MIDAS SHARE TIPS: Think big and cash in on GIANT state-of-the-art distribution centres – Tritax EuroBox is developing sites across the Continent
Just outside Barcelona lies a gleaming, state-of-the-art distribution centre. Measuring more than two million square feet, the equivalent of 2,000 three-bedroom houses, it is one of the biggest warehouses in Europe.
The property is used by Spanish retail giant Mango to distribute clothes all round the world and it is owned by Tritax EuroBox.
The warehouse owner is listed on the London Stock Exchange but owns and develops huge sites across the Continent, from Poland to southern Italy.
Mammoth: The retail warehouse near Barcelona owned by Tritax EuroBox
The shares are £1.04 and should increase steadily in price, as the group intends to double in size within the next few years. There are generous dividends too, paid quarterly and expected to yield more than 4 per cent this year.
Tritax EuroBox tenants are wide-ranging – Amazon in Rome, healthcare multinational Abbott Laboratories in the Netherlands, online tools specialist SVH Handels in Dusseldorf, Germany. There are several international logistics groups too, including ID Logistics, which specialises in transporting drugs, such as the Pfizer vaccine.
The company floated three years ago, following in the footsteps of its larger cousin Tritax BigBox. BigBox focuses on large distribution centres in the UK and Midas recommended the stock when the group floated at £1 a share in 2013.
Today, the shares are £1.83, investors have enjoyed robust dividends along the way and the company is valued at more than £3billion.
EuroBox is at a much earlier stage, with a stock market value of around £620million. But prospects are bright. Ecommerce is less advanced on the Continent than in Britain but it is growing fast, spurred on by the pandemic.
In results for the year to September, EuroBox chairman Robert Orr, a property veteran, announced that profits had more than doubled, the group’s portfolio had increased in value and rents were up almost 17 per cent.
Earlier this month, Orr updated investors declaring that all rents have been collected and he was increasing the quarterly dividend by almost 14 per cent to 1.25 euro cents (1.08p).
Brokers anticipate a full-year dividend of around 6 euro cents and shareholders can choose whether they want to be paid in sterling or in euros (an interesting option for anyone wanting to set up a holiday fund).
In a further sign of confidence, Orr subsequently unveiled a £174million equity raise, with shares on offer at £1.03, a slight discount to the current price of £1.04. Applications are open until March 5, via intermediaries such as AJ Bell, Redmayne Bentley and Shore Capital.
EuroBox already knows what it wants to do with cash. Four German sites and two Italian ones have been lined up and the group wants to expand some existing properties so they can accrue more rent. The new fundraising should also lower EuroBox’s borrowing costs, creating further opportunities for expansion.
Demand for these super-sized distribution centres has been growing fast, as retailers, wholesalers and logistics firms look for ways to fulfil changing consumer tastes, with more people shopping locally and online.
Prices for sites have been chased higher, raising concerns among some in the property market. But EuroBox is different.
An established operator, the group has an extensive network of contacts and sources most sites before they even come up for sale. Some are developed from scratch as well, provided tenants have signed up to lease the finished centres.
As such, EuroBox can acquire properties at better value than rivals and pay attractive dividends to shareholders.
MIDAS VERDICT: Tritax EuroBox is a respected player in a fast-growing market. The share offer, at £1.03, looks attractive, particularly as the company is committed to long-term dividend growth.
Traded on: Main market Ticker: EBOX Contact: tritaxeurobox.co.uk or 020 8051 5070