The logistics investor has withdrawn guidance on any dividend to be paid at the end of this financial year but will continue to make quarterly dividends, and said it is in a robust position to navigate fallout from the pandemic.
Tritax Big Box Reit said it collected a “solid” 86% of rent due from its occupiers in the first quarter and expects by the end of May to collect 96% of rent that was due by 1 April. Discussions are ongoing with customers over the outstanding 4%.
“Despite having fundamentally sound business models, a number of our customers are experiencing unprecedented disruption to operations as a result of the UK Government’s measures put in place to combat the spread of Covid-19,” the company said in an update to the London Stock Exchange, where its shares are traded.
“This has resulted in a slowdown in the occupational markets and increased the likelihood of delays in areas such as planning and construction. The board therefore considers it prudent to withdraw its dividend guidance for the current financial year.”
This means Tritax will not issue forecasts on any potential dividend payout for 2020. However, it announced a quarterly dividend for the quarter ending 31 March, of 1.56p per share – a “conservative” level that would nonetheless allow the company to deliver on its business plans.
“The high-quality nature of our portfolio, strong financial position and diverse customer base provides us with the confidence to continue paying an attractive quarterly dividend,” it said in its trading update on Wednesday.
“We will continue to monitor the dividend position for [full year 2020] with the potential to increase the quarterly dividend when we have better visibility.”
The company said 95% of its buildings remain fully operational, with three temporarily running with a skeletal maintenance staff framework. Meanwhile, Tritax is collaborating with contractors and developers to ensure that appropriate working conditions are in place to maintain operations across its development portfolio.
“At present, there is continued activity at all our sites, albeit at reduced levels, signifying the importance of these buildings in our customers’ supply chains,” it said.
Tritax acquired an 87% stake in Manchester-based warehouse developer DB Symmetry in February 2018, after raising £250m through a share issue. The developer secured planning consent this year on the £73m Tritax Symmetry logistics park in Wigan, designed by AEW architects, totalling 1.4m sq ft. Completion is due in 2027.
Colin Godfrey, chief executive of fund management at Tritax, said the company’s position within the logistics sector puts it in a good position to weather coronavirus-related disruption, which is driving demand for logistics space.
“The company remains well positioned to navigate a prolonged period of uncertainty and to minimise the potential impact on its business and on its financial performance,” Godfrey said.
“We have a diverse, high-quality customer base and are working with each tenant to understand any operational impact or cashflow pressure created by the global response to COVID-19. All our buildings are currently operational, except for three facilities.
“The crisis is bringing into sharp focus the need for occupiers to have a robust, flexible supply chain and the importance of operating in prime, well-located buildings. This pandemic may act as a catalyst for change, accelerating the adoption of e-commerce platforms as consumers increasingly shop online.
“This will continue to drive demand for logistics space as occupiers’ build in resilience and capacity to limit future potential disruptions.”
With a lack of visibility on the depth or duration of the crisis, Tritax will work to ensure it remains in a robust position in the longer term, by preserving a well-funded balance sheet, taking a low-risk approach to development and “a disciplined approach to all non-essential capital expenditure”, he added.
The company plans to hold a virtual annual general meeting on 13 May.