Tritax Big Box’s share price buoyed by solid REIT trading update

Tritax Big Box share price LON:BBOX, rose by +0.63% as the firm’s latest trading update highlights the untapped potential, within its portfolio.

Tritax Big Box has released an impressive trading update for 2024, which, suggests that the firm’s strategy is paying off.

Looking at the headline figures: the company has secured an additional £22.70 million in contracted rents, through what it terms smart asset management and development lettings.

This figure includes one of the UK’s largest pre-lets seen in 2024, a deal over a massive 1.0 million square foot facility for a global e-commerce leader.

The value of the REIT’s portfolio has grown significantly, reaching a total of £6.50 billion by the end of 2024, up from £5.0 billion in the previous year.

What’s particularly interesting is the +26.10% rental reversion potential, that sits within the portfolio.

This is essentially a measure of future rental growth, and it is the difference between a current rent and the estimated market rental value of a property.

In essence, Tritax has the opportunity to increase its rental income by just over a quarter.

On the capital discipline front, Tritax Big Box has been busy optimizing its portfolio.

They’ve completed £306.20 million of disposals, all above book value, including raising £181.20 million from the sale of non-core assets.

This pruning of assets has helped strengthen the balance sheet, and the loan-to-value ratio at the business has improved to 29.0%, down from 32.0% last year. It’s a case of the lower the better, as far as this ratio is concerned.

The company’s debt position remains favourable, with a competitive 3.10% weighted average cost of capital, and 93.0% of its existing debt is either held at fixed rates or hedged. Something that’s important, in periods of interest rate uncertainty.

Tritax has over £500.0 million in available liquidity, so they’re well-positioned for any future opportunities or unexpected issues that may come along

Another interesting development is their venture into data centres, a new area of business which is targeting a yield-on-cost of 9.30%, from their first major project, a 147 MW data centre development, the firm has its eye on another giga-watt of capacity.

However, Tritax’s management may want to see how this market evolves in the wake of the release of DeepSeek, the resource-light Chinese AI, before pursuing any more deals.

This diversification, combined with the firm’s core logistics expertise, suggests Tritax is positioning itself smartly for the future.

Looking ahead to 2025, the fundamentals of the business are looking strong, the unrealised uplift in rental income and the potential from higher-yielding data centre deals are intriguing.

Against this background, Tritax seems well-equipped to continue delivering value for investors.

The stock price is largely unchanged on the update, however, the shares have risen by +7.90% over the last month, suggesting the market had anticipated the good news.