Investment Case

Our ambition is to be the best owner-manager and developer of 'industrial' properties in Europe and a leading income-focused REIT. We are aiming to deliver attractive returns for shareholders in the form of a low-risk, progressive dividend stream, supported by long-term growth in net asset value per share.

SEGRO is a UK Real Estate Investment Trust ('REIT'), and a leading owner, asset manager and developer of modern warehousing, light industrial property, as well as of higher value uses such as offices and data centres. We own or manage 5.3 million square metres of space in £5.2 billion of assets (our share of which totals £4.1 billion), serving 1,250 customers from a range of industry sectors. Our properties are located around major conurbations and at key transportation hubs across eight European countries, principally in the UK, France, Germany and Poland.

In the UK, we have a leading market position in Heathrow, with £0.7 billion of assets (including our share of joint venture assets) in some of the most sought after airside and off-airport locations. We have a £0.6 billion portfolio at Park Royal and Greenford in West London, which has become a primary focus for businesses seeking 'urban logistics' space to service Central London. We also own the £1.0 billion Slough Trading Estate, which is a well-established, modern commercial centre in the Thames Valley and which has also grown to become one of Europe's largest data centre hubs. In Continental Europe, we have £1.2 billion of assets, predominantly comprising logistics warehousing and light industrial assets concentrated in attractive sub-markets such as the Ile de France region around Paris, which shares similar characteristics to Greater London, the Rhine Rhür region in Germany and key markets in Poland.

Our KPIs are aligned with our strategic goal to be the best owner, asset manager and developer of industrial property and a leading income-focused REIT which delivers a high-quality and progressive dividend with resilient capital growth.

Our eight KPIs are fundamental metrics for how we measure progress within the business and they play a key role in determining remuneration throughout the organisation.

More information about our KPIs can be viewed here.

In November 2011, we set out our strategy to address areas of historical underperformance and deliver better future returns to our shareholders. Our ambition is to be the best owner-manager and developer of industrial properties in Europe and a leading income-focused REIT. We are aiming to deliver attractive returns for shareholders in the form of a low risk, progressive dividend stream, supported by long term growth in net asset value per share.

In order to achieve that vision, we are creating a portfolio comprised predominantly of modern warehousing, light industrial and data centre assets which are well specified and located, with good sustainability credentials and which will benefit from a low structural void rate and relatively low intensity asset management requirements. These assets will be concentrated in the strongest sub-markets which have attractive property market characteristics, including good growth prospects and limited supply availability, where we already have, or can achieve, critical mass. We believe such a portfolio should deliver attractive, low risk income returns, with above average rental and capital growth when market conditions are positive and show resilience in a downturn. We aim to enhance these returns through development, but seeking to ensure the 'drag' associated with holding land does not outweigh the potential benefits. Our overall portfolio strategy will be underpinned with an efficient overhead structure and relatively modest financial leverage through the cycle.

In order to implement our strategy, we set out a plan which has four key priorities:

1. Reshaping the existing portfolio by divesting non-core assets which do not meet our strategic and financial criteria and reducing non-income producing assets as a proportion of the total portfolio;

2. Seeking profitable growth by reinvesting in core markets and asset types by taking advantage of attractive development and acquisition opportunities;

3. Reducing net debt and financial leverage over time and introducing further third party capital where appropriate; and

4. Driving our operational performance across the business through greater customer focus, knowledge sharing, efficiency improvements and cost reductions.

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