Thursday, 7 March 2019

Tritax Big Box - Final Results

This property REIT was added to my SIPP portfolio in October 2016 following a placing of shares at 132p.

Tritax Big Box (BBOX) is the only Real Estate Investment Trust dedicated to investing in and funding the pre-let development of very large logistics facilities in the UK. The company believes these properties, known as Big Boxes, are one of the most exciting and highest-performing asset classes in the UK real estate market.

Big Boxes offer tenants economies of scale and cost savings not available from smaller, older buildings. They are also crucial to the efficient and effective operation of retailers, and in particular the fulfilment of e-commerce orders. Because the nature of what the companies use these buildings for is so fundamental to their very existence, Tritax is unlikely to suffer from unexpected vacancies. Over the past year, demand has increased due to Brexit as companies stockpile stock due to the uncertainty of outcome.

The group hold a portfolio of distribution assets which are located close to motorways and are let to tenants including some of the leading supermarkets - Sainsbury, Tesco, Morrisons as well as M&S and Next. Some other tenants include Amazon - the world’s largest electronic and e-commerce retailer, Argos and Ocado - the world’s largest dedicated online grocery retailer.

The UK has been one of the fastest global adopters of online retail and continues to exhibit significant growth in the sector, driving new demand for logistics real estate including Big Box assets. Successful large-scale retailers (online and conventional) and logistics providers are increasingly relying on this format.


Tritax Big Box was first listed at the end of 2013 at an initial floatation price of 100p. During 2016 it raised £550m of equity through two substantially oversubscribed share issues. In the past year it raised a further £250m which was invested over the year in various acquisitions and brings the market cap to over £3bn.

They have this week issued 
results for the 12 months to end December 2018 (link via Investegate). Total Shareholder return for the period was 12.1%. The company target a total return (being the increase in EPRA NAV + dividends paid) of 9.0% per year - the figure for 2017 was 15.2%.

Earnings increased by 8% to 6.88p per share and total portfolio assets are valued at £3.4bn across 54 assets (2016 £2.6bn across 46 assets).


Building on payouts for the previous years of 4.15p, 6.0p, 6.2p and 6.4p in 2017, the declared dividend for the full year 2018 is 6.7p with a target of 6.85p in the coming year. At the current share price this provides a fwd yield of ~4.7%. The dividends are covered by adjusted earnings of 6.88p, which are underpinned by strong rental stream and low cost base.

Commenting on the results, chairman Richard Jewson said:

"The quality of the Group's portfolio and Customer base mean that we are confident of continuing to deliver secure dividends to Shareholders, resulting in attractive returns in a low interest rate environment. While the continued delays and lack of clarity over Brexit presents a substantial uncertainty for the UK economy, our market has remained robust. Since the referendum in June 2016, occupiers have continued to search for space, rents have risen and yields have hardened. Brexit is also encouraging manufacturers and retailers to hold additional stock domestically, increasing occupational requirements for UK warehouse space while supply constraints continue. This reinforces the favourable dynamics for landlords. Nonetheless, Brexit does present significant risk for the UK economy which could impinge upon the current positive attributes of our market.

We see good opportunities to continue to add assets to the portfolio at prices that create value at the point of purchase. Following the db symmetry acquisition, we now have the ability to bring through our own developments which are expected to contribute materially to earnings growth and our progressive dividend policy over the medium term."


I like what I have seen so far and I believe the model offered by Big Box which is basically tapping into a part of the online revolution, has potential for growth as well as a fairly secure dividend underpinned by the long leases and upward only rent reviews. The share price has gained 9% compared to my purchase price of 132p. In addition, I have received a dividends of 13.1p and the prospect of a further 6.85p for the coming year.

The way we shop has changed quite significantly over the past decade and internet sales are forecast to account for over 25% of total sales by 2020. To remain competitive in this environment, retailers need to have large, highly efficient distribution facilities that can fulfil orders quickly and accurately. This need is only becoming more acute as customers demand ever-shorter delivery times.

The demand for the warehouse boxes offered by this REIT is likely to remain strong which means the dividend is reasonably secure and should easily keep pace with inflation.

This article is a record of my personal investment thoughts/decisions and is not a recommendation - as always, please DYOR.


  1. I'm happy with my holding of BBOX, although unfortunately, I was unable to take full advantage of the recent share offer to existing holders at £1.30. I intend to continue topping up this holding when I can.

    1. Thanks weenie. I also missed out but I am fairly happy with the shares I have for now.

  2. I’ve previously held BBOX and liked the fact that the business is easy to understand.
    In tidying up my portfolio, I sold it last year and subsequently the price dropped – at today’s price it looks like good value for money and a relatively safe dividend stock.