Industrial property landlord Tritax Big Box REIT (BBOX) has agreed the sale of a Chesterfield warehouse, currently leased to Amazon, for £57.3 million.
The shares ticked 1.2% higher to 156.7p as investors anticipated the money being recycled into potentially higher development assets.
Investment bank Jefferies estimates the sale was struck at a 4.1% yield with the money being put into developments which can generate between 6% and 8%.
The asset, acquired in March 2014 when it had 6.2 years of lease remaining to Tesco, was sold to its smaller counterpart Warehouse REIT (WHR:AIM) - which traded flat at 114.5p as it also announced the acquisition of another asset let to Wincanton (WIN) for £25 million.
‘MOVING ESCALATOR OF GROWTH’
The price for the Tritax/Warehouse REIT transaction was at a premium to the 30 June 2020 book value and reflected a return of 18.5% per annum for Tritax.
Numis analyst Poonam Lodhia said: ‘We believe this is a sensible transaction that locks in a strong valuation and marks positive progress for BBOX towards its stated disposal target of £125-£175 million for 2H20, as well as reducing its exposure to Amazon from 19.2% to 18.1% of total rent roll which is helpful in reducing risk of over-indexation to a single tenant and gives it capacity for further deals with Amazon.
‘However, BBOX has a lot further to go with disposals given its substantial capex targets.’
From the perspective of Warehouse REIT, today’s deals reflect the start of it putting its new-found financial firepower to work having raised £153 million in June to expand its portfolio. Jefferies analyst Mike Prew said the company’s targeted loan-to-value level of 30-40% ‘provides £200 million to get into the market which is like jumping on a moving escalator of growth’.
