Return and rent roll still rising at Tritax Big Box
Big box logistics real estate investment trust Tritax Big Box posted its full-year results for the 2016 calendar year on Tuesday, with dividends declared for the year totalling 6.2p per share, in line with the board’s target and up 3.3%.
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The FTSE 250 firm said dividends were fully covered by adjusted earnings per share of 6.51p - a 6.4% improvement.
Total shareholder return for the period was 15.1% - based on the increase in share price assuming dividends reinvested - as compared to the FTSE 250 Index, the FTSE All-Share REIT Index and the EPRA NAREIT UK index which delivered total returns of 6.7% and losses of 7.0% and 8.5% respectively.
EPRA net asset value per share increased by 3.46% or 4.71% on a like-for-like basis to 129.00p at 31 December.
Total return - the increase in EPRA NAV plus dividends paid - for the year was 9.6%, compared to the board’s medium-term target of 9% per annum.
Market capitalisation stood at £1.54bn as at 31 December, and its portfolio was independently valued at £1.89bn at the same time, including all forward funded commitments.
The portfolio's contracted annual rent roll increased to £99.66m from £68.37m at the start of the period, which also included all forward funded commitments.
During the year, Tritax further diversified its sources of borrowing, with a new £72m long-term, fixed-rate facility with Canada Life.
The company’s loan-to-value ratio as at 31 December was 30.0%.
Tritax reported a reducing EPRA cost and total expense ratio of 15.8% and 1.06% respectively, which it said reflected the benefits of increased scale, and it confirmed it raised £550m of equity during 2016, through two oversubscribed share issues.
“The outlook for the group remains positive,” said Tritax Big Box chairman Richard Jewson.
“We are in a strong financial position and see further opportunities to acquire high-quality standing assets and to forward fund pre-let developments.”
Jewson said the board considered there to be limited potential for capital growth through further yield compression and whilst more challenging, the firm maintained a 9% per annum total return target.
“Capital growth is therefore likely to come from steady state capitalisation rates being applied to growing income.
“We believe that income will remain the most important component of total return over the next 12 months.
“There are strong drivers to rental growth in the market, both due to the ongoing imbalance between occupational supply and demand and the increase in build costs in 2016, which we expect will feed through to rents.”
That rental growth would help to support the group's progressive dividend policy, Jewson explained, adding that for 2017 the board increased its dividend target to 6.40p per share.
“In summary, our market is resilient and we expect 2017 to be another positive and stable year for the group.”