TIDMSGRO
SEGRO plc ("SEGRO" or the "Group") today publishes a trading
update for the period from 1 July 2021 to 19 October 2021(1) .
David Sleath, Chief Executive, said:
"SEGRO has had an active and successful third quarter as we
continue to capitalise on strong occupier and investment market
conditions, with high leasing volumes across the business.
"We have made significant progress with our profitable
development programme and have completed projects equivalent to
GBP25 million of potential rent, of which over 90 per cent is
already let. We currently have 1 million square meters of space
under construction, and during the period have added to the active
pipeline and secured further land to extend our bank of future
development opportunities.
"We head into the final months of 2021 with confidence in our
ability to drive further sustainable growth in rental income,
earnings and dividends."
Strong rent roll growth during the period as a result of a busy
period of lettings and the continued capture of reversionary
potential (Appendix 1).
-- GBP26 million (Q3 2020: GBP16 million) of new headline rent2 signed
during the quarter, taking the total for the nine months to 30 September
2021 to GBP64 million (9M 2020: GBP50 million). This includes GBP9
million (Q3 2020: GBP6 million) of new, unconditional pre-let agreements
and lettings of speculative developments prior to completion, taking the
nine-month figure to GBP30 million (9M 2020: GBP25 million).
-- New headline rents on review and renewal up more than 13 per cent (UK: 18
per cent, CE: 2 per cent) on previous passing rent in the nine months to
30 September 2021 as ongoing asset management continues to capture
reversionary potential from our existing portfolio.
-- Vacancy rate reduced further to 3.2 per cent (30 June 2021: 4.3 per cent)
predominantly due to strong demand for recently completed speculatively
developed space.
-- Customer retention is 76 per cent for 2021 to date after we took the
opportunity to take back some space in urban estates in London and Paris
with a view to executing identified asset management initiatives.
Development programme continues to deliver high-quality growth
and returns -- potential to increase annualised rent roll by 20 per
cent (GBP92 million) from the pipeline of space under construction
and in advanced discussions.
-- So far in 2021 we have completed 450,000 sq m (9M 2020: 695,800 sq m) of
new developments, capable of generating GBP25 million (9M 2020: GBP38
million) of headline rent, 93 per cent which has been let. Developments
capable of generating a further GBP31 million of rent are expected to
complete in the fourth quarter, GBP26 million of which has been secured.
-- At 30 September 2021, over 998,000 sq m of space was under construction,
equating to potential future headline rent of GBP68 million (30 June
2021: 1.1 million sq m, GBP67 million) of which 66 per cent has been
secured (30 June 2021: 66 per cent). Once complete and fully let, the
pipeline is expected to generate a yield on total development cost of
approximately 6.8 per cent.
-- Additional pre-let projects in advanced discussions equating to 196,000
sq m of space with potential capex of GBP211 million and associated rent
of GBP24 million are expected to commence in the coming months.
Superior operating platform and local expertise driving growth
through sourcing off-market development and investment
opportunities in competitive markets (Appendices 2 and 3).
-- In 2021 so far, we have acquired over GBP260 million of land to top up
our land bank and provide further growth opportunities. During the third
quarter we acquired GBP66 million of land for future development,
including sites in Italy and Poland, as well as two further plots of land
in London acquired in early October.
-- We took advantage of strong market conditions to dispose of GBP98 million
of assets including a portfolio of urban warehouses in Italy and a
stand-alone big box warehouse in Spain.
-- Earlier this month we also completed an asset swap which resulted in the
acquisition of a significant urban warehouse estate in West London for
GBP140 million. As part of this transaction we disposed of a portfolio of
stand-alone UK big boxes and urban warehouses for GBP205 million.
-- We remain on course to invest in excess of GBP750 million in our
development pipeline (excluding land acquisitions) during 2021.
Disciplined capital management has reduced the cost of debt
further and balance sheet is well-positioned to fund further
growth.
-- We issued the first SEGRO Green bond, a ten-year EUR500 million senior
unsecured bond with a coupon of 0.5 per cent.
-- Net debt (including our share of debt in joint ventures) at 30 September
2021 increased to GBP3.3 billion (30 June 2021: GBP3.1 billion).
-- This equates to a pro forma3 look-through LTV of 23 per cent (30 June
2021: 21 per cent).
Financial calendar
The provisional date for 2021 Full Year results is Friday 18
February 2022.
(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 period to, or at, 30
September 2021 unless otherwise indicated. The exchange rate
applied is EUR1.16:GBP1 as at 30 September 2021.
(2) Headline rent is annualised gross passing rent receivable
once incentives such as rent-free periods have expired.
(3) Based on values at 30 June 2021, adjusted for acquisitions,
disposals and other capital expenditure during the third
quarter.
Appendices
1. Leasing data for the period to 30 September(1 2)
Q3 2021 Q3 2020 9M 2021 9M 2020
Take-up of existing space (A) GBPm 9.2 2.2 18.7 8.8
Space returned(2) (B) GBPm (7.1) (2.3) (16.6) (10.5)
NET ABSORPTION OF EXISTING SPACE
(A-B) GBPm 2.1 (0.1) 2.1 (1.7)
Other rental movements (rent
reviews, renewals, indexation)
(C) GBPm 1.4 5.7 5.8 9.6
RENT ROLL GROWTH FROM EXISTING
SPACE GBPm 3.5 5.6 7.9 7.9
Take-up of developments completed
in the period -- pre- let space
(D) GBPm 15.3 14.8 20.1 24.9
Take-up of speculative developments
completed in the past two years
(E) GBPm 6.2 2.4 10.2 8.6
TOTAL TAKE UP (A+C+D+E) GBPm 32.1 25.1 54.8 51.9
Less take-up of pre-lets and
speculative lettings signed in
prior periods GBPm (15.3) (15.1) (20.8) (26.9)
Pre-lets and lettings on
speculative developments signed in
the period for future delivery GBPm 9.0 5.8 30.3 24.6
RENTAL INCOME CONTRACTED IN THE
PERIOD(2) GBPm 25.8 15.8 64.3 49.6
Take-back of space for
redevelopment GBPm (1.6) (2.1)
1 All figures reflect headline rent (annualised gross rental income, after the
expiry of any rent-free periods), exchange rates at 30 September 2021 and
include joint ventures at share. 2 Excluding space taken back for
redevelopment.
2. Acquisitions completed during the three months to 30
September 2021
Purchase price(1) Topped-up net
Asset location / (GBPm, SEGRO Net initial yield initial yield(2)
type share) (%) (%)
UK: Land 20 n/a n/a
Continental Europe:
Urban warehouses 9 5.3 5.3
Continental Europe:
Big box
warehouses 9 4.7 4.7
Continental Europe:
Land 46 n/a n/a
Total acquisitions
during the
quarter 84 5.0(3) 5.0(3)
1 Excluding acquisition costs; purchase price reflects exchange rate at 30
September 2021 and includes joint ventures at share. 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 30 September
2021
Gross proceeds(1) Topped-up net
Asset location / (GBPm, SEGRO Net initial yield initial yield(2)
type share) (%) (%)
Continental Europe:
Urban warehouses 90 3.8 3.8
Continental Europe:
Big box
warehouses 8 3.7 3.7
Total disposals
during the
quarter 98 3.8 3.8
1 Proceeds reflect exchange rate at 30 September 2021 and include joint
ventures at share. 2 Topped up net initial yield includes rent due after
expiry of rent-free periods.
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 contains certain forward-looking statements
with respect to SEGRO's expectations and plans, strategy,
management objectives, future developments and performances, costs,
revenues and other trend information. These statements are subject
to assumptions, risk and uncertainty. Many of these assumptions,
risks and uncertainties relate to factors that are beyond SEGRO's
ability to control or estimate precisely and which could cause
actual results or developments to differ materially from those
expressed or implied by these forward-looking statements. Certain
statements have been made with reference to forecast process
changes, economic conditions and the current regulatory
environment. Any forward-looking statements made by or on behalf of
SEGRO are based upon the knowledge and information available to
Directors on the date of this announcement. Accordingly, no
assurance can be given that any particular expectation will be met
and SEGRO's shareholders are cautioned not to place undue reliance
on the forward-looking statements. Additionally, forward-looking
statements regarding past trends or activities should not be taken
as a representation that such trends or activities will continue in
the future. Other than in accordance with its legal or regulatory
obligations (including under the UK Listing Rules and the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority), SEGRO does not undertake to update forward-looking
statements including to reflect any new information or changes in
events, conditions or circumstances on which any such statement is
based. Past share performance cannot be relied on as a guide to
future performance. Nothing in this announcement should be
construed as a profit forecast. The information in this
announcement does not constitute an offer to sell or an invitation
to buy securities in SEGRO plc or an invitation or inducement to
engage in or enter into any contract commitment or other investment
activities.
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.
About SEGRO
SEGRO is a UK Real Estate Investment Trust (REIT), listed on the
London Stock Exchange and Euronext Paris, and is a leading owner,
manager and developer of modern warehouses and industrial property.
It owns or manages 8.8 million square metres of space (95 million
square feet) valued at GBP17.1 billion 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
seven other European countries.
For 100 years SEGRO has been creating the space that enables
extraordinary things to happen. From modern big box warehouses,
used primarily for regional, national and international
distribution hubs, to urban warehousing located close to major
population centres and business districts, it provides high-quality
assets that allow its customers to thrive.
A commitment to be a force for societal and environmental good
is integral to SEGRO's purpose and strategy. Its Responsible SEGRO
framework focuses on three long-term priorities where the company
believes it can make the greatest impact: Championing Low-Carbon
Growth, Investing in Local Communities and Environments and
Nurturing Talent.
See www.SEGRO.com for further information.
View source version on businesswire.com:
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CONTACT: CONTACT DETAILS FOR INVESTOR / ANALYST AND MEDIA ENQUIRIES:
SEGRO
Soumen Das (Chief Financial Officer)
Tel: +44 (0) 20 7451 9110
Claire Mogford (Head of Investor Relations)
Tel: +44 (0) 20 7451 9048
Gary Gaskarth (External Communications Manager)
Tel: +44 (0) 20 7451 9069
FTI Consulting
Richard Sunderland / Claire Turvey / Eve Kirmatzis
Tel: +44 (0) 20 3727 1000
SOURCE: Segro PLC
Copyright Business Wire 2021
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