Tritax Big Box REIT PLC gets upgrade from Peel Hunt after big

Tritax Big Box REIT PLC (LON:BBOX) has been upgraded to a ‘buy’ recommendation by broker Peel Hunt on the industrial property sector’s trading momentum and the shares’ relative valuation. 

The ‘big ‘box’ warehouse and distribution specialist saw a valuation uplift of circa 8% in the second half of 2020, which was ahead of all analyst expectations, and is one of the real estate investment trust’s largest like-for-like valuation uplifts in a six month period.

“Strength of the market, asset management, and development progress have driven the strong growth,” Peel Hunt’s analysts said, upgrading their forecast net tangible asset 9-12% for coming years as a result.

While we still expect an outperformance of value over growth in UK real estate over the next six-12 months, they said that they “cannot ignore the strength of the momentum in the underlying Industrial market”.

The team that came on board from the Symmetry acquisition are also “building a track record within Tritax, one that is not appreciated by the market”, the analysts added.

BBOX is the cheapest of the industrial REITs covered by the analysts, they added, with around a 0.25 percentage point valuation gap to Segro PLC (LON:SGRO) and Londonmetric Property PLC (LON:LMP). 

Peel Hunt’s new 195p target price, increased from 160p, implies paying for circa two years of NTA growth, or a circa 15% premium to the 2020 forecast NTA.