Tritax Big Box REIT Annual Report 2015

← All annual reports

FY2015 Annual Report · Tritax Big Box REIT

Loading PDF…

T
r
i
t
a
x
B
g
B
o
x
R
E

T
p

A
n
n
u
a

R
e
p
o
r
t
2
0
1
5

Tritax Big Box REIT plc Annual Report 2015

Leading Big Boxes

CONTENTS

STRATEGIC REPORT
Tritax Big Box
Highlights
Chairman’s Statement
A Compelling Business
Fund Manager’s Q&A
Our Market
Our Business Model
Our Strategy and Objectives
Key Performance Indicators
EPRA Performance Measures
Responsible Business
Our Principal Risks and Uncertainties
Manager’s Report
The Manager
Board Approval of Strategic Report

GOVERNANCE
Chairman’s Governance Overview
Application of the Principles of the AIC Code
Leadership
The Board of Directors
Effectiveness
Nomination Committee Report
Accountability
Audit Committee Report
Management Engagement Committee Report
Relations with Shareholders
Directors’ Remuneration Report
Directors’ Report
Directors’ Responsibilities Statement
Depositary Statement
Independent Auditor’s Report

FINANCIAL STATEMENTS
Group Statement of Comprehensive Income
Group Statement of Financial Position
Group Cash Flow Statement
Group Statement of Changes in Equity
Notes to the Consolidated Accounts
Company Balance Sheet
Company Reconciliation of Movement in
Shareholders’ Funds
Notes to the Company Accounts

ADDITIONAL INFORMATION
Company Information
Financial Calendar

1
1
2
4
6
14
16
20
24
26
27
28
29
32
44
46

47
48
50
52
54
56
57
58
60
63
65
66
68
71
72
73

77
78
79
80
81
82
105

106
107

115
116
117

FOR MORE INFORMATION
You will see links throughout this Annual Report to related
information within the report or further reading online.

See title of statement or item page number
Find more information on our Website
www.tritaxbigbox.co.uk

£ Our source of capital
✚ The value we add
❖ Our expertise
▲ Our objectives
★ Our goal

Highlights p2-3

Chairman’s Statement p4-5

An Outstanding Portfolio p8

21
11

208
25

19
22

Our Market p16-19

Manager’s Report p32-43

The Opportunity in Forward

Funded Development p40-43

Tritax Big Box REIT plc Annual Report 2015
Tritax Big Box is the only Real Estate Investment Trust
dedicated to investing in very large logistics facilities
in the UK. We believe these properties, known as
Big Boxes, are one of the most exciting and highest
performing asset classes in the UK real estate market.
Strong tenant demand, coupled with limited supply
and significant inward investment from our tenants,
make our Big Boxes attractive assets.

We own and manage some of the UK’s most
sought after Big Boxes. Our Big Boxes are strategically
important to our tenants as they offer efficiency
savings and are increasingly fulfilling e-commerce
retail sales. Our tenants include some of the biggest
names in retail, logistics, consumer products and
automotive.

We aim to provide a secure and growing income for
our Shareholders, together with capital appreciation.
Our ambition is to be the UK’s pre-eminent owner
of Big Boxes.

Our shares are traded on the Main Market of the London Stock Exchange and were included in the
FTSE 250 Index from 8 June 2015

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONSTRATEGIC REPORT
HIGHLIGHTS

Financial highlights

6.0 pence
DIVIDEND PER SHARE ❖
Dividends declared in respect of 2015
totalled 6.0 pence per share, in line with
our target.
19.4%
TOTAL RETURN ★
Total return for the year of 19.4%, compared
to the FTSE EPRA/NAREIT UK REITs Index
of 10.5%.

£500 million at 1.42%
DEBT FACILITY £
We agreed a new £500 million debt
facility, reducing our average cost
of borrowing by 35bps to 1.42% above
3 month Libor and extending our average
unexpired loan term to 4.67 years.

124.68 pence (+15.9%)
EPRA NAV at 31 December 2015 ❖
The EPRA net asset value per share
increased by 17.11 pence, 15.91%
(31 December 2014: 107.57 pence).
£229 million
EQUITY RAISED £
We raised £229 million of equity during
2015, under our share issuance programme
which expired on 7 July 2015.
100%

CONTRACTED AND INCOME PRODUCING
The portfolio is 100% let or pre-let with
developer licence fee income, across
25 properties.

£1.31 billion

PORTFOLIO VALUE at 31 December 2015
Our investment properties were
independently valued at £1.31 billion1.

£106.75 million (+8.9%)

NET VALUATION GAIN
On our investment property portfolio
during 2015.

£68.37 million pa

CONTRACTED RENTAL INCOME
The portfolio’s contracted rental income
has increased to £68.37 million1 per
annum (31 December 2014: £36.16 million1),
including forward funded developments.

Operational highlights

Our portfolio was fully let or pre-let and income producing during the period.

+11 Big Boxes

16.5 years

ASSETS
We acquired 11 Big Boxes during the year,
five of which were forward funded pre-let
developments. The acquisitions further
diversified the portfolio by geography,
tenant and building size.
c.13 million sq ft

PORTFOLIO AREA
At the year end, the portfolio contained
25 assets, covering approximately
13 million sq ft of logistics space.

1.09%

TOTAL EXPENSE RATIO
The total expense ratio for the year was
1.09%, down from 1.13% for the prior
period, which compares favourably with
our real estate peers.

WAULT
At the year end, the weighted average
unexpired lease term (“WAULT”) was
16.5 years (31 December 2014: 13.9 years),
against our target of at least 12 years.

5.8%

AVERAGE NIY
The average net initial yield of the
portfolio at acquisition is 5.8% against
our year end valuation of 4.9% net
initial yield.
33%

LOAN TO VALUE (“LTV”)
On a fully invested basis, including
the fulfilment of our forward funded
development commitments this
increases to c.40%.

FTSE EPRA

SHARES
Our shares were included in the FTSE
EPRA/NAREIT Global Developed Index
from 23 March 2015...
FTSE 250

SHARES
...the FTSE 250 Index from 8 June 2015...

MSCI Global
Small Cap Index

SHARES
...and the MSCI Global Small Cap Index
from 30 November 2015...

...helping to attract new investors and
supporting liquidity in the shares.

Daily liquidity of
£2.2 million

DAILY AVERAGE TRADING
Daily average trading during 2015
of £2.2 million of shares.

Post balance sheet activity

£200 million

EQUITY RAISED
On 16 February 2016, the Company completed a £200 million equity fundraising
in order to fund its near term investment pipeline.

Including forward funded development commitments

6.2 pence

DIVIDEND PER SHARE
Progressive dividend target of
6.2 pence per share for 2016.

Tritax Big Box REIT plc Annual Report 2015Dividend declared per share (p)

❖

EPRA NAV per share (p)

❖

6.00

4.15

+1.85p

150

120

124.68

107.57

+15.9%

2014

2015

2014

2015

Total return (%)

★

Portfolio valuation (£m)

19.4

10.4

+86.5%

1,500

1,200

900

600

300

619

1,311

+111.7%

2014

2015

2014

2015

Contracted rent roll per annum (£m)

Weighted average unexpired lease term (yrs)

68.37

+89.1%

36.16

16.5

13.9

+2.6yrs

2014

2015

2014

2015

Adjusted earnings per share (p)

Total comprehensive income (£m)

6.12

4.86

+1.26p

133.98

+220.2%

150

120

41.84

2014

2015

See note 13 p90

2014

2015

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONSTRATEGIC REPORT
CHAIRMAN’S STATEMENT

This was an excellent year for the Group, during which we further
strengthened and diversified the portfolio and secured the funding
necessary for our next phase of growth. Market conditions remain
favourable for landlords and we are confident of delivering further
value for Shareholders.

Overview
2015 was an excellent year for the Group and a rewarding
one for Shareholders, as we achieved our dividend and total
return objectives and continued to deliver on our investment
strategy. The Group declared an aggregate dividend for the year
of 6.0 pence per share and achieved a total return of 19.4%.

Share issuance and share price performance £
We raised a further £229 million of equity in 2015, with a placing
and offer for subscription in March 2015 generating gross
proceeds of £175 million and a further placing in June 2015
raising gross proceeds of £54 million. Both issuances were at
a premium to our published NAV at the time.

During the year, we acquired a further 11 Big Boxes, including
five forward funded developments, as the Manager drew on its
market intelligence and excellent relationships with vendors,
agents and developers to identify and acquire high-quality Big
Box assets. These investments further diversified the portfolio
by tenant, geography and range of building sizes. Our portfolio
is 100% fully let or pre-let and income producing.

At the year end, our portfolio of 25 assets was independently
valued at £1.31 billion. This is on a fully completed basis and
includes forward funded commitments. This represents a
valuation uplift of £164.03 million or 14.3% over the aggregate
acquisition price (excluding acquisition costs).

The attractiveness of Big Boxes has contributed to further yield
compression. Notwithstanding this, we have maintained the
average net initial purchase yield across the portfolio at 5.8%
by exercising strong capital discipline and maintaining our
pricing policy. The valuation uplift and the high net initial yield
reflect the Manager’s ability to identify and negotiate attractive
off-market deals and our discipline in not pursuing overpriced
assets. To date, we have acquired 78% of the portfolio through
off-market transactions. At the same time, we have increased
the weighted average unexpired lease term across the
portfolio to 16.5 years at 31 December 2015 (31 December 2014:
13.9 years), well above our target of at least 12 years.

Forward funded developments are often the only way for
occupiers to secure a suitable building and, in recognition of
the opportunities in this area, we amended our investment
policy during the first half of the year to remove the 25% limit on
exposure to forward funded developments in order to benefit
from opportunities resulting from our developer relationships.
Shareholders supported our proposals by approving this change
at the Extraordinary General Meeting on 15 April 2015. Five
of the assets we acquired in 2015 are forward funded, pre-let
developments, where we work with a developer to deliver a
new pre-let Big Box for a tenant. Following the completion in
September 2015 of the Group’s first forward funded develop-
ment, pre-let to Rolls-Royce Motor Cars Limited, the total
number of forward funded assets within the portfolio under
development at the year end was five.

The June 2015 placing was the last under our 12-month share
issuance programme, which closed on 7 July 2015 having raised
gross proceeds of £339 million. We decided not to renew this
programme during the second half of the year, recognising the
significant amount of equity we had raised, while allowing time
for positive share price performance. Over the course of 2015,
the share price rose by 20.1%, outperforming the FTSE All-Share
Index and the FTSE All-Share REIT Index by 23.2% and 11.9%
respectively.

The shares also benefited from our inclusion in the FTSE EPRA/
NAREIT Global Developed Index in March 2015, the FTSE 250
Index in June and the MSCI Global Small Cap Index in November
2015. This is helping to broaden our Shareholder base and
contributes to attractive liquidity in the shares, with daily trading
averaging around £2.2 million of shares during 2015, up from
£0.7 million in 2014.

Financial results
Our financial results are strong, reflecting the successful
implementation of our investment policy and the growth in
the portfolio, as well as robust cost management and positive
market conditions.

Under International Financial Reporting Standards (“IFRS”)
as adopted by the European Union, our operating profit for
2015 was £142.69 million (2014: £46.67 million), with total
comprehensive income of £133.98 million (2014: £41.84 million).
Basic earnings per share (“EPS”) for the period were 21.56
pence (2014: 15.10 pence), which included a net valuation gain
of £106.75 million, or 15.76 pence per share, resulting from
revaluing our investment properties and derivative interest rate
instruments.

Under European Public Real Estate Association (“EPRA”)
guidelines, EPS for the year were 4.70 pence (2014: 4.60 pence).
The EPRA NAV per share at 31 December 2015 was 124.68 pence,
representing an increase of 15.9% over the audited EPRA NAV
per share of 107.57 pence at 31 December 2014. The total return
for the year, which reflects the increase in EPRA NAV plus
dividends paid, was 19.4%.

Tritax Big Box REIT plc Annual Report 2015Adjusted EPS, which is a metric that includes the licence fees
received from developers on our forward funded developments,
was 6.12 pence (2014: 4.86 pence). Licence fee income does not
fall within the EPRA earnings measure. However, the Board links
the Adjusted EPS to our distribution policy.

As at the year end, we had £350 million drawn under this
facility. This left £150 million of headroom to meet our remaining
forward funding commitments plus further capacity to support
our growth ambitions.

The Group has a low and transparent cost base, with a
reduced total expense ratio of 1.09% for 2015 (2014: 1.13%).
This compares favourably with our real estate peers.

Dividends ❖
We have constructed our portfolio to provide a high-quality,
sustainable and growing income stream for our Shareholders.
This enabled us to meet our target of declaring dividends
totalling 6.0 pence per share for 2015. The total dividend was
fully covered by our Adjusted EPS.

During the year, we paid the following interim dividends per share:

• 1.0 pence on 22 April 2015, in respect of January and

February 2015

• 1.5 pence on 15 July 2015, in respect of March, April and

May 2015

• 0.5 pence on 23 September, in respect of June 2015

On 27 January 2016, the Board declared a fourth interim
dividend of 3.0 pence per share, in respect of the period from
July to December 2015.

The Board intends to adopt a progressive dividend policy for
2016, with a target dividend of 6.2 pence per share for the year.
This represents a 3.3% increase in the total dividend for 2015,
which is above the rate of RPI inflation over the period from our
IPO to 31 December 2015.

Loan financing and hedging £
In October 2015, we agreed a new five-year, cross-collateralised,
£500 million secured debt facility with a syndicate comprising
Barclays Bank PLC, Landesbank Hessen-Thüringen Girozentrale
(“Helaba”), Wells Fargo Bank N.A. and ING Real Estate Finance
(UK) B.V. The new facility refinanced £253.34 million of our
existing debt. The pricing of the loan package immediately
reduced our average margin payable by 35bps to 1.42% above
3 month Libor, extended our average unexpired loan term and
brought us additional operational flexibility to manage the
financing requirements of our forward funded developments.

In addition, we have three loans with Helaba. At the end of
the year, we had drawn £35.04 million under these facilities,
secured on the DHL assets at Langley Mill and Skelmersdale,
and the Ocado facility at Erith.

We have continued to protect the Group from significant
increases in interest rates by using derivative instruments,
comprising one small interest rate swap and several interest rate
caps, each coterminous with the initial term of the loans. The
Group’s weighted capped rate of borrowing on hedged debt was
2.94% (2014: 3.81%). The actual average interest rate payable
on our debt was, however, 2.01% (2014: 2.35%) per annum at the
year end. At 31 December 2015, 99.95% of Group debt drawn
down was hedged.

Outlook
The outlook for the Company in 2016 is positive. Following the
hugely successful equity issue in February 2016, with investor
demand leading to significant over subscription against a raise
of £200 million, we are in a very strong position to diversify
further our high-quality portfolio and continue to embed
our leading position in e-commerce supply chain fulfilment.
There remain good opportunities for the Company to acquire
attractive assets and create capital value enhancement at both
point of purchase and through asset management.

Although we see the potential for further yield compression
in the Big Box sector and logistics more generally, we expect
this could be modest compared with 2015. The balance of
occupational supply and demand is, however, causing rents to
rise in the sector and the balanced profile of rent review dates
linked to a combination of open market, RPI and fixed increases
across our portfolio, provides the opportunity to grow income
year on year. This underpins our ability to increase the dividend
in 2016, with an ambition of further dividend growth thereafter.

In conclusion, we remain confident of delivering attractive
total returns to Shareholders, the composition of which will
be increasingly driven by income, as well as opportunities for
further capital value enhancement.

Richard Jewson Chairman
16 March 2016

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONSTRATEGIC REPORT
A COMPELLING BUSINESS

Our Company has a number of important strengths, which we
believe make us a compelling business.

We operate in an attractive market, which has powerful
long-term growth drivers. Our Investment Manager gives us
a competitive advantage through its knowledge, expertise
and relationships. We have built one of the most attractive
portfolios in the UK quoted real estate sector which, combined
with a low cost base, generates a high-quality, sustainable and
growing income stream. This allows us to target a progressive
dividend that can offer appealing risk-adjusted returns.

These strengths have helped us to secure a strong track record
of delivery, as we have achieved the targets we set out at IPO;
they also ensure that we remain well positioned for further success
in the future.

The following pages explain more about our key strengths and
how they position us for further success, building upon the
excellent total Shareholder return performance delivered in 2015,
as shown below:

Total Shareholder return (p)

130

120

110

100

Price
change

Total
return

20.1%

24.1%

7.4%

10.6%

(2.5%)

0.9%

5
1
n
a
J

5
1
b
e
F

5
1
r
a
M

5
1
r
p
A

5
1
y
a
M

5
1
n
u
J

5
1

u
J

5
1
g
u
A

5
1
p
e
S

5
1
t
c
O

5
1
v
o
N

5
1
c
e
D

Tritax Big Box FTSE All-Share Index FTSE All-Share REIT Index

Source: Bloomberg

Tritax Big Box REIT plc Annual Report 2015

STRATEGIC REPORT: A COMPELLING BUSINESS
1. An attractive market with powerful long-term drivers

The fundamentals of the Big Box market are compelling. Demand from tenants is strong because Big Boxes offer
them significant economies of scale and cost savings not available from smaller, older buildings. Equally they are
vital for the swiftly evolving retail market and, in particular, for e-commerce, which is still at a relatively early stage
of development and is growing rapidly in the UK.

At the same time, the supply of Big Boxes in the UK is highly constrained. Their scale makes planning permission
difficult to obtain in locations where they are required. There are currently no new or very modern buildings of over
500,000 sq ft vacant or available and in the course of development. Meanwhile, developers are not planning to
construct speculative buildings of this size.

This supply/demand imbalance benefits asset owners. Building scarcity, the operational and financial efficiencies
they provide, along with the significant investment in fit-out tenants make in technology and mechanisation, are
the reasons they are prepared to sign long leases not often seen in other areas of the commercial property market.
Furthermore, this supply/demand imbalance is producing, and is expected to continue to result in, attractive
rental growth.

See Rising Rents p19

Growing demand and constrained supply...

78%
decrease in new
logistics availability
from 2008-2015

No Big Boxes are
currently vacant or being
speculatively developed
>500,000 sq ft

+44%
forecast growth
in UK internet sales
2015-2019

E-commerce logistics
demand to 2020 (sq ft pa)
UK 17.5m
Western Europe 9.5m

Source: CBRE

Source: eMarketer

...creating favourable conditions

Source: World Bank, Colliers
International, OECD

See Our Market p16-19

2. Our Manager gives us a competitive advantage

❖

Tritax Management LLP is our Investment Manager. We benefit significantly from the Manager’s knowledge,
expertise and relationships. These allow the Manager to source and negotiate deals off-market, at attractive
pricing levels, which offer good value for Shareholders and meet vendors’ desire for quick and certain execution.
This has given us a reputation as one of the industry’s most reliable purchasers and forward-thinking owners and
managers, making us the obvious choice for potential vendors of Big Boxes.

As well as exercising capital discipline and adding initial value through purchasing at attractive prices, the Manager’s
asset management skills can create value throughout an asset’s life cycle, working collaboratively with tenants
and using the Manager’s knowledge of their businesses to identify and carry out value protecting and enhancing
initiatives.

78%
of portfolio acquired
off-market

5.8%
average net initial yield
at acquisition

+£164.03m
valuation uplift over
aggregate acquisition
price since IPO (+14.3%)

19.4%
total return delivered
in 2015

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION

STRATEGIC REPORT: A COMPELLING BUSINESS
3. An outstanding portfolio ✚

Since our IPO in December 2013, we have rapidly acquired an outstanding portfolio of 25 Big Box assets. Our
portfolio is well diversified by size, geography and tenant. The assets are typically modern, occupy prime locations
and are fully let on long leases to tenants with excellent covenant strength.

Many of our tenants have made significant investment in respect of internal fit-out and sophisticated automation,
which can, and typically does, eclipse the cost of the actual building. Such high levels of investment tends to
demonstrate long-term commitment to the asset.

We believe these factors give us one of the highest quality portfolios in the UK quoted real estate sector and
underpin our strategy to deliver low risk and growing income.

£580.4 million
commited into
Big Boxes in 2015

78%1
of portfolio
>500,000 sq ft

87%1
of properties built
since 2000

84%1,2
FTSE 100, FTSE 250 or
equivalent tenants

1 Source: CBRE – by valuation as at 31 December 2015
2 Based on tenant or its listed parent company; DHL assets represented by parent Deutsche Post AG, Rolls-Royce Motor Cars
asset represented by parent BMW, Argos asset represented by parent Home Retail Group, B&Q asset represented by parent
Kingfisher, TK Maxx represented by parent TJX Companies, Kuehne + Nagel represented by lease guarantor Hays plc

Prime locations
Our portfolio covers key logistics locations around the UK, with easy access to major roads/motorways and
ports, allowing our tenants to distribute efficiently and effectively.

Portfolio by geography (%)1

27.08%

●

North West

South East

34.43%

22.89%

15.60%

21
11

208
25

19
22

Key
l Foundation asset
l Value add asset
l Growth covenants asset
1 Forward funded development
n Major port

See Our Strategy and Objectives p24-25

Tritax Big Box REIT plc Annual Report 2015 North East●● Midlands●STRATEGIC REPORT: A COMPELLING BUSINESS
Institutional grade tenants
Our 25 assets are let to 21 different tenants, typically with excellent covenant strength and operating in
a range of retail as well as other sectors:

l Leeds
1

l Skelmersdale
8

l Heywood
17

l Chesterfield
3

l Ripon
9

l Castle Donington
2

l Bognor Regis
10

l Worksop
18

l Doncaster
5

l Thorne
11

l Didcot
4

l Derby
13

l Goole
21

l Middleton
12

l Wigan
20

l Sittingbourne
6

l Erith
15

l Raunds
23

l Manchester
14

l Stoke-on-Trent
22

l Langley Mill
7

l Harlow
16

l Knottingley
24

l Newcastle-under-Lyme l Knowsley
19

® Trade Marks on this page are the property of the respective owners

See Our investment policy p24

A prime portfolio of Big Box assets offering strategic diversity
The assets cover a diverse range of investment categories, locations, size, age and tenant sector. In line with
our investment strategy we invest in three types of assets: foundation, value add and growth covenant assets.

Portfolio value by investment type (%) 1

15.02%

●

Wolseley 1.13%
The Range 4.64%

14.83%

£1.31 billion

Tesco, Chesterfield 2.83%
Next 5.29%
Tesco, Middleton 1.92%
L’Oréal 2.32%
New Look 2.47%

● Foundation assets
● Sainsbury’s 4.53%

M&S 7.70%
Tesco, Didcot 2.52%
Morrisons 9.29%
DHL, Skelmersdale 2.67%
DHL, Langley Mill 1.65%
Rolls-Royce Motor Cars 3.26%
Kuehne + Nagel 2.48%
Ocado 8.97%
Brake Bros 3.03%
Argos 2.80%
B&Q 7.36%
Tesco, Goole 4.05%
Howdens 5.23%
TK Maxx 4.61%

70.15%

1 Source: CBRE – by valuation as at 31 December 2015

See Our acquisition focus p24

Long leases
The strategic importance of Big Boxes to our tenants’ logistics network means they
The strategic importance of Big Boxes to our tenants means they are willing to sign
are generally willing to sign very long leases, with regular upward-only rent reviews.
very long leases, with regular upward-only rent reviews.

Unexpired years on lease

16.5yrs

WAULT

Average

Sainsbury’s

& S

Tesco, Didcot

K uehne + N agel
Rolls-Royce M otor C ars
D H L, Skelm ersdale
M orrisons
D H L, Langley Mill

Brake Bros
O cado

Argos

B & Q

Tesco, G oole

T K M axx
H o w dens
Tesco, C hesterfield

N ext

Tesco, Middleton

L’Oréal

N e w Look

W olseley

The Range

Nice-Pak

D unelm

M atalan

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION●●●●●●●●●●●●●● Growth covenant assets●●● Nice-Pak 2.58%● Dunelm 3.36%● Matalan 3.31%● Value add assets●●●●●

Tritax Big Box REIT plc Annual Report 2015STRATEGIC REPORT: A COMPELLING BUSINESS
4. Attractive dividend income ❖

A stable income stream ▲
We believe that investors seeking income look for companies capable of delivering stable and reliable dividends
for the longer term.

For 2015, we declared a dividend of 6.0 pence per share which was fully covered by Adjusted earnings, giving us
one of the highest dividend yields among UK REITs. For 2016 we have increased our target dividend for the year to
6.2 pence per share.

Portfolio rent roll expiry (%)1

When viewed in the context of our modern assets, high-quality tenants and
length of unexpired lease terms, we consider that our risk-adjusted income
return is particularly appealing. Our dividend is underpinned by a 100% let
portfolio, growing property income from financially strong tenants and
long term leases, primarily delivered through upward only rent reviews and
assisted by the implementation of asset management initiatives.

See Chairman’s Statement p4-5
See Our Strategy and Objectives p24-25

Reliable income growth
Our portfolio offers strong potential for reliable income growth. All of our
leases provide for upward only rent reviews, of which:

0-5 5-10 10-15 15-20 20+ yrs

1 By annual rent, as at 31 December 2015

• 50%1 are reviewed to the open market, allowing us to capture the current and expected strong rental growth

evidenced in the market;

• 26%1 include fixed and minimum rental uplift rent reviews, either providing a specified annually compounded

percentage increase or a minimum and maximum annual percentage increase subject to RPI, providing
predictable minimum increases in income;

• 18%1 have RPI linked rent reviews without a minimum level but subject to an annual percentage cap, providing

a degree of inflation protection; and

• 6% is hybrid; The rent of our Marks and Spencer asset at Castle Donington is reviewed five yearly to the higher

of open market or RPI, subject to a minimum of 1.5% pa and a maximum of 2.5% pa compounded annually.

Rent reviews typically take place every five years but we also benefit from some annual rent reviews. Our portfolio is
well balanced, with a number of rent reviews each year, which avoids having rent reviews clustered heavily in one or
two years when the market might be weaker.

Portfolio rent review frequency (No. of reviews)

Rental income growth and the reversionary nature
of the portfolio (%)
80

71.9

68.4

59.0

60.0

36.1

35.0

20.8

20.4

2015 2016 2017 2018 2019 2020 2021

June 2014 December 2014 June 2015 December 2015

Open market rent review Fixed uplift RPI Hybrid

■ Contracted annual rent ■ Estimated rental value (”ERV”) (per CBRE independent valuation)

7.0%
like-for-like ERV2 growth
31 December 2015 vs.
31 December 2014

5.2%
overall portfolio
reversion3 at
31 December 2015

6.2 pence
dividend target for 2016

£68.4 million
contracted annual rent
as at 31 December 2015

1 By annual rent, as at 31 December 2015.
2 Estimated rental value (“ERV”) is the valuer’s opinion of market rent which, on the date of valuations,
the property could expect to achieve upon a new letting or at rent review on an arms length basis.

3 Reversion – is the difference (increase) between the contracted annual rent and the ERV at the relevant date.

See Manager’s Report p32-43

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION

STRATEGIC REPORT: A COMPELLING BUSINESS
5. A strong track record of delivery

We have exercised strong capital discipline, standing firm on our pricing policy and turning down numerous
unsuitable opportunities. Nonetheless, since listing, we have been successful in achieving our investment aims,
acquiring an average of approximately one asset every month. Our ability to complete transactions quickly is aided
by our ready access to attractive finance.

The quality of our assets, the secure income they generate and our low cost base have enabled us to meet our
objectives of an aggregate dividend of 6 pence per share in respect of 2015 and a net total return in excess of our
target of 9% pa. Since the year end we have also surpassed our original ambition to increase our NAV to more
than £1 billion, and we aspire to grow further for the benefit of our Shareholders.

2015 in brief

29 January
Acquired the forward funded
development of a new logistics
facility pre-let to Ocado at
Erith, inside the M25, for a total
consideration of £101.73 million.

Ocado, Erith, right
see The Opportunity in Forward
Funded Development p40-43

2 February
Announced debt financing of
£13.20 million with Barclays Bank
PLC, secured on the distribution
centre at Dove Valley Park, Derby,
let to Kuehne + Nagel Ltd.

6 March
Declared an interim dividend of
1.00 pence per share, in respect of
the period from 1 January 2015 to
28 February 2015.

19 March
Raised gross proceeds of
£175 million through a Placing and
Offer for Subscription of 159.09
million new Ordinary Shares, at an
issue price of 110 pence per share.

23 March
Our shares were included in the
FTSE EPRA/NAREIT Global
Developed Index.

1 May
Acquired the New Look Retailers Ltd
National and European Distribution
Centre at Lymedale Business Park,
Newcastle-under-Lyme, for
£30.05 million.

13 May
Acquired the forward funded
development of a distribution and
production facility at Wigan, Greater
Manchester, pre-let to Nice-Pak
International, for an investment price
of £28.66 million.

Announced debt financing of
£40.38 million with Barclays Bank
PLC, secured on the B&Q Core
Products National Distribution
Centre at Worksop, Nottinghamshire.

10 April
Acquired the Brake Bros Ltd
Distribution Centre at Flex Meadow,
Harlow, for £37.20 million.

15 April
Shareholders voted at an
Extraordinary General Meeting to
amend the Company’s investment
policy and cancel its share premium
account.

20 April
Acquired the Argos Regional
Distribution Centre at Heywood,
Manchester, for £34.10 million.

29 April
Acquired the B&Q Core Products
National Distribution Centre at
Worksop, Nottinghamshire, for
£89.75 million.

B&Q, Worksop, right
see Foundation Assets p36-37

30 April
Announced debt financing of
£14.80 million with Barclays Bank
PLC, secured on a new logistics
asset near Bognor Regis, pre-let to
Rolls-Royce Motor Cars Ltd.

Tritax Big Box REIT plc Annual Report 2015STRATEGIC REPORT: A COMPELLING BUSINESS

We have delivered

6.0 pence ❖
total dividend per share
declared in respect
of 2015

19.4% ★
total return vs
FTSE EPRA/NAREIT
UK REITs Index of
10.5% for 2015

£1.31 billion
total portfolio valuation,
including forward
funded development
commitments

15.9%
growth in EPRA NAV
during 2015

Tesco, Goole, above

1 June
Acquired the Tesco Regional
Distribution Centre at Capitol Park,
Goole, for £47.10 million.

8 June
Declared an interim dividend of
1.50 pence per share, in respect
of the period from 1 March to
31 May 2015.

Our shares were included in the
FTSE 250 Index.

Acquired the forward funded
development of a distribution facility
in Prologis Park, Sideway, Stoke-
on-Trent, pre-let to Dunelm (Soft
Furnishings) Ltd, for an investment
price of £43.43 million.

Dunelm, Stoke-on-Trent, bottom

18 June
Placed 47.79 million new Ordinary
Shares at a price of 113 pence per
share, raising gross proceeds of
£54 million.

For more information see http://tritaxbigbox.co.uk/investors/#regulatory-news

14 July
Announced debt financing of
£50.87 million with Helaba, secured
on the Ocado distribution facility
at Erith.

2 October
Agreed new £500 million five-year
secured debt facility with Barclays,
Helaba, Wells Fargo and ING;
simultaneously refinanced
£253 million of existing debt.

21 August
Declared an interim dividend of
0.50 pence per share, in respect
of the period from 1 June 2015 to
30 June 2015.

30 November
Our shares were included in the
MSCI Global Small Cap Index.

9 December
Acquired the Matalan Retail Ltd
Northern distribution centre
at Knowsley, Liverpool, for
£42.38 million.

Matalan, Liverpool, below

1 September
Achieved practical completion of the
development of the new Rolls-Royce
Motor Cars technology and logistics
facility near Bognor Regis, West Sussex.

7 September
Acquired the forward funded
development of a distribution facility
at Raunds, Northamptonshire, pre-
let to Howdens Joinery Group Plc, for
an investment price of £67.0 million.

Howdens, Northamptonshire above

22 September
Acquired the forward funded
development of a distribution facility
at Knottingley, West Yorkshire,
pre-let to TK Maxx, for an
investment price of £59.0 million.

TK Maxx, Knottingley, right

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
STRATEGIC REPORT
FUND MANAGER’S Q&A

Fund Manager Colin Godfrey answers a range of questions
posed by Shareholders during 2015.

How have you performed against your investment
objectives in 2015?
We exceeded our objectives. We have met our dividend target
of 6.0 pence per share, fully covered by our adjusted earnings
and achieved a total return of 19.4%, one of the strongest in our
sector. As recently announced, we have increased our dividend
target for 2016 to 6.2 pence per share, a rise of 3.3%, in excess
of the rate of RPI inflation from the date of our IPO in December
2013 to 31 December 2015.

The Company acquired 11 high-quality Big Box investments
in 2015 for a total consideration of £580 million, further
diversifying the portfolio and increasing the Group’s contracted
rental income from £36.16 million to £68.37 million (up 89%).

Despite a very competitive market for logistics investments
resulting in significant yield compression, we have maintained
an attractive purchase yield of 5.8% and increased the
weighted average unexpired lease term from 13.9 to 16.5 years.
We have also exercised strong capital discipline, standing firm
on our pricing policy and turning down numerous investment
opportunities.

What was the rationale behind the decision to
increase the Company’s exposure to pre-let forward
funded developments?
Given the imbalance between supply and demand for Big
Box facilities, we envisaged that the forward funded route
to securing pre-let developments would be a significant
opportunity for the Company.

We acquired five pre-let forward funded developments in 2015,
with Rolls-Royce at Bognor, acquired in September 2014, the
first to be completed, on schedule and on budget, with the tenant
executing the lease in September 2015. More recently, the
forward funded development let to Dunelm reached practical
completion in February 2016, on budget, and ahead of schedule,
which leaves us with 2.3 million sq ft of forward funded assets
under development across four projects.

at a discount to the investment value once complete. There are
also other cost benefits as we also only pay stamp duty land
tax on the land price, rather than the full investment value, thus
reducing our purchase costs.

Are you relying on capital growth to underpin your
dividend target?
No, dividends paid for the year ended 31 December 2015 were
fully covered by adjusted earnings.

Our income is high quality and reliable, giving us confidence
that we can continue to target an attractive and progressive
dividend from rental income. We have also structured the
portfolio so that we have a balanced, upward only rent review
profile, to capture the occupational supply/demand imbalance
that is driving up rents in the Big Box logistics sector, thus
supporting the growth in our dividend.

We do not, therefore, need to rely on capital growth to underpin
our dividends. This is important because capital profits derived
from activities such as speculative development not only result
from higher risk activities, but are more cyclical in nature and
cannot be relied upon over the medium term.

Our portfolio is, however, well placed to generate capital profits
through asset management activity that can be recycled to
maintain the quality of our assets and longevity of weighted
average unexpired lease term.

Are you concerned about the potential for
rising interest rates?
The short-term answer to this question is no, as we are well
insulated with 99.95% of our drawn debt subject to hedging
arrangements which co-terminate with each loan facility.
The vast majority of this hedging has been with interest rate
caps, allowing the Company to benefit from lower interest
costs while 3 month Libor rates remain low, but capping the
Company’s exposure in the event that interest rates rise
significantly and so protecting our dividend.

Due to our established relationships with developers built
up over many years in the Big Box market, we can generally
access these deals before they reach the market and our early
involvement can give us the opportunity to purchase the asset

The longer-term answer depends upon your macroeconomic
view. To the extent that inflation and interest rates do not
uncouple, interest rate rises are likely to be the result of

Tritax Big Box REIT plc Annual Report 2015economic growth. This should feed through to market rental
growth for our assets and provide higher rental income which
would be expected to offset higher interest rate costs. We
therefore believe that our business is well positioned to counter
the effect of longer-term interest rate rises.

Given the long lease profile of the portfolio, are you
considering longer-term debt?
Our recent debt refinance was for a term of five years (with two,
one year extension options) and we believe that the Company
will be well positioned to renew this facility upon expiry, noting
in particular that our lenders have demonstrated a long term
commitment to UK real estate lending and the low risk, high
quality nature of our portfolio.

We are also exploring the potential to take on longer term debt
secured against some of our longer leased assets in order to
provide a balanced debt profile. We are, however, mindful of
the higher interest rate costs associated with longer-term debt
and the reduced flexibility associated with a fixed rate long-term
facility.

What are your longer-term growth ambitions?
Our vision is to continue to grow the Company without
compromising our dividend target, the quality of our
underlying income stream and the ability to create value for
Shareholders. Our business is eminently scalable. Currently
the portfolio comprises 25 assets, which we believe represents
approximately 10% of the UK Big Box market that we would be
interested in acquiring. Given our focused investment strategy
and the growth in the logistics sub-sector there is capacity to
acquire further attractively priced assets, diversifying tenant
exposure and geographical location within our portfolio, while
broadening ownership of our shares and increasing stock
liquidity. We would also expect such growth to deliver cost
savings for our Shareholders.

The development of the Big Box market is in its infancy,
particularly with regard to the way in which it fulfils a key role
in the provision of e-commerce retail sales. Our Company has
the opportunity to influence this developing market. Of course,
there may come a time when we consider that there is limited
ability to generate further value from the sector and if that
happens then the Company will cease to grow and consolidate
its position.

How would Brexit impact the Company?
The Company does not have a formal house view. We are less
concerned about the outcome than the event – uncertainty
is bad for investment, so the quicker we achieve certainty the
better. In the event that there is a vote for the UK to leave the
EU the uncertainty will be extended, as the basis for withdrawal
and trade agreements are negotiated, potentially over several
years. Nonetheless, the majority of our tenants are domestically
focused and so we would expect our business to be largely
unaffected by Brexit.

Have the well reported troubles in the UK
supermarket sector given you any cause for
concern?
Supermarket operators occupy a significant part of the
modern UK logistics stock, so it is a development we have been
watching closely. While a number of supermarket companies
now seem to be showing signs of stabilisation, we have
diversified away from an early core of supermarket tenanted
investments, such that by floor area this represented only 24%
of our portfolio as at 31 December 2015. What is important to
us is that these companies have strong balance sheets and
are capable of meeting their rental obligations under their
leases. While supermarket operators have been vacating or
repurposing stores and supermarkets, we are not aware of
them having done so recently for their logistics facilities. That is
because each logistics facility can service a multitude of local
stores and supermarkets and is therefore more integral to the
structure of their business operations. We have also sought to
invest in buildings that are well located with strong potential for
re-letting.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONSTRATEGIC REPORT
OUR MARKET

We believe that the Big Box sector is currently one of the most
exciting and highest performing asset classes in the UK property
market. In this section, we explain what a Big Box is and why the
fundamentals of our market are so compelling.

Why Big Boxes? The best of logistics
Larger format industrial logistics facilities often have
characteristics not found in the rest of the sector and should
be differentiated from smaller buildings. Big Boxes are highly
efficient distribution centres and logistics hubs, which hold
finished goods for distribution to other parts of the supply chain
or directly to consumers. This large scale format did not exist
in the UK before the early 1990s. Most high-quality Big Boxes
are modern facilities constructed within the past 15 years. This
makes Big Boxes an emerging market and we have been at the
forefront of its recent development.

The Big Box format in the UK is particularly attractive for
a number of reasons:

• the UK has mature transport infrastructure, with excellent

road, rail and air links, as well as numerous ports capable of
handling the large container ships that are increasingly used
to import goods;

• the UK’s relatively small size and dense population allows

Big Box users to construct networks of regional distribution
centres that can cover the country efficiently and reliably.
This reduces the risk of late or missed deliveries, and also cuts
costs; and

• the UK has the world’s highest internet shopping spend
per head and is a major adopter of mobile technology,
an increasingly important channel for online sales.

Operational efficiency stimulating growing occupational
demand
Demand for Big Box assets comes from three main sources:
conventional and online retailers, third-party logistics
companies (“3PLs”), and other companies.

Big Boxes offer previously unavailable flexibility, economies
of scale and low cost of use. They are often the nucleus for
distribution at a national and increasingly a regional level. Many
companies use Big Boxes to centralise dispersed distribution
facilities into fewer, larger facilities, helping optimise staff and
stock management and expand product ranges. This allows
retailers to match store or online offerings with a full product line
in a single warehouse; such an arrangement is not possible with
a collection of smaller buildings each of which would carry part
of the product line. 3PLs are also focusing on Big Box assets to
centralise multiple contracts, provide flexibility, and allow them
to tender more competitively.

Low-bay buildings are typically used for food distribution. For
general merchandise (non-food) distribution, a tall building can
allow for high racking and/or mezzanine floors. This additional
volume can increase efficiency and flexibility, making Big Boxes
very attractive to tenants not least because rents are generally
paid on the ground floor area only, as opposed to the building’s
volume.

To drive efficiency, occupiers increasingly invest in advanced
systems that allow them to stock automatically and rapidly
retrieve products. The tenant will typically own the fit-out. This
capital investment in racking and automated systems within Big
Boxes can be substantial, sometimes eclipsing the construction
cost of the building or value of the investment. Such levels of
commitment to a location often go hand-in-hand with either
an initial long term lease commitment or lease extension. This
can be value enhancing and so such tenant investment is highly
attractive to landlords.

Retail trends – the rise of e-commerce
Big Boxes are integral to the rapid growth of e-commerce
distribution. Online retail growth has substantially outstripped
the UK’s total retail market growth for a number of years and
is likely to be a key driver of future demand for Big Boxes (see
chart below). This growth is expected to continue over the next
few years, with online sales forecast to make up around one fifth
of total retail sales by 2019, a market share which suggests that
online sales have capacity for significant long-term growth. To
respond to this online growth and to remain competitive and
relevant, retailers need to have large, highly efficient distribution
facilities that can fulfil orders quickly and accurately because

Continuing strong growth forecasted in
UK internet sales
100

+65%

73.7

87.0

80.3

67.0

60.4

52.7

2014 2015 2016 2017 2018 2019

Retail e-commerce sales (£bn) Percentage of total retail sales

Source: eMarketer, September 2015

70%

60%

50%

40%

30%

20%

10%

Tritax Big Box REIT plc Annual Report 2015Airport

OTORWAY à . . . . . . . . . . . ß
. . . ß M

e-commerce (B2B)

. . .

S IN

Rail

S à

Port

M O TORWAY à . . . . . . . . . . .

urban retail

e-retailing

O
R
D
E
R
S

.
.
.
S
R
E
D
R
O
ß

S . . .

D
R
A
W
S IN
D
O
O
ß G

ß O R D E R S . . .

ß G

S . . .

S I N

.
.
.
.

à
Y
A
W
R
O
T
O
M

T . . .

E
M
R I N

H
E

N I S
D
R

E
L
E O

E
E R
L T I M

O
E

T
S
ß
R

T
O
P
E
D
L
A
C
O
L

Y
R
E
V

I
L
E
D

Y . . .

E LIV E R

. . . S

E D

ß H

. . . . . . . . . . . . . . . . . . . . . . . . . .

T
C
E
L
L
O
C

K
C

I
L
C
ß

. . . . . . . . .

M
O
T
O
R
W
A
Y
à

.
.
.
.
.

. . .

E DELIVERY à

. . . . . . . . . . . . . ß M
OTORWAY à . . . . . . . . . . . . . . . . . .

E
E
NIS

T à

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONLocal DCLocal DCDistribution CentreDistribution Centre

STRATEGIC REPORT:
OUR MARKET

Peaks in demand are a particular
challenge for online retailers. Those
with the quickest, most efficient
and most reliable ways of fulfilling
consumer demand will be best placed
to benefit as they create customer
goodwill and loyalty.

customers expect ever-faster delivery, with next day and even
same day delivery increasingly the norm. Big Boxes dedicated to
e-commerce increasingly also house the retailer’s data centre
function. These fulfilment centres are therefore effectively
acting as a quasi-retail outlet.

shopping. These stores generally have very limited storage
capacity. Along with the rise of click-and-collect, these factors
mean retailers need much greater control of stock and the
timing and efficiency of deliveries to stores. Speed and reliability
are crucial, which is where Big Boxes come into their own.

Pure online retailers, such as Amazon, ASOS and Ocado,
have led the way in developing advanced facilities. However,
traditional retailers own most of the UK’s largest online
operations and many are co-locating their online and offline
operations to achieve economies of scale and ensure that
they can deliver efficiently and reliably to both store networks
and consumers’ doorsteps from the same facility. The growth
in online sales means that the UK is estimated to have an
e-commerce warehouse space requirement of over 17 million
sq ft per year to 2020, even before potential growth in demand,
which is nearly double that estimated for the rest of Western
Europe combined.

Growing retail demand in peak periods
Changing consumer shopping habits are requiring retailers
to cope with surges in demand. According to IMRG and
Experian, in 2015 online orders on Black Friday were up 36%
on the previous year, to £1.1 billion. Key shopping days before
Christmas 2015 also saw substantial increases in online orders,
with sales on 30 November up 31% to £943 million and sales
on 7 December up 10% to £733 million. Bank holidays are also
key times for online shopping, with Christmas Day sales up 11%,
Boxing Day up 22% and New Year’s Day 33% higher in 2015
than they were a year earlier.

These peaks in demand are a particular challenge for online
retailers. Those with the quickest, most efficient and reliable
ways of fulfilling consumer demand will be best placed to
benefit. At the same time, the ability to provide a trouble-free
service will protect retailers’ reputations from the damage
caused by failed deliveries or long delays. Big Boxes have a
crucial role to play in supporting retailers through these peak
periods.

Other retail trends
The retail market is also developing in other ways that favour Big
Boxes. Retailers want to make the most of their expensive high
street store space, so they are carrying less stock and using
computerised sales tracking to respond rapidly to customer
demand and spend trends. At the same time, consumers are
increasingly favouring smaller convenience stores for food

Occupational supply
Building a new Big Box is relatively quick. Once a site has
detailed planning consent and is serviced with suitable
infrastructure, a Big Box can typically take 6-12 months to
construct. Tenant fit-out can then take a further three to
18 months to implement, subject to the extent and complexity.

Suitable land which can accommodate these Big Boxes is
scarce in key locations that suit the business objectives of
logistics operators – usually near motorways/major roads and
within reach of their target market. This land is often situated
in areas which are not zoned for employment use. The scale of
Big Boxes and the extent of traffic movements they generate
can present further planning challenges. Consequently securing
such a designation can take many years of lobbying for change
of planning use. As such, there is a significant supply lag of new
Big Box stock and developers with suitable land are currently
reluctant to speculatively develop buildings of over 400,000 sq
ft, preferring the pre-let, built-to-suit, route since this carries
lower risk. Consequently, the supply of Big Boxes is likely to
remain constrained in the medium term.

Limited supply and strong demand mean there is now a
shortage of Big Boxes to let and some key areas of the country
currently have no new-build supply. While there is some

The UK has the greatest e-commerce warehouse
space requirement in Europe (sq ft)

The UK will require c.17 million sq ft
of additional space per year to 2020
or c.85 million sq ft in total

)
t
f
q
s
n
o

i
l
l
i

(

t
n
e
m
e
r
i
u
q
e
r
e
c
a
p
s

a
u
n
n
A

15k

10k

UK/
Ireland

Western
Europe

Turkey

South East
Europe

Visegrad
4+Baltics

Southern
Europe

Nordics

Source: World Bank, Colliers International, OECD, Various

Tritax Big Box REIT plc Annual Report 2015

speculative development of smaller buildings, we are not
aware of any properties of over 400,000 sq ft that are being
speculatively built, due to the difficulties described above and
developers preferring the method with lower associated risk.
We have seen more tenants actively looking for built-to-suit
opportunities on a pre-let basis and this is an area of increasing
opportunity for us to acquire investments.

Whilst we expect the supply of Big Boxes to respond to current
trends over time, the supply lag is considerable and these
dynamics mean that demand is likely to outstrip supply for some
time to come. This creates opportunities for rising rents and
increasing capital values for owners.

Rising rents
The combination of strong occupier demand, current scarcity of
suitable vacant buildings and limited new supply has produced an
imbalance which is resulting in strong rental growth in most regions
of England and around the M25 (see CBRE chart below), following
similarly attractive rental growth reported by CBRE in 2014.

Changing investment yields
The increased importance of Big Boxes to tenants has served to
heighten investment demand, resulting in compressed yields in
recent years, as shown in the chart below.

Historically, prime retail yields of around 4% were the norm.
This low yield reflected limited property fabric obsolescence
and reliable rental growth from strong occupational demand.
Industrial property attracted yields of 6.5% or more, due to
higher perceived obsolescence and abundant land supply, which
suppressed rental growth.

The relationship between retail and industrial yields has been
reversing, however, with high street retail under pressure from
shopping centres and online sales, while prime logistics are
benefiting from e-commerce sales growth, lower obsolescence
(due to increase in size and technology), tight land supply and
the cost savings delivered by scale. As a result, prime yields in
the two sectors are converging (see graph below). We believe
that this change in relationship reflects a structural long-term
yield repositioning.

Pre-let deals for Big Boxes are often completed at a premium
to the prevailing market rent, as tenants are keen to secure
the opportunity and developers seek the benefit of growth in
the period between transaction and delivery of the completed
building, often around a year or so after agreeing terms.

Prime logistics yields have reduced from around 6.5% in January
2013 to 5.00% as at December 2015, compared to prime shops
which have improved very little over the same period, from
4.85% to 4.25%.

The estimated rental value of our portfolio (based on an
independent valuation by CBRE as at 31 December 2015) has
shown a like-for-like increase of c.7.0% against the same assets
held at 31 December 2014.

Although yields have hardened for logistics, investors are still
able to source attractive opportunities. In a low interest rate
environment, property yields remain well above the cost of debt,
maintaining a positive yield gap.

Strong rental growth in the UK market (%)

Prime UK investment yields: retail versus distribution (%)

12.5%

10.5%

8.1%

5.3%

4.2%

3.8%

3.3%

M25
East

M25
North

M25
West

Wakefield

Birmingham M1-M6

(Magna Park)

Milton
Keynes

Source: CBRE

Annual prime rental growth (December 2015)

3
1
n
a
J

3
1
r
p
A

3
1

u
J

Source: CBRE

4
1
n
a
J

3
1
t
c
O
Prime shops

4
1
r
p
A

4
1

u
J

4
1
t
c
O

5
1
n
a
J

5
1
r
p
A

5
1

u
J

5
1
t
c
O

Prime distribution (15 yr lease)

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION

STRATEGIC REPORT
OUR BUSINESS MODEL

We own and manage high-quality Big Box logistics assets across
the UK, using the Manager’s experience and expertise to assemble
and grow a well diversified asset portfolio and prudently applying
leverage to increase returns.

▲

OUR OBJECTIVES

GROWTH IN INCOME
Growth in rental income through rent reviews with
in-built growth through asset management

GROWTH IN ASSET VALUE
Increase in the value of
the portfolio

TENANT CONTENTMENT
Building relationships
with tenants

STRONG MARKET

Rental growth driving
progressive dividend and
NAV growth

QUALITY ASSETS
Modern, well
located properties
of importance to our
tenants

DIVERSIFICATION

87% of assets built
since the millennium
with geographic
spread

OUR SOURCE OF CAPITAL

SHAREHOLDER CAPITAL
Our Shareholders’ investment in the Company

DEBT FUNDING
Funds for investment raised through
bank borrowings

DIVESTMENT
Recycling or return of capital
from our non-core and
ex-growth assets

£229 MILLION EQUITY
+
£353 MILLION DEBT

net of debt refinanced
raised in the year

HIGH CALIBRE
OF TENANTS
Pool of
diversified
covenants

84% BLUE CHIP

FTSE 100, 250,
S&P 500,
DAX 302, CAC 40

OUR GOALS
An attractive total return
Progressive annual dividends +
net asset value growth

★

Our target
6.2 pence
Annual dividend target for 2016
+9% pa
Net total return over the
medium term

78% OFF-MARKET
PURCHASES

16.5 YEARS WAULT

ONGOING INITIATIVES
FOR LEASE
AND PHYSICAL
ENHANCEMENT

DRIVING YIELD
COMPRESSION
AND RENTAL
GROWTH

TEAM
High calibre consistent
team delivering performance

PORTFOLIO ASSEMBLY
High quality; diversified; low risk

ATTRACTIVE
ENTRY VALUES

compared to
completed
investments

DEVELOPMENT
Forward funded
pre-lets de-risk
the development
process

INVESTMENT ACTIVITY
Buying and selling for value

SOURCE INVESTMENTS
Research and relationships
Speed and certainty of
execution
Focused investment strategy

FUNDING DEVELOPMENTS
Forward funding of
pre-let developments

EXPERTISE
Applying our expertise, knowledge
and relationships to buy for value,
enhancing capital value

❖

OUR EXPERTISE

STRUCTURAL
CHANGE
Capturing
e-commerce and
changes in retailing

ASSET MANAGEMENT
Extensions, alterations, improvements and rent reviews
Extending rental income period and ensuring facility
works for occupier

THE VALUE WE ADD

✚

See The Asset Management Opportunity p22-23
See Our Strategy and Objectives p24-25

Tritax Big Box REIT plc Annual Report 2015
The Manager’s relationships with developers are increasingly
enabling us to invest in forward funded pre-let developments,
through which we fund the construction of a Big Box which has
been pre-let to a specific tenant. For more information on this
see The Opportunity in Forward Funded Development

Sustaining our advantage
As a specialist Big Box investor, we have a reputation as one of
the sub-sector’s most knowledgeable, forward-thinking and
pragmatic owners and managers. This makes us the obvious
choice for asset owners looking to sell Big Boxes. The consistency
of the Manager’s team helps us to maintain our relationships, in
a market where personnel changes are common, enabling us to
work on longer-term deals with continuity.

As our portfolio grows, we benefit from economies of scale,
increased diversification by geography, tenant and building
type, and a larger list of contacts, helping us to source further
attractive investments off-market. A larger portfolio also gives us
greater insight into market developments and more control over
the evidence for rent reviews and lease renewals, as well as the
potential to work up multi-asset initiatives with the same tenant.

Delivering returns ❖ ★
By acquiring high-quality properties with excellent tenants and
carefully managing our assets, we aim to deliver a robust,
low risk and growing rental stream, which supports our target
of paying a progressive dividend. Our asset selection and
management approach also adds value to our investments,
allowing our Shareholders to benefit from attractive total returns.

In addition, our status as a REIT helps to ensure that the value
we create is not eroded for Shareholders. For example, we are
not subject to corporation tax on profits and gains in respect
of our qualifying property rental business. We can also pay
dividends that qualify as a property income distribution, which
offers tax advantages for certain UK Shareholders.

✚ ❖

The value we add
The starting point for value creation is our ability to source
investments. This depends on the Manager’s extensive network
of investment agency, developer and tenant contacts, built up
over many years. The Manager also spends considerable time
researching and developing relationships with asset owners,
while learning of any triggers that might lead them to sell. These
relationships allow us to source most investments off-market,
enabling us to buy at attractive prices. Creating value can also
be as much about the investments we do not buy. Patience is
vital and we discount numerous opportunities that do not offer
value for money.

The Manager’s expertise and market knowledge enable us to
assess an investment opportunity rapidly and give vendors a
decision promptly. We can also complete transactions quickly,
but always following thorough due diligence. This speed and
certainty of execution is highly attractive to vendors; the
highest offer is not always deliverable, so price is not the only
consideration.

but we are also pragmatic.

We have a clear investment policy
We will buy smaller assets or assets with shorter leases,
where we see an opportunity to add value for Shareholders,
for example due to a near-term lease expiry where we believe
we can re-gear the lease or re-let within a short period. Buying
smaller properties reduces the risk inherent in the investment
and provides building size diversity. We buy assets directly,
but where possible we acquire the special purpose vehicle that
owns the asset, thus reducing our acquisition costs.

The assets we buy are usually strategically important to our
tenants. We work with them to maximise their operational
effectiveness, for example by extending buildings or adding
mezzanine floors. This encourages tenants to sign longer leases,
increasing the security of our revenues and increasing capital
values. Where we buy properties with the potential to add value,
we look to turn them into foundation assets for our portfolio
through asset management
. Our intention is to hold most
assets for the long term but we would consider selling if we have
unlocked value and delivered the asset’s business plan, and we
can reinvest the proceeds in a more attractive opportunity.

See Our Investment Policy p24
See The Asset Management Opportunity p22-23
See The Opportunity in Forward Funded Development p40-43

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
STRATEGIC REPORT: OUR BUSINESS MODEL
THE ASSET MANAGEMENT OPPORTUNITY ✚

Our asset management strategy focuses on creating value
throughout an asset’s life cycle. When selecting assets to buy,
the potential to grow income and enhance capital value through
lease and physical enhancement are key considerations.

We categorise our assets into one of our three investment pillars
.
In particular, 14.83% our portfolio comprise “value add” assets. These
are typically let to tenants with strong covenants, but offer the potential,
through asset management to turn them into foundation assets.

See Our acquisition focus p24

1. Our tenant led approach
Close relationships with our tenants provide us with
market intelligence and allow us to better understand
their businesses, supply chain strategy, occupational
requirements and budget both now and in the future.

Where a tenant occupies more than one property within
our portfolio, we apply a holistic and co-ordinated approach
with the potential for occupational flexibility.

Apply a holistic approach where our tenant occupies more
than one property within the portfolio, adopting a co-
ordinated strategy which provides the potential for flexibility
in respect of their occupational property requirements.

2. Growing our income
Our portfolio offers potential for income growth from rent
reviews. Open market rent reviews comprise 50% of our
portfolio by income, allowing us to capture the strong rental
growth currently evident in the market and which we expect
to continue in the short to medium term. 26% is subject
to fixed or minimum rental uplifts providing predictable
increases in income. 18% have capped RPI indexed rent
reviews. One property representing 6% is a hybrid of the
first two.

We work closely with occupational agents gathering
comparable market evidence from recent rental
transactions to cross-reference the open market rent review
knowledge held by our rent review surveyors.

3. Lengthening our income
We typically buy assets that are strategically important to
our tenants. Lease extensions allow our tenants to protect
their operations and capital investment at the site, while

increasing the length of our rental income and
can increase the capital value of our investment.

Rent reviews can provide the opportunity to open
discussions, particularly if income is over-rented, where
there is potential to agree a rent reduction or smaller rental
increase in exchange for an extension to the lease term,
thereby enhancing capital value.

4. Strengthening our income
Our portfolio is 100% let, however, in the event that a tenant
no longer requires the property, we may be able to negotiate
a surrender premium while simultaneously re-letting the unit
to a new and potentially financially stronger occupier. This
can provide us with an improved investment value.

Growth covenant assets make up 15.02% of our portfolio
by value. These are typically fundamentally sound assets
in good locations, but let to tenants we perceived were
undervalued at the time of purchase and which have the
potential to improve their financial strength, such as young
e-retailers or other companies with growth prospects,
thereby strengthening our income. These assets can offer
value enhancement through yield compression.

5. Protecting value
Our regular inspections ensure that the tenant is meeting
its obligations for maintaining the building in good condition
during the lease term and that alterations are reinstated upon
lease expiry. We constantly monitor the financial strength
of our tenants by appraising their accounts to access the
security of the rent receivable together with researching
whether there have been any changes in ownership and
what impact this may have. These procedures serve to
protect value.

Tritax Big Box REIT plc Annual Report 2015
I

S
T
R
A
T
E
G
C
R
E
P
O
R
T

6. Creating value
To drive operational efficiency, our tenants often look to invest
significant capital expenditure via racking, automated conveying,
mechanical handling systems and mezzanine levels to increase
floor area capacity. We typically acquire assets which are well
configured and have low site cover in order to allow for future
occupational flexibility. A tenant may need to extend an existing
building, alter the unit’s layout or specification, add an additional
unit on the same site, adjacent site or elsewhere in the UK. Such
building expansion or operational improvements can allow us to
commit capital expenditure, in return for higher rent and/or an
extension to the lease term.

As part of our asset management strategy we also incorporate
responsible business initiatives by encouraging tenants to make
environmental enhancements. Highly mechanised buildings and
those with mezzanine floors can be energy hungry given the
scale of heating, lighting and power requirements. By adding roof-
mounted solar panels or wind turbines we can improve a property’s
EPC rating as well as reduce the tenant’s operational costs and
support their sustainability commitments. If we are able to fund
these works, this produces an additional income stream and
improves the quality of the property (
page 28).

see Responsible Business

We would consider selling an ex-growth asset if we have unlocked
value and can recycle the proceeds into a more attractive
opportunity or return capital to shareholders.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
STRATEGIC REPORT
OUR STRATEGY AND OBJECTIVES

Our investment policy
We follow a rigorous investment policy, targeting assets which
offer value to our Shareholders and which usually have a geared
yield range of approximately 5-7%. These assets typically:

Our acquisition focus
The assets we acquire typically fall into one or more of our three
investment pillars:

• are let and income producing, or are pre-let forward funded
developments. We do not invest in speculative (ie unlet)
developments;

• have institutional-grade tenants, with sound businesses

and/or good growth potential;

• are in the right strategic locations in the UK, with strong
transport connections and good workforce availability;

• are of a size, age and specification that meet the requirements

of major tenants (and, where possible, include expansion
options);

• have institutional-standard leases, with regular upward-only

rent reviews and a typical unexpired lease length on purchase
of 12-25 years, to provide long-term and secure income flows;
and

• show evidence that the site is strategically important to

the tenant, such as extensive investment in fitting-out the
property or proximity to the tenant’s market or other key
assets.

on page 4, we

As noted in the Chairman’s Statement
amended our investment policy during the year, to remove the
limit on forward funded pre-let developments, increase the
number of FTSE 350 tenants to which the Company may have
a maximum 30% exposure from one to two, and to remove the
restriction on the use of hedging to a single asset.

See Chairman’s Statement p4-5
See Our Business Model p20-21
See Manager’s Report p32-43
See Responsible Business p28

• Foundation – The quality and sustainability of our rental

income underpins our business. Foundation assets provide
our core, low risk income. They are usually let on long leases
to tenants with excellent covenant strength. The buildings
are commonly new or modern and in prime locations, and the
leases have regular upward-only rent reviews, often either
fixed or linked to inflation indices.

• Value add – These assets are typically let to tenants with
strong 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 tenant
requirements. These assets are usually highly re-lettable.

• Growth covenants – These are fundamentally sound

assets in good locations, but let to tenants we perceive
to be undervalued and who have the potential to improve
their financial strength, such as young e-retailers or
other companies with growth prospects. These assets
offer value enhancement through yield compression.

Our objectives ▲
We have set clear objectives, which reflect our aim of creating
value for Shareholders. In particular, we have targets for our
annual dividend and net total return (dividend paid plus growth
in net asset values). These targets assume we are fully invested
and geared:

• Dividends. ★ We achieved our 2015 target of 6.0 pence per
share. For 2016, we are targeting a total dividend of 6.2 pence
per share, with the target of continued progressive dividend
growth thereafter.

• Total return. ★ Our total return for 2015 of 19.4% exceeded

our medium-term target of 9%+ pa.

At the year end, our NAV was £841 million. Subsequent to
the year end and following the £200 million equity raising in
February 2016, we have surpassed our original ambition of
reaching £1 billion of NAV. We have a longer-term ambition to
continue to grow the Company. This should deliver a number
of scale-related benefits for Shareholders as well as continued
diversification and risk dilution, as described in Our Business
Model

on pages 20-21.

Tritax Big Box REIT plc Annual Report 2015Our operational strategy
To help us deliver long-term and sustainable returns to our Shareholders, we focus on the following strategic areas:

STRATEGIC AREA

IMPLEMENTATION AND BENEFITS

Management team
Recruit and retain a knowledgeable and
talented management team, committed
to delivering value to Shareholders.

The Manager has a team dedicated to running the Group, comprising highly
experienced and qualified people with a track record of success in the Big Box
sub-sector. The reputation and track record of the management team in the
Big Box sub-sector has helped the Company buy 78% of its assets off market,
delivering value to Shareholders.

Tenants
Develop and maintain a deep
understanding of the businesses that
use our space, to create long-term
partnerships.

The Manager’s team regularly update their expertise through continuing professional
development. During 2015, the Manager strengthened its team with the addition of
a Deputy Company Secretary.

Building relationships with tenants enables us to work with them to deliver asset
management initiatives that meet their business objectives and unlock value for
us. Letting several properties to one tenant also creates opportunities for mutually
beneficial initiatives, for example by limiting rent increases on one property in return
for extending the lease term on another, while still creating value enhancement to
our portfolio.

In 2015, we continued to meet our tenants to discuss their business plans and
completed a review of asset enhancement initiatives plus a “green review” to assess
opportunities for environmentally beneficial initiatives such as solar panels.

Operational excellence
Rigorously control costs and
operational efficiencies, without
compromising growth or reputation.

We have a simple and transparent cost base, which largely comprises the
Management fee, the Directors’ fees, and accounting, audit, compliance and
regulatory fees. This helps us to focus on efficiency and achieve one of the lowest
total expense ratios in our peer group.

Capital risk management
Achieve the right risk and return
balance of equity and debt, to finance
our business and enhance returns.

Our success in building the portfolio, through an average of one acquisition per
month since listing, also demonstrates the quality of the Manager’s operations and
its team.

The Group is financed through equity and medium-term debt. Using debt can
increase Shareholder returns and allows us to further diversify our portfolio. We
invest the proceeds of any equity issuance before drawing down debt, to limit our
interest expense and maximise returns on equity. We are targeting an LTV over
the medium term of 40%, which we believe is conservative given the quality and low
risk nature of our investments.

The refinancing during 2015 further reduced our capital risk. More information can
be found in the Manager’s Report

on page 32-43.

Corporate responsibility
Strive to assume our corporate
responsibilities towards society and
the environment, in every part of our
business.

As an externally managed investment company without any employees, the Group’s
opportunities to make a significant impact in this area are minimal. Even so, we
aim to work responsibly, by buying buildings with A, B or C Energy Performance
Certificate ratings where possible and working with tenants to help them achieve
their sustainability goals. More information can be found in Responsible Business
on page 28.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
STRATEGIC REPORT
KEY PERFORMANCE INDICATORS

Our objective is to deliver attractive low risk returns to Shareholders,
by executing the investment policy described on page 24. Set out below
are the key performance indicators we use to track our progress.

KPI AND DEFINITION

RELEVANCE TO STRATEGY

PERFORMANCE

RESULT

1. Total return (TR) ★
TR measures the change in the EPRA net
asset value over the period plus dividends
paid. We are targeting a TR in excess of
9% per annum over the medium term.

TR 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.

2. Dividend ★
Dividends paid to Shareholders and declared
in relation to the year. Our target for 2015 was
a total dividend of 6.0 pence per share.

The dividend reflects our
ability to deliver a low risk
but growing income stream
from our portfolio and is a
key element of our TR.

19.4%
for the year to 31 December 2015
(2014: 10.45%).

2.2 times that of
our medium-term
TR target.

6.0 pence per share
for the year to 31 December 2015
(2014: 4.15 pence per share).

We achieved our target dividend in 2015
and have increased our dividend target to
6.2 pence per share for 2016.

Met dividend
target for 2015
and increased
target for 2016.

3. EPRA NAV per share*
The value of our assets (based on an
independent valuation) less the book value of
our liabilities, attributable to Shareholders and
calculated in accordance with EPRA guidelines.

* EPRA earnings, EPRA NAV and EPRA EPS are 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

4. Loan to value ratio (LTV) £
The proportion of our property portfolio that is
funded by borrowings. Our medium-term LTV
target is 40%.

The EPRA NAV reflects our
ability to grow the portfolio
and to add value to it
throughout the life cycle
of our assets.

124.68 pence
at 31 December 2015 (2014: 107.57 pence).

Increase in EPRA
NAV per share
over the year by
17.11 pence
(15.9%).

The LTV measures the
prudence of our financing
strategy, balancing the
additional returns and portfolio
diversification that come with
using debt against the need to
successfully manage risk.

33.2%
at 31 December 2015 (2014: 32.9%).

6.8 percentage
points below our
medium term LTV
target of 40%.

5. Adjusted earnings per share
Post-tax Adjusted EPS attributable to
Shareholders, which includes the licence
fee receivable on our forward funded
development assets

see note 13 p90.

The Adjusted EPS reflects
our ability to generate
earnings from our portfolio,
which ultimately underpins
our dividend payments.

6.12 pence per share
for the year to 31 December 2015
(2014: 4.86 pence).

Reflects our
6.0 pence dividend
for 2015, as fully
covered by
adjusted EPS.

6. Total expense ratio (TER)
The ratio of total administration and property
operating costs expressed as a percentage
of average net asset value throughout
the period. Over the medium term, we are
targeting a TER of 1% or below per annum.

The TER is a key measure of
our operational excellence.
Keeping costs low supports
our ability to pay dividends.

1.09%
for the year to 31 December 2015
(2014: 1.13%).

Our TER is one of the lowest in our
peer group.

TER reduced by
0.04 percentage
points. Our TER
is expected to
reduce as our
Company grows.

7. Weighted average unexpired
lease term (WAULT)
The average unexpired lease term of the
property portfolio, weighted by annual
passing rents. Our target is a WAULT
of at least 12 years.

The WAULT is a key measure
of the quality of our portfolio.
Long lease terms underpin the
security of our income stream.

16.5 years
at 31 December 2015 (2014: 13.9 years).

+2.6 years vs.
December 2014.

The increase in the WAULT reflects the
quality of the assets we have added to
the portfolio and the benefit of forward
funded pre-let investments, which
typically come with long lease terms.

Tritax Big Box REIT plc Annual Report 2015STRATEGIC REPORT
EPRA PERFORMANCE MEASURES

The table below shows additional EPRA performance measures,
which we provide to aid comparison of our performance with other
European real estate businesses.

KPI AND DEFINITION

PURPOSE

PERFORMANCE

1. EPRA Earnings
Earnings from operational activities (which
excludes the licence fee receivable on our
forward funded development assets).

see note 13 p90

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.

£29.23 million / 4.70 pence per share
for the year to 31 December 2015
(2014: £12.75 million/4.60 pence per share).

2. EPRA NAV
Net asset value adjusted to include properties
and other investment interests at fair value
and to exclude certain items not expected to
crystallise in a long-term investment property
business.

see note 28 p103

Makes adjustments to IFRS NAV
to provide stakeholders with the
most relevant information on
the fair value of the assets and
liabilities within a true real estate
investment company with a
long-term investment strategy.

£845.67 million / 124.68 pence per share
as at 31 December 2015
(31 December 2014: £506.12 million/107.57 pence per share).

3. EPRA NNNAV
EPRA NAV adjusted to include the fair values of:
(i) financial instruments;
(ii) debt and;
(iii) deferred taxes.

Makes adjustments to EPRA
NAV to provide stakeholders
with the most relevant
information on the current
fair value of all the assets and
liabilities within a real estate
company.

£841.10 million / 124.01 pence per share
as at 31 December 2015
(31 December 2014: £503.53 million/107.02 pence per share).

All debt as at 31 December 2015 is floating rate debt, which
has been valued at par. We believe that all margins payable
would still be achievable is the current market.

4.1 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)
purchasers’ costs.

4.2 EPRA ‘Topped-Up’ NIY
This measure adjusts 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).

This measure should make it
easier for investors to judge for
themselves how the valuation
of portfolio X compares with
portfolio Y.

4.93%
at 31 December 2015 (31 December 2014: 5.52%).

As for the EPRA NIY above.

4.95%
at 31 December 2015 (31 December 2014: 5.56%).

5. EPRA Vacancy
Estimated market rental value (ERV)
of vacant space divided by the ERV of the
whole portfolio.

A “pure” (%) measure of
investment property space that
is vacant, based on ERV.

0.00%
as at 31 December 2015 (2014: 0.00%).

6. EPRA Cost Ratio
Administrative and operating costs (including
and excluding costs of direct vacancy) divided
by gross rental income.

A key measure, to enable
meaningful measurement of
the changes in a company’s
operating costs.

17.9%
for the year to 31 December 2015 (2014: 19.4%).

This ratio both includes and excludes vacancy costs.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONSTRATEGIC REPORT
RESPONSIBLE BUSINESS

Operating a responsible and sustainable business is essential to
the continued long term financial success of our Company. During
2015 we undertook a “green review” of our assets. This review was
to build on our pre-acquisition intelligence and identify any areas
of opportunity or concern.

As a responsible owner of investment assets we believe that
our properties should, whenever possible, fulfil their purpose
whilst minimising impact on their surroundings and the broader
environment. We encourage sustainability, both in new
development, maintaining and upgrading existing building fabric
and by encouraging our tenants to adopt sustainable principles
in their business activities.

The property industry predominantly uses two different measures
to assess building energy efficiency and environmental impact: the
Energy Performance Certificate (EPC) and the Building Research
Establishment Environmental Assessment Methodology (BREEAM).

An EPC, required by law whenever a building is bought, sold or
rented, gives a property an energy efficiency rating from A (most
efficient) to G (least efficient). The Minimum Energy Efficiency
Standards (MEES), which implement the UK Energy Act 2011,
place requirements on Landlords to ensure that leased assets
achieve EPC ratings at above the grades of F or G by 2018 and
this is a key criterion of our pre-acquisition review. By gross
internal area our portfolio is rated: “A” 31%, “B” 20% and “C”
30%. None of our properties are rated “F” or “G”.

BREEAM is voluntary. It measures the sustainability of buildings
via six ratings ranging from “Outstanding” to “Unclassified”.
We expect all of our pre-let developments to achieve ratings
of at least “Very Good”.

Before acquiring an existing investment property or forward
funded development, we consider material environmental
risks such as EPC rating, flood and storm risk, connectivity

and circulation, planning requirements and we commission an
environmental survey that includes a review of previous site
uses. For forward funded developments we also consider the
specification, construction method and environmental design
elements such as rainwater harvesting and renewable power.

Each of our Big Box assets are currently let to a single tenant. We
aim to develop strong and open relationships with them, regularly
reviewing and discussing their property requirements with a view to
creating and maintaining fit for purpose Big Boxes which suit their
needs and which are environmentally efficient. Part of the business
plan for each asset includes identifying potential opportunities
to enhance its environmental attributes. We commissioned a
review of our properties to assess the viability for roof mounted
solar generated power and this initiative was well received by our
tenants, strengthening our business relationships. Currently ten of
our properties harvest rainwater and six utilise either solar or wind
generated power and with our input we believe that this number
will increase. Other initiatives include enabling rail connectivity,
energy efficient lighting, insulation and plant replacement.

The Company purchases no utilities and has no influence,
through the terms of the leases on its properties, on aspects
such as greenhouse gas emissions or water consumption, which
are the responsibility of the tenant. Consequently the Company
does not submit performance data to benchmarking indices
such as Global Real Estate Sustainability Benchmark. The
Company does benefit from a range of tenants which publicly
publish commitment to such items and disclose initiatives to
achieve CSR targets. These can involve an application for
Landlord’s consent in order to vary operational practices ranging
from recycling to improving staff facilities such
as the construction of a gymnasium, canteen or staff shop.

These factors combined help to improve the long term
sustainability of our assets, underpinning potential for longer
term income and makes those properties better suited to the
business needs of our tenants.

The Company does not have any employees and does not
maintain its own office space. The Board is comprised of four
male Non-Executive Directors. Our business is based solely in
the UK and we consider the risk of human rights abuses for the
Company to be low. It is important to us and to the continued
service we receive from the Manager, that it has effective
employment practices in place. The Manager has a bespoke
bonus payment policy

and a low staff turnover rate.

See AIFM Remuneration policy applied by the Manager p58

Tritax Big Box REIT plc Annual Report 2015STRATEGIC REPORT
OUR PRINCIPAL RISKS AND UNCERTAINTIES

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

We aim to operate in a low risk environment, focusing on a single
sub-sector of the UK real estate market with the aim of delivering
an attractive, growing and secure income for Shareholders,
together with the opportunity for capital appreciation. The Board
therefore recognises that effective risk management is key to the
Group’s success. Risk management ensures a defined approach
to decision making that seeks to decrease the 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
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 Committee, to assess the
effectiveness of our risk management and internal control
systems. During the course of these reviews, the Board has not
identified or been advised of any failings or weaknesses which
it has determined to be material.

Principal risks and uncertainties
Our principal risks and uncertainties are set out below. They
have the potential to affect materially our business, either
favourably or unfavourably. Some risks may currently be
unknown, while others that we currently regard as immaterial,
and have therefore not been included here, may turn out to be
material in the future.

PROPERTY RISKS
Default of one or more of our tenants.
IMPACT 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.

MITIGATION Our investment policy limits our 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. 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. In addition, we focus on assets let to
tenants with strong financial covenant strength in assets that are strategically important
to the tenant’s business.

The performance and valuation of our property portfolio.
IMPACT An adverse change in our property valuations may lead to a breach of our banking
covenants. Market conditions may also reduce 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 us selling assets to repay our loan commitments, resulting in a fall in our NAV.

MITIGATION Our property 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
maintain our asset values. We have agreed banking covenants with appropriate headroom
and manage our activities to operate well within these covenants. We constantly monitor our
covenant headroom on LTV and interest cover. This headroom is currently substantial.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONHIGHHIGHLOWIMPACTPROBABILITYHIGHHIGHLOWIMPACTPROBABILITYSTRATEGIC REPORT: OUR PRINCIPAL RISKS AND UNCERTAINTIES

PROPERTY RISKS CONTINUED
Our ability to grow the portfolio may be affected by competition for investment
properties in the Big Box sector.
IMPACT Competitors in the sector may be better placed to secure property acquisitions, as
they may have greater financial resources, thereby restricting our ability to grow our NAV.

MITIGATION 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 number of asset management
initiatives within the portfolio, which means we can generate additional income and value
from the existing portfolio.

Our property performance will depend on the performance of the UK retail sector and
the continued growth of online retail.
IMPACT Our focus on the Big Box sector means we directly rely on the distribution
requirements of UK retailers. Insolvencies among the larger retailers and online retailers
could affect our revenues and property valuations.

MITIGATION 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, in the case of forward funded developments, before agreeing the lease
terms, 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.

Development activities are likely to involve a higher degree of risk than associated
with standing assets.
IMPACT Our forward funded developments 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. If any of the risks associated with our forward funded developments
materialised, this could reduce the value of these assets and our portfolio.

MITIGATION Only five of our 25 assets are forward funded assets, representing 24.7%
of the value of our portfolio (on a completed basis). All of these assets are pre-let to
institutional-grade tenants. Any risk of investment into forward funded projects is minimal,
as the developer takes on a significant amount of construction risk and the risk of cost over-
runs. Funds for these developments remain with us and are only released to the developer
on a controlled basis subject to milestones as assessed by our professional surveyors.

FINANCIAL RISKS
Our use of floating rate debt will expose the business to underlying interest rate
movements.
IMPACT Interest on our debt facilities is payable based on a margin over Libor. Any adverse
movements in Libor could significantly impair our profitability and ability to pay dividends
to Shareholders.

MITIGATION We have entered into interest rate derivatives to hedge our direct exposure
to movements in Libor. These derivatives cap our exposure to Libor rises and have terms
coterminous with the loans. We aim, where reasonable, to minimise the level of unhedged
debt with Libor exposure, by taking out hedging instruments with a view to keeping
variable rate debt approximately 90%+ hedged.

Tritax Big Box REIT plc Annual Report 2015HIGHHIGHLOWIMPACTPROBABILITYHIGHHIGHLOWIMPACTPROBABILITYHIGHHIGHLOWIMPACTPROBABILITYHIGHHIGHLOWIMPACTPROBABILITYA lack of debt funding at appropriate rates may restrict our ability to grow. £
IMPACT 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 will
impair our ability to maintain our targeted level of dividend.

MITIGATION Before we contractually commit to buying an asset, we enter into discussions
with our lenders to get an outline heads of terms on debt financing. This allows us to
ensure that we can borrow against the asset and maintain our borrowing policy. The Board
keeps our liquidity and gearing levels under review. We only enter into forward funding
commitments if they are supported by available funds. In October 2015, we arranged
a £500 million five year secured debt facility with a syndicate of four lenders. We had
headroom of £150 million within the facility at the year end. This has created new banking
relationships for us, which helps keep lending terms competitive.

We must be able to operate within our banking covenants.
IMPACT If we were unable to operate within our banking covenants, this could lead to
default and our bank funding being recalled.

MITIGATION We continually monitor our banking covenant compliance, to ensure we have
sufficient headroom and to give us early warning of any issues that may arise. Our LTV is
low and we enter into interest rate caps to mitigate the risk of interest rate rises and also
invest in assets let to institutional-grade tenants.

CORPORATE RISK
We rely on the continuance of the Manager.
IMPACT We continue to rely on the Manager’s services and its reputation in the property
market. As a result, our performance will, to a large extent, depend on the Manager’s abilities.
Termination of the Investment Management Agreement would severely affect our ability to
effectively manage our operations.

MITIGATION Unless there is a default, either party may terminate the Investment Management
Agreement by giving not less than 12 months’ written notice, which may not be given before
the fourth anniversary of the IPO. 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.

TAXATION RISK
We are a UK REIT and have a tax-efficient corporate structure, with advantageous consequences
for UK Shareholders. Any change to our tax status or in UK tax legislation could affect our ability to
achieve our investment objectives and provide favourable returns to Shareholders.
IMPACT If the Company fails to remain a REIT for UK tax purposes, our profits and gains
will be subject to UK corporation tax.

MITIGATION 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 to help monitor REIT compliance
requirements.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONHIGHHIGHLOWIMPACTPROBABILITYHIGHHIGHLOWIMPACTPROBABILITYHIGHHIGHLOWIMPACTPROBABILITYHIGHHIGHLOWIMPACTPROBABILITYSTRATEGIC REPORT
MANAGER’S REPORT

This was another successful year, during which we continued
to implement the Group’s investment and financing strategies,
positioning it for further success.

Investment activity
The Group acquired an additional 11 assets in 2015, bringing the total to 25; the portfolio was 100% fully contracted and income
producing at the year end. These are all high-quality assets, which further diversify the Group’s portfolio by geography, tenant and size,
and include five forward funded, pre-let developments. The acquisitions have also extended the Group’s WAULT from 13.9 years to
16.5 years, while maintaining an attractive average purchase yield at 5.8%. The quality of the acquisitions reflects our ability to draw
on our industry relationships to deliver value for Shareholders. We have minimised cash drag from equity raises by purchasing assets
swiftly on the Group’s behalf while exercising capital discipline.

Standing assets acquired in 2015
B&Q, Worksop

See case study, Foundation Assets p36-37

Brake Bros, Harlow

Acquisition price:
Net initial yield:
GIA:
Eaves:
Built:
Lease expiry:

£37.18 million
5.00%
276,213 sq ft
11m
1988
July 2039

• One of Brake Bros’ main UK regional distribution centres, in a
core location close to the M11, the M25 and central London,
providing distribution across the South-East

• New 25-year lease taken by Brake Bros in July 2014
• Five-yearly upward only rent reviews linked to annual RPI,

with a cap of 5% per annum

• Comprehensive refurbishment, funded by the tenant
• Low site cover of c.35% offers expansion possibilities

Argos, Heywood

Acquisition price:
Net initial yield:
GIA:
Eaves:
Built:
Lease expiry:

£34.10 million
5.31%
395,186 sq ft
13.5m
1998
March 2028

• One of four main regional distribution centres for the Argos

supply chain

• A high specification facility, incorporating modern design

features including cross-docking

• Strategically located on the A58 trunk road linking Leeds and
Manchester, approximately seven miles north of Manchester
city centre, with the M62 approximately two miles to the
south, providing good access to the North-West and the wider
motorway network

• Low site cover of c.37% offers expansion possibilities

New Look, Newcastle-under-Lyme

Acquisition price:
Net initial yield:
GIA:
Eaves:
Built:
Lease expiry:

£30.05 million
5.90%
398,618 sq ft
12m and 15m
2007, extended 2011
January 2025

• One of two national and European distribution centres

occupied by New Look at Lymdale Business Park
• A modern and highly specified facility, with multiple

mezzanine floors. The tenant has invested significantly in the
property, creating one of the UK’s most advanced automated
clothing distribution centres

• Situated in a major UK distribution location close to the M6,

broadly equidistant from Manchester and Birmingham International
Airports and around 52 miles from the Port of Liverpool

Tesco, Goole

Acquisition price:
Net initial yield:
GIA:
Eaves height:
Built:
Lease expiry:

£47.10 million
5.67%
711,933 sq ft
14m
2007
September 2032

• One of Tesco’s principal regional distribution centres and

a main hub for distributing general merchandise, ambient food
and beverages

• A high specification unit, incorporating modern design features
such as cross-docking, and a low site density of c.32%, potentially
allowing for up to 150,000 sq ft of additional space within the site
• The location enjoys excellent road, rail and port connectivity.
The M62 is within two miles, providing easy access to the
North-East. The asset is close to the port of Goole’s dedicated
rail freight terminal and has the potential to be directly
connected to the national rail network

Tritax Big Box REIT plc Annual Report 2015 15

S
T
R
A
T
E
G
C
R
E
P
O
R
T

19
22

Key: l Foundation asset l Value add asset l Growth covenant asset l l Forward funded development n Major port

Matalan, Knowsley

Acquisition price:
Net initial yield:
GIA:
Eaves height:
Built:
Lease expiry:

£42.38 million
6.27%
578,127 sq ft
15m
2006, extended 2014
September 2036

Dunelm, Stoke-on-Trent

Acquisition price:
Net initial yield:
GIA:
Eaves height:
Practical completion: February 2016
Lease expiry:

£43.43 million
5.47%
526,426 sq ft
15m

10 years from practical
completion

• The asset is adjacent to Matalan’s newly constructed office

building and together they form its headquarters. Site cover is
approximately 50%

• The tenant has invested heavily in the unit, creating an

advanced automated clothing conveyor belt system across
four mezzanine floors

• The property is approximately 11 miles east of Liverpool

and 30 miles west of Manchester. It benefits from excellent
transport links, being served by the M57, M56, M62, M58 and
M6, and being close to the main airports in both Liverpool and
Manchester, and to Liverpool Docks

• Strategically located approximately two miles from the M6
on the A500 dual carriageway, which connects to the A50
and A52, providing a key East-West link between the M6 and
M1. The site has good access to the Port of Liverpool and
Manchester and Birmingham Airports

• Dunelm intends to commit significant capital into this

property. It already occupies two smaller units at nearby
Prologis Park, Stoke, together totalling approximately
500,000 sq ft. When combined with this new site, these three
buildings will form Dunelm’s national distribution hub

Howdens, Raunds

Forward funded pre-let developments
Ocado, Erith

See case study, Forward Funded Development p42-43.

Nice-Pak, Wigan

Acquisition price:
Net initial yield:
GIA:
Eaves:
Practical completion: Spring 2016
Lease expiry:

£28.66 million
6.42%
399,519 sq ft
c.11m

25 years from practical
completion

• Located in Westwood Park, just south of Wigan town centre

and approximately two miles from the M6, with good motorway
connectivity to the rest of the UK and the West coast ports
• Pre-let on a new 25-year lease from practical completion,

without break, subject to five-yearly upward only rent reviews
indexed to RPI (collared at 2% per annum and capped at 4%
per annum)

• The tenant intends to commit significant capital into the
property through machinery and automation, in order to
enhance production and distribution efficiency

Acquisition price:
Net initial yield:
GIA:
Eaves height:
Practical completion: June 2016 target
Lease expiry:

£67.00 million
5.03%
657,000 sq ft
15m

30 years from practical
completion

• Strategically located on the A45 corridor, approximately three
miles from J13 of the A14, which provides access to the ports
of Felixstowe and Harwich and direct links to the A1(M) and
M1. The site is close to Northampton and Thrapston, which
have a strong Big Box logistics presence and demand

• The building will have modern specifications, including cross-

docking

TK Maxx, Knottingley

Acquisition price:
Net initial yield:
GIA:
Eaves height:
Practical completion: January 2017 target
Lease expiry:

£59.00 million
5.32%
638,745 sq ft
17m

20 years from practical
completion

• Strategically located at the junction of the M62 and A1,

providing good access to Leeds, Manchester and the ports
of Liverpool and Hull. The facility is expected to benefit from
planned lane expansion on the M62 and from the upgrade of
the A1 to motorway status

• The facility will accommodate three mezzanine floors, to

create an additional c.765,000 sq ft of usable space
• The lease will be subject to five yearly upward-only rent

reviews indexed to RPI, providing a minimum 1% per annum
rental growth (capped at 3% per annum)

Tritax Big Box REIT plc Annual Report 2015 FINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONOur 2015 investments MAP LOCATION AND TENANTACQUISITION DATElOcado, ErithMay 2015lBrake Bros, HarlowJune 2015lArgos, HeywoodApril 2015lB&Q, WorksopApril 2015lNew Look, Newcastle-under-LymeMay 2015lNice-Pak, WiganMay 2015lTesco, GooleJune 2015lDunelm, Stoke-on-TrentJune 2015lHowdens, RaundsOctober 2015lTK Maxx, KnottingleySeptember 2015lMatalan, KnowsleyDecember 2015

STRATEGIC REPORT: MANAGER’S REPORT

Portfolio summary
The table below summarises the Group’s portfolio at the year end. Assets are listed in the order the Group acquired them.

TENANT

Sainsbury’s Supermarket Ltd

LOCATION

Leeds

MONTH OF
ACQUISITION

December 2013

Marks & Spencer plc

Castle Donington

December 2013

Tesco Stores Ltd

Next Group plc

Chesterfield

March 2014

Didcot

Doncaster

Wm Morrison Supermarkets Ltd

Sittingbourne

DHL Supply Chain Ltd

Wolseley UK Ltd

Langley Mill

Skelmersdale

Ripon

April 2014

June 2014

August 2014

Rolls-Royce Motor Cars Ltd

Bognor Regis

October 2014

CDS (Superstores International) Ltd
(trading as The Range)

Thorne

Tesco Stores Ltd

Kuehne + Nagel Ltd *

Middleton

Derby

November 2014

December 2014

L’Oréal (UK) Ltd

Manchester

December 2014

Argos Ltd

B&Q plc

Heywood

Worksop

April 2015

New Look Retailers Ltd

Newcastle-under-Lyme May 2015

Nice-Pak International Ltd

Ocado Holdings Limited †

Brake Bros Ltd

Tesco Stores Ltd

Wigan

Erith

Harlow

Goole

Dunelm (Soft Furnishings) Ltd

Stoke-on-Trent

May 2015

June 2015

TJX UK (trading as TK MAXX)

Knottingley

September 2015

Raunds

Knowsley

October 2015

December 2015

Howden Joinery Group Plc

Matalan

Total

* Guaranteed by Hays Plc
† Guaranteed by Ocado Group plc
¥ CBRE measured floor area

NET PURCHASE
PRICE
£m

PURCHASE
NIY
%

48.75

82.58

28.64

27.20

60.00

97.80

17.53

28.87

12.24

36.98

48.50

22.45

29.27

25.83

34.10

89.75

30.05

28.66

101.73

37.18

47.10

43.43

59.00

67.00

42.38

6.65

5.20

6.60

6.90

6.07

5.20

6.50

6.73

6.25

6.10

8.25

6.00

7.13

5.31

5.13

5.90

6.42

5.25

5.00

5.67

5.47

5.32

5.03

6.27

SIZE
sq ft ¥

571,522

NEXT RENT
REVIEW DATE

May 2018

906,240 December 2016

501,751

288,295

755,055

919,443

255,680

470,385

May 2020

August 2019

March 2018

June 2016

August 2019

221,763 September 2016

313,220 September 2020

750,431

October 2017

302,111 December 2017

343,248

261,259

395,186

April 2017

August 2016

March 2018

880,175 November 2016

398,618

April 2017

399,519

February 2021

563,103

276,213

April 2021

July 2019

711,933

October 2017

526,426

January 2021

638,745

657,000

578,127

January 2022

June 2021

October 2021

1,147.02

5.78 12,885,448

Tritax Big Box REIT plc Annual Report 2015I

S
T
R
A
T
E
G
C
R
E
P
O
R
T

Total portfolio statistics

Portfolio

NUMBER
OF ASSETS

VALUATION

VALUATION
NIY

ANNUAL
CONTRACTED RENT

WAULT

£1.31 billion

4.93%

£68.37 million

16.5yrs

Total portfolio
The portfolio’s long WAULT means that 57% of the rent roll
does not expire for more than 15 years. The spread of the rent
review profile over the next few years supports the Group’s
ability to deliver income growth, which underpins its progressive
dividend policy.

Financial results
Operating profit under IFRS was £142.69 million for the year
(2014: £46.67 million). This increase reflects:

• the growth of the underlying portfolio, with the contracted
rent roll increasing to £68.37 million across 25 assets
(2014: £36.16 million across 14 assets);

Valuation and portfolio value growth
CBRE independently valued the portfolio as at 31 December 2015,
in accordance with the RICS Valuation – Professional Standards
January 2014. CBRE valued the properties individually, without
applying a premium or discount to the portfolio as a whole.

The total value of the portfolio at the year end was £1.31 billion,
including forward funded commitments, compared with the
assets’ aggregate purchase price of £1.15 billion, excluding
purchase costs. This represents a valuation increase of
£164.03 million or 14.3%, when compared to the property
purchase prices excluding acquisition costs.

The valuation increase reflects strong investment demand,
the hardened yields discussed in Our Market
to source investments for the Group at attractive prices.

and our ability

31 December
2015
£’000

31 December
2014
£’000

Investment properties per the Group
Statement of Financial Position

1,157,854

586,179

Forward funding prepayments

–

27,204

Cost to complete forward funded
developments

Licence fees receivable

Restricted cash

139,221

4,602

9,378

–

1,587

4,310

Total portfolio valuation

1,311,055

619,280

• the portfolio’s strong rental income, which equates to a yield

based on book cost of 5.78%;

• the gain of £106.75 million (2014: £31.67 million) recognised on
revaluing the Group’s investment properties at the year end,
which was calculated after accounting for all costs associated
with asset purchases during the year; and

• the Group’s low and predominantly fixed cost base, with the

TER reducing to 1.09% for the year (2014: 1.13%). This continues
to compare very favourably with the Company’s peers.

Administrative and other expenses, which include management
fees and other costs of running the Group, were £7.83 million
(2014: £3.60 million), equivalent to 0.60% (2014: 0.58%)
of the portfolio’s gross valuation (including forward funded
commitments) at 31 December 2015.

Net financing costs for the year were £8.71 million (2014:
£4.82 million), including a reduction in the fair value of interest
rate derivatives of £1.99 million (2014: £2.58 million). Further
information on financing and hedging is provided below.

Total profit before tax for the year was £133.98 million
(2014: £41.84 million), which resulted in basic earnings per share
of 21.56 pence (2014: 15.10 pence).

The Group’s EPRA earnings per share for the year were 4.70 pence
(2014: 4.60 pence). The EPRA NAV per share at 31 December
2015 was 124.68 pence (31 December 2014: 107.57 pence). A full
list of EPRA performance measures is provided

on page 27.

The Group’s Adjusted earnings per share for the year were
6.12 pence (2014: 4.86 pence). The Adjusted earnings per share
figure takes EPRA earnings per share and adds the developer’s
licence fees received on forward funded developments. We
see this as the most relevant measure when assessing dividend
distributions. Further information is set out in note 13
financial statements.

to the

See Our Market p16-19
See EPRA Performance Measures p27
See note 13 p90

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
STRATEGIC REPORT: MANAGER’S REPORT
FOUNDATION ASSETS

The quality and sustainability of our rental income underpins our
business. Foundation assets provide our core, low risk income.
They are usually let on long leases to tenants with excellent covenant
strength. The buildings are commonly new or modern and in prime
locations, and the leases have regular upward-only rent reviews,
often either fixed or linked to CPI or RPI indices.

B&Q, WORKSOP

Acquisition price:
Net initial yield:
GIA:
Eaves height:
Built:
Lease expiry:
On/Off-market:

£89.8 million
5.13%
880,175 sq ft
14-24m
2005
November 2031
Off-market

Foundation assets
make up

75.15%

of our protfolio by value

Tritax Big Box REIT plc Annual Report 2015Our foundation assets

Map location and tenant

l Sainsbury’s, Leeds
1
l M&S, Castle Donington
2
l Tesco, Didcot
4
l Morrisons, Sittingbourne
6
l DHL, Langley Mill
7
l DHL, Skelmersdale
8
l Rolls-Royce Motor Cars, Bognor Regis l TK Maxx, Knottingley
10
l Kuehne + Nagel, Derby
13

l Ocado, Erith
15
l Brake Bros, Harlow
16
l Argos, Heywood
17
l B&Q, Worksop
18
l Tesco, Goole
21
l Howdens, Raunds
23

S
T
R
A
T
E
G
C
R
E
P
O
R
T

Key: l Foundation asset 1 Forward funded development

Case study n Major port

CASE STUDY: B&Q, WORKSOP
A modern facility benefiting from significant
capital investment
In April 2015, the Group acquired the B&Q Core Products
National Distribution Centre at Worksop, Nottinghamshire.
The high-specification property was purpose built in 2005
for B&Q and is designed to manage the tenant’s wide
product range.

It is well located in the East Midlands, adjacent to the A57
which links directly to both the A1 to the East and M1 to the
West. The facility incorporates modern design features
and benefits from very significant capital investment by the
tenant, including a fully automated racking system.

This 880,175 sq ft asset was acquired with an unexpired
lease term of approximately 16.5 years. It is currently let at a
rent of approximately £4.7 million per annum (£5.34 per sq
ft), which is subject to five-yearly rent reviews to the higher
of the open market rent or RPI, capped at 5% per annum.
The next review is due in November 2016.

The property benefits from power generated by a wind
turbine. The Manager is currently in discussion with the
tenant in relation to the potential to install solar panels
thereby reducing operational costs to the tenant and
creating an income stream for us as landlord.

The facility holds around

60%

of B&Q’s UK stock
by value

A prime, high specification Big Box
• Exceptionally low site cover of 24%
• Planning consent is in place to increase the

facility to a total of 1.1 million sq ft

• 71 loading bays and 360 degree circulation
• The facility processes c.400 vehicle

movements a day

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
STRATEGIC REPORT: MANAGER’S REPORT

Financing and hedging
On 2 February 2015, 30 April 2015 and 13 May 2015, the Group
agreed three new term loan facilities with Barclays Bank PLC,
with a combined value of £68.38 million. Two of the loans had
terms of five years and one had a four year term. The loans were
secured individually against the forward funded development
asset pre-let to Rolls-Royce Motor Cars and the freehold assets
let to Kuehne + Nagel and B&Q respectively. These loans were
subsequently refinanced into the larger syndicated facility as set
out below.

On 14 July 2015, the Group agreed a new five-year term facility
provided by Helaba for £50.87 million. This debt was secured
against the forward funded development asset pre-let to Ocado
in Erith and will be drawn over the remainder of the building’s
construction phase.

On 2 October 2015, the Group announced that it had agreed a
new £500 million secured debt facility with a syndicate of four
lenders: Barclays Bank PLC, Helaba, Wells Fargo Bank, N.A. and
ING Real Estate Finance (UK) B.V.

The facility comprises:

• a £320 million term loan, which was drawn immediately;

• a further £80 million term loan, available to draw up to the

first anniversary of the facility; and

• a £100 million revolving credit facility, including a £10 million

overdraft component.

The facility has an opening margin of 1.40% above 3 month
Libor, reducing the Group’s average margin payable on its debt
facilities, when fully drawn, from 1.77% to 1.42%. The facility
extended the Group’s average unexpired loan term to 4.67 years
at 31 December 2015. Subject to lender support, the facility has
two 12-month extension options, which the Group can exercise
after year one and year two. The facility can also be increased to
£700 million, again subject to lender support.

The margin applied to the facility has the ability to reduce to
1.30% in the final three years of the loan term, providing that the
LTV is below a certain threshold.

The Group has used the facility to refinance £253.34 million
of its existing debt, which had been provided by Barclays and
Santander. The Group’s existing loans with Helaba remain
outside the facility and are unaffected.

The loans that were refinanced were not subject to any early
redemption charges, nor was the Group required to write-off
any unamortised arrangement fees relating to the old facilities.

The facility is secured against a portfolio of the Group’s assets
with a cross-collateralised framework and an additional guarantee
provided by the Company. The security under this facility currently
includes all but one of the Group’s forward funded development
assets, with the same margin being applied to both the forward
funded and standing assets included in the security framework.

The facility provides the Group with the operational flexibility it
requires. As at the year end, there was £150 million of headroom
under the facility. The headroom is set aside to allow the Group
to meet its remaining forward funding commitments, as well as
providing additional capacity to fund any prime opportunities
that the Company wishes to purchase. The option to increase
the facility to £700 million, which is not a current commitment
from the lenders, has been put in place to assist with future
growth ambitions.

At the year end, the Group had total long-term bank borrowings
of £385.04 million (31 December 2014: £203.64 million). This
resulted in a LTV ratio of 33.2% (31 December 2014: 32.9%). The
Group continues to target a LTV in the medium term of 40%,
which we believe is conservative given the quality and low risk
nature of the portfolio.

Lender

Syndicate
Helaba
Helaba
Helaba
Total

Asset

Expiry date
October 20201
Portfolio
DHL, Langley Mill
November 2019
DHL, Skelmersdale November 2019
Ocado, Erith

July 20202

Amount drawn
at 31 December
2015
£m
350.00
7.06
11.60
16.38
385.04

1 Two one year extension options available
2 One year extension option available

The Group’s hedging strategy is designed to minimise the effect
of a significant rise in underlying interest rates. The terms of
the new debt facility require the Group to put in place interest
rate hedging in respect of at least 75% of the debt drawn under
the facility. At the year end, the Group had in place derivative
instruments that either fix or cap the interest rates on 99.95%
of its drawn debt. These instruments comprise one interest rate
swap and a number of interest rate caps, each running for the
same term as the respective loan.

Tritax Big Box REIT plc Annual Report 2015Our facility let to Morrisons, was one
of three assets subject to a review in
the period.

Taking into account the interest rate derivatives, this gives
the Group a weighted average all-in running capped rate of
borrowing on hedged debt of 2.94%, a substantial reduction
from the prior year (2014: 3.81%). The actual average interest
rate payable on the Group’s debt was 2.01% (2014: 2.35%) per
annum as at 31 December 2015.

Dividends ❖ ★
The Company declared aggregate dividends in respect of
the year of 6.0 pence per share, as set out in the Chairman’s
Statement
Group’s Adjusted EPS of 6.12 pence per share.

on page 5. The dividend was fully covered by the

Asset management ✚
The potential for adding capital value from asset management
is a key consideration when we select assets for purchase.
For an explanation of our approach to asset management see
The Asset Management Opportunity

on pages 22-23.

Over the past two years, we have met and kept regular
dialogue with each tenant, to discuss their corporate strategy,
understand how the property fits into that strategy and assess
the property’s efficiency. This allows us to assess how we can
help the tenant to meet its objectives, by either enhancing
the property or by expansion. A number of tenants have
indicated their commitment to the property and location with
the opportunity to extend lease lengths or achieve their need
for expansion, which may be incorporated within the existing
site or through further land acquisition or in collaboration with
neighbouring developers.

Timescales for delivery of potential extensions vary but we
believe there are some promising opportunities for the Group.
Significant projects may allow the Group to commit capital
expenditure in return for increased and potentially enhanced rent
or to initiate a re-gear of the lease, to extend for a longer term.

During the year, one open market rent review date arose, in
respect of the property at Chesterfield, let to Tesco. We appointed
specialist rent review surveyors to negotiate on the Group’s behalf.
This review has been referred to arbitration, which instigates
a more formal process and timetable to proceedings. Based
on the initial submissions to the arbitrator, the comparable
evidence suggests that a healthy uplift is likely to be secured.
The annual RPI and fixed rental uplifts at the facilities let to
Morrisons and L’Oréal were settled in June 2015 and August 2015.
This resulted in rental uplifts agreed at over 1% for Morrisons,
Sittingbourne and 3% for L’Oréal, Trafford Park.

A number of tenants have completed building alterations or
applied for the Group’s consent to undertake them. These works
have included installing sophisticated automation systems
and constructing a link bridge to an adjoining new property.
A number of these projects represent a significant capital
commitment by the tenant, reflecting the property’s importance
to the tenant’s distribution network. Where alterations improve
the property’s investment credentials, we will typically offer
to fund the works in return for variations to the lease, so as to
enhance value for the Group.

We have reviewed each property to assess the potential for
environmental enhancements such as adding roof-mounted solar
panels. This improves a property’s EPC rating and offers power
to tenants at lower rates, reducing their operational costs and
supporting their sustainability commitments. If the Group is able to
fund these works, this produces an additional income stream and
improves the quality of the property.

Alternative Investment Fund Manager (“AIFM”)
We are authorised and regulated by the Financial Conduct
Authority as a full-scope AIFM. We are therefore authorised
to provide our services to the Group and the Group benefits
from the rigorous reporting and ongoing compliance regime
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’s internal controls and
risk management systems
see page 72 for a summary of their
work and conclusions.

Company Secretary
On 7 May 2015, the Company announced our appointment as
Company Secretary, replacing Taylor Wessing Secretaries Limited.

Tritax Management LLP Manager
16 March 2016

See Chairman’s Statement p5
See The Asset Management Opportunity p22-23
see Depositary Statement p72

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
STRATEGIC REPORT: MANAGER’S REPORT
THE OPPORTUNITY IN FORWARD FUNDED DEVELOPMENT ✚

We do not undertake speculative development (i.e. develop
buildings without a tenant pre-let). We do, however, forward fund
development, which allows us to capture much of the benefit of
development without taking on many of the risks associated with
traditional speculative development projects.

Capturing value for Shareholders while mitigating
development risk

The Manager’s experience, specialist knowledge and
key relationships:
The Manager has a long track record of funding developments,
as well as acting as a developer. This knowledge is recognised
and valued by developers who work in the Big Box sector.
Such experience has also given the Manager a detailed
understanding of both the structure of these investments and
the physical development process, which sets it apart from
many other landlords.

A forward funded pre-let development’s main components:
With the current scarcity of available Big Boxes, tenants are
increasingly engaging developers to design and build facilities
to meet their specific requirements. This is creating more
opportunities for knowledgeable investors in the forward funded
pre-let marketplace, where quality tenants are often prepared
to commit to longer leases in return for new assets that are
built-to-suit. Having secured a pre-let, developers often prefer to
bring in a forward funder since this avoids the developer having
to tie up valuable capital in infrastructure and construction
costs when they would prefer to be deploying this capital into
new land opportunities.

After terms have been agreed for the purchase, we begin the
process by entering a forward funding development agreement
with a reputable logistics developer which is responsible for
co-ordinating the entire development process – this includes
securing detailed planning consent, negotiating the terms
of the lease and specification of the scheme, appointing the
contractor and a team of highly experienced professionals and
subsequently overseeing the development process.

Once the legal agreements between developer, tenant and
funder have been entered into and planning has been granted,
we acquire the land on which the building is to be constructed
and provide the necessary capital during the construction
period. We usually structure the arrangements such that the
developer pays to the Company a “developer’s licence fee” until
completion. This fee will typically equal the lease rent, meaning
that the investment is fully income producing from the point at
which we purchase the land.

We own the land and building as construction progresses
and make monthly payments, principally against architects’
certificates. Consequently, we do not make payments until the
work to which they relate has been completed. We withhold
the developer’s profit element of the total commitment until the
project has achieved practical completion, and the tenant has
taken up the lease.

Pre-let forward funded development: the process during the construction phase

£
Developer’s licence fee

Construction
contract

CONTRACTOR

DEVELOPER

PROJECT MONITORING
SURVEYOR

Forward funding
agreement

£
Investment price
(equity + debt)

Agreement
for lease

TENANT

Lease

Tritax Big Box REIT plc Annual Report 2015Our Bognor Regis Big Box, let to
Rolls-Royce Motor Cars Ltd, is the first
of our forward funded developments
to reach practical completion. The
warehouse and distribution centre
is on the Oldlands Farm Business
Park and next to the new Bognor
Regis Northern Relief Road. It
was constructed in 11 months and
completed in September 2015.

S
T
R
A
T
E
G
C
R
E
P
O
R
T

Why undertake pre-let forward funded development?

• The opportunity to acquire new, high specification,

institutionally attractive facilities which are designed and
built to the latest occupational requirements.

• Professional teams: The design and build is planned and
overseen by highly experienced professionals including
engineers, architects, quantity surveyors and building surveyors
which all carry suitable professional indemnity insurance.

• Independent monitor: A building monitoring surveyor that

• The ability to influence the lease terms and therefore

reports only to us and our bank(s).

increase the attractions of the investment if we get involved at
an early stage.

• The buildings are pre-let to quality tenants, generally among

the strongest companies in the UK.

• Short construction period: Big Boxes are quick to build

compared to other property types. Construction typically
takes around nine months but the agreements will provide
significant tolerance to cover any delays.

• The investment can provide attractive income due to long

• Insurance: The building under construction is fully insured at

lease lengths (typically 15-30 years).

all times.

• Staggered funding: We usually earn a return on our gross

investment from land purchase, even though our full commitment
is invested progressively over the construction period.

• Off-market: Strong, longstanding relationships with key

logistic developers often enable us to source and negotiate
such deals off-market and therefore out of competition.

• Attractive entry price: It is possible to acquire prime

assets at a discount to the price of a completed and income
producing logistics investment.

Benefiting from development whilst mitigating risk:
A number of factors make these developments significantly
lower risk for us than speculative developments. In particular:

• Pre-let to an appropriate tenant: The developer will already

have secured a tenant, which significantly reduces our investment
risk and means there should be no marketing or income voids,
vacant rates liabilities or uncovered rent free incentives.

• Reduced planning risk: We only acquire the land subject to

developer securing planning consent.

• Income producing during construction: The developer

typically pays us a licence fee (equivalent to the rent) during
construction; this ensures the investment is income producing
for us from the outset, supporting our Shareholder dividend.

• Highly experienced contractor: The developer will engage

a contractor of significant experience and financial
standing that is responsible for constructing the building.
This contractor, along with significant sub-contractors
and consultants, will provide warranties against defective
workmanship or design; such warranties usually apply for at
least 10 years following practical completion.

• The Manager’s development experience and expertise: If the
developer were to become insolvent, we can typically step in
to procure completion of the development, thereby securing
completion of the lease to the tenant.

• Financial control: We retain control of the money required to
complete construction and only release this to the developer
in stages, principally on the basis of independent architect
certificates. In addition, we withhold retentions during the
construction process and for 12 months following practical
completion to cover snagging and any subsequent defects.
Typically, we will also hold any rent-free incentive monies
which have been granted to the tenant as part of the lease
arrangements, and we also retain the developer’s profit which
can be used to cover any increase in project costs or delays in
achieving practical completion.

Tritax has established a number of key relationships with some
of the most recognisable names in logistics development.
Those with whom we have developed buildings in the last two
years include:

BERICOTE

5 Big Boxes
under construction
totalling 2.8 million sq ft

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
STRATEGIC REPORT: MANAGER’S REPORT

Our forward funded developments

Map location
and tenant

Acquisition date

Practical
completion target

Lease
length

l Rolls-Royce
10

Motor Cars Ltd

l Ocado
15
l Nice-Pak
20
l Dunelm
22
l Howdens
23
l TK Maxx
24

October 2014

Winter 2015*

10yrs

May 2015
May 2015
June 2015
October 2015
September 2015 Winter 2017

Spring 2016
Spring 2016
February 2016
Summer 2016

30yrs
25yrs
10yrs
30yrs
20yrs

* Achieved practical completion 1 September 2015
Key: l Foundation asset l Growth covenant asset 1 Forward funded development

Case study n Major port

CASE STUDY: OCADO, ERITH
A forward funded, state-of-the-art development
In May 2015, the Group completed the purchase of land at
Erith, in the London Borough of Bexley and began to forward
fund a new warehouse facility, which is pre-let to Ocado
Holdings Limited and guaranteed by Ocado Group plc.

Tilbury Docks and the DP World container port further to the
East and central London approximately 12 miles to the West.
It benefits from excellent motorway connections to Greater
London and the Home Counties.

The completed building will have a gross internal area of
approximately 563,103 sq ft, equating to a low site cover
of c.35%. Construction began in May 2015, with practical
completion of the developer’s base build targeted for the
spring of 2016.

The unit is to facilitate the growth of the Ocado business by
improving the speed at which stock is picked via bespoke
mechanical handling equipment coupled with its close proximity
to Ocado’s core customer base in the densely populated areas
of London and the Home Counties of South East England.

Ocado has signed a 30-year lease, without a break. The initial
rent will be approximately £5.5 million per annum (£9.75 per
sq ft), subject to five-yearly rent reviews indexed to RPI and
capped and collared at 3% and 1% per annum respectively.
During the construction phase, the Group will receive a
licence fee from the developer equivalent to the initial
passing rent, providing an overall income term of c.31 years.

The site is in a core South-East location inside the M25
(Junction 1a approximately 5 miles to the South-East), with

“The new facility will be enormous, the biggest
of the biggest. Nobody else does them on
this scale.”

Jon Hillary, Director of Development & Engineering,
Ocado, March 2015

Ocado’s largest Big Box:
• £175 million tenant fit out1
• Capacity for dealing with 200,000 orders

a week2

• Will hold 53,000 products (the average
supermarket holds 20,000 products)2

• Close proximity to a dense population means
35% of deliveries will be home deliveries,
with remaining going to regional spokes2
• Upon full capacity expected to employ

3,500 people2

1 The Times, January 2015, Kathryn Hopkins
2 B4B – Economic Development, 23 March 2015, Kirsty Mcauley

Tritax Big Box REIT plc Annual Report 2015OCADO, ERITH

Acquisition price:
Net initial yield:
GIA:
Eaves height:
Built:

Lease expiry:

On/Off-market:

£101.7 million
5.25%
563,103 sq ft
10-12.75m
Practical completion targeted
for spring 2016
30 years from practical
completion
Off-market

S
T
R
A
T
E
G
C
R
E
P
O
R
T

“We were looking for a logistics space and
we had a lengthy list of requirements. The
Tritax Big Box team showed their in-depth
understanding of our needs, underlining their
expertise in the UK big box market and are
delivering us a site matching our demanding
requirements.”

Duncan Tatton-Brown, CFO, Ocado, January 2016

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION

STRATEGIC REPORT
THE MANAGER

The Manager provides all management and advisory services to the
Company, under the Investment Management Agreement. The FCA
authorised the Manager as an AIFM on 1 July 2014.

The Manager is 100% owned by Mark Shaw, Colin Godfrey, James Dunlop and Henry Franklin. Between them, this team of property,
legal and finance professionals has more than 140 years of experience in the real estate sector. They have a track record of creating
value for their clients by procuring the right type of assets and by actively managing them. The core management team (whose
details are set out below) is supported by a team of other accounting, marketing, public relations, administrative and support staff.

Colin Godfrey BSc MRICS
Partner, Fund Manager

Colin has overall responsibility for providing investment
management and advisory services to the Company and is the
Manager’s lead partner. He began his career with Barclays Bank
before joining Conran Roche in the late 1980s. Following this, he
obtained a degree in Urban Estate Management, before training
with Weatherall Green & Smith (now BNP Paribas Real Estate).

After qualifying as a chartered surveyor, Colin specialised in
portfolio fund management, with particular responsibility for
the £1 billion of assets under management of the British Gas
Staff Pension Scheme and the property assets of the Blue
Circle Pension Fund. In 2000, Colin was a founding director of
niche investment property agent SG Commercial, along with
James Dunlop, in which capacity he worked closely with the
Tritax Group. In 2004, Colin became a partner in the Tritax
Group and is responsible for investment selection and product
development. Colin is one of the Manager’s founding partners.

James Dunlop BSc MRICS
Partner, Property Sourcing

James has overall responsibility for identifying, sourcing and
structuring investment assets for the Company. He read
Property Valuation and Finance at City University, before
joining Weatherall Green & Smith (now BNP Paribas Real
Estate) where, in 1991, he qualified as a chartered surveyor
in its Investment Development and Agency division.

In 2000, James formed SG Commercial with Colin Godfrey,
and became a partner in the Tritax Group in 2005. In his
role with SG Commercial, James is regularly in contact with
all the leading firms of agents and is retained by foreign and
domestic institutions and wealthy individuals to buy and
sell commercial property investments. James is responsible
for identifying sectors and specific properties, negotiating
on approved opportunities and handling the disposal of
assets in due course. Along with Colin, James is one of the
Manager’s founding partners.

Henry Franklin BA CTA
Partner, Structuring and Legal

Henry is responsible for structuring the Tritax Group funds,
providing general legal counsel and overseeing compliance
activities and product development. He is a qualified
solicitor, who completed his articles with Ashurst LLP in
2001, specialising in taxation, mergers and acquisitions.

Henry also qualified as a chartered tax adviser in 2004 before
moving to Fladgate LLP in 2005, where he became a partner
in 2007. At Fladgate LLP, Henry specialised in structuring
commercial property funds and advised on the formation of
funds in excess of £500 million. Henry joined the Tritax Group
as a partner in 2008.

Petrina Austin BSc MRICS
Partner, Asset Management and Sustainability

Petrina is responsible for strategically managing the
investment portfolio, identifying and progressing value
enhancing initiatives to protect and maximise investor
returns. She is also responsible for managing third-party
professionals engaged in the process of property and
asset management.

Following a degree in Estate Management from Reading
University, Petrina joined Carter Jonas to continue her
professional training and qualified as a chartered surveyor in
1998. Petrina moved to King Sturge in 1999, to concentrate
on institutional portfolio management. As a partner at
Knight Frank from 2002, she was responsible for the team
managing central London trophy assets. Her remit also
included development consultancy appointments, both in
the UK and overseas. Petrina joined the Tritax Group in 2007.

Tritax Big Box REIT plc Annual Report 2015Bjorn Hobart MA BSc (Hons) MRICS
Partner, Property

Edward Plumley MBA MSc MRICS
Assistant Fund Manager

Bjorn is responsible for identifying and sourcing suitable
investments for the Company, then financially modelling
and appraising the returns, to establish their validity within
the context of the portfolio assets. He also manages day-to-
day due diligence during the acquisition process.

After completing a Geography degree from the University
of Leeds in 2001, Bjorn started his career at Faber Maunsell
(now AECOM). Having gained exposure to large scale
developments, Bjorn received an MA in Property Valuation
and Law at Cass Business School, London. He undertook
his professional training at Atisreal (now BNP Real Estate) in
London, where he qualified as a chartered surveyor in 2005.
In 2007, Bjorn joined SG Commercial, where he advised on
large scale investment and development transactions in
excess of £500 million. During this time, Bjorn worked closely
with the Tritax Group, advising on its portfolio acquisitions
and disposals. Bjorn joined the Tritax Group in 2011.

Edward is responsible for assisting the Fund Manager
with acquisitions and disposals, transaction management,
debt origination, financial modelling and due diligence. He
started his career at Knight Frank on the graduate bursary
scheme, after completing an MSc in Estate Management at
London South Bank University. He qualified as a chartered
surveyor in 2010 with Jones Lang LaSalle (now JLL).

Edward’s investment career began when he joined Ereira
Mendoza in 2011, advising on investment and development
transactions. He joined Tritax in May 2014, having completed
an MBA with Distinction in Construction & Real Estate from
the University of Reading. Ed has been a full member of the
Investment Property Forum since 2012.

Frankie Whitehead ACA
Head of Finance

Frankie joined Tritax in 2014 following the launch of the
Company. When reporting to the Board, he is responsible
for the historical and strategic financial matters in relation to
the Company. This includes interim and year end reporting,
corporate compliance, budgeting/forecasting, treasury
management and the monitoring of internal financial controls.
Frankie also supports the Fund Manager with the Company’s
capital market activity, which includes the recent equity
issuances and debt financings.

Prior to joining the Tritax Group, Frankie spent three years as
Financial Controller at Primary Health Properties Plc (PHP), a
healthcare focussed REIT, which had total AUM of just under
£1 billion. He trained and qualified as a Chartered Accountant
with PKF (UK) LLP, which subsequently merged with BDO
LLP, where he acted as Assistant Manager. Frankie has over
10 years’ experience working in the real estate industry.

Olivia Cox Non practicing Solicitor
Deputy Company Secretary

Olivia joined the Tritax Group in March 2015 as Deputy
Company Secretary to the Company. She is a non-
practising solicitor who completed her training contract
with Berwin Leighton Paisner LLP in 2003, specialising
in Real Estate. She then joined Clifford Chance LLP in
2007, where she continued to specialise in Real Estate
with a particular focus on corporate real estate and hotel
development and management.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONSTRATEGIC REPORT
BOARD APPROVAL OF STRATEGIC REPORT

The Strategic Report was approved on behalf of
the Board by:

Richard Jewson Chairman
16 March 2016

Tritax Big Box REIT plc Annual Report 201548
50
52
52
53
54
56
56
57
57
57
58
58
58
59
60
60
61

GOVERNANCE
Chairman’s Governance Overview
Application of the Principles of the AIC Code
Leadership
Our Governance Framework
Attendance
The Board of Directors
Effectiveness
Board performance and evaluation
Nomination Committee Report
Appointment process
Diversity
Accountability
Internal controls review
AIFM Directive
Going concern and viability substantiation
Audit Committee Report
External auditor
Risk management and internal controls
Financial reporting and significant
judgements
Fair, balanced and understandable
62
substantiation
Management Engagement Committee Report 63
65
Relations with Shareholders
66
Directors’ Remuneration Report
68
Directors’ Report
71
Directors’ Responsibilities Statement
72
Depositary Statement
73
Independent Auditor’s Report

M&S, CASTLE DONINGTON

Our Big Box in Castle Donington, Leicestershire, let
to M&S. Racking prior to stock.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE
CHAIRMAN’S GOVERNANCE OVERVIEW

Since its inception in 2013, the Company has undergone
substantial growth and in June 2015 was included in the FTSE 250
Index. Throughout this period, as a Board, we have been committed
to maintaining and improving the structures and processes required
to underpin such growth and befitting a Company of our size.

We are committed to the highest standards of corporate
governance, which meet the statutory and regulatory
requirements for companies listed in the United Kingdom. In
this section of the Annual Report we set out the principles of
corporate governance that the Board has adopted, we highlight
our corporate governance activities and our compliance with
the codes of corporate governance we have chosen to adopt.

As an investment company, we comply with the AIC Code
of Corporate Governance (the “AIC Code”) published by the
Association of Investment Companies (the “AIC”) and the relevant
provisions of the UK Corporate Governance Code (September
2014) (the “UK Corporate Governance Code”). Details of our
compliance with the AIC Code are included in the Corporate
Governance report

The AIC Code and AIC Guide can be found at
www.theaic.co.uk/sites/default/files/uploads/files/

AICCodeofCorporateGovernanceFeb15.pdf

The UK Corporate Governance Code is available at
www.frc.org.uk/Our-Work/Publications/Corporate-Governance/

UK-Corporate-Governance-Code-2014.pdf

See The Board of Directors p54-55, for biographical details
of the current Directors and their roles

There have been no changes to the Board over the course
of the year. Following an assessment of the composition of
the Board by the Nomination Committee we have appointed
Jim Prower as Senior Independent Director and we are in the
process of seeking an additional Independent Non-Executive
Director to ensure that we continue to have the right balance
of skills, experience and independence in place to support
the future development of the Company. This is detailed in my
2015 Nomination Committee Report

We believe that an annual review of the Board’s effectiveness
is an important process to assist in identifying areas for future
improvement or focus. In 2015, we invited Board Evaluation
Limited, an independent corporate advisory firm, to undertake
an evaluation of the competence and effectiveness of the Board.
Details of the evaluation are set out on page 56

In addition to the Board effectiveness review, the Management
Engagement Committee undertook a detailed review of
the performance to date of the Company’s Manager, Tritax
Management LLP (the “Manager”) and, with the Manager’s
assistance, the performance of the Company’s corporate
advisers and principal suppliers. I am pleased to report that,
overall, we are satisfied that the Manager and the Company’s
corporate advisers and principal suppliers are performing in line
with our expectations and providing good value to Shareholders
as evidenced by the Company’s TER of 1.09%, which compares
favourably against our contemporaries. Further details of this
review are set out in Stephen Smith’s Management Engagement
.
Committee Report for 2015

The Board understands the importance of presenting a fair,
balanced and understandable assessment of the Company’s
position and prospects and the importance of effective
reporting, risk management and control procedures. Further
details regarding these key areas are set out in Jim Prower’s
Audit Committee Report for 2015

Statement of compliance
The Board has considered the principles and recommendations
of the AIC Code by reference to the AIC Corporate Governance
Guide for Investment Companies (“AIC Guide”). The AIC Code,
as explained by the AIC Guide, incorporates the UK Corporate
Governance Code, as well as setting out additional principles and
recommendations on issues that are specifically relevant to the
Company. The Board considers that reporting against the AIC
Code’s principles and recommendations by reference to the AIC
Guide (which incorporates the UK Corporate Governance Code),
will provide better information to Shareholders.

The Company has complied with the recommendations of the
AIC Code and the relevant provisions of the UK Corporate
Governance Code, except as set out below.

For more details of our compliance with the provisions of the AIC Code
and AIC Guide and actions taken since the Board effectiveness review,
See Application of the Principles of the UK Governance Code p50
See Effectiveness p56
See Nomination Committee Report p57

See Management Engagement Committee Report p63-64
See Audit Committee Report p60-62

Tritax Big Box REIT plc Annual Report 2015The UK Corporate Governance Code includes provisions
relating to:

Other key statements
The Directors confirm that to the best of our knowledge:

• the role of the Chief Executive;

• Executive Directors’ remuneration; and

• the need for an internal audit function.

For the reasons set out in the AIC Code, and as explained in
the UK Corporate Governance Code, the Board considers that
these provisions are not relevant to an externally managed
investment company. In particular, all of the Company’s day-to-
day management and administrative functions are outsourced
to third parties. As a result, the Company has no Executive
Directors or employees. Further, under the AIFMD regulations,
Langham Hall UK Depositary LLP provides a service which is
similar to an audit of the internal control and risk management
systems of the Company’s corporate governance and control
environment.
See page 72 for a summary of their work and
conclusions. The Company has, therefore, not reported further
in respect of these provisions.

For the year ended 31 December 2015, the Company voluntarily
complied with the provisions of the UK Corporate Governance
Code, except as follows:

• A.4.1 – the appointment of a Senior Independent Director:
the Company appointed Jim Prower as Senior Independent
Director in March 2016 following the rapid growth of the
Company and its inclusion in the FTSE 250 Index in 2015;

• D.1.2 and 2.1 – as an externally managed investment

company, the Board does not have any Executive Directors.
As such, the UK Corporate Governance Code’s provisions
in respect of Executive Directors’ remuneration are not
applicable. The Board has decided that there is no need for
a separate Remuneration Committee;

• E.1.1 – the Senior Independent Director meeting with the

major Shareholders: Jim Prower was appointed to this role on
15 March 2016. While there has been no Senior Independent
Director during 2015, we have been in close communication
with Shareholders throughout the year. The appointment of
Jim Prower to the role will now provide Shareholders with a
formal channel for communication.

• The Company is well placed to manage its financing and other
business risks. The Board is, therefore, of the opinion that the
going concern basis adopted in the preparation of the Annual
Report is appropriate. Further details regarding this opinion
section of this Corporate
are set out in the Accountability
Governance report on page 58;

• Taking into account the Group’s current position and the impact
of the principal risks documented in the Strategic Report, the
Directors have a reasonable expectation that the Company will
remain viable, continuing to operate and meet its liabilities as
they fall due, over the period to 16 March 2019. Further details
of the Board’s assessment of the viability of the Company
section of this Corporate
are set out in the Accountability
Governance report on page 58 and also Our Principal Risks
and Uncertainties

on page 29;

• 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 the Accountability
section of this Corporate Governance report on page 58;

• 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. See the Audit
Committee Report

, for further information;

• The Strategic Report includes a fair review of the development

and performance of the business and the position of the
Group, together with a description of the principal risks and
; and
uncertainties that it faces

• The continuing appointment of the Manager on the terms agreed
is in the interests of the Company’s Shareholders as a whole.
Further details on the basis for this conclusion are set out in the
Management Engagement Committee Report

on page 63.

Richard Jewson Chairman
16 March 2016

See Depositary Statement p72

See Our Principal Risks and Uncertainties p29-31
See Accountability p58-59
See Audit Committee Report p60-62
See Management Engagement Committee Report p63-64

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
GOVERNANCE
APPLICATION OF THE PRINCIPLES OF THE AIC CODE

The Company has complied with the 21 Principles of the AIC Code
which have been applied as follows:

THE BOARD

1. The Chairman should be independent

The Company’s Chairman, Richard Jewson, is independent. In addition, the Board has appointed a Senior Independent Director
who, among other things, will take the lead in the annual evaluation of the Chairman and will be an alternative contact for
Shareholders.

2. The majority of the Board should be independent

The Board currently comprises four Non-Executive Directors of which the Chairman, Richard Jewson, Jim Prower and Stephen
Smith are independent of the Manager. Mark Shaw, who is a partner and chairman of the Manager, Tritax Management LLP, is not
considered to be independent.

3. Directors should be submitted for re-election at regular intervals

As the Company is a constituent of the FTSE 250, each of the Directors will retire and stand for re-election at the AGM in
May 2016.

4. The Board should have a policy on tenure

The Company’s practice is to appoint Directors for a minimum three year term subject to annual re-election.

5. There should be full disclosure of information about the Board

Full information about the Board, as a whole, and the Directors, as individuals, is set out, inter alia, in this Annual Report.

6. The Board should aim to have a balance of skills, experience, length of service and knowledge of the Company

The Nomination Committee has undertaken a review of the Board’s composition and is actively considering a further
appointment to the Board. In making appointments to the Board, the Committee considers the wide range of skills, knowledge
and experience required to maintain an effective Board. The Nomination Committee Report

is on page 57.

7. The Board should undertake a formal and rigorous annual evaluation of its own performance and
that of its Committees and individual Directors

The Board appointed Board Evaluation Limited to carry out its first annual evaluation of effectiveness during 2015 and a report on
the 2015 review is set out on page 56

8. Directors’ remuneration should reflect their duties, responsibilities and the value of their time spent

The Board as a whole is responsible for reviewing the scale and structure of the Directors’ remuneration and sets remuneration
appropriately, so as to attract, retain and motivate Board members. The Directors each received an increase of £10,000 to their annual fee
in July 2015, back dated to January 2015, to reflect the increased time commitment to the Company over that originally anticipated.

9. The independent Directors should take the lead in the appointment of new Directors and
the process should be disclosed in the Annual Report

The appointment of new Directors to the Board is led by the Nomination Committee. Further details of the activities of the
Nomination Committee

can be found on page 57.

10. Directors should be offered relevant training and induction

All Directors receive an induction on joining the Board and their training and development needs have been assessed as part
of the 2015 annual effectiveness evaluation. A formal training session was undertaken in early 2016.

11. The Chairman (and the Board) should be brought into the process of a new launch at an early stage

The Company operates a single fund and has no plans to launch further funds. However, whenever the Company carries out
equity fundraisings the Chairman and the Board are always involved and are integral to the process from an early stage.

Tritax Big Box REIT plc Annual Report 2015BOARD MEETINGS AND THE RELATIONSHIP WITH THE MANAGER

12. Boards should operate in a supportive, co-operative and open environment

The Chairman promotes an open and constructive environment in the boardroom and actively invites the Non-Executive
Directors’ views. The Non-Executive Directors provide objective, rigorous and constructive challenge to the Manager and
communicate regularly among themselves.

13. The primary focus at regular Board meetings should be a review of investment performance and associated matters
such as gearing, asset allocation, marketing/investor relations, peer group information and industry issues

The Chairman (in conjunction with the Manager) sets the agendas for the meetings, manages the meeting timetable and facilitates
open and constructive dialogue during the meetings. The Board has a schedule of matters specifically reserved for its decision
which include the approval of budgets, setting investment and performance objectives and policies, the approval of the Company’s
financial statements and published reports, the approval of equity and debt fundraising and the approval of all investments.

Prior to each meeting, the Directors are provided with a comprehensive set of papers providing information on the Company’s
proposed investments, its financial position and performance, an update on relevant sectors including the commercial property
and retail sectors, a monthly Shareholder analysis and a report on regulatory and governance matters.

14. Boards should give sufficient attention to overall strategy

The Board, together with the Manager, regularly considers the overall strategy of the Company in light of its performance and
the sector overall.

15. The Board should regularly review both the performance of, and contractual arrangements with, the Manager

The performance of the Manager is assessed on a regular basis by the Management Engagement Committee. Further details
of the review in 2015 are set out in the Management Engagement Committee Report

on pages 63 and 64.

The Board together with the Audit Committee sets the Group’s risk appetite and annually reviews the effectiveness of the
Group’s risk management and internal control systems. The activities of the Audit Committee
responsibilities in relation to the management of risk, are summarised on pages 60-62.

, which assists the Board with its

16. The Board should agree policies with the Manager covering key operational issues

The Board has an agreed set of policies with the Manager covering key operational areas and the implementation of such policies
is subject to a regular, independent review. Further details of this review of internal controls
are set out on page 58. Langham
Hall UK Depositary LLP acts as depositary for the Company and conducts an independent review of the internal controls of the
Company. Further details of the role of Langham Hall UK Depositary LLP

are set out on page 72.

17. The Board should monitor the level of the share price discount or premium (if any) and, if desirable, take action to reduce it

The Board monitors the performance on the Company’s share price both on an absolute level and relative to the prevailing
Net Asset Value per Ordinary Share. The Directors have at their disposal the authority to buy back or issue Ordinary Shares
(within certain parameters) which would allow them to address anomalies in the performance of the Ordinary Shares, if
necessary. The Board works with the Company’s joint financial advisers and corporate broker to maintain regular contact with
the investors and monitor investor sentiment.

18. The Board should monitor and evaluate other service providers

The Management Engagement Committee together with the Manager reviews the continuing appointment of its service providers to
ensure that terms remain competitive and in the best interests of Shareholders, through an annual review of the relevant contracts.

The Board has access to independent professional advisers at the Company’s expense as noted on page 116

SHAREHOLDER COMMUNICATIONS

19. The Board should regularly monitor the Shareholder profile of the Company and put in place a system for canvassing
Shareholder views and for communicating the Board’s views to Shareholders

Representatives of the Manager met regularly with Shareholders throughout 2015 and specifically during the course of the
Company’s financial results and fundraising activities, providing the Board with feedback on Shareholder views and concerns.

The Directors make themselves available at general meetings to address Shareholder queries and the Annual General Meeting,
in particular, provides the Board with an important opportunity to meet with Shareholders, who are invited to meet the Board
following the formal business of the meeting.

Details of specific activities are set out in the Relations with Shareholders

on page 65.

20. The Board should normally take responsibility for, and have direct involvement in, the content of communications
regarding major corporate issues

All communications with Shareholders are subject to sign off by one or more of the Directors, as appropriate. Any
communications regarding major corporate issues are approved by the Board prior to release.

21. The Board should ensure that Shareholders are provided with sufficient information for them to understand the
risk:reward balance to which they are exposed by holding the shares

The Board places great importance on communication with Shareholders. It aims to provide Shareholders with a full understanding
of the Company’s activities and performance and reports formally to Shareholders twice a year by way of the Half Yearly Report
and the Annual Report, including in particular, the Strategic Report. The Strategic Report
is set out on pages 1-46 and this
provides information about the performance of the Company, the Investment Policy, strategy and the risks and uncertainties
relating to the Company’s future prospects.

This is supplemented by frequent notifications via a regulatory information service on developments such as asset acquisitions,
debt financings and fundraising activities, and the Company’s Website is regularly updated.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE
LEADERSHIP

BOARD

The Board consists of four Non-Executive Directors. All the Directors are independent of the Manager with the exception of Mark Shaw, who
is a partner and chairman of the Manager.

The Board has determined the Company’s investment objectives and Investment Policy and has overall responsibility for the Company’s
activities, including reviewing investment activity, performance, business conduct and strategy, as well as developing and complying with the
principles of good corporate governance.

The Board has approved a schedule of matters reserved for its consideration and approval. These matters include:

reviewing and approving Board membership and powers, including the appointment of Directors;

•
• approving the budget, financial plans and annual and interim financial reports; reviewing property valuations and

valuations of its interest rate derivatives;

• overseeing treasury functions;
• managing the Company’s capital structure;
• managing and controlling the Manager and, in conjunction with the Manager, the Company’s principal suppliers;
• approving the dividend policy;
• approving all investment decisions; and
•

reviewing and approving all compliance and governance matters.

The Board also delegates matters to Board Committees and the Manager, as appropriate.

AUDIT COMMITTEE

NOMINATION COMMITTEE

MANAGEMENT ENGAGEMENT
COMMITTEE

MANAGER

To oversee the Group’s
financial reporting, risk
management and internal
control procedures and the
work of its external auditors.

To review the Board’s
composition and to assess
whether the balance of skills,
experience, knowledge and
independence is appropriate
to enable the Board to
operate effectively.

To review and make
recommendations on any
proposed amendment to the
Investment Management
Agreement, to review the
Manager’s performance
and the performance of the
Company’s other key service
providers.

Day-to-day responsibility
for running the Company,
with open and regular
communication with
the Board on, inter alia,
investment decisions,
performance of the Group’s
assets and securing of debt.

See p60-62

See p57

See p63-64

See p44-45

The Board reviews the terms of reference for each committee
as necessary but at least every two years. Copies are available
from the Company Secretary or the Company’s Website

The Board has not established a Remuneration Committee as
it 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
2015 are included in the Directors’ Remuneration Report

See www.tritaxbigbox.co.uk/investors/#corporate-governance
See Directors’ Remuneration Report p60-62

The Board
Each Director has been appointed for a term of three years. In
line with the requirements of the AIC Code, each Director must be
elected by Shareholders at the Company’s AGM and submitted for
re-election at every AGM thereafter.

The Directors believe that the Board is well balanced and
possesses sufficient breadth of skills, a variety of backgrounds,
relevant experience and knowledge to ensure it functions
correctly and is not dominated by any one Director. Biographical
information on each Director is set out in The Board of Directors
. Owing to the Company’s growth over the past year and its
entry into the FTSE 250 Index, the Board intends to appoint an
additional Independent Non-Executive Director to complement
and add to its existing expertise, knowledge and skills base.

See The Board of Directors p54-55

Tritax Big Box REIT plc Annual Report 2015
Board meetings
During 2015, the Board held 11 formal scheduled meetings, with
additional meetings as required. These meetings were typically
held at the Manager’s office and were subject to a quorum of
two Directors.

All Directors are expected to attend all Board and Committee
meetings and to devote sufficient time to the Company’s affairs
to fulfil their duties as Directors. Where Directors are unable to
attend meetings, their comments are provided to the Chairman
before the meeting and shared with the rest of the Board and
the Manager.

During the year ended 31 December 2015, there were 19 Board
meetings. The table below shows each Director’s attendance
.
The Company continued in its growth phase during 2015, so the
Board convened a substantial number of additional meetings
during the year, to consider and implement equity fundraisings,
debt financings and to consider investment opportunities.

Because of the significant number of additional meetings during
the year, it was not logistically feasible for all the Directors to
attend every meeting. The Nomination Committee is satisfied
that all the Directors, including the Chairman, have sufficient
time to meet their commitments to the Company.

Anti-bribery and corruption
The Board has a zero tolerance policy towards bribery 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 to identify aspects of
the business which may be improved to mitigate such risks. The
Manager actively reviews and monitors perceived risks in order
to mitigate them.

The Board followed a formal agenda at its meetings, which the
Company Secretary circulated in advance of each meeting.
A typical agenda includes reviewing investment performance,
assessing the progress of new investment opportunities,
reviewing asset management initiatives at existing investments,
reviewing the Company’s strategy, reviewing the Company’s
historical financial performance and future forecasting, an
update on investor relations and an update on any regulatory or
compliance issues advised by the Manager or other advisers.
When considering investment opportunities, the Board reviewed
detailed written proposals prepared by the Manager and
approved all investment decisions.

Attendance at Board and Committee meetings during the
year ended 31 December 2015
The following table shows the Directors’ attendance at Board
and Board Committee meetings, where they were eligible to
attend, during the year

For the year to 31 December 2015.

BOARD MEETINGS
ELIGIBLE TO ATTEND

BOARD MEETINGS
ATTENDED

AUDIT
COMMITTEE

NOMINATION
COMMITTEE

MANAGEMENT
COMMITTEE

Meetings held

Richard Jewson

Jim Prower

Stephen Smith

Mark Shaw

–

N/A

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE
THE BOARD OF DIRECTORS

Richard Jewson Chairman

Appointed: 18 November 2013

Independent: Yes

Committee memberships:
• Chair of the Nomination Committee
• Management Engagement Committee
• Audit Committee

Jim Prower Senior Independent Non-Executive Director

Appointed: 18 November 2013

Independent: Yes

Committee memberships:
• Chair of the Audit Committee
• Management Engagement Committee
• Nomination Committee

Relevant skills and experience:
• Significant leadership experience as executive director

non-executive director and chairman of a number of public
companies

• Long-standing commercial experience through both

executive and non-executive roles in the construction
services, infrastructure and real estate sectors

• Skilled in guiding companies through strong growth phases as

well as managing the impact of business cycles

Relevant skills and experience:
• A chartered accountant having trained and qualified at

Peat, Marwick, Mitchell & Co, London

• In-depth knowledge of financial matters, particularly in

relation to the real estate sector through his previous role as
finance director at the Argent Group, which is undertaking the
development of King’s Cross Central

• Experienced in raising debt financing for working capital,

development and investment

Principal external appointments:
• Chairman, Raven Russia Limited
• Senior non-executive director, Temple Bar Investment Trust plc

Principal external appointments:
• Senior Independent Director and chairman of audit

committee, Empiric Student Property plc

Significant previous external experience:
• Chairman of Meyer International plc, holding company of

Jewsons Limited

• Archant Limited – Chairman for 17 years
• Chairman of Savills plc for 10 years
• Board member of Grafton Group plc for 18 years
• Non-executive director and Deputy Chairman of Anglian

Water plc for 14 years

Significant previous external experience:
Jim has acted as finance director and company secretary at
several public companies including:
• Minty plc for two years
• Creston Land & Estates plc for six years
• NOBO Group plc for two years

Tritax Big Box REIT plc Annual Report 2015Stephen Smith

Mark Shaw

Appointed: 18 November 2013

Appointed: 8 November 2013

Independent: Yes

Independent: No

Committee memberships:
• Chair of the Management Engagement Committee
• Audit Committee
• Nomination Committee

Committee memberships:
• Nomination Committee
• Management Engagement Committee

Relevant skills and experience:
• Significant experience in real estate investment, having

managed very large property portfolios on behalf of life funds,
listed property vehicles, unit linked and closed-end funds
• Responsibility for property and investment strategy at British

Land Company PLC

Relevant skills and experience:
• Highly experienced in a range of commercial, banking and

investment operations

• Extensive property investment experience, particularly

in developing and structuring property transactions, and
managing a variety of property vehicles including property
unit trusts, listed property vehicles and limited partnerships

Principal external appointments:
• Chairman, Starwood European Real Estate Finance Limited
• Non-executive director, Gatehouse Bank plc, a London based
wholesale investment bank specialising in global real estate

Principal external appointments:
• Chairman, Tritax Management LLP

Significant previous external experience:
• Chief Investment Officer of British Land Company PLC for

three years

• Global Head of Asset Management and Transactions at

AXA Real Estate Investment Managers for 11 years
• Managing Director at Sun Life Properties for five years

For further information on the Board, Board Committees
and the Directors:

see Audit Committee p60-62
see Nomination Committee p57
see Management Engagement Committee p63-64
See www.tritaxbigbox.co.uk /investors/#corporate-governance
See www.tritaxbigbox.co.uk/about/#management

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE
EFFECTIVENESS

Board performance and evaluation
We believe that an annual review of Board effectiveness is
an important process to assist in identifying areas for future
improvement or focus, taking into account the Board’s balance
of skills, experience, independence, knowledge of the Company
and diversity, as well as how the Board works together as a unit
and other factors relevant to its effectiveness.

The evaluation process produced a sound set of results, with
a generally high level of consensus across the Directors. As
the Company matures, future evaluations may invite input
from other stakeholders such as the Manager. The evaluation
concluded that the Board’s performance in relation to the seven
key objectives was good but the following areas were identified
as areas for improvement:

In April 2015, we commissioned an external evaluation of how
the Board and its Committees function and the performance
of the Chairman by the independent corporate advisory firm,
Board Evaluation Limited. Board Evaluation Limited has no other
connection to the Company.

The aim of the evaluation was to obtain the views of Board
members that would provide an insight into the Board’s
effectiveness highlight actions required to improve its
performance and establish a benchmark for measuring future
progress. The evaluation was conducted using a questionnaire
which was completed by all the Directors and returned to Board
Evaluation Limited who summarised the feedback in a report for
discussion by the Board.

The evaluation assessed the performance of the Board in
relation to its seven key objectives, which have been designed
to ensure that the Board operates efficiently and the Company
runs smoothly and include measures such as a review of the
performance of the investments and an assessment of progress
on new investment possibilities at each Board meeting, using
the following effectiveness measures:

• Controls and procedures (including financial);

• Strategic aims;

• Entrepreneurial leadership; and

• Communication and relationships.

Each Director was asked to complete a detailed questionnaire.
Board Evaluation Limited collated the responses, presented its
findings in a written report to the Board and attended a Board
meeting in July 2015 to discuss the results of the evaluation with
the Board.

• Administration of and procedures for Board meetings;

• Board succession planning;

• Director training; and

• Composition of the Audit Committee

Accordingly, since the evaluation process, the Board has
implemented various initiatives including new procedures for
the dissemination of Board papers and agenda management
and a programme for Director training that commenced in
January 2016. The Nomination Committee has considered Board
succession planning (see page 52) and the composition of the
Audit Committee will be considered when a new Independent
Non-Executive Director is appointed.

Training and development
The Board believes that the Directors should develop their
skills and knowledge by attending courses and by holding
other positions. The Chairman is responsible for reviewing
and discussing each Director’s training and development
needs. Accordingly, a Director training programme has been
established for 2016 to assist the Directors to effectively
undertake their duties and to comply with the Company’s
corporate governance obligations.

Upon appointment, all Directors took part in discussions
with the Chairman and other Directors to understand their
responsibilities and the Company’s business and procedures.
The Company also provides regular opportunities for the
Directors to obtain a thorough understanding of its business,
by meeting senior representatives of the Manager and other
service providers, both in person and by phone.

See Nomination Committee Report p57
See Audit Committee Report p60-62

Tritax Big Box REIT plc Annual Report 2015GOVERNANCE
NOMINATION COMMITTEE REPORT

NOMINATION COMMITTEE MEMBERSHIP

Richard Jewson Chairman

Jim Prower

Stephen Smith

Mark Shaw

The Nomination Committee is responsible for reviewing the Board’s
structure, size and composition, and for considering succession
planning for Directors. We have a policy of identifying and approving
candidates to fill Board vacancies, using external search consultants
where appropriate. We operate within defined terms of reference
which are available on the Company’s Website
and on request
from the Company Secretary.

Meetings and activities during the year
We met once during the year to consider the Board’s structure.
We believe that the Board has appropriate experience and
knowledge for the Company, the composition of the Audit
Committee will need to be addressed through the appointment
of an additional Independent Non-Executive Director to the
Board. An additional Independent Non-Executive Director will
also support the existing Board, given the Company’s growth
and inclusion into the FTSE 250 Index.

Pursuant to the Articles, at every AGM of the Company,
one-third of the Directors who are subject to the requirement
to retire by rotation (not including any Director who was
appointed by the Board and is standing for election) will
retire from office and may offer themselves for re-election
by the Shareholders. The Directors to retire by rotation will
be those who have been longest in office since their last
election. However, at the forthcoming AGM of the Company,
notwithstanding the provisions of the Articles, all the Directors
will offer themselves for re-election in accordance with the
provisions of the AIC Code.

When renewing current appointments, all Directors except the
individual in question are able to vote at the general meeting.

Board diversity
The Nomination Committee considers that the Directors have
a balance of skills, qualifications and experience which is
relevant to the Company. We support the recommendations of
the Davies Report and believe in the value and importance of
diversity in the boardroom but we do not consider it appropriate
or in the interest of the Company and its Shareholders to set
prescriptive diversity targets on the Board.

We have appointed Jim Prower as Senior Independent Director
who will be the alternative point of contact for the Company’s
Shareholders. The appointment was made in March 2016.

Richard Jewson Chairman of the Nomination Committee
16 March 2016

Appointment process
Having identified the need to appoint a further Independent
Non-Executive Director, we have begun the process of
identifying suitable candidates with relevant experience and
will consider, establish and start the formal recruitment process
in 2016.

Directors may be appointed by the Company by ordinary
resolution or by the Board. A Director appointed by the Board
holds office only until the next AGM of the Company after his/
her appointment and is then eligible to stand for election.

See www.tritaxbigbox.co.uk/investors/#corporate-governance

The UK Corporate Governance Code is available at:
www.frc.org.uk/Our-Work/Publications/Corporate-Governance/
UK-Corporate-Governance-Code-2014.pdf

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE
ACCOUNTABILITY

Internal controls review
The Directors acknowledge their responsibility for maintaining
the Company’s system of internal control and risk management in
order to safeguard the Company’s assets. This system is designed
to identify, manage and mitigate the financial, operational and
compliance risks that are inherent to the Company. The system
is 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, Capita
Sinclair Henderson Limited (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 Directors’ Report.

The Board has contractually delegated responsibility for accounting
services to the Administrator and for company secretarial services
to Taylor Wessing Secretaries Limited up until 1 May 2015 and
thereafter, to the Manager. These entities have their own internal
control systems relating to these matters, which the Board has
reviewed as part of its Financial Position and Prospects Procedures
memorandum which was updated in 2015 to better reflect the
operations of the Company.

Internal control assessment process
The Board regularly monitors the effectiveness of the
Company’s internal controls and ensures their adequacy. This
includes reviewing reports from the external auditor, details
of which are included in the Audit Committee Report
and
the quarterly reports prepared by Langham Hall UK Depositary
LLP
each year.

. The Board also conducts a formal risk assessment

The Board confirms that, in accordance with the AIC Code
and Guide, and the UK Corporate Governance Code, it 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.

AIFM Directive
The Alternative Investment Fund Managers Directive (“AIFMD”)
became part of UK law in 2013. It regulates AIFMs and imposes
obligations on managers who manage alternative investment
funds (“AIF”) 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, hence,
provides all relevant management and advisory services to the
Company, including regulated activities.

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 their investors.
The policy must include measures to avoid conflicts of interest.

The Manager’s partnership board therefore 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 of
at least 5% of the Manager’s profits. This means that staff
remuneration is predominantly fixed and the variable element
is determined by the Manager’s profitability, rather than the
performance of a particular 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 partners’ remuneration
therefore depends on the Manager’s profitability, rather than
the performance of the AIF. This ensures that the partners have
a vested interest in ensuring the Manager remains financially sound.

The annual fee paid by the AIF is based on a percentage of NAV, as
set out in the Management Engagement Committee Report
. In
addition, the Manager’s partners are required to invest 25% of that
fee (net of tax and certain other costs, as described on page 64)
in the Company’s shares. Those 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.

See Audit Committee Report p60-62
See Depositary Statement p72

See management fee as a percentage of NAV p64

Tritax Big Box REIT plc Annual Report 2015The review also considers the Company’s business model, future
performance, solvency and liquidity and, therefore, covers the
Group’s cash flows, dividend cover, REIT compliance and other
key financial ratios over the period. These metrics are subject
to a sensitivity analysis, which involves flexing a number of key
assumptions underlying the forecast both individually and in
aggregate. Where appropriate, this analysis was carried out
to evaluate the potential impact of the Group’s principal risks
actually occurring. The three-year review also makes certain
assumptions about the normal level of capital recycling likely to
occur and considers whether additional financing facilities will
be required.

Based on the results of this analysis, the Directors have a
reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the period of their assessment.

Going concern and viability
The Strategic Report
describes the Group’s financial position,
cash flows, liquidity position and borrowing facilities. The Group
currently has substantial headroom against its borrowing
covenants, with a Group LTV of 33.2% as at 31 December 2015.
It also benefits from a secure income stream from leases
with long average unexpired terms, which are not overly reliant
on any one tenant. The Company’s cash balance as at
31 December 2015 was £68.6 million, of which £59.2 million
was readily available. It also had undrawn amounts under its
debt facilities of a further £184.5 million. On 16 February 2016,
the Company issued a further 161,290,323 Ordinary Shares,
raising £196,125,000 of net equity proceeds.

As a result, the Directors believe that the Company is well
placed to manage its financing and other business risks.
The Directors believe that there are currently no material
uncertainties in relation to the Company’s ability to continue for
a period of at least 12 months from the date of the Company’s
financial statements. The Board is, therefore, of the opinion
that the going concern basis adopted in the preparation of the
Annual Report is appropriate.

Further, in accordance with the provision C.2.2 of the revised
UK Corporate Governance Code, the Directors have assessed
the prospects of the Company over a period longer than the
12 months required by the “Going Concern” provisions. The
Board conducted this review for a period of three years, up to
16 March 2019, which was selected to match the period over
which the Board monitors and reviews its financial performance
and forecasting.

Considerations in support of the Company’s viability over this
period includes:

• The current blended unexpired term under the Company’s debt

facilities stands at 4.7 years;

• The Company has a WAULT of 16.5 years, which represents

a long and secure income stream; and

• The Company’s tenants are all of Investment Grade and as

such the likelihood of any default under the leases is low and
in any event the Company has a diverse tenant base which
should spread the risk of any default.

See Strategic Report p1-46

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE
AUDIT COMMITTEE REPORT

Intro

AUDIT COMMITTEE MEMBERSHIP

Jim Prower Chairman*

Richard Jewson**

Stephen Smith

* Jim Prower, is considered to possess recent and relevant financial experience for
the purpose of the AIC Code. Details of Jim Prower’s experience can be found in
his biography on page 54.

** Richard Jewson, the Chairman of the Board, sits on the Audit Committee to

enable his greater understanding of the issues facing the Company.

Activities of the Committee
The Audit Committee operates within defined terms of reference,
and on request
which are available on the Company’s Website
from the Company Secretary. We met four times during the year.
These meetings were attended by the Committee members, as
well as representatives of the Manager, the Company Secretary
and the external auditor.

See www.tritaxbigbox.co.uk /investors/#corporate-governance

During the year, the work undertaken by the Audit Committee
included:

• Reviewing the internal controls and risk management

systems. These systems are set out in the Financial Position
and Prospects Procedures memorandum, which is revised
annually and was most recently approved by the Board in
December 2015;

• Reviewing the interim and annual audited financial

statements, including considering key accounting policies
and areas of significant judgement, compliance with statutory
obligations and accounting standards and consistency
throughout the Annual Report;

• Reviewing the process undertaken to ensure that the Board
can confirm that the annual financial statements are fair,
balanced and understandable; and

• Reviewing and approving the external auditor’s terms of
engagement, remuneration and tenure of appointment.

External auditor
During the year we considered the appointment, compensation,
performance and independence of the Company’s external
auditor, BDO LLP (“BDO”).

BDO was appointed as the Company’s auditor following a formal
tender process as part of the IPO. During the year we met key
members of the audit team and BDO formally confirmed its
independence as part of the annual reporting process. We liaise
regularly with the lead audit partner to discuss any issues arising
from the audit as well as its cost-effectiveness.

We acknowledge 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 and, therefore, engaging the external auditor
for non-audit services has been considered. To ensure that
providing these services does not impair BDO’s independence
and objectivity, the Audit Committee has developed the
Company’s policy on this issue. The policy allows the external
auditor to provide routine tax compliance and advisory services.

In developing the policy, we have considered the Financial
Reporting Council’s Ethical Standard Number 5 (revised).
This relates to non-audit services provided to audited
entities and sets out the six principal threats to objectivity
and independence. For example, the auditor cannot act as
management or audit its own work. The Audit Committee has
reviewed the level of non-audit fees paid to BDO in the year,
which totalled £194,000. It has also reviewed the terms under
which BDO is able to perform non-audit services and has
acknowledged that tax advice and corporate due diligence
is provided by separate teams within BDO. We are therefore
satisfied that the audit is independent, objective and effective.

We will keep this issue under constant review, particularly at the
time of new engagements and in light of proposed legislative
changes to ensure that the auditor’s independence and
objectivity is not impaired.

Tritax Big Box REIT plc Annual Report 2015Of the £194,000 non-audit fees paid to BDO, the significant expenditure that was authorised in the year is outlined below:

WORK UNDERTAKEN

RATIONALE FOR USING THE EXTERNAL AUDITOR

Reporting accountant on the
Company’s secondary offerings

Detailed knowledge and understanding of the business and the requirements of
the exercise, having acted as reporting accountant on previous equity fundraisings
for the Company. Low risk of self-interest and self-review threat, as the work is not
used in the audit of the financial statements.

FEE (£)

£62,000

Financial and tax due diligence on
corporate acquisitions

Detailed knowledge and understanding of the business and the requirements of the
exercises. The work was performed by a team independent of the audit team. The
audit team places no reliance on these procedures.

£132,000

The Audit Committee has recommended that a resolution to
reappoint BDO is proposed to Shareholders at the next AGM.

Risk management and internal controls
As part of the Board meetings and Audit Committee meetings,
the Directors review the financial position of the Company and
assess any risks in relation to the Company’s business model
and the Group’s future performance, liquidity and solvency. To
facilitate this process the Manager produces a full set of reports
including the latest management accounts, a review and report
on the Company’s financial planning model, substantiation of
any dividend payments and a general update on the financial
health of the Company.

As the Company’s AIFM, the Manager is subject to a rigorous
reporting and ongoing compliance regime under the AIFMD.
As part of this regulatory process, Langham Hall UK Depositary
LLP
for cash monitoring, asset verification and oversight of the
Company and the Manager.

has been retained by the Company and is responsible

Financial reporting and significant judgements
The Audit Committee monitors the integrity of the financial
information published in the interim and annual financial
statements and considers the extent to which suitable
accounting policies have been adopted, presented and
disclosed. In assessing this we consider whether the Manager
has made suitable and appropriate estimates and judgements,
and seek support from the external auditor to assess them.

. As explained in note 15 to the financial

Valuation of property portfolio
The Group had property assets of £1.16 billion at
31 December 2015, as detailed on the Group Statement of
Financial Position
, CBRE independently valued the properties
statements
in accordance with IAS 40: Investment Property. The total
portfolio valuation including forward funded commitments
at the year end was £1.31 billion. We have reviewed the
assumptions underlying the property valuations and discussed
these with management, and have concluded that the valuation
is appropriate.

Due to the Company’s size and structure and the nature of its
activities and taking into account the controls already in place
and, more particularly, the external service already provided
by Langham Hall UK Depositary LLP, the Audit Committee
has concluded that an internal audit function is unnecessary.
However, we will continue to consider the need for an internal
audit function each year and make recommendations to the
Board as appropriate.

Valuation of interest rate derivatives
The Group mitigates its exposure to interest rate risk by
entering into interest rate hedging arrangements. The Group
accounts for these instruments in accordance with IAS 39 and
makes additional required disclosures under IFRS 7 Financial
Instruments Disclosures. The valuations are provided by the
relevant institutions to which the loans are hedged. The Board
has reviewed and approved these valuations.

For further information on Langham Hall UK Depositary LLP,
see Depositary Statement p72

See Group Statement of Financial Position p79
See note 15, Notes to the Consolidated Accounts p92-93

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE: AUDIT COMMITTEE REPORT

Revenue recognition
Revenue is the Group’s rental income arising from operating
leases on investment property and is recognised on a straight-line
basis. Any increases in rent following rent reviews are recognised
as and when the rent reviews are settled, unless the Directors are
reasonably certain that a rental uplift will be agreed, in which case
a rental adjustment is recognised from the date of the rent review.
Tenant lease incentives are recognised on a straight-line basis
over the term of the lease.

Conclusions in respect of the Company’s Annual Report
The production and audit of the Company’s Annual Report is
a comprehensive process, requiring input from a number of
contributors. To reach a conclusion on whether the Company’s
financial statements are fair, balanced and understandable,
as required under the AIC Code and the UK Corporate
Governance Code, the Board has requested that the Audit
Committee advise on whether we consider that the Annual
Report fulfils these requirements. In outlining our advice, we
have considered the following:

• 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 Audit Committee, which
are intended to ensure consistency and overall balance;

• A letter provided by the Administrator that there have been no
changes to its control environment since 31 December 2014
and that all internal controls in place as at the time of the last
review remain active;

• 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; and

• The satisfactory control report produced by the Administrator

for the year ended 31 December 2014, which has been
reviewed and reported upon by the Administrator’s external
auditor, to verify the effectiveness of the Administrator’s
internal controls, such as the Audit and Assurance Faculty
(AAF) Report.

As a result of the work performed, the Audit Committee
has concluded and reported to the Board that the Annual
Report for the year ended 31 December 2015, 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. The
Board’s conclusions in this respect are set out in the Directors’
Responsibilities Statement

Jim Prower Chairman of the Audit Committee
16 March 2016

See Directors’ Responsibilities Statement p71

Tritax Big Box REIT plc Annual Report 2015GOVERNANCE
MANAGEMENT ENGAGEMENT COMMITTEE REPORT

MANAGEMENT ENGAGEMENT COMMITTEE MEMBERSHIP

Stephen Smith Chairman

Richard Jewson

Jim Prower

Mark Shaw

The Management Engagement Committee met twice in the
year to 31 December 2015, to review its terms of reference, the
Company’s relationships with its main service providers, their
performance and the terms of their appointment, and to review
the Company’s relationship with the Manager, the Manager’s
performance and the terms of the Manager’s appointment.

We conducted a comprehensive review of the performance
of the Manager and, together with the Manager, all of the
Company’s corporate advisers and principal service providers.
This included an assessment of the ongoing requirement for the
provision of such services, the fees paid to and the performance
of such advisers and service providers and additional added
value given by the Manager and the Company’s service
providers and advisers, and whether additional services were
required. The review was for the period ending 30 June 2015
thereby allowing the Committee to refer to figures subject to
review from the auditor, in its assessment of performance.

Under the terms of the Investment Management Agreement,
the Board has delegated day-to-day responsibility for running
the Company to the Manager, including sourcing of investment
opportunities in line with the Company’s Investment Policy, asset
management of the existing portfolio, negotiation of debt facilities
within the parameters of the Company’s policy on gearing and
liaising with the Company’s advisers on equity fundraisings. As
all of the Company’s subsidiaries and therefore all of its assets
are wholly owned and controlled by the Company, the Board
exercises direct control in respect of the Group’s holdings and
the Manager is not required to vote on behalf of the Company.

To ensure open and regular communication between the
Manager and the Board, the Manager is invited to attend all Board
meetings to update the Board on the Company’s investments
and to discuss generally the market and the performance and
strategy of the Company. Details of the Company’s performance
in 2015 is set out in the Strategic Report

. The Manager

has continued to identify a pipeline of high-quality Big Box
assets, drawing on its market intelligence and its excellent
relationships with vendors, agents and developers. These
relationships allowed the Manager to source 78% of its Big Box
assets off-market, thereby ensuring that the Company benefited
from pricing imperfections in the market and met its growth
objectives. In the 12 month period to 30 June 2015, the Company
had met or exceeded all of its target investment objectives,
delivering exceptional returns for Shareholders and, on this
basis, the Management Engagement Committee concluded that
the Manager had performed its obligations in accordance with
the Investment Management Agreement. The Company has
continued to exceed its target investment objectives for the year
ending 31 December 2015. We have concluded, therefore, that
the performance of the Manager for the year 31 December 2015
has been exceptional.

In addition, following an extensive review and full analysis,
we agreed with the Manager that the performance of all of
the Company’s current service providers for the past year
was satisfactory and in some cases exceptional and with the
Manager’s recommendation that each be retained until the
next review. We did not suggest any material changes to the
engagement terms of any of the advisers or service providers.
Our review did not reveal any material weaknesses in the advice
and support provided to the Group and we are satisfied that
the Company is benefiting from added value in respect of the
services it procures.

As part of our review, we considered the terms of the Investment
Management Agreement, to ensure it continues to reflect properly
the commercial arrangements agreed between the Company and
the Manager. We were satisfied that this was the case.

Under the Investment Management Agreement, 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 as a percentage of the Company’s Net Asset Value
(“NAV”), disregarding cash or cash equivalents, announced
before the end of the relevant quarter. 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.

See Strategic Report p1-46

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE: MANAGEMENT ENGAGEMENT COMMITTEE REPORT

The management fee as a percentage of NAV is as set out below:

NAV

RELEVANT PERCENTAGE

Up to and including £500 million

Above £500 million and up to and
including £750 million

Above £750 million and up to and
including £1 billion

Above £1 billion

1.0%

0.9%

0.8%

0.7%

The management fee paid each quarter is 25% of the amount
calculated, based on the information below.

During specified periods after publication of the Company’s
annual or half year results the relevant members of the
Manager (and/or their connected parties) will 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. The price will be equivalent to the prevailing NAV
per share, adjusted for any dividend declared after the NAV per
share is announced. Where this would result in the Company
issuing Ordinary Shares at a price below the NAV per share, 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.

On 20 March 2015, the Company issued 175,557 Ordinary
Shares in respect of the net cash amount, relating to the six
months to 31 December 2014. The issue price was 106.22
pence per Ordinary Share, equivalent to the prevailing NAV of
107.02 pence per Ordinary Share less the third interim dividend
of 0.8 pence per Ordinary Share. On 21 September 2015, the
Company issued 290,795 Ordinary Shares in respect of the net

cash amount, relating to the six months to 30 June 2015. The
issue price was 114.68 pence per Ordinary Share, equivalent to
the prevailing NAV of 116.68 pence per Ordinary Share less the
interim dividends paid in June and August 2015 of, in aggregate,
2.0 pence per Ordinary Share.

Following these issues of Ordinary Shares, the relevant
members of the Manager as at the year end had the following
beneficial interests:

TRITAX PARTNER

Mark Shaw

Colin Godfrey

James Dunlop

Henry Franklin

NUMBER OF SHARES
HELD

PERCENTAGE OF ISSUED
SHARE CAPITAL AS AT
31 DECEMBER 2015

320,094

248,535

196,436

0.05%

0.04%

0.03%

The Board has concluded that, on the basis of our assessment
above, the continuing appointment of the Manager on the
terms agreed is in the interests of the Company’s Shareholders
as a whole.

The Management Engagement Committee will review the
continuing appointment of all of the Company’s principal service
providers and the performance of the Manager on an annual
basis and ensure they are in the best interests of Shareholders
as a whole.

Stephen Smith
Chairman of the Management Engagement Committee
16 March 2016

Tritax Big Box REIT plc Annual Report 2015

GOVERNANCE
RELATIONS WITH SHAREHOLDERS

The Board recognises the importance of maintaining strong
relationships with Shareholders and the Directors place a
great deal of importance on communication. The Manager, the
Company’s broker and the Company’s joint financial adviser
regularly meet Shareholders and take calls from them. The
Board also receives periodic feedback from its broker and joint
financial adviser on Shareholder issues.

During the year, the Manager devoted time to meeting with
existing Shareholders and prospective new investors in the UK,
the US, and the Netherlands, in particular. In November and
December 2015, the Company’s broker, Jefferies International
Limited (“Jefferies”), together with Colin Godfrey, undertook a
specific programme of consultation with 18 of the Company’s
largest Shareholders, representing 53% of the share register in
order to gauge their views on the Company’s performance to
date and ascertain what, if any, concerns they had in relation to
the Company’s future. Jefferies presented a formal report to the
Board on the feedback received from these Shareholders, the
contents of which were discussed and noted at the December
Board meeting. The feedback, which was highly positive overall,
has been taken into account by the Board.

The Manager has also hosted several “Big Box” site visits for
existing and prospective investors during the year and will
continue the initiative in 2016, with the first event having taken
place in January 2016, which included a visit to the assets in
Castle Donington (let to Marks & Spencer) and Worksop (let
to B&Q).

Shareholders are encouraged to attend and vote at the
Company’s general meetings so they can discuss governance
and strategy and the Board can enhance its understanding
of Shareholders’ issues. The Board makes itself available at
the Company’s general meetings to answer any Shareholder
questions and the Chairman makes himself available, as
necessary, outside of these meetings to speak to Shareholders.
The Board is currently establishing a programme of more
informal opportunities for Shareholders to meet with the
Directors, in particular the Chairman and senior members of the
Manager. The Board has also recently appointed Jim Prower as
the Senior Independent Director who will be an alternate point
of communication for Shareholders. The Board is contactable by
emailing the Company Secretary at bigboxcosec@tritax.co.uk.

The Company ensures that any price sensitive information is
released to all Shareholders at the same time and in accordance
with regulatory requirements. The Company’s Annual Report
and Interim Report are dispatched to Shareholders by mail and
are also available to download from the Company’s Website
.
The Manager also produces a quarterly fact sheet summarising
the events of the previous quarter which is available on the
Company’s Website.

See www.tritaxbigbox.co.uk/investors/#company-documents

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE
DIRECTORS’ REMUNERATION REPORT

Annual statement
As the Board has no Executive Directors, it does not consider
it necessary to establish a separate Remuneration Committee.
The Board as a whole is therefore responsible for discussions
regarding remuneration. The Directors’ remuneration is
disclosed in this Remuneration Report, which will be presented
at the AGM for Shareholders’ consideration and approval.

Directors’ remuneration policy
Under the Company’s Articles of Association, all Directors are
entitled to the remuneration determined from time to time by
the Board. The Independent Non-Executive Directors each
received a pay increase of £10,000 per annum on 22 July 2015
backdated to 1 January 2015 in recognition of the additional
time spent by each Director on the Company’s affairs compared
to that originally anticipated, reflected by the Company’s
considerable expansion since its IPO in December 2013.

The Company’s policy is to determine the level of Directors’
fees with regard to those payable to Non-Executive Directors
in the industry generally, individual Directors’ Board and
Audit Committee responsibilities, and the time each Director
dedicates to the Company’s affairs.

The Directors are entitled only to their annual fee and
their 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.

Annual report on remuneration
Each Director has been appointed pursuant to a letter of
appointment dated 18 November 2013, except for Mark Shaw
whose letter of appointment is dated 8 November 2013. No
Director has a service contract with the Company, nor are any
such contracts proposed. The Directors’ appointments can
be terminated in accordance with the Articles and without
compensation.

Each Director, other than Mark Shaw, is entitled to receive a fee
from the Company at a rate determined in accordance with the
Articles. The Directors are each paid an annual fee of £40,000
per annum, other than the Chairman (Richard Jewson) who
is currently entitled to a fee of £70,000 per annum, and the
Chairman of the Audit Committee (Jim Prower), who is currently
entitled to a fee of £45,000 per annum.

The fees paid to the current Directors in the year to 31 December
2015, which have been audited, are set out in the table below.

In addition, each Director is entitled to recover all reasonable
expenses properly incurred in connection with performing
his duties as a Director. Directors’ expenses for the year to
31 December 2015 totalled £1,877. No other remuneration was
paid or payable during the year to any Director.

DIRECTOR*

Richard Jewson Chairman

Jim Prower

Stephen Smith

Total

* As Chairman of the Company’s Manager, Mark Shaw is not entitled to receive a fee.

2015

ANNUAL FEES
£

£70,000

£45,000

£40,000

TOTAL
£

£70,000

£45,000

£40,000

2014
TOTAL
£

£60,000

£35,000

£30,000

£155,000

£125,000

Tritax Big Box REIT plc Annual Report 2015Statement of voting at general meeting
The Company is committed to ongoing Shareholder dialogue
and takes an active interest in voting outcomes. Where there
are substantial votes against resolutions in relation to Directors’
remuneration the Company will seek the reasons for any
such vote and will detail any resulting actions in the Directors’
Remuneration Report. The Directors’ Remuneration Policy
and the Directors’ Remuneration Report were approved by
Shareholders at the AGM held on 15 April 2015. The voting on
the respective resolutions was as follows:

VOTES
CAST

FOR AGAINST

VOTES
WITHHELD

337,094,403 100% 0% 2,260,800

RESOLUTION

Directors’
Remuneration Policy

Directors’
Remuneration Report

Statement of Directors’ shareholding and share interests
The Directors are not required to hold shares in the Company.
At 31 December 2015, the Directors held the following interests
in the Company’s shares:

DIRECTOR

Richard Jewson (Chairman)*

Jim Prower*

Stephen Smith

Mark Shaw

NUMBER OF SHARES
HELD

PERCENTAGE OF
ISSUED SHARE
CAPITAL AS AT
31 DECEMBER 2015

50,000

23,760

–

0.007%

0.004%

–

320,094

0.047%

337,094,403 100% 0% 2,260,800

* The shareholdings of Richard Jewson and Jim Prower are not significant and,

therefore, do not compromise their independence.

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 All-Share Index and the FTSE All-Share REIT Index.

Richard Jewson acquired an additional 4,545 shares under the
Open Offer on 16 February 2016.

Other items
The Company maintains Directors’ and Officers’ liability
insurance cover, at its expense, on the Directors’ behalf.

Total Shareholder return is the measure of returns provided by
a Company to Shareholders reflecting share price movements
and assuming reinvestment of dividends.

Richard Jewson Chairman
16 March 2016

Total Shareholder return (p)

130

120

110

100

Price
change

Total
return

20.1%

24.1%

7.4%

10.6%

(2.5%)

0.9%

5
1
n
a
J

5
1
b
e
F

5
1
r
a
M

5
1
r
p
A

5
1
y
a
M

5
1
n
u
J

5
1

u
J

5
1
g
u
A

5
1
p
e
S

5
1
t
c
O

5
1
v
o
N

5
1
c
e
D

Tritax Big Box FTSE All-Share Index FTSE All-Share REIT Index

Source: Bloomberg

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION

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 2015.

Directors’ interests in shares
The Directors’ interests in the Company’s shares are disclosed in
the Directors’ Remuneration Report

The Directors’ Report, together with the Strategic Report
comprise the “Management Report”, for the purposes of
Disclosure and Transparency 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 by reference, as indicated in the relevant section.

Financial results and dividends
The financial results for the year can be found in the Group
Statement of Comprehensive Income

During the year, the following interim dividends amounting to,
in aggregate, 3.00 pence per share were declared and paid:

• On 22 April 2015, an interim dividend of 1.0 pence per share
was paid to Shareholders on the register on 20 March 2015;

• On 15 July 2015, an interim dividend of 1.5 pence per share

was paid to Shareholders on the register on 19 June 2015; and

• On 23 September 2015, an interim dividend of 0.5p per share
was paid to Shareholders on the register on 4 September 2015.

An additional interim dividend in respect of the six months
ended 31 December 2015 of 3.00 pence per share was
declared on 26 January 2016, which was paid on 9 March 2016 to
Shareholders on the register on 12 February 2016.

Directors
The names of the Directors who served during the year are
set out in the Board of Directors pages
biographical details.

, together with their

The Company maintains Directors’ and Officers’ liability
insurance cover, at its expense, on the Directors’ behalf.

Future developments
An indication of the likely future developments of the Company’s
business is set out in the Strategic Report

Political donations
No political donations were made during the year.

Employees
The Group has no employees and therefore no employee share
scheme.

Financial instruments
Details of the Group’s financial risk management objectives and
policies, together with its exposure to material financial risks,
are set out in note 22 to the consolidated financial statements

Share capital
As part of the Company’s IPO on 9 December 2013, the Company
issued 200,000,000 Ordinary Shares at a price of 100 pence per
share. The shares were admitted to trading on the Specialist Fund
Market of the London Stock Exchange and the Channel Islands
Stock Exchange Authority Limited (“CISEA”) and listed on the
Official List of the CISEA. This was followed by the placing of an
additional 19,980,000 Ordinary Shares in June 2014.

On 30 July 2014, the Company’s shares were listed on the
premium segment of the Financial Conduct Authority’s Official
List and were admitted to trading on the Main Market of the
London Stock Exchange. The Company simultaneously issued
145,631,068 Ordinary Shares, approved a share issuance
programme under which the Company was authorised to issue
up to 350,000,000 Ordinary Shares between July 2014 and
July 2015 (the “Share Issuance Programme”), and approved the
cancellation of its trading on the CISEA and of its listing on the
Official List of the CISEA, which both took effect on 5 August
2014. Pursuant to the Share Issuance Programme, the Company
issued 104,761,904 Ordinary Shares in December 2014.

In March 2015, the Company issued 175,557 Ordinary Shares
pursuant to the Investment Management Agreement and

See Strategic Report p1-46
See Group Statement of Comprehensive Income p78
See The Board of Directors p54-55

See Directors’ Remuneration Report p66-67
See note 22, Financial Risk Management p98-100

Tritax Big Box REIT plc Annual Report 2015
a further 159,090,909 Ordinary Shares pursuant to the Share
Issuance Programme. In June 2015, the Company issued
47,787,607 Ordinary Shares as a final tranche under the Share
Issuance Programme. In September 2015, the Company issued
a further 290,795 Ordinary Shares pursuant to the Investment
Management Agreement.

As at 31 December 2015, there were 677,840,088 Ordinary
Shares in issue.

ORDINARY SHARES

NUMBER

GROSS
PROCEEDS (£)

Balance at start of the year

470,495,220

–

Shares issued in March 2015

159,266,466 175,186,477

Shares issued in June 2015

47,787,607 53,999,996

Shares issued in September 2015

290,795

333,484

Balance at end of the year

677,840,088 229,519,957

On 16 February 2016, the Company issued a further 161,290,323
Ordinary Shares under a prospectus dated 27 January 2016.

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
a restriction 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.

Going concern
The Directors believe that the Company is well placed to manage
its financing and other business risks. The Board is, therefore,
of the opinion that the going concern basis adopted in the
preparation of the Annual Report is appropriate. Please refer

to the Accountability section as covered within Governance on
pages 58-59 for greater detail.

Greenhouse gas emissions reporting
The Board has considered the requirement to disclose the
Company’s measured carbon emissions sources under the
Companies Act 2006 (Strategic Report and Directors’ Report)
Regulations 2013.

During the year ended 31 December 2015:

• Any emissions from the Group’s properties have been the

tenants’ responsibility rather than the Group’s, so the principle
of operational control has been applied;

• Any emissions that are either produced from the

Company’s registered office or from offices used to provide
administrative support are deemed to fall under the Manager’s
responsibility; and

• The Group has not leased or owned any vehicles which fall
under the requirements of Mandatory Emissions Reporting.

As such, the Board believes that the Company has no reportable
emissions for the year ended 31 December 2015.

Substantial shareholdings
As at 29 February 2016, 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:

NO. OF ORDINARY
SHARES

% HOLDING OF
ISSUED SHARE
CAPITAL

INVESTOR

Aviva plc

BlackRock, Inc

Quilter Cheviot Limited

Smith & Williamson
Holdings Limited

Baillie Gifford & Co

Brooks Macdonald Group plc

East Riding of Yorkshire
Council

59,163,154

51,119,307

39,127,056

33,389,799

30,237,935

27,386,296

27,347,333

Brewin Dolphin Limited

25,617,428

7.05

6.09

4.66

3.98

3.60

3.26

3.05

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE: DIRECTORS’ REPORT

Amendment of Articles of Association
The Articles may be amended by a special resolution of the
Company’s Shareholders.

Events subsequent to the year end date
For details of events since the year end date, please refer to
note 32

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 a general meeting on 25 July 2014, the Directors were
granted authority to allot Ordinary Shares in accordance with
section 551 of the Companies Act 2006, inter alia, up to an
aggregate nominal amount of £3,500,000 (based on a further
350,000,000 Ordinary Shares issued with a nominal amount
of £0.01 per Ordinary Share) pursuant to the Share Issuance
Programme and for premium management purposes. The
Directors were also granted authority to issue those Ordinary
Shares non-pre-emptively and wholly for cash. Such authority
expired on 8 July 2015.

Further, at the Annual General Meeting held on 15 April 2015,
the Directors were granted a general authority to allot Ordinary
Shares in accordance with section 551 of the Companies
Act 2006 up to an aggregate nominal amount of £3,136,634
(based on a further 313,663,400 shares issued with a nominal
amount of £0.01 per Ordinary Share). Of those Ordinary Shares,
the Directors were also granted authority to issue up to an
aggregate nominal amount of £470,495 (based on 47,049,500
Ordinary Shares with a nominal amount of £0.01 per Ordinary
Share) non-pre-emptively and wholly for cash. These authorities
expire at the next Annual General Meeting.

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.
In certain facilities, the change of control provisions also include
a change of control at the ultimate 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

Independent auditor
BDO LLP has expressed its willingness to continue as auditor for
the financial year ending 31 December 2016. A resolution relating
to this appointment will be tabled at the forthcoming AGM.

Manager and service providers
The Manager during the year was Tritax Management LLP.
Details of the Manager and the Investment Management
Agreement are set out in the Management Engagement
Committee Report

The Company’s administration was delegated to Capita Sinclair
Henderson Limited.

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.

Annual General Meeting
The Company’s AGM will be held at the offices of
Taylor Wessing LLP, 5 New Street Square, London EC4A 3TW
at 10:00am on 11 May 2016.

This report was approved by the Board on 16 March 2016.

Tritax Management LLP Company Secretary
16 March 2016

Company Registration Number: 08215888

See Nomination Committee Report, Appointment process p57

See note 32, Subsequent events p104
See Management Engagement Committee Report p63-64

Tritax Big Box REIT plc Annual Report 2015GOVERNANCE
DIRECTORS’ RESPONSIBILITIES STATEMENT

The Directors are responsible for preparing the Annual Report
and the Group and parent company financial statements in
accordance with applicable law and regulations.

They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group
and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

Company law requires the Directors to prepare the Group and
Company financial statements for each financial year. The Group
financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as adopted
by the European Union and the Company financial statements
have been prepared 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 year.

In preparing the financial statements, the Directors are required to:

• Select suitable accounting policies and then apply them

consistently;

• Make judgements and estimates that are reasonable and

prudent;

• For the Group financial statements, state whether they have
been prepared in accordance with IFRSs as adopted by the
European Union, subject to any material departures disclosed
and explained in the Group financial statements;

• For the Company financial statements, state whether they have
been prepared in accordance with Financial Reporting Standard
100 Applications of Financial Reporting Requirements (“FRS
100”) and Financial Reporting Standard 101 Reduced Disclosure
Framework (“FRS 101”), as adopted in the year, subject to any
material departures disclosed and explained in the Company
financial statements; and

• 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.

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 Group and Company and
enable them to ensure that its financial statements comply with
the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.

Under applicable law and regulations, the Directors are also
, a Strategic
responsible for preparing a Directors’ Report
Report
and a Corporate
, a Directors’ Remuneration Report
Governance Statement
regulations. These can be found at pages 68-70, 1-46, 66-67 and
48-49 respectively.

that comply with that law and those

Website publication
The Directors are responsible for ensuring the Annual Report,
including the financial statements, is 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. The Directors’ responsibility also extends to the
ongoing integrity of the financial statements contained therein.

Directors’ responsibility statement
We confirm that to the best of our knowledge:

• The financial statements have been prepared in accordance

with International Financial Reporting Standards (IFRS)
as adopted by the European Union and Article 4 of the
IAS Regulation and, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
and the undertakings included in the consolidation as a whole;

• The Strategic Report includes a fair review of the development

and performance of the business and the position of the
Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal
risks and uncertainties that they face; and

• 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.

Signed on behalf of the Board by:

Richard Jewson Chairman
16 March 2016

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE
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,
we represent net assets of US$70bn and deploy our services
to 80 alternative investment funds across various jurisdictions
worldwide. Our role as depositary primarily involves oversight
of the control environment of the Company, in line with UK
regulatory requirements.

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 third-
party financing. We review whether cash transactions are
appropriately 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 Group and shareholding of holding
companies 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 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
submitting quarterly reports to the Manager and the Company,
which are then presented to the Board of Directors, setting out
work performed and the corresponding findings for the period.

In the year ended 31 December 2015, our work included
the review of two equity and two management share issues,
eleven acquisitions, five third-party financing arrangements
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.

Rachael Lyon Head of Client Services
For and on behalf of Langham Hall UK Depositary LLP
London
United Kingdom
16 March 2016

Langham Hall UK Depositary LLP is a limited liability partnership
registered in England and Wales (with registered number
OC388007).

Tritax Big Box REIT plc Annual Report 2015GOVERNANCE
INDEPENDENT AUDITOR’S REPORT
to the members of Tritax Big Box REIT plc

Opinion on financial statements
In our opinion:

• the financial statements give a true and fair view of the
state of the Group’s and the parent company’s affairs as
at 31 December 2015 and of the Group’s profit for the year
then ended;

• the Group financial statements have been properly prepared

in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union;

• the parent company financial statements have been properly
prepared in accordance with United Kingdom Accounting
Standards; and

• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and,
as regards the Group’s financial statements, Article 4 of the
IAS Regulation.

Overview

Materiality

Overall Group materiality of £10.0 million
which represents 0.8% of total assets.

Audit scope

The whole Group was subject to a full audit.

We have obtained an understanding of
the controls in place at the Group which
assisted us in identifying and assessing risks
of material misstatement due to fraud or
error as well as assisting us in determining
the most appropriate audit strategy.

Valuation of the investment property portfolio
and in particular property under construction
(forward funded assets).

Areas of focus

What has
changed since
our 2014 audit

We increased our focus on the risks
associated with investment property under
construction as a result of the increase in
the significance of these assets.

We reduced our assessment of risk arising
from inappropriate revenue recognition
because revenue is due contractually under
long term property lease agreements with
single tenants and there were no significant
new lease incentives in 2015.

Statement of Financial Position and parent company Balance
Sheet, the Group Statement of Changes in Equity, the Group
Cash Flow Statement and the related notes. The financial
reporting framework that has been applied in the preparation
of the Group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted
by the European Union. The financial reporting framework that
has been applied in preparing the parent company financial
statements is applicable law and United Kingdom Accounting
Standards.

Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of misstatements
on the audit and in forming our audit opinion. Materiality is assessed
on both quantitative and qualitative grounds.

£10.0 million
Materiality
Performance materiality £7.5 million
£1.5 million
Specific materiality
£0.1 million
Reporting threshold

Materiality
The magnitude of an omission or misstatement that, individually
or in the aggregate could reasonably be expected to influence the
economic decisions of the users of the financial statements.

We determined materiality for the Group financial statements as
a whole to be £10.0 million (2014: £6.0 million), which was set at
0.8% of Group total assets (2014: 0.8%). This provides a basis
for determining the nature and extent of our risk assessment
procedures, identifying and assessing risk of material
misstatement and determining the nature and extent of further
audit procedures.

We determined that the carrying value of investment property
would be the most appropriate basis for determining overall
materiality given that the Group’s investment property
balance accounts for around 92% (2014: 82%) of the Group’s
total assets and the fact that users of the Group’s financial
statements are primarily focused on the valuation of the
investment property portfolio.

What we have audited
We have audited the financial statements of Tritax Big Box
REIT plc for the year ended 31 December 2015 which comprise
the Group Statement of Comprehensive Income, the Group

We determined that for other account balances, classes
of transactions and disclosures not related to investment
properties, a misstatement of less than materiality for the financial
statements as a whole could influence the economic decisions
of users. We have determined that materiality for these areas

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE: INDEPENDENT AUDITOR’S REPORT

should be £1.5 million (2014: £0.6 million), which was set at 5%
(2014: 5%) of EPRA adjusted earnings. EPRA adjusted earnings
excludes the impact of the net surplus on revaluation of
investment properties and interest rate derivatives.

Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.

On the basis of our risk assessment, together with our
assessment of the Group’s overall control environment, our
judgment was that overall performance materiality for the
Group should be 75% (2014: 75%) of materiality, namely
£7.5 million (2014: £4.5 million).

Reporting threshold
An amount below which identified misstatements are considered
as being clearly trivial.

We agreed with the Audit Committee that we would report to the
Committee all individual audit differences in excess of £100,000
(2014: £75,000) as well as differences below this threshold that,
in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in the
light of other relevant qualitative considerations.

An overview of the scope of an audit of the financial
statements
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) (ISAs UK & Ireland).
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement whether caused by fraud or error.
This includes an assessment of:

• whether the accounting policies are appropriate to the

Group’s and parent company’s circumstances and have been
consistently applied and adequately disclosed;

• the reasonableness of significant accounting estimates made

by the Directors; and

In addition we read all the financial and non financial information
in the annual report to identify material inconsistencies with
the audited financial statements and to identify any information
that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing our audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.

Tailoring the scope of our audit and our assessment of risks
of material misstatement
We designed our audit by determining materiality and assessing
the risks of material misstatements in the financial statements.
In particular we looked at where the Directors make subjective
judgements. We also addressed the risk of management
override of internal controls, including assessing whether there
was evidence of bias by the Directors that represented a risk of
material misstatement due to fraud.

The Group operates solely in the United Kingdom and through
one segment, investment property. The Group audit team
performed all the work necessary to issue the Group and parent
company audit opinion, including undertaking all of the audit
work on the key risks of material misstatement.

The table opposite shows the risks we identified that had the
greatest effect on the overall audit strategy, the allocation
of resources in the audit, and the directing of efforts of the
engagement team, together with our audit response to the risks.
This is not a complete list of all risks identified by our audit.

This year we included accounting for investment properties
under construction (forward funded assets) as a key area of
focus given that some 25% of the Group’s properties were under
construction during the year and accounting for such assets is
typically more complex than the Group’s standing assets.

Last year we included revenue recognition as a key area; this
year we have reduced our risk assessment given that, in our
view, the risk of material misstatement from inappropriate
revenue recognition within the Group’s portfolio of investment
property is low because of the long term contractual nature of
the Group’s rental income and because there were no significant
new lease incentives in 2015 (a potential area of judgement).

• the overall presentation in the financial statements.

The Audit Committee’s consideration of the judgements set out
on page 61.
in this section is set out

Tritax Big Box REIT plc Annual Report 2015RISK

HOW THE SCOPE OF OUR AUDIT ADDRESSED THE RISK

We obtained an understanding of the approach to the
valuation of both investment properties and properties under
construction.

We met with the Group’s external valuer, who valued all of the
Group’s investment properties, to understand the assumptions
and methodologies used in valuing these properties, the
market evidence supporting the valuation assumptions and
the valuation movements in the year.

We used our knowledge and experience to evaluate and
challenge the valuation assumptions, methodologies and the
unobservable inputs used.

We agreed the accuracy of the key observable valuation inputs
supplied to and used by the external valuer and Directors as
appropriate.

We assessed the competency, independence and objectivity
of the external valuer.

For properties under construction we assessed project costs
and progress of development and verified the forecast costs to
complete included in the valuations through cost analysis.

For such forward funded assets we also reviewed the
accounting treatment of licence fees receivable from the
developer during the construction phase as well as the
treatment of any lease incentives with the pre let tenant,
by reference to the agreement with the tenant.

Valuation of investment property portfolio, including
properties under construction (forward funded assets)
The valuation of investment property requires significant
judgement and estimates by management and the external valuer
and is therefore considered a significant risk due to the subjective
nature of certain assumptions inherent in each valuation.

The Group’s investment property portfolio includes:

• Standing investments: these are existing properties that are
currently let. They are valued using the income capitalisation
method.

• Properties under construction: these are properties being
built under forward funded agreements with developers
and which have agreed pre lets with tenants. Such assets
have a different risk and investment profile to standing
investments. They are valued using the residual method
(ie by estimating the fair value of the completed project
using the income capitalisation method less estimated costs
to completion and an appropriate developer’s margin).

Any input inaccuracies or unreasonable bases used in the
valuation judgements (such as in respect of estimated rental
value and yield profile applied and estimated costs to complete
for assets under construction) could result in a material
misstatement of the income statement and statement of
financial position.

There is also a risk that management may influence the
significant judgements and estimates in respect of property
valuations in order to achieve property valuation and other
performance targets to meet market expectations.

Additionally, properties under construction may involve licence
fees receivable from the developer during the construction
phase and lease incentives to the pre let tenant. Accounting for
such assets is typically more complex than for standing assets.

, the Directors are responsible for the

Respective responsibilities of Directors and Auditors
As explained more fully in the statement of Directors’
Responsibilities
preparation of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Financial
Reporting Council’s (FRC’s) Ethical Standards for Auditors.

This report is made solely to the 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 Company’s members those matters we are required
to state to them in an 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 Company and
the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONGOVERNANCE: INDEPENDENT AUDITOR’S REPORT

Opinion on other matters prescribed by the Companies Act 2006
In our opinion:

• materially inconsistent with the information in the audited

financial statements; or

• the part of the Directors’ Remuneration Report to be

audited has been properly prepared in accordance with the
Companies Act 2006;

• 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 information given in the Corporate Governance Statement

on pages 58-59 with respect to internal control

set out
and risk management systems in relation to financial reporting
processes is consistent with the financial statements.

Statement regarding the Directors’ assessment of principal
risks, going concern and longer term viability of the Company
We have nothing material to add or to draw attention to in
relation to:

• the Directors’ confirmation in the annual report that they have
carried out a robust assessment of the principal risks facing
the entity, including those that would threaten its business
model, future performance, solvency or liquidity;

• apparently materially incorrect based on, or materially

inconsistent with, our knowledge of the Company acquired
in the course of performing our audit; or

• is otherwise misleading.

In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge acquired
during the audit and the Directors’ statement that they consider
the Report and Accounts is fair, balanced and understandable
and whether the Report and Accounts appropriately discloses
those matters that we communicated to the Audit Committee
which we consider should have been disclosed.

Under the Companies Act 2006 we are required to report to you
if, in our opinion:

• adequate accounting records have not been kept, or returns

adequate for our audit have not been received from branches
not visited by us; or

• the 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;

• the disclosures in the annual report that describe those risks

• we have not received all the information and explanations we

and explain how they are being managed or mitigated;

require for our audit; or

• the Directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them and their
identification of any material uncertainties to the entity’s
ability to continue to do so over a period of at least 12 months
from the date of approval of the financial statements; or

• the Directors’ explanation in the annual report as to how

they have assessed the prospects of the entity, over what
period they have done so and why they consider that period
to be appropriate, and their statement as to whether they
have a reasonable expectation that the entity will be able to
continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications
or assumptions.

Matters on which we are required to report by exception
Under the ISAs (UK and Ireland), we are required to report to
you if, in our opinion, information in the Report and Accounts is:

• a Corporate Governance Statement has not been prepared

by the Company.

Under the Listing Rules we are required to review:

• the Directors’ statement

, set out on page 59, in relation to

going concern and longer-term viability; and

• the part of the Corporate Governance Statement relating
to the Company’s compliance with the provisions of the
UK Corporate Governance Code specified for our review by
the Listing Rules of the Financial Conduct Authority.

We have nothing to report in respect of these matters.

Richard Levy (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
16 March 2016

BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).

Tritax Big Box REIT plc Annual Report 2015FINANCIAL STATEMENTS
Group Statement of Comprehensive Income
Group Statement of Financial Position
Group Cash Flow Statement
Group Statement of Changes in Equity
Notes to the Consolidated Accounts
1. Corporate information
2. Basis of preparation
3. Significant accounting judgements,

78
79
80
81
82
82
82

estimates and assumptions

82
4. Summary of significant accounting policies 83
87
5. Standards issued but not yet effective
87
6. Total property income
87
7. Service charge expenses
88
8. Administrative and other expenses
88
9. Directors’ remuneration
88
10. Finance income
89
11. Finance expense
89
12. Taxation
90
13. Earnings per share
91
14. Dividends paid
92
15. Investment property
94
16. Investments
95
17. Trade and other receivables
95
18. Cash held at bank
95
19. Trade and other payables
96
20. Bank borrowings
97
21. Interest rate derivatives
98
22. Financial risk management
100
23. Capital management
101
24. Share capital
101
25. Share premium
102
26. Capital reduction reserve
102
27. Retained earnings
103
28. Net asset value per share (NAV)
103
29. Operating leases
104
30. Transactions with related parties
104
31. Capital commitments
104
32. Subsequent events
105
Company Balance Sheet
Company Reconciliation of Movement in
Shareholders’ Funds
Notes to the Company Accounts
1. Accounting policies
2. Taxation
3. Dividends paid
4. Investments
5. Trade and other receivables
6. Cash held at bank
7. Trade and other payables
8. Share capital
9. Share premium
10. Capital reduction reserve
11. Net asset value per share (NAV)
12. Related party transactions
13. Guarantees

106
107
107
109
109
109
111
111
111
112
113
113
114
114
114

DHL, SKELMERSDALE

Our Big Box in Skelmersdale, Lancashire, let to DHL.
This is a highly specified and fully fitted distribution
facility, located approximately one mile from
Junction 4 of the M58 and five miles from Junction 6
of the M6. The port of Liverpool is approximately
14 miles. DHL has committed significant capital
expenditure to fit the unit out, in order to fulfil a new
distribution contract; the unit will also operate as a
multi-contracted facility.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
FINANCIAL STATEMENTS
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2015

Gross rental income
Service charge income
Service charge expense

Net rental income

Administrative and other expenses

Operating profit before changes in fair value of investment properties

Changes in fair value of investment properties

Operating profit

Finance income
Finance expense
Changes in fair value of interest rate derivatives

Profit before taxation

Tax charge on profit for the year

Total comprehensive income (attributable to the Shareholders)

Earnings per share – basic
Earnings per share – diluted

Year ended
31 December
2015
£’000

43,784
1,415
(1,431)

43,768

(7,830)

35,938

106,751

142,689

272
(6,983)
(1,994)

133,984

–

For the period
1 November 2013 to
31 December
2014
£’000

18,603
511
(511)

18,603

(3,603)

15,000

31,668

46,668

205
(2,452)
(2,577)

41,844

–

133,984

41,844

21.56p
21.54p

15.10p
15.10p

Note

6
6
7

10
11
21

13
13

Tritax Big Box REIT plc Annual Report 2015
FINANCIAL STATEMENTS
GROUP STATEMENT OF FINANCIAL POSITION
As at 31 December 2015

Non-current assets
Investment property
Interest rate derivatives

Total non-current assets

Current assets
Trade and other receivables
Cash held at bank

Total current assets

Total assets

Current liabilities
Deferred rental income
Trade and other payables

Total current liabilities

Non-current liabilities
Bank borrowings

Total non-current liabilities

Total liabilities

Total net assets

Equity
Share capital
Share premium reserve
Capital reduction reserve
Retained earnings

Total equity

Net asset value per share – basic
Net asset value per share – diluted
EPRA net asset value per share

At
31 December
2015
£’000

1,157,854
8,635

1,166,489

19,733
68,586

88,319

1,254,808

(11,828)
(24,243)

(36,071)

(377,635)

At
31 December
2014
£’000

586,179
2,379

588,558

30,668
98,616

129,284

717,842

(7,332)
(6,048)

(13,380)

(200,933)

(413,706)

(214,313)

841,102

503,529

6,778
52,738
605,758
175,828

841,102

124.09p
124.01p
124.68p

4,705
272,536
184,444
41,844

503,529

107.02p
107.02p
107.57p

Note

15
21

17
18

24
25
26
27

28
28
28

These financial statements were approved by the Board of Directors on 16 March 2016 and signed on its behalf by:

Richard Jewson Chairman

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS
GROUP CASH FLOW STATEMENT
For the year ended 31 December 2015

Cash flows from operating activities
Profit for the year (attributable to equity Shareholders)
Less: changes in fair value of investment properties
Add: changes in fair value of interest rate derivatives
Less: finance income
Add: finance expense
Accretion of tenant lease incentive
Increase in trade and other receivables
Increase in deferred income
Increase in trade and other payables
Cash received as part of corporate acquisitions

Cash generated from operations

Tax paid

Net cash flow generated from operating activities

Investing activities
Purchase of investment properties
Forward funded payment
Licence fees received
Interest received
Amounts transferred into restricted cash deposits
Amounts transferred out of restricted cash deposits

Net cash flow used in investing activities

Financing activities
Proceeds from issue of Ordinary Share capital
Cost of share issues
Bank borrowings drawn
Bank borrowings repaid
Loan arrangement fees paid
Bank interest paid
Interest rate cap premium paid
Proceeds from disposal of interest rate cap
Dividends paid to equity holders

Net cash flow generated from financing activities

Net (decrease)/increase in cash and cash equivalents for the year

Cash and cash equivalents at start of the year

Cash and cash equivalents at end of the year

Year ended
31 December
2015
£’000

For the period
1 November 2013 to
31 December
2014
£’000

Note

133,984
(106,751)
1,994
(272)
6,983
(2,206)
(12,135)
3,597
162
1,283

26,639

(112)

26,527

(437,607)
–
16,590
289
(5,851)
783

(425,796)

229,520
(4,726)
186,897
(5,500)
(6,080)
(5,663)
(8,324)
74
(22,027)

364,171

(35,098)

94,306

59,208

41,844
(31,668)
2,577
(205)
2,452
(937)
(1,787)
7,332
3,194
–

22,802

–

22,802

(555,696)
(27,204)
1,514
115
(4,310)
–

(585,581)

480,901
(9,594)
215,144
(11,500)
(2,658)
(1,418)
(4,956)
–
(8,834)

657,085

94,306

–

94,306

18
18

20
20

Tritax Big Box REIT plc Annual Report 2015
FINANCIAL STATEMENTS
GROUP STATEMENT OF CHANGES IN EQUITY

1 January 2015

Total comprehensive income

Issue of Ordinary Shares
Shares issued in relation to further Equity issue (March 2015)
Share issue expenses in relation to Equity issue (March 2015)
Shares issued in relation to further Equity issue (June 2015)
Share issue expenses in relation to Equity issue (June 2015)
Shares issued in relation to management contract
Share based payments
Transfer of share based payments to liabilities to
reflect settlement
Cancellation of share premium account

Dividends paid:
Third interim dividend for the period ended 31 December 2014
(0.80 pence)
First interim dividend for the year ended 31 December 2015
(1.00 pence)
Second interim dividend for the year ended 31 December 2015
(1.50 pence)
Third interim dividend for the year ended 31 December 2015
(0.50 pence)

31 December 2015

1 November 2013

Total comprehensive income

Issue of Ordinary Shares
Shares issued in relation to IPO
Share issue expenses in relation to IPO
Shares issued in relation to Tap (June 2014)
Share issue expenses in relation to Tap (June 2014)
Shares issued in relation to further Equity issue (July 2014)
Share issue expenses in relation to further Equity issue (July 2014)
Shares issued in relation to management contract
Shares issued in relation to further Equity issue
(December 2014)
Share issue expenses in relation to further Equity issue
(December 2014)
Share based payments
Transfer of share based payments to liabilities to
reflect settlement
Cancellation of share premium account

Dividends paid:
First interim dividend for the period ended 31 December 2014
(1.85 pence)
Second interim dividend for the period ended 31 December 2014
(1.50 pence)

31 December 2014

1,591
–
477
–
5
–

–
–

–

Undistributable reserves

Distributable reserves

Share
capital
£’000

Share
premium
£’000

Capital reduction
reserve
£’000

Retained
earnings
£’000

Total
£’000

4,705

272,536

184,444

41,844

503,529

–

173,409
(3,547)
53,522
(1,078)
515
–

–
(442,619)

–

–
–
–
–
–
–

133,984

–
–
–
–
–
836

175,000
(3,547)
53,999
(1,078)
520
836

–
442,619

(836)
–

( 836)
–

–

(3,764)

(4,707)

(9,446)

(3,388)

–

(3,764)

(4,707)

(9,446)

(3,388)

6,778

52,738

605,758

175,828

841,102

–

1,950
–
200
–
1,456
–
1

–

198,000
(4,000)
20,579
(402)
148,544
(3,042)
121

1,048

108,952

–
–

–

(2,216)
–

–
(194,000)

–

–
–
–
–
–
–
–

–

–
–

–
194,000

(4,070)

(5,486)

–

41,844

–
–
–
–
–
–
–

–

–
320

(320)
–

–

199,950
(4,000)
20,779
(402)
150,000
(3,042)
122

110,000

(2,216)
320

(320)
–

(4,070)

(5,486)

4,705

272,536

184,444

41,844

503,529

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

1. CORPORATE INFORMATION
The consolidated financial statements of the Group for the year ended 31 December 2015 comprise the results of the Company
and its subsidiaries and were approved by the Board for issue on 16 March 2015. Tritax Big Box REIT plc (“the Company”) is a public
listed company incorporated and domiciled in England and Wales. The Company’s Ordinary Shares are admitted to the official list of
the UK Listing Authority, a division of the Financial Conduct Authority, and traded on the London Stock Exchange.

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

on pages 1-46.

ACCOUNTING POLICIES

2. BASIS OF PREPARATION
The consolidated financial information has been prepared in accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB) as adopted by the European Union and in accordance with the
Companies Act 2006 and Article 4 of the IAS Regulations.

The prior period is for a period of greater than 12 months, due to the change of year end of the Company to align it with the
calendar year. As a result the comparative information disclosed in the Group Statement of Comprehensive Income is not directly
comparable.

The Group’s financial information has been prepared on a historical cost basis, as modified for the Group’s investment properties
and interest rate derivatives, which have been measured at fair value through the Group Statement of Comprehensive Income.

The consolidated financial information is presented in Sterling, which is also the Group’s functional currency, and all values are
rounded to the nearest thousand (£’000), except where otherwise indicated.

The Group has chosen to adopt EPRA best practice guidelines for calculating key metrics such as net asset value and earnings per share.

2.1. Going concern
The consolidated financial statements are prepared on a going concern basis as explained within Accountability

on pages 58-59.

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

3.1. Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most
significant effect on the amounts recognised in the consolidated financial information:

Business combinations
The Group acquires subsidiaries that own investment properties. At the time of acquisition, the Group considers whether each
acquisition represents the acquisition of a business or the acquisition of an asset. The Group accounts for an acquisition as a
business combination where an integrated set of activities is acquired in addition to the property.

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

Tritax Big Box REIT plc Annual Report 2015Operating lease contracts – the Group as lessor
The Group has acquired investment properties that are subject to commercial property leases with tenants. The Group has
determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms
and minimum lease payments, that it retains all the significant risks and rewards of ownership of these properties and so accounts
for the leases as operating leases.

Fair valuation of investment property
The fair value of investment property is determined, by independent property valuation experts, 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 experts use recognised valuation techniques applying the principles of both IAS 40 and IFRS 13.

The valuations have been prepared in accordance with the Royal Institution of Chartered Surveyors (“RICS”) Valuation – Professional
Standards January 2014 (“the Red Book”). Factors reflected include current market conditions, annual rentals, lease lengths and
location. The significant methods and assumptions used by valuers in estimating the fair value of investment property are set out in
note 15

Fair valuation of interest rate derivatives
In accordance with IAS 39, the Group values its interest rate derivatives at fair value. The fair values are estimated by the loan
counterparty with revaluation occurring on a quarterly basis. The counter parties will use a number of assumptions in determining
the fair values including estimations over future interest rates and therefore future cash flows. The fair value represents the net
present value of the difference between the cash flows produced by the contracted rate and the valuation rate.

Group refinancing arrangements
The Group undertook a debt refinancing during the year, to lower its cost of borrowing and provide it with flexible debt
arrangements. In accordance with IAS39, the Group has evaluated whether or not the refinancing represents an extinguishment
of the old financial instruments and whether this would give rise to a gain or loss being recognised in the Group Statement of
Comprehensive Income. In doing so, the Group has considered that it has met all criteria for the refinancing not to be considered
an extinguishment of a liability, which includes, existing borrower and lender relationships, the qualitative test and the 10% present
value test of cash flows, where the net present value of future cash flows of the refinanced instrument do not differ from those of the
existing instrument by more than 10%.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1. Basis of consolidation
The consolidated financial statements incorporate the audited financial statements of the Company and its subsidiaries, as at the
year end date.

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 to affect 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 the United
Kingdom in Big Box assets.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 please see Accounting Policy note 4.14.1
.

Investment property is recognised when the risks and rewards of ownership have been transferred 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 Statement of
Comprehensive Income in the period in which they arise under IAS 40 Investment Property.

Investment properties under construction are financed by the Group where the Group enters into contracts for the development
of a pre-let property under a funding agreement. All such contracts specify a fixed amount of consideration. The Group does not
expose itself to any speculative development risk as the proposed building is pre-let to a tenant under an agreement for lease and
the Group enters into a fixed price development agreement with the developer. Investment properties under construction are initially
recognised at cost (including any associated 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. All other property expenditure is written-off in the Group Statement
of Comprehensive Income 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 Statement of Comprehensive Income in the year of retirement or disposal.

4.5. Derivative financial instruments
Derivative financial instruments, comprising interest rate caps and swaps for hedging purposes, are initially recognised at cost
and are subsequently measured at fair value being the estimated amount that the Group would receive or pay to terminate the
agreement at the period end date, taking into account current interest rate expectations and the current credit rating of the
Company and its counterparties. The gain or loss at each fair value remeasurement date is recognised in the Group Statement of
Comprehensive Income. Premiums payable under such arrangements are initially capitalised into the Group Statement of Financial
Position, subsequently they are remeasured and held at their fair values.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to the fair
value measurement as a whole.

4.6. 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.

Tritax Big Box REIT plc Annual Report 2015

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.

4.7. Trade and other receivables
Trade and other receivables are recognised and carried at the lower of their original invoiced value and recoverable amount.
Where the time value of money is material, receivables are initially recognised at fair value and subsequently measured at amortised
cost. A provision for impairment is made when there is objective evidence that the Group will not be able to recover balances in full.
Balances are written-off when the probability of recovery is assessed as being remote.

4.8. Forward funded pre-let investments
The Group enters into forward funding agreements for pre-let investments.

4.8.1. Forward funded prepayments
Under the terms of certain Development Funding Agreements, the Group may choose to pay the total fixed price construction
cost to the developer upon entering into the Agreement, which is to be held in a restricted bank account. This will be classified as
a forward funded prepayment on the Group Statement of Financial Position. As construction costs are incurred, funds are released
subject to the authorisation of the Group’s subsidiary that has contracted the development, along with appropriate monitoring
surveyor sign off. Accordingly, the initial amount paid into the restricted bank account shown as a forward funded prepayment,
will reduce as construction costs are incurred and funds are released from the restricted account and capitalised accordingly.

4.8.2. Licence fees receivable
During the period between initial investment in a forward funded agreement and the rent commencement date, the Group receives
licence fee income. 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. Under IFRS such
licence fees are deducted from the cost of the investment and are shown as a receivable. Any economic benefit of the licence fee
is reflected within the Group Statement of Comprehensive Income as a movement in the fair value of investment property and not
within gross rental income.

4.9. Cash held at bank
Cash and cash equivalents comprises cash in hand, deposits held at call with banks, other short-term highly liquid investments with
original maturities of three months or less. Cash held at bank also includes amounts held in restricted accounts to cover future rent-
free periods; this is not available for everyday use.

4.10. Trade payables
Trade payables are initially recognised at their fair value; being at their invoiced value inclusive of any VAT that may be applicable.
Payables are subsequently measured at cost.

4.11.1 Bank borrowings
All bank borrowings are initially recognised at fair value net of attributable transaction costs. Any attributable transaction costs
relating to the issue of the bank borrowings are amortised through the Group Statement of Comprehensive Income over the life of
the debt instrument on a straight-line basis. After initial recognition, all bank borrowings are measured at amortised cost, using the
effective interest method.

4.11.2 Refinancing arrangements
The Group accounts for refinancing exchanges with an existing lender by considering both quantitative and qualitative indicators
of extinguishment or modifications. Where the net present value of the future cash flows of the refinanced instrument do not differ
from those of the existing instrument by more than 10%, the quantitative criteria are met to treat the exchange as a modification.
The indicators of qualitative factors as to modification or extinguishment are considered a judgement as referred to in 3.1. Where an
extinguishment exists the new instrument is recognised at fair value and the difference between that and the carrying value of the
old instrument is recognised as a gain or loss in the Group Statement of Comprehensive Income.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.12. Share-based payments
The expense relating to share based payments is accrued over the period 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 transferred to a
liability with a view that there is an expectation that the payment will be settled in cash. Contingently issuable shares are treated as
dilutive to the extent that based on market factors prevalent at the reporting period date the shares would be issuable.

4.13. 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.

4.14. Property income

4.14.1. 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 Statement of Comprehensive Income. 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.

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 rental revenue 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.

Amounts received from tenants to terminate leases or to compensate for dilapidations are recognised in the Group Statement
of Comprehensive Income when the right to receive them arises.

4.14.2. Service charges, insurances and other expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognised in the period in which the compensation becomes receivable.
Service and insurance charges and other such receipts are included in net rental income gross of the related costs, as the Directors
consider that the Group acts as principal in this respect.

4.15. 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.

4.16. 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 in the period in which
they occur.

4.17. 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 non-REIT taxable income for the period, using tax rates enacted or substantively enacted at the period
end date, and any adjustment to tax payable in respect of previous years.

Tritax Big Box REIT plc Annual Report 2015
5. STANDARDS ISSUED BUT NOT YET EFFECTIVE
The following are new standards, interpretations and amendments, which are not yet effective and have not been early adopted in
this financial information, that will or may have an effect on the Group’s future financial statements:

IFRS 9: Financial Instruments (effective 1 January 2018 subject to EU endorsement);
IFRS 15: Revenue from Contracts with Customers (effective 1 January 2017 subject to EU endorsement);
IFRS 16: Leases (effective 1 January 2019).

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group’s
financial statements in the period of initial application, other than on presentation and disclosure.

6. TOTAL PROPERTY INCOME

Rental income – freehold property
Rental income – long leasehold property
Spreading of tenant incentives and guaranteed rental uplifts

Gross rental income

Property insurance recoverable
Service charges recoverable

Total insurance/service charge income

Total property income

Year ended
31 December
2015
£’000

For the period
1 November 2013 to
31 December
2014
£’000

32,893
8,685
2,206

43,784

1,234
181

1,415

45,199

14,851
2,815
937

18,603

460
51

511

19,114

Included within rental income is £2.21 million (2014: £0.94 million) of accrued contracted rental income, relating to fixed or
minimum uplift rental reviews or rent-free lease incentives.

See note 15.

Revenue from three individual tenants represents £4.99 million, £5.49 million and £5.72 million respectively of gross rental income
and therefore each individually representing more than 10% of gross rental income.

7. SERVICE CHARGE EXPENSES

Property insurance expense
Service charge expense

Total property expenses

Year ended
31 December
2015
£’000

For the period
1 November 2013 to
31 December
2014
£’000

1,250
181

1,431

460
51

511

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION

FINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

8. ADMINISTRATIVE AND OTHER EXPENSES

Investment management fees
Directors’ remuneration (note 9)

Auditor’s fees
– Fees payable for the audit of the Company’s annual accounts
– Fees payable for the review of the Company’s interim accounts
– Fees payable for the audit of the Company’s initial accounts
– Fees payable for the audit of the Company’s subsidiaries
– Fees payable for taxation services

Total Auditor’s fee
Corporate administration fees
Regulatory fees
Legal and professional fees
Marketing and promotional fees
Other administrative costs

Year ended
31 December
2015
£’000

6,310
173

For the period
1 November 2013 to
31 December
2014
£’000

2,330
154

129
20
–
32
75

256
358
25
448
94
166

44
14
9
27
60

154
254
25
488
95
103

7,830

3,603

The Auditor has also received £62,000 in respect of providing reporting accountant services in connection with the two equity
issuances occurring during the year. A total £132,000 has been incurred in respect of due diligence and advisory services provided
in connection with the acquisition of Group assets. The fees relating to the share issuances have been treated as share issue
expenses and offset against share premium. The fees in relation to the acquisition of assets have been capitalised in to the cost of
the respective assets.

9. DIRECTORS’ REMUNERATION

Directors’ fees
Employer’s National Insurance

Year ended
31 December
2015
£’000

For the period
1 November 2013 to
31 December
2014
£’000

155
18

173

141
13

154

A summary of the Directors’ emoluments, including the disclosures required by the Companies Act 2006, is set out in the Directors’
Remuneration Report. As Chairman of the Company’s Manager, Mark Shaw is not entitled to receive a fee.

10. FINANCE INCOME

Interest received on bank deposits

Year ended
31 December
2015
£’000

For the period
1 November 2013 to
31 December
2014
£’000

272

205

Tritax Big Box REIT plc Annual Report 2015

11. FINANCE EXPENSE

Interest payable on bank borrowings
Commitment fees payable on bank borrowings
Swap interest payable
Amortisation of loan arrangement fees

Year ended
31 December
2015
£’000

For the period
1 November 2013 to
31 December
2014
£’000

5,843
118
76
946

6,983

2,142
–
–
310

2,452

The total interest payable on financial liabilities carried at amortised cost comprises interest and commitment fees payable on bank
borrowings of £6.48 million (2014: £2.14 million) of which £0.52 million were capitalised in the year (2014: £nil) and amortisation of
loan arrangement fees of £1.08 million (2014: £0.31 million) of which £0.13 million (2014: £nil) were capitalised in the year. The total
interest payable on bank borrowings specifically drawn to finance the construction of investment properties was capitalised in the
current and preceding period.

12. TAXATION
a) Tax charge in the Group Statement of Comprehensive Income

UK corporation tax

Year ended
31 December
2015
£’000

–

For the period
1 November 2013 to
31 December
2014
£’000

–

A reduction in the UK corporation tax rate from 21% to 20% was effective from 1 April 2015. In addition, the Government
announced its intention to further reduce the UK corporation tax rates from 20% to 19% from 1 April 2017. Accordingly, these rates
have been applied in the measurement of the Group’s tax liability at 31 December 2015.

b) Factors affecting the tax credit 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:

Profit on ordinary activities before taxation

Theoretical tax at UK corporation tax rate of 20.25% (31 December 2014: 21.71%)
REIT exempt income
Non-taxable items
Transfer pricing adjustment
Residual losses

Total tax credit

Year ended
31 December
2015
£’000

133,984

27,131
(5,927)
(21,114)
343
(433)

–

For the period
1 November 2013 to
31 December
2014
£’000

41,844

9,084
(2,672)
(6,406)
144
(150)

–

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION

FINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

13. EARNINGS PER SHARE
Earnings per share (EPS) amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the
Company by the weighted average number of Ordinary Shares in issue during the year. As there are dilutive instruments
outstanding, both basic and diluted earnings per share are quoted below.

The calculation of basic and diluted earnings per share is based on the following:

For the year ended 31 December 2015

Basic earnings per share
Adjustment for dilutive shares to be issued
Diluted earnings per share

Adjustments to remove:
Changes in fair value of investment properties (note 15)
Changes in fair value of interest rate derivatives (note 21)

EPRA2 basic earnings per share
EPRA2 diluted earnings per share

Adjustments to include:
Licence fee receivable on forward funded developments
Interest capitalised on forward funded developments

Adjusted basic earnings per share
Adjusted diluted earnings per share

For the period 1 November 2013 to 31 December 2014

Basic and diluted earnings per share

Adjustments to remove:
Changes in fair value of investment properties (note 15)
Changes in fair value of interest rate derivatives (note 21)

EPRA2 basic and diluted earnings per share

Adjustments to include:
Licence fee receivable on forward funded developments

Adjusted basic and diluted earnings per share

1 Based on the weighted average number of Ordinary Shares in issue throughout the year.
2 European Public Real Estate Association.

Net profit
attributable to
Ordinary
Shareholders
£’000

133,984

Weighted average
number of
Ordinary
Shares 1
Number

621,514,696
415,179
621,929,875

Earnings
per share
Pence

21.56p

21.54p

(106,751)
1,994

29,227
29,227

9,519
(708)

38,038
38,038

621,514,696
621,929,875

4.70p
4.70p

621,514,696
621,929,875

6.12p
6.12p

41,844

277,169,193

15.10p

(31,668)
2,577

12,753

710

277,169,193

4.60p

13,463

277,169,193

4.86p

Tritax Big Box REIT plc Annual Report 2015

14. DIVIDENDS PAID

Third interim dividend in respect of period ended
31 December 2014 at 0.80 pence per Ordinary Share

First interim dividend in respect of year ended 31 December 2015 at 1.00 pence per
Ordinary Share (31 December 2014: 1.85 pence)

Second interim dividend in respect of year ended 31 December 2015 at 1.50 pence per
Ordinary Share (31 December 2014: 1.50 pence)

Third interim dividend in respect of year ended 31 December 2015 at 0.50 pence per
Ordinary Share

Total dividends paid

Total dividends paid for the year
Total dividends unpaid but declared for the year

Total dividends declared for the year

Year ended
31 December
2015
£’000

For the period
1 November 2013 to
31 December
2014
£’000

3,764

4,707

9,446

3,388

21,305

3.00p
3.00p

6.00p

–

4,070

5,486

–

9,556

3.35p
0.80p

4.15p

On 23 February 2015, the Company announced the declaration of a third interim dividend in respect of the period from 1 November
2014 to 31 December 2014 of 0.80 pence per Ordinary Share, which was payable on 18 March 2015 to Ordinary Shareholders on
the register on 6 March 2015.

On 6 March 2015, the Company announced the declaration of a first interim dividend in respect of the period from 1 January 2015
to 28 February 2015 of 1.00 pence per Ordinary Share which was payable on 22 April 2015 to Shareholders on the register on
20 March 2015.

On 8 June 2015, the Company announced the declaration of a second interim dividend in respect of the period 1 March 2015 to
31 May 2015 of 1.50 pence per Ordinary Share which was payable on 15 July 2015 to Shareholders on the register on 19 June 2015.

On 21 August 2015, the Company announced the declaration of a third interim dividend in respect of the period 1 June 2015 to
30 June 2015 of 0.50 pence per Ordinary Share which was payable on 23 September 2015 to Shareholders on the register on
4 September 2015.

On 27 January 2016, the Company announced the declaration of a fourth interim dividend in respect of the period 1 July 2015 to
31 December 2015 of 3.00 pence per Ordinary Share which was payable on 9 March 2016 to Shareholders on the register on
12 February 2016.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
FINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

15. INVESTMENT PROPERTY
In accordance with IAS 40: Investment Property, the investment property has been independently valued at fair value by
CBRE Limited (“CBRE”), an accredited independent valuer with a recognised and relevant professional qualification and
with recent experience in the locations and categories of the investment properties being valued. The valuations have been
prepared in accordance with the RICS Valuation – Professional Standards January 2014 (“the Red Book”) and incorporate the
recommendations of the International Valuation Standards Committee which are consistent with the principles set out in IFRS 13.

The Valuer in forming its opinion make 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.

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

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.

As at 1 January 2015
Property additions
Fixed rental uplift1
Transfer of completed property to investment property
Change in fair value during the year

As at 31 December 2015

As at 1 November 2013
Property additions
Fixed rental uplift1
Change in fair value during the period

As at 31 December 2014

Investment
property
freehold
£’000

467,320
152,983
2,132
41,191
57,265

720,891

–
442,698
937
23,685

467,320

Investment
property
long leasehold
£’000

Investment
property
under construction
£’000

110,150
133,363
74
–
17,108

8,709
176,372
–
(41,191)
32,378

Total
£’000

586,179
462,718
2,206
–
106,751

260,695

176,268

1,157,854

–
103,375
–
6,775

110,150

–
7,501
–
1,208

8,709

–
553,574
937
31,668

586,179

1 Included within the carrying value of investment property is £3.14 million in respect of accrued contracted rental uplift income. This balance arises as a result of the IFRS
treatment of leases with fixed or minimal 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.

Investment property at fair value
Forward funding prepayments (note 17)
Licence fee receivable
Capital commitments
Restricted cash (note 18)

Total portfolio valuation*

* Including costs to complete on forward funded development assets.

The valuation summary is set out in the Strategic Report

, page 35.

31 December
2015
£’000

1,157,854
–
4,602
139,221
9,378

1,311,055

31 December
2014
£’000

586,179
27,204
1,587
–
4,310

619,280

Tritax Big Box REIT plc Annual Report 2015
Fair value hierarchy
The following table provides the fair value measurement hierarchy for investment property:

Date of
valuation

Total
£’000

Quoted prices in
active markets
(Level 1)
£’000

Significant
observable inputs
(Level 2)
£’000

Significant
unobservable inputs
(Level 3)
£’000

Assets measured at fair value:
Investment properties

Investment properties

31 December 2015

31 December 2014

1,157,854

586,179

–

1,157,854

586,179

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 are as follows:

Valuation techniques: market comparable method
Under the market comparable method (or market comparable approach), a property’s fair value is estimated based on comparable
transactions in the market.

Unobservable input: passing rent
The rent at which space could be let in the market conditions prevailing at the date of valuation (range: £838,500-£5,490,254 per annum).

Unobservable input: rental growth
The estimated average increase in rent based on both market estimations and contractual arrangements. A reduction of the
estimated future rental growth in the valuation model would lead to a decrease in the fair value of the investment property and an
inflation of the estimated future rental growth would lead to an increase in the fair value. No quantitative sensitivity analysis has
been provided for estimated rental growth as a reasonable range would not result in a significant movement in fair value.

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 (range: 4.25%-7.00%).

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:

Increase/(decrease) in the fair value of investment
properties as at 31 December 2015

Increase/(decrease) in the fair value of investment
properties as at 31 December 2014

-5% in
passing rent
£’000

+5% in
passing rent
£’000

+0.25% in
net initial yield
£’000

-0.25% in
net initial yield
£’000

(65,553)

65,553

(63,563)

69,716

(30,964)

30,964

(26,835)

29,381

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
FINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

16. INVESTMENTS
The Group comprises a number of companies, all subsidiaries included within these financial statements are noted below:

TBBR Holdings 1 Limited
TBBR Holdings 2 Limited
Tritax Acquisition 1 Limited
Baljean Properties Limited
Tritax Acquisition 2 Limited
Tritax Acquisition 2 (SPV) Limited
The Sherburn RDC Unit Trust
Tritax REIT Acquisition 3 Limited
Tritax REIT Acquisition 4 Limited
Tritax Acquisition 4 Limited
Tritax REIT Acquisition 5 Limited
Tritax Acquisition 5 Limited
Tritax Acquisition 6 Limited
Sonoma Ventures Limited
Tritax Acquisition 7 Limited
Tritax Ripon Limited
Tritax REIT Acquisition 8 Limited
Tritax Acquisition 8 Limited
Tritax REIT Acquisition 9 Limited
Tritax Acquisition 9 Limited
Tritax REIT Acquisition 10 Limited
Tritax Acquisition 10 Limited
Tritax REIT Acquisition 11 Limited
Tritax Acquisition 11 Limited
Tritax REIT Acquisition 12 Limited
Tritax Acquisition 12 Limited
Tritax REIT Acquisition 13 Limited
Tritax Acquisition 13 Limited
Tritax REIT Acquisition 14 Limited
Tritax Acquisition 14 Limited
Tritax Acquisition 15 Limited
Tritax Worksop Limited
Tritax REIT Acquisition 16 Limited
Tritax Acquisition 16 Limited
Tritax REIT Acquisition 17 Limited
Tritax Acquisition 17 Limited
Tritax REIT Acquisition 18 Limited
Tritax Acquisition 18 Limited
Tritax Acquisition 19 Limited
Tritax Harlow Limited
Tritax Acquisition 20 Limited
Tritax Lymedale Limited
Tritax REIT Acquisition 21 Limited
Tritax Acquisition 21 Limited
Tritax REIT Acquisition 22 Limited
Tritax Acquisition 22 Limited
Tritax REIT Acquisition 23 Limited
Tritax Acquisition 23 Limited
Tritax Acquisition 24 Limited
Tritax Knowsley Limited

Principal activity
Investment Holding Company
Investment Holding Company
Investment Holding Company
Property Investment
Investment Holding Company
Investment Holding Company
Property Investment
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Property Investment
Property Investment

Country of incorporation
Jersey
Jersey
Jersey
Isle of Man
Jersey
Jersey
Jersey
UK
UK
Jersey
UK
Jersey
Jersey
BVI
Jersey
Guernsey
UK
Jersey
UK
Jersey
UK
Jersey
UK
Jersey
UK
Jersey
UK
Jersey
UK
Jersey
Jersey
BVI
UK
Jersey
UK
Jersey
UK
Jersey
Jersey
Guernsey
Jersey
Guernsey
UK
Jersey
UK
Jersey
UK
Jersey
Jersey
Isle of Man

Ownership %
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Tritax Big Box REIT plc Annual Report 201517. TRADE AND OTHER RECEIVABLES

Forward funded prepayment
Trade receivables
Licence fee receivable
Prepayments and other receivables
VAT

As at 31 December 2015, some trade receivables were past due but not impaired, as set out below.

Past due but not impaired

< 30 days
30-60 days
60-90 days
90 days+

18. CASH HELD AT BANK

Cash and cash equivalents to agree with cash flow
Restricted cash

31 December
2015
£’000

31 December
2014
£’000

–
2,110
4,602
98
12,923

19,733

1,202
–
853
55

2,110

27,204
1,718
1,587
159
–

30,668

1,718
–
–
–

1,718

31 December
2015
£’000

59,208
9,378

68,586

31 December
2014
£’000

94,306
4,310

98,616

Restricted cash represents amounts relating to future rent-free periods on certain assets within the portfolio or rental to-up amounts,
where a cash deduction against the net purchase price was agreed with the vendor. Currently the cash is held in an account at the
bank that has debt security over the asset to cover the periods of cash shortfall as set out in the lease. The restricted cash is not
readily convertible to cash available on demand.

Cash and cash equivalents reported in the Consolidated Statement of Cash Flows totalled £59.21 million (2014: £94.31 million) as
at the year end, which excludes long-term restricted cash deposits totalling £9.38 million (2014: £4.31 million). Total cash held at
bank as reported in the Group Statement of Financial Position is £68.59 million (2014: £98.62 million).

19. TRADE AND OTHER PAYABLES

Trade and other payables
Bank loan interest payable
Accruals
VAT
Tax liability

31 December
2015
£’000

31 December
2014
£’000

19,969
1,326
2,881
–
67

24,243

1,997
723
1,763
1,490
75

6,048

The tax liability arises from the acquisition of a number of special purpose vehicles (SPV’s) during the current and prior period. The tax
liability wholly relates to the period prior to Group ownership. Any tax liability was fully accrued for within the take on accounts of the SPV.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

20. BANK BORROWINGS
A summary of the drawn and undrawn bank borrowings in the year is shown below:

As at 1 January 2015
Bilateral bank borrowings agreed in the year
Bank borrowings refinanced in the year
Syndicated bank borrowings agreed in the year

As at 31 December 2015

As at 1 November 2013
Bank borrowings drawn in the period
Bank borrowings available but undrawn in the period

As at 31 December 2014

Bank
borrowings
drawn
£’000

203,644
84,740
(253,343)
350,000

385,041

–
203,644
–

203,644

Bank
borrowings
undrawn
£’000

13,172
21,313
–
150,000

184,485

–
–
13,172

13,172

Total
£’000

216,816
106,053
(253,343)
500,000

569,526

–
203,644
13,172

216,816

The Group entered into three separate bilateral facilities during the year, drawing on £84.7 million of debt whilst having undrawn
debt facilities available of £34.5 million at the year end in respect of the Ocado, Erith facility. The facilities are secured against
individual investment properties, the asset owning entities and certain intermediary holding companies of those subsidiaries.

On 2 October 2015, the Group agreed a new £500 million secured debt facility with a syndicate of four lenders; Barclays Bank PLC,
Helaba, Wells Fargo Bank N.A. and ING Real Estate Finance (UK) B.V. The facility comprises a £320 million term loan, which was
drawn immediately, a further £80 million term loan and a £100 million revolving credit facility. The revolving credit facility included
an overdraft component of £10 million. As at the year end, the Group has drawn £350 million under this facility. The facility is
fully cross-collateralised against a portfolio of assets, the asset owning entities and certain intermediary holding companies. The
Company provides a full guarantee on behalf of each obligor in respect of each and every lender.

The Group used proceeds from the syndicated facility to refinance £253.3 million of its bilateral debt arrangements, which had been
provided by Barclays and Santander. Its existing loans with Helaba remain outside the facility and are unaffected. There were no
early redemption charges payable on any of the loans that were refinanced.

Each of the Group’s debt facilities has an interest charge which is payable quarterly based on a margin above 3 month Libor. The
weighted average margin payable by the Group on its debt portfolio as at the year end was 1.42% (2014: 1.76%) above 3 month Libor.

The Group has been in compliance with all of the financial covenants of the above facilities as applicable throughout the year
covered by these financial statements.

Any associated fees in arranging the bank borrowings unamortised as at the period end are offset against amounts drawn on the
facilities as shown in the table below:

31 December
2015
£’000

31 December
2014
£’000

Bank borrowings drawn: due in more than one year
Less: Unamortised costs

Non-current liabilities: Bank borrowings

385,041
(7,406)

377,635

203,644
(2,711)

200,933

Tritax Big Box REIT plc Annual Report 2015
Maturity of bank borrowings

Repayable between 1 and 2 years
Repayable between 2 and 5 years
Repayable in over 5 years

31 December
2015
£’000

–
385,041
–

385,041

31 December
2014
£’000

–
203,644
–

203,644

The weighted average term to maturity of the Group’s debt as at the year end is 4.67 years. The syndicated facility has two,
one-year extension options, exercisable after years one and two respectively. One of the bilateral facilities also has a one-year
extension option exercisable after the first year. All of the options require lender consent, when taking these into account the
weighted average term to maturity, for the Group, assuming all options were exercised, would be 6.51 years.

21. INTEREST RATE DERIVATIVES
To mitigate the interest rate risk that arises as a result of entering into variable rate linked loans, the Group entered into a number
of interest rate derivatives during the year. Interest rate caps and an interest rate swap have been taken out in respect of each loan
drawn to cap the rate to which 3 month Libor can rise, with each running coterminous to the initial term of the respective loans.
The weighted average capped rate of Libor for the Group as at the year end was 1.52% (2014: 2.09%), which effectively caps the
Group’s drawn borrowing facilities at an all-inclusive interest rate payable of 2.94% (2014: 3.85%). The total premium payable in the
year towards securing the interest rate caps was £8.32 million.

Non-current assets: Interest rate derivatives

31 December
2015
Drawn
£’000

8,635

31 December
2014
Drawn
£’000

2,379

The interest rate derivatives are marked to market by the relevant counterparty banks on a quarterly basis in accordance with IAS 39.
Any movement in the mark to market values of the derivatives are taken to the Group Statement of Comprehensive Income.

Interest rate derivative valuation brought forward
Interest rate cap premium paid
Disposal of interest rate cap
Changes in fair value of interest rate derivatives

31 December
2015
Drawn
£’000

31 December
2014
Drawn
£’000

2,379
8,325
(75)
(1,994)

8,635

–
4,956
–
(2,577)

2,379

As part of the Group refinancing, on repayment of the borrowings to Santander, the Group disposed of one interest rate cap held
against the loan. The Group received proceeds of £0.08 million on disposal.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

21. INTEREST RATE DERIVATIVES (CONTINUED)
It is the Group’s target to hedge at least 90% of the total debt portfolio using interest rate derivatives. As at the year end date the
total proportion of hedged debt equated to 99.95%, as shown below.

31 December
2015
Drawn
£’000

31 December
2014
Drawn
£’000

Total bank borrowings (note 20)
Notional value of interest rate derivatives

Proportion of hedged debt

385,041
384,854

99.95%

203,644
198,918

97.68%

Fair value hierarchy
The following table provides the fair value measurement hierarchy for interest rate derivatives:

Assets measured at fair value:
Interest rate derivatives

Interest rate derivatives

31 December 2015

31 December 2014

Date of
valuation

Quoted prices in
active markets
(Level 1)
£’000

Significant
observable inputs
(Level 2)
£’000

Significant
unobservable inputs
(Level 3)
£’000

–

8,635

2,379

–

Total
£’000

8,635

2,379

The fair value of these contracts are 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.

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.

22. 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 and cash equivalents. The Group’s other principal financial liabilities are bank borrowings, the
main purpose of which is to finance the acquisition and development of the Group’s investment property portfolio.

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 information:

Book value
31 December
2015
£’000

Fair value
31 December
2015
£’000

Book value
31 December
2014
£’000

Fair value
31 December
2014
£’000

Financial assets
Interest rate derivatives
Trade and other receivables1
Cash held at bank

Financial liabilities
Trade and other payables2
Bank borrowings

8,635
6,786
68,586

2,379
3,447
98,616

24,176
385,041

(4,484)
203,644

1 Excludes VAT certain prepayments, other debtors and forward funded prepayments.
2 Excludes tax and VAT liablities.

Interest rate derivatives are the only financial instruments classified at fair value through profit and loss. All other financial assets
are classified as loans and receivables and all financial liabilities are measured at amortised cost. All financial instruments were
designated in their current categories upon initial recognition.

Tritax Big Box REIT plc Annual Report 2015
Risk management
The Group is exposed to market risk (including interest rate risk), credit risk and liquidity risk. The Board of Directors oversees
the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks that are
summarised below.

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
profit or loss and net assets of a 50 basis point shift in interest rates would result in an increase of £1.53 million or a decrease
of £1.19 million.

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 assisted 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.

Trade receivables
Trade receivables, primarily tenant rentals, are presented in the balance sheet 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. Any rentals past due as at the period end were received shortly after the
year end.

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 are 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 and, going forward, 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.

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

22. FINANCIAL RISK MANAGEMENT (CONTINUED)
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:

31 December 2015
Bank borrowings
Trade and other payables

31 December 2014
Bank borrowings
Trade and other payables

On demand
£’000

<3 months
£’000

3-12 months
£’000

–
–

–

–
–

–

1,947
24,176

26,123

1,180
4,484

5,664

5,842
–

5,842

3,539
–

3,539

1-5 years
£’000

413,599
–

413,599

219,243
–

219,243

> 5 years
£’000

Total
£’000

–
–

–

–
–

–

421,388
24,176

445,564

223,962
4,484

228,446

Included within the contracted payments is £36.35 million (2014: £20.32 million) of bank interest payable up to the point of
maturity across the facilities.

23. CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure that it remains a going concern and continues to qualify for
UK REIT status.

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 40%
of the Group’s gross assets. However, during the investment phase post admission, the Group’s target level of aggregate borrowings
will be 45% 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 would include loan value, interest cover ratio and loan to projected project
cost ratio. The Group LTV at the year end was 33.2% (2014: 32.9%).

Debt is secured 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.

100

Tritax Big Box REIT plc Annual Report 2015
24. SHARE CAPITAL
The share capital relates to amounts subscribed for share capital at its nominal value:

31 December
2015
Number

31 December
2015
£’000

31 December
2014
Number

31 December
2014
£’000

Issued and fully paid at 1 pence each

677,840,088

6,778

470,495,220

At beginning of year – £0.01 Ordinary Shares

Conversion to £0.01 Ordinary Shares
Shares issued in relation to IPO December 2013
Shares issued in relation to further Equity issuance
Shares issued in relation to management contract

470,495,220

–
–
206,878,516
466,352

4,705

–
–
2,068
5

50,000

4,950,000
195,000,000
270,372,972
122,248

At end of year

677,840,088

6,778

470,495,220

4,705

–
1,950
2,704
1

4,705

On 6 March 2015 the Company announced that it intended to proceed with an institutional Placing and Offer for Subscription of
new Ordinary Shares at a price of 110 pence per share. Following this on 19 March 2015 the Company announced it had exercised
its right to increase the size of the Issue to £175 million. As a result, a total of 159,090,909 Ordinary Shares were issued at a price
of 110 pence per Ordinary Share, of which 141,646,051 Ordinary Shares were be issued under the Placing and 17,444,858 Ordinary
Shares will be issued pursuant to the Offer for Subscription.

On 9 March 2015 the Company announced that, in accordance with the terms of the management fee arrangements with the
Manager pursuant to which 25% of the management fee is payable in new Ordinary Shares, it issued 175,557 Ordinary Shares at an
issue price per Ordinary Share of 106.22 pence.

On 8 June 2015 the Company announced that it intended to proceed with an institutional Placing of new Ordinary Shares at a price
of 113 pence per share. Following this on 18 June 2015 the Company announced that 47,787,607 new Ordinary Shares were to be
issued under the Placing at a Placing Price of 113 pence per share raising gross proceeds of £54.0 million.

On 18 September 2015 the Company announced that, in accordance with the terms of the management fee arrangements with the
Manager pursuant to which 25% of the management fee is payable in new Ordinary Shares, it issued 290,795 Ordinary Shares at an
issue price per Ordinary Share is 114.68 pence.

25. SHARE PREMIUM
The share premium relates to amounts subscribed for share capital in excess of nominal value:

Balance at beginning of year
Share premium on Ordinary Shares issued in relation to IPO
Share issue expenses in relation to IPO
Share premium on Ordinary Shares issued in relation to further equity issuance
Share issue expenses in relation to further Equity issuance
Transfer to capital reduction reserve (see note 26)
Share premium on Ordinary Shares issued to management

Balance at end of year

31 December
2015
£’000

272,536
–
–
226,931
(4,625)
(442,619)
515

52,738

31 December
2014
£’000

–
198,000
(4,000)
278,075
(5,660)
(194,000)
121

272,536

101

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
FINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

26. CAPITAL REDUCTION RESERVE

Balance at beginning of year
Transfer from share premium
Third interim dividend for the period ended 31 December 2014
First interim dividend for the year ended 31 December 2015
Second interim dividend for the year ended 31 December 2015
Third interim dividend for the year ended 31 December 2015

Balance at end of year

31 December
2015
£’000

31 December
2014
£’000

184,444
442,619
(3,764)
(4,707)
(9,446)
(3,388)

605,758

–
194,000
–
(4,070)
(5,486)
–

184,444

On 3 June 2015, 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 has been transferred from the share premium
account, into the capital reduction reserve account. The capital reduction reserve account is classed as a distributable reserve.

Please refer to note 14

for details of the declaration of dividends to Shareholders.

27. RETAINED EARNINGS

Balance at beginning of year
Retained profit for the year

Balance at end of year

Retained earnings relates to all net gains and losses not recognised elsewhere.

31 December
2015
£’000

41,844
133,984

175,828

31 December
2014
£’000

–
41,844

41,844

102

Tritax Big Box REIT plc Annual Report 201528. NET ASSET VALUE PER SHARE (NAV)
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.

Net asset values have been calculated as follows:

Net assets per Group Statement of Financial Position

EPRA NAV

Ordinary Shares:
Issued share capital (number)

Basic net asset value per share
Dilutive shares in issue (number)
Diluted net asset value per share

Basic EPRA NAV per share
Dilutive shares in issue (number)
Diluted EPRA NAV per share

31 December
2015
£’000

841,102

845,673

31 December
2014
£’000

503,529

506,106

677,840,088

470,495,220

124.09p
415,179
124.01p

124.76p
415,179
124.68p

107.02p

–

107.02p

107.57p

–

107.57p

EPRA NAV is calculated as net assets per the Consolidated Statement of Financial Position excluding fair value adjustments for
debt-related derivatives.

29. OPERATING LEASES
The future minimum lease payments under non-cancellable operating leases receivable by the Group are as follows:

31 December 2015

31 December 2014

< 1 year
£’000

49,828

32,787

2-5 years
£’000

194,416

130,579

> 5 years
£’000

476,899

294,312

Total
£’000

721,143

457,678

103

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
FINANCIAL STATEMENTS: NOTES TO THE CONSOLIDATED ACCOUNTS

30. TRANSACTIONS WITH RELATED PARTIES
For the year ended 31 December 2015 all Directors plus the Partners of the Manager are considered key management personnel.
The terms and conditions of the Investment Management Agreement are described in the Directors’ Report. Details of the amount
paid for services provided by Tritax Management LLP (“the Manager”) are provided in note 8
the year end relating to the Investment Management Agreement was £2.34 million (2014: £1.01 million).

. The total amount outstanding at

The total expense recognised in the Statement of Comprehensive Income relating to share based payments under the Investment
Management Agreement was £0.84 million (2014: £0.31 million), of which £0.50 million (2014: £0.19 million) was outstanding at the
year end.

Details of amounts paid to Directors for their services can be found within the Directors’ Remuneration Report.

Throughout the year SG Commercial LLP (“SG Commercial”) has provided general property agency services to the Group.
SG Commercial has been paid fees totalling £0.72 million (2014: £1.71 million) in respect of agency services for the year; this
represents a total of 31% of agency fees paid by the Group during the year. There were £0.07 million (2014: £nil) of fees outstanding
as at the year end. Of the four controlling Members of the Manager, namely Mark Shaw, Colin Godfrey, James Dunlop and Henry
Franklin, all except Henry Franklin are also the controlling Members of SG Commercial. While there are currently no existing
contractual arrangements between the Company and SG Commercial, the Company may choose to appoint SG Commercial in the
future from time to time on either a sole or joint agency basis. Any such appointments have been and will continue to be made on
normal market-based contractual terms. In the event that any such appointment is proposed by the Manager, the Board has and
shall continue to be consulted and asked for its approval.

Mark Shaw does not vote at any meeting of the Board relating to contractual terms to be agreed between the Company, the
Manager and SG Commercial, nor with respect to any investment decision where SG Commercial is acting as agent in any capacity.

On 13 November 2014, the Board announced that it had exchanged contracts on The Range UK National Distribution Centre
(“NDC”) at Nimbus Park, Thorne, Doncaster for a purchase price of £48.5 million (net of acquisition costs). The vendor of the
property was Tritax Prime Distribution Income Fund, a limited partnership vehicle managed by the Manager. The four controlling
Partners of the Manager (or their beneficiaries), namely Mark Shaw, Colin Godfrey, James Dunlop and Henry Franklin had total
aggregated equity interests in the limited partnership of 2.14%.

31. CAPITAL COMMITMENTS
The Group had capital commitments of £138.96 million in relation to its forward funded pre-let development assets outstanding as
at 31 December 2015 (31 December 2014: £nil). All commitments fall due within one year from the date of this report.

32. SUBSEQUENT EVENTS
On 27 January 2016 the Company announced the declaration of an interim dividend in respect of the period from 1 July 2015 to
31 December 2015 of 3.0 pence per Ordinary Share.

On 27 January 2016 the Company announced a Placing, Open Offer and Offer for Subscription of new Ordinary Shares at a price
of 124.0 pence per Ordinary Share. On 12 February 2016, the Company announced it had upscaled its equity raise to £200 million
issuing 161,290,323 shares at a price of 124.0 pence per Ordinary Share.

104

Tritax Big Box REIT plc Annual Report 2015FINANCIAL STATEMENTS
COMPANY BALANCE SHEET
Company Registration Number: 08215888

Non-current assets
Investment in subsidiaries

Total non-current assets

Current assets
Trade and other receivables
Called up share capital not paid
Cash held at bank

Total current assets

Total assets

Current liabilities
Trade and other payables
Loans from Group companies

Total current liabilities

Non-current liabilities
Loans from Group companies

Total non-current liabilities

Total liabilities

Total net assets

Equity
Share capital
Share premium reserve
Capital reduction reserve
Retained earnings

Total equity

Net asset value per share – basic
Net asset value per share – diluted
EPRA net asset value per share – basic and diluted

At
31 December
2015
£’000

At
31 December
2014
£’000

Note

8
9
10

11
11
11

547,810

186,507
–
22,381

208,888

284,694

139,045
–
67,266

206,311

756,698

491,005

(2,903)
(53,224)

(56,127)

–

(2,213)
(18,203)

(20,416)

(619)

(56,127)

(21,035)

700,571

469,970

6,778
52,738
605,758
35,297

700,571

103.35p
103.29p
103.29p

4,705
272,536
184,444
8,285

469,970

99.89p
99.89p
99.89p

These financial statements were approved by the Board of Directors on 16 March 2016 and signed on its behalf by:

Richard Jewson Chairman

105

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS
COMPANY RECONCILIATION OF MOVEMENT IN
SHAREHOLDERS’ FUNDS

1 January 2015

Total comprehensive income

31 December 2015

1 November 2013

Total comprehensive income

Issue of Ordinary Shares
Shares issued in relation to IPO
Share issue expenses in relation to IPO
Shares issued in relation to Tap
Share issue expenses in relation to Tap
Shares issued in relation to further Equity issue (July 2014)
Share issue expenses in relation to Equity issue (July 2014)
Shares issued in relation to Management contract
Shares issued in relation to further Equity issue
(December 2014)
Share issue expenses in relation to further Equity issue
(December 2014)
Share based payments
Transfer of share based payments to liabilities to
reflect settlement
Cancellation of share premium account

Dividends paid:
First interim dividend for the period ended 31 December 2014
(1.85 pence)
Second interim dividend for the period ended 31 December
2014 (1.50 pence)

Share
capital
£’000

Share Capital reduction
reserve
£’000

premium
£’000

4,705

272,536

184,444

–

1,591
–
477
–
5
–

173,409
(3,547)
53,522
(1,078)
515
–

–

–
–
–
–
–
–

–
–

–

–
(442,619)

–
442,619

–

(3,764)

(4,707)

(9,446)

(3,388)

Retained
earnings
£’000

8,285

27,012

–
–
–
–
–
836

(836)
–

–

Total
£’000

469,970

27,012

175,000
(3,547)
53,999
(1,078)
520
836

(836)
–

(3,764)

(4,707)

(9,446)

(3,388)

6,778

52,738

605,758

35,297

700,571

–

1,950
–
200
–
1,456
–
1

–

198,000
(4,000)
20,579
(402)
148,544
(3,042)
121

1,048

108,952

(2,216)
–

–

–
–
–
–
–
–
–

–

–
–

–

–
(194,000)

–
194,000

–

(4,070)

(5,486)

–

8,285

–
–
–
–
–
–
–

–

–
320

(320)
–

–

199,950
(4,000)
20,779
(402)
150,000
(3,042)
122

110,000

(2,216)
320

(320)
–

(4,070)

(5,486)

31 December 2014

4,705

272,536

184,444

8,285

469,970

106

Tritax Big Box REIT plc Annual Report 2015FINANCIAL STATEMENTS
NOTES TO THE COMPANY ACCOUNTS

1. ACCOUNTING POLICIES

Basis of preparation
The financial statements have been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting
Requirements (“FRS 100”) and Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).

In the current year the Company adopted FRS 100 and FRS 101. In the previous years the financial statements were prepared in
accordance with applicable UK accounting standards.

This change in the basis of preparation has not materially altered the recognition and measurement requirements previously applied
in accordance with old UK GAAP. Consequentially the principal accounting policies are unchanged from the prior year. The change in
basis or preparation has enabled the Company to take advantage of all of the available disclosure exemptions permitted by FRS 101
in the financial statements, the most significant of which are summarised below. There have been no other material amendments to
the disclosure requirements previously applied in accordance with old UK GAAP.

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 EU endorsed 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 in the Company’s consolidated financial statements. These financial statements do not include certain disclosures in respect of:

• Share based payments;
• Financial instruments;
• 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.

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 2015 amounted to £27.01 million (period from 1 November 2013 to 31 December 2014: £8.28 million).

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 information is presented in Sterling which is also the Company’s functional currency and all values are
rounded to the nearest thousand (£’000), except where otherwise indicated.

Other income
Other income represents dividend income which has been declared by its subsidiaries and is recognised at the point of which it is received.

107

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS: NOTES TO THE COMPANY ACCOUNTS

1. ACCOUNTING POLICIES (CONTINUED)

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.

Financial instruments
Financial assets and financial liabilities are recognised in the balance sheet when the Company becomes a party to the contractual
provisions of the instrument.

Trade and other receivables
Trade and other receivables are initially recognised at fair value and subsequently at amortised cost or their recoverable amount.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the
counterparty or default or significant delay in payment) that the Company will be unable to collect all of the amounts due under the
terms receivable. The amount of such a provision being the difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired receivable. For trade debtors, which are reported net, such provisions
are recorded in a separate allowance account with the loss being recognised within administrative expenses. On confirmation that
the trade debtor will not be collectable the gross carrying value of the asset is written off against the associated provision.

Financial liabilities
Financial liabilities including trade payables, other payables, accruals and amounts due to Group undertakings are originally
recorded at fair value and subsequently stated at amortised cost under the effective interest method.

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 period 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 period date the shares would be issuable.

Significant accounting judgements, estimates and assumptions
The preparation of the Company’s financial information requires management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting
date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to
the carrying amount of the asset or liability affected in future periods. There were no significant accounting judgements, estimates
or assumptions in preparing these financial statements.

108

Tritax Big Box REIT plc Annual Report 20152. TAXATION

UK corporation tax

3. DIVIDENDS PAID

Third interim dividend in respect of period ended 31 December 2014
at 0.80 pence per Ordinary Share

First interim dividend in respect of year ended 31 December 2015
at 1.00 pence per Ordinary Share (31 December 2014: 1.85 pence)

Second interim dividend in respect of year ended 31 December 2015
at 1.50 pence per Ordinary Share (31 December 2014: 1.50 pence)

Third interim dividend in respect of year ended 31 December 2015
at 0.50 pence per Ordinary Share (31 December 2014: 1.50 pence)

Total dividends paid

Total dividends paid for the year
Total dividends unpaid but declared for the year

Total dividends declared for the year

4. INVESTMENTS

As at 1 January 2015
Increase in investments via share purchase
Repayment of loan

As at 31 December 2015

As at 1 November 2013
Increase in investments via share purchase
Increase in investments via loan

As at 31 December 2014

Year ended
31 December
2015
£’000

–

For the period
1 November 2013 to
31 December
2014
£’000

–

Year ended
31 December
2015
£’000

For the period
1 November 2013 to
31 December
2014
£’000

3,764

4,707

9,446

3,388

21,305

3.00p
3.00p

6.00p

Loan
£’000

30,270
–
(30,270)

–

–
–
30,270

30,270

–

4,070

5,486

–

9,556

3.35p
0.80p

4.15p

Total
£’000

284,694
293,386
–

547,810

–
254,424
30,270

284,694

Shares
£’000

254,424
293,386
–

547,810

–
254,424
–

254,424

109

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION
FINANCIAL STATEMENTS: NOTES TO THE COMPANY ACCOUNTS

4. INVESTMENTS CONTINUED
The Company has the following subsidiary undertakings as at 31 December 2015:

110

Principal Activity
Investment Holding Company
Investment Holding Company
Investment Holding Company
Property Investment
Investment Holding Company
Investment Holding Company
Property Investment
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Investment Holding Company
Property Investment
Property Investment
Property Investment

Tritax Big Box REIT plc Annual Report 2015During the year the Company undertook a reorganisation of its subsidiary undertakings. The first step of the reorganisation was
that TBBR Holdings 2 Limited, a subsidiary company issued share capital of £528.4 million to the Company which, in consideration
for those shares, transferred ownership of its investments in certain subsidiaries to TBBR Holdings 2 Limited. No gain or loss was
recognised on transfer of these investments as the investment in TBBR Holdings 2 was recognised at the carrying value of those
investments transferred of £446.9 million.

The next step was that TBBR Holdings 1 Limited, another subsidiary company then issued share capital of £528.4 million to the
Company which, in consideration for those shares, transferred ownership of its investment in TBBR Holdings 2 Limited to TBBR
Holdings 1 Limited. Again, no gain or loss was recognised on transfer of these investments as the investment in TBBR Holdings 2
was recognised at the carrying value of those investment transferred of £446.9 million.

The reorganisation has no impact on the Group financial statements or on the ultimate ownership of any subsidiary undertaking.
The impact of the reorganisation on the Company is that at the year end the only direct subsidiary undertakings held by the
Company were TBBR Holdings 1 Limited, Tritax REIT Acquisition 8 Limited, Tritax REIT Acquisition 9 Limited, Tritax REIT Acquisition
16 Limited, Tritax REIT Acquisition 24 Limited and Tritax Knowsley Limited. The remaining subsidiary undertakings listed in this note
are subsequently held indirectly via the Company’s investment in TBBR Holdings 1 Limited.

5. TRADE AND OTHER RECEIVABLES

Amounts receivable from Group companies
Prepayments
Other receivables

6. CASH HELD AT BANK

Cash held at bank

7. TRADE AND OTHER PAYABLES

Trade and other payables
Accruals

31 December
2015
£’000

186,346
18
143

186,507

31 December
2014
£’000

135,035
16
3,994

139,045

31 December
2015
£’000

22,381

31 December
2014
£’000

67,266

31 December
2015
£’000

31 December
2014
£’000

140
2,763

2,903

823
1,390

2,213

111

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS: NOTES TO THE COMPANY ACCOUNTS

8. SHARE CAPITAL

31 December
2015
Number

31 December
2015
£’000

31 December
2014
Number

31 December
2014
£’000

Issued and fully paid at 1 pence each

677,840,088

6,778

470,495,220

At beginning of year – £1.00 Ordinary Shares

Conversion to £0.01 Ordinary Shares
Shares issued in relation to IPO December 2013
Shares issued in relation to further Equity issue
Shares issued in relation to management contract

470,495,220

–
–
206,878,516
466,352

4,705

–
–
2,068
5

50,000

4,950,000
195,000,000
270,372,972
122,248

At end of year

677,840,088

6,778

470,495,220

4,705

–
1,950
2,704
1

4,705

On 6 March 2015 the Company announced that it intended to proceed with an institutional Placing and Offer for Subscription of
new Ordinary Shares at a price of 110 pence per share. Following this on 19 March 2015 the Company announced it had exercised
its right to increase the size of the Issue to £175 million. As a result, a total of 159,090,909 Ordinary Shares were issued at a price
of 110 pence per Ordinary Share, of which 141,646,051 Ordinary Shares will be issued under the Placing and 17,444,858 Ordinary
Shares will be issued pursuant to the Offer for Subscription.

112

Tritax Big Box REIT plc Annual Report 20159. SHARE PREMIUM
The share premium relates to amounts subscribed for share capital in excess of nominal value:

Balance at beginning of year
Share premium on Ordinary Shares issued in relation to IPO
Share issue expenses in relation to IPO
Share premium on Ordinary Shares issued in relation to further Equity issuances
Share issue expenses in relation to further Equity issuances
Transfer to capital reduction reserve (see note 10)
Share premium on Ordinary Shares issued in to management

Balance at end of year

10. CAPITAL REDUCTION RESERVE

Balance at end of year

31 December
2015
£’000

272,536
–
–
226,931
(4,625)
(442,619)
515

52,738

31 December
2014
£’000

–
198,000
(4,000)
278,075
(5,660)
(194,000)
121

272,536

31 December
2015
£’000

31 December
2014
£’000

184,444
442,619
(3,764)
(4,707)
(9,446)
(3,388)

605,758

–
194,000
–
(4,070)
(5,486)
–

184,444

for all details surrounding the declaration of dividends to Shareholders.

113

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATIONFINANCIAL STATEMENTS: NOTES TO THE COMPANY ACCOUNTS

11. NET ASSET VALUE PER SHARE (NAV)
Basic NAV per share amounts are calculated by dividing net assets in the Company Balance Sheet attributable to ordinary equity
holders of the parent by the number of Ordinary Shares outstanding at the end of the period. As there are dilutive instruments
outstanding, both basic and diluted NAV per share are shown below.

Net asset values have been calculated as follows:

Net assets per Company Balance Sheet
EPRA NAV

Ordinary Shares:
Issued share capital (number)

Net asset value per Share – Basic

EPRA net asset value per Share – Basic

Potentially issuable dilutive shares (number)

Net asset value per Share – Diluted

EPRA net asset value per Share – Basic

31 December
2015
£’000

700,571
700,571

31 December
2014
£’000

469,970
469,970

677,840,088

470,495,220

103.35p

415,179

103.29p

99.89p

–

99.89p

EPRA NAV is calculated as net assets per the Company Balance Sheet excluding fair value adjustments for debt related derivatives.

12. 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 please make reference to note 31 of the Group accounts

on page 102.

13. GUARANTEES
The Company provides a full guarantee on behalf of each obligor in respect of each and every lender with regards to the Group
£500 million syndicated debt facility, as signed on 2 October 2015.

114

Tritax Big Box REIT plc Annual Report 2015ADDITIONAL INFORMATION
116
Company Information
117
Financial Calendar

F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

A
D
D
T
O
N
A
L

ROLLS-ROYCE MOTOR CARS,
BOGNOR REGIS

Our Big Box in Bognor Regis, West Sussex, let to
Rolls-Royce Motor Cars. This is our first forward
funded development completed in September 2015.
The Technology and Logistics Centre was built on
a 18.95 acres site and will be used as a warehouse
and distribution centre for inbound production parts,
a car body store and finished car store with
workshop for car preparation. The site is located
next to the new Bognor Regis Northern Relief
Road, and lies eight miles from Goodwood, West
Sussex, Rolls-Royce Motor Cars’ historic home,
headquarters and principal UK assembly plant.

N
F
O
R
M
A
T
O
N

115

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEADDITIONAL INFORMATION

ADDITIONAL INFORMATION
COMPANY INFORMATION
Company Registration Number: 08215888
Incorporated in the United Kingdom

Directors, Management and Advisers

Directors
Richard Jewson Non-Executive Chairman
Jim Prower Senior Independent Non-
Executive Director
Mark Shaw Non-Executive Director
Stephen Smith Non-Executive Director

Legal Advisers to the Company
as to English law
Taylor Wessing LLP
5 New Street Square
London
EC4A 3TW

Registered office
2-5 Old Bond Street
Mayfair
London
W1S 4PD

Manager
Tritax Management LLP
2-5 Old Bond Street
Mayfair
London
W1S 4PD

Joint Financial Adviser and
Corporate Broker
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London
EC4V 3BJ

Joint Financial Adviser
Akur Limited
66 St James’s Street
London
SW1A 1NE

Auditor
BDO LLP
55 Baker Street
London
W1U 7EU

Company Secretary
Tritax Management LLP
2-5 Old Bond Street
Mayfair
London
W1S 4PD

Registrar
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU

Administrator
Capita Sinclair Henderson Limited
Beaufort House
51 New North Road Exeter
EX4 4EP

Depositary
Langham Hall UK Depositary LLP
5 Old Bailey
London
EC4M 7BA

Bankers
Barclays Bank PLC
PO Box 3333
One Snowhill
Snow Hill Queensway
Birmingham
B3 2WN

Helaba Landesbank
Hessen-Thüringen Girozentrale
3rd Floor
95 Queen Victoria Street
London
EC4V 4HN

Wells Fargo Bank, N.A.
90 Long Acre
London
WC2E 9RA

ING Real Estate
Finance (UK) B.V.
60 London Wall
London
EC2M 3JQ

Valuer
CBRE Limited
Henrietta House
Henrietta Place
London
W1G 0NB

116

Tritax Big Box REIT plc Annual Report 2015ADDITIONAL INFORMATION
FINANCIAL CALENDAR

16 March 2016

Announcement of Full Year Results

11 May 2016

Annual General Meeting

30 June 2016

Half Year End

11 August 2016

Announcement of Half Year Results

31 December 2016

Full Year End

F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

A
D
D
T
O
N
A
L

Designed and produced by Bruce Associates www.bruceassociates.co.uk
in association with Richard Hollins and Neville Wells
Principal photography by Andrew Molyneux
Printed in England by Cousin.

N
F
O
R
M
A
T
O
N

117

Tritax Big Box REIT plc Annual Report 2015 STRATEGIC REPORTGOVERNANCE

Tritax Big Box REIT plc
Standbrook House
4th Floor
2-5 Old Bond Street
Mayfair
London
W1S 4PD

www.tritaxbigbox.co.uk

T
r
i
t
a
x
B
g
B
o
x
R
E

T
p

A
n
n
u
a

R
e
p
o
r
t
2
0
1
5