Tritax Big Box Reit Plc · LSE:BBOX
Tritax Big Box Reit — H1 2024 Earnings Presentation
41 slides from Tritax Big Box Reit's earnings presentation, Aug 7, 2024
Slide 1: Results for the six months ended 30 June 2024
Results for the six months ended 30 June 2024 7 August 2024
Slide 2: Presenters: Colin Godfrey, Frankie Whitehead, Ian Brown
Colin Godfrey, CEO Colin Godfrey, CEO Frankie Whitehead, CFO Colin Godfrey, CEO Frankie Whitehead, CFO Ian Brown, Head of Corporate Strategy & IR 2
Slide 3: Driving growth in UK logistics
Driving growth in UK logistics
Slide 4: Attractive earnings growth, maintaining balance sheet strength
• Attractive earnings growth • Integration of UKCM assets • Inflection point in • Capturing rental reversion, • Maintaining balance sheet proceeding well occupational and investment developing pipeline and strength • Successfully executing on markets investment opportunities our strategy - active •
Slide 5: Financial and operational review
LE = SS SS YY a He = Financial and operational review Delivering earnings growth
Slide 6: Adjusted EPS, dividend per share, total portfolio value
Adjusted EPS Dividend per share Total portfolio value H1 23: 3.94p H1 23: 3.50p FY 23: £5.03bn Adjusted EPS (ex. additional DMA income) EPRA NTA per share Loan to Value H1 23: 3.94p FY 23: 177.15p FY 23: 31.6% 6
Slide 7: H1 24 financial results summary
£ million H1 24 H1 23 change EPRA Cost Ratio Net rental income 127.2 109.3 +16.4% Other operating income (DMA) 12.2 0.0 +100.0% H1 23: 12.6% Operating profit1 123.8 95.5 +29.6% Future income growth through development lettings and Adjusted earnings per share 4.35p 3.94p +10.4% record reversion1 (£ m
Slide 8: Progression in Adjusted EPS
Progression in Adjusted EPS Growth in adjusted earnings 0.44p 0.11p 0.32p (0.09p) (0.25p) (0.09p) (0.40p) 0.20p (0.08p) 4.35p £5.1 million additional 4.10p 3.94p DMA 0.55p added from increased rental income H1 23 Asset Development UKCM Net disposals DMA Income Admimistrative Net finance Other H1 24
Slide 9: Rent reviews and development letting pipeline
FY 24: H2 weighted - higher proportion of reviews Strengthening development letting pipeline % Portfolio reviewed in 7.7% H1 24 17.4% In solicitor’s hands Potential rental income Increase in passing rent from asset management in H1 74.9% 2024, including rent reviews 2.1% EPRA LFL rental Rental incom
Slide 10: Equivalent yield, ERV growth, portfolio value movement
Equivalent yield ERV growth Portfolio value movement 5.7% 5.6% £97m 5.3% 3.2% -£40m +0.7% -0.7% 3.7% -13.1% 3.0% H2 H1 5.8% 3.8% 3.9% 1.9% -£760m FY22 FY23 H124 FY21 FY22 FY23 FY24 FY22 FY23 H124 FY23: £5.03 billion FY23: 23.0% Stabilised valuations and continued ERV growth 1. Reversion of 25.5% rep
Slide 11: Movement in EPRA NTA per share
Movement in EPRA Net Tangible Asset (NTA) value per share (1 January to 30 June 2024) Development capex H1 24 Total NTA increase 0.4p 1.2p (0.3p) 0.6p Investment activity H1 24 3.8p 3.4p (0.2p) capital valuation 182.8p 182.9p surplus 181.6pacross 181.0p total portfolio 179.5p 179.5p 179.3p Disposals
Slide 12: Balance sheet strength and Moody's rating upgrade
Available liquidity Average debt maturity Debt commitments (as at 30 June 2024) Average cost of debt £ million 800 (FY23 : 2.9%) Extension options 700 Fixed / hedged position on drawn debt 300.9 600 250.0 500 Moody’s rating upgrade 400 150.0 229.0 300 100.0 200 168.0 Loan to Value 100.0 271.0 250.0
Slide 13: Outlook and guidance
• Maintaining long-term development • Strong balance sheet to fund growth • DMA guidance increased: guidance: 2-3 million sq ft / £200-250 strategy • 25% reversion within - FY24 : £25 million million capex annually logistics portfolio, opportunities to - FY25 : £10 million capture 64% before end 202
Slide 14: Delivering our strategy
(DA Fté \ = — Delivering our strategy
Slide 15: Value creation strategy
Preserving value High-quality assets attracting world leading Developing land Compounding clients portfolio at yield income on cost of 6-8% ESG Insight driven Direct development and active and innovation management Creating value Adding value Portfolio optimisation and recycling capital 15
Slide 16: Focusing on our four ESG priorities
ESG Focusing on our four ESG priorities Data & evidence-based ESG performance Supporting customers with onsite renewables • Detailed dialogue with our investors & and decarbonisation projects occupiers • 17.4MW of operational solar with a further c.20 • Ongoing ESG integration of the UKCM MW in the
Slide 17: Logistics sector long-term drivers
Encompasses wide range of uses … …simple long-life buildings… … supported by long-term drivers Increasing Population growth households Distribution Manufacturing Cost efficiencies Resilience Cold storage Film studios Long lasting Adaptable Net Zero Online retail Triple net / Full Easy to upgrade rep
Slide 18: Rental growth and market take-up
Take up in-line with pre-pandemic levels1 Speculative supply has continued to decline1 Million sq ft Million sq ft 50 50 40 40 30 30 20 20 10 10 0 0 H1 H2 Pre-covid H1 average (2013-2019) Under construction - spec Under construction - built-to-suit / pre-let Rental growth – industrial viewed as stro
Slide 19: UKCM logistics-focused portfolio
• Complimentary logistics focused portfolio • 41% rental reversion supporting further earnings growth • Delivers cost savings supporting immediate earnings growth and enhances balance sheet strength by reducing leverage • High-quality urban logistics portfolio compliments existing strategy to broade
Slide 20: Logistics share of portfolio and locations
Logistics 92% of portfolio today - 100% within 2 years(1)… …providing urban/last mile through to big box/first mile(1)… 48.1% 29.8% 11.0% 11.1% Logistics Non-Logistics Logistics <100k sq ft 100-250k sq ft 250-500k sq ft >500k sq ft TBBR UKCM Today < 2 years …in the key logistics locations in the UK(
Slide 21: Capturing rental reversion
22.9% total reversion; record logistics reversion of 25.5%... … to drive rental income growth 1 £ million 23% £ million 400 19% 23% £69.6 million 1.3 300 11% of rental reversion 5% 7% 6% 24.9 200 and vacancy to 7% capture 5% 100 15.8 Contracted Rent 7.1 7.9 0 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Slide 22: Maximising value from our assets
Continuing to maximise value from our assets… … undertaking considered investment… • Refurbishment including ESG enhancements: ✓ Upgrading cladding ✓ Solar PV installation ✓ Upgrading EPC from B to A • Constructed in 1988 • 300,000 sq ft building … attractive income growth and returns supported by s
Slide 23: UKCM logistics and non-strategic assets
Logistics Non-strategic • Visited all locations, met with clients • Commenced asset management plans • Hosted client engagement days • Significant unsolicited inbound enquiries across all sub-sectors • Undertaking rent reviews and lease renewals • Advanced negotiations with select number of • Identi
Slide 24: Land portfolio and development potential
Strong income foundation… Significant development potential from land portfolio • Land portfolio primarily held under capital efficient options • Options embed pre-agreed discount to prevailing open- Portfolio Value market land values at point of Existing draw down portfolio • Provides flexibility o
Slide 25: Development Management Agreements
Development Management Agreements (DMA) • Turnkey development sales to owner-occupiers • Strategically helpful in accelerating projects, e.g. Oxford • Requires limited TBBR capital and delivers higher IRRs • Incremental source of funding to development programme Tritax Big Box Oxford • 371,000 sq ft
Slide 26: Total rental income opportunity over £750 million
Progression1 of annual passing rent towards a total opportunity of over £750 million… …with further opportunities on top £ million Further Structurally supported rental market rental 279.8 growth growth +£121 million Potential rent deliverable from (+41%) current development pipeline and 56.6 Asset
Slide 27: Inherent opportunities accelerated by strengthening market
Inherent opportunities accelerated by strengthening market Strategy and portfolio presents clear earnings growth opportunities A A TRITAX BIG BOX Markets at an inflection point Capabilities and expertise to deliver 27
Slide 28: Appendix
A AA TRITAX BIG BOX Appendix
Slide 29: Historical NTA, contracted rent, EPS and dividend
EPRA NAV/NTA per share (pence)1 Contracted rent (£ million) Adjusted EPS (pence) Dividend per share (pence) 222.6 224.0 225.3 Additional 8.23 DMA income 7.3 7.79 7.0 7.75 195.6 6.9 180.4 6.7 6.7 175.6 177.2 180.6 7.17 7.51 6.4 6.4 166.6 7.38 161.1 6.88 6.2 152.8 151.8 6.64 6.91 6.51 6.37 142.2 129.0
Slide 30: Diverse client base on long-dated leases
Diverse client base in range of sectors, including: …. on long dated leases in modern buildings 7% 14% 28% 34% 17% Portfolio 10.4 year WAULT: average 10.4 years 29% building age 19% 29% 14% 8% < 5 Years 5-10 Years <5 years 5-10 years 10-15 years 15-25 years 11-15 Years 16-20 Years >25 years > 20 yea
Slide 31: Tritax Big Box land assets across the UK
Tritax Big Box land asset Across the UK Potential developable space of GAV development of GAV exposure to as proportion of overall portfolio speculative development 31
Slide 32: Tritax Big Box development pipeline
process stage Planning Box pipeline Tritax Big Longer-term land Potential development Potential development starts Development under Timing held under option starts in following 12-24 months within the next 12 months construction (inc. Let) Size 31.2m sq ft 6.2m sq ft 2.6m sq ft 2.2m sq ft Rent £279
Slide 33: Current development costs to complete
Estimated Costs To Estimated Cost To Complete – Complete – By Period Total Contractual H2 24 H1 25 Total Sq Ft £m Rent / ERV £m £m million £m Current Speculative Development 79.4 66.3 13.1 1.6 14.5 Current Let / Pre-Let Development 39.5 31.9 7.6 0.6 9.0 Total 118.9 98.2 20.7 2.2 23.5 1 Licence fee c
Slide 34: Near-term development pipeline
Near Term Development Pipeline Current Estimated Cost ERV Total Sq Ft Book Value to Completion £m million £m £m Potential near term starts within 12 months 2.6 77.3 293.4 27.7 Potential near term starts within the following 12- 6.2 60.5 724.2 56.6 24 months Total 8.8 137.8 1017.6 84.3 Future Develop
Slide 35: Rent reviews settled H1 2024 and due H2 2024
Rent Reviews – Settled In H1 2024 No. of Increase in Contracted Annual Review Type Increase in passing rent Reviews Rental Income RPI / CPI 3 £0.6m 4.6% OMR / Hybrid 3 £1.2m 30.5% Fixed 3 £0.2m 3.0% Total 9 £2.0m 8.8% Rent Reviews – Due in H2 2024 No. of Review Type % of Passing Rent Reviews RPI / C
Slide 36: Rent review and expiries
Rent review and expiries* H2 2024 FY 2025 FY 2026 Review type Frequency Rent (£m) % of passing ERV (£m) Rent (£m) % of passing ERV (£m) Rent (£m) % of passing ERV (£m) Indexation Annual 20.8 6.8 21.4 33.3 11.0 37.6 33.3 11.0 37.6 5-yearly 19.1 6.3 25.9 8.3 2.7 8.3 28.7 9.4 34.0 OMR / Hybrid Annual 0
Slide 37: Portfolio value
£m 30 June 2024 31 December 2023 Investment property 6,220.0 4,843.7 Other property assets 2.6 2.3 Land options (at cost) 155.9 157.4 Share of Joint Ventures 24.4 24.7 Portfolio value 6,402.9 5,028.1 37
Slide 38: Debt facilities and maturities
Loan Amount Drawn at Lender Asset Security Maturity Commitment (£m) 30 June 2024 (£m) Loan Notes 2.625% Bonds 2026 None Dec 2026 250.0 249.7 2.86% Loan notes 2028 None Feb 2028 250.0 248.2 2.98% Loan notes 2030 None Feb 2030 150.0 150.0 3.125% Bonds 2031 None Dec 2031 250.0 248.2 1.5% Green Bonds No
Slide 39: Five-year financial summary
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Contracted rental income1 £166.6m £180.6m £195.6m £224.0m £225.3m EPRA cost ratio 15.1% 14.2% 13.9% 15.7% 13.1% Adjusted EPS 6.64p 7.17p 8.23p 7.79p 7.75p Dividend per share 6.85p 6.40p 6.70p 7.00p 7.30p Dividend payout ratio 103% 90% 91% 93% 94% Number of ass
Slide 40: Management structure and Tritax Management LLP
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 asset base • Enables hiring of industry experts
Slide 41: Important information
THIS PRESENTATION IS BEING PROVIDED 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. Important information This Presentation has