This site uses cookies to improve your experience.

We use cookies to offer you better browsing experience. Cookies enhance site navigation, analyze site usage, and assist in our marketing efforts.To understand more about how we use cookies or to change your cookie preferences, visit our privacy and cookies page or click on ‘Show settings’. By clicking ‘Accept all Cookies,’ you agree to the storing of cookies on your device.

Privacy Policy Centre

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience.

Because we respect your right to privacy, below you will find descriptions on the types of cookies used on this site and options to opt out where preferred. Please note blocking some types of cookies may impact your experience of the site and the services we are able to offer.

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms.

You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site.
All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site.
All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.

Privacy and cookies

David Sleath, Chief Executive, said:

“SEGRO has had an excellent start to 2017. We have signed £16 million of new headline rent, including almost £11 million of pre-let agreements relating to 300,000 sq m of new projects which have been approved or are underway. We were delighted to acquire full ownership of our Heathrow assets during the quarter and with the shareholder support for the associated rights issue, which also secured the necessary funding for our high quality development pipeline.

“Investor demand for warehouse and industrial assets remains strong across our markets and this may lead to further yield compression and capital growth in the first half of the year.”

Operational excellence: continuing momentum in occupational markets (Appendix 1)

  • In the first quarter, we contracted £16.3 million of new rent (Q1 2016: £8.6 million), including £10.6 million of pre-lets (Q1 2016: £3.6 million).
  • The vacancy rate remains low at 5.6 per cent (31 December 2016: 5.7 per cent), mainly reflecting the impact of acquisitions and disposals (+0.3 per cent), offset by development lettings (–0.3 per cent) and by net take-up of existing space (–0.1 per cent).
  • 32,500 sq m of speculative developments were completed in the first quarter, capable of generating headline rent of £1.6 million (SEGRO share) when fully let, of which 40 per cent had been secured at 31 March 2017. No pre-let developments were completed in the period.
  • During the first quarter, we approved or commenced the development of 291,200 sq m of space, most of which were projects categorised in the near-term development pipeline at the end of 2016. These projects represent £13.6 million of potential headline rent, of which 76 per cent is pre-let, and include a 46,000 sq m extension to the Leroy Merlin facility in Milan and a 46,600 sq m facility for a discount supermarket chain in Lyon; in addition, we have agreed to construct a 46,300 sq m warehouse near Milan, also for a discount supermarket chain, which was not in the near-term pipeline at 31 December 2016.
  • At 31 March 2017, 799,200 sq m of new space was approved or under development, of which 68 per cent (by headline rent) is pre-let (31 December 2016: 540,480 sq m, 61 per cent pre-let). These projects equate to potential headline rent of £39.0 million (31 December 2016: £26.6 million), reflecting a projected yield on total development cost of approximately 8 per cent.

Disciplined Capital Allocation: investment activity focused on development and Airport Property Partnership (“APP”) acquisition (Appendices 2 and 3)

  • We took full ownership of the APP in March, acquiring Aviva’s 50 per cent interest in the £1.1 billion vehicle. The net consideration paid was £365 million after taking account of the debt and other liabilities assumed within APP. During the first quarter, we have seen encouraging levels of occupational demand for space within the APP portfolio and continued to make progress in re-gearing peppercorn leases at the Heathrow Cargo Centre due to expire in 2019.
  • At 31 March 2017, the passing rent of SEGRO’s standing assets (including share of assets in joint ventures) was £310.9 million and the ERV (based on the 31 December 2016 valuation) was £380.3 million (31 December 2016: £287.8 million and £354.0 million respectively).
  • Since 31 March 2017, we have completed the disposal of the Northfields Industrial Estate to St George, a member of the Berkeley Group.
  • In the UK, the CBRE Monthly Index showed 3.2 per cent growth in industrial property capital values during the first quarter, outperforming the All Property growth rate of 1.3 per cent.

Net debt reduced by £0.1 billion during the quarter; LTV ratio approximately 29 per cent

  • We raised £556 million of (net) new equity in a rights issue to fund the cash element of the APP acquisition and to invest in future development projects.
  • Net debt (including our share of debt in joint ventures) at 31 March 2017 was £2.0 billion (31 December 2016: £2.1 billion). The decrease principally reflects receipt of the net proceeds from the rights issue, offset by the £216 million cash consideration for, and the £170 million net debt assumed with, the acquisition of the 50 per cent interest in APP, and by £80 million of development capex.
  • The look-through loan to value ratio at 31 March 2017 was approximately 29 per cent, based on asset values at 31 December 2016. We continue to expect to invest in excess of £300 million in our development pipeline during 2017.

Financial calendar

The 2017 Half Year Results will be published on Tuesday 25 July 2017.

1 In this statement, space is stated at 100 per cent, whilst financial figures are stated reflecting SEGRO’s share of joint ventures. Financial figures are stated for the three months to, or at, 31 March unless otherwise indicated. The exchange rate on 31 March 2017 was €1.18:£1 (31 December 2016: €1.17:£1).

 

This Trading Update, the most recent Annual Report and other information are available on the SEGRO website at www.segro.com/investors. Neither the content of SEGRO’s website nor any other website accessible by hyperlinks from SEGRO’s website are incorporated in, or form part of, this announcement.

Forward-looking statements:

This announcement may contain certain forward-looking statements with respect to SEGRO’s expectations and plans, strategy, management objectives, future developments and performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Certain statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Any forward-looking statements made by or on behalf of SEGRO speak only as of the date they are made. SEGRO does not undertake to update forward-looking statements to reflect any changes in SEGRO’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be construed as a profit forecast. Past share performance cannot be relied on as a guide to future performance.

About SEGRO

SEGRO is a UK Real Estate Investment Trust (REIT), and a leading owner, manager and developer of modern warehouses and light industrial property. It owns or manages 6.4 million square metres (69 million square feet) of space valued at £8 billion (as at 31 December 2016), serving customers from a wide range of industry sectors. Its properties are located in and around major cities and at key transportation hubs in the UK and in nine other European countries.

Click here to download this press release as a pdf.

Financial Investors
Copy URL