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Tritax EuroBox plc is dedicated to Continental European logistics real estate. Tritax EuroBox plc seeks to exploit the structurally undersupplied Continental European logistics market, capitalising on Tritax Group’s extensive logistics experience and long-established network of key occupier, owner, developer and agency relationships.
The Company’s objective is to build a well-diversified portfolio of European logistics assets in order to deliver an attractive capital return and secure income.
Tritax EuroBox will seek to meet its Investment Objective through investment in, and management of, a portfolio of logistics assets in Continental Europe diversified by geography and tenant, targeting well located assets in established distribution hubs, within or close to densely populated areas.
The Company will focus on investments in properties fulfilling a key part of the logistics and distribution supply chain for occupiers including retailers, manufacturers and third-party logistics operators. The majority of the portfolio is expected to be invested in large, modern distribution warehouses. A proportion of the portfolio may offer exposure to urban distribution hubs, which help occupiers fulfil the “final mile” part of the distribution chain.
Tritax EuroBox will seek to invest in locations with limited supply of logistics assets that are likely to benefit from structural changes in occupational demand and/or assets benefitting from long term index-linked leases.
In accordance with typical lease lengths prevalent in continental Europe, the Company will target and seek to maintain a weighted average unexpired lease term of greater than five years across the portfolio.
To enhance equity returns the Company will seek to use gearing. The level of gearing will be on a prudent basis for the asset class, with a medium term target of 45% of Gross Assets and a maximum limit of 50% of Gross Assets.
The Company will build a well-diversified portfolio of European logistics assets which fulfil key roles in the logistics and distribution supply chain focused on the most established logistics markets and on the major population centres and logistics terminals. These assets will be large, modern, well specified properties which satisfy modern occupier requirements.
The Manager has identified a strong pipeline of high quality large scale logistics assets, totalling in excess of €1.8 billion. All the assets in the investment pipeline have been sourced through the Manager’s existing relationships, predominantly on an off-market basis, and are focused on standing assets and pre-let forward funded developments.
Tritax EuroBox will target large, modern, well specified Big Box assets which satisfy modern occupier requirements.
Tritax EuroBox will target assets located in established distribution hubs with strong transportation connectivity, good availability of labour, within close proximity to major population centres.
Tritax EuroBox will target assets which benefit from value enhancing capital investment by tenants in state of the art automated handling systems.
Tritax EuroBox will target assets in locations with limited availability of land due to pressures from alternative uses.
A proportion of Tritax EuroBox’s portfolio may include urban distribution hubs providing fulfilment of the “last mile” distribution chain.
Tritax EuroBox will target assets which present potential for asset management and value enhancing initiatives during the lease term.
The majority of the Company’s portfolio is expected to be invested in completed, let investments and pre-let forward funded developments. A proportion of the portfolio may be invested in land zoned for logistics use (and options over such land) and assets benefitting from rental guarantees. These types of acquisition will allow the Company to source higher quality, lower priced assets than could be delivered from purely targeting build assets.
They allow the Company to enter into earlier stage discussions with developers and prospective tenants, thereby minimising competition with other investment buyers.
The Company will acquire completed and let assets from investors, operators or developers which are income-producing.
The Company will invest in assets which are either ready for, or in the course of, construction provided they are pre-let to an acceptable tenant. In such circumstances, the Company may seek to negotiate the receipt of immediate income from the asset, such that the developer is paying the Company a return on its investment during the construction phase and prior to the tenant commencing rental payments under the terms of the lease. In such circumstances, the Company will acquire the land in advance and make staged payments to the developer through the construction period until practical completion of the building and the tenant taking up the lease.
The Company may invest in assets, either built or under construction, but not yet leased by a tenant, with the benefit of Rental Guarantees provided by the vendor in circumstances where the Manager believes that the asset can be let to an acceptable tenant before the expiry of the Rental Guarantee.
The Company may invest in land zoned for logistics use and options over such land. “Land zoned for logistics use” is land that the relevant local government planning authority has identified for logistics as the preferred use and that logistics buildings can be developed subject to detailed planning application and consent being granted. The Company may seek to negotiate the receipt of immediate income from the asset, such that the developer is paying the Company a return on its investment until either a pre-let arrangement or a Rental Guarantee is agreed. On agreement of a pre-let arrangement or Rental Guarantee, the land in question will be treated by the Company as a pre-let forward-funded development or, as the case may be, an asset benefitting form a Rental Guarantee.
The Company intends to categorise its investments in accordance with their proven four investment pillars invest strategy. On a fully invested and geared basis, the Company currently expects approximately 50% of its Gross Assets to be invested in Foundation Assets, 20% of Gross Assets to be invested in Value Add Assets, 20% of Gross Assets to be invested in Growth Covenant Assets and 10% of Gross Assets to be invested in Strategic Land (including options over land and assets benefitting from Rental Guarantees).
Foundation Assets are core low risk income assets. They typically benefit from long leases to institutional grade covenants in prime locations with index-linked rents, providing the foundation to the portfolio.
Value Add Assets provide value add opportunities. They assets are fundamentally strong assets let on shorter leases to financially strong tenants allowing implementation of asset management initiatives to drive value, principally by lease renegotiation.
Growth Covenant Assets are fundamentally strong assets in good locations but let to tenants with improving financial covenants. These assets offer the opportunity to add value as the tenant’s financial standing improves and hence improving income security.
Strategic Land are investments in land zoned for logistics use in strong locations and include options over land and assets benefitting from Rental Guarantees. These assets offer the opportunity to add value as they are positioned at an earlier stage of the development cycle and so can generate Foundation Assets for the future.