Berenberg lowers target price on Tritax Big Box
By Iain Gilbert
Date: Thursday 02 Feb 2023
(Sharecast News) - Analysts at Berenberg lowered their target price on real estate investment trust Tritax Big Box from 190.0p to 170.0p on Thursday, stating repricing was now underway.
Berenberg said Tritax Big Box's mixed Q4 trading update highlighted "a significant valuation impact", down 15.2% year-on-year on a like-for-like basis, as investment markets rapidly repriced asset values to reflect shifting risk-free rates and debt costs in the wake of Liz Truss' mini-budget.
The German bank stated that with the 10-year risk-free rate now approximately 120 basis points below peaks, yield spreads now reflecting "a healthy spread" and the potential for a UK recession to drive risk-free rates lower still, it continues to think that the worst of the yield expansion has now likely been reflected in asset valuations.
"While in-place tenants are high quality and income is secure, we question the occupational appetite for large format warehousing given continued macroeconomic pressures and expect this to result in slowing organic growth and slowing development activity, lowering returns," added the analysts, who stood by their 'hold' rating on the stock.
"We make several forecast changes following the Q4 trading update, adjusting forecast CPI rates in line with those of our economists, lowering development volumes and reducing outer-year market growth forecasts. These changes reduce our NTA forecasts by c18% but increase our EPS estimates by c8%, primarily resulting from lower (NTA-derived) external asset management costs."
Reporting by Iain Gilbert at Sharecast.com
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