(Alliance News) - Tritax Big Box REIT PLC on Friday reported increased rental income from development activity in the three months ended March 31, ahead of its merger with UK Commerical Property REIT Ltd.

The London-based real estate investment trust invests in large logistics warehouses. It completed the merger with its fellow FTSE 250 constituent on Thursday, following an agreement finalised in March for an all-share takeover.

Tritax Big Box shares were up 0.5% to 167.64 pence each in London on Friday morning. It will have 2.48 billion shares in issue following the combination, giving a GBP4.15 billion market capitalisation.

UKCM investors received 0.444 of a new Tritax Big Box share for every UKCM share held. They will own 23% of the combined company, while Tritax Big Box investors have the remaining 77%.

Following the merger of the two mid-cap REITs, Greencore Group PLC replaced UKCM in the FTSE 250 index on Thursday.

Greencore is a Dublin-based maker of package sandwiches and other convenience food. It is returning to the mid-cap index after having been demoted back in September 2022.

Tritax Big Box Chief Executive Colin Godfrey said: "The combination complements our big box weighted investment portfolio with high-quality urban logistics assets enhancing our customer offering and driving accelerated rental growth through early capture of significant rental reversion."

Tritax Big Box is now the UK's fourth largest REIT and management anticipates further benefits including cost savings and a leveraged balance sheet with a reduced loan-to-value ratio of 29%.

The combined entity reported more than GBP550 million in current available liquidity.

Prior to the merger, during the first quarter, Tritax Big Box added GBP1.3 million to annual contracted rent from 0.1 million square feet of development lettings, it said, and a further GBP7.4 million was added to passing rent from 0.8 million sq ft of practical completions in the period.

Tritax Big Box initiated 900,000 square feet of construction and secured planning consent for 1.0 million square feet bringing available undeveloped space in the portfolio to 6.5 million square feet.

"We are seeing an encouraging uptick in levels of activity in our development pipeline...Through rent reviews, lettings and re-gears we are making good progress capturing the significant reversion within our investment portfolio.

"In addition, we continue to take advantage of market conditions to selectively acquire mispriced assets. These factors together with stabilised yields collectively support our positive outlook for 2024," Godfrey commented.

By Elijah Dale, Alliance News reporter

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