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Warehouses could deliver the goods in your portfolio

Make a shed-load of money the REIT way: Warehouses could deliver the goods in your portfolio

PUBLISHED: 21:53, 29 January 2021 | UPDATED: 09:02, 30 January 2021

The re-ordering of the retail hierarchy continues. Boohoo, the online fast fashion business, is to acquire Debenhams, and perhaps also Burton, Dorothy Perkins and Wallis, while Asos – the other big name in sexy street style – is set to snap up Topshop…It is yet another sign that attention is turning to a less glamorous type of retail premises – warehouses and sheds…

These popular pieces of real estate, central to the logistics of transporting and delivering goods, are springing up to cater for the ecommerce explosion sparked by lockdowns. Online purchases grew by 46 per cent in 2020…

Every £1billion spent online requires about 900,000 square feet of shed space, which is the size of almost 12 professional football pitches.

Savills reports that a record 50.1 million square feet of warehouses were let in 2020, with Amazon alone accounting for 25 per cent of demand. The leap this month in warehouse searches on Rightmove’s commercial section indicates the trend is set to continue…

The Tritax Big Box REIT, which is building Europe’s largest distribution centre in Dartford, Kent is at a premium of 20 per cent, and offers a dividend yield of 3.7 per cent.

Aberdeen Standard European Logistics Income, which is at a premium of 11 per cent, has a yield of 4.3p. The QuotedData consultancy notes that, when online shopping reaches 10.7 per cent of all sales, this is the tipping point that creates rapid growth in the creation of warehouses.

Online sales are already at this level in France, Germany and the Netherlands and are expected to keep going upwards.

The Tritax EuroBox trust also provides exposure to these territories but has a discount of 6 per cent.

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