Tritax EuroBox has posted a NAV total return of 5.9% for the year to 30 September 2022.
The company, which invests in European logistics properties, saw its EPRA net tangible assest (NTA) increase 2.2% to €1.38, due to a 5.6% like-for-like uplift in the value of its portfolio, which is now worth €1,765.6m following acquisitions.
The group’s portfolio saw an 8.1% increase in the first half of the year (to 31 March 2022) followed by a 2.3% fall over the next six months – reflecting the pressure that high interest rates is putting on real estate valuations.
The group’s rental income increased 31.9% to €57.9m, driven by 4.0% like-for-like rental growth, asset management activity and acquisitions. Adjusted earnings per share was 4.24 cents, down 8.0% primarily due to timing of deployment of the prior year’s equity raise.
This did not quite cover dividends of 5.00 cents, although this was covered in the quarter ending 30 September 2022 and the company expects full dividend cover for the 2023 financial year.
Operational activity
The company acquired nine properties during the year for a combined net initial yield of 3.7%, which added €20.2m of annual rent. The portfolio is 99.7% occupied with an 8.0 year WAULT. 97% of occupational leases are subject to annual increases of which 82.6% linked to inflation.
Other activity included:
- Development schemes totalling 31,200 sqm were fully let during the year, adding €1.4m to annual rental income.
- Four new leases were signed totalling €5.1m of annual rent, an increase of €0.8m (+18%) above previous rent or guarantees.
- Awarded five Green stars and “Leader in Sustainability for European Industrial Distribution Warehouse Listed Sector” by GRESB, the global ESG benchmark for real estate.
Balance sheet
The company has one of the most robust balance sheets in the sector with low and capped cost of debt and an earliest maturity in the fourth quarter of 2025 and a weighted maturity of 4.5 years. 100% of debt has fixed rates or caps, with a maximum average cost of debt of 1.46% – again one of the lowest in the sector.
During the year the company issued a private placement of €200m, at an average coupon of 1.37% and average maturity of nine years.
It has €239m of available liquidity from undrawn debt facilities at financial year end and significant covenant headroom, with an LTV of 35% and interest cover of 3.9x compared to covenant levels of 65% and 1.5x respectively.
Outlook
The company said that it expects macroeconomic factors to lead to further softening of asset values in the short term. However, it added that structural tailwinds and favourable occupational market fundamentals would continue to support occupier demand and rental growth.
The group added that increased rental income and cost efficiencies will support earnings growth and dividend cover over the next financial year, while its robust balance sheet and resilient portfolio make it well placed to navigate a more uncertain market outlook.
Robert Orr, chairman, commented:
“Economic conditions have changed significantly since June, and our sector will not be immune to subsequent impacts. We will continue to monitor closely the more uncertain environment and remain attentive to the potential risk of weaker markets.
“However, our high-quality portfolio, strong customer base and robust balance sheet mean we are very well positioned to weather the economic headwinds we are facing. The lower cost base and additional revenues generated from operational activity, provide positive momentum to earnings going into 2023 and support a fully covered dividend going forward.”
EBOX : Tritax EuroBox in strong position to navigate uncertain market outlook