Tritax Big Box REIT plc Annual Report 2021Tritax Big Box REIT plc Annual Report 2021
At the heart
Annual Report 2021
About Us
Strategic Report
1 Our Strategic Framework
2 Highlights
4 Our Portfolio
8 Chairman’s Statement
10 Our Business Propositions
14 Fund Manager’s Q&A
16 Market Review
20 Our Business Model
22 Stakeholder Engagement and Section 172
26 Our Strategy
28 Key Performance Indicators
30 EPRA Performance Measures
32 ESG
42 Manager’s Report
53 Financial Review
58 Principal Risks and Uncertainties
65 Going Concern and Viability Statement
Governance
66 Chairman’s Governance Overview
68 Board of Directors
70 Key Representatives of the Manager
72 Application of Code
74 Board Leadership and Company Purpose
78 Stakeholder Engagement
79 Division of Responsibilities
83 Nomination Committee Report
86 Audit, Risk and Internal Control
88 Audit and Risk Committee Report
92 Management Engagement
CommitteeReport
95 Directors’ Remuneration Report
98 Directors’ Report
100 Directors’ Responsibilities
Financial Statements
101 Independent Auditor’s Report
107 Group Statement of
ComprehensiveIncome
108 Group Statement of Financial Position
109 Group Statement of Changes inEquity
110 Group Cash Flow Statement
111 Notes to the Consolidated Accounts
135 Company Statement of Financial Position
136 Company Statement of ChangesinEquity
137 Notes to the Company Accounts
143 Notes to the EPRA and Other Key
Performance Indicators
147 Five Year Summary
149 Glossary of Terms
153 Company Information
Discover more at: tritaxbigbox.co.uk
Specialists in UK logistics
real estate
We are optimally positioned to take advantage of the strong market
condition in UK logistics, underpinned by long-term structural growth.
What we do
Our approach is three-fold: we secure
land suitable for logistics development; we
develop new logistics assets; and we invest
in and actively manage existing logistics
buildings. Our focus is on well-located,
modern and sustainable buildings, let on
long-term leases to high-quality customers
inattractive sectors.
This approach enables us to capture the
significant opportunity in UK logistics
real estate, which is driven by long-term
structural change, supply chain demands
and limited supply of quality space, resulting
in strong and growing occupier demand.
Read more on pages 42 to 52
Who we are
Our Manager, Tritax Management
LLP, through its sector focus has deep
experience and knowledge of logistics, and
customers’ supply chains and is formed
of a team of diverse, passionate and
entrepreneurial people.
Read more on pages 42 to 52
Our vision
Our vision is to be the leading REIT focused
on high-quality UK logistics real estate
assets that:
•
deliver sustainable, long-term income
and value growth for shareholders;
•
are strategically important and support
ourcustomers’ operations; and
•
help ensure our long-term sustainability,
by protecting the environment and
people’s wellbeing thereby delivering
positive social impact.
Read more on pages 26 and 27
Annual Report 2021 Tritax Big Box REIT plc 1
STRATEGIC REPORT
Our Strategic Framework
Providing space
to succeed
Our purpose
Our purpose is to deliver sustainable, long-term logistics
solutions that create compelling opportunities for our
stakeholders and provide our customers with the space
they need to succeed.
STRATEGIC REPORT
The value we create
By following our business model and successfully implementing our strategy, we create value for our stakeholders.
Customers
High-quality buildings
thatplay a central
role in fulfilling their
business needs
Society and
communities
Job creation, tax
revenues, local
infrastructure, enabling
online shopping
Environment
Reduced impact
throughsustainably
builtassets and more
efficient supplychains
Shareholders
Long-term income
andcapital growth
Lenders
Interest payments
backed by secure
cashflows
Our business model
Our business model supports our purpose through our focus
on delivering modern, well-located and sustainable logistics
properties. These are thoughtfully designed to meet the current
and future needs of fast-growing, ambitious companies.
Source high-quality
investments
Invest and divest
tocreate value
Develop on a
risk-controlled basis
Proactively and
responsibly
manageassets
Our strategy
We have a three-part strategy, aligned to the powerful
structural trends driving occupier demand, and underpinned
by a rigorous focus on capital discipline and sustainability.
High-quality assets,
attracting world-
leading companies
Direct and active
management
Insight-driven development and innovation
X Read more about business model on pages 22 to 24
X Read more about stakeholders on pages 22 to 25
X Read more about strategy on pages 26 and 27
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 20212
Highlights
A year of record performance
and significant progress
Financial highlights
Operating profit
3
£178.0m+20.7%
(2020: £147.5m)
IFRS earnings per share
55.39p+110.6%
(2020: 26.30p)
Portfolio value
4
£5.48bn+24.3%
(2020: £4.41bn)
Loan to value (LTV)
23.5%-6.5pts
(2020: 30.0%)
Contracted annual rent roll
£195.6m+8.3%
(2020: £180.6m)
IFRS net asset value per share
218.26p+28.4%
(2020: 169.92p)
EPRA net tangible assets per share
222.60p+26.8%
(2020: 175.61p)
Dividend pay-out ratio (excl additional
development management income)
2
91%-2.0pts
(2020: 93%)
Total accounting return
30.5%+10.6 pt s
(2020: 19.9%)
Adjusted earnings per share
1
8.23p+14.8%
(2020: 7.17p)
Adjusted earnings (excl exceptional
development management income)
2
7.38p+6.8%
(2020: 6.91p)
Dividend per share
6.70p+4.7%
(2020: 6.40p)
1 See Note 12 to the financial statements for reconciliation.
2 The anticipated run rate for development management income is £3.0 – 5.0 million per annum over the medium term. Adjusted EPS becomes 7.38 pence
when excluding development management income above this £4.0 million anticipated run rate. £18.9 million of development management income is included
in the 8.23 pence Adjusted earnings per share in 2021 (2020: £8.6 million included in 7.17p Adjusted earnings per share).
3 Operating profit before changes in fair value and other adjustments.
4 The Portfolio Value includes the Group’s standing assets as well as capital commitments on forward funded developments, land assets held at cost, the
Group’s share of joint venture assets and other property assets.
Annual Report 2021 Tritax Big Box REIT plc 3
STRATEGIC REPORT
Highlights
Strong income and capital
growth delivering record total
accounting returns
•
Adjusted EPS up 14.8% to 8.23p (2020:
7.17p) driven by development completions,
portfolio rental growth and higher development
management agreement (DMA) income.
Adjusted EPS, excluding DMA income above
our anticipated run-rate, grew 6.8% to 7.38p
(2020: 6.91p).
•
Dividend growth of 4.7% to 6.70p per share,
91% pay-out ratio when adjusted for exceptional
DMA income
2
.
•
Record Total Accounting Return of 30.5%
(2020:19.9%), driven by execution of strategy
and strong market conditions.
Long-term structural drivers
underpin unprecedented
occupier demand
•
Strong market take-up of 42.4 million sq ft in
2021 (2020: 43.0 million sq ft), 64% higher than
the annual average since 2010.
•
Limited supply response has led to record low
1.6% market vacancy (2020: 4.1% vacancy) and
strong rental growth.
•
Potential for further prime market yield
compression in 2022 as investor interest
inlogistics remains high.
Enhanced sustainability
performance
•
Sustainability initiatives improving environmental,
social and governance (ESG) ratings:
•
GRESB: Four Green Stars = 81/100 (2020:
Three Green Stars = 72/100) and awarded
Leader for Development in the European and
Global Industrial Listed Sectors.
•
Sustainalytics: Improved from 14.6 to 8.9
(Negligible Risk), Management Score 32.7
to57.2 (Strong).
•
MSCI: Upgraded to BBB from BB.
Significant value gains reflecting
quality of assets, and strength
of performance across
entire portfolio
•
24.3% increase in portfolio value to £5.48billion
(31 December 2020: £4.41 billion) from
development gains, asset management activity
and strong market conditions, including a capital
valuation surplus of 19.1% (net of capex).
•
Portfolio’s high-quality, long-term and resilient
income reflected in:
•
100% rent collection achieved for both
2020 and 2021.
•
WAULT of 13.0 years as at 31 December
2021 (31 December 2020: 13.8 years).
•
0% vacancy (2020: 0%).
Proactive portfolio management
providing further value creation
•
£15.0 million increase in contracted rent roll to
£195.6 million, including £5.0 million generated
from rent reviews achieving an 8.7% increase
in passing rent across 32% of the portfolio,
translating into EPRA like-for-like rental growth
of 3.3% for the year.
•
Like-for-like ERV growth of 7.5% over the year,
with an 11.0% portfolio rental reversion at
the year end.
•
Acquired a state-of-the-art, 0.9 millionsqft
facility in South West England, for £90million
at an attractive net initial yield of 5.1%,
securing long-term income and value
creationopportunities.
•
Progressing assets disposals with target to
dispose of £100-200 million in 2022.
Accelerating levels of
development activity delivering
income growth at an attractive
yield on cost
•
Development achievements during FY
2021 include:
•
3.7 million sq ft of lease completions adding
£24.0 million to contracted rent.
•
1.3 million sq ft of developments under
construction, with the potential to add a
further £10.2 million to contracted rent,
ofwhich 21% has been let.
•
3.0 million sq ft of new planning
consents secured.
•
Strong start to FY 2022 with 1.8 million sq ft
of near-term development starts in Q1 2022,
adding a potential £13.1 million of contracted
rent, of which 56% has been pre-let.
•
FY 2022 guidance increased to 3–4 million sq
ft of starts and £350–400 million of capex into
development, compared to long term target run
rate of 2-3 million sq ft per annum; maintaining
6-8% expected yield on cost.
•
Record levels of occupier demand across our
portfolio with active negotiations on more than
10 million sq ft over 11 sites.
•
Total near-term development pipeline of 8.8million
sq ft with £60-70 million of rent potential.
Positive outlook, driven by clear
strategy, strong balance sheet and
supportive market fundamentals
•
Growing occupational demand/supply
imbalance creating opportunities for the
long-term and supporting rental growth.
•
Accelerating delivery of development activity
to meet growing structural demand.
•
Driving further value from our investment
portfolio through asset management,
acquisitions and disposals.
•
Significant capacity to fund opportunities
through balance sheet strength and potential
asset disposals.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 20214
Our Portfolio
Providing scale
We own the UK’s largest portfolio of logistics investment assets and
the largest logistics-focused development land platform, offering
the potential to deliver attractive, sustainable income and capital
growth to shareholders over the long term. These assets are typically
mission-critical to our customers’ businesses and support our
sustainability goals, as set out on page 32.
16.4% 5.9% 5.1% 4.5% 4.3%
Our top five customers by portfolio income
A portfolio
our strategy
Our portfolio is weighted towards stabilised
Investment assets that deliver resilient and
growing income.
The majority of these are Foundation assets, which provide long-
term and secure income from high-quality occupiers, combined
with a smaller proportion of Value Add assets which offer
additional upside potential through our active approach to asset
management, such as renewing leases, adding extensions and
enhancing environmental performance.
The Development portfolio offers significant scope for value and
income growth and comprises land which the Group owns or
controls via options, providing a capital efficient way of accessing
growth opportunities.
£5.48bn
portfolio value
n
Investment portfolio 92%
n
Strategic land and development
portfolio 8%
n
Foundation assets 80%
n
Value add assets 20%
Annual Report 2021 Tritax Big Box REIT plc 5
STRATEGIC REPORT
Diversified by customer
and sector
Our portfolio is let to 44 customers across 62 investment assets,
are weighted towards defensive, non-cyclical or high-growth sectors,
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 20216
Our Portfolio continued
Diversified
Our investments and development sites are in strategically important
logistics locations across the UK that provide easy access to transport
infrastructure, skilled workforce and power.
The development portfolio comprises 29 sites, which between them
Diversified exposure… and a range of unit sizes
are located in
established logistics
hubs, close to large
and with limited
Our future development sites...
Our land portfolio provides:
have good transport
links and other
infrastructure
have strong ESG
credentials, making
them suitable
for the needs of
modern occupiers.
have sufficient
operational capacity
in areas such as
n
East Midlands 53%
n
North West 12%
n
South East 14%
n
West Midlands 8%
n
North East 7%
n
South West 5%
n
Scotland 1%
n
<100k 1%
n
100k-250k 22%
n
250k-500k 39%
n
500k-1mm 31%
n
>1mm 7%
Annual Report 2021 Tritax Big Box REIT plc 7
STRATEGIC REPORT
Key
Investment portfolio
Strategic Land and Development portfolio
Ports
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 20218
Chairman’s Statement
Accelerating our
performance
Aubrey Adams
Chairman
“ We continued to successfully
deliver our strategy and raised
the funding to accelerate our
development programme, against
a backdrop of a highly attractive
occupational market.”
This was a record year for us, as we continued to successfully deliver
our strategy and raised the funding to accelerate our development
programme, against a backdrop of highly attractive occupational
and investment markets. Critically, all elements of our business are
performing, from our high-quality investment portfolio, which we actively
manage and invest in, to our extensive development programme.
Financial performance
We delivered our strongest financial performance to date, with
operating profit before changes in fair value and other adjustments
of £178.0 million (2020: £147.5 million) and an EPRA Cost Ratio at
an attractive 13.9% (2020: 14.2%). Adjusted earnings per share
excluding exceptional development management agreement (DMA)
income rose 6.8% to 7.38 pence (2020: 6.91 pence).
The attractions of our market contributed to further growth in the
portfolio value, with a fair value gain of £840.9 million across the year.
This produced a 26.8% increase in EPRA Net Tangible Assets to
222.60 pence per share (31 December 2020: 175.61 pence) and a
Total Accounting Return of 30.5%.
The strength and quality of our occupier base was again reflected in
our rent collection performance, with 100% of rent collected for both
2020 and now 2021.
Market backdrop
Our market has powerful, long-term structural growth drivers which
have been accelerated by the global pandemic and other factors,
such as Brexit. These include the continued growth in e-commerce,
the consolidation of logistics networks into fewer, larger, more
modern and efficient buildings, the need to build resilience into
supply chains and the increasing focus on ESG. This includes the
socio-economic benefits of our schemes, as well as environmental
considerations, including our proactive work towards net zero carbon.
Record occupational demand and severely constrained supply is
leading to very strong rental growth, which we are capturing through
proactive asset management, lease re-negotiations, rent reviews
and bringing forward activity within our extensive development
portfolio. Attractive rental growth is also underpinning confidence in
the investment market, with sharpening yields producing improved
capital values.
Successful strategic implementation
In September 2021, we completed a significantly oversubscribed equity
issue to raise gross proceeds of £300 million. This provides a sufficient
level of funding for us to accelerate our near-term development
programme. We have therefore increased our FY 2022 guidance to
include development starts targeted across 3-4 million sq ft, ahead of
our anticipated 2-3 million sq ft per annum long-term run rate. This will
enable us to meet growing occupier demand, while further diversifying
the portfolio by customer, geography and building size.
Our development sites are strategically located in areas of high demand,
with good pools of labour and strong transport infrastructure. They can
accommodate buildings for small urban and last journey logistics up to
large national distribution centres. The sites are of appropriate size and
Annual Report 2021 Tritax Big Box REIT plc 9
STRATEGIC REPORT
location to open up quickly, so we can respond quickly to customer
requirements, as well as having relatively modest infrastructure
requirements, which contributes to the delivery of an attractive yield
on cost. We work closely with occupiers and local stakeholders from
the outset which enables us to create plans aligned to local need and
supports our success rate to date in securing planning consents.
We have a low-risk, agile and intelligence-led approach to
development and only develop buildings without a pre-let when
we are confident in income delivery, with one or more occupiers
indicating a clear requirement for that size of building in that location.
Starting speculative construction gives us both a greater chance
of capturing those lettings earlier and thereby accelerating income
growth, in a shorter timeframe. Evidence within our portfolio supports
that of the wider market, in which, speculatively developed assets are
letting faster and often before construction has completed.
While our land portfolio provides a long-term pipeline of
opportunities, we continue to focus rigorously on maximising value
from our investment portfolio through asset management and
investment acquisitions and disposals. We acquired one new asset
during the year, in line with our strategy to make acquisitions in the
right locations where they meet our core criteria. Current market
pricing and the opportunities within our development portfolio mean
we remain particularly disciplined and will only acquire assets at the
right price and where we see potential for accretive performance. We
remain committed to recycling capital through disposals, but we are
patient sellers and look to balance sales with opportunities to reinvest
the funds.
We work closely with our customers to add value for them and for
us through active management. Our forensic analysis of customer
supply chains enables us to understand their networks and
operations in depth, supporting our asset management proposals
and our development programme. The size of our development
portfolio, the largest in the UK, increases the likelihood that we will
have a suitable site for a customers’ network expansion. The recently
announced pre-let of a new building for B&Q is a great example of
this, and the virtuous circle that can be created by leveraging our
investment portfolio and understanding the needs of our customers
to enhance our development activity.
Sustainability
ESG is fundamental to our strategy, and we develop new buildings
to the highest standards, in line with our net zero carbon strategy.
We firmly believe that assets with the highest ESG performance will
createand preserve greater value for our shareholders and better
support our customers’ requirements. The investment portfolio
has strong sustainability credentials and our asset management
programme continues to improve the few assets that are not EPC
grades A and B. The estimated cost of doing so is low, at around
£4million, principally targeted against the inclusion of LED lighting
and roof mounted solar projects.
We are pleased to see our actions resulted in improved ESG
scores, such as our overall four Green Stars GRESB rating and our
ranking as the leader for development in the European and Global
Industrial Listed Sectors, with a 97/100 score and five Green Stars for
development. This reflects our leadership position in our sector and
puts us in a strong position, as ESG factors will increasingly play a
part in asset valuations and rental levels going forward.
Board changes
As previously announced, Sir Richard Jewson retired from the Board
on 5 May 2021, at which point I became Chairman and Alastair
Hughes became Senior Independent Director. Susanne Given also
stepped down as a Non-Executive Director from 13 September 2021.
On behalf of all members of the Board, I would like to reiterate my
thanks to Sir Richard and Susanne for their valuable input.
We were pleased to welcome two new Non-Executive Directors during
the year. Wu Gang was appointed with effect from 1 October 2021.
He has a strong strategic and financial advisory background and a
wealth of international experience gained during more than 25 years
in investment banking in Asia and Europe. Elizabeth Brown joined
the Board on 15 December 2021. She has a wealth of strategy and
business development expertise, from both consulting and senior
corporate roles. Both new Directors have been appointed to the
Audit& Risk and Management Engagement Committees.
The Manager
The Board is delighted with the continued strong performance of the
Manager, Tritax Management LLP, whose expertise and relationships
are intrinsic to our success. The Manager has continued to reinforce its
capabilities, through senior appointments and strengthening expertise
in important areas such as supply chains, power and dataanalytics.
Dividends
We aim to deliver an attractive and progressive dividend. Our policy
is for the first three quarterly dividends to each represent 25% of the
previous full year dividend. We then use the fourth-quarter dividend
to determine any progression and aim to achieve an overall pay-out
ratio in excess of 90% of Adjusted earnings.
We base our dividend decision on the long-term and stable earning
potential of the business. For this reason, we do not factor in the full
effects of the more variable other operating income generated by
our successful third-party Development Management Agreements
(DMAs), instead choosing to reinvest these proceeds to support
future earnings growth.
Having declared three interim dividends of 1.60 pence per share each,
the Board declared an interim dividend in respect of the fourth-quarter
of 1.90 pence per share, giving a total for the year of 6.70 pence (2020:
6.40 pence), up 4.7%. The pay-out ratio was 91% when adjusting for
DMA income above the expected run rate.
Positive outlook
We have all the attributes we need for success, and we remain very
positive on the outlook for our business.
The development activity we have already committed to since
September and plan to commit to during the remainder of 2022, has
the potential to increase rental income by c £36 million per annum
when completed and fully let. Income generation will be linked to
construction timelines and therefore we expect to see the full benefit
of this activity in our earnings across a two to three year timeframe.
We are well placed to limit the impact of build cost inflation. We
control more logistics focused development land than anyone else
in the UK, which gives us bargaining power in the market. Coupled
with our excellent, longstanding supplier relationships, this helps us
to ensure competitive pricing and minimises any project delays. Both
rental growth and yield compression are also helping to mitigate the
impact of cost inflation. As a consequence we have maintained our
6-8% yield on cost guidance for developments.
While we see a lot of opportunity within our development pipeline, we
continue to rigorously manage our investment portfolio to maximise
value for shareholders. We are constantly appraising our investment
assets and seek to identify opportunities to enhance returns through
asset management, disposals and acquisitions.
We will maintain our disciplined approach to leverage, with our target
LTV remaining in the 30-35% range over the medium term.
In 2022, we expect to deliver further dividend growth and look forward to
the continuing delivery of attractive overall returns for our shareholders.
Aubrey Adams
Chairman
3 March 2022
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202110
Our Business Propositions
Our business
propositions
We are at the heart of sustainable modern supply
customers, attractive returns to shareholders and
embedding sustainability initiatives for the benefit of
our broader stakeholders.
Providing high-quality
logistics space
Delivering a compelling
Leading in ESG
“ Combining the UK’s largest logistics
investment and development portfolio with
are able to provide our customers with the
space they need to succeed.”
X Read more on page 13 X Read more on page 12 X Read more on page 11
Annual Report 2021 Tritax Big Box REIT plc 11
STRATEGIC REPORT
Providing
Our Customer Proposition
In line with our purpose, we work closely
with our customers to deliver the space they
need to succeed. We deliver buildings for our
customers that are:
The right size
With the UK’s largest land portfolio, we are
able to provide new and existing customers
with a range of building sizes to suit their
requirements. This makes them flexible and
efficient and generates economies of scale,
enabling cost efficiencies for our customers.
Well located
Our investment and land assets are in
strategically important logistics locations,
which benefit from strong transport
infrastructure, appropriate power provision
and a suitable labour supply.
Modern
Our investment portfolio is modern, with
an average building age of 10 years, and
our development activity creates a long-
term pipeline of state-of-the-art buildings
to replenish the portfolio. State-of-the-
art buildings are most likely to meet the
requirements of market-leading occupiers.
Sustainable
Our customers are increasingly looking
to occupy sustainable assets. 95% of our
investment portfolio has an EPC grade of
A-C and we continue to invest in green
initiatives such as on-site renewable energy
generation. Our development activity
includes our commitment to net zero carbon
in construction.
Innovative
The scale and flexibility of our buildings
makes them suitable for a wide range of
customers to install the latest technology,
including highly automated and robotic
stocking and retrieval systems, which
improve efficiencies and reduce costs.
We are actively
customer focused
The Manager’s team works in partnership
with our customers to ensure our
buildings maximise their operational
effectiveness. This active and direct
approach helps to future-proof our
buildings for our customers and to
generate growing income and capital
values for shareholders.
Being close to our customers gives
us a competitive edge, by providing
insight into future demand and occupier
requirements. We supplement the
information which we obtain from our
customers and site inspections with
specialist supply chain advice so we can
better understand their logistics operations
and property network. We use this insight
to inform our development and asset
management activities, to reduce risk and
enhance returns for our shareholders.
“ We spend time understanding and
analysing our customers’ supply chains
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202112
A clear and compelling strategy
We focus on attracting high-quality and resilient customers,
engaging directly to grow and maintain income and capital
values through active management, and delivering insight-
led development from our land portfolio.
A resilient portfolio
We have constructed a portfolio of high-quality assets,
in key locations, let to customers operating in strong
business segments. The portfolio has demonstrated
its ability to generate highly visible and resilient income
and protect value, even in uncertain times. We are
complementing this strong foundation with assets
that provide opportunities for us to apply our asset
management expertise to drive greater returns.
Attractive development opportunities
We have the UK’s largest logistics-focused land platform,
giving us an attractive pipeline of internally generated
opportunities for long-term phased delivery and an
attractive yield on cost target of 6-8%.
Financial discipline
With a loan to value of 23.5%, the Group is well financed,
with a strong balance sheet and a range of funding
sources to support our growth ambitions and drive
shareholder returns.
Long-term structural drivers
We believe this is the most attractive and dynamic
sectorin commercial property. There are major long-term
structural trends driving occupational and investor
demand for large-scale logistics assets. These trends
have many years to run and recent events such as
Covid-19 and Brexit have helped to accelerate them.
A sustainable approach
ESG considerations are central to all our investment
decisions. From integrating green initiatives into our
asset management plans, to developing net zero carbon
buildings, or funding through green finance, ESG is fully
considered to ensure long-term risks and opportunities
are addressed.
Extensive expertise
The Manager’s extensive expertise and deep
understanding of our sector, combined with the
calibre of its team and network of contacts, gives us
the capabilities we need to identify opportunities and
successfully execute our strategy.
A compelling
investment case
Our Investor Proposition
logistics assets in the UK. We offer investors an
attractive investment proposition, providing a
sustainable blend of long-term growing income
and capital growth.
Annual Report 2021 Tritax Big Box REIT plc 13
STRATEGIC REPORT
Leading in ESG
Our ESG Proposition
Our aim is to be a market leader when it comes to the ESG
performance of our business. Rigorously focusing on ESG
will ensure our long-term viability and commercial success,
by helping us to make decisions that future-proof our assets,
protect the environment and people’s wellbeing, to deliver
positive social impact.
Our ESG ambition
We aim to be a market leader in sustainable logistics,
by collaborating to create positive change and generate
value in the long term for our customers, their staff and
our other stakeholders.
Our ESG strategy
Our ESG strategy aligns with four of the most relevant
UNSustainable Development Goals:
Sustainable cities and communities:
ensure and demonstrate the resilience
of our assets
Climate action:
achieve a net zero carbon portfolio
Life on land:
enhance biodiversity and wellbeing across
the portfolio
Decent work and economic growth:
create a positive socio-economic impact
through our investments
X We have set objectives and initial targets for 2023
against each of these goals. See page 35.
Enhancing ESG performance
95% of the portfolio (by sq ft) has an EPC rating of A to C
GRESB score 2021 of 81/100 and four Green Stars
(2020: 72/100 and three Green Stars)
GRESB 2021 Leader for Development in the European
and Global Industrial Listed Sectors, with highest score
of 97/100 and five Green Stars
Sustainalytics risk rating score improved to
8.9(negligible) from 14.6 (low)
MSCI rating improved to BBB
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202114
Fund Manager’s Q&A
Colin Godfrey
Chief Executive Officer
Frankie Whitehead
Chief Financial Officer
“ We are in a good position
to manage and mitigate cost
increases. Currently we remain
confident in targeting an
attractive 6-8% yield on cost for
our development programme.”
Q: How do you intend to fund your
development pipeline?
We have de-risked the funding of our near-term development pipeline,
following the highly successful equity raise in September 2021,
which generated gross proceeds of £300 million. As we look beyond
this and over the longer term, it is important that we retain flexibility
and optionality within our main sources of funding our longer-term
development pipeline. We can use the appropriate leverage, which
includes an LTV target of up to 35% over the medium term. We can
take advantage of strong market conditions by selling investment
assets when we have maximised their value in the Group’s ownership
or where they no longer fit the portfolio. We may also partner with
others to co-fund opportunities, for example by forming joint ventures,
should we want to reduce risk. In addition, we will consider raising
further equity, when we believe it is in shareholders’ interests to do so.
Beyond that, we have four main options for funding further developments.
We can use the Group’s cash generation and appropriate leverage
to generate funds internally. We can take advantage of strong market
conditions by selling assets when we have maximised their value in
the Group’s ownership or where they no longer fit the portfolio. We
may also partner with others to co-fund opportunities, for example
by forming joint ventures. In addition, we will consider raising further
equity, when we believe it is in shareholders’ interests to do so.
Q: What impact is inflation having on your business?
Our rental income has in-built protection through our lease
provisions. All rents are upwards only at the point of review and we
have a balance of review types. Over 50% of our leases are linked
to indexation. As a consequence, these leases provide a natural
hedge and enable our income to grow in line with inflation (subject to
cap and collar arrangements). From a finance cost perspective, we
operate with 69% of our borrowings paying a fixed cost and therefore
the cost of this element of our debt will not change for the term of the
loan. We also use interest rate hedging to provide protection against
the balance of our loans, as at the end of the year, 100% of our
drawn borrowings were either fixed or hedged.
The area where we are noticing inflationary pressures the most,
is in regards to our raw material and labour costs within our
developments. This primarily reflects supply chain disruption caused
by Covid-19 and Brexit. We are, however, in a good position to
manage and mitigate cost increases, through using our purchasing
power or excellent relationships in the market. Equally, the favourable
occupational investment markets also mean the cost inflation should
be largely offset by rising rents and capital values. Currently, we
remain confident of targeting an attractive 6-8% yield on cost across
our development portfolio.
Annual Report 2021 Tritax Big Box REIT plc 15
STRATEGIC REPORT
Q: Will you have to invest significant capital
into yourexisting assets to meet higher
environmentalstandards?
No. We have deliberately constructed a portfolio of high-quality,
modern assets with strong sustainability credentials, so we are
already in good shape to meet the anticipated increase in minimum
standards for Energy Performance Certificate (EPC) ratings. At the
year end, 95% of our portfolio was rated grade A-C. We have plans
in place to improve the ratings of the remaining assets, primarily
through solar PV installation and LED lighting. We are therefore well
on track to meet our target for all our assets to be rated A-C by
2023 and have improved our target to achieve grade B or above by
2026. We estimate the total cost of achieving these targets to be low,
atc£4 million.
Q: Will you acquire further investment assets in
the market?
Yes, we bought one asset during the year, at Avonmouth, and we
remain in constant contact with potential vendors, owner occupiers
and agents, with the aim of identifying further purchases which would
be accretive to our returns or where we can add value through active
management. We will replace these assets through a combination of
acquiring assets, either individually or potentially as a portfolio in the
open market, and through the development pipeline with the aim of
maximising returns while ensuring we continue to maintain and grow
income. We are very selective in our purchases, seeking the potential
for mispricing, investments which offer attractive asset management
opportunities or which improve our income growth potential.
Petrina Austin
Head of Asset Management
Bjorn Hobart
Investment Director
Phil Redding
Director of Investment Strategy
Q: Why haven’t you sold any assets this year?
Asset disposals are an important part of our strategy for funding
our development programme and investment acquisitions and they
remain firmly on the agenda. We are patient sellers and we will only
dispose of assets when the timing is right. This includes having a
near-term opportunity to reinvest the funds and replace the income
we forego from the assets we sell. During 2021, we have also seen a
consistent reduction in yields and it made sense to retain assets while
they continue to rise in value, with a view to generating greater returns
later on. In 2022, we will be accelerating our active management
of the portfolio, seeking to take advantage of the strong investment
market to sell assets we believe have reached their full potential.
“ We have deliberately constructed
assets with strong sustainability
credentials, so we are in good
shape to meet the anticipated
increase in minimum EPC ratings.”
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202116
Market Review
Long-term drivers
continue to generate
strong occupier demand
2.
The need to increase productivity, reduce costs and
boost resilience
The economic fallout from Covid-19 has intensified the pressure on
corporate profitability and productivity. To protect margins and avoid
price increases, companies are looking to lower their unit costs, in
part by making distribution as efficient as possible.
Occupiers are consolidating older disparate units into larger
distribution centres with the potential to generate significant cost
economies of scale and optimising staffing and stock levels. They are
also utilising high levels of automation and technology to stock and
retrieve products in large volumes. These systems are typically found
in large, modern logistics buildings.
Events such as Covid-19, Brexit and the blocking of the Suez Canal
have highlighted the risks to long-term supply chains. Customers
are enhancing their resilience by increasing their inventory onshore
and/or manufacturing closer to end markets, resulting in greater
demand for high-quality logistics space.
3.
The drive to enhance sustainability performance
All organisations are under pressure to increase their sustainability,
including reducing their environmental impact and protecting
employee wellbeing. Such initiatives can also reduce energy costs
and increase employee engagement, which is important in a highly
competitive labour market.
Modern large-scale logistics assets feature enhanced insulation, LED
lighting and large roof spaces capable of accommodating solar PV.
These buildings are also more likely to meet the anticipated future
regulatory requirements, such as the minimum rating of B for Energy
Performance Certificates.
In addition, larger buildings lend themselves to better facilities for
staff welfare, such as gyms, canteens and offices. Big sites also
have more scope for green space, which can be used to support
biodiversity and outdoor amenities.
Three long-term drivers underpin occupier
demand for logistics real estate in the UK.
1.
The accelerating growth in e-commerce
Changing shopping patterns have led to a rapid rise in e-commerce,
as consumers demand faster and more convenient ways to make
purchases. In response, companies have developed complex
omnichannel supply chains, in which logistics real estate plays
a fundamental role, from highly automated large-scale fulfilment
centres to small urban / last journey warehouses.
The Covid-19 lockdowns accelerated the shift to e-commerce, with
many people forced to shop online as physical stores were closed.
Online sales accounted for 29% of total retail sales in 2021, up from
19% before the pandemic, having peaked in January 2021 at 38%
1
.
We see considerable scope for this growth to continue, in turn
producing further demand for logistics real estate.
Online retail supply chains require more warehouse space than
traditional high street models. Research suggests every £1 billion of
additional online sales typically generates demand for new logistics
property of anywhere between 0.8 million sq ft and 1.4 million sq ft
2
.
The value of online retail sales increased by a further £9.8 billion in
2021
1
and online retailers committed to 17 million sq ft
3
of space as
they continued to build out their supply chains. Our development
pipeline is well-placed to support new and existing customers in
fulfilling this demand.
1 ONS
2 UKWA and Knight Frank
3 CBRE
Annual Report 2021 Tritax Big Box REIT plc 17
STRATEGIC REPORT
The trading environment remains extremely strong,
and this is set to continue
Occupational demand in 2021 consistent with the record levels
of 2020
Occupiers seeking logistics space remained very active throughout
2021. Take-up was driven by a wide range of occupiers, with a strong
showing from online retailers and third-party logistics providers
(3PLs). This trend is reflected in the enquiries in our own development
pipeline, for buildings over 300,000sq ft, with approximately two-
thirds of interest from online retailers and 3PLs. 2021 saw another
strong year of demand for buildings over 500,000 sq ft with 18 new
lettings (2020: 23) totalling 16 million sq ft
3
.
Key statistics
4
•
Take-up in 2021 of 42.4 million sq ft (2020: 43.0 million sq ft) versus
the annual average since 2010 of 25.9 million sq ft. Buildings over
500,000 sq ft accounted for 38% of total take-up (2020: 48%).
Activity in the second half of the year was increasingly impacted by
the limited availability of space.
•
Build-to-suit developments accounted for 61% of take up (by
number of deals) in the 500,000+ sq ft market (2016-2019: 84%) as
high occupier demand resulted in more take up of speculative and
second hand space than has historically been the case.
•
At the year end, total space under offer across the market was
around 9.1 million sq ft, against 8.8 million sq ft at December 2020.
44% of space under offer at year end is for logistics buildings over
500,000 sq ft.
After several years of strong demand for larger buildings, the lack of
available suitable space and readily developable consented land for
build-to-suit purposes presents a significant opportunity for us.
Millions sq ft
High occupational demand has continued
following a record 2020…
0
40
80
120
160
20222016 2017 2021202020192018
Current requirements as of Q4 2021
Under Offer as at Q4 2021
500k sq ft +
250-500k sq ft
100-250k sq ft
Source: CBRE and Savills
4 All data from CBRE
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202118
Market Review continued
Record low supply is limiting overall take-up
resulting in significant unsatisfied demand
High take-up and the net absorption of space has reduced ready
to occupy space in the market to record low levels. This is resulting
in competition for available units, rental tension and significant
unsatisfied demand. This in turn has encouraged more speculative
development. While the overall level of new development is above
historic averages, speculative units across all size bands are
being rapidly absorbed. Occupiers are moving increasingly early
to securespace; 2021 has seen void rates for speculative units
that have let fall further with many buildings now leasing ahead
ofpractical completion
5
.
Market dynamics are favourable across all size bands of logistics
building. 2021 saw record levels of demand for smaller units with
the limited availability of second-hand space resulting in 54% of
deals (by number) being for speculatively developed units (2020:
49%)
3
. Tight market conditions for larger buildings have resulted in
more speculative schemes being brought forward than is typically
the case, but in the 500,000+ sq ft size range all bar one
3
building
scheduled for completion in 2022 have been let or are under offer
ahead of practical completion. In our view, construction of large
logistics buildings will continue to be driven primarily by occupier-
led build-to-suit opportunities, given the inherent barriers to entry.
Significant barriers exist to developing these sites quickly as the
planning system remains slow moving, and extensive infrastructure
works can be required before a building can be constructed.
Key statistics
•
Vacant, ready to occupy logistics space declined to a record low
of 1.6% at the end of 2021 (2020: 4.1%). A further 8.5 million sq ft
(1.7%) of speculative space is under construction with a practical
completion date of 2022
3
.
•
For assets over 500,000 sq ft, only one
5
existing building, which
is being comprehensively refurbished, is available to let and one
3
speculative building is currently under construction with a practical
completion date of 2022.
… resulting in decreasing availability, with just
two buildings over 500k sq ft available to let
0
10
20
30
40
2016 2017 2021202020192018
Availability (inc. spec U/C) millions sq
ft
500k sq ft +
250-500k sq ft
100-250k sq ft
Source: CBRE
Jun-21 Nov-21
2.7
%
3.5
%
Consensus forecast for rental value growth
2021-2025f
5 Savills
6 IPF UK Consensus Forecasts, Autumn 2021. Based on data received from 20 organisations
Annual Report 2021 Tritax Big Box REIT plc 19
STRATEGIC REPORT
Positive long-term rental growth prospects
The shortage of modern logistics space and persistent high levels of
demand are driving rental growth. Since the start of the pandemic,
prime rents have increased to new highs across all UK regions.
Key statistics
•
IPF Consensus Forecasts from November 2021 expect 2021/25
average annual rental value growth of 3.5%, up from 2.7% in
June 2021
6
.
Investment volumes and yields
0 0
8
4
2
6 3%
1%
6%
2%
7%
4%
10 5%
14
12
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2021
£ billion
Investment volumes
Yield (rhs)
Source: Property data and CBRE
Investors are attracted to the long-term
fundamentals for logistics real estate
Logistics is one of the most sought-after sectors for real estate
investment, with investors attracted by structural consumer trends,
the occupational demand-supply imbalance, secure long-term
income and increased sustainability performance of modern logistics
buildings. Demand for logistics real estate has increased materially
across all investor types. Higher transaction volumes have been
driven primarily by both overseas investors and UK institutions, who
are re-weighting their commercial property holdings by reducing
exposure to traditional real estate sectors (such as retail and office)
in favour of logistics. This demand has put further pressure on prime
yields, which are at historic lows. Our development portfolio gives us
an important advantage in these market conditions, by providing a
pipeline of new assets at an attractive 6-8% target yield on cost.
Key statistics
•
Investment volumes reached a record £12.2 billion in 2021,
up63%on 2020
7
.
•
Capital allocations into logistics property represented 27% of all
UK property investments in 2021, up from 22% in 2020 and well
ahead of the longer-term average of 12%
3
.
•
Consequently distribution warehouse yields compressed by
40basis points in 2021 and are now as low as 3.5% for prime
assets on 15-year or more lease terms
3
.
7 Property data (distribution warehouses transactions over £5m)
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202120
Our Business Model
We own, manage and develop logistics real estate in strategic
locations across the UK, and let to customers that include some
of the world’s largest companies. In doing so, we look to deliver
attractive total returns for shareholders.
How we create value
Unrivalled portfolio
We have an unrivalled portfolio of large-scale, high-quality
buildings, in key logistics locations close to transport
networks, where occupier demand is strong.
Strong customer relationships
We work closely with our customers to understand their
businesses. This ensures we can deliver solutions that
address their individual supply chain and property needs,
informs our decision-making and often leads to working
with customers again in the future at other sites.
Active management
We actively manage our properties and portfolio, for example
by adding extensions, improving our assets’ environmental
performance, securing lease renewals and agreeing rent
reviews. This increases income and capital values.
Attractive leases to market leaders
Our buildings are let on long leases with upward-only rent
reviews, to a well-diversified base of occupiers who are
typically market leaders in their fields. At 31 December
2021, our weighted average unexpired lease term was
13.0years and our top ten customers accounted for 53%
of the contracted rent roll.
Long-term outperformance
throughdevelopment
We have the UK’s largest logistics-focused land platform,
which enables us to develop properties that deliver a target
yield on cost of 6–8%. This provides us the opportunity to
deliver long-term outperformance to shareholders.
Our advantages
Focused approach
By focusing solely on the UK logistics market, our Manager
has deep, unrivalled knowledge and understanding of the
market, and strong, longstanding relationships with its
participants. This means we have privileged access to new
opportunities, often off-market, enabling us to secure better
returns for shareholders.
Agile and entrepreneurial culture
Our Manager’s culture is agile and entrepreneurial, allowing us
to move rapidly to secure the best opportunities and leverage
the huge market opportunity available to us, as demand for
quality logistics warehouses significantly exceeds supply.
Combined investment and
development platform
Combining our investment portfolio and our development
platform within the same group gives us significant
advantages. For example, we can draw on our customer
insights from our asset management work to inform our
development programme, while our development operation
has enhanced credibility with its counterparties, as part of
amuch larger Group.
Annual Report 2021 Tritax Big Box REIT plc 21
STRATEGIC REPORT
How we generate returns
We generate returns through the rent we receive from our
tenants and from profits associated with our portfolio. We have
a low and transparent cost base, with an EPRA Cost Ratio in
2021 of 13.9%, one of the lowest in UK listed real estate.
We recycle capital, selling assets which we believe have
delivered their full potential in our ownership and redeploy
theproceeds into higher returning opportunities.
X Read more on pages 53 to 57
The value we create
High-quality buildings for our customers
We create high-quality and environmentally sustainable
buildings that play a central role in supporting our
customers’ business needs and growth ambitions.
Long-term income and capital growth for
our shareholders
We generate attractive long-term income and capital
growth for our shareholders. In 2021, we paid dividends
totalling 6.70 pence per share and generated a Total
Accounting Return of 30.5%.
Economic and social value for society
andcommunities
Our buildings benefit local communities and society
more generally. They have strong sustainability
credentials, with 90% having an EPC rating of C or
above and new directly developed buildings being built
to net zero carbon in construction, helping to minimise
impact on their environments. They also support
significant employment in their local areas both during
construction and once in operation.
X Read more on pages 26 & 27
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202122
Stakeholder Engagement and Section 172
Engaging with
By considering the Company’s purpose and vision, together
with its strategic priorities, we aim to balance stakeholders’
Section 172 statement
The Directors have had regard for the matters set out in Section
172(1) (a)-(f) of the Companies Act 2006 when performing their duty
under Section 172. The Directors consider that they have acted
in good faith in the way that would be most likely to promote the
success of the Company for the benefit of its members as a whole,
and in doing so have considered (amongst other matters):
•
the likely consequences of any decision in the long term;
•
interest of the Manager and its employees, as the Company
doesnot have any employees;
•
the need to foster the Company’s business relationships
withsuppliers, customers and others;
•
the impact of the Company’s operations on the community
andenvironment;
•
the Company’s reputation for high standards of
businessconduct;and
•
the need to act fairly as between members of the Company.
The table on the right indicates where the relevant information
isinthis Annual Report that demonstrates how we act in
accordancewith the requirements of s172.
Further information on how we have engaged with our key
stakeholders and considered their interests during the last
reportingperiod can be found on pages 22 to 25 and 78.
Our stakeholders
The Manager and its employees
Our shareholders
Our suppliers
Our customers
Our lenders
Government, regulators
Our communities
X Read more on pages 23 to 25, 52 and 56 to 57.
Annual Report 2021 Tritax Big Box REIT plc 23
STRATEGIC REPORT
The Manager and its employees
What they care about
The long-term success of the Company is of key importance
to the Manager. In order to achieve this, as well as establishing
and maintaining lasting relationships, the Manager takes a
keen interest in the wellbeing and satisfaction of its employees.
Being able to attract and retain high calibre talent and then
support those individuals in their professional development is
a high priority for the Manager. The Board and the Manager
maintain a positive and transparent relationship to ensure
alignment of values and business objectives.
How we engage
•
Quarterly reporting to the Board
•
External board evaluations
•
Informal meetings
•
Professional and executive development programmes
•
Employee surveys and Charity Events
Topics
•
Employee satisfaction and resourcing
•
Remote working, staff wellbeing, development
andprogression
•
Business updates
Outcomes
•
Updated software and systems for remote working
•
Continued workforce productivity with minimal
operational impact
•
Implementation of a Working from Home Policy of the
Manager during and past Covid-19
•
Employee social events
Further information
X Page to 52 in the Manager’s Report
X Page 78 in Key decisions of the Board 2021
X Pages 79 to 82 in Division of Responsibilities
X Management Engagement Committee Report on 92 to 94
Our shareholders
What they care about
Delivering sustainable, profitable growth over the longer
term. Our investors take a keen interest in strong corporate
governance, as well as a transparent reporting framework and
the ESG initiatives of the Company.
How we engage
•
Regular market updates on strategy and performance
•
Virtual meetings with the Board and the Manager to aid
understanding and decision making
•
Investor Roadshows, site visits, investor seminars
•
Quarterly update reports to the Board from
Investor Relations
•
Annual General Meeting
•
Meetings held between shareholders and key personnel
from the Board and Manager
Topics
•
Strategic plans and long-term value and returns
•
Governance
•
Sustainability
Outcomes
•
Engagement with key representatives to ensure our purpose
and strategy remains in line with expectations
•
Focus on recycling assets into higher returning development
and investment opportunities
•
Redeployment of capital
•
Update on financial impact and operations during Covid-19
Further information
X Page 20 to 21 in the Business model
X Page 77 in Board leadership and company purpose
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202124
Stakeholder Engagement and Section 172 continued
Our suppliers
What they care about
Our suppliers care about having collaborative and transparent
working relationships with us, including responsive communication
and being able to deliver to their service level agreements at a
competitive fee.
How we engage
•
Invited key suppliers to attend Board and
Committee meetings
•
Informal, one-to-one virtual meetings
•
Review of supplier performance by the Management
Engagement Committee
•
Externally facilitated adviser reports
Topics
•
Service levels and annual performance
•
Fee structure
•
Relationship management
•
Processes and procedures
Outcomes
•
Continued good, and in some cases, exceptional, levels
of service
•
Appointment of Design Portfolio as the Company’s
AnnualFee savings through tender processes
Further information
X Page 78 in Key decisions of the Board 2021
X Management Engagement Committee Report page 92 to 94
Our customers
What they care about
Quality assets, including buildings with strong sustainability
ratings that enable them to succeed. A knowledgeable and
committed landlord that supports their strategy, with a current
focus on fulfilling their rapidly growing e-commerce sales. Our
customers want efficient supply chain logistics and attractive
cost price labour pools.
How we engage
•
Regular face-to-face meetings both virtual and on-
site, when able
•
Charitable engagement which in turn helps bring
environmental and social benefits to the communities
weoperate in
•
Joining the UK GBC Working Group on Nature
Based Solutions
•
Demonstrating leadership by creating the Sustainable
Logistics Alliance with Prologis which published its first
paper on net zero carbon construction
•
Review of published data, such as Annual Accounts,
tradingupdates and analysts’ reports to identify mutually
beneficial opportunities
•
Greater discussion over cash flow and rental collection
inthe current climate
•
Stakeholder surveys
•
Ensure buildings comply with the necessary safety
regulations and insurance
•
Quarterly engagement with The Bridge – a network of
allbusinesses and community stakeholders surrounding
theLittlebrook estate
•
Commissioned supply chain analysis to understand our
customer needs
Topics
•
Impact of Covid-19 and lockdown restrictions
•
Sustainability initiatives
•
Treasury management
•
Supporting e-commerce initiatives
•
Operational efficiencies
Outcomes
•
Payment plans and rent deferrals to help manage cash flow
and resources during Covid-19
•
Strengthening of business relationships
•
Development of a dedicated Occupier Hub
•
Asset management and ESG initiatives
Further information
X Manager’s Report pages 42 to 52
X Sustainability section pages 32 to 41
X Page 78 in Key decisions of the Board 2021
Annual Report 2021 Tritax Big Box REIT plc 25
STRATEGIC REPORT
s172 matter
Further information incorporated into this statement
byreference
Long term
X Market Review pages 16 to 19
X Our Business Model pages 20 to 21
X Manager’s Report page 42 to 52
X Key Board Decisions page 78
Investors
X Strategic Report pages 1 to 65
X Key Board Decisions page 78
X Governance Report pages 66 to 100
Employees
X For information on the Manager’s employees
please refer to pages 9, 23, 51, 78 and 93 to 94
Community
and environment
X Strategic Report pages 32 to 41
X Manager’s Report page 46
X Key Board Decisions page 78
Suppliers
X Strategic Report pages 1 to 57
X Manager’s Report pages 42 to 52
X Key Board Decisions page 78
High business
conduct
X Business Model pages 20 to 21
X Stakeholder Engagement pages 22 to 25
X Strategic Report pages 1 to 64
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202126
Our Strategy
Aligned to long-term
structural growth
We have a clear and compelling strategy designed to capture
to sustainability.
Direct and active
management
Protecting, adding and
realising value
We actively and directly manage our existing
property portfolio, developing long-term
relationships with our customers,
ensuring their needs are met while
identifying and realising opportunities to
add value. We also monitor the broader
market for opportunities where we can
acquire assets and add value through
active asset management.
By proactively evaluating and managing
our portfolio, we aim to grow value and
generate secure and increasing income.
When we believe an asset has reached its
full potential within our ownership, we look
to crystallise this value through disposals,
recycling capital into higher returning
development and investment opportunities.
Insight driven
development
Creating value and capturing
occupier demand
We control the UK’s largest land platform
for the development of logistics real estate.
The customer insights gleaned from our
existing investment portfolio, innovation
applied to development e.g. ESG / power
and long-established successful track
record inform the development process,
ensuring we tailor the development
pipeline to meet demand at an attractive
6-8% yield on cost target.
Most of the Group’s development will be
undertaken on a demand driven pre-let
basis, significantly de-risking the process
and ensuring we only deploy significant
amounts of the Group’s capital when we are
confident that the returns are appropriate
and attractive to our shareholders.
High-quality assets
attracting world-
leading companies
Delivering high-quality,
resilient and growing income
Our logistics assets are critical to the
supply chains of some of the world’s
leading companies. We continue to
focus on building a portfolio that will
perform well through the economic
cycle, providing resilient long-term
income even during challenging times.
We have weighted our customer
exposure towards those in defensive
and high-growth sectors.
Our strategy
Progress 2021
Our portfolio has continued to perform
exceptionally well, with 100% rent
collection, 0% vacancy and significantly
growing in value.
Progress 2021
Through a combination of our asset
management activities and embedded
rent reviews we achieved an 8.7% uplift
inpassing rents.
Progress 2021
We delivered 3.7 million sq ft of
development completions in 2021, adding
£24.0 million to our contracted rent roll.
Future focus
We aim to rotate out of assets which
no longer fit the shape and balance of
the portfolio or are unlikely to meet our
future return targets. We will maintain
our disciplined approach to acquisitions.
Future focus
We aim to complete the remaining
outstanding open market rent reviews and
further lease extensions. We will continue to
look at opportunities to extend or develop
new buildings with existing customers.
Future focus
We aim to commence construction across
3 to 4 million sq ft of logistics space
in FY 2022. Continue to position the
development portfolio to deliver at least
2to 3 million sq ft over the longer term.
Annual Report 2021 Tritax Big Box REIT plc 27
STRATEGIC REPORT
Underpinning our strategy is a
disciplined approach to capital,
wherewe aim to maximise returns
to shareholders while minimising
risk. By evaluating the Group’s
existing assets and identifying ways
to maximise and then realise value,
we will effectively recycle capital to
support the Group’s objectives, using
debt appropriately and potentially
raising additional capital when it is
inshareholders’interests.
The Group’s commitment to
sustainability forms an intrinsic
andoverarching part of our strategy.
X See pages 32 to 41.
High-quality assets
attracting world-
leading companies
Direct and active
management
Insight driven
development
and innovation
Developing assets in
the portfolio at a target
yield on cost of 6-8%
Adding and realising
value – targeting asset
disposals at c <4.5%
Redeploying proceeds
into higher returning
opportunities
Our strategy
Underpinned by a
disciplined approach
to capital allocation
and emphasis
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202128
Key Performance Indicators
Measuring our performance
1. Total accounting
return (TAR)
See notes to the EPRA and Other
KeyPerformance Indicators.
2. Dividend
See note 13.
3. EPRA NTA
per share
1
See note 28.
4. Loan to value
ratio (LTV)
See notes to the EPRA and Other
KeyPerformance Indicators.
5. Adjusted
earnings
per share
See note 12.
6. Total expense
ratio (TER)
7. Weighted
average
unexpired lease
term (WAULT)
8. GRESB
2
score
Relevance to strategy
TAR calculates the change in
the EPRA Net Tangible Assets
(EPRA NTA) over the period
plus dividends paid. It measures
the ultimate outcome of our
strategy, which is to deliver
value to our Shareholders
through our portfolio and to
deliver a secure and growing
income stream.
Relevance to strategy
The dividend reflects our ability
to deliver alow-risk but growing
income stream from our
portfolio and is a key element
of our TAR.
Relevance to strategy
The EPRA NTA reflects our
ability to grow the portfolio and
to add value to it throughout the
lifecycle of our assets.
Relevance to strategy
The LTV measures the
prudence of our financing
strategy, balancing the potential
amplification of returns and
portfolio diversification that
come with using debt against
the need to successfully
manage risk.
Relevance to strategy
The Adjusted EPS reflects our
ability to generate earnings
from our portfolio, which
ultimately underpins our
dividend payments.
Relevance to strategy
This is a key measure of our
operational performance.
Keeping costs low supports our
ability to pay dividends.
Relevance to strategy
The WAULT is a key measure
of the quality of our portfolio.
Long lease terms underpin the
security of our income stream.
Relevance to strategy
The GRESB score reflects
thesustainability of our assets
and how well we are managing
ESG risks and opportunities.
Sustainable assets protect
usagainst climate change
andhelp our customers
operateefficiently.
30.5%
19.9%
3.8%
30.5%
2020: 19.9%
2021
2020
2019
6.70p
6.40p
6.85p
6.70p
2020: 6.40p
2021
2020
2019
222.60p
175.61p
151.79p
222.60p
2020: 175.61p
2021
2020
2019
23.5%
30.0%
29.9%
23.5%
2020: 30.0%
2021
2020
2019
1 EPRA NTA is calculated in accordance with the Best Practices Recommendations of the European Public Real Estate Association (EPRA). We use these alternative
metrics as they provide a transparent and consistent basis to enable comparison between European property companies.
2 Global Real Estate Sustainability Benchmark (GRESB).
Set out below are the key performance indicators we use to track our
Annual Report 2021 Tritax Big Box REIT plc 29
STRATEGIC REPORT
1. Total accounting
return (TAR)
See notes to the EPRA and Other
KeyPerformance Indicators.
2. Dividend
See note 13.
3. EPRA NTA
per share
1
See note 28.
4. Loan to value
ratio (LTV)
See notes to the EPRA and Other
KeyPerformance Indicators.
5. Adjusted
earnings
per share
See note 12.
6. Total expense
ratio (TER)
7. Weighted
average
unexpired lease
term (WAULT)
8. GRESB
2
score
Relevance to strategy
TAR calculates the change in
the EPRA Net Tangible Assets
(EPRA NTA) over the period
plus dividends paid. It measures
the ultimate outcome of our
strategy, which is to deliver
value to our Shareholders
through our portfolio and to
deliver a secure and growing
income stream.
Relevance to strategy
The dividend reflects our ability
to deliver alow-risk but growing
income stream from our
portfolio and is a key element
of our TAR.
Relevance to strategy
The EPRA NTA reflects our
ability to grow the portfolio and
to add value to it throughout the
lifecycle of our assets.
Relevance to strategy
The LTV measures the
prudence of our financing
strategy, balancing the potential
amplification of returns and
portfolio diversification that
come with using debt against
the need to successfully
manage risk.
Relevance to strategy
The Adjusted EPS reflects our
ability to generate earnings
from our portfolio, which
ultimately underpins our
dividend payments.
Relevance to strategy
This is a key measure of our
operational performance.
Keeping costs low supports our
ability to pay dividends.
Relevance to strategy
The WAULT is a key measure
of the quality of our portfolio.
Long lease terms underpin the
security of our income stream.
Relevance to strategy
The GRESB score reflects
thesustainability of our assets
and how well we are managing
ESG risks and opportunities.
Sustainable assets protect
usagainst climate change
andhelp our customers
operateefficiently.
0.79%
0.86%
0.87%
0.79%
2020: 0.86%
2021
2020
2019
8.23p
7.17p
6.64p
8.23p
2020: 7.17p
2021
2020
2019
13.0 years
13.8 years
14.1 years
13.0 years
2020: 13.8 years
2021
2020
2019
81/100
72/100
55/100
81/100
2020: 72/100
2021
2020
2019
“ Across all aspects of our
portfolio, our business is
delivering, reflected in record
total accounting returns.”
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202130
EPRA Performance Measures
Measuring our performance
The table below shows additional performance measures, calculated in
comparison with other European real estate businesses.
For a full reconciliation of the new EPRA NAV measures, please see the
1. EPRA earnings
(diluted)
See note 12.
2. EPRA net
tangible assets
See note 28.
3. EPRA net
reinstatement
value (NRV)
See note 28.
4. EPRA net
disposal
value (NDV)
See note 28.
5. EPRA net initial
yield (NIY)
See notes to the EPRA and Other
KeyPerformance Indicators.
6. EPRA
See notes to the EPRA and Other
KeyPerformance Indicators.
7. EPRA vacancy
See notes to the EPRA and Other
KeyPerformance Indicators.
See notes to the EPRA and Other
KeyPerformance Indicators.
Purpose
A key measure of a company’s
underlying operating results
and an indication of the extent
to which current dividend
payments are supported
by earnings.
Purpose
Assumes that entities buy and
sell assets, thereby crystallising
certain levels of unavoidable
deferred tax.
Purpose
Assumes that entities never sell
assets and aims to represent
the value required to rebuild
the entity.
Purpose
Represents the shareholders’
value under a disposal
scenario, where deferred
tax, financial instruments and
certain other adjustments are
calculated to the full extent
of their liability, net of any
resulting tax.
Purpose
This measure should make it
easier for investors to judge for
themselves how the valuations
oftwo portfolios compare.
Purpose
This measure should make it
easier for investors to judge for
themselves how the valuations
oftwo portfolios compare.
Purpose
A “pure” (%) measure of
investment property space
that is vacant, based on ERV.
Purpose
A key measure to enable
meaningful measurement of
the changes in a company’s
operating costs.
£131. 2m/ 7.47p
£105.5m/6.17p
£89.4m/5.29p
£131.2m/
7.47p
2020: £105.5m/6.17p
2021
2020
2019
£4.2bn/222.60p
£3.0bn /175.61p
£2.6bn/151.79p
£4,157.6m/
222.60p
2020: £3.0bn/175.61p
2021
2020
2019
£4.5bn/242.84p
£3.3bn/193.41p
£2. 9b n /167.52 p
£4,535.7m/
242.84p
2020: £3.3bn/193.41p
2021
2020
2019
£4.1bn /219.27p
£2.9bn/166.36p
£2.5bn/147.80p
£4,095.5m/
219.27p
2020: £2.9bn/166.36p per share
2021
2020
2019
Annual Report 2021 Tritax Big Box REIT plc 31
STRATEGIC REPORT
1. EPRA earnings
(diluted)
See note 12.
2. EPRA net
tangible assets
See note 28.
3. EPRA net
reinstatement
value (NRV)
See note 28.
4. EPRA net
disposal
value (NDV)
See note 28.
5. EPRA net initial
yield (NIY)
See notes to the EPRA and Other
KeyPerformance Indicators.
6. EPRA
See notes to the EPRA and Other
KeyPerformance Indicators.
7. EPRA vacancy
See notes to the EPRA and Other
KeyPerformance Indicators.
See notes to the EPRA and Other
KeyPerformance Indicators.
Purpose
A key measure of a company’s
underlying operating results
and an indication of the extent
to which current dividend
payments are supported
by earnings.
Purpose
Assumes that entities buy and
sell assets, thereby crystallising
certain levels of unavoidable
deferred tax.
Purpose
Assumes that entities never sell
assets and aims to represent
the value required to rebuild
the entity.
Purpose
Represents the shareholders’
value under a disposal
scenario, where deferred
tax, financial instruments and
certain other adjustments are
calculated to the full extent
of their liability, net of any
resulting tax.
Purpose
This measure should make it
easier for investors to judge for
themselves how the valuations
oftwo portfolios compare.
Purpose
This measure should make it
easier for investors to judge for
themselves how the valuations
oftwo portfolios compare.
Purpose
A “pure” (%) measure of
investment property space
that is vacant, based on ERV.
Purpose
A key measure to enable
meaningful measurement of
the changes in a company’s
operating costs.
3.56%
4.18%
4.34%
3.56%
2020: 4.18%
2021
2020
2019
3.75%
4.38%
4.60%
3.75%
2020: 4.38%
2021
2020
2019
0%
0%
1.2%
0.0%
2020: 0.0%
2021
2020
2019
13.9%
14.2%
15.1%
13.9%
2020: 14.2%
2021
2020
2019
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202132
ESG
Evolving our strategy
In 2022, we will aim to:
• expand the further installation of renewable energy initiatives
including solar;
• improve the EPC ratings of those assets which are
below grade C;
• collaborate with customers to obtain emissions data and further
develop net zero carbon plans;
• develop further our net zero carbon in construction work
to develop our knowledge of low carbon materials and
construction methods;
• work with existing customers to improve biodiversity through
innovative use of landscaping and habitat;
• continue to assess the potential for biodiversity net gain in
development projects;
• support local communities through job creation opportunities
and charity partnerships, developing on the proactive
work already undertaken with schools, colleges and
Schoolreaders; and
• work with customers on initial fit out designs and
enhancements, to provide or improve employee welfare
facilities, both internal and external.
As the owner of one of the largest logistics portfolios and the
biggest logistics development land portfolio in the UK, we have
aresponsibility to ensure our portfolio is sustainable and supports
the health and wellbeing of our customers.
ESG is integrated into our investment and asset management
approach and procedures. When acquiring standing assets, we
target well-designed, efficient buildings. The Group aims to acquire
assets with strong sustainability credentials, including a BREEAM
rating of Very Good or above or an EPC rating of B or above. Where
this benchmark is not met, we identify opportunities to upgrade the
assets to these standards or better.
On acquisition our Sustainability Risk Assessment (SRA) reviews
green building certifications, building surveys and specifications
(life cycle assessment) climate change and flood risk assessments,
regulatory compliance, environmental hazards or incidents, social
risks and social welfare. This review identifies opportunities for
adding value to the asset or any mitigation or adaption strategies,
which creates the Sustainability Action Plan (SAP).
All of our assets, including new projects have a bespoke SAP
integrated within its asset business plan. These plans identifyboth
asset management and operational initiatives, and projectsinclude
roof mounted solar PV, LED lighting and mechanical and
electrical upgrades. We use these to engage with our customers
and collaborate on sustainability projects. The SAPs are
updatedfollowing site inspections, customer engagement and
reviewed formally, identifying any new risks and opportunities,
including legislative requirements. Within each SAP a number
of environmental factors are considered, including material and
energy use.
Our Standard New Building Base Specification sets out the
sustainability requirements for new developments. We require
aminimum BREEAM Very Good rating and an EPC rating of A.
We have objectives to reduce waste and reuse materials. For
newdevelopments originated from land assets acquired through
Tritax Symmetry, we are committed to achieving net zero carbon
tothe point of practical completion.
Leading approach to ESG
During 2021, we have continued to make good progress with implementing
our ESG strategy and remain on track to meet and achieve our targets.
ESG Goal 1:
Tritax Big Box REIT plc Annual Report 202132
Annual Report 2021 Tritax Big Box REIT plc 33
STRATEGIC REPORT
Target table
Sustainability goals 2023 target Actions in 2021 Progress against target
Sustainable buildings
Ensure and demonstrate
the sustainability of
ourassets
Embed ESG into investment
practicesand ensure any new
acquisitions and investments align
withESG investment principles.
Allocated proceeds of the £250million Green Bond
raised in 2020 to qualifying green initiatives (see
Finance Review onpage 55).
Achieved
Ensure all new development
assetsinthe portfolio have a
green building certification.
All new developments completed in theyear
achieved at least BREEAM Very Good.
On track
Improve GRESB score to three
Green Stars.Improve MSCI ESG
rating to A.
2021 GRESB score of four GreenStars.MSCI
ratingimproved toBBB.
Achieved
On track
Implement green leases on all new
leasing opportunities, where our
customers agree.
New green leases clauses included infive
newagreements.
On track
Provide recommendation reports
to customers, and provide
sustainable operations guides.
Bespoke asset management proposals provided to
customers including ESG and solar PV initiatives.
On track
The new developments completed at DPD, Co-Op and Amazon Littlebrook contributed to an increase in the coverage of green building
certifications to 50% of the portfolio floor space. This is significantly higher than the industry average of 26% (source: MSCI).
In addition, we continued to work with customers to obtain their operational performance data in relation to energy and water use and waste.
Approximately 74% of customers shared their 2020 data with us, up from 19% in the previous year. This provides insight into their sustainability
performance and helps us to identify opportunities to improve in areas such as energy efficiency. We are procuring a more advanced ESG
data management system, to support the collection and reporting of asset-level data. Obtaining this utility data enables us to analyse and
work with our customers, to assess a timetable and plan for achieving net zero carbon across the portfolio.
Further information on our initiatives in the year can be found on page 46 of the Manager’s Report.
Our progress is reflected in further improvements in our ratings by leading agencies. The Group’s GRESB score increased to 81/100 and with
four Green Stars awarded (2020: 72/100 and three Green Stars). We were ranked as the leader for development in the European and Global
Industrial Listed Sectors, achieving the highest score for the sector with a score of 97/100 and the maximum of five Green Stars (2020: 91/100,
five Green Stars).
The Group also recorded increases in its Sustainalytics score, with the risk rating revised from 14.6 (Low) to 8.9 (Negligible), putting the Group
in the top 4% of REITs assessed. The Management score increased to Strong. Our MSCI rating improved to BBB.
ESG Goal 1:
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202134
ESG continued
ESG Goal 2:
Achieving net zero carbon is a key consideration and target for both
us and our customers. Our carbon emissions are made up of both
direct operational emissions and indirect supply chain emissions. Our
direct operational emissions (Scope 1 & 2) are minimal and principally
relate to assets where we provide energy for external services,
such as estate roadway lighting. These activities have been net zero
carbon since 2018, through the procurement of renewable energy.
We are now focused on reducing our indirect (Scope 3) supply chain
carbon emissions. This includes our development activity. In June
2020 we announced all new developments within the land portfolio
Target table
Sustainability goals 2023 target Actions in 2021 Progress against target
Energy and carbon
Achieve net zero carbon
for all direct activities
Maintain net zero carbon
forScope 1 and 2 GHG
emissions.Measure indirect
(Scope 3) emissions.
Maintained net zero for Scope 1 and 2.
Measured the embodied carbon from new
construction.Increased data collection from
customers, in order to develop action plans.
On track
Identify the products and
processes that remove carbon
from construction.
Completed initial net zero carbon in construction
development, analysed the embodied carbon
andidentified opportunities to address in
futuredevelopments.
On track
Improve EPCs to A-C Grade. During the year we implemented measures which
increased the certification of the portfolio A to C
from 90% to 95%.
On track
Install renewable energy
generation projects to benefit
ourcustomers.
Installed solar PV at Amazon Littlebrook and
Brakes, Harlow. Consented to two schemes at
Amazon, Durham and Amazon, Haydock. All assets
reviewed by specialist consultants for inclusion of
roof mounted solar PV and proposals are under
consideration with customers.
On track
Ensure top three priority assets
have climate resilience plans
inplace.
Conducted climate scenario analysis of the
fullportfolio to understand the potential risks
andopportunities.
On track
Information on our initiatives during the year, including the Group’s initial net zero carbon development, improvements to EPC ratings and
installation of renewable power generation, can be found on page 47 of the Manager’s Report.
The Manager also participates in a UK GBC working group on “Whole Life Carbon Reduction” for the Built Environment.
acquired through Tritax Symmetry portfolio will be constructed to net
zero carbon, as defined by the UK GBC. Our net zero carbon strategy
recognises the need for short term offsetting. While this ambition
could have an effect on costs of both construction and materials, we
consider it provides a hedge against potential future carbon legislation
and taxation.
We are working with our customers to assess the emissions of their
operations and seek to facilitate low-carbon alternatives, where the
customer has direct operational control. For example, through the
introduction of solar PV or wind generated power.
Annual Report 2021 Tritax Big Box REIT plc 35
STRATEGIC REPORT
Streamlined Energy and Carbon Reporting (SECR)
Methodology
The GHG emissions data was compiled in accordance with the GHG Protocol methodology and the 2021 HM Government Environmental
Reporting Guidelines.
The Group takes the operational control approach, which covers common parts estate areas at Stoke and Harlow assets. The services
provided for the common parts of the managed assets are external so no floor area intensity is provided.
Scope 1, 2 and 3 emissions for managed assets are calculated using country-specific conversion factors sourced from DEFRA.
SECR 2021
1
2020
2
Energy Consumed (Kwh) 1,145,879.33 1,398,893.99
Scope 1 Direct emissions – gas (tCO
2
e) 0 0
Scope 2 Indirect emissions – electricity (tCO
2
e) 1,113.77 326.13
Scope 3 Other indirect emissions – manager headoffice impact,
business travel (tCO
2
e)
-
3
38.56
Total GHG emissions 1,113.77 364.69
4
Carbon intensity ratio (kgCO
2
/m
2
) 0.36
5
0.12
1 Unverified data.
2 Data verified by Carbon Footprint Limited.
3 Data in the process of being obtained for disclosure in 2022 Annual Report.
4 The 2020 data has undergone verification since publication in the 2020 Annual Report and as such the methodology has been widened to include Tritax
Symmetry head office data.
5 Includes scope one and two data only.
Emissions data for Scope 1 and 2 is derived from renewable energy sources, thus achieved net zero carbon for all direct operations.
See page 34 for more information on the Group’s EPC certification strategy.
Further emission data (2020)
(tCO
2
e)
Tenant emissions
1
30,541,637.95
Construction site emissions
2
110,556.47
1 Based on 74% of tenant data collected in 2020.
2 Construction – Tritax Symmetry Portfolio.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202136
Our targets
We are aligned with the Paris Agreement to achieve net zero carbon
for all the Fund’s direct and indirect activities by 2050, following a
1.5C reduction pathway:
1. Reduce direct landlord impacts (scope 1 and 2) to net zero
carbon by 2030
2. Reduce construction impacts to net zero carbon by 2040
3. Support our tenants to reduce their operational impacts to
netzero carbon by 2050
carbon commitments
Our net zero carbon pathway
ESG continued
Reduce operational
energy consumption
to deliver our carbon
reduction targets in
line with a 1.5 degrees
warming pathway.
Invest in renewable
energy through REGO
backed contracts
and installing of
onsite renewable
energy generation
opportunities.
Develop an internal
approach towards
carbon pricing to fully
understand carbon risks
and opportunities in
the investment decision
making process.
Continue to reduce
construction impact
through low carbon
design, innovation
andmaterials.
Offset remaining
emissions only as a last
resort and into robust
offsetting projects.
Our carbon footprint
We have mapped our full carbon footprint in 2020:
• Our direct landlord emissions account for 0.0011%
• Our construction impacts account for 0.3607%
• The majority of the Group’s carbon emissions come from tenant
operations, making up 99.6381%
Annual Report 2021 Tritax Big Box REIT plc 37
STRATEGIC REPORT
ESG Goal 3:
Biodiversity is in decline in the UK, with one million species at risk of
extinction. We have a responsibility to ensure our activities mitigate
impacts and we actively enhance biodiversity, to deliver a net gain.
We commission specialist ecologists to calculate the biodiversity
value of the original land use, adopting DEFRA’s biodiversity metric
calculation tool. An assessment of on-site and off-site measures
is undertaken to assess the potential for overall net gain. Off-site
measures are targeted at neighbouring sites, to maximise the local
environmental benefits.
Our biodiversity aims cover all of the portfolio and are included within
asset Sustainability Action Plans. Many of our standing investments
already have biodiversity features, such as green areas for recreation
and habitats supporting native and locally important species.
Protection and enhancement of these areas is kept under review
through our regular inspections and inspection report template. For
assets with no biodiversity features, our initiatives include creating
Biodiversity Action Plans, which include actions such as rewilding
Target table
Sustainability goals 2023 target Actions in 2021 Progress against target
Nature and wellbeing
Enhance biodiversity and
wellbeing on our land
Pilot 15% biodiversity net gain
onnew developments.
Completed initial assessments at the development
sites at Middlewich, Merseyside and Rugby, which
areestimated to contribute net biodiversity gains
ofover 10%.
On track
Implement biodiversity
enhancements on 11 assets
with no measures in place.
Continued discussions with customers on
biodiversity initiatives including beehives, wildflower
planting, insect “hotels” and bird/owl boxes. At
Littlebrook completed the planting of a green
wallwith variety of flowering clematis, installation
ofbeehives.
On track
Support the local environment for
the communities near our assets.
Started discussions with local conservation
volunteering groups and customers to ascertain
interest and whether there is potential for multi
customer projects.
Progress delayed
dueto impact of
Covid restrictions.
Information on our initiatives during the year can be found on page 47 of the Manager’s Report.
enhancements and supporting locally important species (such
as bees, birds, insects). We can confirm that there have been no
notifiable environmental incidents, or any fines or penalties levied on
the Company in the last three years.
We also promote local volunteering opportunities to our Customers,
which include practical activities such as planting trees, sowing
meadows and establishing wildlife ponds, with a focus on health
and fitness.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202138
ESG Goal 4:
Social value
Our assets are well located for local employment opportunities,
meaning our investment in standing assets and developments create
jobs and positive social impact across a wide supply chain. These
jobs often provide skills training, improving the economic opportunities
for those employed. We have a social value charter, which sets out
our ambition to create socio-economic value in our development of
new logistics assets.
We actively engage with our communities throughout the development
process, holding regular meetings to inform them of our plans and
Target table
Sustainability goals 2023 target Actions in 2021 Progress against target
Social Value
Create a positive
socio-economic impact
through our investment
Measure social value to
demonstrate impact of
ourinvestment.
Began to embed social value measurement
framework for developments. We jointly published
research with planning and development
consultants, Turley, to quantify the impact of every
1m sq ft delivered. This indicated: Construction
phase: 1,400 jobs in the construction sector
andinother sectors across the wider economy.
Operational phase: 2,400 direct and indirect jobs
inwarehouse and delivery operations.
On track
Support apprenticeships and
employability in construction.
Held skills identification discussions with a
logisticsrecruitment agency and continued to
facilitate site visits with colleges to illustrate the
range of job opportunities within construction
andlogistics sector.
On track
Invest in our communities through
the Community Benefit Fund.
Following the occupation of DPD Bicester, we
arereviewing potential local beneficiaries and
suitable projects. This initial project has focused
onsupporting local primary schools.
On track
Support Schoolreaders until 2023,
to increase childhood literacy in
the communities where our assets
are located.
In addition to our three year sponsorship
programme, we also sponsored the charity’s
awareness-raising campaign, helping to reach
c2,500 additional children each week.
On track
Information on our initiatives during the year can be found on page 47 of the Manager’s Report.
to listen to their views. We appoint a dedicated Community Liaison
representative for each development to interact with local schools to
raise awareness of careers in construction and logistics, with visits
arranged to our development sites.
Tritax Symmetry’s Community Benefit Fund is committed to providing
10 pence per sq ft of new logistics space delivered by Tritax
Symmetry following occupation. This complements our community
charity partnership with Schoolreaders, where we fund volunteers to
provide reading support for schoolchildren in the communities where
our assets are located.
ESG continued
Annual Report 2021 Tritax Big Box REIT plc 39
STRATEGIC REPORT
Climate-related risks and opportunities
With assets across the UK we are exposed to both physical and transitional risks and opportunities from climate change. The Board of
Directors recognises the importance of understanding the risks and opportunities presented by climate change and the impacts it could have
on business operations. We are committed to assessing and mitigating risks that are material to our business.
We continued to progress this work through 2021. In our disclosure we set out how we are implementing the recommendations of the Task
Force on Climate-Related Financial Disclosures (TCFD) to provide investors and other stakeholders with information on climate-related risks
and opportunities that are relevant to our business.
1. Governance
Board oversight of climate-related risks and opportunities
The Board agreed a new long-term sustainability strategy in May 2020, in which climate change is ranked as the most material sustainability
issue for the Company. This was determined through a materiality exercise that included engagement with the Board.
Tritax Management LLP’s (the “Manager”) CSR Committee is responsible for monitoring trends and developments in climate-related issues
and any material changes are ultimately reported up to the Board. The Board receives updates from the Manager’s ESG Director at every
Board meeting, which occur at least quarterly, where emerging climate change and other relevant briefings together with initiative progress
reports are provided. The Board has determined Karen Whitworth, Non-Executive Director of the Company as the “ESG Champion”. Karen
regularly meets with the Manager’s ESG Director to discuss sustainability issues including climate-related risks facing the Company and
reports back to the wider Board as necessary.
The Board and the Manager has undertaken ESG Investment, TCFD and Carbon Reporting training to support their understanding of climate
change and other ESG risks and opportunities to aid the appraisal of these issues in overseeing the Company’s activities.
Manager’s role in assessing and managing climate-related risks and opportunities
The Manager has an established CSR Committee which is responsible for the delivery of the sustainability strategy, including climate change
and its associated risks and opportunities. The CSR Committee is jointly chaired by the Manager’s Chief Operating Officer (COO), Henry
Franklin, and Head of Asset Management, Petrina Austin, who are ultimately responsible for climate change amongst the management
team. The ESG Director is an integral member of the Committee with onward reporting at Board meetings and to the Manager’s Executive
Committee. The Executive Committee which is a Committee of the Manager on behalf of the Company, subsequently reports up to the
Company’s Audit & Risk Committee which ultimately reports to the Board.
Monitoring of climate change issues is supplemented by executive briefings from specialist consultants such as Hillbreak and CEN-ESG and
through the Company’s membership of the UK Green Building Council (UKGBC).
2. Strategy
The climate-related risks and opportunities that the business has identified over the short, medium and long term
We have worked with DNV, an independent consultant, to identify and assess the impact of climate-related risks through qualitative and
quantitative scenario analysis, considering both short-term and long-term impacts on each standing asset in our portfolio (62 Investment
assets plus nine assets under construction) and on our overall business model. Our assessment concluded that our exposure to all climate-
related risks is relatively low in the short to medium term (up to 2030) with the analysis indicating the potential to increase from 2050 onwards.
Risks and opportunities with the potential to become material are identified in the table below, with transition risks more likely to become
material under a 2-degrees compliant scenario and physical risks becoming more pertinent under a business-as-usual scenario. Howwe
respond to these risks and opportunities has the potential to affect the performance of our assets (please see section 4 ‘Metrics and Targets’
for a summary of actions the Company is taking to mitigate and adapt to physical and transitional risks and opportunities).
Taskforce on Climate-Related
Financial Disclosures (TCFD)
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202140
2. Strategy continued
Issue Potential risk Potential opportunity
Transition risks and opportunities
Carbon pricing Costs could increase as carbon pricing is
factored into construction and operating costs
(from embodied carbon and cost of carbon
intensive energy for occupiers).
A portfolio with low carbon emission
could have lower costs through
reductions in costs associated with
carbon pricing.
Rapid increase in climate-related
policies There is a large policy gap to
meet the legally binding 2050 net zero
carbon target that will require new and
radical policies.
New policies may affect our ability to develop or
lease new assets that are below standards set by
Government e.g. raising the minimum standard
for MEES.
The development of net zero carbon
assets and the efficient standing
investments could future proof the
portfolio against future increasing in
minimum standards – such as MEES.
Energy supply and carbon intensity
Energydemand in assets is going up
due to automation, and in the future,
increased use of electric fleet. Potential
for increased levies on carbon-based
energy increasing costs.
As energy demand in assets increases, security
of supply is an issue for occupiers and could
disrupt their operations.
At the same time, costs of carbon-based energy
and potential new levies on such energy could
increase energy costs.
Investing in on-site renewable energy
generation for the benefit of our
tenants could protect against energy
volatility and reduce the carbon
intensity of the operational energy use
within the portfolio.
Climate action failure
In addition to the policy gap, continued
failure to act will increase the impacts
of climate change, meaning greater
adaption is needed.
More extreme weather events will worsen
the above.
Adaptation will be more expensive, and
mitigation will not be as reliable.
Adapt new build specifications
through our agile development
manager to react quickly to increased
or alternative risks.
Need for mitigation and adaptation
investments
We need to consider the mitigation and
adaptation measures that are needed to
protect our assets from the impacts of
climate change.
The level of exposure will vary between assets
but may have the following impacts: requirement
for upgrades and investment to protect against
risk such as retrofitting, review of major incident
planning, or even disposal of the asset where the
cost of protection exceeds financial benefit.
Opportunities to future proof assets
through asset management and
development will provide a resilient
portfolio that will remain attractive and
relevant to occupiers and investors,
potentially increasing access to
sustainability-linked financial products
for example.
Physical risks
and opportunities
Acute and chronic physical
climate-related risks
In the UK, the main climate change risks
are identified as: rising temperatures,
rising sea-levels, flood risk, drought
andwindstorms.
Climate change is causing more extreme weather
events and natural disasters. Buildings will need
to be resilient to changes in weather such as
rising temperatures, but also to extreme weather
events such as flash flooding. Assets will require
more cooling for heatwaves, and increased flood
protection. The UK will also be subject to more
windstorms, which could damage assets and
interrupt operations for occupiers.
The Company has the opportunity
to work closely together with tenants
and other stakeholders to ensure
resilience to extreme weather events
is integrated into asset design (e.g.
cooling mechanisms and flood
protection systems) and management.
Evidencing robust controls to
prospective tenants could enhance
Tritax’s value proposition and drive
longer-term tenancies.
The impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning
As described in section 1, we have established our overall ESG governance structure at Board level alongside the Manager’s CSR Committee
to develop and drive execution of our overall sustainability strategy, including our climate-focused efforts. We will continue to highlight climate-
related risks as part of our annual strategic and financial planning cycle, during which all relevant teams will critically assess their role in
mitigating the impact of climate-related risks and opportunities.
The resilience of the organisation’s strategy, taking consideration of different climate-related scenarios
Given the uncertainty in the development of policies and future technological trends, our analysis used two scenarios to assess the impact of
transitional and physical risks on our entire portfolio of standing assets to 2050. The scenarios used were as follows:
• Business As Usual Scenario (IPCC RCP 8.5 Scenario). This scenario is based on the current trajectory where most countries have pledged
their Nationally Determined Contributions (NDCs) that still fall short of the Paris Agreement targets. This leads to global warming significantly
exceeding 3.0 degrees Celsius by 2100.
• 2-Degrees Compliant Scenario (IPCC RCP 2.6 Scenario). 2-Degrees Compliant Scenario (IPCC RCP 2.6 Scenario). This scenario is based
on the assumption that countries manage to fulfil their Nationally Determined Commitments (NDCs) for 2030, deliver on statements made at
the COP26 climate conference and meet their targets for reaching net zero.
Under both scenarios, analysis reconfirmed that the resilience of our business strategy is unlikely to be materially compromised by climate-
related risks although, as expected, in the longer term the physical climate risks faced by a small number of standing assets in the portfolio are
likely to become marginally more acute under the business-as-usual scenario. However, the Company is confident that existing pre-acquisition
due diligence assessments, property management procedures and insurance cover currently provide satisfactory mitigation of climate-related
risks and protection against material financial losses should climate-related damages be incurred.
Despite low risk exposure, short-term focus on such matters as driving emissions reduction is important, particularly considering expected
policy and regulatory changes as well as shifts in customer preferences.
ESG continued
Annual Report 2021 Tritax Big Box REIT plc 41
STRATEGIC REPORT
3. Risk management
3a. Describe the organisation’s process for identifying and assessing climate-related risks
As described above, in 2021 we have worked with an independent expert to identify and assess the relative significance of physical and
transitional climate-related risks. The Manager was updated on key findings in and will continue to monitor these risks on an ongoing basis.
3b. Describe the organisation’s processes for managing climate-related risks
Ownership and management of all risks is assigned to relevant members of the Manager who are responsible for ensuring the operating
effectiveness of the internal control systems and for implementing key risk mitigation plans. Assessment of climate-related risks and
opportunities are embedded within our investment and asset management strategies for acquisitions and major capital expenditures; as
outlined in our acquisition and development requirements.
3c. Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s
overall risk management
The Audit & Risk Committee formally considers and assesses the risks that may be relevant to the Company on a biannual basis as reported
by the Manager’s Executive Committee. The risks highlight the potential impact on the Company along with any mitigating factors. The risks are
also reviewed and assessed by key representatives Manager including the Manager’s Executive Committee on an ad hoc basis. As part of this
process the Company recognises the importance of identifying and monitoring climate-related risks, which feature on our principal risk register.
The Manager has also established a Risk Committee which conducts periodic horizon scanning for new risks which may impact funds under
management including the Company.
The Investment Committee of the Manager also assesses the climate-related risks and opportunities. Acquisitions are subject to ESG Due
Diligence assessments which inform the members of the Investment Committee of any climate-related risks, such as flooding, to inform the
investment decisions on climate-related risks. Once acquired, as part of annual insurance renewal, an assessment of the physical climate
change risks of the assets within the portfolio are assessed and the results are shared with the Partners. The Partner responsible for Asset
Management and Property Management ensures that any material risks are considered for the Fund.
4. Metrics and targets
We recognise the need to tackle climate change today. As such, the Company has already established the following metrics and targets which
are driving our business towards becoming more sustainable and improving our management of climate-related risks and opportunities:
Metric 2021/22 progress Target
Direct landlord Greenhouse gas emissions
(Scopes 1 and 2)
Achieved, please see page 35 for
moreinformation.
Net zero by 2030
Greenhouse gas emissions from construction Please see page 35 for more information. Net zero by 2040
Tenant operational Greenhouse gas
emissions (Scope 3)
Please see page 35 for more information. Net zero by 2050
EPCs of existing portfolio to A-C Grade Please see page 34 for more information. Improve all EPC’s to at least a C grade
by 2023 and B grade by 2026
% of new buildings developed to
Net-Zerostandards
Please see page 32 for more information. All new developments within the land
portfolio acquired through Tritax
Symmetry portfolio will be constructed
to net zero carbon, as defined by the
UK GBC from June 2020
On-site renewable energy generation projects Please see ESG Goal 2 on page 34 for
moreinformation.
Progressing with on-site renewable
energy generation projects in place
% priority assets with climate resilience
plan in place
Conducted climate scenario analysis of the
fullportfolio to understand the potential risks
andopportunities.
All priority assets have climate resilience
plans in place
We raised a Green Bond of £250 million in November 2020, which we view as an opportunity to finance our net zero carbon activities through
this green finance. This includes significant opportunity to invest in onsite renewable energy generation.
We are committed to doing more in this area and we are challenging ourselves to go further with our targets and to move faster in achieving
those targets.
Please see the 2021 Annual Report and Accounts and the 2022 EPRA ESG Report for further reporting on our climate change metrics
and targets.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202142
Manager’s Report
Record breaking
performance
Colin Godfrey
CEO
“ We are at an inflection point
where our development
portfolio is now delivering and
our confidence in future value
delivery has increased. We are
time, with the right strategy,
the right product and the right
team to unlock value. And we’re
During the year, we benefited from the continued successful
implementation of our strategy and exceptionally strong market
conditions, which together helped us to deliver a record performance.
Strategy
Our strategy has three interlinked and reinforcing components, which
enable the delivery of sustainable income and capital growth. The
strategy aligns with the market drivers described above and ensures
we meet our wider responsibilities, whilst carefully managing risk.
The three elements of the strategy are:
1. Building a portfolio of high-quality assets attracting world-leading
customers – delivering resilient and growing income.
2. Direct and active management – protecting, adding and realising
both income and capital value.
3. Insight driven development and innovation – creating both
attractive capital value and accretive income returns.
ESG is intrinsic to each of these elements. Our ESG
approachencompasses:
• healthy and sustainable buildings – ensuring and demonstrating
the resilient design of our assets;
• energy and carbon – achieving net zero carbon for all
directactivities;
• nature and wellbeing – enhancing biodiversity and wellbeing
onour land; and
• social value – creating a positive socio-economic impact
throughour investment.
Information on how we implemented the strategy during the year
isset out in the following sections.
Annual Report 2021 Tritax Big Box REIT plc 43
STRATEGIC REPORT
1) High-quality assets attracting
world-leading customers
We have assembled an unrivalled portfolio of investment assets, let
to an exceptional customer base that includes some of the world’s
largest and most successful companies. To generate attractive,
stable and long-term returns for shareholders, our portfolio
composition favours high-quality customers, long lease lengths,
desirable locations, attractive building size and format, strong ESG
characteristics, modern assets and income growth embedded in
the leases.
For 2021, we set the following priorities in relation to the
InvestmentPortfolio:
Priority Progress
Evaluate further acquisitions of
standing assets, where we can
either add value through asset
management, take advantage
ofmarket mispricing, and acquire
attractive forward funded
development opportunities.
We maintained discipline in our
investment activity as yield
compression made it harder to
identify true value. Consequently,
we acquired one value add asset
inAvonmouth for £90 million
whichwe believe was mispriced.
Seek to further diversify our
portfolio through general portfolio
management e.g. customer,
building, geography, as well
asincreasing our exposure in
theportfolio mix to value add
investment opportunities
anddevelopment.
Added new customers and
locations through the Avonmouth
acquisition and the development
programme delivering new
stabilised assets.
Target disposals of investments
where we have the opportunity
torecycle this capital into higher
returning opportunities or to
improve overall portfolio quality.
Decided not to undertake
disposals of standing assets during
the year, reflecting our view of the
market and the performance
associated with our portfolio (see
direct and active management
below), noting that we have begun
marketing assets for sale in 2022.
Portfolio composition
The total portfolio comprises the Investment Portfolio and
Development Portfolio.
The Investment Portfolio provides long-term stable and growing
income and comprises:
• investment assets which are typically let and income producing;
• pre-let development assets which will become income producing
once constructed;
• assets in the course of development which have been let during
the course of speculative development and prior to practical
completion of the construction; and
• developed buildings which have practically completed and which
have yet to achieve a letting.
The Development Portfolio provides new assets for the Investment
Portfolio through a combination of pre-let and speculative activity
andcomprises:
• land (with or without planning consent) (see insight driven
development and innovation below);
• options over land; and
• assets in the course of construction which are not let.
At the year end, the total portfolio was valued at £5.48 billion
(31December 2020: £4.41 billion), an increase of 24.3%.
Investment portfolio: 91.9% of GAV Development portfolio: 8.1% of GAV
Foundation: 73.4% Developments and land: 8.1%
Value add: 18.5%
Foundation assets provide long-term and high-quality income.
They are typically let on long leases to customers with excellent
covenant strength and are commonly new or modern buildings,
in prime locations. Value Add assets offer the chance to grow
income and capital values, as they present opportunities to create
additional value through asset management or have customers with
the potential to grow and improve in covenant quality. The mix of
Foundation and Value Add assets enables us to deliver an attractive
blended total return.
At 31 December 2021, the Investment Portfolio comprised 62 assets
(31 December 2020: 59 assets), following the acquisition of an asset
in Avonmouth described below and two assets in the Development
Portfolio reaching practical completion (see insight driven
development and innovation). The Investment Portfolio in aggregate
totalled 33.7 million sq ft.
A secure and resilient customer base
We have a diversified base of 44 different customers, which we
believe is the strongest customer line-up of any quoted logistics real
estate business in Europe. As a proportion of the total contracted
rent roll, 63.5% of our customers are in defensive and resilient
sectors, such as e-commerce and food retail, and 66.1% are
companies with parent revenues of over 10 billion in their respective
local currencies (primarily GBP, USD and EUR).
The Group’s top 10 customers are shown below:
Customer % of contracted annual rent
Amazon
16.4%
Morrisons 5.9%
Tesco 5.1%
Howdens 4.5%
Co-Op 4.3%
Ocado 3.9%
Argos 3.6%
Marks & Spencer 3.5%
DSG 3.1%
B&Q 2.7%
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202144
Manager’s Report continued
1) High-quality assets attracting world-leading
customers continued
A long-term and reliable income stream
At the year end, the weighted average unexpired lease term (WAULT)
of the Investment Portfolio was 13.0 years (31 December 2020: 13.8
years). Foundation assets had a WAULT of 15.1 years (31 December
2020: 15.8 years).
Of total rents, 41.4% are generated by leases with 15 or more years
to run. 19.1% of total rent comes from leases expiring within five years
of the year end, which therefore provide near to medium-term asset
management opportunities.
Embedded income growth and inflation protection
All our leases provide for upward-only rent reviews, with 53.6% of the
rent roll being RPI/CPI linked, 28.5% open market, 9.7% fixed and
8.2% hybrid. 20.1% are reviewed annually and 79.9% on a five-yearly
basis. The portfolio balances the certainty offered by fixed and
inflation-linked leases with the ability to capture market growth from
open market and hybrid reviews.
Approximately 56% of the rent roll has either a fixed or minimum
increase at rent review. Across the Investment Portfolio this will
produce a minimum average increase of 1.7% per annum when a
review arises. Cap and collar arrangements cover approximately half
of the rent roll and have an average range of 1.5% to 3.4%. We see
this range as the minimum increase and aim to achieve higher rental
growth across the portfolio through proactive management.
We have assembled the Investment Portfolio to benefit from a
balance of rent review types helping to deliver annual income growth
and a progressive dividend. Some 37% of the portfolio rent roll was
subject to review in 2021. Including outstanding rent reviews from
prior periods, total reviews were settled in respect of 32% of the
portfolio, with the remainder expected to be completed in 2022. Due
to the addition of completed development assets with annual reviews,
35% is now expected to be reviewed in 2022. Progress with rent
reviews in 2021 is set out in the asset management section below.
At each valuation date, the estimated rental value (ERV) of the
Investment Portfolio is independently assessed. At 31 December
2021, the ERV was £217.1 million, 11.0% above the passing rent for
the properties. The like-for-like ERV growth for the 12 months to
December 2021 was 7.5%. Open market rent reviews, lease expiries,
new leases or lease regears give us the opportunity to capture this
reversionary potential.
The portfolio had a 0% vacancy rate at the year end (31 December
2020: 0%).
Maximising returns in our investment portfolio through
acquisitions and disposals
We constantly seek to enhance the returns of our investment portfolio
for our shareholders. We undertake quarterly reviews of all assets
within the portfolio evaluating factors such as potential future returns,
location, quality and ESG credentials. We will seek to crystalise value
through disposals, using the proceeds to both fund development
activity and to acquire other investment assets. Through constant
evaluation, and buying and selling of assets, we aim to optimise the
performance of our investment portfolio. While we anticipate the
majority of our asset acquisitions and disposals to be single assets, if
we can accelerate our portfolio enhancement through larger portfolio
acquisitions or disposals, we may consider such opportunities.
Acquiring assets with value creation potential
We continue to identify opportunities to purchase investments which
we believe will provide accretive returns for shareholders. This may
include opportunities where we can add value through active asset
management, benefit from mispricing or use our market contacts and
reputation to secure investments off-market.
In April 2021, we acquired a 0.9 million sq ft facility in the key logistics
location of Avonmouth for £90 million. The acquisition added
Accolade Wines Limited to the portfolio, one of the world’s largest
wine companies and the leading producer and distributor in the UK
and Australia.
For more information on the acquisition, see the case study below.
Maximising returns in our investment portfolio through
acquisitions and disposals
We constantly monitor and evaluate our portfolio, to identify
assets where:
1. we have completed our asset management plans and
maximised value;
2. the asset’s investment characteristics no longer fit within the
required portfolio profile; or
3. the asset’s relative future performance may be below others in
the portfolio, potentially due to risks associated with the asset
orthe customer.
Our approach to portfolio optimisation considers a wide range
of criteria, including the asset’s size, age, location and ESG
credentials. We also consider the need to deliver a consistent
and predictable level of earnings, so we look to balance disposals
with income producing acquisitions and developments. We also
consider conditions in the investment market and the stage of the
market cycle.
We remain patient sellers and did not dispose of any standing
assets in the year. This reflected the current strong position of our
investment portfolio and our view of prevailing market conditions.
Priorities for 2022
Our priorities for the next 12 months in relation to the Investment
Portfolio are:
• rotate out of assets which no longer fit the shape and balance of
the portfolio and which are expected to deliver lower quartile future
total returns;
• maintain our disciplined approach to acquisitions, ensuring
they complement the portfolio and have potential for superior
risk adjusted returns relative to the investment pillar; these may
include opportunities to add value through active management
orinvestments considered mis-priced; and
• maintain the balance between low-risk foundation income and
higher rental growth potential.
“ We have assembled the Investment Portfolio
to benefit from a balance of rent review types
helping to deliver annual income growth and
Annual Report 2021 Tritax Big Box REIT plc 45
STRATEGIC REPORT
2) Direct and active management
Our asset management priorities for 2021 were as follows:
Priority Progress
Initiate rent reviews on the
37% of the portfolio up for
review in the year, to drive
income and capital values.
Rent reviews initiated as planned, with
reviews on 32% of the portfolio agreed
bythe year end, increasing income by
£5.0million. We expect to conclude
outstanding rent reviews during 2022.
Aim to secure further
leaseterm extensions,
tolengthen the portfolio’s
income profile.
Secured extensions on the Wincanton,
Harlow and Rolls-Royce Motor Cars,
Bognor Regis, assets. Proposals
currently under consideration with
12further customers.
Commissioned specialist supply chain
research to strengthen insight into
customers’ operations and network
strategy, to assist with identifying
opportunities and supporting proposals.
Pursue opportunities
forphysical building
extensions and
propertyimprovements.
Two proposals for extensions of c.0.2
million sq ft currently under consideration
with customers. One extension proposal
with B&Q resulted in completion of a
pre-let of a new facility for our
Development portfolio.
Owing to the rapid growth in
e-commerce, some of our occupiers
required additional space more
immediately than the timescale required
for a structural extension and thus we
consented to the inclusion of extensive
mezzanine floor structures at Marks &
Spencer, Castle Donington and Hachette,
Didcot, creating considerable additional
internal storage.
Continue to propose and,
where agreed, implement
green initiatives.
Completed installation of solar PV
schemes at Brakes Harlow and Amazon
Littlebrook. Progressed discussions with
further customers on Landlord funded
solar PV and consented to two occupier
implemented solar PV schemes with
Amazon at Durham and Darlington.
Increase in level of portfolio with an EPC
(A-C) to 95%. Agreed five leases with
green clauses and consented to the
inclusion of an anaerobic digester to
utilise food waste for Ocado at Dordon.
Understanding and supporting customers
Being close to customers is central to our business model.
Understanding their businesses maximises our ability to identify
and pursue opportunities to support their logistics needs. We are
responsible for every customer interaction, as we perform most asset
and property management activities ourselves, and we maintain
regular contact with customers’ key decision makers.
We build on this customer interaction by commissioning third-party
supply chain research, which gives us detailed insights into a
customer’s entire logistics network, the role our assets play within it
and their future business needs. This enables us to have discussions
with our customers about how our development pipeline could
contribute to their network growth, supports our asset management
proposals, provides an understanding of opportunity and risk relevant
to our investment assets and thereby assists in our decisions to hold,
sell or buy investments.
Risk management is fundamental to our approach. We therefore
conduct ongoing covenant analysis of our customers, combining
publicly available information and third-party opinions with our
own insights. This enables us to mitigate customer-related risks by
adjusting our exposure to stronger tenants and sectors, and identify
opportunities to capture both capital and income growth. Our
collection of 100% of rent over the last two years demonstrates the
quality of our customers and the importance of our assets to them.
Similarly, we look to protect income by a procedural approach to
property management. This commences at acquisition with detailed
due diligence of surveys, including environmental items and a
materials review, including key items like cladding. Extensive due
diligence forms part of the basis of our asset business plans and
sustainability action plans. This approach demonstrates a robust
management regime for our insurers. In 2021, 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 insuranceprovisions
are in place. Regular property inspections by our Property
Management team also enables first hand checks and reporting.
Growing and lengthening income
We regularly engage with customers on lease proposals, including
extending leases and extensions to buildings. During the year, we
agreed lease extensions with:
• Wincanton, extending its lease on the Harlow asset by two
years; and
• Rolls-Royce Motor Cars, extending the leases on both units at
Bognor Regis by 10 years.
We continue to negotiate the terms of a new lease with Tesco on the
Southampton asset, with the previous lease having expired in January
2021. A further 12 lease proposals were under consideration by
customers at the year end, including buildings extensions and ESG
initiatives (see below).
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202146
Manager’s Report continued
2) Direct and active management continued
Growing and lengthening income continued
During the year, we settled rent reviews on 18 properties, across
32% of the portfolio’s annual contracted rent. The reviews achieved
an average 8.7% increase on the previous passing rent, resulting in
a cumulative £5.0 million of additional rent. This translates into EPRA
like-for-like rental growth of 3.3% for the year. The table below shows
a breakdown of these reviews by type:
Number
% of
contracted
rent
Growth in
passing rent
Index linked
9 18.3% 8.4%
Open market/hybrid 5 6.9% 9.1%
Fixed 4 6.6% 9.0%
Total 18 31.8% 8.7%
Enhancing ESG performance through asset management
andengagement
Asset management initiatives that enhance ESG performance can
benefit our business, our customers and society more generally.
We can earn additional income and generate higher capital values,
while prolonging the life of the asset, increasing its marketability to
potential tenants and reducing the risk that the building becomes
obsolete. Customers can benefit from lower operating costs, while
environmental enhancements contribute towards their corporate
commitments, such as net zero carbon targets. ESG is therefore a key
part of our customer interactions and proposals. Every lease re-gear
proposal which is submitted to a customer includes an ESG initiative.
We continue to discuss projects to add on-site solar PV energy
generation and appointed specialist consultants to manage the
assessment and delivery of these schemes. Every asset is assessed
for the inclusion of roof mounted solar PV. Talks were ongoing
covering 12.6m sq ft of the investment portfolio. Should all these
projects proceed, they have the potential to generate savings of
approximately 8,315 tonnes of carbon per year.
The installation of a solar scheme with Brakes at Harlow completed
in December. This will generate additional green revenue for us, with
a projected IRR of 7.5% pa. The scheme will generate 931 MWh of
renewable energy and save 198 tonnes of carbon. Installation of the
3.5 MW solar PV scheme at the Littlebrook building let to Amazon
also completed in the year. At the year end, 9.2m sq ft of assets
included roof mounted solar PV.
During the year, the UK Government commenced a consultation
process in respect of the Minimum Energy Efficiency Standards
(MEES) Regulations, with an expectation that the minimum
acceptable Energy Performance Certificate (EPC) grade may
increase from D to B in 2030. Our target is to improve all EPCs to
at least a C grade by 2023 and we accelerated our original target
to achieve at least a B grade by 2026. At the year end, 95% of the
portfolio was grade C or above, up from 90% at the start of the
year. This improvement has been driven by the completion of new
buildings in the development programme as well as improvements
made to certain Investment assets. Three assets representing 4.5%
of the portfolio are rated D and are targeted for initiatives such as
replacement LED lighting or solar PV installation, which will improve
their EPCs and achieve our 2023 target.
We continue to progress our plans to implement green leases where
possible, by incorporating best practice green lease clauses in each
new lease or lease variation. Green leases encourage co-operation
between us and our customers, as they include clauses that set out
specific environmental requirements, for example that the tenant
will provide ESG data, will operate sustainably and that the landlord
will consent to all feasible requests for sustainability upgrades.
Weagreed green lease clauses during the year on five leases.
We continue to progress our biodiversity strategy which included the
installation of beehives at Littlebrook, to support local biodiversity
and our national ecosystem.
We have a three-year partnership with Schoolreaders, a literacy
charity that provides reading support for young children. The charity
provides volunteers in the counties where our assets are located,
thus benefitting the communities of our customers. We are proud to
have sponsored the campaign to raise funds and increase awareness
of its services. The success of the campaign has enabled the charity
to reach an additional 2,500 children with weekly reading support.
We were also the lead sponsor of an all-female crew, The Mothership,
which took part in the Talisker Whisky Atlantic Challenge ocean
rowing race in December 2021. The crew included Jo Blackshaw,
Investor Relations Director at Tritax. The team embraced core Tritax
values and were united by their passion to empower women and
children to discover new experiences and opportunities without
limitation. Coming in second in the women’s race, the crew raised
close to £70K for Noah’s Ark Children’s Hospice, Felix Fund and
Women in Sport.
Priorities for 2022
Our priorities for the next 12 months in relation to our asset
management programme are:
• complete all outstanding open market rent reviews;
• complete further lease extensions, incorporating ESG initiatives
and green lease clauses; and
• agree terms to extend a property or alternatively secure
an additional pre-let for our Development portfolio with a
current customer
“Asset management initiatives that
enhance ESG performance can
benefit our business, our customers
Annual Report 2021 Tritax Big Box REIT plc 47
STRATEGIC REPORT
The vast majority of the land portfolio is held through long-term
option agreements. The capital efficiency and flexibility provided by
these options allows us to align the pace and scale of development
activity to market demand.
The land portfolio is actively managed to ensure that land utilised
fordevelopment (following the receipt of a detailed planning consent)
is replenished by new sites where infrastructure and servicing
works are on-going or by schemes being advanced through the
planning process. This dynamic process enables the land portfolio to
create a controlled supply of new development opportunities on an
on-going basis.
Our Investment Policy limits land and development exposure to
15% of GAV and within this total speculative development exposure
cannot exceed 5% of GAV. We are operating well within those limits
at the year end, with land and development exposure totalling 8.1%
(2020: 8.6%) and speculative exposure 1.6% (2020: 0%).
At the year end, the development portfolio comprised 8.1% of the
company’s Gross Asset Value. While currently representing a small
proportion of the overall portfolio, primarily due to the capital efficient
way land is held through long-term options, the development land
has the potential to more than double the size of the business.
More detail on our development pipeline was presented to investors
on 27 January 2022, the presentation and recording of the seminar
can be found here link.
A year of significant progress
This was a successful year for the development programme, as we
made good progress with the developments in build and continued
to deliver new planning consents and infrastructure works, giving us
a growing number of sites in a credible delivery state.
The equity raise in September 2021, provides the necessary funding
to support an acceleration in our near-term development programme.
With an increasing number of occupier conversations moving from
high level discussions, into detailed negotiations, we have growing
visibility in terms of targeted near-term starts and the level of income
delivery associated with these assets. From this acceleration in the
development programme, when taking those assets that were either
under construction at the year-end as well as those assets with a
targeted start date in 2022, we have visibility over the potential to add
£36 million of incremental rent to the portfolio. The timeframe attached
to rental income recognition will be linked to construction timeframes
and therefore a c12-18 month period should be reflected between
construction commencement and income generation. Therefore, when
looking at the targeted development starts in 2022, we would expect
to see the benefit to earnings flowing through by 2024.
2021 was a year of significant progress for the development
programme on all fronts: we completed a substantial amount of
newpre-let development, made good progress with infrastructure
and other site preparation works, commenced construction of
further phases of development and continued to secure new
planning consents and upgrade existing consents.
Case study – acquiring assets
We look to acquire assets where we can add value through
active management or at the point of acquisition. The asset
we acquired in Avonmouth during the year demonstrated both
these characteristics.
The Avonmouth facility is an excellent fit with our strategy. It is
let on a long lease with more than 12 years left at acquisition
and is mission critical to its occupier, Accolade Wines, which
has invested heavily in the building to make it Europe’s largest
wine production, warehouse and distribution centre. The
location is also highly attractive, being close to the Port of
Bristol which Accolade uses to import goods in shipping
containers. Growth expectations for the port are contributing
to rising demand and low vacancy rates in the area, offering
the potential for sustained rental growth.
The asset was acquired at a net initial yield of 5.1%, which
represented excellent value against current prime yields. This
reflected our strong relationship with the vendor’s agent and
the Group’s credibility in the market, as a well-capitalised
purchaser who could offer the vendor low execution risk. As a
REIT, we were also able to structure the transaction in a way
that benefited the vendor, by acquiring the corporate vehicle
that held the asset. We have already benefited from significant
value appreciation since purchase.
The asset also offers scope for active management. Onpurchase
there was an attractive reversionary rental position, with
five-yearly rent reviews. Since purchase, we have engaged with
the customer on opportunities to add further value and on ESG
related initiatives.
3) Insight driven development and innovation
We control the UK’s largest land portfolio for logistics development,
capable of delivering approximately 39 million sq ft of logistics space.
As well as its scale, the portfolio is diversified in terms ofgeography
and in the range of unit sizes that can be constructed. Thismaximises
the scope of occupier solutions that can be offered and the quantum
of development that can be undertaken.
It provides an ongoing source of development activity, creating a
pipeline of new, high quality investments into our core investment
portfolio. The development programme is a key driver of portfolio
returns, targeting a yield on cost of 6-8% through an appropriate
combination of pre-let and speculative developments.
We have an experienced, multi-functional in-house team with a
long track record of successful delivery, both in terms of obtaining
planning consents and delivering new buildings. The land portfolio
has taken over 10 years to assemble, with its scale and diversity very
difficult for our competitors to replicate. This forms an effective barrier
to entry and provides us with an important competitive advantage in
the marketplace.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202148
Manager’s Report continued
3) Insight driven development and
innovation continued
A year of significant progress continued
Our priorities for 2021 in relation to the Development Portfolio were
as follows:
Priority Progress
Aim to successfully complete
thedevelopments currently
under construction, in
accordance with development
budget and programme.
Five developments reached
practical completion totalling
3.7million sq ft, with the
remainder of projects in build
ontrack.
Commence development of a
number of smaller units, to open
up sites and replace recently let
speculatively built stock.
Started development of
1.3 million sq ft of space, across
nine units, with an average size
of c150,000sq ft.
Further progress new and
existing planning applications
across the development portfolio.
Secured new planning consents
on 3.0 million sq ft and
submitted applications on a
further 2.1 million sq ft.
Progress site infrastructure works
on consented sites to facilitate
letting delivery.
Progressed site infrastructure
works to enable up to 2.3 million
sq ft of logistics space.
Look to secure further pre-let
developments.
Secured 1.1 million sq ft of
pre-lets/lettings during
construction.
Continue to target 2-3 million sq ft
of development activity per annum.
Accelerated development
activity,with new target of
3-4million sq ft, reflecting
strongoccupational market.
Development activity in 2021
Key development activity in the year included:
• 3.7 million sq ft of lease completions – adding £24 million to
contracted rent, of which 100% was pre-let or let during construction;
• 3.0 million sq ft of new planning consents secured; and
• 1.3 million sq ft of developments starts – with the potential to add
approximately £10.2 million to contracted rent, of which 21% has
been pre-let to date.
“ With an increasing number of occupier
conversations moving from high level
conversations, into detailed negotiations,
we have growing visibility in terms of
3.7 million sq ft of lease completions
Four pre-let developments totalling 3.7 million sq ft were completed
and became income producing during the year. These were the
developments for Co-Op in Biggleswade, DPD in Bicester, Amazon
in Littlebrook and Ocado in Bicester. A fifth asset, a 0.5 million sq
ft speculative development at Littlebrook, was let to Ikea prior to
the buildings completion. In total, the five developments added
£24.0million to the annual passing rent roll.
The facility constructed for DPD in Bicester asset was our first net
zero carbon in construction building (see Enhancing sustainability
through development for more information).
3.0 million sq ft of new planning consents secured
We continued to improve and upgrade the planning status of the land
portfolio during the year and maintained our high levels of planning
success. At Symmetry Park Merseyside we secured a detailed
consent for a 0.2 million sq ft logistics facility and outline consent
for a further 0.8 million sq ft of distribution space. We also secured
detailed consent for 0.7 million sq ft at Rugby and hybrid consent
for1.4 million sq ft at Wigan.
The Group submitted planning applications on 2.1 million sq ft of
space that were still awaiting determination at the year end. These
included units at Rugby, Littlebrook, Middlewich and Gloucester.
In response to the heightened level of activity experienced in 2021,
the unprecedented level of occupier demand and increased visibility
of interest in the near-term development pipeline, we increased our
estimate of target development starts to 3 – 4 million sq ft in 2022,
above our longer-term target of 2 – 3 million sq ft per annum. The
equity raise undertaken in September 2021 provides the necessary
funding to support this acceleration in our near-term programme
(seeFinancial Review for more information).
We divide the development portfolio into 3 categories:
1. Current development pipeline: buildings under construction.
2. Near-term development pipeline: anticipated development starts
during the next three years, split between development starts
within twelve months, and expected starts in the subsequent
12– 24 months.
3. Future development pipeline: longer-term development
opportunities, primarily held under land option agreements.
Annual Report 2021 Tritax Big Box REIT plc 49
STRATEGIC REPORT
Current development pipeline – 1.3 million sq ft
The Group’s current development pipeline comprises buildings under construction.
During 2021, we commenced construction of nine buildings on a speculative basis, across schemes at Aston Clinton, Middlewich,
Biggleswade and Bicester. These units total 1.3 million sq ft and have the potential to add £10.2 million to the annual rent roll.
We will consider undertaking speculative development only when there is demonstrable pent-up demand, limited supply and where we
have good visibility on specific occupier requirements for the proposed scheme. Speculative development is usually focused on smaller and
mid-sized units and can be considered where site constraints limit building configurations or to “open up” and provide credibility to a new
scheme by demonstrating development activity.
This considered approach can be seen at our scheme in Aston Clinton where two buildings totalling 0.3 million sq ft have been let during
thecourse of construction, representing c.70% or £2.4 million of the potential rent deliverable from this scheme.
While the primary intention is to create income-producing assets to grow the Group’s investment portfolio, we will occasionally develop
an asset for freehold sale, where working with an occupier will improve our ability to bring forward a planning consent, open up a site and
accelerate the capture of development profit.
In line with this approach, we agreed to sell a 0.1 million sq ft parcel of land at Biggleswade, having worked with the purchaser to secure
planning for 0.6 million sq ft of warehouse space on previously unallocated land.
At the reporting date, we had the following assets in the current development pipeline. The total estimated cost to completion is £65.4 million.
Estimated costs to completion
Period
Contractual
Total H1 2022 H2 2022 H1 2023 Total sq ft rent/ ERV
£m £m £m £m m £m
Location, Unit
Aston Clinton, Units 4 – 6 20.2 11.0 9.2 — 0.4 3.2
Middlewich 1A, Units 11 – 12 7.6 7.6 — — 0.2 1.3
Bicester Phase 1 Plot C 14.7 7.6 7.1 — 0.3 2.1
Biggleswade Phase 2, Units 2 – 4 22.9 17.9 5.0 — 0.4 3.6
Total 65.4 44.1 21.3 — 1.3 10.2
Of which is pre-let 14.0 — — — 0.3 2.4
Near-term development pipeline – 8.8 million sq ft
The Group’s near-term development pipeline comprises anticipated development starts within the next three-year period. This category is
further broken down into development starts targeted within the next 12 months, and development starts which are expected to occur within
the subsequent 12 – 24 months. This excludes assets which were under construction at the year-end as these are included in the current
development pipeline.
In January 2022, due to the increasing visibility over the level of occupational requirements and the positioning of the development portfolio
in terms of being able to satisfy this demand, we increased our guidance to target 3 – 4 million sq ft of development starts for 2022. Beyond
this, our longer-term guidance remains, which is to target the delivery of 2 – 3 million sq ft per annum.
At the year end, the Group’s near-term development pipeline spanned 8.8 million sq ft, which consisted of developments with a targeted
startdate within 12 months totalling 3.7 million sq ft and developments with a targeted start date in the subsequent 12 – 24 months totalling
5.1 million sq ft each with a potential rental income of £25 – 30 million and £35 – 40 million respectively.
2022 development activity
2022 has commenced strongly, with 1.8 million sq ft of near-term development starts so far in Q1 2022, adding a potential £13.1 million of
contracted rent, of which 56% has been pre-let.
This development activity includes two pre-lets: a 0.6 million sq ft HQ warehouse in Glasgow let to HarperCollins and a 0.4m sq ft logistics
facility in Doncaster let to B&Q, both on 15-year leases with CPI linked reviews.
In addition, speculative construction has begun across our sites at Merseyside, Littlebrook and Kettering. The building sizes across these
sites range from 0.1 million to 0.3 million sq ft and are being constructed in locations where there is evidence of pent-up demand, a limited
supply of modern buildings and where occupier discussions are well advanced.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202150
Manager’s Report continued
Near-term development pipeline – 8.8 million sq ft continued
Current book Estimated cost Estimated gross
value to completion ERV yield on cost
Total sq ft £m £m £m %
Near term starts within 12 months 3.7m 100.9 336.0 27.1 6-8%
Near term starts within the following 12 – 24 months 5.1m 72.2 563.5 41.8 6-8%
8.8m 173.1 899.5 68.9 6-8%
The table above analyses the near-term development pipeline at the year end. This supports our expectation of commencing 3 – 4 million sq ft
of new development in FY22, through an appropriate combination of pre-let activity and speculative development.
The current pipeline under construction at the year-end, together with the near-term pipeline expected to commence in 2022, have the
potential to add £36 million of contracted rent to the portfolio when these buildings are completed over the subsequent 12 – 24 month period.
We would therefore expect to see the full earnings benefit of these developments coming through by 2024.
“ Options provide a capital
efficient way of gaining exposure
to land through the limited
upfront costs needed to secure
Future development pipeline
The Group’s future development pipeline comprises the strategic
land portfolio and is predominantly controlled under longer-term
option agreements.
As at year end, the future development pipeline comprised1,370acres
with the potential to support 28.5 million sq ft of logistics development.
Options provide a capital efficient way of gaining exposure to land
through the limited upfront costs needed to secure these positions.
This structure also reduces development risk, as the land is only
acquired following the receipt of a planning consent and maximises
flexibility in terms of the timing and quantum of land drawdowns.
The longer-term pipeline has sites at various stages of the planning
process with multiple sites being currently promoted through local
plans. The longer-term pipeline relates to sites where construction
starts are expected to occur beyond three years.
The Group owns or is in the process of exercising the land option
across approximately 17% of the land portfolio and controls 83%
through long-term option agreements.
Development Management Agreements (“DMA”)
Under a DMA, we typically manage the delivery of an asset for a
third-party funder, in return for a fee and/or profit share. We will not
own the asset at any point and DMA’s are therefore not included within
our asset portfolio. DMA’s can provide us with an attractive source
ofadditional income for shareholders, with no capital requirements.
We had a DMA on our scheme in Banbury which has now been fully
developed out. Construction completed just prior to Christmas on
the final unit of 0.1 million sq ft. This unit was let at the beginning of
January and the letting concludes our involvement at Banbury.
The treatment and impact of DMA income on our performance is
discussed in more detail in the Financial Review.
Cost inflation being mitigated
Like many developers in the UK, we are experiencing cost inflation
for key raw materials which is feeding through to our development
projects. This issue is primarily being caused by the significant
supply chain disruption experienced as a result of Covid-19 and
Brexit. Labour costs are also increasing as a result of the widespread
reduction in labour availability that is hitting many sectors across the
economy, including the construction industry.
We are well placed to mitigate the impact of increasing build costs.
Our development platform has excellent relationships with key
suppliers in the construction supply chain that have been built
up over many years. In addition, the scale of our development
programme means we have greater buying-power compared to
most other developers in the logistics sector. These factors help us
to secure beneficial pricing and gain priority in reserving essential
building materials which keeps cost increases and potential project
delays to a minimum.
The favourable market conditions being experienced in the logistics
market are driving rental growth and asset value appreciation which
are also helping to mitigate the adverse impact of build cost inflation.
As a result, we remain confident in our guidance of delivering an
attractive 6 – 8% yield on cost on our overall development programme
with nearer-term projects likely to be delivered towards the lower end of
this range and medium to longer term projects towards the higher end.
Enhancing ESG performance through development
Our commitment to sustainable development is reflected in our
standards and objectives for construction, which across the
development portfolio acquired through the acquisition of DB
Symmetry, include achieving a minimum of BREEAM Very Good, an
EPC A grade and net zero carbon to the point of practical completion.
Annual Report 2021 Tritax Big Box REIT plc 51
STRATEGIC REPORT
Case study – generating value
through successful development
Our development site at Biggleswade exemplifies our ability to
create value through the development portfolio and generate
additional opportunities for value creation.
Biggleswade is a highly attractive location for occupiers. It is
situated on the A1, giving fast access to the M25, M1 and A14,
and the town offers a large and growing workforce, with skills
appropriate for the logistics sector. As with several other key sites
in our development portfolio, it offered us the chance to secure
an initial piece of development land and then grow ourholding
over time, by agreeing options with further landowners.
Our initial plan for phase 1 of the site was to develop around
1 million sq ft of space on a speculative basis, across several
units. Having obtained planning consent and received
considerable occupier interest, the business showed its agility
by quickly adapting its plans, when the opportunity arose to
secure a pre-let with Co-Op on a single 661,000 sq ft facility.
This unit was completed in February 2021 and, following the
customer’s fit out, became fully operational in early 2022.
With the pre-let signed and the site successfully opened
up, the team agreed an option on the phase 2 land and
subsequently obtained planning consent for 577,000 sq ft
across four units. This was achieved despite the land not being
allocated within the local authority plan, reflecting the shortage
of employment land within the borough, our strong relationship
with the local authority and the support of an occupier, Bond
International. Bond has since agreed to acquire one of the
units, of 112,000 sq ft, and we are seeing strong interest in the
three remaining units, which are scheduled for completion in
autumn 2022.
This success had led to us securing options on phases 3 and
4 at Biggleswade, which between them have the potential to
deliver a further 2.1 million sq ft of space. Phase 3 is already
attracting occupier interest on a pre-let basis and, while
planning has not yet been submitted, the local authority is
supportive of further applications, and we are working closely
with them to bring the scheme forward.
During the year, we completed our first net zero carbon development
for DPD at Bicester with the project serving as a pilot study to explore
ways we can reduce embodied carbon from construction. Having
modelled the construction to provide a baseline for improvement,
we worked with the contractor to identify ways to reduce embodied
carbon. This resulted in carbon savings of 535 tonnes or 8% against
the baseline. The final carbon balance has been offset through
projects that align with the UK Green Building Council’s guidance.
The project highlighted further areas for carbon reductions, which
wewill look to implement on future developments.
The five new developments completed in the year contributed to
increasing the proportion of A-C grade EPCs across the portfolio
from 90% to 95%. We have also continued to increase the proportion
of the portfolio with Green Building certification, which is up to 50%
from 43% as at January 2021.
Enhancing biodiversity is an important part of our ESG strategy,
in line with forthcoming legislation. During the year, we completed
biodiversity assessments at Middlewich, Merseyside, Biggleswade
and Rugby, enabling us to compensate for the reductions in habitat
that would otherwise have occurred. Future initiatives may include
creating new on-site and off-site habitats by planting woodlands,
hedgerows and new wildflower meadows.
Enhancing wellbeing is increasingly an important consideration
for occupiers. We have conducted a review of our standard base
specification against WELL Standard factors, meaning that future
occupiers will be able to tailor their workspace with wellness
as a priority and ensures occupiers can work towards a WELL
accreditation if they wish.
As part of our comprehensive regeneration of a redundant power
station at Littlebrook in Dartford, that now includes developments for
Amazon and Ikea, we have begun a partnership with a local football
club and an associated skills initiative, with funding of £215,000 over
five years. The site also enjoys a number of nature and wellbeing
features, such as cycle paths, walking paths and an apiary to
repopulate a locally endangered Dartford bee.
Priorities for 2022
Our priorities for the next 12 months in relation to our development
programme are:
• commence construction of 3 – 4 million sq ft high performing,
sustainable buildings in line with our net zero carbon strategy;
• continue to identify pre-lets and occupiers to lease the
speculativeprogramme;
• position the development portfolio to deliver 2 – 3 million sq ft of
logistics space over the longer-term – but be ready to respond
tohigher levels of demand in the near-term;
• secure further planning consents to ensure the targeted level of
development can be maintained; and
• secure further options on additional land to replenish the overall
development land portfolio.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202152
Manager’s Report continued
Investing in the Manager’s capabilities
As Manager, we continue to invest in our capabilities, so we can
provide the highest standards of service to the Group as it grows.
We have recruited a new Head of Research and continued to expand
our data analytics team, to underpin our intelligence-led approach
to the market. We have also appointed a new ESG Director, a new
Head of People Development and a new Director of Strategic Power
as we seek to strengthen our in-house capabilities and remain at the
forefront of innovation.
To ensure we have insight into how engaged our employees are,
we conducted a staff satisfaction survey in March 2021. There was
an overall engagement score of 74%, above benchmark of 71%,
with the results providing insight into how further improvements can
be made. All employees receive annual and interim reviews, which
includes analysis of training requirements. Training is undertaken
formally through specialist courses or informally through “lunch and
learn” events. ESG is embedded in reporting formats across all areas
of the business. The Manager achieved ISO14001, demonstrating
appropriate environmental management systems and processes.
The Group is also benefiting from the Manager becoming part of
global asset manager abrdn. This gives us access to a wide range
of specialist resource. Examples include aligning our approach
on climate change and collaborating on approaches to ESG data
management, in addition to utilising central resource functions to
increase efficiencies to the benefit of the Group’s shareholders.
Case study – the world’s
toughest row
The investment made by Tritax Big Box as lead sponsor of my
crew The Mothership provided us with essential funding to
take part in the Talisker Whisky Atlantic Challenge, also known
as ‘The World’s Toughest Row’, where we successfully rowed
3000k miles unaided in 40 days.
I am proud to be working for a Company which understands
the multi-faceted nature of motherhood and is striving to
support gender equality. We felt that the Company’s strategic
goals of operating a sustainable business and promoting social
responsibility chime with our crew’s objectives. All crews taking
part enjoy a sustainable crossing using only solar power to
drive the instruments on board, and collectively TheMothership
has been empowered to hope to inspire women and children of
all ages reminding them that our gender has nolimitations.
We are now four of only 250 women who have ever successfully
rowed an ocean and the Company’s support in allowing me
the flexibility to take part has enabled us to raise £70k for three
extremely worthwhile charities. Thank you on behalf of the
crew and the three charities.
Annual Report 2021 Tritax Big Box REIT plc 53
STRATEGIC REPORT
Financial Review
We delivered another strong financial performance during the year,
as the continued successful delivery of the strategy and the positive
market conditions contributed to further growth in net rental income,
earnings and net tangible assets per share. In addition, we are
gaining increasing visibility on future income growth capable of being
generated through our near-term development pipeline and as a
result have increased our capex target for development activity for
the forthcoming year (see below for further details).
The total dividend for the year was 6.70 pence per share (2020: 6.40
pence), representing growth of 4.7%. This contributed to a record
year for Total Accounting Return of 30.5% (2020: 19.9%), with growth
driven by market fundamentals translating into yield compression
across our investment portfolio, capital profits generated via our
development programme and further rental growth.
Rent collection remained very strong. Having successfully collected
all the rent due for 2020, we have achieved 100% collection of rent
due for 2021.
The share issue in September 2021 raised gross proceeds of
£300million at 204.00 pence per share, a premium to the prevailing
EPRA net tangible asset per share at the date of the issue of
194.22pence. In January 2022, the Company increased its guidance,
targeting development starts in 2022 of 3 – 4 millionsqft. This issue
of equity was raised with increasing visibility over an accelerating in
our development activity and the implications this has on near-term
financing requirements. This de-risks the financing of our development
programme for the next 12 to 18 months and means that westart
2022 in a well-capitalised position as we seek to capture this
opportunity. As a result of the issue and the further growth in the
portfolio valuation, the LTV ratio stood at 23.5% at 31December2021
(2020: 30.0%). At the same date, we had undrawn committed
borrowing facilities of £550 million.
For 2021, we set the following priorities in relation to our financial
performance:
Priority Progress
Continue to place an emphasis
on high rent collection levels.
100% of rent collected for the last
two years.
Deliver growth in both earnings
and net asset value.
Adjusted EPS
1
up 6.8% to 7.38p
and EPRA net tangible assets
pershare up 26.8% to 222.60p.
Ensure we maintain sufficient
liquidity levels to meet the
Company’s strategic needs.
Oversubscribed £300 million
share issue completed, to
financethe strategy for the next
12 – 18 months. £550 million
undrawn debt commitment
available as at 31 December 2021.
Maintain a strong balance sheet
position with our loan to value
within guidance of up to 35% LTV.
LTV at the year end of 23.5%.
Capital allocation framework
Effectively implementing our strategy requires us to carefully evaluate
the sources of financing and the uses to which we put it, with the aim
of delivering an attractive long-term return for shareholders.
Sources
We have the following sources of capital available, which we can use
in isolation or in combination:
• debt financing, with leverage within our stated target range;
• sale of existing investment assets;
• sale of development land;
• partnerships, such as joint ventures;
• raising additional equity, when in shareholders’ interests; and
• development management income, which when above our
medium term guidance levels are reinvested into the business.
Uses
Our strategy presents us with several options for deploying capital.
We rigorously evaluate opportunities on both an absolute basis
and relative to other opportunities. As market dynamics continue
toevolve, we will adapt where we deploy capital as necessary.
Our opportunities include:
• investing in and asset managing existing assets;
• acquiring assets that meet our investment criteria;
• developing assets on land the Group owns; and
• progressing and adding to our existing land bank.
Delivering strong,
sustainable performance
Frankie Whitehead
Chief Financial Officer
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202154
Financial Review continued
Presentation of financial information
The financial information is prepared under IFRS. Our subsidiaries
are consolidated at 100% and its interests in joint ventures are equity
accounted for.
The Board sees Adjusted EPS
1
as the most relevant measure when
assessing dividend distributions. Adjusted EPS
1
is based on EPRA’s
Best Practices Recommendations and excludes items considered
to be exceptional, non-recurring or not supported by cash flows,
and includes the developer’s licence fees that we receive on forward
funded developments.
Financial results
Net rental income
Net rental income for the year was 14.3% higher at £184.6 million
(2020: £161.5 million). The growth was the result of:
• a full year of income from lettings secured in 2020;
• five assets (DPD Bicester, Co-Op Biggleswade, Amazon
Littlebrook, Ikea Littlebrook and Ocado Bicester) becoming income
producing following practical completion during the year;
• net rental income from the Avonmouth asset acquired in April 2021
and a full year of income from the asset acquired in Southampton
in November 2020;
• rental growth secured through rent reviews and our active asset
management programme, with reviews settled delivering increases
to passing rent of 8.7% in the year across those assets; less
• a full year of income foregone from the assets sold in 2020.
At the year end, the contracted annual rent roll was £195.6 million
across 62 investments assets (31 December 2020: £180.6 million
across 59 assets). This includes £0.8 million relating to pre-let assets
in construction at 31 December 2021.
Administrative and other expenses
Administrative and other expenses, which includes all the operational
costs of running the Group, totalled £25.5 million for the year (2020:
£22.6 million). Growth in the average NAV resulted in the Investment
Manager fee increasing by £2.8 million to £20.7 million in the year.
Our operating cost base remains low and transparent, and the EPRA
Cost Ratio (including vacancy cost) for the year was lower at 13.9%
(2020: 14.2%), reflecting the operational cost benefits of further scale.
Operating profit
Operating profit before changes in fair value and other adjustments
was £178.0 million (2020: £147.5 million).
As noted in the discussion of our development programme, we earn
fees and/or profit share from managing developments for third parties.
By its nature, this other operating income is more variable than
property rental income, and it is included within Adjusted earnings as
it is supported by cash flows. We recognised £18.9 million of other
operating income from these agreements in the year (2020: £8.6 million).
This is above the anticipated £3-5 million run-rate for this income over
the medium term and we have therefore highlighted its impact on
earnings within the profit and earnings section below.
Share-based payment charge and contingent consideration
The structure of the Tritax Symmetry transaction led to senior
members of the Symmetry team becoming B and C shareholders.
Under IFRS, the structure of the Tritax Symmetry transaction has led
to the B and C shareholders’ value being split between:
i) contingent consideration, which is determined by certain provisions
under the shareholder agreement between Tritax Symmetry
HoldCo and the Tritax Symmetry Management Shareholders; and
ii) a share-based payment charge, which is the compensation the B
and C shareholders will receive as a result of their economic right
held to their share of future performance of the Tritax Symmetry
Development Assets.
During 2021, £5.5 million (2020: £5.9 million) was charged tothe Group
Statement of Comprehensive Income in respect of share-based
payment charges. A further £4.2 million (2020: £2.9 million) wascharged
in respect of the changes in the fair value of contingentconsideration.
Financing costs
Net financing costs for the year were £40.1 million (2020: £37.6million),
excluding the improvement in the fair value of interest rate derivatives
of £2.8 million (2020: £2.3 million reduction). The average cost of debt
was steady across year at 2.26% (2020: 2.17%), and the movement in
net financing costs was therefore the result of changes in the average
debt drawn during the year, which was £1.5 billion compared with
£1.3 billion in 2020.
Tax
We have continued to comply with our obligations as a UK REIT
and therefore are exempt from corporation tax on the property
rental business.
We received an exceptional tax credit of £3.9 million in the year.
Onacquisition of Tritax Symmetry, a deferred tax provision was
made for trading assets which were subsequently appropriated
to investment property, resulting in a tax liability which offset
the deferred tax provision on acquisition. This tax charge was
fully provided for within the Tritax Symmetry completion balance
sheet and it was therefore not charged to the Group Statement
of Comprehensive Income. Following the submission of tax
computations for 2019 and with no appropriation required for one
particular scheme, we received a refund in the year of £3.9 million
forappropriation tax previously paid.
The other operating income received under DMA contracts has
resulted in a tax charge of £2.4 million for 2021. The underlying tax
credit, being the net of the sums mentioned above, was therefore
£1.5 million for the year (2020: £0.1 million charge).
Profit and earnings
Profit before tax is significantly influenced by the movement in
property valuations (see below) and was £971.1 million for the year
(2020: £449.5 million). This resulted in basic earnings per share
1 excluding exceptional development income
55
STRATEGIC REPORT
Annual Report 2021 Tritax Big Box REIT plc
(EPS) of 55.39 pence (2020: 26.30 pence) and basic EPRA EPS
of7.47 pence (2020: 6.17 pence).
Adjusted EPS for 2021 was 8.23 pence (2020: 7.17 pence). The calculation
of Adjusted EPS can be found in note 12 to the financial statements.
When removing the income generated from development management
agreements, which we consider to be non-recurring and in excess of the
anticipated run-rate over the medium term, Adjusted EPS
1
was 7.38 pence
(2020: 6.91 pence). This excess DMA income is reinvested back into the
business with a view to generating recurring property rental income.
Dividends
Since 1 January 2021, the Board has declared the following
interimdividends:
Amount In respect of
Declared per share three months to Paid/to be paid
6 May 2021 1.60p 31 March 2021 1 June 2021
28 July 2021 1.60p 30 June 2021 23 August 2021
21 October 2021 1.60p
30 September
2021
17 November
2021
2 March 2022 1.90p 31 December
2021
31 March 2022
The total dividend for the year was therefore 6.70 pence per share,
an increase of 4.7% on the 6.40 pence paid in respect of 2020.
Thepay-out ratio for the year was 91% when compared against
Adjusted EPS
1
of 7.38 pence (2020: 93%).
Portfolio valuation
CBRE independently values the Group’s Investment assets that are
leased, pre-leased or have commenced construction. These assets
are recognised in the Group Statement of Financial Position at fair
value. Colliers independently values all optioned land and owned land
which has no current construction activity. Land options and any
other property assets are recognised at cost, less amortisation or
impairment charges under IFRS.
The share of joint ventures relates to 50% interests in two sites at
Middlewich and Northampton, relating to land and land options. These
two sites are equity accounted for and appear as a single line item in the
Statement of Comprehensive Income and Statement of Financial Position.
The total portfolio value at 31 December 2021, including all remaining
contractual commitments on forward funded developments and our
share of joint ventures, was £5.48 billion:
31 December 2021 31 December 2020
£m £m
Investment properties 5,249.1 4,053.5
Other property assets 4.0 9.4
Land options (at cost) 201.5 228.1
Share of joint ventures 25.6 28.5
Remaining forward funded
development commitments — 87.7
Portfolio value 5,480.2 4,407.2
The gain recognised on revaluation of our Investment properties was
£840.9 million (2020: £351.1 million). This portfolio valuation surplus
was therefore 19.1% across our investment and development assets,
net of capital expenditure. The main drivers of this increase include:
• the continued strength of the market and market yield compression,
with 43 bps of like-for-like compression recognised across the
year, taking our portfolio equivalent yield to 4.1% (31 December
2020: 4.5%);
• capital gains reflected across our development portfolio which
included five assets which reached practical completion in the year
and a further nine assets where construction commenced during
the year end; and
• the contribution from capitalising the rental growth achieved
across the investment portfolio.
Capital expenditure
We acquired one asset in an off-market transaction during the year,
for £90 million net of costs, reflecting a net initial yield of 5.1%.
We were targeting the deployment of £200 – 250 million during 2021
into development. This year, we exceeded that target, investing a
total of £274.3 million into a combination of land options, owned land
and assets under construction.
Total capital expenditure for the year therefore was £371.8 million
(2020: £302.2 million).
In January 2022, due to a notable increase in the level of occupier
demand across the development portfolio, the Company increase its
development guidance to target capital expenditure into development
of £350 – £400 million in 2022.
“ We have declared a dividend
totalling 6.70 pence per share for
1 excluding exceptional development income
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202156
Financial results continued
Embedded value within land options
Under IFRS, land options are recognised at cost and subject to
impairment review. As at 31 December 2021, our investment in land
options totalled £201.5 million (31 December 2020: £228.1 million).
As the land under option approaches the point of receiving planning
consent, any associated risk should reduce and the fair value should
increase. When calculating our EPRA NTA, we therefore make a fair
value mark-to-market adjustment for land options. At the year end,
the fair value of land options was £66.0 million greater (31 December
2020: £80.1 million greater) than aggregate costs expended to date.
Net assets
The year-end EPRA NTA per share was 222.60 pence (31 December
2020: 175.61 pence), up 26.8%. The primary driver of this increase
was due to the growth in value of the property portfolio, as
described above.
The Total Accounting Return for the year, which is the growth in
EPRA NTA plus dividends paid, was 30.5% (2020: 19.9%).
Equity capital
On 30 September 2021, the Company announced the results of a
placing, retail offer and direct subscription for new Ordinary Shares.
In total, 147,058,823 new Ordinary Shares were issued at 204 pence
per share, raising gross proceeds of £300 million. The issue price
represented a discount of 5.3% to the closing price on 29 September
2021 of 215.40 pence and a premium of 5.0% to the EPRA net
tangible assets per share at 30 June 2021 of 194.22 pence.
Debt capital
At 31 December 2021, the Group had the following borrowings:
Lender Maturity
Loan
commitment
£m
Amount drawn
at 31 December
2021
£m
Loan notes
2.625% Bonds 2026 Dec 2026 250.0 249.5
2.86% Loan notes 2028 Feb 2028 250.0 250.0
2.98% Loan notes 2030 Feb 2030 150.0 150.0
3.125% Bonds 2031 Dec 2031 250.0 247.5
1.5% Green bonds 2033 Nov 2033 250.0 246.4
Bank borrowings
RCF (syndicate of seven banks) Dec 2023/24 350.0 —
RCF (syndicate of six banks) Jun 2024/26 200.0 —
Helaba Jul 2025 50.9 50.9
PGIM Real Estate Finance Mar 2027 90.0 90.0
Canada Life Apr 2029 72.0 72.0
Total 1,912.9 1,356.3
There was one change to our debt facilities during the year, with the
maturity date of £190 million of the £200 million RCF extended by
12months to June 2026.
Green finance
In November 2020, we launched our Green Finance Framework and
issued £250 million of unsecured Green Bonds. During 2021, we
deployed and allocated the proceeds of this issue against our green
initiatives, including our sustainable development projects. This paves
the way for growing our green portfolio in a manner that supports
further Green Bond issuance in future.
Information on the allocation of the Green Bond proceeds can be
found in the Group’s Green Finance Report, which is available at
https://www.tritaxbigbox.co.uk/media/zjvgaohc/tritax-big-box-reit-
green-finance-allocation-and-impact-report.pdf.
Interest rates and hedging
Of the Group’s debt commitments, 69% (31 December 2020: 69%) is
at fixed interest rates. For our variable rate debt, our hedging strategy
is to use interest rate caps which run coterminous with the respective
loan. These allow us to benefit from current historically low interest
rates, while minimising the effect of a significant increase in interest
rates in the future.
Combined with the fixed-rate debt, the Group’s derivative instruments
hedged 100.0% of its drawn debt as at the year end. As a consequence,
we had a capped cost of debt of 2.53% (31 December 2020: 2.49%)
at the year end. The all-in running cost of borrowing at 31 December
2021 was 2.26% (31 December 2020: 2.17%).
“ The Total Accounting Return for
the year, which is the growth in
EPRA NTA plus dividends paid,
Financial Review
continued
Annual Report 2021 Tritax Big Box REIT plc 57
STRATEGIC REPORT
Debt maturity
At 31 December 2021, our debt had an average maturity of 6.5 years
(31 December 2020: 7.4 years).
Loan to value (LTV)
We have a conservative leverage policy, with a medium-term LTV
target of 30%-35%. At the year end, the LTV was 23.5% (31 December
2020: 30.0%), reflecting the receipt of proceeds from the equity issue
ahead of their deployment and valuation growth recorded across the
property portfolio. Please also see notes to the EPRA and other key
performance indicators for further details on the LTV calculation.
Net debt and operating cash flow
Net debt at the year end was £1,285.2 (31 December 2020:
£1,297.9million), as below:
31 December
2021
£m
31 December
2020
£m
Gross debt drawn 1,356.3 1,355.7
Less: cash (71.1) (57.8)
Net debt 1,285.2 1,297.9
Net operating cash flow plus licence fees received was £196.1 million
for the year (2020: £140.2 million). Net cash flow used in investing
activities during the year was £327.3 million (2020: £150.2 million).
Going concern
We continue to have a healthy liquidity position, with strong levels
of rent collection, a favourable debt maturity profile and substantial
headroom against its financial covenants.
The Directors have reviewed our current and projected financial position
over a five-year period, making reasonable assumptions about its
future trading performance, including any potential longer-term effects
of Covid-19. Various forms of sensitivity analysis have been performed,
in particular regarding the financial performance of our customers.
As at 31 December 2021, our property values would have to fall by
approximately 50% before our loan covenants are breached at the
corporate level.
At the year end, we had an aggregate of £550 million of undrawn
commitments under its senior debt facilities, of which £65.4 million
(see note 32) was committed under various development contracts.
Our loan to value ratio stood at 23.5%, with the debt portfolio having
an average maturity term of approximately 6.5 years. During the year,
we raised £300 million through a heavily oversubscribed share issue,
as well as agreeing an extension to the maturity of our £200 million
revolving credit facility (see note 23), indicating that additional liquidity
is available at attractive rates.
As at the date of approval of this report, we had substantial headroom
within our financial loan covenants. Our financial covenants have been
complied with for all loans throughout the year and up to the date
of approval of these financial statements. As a result, the Directors
have a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
theforeseeable future, which is considered to be till 31 March 2023.
Credit rating
The Company has a Baa1 long-term credit rating from Moody’s
Investor Services. In December 2021, Moody’s improved the
Company’s outlook to Baa1 (positive) from Baa1 (stable). This reflects
the Company’s growing scale and continued focus on high-quality
logistics assets, supported by even stronger sector fundamentals
and the benefit of controlling and owning the UK’s largest land
portfolio. The positive outlook reflects Moody’s expectation that the
Company will continue to generate growing cash flow and maintain
good liquidity, while retaining high occupancy levels and a balanced
growth strategy. The change applies to the long-term issuer rating.
Alternative Investment Fund Manager (AIFM)
The Manager is authorised and regulated by the Financial Conduct
Authority as a full-scope AIFM. The Manager is therefore authorised
to provide services to the Group and the Group benefits from the
rigorous reporting and ongoing compliance applicable to AIFMs
in the UK.
As part of this regulatory process, Langham Hall UK Depositary LLP
(Langham Hall) is responsible for cash monitoring, asset verification
and oversight of the Company and the Manager. In performing its
function, Langham Hall conducts a quarterly review during which it
monitors and verifies all new acquisitions, share issues, loan facilities
and other key events, together with shareholder distributions, the
quarterly management accounts, bank reconciliations and the
Company’s general controls and processes. Langham Hall provides
a written report of its findings to the Company and to the Manager,
and to date it has not identified any issues. The Company therefore
benefits from a continuous real-time audit check on its processes
and controls.
Priorities for 2022
Our priorities for 2022 in relation to our financial performance and
position are:
• to target further growth in both earnings and net asset value and
therefore provide attractive Total Accounting Returns to Shareholders;
• to maintain a strong balance sheet and loan to value within the
guidance of up to 35%; and
• to increase capital expenditure deployed into development, the
2022 target is £350 – £400 million.
“ We have a healthy liquidity
position, with strong levels of
rent collection, a favourable debt
maturity profile and substantial
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202158
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 its behalf. We
aim to operate in a low-risk environment, focusing on a single
subsector of the UK real estate market to deliver an attractive,
growing and secure income for shareholders, together with the
opportunity for capital appreciation. The Board recognises that
effective risk management is important to our 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,
manage 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.
At least twice a year, the Board undertakes a formal risk review,
with the assistance of the Audit & Risk Committee, to assess
the effectiveness of 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.
Managing risk
Property risk
1. Tenant default
2. Portfolio strategy
3. Competition for investment
4. Performance of the UK retail sector and
the continued growth of online retail
5. Execution of development business plan
Financial risk
6. Debt financing
Corporate risk
7. We rely on the continuance
oftheManager
Taxation risk
8. UK REIT status
Political risk
9. Disruptive Brexit
Other risk
10. Severe economic downturn
11. Physical and transitional risks from
climate change
Low Medium High
Low Medium High
2
1
10
3
4
8
7 6
11
5
9
Probability
Impact
TBBR
Board
TBBR Audit
& Risk Committee
TMLLP Executive Committee
TMLLP Risk Committee
Reporting and escalation
Direction and oversight
Annual Report 2021 Tritax Big Box REIT plc 59
STRATEGIC REPORT
PROPERTY RISK
1. Tenant default
The risk around one or more of our tenants defaulting.
Gross risk Mitigation Net Probability Net impact
Medium –
High
Our investment policy limits the exposure to any one tenant
to 20% of gross assets or, where tenants are members
of the FTSE, up to 30% each for two such tenants. This
prevents significant exposure to a single retailer. To mitigate
geographical shifts in tenants’ focus, we invest in assets in
a range of locations, with easy access to large ports and
key motorway junctions. Before investing, we undertake
thorough due diligence, particularly over the strength of
the underlying covenant and the group of the covenants.
We select assets with strong property fundamentals (good
location, modern design, sound fabric), which should be
attractive to other tenants if the current tenant fails. We
continually monitor and keep the strength of our tenant
covenant’s under review. In addition, we focus on assets
let to tenants with strong financial covenant strength,
and assets that are strategically important to the tenant’s
business. Ourmaximum exposure to any one tenant
(calculated by contracted rental income) was less than
16.5% as at 31 December 2021.
Medium Medium – The default of one or more of our
tenants would immediately reduce revenue
from the relevant asset(s). If the tenant cannot
remedy the default and we have to evict the
tenant, there may be a continuing reduction
in revenues until we are able to find a suitable
replacement tenant, which may affect our
ability to pay dividends to Shareholders. The
circumstances around Covid-19 have led to
certain sectors including certain parts of the
retail sector being negatively impacted, this
will impact the financial strength of some of
our Customers.
Risk appetite
We have a specific Investment Policy, which we adhere to and for
which the Board has overall responsibility. We have a limit within
our Investment Policy, which allows our exposure to land and unlet
development to be up to 15% of gross asset value, of which up to
5%can be invested in speculative development.
Principal risks and uncertainties
Further details of our principal risks and uncertainties are set out
below. They have the potential to materially affect our business.
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 principal risks are the same
as detailed in the 2020 Annual Report, with the key changes being
i) the introduction of a new risk relating to physical and transitional
risks from climate change, and ii) the consolidation of previous risks
in relation to debt financing into one risk (Risk 6), along with the
consolidation of previous risks in relation to development, into one
risk (Risk 5).
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 are not yet fully understood. As
a result, any appropriate mitigations are also still evolving, however,
these emerging risk are not considered to pose a material threat
to the Company in the short term. This could, however, change
depending on how these risks evolve over time. Senior members
of the Manager are responsible for day-to-day matters and have
a breadth of experience across all corporate areas; they consider
emerging risks and any appropriate mitigation measures required.
These emerging risks are then raised as part of the bi-annual
risk assessment where it is considered whether these emerging
risks have the potential to have a materially adverse affect on the
Company. The emerging risks that could impact the Company’s
performance cover a range of subjects which include but are not
restricted to climate change, technological advancement, inflation
and supply chain disruption. The Board is mindful of current events
involving Russia and the Ukraine, which, at present is uncertain
and evolving day by day. With no direct exposure to Europe, we
are currently not seeing any significant impact on our business but
we will continue to monitor the situation closely. 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.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202160
PROPERTY RISK continued
2.Portfolio strategy
The ability of the Company to execute on its strategy and deliver performance.
Gross risk Mitigation Net Probability Net impact
Slight –
High
The Group is focused on a single sector of the commercial
property market, the investment portfolio is 100% let,
with long unexpired weighted average lease terms and an
institutional-grade tenant base. All the leases contain upward-
only rent reviews, which are either fixed, RPI/CPI linked or
at open market value. These factors help support our asset
values and overall portfolio performance. We undertake
ongoing reviews of asset performance along with a review
over the balance of our portfolio, split between Foundation,
Value Add and Land as well as considerations over covenant,
location and building type. Our asset performance is regularly
appraised and where we feel the assets are mature in terms
of performance, they are ear-marked for potential disposal.
Our development portfolio is executed in a low-risk manner,
with significant capital targeted for deployment once we have
secured a pre-let agreement.
Low Medium – An adverse change in the
performance of our property portfolio may
lead to lower returns for Shareholders or a
breach of our banking covenants. Market
conditions may lead to a reduction in the
revenues we earn from our property assets,
which may affect our ability to pay dividends
to Shareholders. A severe fall in values may
result in a fall in our NAV as well as a need to
sell assets to repay our loan commitments.
3. Competition for investment in the Big Box sector
With increasing competition in the investment market this may restrict our ability to grow the portfolio.
Gross risk Mitigation Net Probability Net impact
Moderate –
Medium
In 2021 the investment market was particularly strong, this
saw increased competition bid down investment yields to
record low levels. The strength of the market has increased
the competition for UK logistics assets. Despite this, we
have extensive contacts in the sector and often benefit from
off-market transactions. We also maintain close relationships
with a number of investors and developers in the sector,
giving us the best possible opportunity to secure future
acquisitions. We are not exclusively reliant on acquisitions
to grow the portfolio. Our leases contain upward-only rent
review clauses and we have a large development pipeline
and a number of current asset management initiatives within
the portfolio, which means we can generate additional
income and value from the existing portfolio. We own and
control one of the largest development land banks in the
UK, which significantly reduces the risk that competition will
impact our ability to grow and enhance shareholder value.
Medium Low – Competitors in the sector may
be better placed to secure property
acquisitions, as they may have greater
financial resources, thereby partly restricting
the ability to grow our NAV, deliver value to
shareholders, further diversify the portfolio
and add additional liquidity to our shares.
Post the effects of Covid-19, logistics assets
are arguably even more sought after than
before and therefore competition is likely
to increase for the most prime assets. This
has been observed during 2021 with yields
being bid down to record low levels.
4. Performance of the UK retail sector and the continued growth of online retail
Gross risk Mitigation Net Probability Net impact
Severe –
Medium
The diversity of our institutional-grade tenant base means
the impact of default of any one of our tenants is low.
In addition to our due diligence on tenants before an
acquisition or letting, we regularly review the performance
of the retail sector, the position of our tenants against their
competitors and, in particular, the financial performance of
our tenants. We have also increasingly been diversifying our
tenant exposure to various sub-sectors of the retail sector
i.e. online, food, homeware, fashion, other. Our fashion
retail exposure is c.3% of contracted rent. The risk around
traditional retail is mitigated by the increase in online retail
sales, the transition to omnichannel shopping, and this
has driven occupational demand in 2021. Our portfolio
is modern and of a high-quality nature and therefore is
attractive to those with an online presence.
High Medium – Our focus on the Big Box
sector means we directly rely on the
distribution requirements of UK retailers
and manufacturers. Insolvencies and
CVA’s among the larger retailers and online
retailers could affect our revenues and
property valuations. The probability of
certain retailers defaulting has increased
post Covid-19, however a greater proportion
of sales are being made online which
compensates for this, these orders are
fulfilled via the assets that we invest in.
Principal Risks and Uncertainties continued
Annual Report 2021 Tritax Big Box REIT plc 61
STRATEGIC REPORT
5. Execution of Development business plan
There may be a higher degree of risk within our development portfolio.
Gross risk Mitigation Net Probability Net impact
Moderate –
High
The Company has a significant development pipeline, it
represents c.8% of our gross assets as of 31 December
2021. Our development strategy is low risk and we target
only investing significant capital into a development project
once a pre-let agreement has been secured. Our appetite
for speculative development is low and we have a limit of
5% of GAV exposed to speculative developments within
our Investment Policy. The risk of cost overruns is mitigated
by our experienced development team which includes a
thorough procurement and tender process on all contracts,
including agreeing fixed priced contracts. We undertake
thorough covenant analysis and ongoing reviews of our
contractors and secure guarantees in relation to build
contracts where possible. In respect of pre-let forward
funded developments, any risk is low, and mitigated by
the fact the developer takes on a significant amount of
construction risk and the risk of cost over-runs.
Low Low – Our development activities are likely
to involve a higher degree of risk than is
associated with standing assets. This could
include general construction risks, delays
in the development or the development
not being completed, cost overruns or
developer/contractor default. Very recently
we have seen small delays to construction
starts due to the availability of certain raw
materials as well as inflationary increases to
construction costs, which we will continue
to monitor and mitigate where we can.
If any of the risks associated with our
developments materialise, this could affect
the value of these assets or result in a delay
to lease commencement. The occupational
market is very strong and the UK is
experiencing the lowest level of vacancy
rates ever, this should be positive from a
development perspective for TBBR.
FINANCIAL RISK
6. Debt financing
Gross risk Mitigation Net Probability Net impact
Slight –
Medium
The Group has diversified sources of long-term unsecured
borrowings in the form of £500 million in Public Bonds,
£400 million in Unsecured Private Loan Notes and £250
million in Green Bonds. Wealso have £550 million of bank
finance available split across two revolving credit facilities,
and £212.9million of secured debt across three separate
facilities. This helps keep lending terms competitive. This
access to multiple debt markets should enable the Group
to raise future liquidity in a more efficient and effective
manner via an unsecured platform whilst at competitive
rates. The Board keeps our liquidity and gearing levels
under review, as well as monitoring the bank covenants
and any associated headroom within covenant levels. We
have undrawn headroom of £550 million within our current
debt commitments, at 31 December 2021. The Group aims,
where reasonable to minimise the level of debt with Sonia
exposure, by using hedging instruments with a view to
keeping variable rate debt approximately 90%+ hedged.
Medium Medium – Without sufficient debt funding,
we may be unable to pursue suitable
investment opportunities in line with our
investment objectives. If we cannot source
debt funding at appropriate rates, either
to increase the level of debt or re-finance
existing debt, this may impair our ability to
maintain our targeted dividend level and
deliver attractive returns to shareholders.
Interest rates on the majority of our debt
facilities are fixed term, however we do have
an exposure to variable rate debt.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202162
CORPORATE RISK
7. We rely on the continuance of the Manager
Gross risk Mitigation Net Probability Net impact
Slight –
High
Unless there is a default, either party may terminate the
Investment Management Agreement by giving not less than
24 months’ written notice. The Management Engagement
Committee regularly reviews and monitors the Manager’s
performance. In addition, the Board meets regularly with
the Manager, to ensure we maintain a positive working
relationship. Following the acquisition of 60% of the
Manager by abrdn, this enhances the resources available
tothe Manager.
Low Medium – We continue to rely on the
Manager’s services and its reputation in the
property market. As a result, the Company’s
performance will, to a large extent, be
underpinned by the Manager’s abilities in
the property market and its ability to asset
manage and develop its property portfolio.
Termination of the Investment Management
Agreement would severely affect the
Company’s ability to effectively manage its
operations and may have a negative impact
on the share price of the Company.
TAXATION RISK
8. UK REIT status
We are a UK REIT and have a tax-efficient corporate structure, which is advantageous for UK Shareholders. Any change to our tax status
orinUK tax legislation could affect our ability to achieve our investment objectives and provide favourable returns to Shareholders.
Gross risk Mitigation Net Probability Net impact
Severe –
High
The Board is ultimately responsible for ensuring we adhere
to the UK REIT regime. It monitors the REIT compliance
reports provided by:
• the Manager on potential transactions;
• the Administrator on asset levels; and
• our Registrar and broker on shareholdings.
The Board has also engaged third-party tax advisers and
auditors to help monitor REIT compliance requirements.
Low Low – If the Company fails to remain a
REIT for UK tax purposes, our property
profits and gains will be subject to UK
corporation tax.
POLITICAL RISK
9. Disruptive Brexit
Gross risk Mitigation Net Probability Net impact
Moderate –
Low
The Group operates with a focus in the UK Big Box
market which has a supply shortage against current
levels of demand, which, along with the structural shift
to online retailing will assist in supporting portfolio and
sector performance. We have regular engagement with
key occupiers to understand how Brexit is affecting their
businesses and whether this is affecting their need for
logistics space. The Group is currently well positioned with
long and secure leases and a diverse blue chip tenant line
up, with a focus on tenants with financial strength, which
are well positioned to withstand any uncertainty in the UK
economy. For those businesses that may need to stock
more inventory onshore due to concerns surrounding
import delays, this is likely to lead to greater demand for
warehousing space in the UK which is an opportunity for
us. With our existing landbank we are able to work with
our occupiers to support them with the development of
new assets.
Medium Low – The UK left the EU in January
2020 and following the transition period
up to 31 December 2020, the EU and UK
have reached an agreement on a new
partnership. This agreement sets out the
rules that apply between the EU and the UK
as of 1January 2021. Economic volatility is
not a new riskfor the Group; however, until
some of the implications, which include
longer term trade relationships become
clearer, the exact impact on the Company
and its customers remains uncertain.
Principal Risks and Uncertainties continued
Annual Report 2021 Tritax Big Box REIT plc 63
STRATEGIC REPORT
OTHER RISK
10. Severe economic downturn
Gross risk Mitigation Net Probability Net impact
Severe –
High
A severe economic downturn could be caused
by civil unrest, terrorism, war or a pandemic. On
23March 2020 the Covid-19 pandemic caused
the UK Government to place the UK into lockdown
and issue significant support to the UK economy.
Throughout 2020 there were various forms of
restrictions placed on the freedom of movement
due to the virus, which caused the UK to enter a
recession in the year. Whilst there has been some
return to normality following the roll out of the
vaccine, it is a virus which is still impacting on a
global scale.
The Group mitigates the impact of this by investing
in high-quality investment assets that operate in
a sector that has strong structural drivers and a
supply demand imbalance in favour of landlords.
The Group monitors its Customer’s financial health
regularly and where possible enters into long leases.
The Manager continues to monitor the business
continuity plan of its suppliers to ensure the
impact to the Group and its service providers is
minimised. Members of the Manager’s staff, have
a working week that now involves some element
ofworkingvirtually.
The Manager continues to monitor the impact that
Covid-19 has had on the Groups assets and its
tenants in order to protect the Groups cash flow
regarding rent collection, impact on dividends and
banking covenants.
Covid-19 has accelerated behavioural patterns such
as online shopping, which, as a result led to the
highest level of occupational take-up in 2020, which
we expect to be surpassed in 2021. This is highly
supportive of our business model.
High Low – A severe downturn in the economy
could impact a number of the Groups tenants,
contractors, and service providers, which could
mean a loss of rent income and disruption to
operations. The probability of this is deemed
moderate as following the Covid-19 outbreak during
2020 and subsequent impact on the economy,
despite there now being a vaccine, global markets
are still very sensitive to new variants and the
number of cases. Elements of the economy such
ashospitality and travel still remain effected.
STRATEGIC REPORT
Tritax Big Box REIT plc Annual Report 202164
Principal Risks and Uncertainties continued
OTHER RISK continued
11. Physical and transitional risks from climate change
Gross risk Mitigation Net Probability Net impact
Moderate –
Medium
The Manager operates with a dedicated
sustainability team as well as an ESG Committee
who take operational responsibility for the
Company’s ESG matters. The Manager regularly
reports to the Board, including monitoring against
the Company’s stated sustainability targets and
providing updates on future initiatives.
The Company has a modern portfolio, with strong
ESG credentials which include 95% of the portfolio
having and EPC rating of A-C, these properties
should be more appealing to occupiers and
therefore perform well relative to others.
ESG is embedded within our investment and
development processes such that climate related
risks are looked at when purchasing assets and
minimum standards of BREEAM Very Good and
net zero carbon are targeted for development. We
are also confident that due diligence assessments,
internal procedures and insurance cover adequately
mitigate these ESG risks.
We also actively participate and engage in several
Real Estate and Sustainability organisations (such as
EPRA, Sustainalytics and the World Green Building
Council) to ensure we are aware of future initiatives
and challenges. We measure and report annually
on our key ESG metrics to demonstrate how we are
managing our ESG risks.
TBBR engaged with a third party to conduct climate
change risk assessments in 2021 to understand
the impacts of climate change on the portfolio,
using various scenario analysis. From a physical
risk perspective, the findings suggested that the
portfolio is unlikely to be materially affected under
a2.0 degree global warming scenario.
Medium Medium – There is a risk of physical damage to the
property portfolio as a result environmental related
factors such as flood risk and rising temperatures.
As institutional investors focus their capital towards
more energy efficient buildings, there is the risk that
less energy efficient buildings do not perform as well
as those with the highest ESG credentials.
ESG requirements are likely to increase over time
and therefore the impact of a failure to comply with
regulatory standards has the potential to affect the
performance of the Company in the future.
The costs of carbon pricing could increase in the
future therefore increasing the future construction
costs associated with our development pipeline and
therefore reducing development profits.
The Strategic Report was approved by the Board and signed
on its behalf by Aubrey Adams, Chairman, on 2March 2022.
Annual Report 2021 Tritax Big Box REIT plc 65
STRATEGIC REPORT
Going Concern and Viability Statement
The Strategic Report describes the Group’s financial position,
cash flows, liquidity position and borrowing facilities. The Group’s
cash balance as at 31 December 2021 was £71.1 million, of which
£70.9 million was readily available. It also had a further £550 million
of undrawn commitments under its senior debt facilities, of which
£65.4 million (see note 32) was committed under various pre-let
development and construction contracts at the year end.
The Group currently has substantial headroom against its borrowing
covenants, with a Group LTV of 23.5% as at 31 December 2021.
A significant part of the Group’s borrowings are on an unsecured
basis, providing the Group with a deeper pool of liquidity and with
more flexibility over its arrangements. In June 2021, the Group
agreed an extension to the maturity of £190 million of its £200 million
unsecured RCF by 12 months to June 2026. This assisted the Group
in positioning its weighted average maturity across its borrowings of
6.5 years as at 31 December 2021 (2020: 7.4 years). As a result and
following rigorous stress testing of financial forecasts in relation to
future viability, the Directors believe that the Group is well placed to
manage its current and future financial commitments.
The Group benefits from a secure income stream of leases with an
average unexpired term of 13.0 years, containing upward-only rent
reviews, which are not overly reliant on any one tenant and present
awell-diversified risk.
The Directors believe that there are currently no material uncertainties
in relation to the Company and the Group’s ability to continue until
31 March 2023. The Board is, therefore, of the opinion that the
goingconcern basis adopted in the preparation of 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 3 March 2027. This period has been selected because it is the
period that is used for the Group’s medium-term business plans and
individual asset performance analysis.
The assumptions underpinning these forecast cash flows and
covenant compliance forecasts were sensitised to explore the
resilience of the Group to the potential impact of the Group’s
significant risks, or a combination of those risks. The key
assumptions sensitised for the forecast cash flows in downside
scenarios were portfolio value, which was sensitised by up to a
30% reduction or to vacant possession value upon lease expiry,
occupation of buildings was assumed to be 100% except where
tenant defaults were sensitised, rental uplifts assumed to be between
0% and 2% upon reviews, cost inflation was assumed to be up to
10% and debt cost assumptions varied upon refinancing.
The principal risks on pages 57 to 63 summarises those matters that
could prevent the Group from delivering on its strategy. A number
of these principal risks, because of their nature or potential impact,
could also threaten the Group’s ability to continue in business in its
current form if they were to occur.
The Directors paid particular attention to the risk of a deterioration
in economic outlook which would impact property fundamentals,
including investor and occupier demand which could have a negative
impact on valuations, and give rise to a reduction in the availability
of finance. The Board also paid attention to the impact of either a
delay to the receipt of planning permission or the risk of not achieving
planning consent as well as the impact of inflationary costs on raw
materials in the current environment. The remaining principal risks,
whilst having an impact on the Group’s business model, are not
considered by the Directors to have a reasonable likelihood of impacting
the Group’s viability over the five-year period to 3 March 2027.
The sensitivities performed were designed to be severe but plausible;
and to take full account of the availability of mitigating actions that
could be taken to avoid or reduce the impact or occurrence of the
underlying risks:
Downturn in economic outlook: Key assumptions including
occupancy, void periods, planning risk, rental growth and yields
were sensitised to reflect reasonably likely levels associated with an
economic downturn. The assumptions were considered in light of
Covid-19 and any short- to medium-term impact resulting from the
pandemic. Various forms of sensitivity analysis have been performed,
in particular with regard to the financial performance of the Group’s
customers, taking into account any discussions held with customers
surrounding their operational performance, including their current
status on rent collection.
Restricted availability of finance: Following the extension of the
£190 million RCF by 12 months until June 2026, the Group does
not have a significant refinancing event occurring until December
2024. Financing is arranged in advance of expected requirements
and the Directors have reasonable confidence that additional or
replacement debt facilities will be put in place when the need
arises. Furthermore, the Group has the ability to make disposals
of investment properties to meet the future financing requirements
under the development portfolio.
Viability Statement
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 period ending 3 March 2027.
66 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Chairman’s Governance Overview
Aubrey Adams OBE, FCA, FRICS
Chairman
This report seeks to demonstrate and explain the Company’s core
governance-related processes and procedures, and highlights the
key governance actions which have taken place during the period.
The Board continues to believe that sound corporate governance plays
a key role in shaping the long-term success of the Company and
provides a strong foundation for the delivery of its strategic objectives.
Board priorities
One of our key priorities as a Board is to oversee the successful
implementation of the business’ strategy and ensure it is positioned for
long-term success. The Board continues to support the Manager in any
potential investment and divestment decisions and ensures ongoing
compliance with the Company’s Investment Policy and Objectives.
The Company has continued to grow throughout the period aided
by a highly successful equity raise in September 2021, raising
£300million gross proceeds, which will be used to fund our
near-term development pipeline.
The Board continued to monitor the impacts of the Covid-19
pandemic on the business as well as the wider macroeconomic
environment. The Board recognises that although the pandemic
has been challenging for society as a whole it has reinforced
the importance of the logistic sector and the overall strategy of
the Company.
ESG remains an important focus for the Company, as well as its
stakeholders, and with the support of the Manager, the Company is
making good progress in implementing its sustainability strategy and
has already achieved a number of its 2023 targets. The Company has
also fully allocated £250 million of Green Bond proceeds, following
the issuance in November 2020 to qualifying green initiatives.
KarenWhitworth is our “ESG Champion” on the Board and engages
directly with the Manager’s ESG Director on various sustainability
topics. A key focus for the period has been understanding the risks
and opportunities presented by climate change and the impacts
it could have on our business operations. For further information
pleaserefer to pages 39 to 41.
During the period, abrdn completed its acquisition of a 60% stake
inthe Manager. We believe that the acquisition has strengthened
theManager’s resources and will continue to benefit the Company
in the long term. We look forward to the continued high quality of
service and performance of the Manager.
During the year, the Management Engagement Committee continued
to conduct a comprehensive review of the Investment Management
Agreement (“IMA”), supported during the process by various external
advisers. It is anticipated that the review will be finalised in the
near term.
Governance highlights for 2021
• Appointed Wu Gang and Elizabeth Brown as
Non-ExecutiveDirectors.
• Successfully implemented the succession planning
programme with the appointment of Aubrey Adams as
Chairman with effect from the 2021 AGM and Alastair Hughes
as Senior Independent Director.
• Complied with all of the principles and provisions of the
2019 AIC Code applicable to the Company. Please see
pages 72 to 73.
• Met all of the requirements set out in the Financial Reporting
Council’s Guidance on Risk, Internal Control and Related
Financial and Business Reporting. Please see page 73.
• Conducted a comprehensive external Board evaluation
exercise. Please see page 85.
• Continued to enhance the Company’s succession and
contingency planning processes. Please see pages 83 to 85.
• Further enhanced processes and procedures across the
business and its supply chain in compliance with the Modern
Slavery Act 2015 and prepared our annual statement which
appears on our website. Please see page 87.
• Made good progress on implementing our sustainability
strategy and achieved a number of our 2023 targets. Please
see pages 32 to 41.
“ Strong governance is
essential for the creation of
value for all stakeholders.”
67
CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
Board and Committee composition
As announced in January 2021, Richard Jewson retired as Chairman
of the Company following the May 2021 Annual General Meeting.
TheNomination Committee led a comprehensive Chairman
succession search, which resulted in my appointment as Chairman
and Alastair Hughes as Senior Independent Director. Susanne Given
resigned from the Board in September 2021 following five years of
service owing to her other commitments. Following these changes,
the Nomination Committee reviewed the composition of the Board
and identified the desirability to appoint two new Non-Executive
Directors. We welcomed Wu Gang and Elizabeth Brown as
Non-Executive Directors to the Board during the year. For further
details regarding the recruitment process please refer to page 83
inthe Nomination Committee Report.
Board development
We continue to receive regular updates and briefings on corporate
governance as well as wider regulatory changes within the market
toensure we comply with all applicable laws and regulations.
During the year, the Board completed several training sessions,
witha key focus on the UK economy and capital markets and on
the incoming Task Force on Climate-related Disclosures and Carbon
Reporting. The sessions help to upskill the Board and ensure we
have sufficient knowledge to discharge our duties effectively, further
details of which can be found on page 74.
Board engagement
We believe that our positive engagement and working relationship
with the Manager is key to enhancing the Company’s governance
arrangements and ensuring that they are robust and fit for purpose.
We work closely with the Manager to identify areas for improvement
and best practice which promotes an open and collaborative culture.
This year, we reviewed a number of our policies and procedures,
including refreshing the Disclosure Policy.
We also regularly engage with the Company’s advisers, Jefferies
(Joint Financial Adviser and Joint Corporate Broker), JP Morgan
Chase & Co (Joint Corporate Broker), Taylor Wessing LLP (Legal
Adviser) and Akur Limited (Joint Financial Adviser), to discuss
investor feedback they have received and/or gauge their views on
corporate strategy and performance. We also provide investors with
regular updates on significant business events, specifically financial
performance and investment activity, through announcements via
theRegulatory News Service of the London Stock Exchange (“RNS”).
Priorities for 2022
Looking ahead to 2022, the Board is focused on embedding our
new Non-Executive Directors, Wu Gang and Elizabeth Brown, to the
Board as well as continuing to progress the Company’s sustainability
strategy and targets ahead of our 2023 deadline alongside the
delivery of further strong financial performance. In addition, we
plan to finalise the IMA review in the near term and look forward
toupdating the market in due course.
Aubrey Adams OBE, FCA, FRICS
Chairman
2 March 2022
Statement of compliance
The Board of Tritax Big Box REIT plc has considered the
Principles and Provisions of the 2019 AIC Code of Corporate
Governance (“AIC Code”). The AIC Code addresses the
Principles and Provisions set out in the UK Corporate Governance
Code (the“UKCode”), and sets out additional Provisions on
issues that are of specific relevance to investment companies.
The Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council, provides more relevant information
to shareholders.
The Company has fully complied with the Principles and
Provisions of the AIC Code.
The AIC Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies.
X For further details please see pages 72 to 73.
68 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Aubrey Adams OBE, FCA, FRICS
Independent Chairman
Appointed Tenure
11 September 2017 4 years 6 months
Relevant skills and experience
• Almost 40 years’ experience at Board level
in the real estate industry, including part
ofhis executive career as Chief Executive
ofSavills plc
• Extensive experience as a Chairman
and Non-Executive Director, including as
Senior Independent Director of Associated
British Ports plc and Chairman of Max
Property Group plc
• Fellow of the Institute of Chartered
Accountants in England and Wales
• Fellow of the Royal Institution of
Chartered Surveyors
External appointments
• Chairman of the Board of Trustees of
Wigmore Hall since May 2011
• Group Chair of L&Q Housing Trust, a leading
housing association since September 2015
• Director of Nameco (No.522)
M N
Board of Directors
Composition, succession
Richard Laing FCA
Independent Non-Executive Director
Appointed Tenure
16 May 2018 3 years 10 months
Relevant skills and experience
• In depth knowledge of financial matters
through his previous role as Finance Director
and Chief Executive of CDC Group plc
for 11 years; as Finance Director of De La
Rue plc; as financial analyst and manager
at Bookers Group plc; and from five years
atPricewaterhouseCoopers
• Experienced Non-Executive Director and
Non-Executive Chairman of quoted and
unquoted businesses
• Fellow of the Institute of Chartered
Accountants in England and Wales
External appointments
• Chairman of 3i Infrastructure plc since
January 2016
• Non-Executive Director and Chairman of
the Audit and Risk Committee of JP Morgan
Emerging Markets Investment Trust plc since
January 2015
• Deputy Chairman of the Board of Trustees
of Leeds Castle since September 2012,
Chairman of the Audit and Risk Committee
and member of the Investment Committee
NM MA
Alastair Hughes FRICS
Senior Independent Director
Appointed Tenure
1 February 2019 3 years 1 month
Relevant skills and experience
• Over 30 years’ experience in the UK and
international real estate markets both at
anoperational and strategic level
• Former director and Global Executive
board member of Jones LaSalle Inc (“JLL”),
previously serving as Managing Director of
JLL in the UK, before becoming CEO for
Europe Middle East and Africa and most
recently CEO for Asia Pacific
• Fellow of the Royal Institution of
CharteredSurveyors
External appointments
• Non-Executive Director of Schroder Real
Estate Investment Trust Limited since
April 2017
• Non-Executive Director of The British Land
Company plc since January 2018
• Non-Executive Director of QuadReal since
October 2019
M N
69
CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
Elizabeth Brown
Independent Non-Executive Director
Appointed Tenure
15 December 2021 3 months
Relevant skills and experience
• 20 year’s experience in Strategy and M&A,
as a former strategy consultant with L.E.K.
Consulting, an investment director at the
RBS Special Opportunities Fund, and in
senior in-house strategy roles at Dixons
Carphone and Diageo
• Track record in devising investment
strategies, leading acquisitions and
disposals, and long-term strategic planning
• Brings a clear focus on consumer trends
and market insights, identifying growth
opportunities and translating these into
value-creating strategies
• Group Strategy Director and Global Head
ofM&A at Diageo since 2017
• Strategy Director of Services from 2016 to
2017 and Head of Corporate Development
from 2013 to 2017 at Currys (formerly
Dixons Carphone)
• Director at the RBS Special Opportunities
Fund from 2005 to 2012
• Strategy consultant at L.E.K. Consulting
from2002 to 2005
External appointments
• Group Strategy Director at Diageo plc
MA
Audit and Risk Committee
Management Engagement Committee
Nomination Committee
Chairman of Committee
N
M
A
Wu Gang
Independent Non-Executive Director
Appointed Tenure
1 October 2021 5 months
Relevant skills and experience
• A strong strategic and financial advisory
background and a wealth of international
experience gained from a career of over
25 years in investment banking in Asia
and Europe
• Set up and led the European investment
banking team at CLSA Securities, the
international investment Banking platform of
CITIC Securities, from 2015 to January 2019
• Prior to CLSA Securities, Wu Gang was
headof M&A and General Industrials at
ICBCInternational
• Held senior level positions at The Royal
Bank of Scotland, HSBC and Merrill Lynch
inHongKong and London
• Served as a Non-Executive Director of
LairdPlc from January 2017 to June 2018
External appointments
• Non-Executive Director of Ashurst LLP
andIG Group Holdings Plc
• Senior Adviser at Rothschild & Co
HongKong Limited
A M
Karen Whitworth ACA
Independent Non-Executive Director
Appointed Tenure
21 October 2019 2 years 5 months
Relevant skills and experience
• Significant retail, strategic, financial and
logistics experience gained through several
commercial, operational and governance roles
• Over 17 years of Board level experience in
public and private organisations
• Financial acumen – Fellow of the Institute of
Chartered Accountants in England and Wales
• Non-Executive Director and Chair of the Audit
and Risk Committee of Pets at Home Group
plc until May 2021
• Various operational, strategic and commercial
roles at J Sainsbury’s PLC, from 2007 to
2018, ultimately becoming a member of the
Commercial Board and Director of Non-Food
Grocery and New Business for the last
three years
• Supervisory member and Audit Committee
member of GS1 UK Limited from 2013 to 2018
• Chairman’s Adviser/Finance Director at BGS
Holdings Limited (trading as “Tunetribe”) from
2005 to 2007
• Various roles at Intercontinental Hotel Group
plc from 2000 to 2005, including Senior Vice
President of Strategy and Transformation and
Senior Vice President of Investor Relations
External appointments
• Non-Executive Director and member
of the Audit Committee and Corporate
Responsibility Committee of Tesco plc
• Non-Executive Director and Audit Committee
Chair of The Rank Group Plc since November
2019 and Senior Independent Director from
January 2022
• Independent Adviser to Growup
Farms Limited
MA N
70 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Key Representatives of the Manager
Tritax Management LLP (the “Manager”) acts as the Company’s Alternative Investment Fund Manager (“AIFM”) for the purposes of the
Alternative Investment Fund Manager Directive (“AIFMD”) and as such the Board has delegated authority to the Manager to conduct portfolio
and risk management services on behalf of the Company. Whilst the Manager has the ultimate responsibility to make the final decision over
portfolio and risk management services, the Board actively discusses potential investments and divestments with the Manager and ensures
ongoing compliance with the Company’s Investment Policy and Investment Objectives.
This complies with the European Securities and Markets Authority (“ESMA”) guidelines published on 13 August 2013 in respect of the AIFMD
and ensures that the Company continues to adopt best governance practice.
To read more about our colleagues please go to https://www.tritaxbigbox.co.uk/about/people-and-culture/.
Petrina Austin
Head of Asset Management
Relevant skills and experience
Petrina leads the Group’s asset management
function and is responsible for the strategic
management of the investment portfolio,
identifying and progressing value enhancing
initiatives, so as to protect and maximise
investor returns.Petrina began her career at
Carter Jonas before moving to King Sturge
(now JLL) to concentrate on institutional
portfolio management. In 2002, Petrina joined
Knight Frank before joining Tritax Group in 2007.
Henry Franklin
Chief Operating Officer
Relevant skills and experience
Henry is responsible for tax, legal and
compliance activities, working closely with the
Board, the management team and external
advisers to ensure the robustness of the tax
and legal structure. Henry is a qualified solicitor
who completed his articles with Ashurst LLP in
2001, qualifying as a chartered tax adviser in
2004 before moving to Fladgate LLP in 2005.
Henry joined the Tritax Group in 2008.
Colin Godfrey
CEO – Fund Management
Relevant skills and experience
Colin is responsible for leading the Group’s fund
management function and overall responsibility
for the provision of strategic investment advice
to the Group. Colin began his career with
Barclays Bank before joining Conran Roche
inthe late 1980s. Once qualified as a chartered
surveyor, Colin specialised in portfolio fund
management, with particular responsibility for
the £1billion assets of the British Gas Staff
Pension Scheme. In 2000, Colin was a founding
director of SG Commercial and became a
partner of Tritax Group in 2004.
Bjorn Hobart
Investment Director
Relevant skills and experience
Bjorn is responsible for managing the
Company’s investment portfolio and serves
asChairman of the Investment Committee.
Bjorn started his career at Faber Maunsell
(nowAECOM) and went on to undertake an MA
inProperty Valuation and Law. In 2007, Bjorn
joined SG Commercial and joined Tritax Group
in 2011, becoming a partner in 2017.
Frankie Whitehead
Chief Financial Officer
Relevant skills and experience
Frankie is responsible for all aspects of the
Group’s finance and corporate reporting.
Frankie is a chartered accountant and joined
Tritax in 2014 following the Company’s IPO.
Frankie previously performed the role of
Financial Controller at Primary Health Properties
Plc and trained and qualified at PKF (UK) LLP
which subsequently merged with BDO LLP.
Frankie became a partner of the Tritax Group
in2020.
Phil Redding
Director of Investment Strategy
Relevant skills and experience
Phil is responsible for providing strategic
investment advice to the Company. Phil
startedhis career at King & Co (now JLL) where
he qualified as a chartered surveyor in their
Industrial Agency and Development division
in1992. In 1995, Phil joined SEGRO plc holding
anumber of management positions before
becoming Chief Investment Officer and member
of the Board in 2013. Phil joined Tritax Group
in2020.
71
CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
Male 67%
Female 33%
Board gender split
1–2 years
2
3–4 years
2
2–3 years
1
4–5 years
1
Non-Executive Director tenure
Board relevant
The Board has a complementary
rangeof skills which are relevant
totheGroup’s medium and
longer-termobjectives.
Financial
Property
Retail
ESG
Logistics
Governance/PLC
e-Commerce
Risk Management
Strategy
Green Finance
Committee
Disclosure
Committee
CSR
Committee
Risk
Committee
Investment
Committee
Operations
Committee
Audit and Risk
Committee
Nomination
Committee
Management
Engagement
Committee
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i
g
o
r
o
u
s
c
h
a
l
l
e
n
g
e
Board of Directors
Manager has delegated
authority to these
committees
M
a
n
a
g
e
r
The Board considers Richard Laing to have
recent and relevant financial expertise to chair
the Audit and Risk Committee.
Executive
Committee
72 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Application of Code
The AIC Code, and the underlying UK Code, have placed increased emphasis on “comply or explain” with regard to the principles of the Code.
Our explanations of how we have applied the main principles of the AIC Code can be found below.
Board leadership and company purpose
Principle A. A successful company is led by an effective board,
whose role is to promote the long-term sustainable success of the
company, generating value for shareholders and contributing to
wider society.
• Strategic Report pages 1 to 65
• Board leadership and Company purpose pages 74 to 77
Principle B. The board should establish the company’s purpose,
values and strategy, and satisfy itself that these and its culture are
aligned. All directors must act with integrity, lead by example and
promote the desired culture.
• Strategic Report pages 1 to 66
• Board leadership and Company purpose pages 74 to 77
• Division of responsibilities pages 79 to 82
Principle C. The board should ensure that the necessary resources
are in place for the company to meet its objectives and measure
performance against them. The board should also establish a
framework of prudent and effective controls, which enable risk
tobeassessed and managed.
• Principal Risks and Uncertainties pages 58 to 64
• Section 172 Statement page 22
• Audit, risk and internal control pages 86 to 87
• Audit and Risk Committee Report pages 88 to 91
Principle D. In order for the company to meet its responsibilities to
shareholders and stakeholders, the board should ensure effective
engagement with, and encourage participation from, these parties.
• Stakeholders pages 22 to 25 and 78
• Section 172 Statement page 22
Division of responsibilities
Principle F. The chair leads the board and is responsible for
its overall effectiveness in directing the company. They should
demonstrate objective judgement throughout their tenure and
promote a culture of openness and debate. In addition, the chair
facilitates constructive board relations and the effective contribution
of all non-executive directors, and ensures that directors receive
accurate, timely and clear information.
• Board leadership and Company purpose pages 74 to 77
• Division of responsibilities pages 79 to 82
Principle G. The board should consist of an appropriate
combination of directors (and, in particular, independent
non-executive directors) such that no one individual or small
groupofindividuals dominates the board’s decision making.
• Division of Responsibilities pages 79 to 82
• Composition, succession and evaluation pages 68 to 71
Principle H. Non-executive directors should have sufficient time to
meet their board responsibilities. They should provide constructive
challenge, strategic guidance, offer specialist advice and hold
third-party service providers to account.
• Board leadership and Company purpose pages 74 to 77
• Division of responsibilities pages 79 to 82
• Audit and Risk Committee Report pages 88 to 91
• Management Engagement Committee Report pages 92 to 94
Principle I. The board, supported by the company secretary,
shouldensure that it has the policies, processes, information, time
and resources it needs in order to function effectively and efficiently.
• Division of Responsibilities pages 79 to 82
• Nomination Committee Report pages 83 to 85
Composition, succession and evaluation
Principle J. Appointments to the board should be subject to
a formal, rigorous and transparent procedure, and an effective
succession plan should be maintained. Both appointments and
succession plans should be based on merit and objective criteria
and, within this context, should promote diversity of gender, social
and ethnic backgrounds, cognitive and personal strengths.
• Nomination Committee Report pages 83 to 85
Principle K. The board and its committees should have a
combination of skills, experience and knowledge. Consideration
should be given to the length of service of the board as a whole
andmembership regularly refreshed.
• Composition, succession and evaluation pages 68 to 71
Principle L. Annual evaluation of the board should consider its
composition, diversity and how effectively members work together
toachieve objectives. Individual evaluation should demonstrate
whether each director continues to contribute effectively.
• Nomination Committee Report pages 83 to 85
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CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
Audit, risk and internal control
Principle M. The board should establish formal and transparent
policies and procedures to ensure the independence and
effectiveness of external audit functions and satisfy itself on
theintegrity of financial and narrative statements.
• Audit, risk and internal control pages 86 to 87
• Audit and Risk Committee Report pages 88 to 91
Principle N. The board should present a fair, balanced and
understandable assessment of the company’s position and prospects.
• Audit and Risk Committee Report pages 88 to 91
• Responsibilities statements page 100
Principle O. The board should establish procedures to manage risk,
oversee the internal control framework, and determine the nature and
extent of the principal risks the company is willing to take in order to
achieve its long-term strategic objectives.
• Principal Risks and Uncertainties pages 58 to 64
• Viability Statement page 65
• Audit, risk and internal control pages 86 to 87
• Audit and Risk Committee Report pages 88 to 91
• Notes to the financial statements pages 111 to 134
Remuneration
Principle P. Remuneration policies and practices should
be designed to support strategy and promote long-term
sustainable success.
• Management Engagement Committee Report pages 92 to 94
• Directors’ Remuneration Report pages 95 to 97
Principle Q. A formal and transparent procedure for developing
policy on remuneration should be established. No director should
beinvolved in deciding their own remuneration outcome.
• Directors’ Remuneration Report pages 95 to 97
Principle R. Directors should exercise independent judgement and
discretion when authorising remuneration outcomes, taking account
of company and individual performance, and wider circumstances.
• Directors’ Remuneration Report pages 95 to 97
Key Board statements
Requirement Board statement Where to find further information
Going concern basis The Board is of the opinion that the going concern
basisadopted in the preparation of the Annual Report
isappropriate.
Further details are set out on page 65 of
the Strategic Report.
Viability Statement The Board is of the opinion that the Viability Statement
adopted in the preparation of the Annual Report
isappropriate.
Further details are set out on page 65 of
the Strategic Report.
Annual review of systems of risk
management and internal control
A continuing process for identifying, evaluating and
managing the risks the Company faces has been
established and the Board has reviewed the effectiveness
of the internal control systems.
Further details are set out in Audit, risk and
internal controls on pages 86 and 87 of this
Governance Report.
Robust assessment of the
Company’s emerging and principal
risks to the business model, future
performance, solvency and liquidity
of the Company
The Audit and Risk Committee and the Board undertake
afull risk review twice a year where all the emerging,
principal risks and uncertainties facing the Company
andthe Group are considered.
Further details can be found in Our Principal
Risks and Uncertainties on pages 58 to 64
of the Strategic Report.
Fair, balanced and understandable The Directors confirm that to the best of their knowledge
the Annual Report and Accounts taken as a whole is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Company’s
performance, business model and strategy.
Further details of the fair, balanced and
understandable statement can be found
in the Audit and Risk Committee Report
on pages 88 to 91.
Appointment of the Manager The Directors consider the continuing appointment of
theManager on the terms agreed in the Investment
Management Agreement dated 11 September 2017
tobein the best interests of the Company.
Further details are set out in the
Management Engagement Committee
Report on pages 92 and 93.
s172 of the Companies Act 2006 The Directors have considered the requirements of
s172when making strategic decisions.
Further details are set out on page 22
of the Strategic Report.
74 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Board Leadership and Company Purpose
Key activities of
Post year end
• Agreed action plan following Board and Committee evaluation to focus on in 2022.
• Declared an interim dividend of 1.90 pence per share, in respect of the three months to 31 December 2021.
• Approved the Annual Report and Accounts 2021.
January–March 2021
• Declared an interim dividend
of 1.7125 pence per share, in
respect of the three months
to31 December 2020.
• Approved the Annual Report
and Accounts 2020.
• Received training on the
Economy and Capital Markets
by a leading economist from
Panmure Gordon.
October–December 2021
• Declared an interim dividend
of 1.60 pence per share, in
respect of the three months
to30 September 2021.
• Conducted the Board and
Committee evaluation.
• Appointed Wu Gang
and Elizabeth Brown as
Non-Executive Directors
ofthe Company.
• Improved the Company’s
credit rating with Moody’s
to Baa1 (positive) from
Baa1 (stable).
• Received training on
TCFDand carbon reporting
byHillbreak.
July–September 2021
• Declared an interim dividend
of 1.60 pence per share, in
respect of the three months
to30 June 2021.
• Approved the Interim
results 2021.
• Conducted the performance
review of the Manager.
• Raised £300 million issuance
through asuccessful
equity raise.
• Insurance Board update with
afocus on Cyber risk.
April–June 2021
• Declared an interim dividend
of 1.60 pence per share, in
respect of the three months
to31 March 2021.
• Held the Company’s Annual
General Meeting.
• Conducted the performance
review of the Company’s
keysuppliers.
• Strategy Review.
• Appointed of Aubrey
Adams as Chairman and
Alastair Hughes as Senior
Independent Director.
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Annual Report 2021 Tritax Big Box REIT plc
How we govern the Company
The Board is responsible for promoting the long-term sustainable
success of the Company and generating value for its Shareholders
and other stakeholders through effective leadership. The Board and
the Manager work closely together to maintain the highest standards
of corporate governance. We believe that our positive engagement
and working relationship with the Manager is key to enhancing the
Company’s governance arrangements and ensuring that they are
robust and fit for purpose. We work closely with the Manager to
identify areas for improvement and best practice which creates an
open and collaborative culture. The Company’s success is based
upon the effective implementation of its strategy by the Manager and
third-party service providers under the leadership of the Board. The
Board’s culture provides a forum for constructive and robust debate,
which the Board believes has been crucial to the success of the
Company to date.
The Company’s purpose is to deliver sustainable logistics solutions
that create compelling opportunities for our stakeholders and provide
our customers with the space to succeed. In order to achieve this,
the Board has determined the Company’s Investment Objectives
and Investment Policy. It has overall responsibility for the Company’s
activities, including reviewing investment activity, performance,
business conduct and strategy, in compliance with the principles of
good corporate governance. The Board has delegated the day-to-day
operational aspects of running the Company to the Manager and
approved a schedule of matters reserved for its consideration and
approval, which are set out on this page. Although the Board does
not formally approve investment proposals or decisions, as this is
a matter delegated to the Manager, the Board is kept fully informed
and notified of investment proposals and decisions to enable the
Directors toundertake their responsibilities and duties appropriately.
As well as regular Board meetings, the Board also meets for
dedicated strategy meetings, in which the Company’s immediate
and long-term strategy is discussed, and holds ad hoc meetings to
consider specific issues, the market generally and its stakeholders.
There is frequent engagement and interaction between the Manager
and Tritax Symmetry Management Ltd (Tritax Symmetry) regarding
the development pipeline and the status of current projects. This
regular engagement is overlaid by a series of meetings to ensure
appropriate oversight and governance of Tritax Symmetry, being
weekly updates and occupier review meetings, quarterly project
review meetings and quarterly board meetings of Tritax Symmetry.
These meetings provide a forum for reporting on detailed project
matters by Tritax Symmetry to the Manager and discussion of the
wider business strategy.
The Manager retains approval rights in relation to transactional
documentation proposed to be entered into by Tritax Symmetry.
A typical Board agenda includes:
• a review of investment performance;
• a review of investments, divestments and asset
managementinitiatives;
• a report on the development activities of the Tritax Symmetry arm
of the Group;
• an update on investment opportunities available in the market
andhow they fit within the Company’s strategy;
• a report on the property market;
• a review of the Company’s financial performance;
• an update on sustainability and targets;
• a review of the Company’s financial forecast, cash flow and
ability to meet targets, including a review of the Company’s debt
covenants and debt maturity;
• a review of the Company’s financial and regulatory compliance;
• updates on Shareholder and stakeholder relations;
• updates on the Company’s capital market activity;
• specific regulatory, compliance or corporate governance updates;
• a bi-annual risk management review;
• investor relations update; and
• marketing and communications update.
Board reserved matters
• Reviewing and approving Board composition, including the
appointment of Directors.
• Approving and implementing the Company’s strategy.
• Approving the budget, financial plans and Annual and Interim
financial reports.
• Approving the dividend policy.
• Reviewing property valuations and valuations of its interest
rate derivatives.
• Overseeing treasury functions and managing the Company’s
capital structure.
• Reviewing and monitoring the Manager’s ongoing
compliance with the Company’s Investment Objectives and
Investment Policy.
• Overseeing the services provided by the Manager and, in
conjunction with the Manager, the Company’s principal
service providers.
• Reviewing and approving all compliance and
governance matters.
• Approval of the issuance of new ordinary share capital.
76 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Board Leadership and Company Purpose continued
Sustainability
Managing sustainability is core to our business. The CSR
Committee of the Manager regularly reports to and engages with
the Board on its sustainability activities. The CSR Committee
has ultimate responsibility for all ESG related policies of the
Manager and recommends them to the Operations Committee,
who include these as as part of their full review of all policies. For
full details of all policies please refer to the Manager’s website.
During the year, the Board continued to embed the Sustainability
Strategy and made good progress towards the Company’s 2023
sustainability targets. The Company received a GRESB score of
81/100 which represents an increase of 9 points since 2020 and
achieved four Green Stars out of five for our standing portfolio.
In addition, the Company was also awarded the GRESB 2021
Leader for Development in the European and Global Industrial
Listed Sectors, achieving the highest score for the industrial
sector with a score of 97/100 and the maximum five Green
Stars. Further to the issuance of the Company’s Green Bond
in 2020, the Green Finance Committee has fully allocated all
proceeds from the Bond to eligible Green initiatives.
X For further information on our sustainability strategy please refer
topages 32 to 41.
The Company has made a commitment to achieve net zero
carbon for its direct activities by 2030 and for its total Scope 3
emissions by 2050.
X For further information on how the Company reports against TCFD
please see page 39.
The Board ESG champion meets regularly with the Manager’s
ESG Director to discuss progress on the Sustainability Strategy
and have deep dives into key sustainability issues relevant to the
Board. This year, key matters discussed included:
• climate change risk and how the Company will report against
the TCFD recommendations; and
• carbon Reporting.
To demonstrate its own commitment to sustainability, the
Manager procures renewable energy and sends zero waste to
landfill. It also achieved ISO 14001 accreditation in late 2020.
X Please see pages 32 to 41 for the Sustainability report.
Strategy
The 2021 strategy meeting took place in May 2021 and focused
on assessing whether the Company’s strategy remained fit
for purpose to ensure the Company’s long-term success.
The meeting involved the full Board and key members of the
Manager who discussed the portfolio strategy and the strategic
targets for the year ahead. The Board agreed to continue to
monitor the performance of the investment portfolio and where
it makes sense to do so, recycle capital into opportunities that
are going to improve performance, based on the Company’s
risk return analysis. The Board also agreed to continue with
the development led strategy which would be aided by the
equity raise, which took place in Q3 2021, in order to fund an
acceleration in development activity. The Board requested
that the Manager explore additional income streams for the
Company through asset management initiatives and further
nurturing occupier relationships.
X Please see pages 26 and 27 for more details on strategy in the
Strategic Report.
Given the current dynamics of the logistics market, with strong
demand but limited supply of suitable assets, we believe that we
are well positioned to capture further value through the Group’s
development pipeline.
Our focus in 2022 and beyond
Our focus for the coming year will be on achieving planning
consents, securing pre-lettings for our development assets and
acquiring investment assets in order to grow the Group’s strong
asset base and deliver enhanced returns to Shareholders.
For further details of the Company’s strategy see pages 26 and 27
of the Strategic Report.
Culture
The culture and ethos of the Company are integral to its success.
The Board promotes open dialogue and frequent, honest and open
communication between the Manager and other key providers and
advisers to the Company. Whilst the Company is externally managed,
the Board is confident that the culture within the Manager is aligned
with that of the Board.
The Board believes that its positive engagement and working
relationship with the Manager helps the business achieve its
objectives by creating an open and collaborative culture, whilst
allowing for constructive challenge. The Non-Executive Directors
meet regularly with members of the Manager outside of Board
meetings to discuss various key issues relating to Company matters.
The Company’s success is based upon the effective implementation
of its strategy by the Manager and third-party providers under the
leadership of the Board. The Board’s culture provides a forum for
constructive and robust debate, and the Board believes that this
hasbeen fundamental to the success of the Company to date.
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Annual Report 2021 Tritax Big Box REIT plc
Relations with Shareholders and other stakeholders
Maintaining strong relationships with the Company’s Shareholders
and other stakeholders and an understanding of their priorities
and concerns is a key objective of the Board. The Chairman and
the Senior Independent Director (“SID”), alongside the CEO Fund
Management, Chief Financial Officer and Head of Investor Relations
of the Manager are the Company’s principal spokespersons who
regularly communicate with the Company’s Shareholders, the press,
analysts, investors and other stakeholders. All Directors are available
to speak to Shareholders on any matters relating to the Company.
During the year, the Manager, together with the Company’s Brokers,
devoted time to meeting with existing Shareholders and prospective
new investors virtually from the UK, Continental Europe, South
East Asia, the USA and South Africa. The Chairman and SID held
a governance road show in Q4 2021 with key Shareholders of the
Company. The key theme to emerge from the meetings was the
Group’s ESG performance over the period. The Manager also held
an investor seminar in January 2022 which provided stakeholders
with a market update, information on the Company’s strategy and
thedevelopment pipeline.
X Further details of the Company’s engagement with our other key
stakeholders can be found on pages 22 to 25 and 78.
Site visits
There is continued demand from Shareholders and prospective
investors to visit our assets and development sites. In December
2021, the Manager undertook a number of site visits with analysts to
Biggleswade and Kettering and the Manager alongside the Investor
Relations team plan to host a programme of site visits in 2022.
Annual General Meeting (“AGM”)
The Company’s general meetings provide the Board and the
Manager with a valuable opportunity to engage with its shareholders
on governance and strategy. All the Directors usually attend the AGM
and make themselves available to answer Shareholders’ questions.
The Chairman also makes himself available outside of these meetings
to speak to Shareholders.
The SID is available for Shareholders to contact if other channels
of communication with the Company are not available or are
inappropriate. Various Directors also regularly attend the biannual
financial results presentations.
We encourage Shareholders to attend and vote at the AGM and
take the opportunity to engage with the Board and the Manager.
Due to the ongoing Covid-19 pandemic restrictions in May 2021,
Shareholders were unable to attend in person. We plan to hold
our May 2022 AGM in person, at Taylor Wessing’s office as in
previous years.
The Chairman and the SID as well as other Directors can be contacted
by emailing the Company Secretary on cosec@tritaxbigbox.co.uk,
who will pass the communication directly to the relevant person,
orby post at the Company’s registered office.
Public communications
The Company ensures that any price sensitive information is
released to all Shareholders at the same time and in accordance with
regulatory requirements. All Company announcements which are
released through the London Stock Exchange’s Regulatory News
Service (“RNS”) are also made available on the Company’s website.
The website also holds the quarterly fact sheets, share price and
dividend information, investor presentations, the Key Information
Document required by PRIIPS regulations and the Annual and Interim
Reports which are available for download. The Company’s Annual
and Interim Reports are dispatched to Shareholders upon request.
78 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Equity raise
Stakeholder
How were stakeholders’ views taken
into account?
The placing in September 2021 was
underpinned by active discussions
withoccupiers across approximately
7.0million sq ft of consented land and
lettings during the year to Ikea at Littlebrook
and HarperCollins at Glasgow, totalling
1.0million sq ft. The placing provided a
strong underpin to the 1.3 million sq ft of
speculative development in progress or
planned to commence in Q4 2021.
Impact – what actions were taken as
a result of this engagement/taking
concerns into account?
As a result, the Board approved the decision
to conduct the placing in September2021,
successfully raising £300 million at a
premium to IFRS NAV through issuing new
shares, which allowed the Company to take
advantage of its attractive development
pipeline. The raise allowed institutional and
retail investors to participate through an
accelerated book build.
Further details can be found on pages 42 to52
Long-term effects of the decision?
The equity raise supported the continued
growth of the Company and delivery of its
development strategy. The raise was three
times oversubscribed and demonstrated
ourability to fund our attractive development
pipeline. A further 147,058,823 shares were
issued in relation to the equity raise.
Stakeholder Engagement
Net zero carbon
development pilot
Stakeholder
How were stakeholders’ views taken
into account?
As part of the Company’s sustainability
strategy and its commitment to net zero
carbon by 2050, TSL commissioned
an Independent Carbon Assessor to
conduct carbon modelling with a view to
understanding what measures it could take
to mitigate carbon emissions in construction.
In addition to this, TSL were also mindful
of the views expressed by Shareholders,
the recent carbon targets and feedback
from tenants who are looking formore
sustainable assets.
Impact – what actions were taken as
aresult of this engagement/taking
concerns into account?
Since June 2020, all base build units
within the Tritax Symmetry development
portfolio will be built as “Net Zero Carbon in
Construction”. DPD, Bicester was the first
net zero carbon construction for TSL and
provided an opportunity to pilot this initiative.
X Further details can be found on page 34
Long-term effects of the decision?
The pilot scheme at DPD, Bicester helped
identify ways to reduce embodied carbon
from construction and achieved a 8%
reduction against its baseline of 6,614 tonnes
of carbon. It provided a model for future
initiatives and helped identify opportunities
for improvement. Engagement with our
building contractors showed that earlier
involvement in suggesting carbon saving
measures and measure assumptions all
helped to improve carbon offsetting and
these lessons learned would be taken
into the next construction initiative. A
long-term aim of the initiative is to create
a more sustainable asset and operational
environment not only for our tenants, but
also for the communities who live and work
near our assets.
The Mothership (Atlantic Row)
Stakeholder
How were stakeholders’ views taken
into account?
One of the Company’s strategic goals is to
operate a sustainable business, promote
socially responsible values and support the
wider community. The Board recognises the
importance of supporting valuable charitable
causes, especially during the pandemic.
Impact – what actions were taken as
a result of this engagement/taking
concerns into account?
The Board resolved to support
“TheMothership”, a crew of four female
rowers including the Manager’s IR Director,
Jo Blackshaw to race 3,000 miles across
the Atlantic in the Talisker Whisky Atlantic
Challenge. The donation enabled the team
to take part in the challenge by acting as
the lead sponsor. This in turn resulted in
the team raising over £69k for worthwhile
charities, including Felix Fund, Women in
Sport and Noah’s Ark Children’s Hospice.
The endeavour demonstrated the ability
to be self-sufficient and resilient by taking
on the utmost challenge, in turn helping to
inspire and empower women and children
topursue their goals, whilst promoting
gender equality.
Long-term effects of the decision?
In addition to the above benefits, this
sponsorship helped to secure media
coverage across the national, broadcast
andsector press, further raising the
profile ofthe Company. It also highlighted
its continuing support of the Manager’s
employees and the community in which
itoperates.
For further information on the challenge
please refer to https://www.tritaxbigbox.co.
uk/news-insights/news-and-insights/
tritax-director-raises-59k-during-extreme-3-
000-mile-row-across-the-atlantic/
Our stakeholders
Key decisions
The Manager and its employees
Our shareholders
Our suppliers
Our customers
Our lenders
Government, regulators
andlocalcouncils
Our communities
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The Board and its Committees
The Board currently consists of six Non-Executive Directors, all
independent of the Manager. We believe that the Board is well
balanced and possesses a sufficient breadth of skills, variety of
backgrounds, relevant experience and knowledge to ensure it
functions effectively and promotes the long-term sustainable success
of the Company, whilst generating shareholder value and keeping
in mind wider stakeholder interests. In light of Sir Richard Jewson’s
retirement in May 2021, the Nomination Committee identified the
need to recruit a new Non-Executive Director to further strengthen
the existing Board.
X Further details can be found on page 83.
Directors’ biographies are set out on pages 68 and 69. In accordance
with the requirements of the AIC Code, all of the Directors will stand
for re-election at the Company’s AGM on 4 May 2022.
We have not established a Remuneration Committee as the
Board has no Executive Directors and the Company has no other
employees. The Board as a whole is responsible for reviewing the
scale and structure of the Directors’ remuneration. Details of the
Directors’ remuneration for the year ended 31 December 2021 are
included in the Directors’ Remuneration Report on pages 95 to 97.
Conflicts of interest
Each Director has a duty to avoid a situation in which he or she has
a direct or indirect interest that may conflict with the interests of the
Company. The Board may authorise any potential conflicts, where
appropriate, in accordance with the Articles of Association. Where a
potential conflict of interest arises, a Director will declare their interest
at the relevant Board meeting and not participate in the decision
making in respect of the relevant business.
Board meetings
During 2021 we held seven scheduled Board meetings, plus six
further ad hoc meetings which dealt with transactional and other
specific events such as the equity raise and asset purchase. During
the Covid-19 pandemic all meetings were held virtually. Although this
format has proved efficient and in many ways convenient, the Board
looks forward to spending more time together in person.
The Board meetings follow a formal agenda, which is approved by
the Chairman and circulated by the Company Secretary in advance
of the meeting to all Directors and other attendees. At each Board
meeting, every agenda item is considered against the Company’s
strategy, its Investment Objectives, its Investment Policy, s172 and
allDirectors’ duties.
The Board is kept fully informed of potential investment opportunities,
along with wider property market intelligence, through a comprehensive
set of Board papers prepared by the Manager prior to each meeting.
Included within this pack are the investment reports prepared by the
Manager’s Investment Committee for each acquisition and asset
management opportunity. Representatives of the Manager are
invited to attend the Board meetings as are representatives of the
Company’s other advisers as required, particularly representatives
from Jefferies, JP Morgan Chase & Co, Akur Capital and Taylor
Wessing LLP.
Outside the Board meetings, the Manager shares recommendations
around investment opportunities and keeps the Directors fully
informed on the progress of transactions. The Board also has full
access to the Management team and the Company Secretarial
team at all times to discuss any specific matters outside of
formal meetings.
Board reporting
In July 2021, the Secretariat held a workshop with Board
Intelligence to review the Board and Committee packs with the
primary aim of benchmarking the packs against the Company’s
peers and providing recommendations on how Board papers
could be further improved to align to Board Intelligence’s best in
class reporting template. Following the initial feedback session,
Board Intelligence met with the Chairman to understand any
aims or concerns faced with the Board pack and to discuss initial
findings. Board Intelligence then proceeded to schedule one-to-
one calls with several of the paper authors, including the CEO
Fund Management, Investment Director, Chief Operating Officer,
Head of Asset Management, Chief Financial Officer and ESG
Director to discuss how the structure of each report could be
improved to align with best practice. Since then, clearer and more
concise reports have been implemented across the business
which has helped to further refine and focus Board reporting.
The Chairman and the Senior Independent Director
Our Independent Chairman, Aubrey Adams, has no relationships that
could create a conflict of interest between his interest and those of
Shareholders or the Manager.
As we are subject to the AIC Code, there is no requirement for a
limitation on the length of tenure of the Chairman. However, we
recognise that there is a significant body of opinion that tenure
should be limited to nine years and take this into account in our
succession planning.
The Chairman’s other significant commitments include Chairmanship
of L&Q Housing Trust and Board of Trustees of Wigmore Hall. For
the Chairman’s full biography please refer to page 68 and 69 and
the Company website. The Board believes he dedicates sufficient
time to his Chairmanship of the Company. The Board has adopted a
Policy on Tenure and Re-election; for more information please refer
to page 84.
As Chairman, he sets the agenda for Board meetings with assistance
from the Company Secretary, manages the meeting timetable and
facilitates open and constructive dialogue during the meetings.
The SID, Alastair Hughes, and the other Directors met during the
year, without the Chairman, to appraise his performance. The
outcome of this meeting is detailed on page 85.
Division of Responsibilities
80 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Division of Responsibilities continued
Chairman
Role and responsibilities
• Responsible for the leadership and effectiveness of the Board
andforsetting the Board agenda.
• Ensuring effective communication so that the Board is aware of the
viewsof Shareholders and other stakeholders, and demonstrates
objectivejudgement.
• Promoting a culture of openness and debate.
The Board
The Board is responsible for promoting the long-term
sustainable success of the Company, workingtowards
strategic objectives and generating value for Shareholders
andother stakeholders.
To read more see pages 68 and 69
The Manager
Day-to-day running of the Company including: making the
final decision, in consultation with the Board, in respect of
investments and divestments, financial management, asset
management and investor relations. Colin Godfrey, as CEO-
Fund Management, James Dunlop as CEO Investments
and Henry Franklin, as COO of the Manager, oversee the
Manager’s relationship with the Company.
To read more see pages 42 to 52
The Manager
Role and responsibilities
• Making the final decisions in respect of investments and divestments.
• Financial management.
• Asset Management.
• Investor Relations.
To read more see pages 42 to 52
Board Committees
The Board has delegated some of its responsibilities to its
three formal Committees: the Nomination, Audit & Risk and
Management Engagement Committees. The Board has also
established a Disclosure Committee which meets as and
when required. The Company ensures that all of the Board
Committees have sufficient resources and skills to carry out
their obligations.
These Committees are each chaired by a different Non-
Executive Director and have their own Terms of Reference
which can be found on the Company’s website (or copies are
available on request from the Company Secretary).
The Terms of Reference are reviewed as necessary by the
Board as a whole. The Company Secretary acts as secretary
to these Committees and each Committee Chair reports the
outcome of the meetings to the Board.
To read more see pages 83 to 94
Audit and Risk Committee
• Reviewing the integrity of the Group’s financial statements and
anysignificant financial reporting judgements.
• Reviewing and monitoring the relationship with the Auditor.
• Reviewing the internal controls of the Administrator (Link).
• Overseeing the Company’s risk management process.
• Advising the Board on whether the Annual Report and Accounts provide
a fair, balanced and understandable view of the Company’s performance,
position and strategy.
• Considering and reviewing the Company’s Viability and Going
ConcernStatements.
To read more see pages 88 to 91
Manager Committees
The Company’s Investment manager has delegated some
of its responsibility to five Committees: the Investment,
Operations, Executive, Risk and CSR Committees. The CSR
Committee has also established a Sub-Committee, the Green
Finance Committee.
Investment Committee
• Chaired by Bjorn Hobart (Investment Director) and attended by various
members of the Manager.
• Reviewing and recommending investments and divestments.
• Reviewing, approving and monitoring activities within the development portfolio.
Executive Committee
• Chaired by Colin Godfrey (CEO - Fund Management), comprising various
partners of the Manager.
• Oversight of the Group as a whole and is responsible for reviewing the
corporate and capital strategy and activity of the Company and making
recommendations up to the Board as necessary.
Operations Committee
• Chaired by Henry Franklin, Chief Operating Officer of the Manager.
• Oversight of the internal controls of Tritax Management LLP and statutory
audit process.
• Approval of all Tritax Management LLP policies and procedures.
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Annual Report 2021 Tritax Big Box REIT plc
Senior Independent Director
Role and responsibilities
• Acting as a sounding board for the Chairman and a trusted
intermediary for other Directors. Available to discuss with
Shareholders any concerns that cannot be resolved through
the normal channels of communication with the Chairman.
• Leading the other Directors in evaluating the performance
oftheChairman.
Company Secretariat andCompliance
• Overseeing the Company’s governance structure and managing
the Company’s regulatory compliance.
• Administering the Group’s subsidiaries.
Nomination Committee
• Reviewing the Board composition and assessing whether the balance
of skills, experience, knowledge, diversity and independence is
appropriate to enable the Board to operate effectively.
• Managing succession planning and ensuring that the Directors receive
necessary training, including ESG/CSR topics.
• Board and Committee evaluations.
To read more see pages 83 to 85
Disclosure Committee
• Identifying inside information and maintaining disclosure registers in the
form of insider lists.
• Determining whether delayed disclosure is appropriate on a case-by-case
basis and liaising with the FCA as necessary.
• Supervising and overseeing the preparation of disclosures to the market.
• Chaired by Aubrey Adams and comprises various members of the Manager.
CSR Committee
• Co-Chaired by Henry Franklin and Petrina Austin, comprising various
members of the Manager.
• Responsible for oversight of CSR and sustainability matters.
• Reviewing and making recommendations to the Manager and the
Company’s Board, regarding progress on integrating environmental, social
and governance (“ESG”) factors into business strategy and decision making.
• Providing oversight of the Manager’s policies in terms of performance,
communication and engagement on CSR and sustainability matters, to
ensure the Manager and the Company are effective in meeting their social
and regulatory requirements and achieving their objective of being socially
responsible corporate entities.
Risk Committee
• Chaired by Henry Franklin, comprising the Chief Financial Officer
andHead of Risk & Compliance of the Manager.
• Responsible for identifying, recording and measuring risks to the
Manager and implementing controls to mitigate such risks.
• Oversight of the risk assessments made by the Company as well as
other real estate funds to amplify the focus on risk and to ensure the
Company is alerted to any new risks identified by the Manager.
Management Engagement Committee
• Reviewing the Company’s main suppliers including the Manager, the
Joint Financial Advisers, the Valuers and the Registrar to ensure that
the Company is receiving a high level of performance along with value
for money.
• Overseeing re-tenders and new appointments.
To read more see pages 92 to 94
Green Finance Committee (Sub-Committee
ofCSR Committee)
• Chaired by the Manager’s CFO and comprised of members of the
Manager’s asset management team.
• Review the Green Portfolio of the Company to confirm that the assets
and projects included in the Green Portfolio meet the criteria set out in
the Framework.
• Review the Framework to reflect any changes with regards to the
Company’s sustainability strategy and market standards.
• Approve the Annual Green Finance Report ahead of circulation to investors.
• Monitor evolution of the capital markets in terms of disclosure and
reporting in order to be in line with market best practices.
82 Tritax Big Box REIT plc Annual Report 2021
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Division of Responsibilities continued
Attendance at Board and Committee meetings during the year ended 31 December 2021
All Directors are expected to devote sufficient time to the Company’s affairs to fulfil their duties as Directors and to attend all scheduled meetings
of the Board and of the Committees on which they serve. Where Directors are unable to attend a meeting, they will provide their comments on
the Board papers received in advance of the meeting to the Chairman, who will share such input with the rest of the Board and the Manager.
The Nomination Committee is satisfied that all the Directors, including the Chairman, have sufficient time to meet their commitments.
The table below sets out the Board and Committee attendance at scheduled meetings during the year. During this period the absences
shown were as a result of changes to the Board membership or pre-planned commitments.
Sir Richard
Jewson
1
Aubrey
Adams
Alastair
Hughes
Karen
Whitworth
Richard
Laing
Susanne
Given
2
Wu Gang
3
Elizabeth
Brown
4
Board 2/2 7/7 7/7 7/7 7/7 5/5 1/1 N/A
Audit and Risk Committee 3/3 N/A 7/7 7/7 7/7 5/5 1/1 N/A
Management Engagement Committee 1/1 1/1 1/1 1/1 1/1 1/1 N/A N/A
Nomination Committee N/A 2/2 2/2 2/2 N/A N/A N/A N/A
Strategy meetings 1/1 1/1 1/1 1/1 1/1 1/1 N/A N/A
1 Sir Richard Jewson retired from the Board effective 5 May 2021.
2 Susanne Given resigned from the Board effective 13 September 2021.
3 Wu Gang was appointed to the Board effective 1 October 2021.
4 Elizabeth Brown was appointed to the Board effective 15 December 2021.
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Annual Report 2021 Tritax Big Box REIT plc
Nomination Committee Report
Aubrey Adams OBE, FCA, FRICS
Chairman
Dear Shareholders,
I am pleased to present the Nomination Committee Report for
the year ended 31 December 2021. The Nomination Committee’s
focus in 2021 was on continuing to implement the Board’s
succession planning programme and we were delighted to
welcomeWu Gang and Elizabeth Brown to the Board in October
andDecember2021 respectively.
The Committee’s role is to review the size, structure and composition
of the Board, including succession planning, and to ensure that it
has the right mix of skills, experience and knowledge to enable the
Company to fulfil its strategic objectives. The Committee is also
responsible for making recommendations for new appointments
to the Board and for reviewing the performance and terms of
engagement for the existing Directors. The Committee operates
within defined Terms of Reference which are available on the
Company’s website or from the Company Secretary.
Board changes
We met for two scheduled and four ad hoc meetings during 2021.
Aspart of the Board’s succession planning programme, I succeeded
Richard Jewson as Chairman following the May 2021 AGM. The
Board also appointed Alastair Hughes as the new SID. In September
2021, Susanne Given resigned from the Board following five years of
service to focus on her other commitments. In light of the changes
to the Board during the period, the Nomination Committee reviewed
the structure, skills and experience of the Board and identified the
need to appoint two new Non-Executive Directors with capabilities
ineconomics & capital markets as well as strategy and ESG.
NED recruitment process
The Committee met with several NED recruitment agencies and
following a thorough interview process, decided to appoint Odgers
Berndtson (“Odgers”) to assist with the NED recruitment process
in May 2021. The Committee agreed a role specification, which
included the skills and experience necessary for the proposed
recruitment. As part of this, Odgers identified a long list of external
candidates and arranged a series of interviews with the Board as as
well as the CEO, Fund Management. Following the recommendation
of the Committee, the Board appointed Wu Gang in October 2021.
WuGang is a member of the Audit & Risk and Management
Engagement Committees. Wu Gang brings strong strategic and
financial advisory experience to the Board gained from a career of
over 25 years in investment banking. Wu Gang currently serves as
Non-Executive Director of Ashurst LLP and IG Group Holdings Plc
aswell as a Senior Adviser at Rothschild & Co Hong Kong Limited.
Membership
Aubrey Adams, Chair
Alastair Hughes
Karen Whitworth
For full details on Committee attendance please refer to page 82
Key areas of focus in 2021
• The size, structure and composition of the Board;
• NED Recruitment;
• Board and Committee evaluation; and
• The proposal for re-election of the Directors at the AGM which
we plan to hold on 4 May 2022.
“ We are pleased to confirm
that we have achieved the
Hampton Alexander and Parker
reports’ targets.”
84 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Nomination Committee Report continued
NED recruitment process continued
In October 2021, following Susanne’s departure from the Board,
the Committee again re-evaluated the skills and experience on the
Board and considered it necessary to recruit another Non-Executive
Director. The Committee followed a similar recruitment process to the
one for Wu Gang and following the Committee’s recommendation,
the Board appointed Elizabeth Brown to the Board in December
2021. Elizabeth is a member of the Audit & Risk and Management
Engagement Committees. Elizabeth brings strong strategy and
business development experience and currently serves as the Group
Strategy Director for Diageo plc, having responsibility for overall
group strategy and M&A.
Wu Gang and Elizabeth will hold office until the Company’s AGM which
we plan to hold on 4 May 2022, when they will stand for election by
Shareholders as Non-Executive Directors of the Company.
Odgers have no connection with the Company or individual Directors,
apart from the provision of Non-Executive recruitment services.
During the year, we also reviewed the composition of the Board’s
Committees and recommended a refresh of members in order
to best utilise the existing skills and experience. As a result, the
membership of each Committee is as follows:
Committee Membership
Audit and Risk Committee Richard Laing (Chair), Karen Whitworth,
Wu Gang, Elizabeth Brown
Management
EngagementCommittee
Karen Whitworth (Chair), AubreyAdams,
Richard Laing, Alastair Hughes, Wu Gang,
Elizabeth Brown
Nomination Committee Aubrey Adams (Chair), Alastair Hughes,
Karen Whitworth
Policy on tenure and succession planning
The Board has implemented a policy on Tenure and Re-election, and
in accordance with the provisions of the AIC Code, all the Directors
will offer themselves for re-election at each AGM. We considered
the ongoing independence of each of the Directors, their respective
skills, experience and time commitment, as well as any other external
appointments held by the Directors. We believe that each Director
has contributed a significant amount over a particularly challenging
year, following the ongoing Covid-19 pandemic. Following the
advice of the Committee and in line with the AIC Code, the Board
will recommend the re-election of each Director and the election of
WuGang and Elizabeth Brown at the forthcoming AGM.
Directors were previously appointed for an initial period of two
years. During the year, the Committee conducted a review of the
appointment term and concluded that new appointments and
renewals should reflect a three-year initial term with each Director’s
performance evaluated at least annually during the Board &
Committee and individual Director evaluation. In accordance with
the principles of the AIC Code, we do not consider it necessary to
mandatorily replace a Director after a predetermined period of tenure.
We are, however, mindful of the circumstances of each Director and
implement succession planning accordingly.
Board diversity and inclusion
The Company does not have any employees. In respect of
appointments to the Board, we consider that each candidate
should be appointed on merit to make sure that the best candidate
for the role is appointed every time. We commit to diversity and
inclusion with respect to all protected characteristics, including
gender, at Board level and encourage candidates from all
education backgrounds and all walks of life. No candidate will face
discrimination due to their race, ethnicity, country of origin, nationality,
cultural background, gender or any other protected characteristic in
the board nomination process. What is important to us is professional
achievement and the ability to be a successful Director based on the
individual’s skill set and experience.
Qualifications are considered when necessary to ensure compliance
with regulation such as in relation to appointments to the Audit and
Risk Committee. We regularly review the Company’s Diversity and
Inclusion Policy and believe that the Board has a balance of skills,
qualifications and experience which are relevant to the Company.
The Board supports the recommendations set out in the Hampton-
Alexander Review on gender diversity and the Parker Review on
ethnic diversity and recognise the value and importance of cognitive
diversity in the boardroom. As at the date of this report the Board
consisted of four male and two female members who have both
been appointed in the last four years, meaning we have achieved the
33% female Board representation target as set out by the Hampton-
Alexander initiative. In addition, the Board has now also met the
recommendations set out in the Parker Review following the recent
Non-Executive Director appointments.
Director training programme
We recognise that it is essential to keep abreast of regulatory
and compliance changes including CSR and ESG related issues.
Accordingly, a bespoke training programme is agreed and arranged
periodically. Annually, the Board receive regular training on corporate
governance developments, financial regulatory changes, and on
relevant issues including ESG/CSR topics.
The Board received formal training sessions and updates from some
of the Company’s external service providers including a session
on economics and capital markets provided by Panmure Gordon
and carbon reporting and TCFD reporting training provided by the
Manager’s ESG Director and Hillbreak. The Company’s Insurance
Broker, Lockton Companies LLP also provided cyber risk training.
The 2021 Board evaluation confirmed that the training programme
iswell structured and the Company Secretary would work on
creating a formal training plan for 2022.
In addition to the bespoke training programme, each Director
is expected to maintain their individual professional skills and is
responsible for identifying any training needs to help them ensure
that they maintain the requisite knowledge to be able to consider
and understand the Company’s responsibilities, business and
strategy. All Directors have access to the advice and services
oftheCompanySecretary.
The Directors are also entitled to take independent advice at the
Company’s reasonable expense at any time.
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Board performance and evaluation
In 2021, the Board engaged Lintstock to undertake the Board
& Committee evaluation. Lintstock has no connection with the
Company apart from conducting the Board evaluation. The previous
Board evaluations provided a benchmark for the 2021 evaluation
and enabled Lintstock to understand the Board, the relationships
between the Directors and between the Board and the Manager,
theCompany Secretary and other key stakeholders to the Company
as well as the Company’s Shareholders.
The 2021 Board evaluation took the form of comprehensive
questionnaires which were sent to each of the Directors and three
key representatives of the Manager. It contained a section designed
specifically as an appraisal of the Chairman. In light of the changes
tothe Board in 2021, the Board plans to instruct Lintstock to conduct
a fuller evaluation in 2022 to include interviews with the full Board and
key representatives of the Manager.
The Board were asked to consider: Board composition and
dynamics; stakeholder engagement; management and focus of
meetings; Board dynamics; Board support; Board Committees;
strategic oversight; risk management and internal control; priorities
for change as well as some specific questions relating to Covid-19,
TritaxSymmetry and abrdn. The outcome of the 2021 Board
evaluation was very positive, displaying a strong working relationship
between the Board members and the Manager, which is reflected in
the effective challenge by the Board and a constructive atmosphere
in Board meetings.
The Board notes the ICSA principles of good practice for listed
companies using external board reviewers in January 2021, and
confirms compliance with all principles.
The Board met in December 2021 to discuss Lintstock’s 2021
BoardEvaluation Report and the following top three priorities for
2022 wereidentified:
• Settling in the new Non-Executive Directors: The Board
would spend time settling in the new Chairman and the new
Non-Executive Directors to the Board.
• Strategy: The Board agreed to spend more time addressing
theCompany’s strategy as well as defining the Company’s
long-term strategy.
• Development Pipeline: The Board agreed to increase focus
on the development portfolio to ensure that the Board remained
abreast with the key deliverables.
Other priorities included:
• Finalising the review of the Investment Management Agreement
between the Company and the Manager.
• Increasing the Board’s focus on longer-term trends and
macro-economic factors affecting the Company.
• Understanding the key milestones to achieving progress from
an ESG perspective and continuing to implement the reporting
requirements of the TCFD disclosure.
Led by Alastair Hughes, the Senior Independent Director, the
Directors met without me present to appraise my performance as
Chairman. The review was very positive and the other Directors
described the transition of Chairmanship as seamless. TheDirectors
noted that although my Chairmanship was relatively new I hadhandled
the closing of the equity raise well and believed that I would Chair the
Board effectively over the coming years.
Director induction
The Company Secretary conducts a comprehensive induction
process for all new Board members which aims to provide a broad
introduction to the Group. Each new appointment receives a tailored
programme comprising one-to-one meetings with current Board
directors, representatives of the Manager, the Company’s key
advisers and BDO LLP, the Company’s Auditor. This is supported
by a comprehensive library of corporate documentation, board
packs and key financial and operational information. All new
Non-Executive Directors are also invited on a site visit of one of
theCompany’s assets.
Committee evaluation
The overall performance of the Nomination Committee was rated
highly, particularly its performance in reviewing the composition
of the Board and successfully recruiting two new Non-Executive
Directors during the year.
Priorities for 2022
2022 will see the Nomination Committee continue to focus on
embedding the new Chairman and Non-Executive Directors as well
as continuing to focus on wider succession planning of the Board.
Aubrey Adams OBE, FCA, FRICS
Chair of the Nomination Committee
2 March 2022
86 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Audit, Risk and Internal Control
The Board is responsible for delivering robust and sustainable value
to its Shareholders and wider stakeholders by setting and working
toward strategic objectives. In order to do so we undertake robust
assessments of the risks which the Group faces and ensure controls
and mitigations are in place to manage those risks. The Company’s
key risks are set out on pages 58 to 64 of the Strategic Report.
The Audit and Risk Committee reviewed the principal and emerging
business risks of the Company on behalf of the Board, with a specific
focus on inflation risk, in light of the direct and indirect consequences
of matters such as Covid-19 and Brexit on the economy and supply
chains, as described on page 14 and 88 to 91.
The Board and Audit and Risk Committee regularly review the
financial position of the Company and perform an assessment of
any risks in relation to the Company’s business model, the Group’s
future performance, liquidity and solvency as well as any risks
relating to specific or proposed investments and tenants or initiatives
relating to assets. To facilitate this process, the Manager produces
financial reports, which include the latest management accounts, a
review and report on the Company’s financial forecast, a report on
proposed and existing investment and asset management initiatives,
substantiation of any dividend payments and a general update on
thefinancial health of the Company.
As the Company’s AIFM, the Manager is subject to reporting and
ongoing compliance under the AIFMD. As part of this regulatory
process, Langham Hall UK Depositary LLP has been retained by the
Company and is responsible for cash monitoring, asset verification
and oversight of the Company and the Manager. Langham Hall UK
Depositary LLP report quarterly to the Board and the Manager.
The Manager also employs a Head of Risk & Compliance to assist
with the discharge of the Manager’s obligations in accordance with
the AIFMD.
Risk management and internal controls review
The Company’s internal control and risk management systems and
processes are designed to identify, manage and mitigate the financial,
operational and compliance risks that are inherent to the Group and
safeguard the Group’s assets. These safeguards and systems in
place are designed to manage (rather than eliminate) the risk of failure
to achieve business objectives and can only provide reasonable, but
not absolute, assurance against material misstatement or loss.
The Board and the Manager have, together, reviewed all financial
performance and results notifications. Non-financial internal
controls include the systems of operational and compliance controls
maintained by the Company’s administrator, Link Asset Services
(the“Administrator”), and by the Manager in relation to the Company’s
business, as well as the management of key risks referred to in the
Strategic Report on pages 58 to 64.
The Board has contractually delegated responsibility foradministrative
and accounting services to the Administrator and for company
secretarial services to the Manager. These entities have their own
internal control systems relating to these matters, which we have
reviewed as part of the Company’s Financial Position and Prospects
Procedures document, which was reviewed, updated and approved
in December 2021.
The Company has engaged Grant Thornton to provide internal audit
services. During the year, Grant Thornton undertook an internal
controls review on specific operations.
X For further details on the review please see page 90.
The Company is managed externally by the Manager. All payments
ofCompany funds are authorised by the Manager in accordance
with the duties delegated to it pursuant to the terms of the
Investment Management Agreement (“IMA”) and in accordance with
theprovisions of the AIFMD. The Manager instructs the Administrator
to make the duly authorised payment and Langham Hall UK
Depositary LLP, as part of its role as Depositary, reviews each
material payment in relation to the specific test areas as mentioned
inthe report overleaf. The Audit and Risk Committee considers
that the internal controls in place and the function undertaken by
Langham Hall UK Depositary LLP, alongside the external audit
provides the appropriate rigour and assurance over the managing
of Company funds. In addition to this, the Administrator has its own
internal audit performed on an annual basis by BDO, from which
the Company reviews any findings. The 2020 audit did not raise any
significant findings and whilst the 2021 audit is in the process of
being finalised, no significant findings have been raised to date.
Internal control and risk assessment process
In accordance with the AIC Code, the Board has established a
continuing process for identifying, evaluating and managing the risks
the Company faces and has reviewed the effectiveness of the internal
control systems.
This includes reviewing reports from the Auditor (details of which are
included in the Audit and Risk Committee Report), regular reports
from the Company Secretary (outlining corporate activity within the
Group and outlining the Company’s compliance with the AIC Code)
and proposed future initiatives relating to the Company’s governance
and compliance framework. The Audit and Risk Committee also
receives quarterly compliance reports prepared by Langham Hall UK
Depositary LLP and review the formal risk assessment conducted by
the Audit and Risk Committee and the Manager twice a year.
Furthermore, we actively consider investment opportunities, asset
management initiatives, debt and equity fundraisings and other
financial matters against the requirements of the Company’s
Investment Objectives and Investment Policy.
The Audit and Risk Committee also conducts a robust assessment
of the emerging and principal risks to the business model, future
performance, solvency and liquidity of the Company at least twice a
year and reports its findings to the Board. The Manager is asked to
analyse and report on the risks which the Company may encounter
on specific transactions including, for example, an adverse decision
regarding the development of an asset at the planning stages or a
sudden change in market conditions before the launch of an equity
raise or debt issue. We then consider each risk in turn, probing
the Manager’s assumptions and analysing whether the risk factors
attributed to each individual risk are fair and accurate, and the effect
of any mitigating factors.
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Annual Report 2021 Tritax Big Box REIT plc
We also consider this as part of our biannual risk review and at each
strategy meeting, and challenge the Manager to actively review
the risks it includes. Please see pages 58 to 64 for more details on
emerging and principal risks.
The Manager maintains a risk register, where perceived risks and
associated mitigations are recorded and this is shared with the Board
for approval.
The Manager also reports to the Board twice a year on the
Company’s longer-term viability which includes financial sensitivities
and stress testing of the business to ensure that the adoption of the
going concern basis and longer-term viability are appropriate.
Anti-bribery and corruption
The Board has a zero tolerance policy towards bribery and corruption
and is committed to carrying out business fairly, honestly and openly.
In considering the Bribery Act 2010, at the date of this report, the
Board had assessed the perceived risks to the Company arising
from bribery and corruption and identified aspects of the business,
which may be improved to mitigate such risks. The Manager actively
reviews and monitors perceived risks. Responsibility for anti-bribery
and corruption has been assigned to the Head of Risk and
Compliance within the Manager. The Head of Risk and Compliance
reports to the Committee biannually on any compliance matters.
All employees of the Manager are required to undertake certain
e-training on anti-bribery and other topics such as conflicts
of interests and anti-money laundering which is provided
through Thistle.
Modern slavery and human trafficking policy
The Group is committed to maintaining the highest standards of
ethical behaviour and expects the same of its business partners.
Slavery and human trafficking are entirely incompatible with the
Group’s business ethics. We recognise that the real estate and
construction sectors rank highly for modern slavery risks. We believe
that every effort should be made to eliminate slavery and human
trafficking in the Group’s supply chain. We seek to mitigate the
Group’s exposure by engaging with reputable professional service
firms based in the United Kingdom, who adhere to the Modern
Slavery Act 2015. We also regularly request formal governance
information from the Group’s suppliers, to enable ongoing monitoring
of business and supply chain risk and conduct due diligence and
risk assessment on potential new suppliers. We will continue to
monitor and collaborate with the Group’s suppliers, customers and
developers, to ensure that they have systems and controls that
reduce the risk of facilitating modern slavery and human trafficking.
Depositary statement
Established in 2013, Langham Hall UK Depositary LLP is an
FCA regulated firm that works in conjunction with the Manager
and the Company to act as depositary. Consisting exclusively
of qualified and trainee accountants and alternative specialists,
the entity represents net assets of US$100 billion and we
deploy our services to over 100 alternative investment funds
across various jurisdictions worldwide. Our role as depositary
primarily involves oversight of the control environment of the
Company, in line with the requirements of the Alternative
Investment Fund Managers Directive (AIFMD).
Our cash monitoring activity provides oversight of all the
Company held bank accounts with specific testing of bank
transactions triggered by share issues, property income
distributions via dividend payments, acquisitions and
thirdparty financing. We review whether cash transactions
areappropriately authorised and timely. The objective of our
asset verification process is to perform a review of the legal
title of all properties held by the Company, and shareholding
of special purpose vehicles beneath the Company.
We test whether on an ongoing basis the Company is
being operated by the Manager in line with the Company’s
prospectus, and the internal control environment of the
Manager. This includes a review of the Company’s and its
subsidiaries’ decision papers and minutes.
We work with the Manager in discharging our duties, holding
formal meetings with senior staff on a quarterly basis and
submit quarterly reports to the Manager and the Company,
which are then presented to the Board of Directors, setting
out our work performed and the corresponding findings for
the period.
In the year ended 31 December 2021, our work included the
review of one ordinary and two management share issues,
one investment property acquisition and four property income
distributions. Based on the work performed during this period,
we confirm that no issues came to our attention to indicate that
controls are not operating appropriately.
Joe Hime
Head of UK
For and on behalf of Langham Hall UK Depositary LLP,
London, UK
Langham Hall UK Depositary LLP is a limited liability
partnership registered in England and Wales
(with registered number OC388007).
88 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Audit and Risk Committee Report
Richard Laing FCA
Chair of the Audit and Risk Committee
Dear Shareholders,
I am pleased to present the Audit and Risk Committee
Report for the year ended 31 December 2021. TheAudit
and Risk Committee’s role is to oversee the Company’s
financial reporting process, including the risk
management and internal financial controls in place
within the Manager, the valuation of the property
portfolio, the Group’s compliance with accepted
accounting standards and other regulatory requirements
as well as the activities of the Auditor. We were pleased
to welcome Wu Gang and Elizabeth Brown to the
Committee during the period and believe they will both
be valuable additions to the Board.
We operate within defined Terms of Reference, which are
available on the Company’s website and on request from
the Company Secretary. All Audit and Risk Committee
members are independent Non-Executive Directors of
the Company, not connected to the Manager nor the
Auditor. The Committee believes that its members have
the right balance of skills and experience to be able to
function effectively. The Committee considers Karen
Whitworth and myself to be industry experts given our
financial backgrounds with Wu Gang bringing a wealth of
financial expertise from his career in investment banking.
As such we consider 75% of the Committee to have
significant financial experience.
Further details of each Director’s experience can be
found in the biographies on pages 68 to 69. We met
for seven scheduled and one ad hoc meeting during
2021, following the Company’s corporate calendar,
which ensures that the meetings are aligned to the
Company’s financial reporting timetable. The Company
Secretary and I ensure that the meetings are of sufficient
length to allow the Committee to consider all important
matters and the Committee is satisfied that it receives
full information in a timely manner to allow it to fulfil
its obligations. These meetings are attended by the
Committee members, as well as representatives of the
Manager, the Company Secretary and where necessary
the Auditor, BDO LLP, and, on occasion, the Company’s
Chairman. We also met with the Auditor without any
representative of the Manager present. The Committee
also met with the Company’s independent valuers,
CBRE and Colliers, in July 2021 and January 2022 as
part of the interim and year-end audit processes. As the
Committee Chair, I have had regular communications
with the Company Secretary, the Company’s CFO
and the Auditor. In addition, the Committee has
discussions throughout the year outside of the formal
Committee meetings.
Membership
Richard Laing, Chair
Karen Whitworth
Wu Gang
Elizabeth Brown
For full details on Committee attendance please refer to page 82
Key areas of focus in 2021
• Recommended to the Board that the Annual Report and Accounts for 2021, taken
as whole, is fair, balanced and understandable and that it provides the information
necessary for Shareholders to assess the Company’s position and performance,
business model and strategy;
• Reviewed the Interim results for 2021 and recommended these to the Board
for approval;
• Monitored the integrity of the financial statements of the Company and any formal
announcements relating to the Company’s financial performance and reviewed any
significant financial reporting judgements contained in them;
• Monitored the effectiveness of the Group’s assessment of risk to ensure actions are
being taken to mitigate the Group’s exposure to risk;
• Reviewed the robustness of the Company’s internal financial controls and
the efficiency of the internal control and risk management systems used by
the Company;
• Assessed the quality of the annual and interim property valuations prepared by
the Company’s independent valuers and challenged the assumptions used by the
Valuers in preparing the valuation;
• Reviewed and considered the basis of the Viability and Going Concern Statements
made by the Directors;
• Reviewed and monitored the Company’s relationship with its Auditor;
• Reviewed the accounting and reporting implications of changes in standards or
best practice;
• Evaluated the Company’s key climate-related risks in preparation for TCFD reporting; and
• Monitored the impact of Covid-19 on the performance of the Company and
itsstakeholders.
“ We are pleased to have complied
with the Task Force on Climate-
Related Financial Disclosures
89
CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
Financial reporting and significant judgements
• Monitored the effectiveness of the Group’s assessment of
risk to ensure actions are being taken to mitigate the Group’s
exposure to risk;
• Reviewed the robustness of the Company’s internal financial
controls and the efficiency of the internal control and risk
management systems used by the Company;
• Assessed the quality of the annual and interim property valuations
prepared by the Company’s independent Valuers and challenged
the assumptions used by the Valuers in preparing the valuation;
• Reviewed and considered the basis of the Viability and Going
Concern Statements made by the Directors;
• Reviewed and monitored the Company’s relationship with
its Auditor;
• Reviewed the accounting and reporting implications of changes
instandards or best practice;
• Evaluated the Company’s key climate-related risks in preparation
for TCFD reporting; and
• Monitored the impact of Covid-19 on the performance of the
Company and its customers.
• Monitored the integrity of the financial information published in the
Interim and Annual Reports and considered whether suitable and
appropriate estimates and judgements have been made in respect
of areas which could have a material impact on the financial
statements. We also considered the processes undertaken by the
Manager to ensure that the financial statements are fair, balanced
and understandable.
A variety of financial information and reports were prepared by the
Manager and provided to the Board and to the Committee over the
course of the year. These included budgets, periodic re-forecasting
following acquisitions or corporate activity, papers to support raising
of additional finance, general compliance and following Covid-19 a
regular update on rent collection and the financial impact thereof on
the Company.
The FRC conducted a procedural review of the Company’s
30June2021 interim accounts, and the Committee is pleased to
report that there were no immediate questions to raise with the
Company. The Committee and the Manager have addressed a small
number of narrative reporting matters in the 2021 Annual Report.
Following a review of information flow, the Committee now receives
a biannual report on Compliance activities and IT controls. The
Committee also undertook a deep dive on cyber security controls.
We also regularly review the Company’s ability to continue to pay
aprogressive dividend. This financial information was fully reviewed
and debated both at Committee and Board level across a number
of meetings.
The Manager and the Auditor update us on changes to accounting
policies, legislation and best practice and areas of significant
judgement by the Manager. They pay particular attention to
transactions which they deem important due to size or complexity.
The Company successfully raised £300 million of equity in
September 2021 which will be used to accelerate the activity within
the development portfolio. The Company also provisionally allocated
all the proceeds from the Green Bond issuance in Q4 2020 to eligible
green initiatives. The Company reported against this for the first time
in December 2021 and the full report can be found on the Company’s
website. InDecember 2021, the Company reported Moody’s Investor
Services improvement to the Company’s outlook to Baa1 (positive)
from Baa1 (stable). In addition, the Company successfully transitioned
its facility agreements to the Sonia reference rate following the
discontinuation of Libor at the end of 2021.
Valuation of property portfolio
We have separated the valuation appointments, such that CBRE
value our investment assets and Colliers value our development
assets, both on a biannual basis. The Group’s portfolio value was
£5.48 billion (31 December 2020: £4.41 billion), reflecting an uplift
of24.3% for the period.
1.
Planning
meeting
3.
Challenge
4.
Ongoing
review
2.
Scope
1. Planning meeting
We meet with the Auditor and the Manager before the preparation
of each of the Interim and Annual results, to plan and discuss the
scope of the audit or review as appropriate, and challenge where
necessary to ensure its rigour.
2. Scope
At these meetings the Auditor prepares a detailed audit or review
plan which is discussed and questioned by us and the Manager
to ensure that all areas of the business are appropriately reviewed
and that the materiality thresholds are set at the appropriate level,
which varies depending on the matter in question.
3. Challenge
We discuss with the Auditor its views over significant risk areas
and why it considers these to be risk areas. The Committee,
whereappropriate, continues to challenge and seek comfort
fromthe Auditor over those areas which drive audit quality.
4. Ongoing review
We meet with the Auditor again just prior to the conclusion of
the review or audit to consider, challenge and evaluate their
findings in depth.
90 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Valuation of property portfolio continued
Following production of the draft valuation by the valuers, the Manager
meets with the valuers to discuss and challenge various elements of
the property valuation, if necessary. The Auditor, in fulfilling its function
as independent Auditor to the Company, also meets with the valuers
to discuss, and where necessary, challenge the assumptions within
the property valuations. The Committee meets with both valuers to
discuss and challenge the valuation and to ensure it was conducted
properly, independently and could be fully supported. Subject to
reviewing and agreeing any subsequent changes, the Committee also
receives a copy of the property valuations for the portfolio once they
have been reviewed by the Manager and after the Auditor has met with
the valuers. Theperformance of the valuers is assessed on an annual
basis by the Management Engagement Committee in its report on
pages 92 to 94. In line with best practice and to ensure the continued
independence of the valuers CBRE rotated Ben Thomas for the
June2021 valuation and Nick Knight for the December 2021 valuation.
As explained in note 14 to the financial statements, CBRE and Colliers
independently valued the properties in accordance with IAS 40:
Investment Property. We have reviewed the underlying assumptions
within the property valuations and discussed these with the Manager
and the valuers, and have concluded that the valuation is appropriate
with a particular regard to the current environment and any short-term
impacts from Covid-19 or climate related matters.
The Board approved both the CBRE and the Colliers valuations
inAugust 2021 and March 2022 in respect of the interim and
annualvaluations.
B and C Shares
Subject to certain conditions, the B and C Shares of Tritax Symmetry
entitle the holders to 13% of the adjusted NAV of Tritax Symmetry.
These conditions include bad leaver provisions which, as a result,
has led to 50% of Adjusted NAV being recognised as contingent
consideration in accordance with IFRS 3. Any further value paid
to the B and C shareholders will therefore be accounted for as a
payment for post-combination services and therefore recognised
asa share-based payment.
Land options
As we consider that land options do not meet the definition of
investment property, land options will be classified as a non-financial
asset and measured at cost less provision for impairment under
IFRS in the Group Statement of Financial Position. Land options
aremeasured at fair value and included as such within EPRA NTA.
Fair, balanced and understandable financial statements
The production and audit of the Group’s Annual Report is a
comprehensive process, requiring input from a number of
contributors. To reach a conclusion on whether the Annual
Report isfair, balanced and understandable, as required under
the AIC Code, the Board has requested that the Committee
advise on whether it considers that the Annual Report fulfils
theserequirements. Inoutlining our advice, we have considered
thefollowing:
• the comprehensive documentation that outlines the controls
in place for the production of the Annual Report, including the
verification processes to confirm the factual content;
• the detailed reviews undertaken at various stages of the production
process by the Manager, Administrator, Joint Financial Advisers,
Auditor and the Committee, which are intended to ensure
consistency and overall balance;
• controls enforced by the Manager, Administrator and other third-party
service providers, to ensure complete and accurate financial
records and security of the Company’s assets;
• the satisfactory ISAE 3402 control report produced by the
Administrator for the year ended 31 December 2020, which has
been reviewed and reported upon by the Administrator’s external
auditor, to verify the effectiveness of the Administrator’s internal
controls; and
• a letter provided by the Administrator that there have been no
changes to its control environment since 31 December 2020 and that
all internal controls in place at the time of the last review remain active.
As a result of the work performed, we have concluded and reported
to the Board that the Annual Report for the year ended 31 December
2021, taken as a whole, is fair, balanced and understandable and
provides the information necessary for Shareholders to assess the
Company’s performance, business model and strategy.
Covid-19
The Committee continued to assess the impact of Covid-19 on the
business as part of its formal assessment of risk. The Committee and
Board also considered its financial impact including an assessment
of rent collection, cash flow projections, property values alongside
the financial impact on the Group’s customers at regular intervals
throughout the period. This is also something we have considered
aspart of the assessment over going concern and viability and
continue to monitor on a regular basis.
Task Force on Climate-Related Financial
Disclosures (TCFD)
We welcome the Task Force on Climate-related Financial Disclosures
(TCFD) as a vital step in increasing stakeholders’ and companies’
focus on climate change. The Company has engaged DNV, an
environmental consultant, to assist in our scenario planning
and embedding climate risk into our current risk framework.
TheManager’s Executive Committee conducts the initial review
intothe Company’s risks including climate related risks and reports
up to the Committee who maintain overall responsibility for climate
risks facing the business and advises the Board accordingly.
X Please refer to pages 39 to 41 for our 2021 TCFD disclosure.
Internal audit
The Company does not have an internal audit function but has
engaged Grant Thornton UK LLP to perform certain internal audit
services. In the year Grant Thornton performed a review over
the following operational areas of Tritax Symmetry: management
controls(including contract, procurement & risk), governance
and reporting, and knowledge and resources. The findings report
was based on information received from discussions with the
Manager and Tritax Symmetry management as well as walk through
testing of processes and controls. All findings were rated as low
in terms of severity and recommendations to current practices
will be implemented. In 2022 Grant Thornton will undertake the
next iterationof the review focusing on Tritax Symmetry’s risk
management and health and safety processes.
Audit and Risk Committee Report continued
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CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
External audit
The Audit and Risk Committee recommended that BDO be
reappointed following a re-tender in 2017. The period of total
uninterrupted engagement is eight years, covering the years ending
31 December 2014 to 31 December 2021. Geraint Jones has been
the Lead Audit Partner since 2019.
This year is the fifth year that BDO have conducted the audit post
their retender in 2017. The Company confirms that it has complied
with the Competition and Markets Authority’s Order in the year.
TheCommittee was satisfied that it was not optimal to tender
external audit services in the current year. The Committee noted
that a competitive tender for the external auditor must be held no
later than 2027. The Committee has assessed and values the quality
andstability of the relationship with BDO as current auditor.
The Committee monitors the performance of the external auditor,
providing an in-depth evaluation of its performance following the
external audit, and then makes a recommendation to the Board.
When considering the appropriateness of the re-appointment of
BDO, we also consider in our review, the ratio of audit to non-audit
fees and the effectiveness of the audit process, together with
other relevant review processes. We were satisfied that we should
recommend the re-appointment of BDO.
The Committee has met with the key members of the audit team
over the course of the year and BDO has formally confirmed its
independence as part of the reporting process.
We consider that the audit team assigned to the Company by BDO
has a good understanding of the Company’s business which enables
it to produce a detailed, high-quality, in-depth audit and permits the
team to scrutinise and challenge the Company’s financial procedures
and significant judgements. We ask the Auditor to explain the key
audit risks and how these have been addressed. We also considered
BDO’s internal quality control procedures and transparency report
and found them to be sufficient. Overall, the Committee is satisfied
that the audit process is transparent and of good quality and that
theAuditor has met the agreed audit plan.
BDO’s audit for the year ended 31 December 2020 is being
reviewed by the FRC’s Audit Quality Review team as part of their
annual inspection of the firm’s audit work. Although no final report
has yet been issued, the Audit & Risk Committee has discussed
with BDO the draft findings of the review and how BDO intends to
address these matters in their audit approach for the year ended
31 December 2021. None of these matters was considered by the
Committee to impact significantly on audit quality.
Please refer to note 8 in the financial statements for a summary
offees paid to the Auditor.
We continue to believe that, in some circumstances, the external
Auditor’s understanding of the Company’s business can be beneficial
in improving the efficiency and effectiveness of advisory work. For
this reason we continue to engage BDO as reporting accountants
on the Company’s issues of equity and debt capital in the normal
course of the Company’s business. PricewaterhouseCoopers are
appointed to assist with financial and tax due diligence on corporate
acquisitions and to provide general tax compliance advice.
The Non-Audit Services Policy requires approval by the Committee
above a certain threshold before the external Auditor is engaged
toprovide any permitted non-audit services.
The Company paid £55,250 in fees to the Auditor for non-audit
services during 2021. These fees are set out in the table below.
Work undertaken
Rationale for using
the external Auditor
Fee
(£)
Interim Review Work is normally performed
by anexternal Auditor.
43,250
Agreed upon procedures
over theadjusted NAV
Extension of audit
procedures.
12,000
Reporting
accountantservices
Knowledge of the Group. nil
Total £55,250
The ratio of audit to non-audit services received in the year was 12%
(2020: 23%). The Committee periodically monitors the ratio to ensure
that any fees for permissible non-audit services do not exceed 70%
of the average audit fees paid in the last three years.
Committee evaluation
The overall performance of the Audit and Risk Committee was
rated highly, in particular its review and assessment of the work
ofthe external Auditors, financial reporting, internal control, risk
management systems and the independent property valuations.
Priorities for 2022
The Committee will focus on further embedding TCFD reporting
into the Company’s risk processes. In addition, the Committee
has agreed to review the Company’s risk appetite and overall risk
tolerance of the Company’s principal risks.
Richard Laing, FCA
Chair of the Audit and Risk Committee
2 March 2022
Non-audit 12%
Audit 88%
Ratio of audit to
non-audit services
92 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Management Engagement Committee Report
Karen Whitworth
Chair of the Management Engagement Committee
Dear Shareholders,
I am pleased to present the Management Engagement Committee
Report for the year ended 31 December 2021. I took over the
Chairmanship of the Committee from Susanne Given with effect
from 1 October 2021 and my focus has been on completing the
Investment Management Agreement (“IMA”) review. The Management
Engagement Committee’s role is to review the performance of the
Manager and the Company’s key service providers and if required
to recommend the re-tender of their services for consideration by
the Board. The Committee is also responsible for overseeing any
amendments to the IMA.
During the period we met for one scheduled and three ad hoc
meetings. The Committee continued to conduct its comprehensive
review of the IMA in order to protect the Company, whilst ensuring
that it offers good value to stakeholders, positioning the Company as
an attractive investment opportunity in the market. The Committee
met several times and enlisted the help of Akur, Jefferies and Alvarez
& Marsal Tax and UK LLP in providing various market comparison
reports to assist in their discussions. The Committee plans to
conclude this review in the near term.
Under the terms of the IMA and in accordance with the ESMA
guidance, as to the interpretation of the rules under AIFMD, the Board
has delegated the day-to-day responsibility for running the Company
to the Manager. The Manager is responsible for making investment
and divestment decisions in accordance with the Company’s
Investment Policy along with asset management of the existing
portfolio. The negotiation of debt facilities within the parameters of
the Company’s policy on gearing and liaising with the Company’s
advisers on proposed equity fundraisings require approval from
the Board prior to execution. All of the Company’s subsidiaries and
therefore all of its assets are wholly owned and controlled by the
Company as at 31 December 2021, except certain Tritax Symmetry
assets which are held in joint venture vehicles, and the Board
exercises direct control in respect of the Group’s holdings.
The Board continues to review all investment and divestment
decisions as well as the asset management policy established by the
Manager and remains responsible for ensuring that these decisions
are made in accordance with the Company’s Investment Policy.
To ensure open and regular communication between the Manager
and the Board, the certain key representatives of the Manager
are invited to attend all Board meetings to update the Board on
the Company’s portfolio activity and discuss the general market
conditions and the financial performance and strategy of the
Company. Details of the Company’s performance in 2021 have
beenset out in the Strategic Report on pages 2 and 3.
Membership
Karen Whitworth, Chair
Aubrey Adams
Alastair Hughes
Richard Laing
Wu Gang
Elizabeth Brown
For full details on Committee attendance please refer to page 82
Key areas of focus in 2021
• Reviewed the Investment Management Agreement between
the Company and the Manager;
• Reviewed the Manager’s key suppliers and their
performance; and
• Appointed new suppliers.
“ We are pleased to have
appointed several new key
suppliers throughout the period.”
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CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
Suppliers
The Company appointed a number of new suppliers during the
period to support the Company in its next phase of growth and
development. Following the completion of last year’s annual reporting
cycle, the Manager undertook a tender of the Annual Report design
agency and Design Portfolio was appointed for the new cycle
for the Tritax Group. The approach was to maximise efficiencies
in the delivery and the cost of the Annual Report. The Manager
also undertook a tender to appoint a joint corporate broker to
complement Jefferies. After an extensive interview process where
the Board and certain key representatives of the Manager met
with several potential candidates, the Board decided to appoint
JPMorgan Chase & Co inJuly 2021.
The Company also decided to re-tender its corporate communications
agency during the period. The team interviewed several potential
agencies which resulted in the appointment of KEKST CNC in
February 2022. Finally, Savills replaced Colliers astheproperty
managers for the Portfolio in December 2021.
We agree with the Manager that the performance of the Company’s
current service providers for the past year continued to be
satisfactory, and in several cases exceptional, and agreed with the
Manager’s recommendation that each be retained until the next
review, with the exception of the aforementioned changes. We are
satisfied that the Company is benefiting from added value in respect
of the services it procures.
The Manager
The Committee also reviews the Manager’s culture and organisational
structure. The Manager increased the number of employees during
2021 to ensure that the Company is well served. The new hires included
an ESG Director, Head of Strategic Power, Property Manager, Fund
Controller, Head of People Development and a Director of Marketing
and Communications.
Following the completion of abrdn acquisition of a 60% interest in
the Manager in April 2021, Mark Shaw retired from the Partnership.
Phil Redding and Alasdair Evans became equity partners on
1February 2021.
Throughout 2021, the Committee focused on the annual assessment
of the Manager’s performance and continued to review the terms of
the IMA between the Company and the Manager to ensure the IMA
continues to offer good value for Shareholders. We plan to finalise
theIMA review in the near term.
IMA terms
The IMA continues on a rolling basis, with either party having the
rightto terminate the Investment Management Agreement by giving
at least 24 months’ notice. There are provisions allowing the parties
to terminate without notice in certain circumstances, including
material breach and/or loss of key personnel.
Conflict management
The IMA contains robust conflict provisions and the Manager is
not permitted in any circumstance to manage another fund with an
exclusive investment strategy focusing on distribution or logistics
assets in excess of 300,000 sq ft located within the UK. The Manager
is permitted to acquire and manage UK distribution or logistics assets
which provide less than 300,000 sq ft of accommodation on behalf
of other funds subject to certain caveats designed to ensure that any
assets which may be of interest to the Company are offered to the
Company in priority to other funds managed by the Manager.
We will review the continuing appointment of all of the Company’s
principal service providers and the performance of the Manager
onan annual basis, in order to ensure they are in the best interest
ofthe Company.
Management fee
Under the terms of the IMA, the Manager is entitled to a management
fee in consideration for its services. This is payable in cash by the
Company each quarter and is calculated based on a percentage
of the Company’s Net Asset Value (“NAV”), disregarding cash or
cash equivalents. The fee is payable quarterly in arrears and the
Manager is obliged to apply 25% of the fee in shares of the Company
(“Management Shares”) (see below for further detail). If the Group
buys or sells any assets after the date at which the relevant NAV is
calculated, the NAV is adjusted pro rata for the net purchase or sale
price, less any third-party debt drawn or repaid whilst remaining
capped at NAV.
The management fee as a percentage of NAV is as set out below:
NAV
Relevant
percentage
Up to and including £500 million 1.0%
Above £500 million up to and including £750 million 0.9%
Above £750 million up to and including £1 billion 0.8%
Above £1 billion up to and including £1.25 billion 0.7%
Above £1.25 billion up to and including £1.5 billion 0.6%
Above £1.5 billion 0.5%
During specified periods after publication of the Company’s annual
or interim results the members of the Manager are obliged to use
25% of the management fee (net of any VAT, personal taxation
liabilities and dealing costs, including stamp duty or stamp duty
reserve tax) (the “net cash amount”), to subscribe for Ordinary
Shares in the Company. This is done at a price equivalent to the
prevailing NAV per share, adjusted for any dividend declared after
the NAV per share is announced if the new shares do not qualify
forreceipt of this dividend. In the circumstance where NAV is below
the prevailing share price, new Ordinary Shares will be issued.
Where the NAV is above the prevailing share price, the Company’s
Broker will be instructed to acquire Ordinary Shares in the market
for those persons, to the value as near as possible equal to the net
cash amount.
94 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Management fee continued
The Management shares may be allocated to any of the Partners of
the Manager, and all employees of the Manager are eligible to receive
share allocations at the discretion of the Manager.
On 15 March 2021, the Manager issued 741,884 Ordinary Shares to
the Manager’s Partners, its staff in respect of the net cash amount,
relating to the six-month period to 31 December 2020. Theissue
price was 169.92 pence per Ordinary Share being the most recent
published NAV per Ordinary Share as at 31 December 2020.
On 9 August 2021, the Manager issued 838,725 Ordinary Shares to
the Manager’s Partners, its staff and abrdn (following its acquisition
of60% interest in the Manager in April 2021) in respect of the net
cash amount, relating to the six-month period to 30 June 2021.
Theissue price was 188.57 pence per Ordinary Share being the
mostrecent published NAV per Ordinary Share as at 30 June 2021.
Partners of the Manager and its staff had the following beneficial
interests as at the date of this report:
PDMR or person
closely associated
Number of
Ordinary
Shares held
Percentage of
issued share
capital as at
2 March 2022
Colin Godfrey 2,381,434 0.128%
James Dunlop 2,319,073 0.124%
Henry Franklin 1,735,710 0.093%
Bjorn Hobart 329,915 0.018%
Petrina Austin 290,800 0.016%
Frankie Whitehead 131,118 0.007%
Phil Redding 7,381 0.001%
Tritax Management LLP 95,275 0.005%
Staff of Tritax Management LLP
1
579,893 0.031%
Total 7,870,599 0.423%
1 The figure comprises Ordinary Shares issued to staff of Tritax Management
LLP under the terms of the IMA and at IPO, and does not include other
shares that may have otherwise been acquired by staff.
AIFM Directive
The AIFMD became part of UK law in 2013. It regulates AIFMs and
imposes obligations on managers of alternative investment funds
(“AIFs”) in the EU or who market shares in AIFs to EU investors.
Under the AIFMD, the AIFM must comply with various organisational,
operational and transparency obligations.
The Manager is authorised by the FCA as an AIFM and provides
all relevant investment management and advisory services to the
Company, including regulated activities. The Manager is responsible
for making investment and divestment decisions in respect of the
Company’s assets as part of its regulatory responsibility for the
overall portfolio and risk management of the Company. This is in
linewith published ESMA guidance on the application of the AIFMD.
AIFM remuneration policy applied by the Manager
As a full scope AIFM, the Manager must apply a remuneration policy
in line with its business strategy, objectives, values and interests, as
well as those of the AIFs it manages or its investors. The policy must
include measures to avoid conflicts of interest. This ensures that the
Partners have a vested interest in ensuring the Manager remains
financially sound.
The annual fee paid by the Company is based on a percentage of its
NAV, as set out on page 93. In addition, the Manager’s Partners are
required to apply 25% of that fee (net of tax and certain other costs,
as described on the previous page) to the purchase of Management
Shares. Management Shares are subject to a 12-month lock-in
period. This aligns the interests of the Manager’s Partners with
the strategy and interests of the Company and its Shareholders.
The Manager’s Partners are able to allocate a proportion of the
Management Shares to key members of staff, which they have once
again done in respect of both Management Share issues in 2021.
The Manager’s partnership board meets at least twice a year to
discuss the remuneration of its entire staff. Staff are remunerated in
accordance with their seniority, expertise, professional qualifications,
responsibilities and performance. They are paid salaries in line with
market rates and, in profitable years, awarded a discretionary bonus
from a bonus pool worth, in aggregate, at least 5% of the Manager’s
profits. The discretionary bonus may consist of cash or Ordinary
Shares in the Company allocated to certain members of staff out
of the Management Shares. This means that staff remuneration
is predominantly fixed and the variable element is determined by
the Manager’s overall profitability, rather than the performance of
aparticular AIF.
The Manager’s Partners are entitled to their partnership share of its
profits and losses. None of the Partners are entitled to additional
partnership drawings that depend on the performance of any AIF
managed by the partnership. The Partner’s remuneration therefore
depends on the Manager’s overall profitability, rather than the
performance of any AIF.
Committee evaluation
The overall performance on the Management Engagement
Committee for the period was positively rated, in particular its
oversight of the performance and retention of key service providers.
Priorities for 2022
The Committee will focus on completing the IMA review in the near
term and on the review of the performance of all key suppliers, with
afocus on the Manager’s performance.
Karen Whitworth, ACA
Chair of the Management Engagement Committee
2 March 2022
Management Engagement Committee Report continued
95
CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
Directors’ Remuneration Report
Annual statement
The Company only has Non-Executive Directors and therefore does not consider it necessary to establish a separate Remuneration Committee.
The Directors’ remuneration is disclosed below. The Remuneration Report will be presented at the AGM on 4 May 2022 forshareholder
consideration and approval. The only relevant remuneration decision taken in the year under review was on the level ofNon-Executive Director
fees. The Directors’ remuneration is disclosed on page 96.
During the year, the Board made certain an amendment to the base Non-Executive Director fee level for the Board of Directors of theCompany.
The decision followed arobust review, further details of which are set out below:
Role
Revised fee
per annum
in 2022
(£)
Fee agreed
in 2019
(£)
Non-Executive Director 54,000 50,000
In Q4 2021, the Board commissioned a report on Non-Executive Director Remuneration from Deloitte LLP to assess the fee levels of the
Board of Directors and benchmark those fees against the Company’s peers. Following the review, and to ensure the Company continues to
attract suitably experienced talent to the Board, it was decided to apply an RPI uplift to the NED basic fee level, from the last point of increase
in May 2019. The Board agreed the above fee structure and to review the Non-Executive Director fees annually.
Directors’ Remuneration Policy
The Company’s policy is to determine the level of Directors’ fees with regard to those payable to Non-Executive Directors of comparable
REITs and the time each Director dedicates to the Company’s affairs. The Remuneration Policy is set out in the Company’s 2020 Annual
Report, which is available on the Company’s website. The next time it is intended that Shareholders will be asked to approve the Directors’
Remuneration Policy will be at the Company’s AGM in 2024 and the Remuneration Policy approved at the Company’s 2021 AGM will continue
to apply until such time.
The Directors are entitled to their annual fee and reasonable expenses. No element of the Directors’ remuneration is performance-related, nor
does any Director have any entitlement to pensions, share options or any long-term incentive plans from the Company. Under the Company’s
Articles, all Directors are entitled to the remuneration determined from time to time by the Board. There were no revisions to the policy during
the period.
Each Director has been appointed pursuant to a Letter of Appointment. Previously Directors were appointed for a two-year term, subject
toannual re-election at the Company’s AGM. Following a review of appointment terms during the year, all new appointments and renewals
will be appointed for a three-year initial term. No Director has a service contract with the Company, nor are any such contracts proposed.
TheDirectors’ appointments can be terminated in accordance with the notice provisions and the Articles and, in certain circumstances,
without compensation. The terms of appointment of the Directors are set out in the below table.
Director Letter of appointment dated
Expected and actual
date of expiry
Unexpired term as at
31 December 2021 Notice period
Aubrey Adams 11 September 2017 11 September 2024 33 months 3 months
11 September 2019
11 September 2021
Richard Laing 16 May 2018 16 May 2022 5 months 3 months
16 May 2020
Alastair Hughes 1 February 2019 1 February 2023 14 months 3 months
1 February 2021
Karen Whitworth
21 October 2019
21 October 2021 21 October 2024 34 months 3 months
Wu Gang 1 October 2021 1 October 2024 33 months 3 months
Elizabeth Brown 15 December 2021 15 December 2024 36 months 3 months
96 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Statement of consideration of shareholder views
The Board will seek shareholder views when evaluating and setting ongoing remuneration strategy and prior to any significant changes to
the remuneration policy, where appropriate. The Company is committed to ongoing shareholder dialogue and takes an active interest in
voting outcomes.
Annual report on remuneration (audited)
The fees paid to the past and current Directors in the year to 31 December 2021, which have been audited, are set out below. In addition,
each Director is entitled to recover all reasonable expenses incurred in connection with performing his or her duties as a Director. Directors’
expenses for the year to 31 December 2021 totalled nil (2020: £4,273). No other remuneration was paid or payable during the year to
any Director.
Annual fee Expenses Total Fixed Remuneration
Director
For year
ended
31.12.2021
(£)
For year
ended
31.12.2020
(£)
For year
ended
31.12.2021
(£)
For year
ended
31.12.2020
(£)
For year
ended
31.12.2021
(£)
For year
ended
31.12.2020
(£)
Sir Richard Jewson
1
40,923 120,000 N/A 3,459 40,923 123,459
Susanne Given
1
38,570 55,000 N/A N/A 38,570 55,000
Aubrey Adams
2
97,526 55,000 N/A N/A 97,526 55,000
Richard Laing 60,000 60,000 N/A 814 60,000 60,814
Alastair Hughes
2
53,154 50,000 N/A N/A 53,154 50,000
Karen Whitworth
3
51,250 50,000 N/A N/A 51,250 50,000
Wu Gang
3
12,500 N/A N/A N/A 12,500 N/A
Elizabeth Brown
3
2,500 N/A N/A N/A 2,500 N/A
1 Sir Richard Jewson retired effective 5 May 2021, Susanne Given resigned effective 13 September 2021.
2 Aubrey Adams was appointed Chairman of the Company effective 5 May 2021, Alastair Hughes was appointed SID effective 5 May 2021.
3 Wu Gang was appointed effective 1 October 2021, Karen Whitworth was appointed Chair of the Management Engagement Committee effective 1 October 2021
and Elizabeth Brown was appointed effective 15 December 2021.
Annual change in remuneration
Director 2021 2020
Sir Richard Jewson 0% 0%
Susanne Given 0% 0%
Aubrey Adams
1
118% 0%
Richard Laing 0% 0%
Alastair Hughes
2
10% 0%
Karen Whitworth
3
10% 0%
Wu Gang N/A N/A
Elizabeth Brown N/A N/A
1 Aubrey Adams was appointed as Chairman of the Company effective 5 May 2021.
2 Alastair Hughes was appointed SID effective 5 May 2021.
3 Karen Whitworth was appointed Chair of the Management Engagement Committee effective 1 October 2021.
External advisers
The Board and its Committees have access to sufficient resources to discharge their duties. Deloitte LLP was engaged during the period
to carry out the Non-Executive Director fee benchmarking exercise. To the best of its knowledge, Deloitte LLP has no connection with the
Company, apart from the Non-Executive Director fee review.
Statement of voting at general meeting
The Company is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. If there are substantial votes
against any resolutions, the Company will consult with shareholders in order to understand the reasons for any such vote. The Company will
provide an update on the views received from shareholders no later than six months after the meeting and any resulting action will be detailed
in the next Annual Report.
The Directors’ Remuneration Policy and the Directors’ Remuneration Report were approved by shareholders at the Company’s AGMs held on
5 May 2021. The voting on the respective resolutions was as shown below:
Resolution For % * Against % Votes withheld
Directors’ Remuneration Policy 99.65% 0.35% 33,272,869
Directors’ Remuneration Report 99.67% 0.33% 5,368,613
* Including votes in favour and discretion.
Directors’ Remuneration Report continued
97
CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
Total shareholder return
The graph below shows the Total Shareholder Return (as required by company law) of the Company’s Ordinary Shares relative to a return on a
hypothetical holding over the same period in the FTSE 250 and the FTSE All-Share REIT Index.
400
350
300
250
200
150
100
50
Dec 13 Dec 15 Dec 17 Dec 19 Dec 20Dec 14 Dec 16 Dec 18 Dec 21
Tritax Big Box FTSE 250 FTSE All-Share REIT
Pence
Total Shareholder Return is the measure of returns provided by a company to shareholders reflecting share price movements and assuming
reinvestment of dividends.
Directors’/PDMR shareholdings (audited)
There is no requirement for the Directors of the Company to own shares in the Company. As at 2 March 2022, the Directors and their persons
closely associated held the shareholdings listed below.
Director*
Number of
shares
held
Percentage
of issued
share capital
Dividends
received
31 December
2021
£
Aubrey Adams 220,000 0.012% 13,345
Wu Gang – – –
Elizabeth Brown – – –
Richard Laing 50,000 0.003% 3,051
Alastair Hughes 35,000 0.002% 2,279
Karen Whitworth 30,705 0.002% 1,277
* Includes Directors and persons closely associated (as defined by the UK Market Abuse Regulation) shareholdings.
The shareholdings of these Directors are not significant and, therefore, do not compromise their independence.
Relative importance on spend on pay
2021
£m
2020
£m
Change
%
Directors’ remuneration 0.4 0.4 0%
Investment management fees 20.7 17.9 16%
Dividends paid to shareholders 114.4 109.2 5%
Other items
The Company maintains Directors’ and Officers’ liability insurance cover, at its expense, on the Directors’ behalf.
Aubrey Adams OBE, FCA, FRICS
Chairman
2 March 2022
98 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Directors’ Report
Introduction
The Directors are pleased to present the Annual Report, including
the Company’s audited financial statements as at, and for the year
ended, 31 December 2021.
The Directors’ Report and the Strategic Report comprise the
“Management Report” for the purposes of Disclosure Guidance
andTransparency Rule 4.1.5R.
Statutory information contained elsewhere in the
Annual Report
Information required to be part of this Directors’ Report can be found
elsewhere in the Annual Report and is incorporated into this report
byreference, as indicated in the relevant section.
Information Location in Annual Report
Directors Pages 68 and 69
s172 Page 22
Business relationships Page 1 to 65
Directors’ interest in shares Page 97
Future developments of the Company Pages 26 to 27
Financial instruments Note 25 on page 130
Corporate governance statement Pages 67 and 72 to 73
Going concern and viability Page 65
Disclosure of information to Auditor Page 99
Share capital Page 98
Incorporation by reference
The Governance Report (pages 66 to 100 of this Annual Report and
Accounts for the year ended 31 December 2021) is incorporated by
reference into this Directors’ Report.
Financial results and dividends
The financial results for the year can be found in the Group Statement
of Comprehensive Income on page 107.
The following interim dividends amounting to, in aggregate,
6.70pence per share were declared in respect of the year ended
31December 2021:
On 6 May 2021, we declared an interim dividend in respect of the
period from 1 January 2021 to 31 March 2021 of 1.6 pence per
Ordinary Share, paid on 1 June 2021 to shareholders on the register
on 14 May 2021.
On 28 July 2021, we declared an interim dividend in respect of the
period from 1 April 2021 to 30 June 2021 of 1.6 pence per Ordinary
Share, paid on 23 August 2021 to shareholders on the register on
6August 2021.
On 21 October 2021, we declared an interim dividend in respect of
the period from 1 July 2021 to 30 September 2021 of 1.6 pence per
Ordinary Share, paid on 17 November 2021 to shareholders on the
register on 29 October 2021.
A fourth interim dividend in respect of the three months ended
31December 2021 of 1.9 pence per share, was approved for
declaration on 2March 2022, payable on 31 March 2022.
Political donations
No political donations were made during the year.
Employees
The Group has no employees and therefore no employee share
scheme or policies on equal opportunities and disabilities.
Share capital
On 15 March 2021, the Manager issued 741,884 Ordinary Shares
inaccordance with the terms of the IMA and Symmetry Manco deal
bonus agreement.
On 9 August 2021, the Manager issued 838,725 Ordinary Shares
inaccordance with the terms of the IMA.
On 4 October 2021, the Company issued 147,058,823 Ordinary
Shares in accordance with a placing programme.
As at 31 December 2021, there were 1,867,781,310 Ordinary
Shares in issue.
Ordinary Shares Number
Gross proceeds
(£)
Balance at the start of the year 1,719,141,878 N/A
Shares issued in accordance
with the terms of the IMA and
Symmetry Manco deal bonus
agreement. 741,884 N/A
Shares issued in accordance
with the terms of the IMA. 838,725 N/A
Shares issued in accordance with a
placing programme 147,058,823 £300 million
Balance at end of the year 1,867,781,310 £300 million
Restrictions on transfer of securities in the Company
There are no restrictions on the transfer of securities in the Company,
except as a result of:
• the FCA’s Listing Rules, which require certain individuals to have
approval to deal in the Company’s shares; and
• the Company’s Articles of Association, which allow the Board
to decline to register a transfer of shares or otherwise impose
arestriction on shares, to prevent the Company or the Manager
breaching any law or regulation.
The Company is not aware of any agreements between holders of
securities that may result in restrictions on transferring securities in
the Company.
Securities carrying special rights
No person holds securities in the Company carrying special rights
with regard to control of the Company.
Substantial shareholdings
As at 11 February 2022, the Company is aware of the following
substantial shareholdings, which were directly or indirectly interested
in 3% or more of the total voting rights in the Company’s issued
share capital. As at 11 February 2022, the issued share capital
remained the same as at 31 December 2021 with 1,867,781,310
shares in issue.
Shareholder name
Holding as at
11 February 2022 %
BlackRock 139,897,232 7.49
Vanguard Group 92,475,699 4.95
Aviva Investors 87,318,530 4.67
Cohen & Steers 86,141,477 4.61
Legal & General Investment Management 66,646,488 3.57
SSGA 61,335,579 3.28
Brewin Dolphin, stockbrokers 60,254,215 3.23
99
CORPORATE GOVERNANCE
Annual Report 2021 Tritax Big Box REIT plc
Amendment of Articles of Association
The Articles may be amended by a special resolution of the
Company’s shareholders.
Powers of the Directors
The Board will manage the Company’s business and may exercise all
the Company’s powers, subject to the Articles, the Companies Act
and any directions given by the Company by special resolution.
Powers in relation to the Company issuing its shares
At the AGM held on 5 May 2021, the Directors were granted a
renewed general authority to allot Ordinary Shares in accordance
with section 551 of the Companies Act 2006, up to an aggregate
nominal amount of £11,465,892. Of those Ordinary Shares, the
Directors were granted authority to issue up to an aggregate nominal
amount of £859,942 (which is equivalent to 5% of the Company’s
issued share capital as at that date) non pre-emptively and wholly for
cash and authority to issue up to an aggregate nominal amount of
£859,942 to be used only for the purpose of financing (or refinancing,
if the authority is to be used within six months after the original
transaction), a transaction which the Directors determine to be an
acquisition or other capital investment of a kind contemplated by the
Statement of Principles on Disapplying Pre-Emption Rights. These
authorities replaced the equivalent authorities given to the Directors
at the AGM held on 13 May 2020.
These authorities expire at the next AGM in Q2 2022.
Change of control
Under the Group’s financing facilities, any change of control at
the borrower or immediate Parent Company level may trigger
a repayment of the outstanding amounts to the lending banks
orinstitutions.
In certain facilities including the issue of recent loan notes, the
change of control provisions also include a change of control at
theultimate Parent Company level.
Appointment and replacement of Directors
Details of the process by which Directors can be appointed or
replaced are included in the Nomination Committee Report on
pages 83 to 85.
Disclosure of information to the Auditor
The Directors, who were members of the Board at the time of
approving the Directors’ Report, have confirmed that:
• so far as each Director is aware, there is no relevant audit
information of which the Company’s Auditor is not aware; and
• each Director has taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any relevant
audit information and to establish that the Company’s Auditor is
aware of that information.
Events subsequent to the year-end date
For details of events since the year-end date, please refer to note 33
on page 134 to the consolidated financial statements.
Independent Auditor
BDO LLP has expressed its willingness to continue as Auditor for the
financial year ending 31 December 2022.
Manager and service providers
The Manager during the year was Tritax Management LLP. Details
ofthe Manager and certain elements of the Investment Management
Agreement are set out in the Management Engagement Committee
Report on pages 92 and 93.
Additional information
In accordance with Listing Rule (LR) 9.8.4C R, the only disclosure
requirement required under LR 9.8.4 R is the disclosure of capitalised
interest, which is disclosed in note 10. Page 118.
Annual General Meeting
It is planned for the Company’s AGM to be held on 4 May 2022 at the
offices of Taylor Wessing LLP, 5 New Street Square, London EC4A 3TW.
Further details will be provided in the Notice of Meeting.
This report was approved by the Board on 2 March 2022.
Tritax Management LLP
Company Secretary
2 March 2022
Company Registration Number: 08215888
100 Tritax Big Box REIT plc Annual Report 2021
CORPORATE GOVERNANCE
Directors’ Responsibilities
In respect of the Annual Report and the financial statements
The directors are responsible for preparing the annual report and the
financial statements in accordance with UK adopted international
accounting standards and applicable law and regulations.
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors are required
to prepare the group financial statements in accordance with UK
adopted international accounting standards and have elected to
prepare the company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law). Under company law the
directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of
the group and company and of the profit or loss for the group for
that period.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state whether the Group financial statements have been prepared
in accordance with UK adopted international accounting
standards, subject to any material departures disclosed and
explained in the financial statements;
• state whether the Company financial statements have been
prepared in accordance with Financial Reporting Standard 101
Reduced Disclosure Framework (“FRS 101”) subject to any material
departures disclosed and explained in the Company financial
statements;
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the group and the company will
continue in business;
• prepare a directors’ report, a strategic report and directors’
remuneration report which comply with the requirements of the
Companies Act 2006.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group and
company’s transactions and disclose with reasonable accuracy at
any time the financial position of the company and enable them to
ensure that the financial statements comply with the Companies
Act 2006.
They are also responsible for safeguarding the assets of the
group and company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities. The
Directors are responsible for ensuring that the Annual Report and
accounts, taken as a whole, are fair, balanced and understandable
and provides the information necessary for shareholders to assess
the group’s performance, business model and strategy.
Website publication
The directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the company’s website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the company’s website is the responsibility of the directors.
Thedirectors’ responsibility also extends to the ongoing integrity
ofthe financial statements contained therein.
Directors’ responsibilities pursuant to DTR4
The directors confirm to the best of their knowledge:
• the Group financial statements have been prepared in accordance
with the applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit and
loss of the group; and
• the Annual Report includes a fair review of the development and
performance of the business and the financial position of the group
and parent company, together with a description of the principal
risks and uncertainties that they face.
Aubrey Adams OBE, FCA, FRICS
Chairman
2 March 2022
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2021
and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with UK accounting standards; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Tritax Big Box REIT plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended
31 December 2021 which comprise the Group Statement of Comprehensive Income, the Group Statement of Financial Position, the Company
Balance Sheet, the Group and Company Statement of Changes in Equity, the Group Cash Flow Statement and notes to the financialstatements,
including a summary of significant accounting policies. The financial reporting framework that has been applied in preparation of the Group
financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been
applied in the preparation of the Parent Company financial statements is Financial Reporting Standard 101 Reduced Disclosure Framework
(United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with
the additional report to the Audit Committee.
Independence
We were reappointed as auditors by the members at the Annual General Meeting on 5 May 2021 to audit the financial statements for the
yearending 31 December 2021 and subsequent financial periods. The period of total uninterrupted engagement including retenders and
reappointments is 8 years, covering the years ending 31 December 2014 to 31 December 2021. We remain independent of the Group and the
Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. The non-audit services prohibited by that standard were not provided to the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and Company’s ability to continue to adopt
the going concern basis of accounting included:
• using our knowledge of the Group and its market sector together with the current general economic environment to assess management’s
identification of the inherent risks to the Group’s business and how these might impact the Group’s ability to remain a going concern for the
going concern period, being the period to 31 March 2023, which is at least 12 months from when the financial statements are authorised
forissue;
• obtaining an understanding of management’s process for assessing going concern including an understanding of the key assumptions used;
• obtaining management’s going concern assessment and:
• assessing the Group’s forecasts cash flows with reference to historic performance and challenging the Directors’ forecast assumptions
incomparison to the current performance of the Group;
• testing the inputs into the forecasts for reasonableness based on historic activity and corroboration to contractual agreements;
• agreeing the Group’s available borrowing facilities and the related terms and covenants to loan agreements;
• obtaining covenant calculations and forecast calculations to test for any potential future covenant breaches. We also considered the
covenant compliance headroom for sensitivity to both future changes in property valuations and the Group’s future financial performance;
• considering board minutes, and evidence obtained through the audit and challenged the Directors on the identification of any contradictory
information in the forecasts and the impacting the going concern assessment;
• analysing the Director’s stress testing calculations and challenging the assumptions made using our knowledge of the business and of the
current economic climate, to assess the reasonableness of the downside scenarios selected; and
• reviewing the disclosures in the financial statements relating to going concern to check that the disclosure is consistent with the circumstances.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a going concern for the going concern
period, being the period to 31 March 2023, which is at least twelve months from when the financial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add
ordraw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate
toadopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Independent Auditor’s Report
To the members of Tritax Big Box REIT plc
FINANCIAL STATEMENTS
101Annual Report 2021 Tritax Big Box REIT plc
Independent Auditor’s Report continued
To the members of Tritax Big Box REIT plc
An overview of the scope of our audit
Overview
Coverage
1
100% (2020: 100%) of Group profit before tax
100% (2020: 100%) of Group revenue
100% (2020: 100%) of Group total assets
Key audit matters
Valuation of investment property portfolio, including
properties under construction (forward funded assets)
2021
2020
Carrying value of land options
The carrying value of land options is no longer assessed as a significant risk, and
therefore not considered to be a key audit matter in 2021, as there is significant
headroom between the fair value and the carrying value of the land options.
Materiality Group financial statements as a whole
£55m (2020: £43m) based on 1% (2020: 1%) of gross assets
1 These are areas which have been subject to a full scope audit by the group engagement team.
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control,
and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal
controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
The Group operates solely in the United Kingdom, and all audit procedures are performed by the Group audit team. We identified two
significant components, in addition to the Parent Company:
• The investment property component of the Group directly managed by the Tritax Manager; and
• The Tritax Symmetry component of the group, which is managed directly by the TSL Manager and overseen by the Tritax Manager.
There were no non-significant components.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
ofthe current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts
ofthe engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
ouropinion thereon, and we do not provide a separate opinion on these matters.
FINANCIAL STATEMENTS
102 Tritax Big Box REIT plc Annual Report 2021
An overview of the scope of our audit continued
Key audit matters continued
Key audit matter How the scope of our audit addressed the
keyaudit matter
Valuation of investment
property portfolio,
including properties
under construction
(including forwarded
funded assets)
Refer to note 3 and 4 in
relation to accounting
policies over significant
estimates and judgements.
Refer to note 14 in relation
toinvestment property.
The Group’s investment property portfolio includes:
• Standing assets: these are existing properties
that are currently let or available to let. They are
valued using the income capitalisation method.
• Properties under construction: these are
properties being built, some of which are under
forward funded agreements with developers
andwhich have agreed pre lets with tenants.
Properties under construction have a different
risk and investment profile to the standing
assets. They are valued using the residual
method, being estimating the fair value of the
completed project using the income capitalisation
method less estimated costs to completion with
adjustments made for any developer licence fees
or tenant pre-let incentives.
The valuation of investment property requires
significant judgement and estimates by the
Directors and the independent valuer (“the Valuer”)
and is therefore considered a significant risk due
tothe subjective nature of certain assumptions
inherent in each valuation.
Any input inaccuracies or unreasonable bases used
in the valuation judgements (such as capitalisation
yields, future lease income, and in the case of
properties under construction, costs to complete)
could result in a material misstatement of
investment property asset and therefore impacting
the income statement and balance sheet.
There is also a risk that the Directors may unduly
influence the significant judgements and estimates
in respect of property valuations in order to achieve
property valuation or other performance targets to
meet market expectations or other financial targets.
We read the external valuation reports and checked
that the approaches used were consistent with the
requirements of relevant accounting standards.
We assessed the Valuer’s competence and
capabilities and read their terms of engagement
with the Group, determining that there were no
matters that affected their independence and
objectivity, including any influence from Directors
over the significant judgements and estimates,
orimposed scope limitations upon their work.
We checked the data provided to the Valuer by the
Group and found that it was consistent with the
information we audited. This data included inputs
such as current rent and lease terms, which we
have agreed on a sample basis to executed lease
agreements as part of our audit work.
Alongside our internal valuations specialists we met
with the Valuer and gained an understanding of the
valuation methods and assumptions used. We
challenged the assumptions utilised by the Valuer
within the valuation by benchmarking the valuation
to our expectations developed using independent
data around the year end.
We assessed the licence fee receivable, project
costs and progress of development for properties
under construction by agreeing relevant details to
the underlying agreements and verified the forecast
costs to complete included in the valuations to
project costing reports. Receipts of licence fees
during the year were verified to the bank.
We checked that the property valuations have been
properly included in the financial statements. We
also assessed whether the disclosures in the
financial statements are appropriate and in
accordance with relevant accounting standards.
Key observation:
Our testing indicated that the estimates and
judgements used by the Directors in the valuation
of the investment property portfolio were appropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality
to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken
on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
FINANCIAL STATEMENTS
103Annual Report 2021 Tritax Big Box REIT plc
Independent Auditor’s Report continued
To the members of Tritax Big Box REIT plc
Our application of materiality continued
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Group financial statements Parent company financial statements
2021
£m
2020
£m
2021
£m
2020
£m
Materiality 55.0 43.0 35.0 32.0
Basis for determining materiality 1% of total assets 1% of total assets 1% of total assets 1% of total assets
Rationale for the benchmark applied We determined that total assets would be
the most appropriate basis for determining
overall materiality as we consider it to be
one of the principal considerations for users
of the financial statements in assessing the
financial performance of the Group
We determined that total assets would be
the most appropriate basis for determining
overall materiality as we consider it to be
one of the principal considerations for users
of the financial statements in assessing the
financial performance of the Parent.
Performance materiality 41.25 32.25 26.25 24.0
Basis for determining
performancemateriality
75% of materiality - it is set at an amount
toreduce to an appropriately low level the
probability that the aggregate of
uncorrected and undetected
misstatements exceeds materiality.
75% of materiality - it is set at an amount
toreduce to an appropriately low level the
probability that the aggregate of
uncorrected and undetected
misstatements exceeds materiality.
Specific materiality
We consider that for both the Group and Parent, a misstatement of less than materiality for the financial statements as a whole, specific
materiality, could influence the economic decisions of users.
For the Group we consider specific materiality to apply to all financial statement areas that would impact European Public Real Estate
Association (“EPRA”) earnings. EPRA earnings excludes the impact of the net surplus on revaluation of Investment properties, any impairment
of land options and interest rate derivatives, and we consider this to be a key performance measure of the Group. On this basis we determined
specific materiality to be 5% of EPRA Earnings, being £6.4m (2020: £5.2m).
We further applied a performance materiality level of 75% of specific materiality to ensure that the risk of errors exceeding specific materiality
was appropriately mitigated.
Component materiality
We set materiality for each component based on a percentage of group materiality dependent on the size and our assessment of the risk
ofmaterial misstatement of that component. Component materiality ranged from £21.5m to £53.8m and we further applied performance
materiality levels of 75% of the overall component materiality to our testing to ensure that the risk of errors exceeding component materiality
was appropriately mitigated. Component materiality thresholds were calculated on a similar basis in the prior year.
Reporting threshold
We agreed with the Audit Committee that we would report to them individual audit differences in excess of £1.65m (2020: £1.2m) for financial
statement differences, and for specific items differences in excess of £0.32m (2020: £0.26m). We also agreed to report differences below this
threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report other
than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
FINANCIAL STATEMENTS
104 Tritax Big Box REIT plc Annual Report 2021
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Parent Company’s compliance with the provisions of the UK Corporate Governance Code specified for
our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern and longer-term viability • The Directors’ statement with regards the appropriateness of adopting the going
concern basis of accounting and any material uncertainties identified set out on
page65; and
• The Directors’ explanation as to its assessment of the entity’s prospects, the period
this assessment covers and why they period is appropriate set out on page 65.
Other Code provisions • Directors’ statement on fair, balanced and understandable set out on page 73;
• Board’s confirmation that it has carried out a robust assessment of the emerging
andprincipal risks set out on page 73;
• The section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on page 86; and
• The section describing the work of the Audit and Risk Committee set out on pages 88
to 91.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006
and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial
year for which the financial statements are prepared is consistent with the financial
statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and
its environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been
properly prepared in accordance with the Companies Act 2006.
Matters on which we are required
toreport by exception
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ remuneration
report to be audited are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
FINANCIAL STATEMENTS
105Annual Report 2021 Tritax Big Box REIT plc
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary
toenable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue
asa going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
Through our knowledge of the Group and its sector we used our understanding of the legal and regulatory framework applicable to the Group
and the sector in which it operates and considered the risk of acts by the Group that were contrary to applicable laws and regulations,
including fraud. We performed our own checks of compliance with relevant requirements including, but not limited to, the Companies Act
2006, the UK Listing Rules, the REIT tax regime requirements and legislation relevant to the rental of properties. We considered the Group’s
own control environment for monitoring its compliance with laws and regulation and obtained their papers on compliance, in addition to
performing our own review.
These matters were discussed with the entire audit team at both planning and throughout the audit.
We addressed the risk of management override of internal controls, including sample testing journals processed during the year and
evaluating whether there was evidence of bias in management judgements that represented a risk of material misstatement due to fraud. This
included evaluating any management bias within the valuation of investment property, as mentioned under the key audit matters subheading,
which we consider is the greatest risk of management manipulation.
The fraud risk around revenue recognition was addressed by inspecting signed lease agreements to recalculate the annual turnover and
agreeing cash receipts to bank statement to check customers exist and that the management information did agree for a sample of tenants.
We agreed all bank balances and loans to direct bank confirmations and agreements.
Our tests included agreeing the financial statement disclosures to underlying supporting documentation where relevant, review of Board and
Committee meeting minutes, and enquiries with management and the Audit Committee as to their identification of any non-compliance with
laws and regulations.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures
performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them
inan auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Geraint Jones (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
United Kingdom
2 March 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Independent Auditor’s Report continued
To the members of Tritax Big Box REIT plc
FINANCIAL STATEMENTS
106 Tritax Big Box REIT plc Annual Report 2021
Group Statement of Comprehensive Income
For the year ended 31 December 2021
Note
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Gross rental income 6 184.7 161.6
Service charge income 6 5.1 4.6
Service charge expense 7 (5.2 ) (4.7 )
Net rental income 184.6 161.5
Gross operating income 24.7 28.3
Other operating costs (5.8 ) (19.7 )
Other operating income 6 18.9 8.6
Administrative and other expenses 8 (25.5 ) (22.6 )
Operating profit before changes in fair value and other adjustments
1
Changes in fair value of investment properties 14 840.9 351.1
Gain on disposal of investment properties 14 2.0 0.1
Share of profit/(loss) from joint ventures 16 0.1 (0.1 )
Impairment of intangible and other property assets (2.9 ) (0.4 )
Share-based payment charge 22 (5.5 ) (5.9 )
Changes in fair value of contingent consideration payable 22 (4.2 ) (2.9 )
Operating profit 1,008.4 489.4
Finance expense 10 (40.1 ) (37.6 )
Changes in fair value of interest rate derivatives 24 2.8 (2.3 )
Profit before taxation 971.1 449.5
Taxation 11 1.5 (0.1 )
Profit and total comprehensive income 972.6 449.4
Earnings per share – basic 12 55.39 p 26.30 p
Earnings per share – diluted 12 55.31 p 26.30 p
1 Operating profit before changes in fair value of investment properties and contingent consideration payable, gain on disposal of investment properties, share
ofprofit/(loss) from joint ventures, impairment of intangible and other property assets and share-based payment charges.
FINANCIAL STATEMENTS
107Annual Report 2021 Tritax Big Box REIT plc
Group Statement of Financial Position
As at 31 December 2021
Note
31 December
2021
£m
31 December
2020
£m
Non-current assets
Intangible assets 1.7 2.0
Investment property 14 5,249.1 4,053.5
Investment in land options 15 201.5 228.1
Investment in joint ventures 16 25.6 28.5
Other property assets 21 4.0 9.4
Trade and other receivables 18 2.0 2.0
Interest rate derivatives 24 1.8 0.1
Total non-current assets 5,485.7 4,323.6
Current assets
Trade and other receivables 18 37.1 25.1
Cash at bank 19 71.1 57.8
Total current assets 108.2 82.9
Total assets 5,593.9 4,406.5
Current liabilities
Deferred rental income (38.6 ) (36.1 )
Trade and other payables 20 (85.9 ) (69.3 )
Tax liabilities 11 (4.3 ) (1.9 )
Total current liabilities (128.8 ) (107.3 )
Non-current liabilities
Trade and other payables 20 (2.0 ) (2.0 )
Interest rate derivatives 24 – (1.1 )
Bank borrowings 23 (207.6 ) (206.7 )
Loan notes 23 (1,137.6 ) (1,136.4 )
Amounts due to B and C shareholders 22 (41.4 ) (31.7 )
Total non-current liabilities (1,388.6 ) (1,377.9 )
Total liabilities (1,517.4 ) (1,485.2 )
Total net assets 4,076.5 2,921.3
Equity
Share capital 27 18.7 17.2
Share premium reserve 27 762.0 466.5
Capital reduction reserve 27 964.5 1,078.9
Retained earnings 27 2,331.3 1,358.7
Total equity 4,076.5 2,921.3
Net asset value per share – basic 28 218.26 p 169.92 p
Net asset value per share – diluted 28 218.18 p 169.92 p
EPRA net tangible asset per share – basic 28 222.60 p 175.61 p
EPRA net tangible asset per share – diluted 28 222.52 p 175.61 p
These financial statements were approved by the Board of Directors on 2 March 2022 and signed on its behalf by:
Aubrey Adams
Chairman
FINANCIAL STATEMENTS
108 Tritax Big Box REIT plc Annual Report 2021
Group Statement of Changes in Equity
For the year ended 31 December 2021
Note
Share
capital
£m
Share
premium
£m
Capital
reduction
reserve
£m
Retained
earnings
£m
Total
£m
1 January 2021 17.2 466.5 1,078.9 1,358.7 2,921.3
Profit for the year and total comprehensive income – – – 972.6 972.6
Contributions and distributions:
Shares issued in relation to equity issue 27 1.4 298.5 – – 299.9
Share issue costs – (5.8 ) – – (5.8 )
Shares issued in relation to management contract 27 0.1 2.8 – – 2.9
Share-based payments – – – 2.7 2.7
Transfer of share-based payments to liabilities to reflect settlement – – – (2.7 ) (2.7 )
Dividends paid 13 – – (114.4 ) – (114.4 )
31 December 2021 18.7 762.0 964.5 2,331.3 4,076.5
Note
Share
capital
£m
Share
premium
£m
Capital
reduction
reserve
£m
Retained
earnings
£m
Total
£m
1 January 2020 17.1 446.7 1,188.1 909.3 2,561.2
Profit for the year and total comprehensive income – – – 449.4 449.4
Contributions and distributions:
Shares issued in relation to equity consideration 27 0.1 19.9 – – 20.0
Share issue costs – (0.1 ) – – (0.1 )
Share-based payments – – – 2.4 2.4
Transfer of share-based payments to liabilities to reflect settlement – – – (2.4 ) (2.4 )
Dividends paid 13 – – (109.2 ) – (109.2 )
31 December 2020 17.2 466.5 1,078.9 1,358.7 2,921.3
FINANCIAL STATEMENTS
109Annual Report 2021 Tritax Big Box REIT plc
Group Cash Flow Statement
For the year ended 31 December 2021
Note
For the
year ended
31 December
2021
£m
For the
year ended
31 December
2020
£m
Cash flows from operating activities
Profits for the period (attributable to the shareholders) 972.6 449.4
Add: tax (credit)/charge (1.5 ) 0.1
Add: changes in fair value of contingent consideration payable 4.2 2.9
Add: finance expense 40.1 37.6
Add: changes in fair value of interest rate derivatives (2.8 ) 2.3
Add: share-based payment charges 5.5 5.9
Add: impairment of intangible and other property assets 2.9 0.4
Add: amortisation of other property assets 5.4 4.5
Add: share of (profit)/loss from joint ventures (0.1 ) 0.1
Less: changes in fair value of investment properties (840.9 ) (351.1 )
Less: gain on disposal of investment properties (2.0 ) (0.1 )
Accretion of tenant lease incentive 14 (7.2 ) (9.3 )
Increase in trade and other receivables (12.0 ) (4.0 )
Increase in deferred income 1.7 0.7
Increase in trade and other payables 26.2 15.0
Cash generated from operations 192.1 154.4
Taxation credit/(charge) 11 4.0 (16.8 )
Net cash flow generated from operating activities 196.1 137.6
Investing activities
Additions to investment properties (316.9 ) (279.0 )
Additions to land options (15.0 ) (7.6 )
Additions to joint ventures (0.5 ) (0.7 )
Net proceeds from disposal of investment properties 4.2 132.3
Licence fees received – 2.5
Interest received – 0.1
Dividends received from joint ventures 0.9 2.2
Net cash flow used in investing activities (327.3 ) (150.2 )
Financing activities
Proceeds from issue of Ordinary Share capital 302.8 –
Cost of share issues (5.8 ) –
Bank borrowings drawn 23 245.5 289.5
Bank and other borrowings repaid 23 (245.5 ) (339.5 )
Amounts received on issue of loan notes 23 – 246.2
Loan arrangement fees paid (0.7 ) (2.1 )
Bank interest paid (37.5 ) (35.5 )
Dividends paid to equity holders (114.3 ) (109.6 )
Net cash flow generated from financing activities 144.5 49.0
Net increase in cash and cash equivalents for the year 13.3 36.4
Cash and cash equivalents at start of year 19 57.6 21.2
Cash and cash equivalents at end of year 19 70.9 57.6
FINANCIAL STATEMENTS
110 Tritax Big Box REIT plc Annual Report 2021
1. Corporate information
The consolidated financial statements of the Group for the year ended 31 December 2021 comprise the results of Tritax Big Box REIT plc
(“theCompany”) and its subsidiaries (together, “the Group”) and were approved by the Board for issue on 2 March 2022. The Company is
apublic limited company incorporated and domiciled in England and Wales . The Company’s Ordinary Shares are admitted to the official list
ofthe UK Listing Authority, a division of the Financial Conduct Authority, and traded on the London Stock Exchange. 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.
Accounting policies
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting under those standards.
The comparative information disclosed relates to the year ended 31 December 2020.
The Group’s financial statements have been prepared on a historical cost basis, other than as explained in the accounting policies below.
The consolidated financial statements are presented in Sterling, which is also the Company’s functional currency, and all values are rounded
tothe nearest £0.1 million as per prior year, except where otherwise indicated.
The Group has chosen to adopt European Public Real Estate Association (“EPRA”) best practice guidelines for calculating key metrics such
asnet asset value and earnings per share (www.epra.com/finance/financial-reporting/guidelines).
2.1. Going concern
Given the impact of Covid-19 on the UK economy, the Board has paid particular attention to the appropriateness of the going concern basis in
preparing these financial statements. Any going concern assessment considers the Group’s financial position, cash flows, liquidity and capital
commitments including its continued access to its debt facilities and headroom under financial loan covenants.
The Directors have considered the cash flow forecasts for the Group for a period of 12 months from the date of approval of these financial
statements. These forecasts include the Directors’ assessment of the impact of Covid-19 on the Group and include various levels of stress
testing of financial forecasts with consideration over downside scenarios. The Directors have reviewed the current and projected financial
position of the Group, making varying assumptions about its future trading performance. Various forms of sensitivity analysis have been
performed having a particular regard to the current financial performance of the Group’s customers, taking into account any discussions held
with the customer surrounding their rental obligations. The analysis also included sensitivities over the following: portfolio valuation movements
due to market volatility, rates of rent collection, the risk around any customer default, future levels of inflation and future interest rate movements.
To date, the impact on the Group from Covid-19 has been limited. Whilst the Group had a greater level of arrears than it would ordinarily
expect with regards to rental income at the end of the prior year, the Group has received 100% of all rent falling due in respect of both 2020
and 2021. The Directors have also considered the arrears position in light of IFRS 9, expected credit loss model; see note 18 for further details.
As at 31 December 2021, the Group had an aggregate £550 million of undrawn commitments under its senior debt facilities, of which
£65.4million was committed under various pre-let development contracts. The Group’s loan to value ratio stood at 23.5%, with the debt
portfolio having an average maturity term of approximately 6.5 years. As at the date of approval of this report, the Group has substantial
headroom within its financial loan covenants, which include loan to value covenants at 60% on its tightest loans. The Group’s financial
covenants have also been complied with for all loans throughout the year and up to the date of approval of these financial statements. As
at31December 2021, property values would have to fall by approximately 50% before loan covenants at the corporate level are breached.
The Directors have assessed the Group’s ability to continue as a going concern and are not aware of any material uncertainties that may
castsignificant doubt upon the Group’s ability to continue as a going concern. Therefore the Directors are satisfied that the Group has the
resources to continue in business until at least 31 March 2023.
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
thereported 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
theasset or liability affected in future periods.
Notes to the Consolidated Accounts
FINANCIAL STATEMENTS
111Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
3. Significant accounting judgements, estimates and assumptions continued
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:
Other operating income
Other operating income is receivable from development management agreements in place with third parties. Development management
income is recognised in the accounting period in which the services are rendered and a significant reversal is not expected in future periods.
Judgement is exercised in identifying performance obligations including achieving a pre-let, managing the building of an asset and arranging
for lease completion. Certain performance obligations, such as achieving a pre-let or letting, are recognised at a point in time and others, such
as managing the construction of an asset, are recognised over time based on the actual service provided to the end of the reporting period as
a proportion of the total services. Management determines the stage of completion of an asset by assessing the total costs incurred on a project,
as a proportion of the total costs expected to be incurred. A judgement is formed over the level of other operating income to be recognised in any
accounting period, which also takes into account any associated costs borne under the development management agreements.
Land options
Measurement
Land options, and other non-financial assets, are initially capitalised at cost and considered for any impairment indication annually. The
impairment review includes consideration of the resale value of the option, likelihood of achieving planning consent and current recoverable
value as determined by an independent valuer. In the calculation of the resale value or recoverable value of land options, several estimates are
required which includes the expected size of the development, expected rental and capitalisation rates, estimated build costs, the time to
complete the development and anticipated progress with achieving planning consent, as well as the associated risks of achieving the above.
B and C Shares
As part of the acquisition of Tritax Symmetry which completed on 19 February 2019, shares were issued in Tritax Symmetry Limited to the
management shareholders of Tritax Symmetry (“Symmetry Management Shareholders”) in the form of B and C shares (the “B and C Shares”).
The terms of these shares are complex and as a result the Directors have had to make a number of judgements in order to conclude on the
appropriate accounting treatment. The significant judgements applied in relation to the B and C Shares were as follows:
1. Subject to remaining in continued employment these shares entitle the holders to 13% of the Adjusted NAV of Tritax Symmetry Limited.
Were an individual to leave employment and be deemed a bad leaver, the amount payable is the lower of the value of the shares on the
completion date and 60% of Adjusted NAV. The Directors have therefore concluded that the unconditional amount payable to the B and C
shareholders, being 60% of the value of the B and C Shares on acquisition, should be treated as contingent consideration in accordance
with IFRS 3. The fair value of the contingent consideration is remeasured at each reporting date. Any additional amounts paid to the B and
C shareholders as a result of their continued service is accounted for as payment for the provision of post-combination services.
2. The B and C Shares have put options in place at various points in time over an eight-year period from completion, along with a put and
calloption at the end of eight years from the completion date. The B and C Shares are not considered to represent a present ownership
interest in the Group as an element of the amount due to the B and C shareholders is dependent on them continuing to remain in
employment and provide services to the Group. Therefore, the Directors have concluded that the B and C Shares do not represent
anon-controlling interest and the amounts owed to the B and C shareholders should instead be presented as a financial liability.
3. When settled the B and C Shares are settled 25% in cash with the remaining 75% settled in either cash or shares at the discretion of
theCompany. Both elements are considered to represent share-based payments as the amounts due are based on the Adjusted NAV
ofthe underlying business of Tritax Symmetry Limited. The Directors will endeavour to settle all of the B and C Shares in cash, subject
tosufficient funds being available to the Group at the time of settlement without adversely impacting the operations of the Group. In
accordance with IFRS 2 this is accounted for as a cash settled share-based payment. In conformity with the requirements of IFRS 2
forcash settled share-based payments, the share-based payment charge is the fair value of the settlement value of the B and C Shares
inTritax Symmetry Limited, established by a Monte Carlo simulation model and reassessed at each reporting date.
Business combinations
The Group acquires subsidiaries that own property and other property interests. At the time of acquisition, the Group considers whether
eachacquisition represents the acquisition of a business or the acquisition of an asset. The Group accounts for an acquisition as a business
combination where 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. Where such acquisitions are not judged to be the acquisition of a business, they
arenottreated 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 deferred tax arises. The fair
valueof assets and liabilities are established using industry-leading third-party professionals, instructed by the Company.
FINANCIAL STATEMENTS
112 Tritax Big Box REIT plc Annual Report 2021
3. Significant accounting judgements, estimates and assumptions continued
3.1. Judgements continued
Estimates
Fair valuation of investment property
The market value of investment property is determined by an independent property valuation expert (see note 14) 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 and the principles of both IAS 40 and IFRS 13.
The valuations have been prepared in accordance with the RICS Valuation – Global Standards July 2017 (the “Red Book”). Factors reflected
comprise current market conditions including net initial yield applied, annual rents and estimated rental values, lease lengths, location and building
specification which would include climate-related considerations. The net initial yield, being the most significant estimate, is subject to changes
depending on the market conditions which are assessed on a periodic basis. The significant methods and assumptions used by the valuers in
estimating the fair value of investment property, together with the sensitivity analysis on the most subjective inputs, 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 its subsidiaries, as at the year end date. On
31December 2020, IFRS as adopted by the European Union at that date was brought into the UK law and became UK-adopted international
accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. Tritax Big Box plc transitioned to
UK-adopted international accounting standards in its consolidated financial statements on 1 January 2021. There was no impact on or
changes in accounting policies from the transition.
4.2. Subsidiaries
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns from the investee and the ability of the investor to use its power
toaffect those variable returns. Control is reassessed wherever facts and circumstances indicate that there may be a change in any of these
elements of control.
4.3. Segmental information
The Directors are of the opinion that the Group is engaged in a single segment business, being the investment in UK logistic assets and land
options with a view to developing logistics and holding these for investment purposes. The Directors consider that these properties have
similar economic characteristics in nature and as a result they have been reported as a single reportable operating business. All of the Group’s
revenue and assets are based in the United Kingdom.
4.4. Investment property and investment property under construction
Investment property comprises completed property that is held to earn rentals or for capital appreciation, or both. Property held under a lease
is classified as investment property when it is held to earn rentals or for capital appreciation or both, rather than for sale in the ordinary course
of business or for use in production or administrative functions.
The corresponding entry upon recognising lease incentives or fixed/minimum rental uplifts is made to investment property. For further details
see Accounting Policy note 4.15.1.
Investment property is recognised once practical completion is achieved and is measured initially at cost including transaction costs. Transaction
costs include transfer taxes, professional fees for legal 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 in the year in which they arise under IAS 40 “Investment Property”.
Long leaseholds are accounted for as investment property as they meet the criteria for right of use assets.
Investment properties under construction are financed by the Group where the Group enters into contracts to forward fund the development
of a pre-let property. All such contracts specify a fixed amount of consideration. The Group also directly enters into construction contracts to
develop logistics assets, in the form of pre-let development, with an allowance of up to 5% of GAV in speculative development (with no pre-let
secured). Investment properties under construction are initially measured at cost (including the transaction costs), which reflect the Group’s
investment in the assets. 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, which include an
appropriate developer’s margin.
Additions to properties include costs of a capital nature only. Expenditure is classified as capital when it results in identifiable future economic
benefits, which are expected to accrue to the Group. Capitalised expenditure also includes finance costs incurred on qualifying assets under
construction. All other property expenditure is expensed in the Group profit or loss as incurred.
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 would result in
either gains or losses at the retirement or disposal of investment property. Any gains or losses are recognised in the Group profit or loss in
theyear of retirement or disposal.
FINANCIAL STATEMENTS
113Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
4. Summary of significant accounting policies continued
4.5. 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.
4.5.1. Financial assets
The Group classifies its financial assets into one of the categories discussed below. The Group’s accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises in-the-money derivatives and out-of-money derivatives where the time value offsets the negative intrinsic value.
Theyare carried in the Group Statement of Financial Position at fair value with changes in fair value recognised in the Group profit or loss in
the finance income or expense line. Other than derivative financial instruments which are not designated as hedging instruments, the Group
does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.
Amortised cost
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 and contractual cash flows 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 tenant default (being the failure of a
tenant to timely pay rent due) to determine the lifetime expected credit loss for the trade receivables. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is written off against the associated provision.
The Group’s financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the Group
Statement of Financial Position.
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original
maturities of three months or less.
4.5.2. Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired.
The Group’s accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises out-of-the-money derivatives where the time value does not offset the negative intrinsic value; and the amounts
dueto B and C shareholders. They are carried in the Group Statement of Financial Position at fair value with changes in fair value recognised
in the Group profit or loss. Other than these derivative financial instruments, the Group does not have any liabilities held for trading nor has it
designated any financial liabilities as being at fair value through profit or loss.
Other financial liabilities
Other financial liabilities include the following items:
Bank borrowings and the Group’s loan notes are initially recognised at fair value net of any transaction costs directly attributable to the issue
ofthe instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method,
whichensures that any interest expense over the period 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.
4.6. Forward funded pre-let investments
The Group enters into forward funding development agreements for pre-let investment property. The Group will enter into a forward funding agreement
with a developer and simultaneously enter into an agreement for lease with a prospective tenant willing to occupy the building once complete.
4.6.1. Licence fees receivable
During the period between initial investment in a forward funded agreement and the rent commencement date under the lease, the Group
receives licence fee income on certain property transactions. 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.
IAS40.20 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 property and are initially recognised as a receivable. Any economic benefit of
the licence fee is reflected within the Group profit or loss as a movement in the fair value of investment property and not within gross rental
income. Licence fees received are treated as gross receipts within the Group Cash Flow Statement. In addition, IAS 16.21 indicates that income
and expenses from operations that are not to bring an asset to the location and condition necessary for it to be capable of operating in the
manner intended, should be recognised in profit or loss.
FINANCIAL STATEMENTS
114 Tritax Big Box REIT plc Annual Report 2021
4. Summary of significant accounting policies continued
4.7. Joint arrangements
The Group is a party to a joint arrangement when there is a contractual arrangement that confers joint control over the relevant activities of
thearrangement to the Group and at least one other party. Joint control is assessed under the same principles as control over subsidiaries.
The Group classifies its interests in joint arrangements as either:
• joint ventures: where the Group has rights to only the net assets of the joint arrangement; or
• joint operations: where the Group has both the rights to assets and obligations for the liabilities of the joint arrangement.
In assessing the classification of interests in joint arrangements, the Group considers:
• the structure of the joint arrangement;
• the legal form of joint arrangements structured through a separate vehicle;
• the contractual terms of the joint arrangement agreement; and
• any other facts and circumstances (including any other contractual arrangements).
The Group does not have any joint operations.
Joint ventures are initially recognised in the Group Statement of Financial Position at cost. Subsequently joint ventures are accounted for
usingthe equity method, where the Group’s share of post-acquisition profits and losses and other comprehensive income is recognised
intheGroup profit or loss.
Profits and losses arising on transactions between the Group and its joint ventures are recognised only to the extent of unrelated investors’
interests in the associate. The investor’s share in the joint venture’s profits and losses resulting from these transactions is eliminated against
the carrying value of the joint venture.
Any premium paid for an investment in a joint venture above the fair value of the Group’s share of the identifiable assets, liabilities and
contingent liabilities acquired is capitalised and included in the carrying amount of the investment in joint venture. Provision for impairment
invalue is made where there is objective evidence that the investment in a joint venture has been impaired.
4.8. Goodwill
Goodwill is capitalised as an intangible asset, with any impairment in carrying value being charged to the Group profit or loss. Where the fair
value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the
Group profit or loss on the acquisition date as a gain on bargain purchase or negative goodwill.
4.9. Intangible assets
As a result of the acquisition of Tritax Symmetry in 2019, the DMA between the Company and Tritax Symmetry Management Limited is
assessed as a favourable contract. It is recognised as an intangible asset on the Group Statement of Financial Position and is amortised
overthe original eight year term of the DMA. The favourable element of the DMA was assessed with reference to a reasonable mark-up
thatmay be expected for these services if the agreement were set up at arm’s length, discounted over the eight-year period.
4.10. Land options
Land options are classified as non-financial assets as they are non-liquid assets with no active market and they cannot be readily converted
into cash. The options are exercisable at a future date subject to receiving planning consent. They are initially carried at cost and are tested
forimpairment annually and whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
Wherethe carrying value of an asset exceeds its recoverable amount (the higher of value in use and fair value less costs to sell), the option
iswritten down accordingly as a charge to the Group profit or loss. Once the options are exercised and the land is drawn down, they are
transferred into investment property.
4.11. Impairment of assets
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year
end. Other non-financial assets including intangible assets, investment in joint ventures and land options are subject to annual impairment
tests, or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value
of an asset exceeds its recoverable amount (the higher of value in use and fair value less costs to sell), the asset is impaired accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group
ofassets to which it belongs for which there are separately identifiable cash flows, its cash-generating units (“CGUs”). Goodwill is allocated
oninitial recognition to each of the Group’s CGUs that are expected to benefit from a business combination that gives rise to the goodwill.
Impairment charges are included in Group profit or loss. An impairment loss recognised for goodwill is not reversed.
4.12. Business combination
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 optional “concentration test” is also applied; 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.
FINANCIAL STATEMENTS
115Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
4. Summary of significant accounting policies continued
4.12. Business combination continued
Where an acquisition is considered to be a business combination the consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the Group Statement of Financial Position, the acquiree’s identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at the acquisition date. Any excess of the cost of a business combination over
the Group’s interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired is treated as goodwill. Where the fair
value of identifiable assets, liabilities and contingent liabilities acquired exceeds the fair value of the purchase consideration, the difference
istreated as gain on bargain purchase and credited to the Group profit or loss. The results of acquired operations are included in the Group
profit or loss from the date on which control is obtained until the date on which control ceases.
Where such acquisitions are not judged to be the acquisition of a business, they are not treated as business combinations. Rather, the cost
toacquire the corporate entity is allocated between the identifiable assets and liabilities of the entity based upon their relative fair values at
theacquisition date. Accordingly, no goodwill or additional deferred tax arises.
Where amounts payable for the acquisition of a business are subject to a contingent consideration arrangement in which the payments are
automatically forfeited if employment terminates, the amounts are treated as remuneration for post-combination services rather than
consideration for the acquisition of a business.
4.13. Share-based payments
The Company has entered into an agreement with the Symmetry Management Shareholders where future amounts payable are based on the
Adjusted NAV of Tritax Symmetry Limited and subject to certain provisions around continuing employment. 25% of the amounts payable are
tobe settled in cash with the remaining 75% settled in cash or shares at the discretion of the Company. Where the Company has a present
obligation to settle the amounts in cash, either through its stated intention or past practice, the Company accounts for the amounts as cash
settled share-based payments. The fair value of the cash settled obligation is recognised over the vesting period and presented as a liability
inthe Group Statement of Financial Position. The liability is remeasured at each reporting date with the charge to the profit or loss updated
over the vesting period.
4.14. 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.
4.15. Property income
4.15.1. 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. A rental adjustment is recognised from the rent review date in relation to unsettled
rent reviews, where the Directors are reasonably certain that the rental uplift will be agreed. 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.
For leases, which contain fixed or minimum uplifts, the rental income arising from such uplifts is recognised on a straight line basis over the
lease term.
Tenant lease incentives are recognised as a reduction of gross rental income on a straight line basis over the term of the lease. The lease term
is the non cancellable period of the lease together with any further term for which the tenant has the option to continue the lease where, at the
inception of the lease, the Directors are reasonably certain that the tenant will exercise that option.
When the Group enters into a forward funded transaction, the future tenant signs an agreement for lease. No rental income is recognised
under the agreement for lease, but once practical completion has taken place the formal lease is signed, at which point rental income
commences to be recognised in the Group profit or loss from the rent commencement date.
4.15.2. Other operating income
The other operating income is generated through the Group providing development management services to third parties. It is recognised
onan accruals basis in the period in which the services have been rendered, performance obligations have been satisfied and a significant
reversal is not expected in future periods.
4.16. Finance income
Finance income is recognised as interest accrues on cash balances held by the Group. Interest charged to a tenant on any overdue rental
income is also recognised within finance income.
4.17. Finance costs
Finance costs consist of interest and other costs that an entity incurs in connection with bank and other borrowings. Any finance costs that
are separately identifiable and directly attributable to the acquisition or construction of an asset that takes a period of time to complete are
capitalised as part of the cost of the asset. All other finance costs are expensed to the Group profit or loss in the period in which they occur.
4.18. Taxation
Taxation on the profit or loss for the period not exempt under UK REIT regulations comprises current and deferred tax. Current tax is expected
tax payable on any profit not relating to the property rental business for the year, using tax rates enacted or substantively enacted at the
year-end date, including any adjustment to tax payable in respect of previous years.
FINANCIAL STATEMENTS
116 Tritax Big Box REIT plc Annual Report 2021
5. New standards issued
5.1. New standard issued and effective from 1 January 2021
The following new accounting amendment has been applied in preparing the consolidated financial statements:
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 using the guidance in paragraph B5.4.5 of IFRS 9 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 other amendments to IFRS effective in the year. They have no significant impact on the Group
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
Amendments to IAS 1 on Classification of liabilities as Current or Non-Current are effective for the financial years commencing on or after
1January 2023 and are to be applied retrospectively. It is not expected that the amendments may have an impact on the presentation and
classification of liabilities in the Group Statement of Financial Position based on rights that are in existence at the end of the reporting period.
There are no other standards that are not yet effective that would be expected to have a material impact on the Group in the current or future
reporting periods and on the foreseeable future transactions.
6. Total property income
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Rental income – freehold property 146.5 122.8
Rental income – long leasehold property 30.9 29.4
Spreading of tenant incentives and guaranteed rental uplifts 7.2 9.3
Other income 0.1 0.1
Gross rental income 184.7 161.6
Property insurance recoverable 3.9 3.6
Service charges recoverable 1.2 1.0
Total property insurance and service charge income 5.1 4.6
Total property income 189.8 166.2
There was one individual tenant representing more than 10% of gross rental income present during both years.
Included in the £18.9 million of other operating income, was a charge of £5.4 million (2020: £4.5 million) being amortisation of other property
assets. The other operating income is generated through the Group providing development management services to third parties.
7. Service charge expenses
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Property insurance expense 4.0 3.7
Service charge expense 1.2 1.0
Total property expenses 5.2 4.7
FINANCIAL STATEMENTS
117Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
8. Administrative and other expenses
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Investment management fees 20.7 17.9
Directors’ remuneration (note 9) 0.4 0.4
Auditor’s fees
Fees payable for the audit of the Company’s annual accounts 0.4 0.3
Fees payable for the review of the Company’s interim accounts 0.1 0.1
Fees payable for the audit of the Company’s subsidiaries 0.1 0.1
Total Auditor’s fee 0.6 0.5
Development management fees 0.8 0.7
Corporate administration fees 0.5 0.5
Regulatory fees 0.1 0.1
Legal and professional fees 1.3 1.3
Marketing and promotional fees 0.5 0.5
Other costs 0.6 0.7
Total administrative and other expenses 25.5 22.6
The Auditor provided audit services in respect of joint ventures of £nil (2020: £7,500).
9. Directors’ remuneration
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Directors’ fees 0.3 0.3
Employer’s National Insurance 0.1 0.1
0.4 0.4
A summary of the Directors’ emoluments, including the disclosures required by the Companies Act 2006, is set out in the Directors’
Remuneration Report.
10. Finance expense
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Interest payable on bank borrowings 6.1 7.6
Interest payable on loan notes 29.8 26.3
Commitment fees payable on bank borrowings 2.0 1.6
Swap interest payable 0.4 0.2
Borrowing costs capitalised against development properties (0.7) –
Amortisation of loan arrangement fees 2.5 1.9
40.1 37.6
FINANCIAL STATEMENTS
118 Tritax Big Box REIT plc Annual Report 2021
11. Taxation
a) Tax charge in the Group Statement of Comprehensive Income
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
UK corporation tax charge (2.4) (0.1)
Appropriation tax refund 3.9 –
Total tax credit/(charge) 1.5 (0.1)
The UK corporation tax rate for the financial year is 19%. Accordingly, this rate has been applied in the measurement of the Group’s tax liability
at 31 December 2021.
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:
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Profit on ordinary activities before taxation 971.1 449.5
Theoretical tax at UK corporation tax rate of 19.00% (31 December 2020: 19.00%) 184.5 85.4
REIT exempt income (23.8) (19.0)
Non-taxable items (160.7) (66.7)
Transfer pricing adjustment – –
Permanent differences/tax losses not recognised – (1.8)
Tax refund (3.9) –
Residual losses 6.3 2.2
Total tax charge 2.4 0.1
Non-taxable items include income and gains that are derived from the property rental business and are therefore exempt from UK corporation
tax in accordance with Part 12 of CTA 2010.
REIT exempt income includes property rental income that is exempt from UK corporation tax in accordance with Part 12 of CTA 2010.
The current year tax liability of £4.3 million (2020: £1.9 million) relates to tax payable on non-property profits arising in the year and
appropriation tax charges in relation to the business combination which occurred in 2019.
FINANCIAL STATEMENTS
119Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
12. Earnings per share
Earnings per share (EPS) are calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the weighted
average number of Ordinary Shares in issue during the period. As there are dilutive instruments outstanding, basic and diluted earnings per
share are shown below.
In relation to the dilutive shares to be issued in respect of the B and C Shares, the Directors have indicated a current intention to settle these
100% in cash. The calculation of basic and diluted earnings per share is based on the following:
For the year ended 31 December 2021
Net profit
attributable to
Ordinary
Shareholders
£m
Weighted
average
number of
Ordinary
Shares
1
’000
Earnings
per share
pence
Basic EPS 972.6 1,755,927 55.39
Shares to be issued on outstanding investment manager’s fees 668
Dilutive share based payment charge 1.7
Fair value movement in contingent consideration 4.2 8,017
Dilutive shares in respect of B and C shareholders 4,462
Diluted EPS
2
978.5 1,769,074 55.31
Adjustments to remove:
Dilutive share based payment charge (1.7)
Changes in fair value of contingent consideration payable (4.2)
Changes in fair value of investment property (840.9)
Changes in fair value of interest rate derivatives (2.8)
Gain on disposal of investment properties (2.0)
Amortisation of other property assets 5.4
Refund of corporation tax (3.9)
Share of profit from joint ventures (0.1)
Impairment of intangible contract and other property assets 2.9
EPRA EPS and diluted EPS 131.2 1,755,927 7.47
Shares to be issued on outstanding investment manager’s fees 668
EPRA diluted EPS
2
131.2 1,756,595 7.47
Adjustments to include:
Licence fee receivable on Forward Funded Developments 7.3
Fixed rental uplift adjustments (6.2)
Share-based payments charges 5.5
Changes in fair value of contingent consideration payable 4.2
Amortisation of loan arrangement fees and intangibles (see note 10) 2.5
Adjusted EPS and diluted Adjusted EPS 144.5 1,755,927 8.23
Shares to be issued on outstanding investment manager’s fees 668
Adjusted diluted EPS 144.5 1,756,595 8.22
1 Based on the weighted average number of Ordinary Shares in issue throughout the year.
2 Based on the weighted average number of Ordinary Shares in issue throughout the year, plus potentially issuable dilutive shares (see below).
3 Relates to dilutive shares in respect of contingent consideration. This being the 75% of the amounts due to the B and C shareholders that could potentially be
settled as equity. The share-based payments charges are dilutive to basic EPS only at year end.
FINANCIAL STATEMENTS
120 Tritax Big Box REIT plc Annual Report 2021
12. Earnings per share continued
For the year ended 31 December 2020
Net profit
attributable to
Ordinary
Shareholders
£m
Weighted
average
number of
Ordinary
Shares
1
’000
Earnings
per share
pence
Basic EPS and diluted EPS
2
449.4 1,708,504 26.30
Adjustments to remove:
Changes in fair value of investment property (351.1)
Changes in fair value of interest rate derivatives 2.3
Gain on disposal of investment properties (0.1)
Amortisation of other property assets 4.5
Share of loss from joint ventures 0.1
Impairment of intangible contract 0.4
EPRA EPS and EPRA diluted EPS
2
105.5 1,708,504 6.17
Adjustments to include:
Licence fee receivable on Forward Funded Developments 12.9
Fixed rental uplift adjustments (6.4)
Share-based payments charges 5.9
Changes in fair value of contingent consideration payable 2.9
Amortisation of loan arrangement fees and intangibles (note 10) 1.8
Adjusted EPS and Adjusted diluted EPS 122.6 1,708,504 7.17
1 Based on the weighted average number of Ordinary Shares in issue throughout the year.
2 Based on the weighted average number of Ordinary Shares in issue throughout the year, plus potentially issuable dilutive shares (see below).
3 Relates to dilutive shares in respect of contingent consideration. This being the 75% of the amounts due to the B and C shareholders that could potentially be
settled as equity. The share-based payments charges were non-dilutive at prior year end.
Adjusted earnings is a performance measure used by the Board to assess the Group’s dividend payments. The metric reduces EPRA earnings
by other 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. Licence fees received during the period are added to earnings on the basis noted below as the Board
sees these cash flows as supportive of dividend payments. The Board compares the Adjusted earnings to the available distributable reserves
when considering the level of dividend to pay.
The adjustment for licence fees receivable is calculated by reference to the proportion of the total period of completed construction during the
year, multiplied by the total licence fee receivable on a given forward funded asset. Licence fees will convert into rental income once practical
completion has occurred and therefore rental income will flow into EPRA and Adjusted earnings from this point.
Fixed rental uplift adjustments relate to adjustments to net rental income on leases with fixed or minimum uplifts embedded within their review
profiles. The total minimum income recognised over the lease term is recognised on a straight-line basis and therefore not supported by cash
flows during the early term of the lease, but this reverses towards the end of the lease.
Share-based payment charges relate to the B and C shareholders. Whilst impacting on earnings, this value is considered capital in nature
from the perspective it relates to an equity holding in Tritax Symmetry Limited. It is therefore removed from Adjusted earnings.
13. Dividends paid
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Fourth interim dividend in respect of period ended 31 December 2020 at 1.7125 pence per Ordinary Share
(fourth interim for 31 December 2019 at 1.7125 pence per Ordinary Share) 29.5 29.2
First interim dividend in respect of year ended 31 December 2021 at 1.6000 pence per Ordinary Share
(31December 2020: 1.5625 pence) 27.5 26.6
Second interim dividend in respect of year ended 31 December 2021 at 1.6000 pence per Ordinary Share
(31December 2020: 1.5625 pence) 27.5 26.7
Third interim dividend in respect of year ended 31 December 2021 at 1.6000 pence per Ordinary Share
(31December 2020: 1.5625 pence) 29.9 26.7
Total dividends paid 114.4 109.2
Total dividends paid for the year 4.80p 4.69p
Total dividends unpaid but declared for the year 1.90p 1.713p
Total dividends declared for the year 6.70p 6.40p
On 2 March 2022, the Company will approve the fourth interim dividend for declaration in respect of the year ended 31 December 2021
of1.90 pence per share payable on 31 March 2022. The total dividends declared for the year of 6.70 pence are all property income
distributions (PID).
FINANCIAL STATEMENTS
121Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
14. Investment property
In accordance with IAS 40, Investment Property are stated at fair value as at 31 December 2021. The investment property has been
independently valued by CBRE Limited (“CBRE”) and Colliers International Valuation UK LLP (“Colliers”), both accredited independent
valuerswith recognised and relevant professional qualifications and with recent experience in the locations and categories of the
investmentproperties being valued. CBRE values all investment property with leases attached or assets under construction. Colliers
valuesall land holdings and land options. The valuations have been prepared in accordance with the RICS Valuation – Global Standards
July2017 (the “Red Book”) and incorporate the recommendations of the International Valuation Standards and the RICS Valuation –
Professional Standards UK January 2014 (Revised April 2015) which are consistent with the principles set out in IFRS 13.
The valuer, in forming its opinion, makes a series of assumptions, which are typically market related, such as net initial yields and expected
rental values and are based on the valuer’s professional judgement. The valuer has sufficient current local and national knowledge of the
particular property markets involved and has the skills and understanding to undertake the valuations competently. There have been no
changes to the assumptions made in the year as a result of Covid-19 or other factors such as climate change.
The valuations are the ultimate responsibility of the Directors. Accordingly, the critical assumptions used in establishing the independent
valuation are reviewed by the Board. It is the view of the Company, that ESG factors will increasingly play a part in asset valuations in the
future. For example, assets with the highest standards of ESG are likely to command the highest rental levels and have the least future capex
requirements with regards to meeting ESG standards.
All corporate acquisitions during the year have been treated as asset purchases rather than business combinations because they are
considered to be acquisitions of properties rather than businesses.
Investment
property
freehold
£m
Investment
property
long leasehold
£m
Investment
property under
construction
£m
Total
£m
As at 1 January 2021 2,885.3 696.1 472.1 4,053.5
Property additions
1
89.6 – 260.0 349.6
Property disposed in the year – – (2.1) (2.1)
Fixed rental uplift and tenant lease incentives
2
6.5 0.7 – 7.2
Transfer of completed property to investment property 681.1 – (681.1) –
Change in fair value during the year 546.2 115.7 179.0 840.9
As at 31 December 2021 4,208.7 812.5 227.9 5,249.1
Investment
property
freehold
£m
Investment
property
long leasehold
£m
Investment
property under
construction
£m
Total
£m
As at 1 January 2020 2,578.0 640.8 322.4 3,541.2
Property additions
1
73.1 0.1 210.6 283.8
Property disposed in the year (131.9) – – (131.9)
Fixed rental uplift and tenant lease incentives
2
7.5 1.8 – 9.3
Transfer of completed property to investment property 203.0 – (203.0) –
Change in fair value during the year 155.6 53.4 142.1 351.1
As at 31 December 2020 2,885.3 696.1 472.1 4,053.5
1 Licence fees deducted from the cost of investment property under construction were nil in the year (2020: £14.2 million).
2 Included within the carrying value of investment property is £59.5 million (2020: £52.3 million) in respect of accrued contracted rental uplift income. 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 difference between this and cash receipts change the carrying value of the property against which
revaluations are measured. Also see note 6.
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Investment property at fair value per Group Statement of Financial Position 5,249.1 4,053.5
Capital commitments under forward funded development and other contracts 9.2 87.7
Total investment property valuation* 5,258.3 4,141.2
* Including costs to complete under forward funded development and other contracts.
FINANCIAL STATEMENTS
122 Tritax Big Box REIT plc Annual Report 2021
14. Investment property continued
Capital commitments under forward funded development contracts represent costs to bring the asset to completion under the developer’s
funding agreements which include the developer’s margin. Costs committed under other contracts of £9.2 million have been provided for in
the Group Statement of Financial Position in 2021.
The Group has other capital commitments which represent commitments made in respect of direct construction, asset management initiatives
and development land. These costs are not provided for in the Group Statement of Financial Position (refer to note 32).
Cash received in respect of future rent-free periods represents amounts that were topped up by the vendor on acquisition of the property to
cover future rent-free periods on the lease. The valuation assumes the property to be income generating throughout the lease and therefore
includes this cash in the value.
Licence fees that have been billed but not received from the developer in relation to the property are included within trade and other
receivables. The valuation assumes the property to be income generating and therefore includes this receivable in the value.
Fees payable under the DMA totalling £1.0 million (2020: nil) have been capitalised in the year being directly attributable to completed
development projects during the year.
The valuation summary is set out in the Strategic Report.
Fair value hierarchy
The Group considers that all of its investment properties 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.”
Market Value as defined in the RICS Valuation Standards is the equivalent of fair value under IFRS.
The following descriptions and definitions relating to valuation techniques and key unobservable inputs made in determining fair values
areasfollows:
Valuation techniques
The yield methodology approach is used when valuing the Group’s properties which uses market rental values capitalised with a market
capitalisation rate. This is sense-checked against the market comparable method (or market comparable approach) where a property’s fair
value is estimated based on comparable transactions in the market.
For investment property under construction and the majority of land held for development, properties are valued using a residual method
approach. Under this approach, the valuer initially assesses the investment value (using the above methodology for completed properties).
Then, the total estimated costs to complete (including notional finance costs and developer’s profit) are deducted from the value to take into
account the hypothetical purchaser’s management of the remaining development process and their perception of risk with regard to
construction and the property market (such as the potential cost overruns and letting risks). Land values are sense-checked against the rate
per acre derived from actual market transactions.
The key unobservable inputs made in determining fair values are as follows:
Unobservable input: estimated rental value (ERV)
The rent per square foot at which space could be let in the market conditions prevailing at the date of valuation.
Passing rents are dependent upon a number of variables in relation to the Group’s property. These include: size, location, tenant covenant
strength and terms of the lease.
Unobservable input: net initial yield
The net initial yield is defined as the initial gross income as a percentage of the market value (or purchase price as appropriate) plus standard
costs of purchase.
Unobservable inputs
ERV range
£sqf
net initial
yield range
%
2021 3.91 – 13.75 2.67 – 6.31
2020 3.91 – 12.85 3.15 – 6.28
FINANCIAL STATEMENTS
123Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
14. Investment property continued
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 judgements and
is inherently subjective by nature.
As a result the following sensitivity analysis has been prepared:
-5% in
passing rent
£m
+5% in
passing rent
£m
+0.25% in
net initial yield
£m
-0.25% in
net initial yield
£m
(Decrease)/increase in the fair value of investment properties
asat31 December 2021 (251.1) 251.1 (321.3) 368.5
(Decrease)/increase in the fair value of investment properties
asat31December 2020 (201.3) 201.3 (226.7) 255.5
15. Investment in land options
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Opening balance 228.1 226.0
Costs capitalised in the year 15.0 9.1
Transferred to investment property (41.6) (5.4)
Disposals – (1.6)
Closing balance 201.5 228.1
The average maturity date across land options held is approximately seven years (2020: eight years) term remaining.
Fees payable under the DMA totalling £3.4 million (2020: £3.3 million) have been capitalised in the year being directly attributable to the
ongoing development projects.
16. Investment in joint ventures
As at 31 December 2021 the Group has two joint ventures which have been equity accounted for. There were no equity accounted joint
ventures prior to the acquisition of Tritax Symmetry in February 2019.
The Group has the following joint ventures as at 31 December 2021:
Principal activity
Country of
incorporation Ownership Joint venture partner
HBB (J16) LLP Property development UK 50% HB Midway Limited
Magnitude Land LLP Property investment UK 50% Pochin Midpoint Limited
The registered office for the above joint ventures is: Unit B, Grange Park Court, Roman Way, Northampton, England NN4 5EA.
Net investment
Total 100%
£m
Group’s share
£m
At beginning of year 57.0 28.5
Total comprehensive income 0.2 0.1
Impairment of JV asset (5.2) (2.6)
Capital repaid (1.8) (0.9)
Cash contributed 1.0 0.5
As at 31 December 2021 51.2 25.6
FINANCIAL STATEMENTS
124 Tritax Big Box REIT plc Annual Report 2021
16. Investment in joint ventures continued
The joint ventures have a 31 December year end. The aggregate amounts recognised in the Group Statement of Financial Position and
Statement of Comprehensive Income are as follows:
Comprehensive Income Statement
Year ended 31 December 2021
Total 100%
£m
Group’s share
£m
Administrative expenses 0.2 0.1
Profit before taxation 0.2 0.1
Taxation – –
Total comprehensive profit 0.2 0.1
Statement of Financial Position
As at 31 December 2021
Total 100%
£m
Group’s share
£m
Investment property 5.0 2.5
Options to acquire land 48.6 24.3
Non-current assets 53.6 26.8
Other receivables 1.0 0.5
Cash (0.6) (0.3)
Current assets 0.4 0.2
Trade and other payables (2.8) (1.4)
Current liabilities (2.8) (1.4)
Net assets 51.2 25.6
The Group’s share of contingent liabilities in the joint ventures is £nil (December 2020: £nil).
17. Investments
The Group comprises a number of Special Purpose Vehicle (SPV) subsidiaries. All SPV subsidiaries that form these financial statements are
noted within the Company financial statement in note 5.
18. Trade and other receivables
Non-current trade and other receivables
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Cash in public institutions 2.0 2.0
The cash in public institutions is a deposit of £2.0 million paid by certain tenants to the Company, as part of their lease agreements.
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Trade receivables 7.1 21.8
Prepayments, accrued income and other receivables 25.7 1.7
VAT 4.3 1.6
37.1 25.1
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade
receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and ageing.
The expected loss rates are based on the Group’s historical credit losses experienced over the three-year period prior to the year end. The
historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group’s customers.
The expected credit loss provision as at 31 December 2021 was £0.1 million (31 December 2020: £0.2 million). No reasonably possible
changes in the assumptions underpinning the expected credit loss provision would give rise to a material expected credit loss.
FINANCIAL STATEMENTS
125Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
19. Cash held at bank
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Cash and cash equivalents to agree with cash flow 70.9 57.6
Restricted cash 0.2 0.2
71.1 57.8
Restricted cash is cash where there is a legal restriction to specify its type of use, i.e. this may be where there is a joint arrangement with a
tenant under an asset management initiative.
Cash and cash equivalents reported in the Consolidated Statement of Cash Flows totalled £70.9 million (2020: £57.6 million) as at the year
end, which excludes long-term restricted and ring-fenced cash deposits totalling £0.2 million (2020: £0.2 million). Total cash held at bank
asreported in the Group Statement of Financial Position is £71.1 million (2020: £57.8 million).
20. Trade and other payables
Non-current trade and other payables
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Other payables 2.0 2.0
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Trade and other payables 66.6 52.7
Bank loan interest payable 6.0 6.0
Accruals 13.3 10.6
85.9 69.3
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
21. Business combination
The Group acquired an 87% economic interest in Tritax Symmetry on 19 February 2019, a development group with ownership of a
combination of land and land options.
The B and C Shares issued to Symmetry Management Shareholders are treated as a combination of both contingent consideration for the
acquisition of a 13% economic interest in the Symmetry Portfolio and a 13% economic right held to their share of future performance of the
Tritax Symmetry Development assets. This is as a result of certain vesting conditions attached to the B and C Shares over the first five years
ofthe contract (see note 22 below).
A non-controlling interest has not been recognised at the acquisition date for the 13% economic interest held by the Symmetry Management
Shareholders due to the put and call options attached to the shares issued, which are expected to be exercised on or around the eighth
anniversary of the acquisition at the latest. The Symmetry Management Shareholders have a put option, on the third to eighth anniversary
ofthe acquisition allowing them to sell 1.5% of their 13% economic interest to the Company at each date. The Company has a call option,
tobuy any remaining economic interest still due to the Symmetry Management Shareholders on the eighth anniversary.
During the year, other property assets were amortised by a charge of £5.3 million (2020: £4.5 million) resulting in a net position on the Group
Statement of Financial Position of £4.0 million (2020: £9.4 million).
FINANCIAL STATEMENTS
126 Tritax Big Box REIT plc Annual Report 2021
22. Amounts due to B and C shareholders
Amounts due to B and C shareholders comprise the fair value of the contingent consideration element of B and C Shares along with the fair
value of the obligation under the cash settled share-based payment element of B and C Shares.
Amounts due to B and C shareholders are detailed in the table below:
31 December 2021
Contingent
consideration
£m
Share-based
payment
£m
Fair value
£m
Opening balance 22.5 9.2 31.7
Fair value movement recognised 4.2 – 4.2
Share-based payment charge – 5.5 5.5
Closing balance 26.7 14.7 41.4
31 December 2020
Contingent
consideration
£m
Share-based
payment
£m
Fair value
£m
Opening balance 19.6 3.3 22.9
Fair value movement recognised 2.9 – 2.9
Share-based payment charge – 5.9 5.9
Closing balance 22.5 9.2 31.7
The Group considers that the amounts due to the B and C shareholders 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.
1. Contingent consideration
The B and C Shares vest over a five-year period and require the Symmetry Management Shareholders to, amongst other things, remain in the
employment of the Symmetry ManCo for the vesting period. The value of the amount due (subject to certain vesting conditions) is the lower of
50% of the adjusted NAV of Tritax Symmetry at the relevant future point in time and the value of the B and C Shares at the original completion
date. Based on the above, the range of possible outcome is between £nil to £38 million. In accordance with IFRS 3 “Business Combinations”
the unconditional amount due under shareholders agreement is accounted for as contingent consideration.
The adjusted NAV of Tritax Symmetry is the NAV of Tritax Symmetry at the reporting date, adjusted for various matters impacting on the fair
value of those land options where planning permission has been obtained but the land has not been acquired along with the elimination of
profits created from the Tritax Symmetry investment assets.
2. Share-based payment
In accordance with IFRS 3 “Business Combinations” the requirement to remain in continued employment in order to realise the full value of the
B and C Shares has resulted in the excess value (over and above the amount recognised as contingent consideration) being accounted for as
payments for post combination services which reflect the 13% economic right held to their share of future performance of the Tritax Symmetry
Development assets over and above the completion NAV. The amount due to Symmetry Management Shareholders is based on the adjusted
NAV of Tritax Symmetry and is settled in cash to the value of 25% with the balance settled in either cash and/or shares in the Company, at the
sole discretion of the Company.
The fair value of the B and C Shares has been calculated using a Monte Carlo simulation model, for the cash settled element of the liability.
This approach has the benefits of being flexible, not reliant on a single case scenario and removes the inherent difficulties with determining
discount rate to assign to a particular class of share as the risk would change every time the NAV moved. The change in volatility assumptions
does not lead to a significant change in the resulting fair values of the B and C Shares because there are limited hurdles attached to them and
it is assumed that all will be exercised at some point over the eight year horizon. The key unobservable inputs for the Monte Carlo simulation
purposes are the net initial yield of completed developments, future costs of debt and the timing of the completion of the developments.
The Company has the legal option of settling the share-based payment either via cash or equity, with a minimum of 25% being settled in cash.
The Directors have a current intention to maximise the cash element of the settlement as they believe this would minimise dilution to existing
shareholders. The Directors will endeavour to settle all of the B and C Shares in cash, subject to sufficient funds being available to the Group
at the time of settlement without adversely impacting the operations of the Group.
Amounts due to B and C shareholders are shown as a liability at fair value in the Group Statement of Financial Position. The liability is fair
valued at each reporting date with a corresponding charge recognised in the Group profit or loss over the vesting period. For the year ended
31 December 2021, £5.5 million (2020: £5.9 million) was charged in the Group profit or loss for the share-based payment.
FINANCIAL STATEMENTS
127Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
23. Borrowings
The Group has a £200 million unsecured revolving credit facility (“RCF”) with a syndicate of relationship lenders comprising Banco Santander
S.A. London Branch, Barclays Bank plc, BNP Paribas London Branch, HSBC UK Bank plc, The Royal Bank of Scotland International Limited
London Branch and Wells Fargo Bank N.A. London Branch. In June 2021, the termination date in respect of £190 million of the £200 million
RCF was extended from 14 June 2024 to 14 June 2026.
The Group also has a second RCF of £350 million which provides the Group with a significant level of operational flexibility. The syndicate
forthe £350 million unsecured RCF comprises Barclays Bank plc, BNP Paribas London Branch, HSBC Bank plc, Sumitomo Mitsui
BankingCorporation, The Royal Bank of Scotland plc, Santander UK plc and Wells Fargo Bank N.A. London Branch. The termination date
of£300million of the £350 million RCF is 10 December 2024, and the remaining £50 million is 10 December 2023.
The Group has a £250 million unsecured green bond, maturing on 27 November 2033. The notes have an interest rate of 1.5%. An amount
equivalent to the net proceeds of each Green Finance Transaction (“GFT”) has been used to acquire, finance or refinance, in whole or in part,
new or existing Eligible Green Projects (“EGPs”) that met the Eligibility Criteria. The Group had published a Green Finance Report that detailed
the allocation of net proceeds of Green Finance Transactions and associated impact metrics during the year.
As at 31 December 2021, 69% (2020: 69%) of the Group’s debt facility commitments are fixed term, with 31% floating term (2020: 31%).
Whenincluding interest rate hedging the Group has fixed term or hedged facilities totalling 100% of drawn debt (see note 24).
As at 31 December 2021, the weighted average running cost of debt was 2.26% (2020: 2.17%) and the Group’s average capped cost of debt
was 2.53% (2020: 2.49%). As at the same date the Group had undrawn debt commitments of £550.0 million.
The Group has been in compliance with all of the financial covenants across the Group’s bank facilities as applicable throughout the period
covered by these financial statements.
The London Interbank Offered Rate (LIBOR) has been phased out from the end of 2021 and is expected to be replaced by various
alternativerisk-free-rates (RFRs) across the Global Financial Markets. The cessation of LIBOR took effect from 31 December 2021, this is
anindustry-wide change driven by the regulators. Financial regulatory authorities had expressed their concern that the interbank lending
market which LIBOR is intended to reflect is no longer sufficiently active or liquid.
As a result and during the year, the Company transitioned all of its borrowings subject to a variable rate of interest from Libor to Sonia
(SterlingOvernight Index Average). Sonia is an overnight rate, whereas Libor was a term rate. Sonia is close to a risk free measure of
borrowingcosts. Itis compounded over a lending period to produce a backward-looking term interest rate.
From 1 January 2022 all borrowings under these agreements will attract an interest rate of the borrowing margin plus Sonia plus a creditadjustment
spread equal to 11.93 bps. It is expected that this change in risk-free rate will not lead to a material change in overall borrowing costs.
A summary of the drawn and undrawn bank borrowings in the year is shown below:
Bank borrowings
Bank borrowings
drawn
£m
Bank borrowings
undrawn
£m
Total
£m
As at 1 January 2021 212.9 550.0 762.9
Bank borrowings drawn in the year under existing facilities 245.5 (245.5) –
Bank borrowings repaid in the year under existing facilities (245.5) 245.5 –
As at 31 December 2021 212.9 550.0 762.9
Bank borrowings
drawn
£m
Bank borrowings
undrawn
£m
Total
£m
As at 1 January 2020 262.9 500.0 762.9
Bank borrowings drawn in the year under existing facilities 289.5 (289.5) –
Bank borrowings repaid in the year under existing facilities (339.5) 339.5 –
As at 31 December 2020 212.9 550.0 762.9
Any associated fees in arranging the bank borrowings and loan notes that are unamortised as at the year end are offset against amounts
drawn on the facilities as shown in the table below:
Bank borrowings drawn
31 December
2021
£m
31 December
2020
£m
Bank borrowings drawn: due in more than one year 212.9 212.9
Less: unamortised costs on bank borrowings (5.3) (6.2)
207.6 206.7
FINANCIAL STATEMENTS
128 Tritax Big Box REIT plc Annual Report 2021
23. Borrowings continued
Loan notes
Bonds
31 December
2021
£m
31 December
2020
£m
2.625% Bonds 2026 249.5 249.3
3.125% Bonds 2031 247.5 247.3
2.860% USPP 2028 250.0 250.0
2.980% USPP 2030 150.0 150.0
1.500% Green Bonds 2033 246.4 246.2
Less: unamortised costs on loan notes (5.8) (6.4)
1,137.6 1,136.4
The weighted average term to maturity of the Group’s debt as at the year end is 6.5 years (31 December 2020: 7.4 years).
Maturity of borrowings
31 December
2021
£m
31 December
2020
£m
Repayable between one and two years – –
Repayable between two and five years 300.3 50.9
Repayable in over five years 1,056.0 1,304.8
1,356.3 1,355.7
24. Interest rate derivatives
To mitigate the interest rate risk that arises as a result of entering into variable rate loans, the Group has entered into a number of interest rate
derivatives. A number of interest rate caps and one interest rate swap have been taken out in respect of the Group’s variable rate debt to fix
or cap the rate to which three-month Libor can rise. Each runs coterminous to the initial term of the respective loans. With effect from
1 January 2022, the interest rate derivatives have been transitioned to Sonia, as this is the risk-free rate now adopted by the Group’s variable
rate loan facilities.
The weighted average capped rate, excluding any margin payable, for the Group as at the year end was 1.11% (2020: 1.10%), which effectively
caps the level to which Sonia can rise to, therefore limiting any effect on the Group of an interest rate rise. The interest rate derivatives mean
that the Group’s borrowing facilities at the year end have an all-inclusive capped interest rate payable of 2.53% (2020: 2.49%). The total
premium payable in the year towards securing the interest rate caps was £nil (2020: nil).
31 December
2021
£m
31 December
2020
£m
Non-current assets: interest rate derivatives 1.8 0.1
Non-current liabilities: interest rate derivatives – (1.1)
The interest rate derivatives are valued by the relevant counterparty banks on a quarterly basis in accordance with IFRS 9. Any movement in
the mark-to-market values of the derivatives are taken to the Group profit or loss.
31 December
2021
£m
31 December
2020
£m
Interest rate derivative valuation brought forward (1.0) 1.3
Changes in fair value of interest rate derivatives 2.8 (2.3)
1.8 (1.0)
It is the Group’s target to hedge at least 90% of the total debt portfolio either using interest rate derivatives or entering fixed-rate loan arrangements.
As at the year-end date the total proportion of drawn debt either hedged via interest rate derivatives or subject to fixed-rate loan agreements
equated to 100.00%, as shown below:
31 December
2021
Drawn
£m
31 December
2020
Drawn
£m
Total borrowings drawn (note 23) 1,356.3 1,355.7
Notional value of effective interest rate derivatives and fixed-rate loans 1,356.3 1,355.7
Proportion of hedged debt 100.00% 100.00%
FINANCIAL STATEMENTS
129Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
24. Interest rate derivatives continued
Fair value hierarchy
The fair value of Group’s interest rate derivatives is recorded in the Group Statement of Financial Position and is determined by forming an
expectation that interest rates will exceed strike rates and discounting these future cash flows at the prevailing market rates as at the year end.
This valuation technique falls within Level 2 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 years, nor have there been any transfers between Level 2 and Level 3 during any of the years.
25. Financial risk management
Financial instruments
The Group’s principal financial assets and liabilities are those that arise directly from its operations: trade and other receivables, trade and
other payables and cash held at bank. The Group’s other principal financial assets and liabilities are amounts due to B and C shareholders,
bank borrowings and interest rate derivatives. The main purpose of bank borrowings and derivatives is to finance the acquisition and
development of the Group’s investment property portfolio and hedge against the interest rate risk arising.
Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments that are carried in the
financial statements:
Book value
31 December
2021
£m
Fair value
31 December
2021
£m
Book value
31 December
2020
£m
Fair value
31 December
2020
£m
Financial assets
Interest rate derivatives 1.8 1.8 0.1 0.1
Trade and other receivables
1
31.3 31.3 21.8 21.8
Cash held at bank 71.1 71.1 57.8 57.8
Financial liabilities
Interest rate derivatives – – (1.1) (1.1)
Trade and other payables
2
85.9 85.9 71.3 71.3
Amounts due to B and C shareholders 41.4 41.4 31.7 31.7
Borrowings 1,356.3 1,405.3 1,355.7 1,496.9
1 Excludes certain VAT, prepayments and other debtors.
2 Excludes tax and VAT liabilities.
Interest rate derivatives and amounts due to B and C shareholders are the only financial instruments measured at fair value through profit and
loss. All other financial assets and all financial liabilities are measured at amortised cost. All financial instruments were designated in their
current categories upon initial recognition.
The following table sets out the fair value of those financial liabilities measured at amortised cost where there is a difference between book
value and fair value.
Date of valuation
Total
(Level 1)
£m
Quoted prices in
active markets
(Level 2)
£m
Significant
observable inputs
(Level 3)
£m
Significant
unobservable
inputs
£m
Borrowings 31 December 2021 1,352.5 1,187.3 165.2 –
Borrowings 31 December 2020 1,446.1 1,271.7 174.4 –
The Group has two fixed-rate loans totalling £162 million, provided by PGIM (£90 million) and Canada Life (£72 million). The fair value is
determined by comparing the discounted future cash flows using the contracted yields with the reference gilts plus the margin implied. The
reference gilts used were the Treasury 1.25% 2027 Gilt and Treasury 4.75% 2030 Gilt respectively, with an implied margin that is unchanged
since the date of fixing. The loans are considered to be a Level 2 fair value measurement. For all other bank loans there is considered no other
difference between fair value and carrying value.
The fair value of financial liabilities traded on active liquid markets, including the 2.625% Bonds 2026, 3.125% Bonds 2031, 1.5% Bonds 2033,
2.860% USPP 2028 and 2.980% USPP 2030, is determined with reference to the quoted market prices. These financial liabilities are
considered to be a Level 1 fair value measure.
The fair value of the financial liabilities at Level 1 fair value measure were £1,187.3 million (2020: £1,271.1 million) and the financial liabilities
atLevel 2 fair value measure were £165.2 million (2020: £174.4 million).
Risk management
The Group is exposed to market risk (including interest rate risk), credit risk and liquidity risk. The Board of Directors oversees themanagement
of these risks. The Board of Directors reviews and agrees policies for managing each of these risks that are summarised below.
FINANCIAL STATEMENTS
130 Tritax Big Box REIT plc Annual Report 2021
25. Financial risk management continued
Market risk
Market risk is the risk that the fair values of financial instruments will fluctuate because of changes in market prices. The financial instruments
held by the Group that are affected by market risk are principally the Group’s cash balances, bank borrowings along with a number of interest
rate derivatives entered into to mitigate interest rate risk.
The Group monitors its interest rate exposure on a regular basis. A sensitivity analysis performed to ascertain the impact on the Group profit
or loss and net assets of a 50 basis point shift in interest rates would result in an increase of £0.3 million (2020: £0.3 million) or a decrease of
£0.3 million (2020: £0.3 million). The difference between the increase and decrease absolute figure is due to the interest rate caps in place.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial
loss. The Group is exposed to credit risks from both its leasing activities and financing activities, including deposits with banks and financial
institutions. Credit risk is mitigated by tenants being required to pay rentals in advance under their lease obligations. The credit quality of the
tenant is assessed based on an extensive credit rating scorecard at the time of entering into a lease agreement.
Outstanding trade receivables are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of each
class of financial asset. We conduct ongoing covenant analysis of our customers and strengthened our team to support this work during the
period. The analysis combines publicly available financial and trading information with our own observations and customer conversations as
well as the opinions of third-party professionals to form a view over the credit risk of counter-parties under our leases.
Trade receivables
Trade receivables, primarily tenant rentals, are presented in the Group Statement of Financial Position net of allowances for doubtful
receivables and are monitored on a case by case basis. Credit risk is primarily managed by requiring tenants to pay rentals in advance and
performing tests around strength of covenant prior to acquisition and on an ongoing annual basis. A small number of tenants had entered
intopayment plans during the prior year which continued for part of the current year, as a result of the impact of Covid-19. All payments have
currently been received in line with the payment plans and there are no payment plans continuing. Therefore we do not currently foresee any
issues with the recoverability of the remaining payment plan balances.
Credit risk related to financial instruments and cash deposits
One of the principal credit risks of the Group arises with the banks and financial institutions. The Board of Directors believes that the credit risk
on short-term deposits and current account cash balances is limited because the counterparties are banks, who are committed lenders to the
Group, with high credit ratings assigned by international credit-rating agencies.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital, the finance charges, principal repayments on its borrowings and its
commitments under forward funded development arrangements. It is the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due, as the majority of the Group’s assets are property investments and are therefore not readily realisable. The Group’s
objective is to ensure it has sufficient available funds for its operations and to fund its capital expenditure. This is achieved by continuous
monitoring of forecast and actual cash flows by management, ensuring it has appropriate levels of cash and available drawings to meet
liabilities as they fall due.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
<3 months
£m
3-12 months
£m
Between
1-2 years
£m
Between
2-5 years
£m
More than
5 years
£m
Total
£m
31 December 2021
Borrowings 8.7 26.2 34.9 404.3 1,153.9 1,628.0
Amounts due to B and C shareholders – – – – 41.4 41.4
Trade and other payables 85.9 – – – 2.0 87.9
94.6 26.2 34.9 404.3 1,197.5 1,757.3
31 December 2020
Borrowings 8.7 26.1 34.8 154.9 1,437.5 1,662.0
Amounts due to B and C shareholders – – – – 31.7 31.7
Trade and other payables 69.3 – – – 2.0 71.3
78.0 26.1 34.8 154.9 1,471.2 1,765.0
Included within the contracted payments is £265.1 million (2020: £299.2 million) of loan interest payable up to the point of maturity across
the facilities.
FINANCIAL STATEMENTS
131Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
26. Capital management
The Board, with the assistance of the Investment Manager, monitors and reviews the Group’s capital so as to promote the long-term success
of the business, facilitate expansion and to maintain sustainable returns for shareholders. The Group considers proceeds from share
issuances, bank borrowings and retained earnings as capital. The Group’s policy on borrowings is as set out below:
The level of borrowing will be on a prudent basis for the asset class, and will seek to achieve a low cost of funds, while maintaining flexibility in
the underlying security requirements, and the structure of both the portfolio and the REIT Group.
The Directors intend that the Group will maintain a conservative level of aggregate borrowings with a medium-term target of 30% - 35% of the
Group’s gross assets.
The Group has complied with all covenants on its borrowings up to the date of this report. All of the targets mentioned above sit comfortably
within the Group’s covenant levels, which include loan to value (“LTV”), interest cover ratio and loan to projected project cost ratio. The Group
LTV at the year end was 23.5% (2020: 30.0%) and there is substantial headroom within existing covenants.
Debt is drawn at the asset and corporate level, subject to the assessment of the optimal financing structure for the Group and having
consideration to key metrics including lender diversity, debt type and maturity profiles.
27. Equity reserves
Share capital
The share capital relates to amounts subscribed for share capital at its nominal value:
Issued and fully paid at 1 pence each
31 December
2021
Number
31 December
2021
£m
31 December
2020
Number
31 December
2020
£m
Balance at beginning of year – £0.01 Ordinary Shares 1,719,141,878 17.2 1,706,974,948 17.1
Shares issued in relation to further equity issuance 147,058,823 1.4 – –
Shares issued in relation to management contract 1,580,609 0.1 – –
Shares issued in relation to the consideration for a corporate acquisition – – 12,166,930 0.1
Balance at end of year 1,867,781,310 18.7 1,719,141,878 17.2
Share premium
The share premium relates to amounts subscribed for share capital in excess of its nominal value.
Capital reduction reserve
In 2015 and 2018, the Company by way of Special Resolution cancelled the then value of its share premium account, by an Order of the High
Court of Justice, Chancery Division. As a result of this cancellation, £422.6 million and £932.4 million respectively were transferred from the
share premium account into the capital reduction reserve account. The capital reduction reserve account is classed as a distributable reserve.
Movements in the current year relate to dividends paid.
Retained earnings
Retained earnings relates to all net gains and losses not recognised elsewhere.
28. Net asset value (NAV) per share
Basic NAV per share is calculated by dividing net assets in the Group Statement of Financial Position attributable to ordinary equity holders of
the Parent by the number of Ordinary Shares outstanding at the end of the year. As there are dilutive instruments outstanding, both basic and
diluted NAV per share are shown below.
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Net assets per Group Statement of Financial Position 4,076.5 2,921.3
EPRA NTA 4,157.6 3,019.1
Ordinary Shares:
Issued share capital (number) 1,867,781,310 1,719,141,878
Basic net asset value per share 218.26p 169.92p
Dilutive shares in issue (number) 668,309 –
Diluted net asset value per share 218.18p 169.92p
FINANCIAL STATEMENTS
132 Tritax Big Box REIT plc Annual Report 2021
28. Net asset value (NAV) per share continued
31 December 2021 31 December 2020
EPRA NTA EPRA NRV EPRA NDV EPRA NTA EPRA NRV EPRA NDV
£m £m £m £m £m £m
NAV attributable to shareholders 4,076.5 4,076.5 4,076.5 2,921.3 2,921.3 2,921.3
Revaluation of land options 66.0 66.0 66.0 80.1 80.1 80.1
Mark-to-market adjustments
ofderivatives 16.9 16.9 – 19.7 19.7 –
Intangibles (1.7) – – (2.0) – –
Fair value of debt – – (47.0) – – (141.3)
Real estate transfer tax
1
– 376.3 – – 304.0 –
NAV 4,157.7 4,535.7 4,095.5 3,019.1 3,325.1 2,860.1
NAV per share 222.60p 242.84p 219.27p 175.61p 193.41p 166.36p
Dilutive NAV per share 222.52p 242.75p 219.19p 175.61p 193.41p 166.36p
1 EPRA NTA and EPRA NDV reflect IFRS values which are net of real estate transfer tax (“RETT”). RETT is added back when calculating EPRA NRV.
See notes to EPRA NAV calculations for further details.
29. Operating leases
The future minimum lease payments under non-cancellable operating leases receivable by the Group are as follows:
<1 year 2-5 years >5 years Total
£m £m £m £m
31 December 2021 191.5 719.8 1,825.6 2,736.9
31 December 2020 157.8 615.4 1,499.1 2,272.3
The Group’s investment properties are leased to single tenants, with the exception of one asset which is leased to two separate tenants, some
of which have guarantees attached, under the terms of a commercial property lease. Each has upward-only rent reviews that are linked to
either RPI/CPI, open market or with fixed uplifts. The weighted average unexpired lease term is 13.0 years (2020: 13.8 years).
30. Transactions with related parties
For the year ended 31 December 2021, all Directors and some of the Members of the Manager are considered key management personnel.
The terms and conditions of the Investment Management Agreement are described in the Management Engagement Committee Report.
Details of the amount paid for services provided by Tritax Management LLP (“the Manager”) are provided in note 8.
The total amount outstanding at the year end relating to the Investment Management Agreement was £5.7 million (2020: £4.5 million).
The total expense recognised in the Group profit or loss relating to share-based payments under the Investment Management Agreement
was£2.7 million (2020: £2.4 million), of which £1.5 million (2020: £1.2 million) was outstanding at the year end.
Details of amounts paid to Directors for their services can be found within the Directors’ Remuneration Report. £nil were paid to
SGCommercial in the year ended 31 December 2021 (31 December 2020: £0.3 million) in respect of agency services for the year;
thisrepresents a total of nil (2020: 11%) of agency fees paid by the Group during the year and £nil was outstanding as at the year ended
31December 2021 (31 December 2020: £ 0.2 million).
On 1 October 2020, there were three new Members of the Manager, namely Nicholas Preston, Frankie Whitehead and James Watson.
On1February 2021, Alasdair Evans and Philip Redding were also appointed as new Members of the Manager. They are also Members of
SGCommercial. Of these Frankie Whitehead and Philip Reading are considered as key management personnel. The other six Members of
theManager were Mark Shaw (resigned 1 April 2021), Colin Godfrey, James Dunlop, Henry Franklin, Petrina Austin and Bjorn Hobart, who
arealso Members of SG Commercial.
During the year the Directors who served during the year received the following dividends: Richard Jewson: £1,494 (2020: £5,584), Aubrey
Adams: £13,345 (2020: £11,944), Susanne Given: £nil (2020: £nil), Alastair Hughes: £2,279 (2020: £2,240), Richard Laing: £3,051 (2020: £2,933),
Karen Whitworth £1,277 (2020: £750) Wu Gang £nil (2020: £nil) and Elizabeth Brown £nil (2020: £nil) . See note 9 and Directors’ Remuneration
Report for further details.
During the year the Members of the Manager received the following dividends: Mark Shaw: £nil (2020: £121,639), Colin Godfrey: £149,570
(2020: £119,353), James Dunlop: £145,509 (2020: £115,362), Henry Franklin: £107,003 (2020: £86,776), Petrina Austin: £18,004 (2020: £13,338),
Bjorn Hobart: £20,349 (2020: £14,624), Frankie Whitehead £7,888 (2020: £6,097) and Philip Reading £118 (2020: £nil).
FINANCIAL STATEMENTS
133Annual Report 2021 Tritax Big Box REIT plc
Notes to the Consolidated Accounts continued
31. Reconciliation of liabilities to cash flows from financing activities
Borrowings
£m
Derivative
financial
instruments
£m
Loan notes
£m
Total
£m
Balance on 1 January 2021 206.8 1.0 1,136.5 1,344.3
Cash flows from financing activities:
Bank borrowings advanced 245.5 – – 245.5
Bank borrowings repaid (245.5) – – (245.5)
Amounts received on the issue of loan notes – – – –
Loan arrangement fees paid (0.4) – (0.5) (0.9)
Non-cash movements:
Change in creditors for loan arrangement fees payable 0.1 – 0.2 0.3
Amortisation of loan arrangement fees 1.1 – 1.4 2.5
Fair value movement – (2.8) – (2.8)
Balance on 31 December 2021 207.6 (1.8) 1,137.6 1,343.4
Borrowings
£m
Derivative
financial
instruments
£m
Loan notes
£m
Total
£m
Balance on 1 January 2020 256.2 (1.3) 891.5 1,146.4
Cash flows from financing activities:
Bank borrowings advanced 289.5 – – 289.5
Bank borrowings repaid (339.5) – – (339.5)
Amounts received on the issue of loan notes – – 246.2 246.2
Loan arrangement fees paid (0.4) – (1.7) (2.1)
Loan arrangement written off 0.1 – – 0.1
Non-cash movements:
Change in creditors for loan arrangement fees payable – – (0.5) (0.5)
Amortisation of loan arrangement fees 0.9 – 1.0 1.9
Fair value movement – 2.3 – 2.3
Balance on 31 December 2020 206.8 1.0 1,136.5 1,344.3
32. Capital commitments
The Group had capital commitments of £65.4 million in relation to its development activity, asset management initiatives and commitments
under development land, outstanding as at 31 December 2021 (31 December 2020: £93.9 million). All commitments fall due within one year
from the date of this report.
33. Subsequent events
There were no significant events occurring after the reporting period, but before the financial statements were authorised for issue.
FINANCIAL STATEMENTS
134 Tritax Big Box REIT plc Annual Report 2021
Company Statement of Financial Position
As at 31 December 2021
Company Registration Number: 08215888
Note
At
31 December
2021
£m
At
31 December
2020
£m
Fixed assets
Investment in subsidiaries 5 2,188.3 2,188.3
Total fixed assets 2,188.3 2,188.3
Current assets
Trade and other receivables 6 1,323.5 1,069.0
Cash held at bank 7 2.8 10.2
Total current assets 1,326.3 1,079.2
Total assets 3,514.6 3,267.5
Current liabilities
Trade and other payables 8 (15.3) (14.3)
Loans from Group companies (71.9) (71.0)
Total current liabilities (87.2) (85.3)
Non-current liabilities
Loan notes 9 (1,137.6) (1,136.4)
Total non-current liabilities (1,137.6) (1,136.4)
Total liabilities (1,224.8) (1,221.7)
Total net assets 2,289.8 2,045.8
Equity
Share capital 10 18.7 17.2
Share premium reserve 762.0 466.5
Capital reduction reserve 964.5 1,078.9
Retained earnings 544.6 483.2
Total equity 2,289.8 2,045.8
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own
profit and loss account in these financial statements. The profit attributable to the Parent Company for the year ended 31 December 2021
amounted to £61.4 million (31 December 2020: £145.2 million).
These financial statements were approved by the Board of Directors on 2 March 2022 and signed on its behalf by:
Aubrey Adams
Chairman
FINANCIAL STATEMENTS
135Annual Report 2021 Tritax Big Box REIT plc
Company Statement of Changes in Equity
For the year ended 31 December 2021
Undistributable reserves Distributable reserves
Note
Share
capital
£m
Share
premium
£m
Capital
reduction
reserve
£m
Retained
earnings
£m
Total
£m
1 January 2021 17.2 466.5 1,078.9 483.2 2045.8
Profit for the year and total
comprehensive income – – – 61.4 61.4
17.2 466.5 1,078.9 544.6 2,107.2
Contributions and distributions
Shares issued in relation to further
equity issue 10 1.4 298.5 – – 299.9
Share issue costs in relation to further
equity issue 10 – (5.8) – – (5.8)
Shares issued in relation to
management contract 0.1 2.8 – – 2.9
Share-based payments – – – 2.7 2.7
Transfer of share-based payments to
liabilities to reflect settlement – – – (2.7) (2.7)
Dividends paid 4 – – (114.4) – (114.4)
31 December 2021 18.7 762.0 964.5 544.6 2,289.8
Undistributable reserves Distributable reserves
Note
Share
capital
£m
Share
premium
£m
Capital
reduction
reserve
£m
Retained
earnings
£m
Total
£m
1 January 2020 17.1 446.7 1,188.1 338.0 1,989.9
Profit for the year and total
comprehensive income – – – 145.2 145.2
17.1 446.7 1,188.1 483.2 2,135.1
Contributions and distributions
Shares issued in relation to equity
consideration 10 0.1 19.9 – – 20.0
Share issue costs – (0.1) – – (0.1)
Share-based payments – – – 2.4 2.4
Transfer of share-based payments to
liabilities to reflect settlement – – – (2.4) (2.4)
Dividends paid 4 – – (109.2) – (109.2)
31 December 2020 17.2 466.5 1,078.9 483.2 2,045.8
FINANCIAL STATEMENTS
136 Tritax Big Box REIT plc Annual Report 2021
Notes to the Company Accounts
1. Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).
Assets are classified in accordance with the definitions of fixed and current assets in the Companies Act 2006.
Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore these
financial statements do not include:
• Certain comparative information as otherwise required by adopted IFRS;
• Certain disclosures regarding the Company’s capital;
• A statement of cash flows;
• The effect of future accounting standards not yet adopted;
• The disclosure of the remuneration of key management personnel; and
• Disclosure of related party transactions with other wholly owned members of Tritax Big Box REIT plc.
In addition, and in accordance with FRS 101, further disclosure exemptions have been adopted because equivalent disclosures are included
inthe Company’s consolidated financial statements. These financial statements do not include certain disclosures in respect of:
• Share-based payments;
• Financial instruments; and
• Fair value measurement other than certain disclosures required as a result of recording financial instruments at fair value.
Principal accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently
applied to all the years presented, unless otherwise stated.
Basis of accounting
These financial statements have been presented as required by the Companies Act 2006 and have been prepared under the historical cost
convention and in accordance with applicable Accounting Standards and policies in the United Kingdom (“UK GAAP”).
Currency
The Company financial statements are presented in Sterling which is also the Company’s functional currency and all values are rounded to the
nearest 0.1 million (£m), except where otherwise indicated.
Other income
Other income represents dividend income which has been declared by its subsidiaries and is recognised when it is received.
Dividends payable for 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.
1.1. Financial assets
The Company classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was
acquired. The Company’s accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises in-the-money derivatives and out-of-money derivatives where the time value offsets the negative intrinsic value.
Theyare carried in the Company Balance Sheet at fair value with changes in fair value recognised in the profit or loss in the finance income
orexpense line. Other than derivative financial instruments which are not designated as hedging instruments, the Company does not have
anyassets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.
Amortised cost
These assets arise principally from the provision of goods and services to customers (such as 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 and contractual cash flows 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 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. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written
off against the associated provision.
FINANCIAL STATEMENTS
137Annual Report 2021 Tritax Big Box REIT plc
Notes to the Company Accounts continued
1. Accounting policies continued
1.1. Financial assets continued
Amortised cost continued
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected
credit loss model. The methodology used to determine the amount of provision is based on whether there has been a significant increase in
credit risk since initial recognition of the financial asset, 12-month expected credit losses along with gross interest income are recognised.
Forthose for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised.
For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
The Company’s financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the
Company Balance Sheet.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original
maturities of three months or less.
Investments in subsidiaries
The investments in subsidiary companies are included in the Company’s Balance Sheet at cost less provision for impairment.
Share-based payments
The expense relating to share-based payments is accrued over the year in which the service is received and is measured at the fair value of
those services received. The extent to which the expense is not settled at the reporting period end is recognised as a liability as any shares
outstanding remain contingently issuable. Contingently issuable shares are treated as dilutive to the extent that, based on market factors
prevalent at the reporting year end, the shares would be issuable.
Significant accounting judgements, estimates and assumptions
The preparation of the Company’s financial statements require management to make judgements, estimates and assumptions that affect
thereported 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
theasset or liability affected in future years. There were no significant accounting judgements, estimates or assumptions in preparing these
financial statements.
2. Standards issued and effective from 1 January 2021
There was no material effect from the adoption of other amendments to IFRS effective in the year. They have no impact to the Company
significantly as they are either not relevant to the Company’s activities or require accounting which is consistent with the Company’s current
accounting policies.
3. Taxation
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
UK corporation tax – –
The UK corporation tax rate for the financial year is 19%. Accordingly, this rate has been applied in the measurement of the Group’s tax liability
at 31 December 2021.
4. Dividends paid
For detail of dividends paid by the Company during the year, refer to note 13 of the Group’s financial statements.
FINANCIAL STATEMENTS
138 Tritax Big Box REIT plc Annual Report 2021
5. Investment in subsidiaries
Shares
£m
Loan
£m
Total
£m
As at 1 January 2021 2,188.3 – 2,188.3
Increase in investments via share purchase – – –
As at 31 December 2021 2,188.3 – 2,188.3
As at 1 January 2020 1,973.9 – 1,973.9
Increase in investments via share purchase 214.4 – 214.4
As at 31 December 2020 2,188.3 – 2,188.3
The increase in investments were as a result of capitalisation of inter-company loans and to fund the acquisitions made in the periods.
The Company has the following subsidiary undertakings as at 31 December 2021:
Principal activity Country of Incorporation Ownership %
TBBR Holdings 1 Limited Investment holding company Jersey 100% *
TBBR Holdings 2 Limited Investment holding company Jersey 100%
Baljean Properties Limited Property investment Isle of Man 100%
Tritax Acquisition 2 Limited Investment holding company Jersey 100%
Tritax Acquisition 2 (SPV) Limited Investment holding company Jersey 100%
The Sherburn RDC Unit Trust Property investment Jersey 100%
KG (Jersey) Limited
#
Investment holding company Jersey 100%
KL (Jersey) Limited
#
Investment holding company Jersey 100%
G Avonmouth Unit Trust
#
Property Investment Jersey 100%
Tritax Acquisition 4 Limited Property investment Jersey 100%
Tritax Acquisition 5 Limited Property investment Jersey 100%
Sonoma Ventures Limited Property investment BVI 100%
Tritax REIT Acquisition 8 Limited Investment holding company UK¹ 100% *
Tritax REIT Acquisition 9 Limited Investment holding company UK¹ 100% *
Tritax Acquisition 9 Limited Property investment Jersey 100%
Tritax Acquisition 10 Limited Property investment Jersey 100%
Tritax Acquisition 11 Limited Property investment Jersey 100%
Tritax Acquisition 12 Limited Property investment Jersey 100%
Tritax Acquisition 13 Limited Property investment Jersey 100%
Tritax Acquisition 14 Limited Property investment Jersey 100%
Tritax Worksop Limited Property investment BVI 100%
Tritax REIT Acquisition 16 Limited Investment holding company UK¹ 100% *
Tritax Acquisition 16 Limited Property investment Jersey 100%
Tritax Acquisition 17 Limited Property investment Jersey 100%
Tritax Acquisition 18 Limited Property investment Jersey 100%
Tritax Harlow Limited Property investment Guernsey 100%
Tritax Lymedale Limited Property investment Guernsey 100%
Tritax Acquisition 21 Limited Property investment Jersey 100%
Tritax Acquisition 22 Limited Property investment Jersey 100%
Tritax Acquisition 23 Limited Property investment Jersey 100%
Tritax Acquisition 24 Limited Property investment Jersey 100%
Tritax Knowsley Limited Property investment Isle of Man 100%
Tritax Burton Upon Trent Limited Property investment BVI 100%
Tritax Acquisition 28 Limited Property investment Jersey 100%
Tritax Peterborough Limited Property investment Jersey 100%
Tritax Littlebrook 2 Limited Property investment Jersey 100%
Tritax Littlebrook 4 Limited Property investment Jersey 100%
Tritax Atherstone (UK) Limited Property investment UK¹ 100%
Tritax Stoke DC1&2 Limited Investment holding company Jersey 100% *
Tritax Stoke DC3 Limited Investment holding company Jersey 100% *
Tritax Holdings CL Debt Limited Investment holding company Jersey 100% *
Tritax Portbury Limited Property investment Jersey 100%
Tritax Newark Limited Property investment Jersey 100%
Tritax Carlisle Limited Investment holding company Jersey 100% *
Tritax Worksop 18 Limited Property investment Jersey 100% *
Tritax Stoke Management Limited Management company UK¹ 100%
FINANCIAL STATEMENTS
139Annual Report 2021 Tritax Big Box REIT plc
Notes to the Company Accounts continued
Principal activity Country of Incorporation Ownership %
Tritax Holdings PGIM Debt Limited Investment holding company Jersey 100% *
Tritax Merlin 310 Trafford Park Limited Property investment Jersey 100% *
Tritax West Thurrock Limited Property investment Jersey 100%
Tritax Tamworth Limited Property investment Jersey 100%
Tritax Acquisition 35 Limited Property investment Jersey 100%
Tritax Acquisition 36 Limited Property investment Jersey 100% *
Tritax Acquisition 37 Limited Property investment Jersey 100% *
Tritax Acquisition 38 Limited Property investment Jersey 100% *
Tritax Acquisition 39 Limited Property investment Jersey 100% *
Tritax Acquisition 40 Limited Property investment Jersey 100% *
Tritax Acquisition 41 Limited Property investment Jersey 100% *
Tritax Littlebrook 1 Limited Property investment Jersey 100%
Tritax Littlebrook 3 Limited Property investment Jersey 100%
Tritax Atherstone Limited Investment holding company Jersey 100% *
Tritax Acquisition 42 Limited Property investment Jersey 100% *
Tritax Acquisition 43 Limited Property investment Jersey 100% *
Tritax Carlisle UK Limited Investment holding company UK¹ 100%
Tritax Edinburgh Way Harlow Limited Property investment Jersey 100% *
Tritax Crewe Limited Investment holding company Jersey 100% *
Tritax Acquisition 44 Limited Property investment Jersey 100% *
Tritax Acquisition 45 Limited Property investment Jersey 100% *
Tritax Acquisition 46 Limited Property investment Jersey 100% *
Tritax Acquisition 47 Limited Property investment Jersey 100% *
Tritax Acquisition 48 Limited Property investment Jersey 100% *
Tritax Acquisition 49 Limited
#
Property investment Jersey 100% *
Tritax Littlebrook Management Limited
#
Property investment UK¹ 100% *
Tritax Symmetry Holdings Limited (formerly known
asTritax Symmetry Limited) Investment holding company Jersey 100% *
db Symmetry Group Ltd Investment holding company UK² 100%
db Symmetry Ltd Investment holding company UK² 100%
Tritax Symmetry Power Limited
#
Investment holding company UK² 100%
Tritax Symmetry Power Biggleswade Limited
#
Investment holding company UK² 100%
Tritax Symmetry (BVI) Ltd Investment holding company British Virgin Islands 100%
Tritax Symmetry Holdings (Biggleswade) Co Ltd Investment holding company British Virgin Islands 100%
Tritax Symmetry Properties (Biggleswade) Co Ltd Property investment British Virgin Islands 100%
Tritax Symmetry Holdings (Blyth) Co Ltd Investment holding company British Virgin Islands 100%
Tritax Symmetry Properties (Blyth) Co. Ltd Property investment British Virgin Islands 100%
Tritax Symmetry Holdings (Middlewich) Co. Ltd Investment holding company British Virgin Islands 100%
Tritax Symmetry Properties (Middlewich) Co. Ltd Investment holding company British Virgin Islands 100%
Tritax Symmetry Development (Blyth) UK Ltd Property development UK² 100%
Tritax Symmetry Development (Biggleswade) UK Ltd Property development UK² 100%
Tritax Symmetry Ardley Limited Property investment Jersey 100%
Tritax Symmetry Bicester 2 Limited Property investment Jersey 100%
Tritax Symmetry Northampton West Ltd Property investment Jersey 100%
Tritax Symmetry Rugby South Ltd Property investment Jersey 100%
Tritax Symmetry St Helens Ltd Property investment Jersey 100%
Tritax Symmetry Wigan Ltd Property investment Jersey 100%
Tritax Symmetry Oxford North Ltd Property investment Jersey 100%
Tritax Symmetry Northampton Ltd Property investment Jersey 100%
Tritax Symmetry Merseyside 1 Ltd Property investment Jersey 100%
Tritax Symmetry South Elmsall Ltd Property investment Jersey 100%
Tritax Symmetry (Goole) Ltd Property investment UK² 100%
Tritax Symmetry (Midlands) Ltd Investment holding company UK² 100%
Tritax Symmetry (Aston Clinton) Ltd Property investment UK² 100%
Tritax Symmetry Leicester South Ltd Property investment Jersey 100%
Tritax Symmetry Gloucester Ltd Property investment Jersey 100%
Tritax Symmetry (Speke) Ltd Property investment UK² 100%
5. Investment in subsidiaries continued
FINANCIAL STATEMENTS
140 Tritax Big Box REIT plc Annual Report 2021
Principal activity Country of Incorporation Ownership %
Tritax Symmetry (Barwell) Ltd Property investment UK² 100%
Tritax Symmetry (Rugby) Ltd Property investment UK² 100%
Tritax Symmetry (Hinckley) Ltd Property investment UK² 100%
Tritax Symmetry (Darlington) Ltd Property investment UK² 100%
Tritax Symmetry (Blyth) Ltd Property investment UK² 100%
Tritax Symmetry (Bicester Reid) Ltd Property investment UK² 100%
Tritax Symmetry (Wigan) Ltd Property investment UK² 100%
Tritax Symmetry (Land) LLP Investment holding company UK² 100%
Tritax Symmetry (Kettering) LLP Property investment UK² 100%
Tritax Symmetry (Lutterworth) LLP Property investment UK² 100%
Tritax Symmetry (Northampton) LLP Investment holding company UK² 100%
Symmetry Park Darlington Management Company Ltd Management company UK² 100%
Symmetry Park Aston Clinton Management
CompanyLimited Management company UK² 100%
Tritax Symmetry Glasgow East Limited
#
Property investment Jersey 100%
Symmetry Park Biggleswade Management
CompanyLimited
#
Management company UK² 100%
Tritax Symmetry Biggleswade 2 Limited
#
Property investment Jersey 100%
Tritax Symmetry Biggleswade 3 Limited
#
Property investment Jersey 100%
Tritax Symmetry Middlewich 1 Limited
#
Property investment Jersey 100%
Tritax Symmetry Biggleswade 4 Limited
#
Property investment Jersey 100%
Tritax Symmetry Biggleswade Land Limited
#
Property investment UK² 100%
* These are direct subsidiaries of the Company.
#
These are new investments of the Company in the year.
The registered addresses for subsidiaries across the Group are consistent based on their country of incorporation and are as follows:
Jersey entities: 26 New Street, St Helier, Jersey JE2 3RA.
Guernsey entities: PO Box 286, Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 4LY.
Isle of Man entities: 33-37 Athol Street, Douglas, Isle of Man IM1 1LB.
British Virgin Islands entities: Jayla Place, Wickhams Cay 1, Road Town, Tortola, BVI VG1110.
UK¹ entities: 3rd Floor, 6 Duke Street St James’s, London SW1Y 6BN.
UK² entities: Unit B, Grange Park Court, Roman Way, Northampton, England NN4 5EA.
The Company also has interests in the following joint arrangements as at 31 December 2021:
Principal activity Country of incorporation Ownership %
Symmetry Park Doncaster Management Company Limited Management company UK² 50%
Symmetry Park Bicester Management Company Limited Management company UK² 33%
All of the companies registered offshore are managed onshore and are UK residents for UK corporation tax purposes, save for the Sherburn
Unit Trust and G Avonmouth Trust.
6. Trade and other receivables
31 December
2021
£m
31 December
2020
£m
Amounts receivable from Group companies 1,319.8 1,066.2
Prepayments 0.3 0.1
Other receivables 3.4 2.7
1,323.5 1,069.0
All amounts that fall due for repayment within one year and are presented within current assets as required by the Companies Act. The loans
to Group companies are repayable on demand with no fixed repayment date although it is noted that a significant proportion of the amounts
may not be sought for repayment within one year depending on activity in the group companies. Interest is charged between 0%–10%
(2020:0%–10%).
5. Investment in subsidiaries continued
FINANCIAL STATEMENTS
141Annual Report 2021 Tritax Big Box REIT plc
7. Cash held at bank
31 December
2021
£m
31 December
2020
£m
Cash held at bank 2.8 10.2
8. Trade and other payables
31 December
2021
£m
31 December
2020
£m
Trade and other payables 8.8 8.5
Accruals 6.5 5.8
15.3 14.3
9. Loan notes
Bonds
31 December
2021
£m
31 December
2020
£m
2.625% Bonds 2026 249.5 249.3
3.125% Bonds 2031 247.5 247.3
2.860% USPP 2028 250.0 250.0
2.980% USPP 2030 150.0 150.0
1.500% Green bonds 2033 246.4 246.2
Less: unamortised costs on loan notes (5.8) (6.4)
Non-current liabilities: net borrowings 1,137.6 1,136.4
Maturity of loan notes
31 December
2021
£m
31 December
2020
£m
Repayable between one and two years – –
Repayable between two and five years 249.5 –
Repayable in over five years 893.9 1,142.8
1,143.4 1,142.8
10. Equity reserves
Refer to note 27 of the Group’s financial statements.
11. Related party transactions
The Company has taken advantage of the exemption not to disclose transactions with other members of the Group as the Company’s own
financial statements are presented together with its consolidated financial statements.
For all other related party transactions make reference to note 30 of the Group’s financial statements.
12. Directors’ remuneration
Refer to note 9 of the Group’s financial statements.
13. Subsequent events
Refer to note 33 of the Group’s financial statements.
Notes to the Company Accounts continued
FINANCIAL STATEMENTS
142 Tritax Big Box REIT plc Annual Report 2021
Notes to the EPRA and Other Key Performance Indicators
1. EPRA earnings per share
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Total comprehensive income (attributable to shareholders) 972.6 449.4
Adjustments to remove:
Changes in fair value of investment properties (840.9) (351.1)
Changes in fair value of interest rate derivatives (2.8) 2.3
Share of (profits)/loss from joint ventures (0.1) 0.1
Gain on disposal of investment properties (2.0) (0.1)
Amortisation of other property assets 5.4 4.5
Impairment of intangible and other property assets 2.9 0.4
Tax refund (3.9) –
Profits to calculate EPRA earnings per share 131.2 105.5
Add back: Changes in fair value of contingent consideration payable – –
Profits to calculate EPRA diluted earnings per share 131.2 105.5
Weighted average number of Ordinary Shares 1,755,926,756 1,708,504,125
EPRA earnings per share – basic 7.47p 6.17p
Dilutive shares to be issued 668,309 –
EPRA earnings per share – diluted 7.47p 6.17p
2. EPRA NAV per share
31 December 2021 Note
EPRA NTA
£m
EPRA NRV
£m
EPRA NDV
£m
NAV attributable to shareholders 4,076.5 4,076.5 4,076.5
Revaluation of land options 66.0 66.0 66.0
Mark-to-market adjustments of derivatives 16.9 16.9 –
Intangibles (1.7) – –
Fair value of debt – – (47.0)
Real estate transfer tax
1
– 376.3 –
At 31 December 2021 28 4,157.7 4,535.7 4,095.5
NAV per share 222.60p 242.84p 219.27p
Dilutive NAV per share 222.52p 242.75p 219.19p
31 December 2020 Note
EPRA NTA
£m
EPRA NRV
£m
EPRA NDV
£m
NAV attributable to shareholders 2,921.3 2,921.3 2,921.3
Revaluation of land options 80.1 80.1 80.1
Mark-to-market adjustments of derivatives 19.7 19.7 –
Intangibles (2.0) – –
Fair value of debt – – (141.3)
Real estate transfer tax
1
– 304.0 –
At 31 December 2020 28 3,019.1 3,325.1 2,860.1
NAV per share 175.61p 193.41p 166.36p
Dilutive NAV per share 175.61p 193.41p 166.36p
1 EPRA NTA and EPRA NDV reflect IFRS values which are net of RETT. RETT are added back when calculating EPRA NRV.
FINANCIAL STATEMENTS
143Annual Report 2021 Tritax Big Box REIT plc
Notes to the EPRA and Other Key Performance Indicators continued
3. EPRA net initial yield (NIY) and EPRA “topped up” NIY
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Investment property – wholly owned 5,123.7 4,026.9
Investment property – share of joint ventures 2.5 2.0
Less: development properties (105.0) (480.7)
Completed property portfolio 5,021.2 3,548.2
Allowance for estimated purchasers’ costs 340.4 240.6
Gross up completed property portfolio valuation (B) 5,361.6 3,788.8
Annualised passing rental income 195.9 180.2
Less: contracted rental income in respect of development properties – (19.1)
Property outgoings (0.2) (0.4)
Less: contracted rent under rent-free period (4.8) (2.5)
Annualised net rents (A) 190.9 158.2
Contractual increases for fixed uplifts 10.2 7.6
Topped up annualised net rents (C) 201.1 165.8
EPRA net initial yield (A/B) 3.56% 4.18%
EPRA topped up net initial yield (C/B) 3.75% 4.38%
4. EPRA vacancy rate
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Annualised estimated rental value of vacant premises – –
Portfolio estimated rental value
1
216.2 172.5
EPRA vacancy rate 0% 0%
1 Excludes land held for development.
5. EPRA cost ratio
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Property operating costs 0.2 0.2
Administration expenses 25.5 22.6
Service charge costs recovered through rents but not separately invoiced – 0.2
Total costs including and excluding vacant property costs (A)/(B) 25.7 23.0
Vacant property cost – (0.2)
Total costs excluding vacant property costs (B) 25.7 22.8
Gross rental income – per IFRS 184.7 161.6
Less: Service charge cost components of gross rental income – –
Gross rental income (C) 184.7 161.6
Total EPRA cost ratio (including vacant property costs) 13.9% 14.2%
Total EPRA cost ratio (excluding vacant property costs) 13.9% 14.1%
FINANCIAL STATEMENTS
144 Tritax Big Box REIT plc Annual Report 2021
6. EPRA like-for-like rental income
Year ended
31 December 2021
£m
Year ended
31 December 2020
£m
Change
£m
Change
%
Like-for-like rental income 150.6 145.8 – –
Other rental income 0.1 0.1 – –
Like-for-like Gross rental income 150.7 145.9 4.8 3.3
Irrecoverable property expenditure (0.1) (0.1) – –
Like-for-like Net rental income 150.6 145.8 4.8 3.3
Reconciliation to Net rental income per
Statement of Comprehensive Income:
Development properties 20.9 3.0 – –
Properties acquired 5.8 0.4 – –
Properties disposed 0.2 5.7 – –
Properties under rent free periods – (2.6) – –
Spreading of tenant incentives and guaranteed rental uplifts 7.2 9.3 – –
Total per statement of comprehensive income 184.7 161.6 – –
7. EPRA property-related capital expenditure
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Acquisition
1
89.6 82.3
Development
2
274.3 210.6
Investment properties:
Tenant incentives
3
7.2 9.3
Capitalised interest 0.7 –
Total 371.8 302.2
1 See note 14.
2 See note 14 and note 15.
3 Fixed rental uplift and tenant lease incentives after adjusting for amortisation on rental uplift and tenant lease incentives.
8. Total Accounting Return (“TAR”)
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Opening EPRA NTA 175.61p 151.79p
Closing EPRA NTA 222.60p 175.61p
Change in EPRA NTA 46.99p 23.82p
Dividends paid 6.51p 6.40p
Total growth in EPRA NTA plus dividends paid 53.50p 30.22p
Total return 30.5% 19.9%
One-off transactional costs – –
Total return excluding one-off transactional costs 30.5% 19.9%
FINANCIAL STATEMENTS
145Annual Report 2021 Tritax Big Box REIT plc
9. Total expense ratio
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Total operating costs 25.5 22.6
Average net assets over the period 3,231.0 2,619.4
Total expense ratio 0.79% 0.86%
10. Loan to value ratio
Year ended
31 December
2021
£m
Year ended
31 December
2020
£m
Gross debt drawn 1,356.3 1,355.7
Less: Cash (71.1) (57.8)
Net Debt 1,285.2 1,297.9
Gross property value 5,480.2 4,319.6
Loan to value ratio 23.5% 30.0%
Notes to the EPRA and Other Key Performance Indicators continued
FINANCIAL STATEMENTS
146 Tritax Big Box REIT plc Annual Report 2021
Five Year Summary
Group Statement of Comprehensive Income
2021
£m
2020
£m
2019
£m
2018
£m
2017
£m
Gross rental income 184.7 161.6 144.4 133.9 108.0
Service charge income 5.1 4.6 4.1 3.9 2.9
Service charge expense (5.2) (4.7) (4.2) (5.0) (3.0)
Net rental income 184.6 161.5 144.3 132.8 107.9
Other operating income 18.9 8.6 4.1 – –
Administrative and other expenses (25.5) (22.6) (21.7) (18.1) (14.1)
Acquisition related costs – – (4.2) (1.0) –
Operating profit before changes in fair value of investment properties,
share of profit from joint ventures and share-based payment charges 178.0 147.5 122.5 113.7 93.8
Changes in fair value of investment properties 840.9 351.1 54.5 163.0 176.0
Gain on disposal of investment properties 2.0 0.1 – – –
Share of profit/(loss) from joint ventures after tax 0.1 (0.1) – – –
Impairment of intangible and other property assets (2.9) (0.4) (0.6) – –
Share-based payment charge (5.5) (5.9) (3.3) – –
Changes in fair value of contingent consideration payable (4.2) (2.9) (0.5) – –
Gain on bargain purchase – – 7.8 – –
Operating profit 1,008.4 489.4 180.4 276.7 269.8
Finance income – – 0.4 0.2 0.4
Finance expense (40.1) (37.6) (34.4) (23.1) (20.3)
Changes in fair value of interest rate derivatives 2.8 (2.3) (5.2) (1.2) (2.1)
Changes in fair value of amounts due to third parties – – – – –
Profit before taxation 971.1 449.5 141.2 252.6 247.8
Tax on profit for the period 1.5 (0.1) – – –
Profit and total comprehensive income 972.6 449.4 141.2 252.6 247.8
Earnings per share – basic 55.4p 26.3p 8.40p 17.54p 19.54p
Earnings per share – diluted 55.3p 26.3p 8.38p 17.54p 19.53p
FINANCIAL STATEMENTS
147Annual Report 2021 Tritax Big Box REIT plc
Group Statement of Financial Position
2021
£m
2020
£m
2019
£m
2018
£m
2017
£m
Non-current assets
Intangible assets 1.7 2.0 2.3 – –
Investment property 5,249.1 4,053.5 3,541.2 3,038.3 2,599.2
Investment in land options 201.5 228.1 226.0 – –
Investment in joint ventures 25.6 28.5 30.1 – –
Other property assets 4.0 9.4 13.9 – –
Trade and other receivables 2.0 2.0 – – –
Interest rate derivatives 1.8 0.1 1.3 5.2 2.0
Total non-current assets 5,485.7 4,323.6 3,814.8 3,043.5 2,601.2
Current assets
Rent and other receivables 37.1 25.1 25.7 42.3 10.2
Cash at bank 71.1 57.8 21.4 48.3 78.1
Total current assets 108.2 82.9 47.1 90.6 88.3
Total assets 5,593.9 4,406.5 3,861.9 3,134.1 2,689.5
Current liabilities
Deferred rental income (38.6) (36.1) (35.3) (30.2) (27.6)
Trade and other payables (85.9) (69.3) (76.1) (42.5) (23.4)
Tax liabilities (4.3) (1.9) (18.7) – –
Total current liabilities (128.8) (107.3) (130.1) (72.7) (51.0)
Non-current liabilities
Trade and other payables (2.0) (2.0) – – –
Interest rate derivatives – (1.1) – – –
Bank borrowings (207.6) (206.7) (256.2) (327.8) (216.8)
Loan notes (1,137.6) (1,136.4) (891.5) (492.7) (492.2)
Amounts due to third parties (41.4) (31.7) (22.9) – –
Total non-current liabilities (1,388.6) (1,377.9) (1,170.6) (820.5) (709.0)
Total liabilities (1,517.4) (1,485.2) (1,300.7) (893.2) (760.0)
Total net assets 4,076.5 2,921.3 2,561.2 2,240.9 1,929.5
Equity
Share capital 18.7 17.2 17.1 14.8 13.7
Share premium reserve 762.0 466.5 446.7 153.6 932.4
Capital reduction reserve 964.5 1,078.9 1,188.1 1,304.4 467.9
Retained earnings 2,331.3 1,358.7 909.3 768.1 515.5
Total equity 4,076.5 2921.3 2,561.2 2,240.9 1,929.5
Net asset value per share – basic 218.26p 169.92p 150.04p 152.00p 141.50p
Net asset value per share – diluted 218.18p 169.92p 150.04p 152.00p 141.44p
EPRA net asset value per share – diluted 222.52p 175.61p 151.79p 152.83p 142.24p
Five Year Summary continued
FINANCIAL STATEMENTS
148 Tritax Big Box REIT plc Annual Report 2021
Glossary of Terms
“Adjusted Earnings”
Post-tax earnings attributable to shareholders, adjusted to include
licence fees receivable on forward funded development assets and
adjusts for other earnings not supported by cash flows. “Adjusted
Earnings per share” or “Adjusted EPS” on a per share basis.
“B and C Shares”
The B and C Shares in Tritax Symmetry issued to the Symmetry
Management shareholders.
“Big Box”
A “Big Box” property or asset refers to a specific subsegment of the
logistics sector of the real estate market, relating to very largelogistics
warehouses (each with typically over 500,000 sq ft of floor area) with
the primary function of holding and distributing finished goods, either
downstream in the supply chain or direct to consumers, and typically
having the following characteristics: generally a modern constructed
building with eaves height exceeding 12 metres; let on long leases
with institutional-grade tenants; with regular, upward-only rental
reviews; having a prime geographical position to allow both efficient
stocking (generally with close links to sea ports or rail freight hubs)
and efficient downstream distribution; and increasingly with
sophisticated automation systems or a highly bespoke fit out.
“Board”
The Directors of the Company.
“BREEAM”
The Building Research Establishment Environmental Assessment
Method certification of an asset’s environmental, social and economic
sustainability performance, using globally recognised standards.
“Company”
Tritax Big Box REIT plc (company number 08215888).
“CPI”
Consumer Price Index, a measure that examines the weighted
average of prices of a basket of consumer goods and services, such
as transportation, food and medical care as calculated on a monthly
basis by the Office of National Statistics.
“Current development pipeline”
Assets that are in the course of construction or assets for which we
have made a construction commitment.
“CVA”
A company voluntary liquidation, a legally binding agreement
between a business and its creditors which sets out a debt
repayment plan and enables a viable business to avoid insolvency.
“db Symmetry”
db Symmetry Group Ltd and db symmetry BVI Limited, together with
their subsidiary undertakings and joint venture interests, which were
acquired by the Group in February 2019.
“Directors”
The Directors of the Company as of the date of this report being
Aubrey Adams, Alastair Hughes, Elizabeth Brown, Wu Gang,
RichardLaing and Karen Whitworth.
“Development Management Agreement” or “DMA”
An agreement between the Group and a developer setting out the
terms in respect of the development of an asset. In particular, the
development of the Symmetry Portfolio is the subject of a DMA
between Tritax Symmetry and Symmetry ManCo.
“Development portfolio” or “Development assets”
The Group’s Development portfolio comprises its property assets
which are not Investment assets, including land, options over land
aswell as any assets under construction on a speculative basis.
“Embodied Carbon”
The amount of carbon emitted during the construction of a building.
This includes extraction of raw materials, manufacturing and
refinement of materials, transport, building phase, deconstruction,
and disposal.
“EPC rating”
A review of a property’s energy efficiency.
“EPRA”
European Public Real Estate Association.
“EPRA Earnings”
Earnings from operational activities (which excludes the licence
feesreceivable on our Forward Funded Development assets).
“EPRA NAV” or “EPRA Net Asset Value”
The Basic Net Asset Value adjusted to meet EPRA Best Practices
Recommendations Guidelines (2016) requirements by excluding the
impact of any fair value adjustments to debt and related derivatives
and other adjustments and reflecting the diluted number of Ordinary
Shares in issue.
“EPRA Triple Net Asset Value (NNNAV)”
EPRA NAV adjusted to include the fair values of financial instruments,
debt and deferred taxes.
“EPRA Net Tangible Asset (NTA)”
The Basic Net Asset Value adjusted to meet EPRA Best Practices
Recommendations Guidelines (2019) requirements by excluding
intangibles and the impact of any fair value adjustments to related
derivatives. This includes the revaluation of land options.
“EPRA Net Reinstatement Value (NRV)”
IFRS NAV adjusted to exclude the impact of any fair value
adjustments to related derivatives. This includes the revaluation
ofland options and the Real estate transfer tax (RETT).
“EPRA Net Disposal Value (NDV)”
IFRS NAV adjusted to include the fair values of debt and the
revaluation of land options.
“EPRA Net Initial Yield (NIY)”
Annualised rental income based on the cash rents passing at the
balance sheet date, less non-recoverable property operating
expenses, divided by the market value of the property, increased
with(estimated) purchaser’s costs.
“EPRA ‘Topped-Up’ NIY”
This measure incorporates an adjustment to the EPRA NIY in respect
of the expiration of rent-free periods (or other unexpired lease
incentives, such as discounted rent periods and step rents).
FINANCIAL STATEMENTS
149Annual Report 2021 Tritax Big Box REIT plc
Glossary of Terms continued
“EPRA Vacancy”
Estimated market rental value (ERV) of vacant space divided by the
ERV of the whole portfolio.
“EPRA Cost Ratio”
Administrative and operating costs (including and excluding costs
ofdirect vacancy) divided by gross rental income.
“Estimated cost to completion”
Costs still to be expended on a development or redevelopment
topractical completion, including attributable interest.
“Estimated rental value” or “ERV”
The estimated annual market rental value of lettable space as
determined biannually by the Group’s valuers. This will normally
bedifferent from the rent being paid.
“FCA”
The United Kingdom Financial Conduct Authority (or any successor
entity or entities).
“Forward Funded Development”
Where the Company invests in an asset which is either ready for, or in
the course of, construction, pre-let to an acceptable counterparty. In
such circumstances, the Company seeks to negotiate the receipt of
immediate income from the asset, such that the developer is paying
the Company a return on its investment during the construction
phase and prior to the tenant commencing rental payments under
the terms of the lease. Expert developers are appointed to run the
development process.
“Foundation asset”
Foundation assets provide the core, low-risk income that underpins
our business. They are usually let on long leases to customers
withexcellent covenant strength. These buildings are commonly
newormodern and in prime locations, and the leases have
regularupward- only rent reviews, often either fixed or linked
toInflation Indices.
“FRI Lease”
Full Repairing and Insuring Lease. During the lease term, the tenant
isresponsible for all repairs and decoration to the property, inside
and out, and the building insurance premium is recoverable from
thetenant.
“Future development pipeline”
The Group’s land bank for future development typically controlled
under option agreements which do not form part of the Current
orNear Term development pipeline.
“Gearing”
Net borrowings divided by total shareholders’ equity excluding
intangible assets and deferred tax provision.
“GIA”
Under the RICS Code of Measuring Practice (6th Edition) the Gross
Internal Area (GIA) is the basis of measurement for valuation of
industrial buildings (including ancillary offices) and warehouses.
The area of a building measured to the internal face of the perimeter
walls at each floor level (including the thickness of any internal walls).
All references to building sizes in this document are to the GIA.
“GAV”
The Group’s gross asset value.
“Global Real Estate Sustainability Benchmark
(GRESB) Assessment”
GRESB assesses the ESG performance of real estate and
infrastructure portfolios and assets worldwide, providing
standardised and validated data to the capital markets.
“Gross rental income”
Contracted rental income recognised in the period, in the income
statement, including surrender premiums and interest receivable
onfinance leases. Lease incentives, initial costs and any contracted
future rental increases are amortised on a straight-line basis over
thelease term.
“Group” or “REIT Group”
The Company and all of its subsidiary undertakings.
“Growth Covenant asset”
Growth Covenant assets are fundamentally sound assets in good
locations, let to customers we perceive to be undervalued at the
point of purchase and who have the potential to improve their
financial strength, such as young e-retailers or other companies
withgrowth prospects. These assets offer value enhancement
through yield compression.
“IMA”
The Investment Management Agreement between the Manager
andthe Company.
“Investment portfolio” or “Investment assets”
The Group’s Investment Portfolio comprises let or pre-let (in the
caseof Forward Funded Developments) assets which are income
generating, as well as any speculative development assets which
have reached practical completion but remain unlet.
“Investment property”
Completed land and buildings held for rental income return and/or
capital appreciation.
“Land asset”
Opportunities identified in land which the Manager believes will
enable the Company to secure, typically, pre-let Forward Funded
Developments in locations which might otherwise attract lower
yieldsthan the Company would want to pay, delivering enhanced
returns but controlling risk.
“LIBOR”
London Interbank Offered Rate.
“Link” or “Link Asset Services”
A trading name of Link Market Services Limited
(companynumber2605568).
“Listing Rules”
The listing rules made by the Financial Conduct Authority under
section 73A of FSMA.
“Loan Notes”
The loan notes issued by the Company on 4 December 2018.
FINANCIAL STATEMENTS
150 Tritax Big Box REIT plc Annual Report 2021
“Loan to Value (LTV)”
The proportion of our gross asset value that is funded by
netborrowings.
“London Stock Exchange”
London Stock Exchange plc.
“Manager”
Tritax Management LLP (partnership number 0C326500).
“Minimum Energy Efficiency Standards (MEES)”
The legal standard for minimum energy efficiency which applies to
rented commercial buildings as regulated by the Energy Efficiency
(Private Rented Property) (England and Wales) Regulations 2015.
“Near-term development pipeline”
Sites which have either received planning consent or sites where
planning applications have been submitted prior to the year end.
“Net equivalent yield”
The internal rate of return from an Investment property, based on the
value of the property assuming the current passing rent reverts to
ERV and assuming the property becomes fully occupied over time.
“Net initial yield”
The annual rent from a property divided by the combined total of
itsacquisition price and expenses.
“Net rental income”
Gross rental income less ground rents paid, net service charge
expenses and property operating expenses.
“Net zero carbon”
Highly energy efficient and powered from on-site and/or off-site
renewable energy sources, with any remaining carbon balance offset.
“Net Zero Carbon - Construction”
When the amount of carbon emissions associated with a buildings
construction up to practical completion is zero through use of offsets
or the export of onsite renewables.
“Net Zero Carbon - Operational Energy”
When the amount of carbon emissions associated with a building’s
operational energy on an annual basis is zero.
“Net Zero Carbon - Whole Life”
When the amount of carbon emissions associated with a buildings
embodied and operational impacts over the life of the building
arezero.
“Non-PID Dividend”
A dividend received by a shareholder of the principal company that is
not a PID.
“Operational Carbon”
The carbon emissions arising from all energy consumed and from
water supply and waste water treatment for an asset in-use, over
itslife cycle.
“Ordinary Shares”
Ordinary Shares of £0.01 each in the capital of the Company.
“Passing rent”
The annual rental income currently receivable on a property as at the
balance sheet date (which may be more or less than the ERV).
Excludes rental income where a rent-free period is in operation.
Excludes service charge income (which is netted off against service
charge expenses).
“PID” or “Property income distribution”
A dividend received by a shareholder of the principal company in
respect of profits and gains of the Property Rental Business of the
UK resident members of the REIT group or in respect of the profits or
gains of a non-UK resident member of the REIT group insofar as they
derive from their UK Property Rental Business.
“Portfolio”
The overall portfolio of the Company including both the Investment
and Development portfolios.
“Portfolio Value”
The value of the Portfolio which, as well as the Group’s standing
assets, includes capital commitments on Forward Funded
Developments, Land Assets held at cost, the Group’s share of joint
venture assets and other property assets.
“Pre-let”
A lease signed with a customer prior to commencement of
adevelopment.
“REIT”
A qualifying entity which has elected to be treated as a Real Estate
Investment Trust for tax purposes. In the UK, such entities must be
listed on a recognised stock exchange, must be predominantly
engaged in property investment activities and must meet certain
ongoing qualifications.
“Rent roll”
See “Passing rent”.
“RPI”
Retail price index, an inflationary indicator that measures the change
in the cost of a fixed basket of retail goods as calculated on a monthly
basis by the Office of National Statistics.
“Scope 1 Emissions”
Direct carbon emissions from owned or controlled sources.
“Scope 2 Emissions”
Indirect emissions from the generation of purchased electricity,
steam, heating and cooling.
“Scope 3 Emissions”
All other indirect emissions that occur in a company’s value chain.
“SDLT”
Stamp Duty Land Tax – the tax imposed by the UK Government on the
purchase of land and properties with values over a certain threshold.
“Shareholders”
The holders of Ordinary Shares.
FINANCIAL STATEMENTS
151Annual Report 2021 Tritax Big Box REIT plc
“Speculative development”
Where a development has commenced prior to a lease agreement
being signed in relation to that development.
“sq ft”
Square foot or square feet, as the context may require.
“Symmetry Management shareholders”
The holders of B and C Shares in Tritax Symmetry.
“Symmetry ManCo”
Tritax Symmetry Management Limited, a private limited company
incorporated in England and Wales (registered number 11685402)
which has an exclusive development management agreement
withTritax Symmetry to manage the development of the Tritax
Symmetry Portfolio.
“Topped up net initial yield”
Net initial yield adjusted to include notional rent in respect of let
properties which are subject to a rent-free period at the valuation
date thereby providing the Group with income during the
rent-freeperiod. This is in accordance with EPRA’s Best
PracticesRecommendations.
“Total Expense Ratio” or “TER”
The ratio of total administration and property operating costs
expressed as a percentage of average net asset value throughout
theperiod.
“Total Accounting Return”
Net total return, being the percentage change in EPRA NTA over
therelevant period plus dividends paid.
“Total Shareholder Return”
A measure of the return based upon share price movement over
theperiod and assuming reinvestment of dividends.
“Tritax Symmetry”
Tritax Symmetry Holdings Limited, a limited company incorporated
inJersey (registered number 127784).
“Tritax Symmetry Portfolio”
The portfolio of assets held through Tritax Symmetry following
theacquisition of db Symmetry in February 2019, including land,
options over land and a number of assets under development.
“UK AIFMD Rules”
The laws, rules and regulations implementing AIFMD in the UK,
including without limitation, the Alternative Investment Fund
Managers Regulations 2013 and the Investment Funds sourcebook
of the FCA.
“Value Add asset”
These assets are typically let to customers with good covenants and
offer the chance to grow the assets’ capital value or rental income,
through lease engineering or physical improvements to the property.
We do this using our asset management capabilities and
understanding of customer requirements. These are usually highly
re-lettable. It also includes assets developed on a speculative basis
which have reached practical completion but remain unlet at the
period end.
“WAULT” or “Weighted Average Unexpired
LeaseTerm”
The income for each property applied to the remaining life for an
individual property or the lease and expressed as a portfolio average
in years. In respect of Forward Funded Developments, the unexpired
term from lease start date.
“Yield on cost”
The expected gross yield based on the estimated current market
rental value (ERV) of the developments when fully let or actual rental
value for completed developments or those pre-let, as appropriate,
divided by the estimated or actual total costs of the development.
Glossary of Terms continued
FINANCIAL STATEMENTS
152 Tritax Big Box REIT plc Annual Report 2021
Company Information
Company Registration Number: 08215888
Incorporated in the United Kingdom
Directors, Management and Advisers
Directors
Aubrey Adams OBE, FCA, FRICS
Non-Executive Chairman
Alastair Hughes FRICS
Senior Independent Director
Elizabeth Brown
Non-Executive Director
Wu Gang
Non-Executive Director
Richard Laing FCA
Non-Executive Director
Karen Whitworth ACA
Non-Executive Director
Registered office
3rd Floor
6 Duke Street, St James’s London
SW1Y 6BN
Manager
Tritax Management LLP
3rd Floor
6 Duke Street, St James’s London
SW1Y 6BN
Joint Financial Adviser
Akur Limited
66 St James’s Street London
SW1A 1NE
Joint Financial Adviser and Joint
CorporateBroker
Jefferies International Limited
100 Bishopsgate London
EC2N 4JL
Joint Corporate Broker
JP Morgan Chase & Co
27th Floor
25 Bank Street
London
E14 5JP
Legal Advisers to the Company
Taylor Wessing LLP
5 New Street Square London
EC4A 3TW
Auditor
BDO LLP
55 Baker Street London
W1U 7EU
Company Secretary
Tritax Management LLP
3rd Floor
6 Duke Street, St James’s London
SW1Y 6BN
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road Bristol
BS99 6ZZ
Administrator
Link Asset Services
Beaufort House
51 New North Road Exeter
EX4 4EP
Depository
Langham Hall UK Depositary LLP
8th Floor
1 Fleet Place London
EC4M 7RA
Valuers
CBRE Limited
Henrietta House Henrietta Place London
W1G 0NB
Colliers International Valuation UK LLP
50 George Street London
W1U 7GA
Bankers
Barclays Bank PLC
PO Box 3333
One Snowhill
Snow Hill Queensway Birmingham
B3 2WN
BNP Paribas
10 Harewood Avenue London
NW1 6AA
Canada Life Investments
1-6 Lombard Street London
EC3V 9JU
Helaba Landesbank Hessen-Thüringen
Girozentrale
3rd Floor
95 Queen Victoria Street London
EC4V 4HN
HSBC Bank plc
Level 2, 8 Canada Square Canary Wharf
London
E14 5HQ
PGIM Real Estate Finance
8th Floor
One London Bridge London
SE1 9BG
Royal Bank of Scotland
250 Bishopsgate London
EC2M 4AA
Santander
2 Triton Square Regent’s Place London
NW1 3AN
Sumitomo Mitsui Trust Bank
155 Bishopsgate London
EC2M 3XU
Wells Fargo Bank, N.A.
33 King William Street London
EC4R 9AT
Cautionary statement
This Annual Report and the Tritax Big Box REIT
plc website may contain certain ‘forward-looking
statements’ with respect toTritax Big Box REIT
plc’s (“Company”) financial condition, results of
itsoperations and business, and certain plans,
strategy, objectives, goals and expectations with
respect to these items and the economies and
markets in which the Company operates. Forward-
looking statements are sometimes, but not always,
identified by their use of a date in the future or such
words as ‘anticipates’, ‘aims’, ‘due’, ‘could’, ‘may’,
‘should’, ‘will’, ‘would’, ‘expects’,
‘believes’, ‘i ntends’,
‘plans’, ‘targets’, ‘goal’ or ‘estimates’
or, in each case,
their negative orother variations or comparable
terminology. Forward-looking statements arenot
guarantees of future performance. Bytheir very
nature forward-looking statements are inherently
unpredictable, speculative and involve risk and
uncertainty because they relate to events and
depend oncircumstances that will occur in the future.
Many of these assumptions, risks and uncertainties
relate to factors that are beyond the Company’s
ability to control or estimate precisely. There are
anumber of such factorsthat could cause actual
results and developments to differ materially from
those expressed or implied by these forward-
looking statements. These factors include, but
arenot limited to, changes in the economies and
markets in which the Company operates; changes
in the legal, regulatory and competition frameworks
in which the Company operates; changes in the
markets from which the Company raisesfinance;
the impact of legal or other proceedings against or
which affect the Company; changes in accounting
practices and interpretation of accounting
standards under IFRS, and changes in interest and
exchange rates. Any forward-looking statements
made in this Annual Report or Tritax Big Box REIT
plc website, or made subsequently, which are
attributable to the Company, or persons acting on
their behalf, are expressly qualified in their entirety
by thefactors referred to above. Each forward-looking
statement speaks only as of the dateit is made.
Except as required by its legal or statutory
obligations, the Company does not intend to
update any forward-looking statements. Nothing
inthis Annual Report or the Tritax Big Box REIT plc
website should be construed as a profit forecast or
an invitation to deal in the securities of the Company.
CBP011516
Tritax Big Box REIT plc’s commitment to environmental
issues is reflected in this Annual Report, which has been
printed on Revive 100 Silk, an FSC
®
certified material.
This document was printed by Park Communications
using its environmental print technology, which minimises
the impact of printing on the environment, with 99% of
dry waste diverted from landfill. Both the printer and the
paper mill are registered to ISO 14001.
Tritax Big Box REIT plc Annual Report 2021
Tritax Big Box REIT plc
www.tritaxbigbox.co.uk
Tritax Big Box REIT plc Annual Report 2021