Tritax reports solid profit growth in 2023

1st Mar 2024 07:25

(Sharecast News) - Tritax Big Box, the logistics-focused real estate group currently undergoing a potential £900m all-share merger with UK Commercial Property Reit (UKCM), delivered a small increase full-year profits as a result of higher rental income and lower costs.

There were few surprises in Friday's results, following an in-depth trading update from Tritax in January, though the company gave a confident outlook for 2024 and beyond, helping shares higher in morning trade.

"Easing inflation, continuing rental growth, and improving yields on cost all reinforce our conviction in our development programme," said Tritax chair Aubrey Adams.

"The group has very good potential for long-term income and capital growth, supported by enduring structural drivers in the logistics real estate market."

Operating profits in 2023 totalled £193.2m, up 5.5% on the previous year, while contracted annual rents rose 0.6% to £225.3m.

However, a 0.6% reduction in the portfolio value to £5.03bn meant the IFRS net asset value per share fell by 2.3% to 175.13p.

Tritax lifted its dividend payment to 7.30p, from 7p the year before, as the payout ratio improved to 94% from 93%.

Tritax and UKCM proposed their merger on 12 February and have until 8 March to announce a firm intention to finalise a formal offer.

"The rationale for this deal is driven by enhanced scale making the new entity the fourth largest UK REIT with a combined market capitalisation of c.£3.9bn," said Shore Capital analyst Andrew Saunders.

"The deal would establish a c.£6.3bn portfolio focused on high-quality UK logistics assets generating over £290m of rental income per annum with significant embedded and growing rental reversion potential."

The stock was up 1.6% at 148.9p by 0825 GMT.