Tritax Big Box Reit Share Discussion Threads

[yump] 25/1/2023 17:51

Nice share price reversal today. Be very surprised if it didn't get back near to 160-170p.

Actually, 180p would have a nice symmetry about it.

[yump] 25/1/2023 12:39

Pretty decent. Demand still strong. Some reduction in property values, but its the income from rental that's key for dividends. I'm assuming its not just valued on NAV, which is a bit different from quite a few trusts. You can actually see the numbers here, its not an opaque back office calculation.

[skinny] 25/1/2023 07:01

Strong operational performance - record development lettings - resilient portfolio

Tritax Big Box REIT plc (the Company), a UK leader in high-quality logistics real estate, today announces an update on its performance for the financial year ended 31 December 2022 (FY 2022), ahead of the release of its results on 2 March 2023.

Colin Godfrey, Tritax Big Box CEO, commented:

"We delivered excellent operational performance in FY 2022 underpinned by record development lettings and further development starts as we continued to capitalise on a strong occupational market .

"Against this positive operational performance, the macroeconomic backdrop has been challenging with increasing inflation and interest rates leading to a significant weakening of the investment market and material falls in asset values in the second half of the year across the sector. More recently, however, given the attractive long-term fundamentals of UK logistics, we are seeing encouraging early signs of stabilisation in the investment market and greater discernment over asset quality which plays to the quality and strength of our portfolio.

"With a more uncertain economic backdrop, stakeholders can take comfort from our very strong balance sheet and highly resilient income, underpinned by triple-net, long-term leases let to a diverse range of robust customers which positions us well to weather this uncertainty."

Occupational market remains strong at near record levels

-- 38 million sq ft of UK lettings in 2022 (2021: 42 million sq ft) to a diverse range of occupiers, the third highest year on record and 33% above the 10-year average(1) .

-- UK supply remains constrained with ready to occupy vacant space low at just 2.0% (Q4 2021: 1.6%)(1) .

-- Real estate transaction market remains open but has slowed; distribution warehouse investment volumes totalled GBP2.4 billion in H2 2022 (H2 2021: GBP6.1 billion)(2) .

-- Prime market yields for high quality rack-rented buildings with c.15 year unexpired lease terms and open market reviews are around 5.0% (Q4 2021: 3.5%)(1) .

Record development letting activity increasing contracted annual rent by GBP23.3 million

-- GBP23.3 million of annual contracted rent secured through 3.1 million sq ft of development lettings within 6-8% yield on cost guidance.

-- 2.9 million sq ft of development starts in 2022, of which 2.4 million sq ft (82%) has been let to a diverse range of customers.

o 0.4 million sq ft of 2022 development starts still under construction and unlet with potential to add a further GBP5.0 million per annum to contracted rent.

o 0.1 million sq ft started at Littlebrook and subsequently sold post practical completion (see below).

-- Maintaining long-term development guidance of 2-3 million sq ft per annum (GBP200-250m of capex) at a 6-8% yield on cost.

Active management continuing to grow income and generate value

-- GBP5.1 million added to annual contracted rent from rent reviews and a lease renewal.
o 7.6% increase in passing rent across the 34.2% of the portfolio subject to lease events.

-- Like-for-like ERV growth of 9.1% over the year, with a 19.1% portfolio rental reversion at 31 December 2022.

-- Exchanged(3) on the sale of GBP25.0 million of newly developed and vacant non-core assets at Littlebrook, in line with 31 December 2022 independent valuation, and continuing to pursue further disposals to support development capex.

High-quality portfolio with resilient and attractive income characteristics

-- GBP28.4 million growth (14.5%) in annual contracted rent to GBP224.0 million from development lettings and active management underpinning future earnings growth.

-- 100% of rent collected in relation to FY 2022 (FY 2021: 100%).
-- Long term leases to a diverse range of large customers with 12.6 years weighted average unexpired lease term (WAULT) as at 31 December 2022.

Change in portfolio valuation and EPRA NTA

-- Total portfolio value of GBP5.1 billion as at 31 December 2022 (31 December 2021: GBP5.5 billion), equating to an equivalent yield of 5.3% (31 December 2021: 4.1%).

-- Reduction in like-for-like value of investment assets(4) was -15.2% across the year (H2 2022: -20.0%) with performance ahead of key market monthly indices driven by portfolio asset quality.

-- The impact of changes in yields on EPRA NTA has been partly mitigated by development profits and growth in ERV, noting agency reports of continued attractive market rental growth.

-- 31 December 2022 EPRA NTA per share expected to be in line with the consensus of recent analysts' estimates (5) .

Maintaining a strong balance sheet

-- 31% Loan to Value at 31 December 2022, within medium-term guidance range of 30%-35% and maintaining substantial covenant headroom.

-- 5.4 years average debt maturity, 99% of drawn debt fixed or hedged at 31 December 2022, with an average cost of 2.6%.

-- GBP200 million increase in RCF commitments, executed on existing terms, with total available liquidity at 31 December 2022 in excess of GBP500 million.

[yump] 23/1/2023 17:28

Thanks - useful read.

[severnof9] 23/1/2023 09:56

I read this legal article today. It is by it is written by Jack Lightburn of Stevens and Bolton LLP. I am simply crediting the author I have no interest in or prior knowledge of these lawyers. In my view it is interesting anecdotal evidence that the market appears to be playing to TBB strengths.


Amazon announced plans last week to shut three warehouses in the UK, a decision which will affect around 1,200 jobs and bring 1.3 million square feet of warehousing space back to the market. The online retailer also stated its intention to open two new major warehouses, which it claims will create 2,500 new jobs in the next three years.

A spokesman commented: “We are always evaluating our network to make sure it fits our business needs… As part of that effort, we may close older sites, enhance existing facilities or open new sites…”

This development is interesting to consider in light of Savills’ latest Big Shed Briefing blog (BSB) and it could be viewed as symptomatic of a number of recent trends within the I&L sector. Whilst the headline from the BSB is that 2022 was the third strongest ever year for take-up of industrial and logistics space, the sector was not immune to the wider geopolitical and UK specific factors causing uncertainty in the economy. This is most clearly illustrated by the sharp decline in take-up in the second half of the year (19.01m sq ft) following record numbers in the first six months (28.98m sq ft), albeit the lesser figure is still well above the long-term half-yearly average. Savills also note that online retailers took just 6.6m sq ft of new space, the lowest level since 2017. Amazon’s announcement does not seem out of place in this context.

Another interesting takeaway from the BSB is the escalating demand for brand new units, likely driven by a combination of increasing investor focus on ESG, rising energy prices and the ever widening reach of environmental regulation, not least the impact of the minimum energy efficiency standard (MEES) regulations and the government’s plans to increase the minimum standard to an EPC rating of B by 2030. Savills’ data reveals that take-up for second hand sites made up only 22% of the market in 2022 - a record low - whereas build-to-suit transactions equated to 50% of the market, of which speculative take up amounted to over half - the highest level ever recorded. Perhaps the most startling statistic of all is that the average void for speculatively constructed units in 2022 was just one month.

Whilst Amazon’s decision to close three warehouses can be viewed as a continuation of the market downturn seen in the second half of 2022, its plans to open two brand new warehouses are also indicative of the move away from second hand units and the ever increasing demand for high-quality new space. It will be interesting to see if other major space users follow Amazon’s lead in trading in old space for new.

In our own practice we continue to see significant demand for I&L deals. In the last few months alone we have advised on a forward commitment to purchase a newly-built big shed let to a large surgical manufacturing company and are also advising an institutional fund client on the letting of a significant new warehouse and light industrial unit, so we are not seeing any signs of demand for high quality new I&L space abating.

In my view it is interesting anecdotal evidence that the market appears to be playing to TBB strengths.



Amazon announced plans last week to shut three warehouses in the UK, a decision which will affect around 1,200 jobs and bring 1.3 million square feet of warehousing space back to the market. The online retailer also stated its intention to open two new major warehouses, which it claims will create 2,500 new jobs in the next three years.

A spokesman commented: “We are always evaluating our network to make sure it fits our business needs… As part of that effort, we may close older sites, enhance existing facilities or open new sites…”

This development is interesting to consider in light of Savills’ latest Big Shed Briefing blog (BSB) and it could be viewed as symptomatic of a number of recent trends within the I&L sector. Whilst the headline from the BSB is that 2022 was the third strongest ever year for take-up of industrial and logistics space, the sector was not immune to the wider geopolitical and UK specific factors causing uncertainty in the economy. This is most clearly illustrated by the sharp decline in take-up in the second half of the year (19.01m sq ft) following record numbers in the first six months (28.98m sq ft), albeit the lesser figure is still well above the long-term half-yearly average. Savills also note that online retailers took just 6.6m sq ft of new space, the lowest level since 2017. Amazon’s announcement does not seem out of place in this context.

Another interesting takeaway from the BSB is the escalating demand for brand new units, likely driven by a combination of increasing investor focus on ESG, rising energy prices and the ever widening reach of environmental regulation, not least the impact of the minimum energy efficiency standard (MEES) regulations and the government’s plans to increase the minimum standard to an EPC rating of B by 2030. Savills’ data reveals that take-up for second hand sites made up only 22% of the market in 2022 - a record low - whereas build-to-suit transactions equated to 50% of the market, of which speculative take up amounted to over half - the highest level ever recorded. Perhaps the most startling statistic of all is that the average void for speculatively constructed units in 2022 was just one month.

Whilst Amazon’s decision to close three warehouses can be viewed as a continuation of the market downturn seen in the second half of 2022, its plans to open two brand new warehouses are also indicative of the move away from second hand units and the ever increasing demand for high-quality new space. It will be interesting to see if other major space users follow Amazon’s lead in trading in old space for new.

In our own practice we continue to see significant demand for I&L deals. In the last few months alone we have advised on a forward commitment to purchase a newly-built big shed let to a large surgical manufacturing company and are also advising an institutional fund client on the letting of a significant new warehouse and light industrial unit, so we are not seeing any signs of demand for high quality new I&L space abating.

[scruff1] 22/1/2023 22:42

Yes. Not gone ito too much depth yet but from what I gather the way they reached a deal with Sainsbury was superb. I also like the way that their assets are sort of multi functional which I find reassuring somewhat in the current climate. The article in Money Week was also interesting in that it touched on the topic I think you mentioned the other week - the sort of dual use of Retail/distribution units. Also the fact that debt payment has been fixed for 4 years - there will be many envious of that

[williamcooper104] 22/1/2023 22:14

The LTV is low post all the Sainsbury's cash coming in and the debts fixed for c4 years Assets are excellent and the manager is great too

[scruff1] 22/1/2023 21:59

I find it attractive and will follow it closely. There seem to be quite a number of positives at the moment. The dangers appear to be the obvious ones and the usual possiblity of dilutions

[williamcooper104] 22/1/2023 21:14

Yep; have been in SUPR since IPO

[scruff1] 22/1/2023 20:51

and now it does ???? New to me

[scruff1] 22/1/2023 20:48

and why doesnt their EPIC appear as normal above?

[scruff1] 22/1/2023 20:46

Do you currently hold? I see you have added posts

[scruff1] 22/1/2023 20:45

William you are amazing. Is there owt you dont know? What will the 6 numbers for next weeks lottery be please?

[williamcooper104] 22/1/2023 20:31

There's a thread Search under "an income play"

[scruff1] 22/1/2023 20:03

Read an interesting article (well I thought so !) in last weeks Money Week about SUPR. It would have been interesting I think to holders of other reits. I cant post it as I have the printed version but just in case anyone has access. SUPR doesnt seem to have its own thread but does anyone have a position and/or a comment?

[williamcooper104] 16/1/2023 20:43

Interesting given Next and M&S expanding we may just be seeing the bottoming of retail/shopping centre You weren't the only one: Orion (a previously very successful PE fund) blew through £80m in a few months on Intu and then playing on tilt walked away from a £20m deposit to buy (at a good price) retail parks from HMSO On a recovery play you can't underwrite getting your timing right so you need a balance sheet that allows you to get your timing wrong - don't think any UK reit gave you that; we didn't have an SPG (Simon - big US reit)

[severnof9] 16/1/2023 20:04

Many thanks for sharing your conclusions/reasoning William

[yump] 16/1/2023 19:54

O/t I missed the leverage and the writing on the wall with INTU and took a nasty loss. Thought the shopping centre decline had levelled out when I bought them !

At least the chunks bought here near the apparent bottom might make a nice capital profit plus div. Much easier to sit on income shares if they’ve effectively given you a capital gain fairly early.

[williamcooper104] 16/1/2023 16:26

The land bank can double the size of the company Forget about NAV - the current earnings yield is c4.8 percent On £1.90 it falls to 3.9 percent The development yields are 6-8 percent So it's likely going to be accretive to raise equity to fund the development pipeline

[williamcooper104] 16/1/2023 16:20

Current share price gives an implied yield of 5.18 percent Assuming 4.75 percent (which is c25bps tighter than current market) and the land bank in at 40 percent haircut I get to 1.95 and 1.80 without land bank With land bank and yields at 5 I'm getting to 1.82 share price So perhaps £1.80 is best current estimate with room to get to £1.95-£2.0 on continuing favourable interest rate environment Given only £50m debt to refi in 2024 and then first material maturity being in Dec 26 (really 2025 given need to always refi early) - I'm holding

[williamcooper104] 16/1/2023 15:13

With hmso and Intu in particular it was both a structurally declining market and x rated leverage

[yump] 16/1/2023 10:03

So, will it be recovery to 160-170 or 180-190 and in what timescale ?

Time for charting to prove its prediction theory.