Tritax Euro.eur Regulatory News (BOXE)

16 February 2022

Tritax EuroBox plc forward funds Logistics Capital Partners' development of a prime logistics asset in the Netherlands, pre-let to top four global food retailer

Demonstrates further progress in strategy to invest in prime logistics locations in Western Europe

Tritax EuroBox plc ("Tritax EuroBox" or the "Company") which invests in high-quality, prime logistics real estate, strategically located across continental Europe, announces that it has conditionally agreed the acquisition of a €144.26 million prime logistics asset in Roosendaal, the Netherlands, from Logistics Capital Partners ("LCP"), one of the Company's main development and asset management partners. The asset is pre-let to a top four global discount supermarket retail group.

A modern and well located prime logistics asset

Roosendaal, strategically situated in the south east of the Netherlands, was ranked the third best Logistics Hotspot 2019 out of the 28 regions in the Netherlands (Source: Logistiek NL). This optimal location provides rapid connections to the ports of Rotterdam, Antwerp and Amsterdam. The area is characterised by strong tenant demand and low supply of new buildings.

Once complete, the asset will comprise a single property, divided into three units, built in three phases. It will have a total net rentable area of approximately 113,179 sqm built on a total site area of approximately 210,488 sqm.

Delivering attractive returns to shareholders, with further upside potential

This transaction is structured as a forward funding development opportunity, where the Company buys the land and funds the construction of the building under a fixed price contract.

· The total cost of the land and development expenditure is €144.26 million and reflects a net initial yield of 3.5%, after purchase costs and non-recoverable expenditure.

o All three units are already pre-let to a top four global discount supermarket retail group, on a single lease, expiring in November 2027.

o The lease will generate approximately €5.1 million annually on completion of all three phases and is initially annually indexed to Dutch CPI.

o The lease incorporates a rent review and option to extend for a further five years at the end of the sixth year of the lease term.

o This review allows the rent to increase to the prevailing open market level, with a cap of 10% above the existing (indexed) rent at that time.

LCP completed the construction of the first phase in December 2021, with completion of the second and third phases expected by 1 December 2022 and 1 April 2023, respectively. As part of the proposal, during the construction phase, LCP will pay the Company income equivalent to the expected rent, until practical completion. 

Combined with strong ESG credentials

Strong ESG credentials are at the forefront of the asset's design and build, meeting several of the Company's sustainability objectives through a BREEAM Very Good certification and incorporating a number of sustainability initiatives, providing social and environmental benefits for staff and the locality.

Alina Iorgulescu, Assistant Fund Manager of Tritax EuroBox, commented:

"We are delighted to announce further deployment into a prime European logistics location, following the Swedish acquisition announced on 17 January. Today's acquisition cements our commitment to acquire top quality assets in prime locations across Europe, all built to high ESG standards and accommodating leading international occupiers, whilst building our relationship with our partner Logistics Capital Partners.

"By negotiating a market rent review within the lease, we have an opportunity to capture the strong rental growth we are seeing in the Netherlands - as well as in other markets in Europe - where demand for high quality, modern logistics assets outstrips supply, which remains constrained, due to limited land availability in the right locations. We expect this rental growth to continue during the current lease term of the asset as well as creating strong income and capital growth potential and sustainable value for shareholders."

Related party aspects of this proposed acquisition

The Company is acquiring the asset from LCP. As LCP is considered as a related party to the Company under the Listing Rules, the acquisition of the asset is subject to shareholder approval. A circular containing further information about the acquisition and a notice convening a General Meeting of the Company at which shareholders will be asked to vote in favour of a resolution to approve the proposed transaction will be posted to shareholders as soon as practicable.

Further details of the acquisition, including the key commercial terms, are set out in the appendix to this announcement.

For further information please contact:

Tritax Group+44 (0) 20 8051 5070

Nick PrestonMehdi Bourassi

Alina Iorgulescu

Maitland/AMO (Media enquiries)James Benjamin+44 (0) 7747 113 930tritax-maitland@maitland.co.uk

The Company's LEI is: 213800HK59N7H979QU33.

Notes:

Tritax EuroBox plc (ticker: EBOX (Sterling) and BOXE (Euro), invests in and manages a well-diversified portfolio of well-located Continental European logistics real estate assets that are expected to deliver an attractive capital return and secure income to shareholders. These assets fulfil key roles in the logistics and distribution supply-chain focused on the most established logistics markets and on the major population centres across core Continental European countries.

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.

The Company's Manager, Tritax Management LLP, has assembled a full-service European logistics asset management capability including specialist "on the ground" asset and property managers with strong market standings in the Continental European logistics sector.

Further information on Tritax EuroBox plc is available at www.tritaxeurobox.co.uk

APPENDIX

Background to and reasons for the Roosendaal Proposal

The acquisition of the Roosendaal asset (the "Roosendaal Proposal") forms part of the deployment of the proceeds of the capital recently raised by the Company following its issue of new ordinary shares in September 2021.

The Company has entered into a conditional sale agreement with LCP Holdco Belgium BV ("LCP HoldCo") and LCP NL DC2 BV, a wholly-owned subsidiary of LCP HoldCo (the "LCP SPV"), pursuant to which the Company will acquire the asset from the LCP SPV (the "Roosendaal Proposal").

The acquisition is structured as a corporate transaction, with the Company acquiring from LCP HoldCo all the issued and outstanding shares in the LCP SPV, being the entity holding the Roosendaal asset for a total consideration, including future construction costs of approximately €144.26 million.

The Roosendaal asset, held freehold, has a total net rentable area of approximately 113,179 square metres built on a total site area of approximately 210,488 square metres and comprises one building divided into three purpose-built logistics units with parking spaces and truck spaces.

The first phase completed in December 2021, whilst it is expected the second and third phases will be delivered by 1 December 2022 and 1 April 2023, respectively.

All phases of the development are pre-let pursuant to a single lease agreement with a top four global food retail group expiring in November 2027. The lease will generate approximately €5.1 million annually on completion of all three phases.

The Company and Tritax Management LLP believe that the Roosendaal Proposal represents good value for the Company and will help the Company to achieve its near-term investment objectives. In addition to the investment returns expected to be generated from the Roosendaal Proposal, it will also represent the Company's second acquisition in the Netherlands, helping the Company build scale and spread costs over a wider asset base. This acquisition will also provide wider diversification to spread risk across the portfolio.

Jones Lang LaSalle Ltd ("JLL") has independently valued the completed Roosendaal asset at a level, assuming completion of the asset, which is above the purchase price.

Principal terms of the Roosendaal Proposal

· On 15 February 2022, the Company entered into a conditional share purchase agreement with LCP HoldCo and the LCP SPV, pursuant to which the Company will acquire the Roosendaal asset from the LCP SPV (the "Roosendal Sale Agreement").

· The total consideration to be paid by the Company for the interest in the LCP SPV and the development of the Roosendaal asset, including the development fees payable to the LCP SPV and all other fees and costs, is €144.26 million (approximately £121.06 million), reflecting a net initial yield of 3.5 per cent after purchase costs and non-recoverable expenditure.

· As part of the Roosendaal Proposal, LCP Services (UK) Limited will pay the Company income which will amount to the difference between the rent being paid by the tenant and the total rent of approximately €5.01m per annum until practical completion.

· Bouwbedrijf Vrolijk B.V. (the "Contractor") and the LCP SPV are in the process of concluding a construction agreement pursuant to which the Contractor is obliged to construct the final two phases of the Roosendaal asset.

· On 15 February 2022, LCP and the LCP SPV entered into a development management agreement (the "Roosendaal Development Management Agreement") pursuant to which LCP was appointed as construction manager to procure the construction of the Roosendaal asset by the Contractor. The Roosendaal Development Management Agreement contains certain undertakings and obligations customary for an agreement for construction services.

· The gross property assets of the LCP SPV, which are the subject of the transaction, total approximately €102.03 million as at 14 February 2022. Other net assets and liabilities amount to a net liability of approximately €6.78 million. Construction costs to reach completion will be approximately €42.21 million.

· The Roosendaal Sale Agreement is conditional on the approval of shareholders at the General Meeting.

Ends