See our 2016 full year results

We are pleased to announce our full year results for the period from 1 January to 31 December 2016

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Tritax Big Box is the only Real Estate Investment Trust dedicated to investing in very large logistics facilities in the UK. We own, manage and develop some of the UK’s most sought-after Big Boxes.

Our Big Boxes are strategically important to our tenants as they offer efficiency savings and are increasingly fulfilling e-commerce retail sales. Our tenants include some of the biggest names in retail, logistics, consumer products and automotive.

We aim to provide a secure and growing income for our Shareholders, together with capital appreciation. Our ambition is to be the UK’s pre-eminent owner of Big Boxes.

9% pa

Our Business Model

We own and manage high-quality Big Box logistics assets across the UK, using the Manager’s experience and expertise to assemble and grow a well-diversified asset portfolio and prudently applying leverage to increase returns.




The value we add

The value we add
The starting point for value creation is our ability to source investments. This depends on the Manager’s extensive network of investment agency, developer and tenant contacts, built up over many years. The Manager also spends considerable time researching and developing relationships with asset owners, while learning of any triggers that might lead them to sell. These relationships allow us to source most investments off-market, enabling us to buy at attractive prices. Creating value can also be as much about the investments we do not buy. Patience is vital and we discount numerous opportunities that do not offer value for money.

The Manager’s expertise and market knowledge enable us to assess an investment opportunity rapidly and give vendors a decision promptly. We can also complete transactions quickly, but always following thorough due diligence. This speed and certainty of execution is highly attractive to vendors; the highest offer is not always deliverable, so price is not the only consideration.

We have a clear investment policy but we are also pragmatic. We will buy smaller assets or assets with shorter leases, where we see an opportunity to add value for Shareholders, for example due to a near-term lease expiry where we believe we can re-gear the lease or re-let within a short period. Buying smaller properties reduces the risk inherent in the investment and provides building size diversity. We buy assets directly, but where possible we acquire the special purpose vehicle that owns the asset, thus reducing our acquisition costs.

The assets we buy are usually strategically important to our tenants. We work with them to maximise their operational effectiveness, for example by extending buildings or adding mezzanine floors. This encourages tenants to sign longer leases, increasing the security of our revenues and increasing capital values. Where we buy properties with the potential to add value, we look to turn them into foundation assets for our portfolio through asset management. Our intention is to hold most assets for the long term but we would consider selling if we have unlocked value and delivered the asset’s business plan, and we can reinvest the proceeds in a more attractive opportunity.

The Manager’s relationships with developers are increasingly enabling us to invest in pre-let forward funded developments, through which we fund the construction of a Big Box that has been pre-let to a specific tenant. For more information on this see The Opportunity in Forward Funded Development.

Business model 


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Sustaining our advantage

Sustaining our advantage
As a specialist Big Box investor, we have a reputation as one of the sub-sector’s most knowledgeable, forward-thinking and pragmatic owners and managers. This makes us the obvious choice for asset owners looking to sell Big Boxes. The consistency of the Manager’s team helps us to maintain our relationships in a market where personnel changes are common, enabling us to work on longer-term deals with continuity.

As our portfolio grows, we benefit from economies of scale, increased diversification by geography, tenant and building type, and a larger list of contacts, helping us to source further attractive investments off-market. A larger portfolio also gives us greater insight into market developments and more control over the evidence for rent reviews and lease renewals, as well as the potential to work up multi-asset initiatives with the same tenant.

Delivering returns

Delivering returns
By acquiring high-quality properties with excellent tenants and carefully managing our assets, we aim to deliver a robust, low-risk and growing rental stream, which supports our target of paying a progressive dividend. Our asset selection and management approach also adds value to our investments, allowing our Shareholders to benefit from attractive total returns.

In addition, our status as a REIT helps to ensure that the value we create is not eroded for Shareholders. For example, we are not subject to corporation tax on profits and gains in respect of our qualifying property rental business. We can also pay dividends that qualify as a property income distribution, which offers tax advantages for certain UK Shareholders.


Our strategy

Central to delivering the Group’s objective of driving Shareholder returns is capitalising on the Manager’s deep understanding of the Big Box sub-sector. It is this knowledge and experience that will allow the Company to exploit value from the favourable dynamics that this sector presents.

The Company’s primary focus is creating growing and sustainable income through buying well – quality assets that are attractively priced that will protect and grow capital value over the medium term. Where appropriate, performance will be further underpinned by proactive asset management and exploiting market anomalies.

More specifically, the Company seeks to deliver its objective by positioning business behind three key themes and investing accordingly:

Foundation assets

The quality and sustainability of our rental income underpins our business. Foundation assets provide our core, low-risk income. They are usually let on long leases to tenants with excellent covenant strength. The buildings are typically new or modern and in prime locations, and the leases have regular upward-only rent reviews, often either fixed or linked to inflation indices.

Value Add assets

These assets are typically let to tenants with strong financial covenants and offer the chance to grow the assets’ capital value or rental income, through lease engineering or improvements to the property. We do this using our asset management capabilities and understanding of tenant requirements. These assets are usually highly re-lettable.

Growth Covenant assets

These are fundamentally sound assets in good locations, but let to tenants we perceive to be undervalued at the time of purchase and which have the potential to improve their financial strength, such as early stage e-retailers or other companies with growth prospects. These assets offer value enhancement through yield compression.

Leverage is used prudently to further drive Shareholder returns. The Company’s medium-term target aggregate borrowing is 40% of portfolio value. The Company retains full gearing strategy and takes into account factors such as lender diversity, cost of debt, debt type and maturity profiles.

Our Management

Board of Directors

The Board is responsible for leading and controlling the Company and has overall authority for the management and conduct of the Company’s business, strategy and development.

The Board is also responsible for ensuring the maintenance of a sound system of internal control and risk management (including financial, operational and compliance controls) and for reviewing the overall effectiveness of systems in place as well as for the approval of any changes to the capital, corporate and/or management structure of the Company.

Richard Jewson

Jim Prower ACA

Susanne Given

Mark Shaw FCA

Stephen Smith

The Manager

The Company’s Manager is Tritax Management LLP and is part of the Tritax Group. Since 1995, the Tritax Group has acquired and developed commercial property assets with an acquisition value of more than £4.0 billion on behalf of property unit trusts, limited partnerships and syndicates, involving more than 122 separate investment vehicles and including Big Box assets, industrial properties, office, retail and hotels.

As at January 2017, the Tritax Group had total assets under management with an acquisition value of approximately £2.4 billion, across more than 122 investment vehicles (including the Company), consisting of over 22 m sq ft of real estate assets.

Since 2000, the Tritax Group has delivered an average exit IRR across its non-tax products of approximately 16.00% pa, with a number of its tax products achieving performance in excess of this average. Its tenant list has currently and historically included Amazon, Next, Intercontinental Hotels Group, Sainsbury’s, RBS, Royal Mail, Tesco, IBM, HMRC, Halfords, GDF Suez, Accor and Asda.

Colin Godfrey

James Dunlop

Henry Franklin

Petrina Austin

Bjorn Hobart

Ed Plumley

Frankie Whitehead

Olivia Cox

Portrait of Olivia Cox

Corporate Governance

Since its inception in December 2013, the Company has undergone substantial growth and in June 2015 was included in the FTSE 250 Index.

Throughout this period, as a Board, we have been committed to maintaining and improving the structures and processes required to underpin such growth as befitting a Company of our size.

Here we provide details on the roles, responsibilities and processes that help us to govern the Company.

Corporate Governance reports and statements

The Role and Duties of the Board

The Board is responsible for leading and controlling the Company and has overall authority for the management and conduct of the Company’s business, strategy and development. The Board is also responsible for ensuring the maintenance of a sound system of internal control and risk management (including financial, operational and compliance controls) and for reviewing the overall effectiveness of systems in place as well as for the approval of any changes to the capital, corporate and/or management structure of the Company.

Board Committees

Audit Committee
The Company has established an Audit Committee, which comprises all the Directors, with Jim Prower as the Chairman of the committee. The Audit Committee meets at least twice a year and assists the Board in observing its responsibility for ensuring that the Company’s financial systems provide accurate and up-to-date information on its financial position and that the published financial statements represent a true and fair reflection of this position. It also assists the Board in ensuring that appropriate accounting policies, internal financial controls and compliance procedures are in place. The Audit Committee receives information from the external auditors.

Management Engagement Committee
The Company has established a Management Engagement Committee, which comprises all the Directors, with Stephen Smith as the Chairman of the committee. The Management Engagement Committee meets at least once a year. The Management Engagement Committee’s main function is to review and make recommendations on any proposed amendment to the Property Investment Management and Services Agreement and the Investment Advisory Agreement and keep under review the performance of the Manager and examine the effectiveness of the Company’s internal control systems. The Management Engagement Committee also performs a review of the performance of other key service providers to the REIT Group.

Nomination Committee
The Company has established a Nomination Committee, which comprises all of the Directors with Richard Jewson as Chairman of the committee. The Nomination Committee’s main function is to regularly review the structure, size and composition of the Board and to consider succession planning for Directors. The Nomination Committee meets at least once a year.

The Role and Duties of the Senior Independent Director

Internal Controls

The Board acknowledges it is responsible for maintaining the Company’s system of internal control and risk management in order to safeguard the assets of the Company. This system is designed to identify, manage and mitigate financial, operational and compliance risks inherent to the Company. The system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable, but not absolute, assurance against material misstatement or loss.

External Auditors

BDO LLP provides audit services to the Company. The Annual Report and Accounts are prepared in accordance with the accounting standards set out under IFRS and with EPRA’s best practice recommendations. The fees charged by the Auditor depend on the services provided and on the time spent by the Auditor on the affairs of the Company; there is therefore no maximum amount payable under the Auditor’s engagement letter.

Articles of Associations


Principal Risks and Uncertainties

We aim to operate in a low-risk environment, focusing on a single sub-sector of the UK real estate market with the aim of delivering an attractive, growing and secure income for Shareholders, together with the opportunity for capital appreciation. The Board therefore recognises that effective risk management is key to the Group’s success. Risk management ensures a defined approach to decision-making that seeks to decrease the uncertainty surrounding anticipated outcomes, balanced against the objective of creating value for Shareholders.

Our principal risks and uncertainties are set out below. They have the potential to affect materially our business, either favourably or unfavourably. Some risks may currently be unknown, while others that we currently regard as immaterial and have therefore not been included here, may turn out to be material in the future.

Property Market Risks

Default of one or more of our tenants.
Impact The default of one or more of our tenants would immediately reduce revenue from the relevant asset(s). If the tenant cannot remedy the default and we have to evict the tenant, there may be a continuing reduction in revenues until we are able to find a suitable replacement tenant, which may affect our ability to pay dividends to Shareholders.

Mitigation Our investment policy limits our exposure to any one tenant to 20% of gross assets or, where tenants are members of the FTSE, up to 30% each for two such tenants. This prevents significant exposure to a single retailer. To mitigate geographical shifts in tenants’ focus, we invest in assets in a range of locations, with easy access to large ports and key motorway junctions. Before investing, we undertake thorough due diligence, particularly over the strength of the underlying covenant. We select assets with strong property fundamentals (good location, modern design, sound fabric), which should be attractive to other tenants if the current tenant fails. In addition, we focus on assets let to tenants with strong financial covenant strength in assets that are strategically important to the tenant’s business.

The performance and valuation of our property portfolio.
An adverse change in our property valuations may lead to a breach of our banking covenants. Market conditions may also reduce the revenues we earn from our property assets, which may affect our ability to pay dividends to Shareholders. A severe fall in values may result in us selling assets to repay our loan commitments, resulting in a fall in our NAV.

Mitigation Our property portfolio is 100% let, with long unexpired weighted average lease terms and an institutional-grade tenant base. All the leases contain upward-only rent reviews, which are either fixed, RPI/CPI linked or at open market value. These factors help maintain our asset values. We have agreed banking covenants with appropriate headroom and manage our activities to operate well within these covenants. We constantly monitor our covenant headroom on LTV and interest cover. This headroom is currently substantial.

Our ability to grow the portfolio may be affected by competition for investment properties in the Big Box sector.
 Competitors in the sector may be better placed to secure property acquisitions, as they may have greater financial resources, thereby restricting our ability to grow our NAV. 

Mitigation We have extensive contacts in the sector and often benefit from off-market transactions. We also maintain close relationships with a number of investors and developers in the sector, giving us the best possible opportunity to secure future acquisitions. We are not exclusively reliant on acquisitions to grow the portfolio. Our leases contain upward-only rent review clauses and we have a number of asset management initiatives within the portfolio, which means we can generate additional income and value from the existing portfolio.

Funding Risks

  • Our use of floating rate debt will expose the business to underlying interest rate movements.
  • A lack of debt funding at appropriate rates may restrict our ability to grow.
  • We must be able to operate within our banking covenants.

Operational Risks

The REIT Group will continue to be reliant on the management and advisory services the Group receives from the Manager. As a result, the Group’s performance will, to a large extent, be dependent upon the ability of the Manager and retention of its key staff by the Manager.

Taxation Risks

If the Group breaches any of the REIT regulations, this may lead to the Group losing its REIT status and therefore members of the Group may be subject to UK corporation tax.

Our Principal Risks and Uncertainties

Company Contacts

Colin Godfrey Partner, Fund Manager Tritax Group Email: Tel: +44 (0)20 7290 1616

Kirstin L Walmsley Head of Marketing Tritax Group Email: Tel: +44 (0)20 7290 1616

James Benjamin Alex Shilov Lydia Thompson Newgate Communications Financial PR Email: Tel: +44 (0)20 7680 6550