17th May 2024 16:39
(Alliance News) - Tritax Big Box REIT PLC on Friday was applauded for getting the merger with UK Commerical Property REIT Ltd "over the line," while an update confirmed trading remains strong.
On Friday, the London-based real estate investment trust which invests in large logistics warehouses, reported increased rental income from development activity in the three months ended March 31, ahead of its merger with UKCM
It completed the merger with its fellow FTSE 250 constituent on Thursday, following an agreement finalised in March for an all-share takeover.
Tritax Big Box shares were down 1.0% to 165.30 pence each in London on Friday. It will have 2.48 billion shares in issue following the combination, giving a GBP4.15 billion market capitalisation.
UKCM investors received 0.444 of a new Tritax Big Box share for every UKCM share held. They will own 23% of the combined company, while Tritax Big Box investors have the remaining 77%.
Tritax Big Box is now the UK's fourth largest REIT and management anticipates further benefits including cost savings and a leveraged balance sheet with a reduced loan-to-value ratio of 29%.
Prior to the merger, during the first quarter, Tritax Big Box added GBP1.3 million to annual contracted rent from 0.1 million square feet of development lettings, it said, and a further GBP7.4 million was added to passing rent from 0.8 million sq ft of practical completions in the period.
Tritax Big Box initiated 900,000 square feet of construction and secured planning consent for 1.0 million square feet bringing available undeveloped space in the portfolio to 6.5 million square feet.
Shore Capital analyst Andrew Saunders said the update confirms "strong trading leasing momentum and development progress."
He said he was pleased to see the UKCM acquisition completed and applauded the Tritax team in getting the deal "over the line."
"We have been supportive of this acquisition from the outset, believing the rationale to be sensible, driven by enhanced scale, making the new REIT among the top-5 largest in the UK with a combined market capitalisation in excess of GBP4 billion. While portfolio fit is not perfect (they rarely are… and will involve disposals) it will enhance the customer offer across a broader range of property sizes and tenant uses from mega-boxes to smaller assets within key urban locations," he commented.
Saunders thinks the deal will generate "attractive enhancement" to earnings from both a reduction in management charges and direct overheads but also in the longer- term as non-core disposal proceeds can be recycled into the development pipeline.
He reiterated a 'buy' rating on Tritax, believing it offers "attractive long-term value."
With a "secure" balance sheet and available liquidity in excess of GBP550 million, Tritax also has the "financial headroom" to deliver and capture future development upside, Saunders believes.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Tritax Big Box