- -------------- -------------------
Adjusted earnings(3) (GBP'000) 15,416 4,091 13,463
----------------------------------------- -------------- -------------- -------------------
Number of Ordinary Shares(1) 564,382,653 202,644,412 277,169,193
----------------------------------------- -------------- -------------- -------------------
Adjusted basic and diluted earnings
per share(2) (pence) 2.73p 2.02p 4.86p
----------------------------------------- -------------- -------------- -------------------
(1 Based on the weighted average number of Ordinary Shares in issue throughout the period)
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(2 There is no difference between basic and diluted earnings per share)
(3 Adjusted earnings includes licence fees receivable on forward funded investments)
8. Dividends paid
Six Six Fourteen months
ended 31 December
2014
months ended months ended (audited)
30 June 30 June
2015 2014 GBP'000
(unaudited) (unaudited)
GBP'000 GBP'000
------------------ ----------------- -------------- -------------- -------------------
Third interim dividend for the
period ended 31 December 2014
- 0.80p paid March 2015 3,764 - -
First interim dividend for the
period ended 31 December 2015
- 1.00p paid April 2015
(31 December 2014:1.85p paid
August 2014) 4,707 - 4,070
Second interim dividend for the
period ended 31 December 2014
- 1.50p paid December 2014 - - 5,486
Total Dividends paid 8,471 - 9,556
------------------------------------- -------------- -------------- -------------------
Total Dividends paid - per share 1.80p - 3.35p
------------------------------------- -------------- -------------- -------------------
On 6 March 2015 the Company announced the declaration of an interim dividend in respect of the period 1 January 2015 to 28 February 2015 of 1.00 pence per share payable in April 2015.
On 8 June 2015 the Company announced the declaration of an interim dividend in respect of the period 1 March 2015 to 31 May 2015 of 1.50 pence per share payable in July 2015.
On 21 August 2015 the Company announced the declaration of an interim dividend in respect of the period 1 June 2015 to 30 June 2015 of 0.50 pence per share payable in September 2015.
9. Cash and cash equivalents
Six Six Fourteen months
ended 31 December
2014
months ended months ended (audited)
30 June 30 June
2015 2014 GBP'000
(unaudited) (unaudited)
GBP'000 GBP'000
---------------- ---------------- -------------- -------------- -------------------
Cash held at bank 89,793 13,974 94,306
Restricted cash 4,098 - 4,310
---------------------------------- -------------- -------------- -------------------
Cash and cash equivalents per
Condensed Group Statement of
Financial Position 93,891 13,974 98,616
---------------------------------- -------------- -------------- -------------------
Restricted cash represents amounts relating to future rent free periods on assets forming the portfolio. This cash was deducted against the net purchase price of the property when the acquisition was made. Currently the cash is held in an account at the bank that holds the debt security over the asset to cover the rent free periods under the lease.
10. Investment property
In accordance with IAS 40: Investment Property, the investment property has been independently valued at fair value by CBRE Limited ("CBRE"), an accredited independent valuer with a recognised and relevant professional qualification and with recent experience in the locations and categories of the investment property being valued. The valuations have been prepared in accordance with the RICS Valuation - Professional Standards January 2014 ("the Red Book"). The valuers have sufficient current local and national knowledge of the particular property markets involved, and have the skills and understanding to undertake the valuations competently.
The valuation models prepared in accordance with those recommended by the International Valuation Standards Committee have been applied and are consistent with the principles in IFRS 13.
In accordance with the Group's accounting policies, it has treated all acquisitions during the period as asset purchases rather than business combinations as they were judged to be acquisitions of properties rather than businesses.
Investment Investment
Investment properties properties
properties long under construction
freehold leasehold GBP'000 Total
GBP'000 GBP'000 GBP'000
-------------------------------- ------------- ------------ -------------------- ----------
As at 1 January 2015 467,320 110,150 8,709 586,179
Property additions 152,996 90,878 75,114 318,988
Fixed rental uplift 945 - - 945
Change in fair value during
the period 31,024 9,822 17,102 57,948
-------------------------------- ------------- ------------ -------------------- ----------
As at 30 June 2015 (unaudited) 652,285 210,850 100,925 964,060
-------------------------------- ------------- ------------ -------------------- ----------
As at 1 January 2014 132,411 - - 132,411
Property additions 120,524 103,390 - 223,914
Fixed rental uplift 401 - - 401
Change in fair value during
the period 8,904 (4,890) - 4,014
-------------------------------- ------------- ------------ -------------------- ----------
As at 30 June 2014 (unaudited) 262,240 98,500 - 360,740
-------------------------------- ------------- ------------ -------------------- ----------
As at 1 November 2013 - - - -
Property additions 442,698 103,375 7,501 553,574
Fixed rental uplift 937 - - 937
Change in fair value during
the period 23,685 6775 1,208 31,668
-------------------------------- ------------- ------------ -------------------- ----------
As at 31 December 2014
(audited) 467,320 110,150 8,709 586,179
-------------------------------- ------------- ------------ -------------------- ----------
The table below reconciles between the fair value of the Investment Property per the Condensed Group Statement of Financial Position and Investment Property per the independent valuation performed in respect of each period end.
As at 30 June As at 30 As at 31 December
June 2014
2015 2014 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
------------------ ----------------- -------------- ------------- ------------------
Value per independent valuation
report 1,093,465 360,740 619,280
Less:
Forward funded prepayments (14,636) - (27,204)
Forward funded commitments (101,058) - -
Licence fee receivable (9,613) - (1,587)
Restricted cash (4,098) - (4,310)
------------------------------------- -------------- ------------- ------------------
Fair value per Condensed Group
Statement of Financial Position 964,060 360,740 586,179
------------------------------------- -------------- ------------- ------------------
11. Bank borrowings
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A summary of the bank borrowings drawn in the period are shown below:
Bank Bank borrowings
borrowings undrawn
drawn GBP'000 Total
GBP'000 GBP'000
-------------------------------- ------------ ---------------- ----------
As at 1 January 2015 203,644 13,172 216,816
Bank borrowings drawn in the
period 68,359 (13,172) 55,187
-------------------------------- ------------ ---------------- ----------
As at 30 June 2015 (unaudited) 272,003 - 272,003
-------------------------------- ------------ ---------------- ----------
Any associated fees in arranging the bank borrowings unamortised as at the period end are offset against amounts drawn on the facilities as shown in the table below:
Six Six Fourteen
months ended months ended months ended
30 June 30 June 31 December
2014
2015 2014 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
--------------------- --------------------- -------------- -------------- --------------
Bank borrowings drawn: due within
one year - 11,500 -
Bank borrowings drawn: due greater
than one year 272,003 155,234 203,644
-------------------------------------------- -------------- -------------- --------------
Total bank borrowings 272,003 166,734 203,644
-------------------------------------------- -------------- -------------- --------------
Less: Unamortised costs (3,182) (1,972) (2,711)
-------------------------------------------- -------------- -------------- --------------
Total bank borrowings per the Condensed
Group Statement of Financial Position 268,821 164,762 200,933
-------------------------------------------- -------------- -------------- --------------
On 14 July 2015 the Company announced that it had agreed senior debt financing secured on the forward funded asset pre-let to a subsidiary of Ocado Group plc. See Note 18 for further details.
12. Interest rate derivatives
The Group uses interest rate derivatives to mitigate exposure to interest-rate risk. The fair value of these contracts is recorded in the Condensed Group Statement of Financial Position and is determined by forming an expectation that interest rates will exceed strike rates and discounting the future cash flows of the interest rate derivatives at the prevailing market rates as at the balance sheet date. There have not been any transfers of assets or liabilities between levels of fair value hierarchy in the period.
Fair value measurements at 30 June 2015 are below:
Level Level 2(2) Level 3(3) Total
1(1) GBP'000 GBP'000 GBP'000
GBP'000
---------------------------------------- ---------- ----------- ----------- ---------
Assets
30 June 2015 interest rate derivatives - 2,408 - 2,408
30 June 2014 interest rate derivatives - 3,008 - 3,008
31 December 2014 interest rate
derivatives - 2,379 - 2,379
---------------------------------------- ---------- ----------- ----------- ---------
(1. Valuation is based on unadjusted quoted prices in active markets for identical financial assets and liabilities)
2. Valuation is based on inputs (other than quoted prices included in Level 1) that are observable for the financial asset or liability, either directly (i.e. as unquoted prices) or indirectly (i.e. derived from quoted prices)
(3. Valuation is based on inputs that are not based on observable market data)
13. Share capital
30 June 30 June 31 December
2014
2015 (unaudited) 2014 (audited)
GBP'000
(unaudited) GBP'000
GBP'000
----------------------------------------- ------------------ ------------- ------------
Issued and fully paid at 1p each 6,775 2,200 4,705
----------------------------------------- ------------------ ------------- ------------
At the beginning of the period 4,705 2,000 50
Shares issued in relation to IPO
- December 2013 - - 1,950
Shares issued in relation to Tap
- June 2014 - 200 200
Shares issued in relation to equity
issue - July 2014 - - 1,456
Shares issued in relation to equity
issue - December 2014 - - 1,048
Shares issued in relation to equity
issue - March 2015 1,591 - -
Shares issued in relation to equity
issue - June 2015 478 - -
Shares issued in relation to management
contract 1 - 1
----------------------------------------- ------------------ ------------- ------------
At June 2014 (unaudited) 6,775 2,200 4,705
----------------------------------------- ------------------ ------------- ------------
The Company had 677,549,293 shares of nominal value 1p each in issue at the end of the period.
On 19 March 2015, the Company announced that it had raised GBP175 million via Placing and Offer for Subscription. As a result, a total of 159,090,909 new Ordinary Shares were issued at a price of 110 pence per Ordinary Share, of which 141,646,051 Ordinary Shares were issued under the Placing and 17,444,858 Ordinary Shares were issued pursuant to the Offer for Subscription.
On 18 June 2015 the Company announced that 47,787,607 new Ordinary Shares were issued via a Placing at a Placing Price of 113 pence per Ordinary Share raising gross proceeds of GBP54.0 million.
14. Share premium
The share premium relates to amounts subscribed for share capital in excess of nominal value:
30 June 30 June 31 December
2014
2015 (unaudited) 2014 (audited)
GBP'000
(unaudited) GBP'000
GBP'000
---------------------------------- ------------------ ------------- ------------
Balance at the beginning of the
period 272,536 194,000 -
Share premium on the issue of
Ordinary Shares 226,931 20,579 476,075
Share issue costs (4,669) (287) (9,660)
Transfer to capital reduction
reserve (442,619) - (194,000)
Share Premium on Ordinary Shares
issued to management 185 - 121
---------------------------------- ------------------ ------------- ------------
52,364 214,292 272,536
---------------------------------- ------------------ ------------- ------------
On 3 June 2015, the Company by way of Special Resolution, cancelled the then value of its share premium account, by an Order of the High Court of Justice, Chancery Division. As a result of this cancellation, GBP442.6 million has been transferred from the share premium account to the capital reduction reserve account. The capital reduction reserve account is classed as a distributable reserve.
15. Transactions with related parties
The fees calculated and payable for the period to the Investment Manager was as follows:
30 June 30 June 31 December
2014
2015 (unaudited) 2014 (audited)
GBP'000
(unaudited) GBP'000
GBP'000
----------------------- ------------------ ------------- ------------
Tritax Management LLP 2,517 923 2,330
----------------------- ------------------ ------------- ------------
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