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Tritax Big Box REIT ventures into urban logistics

Tritax Big Box REIT has acquired a urban logistics park in Birmingham for £58.5m, at a 4.5% net initial yield and a reversionary yield of 6.7%.

The group has bought Junction 6 Industrial Park, one of the UK’s leading urban logistics estates of scale totalling 384,000 sq ft across 12 assets.

It is located less than three miles from the centre of Birmingham and currently has a WAULT of 2.5 years – providing the company with a near-term opportunity to capture rental reversion. The current passing rent is £7.30 per sq ft on average versus a £10.90 per sq ft estimated rental value (ERV).

Chief executive Colin Godfrey said the acquisition “complements our existing portfolio, broadens our customer offer, and provides additional asset management opportunities to drive income growth”.

In a trading update, the company also said it was aiming to dispose of between £100m and £200m of assets in 2023, in addition to the £150m it has already sold this year at a blended net initial yield of 4.6%.

Letting of 0.5m sq ft of new developments so far this year has added £4.1m to annual contracted rent, while 1.4m sq ft of lease completions has added £10.5m to passing rent. In addition, 0.9m sq ft of new planning consents have been secured, bringing total consented undeveloped land portfolio to 8.1m sq ft. A yield on cost guidance of 6-8% has been maintained with 2023 schemes expected to be delivered in the mid 6-7% range.

The group’s loan to value ratio at the end of the first quarter was 30.0% (based on Dec 22 valuations and adjusted for disposals and other capital expenditure during the first quarter), with a weighted average cost of debt of 2.6%, of which 100% of drawn debt is either fixed or hedged. The debt has an average 5.1 years to expiry with the earliest refinancing event in December 2024. There was more than £600m of available liquidity at end of the first quarter 2023.

BBOX : Tritax Big Box REIT ventures into urban logistics

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