TIDMSGRO
RNS Number : 6534C
SEGRO PLC
19 April 2017
19 April 2017
SEGRO plc
Trading Update
SEGRO plc ("SEGRO" or the "Group") today publishes its trading
update for the period from 1 January to 18 April 2017(1) .
David Sleath, Chief Executive, said:
"SEGRO has had an excellent start to 2017. We have signed GBP16
million of new headline rent, including almost GBP11 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
-- In the first quarter, we contracted GBP16.3 million of new
rent (Q1 2016: GBP8.6 million), including GBP10.6 million of
pre-lets (Q1 2016: GBP3.6 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 GBP1.6
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 GBP13.6 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 GBP39.0 million
(31 December 2016: GBP26.6 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 GBP1.1 billion vehicle. The net
consideration paid was GBP365 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 GBP310.9 million
and the ERV (based on the 31 December 2016 valuation) was GBP380.3
million (31 December 2016: GBP287.8 million and GBP354.0 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 GBP0.1 billion during the quarter; LTV ratio
approximately 29 per cent
-- We raised GBP556 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 GBP2.0 billion (31 December 2016: GBP2.1
billion). The decrease principally reflects receipt of the net
proceeds from the rights issue, offset by the GBP216 million cash
consideration for, and the GBP170 million net debt assumed with,
the acquisition of the 50 per cent interest in APP, and by GBP80
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 GBP300 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 EUR1.18:GBP1 (31 December 2016: EUR1.17:GBP1).
Appendices
1. Leasing data for the three months to 31 March(1)
Q1 2017 Q1 2016
-------------------------------------------- ------ -------- --------
Take-up of existing space(2) (A) GBPm 2.1 3.7
Space returned(3) (B) GBPm (1.1) (4.1)
NET ABSORPTION OF EXISTING SPACE (A-B) GBPm 1.0 (0.4)
Other rental movements (rent reviews,
renewals, indexation)(2) (C) GBPm 1.4 (0.1)
RENT ROLL GROWTH FROM EXISTING SPACE GBPm 2.4 (0.5)
Take-up of pre-let developments completed
in the period(2) (D) GBPm 0.0 2.7
Take-up of speculative developments(2
4) (E) GBPm 2.8 1.4
TOTAL TAKE UP(2) (A+C+D+E) GBPm 6.3 7.7
Less take-up of leases on developments
signed in prior periods(2) GBPm (0.6) (2.7)
Pre-lets signed in the period for delivery
in later periods (2 5) GBPm 10.6 3.6
RENTAL INCOME CONTRACTED IN THE PERIOD(2) GBPm 16.3 8.6
Take-back of space for redevelopment GBPm (0.1) (0.1)
-------------------------------------------- ------ -------- --------
1 All figures reflect exchange rates at 31 March and include
joint ventures at share.
2 Annualised rental income, after the expiry of any rent-free
periods.
3 Annualised rental income, excluding space taken back for
redevelopment.
4 Speculative developments completed during the preceding two
years.
5 Includes lettings of speculatively developed space prior to
completion.
2. Acquisitions completed during the three months to 31 March 2017
Asset location / type Purchase Net initial Topped-up
price(1) yield
(GBPm, SEGRO (%) net initial
share) yield(2) (%)
---------------------- ------------- ----------- --------------
UK: Acquisition of
50% interest in APP 548.5 3.6 4.2
Continental Europe: 17.3 n/a n/a
Land
Total acquisitions
during the quarter 565.8 3.6(3) 4.2(3)
---------------------- ------------- ----------- --------------
1 Excluding acquisition costs; purchase price reflects exchange
rate at 31 March 2017.
2 Topped up net initial yield includes rent due after expiry of
rent-free periods.
3 Yield excludes land acquisitions.
3. Disposals completed during the three months to 31 March 2017
Asset location / type Gross proceeds Net initial yield Topped-up
(GBPm, SEGRO share) (%) net initial yield(1) (%)
----------------------------------- -------------------- ----------------- -------------------------
UK: Light Industrial 149.9 3.7 4.8
Total disposals during the quarter 149.9 3.7 4.8
----------------------------------- -------------------- ----------------- -------------------------
1 Topped up net initial yield includes rent due after expiry of
rent-free periods.
CONTACT DETAILS FOR INVESTOR / ANALYST AND MEDIA ENQUIRIES:
SEGRO Soumen Das (Chief Financial Tel: +44 (0)
Officer) 20 7451 9110
--------------
Harry Stokes (Head of Investor Tel: +44 (0)
Relations and Research) 20 7451 9124
--------------
Allyson Andrews (External Communications Tel: +44 (0)
Manager) 20 7451 9118
-------------- ---------------------------------------- -------------
FTI Consulting Richard Sunderland / Claire Tel: +44 (0)
Turvey 20 3727 1000
-------------- ---------------------------------------- -------------
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 GBP8 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.
See www.SEGRO.com for further information.
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTBRGDSSUBBGRI
(END) Dow Jones Newswires
April 19, 2017 02:00 ET (06:00 GMT)
Segro (LSE:SGRO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Segro (LSE:SGRO)
Historical Stock Chart
From Apr 2023 to Apr 2024