Tritax Big Box Reit Plc · LSE:BBOX
Tritax Big Box Reit — H1 2023 Earnings Presentation
43 slides from Tritax Big Box Reit's earnings presentation, Aug 3, 2023
Slide 1: Tritax Big Box H1 2023 Results
A AA TRITAX BIG BOX Strong operational performance Robust balance sheet Significant opportunities
Slide 2: Presenters
Ian Brown, Head of Corporate Strategy & Aubrey ColinAdams, Chairman Godfrey, CEO Frankie Whitehead, CFO Investor Relations H1 2023 Results 2
Slide 3: Agenda
• Introduction • Financial results • Strategic delivery • Questions & answers H1 2023 Results 3
Slide 4: Continued strong operational performance, asset values stabilising
• Continued strong operational • Long-term structural drivers • Development pipeline and performance • High-quality portfolio continue to support significant portfolio reversion • Asset values stabilising • Active management occupational market. underpin future earnings • Delivering further earnings
Slide 5: Operational performance, stabilising asset values, strong balance sheet
Operational performance < Stabilising asset values Strong balance sheet
Slide 6: H1 2023 results highlights
Adjusted earnings per share • Earning growth supported by increasing passing rent from development (ex. exceptional DMA income) completions in part offset by asset disposals • Asset values stabilising reflecting quality of portfolio and resilience of income H1 2022: 3.73p Dividend per share • Future
Slide 7: Financial results summary
£ million H1 2023 H1 2022 Contracted annual rent Net rental income 109.3 101.5 +7.7% Administrative costs 13.8 15.3 +9.8% 31 December 2022: £224.0m Net finance costs 20.7 18.4 +12.5% Adjusted earnings per share1 3.94p 3.73p +5.6% (ex. exceptional development management income) Dividend per share 3.5
Slide 8: Earnings drivers: rental growth, management fee, indebtedness
3.6% LFL rental growth 14% reduction in management fee Higher average indebtedness Development Management Income (DMA): H1 2023 - £0m H1 2022 - £2.6m H1 2023 Results 8
Slide 9: Rental growth and stabilised yields generating capital growth
Equivalent yield % ERV movement % (like-for-like) Capital value movement % (whole portfolio 1) 7.0% 5.3% 5.3% 5.8% 1.0% 4.1% 3.9% 3.2% -19.9% H1 2022 H2 2022 H1 2023 30/06/2022 31/12/2022 30/06/2023 H1 2022 H2 2022 H1 2023 FY 2022: £5.06 billion FY 2022: 19.1% Rental growth combined with stabilised
Slide 10: Portfolio value, NTA and conservative leverage
H1 2023 FY 2022 Portfolio value1 (£m) 11 5,046.9 5,059.3 -0.2% H1 2023 Portfolio capital value surplus 3 EPRA NTA (£m) 3,420.4 3,370.8 +1.5% EPRA NTA per share 183.02p 180.37p +1.5% Consistent and conservative approach to leverage Loan to Value 30.3% 31.2% -0.9pts Loan to value 29.9% 30.0% 31.2% 30.
Slide 11: Significant headroom on net debt / EBITDA
Significant headroom even following 20% property value declines in H2 2022 4.6x • Crystalising value Net Debt / EBITDA1 60% • Enhancing returns • Supporting balance sheet strength 30% 1.5x 31 December 2022: 8.6x • Overall expect net debt to be broadly level in FY 2023 maintaining balance sheet stren
Slide 12: Diversified and long-term debt portfolio
Diversified and long-term debt portfolio as at 30 June 2023 Available liquidity Average debt maturity £ million 600 500 250.0 Fixed / hedged position on drawn debt 400 300 450.0 200 300.0 250.0 Average cost of debt 250.0 250.0 100 150.0 90.0 72.0 0 50.9 at 30 June 2023 2023 2024 2025 2026 2027 2028
Slide 13: Near term income visibility growing with significant future potential
£ million per annum Assumes no future rental growth +£93 million / +44% of potential rent deliverable from Current development pipeline and rental reversion capture Expected income commencement 2023 2024 2024/25 £5m vacancy Current Near-term potential Current Near Term < 12 Future Current passing an
Slide 14: Strong balance sheet and liquid assets provide capacity to fund strategy
• Disposals likely to be focus of near- • Maintaining long-term development • Sustainable earnings growth, term funding requirements guidance: 2-3 million sq ft / £200-250 with development-led acceleration • Significant reversion of £48 million million capex annually within investment portfolio • Ba
Slide 15: Delivering our strategy
Delivering our strategy
Slide 16: Structural drivers of occupier demand
Prime headline rental growth, H1 2023 9 8 South East Vacancy (%) North West 5.9% 7 UK average 6 East Midlands West Midlands 5.6% 5 West Midlands East Midlands 5.6% 4 3 North West UK average 4.9% 2 South West Yorks / North East 3.1% 1 Yorkshire / North East 0 South West 2.9% South East 1.9% 2 1, 2… 5
Slide 17: Disciplined capital allocation and sustainability
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 disciplined approach to capital allocation and emb
Slide 18: Optimising performance and redeploying capital
• H1 2023 – exchanged or completed on £235 million of asset sales at or above • £200-250 million invested in development • Acquired £58 million urban logistics book value starts in FY 2023 portfolio • Focused on enhancing portfolio quality • 2-3 million sq ft of construction starts • Opportunistic a
Slide 19: ESG progress and delivery
• Disclosed our updated ESG targets in FY2022 results • Asset by asset NZC • Further integration of ESG • Upgraded our baseline roadmap • Completed our GRESB criteria into due diligence specification – EPC A & • We are now in delivery BREEAM ‘Excellent’ • Development of portfolio submission with 90
Slide 20: One of Europe's most modern portfolios
• Modern assets with Modern buildings1… … with strong EPC ratings1… …. in a range of locations2…. …and sizes3 an average building age of 10 years 6% 1% 3% 2% 7% 17% 18% • Well configured, 1% flexible space with 26% significant eaves 10 year 41% 99% of 34% 8% heights 53% 30% average portfolio rated •
Slide 21: Long dated leases with upward-only reviews
51 large customers across a diverse range sectors, including: Long dated leases… …. with a range of upward-only …. and frequencies review types… 39% 9% open 9% 18% 25% market 9% 23% Portfolio WAULT: 52% 12.6 years 12% 30% 82% 31% < 5 Years Inflation linked Annually Five yearly 5-10 Years Open market
Slide 22: H1 2023 delivery and reversion capture
H1 2023 delivery 3.9% LFL ERV growth in H1 2023 - overall reversion 21% 325 • 19% of portfolio subject to review in 2023, of which: £m 21% 275 19% • 14.1% inflation linked £47.8m of rental 11% reversion to 225 • 1.7% open market / hybrid 7% 6% capture 5% • 3.2% fixed 175 7% • EPRA LFL rental growth
Slide 23: Liquidity and valuation evidenced in recent transactions
• Undertaking disposals to optimise portfolio and drive returns • June 23 – exchanged on £84.3 million asset at 4.0% NIY let to Howdens • H1 2023 exchanged or completed on £235 million of assets • Healthy level of unsolicited inbound offers from a range of global buyers Blended Net Initial Yield Tot
Slide 24: J6 Industrial Park, Birmingham acquisition
J6 Industrial Park, Birmingham • Repricing of assets creating attractive opportunities in urban logistics • Prime urban logistics location three miles from centre of Birmingham • 12 single-occupancy units totalling 384k sq ft ranging from 12k to 83k sq ft • c.£7.30 psf average passing rent versus £1
Slide 25: Progressing construction, lettings and new planning consents
• Completion and letting of • Phase 2 – 578k sq ft of let 646k sq ft in 6 units from or sold prior to or at 56k sq ft to 184k sq ft practical completion • Attracted tenants including • Phase 3 - secured outline Apple, GIG and Rexel consent for 927k sq ft • Capturing significant rental • Phase 3 - co
Slide 26: Strong development progress delivering growing rental income
• On track to deliver lower end of 2-3 million sq ft of development starts Development lettings secured guidance in FY 2023 • Occupational interest at near record levels Let developments reaching practical completion • Achieving rental levels 15-20% above expectations Development starts • Cost press
Slide 27: Clear path to growing rental income
Capture portfolio reversion Supportive market Financial fire power fundamentals Develop near-term pipeline Attractive long-term Strategy delivering growth opportunities Opportunity to increase rental income by Clear path to growing rental income H1 2023 Results 27
Slide 28: Questions and presenters
Ian Brown, Head of Corporate Strategy & Aubrey ColinAdams, Chairman Godfrey, CEO Frankie Frankie Whitehead, Whitehead, CFO CFO Investor Relations H1 2023 Results 28
Slide 29: Appendix
A AA TRITAX BIG BOX Appendix
Slide 30: Movement in EPRA NTA per share
Movement in EPRA Net Tangible Asset Value per share for the period from 1 January to 30 June 2023 +1.0% capital valuation surplus Pence Equivalent Yield: 5.3%, (Dec 22: 5.3%) H1 2023 ERV growth: +3.9% Investment Development Operating profit Share based Dividends paid EPRA NTA EPRA NTA assets assets
Slide 31: Tritax Big Box land asset
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 H1 2023 Results 31
Slide 32: Development potential from land portfolio
• Land portfolio primarily held Strong foundations under capital efficient options Significant development potential from land portfolio • Options embed pre-agreed discount to prevailing open- Portfolio Value market land values at point of Existing draw down portfolio • Provides flexibility over qua
Slide 33: Delivering 2-3m sq ft of development starts per annum
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 26.7m sq ft 9.0m sq ft 2.9m sq ft 2.6m sq ft Rent £232
Slide 34: ESG indices progress and performance
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 Rated n/a Silver Gold Gold + Most Improved H1
Slide 35: 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 36: Debt facilities schedule
Loan Amount Drawn at Lender Asset Security Maturity Commitment (£m) 30 June 2023 (£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 250.0 247.9 1.5% Green Bonds No
Slide 37: Estimated costs to complete
Estimated Costs To Complete Contractual Total Period Total Sq Ft Rent / ERV H2 2023 H1 2024 H2 2024 £m million £m £m £m £m Current Speculative Development 38.2 19.5 18.0 0.7 0.9 7.8 Current Let / Pre-Let Development 45.1 44.3 0.8 - 1.7 12.5 Total 83.3 63.8 18.8 0.7 2.6 20.3 . H1 2023 Results 37
Slide 38: Near term development pipeline
Near Term Development Pipeline Current Estimated Cost to ERV Estimated Average Total Sq Ft Book Value Completion £m Gross Yield on Cost Million £m £m (uncommitted) Potential near term starts in H2 2023 2.9 39 320 25 6-8% Potential near term starts within the 9.0 116 1,015 77 6-8% following 12-24 mon
Slide 39: Rent reviews settled and due
Rent Reviews – Settled In H1 2023 No. of Review Type % of Contracted rent Growth in passing rent Reviews RPI / CPI 2 5.3% 2.7% OMR / Hybrid 2 2.2% 29.2% Fixed 2 2.4% 4.0% Total 6 9.9% 8.8% Rent Reviews – Due in 2023 No. of % of Contracted Review Type Reviews Rent RPI / CPI 6 14.1% OMR / Hybrid 2 1.7
Slide 40: Portfolio value reconciliation
£m 30 June 2023 31 December 2022 Investment property 4,766.1 4,847.3 Other property assets 2.3 2.3 Financial asset 2.4 - Land options (at cost) 165.0 157.4 Share of Joint Ventures 26.8 27.2 Asset held for sale 84.3 25.1 Portfolio value 5,046.9 5,059.3 H1 2023 Results 40
Slide 41: Historical contracted rent, EPS, dividend and NTA
8.23 224.0 Exceptional DMA income 7.79 195.6 180.6 7.17 7.51 166.6 6.88 7.38 161.1 6.64 6.51 6.91 6.37 126.0 99.7 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 222.6 6.9 7.0 6.7 6.7 6.4 6.4 180.4 6.2 175.6 152.8 151.8 142.2 129.0 FY 16 FY 17 FY 18 FY 19 FY 20 FY
Slide 42: Five-year financial summary
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Contracted rental income1 £126.0m £161.1m £166.6m £180.6m £195.6m £224.0m EPRA cost ratio 13.1% 13.7% 15.1% 14.2% 13.9% 15.7% Adjusted EPS 6.37p 6.88p 6.64p 7.17p 8.23p 7.79p Dividend per share 6.40p 6.70p 6.85p 6.40p 6.70p 7.00p Dividend payout ratio
Slide 43: Important information
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. THIS DOCUME