2018 Interim Results Announcement

Listen to our audio results for the period from 1 July 2018 to 31 December 2018

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Tritax EuroBox plc focuses on 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 manage a well-diversified and environmentally sustainable portfolio of European logistics assets in order to deliver a secure dividend and an attractive capital return.


The Company invests in continental European logistics real estate assets which deliver secure and growing levels of income.

On a fully invested and geared basis, Tritax EuroBox targets an initial Ordinary Share dividend yield of 4.75% p.a.¹ by reference to the Issue Price, which the Company expects to increase progressively through regular indexation events inherent in underlying lease agreements and by increased rents following the expiration of leases and the subsequent capturing or market rental value growth.

The Company pays dividends on a quarterly basis. Dividends are declared in Euro and paid, by default, in Sterling. However, Shareholders are able to elect to receive dividends in Euro.

The date on which the Euro/Sterling exchange rate is set will be announced at the time the dividend is declared and a further announcement will be made once such exchange rate has been determined.

1 Euro denominated returns, by reference to IPO issue price, on a fully invested and geared basis. These are targets only and not profit forecasts. There can be no assurances that these targets will be met and they should not be taken as indications of the Company’s expected or actual future results. Accordingly, potential investors should not place any reliance on these targets in deciding whether or not to invest in the Company and should decide for themselves whether the targets are reasonable or achievable.

9% pa

The Company invests in prime continental European logistics real estate assets which deliver an attractive capital return and secure income.

On a fully invested and geared basis, Tritax EuroBox is targeting a total return on Ordinary Shares in excess of 9% p.a.¹, by reference to the Issue Price over the medium term.

1 Euro denominated returns, by reference to IPO issue price, on a fully invested and geared basis. These are targets only and not profit forecasts. There can be no assurances that these targets will be met and they should not be taken as indications of the Company’s expected or actual future results. Accordingly, potential investors should not place any reliance on these targets in deciding whether or not to invest in the Company and should decide for themselves whether the targets are reasonable or achievable.

45% of GAV

Tritax EuroBox seeks to use gearing to enhance equity returns. The level of borrowing is on a prudent basis for the asset class, and seeks to achieve a low cost of borrowing, whilst maintaining flexibility in the underlying security requirements and the structure of both the portfolio and the Company.

The Company maintains a conservative level of aggregate borrowings with a medium term target of 45% of the gross asset value of the assets held or controlled by the Company at the time of borrowing and a maximum limit of 50% of the gross asset value of assets at the time of borrowing.


Tritax EuroBox seeks to meet its investment objective through investment in, and management of, a portfolio of distribution or logistics assets in Continental Europe diversified by geography and tenant, targeting well located environmentally sustainable assets in established distribution locations, within or close to densely populated areas.

The Company aims to maintain a weighted average unexpired lease term of greater than five years across the portfolio in accordance with typical lease lengths prevalent in Continental Europe.

£300m (c.€340m)

Tritax EuroBox plc, a closed-ended investment company incorporated in England and Wales, raised £300 million (c.€340 million), via a placing, an offer for subscription and an intermediaries offer of Ordinary Shares in the capital of the Company.

The Ordinary Shares were admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange on 9 July 2018.

An investment in the Company enables investors to gain exposure to a portfolio of well located Continental European logistics real estate assets, diversified by geography and tenant, that are expected to deliver an attractive capital return and secure income to Shareholders.


Tritax has identified a strong pipeline of high quality large scale logistics assets, totalling in excess of €1.8 billion and entered into advanced negotiations in respect of the acquisition of seven assets within this pipeline for an aggregate consideration in excess of €600 million. Four of these seven assets have been sourced through the Manager’s asset managers, LCP and Dietz.

  • 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.
  • These assets are located in Germany, Italy, the Netherlands, Poland and Spain with an average size in excess of 105,000 sq m, an average lot size of €87 million, a weighted average unexpired lease term of 12.4 years and a weighted average net initial yield of 5.1%. All the buildings are, or will be once completed, of modern specification and built within the last five years.
  • Issue proceeds are expected to be deployed within six to nine months of Admission.

* On a fully invested and geared basis. The Dividend and Return targets stated above are targets only and not a profit forecast.
† A medium term target

The case for logistics in Continental Europe

Occupier demand for Continental European logistics assets is in the midst of a major long-term structural change principally driven by the growth of e-commerce. This is evidenced by technological advancements, increased automation and supply-chain optimisation, set against a backdrop of resurgent economic growth across much of Continental Europe.

Tritax Group believes that the current market dynamic in Continental Europe closely resembles market conditions in the UK prevalent approximately five years ago, when online retail penetration began to accelerate.

This rising demand for modern logistics assets is coupled with significant supply shortages in key markets, which provides a strong foundation for rental growth.

Occupier driven demand

Growth in e-commerce is a highly significant driver of occupier demand, but only part of the story. In addition, occupiers are striving to increase their supply chain efficiencies and upgrade their logistics facilities to large, modern, sustainable, well-located stock. This often results in a consolidation of space, into fewer, larger units, enabling occupiers to centralise and optimise their inventory management.

Increasing levels of centrally held inventory is driving demand for Big Box facilities. According to Prologis, each online retail sale typically requires up to three times more space than traditional offline sales. The need for this space is exemplified by Amazon, which utilises some of the largest warehouses in Europe.

The advent and rapid adoption of new technology is also having a marked impact on the nature of occupier demand. Logistics operators across Europe had been relatively slow to adopt automation and smart technologies compared with some markets, but this is changing quickly. The combination of the wider spread adoption of automation and the growth in e-commerce are both driving demand for high quality warehouse and logistics facilities.

Occupiers are increasingly in search of specialized e-commerce fulfilment centres, with high-tech, flexible space, and with warehouse automation becoming more common, they are investing more heavily in their facilities. This creates the incentive for a longer-term commitment to their premises, due to the prohibitively high relocation costs and the need to amortise capital outlay over a long time period. Indeed, there are many instances where automation costs exceed construction costs and in some cases, investment values. For investors, this can be seen as a strong commitment from the tenant.

Not all of the new demand is for the very largest of facilities. A location in close proximity to the consumer base is crucial and smaller logistics sites within, or just outside of the metropolitan centres will be increasingly important as businesses compete to drive down the cost and time of accessing these urban markets. Small-scale logistics sites within close proximity to consumers will remain highly desirable, as part of the “last-mile” element of the delivery chain.

Constrained market supply

Rising occupier demand for Grade A facilities, and the relative lack of speculative development over the last decade, has created significant supply shortages of high quality stock. Logistics operators are increasingly seeking to centralise their activities in modern logistics facilities. However, an aversion to risk of void on speculatively built space and the relative dearth of appropriate development finance (for schemes without pre-let conditions), combined with high construction costs has dampened speculative development activity in recent years, forcing occupiers to pursue pre-let or build-to-suit solutions.

While a lack of substitute locations will drive up rents, differing approaches to planning, along with availability of land mean that each market has a unique supply dynamic. Locations with tighter planning regulations or a lack of available land will be less able to respond to rising demand and this will push rents higher.

In general, there has been a reduction in the availability of land zoned for industrial land use, particularly around major urban centres, with developers preferring to convert aging industrial properties to higher land value uses such as residential. The reduction in land zoned for industrial use limits the supply response and with strong demand for these locations it is increasingly hard to find and assemble very large sites in some markets. This is feeding into rising land prices, and will ultimately help drive rental growth.

Rental growth

Across Europe, we expect online sales to account for a rising portion of retail trade. Based on the trajectory of the UK market, we estimate that the German market lags the UK by two to three years, while France, the Netherlands and much of Western Europe are around five years behind (based on e-commerce as a proportion of total retail sales). The markets of Southern Europe and CEE are around ten years behind on average (based purely on penetration rates). The future growth in e-commerce across Europe and occupiers drive towards modernisation of supply-chains, combined with the lack of stock, offer opportunities for rental growth.

Logistics rents have been accelerating in the UK, with prime London logistics rents increasing 20% over the past five years, with 9% growth in 2017 alone. Barcelona recorded the strongest annual growth in 2017, with rents up 24% on 2016. In the last five years, the markets of Lisbon, Warsaw, Milan, Madrid and Dusseldorf have all recorded negative rental growth. However, rents in these markets are now stable or rising, and rising economic prosperity and the forecast growth in e-commerce will support future values.

Our competitive strengths

The Directors believe that the Company has the following key competitive strengths:

Key growth areas

The Company’s focus on distribution or logistics real estate assets in Continental Europe offers investors exposure to a key asset class driven by the continuing evolution of the retail sector in Europe. The countries targeted are Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Slovakia, Spain and Sweden.

Favourable demand/supply dynamic

The imbalance of occupational supply and demand remains favourable for landlords, pointing to the potential for rental growth;

Asset availability

The Company is confident that the Manager’s extensive contacts within the European logistics market, covering occupiers, developers and investors will continue to provide a top quality pipeline of assets for consideration;

Secure growing income stream

The Company’s dividend yield target will be met by rent generated from lease agreements with institutional-grade tenants, which incorporate indexation provisions, allowing the Company to benefit from a secure inflation protected income stream;

Extensive European expertise

The Manager has the necessary expertise to establish, manage and grow a logistics portfolio in Europe. Through a combination of Tritax Group staff who are experienced in the European real estate investment market and have extensive knowledge of the logistics sector and deep understanding of the intricacies of logistics operators, and strategic alliances with specialist logistics asset management platforms across Europe, the Manager will source and manage an expanding portfolio;

Development benefit with minimised development risk

The Company funds and acquires developments which are either pre-let or have the benefit of rental guarantees. The Company may invest in land zoned for logistics use which has the relevant permits and authorisations for constructing logistics assets. In all of these cases the Company will receive income from the developer. The level of income is determined by the amount of capital invested. This exposure allows the Company to access high quality new logistics assets in a way which reduces a number of the risks associated with development. Save for assets benefitting from rental guarantees, the Company will not undertake speculative development.