BBOX has signed a development management agreement to deliver its 125MW Chelmsford scheme. The structure rewards the manager handsomely, and the market should start treating data centres as more than a sideline.
Tritax Big Box REIT PLC (LSE:BBOX) has entered a development management agreement to build out its 125MW Chelmsford data centre, days after the government cleared its 107MW Manor Farm scheme near Heathrow.
The deal copies the Manor Farm structure. Tritax Management collects a project assembly fee of around £3.3m, a development management fee of up to 5% of cost, and a 17.5% cut of development profits once the scheme is built and let.
Half of that profit share gets reinvested into BBOX shares. The manager is paid to deliver, and paid again to stay aligned with shareholders.
The numbers point to scale
BBOX has not disclosed a development cost for Chelmsford. Manor Farm offers the read across, with an indicative cost near £365m for 107MW.
Chelmsford targets a 10-11% yield on cost. That sits above the 9.3% originally pencilled in for Manor Farm, and it already absorbs the manager's fees.
The site sits on greenfield land at Beaulieu Park, around 35 miles northeast of London. Two hyperscale buildings are planned, with delivery anticipated in 2028 and rent of £23m to £25m a year.
Two sites, one growth story
Manor Farm and Chelmsford together represent more than 230MW. Tritax has guided to roughly £58m of annual rent across the pair at yields of 9 to 11%.
Behind them sits a pipeline of around 1GW of identified UK opportunities, built on a power-first land strategy. In a market where grid connections are the scarce input, controlling power is the moat.
This is the shift the announcement confirms. Data centres are no longer a curiosity bolted onto a logistics REIT. They are a second vertical, and management wants the market to price them as one.
What still has to land?
The risk is in execution, not ambition. Manor Farm won planning, but the next milestone is a pre-let before construction starts.
Chelmsford needs its own planning consent, and the targeted yields assume both power delivery and tenant demand arrive on schedule. Hyperscaler appetite is real, but a signed lease is what turns a yield target into recognised profit.
For now, investor focus stays on three levers. Planning progress, power delivery, and leasing activity will set the value, in that order.
Panmure Liberum rates BBOX a 'buy' with a 161p target. The Chelmsford deal does not change the thesis. It hardens it
