Tritax Big Box REIT partner Colin Godfrey has said the “compelling fundamentals” of the UK warehouse market “remain largely undisturbed by the ongoing uncertainties associated with the economic and geopolitical backdrop”.
In a trading update on 2017, he said that the “weight of occupier and investor demand for big-box logistics assets, coupled with a lack of meaningful supply, ensured that values and rental growth remained robust during 2017, with evidence suggesting that such attractive dynamics were likely to continue to support the performance of the sector into 2018”.
During the period the investor bought 11 new big-box investments in 2017, including one prelet forward-funded development, with an aggregate purchase price of £435m, and paid £62.5m for 124 acres of prime London logistics development land.
It also reached practical completion on four pre-let forward funded developments, totalling 2m sq ft in 2017.
As at 31 December 2017 it had invested £2.5bn in a portfolio of 46 big assets as well as 124 acres of development land at Littlebrook, Dartford.
Its portfolio is 100% let or pre-let to 36 institutional tenants with contracted annual rental income of £124.6m and all the leases provide for upward only rent reviews.
Since 31 December 2017, a further 3 Big Box assets have been acquired with an aggregate purchase price of £139.m, increasing the portfolio to a total of 49 assets and extending the weighted average unexpired lease term across the portfolio to 14.5 years
Colin Godfrey, Partner of Tritax, said: “We continue to implement the company’s strategy, further diversifying our portfolio by geography and tenant whilst remaining patient and disciplined in our approach.
“During 2017, whilst maintaining a high proportion of foundation assets to underpin the portfolio’s core, low-risk income (74% of the portfolio by value), we have also sought to selectively acquire some value-add opportunities, which included 124 acres of prime development land at Dartford, offering the potential to deliver further value to our shareholders in 2018 and beyond.
“Our increased scale brought further strategic benefits including the issuance of our £500m debut unsecured loan notes, which nearly doubled our average term to maturity at an attractive fixed cost of debt.
The compelling fundamentals of our market remain largely undisturbed by the ongoing uncertainties associated with the economic and geopolitical backdrop. The weight of occupier and investor demand for Big Box logistics assets, coupled with a lack of meaningful supply, ensured that values and rental growth remained robust during 2017, with evidence suggesting that such attractive dynamics are likely to continue to support the performance of the sector into 2018.”
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