I am not.

The fact that they invest only in a narrow segment of the property market (the "big boxes") would concern me.

Should anything happen to impact the value of these boxes (any kind of shift in the operating model of these distribution companies) it may hit all of them.

Similar eggs in similar baskets?

But could be a good investment for others?

It is not an IPO, the company are placing ~190m shares to the market to raise more capital to fund acquisitions.



I am not getting involved because there isn't space to add this company to the portfolio, and I don't particularly like the company's prospects enough to invest.

Hmmm, that's odd, td direct investing show it as an ipo, I think they mean it comes in under ipo t&c's.

And to respond to eggs in one basket, I only intend to buy about 5% of my portfolio value, only a few thousand pounds. If it all goes belly up in future it's no big deal. fj

5% of what? (e.g. total equities, UK equities, equities in individual companies)

Hmmm, 5% of my portfolio of equities.

I realise it could have meant something else.

Portfolio consists of etf's, it's, individual companies, but following a 60/20/20 ratio of equities/bonds/property

IT magazine recommends taking up the offer

fj

in that case, 5% is a fairly bold move, i'd say. not crazy, but you must be quite keen on this investment.

though presumably you will also be consulting an IFA. well worth the assurance, for only 1% or 2% of your total portfolio value.

You are thinking of putting 5% of your equity money into this mid sized company with a current total market cap of about £1bn on the advice of a mag? £1bn's only about 0.03% of the UK equity market, never mind the world equity market. I take it you arent a fan of trackers and passive investing! 5% is enough to reasonably cover the whole of S Korea, Singapore, Taiwan and Hong Kong (the "4 tigers").

I had a few thousand pounds of Tritax and added more at their last fundraising at 124p which swiftly moved back over 130-odd. However, I reduced my holding significantly again after it fell back to the high 120s after the Brexit vote result.

Their previous results webcast had been positive and it's an interesting niche. But much of the future return was to be delivered through yield from the big boxes rather than capital growth. With the ongoing uncertainty created by the Brexit vote, and the consequential negative impact on business confidence and investment for a few years, a logistics business is significantly more likely to be impacted in a negative way than some of my other specialist funds such as the healthcare ones PHP or THRL which are less driven by consumer and business confidence. So, I throttled back my holdings in favour of some other things at home and abroad.

Having done that, I saw Big Box had advanced a bit over the couple of months that followed (reduction in UK interest rates is helpful when your shares are being bought for their yield, and you use gearing) and it was over 140p a couple of weeks ago before they announced the discounted placing. There is not the demand to confidently get the placing away at the price it had risen to, otherwise they would have gone for something higher than the 132p, but the idea that people would pay over 140p recently is positive for buying in at 132p for the long long term.

The existing shareholder offer was only made on a 1 for 11 basis but for the open offer I'll put in for an extra thousand shares. This would still leave me at a lower holding than I had pre Brexit. Fundamentally I don't like them as much as I did, but based on the yield and the fact that interest rates aren't going through the roof any time soon, they are probably more stable than piling into massively expensive defensive equities. I'm just adding as I have a bit of money spare in the SIPP and too lazy to decide where to put it right now

As a specialist UK logistics-focused holding i wouldn't have it anywhere near as high as 5% of my investments, but it does depend whether when you say 5% of your equities you mean of all your equities and bonds and funds etc, or whether you literally mean a twentieth of just your direct equities. The latter would probably be more sensible.

CREI (Custodian REIT) is another company in the same business but on a less demanding valuation than BBOX. Might be worth getting some of those instead of more BBOX.

132p with market price current 134.

Not very tempting really?

David

It is in the "same business" in terms of owning and leasing out a portfolio of commercial property.

It is not at all like BBOX's specialism of seeking exclusively "big box" special purpose warehouse/logistics setups of half a million square feet or more which are used as the backbone of a company's distribution strategy. If you invest in Custodian you get exposure to car showrooms and day nurseries and office space. BBOX is not trying to do that.

So, it depends what story you want to buy into, but they are significantly different stories.
That is a pretty poor way to evaluate an opportunity.
They are making £150m of brand new shares available, at a fixed price free of stamp duty and commissions - and the £150m is a relatively large amount compared to the market cap and normal trading volumes. The offer process will give people who want the shares the opportunity to buy new shares to support the expansion at a guaranteed price rather than the alternative of buying existing shares in the market.

So the reduced demand to buy second-hand shares at the market price, means that market price will inevitably fall to closer to the new offered placement price as it gets closer to the share issue date. It doesn't mean the offer price is a bad deal.

The 132p is a 7% discount to the prevailing market price when it was announced (accounting for the interim dividend qualification date). Sure, it is now only 2-3p cheaper than buying on market and paying the stamp, because market price fell due to the existence of the new fundraising. But that doesn't scream "avoid buying any shares here there is nothing on offer".

For 132p, you're buying into a company that people thought was worth 145p a week or two ago, with no significant adverse news since, and which will now be able to use the raised funds to make new investments expected to be earnings-enhancing (and the running costs of the company will now be split over a wider pool of capital making it more efficient). It is probably shortsighted to just say "it's not attractive on the basis of the offer price being almost as high as the market price".

It may of course not be attractive on the basis of the other factors I mentioned, like being a supplier of distribution/ logistics hubs in a time where Brexit macroeconomics are likely to hold back GDP and investment for a multi year period.

I have put in my order for some shares as I like the set up which is essentially a play on the online shopping revolution. I think this is set to expand and do not see a great deal of downside.

With interest rates at rock bottom and the fall in sterling making a top-up of my Vanguard Lifestrategy unattractive at present, the opportunity to get an income of 4.6% (and the aim of 9% total return) is appealing.

This will be around just under 2% of my total portfolio however so not going overboard!

i hold LMP - another REIT, and with some similarity, in that the focus is mainly on properties for distribution, especially with an eye on the trend for growth in online retail.

i wondered whether BBOX shares would be cheaper, and so whether it might be switching from LMP to BBOX. however, both seem to be priced about 2% or 3% above net asset value, and both yielding c. 4.5% ... so once again i can decide to do nothing

Already hold the shares. Have subscribed for the basic entitlement. As like the business model with some growth to come as well. One to hold for the long term as should be a solid cash generator in the years to come.