Its shares are trading at a rare discount after Amazon spooked the market
Thursday 26 May 2022 Author: Ian Conway

Given how hot the logistics and warehousing sector is, it is surprising to find one of the leading European operators trading at a 20% discount to NAV (net asset value).

Yet that is the situation at Tritax Eurobox (BOXE), which owns a €1.6 billion portfolio of assets giving it an NAV per share of €1.42 against a share price of just €1.14.

The catalyst for this discount can be traced back to a throwaway comment by the chief executive of (AMZN:NASDAQ) in the firm’s first-quarter earnings report last month.

Having doubled the size of its fulfilment network during the pandemic, Amazon was ‘no longer chasing physical or staffing capacity’ said Andy Jassy.

His comment referred mainly to North America, which accounts for over 70% of retail revenues, but UK investors took it as a cue to dump shares across the warehouse sector.

As its name suggests, Tritax Eurobox only operates in Europe where e-commerce is way behind the UK and North America.


According to Statista, online sales account for around 20% of retail trade in Germany, less than 15% in France and just 10% in Spain, but all three markets are on a steep upward trend.

In the Netherlands, Italy, Poland and Sweden, the firm’s other key markets, online penetration is even lower but is also rising fast.

On top of the growth in e-commerce, demand has been spurred by the need to reinforce and de-risk supply chains after the pandemic led to shortages of critical parts across a range of industries.

Companies are reviewing manufacturing locations and transport links, reshoring production and back-up facilities, and holding more stock closer to their customers and end users.

This is adding to the ‘race for space’ in a market where vacancy rates are already extremely low (just 3% in March according to consultants CBRE).

Given that rents are a small cost relative to the overheads of operating a large logistics hub, the firm is able to increase prices to new and existing customers when it comes to reletting its space.

At Hammersbach in Germany it secured a 24% increase in rent on reletting and at Bornem in Belgium it secured a 16% increase, for example.

The combination of tight supply, rising rents and higher asset values means double-digit annual total returns are on offer.

Trevor Green, head of UK institutional equities at Aviva Investors, the firm’s largest shareholder, maintains the opportunities in Continental Europe are ‘still firmly in place, with clear demand for their sites coming from numerous tenants as their target markets play catch-up with the UK’.


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