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Tritax Eurobox rallies on Covid-19 e-commerce boom

20 May 2020

Real estate investment trust reports some delays in collecting rents but says overall the pandemic is spurring demand for the logistics properties it owns.

Tritax Eurobox (EBOX ) shares jumped over 5% yesterday as the company reported the Covid-19 outbreak and the subsequent boom in online shopping has boosted demand for its European logistics warehouses. 

Shares in the £324m real estate investment trust (Reit) gained 4.2p or to 83.4p, and are up another 2% to 85.2p today, after the company reassured investors about prospects in its half-year results to 31 March.

Although the shares have rallied from a low of 68p at the end of March, they are still well off the 95p at which they started the year and stand at a 20% discount to net asset value (NAV). 

While the global pandemic is pushing many Reits off course, EBOX saw its NAV under the EPRA property industry standard rise 3.5% over the six-month period. With dividends included the total return was 5.7%, putting the trust on track to deliver a return of 9% in its full year. 

The listed property fund also said it had collected all of the rent owed to it between 1 October and 31 March. However, as of mid-May it had allowed four tenants out of its 21, to defer rental payment beyond the financial year to 30 September.

The portfolio of 12 assets, which has a rent roll of €40.5m (£36.2m), was valued at €819.4m, reflecting a 2.6% uplift in the half year. It has maintained its interim dividend of 2.20 euro cents per share. 

Chairman Robert Orr said the Covid-19 outbreak in Europe which happened in the final weeks of the reporting period failed to dent the positive performance, despite the share price plunging to a low of 68p in the sell-off. 

He said, if anything, the virus had played into EBOX’s hands as it is ‘likely to tighten the supply of large-scale logistics space even further, at least in the near term’.

‘Developers are now facing delays with completing construction of existing projects and permissions for new developments are also being delayed,’ said Orr. 

The government lockdowns and subsequent consumer response to those restrictions has also accelerated online shopping, building demand for warehousing in prime areas. 

‘During the pandemic, many consumers have turned to online shopping for the first time, particularly in southern Europe which previously had seen low e-commerce penetration, which should accelerate the ongoing shift to e-commerce,’ said Orr. 

As well as the practical opportunities of tightened supply and increased demand, the outbreak has focused attention on the reliance on China and overseas supply chains. 

‘The pandemic has also highlighted the need for robust and flexible supply chains and shown the importance of operating from prime, well-located buildings,’ said Orr. 

‘Companies may look to protect themselves from future supply chain disruption by bringing manufacturing back to Europe and by holding more inventory at a national or regional level.’ 

Conor Finn, analyst at Liberum, said supply chain risk had already changed the way retailers operated.

‘Several retailers and logistics operators have increased stockpiling activity given increased online spending and to protect themselves from supply chain disruption,’ he said. 

‘This is putting further pressure on the already limited supply of space. Total vacancies have been trending downwards over the past decade and are already below 4% in Europe.’ 

EBOX shares have held up better than their European peers, falling around 15% this year versus an average 32% decline in the sector.


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