Tritax reported a 10.6% rise in full-year net rental income to £305mn, with benefits from the UK Commercial Property REIT acquisition, developments, and rental growth more than offsetting the negative impact of disposals. Operating profit grew 6.1% to £281mn.
The portfolio value increased from £6.6bn to £7.9bn, largely driven by the £1.0bn acquisition of Blackstone’s logistics portfolio. This resulted in the loan-to-value ratio rising from 28.8% to 33.2% (target: less than 35%).
Vacancy rates remained broadly stable at 5.6%, with increased leasing activity offsetting higher vacancy rates in the Blackstone portfolio.
A dividend of 2.255p per share was announced, taking the full-year total to 8.0p, up 4.4%.
The shares were broadly flat in early trading.
Our view
Tritax’s full-year results didn’t spring any surprises following last month’s trading update. High occupancy rates have helped to drive solid pricing, and the top line’s benefitting from recent acquisitions. At its core, Tritax Big Box generates income through renting out large warehouses, or 'Big Boxes', which are central to modern logistics and e-commerce.
Tritax’s customers continued to snap up new developments last year as building a strong logistics network is non-negotiable in this day and age. And management has outlined a few levers it can pull to drive further growth over the coming years.
One of those levers is potentially high-yielding new developments, like energy and datacentre projects. Tapping into the growing demand for sites to host new AI datacentres is a shift from the traditional Big Box properties, but the pipeline looks good, and we think this will be a growing area – it’s early days but something to watch.
Real estate investment trusts (REIT), like Tritax, must pay out the majority of rental profits to investors. Desirable assets mean attractive deal terms, such as upwards-only rent reviews, which are helping boost income. A wide range of high-quality tenants should hopefully add some more security to the 5.0% forward dividend yield, while further expansion could lead to increasing payouts – though not guaranteed.
Paying out rental income makes expansion complicated, too. Tritax is selling lower-yielding mature assets to invest in higher-yielding development opportunities. 2024’s merger with UK Commercial Property is helping on that front, too. In 2025, Tritax made good progress selling off unwanted assets from the merger, freeing up lots of cash. Against an improving market backdrop, activity here is picking up, which helps give options.
Developing new sites is also key, and a shortage of ready-to-occupy premises means customers have been snapping up units before they've been completed. But it's expensive to get sites up and running, and if it doesn't get filled, it could become a financial headache.
Tritax’s valuation has risen in recent months and now sits at an 11% discount to its underlying net asset value, which at first glance offers less value than the sector average discount of around 19%. We still see some upside on offer over the long term, given that the group has a good selection of growth levers available to pull. But progress will likely be slow, and as ever, there are no guarantees.
Environmental, social and governance (ESG) risk
Real estate is relatively low risk in terms of ESG. One of the principal drivers of this risk is the capacity to integrate material ESG considerations into decision-making, risk management and public reporting; the most material ESG considerations are environmental, like carbon emissions reduction, energy efficiency and physical climate risk. The rise of hybrid working has also reduced demand for commercial property, making product governance and customer satisfaction a top priority. Other risks to monitor include labour relations, business ethics, and emissions & waste.
According to Sustainalytics, Tritax’s overall management of material ESG issues is strong.
Tritax demonstrates strong ESG commitment with board-level oversight, robust reporting standards, and a clear code of conduct that protects employees reporting misconduct. The company integrates physical climate risk into its strategy, conducting full carbon life cycle assessments for new developments, but lacks detailed water management programs and transparency on managerial responsibility for safety.
Tritax Big Box REIT key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.