Tritax Big Box reports strong occupational demand
By Josh White
Date: Wednesday 07 May 2025
(Sharecast News) - Tritax Big Box REIT said on Wednesday that its bespoke logistics and data centre developments were continuing to offer superior risk-adjusted returns, with strong occupational demand and a significant opportunity to more than double rental income in the medium term.
The FTSE 250 real estate investment trust said in a trading update released alongside its annual general meeting that it was seeing continued strength in occupier demand, with five million square feet of take-up in the first quarter of 2025, and a further 12.9 million square feet under offer.
While speculative development starts remained low, increased market vacancy to 6.3% was largely attributed to a rise in second-hand space.
Rental growth had remained resilient, with MSCI reporting a 1.2% increase in the first quarter, in line with the same period last year.
Prime yields remained stable at 5.25%.
Tritax highlighted a record 28% reversionary potential across its portfolio, which it expected to unlock through active asset management.
Year-to-date lease events covering 8.9% of the portfolio had added £2.3m in incremental income, representing an 8.3% absolute increase in rent, with open market reviews yielding uplifts averaging 37.3%.
A further 18.6% of contracted rent was due for review in the remainder of 2025.
The company said it was making progress on the disposal of non-strategic assets from the UK commercial property REIT portfolio, with 50% sold at a 2.9% premium to book value and £95.6m currently under offer.
On the development side, 1.3 million square feet of lettings were in solicitors' hands, with an estimated annual rent of £11.9m.
Tritax reaffirmed its guidance of a 7% to 8% yield on cost for 2025 development starts.
The firm also reported strong occupational interest in its 107 MW data centre project at Manor Farm in West London, with non-disclosure agreements signed with major hyperscale and co-location operators.
Planning consent was targeted by the end of 2025, and Tritax said it was advancing a wider 1GW pipeline within the London availability zone.
The company said it would host a seminar for investors on 30 June to outline its growth strategy in logistics and data centres.
"We remain well positioned to offer investors superior risk-adjusted returns driven by our focused UK logistics and data centres strategy," said chief executive officer Colin Godfrey.
"Our integrated approach across active management, investment and development provides extensive organic growth opportunities, which have the potential to more than double rental income.
"This, combined with our efficient cost structure and limited near-term debt maturities, underpins our ability to continue to grow earnings and dividends."
Godfrey said that, despite a period of challenging investment market conditions, the company had successfully sold £634m of assets at or above their book valuations since the September 2022 mini-budget.
"This demonstrates the quality of our portfolio and provides confidence in both our asset values and our ability to continue to finance our strategy through capital rotation.
"We are pleased with the levels of interest from both hyperscalers and co-locators in our first data centre opportunity at Manor Farm, West London.
"With an acute shortage of power in this key availability zone, our ability to provide 107 MW of power delivery in 2027 is unique."
The planning process was progressing as expected, Colin Godfrey noted, with an aim of achieving consent by the end of 2025.
"We expect our investment portfolio, which our clients primarily use to serve the UK domestic market, to remain unaffected by US tariff changes."
At 1125 BST, shares in Tritax Big Box were down 0.65% at 143.85p.
Reporting by Josh White for Sharecast.com.
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