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Trading statements

Tritax Big Box REIT well placed to capture growth

19 January 2017 07:46

Tritax Big Box REIT said it is well placed to capture the strong rental growth of the past 18 months given the profile of rent reviews across its portfolio.

"According to estimates (by Colliers), to keep pace with an e-commerce sector which continues to grow as a percentage of UK retail, the UK/Ireland market will require about 18m sq ft of logistics space to be built annually," Tritax said.

This estimate, Tritax observed, was far ahead of the Savills' estimate that about 3.5 million sq ft is projected to be built annually.

"Meanwhile, logistics availability in the UK has been decreasing since 2009 with the supply of speculatively developed Big Box assets extremely limited," the company said.

Tritax's directors also confirmed a dividend target of 6.4p a share for the year ending Dec. 31, 2017. This would be up 3.2% on the 6.2p target for 2016, and above the rate of retail-price index inflation for 2016.

Colin Godfrey, partner of Tritax, said investment demand for high-quality logistics assets continued unabated during 2016, notwithstanding the EU Referendum in June 2016, with yields buoyed by continued strong industrial rental growth.

"The high-quality, income-focused nature of our portfolio contributed to strong share price performance during a period in which UK REIT shares came under considerable pressure," he said in a statement.

"Whilst the economic backdrop looks uncertain for 2017, there are positive factors influencing our sector."

Godfrey noted that, according to IMRG, online retail sales on Black Friday 2016 were up 12.2% on the previous year, to £1.23bn.

New technology was also creating new channels and changing how consumers interact with retailers, with some omnichannel retailers having a need for physical, online, mobile and telephone sales ordering capabilities.

"Big Box logistics continues to benefit from structural change in shopping habits, with the growth in e-commerce and the economies of scale offered by these assets driving strong occupational demand in the sector, whilst significant barriers to entry result in limited supply driving solid rental growth," said Godfrey.

Tritax has a portfolio of £1,877 million (including forward funded commitments) invested in 35 Big Box assets let to 29 tenants.

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Related Company: BBOX

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