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Tritax Big Box REIT PLC on Wednesday said its portfolio value was down, despite third highest lettings year on record.
The London-based logistics real-estate investment trust said it secured an additional £23.3 million in annual contracted rent from 3.1 million square feet of development lettings in 2022. Tritax maintained long-term development guidance of between 2 million and 3 million square feet per year at a 6% to 8% yield on cost.
Tritax Big Box added that of 2.9 million square feet of development starts in 2022, of which 2.4 million square feet has been let. Another 400,0000 square feet are still under construction and could add £5.0 million to annual contracted rent.
A further £5.1 million was added to contracted rent as a result of rent reviews and rent renewals, Tritax Big Box said.
It noted that 100% of the rent for 2022 was collected, unchanged from last year.
Big Box said its total portfolio value at December 31 was £5.1 billion, down 7% from £5.5 billion in 2021, but representing an equivalent yield of 5.3%, up from 4.1% in 2021.
There was a drop in like-for-like value of investment assets of 15% over the year, Tritax said, compared with a 20% reduction in the second half on 2022.
Looking at the UK logistics sector as a whole, Tritax Big Box noted that 38 million square feet of lettings were made in 2022, down 9.5% from 42 million square feet the year prior, but the third highest year on record and 33% above the 10-year average.
Distribution warehouse investment volumes in the UK industry as a whole were £2.4 billion in the second half of 2022, down 61% from £6.1 billion in the same period last year, due to a slowdown in the real estate transaction market.
Supply in the UK remains constrained, Tritax Big Box noted, with only 2.0% ready to occupy vacant space, marginally up from 1.6% a year ago.
Chief Executive Officer Colin Godfrey said: ‘Against this positive operational performance, the macroeconomic backdrop has been challenging with increasing inflation and interest rates leading to a significant weakening of the investment market and material falls in asset values in the second half of the year across the sector.
‘More recently, however, given the attractive long-term fundamentals of UK logistics, we are seeing encouraging early signs of stabilisation in the investment market and greater discernment over asset quality which plays to the quality and strength of our portfolio.’
Tritax Big Box shares were up 1.3% trading at 150.70 pence per share on Wednesday morning in London.
By Harvey Dorset, Alliance News reporter
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