Shares in large-scale logistics warehouse investment company Tritax Big Box REIT (BBOX) jumped 3% to a new all-time high of 221.5p after the firm recorded its strongest ever take-up of space in the first half of the year.
The company described demand as ‘unprecedented’, with 21 million square feet of space let and a further 16 million square feet under offer, of which roughly half is for sites over 500,000 square feet.
Due to the dash to lease warehouse space and the lack of new sites coming to market, the firm’s vacancy rate is at a record low of 2% and it is implementing ‘strong’ rent increases across all regions.
As investors allocate ever higher funds to the sector, prime yields are being driven further down, boosting the value of the firm’s assets.
These strong market conditions, together with active management of its sites and development gains, resulted in a 10.9% increase in the value of the portfolio between December and June to £4.89 billion.
Earnings per share rose 23.6% to 4.03p driven by higher than expected development management income, completions and rent increases. Underlying earnings per share were up 13.2% to 3.69p, while dividends were 3.2p per share, equivalent to 87% of core earnings.
The firm’s WAULT (weighted average unexpired lease term) is 13.4 years, which gives good visibility of income for the long term.
Meanwhile, development activity is expected to accelerate in the second half with the potential to add another £19.1 million in annual rent.
Chairman Aubrey Adams commented ‘We are benefitting from implementing a strategy that anticipated long-term and accelerating structural changes, particularly the growth in e-commerce.
‘The strategic decision we took in 2019 to increase our development capabilities is paying off, providing us with a significant opportunity to capture unprecedented levels of demand and deliver attractive total returns to shareholders.’
