Tritax Big Box REIT's development arm, Tritax Symmetry, is building a large industrial estate in Knowsley. Credit: via Inform Communications

Tritax confident in market strength despite inflation

Tritax Big Box REIT, whose development arm is Tritax Symmetry, is on track to deliver 3m-4m sq ft of development starts this fiscal year. This is according to its Q1 2022 trading update on the London Stock Exchange.

“Demand from a broad range of occupiers for new logistics space remains very strong, underpinning our confidence in our growth prospects,” said chief executive Colin Godfrey.

“We are actively managing our portfolio, completing several rent reviews and lease extensions during the period which will deliver attractive levels of income growth,” he continued. “With 3.1 million sq ft of space currently under construction, we have growing visibility on accelerating earnings growth over the medium-term.”

Godfrey went on to describe how the company is handling rising prices.

“We are mitigating much of the construction cost inflation in our near-term development pipeline through our specialist approach to procurement, locking in fixed price building contracts, and our ability to pass through increased costs to rents,” he said.

“Our active management of open market rent reviews, the significant proportion of inflation-linked leases and strong occupier demand combined provide a good degree of inflation protection.”

More than a third of the 3.1m sq ft of developments under construction have already been let, securing £8.4m in contracted rent for the company.

According to Tritax, the remaining 1.8m sq ft of logistics space being built has the potential to add £15.2m in rent.

Of the 3m-4m sq ft of development starts this year. Tritax is aiming for a 6% to 8% yield on cost target range. This earnings impact will be seen in the company’s 2023 and 2024 results, according to the trading update.

Tritax’s shares were down 2.07% on the morning of the trading update announcement.

In the North West, current Tritax projects include Symmetry Park, Merseyside in Knowsley and Symmetry Park in Wigan.

Correction: An earlier version of this story attributed an increase in nationwide take-up in the industrial sector to Tritax Big Box REIT alone. Take-up in the sector has doubled nationwide in the first quarter of 2022 compared to that same period last year.

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