17th Dec 2015 12:27
LONDON (Alliance News) - Tritax Big Box REIT PLC Thursday said it will adopt a progressive dividend policy from next year and said it expects growing demand and restricting supply of "Big Box" properties to continue going forward.
The real estate investment trust focuses on acquiring and utilising so-called "Big Box" assets, which are vast properties that are usually over 500,000 square feet in size that tend to be used by big corporations that need warehouses, distribution centres and other similar facilities.
Tritax said it will implement a progressive dividend policy from 2016 onwards, with payouts being covered by its earnings. Since its initial public offering back in late 2013, Tritax has targeted an annual dividend yield of 6%.
Tritax has achieved a share price total return of 20.9% since the start of 2015, which rises to 35.7% since its IPO.
Tritax has acquired 11 new assets since the start of 2015, pushing its portfolio up to 25 properties comprised of 20 completed assets and five forward funded developments that have already been let. Combined, those assets cover 13.0 million square foot of floor space, of which 2.8 million square foot is under construction.
With all of those properties leased out, Tritax's annual rental income from the properties stood at GBP68.2 million as of Wednesday.
Importantly, all of the leases will see rent increases in the future when rent reviews are conducted. Over half of the leases are linked to the open market, meaning rent will be based on the open market rental value when redetermined. A quarter of the leases have fixed rent increases in place with the other quarter of leases set to see rent increase in line with RPI.
Due to the nature of its assets, 84% of Tritax's tenants are public listed companies, with 69% of its tenants being listed either on the FTSE 100 or FTSE 250.
Tritax is confident moving forward as demand grows and supply dwindles. Tritax said the availability of logistics in the UK has been falling since 2009, with the availability of "Big Box" assets "extremely limited".
"As far as the company's investment manager is aware, no Big Box assets of 500,000 square feet or above are currently being developed speculatively," said the trust.
"As a result of growing occupier demand and constrained occupational supply, strong rental growth has been evidenced during the last 18 months and is expected to continue through 2016 with the company well placed to capture market rental growth given the profile of rent reviews across the portfolio," it added.
Tritax shares were trading up 1.1% to 127.70 pence per share on Thursday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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