Tritax Big Box Reit Plc · LSE:BBOX
Tritax Big Box Reit — FY 2022 Earnings Presentation
44 slides from Tritax Big Box Reit's earnings presentation, Mar 2, 2023
Slide 1: Strong operational performance
Strong operational performance Record lettings High-quality portfolio
Slide 2: Presentation team
Presentation team Aubrey Adams, Chairman Colin Godfrey, CEO Ian Brown, Head of Corporate Strategy & Frankie Whitehead, CFO Investor Relations FY 2022 Results 2
Slide 3: Agenda
Agenda • Introduction • Financial results • Strategic delivery • Questions & answers FY 2022 Results 3
Slide 4: Strong operational performance
Strong operational performance
Slide 5: Strong operational performance
Strong operational performance Results Strategy Market Growth Strong operational performance. Ongoing successful delivery of Long-term structural drivers Attractive long-term growth Repricing of logistics assets in our strategy continue to support occupational opportunities H2 2022 market. Investmen
Slide 6: Strong operational performance
Strong operational performance Development pipeline Development capex Rental growth ESG Financial performance What we said we would do What we said we would do What we said we would do What we said we would do What we said we would do 3-4 million sq ft development £350-400 million capex Review 35% o
Slide 7: Driving earnings growth
a SY / a ar ey, = nd — PS Sa —— a Driving earnings growth
Slide 8: Strong operational performance
Strong operational performance • Recurring earnings per share growth generated by development completions and Adjusted EPS (ex. additional DMA income) like-for-like income growth, despite a 6.4% increase in average share count • Increase in dividend in line with progressive dividend policy • Portfol
Slide 9: Consistently growing recurring income
Consistently growing recurring income Contracted rent (£ million) Adjusted earnings per share (pence) EPRA NAV / NTA per share (pence)1 Dividend per share (pence) Additional DMA income 224.0 8.23 222.6 7.0 6.9 7.79 6.7 6.7 195.6 6.4 6.4 180.6 7.51 6.2 7.17 7.38 166.6 180.4 161.1 6.88 175.6 6.64 6.91
Slide 10: Growing income supporting dividend growth
Growing income supporting dividend growth £ million FY 2022 FY 2021 Contracted annual rent Net rental income 206.0 184.6 11.6% Operating profit1 183.1 178.0 2.9% £224.0m +14.5% Adjusted earnings per share 7.79p 8.23p -5.3% FY 2021: £195.6m Adjusted earnings per share2 7.51p 7.38p 1.8% EPRA Cost Rati
Slide 11: Delivering growth in adjusted earnings
Delivering growth in adjusted earnings Growth in Adjusted Earnings (£m) (excluding additional DMA income) +8.3% 3.6% LFL rental growth FY 2022 Results 11
Slide 12: Fee reduction and income growth lowering cost ratio
Fee reduction and income growth lowering cost ratio EPRA Cost Ratio expected to fall due to: EPRA Cost Ratio % A) Total pro forma cost savings of £4.1 million from: i. IM Fee reduction – pro-forma fee saving of £0.3 million p.a. (A) £4.1m annual cost saving ii. EPRA NTA reduction – pro-forma annual
Slide 13: A changing yield environment in H2 2022
A changing yield environment in H2 2022… Equivalent yield % Capital value movement % (whole portfolio) ERV movement % (like-for-like) 7.0% 9.2% 5.3% 4.1% 4.1% 5.8% 3.2% -13.1% -19.9% 31/12/2021 30/06/2022 31/12/2022 H1 2022 H2 2022 FY 2022 H1 2022 H2 2022 FY 2022 Portfolio value: £5.06 billion Portf
Slide 14: Impacting on valuations and total returns
…impacting on valuations and total returns FY 2022 FY 2021 Portfolio capital value deficit FY 2022 Portfolio value1 (£m) 11 5,059.3 5,480.2 7.7% EPRA NTA (£m) EPRA NTA per share 3,370.8 180.37p 4,157.7 222.60p -19.0% -13.1% Valuation deficit of £759.5m Loan to Value 31.2% 23.5% 7.7pts Capex FY 2022
Slide 15: Robust balance sheet with substantial available liquidity
Robust balance sheet with substantial available liquidity Loan to Value Interest cover Diversified and long-term debt portfolio as at 31 December 2022 £ million 31.2% at 31 Dec 2022 4.8x 600 Incremental £200m Available liquidity Average debt maturity increase in RCF Activity during the period1 500 4
Slide 16: Securing income growth
Securing income growth Assumes no future rental growth £ million per annum +£85 million / +41% of potential rent deliverable from Current development pipeline and rental reversion capture Targeted delivery through 2024 £5m vacancy Current development Current Near Term < 12 Near-term – Future 1 devel
Slide 17: Outlook
Outlook Ongoing portfolio Investing for growth Financial discipline Attractive optimisation • Maintaining long-term development • Balance sheet capacity to fund accounting returns • Significant reversion within guidance: 2-3 million sq ft / £200-250 growth strategy; maintaining 30-35% • Sustainable
Slide 18: Delivering our strategy
Delivering our strategy
Slide 19: Structural drivers remain supportive
Structural drivers remain supportive Macro-economic factors leading to rapid H2 adjustment in ... however it was another very strong year of leasing activity2, 3… investment market pricing 1, 2... 12 7% 60 Current enquiries as of Q4 2022 Take up, million sq ft 10 6% 50 5% Under offer as of Q4 2022 8
Slide 20: Strategy aligned to long-term growth drivers
Strategy aligned to long-term growth drivers High-quality assets attracting world leading Developing land- customers Adding value bank at yield on cost of 6-8% ESG Insight driven Direct development and active and innovation management Portfolio optimisation and recycling capital Underpinned by disci
Slide 21: Improving ESG performance across our business
Improving ESG performance across our business Progress and performance reflected by the major indices: Indices 2019 2020 2021 2022 B BB BBB AA 55/100 72/100 81/100 83/100 (Global Sector Leader – Development) 8.3 15.1 14.6 9 Negligible risk + Industry Low risk Low risk Negligible risk & Regional Top
Slide 22: Integrating and delivering ESG performance
Integrating and delivering ESG performance Our updated 2023 ESG targets include: 1. Sustainable buildings •Continuing the integration of ESG criteria into our investment strategy •Producing a low-carbon baseline development specification 2. Climate and carbon •Releasing and implementing our updated
Slide 23: Modern assets in a range of sizes and locations
Modern assets in a range of sizes and locations… • Modern assets with Modern buildings1… … with strong EPC ratings1… …. in a range of locations2…. …and sizes3 an average building age of 10 years 5% 2% 3% 2% 6% 19% 20% • Well configured, 1% flexible space with 25% 33% significant eaves 10 year 44% 98
Slide 24: Let to a diversified range of large customers
…let to a diversified range of large customers… 51 large customers across a diverse range sectors, including: 10 largest customers by contracted rent 14.5% 5.3% 4.5% 4.7% 3.7% 3.9% 4.0% 3.2% 3.4% 3.4% Note: Based on contracted rent FY 2022 Results 24
Slide 25: Supporting resilient income generation
…supporting resilient income generation • Portfolio provides blend of Long dated leases… …. with a range of review types… …. and review frequencies… inflation linked and open market rent reviews 39% 9% 9% open 18% • Increased proportion of open 20% market 8% market rent reviews to 39% from new devel
Slide 26: Adding value through active management
Adding value through active management… FY 2022 delivery includes: Portfolio reversion now stands at 19%... 325 £5.1m pa increase in passing rent from 33% of portfolio rent reviewed plus 1% £m from a lease extension 275 19% 11% 225 6% Contracted Rent 3 x lease extensions or renewals 3 x fixed uplift
Slide 27: Ongoing portfolio optimisation
… and ongoing portfolio optimisation • We continually look at ways to optimise our investment Small Unit Scheme, Littlebrook Worksop portfolio • Completed on small unit scheme at Littlebrook Formed of 20 non-core multi-let small units totalling 83,000 sq ft constructed as part of planning consent
Slide 28: Strong foundations + significant development potential
Strong foundations + significant development potential • Land portfolio primarily held Strong foundations under capital efficient options Significant development potential from land portfolio • Options embed pre-agreed discount to prevailing open- £5.06 bn Portfolio Value market land values at point
Slide 29: Development lettings of £23.3m secured in FY 2022
Development lettings of £23.3m secured in FY 2022 FY 2022 Development highlights: Balance of pre-let, let during 58% exposure to open market rents Record development lettings secured construction and spec 3.1 million sq ft 4.4% Average Cap 2.1% Average Floor OMR 20% Pre-let Let during construction 4
Slide 30: By supporting our customers
… by supporting our customers • 5 units (2 pre-let, 3 spec let during construction) • 1.3 million sq ft • 15 year WAULT • Open market - 5 yearly upward only rent reviews • Full repairing and insuring leases (“triple net”) • BREEAM Excellent / Very Good and EPC A • 2.9 MW solar capacity Rugby campus
Slide 31: Well positioned to capture the opportunity
Well positioned to capture the opportunity Supportive market £ Financial Attractive long-term Strategy is delivering fundamentals firepower growth opportunities FY 2022 Results 31
Slide 32: Appendix
A AA TRITAX BIG BOX Appendix
Slide 33: EPRA NTA movement
EPRA NTA movement Movement in EPRA Net Tangible Asset Value per share for the period from 1 January to 31 December 2022 -19.0% Pence +7.0% capital valuation surplus -19.9% capital valuation deficit FY 2022 Results 33
Slide 34: Portfolio debt summary
Portfolio debt summary Loan Amount Drawn at Lender Asset Security Maturity Commitment (£m) 31 December 2022 (£m) Loan Notes 2.625% Bonds 2026 None Dec 2026 250.0 249.6 2.86% Loan notes 2028 None Feb 2028 250.0 250.0 2.98% Loan notes 2030 None Feb 2030 150.0 150.0 3.125% Bonds 2031 None Dec 2031 250.
Slide 35: High-quality and resilient portfolio
High-quality and resilient portfolio Range of building sizes1 Modern assets1 Highly automated 1 2% 6% 5% 44% 25% <100k sq ft <5 years 47% 61% 100 - 250k sq ft 5-10 years Automated 250 -500k sq ft 10-15 years 31% 15-25 years Not automated >500k sq ft >25 years 53% 14% 12% Long Term Income2 Rent revie
Slide 36: UK's largest logistics focused land platform
UK’s largest logistics Tritax Big Box land asset focused land platform 25 sites c.40m sq ft Across the UK Potential developable space <15% <5% of GAV development of GAV exposure to as proportion of overall portfolio speculative development Delivering long-term income and value growth to shareholders
Slide 37: Dynamic pipeline of development opportunities
Dynamic pipeline of development opportunities Unallocated process stage Planning /Allocated Outline Consent Detailed Consent Box pipeline Tritax Big Future development Current development Near-term development pipeline pipeline pipeline Longer-term land Potential development Potential development st
Slide 38: Current development pipeline
Current development pipeline Estimated Costs To Estimated Cost To Complete – By Period Complete – Total Contractual H1 2023 H2 2023 H1 2024 Total Sq Ft £m Rent / ERV £m £m £m million £m Current Speculative Development 9.7 9.4 0.3 - 0.4 4.7 Current Let / Pre-Let Development 90.2 45.6 44.6 - 2.6 18.9
Slide 39: Near term and future development pipeline
Near term and future development pipeline Near Term Development Pipeline Current Estimated Cost Estimated Average ERV Total Sq Ft Book Value to Completion Gross Yield on £m million £m £m Cost Near term starts within 12 months 2.3 47.3 244.9 18.2 6-8% Near term starts within the following 8.5 109.2 9
Slide 40: Lease events
Lease events Rent Reviews – Settled In FY 2022 No. of Increase in Contracted Annual Review Type Increase in passing rent Reviews Rental Income RPI / CPI 12 £2.4m 5.7% OMR / Hybrid 5 £1.6m 12.9% Fixed 3 £0.5m 5.5% Total 20 £4.5m 7.0% Rent Reviews – Due in FY 2022 No. of Review Type % of Passing Rent
Slide 41: Portfolio value
Portfolio value £m 31 December 2022 31 December 2021 Investment property 4,847.3 5,249.1 Other property assets 2.3 4.0 Land options (at cost) 157.4 201.5 Share of Joint Ventures 27.2 25.6 Held For Sale 25.1 - Portfolio value 5,059.3 5,480.2 FY 2022 Results 41
Slide 42: Performance track record
Performance track record FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Contracted rental income1 £161.1m £166.6m £180.6m £195.6m £224.0m EPRA cost ratio 13.7% 15.1% 14.2% 13.9% 15.7% Adjusted EPS 6.88p 6.64p 7.17p 8.23p 7.79p Dividend per share 6.70p 6.85p 6.40p 6.70p 7.00p Dividend payout ratio 97% 103%
Slide 43: Benefits of our structure
Benefits of our structure Structure benefits Independent Non-Executive • Dedicated team focused on TBBR with significant “skin in the game” Board • Facilitates cross sharing of ideas and best practice • TBBR shareholders benefit from lower costs - administrative resources spread across larger TML as
Slide 44: Disclaimer
Disclaimer THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR GENERAL INFORMATION ONLY REGARDING TRITAX BIG BOX REIT PLC. INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE SHARES ON THE BASIS OF INFORMATION CONTAINED IN THIS PRESENTATION OR IN RELIANCE ON THIS PRESENTATION.