Tritax Euro.eur Regulatory News (BOXE)

6 December 2022

Tritax EuroBox plc

RESULTS FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2022

Tritax EuroBox plc ("the Company") reports its results for the 12 months ended 30 September 2022.

Strong platform - optimising performance

Increase in rental income and cost efficiencies supporting future earnings growth and dividend cover

· 31.9% increase in rental income to €57.9m, reflecting 4.0% like-for-like rental growth, asset management activity and acquisitions.

· Adjusted EPRA cost ratio of 29.5%; Financial Year 2023 ratio expected to be c. 25%, driven by expected future income growth and estimated €2.1m annual savings from reduced management fee.

· Adjusted EPS of 4.24 cents, down 8.0% primarily due to timing of deployment of prior year equity raise.

· Dividend per share of 5.00 cents; covered in the quarter ending 30 September 2022 and expected to be fully covered for the Financial Year 2023.

Resilient investment portfolio let to strong customers on long-term inflation linked leases

· Portfolio value €1,765.6m, up 37.8% (FY 2021 €1,281.4m), primarily driven by acquisitions in the period.

· 5.6% like-for-like capital growth reflecting H1 2022 increase of 8.1% offset by 2.3% decrease in H2 2022.

· 9.5% (€7.1m) portfolio reversion driven by like-for-like estimated rental value growth of 8.2%.

· 97% of occupational leases subject to annual increases of which 82.6% linked to inflation.

· 99.7% occupancy and significant income visibility with 8.0 years WAULT.

Operational activity reinforcing portfolio resilience and ESG performance

· Acquired nine high quality, sustainable assets at a net initial yield of 3.7% adding €20.2m p.a. to annual rent and benefiting from 11.2% reversion (€2.2m).

· Development schemes totalling 31,200 sqm fully let producing €1.4m of annual rental income.

· Four new leases signed totalling €5.1 million of annual rent, an increase of €0.8m (+18%) above previous rent or guarantees.

· Awarded five Green stars and "Leader in Sustainability for European Industrial Distribution Warehouse Listed Sector" by GRESB, the global ESG benchmark for real estate.

Robust balance sheet with low and capped cost of debt - earliest maturity in Q4 2025

· Issued private placement of €200m, at an average coupon of 1.37% and average maturity of nine years.

· 100% of debt with fixed rates or caps, with a maximum average cost of debt of 1.46%.

· 4.5 years weighted maturity with earliest refinancing in Q4 2025.

· €239m of available liquidity from undrawn debt facilities at financial year end.

· Significant covenant headroom with LTV of 35% and interest cover of 3.9x compared to covenant levels of 65% and 1.5x respectively. 

Outlook

· Structural tailwinds and favourable occupational market fundamentals expected to continue to support occupier demand and rental growth.

· Macro factors expected to lead to further softening of asset values in the short term.

· Robust balance sheet and resilient portfolio means the business is well placed to navigate a more uncertain market outlook.

· Increased rental income and cost efficiencies will support earnings growth and dividend cover over the next financial year.

Robert Orr, Chairman of Tritax EuroBox plc, commented:

"Economic conditions have changed significantly since June, and our sector will not be immune to subsequent impacts. We will continue to monitor closely the more uncertain environment and remain attentive to the potential risk of weaker markets.

"However, our high-quality portfolio, strong customer base and robust balance sheet mean we are very well positioned to weather the economic headwinds we are facing. The lower cost base and additional revenues generated from operational activity, provide positive momentum to earnings going into 2023 and support a fully covered dividend going forward."

Presentation for analysts and investors

A Company presentation for analysts and investors will take place via a live webcast at 09.30am (GMT) today. To view the live webcast, please register at:

https://stream.brrmedia.co.uk/broadcast/634eb9d56815e65bb9fdbf94

Analysts and investors will also be able to listen to the event via a moderated conference call using the following details:

Phone number: +44 (0)330 551 0200

Participant access: quote 'Tritax'

The presentation will be accessible on-demand later in the day from the Company website: https://www.tritaxeurobox.co.uk/investors/results-centre/.

Notes

1 See note 12 to the financial statements for reconciliation

2 Valuation under IFRS (excluding rental guarantees)

3 As per KPI definition

4 Including rental guarantee and licence fee

5 Adjusted for vacancy

6 Including licence fee income and rental guarantees, excluding exceptional lease surrender in Hammersbach

FOR FURTHER INFORMATION, PLEASE CONTACT:

Tritax Group +44 (0) 20 8051 5070Phil ReddingMehdi BourassiIan Brown / Jo Blackshaw (Investor Relations)

Kekst CNC (Media enquiries)

Neil Maitland/Tom Climie+44(0) 7971 578 507 / +44(0) 7760 160 248 tritax@kekstcnc.com

Notes:

Further information on the Company is available at www.tritaxeurobox.co.uk

The Company's LEI is: 213800HK59N7H979QU33.

CHAIRMAN'S STATEMENT

Delivering resilience and strategic progress

The Company made good progress in 2022 with implementing its investment strategy, including completing the deployment of capital from the prior year's equity raise and continuing to extract value from the existing portfolio through active asset management and development. All investment, asset management and development activity has been fully aligned with our ESG strategy which has been reflected in improved overall ESG performance.

Strategic progress

Since IPO in 2018, we have focused on constructing a portfolio of best-in-class, modern logistics assets that are mission-critical to our customers, and concentrated in key locations in Western Europe's major supply chain corridors. At the year end, 99.7% of the portfolio was income producing and 97% of our leases included an element of annual uplifts. These efficient portfolio characteristics generate a secure and growing income stream that supports our policy of a providing an attractive dividend to shareholders.

During the year we further enhanced the portfolio, deploying €533 million into a mix of core, value-add and development opportunities, the majority of which offer the potential to improve future rental levels. In terms of development projects, we continue to carefully manage risk by funding pre-let schemes, seeking rent guarantees on speculative developments and by agreeing fixed-price contracts with leading developers, giving us certainty of project cost and delivery at a time of material shortages and elevated build cost inflation.

We made good progress with our asset management plans during the year, including handing over the major extension at Barcelona post year end and agreeing four new leases, further diversifying our customer base. In addition, the portfolio has inherent opportunities to create further income and value through lease extensions, lettings, reversions and additional development on unutilised plots of land. These initiatives will continue to drive earnings growth as they come to fruition.

ESG is deeply integrated in our investment philosophy and our approach to asset management. In recognition of our continued focus in this important area, we were pleased to achieve a further increase in our GRESB score, which now stands at 88 out of 100 compared to 82 in 2021 (GRESB average = 74; GRESB Peer Group average = 79). We were awarded five stars and designated as Leader in ESG for European Industrial Distribution Warehouse Listed Sector.

We were also awarded EPRA Gold Level certification for ESG reporting best practice in the first year of inclusion in the EPRA Sustainability Best Practices Recommendations.

Post year end, we agreed an amendment to the Investment Management Agreement with the Manager, which included a reduction in the management fee (backdated to August 2022). Further details are contained in the Manager's report. This will enable significant cost savings to accrue to the Company and consequently will benefit earnings, the EPRA cost ratio and will contribute to an expected covered dividend position going forward.

Financial performance

The portfolio was valued at €1.77 billion at the year-end (+37.8% on previous year), generating like-for-like capital and ERV growth of 5.6% and 8.2% respectively. The Company's EPRA NAV per share increased by 2.2%.

We declared quarterly dividends totalling 5 cents per share in respect of the year, in line with the prior year.

This performance contributed to a Total Return of 6% (2021: 14.3%), against our long-term average target of 9%.The decrease compared to last year is the result of a softening in capital values in the second half of the financial year.

For the full year, the total dividend represented 84.8% of Adjusted EPS. The trajectory in dividend cover is positive, with the dividend fully covered in the final quarter of the 2022 financial year. The full impact of this year's activities, completion of further rent enhancing initiatives over the course of the next 12 months, combined with the reduction to the Manager's fee and rigorous focus on costs, means that we believe we can achieve a fully covered dividend for full year 2023.

The Company benefits from a variety of debt sources, including bank facilities, a green bond and our first private placement, which we issued during the year. The interest on this debt is either fixed or capped and none of the facilities mature before Q4 2025. The year-end LTV was 35% or 41% including all our current funding commitments.

Governance

We were delighted to welcome Sarah Whitney as a Non-Executive Director with effect from 14 February 2022. Sarah was also appointed as a member of the Audit and Management Engagement Committees. Following a review of the Board and Committee composition, we are also pleased to announce that Sarah Whitney will succeed Keith Mansfield as Senior Independent Director ("SID") with effect from 6th December. Keith will continue as chair of the Audit & Risk Committee. Sarah brings over 35 years of senior executive experience advising international and UK organisations and boards on strategy, corporate finance, and real estate and economic development matters, as well as complementary non-executive expertise. Keith Mansfield remains Chair of the Audit & Risk Committee.

In September 2022, Nick Preston stepped down as Fund Manager of the Company, with Phil Redding appointed in his place. Phil was the Manager's Director of Investment Strategy prior to his appointment. He is highly experienced in the sector, with deep knowledge of continental European markets gained during 25 years at SEGRO plc. Nick was instrumental in establishing the Company and on behalf of the Board, I thank him for his valuable contribution.

The Board and Company held its annual strategy meeting in September to discuss the macroeconomic backdrop and ensure the Company's approach remains relevant now, and for the future. The Company has a high quality portfolio of assets, let to a diverse and strong customer base, and has significant balance sheet headroom. The conclusion of this exercise confirmed that the Board believes the Company has the right strategy and foundations in place to continue delivering for our shareholders.

The Board is pleased that it now meets the targets set out in the FTSE Women Leaders Review (which follows the Hampton-Alexander Review) and we are committed to meeting the targets set out in the Parker Review at the appropriate opportunity.

For further information on the Company's governance activities please refer to pages [•] and [•] in the Governance Report.

Outlook

Following a strong first half for European logistics markets in 2022, the macroeconomic backdrop changed significantly in the second half with the ECB responding to the elevated levels of inflation with a series of aggressive interest rate hikes. The knock-on impact of rising bond yields and debt costs, together with the increased likelihood of European economies experiencing a period of slower growth, has not yet been fully transmitted into real estate markets, with the scale and duration of adjustments to pricing and growth still uncertain.

We believe the structural tailwinds positively impacting the European logistics sector, particularly the growth of internet retail, remain in place and other demand drivers such as the need for supply-chain resilience and buildings that support ESG objectives, will continue to create additional sources of demand. Low vacancy rates and constrained supply of land also serve to underpin occupational market fundamentals.

However, we are cognisant of the recent declines in investment transaction volumes and evidence of a softening in asset pricing and we remain attentive to the potential risk of weaker occupational markets.

In these more uncertain times, the quality of our portfolio together with the strength of our balance sheet combine to provide the Company with the resilience and resources to navigate more volatile market conditions. In addition, the embedded indexation, reversion and asset management opportunities in the portfolio provide the ability to grow income and create value throughout the market cycle.

The actions taken this year to reduce costs, together with the full year impacts of new investments, indexation and the completion of the Mango extension, will also provide positive momentum to earnings, help lower the cost ratio and support a fully covered dividend for the next financial year.

Although we are taking a more cautious stance in terms of our outlook for market conditions, the Company remains well positioned for the future with a resilient portfolio and strong balance sheet enabling us to navigate a more uncertain macroeconomic backdrop.

Robert Orr

Independent Chairman

5 December 2022

OUR MARKET

Market fundamentals remain supportive

Strong rental growth across core continental European markets

The European logistics market continues to see a wide range of different businesses demanding warehouse space. This is reflected in the Tritax EuroBox Summer 2022 Occupier Survey1, which showed that 89% of respondents expected to occupy the same or more space over the next three years.

The primary structural trends driving this long-term demand are:

• The growth of e-commerce, requiring companies to redefine their supply chain which often involves having large and highly automated logistics facilities, close to major population centres and strong transport links.

• The need to optimise, reinforce and de-risk supply chains, to ensure their efficiency and resilience to external shocks.

• The growing necessity for businesses to operate from sustainable properties that will remain fit for purpose for years to come.

Global events such as the pandemic and heightened geopolitical risk have accelerated these trends in recent years.

Warehouse space is fundamental to successfully fulfilling e-commerce sales as companies require large, flexible, modern, and well-located properties to rapidly and efficiently deliver orders and manage returns. While year-on-year growth rates and the speed of online adoption across Europe will vary, the multiyear trend remains upwards. We expect to see further growth in the future with e-commerce as a percentage of retail sales expected to grow from 16% in 2021 to 20% in 20262 and reach 30% by 20303.

Supply chains used to be optimised for efficiency, productivity, and cost, but resilience is now equally critical. Companies are adopting the latest supply chain planning tools, reviewing manufacturing locations and transportation networks, and holding more critical stock closer to customers and end users. Our Tritax Eurobox Occupier Survey showed that 38% of respondents expect to hold more stock over the next three years1. These changes may cause companies to redesign parts of their supply chains, and in doing so, create demand for new buildings. We believe this will favour newer, well-located and technically capable buildings of the type we own.

The sustainability of their properties is increasingly at the forefront of occupiers' thinking. In addition to reducing their environmental impacts, occupiers want a workspace that promotes employee wellbeing to help them attract and retain staff. Energy generation and use is also in focus. Roof mounted solar PV is increasingly desirable and by occupying assets built with state-of-the-art design and materials, incorporating low carbon technologies and energy efficiencies, occupiers can further minimise their environmental footprint. Demand for clean energy will also increase as companies decarbonise their transportation. This will place new pressures on warehouse sites, such as generating clean energy and providing charging points.

Real estate market fundamentals and investment markets

Strong levels of take up

We continued to see strong demand for warehouse space during the 12-months to September 20224. Belgium, Germany, Italy, Poland, and Spain all experienced record levels of take up across the period. Take up in Germany totalled 8.4m sqm, up 6% on a like-for-like basis5. With vacancy rates in many markets at or close to record lows, occupiers have been left with a limited number of options through which to satisfy new logistics requirements.

Demand continues to emerge from a wide variety of sources including more traditional distribution-led requirements, as well as to meet e-commerce needs. We are also seeing companies supplement their distribution facilities with buffer buildings, to ensure the end-to-end supply chain continues to function independent of any external shock. Eurostat data showed inventory in Europe increased by €171bn across H1 20226.

In the short-term, the economic environment and its impact on consumer demand could affect leasing decisions. The extent to which this impacts the market will be determined by the depth and length of any economic slowdown. At the same time, we believe the logistics market will be somewhat insulated by several factors; tight market conditions, planning/zoning constraints, build costs, and debt availability will likely limit new supply. The tightness of markets and mission-critical nature of many logistics buildings will make occupiers hesitant to give up space and in the context of the wider business, occupational costs are not excessive. Supply chain reinvention, ecommerce trends and the focus on ESG are also multiyear trends around which companies make long-term investment decisions.

Supply remains constrained

Completions of new space increased to 19.2m sqm in the 12-months to Q3 2022, up from 15.2m sqm a year earlier5. New buildings are frequently the only route occupiers can use to find space and as a result, these developments have been rapidly absorbed and have not increased overall vacancy (see below).

The availability of modern, vacant buildings remains low across our core European markets. There are also a limited number of undeveloped sites available in these markets that can accommodate the very largest logistics facilities, and municipalities are often reluctant to zone land for the construction of assets of this scale. As a consequence, companies looking for very large new logistics facilities have few choices. In addition, developing new buildings has become increasingly challenging during 2022 as financing costs, cost-price inflation, land and power availability have all become further barriers to development. Against this backdrop, we expect development activity to slow in 2023, which will be a positive influence for market fundamentals.

Vacancy

National vacancy rates are at or close to record lows. Vacancy rates in many core logistics sub-markets are often even lower. Barcelona for example, has a vacancy rate of 3.9% (Spain: 5.6%) and in the A12/E19 corridor in Belgium just 0.1% of space is vacant (Belgium: 1.5%)5.

Rental growth

Prime headline rents have increased across all our eight core European markets in the 12-months to Q3 2022 with many sub-markets seeing double digit rental growth. Growth has also become more widespread with markets in peripheral countries such as Poland and Sweden seeing strong increases in the period5.

The market environment has helped logistics asset owners to selectively improve lease terms, as well as rental levels. This is an important development in Europe, given high inflation. One particular benefit has been the ability to agree new leases that more fully capture inflation, rather than having caps included.

Capital markets

This year, the investment environment for all asset classes has shifted in response to central banks raising rates to address the inflationary environment. Debt costs have increased as a result, impacting the returns available to investors on leveraged acquisitions. Wider capital market conditions have also shifted, with logistics yields increasing through the second half of the year.

Real estate transactions have slowed since Q2 2022 but total industrial/logistics transaction volumes across our core European markets were €42 billion for the 12-months to September 2022, up 32% on the previous year7. Limited recent activity is making price discovery challenging. CBRE prime market yields for September 2022 have typically moved out by 35-60bps from their Q1/Q2 2022 lows5.

Reported yields are CBRE's best estimate for a prime, rack-rented building in each market. However, many buildings have reversionary potential because of the healthy recent rental growth, which leases have often failed to fully capture. Pricing for these assets may therefore not directly reflect 'market' levels, as there may be scope for additional income growth.

While global capital markets remain volatile, real estate pricing will continue to be impacted by the macro drivers that currently dominate. In the medium-term, however, we believe that logistics real estate remains a compelling area for investment. High-quality real estate forms the backbone of the global economy and logistics real estate is one sub-sector that is central to this premise.

1 Source: 2022 European real estate logistics census

2 Source: Morgan Stanley, Global Ecommerce Growth Forecast, 2022

3 Source: Eurocommerce, European E-Commerce Report 2022

4 European data used in this report considers the following markets: Belgium, France, Germany, Italy, Netherlands, Poland, Spain, and Sweden unless otherwise stated

5 Source: CBRE

6 Source: Eurostat

7 Data includes transaction volumes in the Czech Republic, Hungary, Romania, and Slovakia as well as our eight core markets. Source: CBRE

MANAGER'S REPORT

Our approach to investment and portfolio management

Our strategy is to create value at the point of acquisition and throughout the lifecycle of the asset, by intelligent stock selection and proactive asset management. This strategy is underpinned by a disciplined approach to capital allocation, a commitment to ESG and appropriate financing.

We will continue to construct a portfolio which is diversified by geography and customer, that generates a secure level of inflation-linked income, as well as containing opportunities to capture capital growth. This will in turn support the dividend and total returns the Company is targeting.

The Company's Investment Policy determines the type of assets we want to acquire. We also make strategic choices about the countries we want to invest in, recognising that European logistics is not a single market and that there is considerable variation between countries and in the type and quality of logistics properties available.

Our investment criteria

Our approach to stock selection is described in our investment policy which governs our acquisition strategy. We focus on large, high-quality logistics assets which are typically:

• Well-located in established distribution hubs, within or close to densely populated areas.

• In locations with limited supply, that are likely to benefit from structural changes in occupational demand.

• Fulfilling a key part of the occupiers' logistics and distribution supply chain.

• Benefiting from index-linked leases.

When reviewing potential acquisitions, we also consider:

• Transport connectivity, the availability of labour and operational considerations such as power supply and data connectivity.

• The physical characteristics of the building, including its ESG credentials, configuration, layout and flexibility for a wide range of occupiers.

• The duration of the lease, potential for future rental growth, and the ability to capture this growth.

• The customer's financial strength; the capital expenditure the customer has committed to the asset, and the role the asset will play in the customer's operations.

• The potential for asset management and value-adding initiatives during and at the end of the lease term.

A modern, diversified and resilient portfolio

At the year end, the portfolio comprised 24 assets, which were well diversified by building size and occupier, and situated in the core European countries of Belgium, Germany, Italy, the Netherlands, Poland, Spain and Sweden. These assets are key to our customer partners' logistics and distribution supply chain needs, and have the following characteristics:

• Modern, with 85% of the portfolio having been built in the last ten years, helping to ensure that the buildings meet the latest operational and ESG needs of occupiers;

• Large, with 65% of the portfolio assets being in excess of 50,000 sqm and an average size of 60,000 sqm;

• Sustainable, with 92% of the standing assets by floor area covered by Green Building Certifications or Energy Performance Certificates;

• Secure income, with around 75% of the Company's 36 customers being multi-billion Euro businesses, including some of the world's best-known companies;

• Inflation protection, with 97% of the Company's rental income including annual uplifts, 54% benefitting from uncapped CPI linkage, and 14% benefiting from indexation which is fixed;

• Embedded income growth, potential to capture 9.5% (€7.1m) reversion potential across the portfolio through asset management; and

• Long leases, resulting in a WAULT at the year end of 8 years, the unexpired lease terms at the year end ranged up to 24 years.

The Company made good progress with all elements of its strategy during the year, as set out below.

Expanding our high-quality portfolio

The Company's investment strategy is focused on creating a portfolio that provides a balanced exposure to core, stabilised assets with a managed exposure to value-add situations, which have the potential for higher returns. The investments made during the year reflect this approach and included income-producing investment acquisitions, pre-let development fundings, speculative development fundings and development projects. All the acquisitions are fully aligned with our ESG strategy and also provide the opportunity to meet or exceed our targets through integration with our existing asset management plans.

Actively managing the portfolio

We undertake a rigorous bottom-up review of all our assets on a bi-annual basis to determine the optimum value-maximising strategy for each property and gain visibility on expected returns. This process also informs our recycling strategy by highlighting those assets where for example, we have completed our asset management plan and maximised the value creation potential of the asset.

In addition, we undertake a top-down review to ensure the portfolio is positioned appropriately to benefit from the positive structural drivers and underlying market fundamentals that continue to impact the Continental European logistics sector. This process also informs the recycling strategy, for example, by identifying markets where performance is expected to decline or where we have a sub-scale market position and gaining sufficient scale in an appropriate timescale will be challenging.

Asset management and development activities: capturing embedded value

The strategic tilt towards a greater exposure to value add and development assets announced a year ago is bearing fruit and is providing us with additional opportunities to unlock value from the portfolio.

To create and successfully implement our asset management strategies requires us to have close relationships with and a deep understanding of our customer partners and their businesses and objectives. This is achieved through multiple interactions from within the in-house asset management team, through our external asset management partners and by way of specific initiatives such as our annual customer satisfaction survey.

Examples of our activities during the last year included the following:

Completed development

• Bornem, Belgium. During the year, we completed this speculative scheme on the previously vacant land and agreed a nine-year lease to an online grocery retailer (see below). The development was completed at a yield on cost of 7.0% and the total profit of €7 million gave an attractive profit on cost of 70%.

Speculative developments

At the year end, the Company had four forward funded speculative developments, as described below:

• Rosersberg I, Stockholm, Sweden. We received a building permit for the 13,000 sqm phase 1 facility in December 2021 and construction began in February 2022, with practical completion expected in December 2022. Discussions are under way with potential occupiers, with letting agents appointed.

• Rosersberg II, Stockholm, Sweden. The building permit for the 18,000 sqm second phase was received in May 2022 and construction began in June 2022, with practical completion expected in June 2023. Discussions are under way with potential occupiers.

• Settimo Torinese, Turin, Italy. Construction of this 28,000 sqm asset is ongoing with practical completion revised from Q4 2022 to beginning of Q2 2023. The marketing campaign to identify occupiers is progressing.

• Malmö, Sweden. Planning and design work is progressing well and the application for a building permit is targeted for Q1 2023. We continue to engage with the wider development team and leasing agents to firm up on potential scheme designs.

Post year end planned developments

• Oberhausen, Germany. The developer is completing the process of obtaining the final permit for this 23,000 sqm logistics project, which will enable the Company to acquire the site, this is forecast to be by the end of 2022. Development is planned to commence in August 2023 with practical completion of the scheme anticipated to be in August 2024.

Pre-let developments

The Company had two pre-let forward funded developments under construction at the year-end:

• Bönen, Germany. Demolition and ground works completed in the first half of the year and building construction began in April 2022. Practical completion of the scheme is targeted for June 2023.

• Roosendaal, the Netherlands. The first phase is complete and income producing, with construction of the remaining two phases on schedule for completion in April 2023.

Completed extension developments

• Barcelona, Spain. Construction of the 94,000 sqm extension completed in the second half of the year and is forecast to be handed over on budget and on schedule on 25 November 2022. This new extension will be incorporated into the existing lease, which runs until December 2046. The Company financed the construction of the project at a yield on cost of 8.8% based on a capital commitment of €31.5 million.

• Strykow, Poland. Construction of the 16,000 sqm extension reached practical completion in April 2022, with the lease running for five years at a headline rent of €647,427 per annum after an initial rent free period. The lease includes standard green clauses and annual indexation.

Potential extension developments

The Company has several land plots with development potential. These plots are zoned for logistics but would require additional permits to enable development to commence.

• Wunstorf, Germany. The building has the capacity to be extended by 10,000 sqm. We continue to discuss proposals with our customer, Havi.

• Geiselwind, Germany. This asset is Puma's global logistics centre. We are in discussions with Puma on a 42,000 sqm extension, which the Company would fund, and an associated lease extension.

• Rome, Italy. The local authority has granted a building permit to construct further mezzanine extensions within this Amazon distribution centre.

• Rumst, Belgium. This European distribution hub for Cummins Inc has a plot of land which could accommodate a 14,000 sqm development.

• Strykow, Poland. There is further contiguous plot of land that could accommodate an additional extension of 9,000 sqm to the existing building. We are in discussions with an existing customer about expansion plans and a potential lease regear.

Growing income through indexation

The structure of rent review provisions within the majority of leases allows the portfolio to deliver inherent year-on-year rental growth. Rental uplifts are either indexed to local inflation measures or fixed at an agreed rate, with these increases most commonly being effected on an annual basis. 54% of the Company's occupational leases are exposed to uncapped indexation with 29% capped or other and 14% fixed. These review structures thereby offer considerable inflation protection and regular uplifts in income that supports the Company's aim of providing an attractive and growing dividend to shareholders.

Growing income through leasing

• Nivelles, Belgium. In November 2021, the Company agreed a new nine-year lease on the vacant unit 2 to Associated Retail SA trading as Match Supermarkets, a leading Belgian convenience supermarket group. The initial rent reflects a headline rent of €47.30 psm (€794,000 per annum), which on a net effective basis is 8% above the rental level for unit 1 that was leased in October 2020. The rent will be subject to annual uplifts in line with the Belgian Healthcare Index. The scheme is now fully let.

• Bornem, Belgium. In March 2022, the Company signed a nine-year lease to an online grocery retailer on the recently developed 14,935 sqm unit. The warehouse rent of €48 psm (€716,880 per annum) is 7% above the agreed rental guarantee and 17% above the previous letting of the adjacent building signed in March 2019. The lease includes break options in years 3 and 6 and annual indexation to the Belgian Healthcare Index.

• Hammersbach, Frankfurt, Germany. The Company agreed a new lease on this 43,000 sqm building to B+S GmbH Logistik, a leading German third-party logistics provider. The seven-year lease has a five-year customer extension option, at a rent of €69 psm (€3,056,999 per annum) on the warehouse space, an increase of 24% on the previous rent. In addition, as part of the transaction other lease terms have been improved including moving the indexation provision to capture 100% of CPI annually and including a market rent review if B+S exercises the extension option at the end of the 5th year.

• Gelsenkirchen, Germany. The Company agreed a five-year lease on this 7,045 sqm unit to ETC Group, a new customer, at a warehouse space rent of €73 psm (€514,595 per annum). This is 6% above the rental guarantee level. The new lease contains an indexation provision of 100% of CPI annually and the inclusion of standard green clauses.

Implementing our ESG strategy

The new additions to the portfolio during the year have further enhanced the portfolio's already strong ESG credentials. In particular:

• Gelsenkirchen, Bönen and Dormagen: These brownfield sites will be redeveloped with the aim of achieving DGNB Gold standard.

• Settimo Torinese: The asset will be developed to BREEAM Very Good standard.

• Piacenza: The two units have BREEAM In-Use Very Good and BREEAM In-Use Excellent ratings, respectively, and a roof-mounted photovoltaic system.

• Rosersberg I and II: The developments are targeting a minimum of BREEAM Very Good and will include energy saving initiatives and staff wellbeing measures.

• Roosendal: The scheme is aiming for a BREEAM Very Good certification and incorporates ESG initiatives that provide social and environmental benefits for staff and the locality.

• Malmo: The development will target a minimum certification of BREEAM Very Good.

We continue to investigate and implement solar renewable energy projects across our portfolio. We have ten solar energy projects implemented, at Rome, Bornem (x3), Rumst (x2), Piacenza, Breda and Nivelles (x2). Eight more projects are in the feasibility pipeline, including adding PV panels to the building extension at Barcelona. Our existing solar projects are generating approximately 6.74MW of green electricity. The next phase of projects in our feasibility pipeline has the capacity to generate 20MW of solar energy.

We aim to include Green lease clauses in all new leases. The four leases listed adjacent all included our standard Green lease terms. These ensure the customer partner is committed to using the building in a sustainable way, for example by sharing data with us on energy, water consumption, waste management and recycling. There are now 9 Green leases across the portfolio, representing 18% of the portfolio by income.

Our TCFD & CRREM analysis has now given us the baseline data from which to further develop our asset management plans in relation to the mitigation of climate and carbon risk across our portfolio.

At Bornem, we contributed €42,000 towards increasing the external green areas by 240 sqm, installing a new bicycle storage facility and additional wellbeing facilities for visiting truck drivers. In return, we secured longer income by negotiating the removal of a customer break option in the lease.

We collaborate with our customer partners to manage and enhance biodiversity. Shortly after the year end, we began replanting the entire external area at the Barcelona asset, in conjunction with our customer, Mango and neighbouring owner VGP. The project will reintroduce native plant species, improve biodiversity and benefit a neighbouring bee farm.

In addition to asset-level community engagement, we have a corporate charity initiative with The Mission to Seafarers, which supports the 1.5 million people working at sea, as part of the global supply chain and logistics network. The Company is working with the charity to develop a long-term partnership to support social value and made €22,000 of funding available in October 2021 to purchase a mini-bus to help transport workers and crucial supplies.

Further improving our ESG ratings

The successful implementation of our ESG strategy has resulted in us consistently improving scores for the Company in key external benchmarks. We were pleased to achieve a further increase in our GRESB score, which now stands at 88 (GRESB average = 74; GRESB Peer Group average = 79). We were awarded five Green stars and designated as Leader in ESG for European Industrial Distribution Warehouse Listed Sector.

During the year, we were awarded EPRA Gold Level certification for ESG best practice in the first year in inclusion in the EPRA Sustainability Best Practices Recommendations.

In 2022, third-party specialist consultants undertook climate scenario risk modelling work across the whole portfolio and our management reporting and due diligence enabled strong assurance that all risks had already been considered, mitigation works completed and that appropriate insurance provisions are in place. Regular property inspections by our Property Management team also enables first hand checks and reporting.

FINANCIAL REVIEW

Portfolio valuation

The portfolio was independently valued by JLL as at 30 September 2022, in accordance with the RICS Valuation - Global Standards. The portfolio's total value at the year end was €1,765.6 million (30 September 2021: €1,281.4 million), with a like-for-like valuation increase of 5.6% during the year. The first six months of the financial year were marked by continuous yield improvement driving strong valuation growth. However, inflation and macro-uncertainties have forced central banks to tighten liquidity around the globe, leading to a marked increase in risk-free rates, and financing cost. This had the effect of reversing the property yield curve, with a like-for-like 29bps yield increase in the valuation of our portfolio between March and September. The Board recognises the 52% share price discount to EPRA NTA, as at 30 September 2022. The valuation of Investment Property is the main driver of the EPRA NTA, and was determined by JLL as independent valuers. The Board is satisfied that the valuation exercise was performed in accordance with RICS Valuation - Global Standards. As such, the Board has full confidence in the level of EPRA NTA disclosed in the financial statements at the reporting date.

Throughout the year, we witnessed continued strong occupational market conditions. The estimated rental value of the portfolio, which is the rent the portfolio should generate if all buildings were leased at current market levels, increased by 8.2% on a like-for-like basis over the year, and 2.7% since March 2022. This resulted in the portfolio's overall reversionary potential - the potential uplift from current rental levels - increasing to 9.5%.

Financial results

Rental income

Rental income for the year was €57.9 million (2021: €43.9 million), up 31.9%. The growth was primarily the result of portfolio growth from the equity raise in September 2021, as well as the benefit of rental indexation and our asset management initiatives. On a like-for-like basis against September 2021, rental income was 4.0% higher. As at 30 September 2022, the annualised rental income was €74.3 million (30 September 2021 €53.4 million).

The Company's operating and administrative costs were €18.2 million (2021: €12.2 million), which primarily comprised:

• the Management Fee payable to the Manager of €7.9 million (2021 €5.5 million);

• the Company's running costs, including accounting, tax and audit; and

• the Directors' fees

On 6 October 2022, the Company and the Manager announced a number of proposed changes to the Investment Management Agreement (IMA), which were subsequently approved by shareholders at a general meeting on 25 October 2022. The amendments include a revised basis for calculating the Management Fee, which has been backdated to 1 August 2022. Prior to 1 August 2022, the Management Fee was calculated as follows:

The revised basis for calculating the Management Fee is as follows:

In addition, property management services procured by the Manager will now be reinvoiced directly to the Company and, hence, fees relating to such services will be paid by the Company. The revised IMA results in meaningful savings for the Company, which in a full financial year we estimate at €2.1 million, based on the 30 September 2022 net asset value, which was the last available NAV prior to the announcement of the change.

The EPRA cost ratio for the financial year (inclusive of vacancy cost) was 41.3% (2021: 30.5%). The adjusted EPRA cost ratio was 29.5% (2021: 28.5%) which excludes the lease surrender payment at Hammersbach and includes rental guarantees. With the deployment of proceeds from our September 2021 equity raise into income producing assets, the portfolio is expected to generate greater income for the full year, combined with a lower cost base, we expect the cost ratio to decrease materially and stabilise at a percentage in the mid-20s.

The total cost of debt for the year was €8.7 million (2021: €7.1 million), reflecting an attractive average cost of debt of 1.2% (2021: 1.9%). This is the result of new debt entered into in the last 18 months (see debt financing below). Looking forward to FY23, the maximum average run rate cost of debt is 1.46%. Interest cover for the year was 6.6 times (2021: 6.3 times).

Profit before tax for the period was €76.6 million (2021: €129.0 million), including the gain on revaluation of the investment properties of €49.9 million (2021: €106.5 million).

The current income taxation charge for the year was 2.3% of the Company's net property income.

The taxation charge is primarily incurred in the local jurisdictions in which the Company invests. As an HMRC-approved investment trust, the Company is exempt from UK corporation tax on its chargeable gains. The Company is also exempt from UK corporation tax on dividend income received, whether from UK or non-UK companies, provided the dividends fall within one of the exempt classes under the Corporation Tax Act 2009.

The corporation tax rate in future periods will depend primarily on the jurisdictions where the Company acquires assets, given the differing tax rates across continental Europe. The Company does not use any structures designed to artificially reduce its tax liabilities and looks to pay the appropriate level of tax where it is due.

The Company's EPS measures for the year reflect some short-term dilution from the September 2021 equity issue, as we invested the proceeds in income-generating assets throughout the year.

Basic EPS for the year were 7.28 cents (2021: 19.59 cents) decreasing from the prior year due to significant valuation uplift in 2021. EPRA EPS, which primarily excludes the valuation movement, was 2.58 cents (2021: 2.75 cents).

Adjusted Earnings for the year were €34.2 million (2021: €24.7 million), resulting in Adjusted EPS of 4.24 cents (2021: 4.61 cents). Annualising the EPS generated in the quarter ending 30 September 2022, the EPS is 5.04 cents. More information about the calculation of basic, EPRA and adjusted EPS can be found in note 12 to the financial statements.

Net assets

The IFRS NAV per share at the year end was €1.32 (30 September 2021: €1.31). Information on EPRA's net asset valuation metrics can be found in the EPRA Performance Measures section.

Debt financing

During the year, the Company raised its debut private placement of €200 million senior unsecured notes, from institutional investors. The notes comprise three tranches with a weighted average coupon of 1.37% and a weighted average maturity of 9 years at drawdown. The funds were drawn in January 2022.

The three tranches comprise:

• €100 million at a fixed coupon of 1.22%, with 7-year maturity;

• €50 million at a fixed coupon of 1.45%, with 10-year maturity; and

• €50 million at a fixed coupon of 1.59%, with 12-year maturity.

On 10 March 2022, the Company announced that Fitch Ratings Limited had upgraded its senior unsecured rating to BBB from BBB-. Fitch also affirmed the Company's Long-Term Issuer Default Rating at BBB- with stable outlook.

At the year end, the Company had total debt drawn of €11 million. This resulted in an LTV ratio of 35.2% (30 September 2021: 13.3%), with €239 million available undrawn debt. Taking into account the Company's capital commitments on its development and asset management projects, the proforma LTV increases to 40.6%. The Company's financing is well insulated from rising interest rates in the short term, with no maturities before Q4 2025, 73% of its total debt capacity fixed, and the part floating benefiting from interest rates caps limiting the rise in Euribor to 0.65%. These interest rates caps are maturing in October 2023.

Post period end activity

On 6 October 2022, the Company announced the proposed changes to the IMA, as discussed above.

[Others TBD]

Related party transactions

Transactions with related parties included the Management Fee paid to the Manager, the Directors' fees, and certain acquisitions the Company made from two of its main development and asset management partners, Dietz AG and Logistics Capital Partners (Dietz AG and Logistics Capital Partners were deemed related party under Listing Rules).

Alternative Investment Fund Manager (AIFM)

The Company is an Alternative Investment Fund within the meaning of the AIFMD and has appointed the Manager as its AIFM. The Manager is authorised and regulated by the Financial Conduct Authority as a full scope AIFM.

Dividends

The Company has declared the following dividends in respect of the year:

The total dividend for the year was 5.0 cents per share or €40.3 million (2021: €30.7 million) and was 84.8% covered by Adjusted Earnings (2021: 80.2%). It was fully covered by Adjusted Earnings in the quarter ending 30 September 2022. We expect the dividend to be fully covered in FY23, as discussed in the Chairman's Statement.

Mehdi Bourassi

CFO for Tritax EuroBox plc

5 December 2022

KEY PERFORMANCE INDICATORS

Set out below are the key performance indicators we use to track our strategic progress

EPRA PERFORMANCE MEASURES

The table below shows additional performance measures, calculated in accordance with the Best Practices Recommendations of the European Public Real Estate Association (EPRA). We provide these measures to aid comparison with other European real estate businesses. For a full reconciliation of the new EPRA NAV measures, see the Notes to the EPRA and Other Key Performance Indicators.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board has overall responsibility for risk management and internal controls, with the Audit & Risk Committee reviewing the effectiveness of the risk management process on our behalf.

We aim to operate in a low-risk environment, focusing on the Continental European logistics real estate sector to deliver an attractive capital return and secure income for Shareholders. The Board recognises that effective risk management is key to Group's success. Risk management ensures a defined approach to decision making that decreases uncertainty surrounding anticipated outcomes, balanced against the objective of creating value for Shareholders.

Approach to managing risk

Our risk management process is designed to identify, evaluate, understand and mitigate (rather than eliminate) the significant risks we face. The process can, therefore, only provide reasonable, and not absolute, assurance. As an investment company, we outsource key services to the Manager, the Administrator and other service providers, and rely on their systems and controls. The Manager has established its own Risk Committee which ensures consistency and transfer of best practice in reporting, monitoring and controlling risk.

At least three times a year, the Board undertakes a formal risk review, with the assistance of the Audit & Risk Committee, to assess the effectivenessof our risk management and internal control systems. During these reviews, the Board has not identified or been advised of any failings or weaknesses which it has determined to be material.

Covid-19 risks

1. The Covid-19 pandemic severely impacting the global economy and financial market may cause loss to the Company.

Property risks

2. Customers may default.

3. The value of the property portfolio may fluctuate.

4. Portfolio growth may slow.

5. Lack of diversification may amplify local risks.

6. Development activities may not be profitable.

Operational risks

7. The Company is reliant on the continuing services provided by the Manager.

8. Insurance at appropriate premiums may not be available.

Financial risks

9. Interest rates may fluctuate.

10. Debt funding at appropriate rates may not be available.

11. Debt covenants may be breached.

Taxation risks

12. A change in the Company's investment trust status may cause loss.

13. Changes to local tax legislation in countries in which the Company is invested may cause loss.

Political risks

14. General political and/or economic uncertainty may disrupt the Company's business.

15. Rising energy prices may impact the overall economy and our customers.

ESG risks

16. ESG risks and inability to capitalise on the opportunities could lead to loss of competitive advantage, higher vacancies and higher operating costs for the Company and its customers.

17. The company's data may be exposed to cyber attack.

Risk appetite

We have a specific Investment Policy, which we adhere to and for which the Board has overall responsibility.

Our risk appetite is low and, in particular, we do not undertake any fully speculative development. We have high-quality customer partners, with a portfolio of modern buildings and one of the longest unexpired lease terms in the sector, coupled with an average term to maturity on our debt of four years, all subject to interest rate derivative caps.

Principal risks and uncertainties

Further details of our principal risks and uncertainties are set out below. They have the potential to affect our business materially, either favourably or unfavourably. Some risks are currently unknown, while others that we currently regard as immaterial, and have therefore not included here, may turn out to be material in the future. The Board also continually reviews and assesses emerging risks, and has a process in place to decide their inclusion as principal risks.

Principal risks

The matrix below illustrates our assessment of the impact and probability of the principal risks identified, the rationale for which is contained within the commentary for each risk category.

Emerging risks

As well as the principal risks, the Directors have identified a number of emerging risks which are considered as part of the formal risk review. Emerging risks encompass those that are rapidly evolving, for which the probability or severity is not yet fully understood. As a result, any appropriate mitigations are also still evolving; however, these emerging risks are not considered to pose a material threat to the Company in the short term. These emerging risks are raised as part of the biannual risk assessment where the effects on the Group are considered. The emerging risks that could impact the Company's performance cover a range of subjects which include but are not restricted to climate change, ESG and technological advancement. The Audit & Risk Committee has also considered emerging risks following Covid-19 such as changes in the regulatory environment or tax regimes as a result of the pandemic.

COVID-19 RISKS

1. The COVID-19 pandemic severely impacting the global economy and financial market may cause loss to the Company

PROPERTY RISKS

2. Customers may default

3. The value of the property portfolio may fluctuate

4. Portfolio growth may slow

5. Lack of diversification may amplify local risks

6. Development activities may not be profitable

OPERATIONAL RISKS

7. The Company is reliant on the continuing services provided by the Manager

8. Insurance at appropriate premiums may not be available

FINANCIAL RISKS

9. Interest rates may fluctuate, and debt funding at appropriate level may not be available

10. The Euro may fluctuate against other currencies of countries in which the Company operates

11. Debt covenants may be breached

TAXATION RISKS

12. A change in the Company's investment trust status may cause loss

13. Changes to local tax legislation in countries in which the Company is invested may cause loss

POLITICAL RISKS

14. General political and/or economic uncertainty may disrupt the Company's business

15. Rising energy prices may impact the overall economy and our customers

ESG RISKS

16. ESG risks and inability to capitalise on the opportunities could lead to loss of competitive advantage, higher vacancies and higher operating costs for the Company and its customers

CYBER RISKS

17. The company's data may be exposed to cyber attack

GOING CONCERN AND VIABILITY STATEMENT

The Group's cash balance as at 30 September 2022 was €90.18 million. It also had undrawn amounts under its debt facilities of a further €207 million at the reporting date. Of the Group's total facilities (RCF, Green Bond and USPP), €250 million mature in 2025, €500 million in 2026, €100m in 2029, €50 million in 2032 and €50 million in 2034.

The Group currently has substantial headroom against its borrowing covenants, with an LTV of 35% as at 30 September 2022 against a borrowing covenant limit of 65%. The Group's borrowings are unsecured, providing it with a deeper pool of liquidity and with more flexibility over its arrangements.

The Group also benefits from a secure income stream from leases with long average unexpired terms, which are not overly reliant on any one customer. This diversification mitigates the risk of customer default. As a result, the Directors believe that the Group is well placed to manage its current and future financial commitments and other business risks.

Having reviewed the Group's cash flow forecasts, which show that liabilities can be met as they fall due, the Directors believe that there are currently no material uncertainties in relation to the Group's ability to continue for a period of at least 12 months from the date of approval of the financial statements. The Board is, therefore, of the opinion that the going concern basis adopted in preparing the Annual Report is appropriate.

Assessment of viability

The period over which the Directors consider it feasible and appropriate to report on the Group's viability is the five-year period to September 2027. This was previously considered over a three-year period.

The period for this assessment is the same five-year time horizon as covered by the Group's financial forecasts and plans. This is considered to be the optimum balance given the age of the Group as well as the long-term nature of investment in property. The Directors confirm that they have no reason to expect any change in the Group's viability immediately following the period assessed.

The assumptions underpinning these forecast cash flows and covenant compliance forecasts were sensitised, to explore the Group's resilience to the potential impact of its significant risks, or a combination of those risks. The principal risks summarise those matters that could have a significant impact on the Group's ability to remain in operation and meet its current obligations.

While the principal risks assessed by the Directors could affect the Group's business model, the Directors do not consider that they have a reasonable likelihood of impacting the Group's viability over the five-year period to September 2027.

The Group's financial forecast include sensitivities including yield expansion, resulting in property valuation fall and the impact of cash flows and covenant compliance. This forecast has been further sensitised for the following scenarios:

1) The combined impact of three key customers defaulting without replacement, a 12 month delay in letting properties under development, along with a significant increase in Euribor.

2) Additional yield expansion resulting in further property valuation falls and the impact on debt covenants.

Viability Statement

The Directors confirm that they have carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity.

Having considered the forecast cash flows and covenant compliance, and the impact of the sensitivities in combination, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the five-year period of their assessment to September 2027.

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2022

GROUP STATEMENT OF FINANCIAL POSITION

As at 30 September 2022

The financial statements were approved by the Board of Directors on 5 December 2022 and signed on its behalf by:

Robert Orr

Chairman

Company registration number: 11367705

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30 September 2022

GROUP CASH FLOW STATEMENT

For the year ended 30 September 2022

NOTES TO THE CONSOLIDATED ACCOUNTS

1. Corporate information

The consolidated financial statements of the Group for the year ended 30 September 2022 comprise the results of Tritax EuroBox plc ("the Company") and its subsidiaries (together "the Group") and were approved by the Board for issue on 5 December 2022. The Company is a public limited company incorporated and domiciled in England and Wales. The registered address of the Company is disclosed in the Company Information.

The nature of the Group's operations and its principal activities are set out in the Strategic Report.

The financial information presented here does not constitute the company's statutory accounts for the periods ended 30 September 2022 or 2021 but is derived from those accounts. Statutory accounts for period ended 30 September 2021 have been delivered to the registrar of companies, and those for the year ended 30 September 2022 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. 

Accounting policies

2. Basis of preparation

The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards (UK-adopted IFRS) and the applicable legal requirements of the Companies Act 2006. The Group's financial statements have been prepared on a historical cost basis, as modified for the Group's investment properties and interest rate derivatives, which have been measured at fair value through the Group profit or loss.

The Group has chosen to adopt EPRA (European Public Real Estate Association - www.epra.com/finance/financial-reporting/guidelines) best practice guidelines for calculating key metrics such as net tangible assets (NTA) and earnings per share. The Group has decided to adopt EPRA NTA as its primary EPRA NAV measure. These are disclosed in notes 12 and 25.

2.1. Going concern

The Directors have prepared cash flow forecasts for the Group for a period of at least 12 months from the date of approval of the consolidated financial statements.

The assumptions underpinning these forecast cash flows and covenant compliance forecasts were sensitised, to explore the Group's resilience to the potential impact of its significant risks, or a combination of those risks. The Group's financial forecast include sensitivities including yield expansion, resulting in property valuation fall and the impact of cash flows and covenant compliance. This forecast has been further sensitised for the following scenarios:

1) The combined impact of three key tenants defaulting without replacement, a 12 month delay in letting properties under development, along with a significant increase in Euribor.

2) Additional yield expansion resulting in further property valuation falls and the impact on debt covenants.

The Group's cash balance at 30 September 2022 was €90.18 million. It also had undrawn amounts under its unsecured revolving credit facility ("RCF") of a further €207 million at the date of approval of these financial statements. Of the Group's total facilities (RCF, Green Bond and USPP), €250 million mature in 2025, €500 million in 2026, €100m in 2029, €50million in 2032 and €50 million in 2034. The loan includes financial covenants for loan-to-value ("LTV"), interest cover ratio ("ICR") and gearing. These covenants have been complied with throughout the year and up to the date of approval of these financial statements.

The LTV covenant is measured quarterly based on the property valuation as used in the consolidated financial statements. Based on the most recent valuation the Group retained headroom against a covenant limit, reporting 35% against the limit of 65%. LTV would breach 65% if the valuation of the Group's investment properties were to decrease by 45.9%, based off latest valuation.

The gearing covenant is measured quarterly based on consolidated total net borrowings to consolidated shareholders' funds. Based on the most recent reporting the Group retained headroom against the covenant limit, reporting 58% against the limit of 150%.

LTV and gearing covenants are measured using "Net Borrowings" which reduces the drawn debt by the Group's cash holdings at each measurement date.

The ICR covenant is measured as the ratio of the Group's consolidated earnings before income and tax, subject to certain adjustments, to consolidated net finance costs in respect of any measurement period, by reference to accounting income. Based on the most recent reporting, the Group was not in breach of covenant minimum, reporting 3.85 times which was above the 1.5 times minimum.

As a result of the above considerations the Directors forecast that covenant compliance will continue for at least the next 12 months.

Consequently, the directors are confident that the Group and the Company will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

3. Significant accounting judgements, estimates and assumptions

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

3.1. Judgements

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:

Business combinations

The Group acquires subsidiaries that own investment properties. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. Under the Definition of a Business (Amendments to IFRS 3 "Business Combinations"), to be considered a business an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The group applies the optional 'concentration test' in determining whether an acquisition is a business combination, where substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. Therefore, the Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the property.

Where such acquisitions are not judged to be the acquisition of a business, they are not treated as business combinations. Rather, the cost to acquire the corporate entity is allocated between the identifiable assets and liabilities of the entity based upon their relative fair values at the acquisition date. Accordingly, no goodwill or additional deferred tax relating to pre-acquisition property valuation gains arises.

In the current and prior periods all acquisitions were accounted for as asset acquisitions as in all acquisitions substantially all of the fair value of the gross assets acquired were concentrated in a single asset.

Segment reporting

The Directors are of the opinion that the Group is engaged in a single segment business, being the investment in and development of European big box assets. The Directors consider that these properties have similar economic characteristics and as a result these individual properties have been reported as a single operating segment.

3.2. Estimates

Fair valuation of investment property

The fair value of investment property is determined, by an independent property valuation expert, to be the estimated amount for which a property should exchange on the date of the valuation in an arm's-length transaction. Properties have been valued on an individual basis. The valuation expert uses recognised valuation techniques, applying the principles of both IAS 40 and IFRS 13.

The valuations have been prepared in accordance with the Royal Institution of Chartered Surveyors ("RICS") Valuation - Global Standards January 2022 ("the Red Book"). Factors reflected include current market conditions, annual rentals, lease lengths and location. The significant methods and assumptions used by valuers in estimating the fair value of investment property are set out in note 14.

4. Summary of significant accounting policies

4.1. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company up to 30 September 2022.

Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. For acquisitions not considered business combinations, the cost of acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognised. Non-controlling interests are accounted for in section 4.5.

For each of the subsidiaries within the Group with non-controlling interests (see note 4 of the Company financial statements), the Group has issued put options to the non-controlling interest. The Group has adopted the anticipated acquisition method under which the underlying interests of the non-controlling interest are presented in the Group Statement of Financial Position and the Group Statement of Comprehensive Income as if they are already acquired by the Group.

The day-to-day operations of Fondo Minerva Eurobox Italy, are managed by Savills IM, ("Savills") in accordance with the requirements of the Italian REIF regime. The Company has control to replace Savills with another operator and therefore considers the investment to be a subsidiary under IFRS 10.

The results of subsidiaries where control is acquired or disposed of during the year are included in the Group profit or loss from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those of the Group.

All intercompany transactions and balances between Group companies are eliminated on consolidation. These consolidated financial statements include the financial statements of the Company and the subsidiary companies as listed in note 4 of the Company accounts.

4.2. Investment property and investment property under construction

Investment property comprises completed property that is owned or held under a lease to earn rentals or for capital appreciation, or both, and property under development where the Group intends to retain ownership on completion.

Investment property is recognised when it is probable that the future economic benefits that are associated with the investment property will flow to the entity and the cost of the investment property can be measured reliably. The cost of investment property includes potential payments under put options granted to non-controlling interests of subsidiaries which own investment property. Rent guarantees and top ups paid by a vendor to the Group to compensate the Group for vacant space or rent free periods are treated as part of the cost of the property acquired and offset the initial purchase consideration. Such receipts are included in the Group's Adjusted EPS in note 12. Transaction costs include transfer taxes, professional fees for legal and other services and other costs incurred in order to bring the property to the condition necessary for it to be capable of operating. Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair values are included in the Group profit or loss.

Investment properties under construction are financed by the Group where the Group enters into contracts for both pre-let properties and speculative development under a funding agreement. All such contracts specify a fixed amount of consideration. The speculative development risk is mitigated by having rental guarantees in place to mitigate this risk. Investment properties under construction are initially recognised at cost (including any associated costs), which reflect the Group's investment in the assets. Development payments made in line with funding agreements are recognised in additions. Subsequently, the assets are remeasured to fair value at each reporting date. The fair value of investment properties under construction is estimated as the fair value of the completed asset less any costs still payable in order to complete.

Additions to properties include costs of a capital nature only. Expenditure is classified as capital when it results in identifiable future economic benefits, that can be measured reliably, which are expected to accrue to the Group. All other property expenditure is expensed in the Group profit or loss as incurred.

The corresponding entry upon recognising lease incentives or fixed/minimum rental uplifts is made to investment property. For further details please see Accounting Policy note 4.8.1.

Investment properties cease to be recognised when they have been disposed of or withdrawn permanently from use and no future economic benefit is expected from disposal. The difference between the net disposal proceeds and the carrying amount of the asset at the point of disposal is recognised in the Group profit or loss in the year of retirement or disposal.

4.3. Assets held-for-sale

A non-current asset or disposal group is classified as held for sale when the carrying amount will be recovered principally through sale rather than through continuing use, it is available for immediate sale and sale is highly probable within one year. Such assets, or disposal groups are measured at the lower of the carrying amount and fair value less costs to sell and once classified as held-for-sale, the asset is no longer amortised or depreciated. Investment property that is classified as held for sale is held at fair value.

4.4. Financial instruments

Fair value hierarchy

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period.

4.4.1. Financial assets

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

Derivative financial instruments

Derivative financial instruments refer to interest rate caps purchased for hedging purposes which are initially recognised at fair value plus costs of acquisition and are subsequently measured at fair value. The Group does not apply hedge accounting and hence the gain or loss at each fair value remeasurement date is recognised in the profit or loss.

Amortised cost

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position.

These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows which are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost being the effective interest rate method, less provision for impairment.

Impairment provisions for current and non current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss disclosed in the Group profit or loss. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

4.4.2. Financial liabilities

The Group classifies its financial liabilities as amortised cost.

The Group's accounting policy for each type of financial liability is as follows:

Loans and borrowings

Loans and bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the year to repayment is at a constant rate on the balance of the liability carried in the Group Statement of Financial Position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payment while the liability is outstanding.

Extensions of bank borrowings under accordion options in the original facility agreement are treated as changes in estimated cash flows under the original financial liability.

Other non-derivative financial liabilities

Non-derivative financial liabilities are recognised initially at the date that the Group becomes a party to the contractual provisions of the instrument and are measured initially at fair value less initial direct costs and subsequently measured at amortised cost. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

4.5. Put option liabilities

Liabilities for put options held by non-controlling interests are initially and subsequently recognised at the present value of the exercise price of the option. This is taken to be the non-controlling interest's proportionate share of the current fair value of investment property, the carrying amount of other net assets plus the present value of anticipated payments to be made by the Group under dividend guarantees to the non-controlling interest.

Changes in the carrying amount of the put liability are recognised within finance expenses in the Group Statement of Comprehensive Income.

4.6. Forward funded pre-let investments

The Group enters into forward funding development agreements. For pre-let investments, the Group will enter into a forward funding agreement with a developer and simultaneously enter into an agreement for lease with a prospective customer willing to occupy the building once complete.

During the period between initial investment in a forward funded agreement and the rent commencement date under the lease, the Group usually receives licence fee income. Usually this is payable by the developer to the Group throughout this period and typically reflects the approximate level of rental income that is expected to be payable under the lease, as and when practical completion is reached. IAS 40.20 states that investment property should be recognised initially at cost, being the consideration paid to acquire the asset, therefore such licence fees are deducted from the cost of the investment and are shown as a receivable.

4.7. Dividends payable to Shareholders

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the Shareholders at an Annual General Meeting.

4.8. Property income

4.8.1. Rental income

Rental income arising from operating leases on investment property is accounted for on a straight line basis over the lease term and is included in gross rental income in the Group profit or loss. The lease term is the non cancellable period of the lease. Customer break clauses are assumed to be exercised unless it is reasonably certain at inception of the lease that the break will not be exercised. Customer lease incentives are recognised as an adjustment of rental revenue on a straight line basis over the term of the lease. Included in the straight-line basis are the effects of future fixed or minimum uplifts. Any contingent rental uplifts are excluded until the amounts are known. Initial direct costs incurred in negotiating and arranging an operating lease are recognised as an expense over the lease term on the same basis as the lease income. Rental income is invoiced, either monthly or quarterly in advance, and for all rental income that relates to a future period, this is deferred and appears within current liabilities on the Group Statement of Financial Position.

Amounts received from customers to terminate leases or to compensate for dilapidations are recognised in the Group statement of comprehensive income when the right to receive them arises. Similarly, amounts paid to customers to terminate leases are recognised in the Group statement of comprehensive income.

When the Group enters into a forward funded transaction, the future customer signs an agreement for lease. No rental income is recognised under the agreement for lease; once practical completion has taken place and the formal lease is signed, rental income commences to be recognised in the Group profit or loss.

4.8.2. Service charges and other income

Income arising from expenses recharged to customers is recognised in the period in which the compensation becomes receivable. Service charge and insurance premiums and other such receipts are included in the gross property income gross of the related costs, as the Directors consider that the Group acts as principal in this respect.

4.9. Finance income

Finance income is recognised as interest accrues on cash balances and short term deposits held by the Group. Interest charged to a customer on overdue rental income is also recognised within finance income.

4.10. Finance costs

Finance costs consist of interest and other costs that the Group incurs in connection with bank and other borrowings, and the holding of deposits in Euro bank accounts. All interest costs are expensed to the Group profit or loss in the period in which they occur on an effective interest basis and all loan issue costs paid are offset against amounts drawn on the facilities and are amortised over the term of the facilities.

The Group has elected not to capitalise interest on investment properties under development.

4.11. Taxation

The Company is approved by HMRC as an investment trust under Section 1158 of the Corporation Tax Act 2010.

In respect of each accounting period for which the Company continues to be approved by HMRC as an investment trust, the Company will be exempt from UK taxation on its capital gains. The Company is, however, liable to UK corporation tax on its income.

The Company should in practice be exempt from UK corporation tax on dividend income received, provided that such dividends (whether from UK or non-UK companies) fall within one of the ''exempt classes'' in Part 9A of the CTA 2009. The Company is also able to elect to take advantage of modified UK tax treatment in respect of its ''qualifying interest income'' for an accounting period referred to as the ''streaming'' regime. Under regulations made pursuant to the Finance Act 2009, the Company may designate as an ''interest distribution'' all or part of the amount it distributes to shareholders as dividends, to the extent that it has ''qualifying interest income'' for the accounting period. If the Company designates any dividend it pays in this manner, it is able to deduct such interest distributions from its income in calculating its taxable profit for the relevant accounting period.

The Company's status as an approved investment trust does not impact the taxation of its subsidiaries or the Group's liability to tax in the other countries in which the Group operates.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from "profit before tax" as reported in the Consolidated Statement of Comprehensive Income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group's current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting year.

Where corporation tax arises in subsidiaries, these amounts are charged to the Consolidated Statement of Comprehensive Income. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the balance sheet in the countries where the Group operates.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting year. The rates used in the calculation of deferred tax are in accordance with legislation where the Group operates.

The carrying values of the Group's investment properties are assumed to be realised by sale at the end of use. The capital gains tax rate applied is that which would apply on a direct sale of the property recorded in the Consolidated Balance Sheet regardless of whether the Group would structure the sale via the disposal of the subsidiary holding the asset, to which a different tax rate may apply. The deferred tax is then calculated based on the respective temporary differences and tax consequences arising from recovery through sale.

4.12. Provision

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.

4.13. Foreign currency translation

The presentation currency of the Company is Euro. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. All entities in the Group, with the exception of Sweden , have Euro as the functional currency.

The assets and liabilities of Sweden are translated to the Group's presentational currency, Euro, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve.

Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date that the fair value was determined. Gains and losses arising on exchange are included in the profit or loss for the year, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly to equity, and any exchange component of that gain and loss is also recognised directly to equity.

5. Standards in issue

5.1. Standards in issue and effective from 1 October 2021

IFRS Phase 2 amendments for interest rate benchmark (IBOR) reform provide a practical expedient to account for changes in the basis for determining contractual cash flows of financial assets and financial liabilities as a result of IBOR reform. Under the practical expedient, entities will account for these changes by updating the effective interest rate without the recognition of an immediate gain or loss. This practical expedient applies only to such a change and only to the extent that it is necessary as a direct consequence of interest rate benchmark reform, and the new basis is economically equivalent to the previous basis.

There was no material effect from the adoption of the above and other amendments to IFRS effective in the year. They have no impact to the Group significantly as they are either not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies.

5.2. New standards issued but not yet effective

There are new standards and amendments to standards and interpretations which have been issued that are effective in future accounting periods, and which the Group has decided not to adopt early. None of these are expected to have a material impact on the consolidated financial statements of the Group.

6. Gross property income

The Group derives property income from the following countries:

The undiscounted future minimum lease payments under non cancellable operating leases receivable by the Group are as follows:

The Group's investment properties are leased mainly to single customers, some of which have rental securities attached (bank or parent guarantees, cash deposit), under the terms of a commercial property lease. The majority have rent indexation that are linked to either RPI/CPI or fixed uplifts.

There are two customers representing more than 10% of rental income during the year (2021: two customers). As of 30 September 2022, one customer represented more than 10% of passing rent (2021: four customers).

7. Direct property costs

*Payment to terminate existing lease

8. Administrative and other expenses

1 Investment management fees include fees payable to Tritax Management LLP for €7.88 million (30 September 2021: €5.46 million (see note 26). The remaining €3.98 million (2021: €2.42 million) were paid to asset managers and property managers.

The effect of foreign exchange differences for the year ended 30 September 2022 consists of unrealised foreign exchange currency loss of €0.28 million and offset by realised foreign exchange currency gain of €0.08 million (2021: unrealised foreign exchange currency loss of €0.74 million and offset by realised foreign exchange currency gain of €0.04 million).

Fees relating to the share issuances have been treated as share issue expenses and offset against share premium. The transaction costs related to the loan and borrowings have been treated as part of the arrangement fees for issuing the debt, of which €nil million relates to fee payable to the auditors as non-audit services (2021: €0.07 million). The fees in relation to the acquisition of assets have been capitalised into the cost of the respective assets.

9. Directors' remuneration

A summary of the Directors' emoluments, including the disclosures required by the Companies Act 2006, is set out in the Directors' Remuneration Report.

Personnel

During the current and prior periods under review the Company did not have any personnel, besides the Directors of the Company.

10. Finance expense

The total interest payable on financial liabilities carried at amortised cost comprises interest and commitment fees payable on bank borrowings of €7.89 million (30 September 2021: €6.80 million), of which €nil was capitalised in both periods, and amortisation of loan arrangement fees of €2.43 million (30 September 2021: €2.47 million) of which €2.40 million (30 September 2021: €8.92 million) of the loan agreement fees was capitalised into the loan in the year (see note 18).

11. Taxation

a) Tax charge in the Group Statement of Comprehensive Income

1 2021 includes the capital gains tax on disposal of investment properties for €3.05 million.

The UK corporation tax charge of €nil reflects the Company's intention to declare sufficient "qualifying interest distributions" to fully offset its "qualifying interest income" in the year in accordance with its status as an Investment Trust Company ("ITC").

In the 3 March 2021 Budget it was announced that, from 1 April 2023, the UK main rate of corporation tax will increase to 25%. Given that the Company's tax charge is €nil, due to its status as an Investment Trust Company, there is no anticipated consequential effect on the future tax charge.

b) Factors affecting the tax charge for the year

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The differences are explained below:

The amount of unutilised tax losses and tax credits for which no deferred tax asset is recognised in the profit and loss account was €9.6 million (2021: €6.12 million).

12. Earnings Per Share

Earnings per share ("EPS") amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Group by the weighted average number of Ordinary Shares in issue during the year. As at 30 September 2022 and 2021, there are no dilutive or potentially dilutive equity arrangements in existence.

The calculation of EPS is based on the following:

1 Based on the weighted average number of Ordinary Shares in issue throughout the period.

2 This is offset against the cost of investment properties.

3 Covid-19 rent deferral was received in full in 2021.

4 Capital investment to terminate an existing lease in Hammersbach to harness rental growth resulting in longer term value to the business - refer to note 7

Adjusted Earnings is a performance measure used by the Board to assess the level of the Group's dividend payments. The metric mainly adjusts EPRA earnings for:

i. Exclusion of non-cash items credited or charged to the Group Statement of Comprehensive Income, such as fixed rental uplift adjustments and amortisation of loan arrangement fees;

ii. Inclusion of licence fees which relate to cash received from developers during development periods, in order to access the land; and

iii. Inclusion of rental guarantee adjustments which relate to acquired assets with properties which have had an income guarantee attached to them as part of the acquisition of the asset. The rental guarantee is released (through a cash movement or contracted liability settlement) as Adjusted Earnings over the period of the lease which it is intended to cover or lease break. However, this release does not go through rental income in the Group Statement of Comprehensive Income, and as such an adjustment is made to recognise the receipt.

iv. Exclusion of exceptional items, considered as an expense under IFRS, which are capital in substance and nature and result in longer term value to the business.

13. Dividends paid

On 6 December 2022 the Directors of the Company declared a fourth interim dividend in respect of the period from 1 July 2022 to 30 September 2022 of 1.25 cent per Ordinary Share, which will be payable on or around 13 January 2023 to Shareholders on the register on 16 December 2022.

Out of €40.34 million (30 September 2021: €30.73 million) dividends declared for the year, €8.79 million (30 September 2021: €6.04 million) is designated as interest distribution.

14. Investment properties

The Group's investment property has been valued at fair value by Jones Lang LaSalle Limited ("JLL"), an accredited independent valuer with a recognised and relevant professional qualification and with recent experience in the locations and categories of the investment properties being valued. The valuations have been prepared in accordance with the RICS Valuation - Global Standards January 2022 ("the Red Book") and incorporate the recommendations of the International Valuation Standards which are consistent with the principles set out in IFRS 13. In forming its opinion, JLL makes a series of assumptions, which are typically market related, such as yields and expected rental values and are based on the Valuer's professional judgement and the current tenancy of the properties.

The valuations are the ultimate responsibility of the Directors. Accordingly, the critical assumptions used in establishing the independent valuation are reviewed by the Board.

The total valuation fee incurred by the Group in the year amounts to €124,800 (period ended 30 September 2021: €75,400). The fee is not contingent on the valuation of the properties.

Other than Tritax EuroBox plc, the external valuer provides valuation and research - related services to the Tritax Group, as well as to other funds Tritax Group manages. The Directors ensure full independence of the valuer.

All acquisitions during the current and prior period have been treated as asset purchases rather than business combinations (see note 3.1).

During the year, the following investment properties were acquired:

1 Acquired based on an asset deal.

1 This balance arises as a result of the IFRS treatment of leases with fixed or minimum rental uplifts and rent free periods, which requires the recognition of rental income on a straight line basis over the lease term. The amount as at 30 September 2022 was €10.94 million (30 September 2021: €7.67 million). The difference between this and cash receipts changes the carrying value of the property against which revaluations are measured (also see note 6).

2 Included in the fair value change in the year were unrealised gains of €93.08 million (30 September 2021 : €107.34 million) and unrealised losses of €43.14 million (30 September 2021 : €0.88 million).

3 This Includes acquisition costs of €13.81 million (30 September 2021 : €3.69 million).

As at 30 September 2022, the Group had €123.7 million of outstanding capital commitments in relation to its forward funded development assets (30 September 2021: €32.4 million):

• Roosendaal €30.0 million

• Dormagen €18.7 million

• Bonen €34.9 million

• Rosersberg I €3.9 million

• Rosersberg II €22.7 million

• Settimo €13.5 million

These costs are not provided for in the Statement of Financial Position. Capital commitments represent costs to bring the asset to completion under the developer's funding agreements which include the developer's margin.

Valuation risk

There is risk to the fair value of real estate assets that are part of the portfolio of the Group, comprising variation in the yields that the market attributes to the real estate investments and the market income that may be earned.

Real estate investments can be impacted adversely by external factors such as the general economic climate, supply and demand dynamics in the market, climates risks, competition, and increase in operating costs.

Besides asset specific characteristics, general market circumstances affect the value and income from investment properties such as the cost of regulatory requirements related to investment properties, interest rate levels and the availability of financing.

The Manager of the Group has implemented a portfolio strategy with the aim to mitigate the above stated real estate risk. By diversifying in regions, risk categories and customers, it is expected to lower the risk profile of the portfolio.

As of the date of this Annual Report, the only investments of the Group that have been identified consist of the current portfolio as specified in the Management Report. While the Group is negotiating to acquire further properties, there is no guarantee that these properties will form part of the portfolio of the Group.

With respect to new investments, management will be targeting specific investment categories based on the Group's investment objective and restrictions. Because such investments may be made over a substantial period of time, the Group faces the risk of interest rate fluctuations in case of leveraging these investments and adverse changes in the real estate markets.

Fair value hierarchy

The Group considers that all of its investment properties and investment properties under construction fall within Level 3 of the fair value hierarchy as defined by IFRS 13. There have been no transfers between Level 1 and Level 2 during any of the periods, nor have there been any transfers between Level 2 and Level 3 during any of the periods.

The valuations have been prepared on the basis of Market Value ("MV"), which is defined in the RICS Valuation Standards, as:

"The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."

MV as defined in the RICS Valuation Standards is the equivalent of fair value under IFRS.

The descriptions and definitions relating to valuation techniques and key unobservable inputs made in determining fair values are as follows:

Valuation techniques

Investment properties completed: income approach

The income method (or income approach) quantifies the net present value of future benefits associated with the ownership of the asset by totalling the current tenancy of the property, followed by the demand market rent on lease expiry, capitalised at an appropriate yield. The methodology is based on a direct capitalisation model where the lease-based income has been capitalised with an all-risk yield in perpetuity, except for the investment properties in Italy were valued by adopting an Income Approach with a Discounted Cash Flow Methodology (DCF) analysis. The choice of this methodology represents the likely basis of analysis to be used by a potential purchaser for this type of property (income producing).

Investment properties under construction: residual approach or equivalent

The residual approach or equivalent for properties under construction takes the expected valuation of the finished property using the income approach and deducts forecast costs to complete the development and an allowance for developer's profit.

Unobservable input: estimated rental value ("ERV")

ERV is dependent upon a number of variables in relation to the Group's property. These include: size, building specification and location. At 30 September 2022, the range was between €44 and €94 per square metre, per annum (2021: €41 and €88).

Unobservable input: yield

Yield is dependent on the customer, lease length and the other variables listed above for ERV. At 30 September 2022, the average yield for standing assets was 3.94% and the range was between 3.28% - 4.89% (2021: 3.33% - 7.00%). Implicit in the yield is the valuers consideration of climate risks.

Yield and ERV are not necessarily independent variables. It is possible a change in one assumption may result in an offsetting change to the other but equally the change in both assumptions may increase the impact on valuation.

Sensitivities of measurement of significant unobservable inputs

As set out within significant accounting estimates and judgements above, the Group's property portfolio valuation is open to estimation uncertainty and is inherently subjective by nature. At the balance sheet date, when the property portfolio was valued, the Group considered the range used below, in the sensitivity analysis, to be appropriate as at that date.

As a result the following sensitivity analysis has been prepared for investment properties:

The JLL valuation includes deductions for transaction costs that would be incurred by a hypothetical purchaser at the valuation date. These costs include Real Estate Transfer Tax ("RETT") equivalent to stamp duty except for properties in Belgium, Italy and Sweden. In Italy, this is due to the structure of an Investment Management Company ("SGR").In Belgium and Sweden, the local valuation practice is to exclude such costs given the prevalence of corporate rather than asset transactions in these markets.

15. Trade and other receivables

The cash in public institutions is a deposit of €1.17 million given by the customer for the property in Barcelona, Spain.

* VAT receivable includes VAT on capital expenditure across the developments and a reclaim on the purchase of the property in Italy €1 million (30 September 2021: €2 million).

The following table sets out the ageing of trade receivables as at 30 September 2022: