Regulatory News:
18 April 2024
SEGRO plc
Trading Update
SEGRO plc (“SEGRO” or the “Group”) today publishes a trading
update for the period from 1 January 2024 to 31 March 20241.
Summary
- Strong growth in our rent roll during the first quarter,
supported by ongoing favourable occupier market dynamics.
- SEGRO has completed or unconditionally exchanged on £159
million of disposals so far in 2024, at prices above December 2023
book value. Market data shows industrial and logistics asset values
are stabilising.
- SEGRO is well-placed to invest in profitable development with
an average yield on cost of 7-8 per cent, with capacity for further
attractive growth opportunities enhanced by the proceeds of our
recent equity raise.
David Sleath, Chief Executive, said:
“2024 has started well for SEGRO. Our prime urban and big box
portfolio and market-leading operating platform, supported by
favourable occupier markets, have enabled us to sign £29 million of
new headline rent during the first quarter. This was achieved
through capturing rental uplift on lease renewals and rent reviews,
as well as the signing of £17 million of new pre-let
developments.
“Market data is showing that industrial and logistics asset
values are stabilising and potentially reaching a turning point.
Although transaction volumes remain muted, we have disposed of £159
million of land and standing assets so far this year (including
£134 million exchanged since the quarter end), at prices above
December 2023 book values, in line with our continued approach to
disciplined capital allocation.
“As stated in our Full Year 2023 results, our existing portfolio
and land bank offer us the potential to grow our passing rents by
more than 50 per cent over the next three years, through capturing
embedded rent reversion, leasing vacant units and developing new
space. The £907 million of new equity raised in February provides
us with the capacity to pursue further attractive growth
opportunities, both through development and asset acquisitions.
This gives us confidence in our ability to deliver further compound
growth in earnings and dividends during 2024 and beyond.”
Financial calendar
Half Year 2024 results will be published on Friday 26 July
2024.
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, 31
March unless otherwise indicated. The exchange rate applied is
€1.17:£1 as at 31 March 2024.
2 Headline rent is annualised gross passing rent receivable once
incentives such as rent-free periods have expired.
3 Based on values as at 31 December 2023, adjusted for the
equity placing, acquisitions, disposals and other capital
expenditure during the first quarter.
OPERATING SUMMARY & KEY
METRICS
Q1 2024
Q1 2023
ACTIVE ASSET MANAGEMENT CAPTURING
RENTAL GROWTH AND INCREASING THE RENT ROLL (see Appendix):
Occupier markets remain
favourable, which has supported our ability to lease new space and
grow rents in the standing portfolio through capturing embedded
reversion. Occupancy decreased slightly since year end (31 December
2023: 95.0 per cent) due to speculative development completions but
remains within our target range and customer retention remains
high.
Total new headline rent2 signed during the
period (£m)
29
24
Pre-lets signed during the period (£m)
17
9
Uplift on rent reviews and renewals
(%)
Group
18
14
UK
21
18
CE
9
3
Occupancy rate (%)
94.5
95.7
Customer retention (%)
90
82
INVESTMENT ACTIVITY REMAINS
DISCIPLINED AND FOCUSED ON SECURING PROFITABLE GROWTH:
Most of our investment during the period
was in our development programme (including the construction of two
new data centres) with development capex for 2024, including
infrastructure, still expected to be approximately £600
million.
Development capex (including
infrastructure) (£m)
99
138
Acquisitions (£m)
-
130
Disposals (£m)
25
48
EXECUTING AND GROWING OUR
PROFITABLE DEVELOPMENT PIPELINE:
We signed a further £17 million
of pre-lets during the first quarter. Development completions were
lower, due to the timing of projects. Our development pipeline
remains highly profitable with an average yield on cost in the
current and near-term pipeline of 7.6 per cent and a yield on new
money in excess of 10 per cent.
Development completions year-to-date:
– Space completed (sq m, at
100%)
78,200
173,300
– Potential rent (£m, at share) (Rent
secured)
9 (57%)
11 (74%)
Current development pipeline potential
rent (£m) (Rent secured)
61 (73%)
68 (73%)
Near-term development pipeline potential
rent (£m)
3
16
BALANCE SHEET
31 Mar 24
31 Dec 23
LONG-TERM, DIVERSIFIED DEBT
PROFILE PROVIDES CERTAINTY AND FLEXIBILITY
We retain substantial liquidity
and leverage remains modest. We have no material near-term
refinancing requirements and a 6.7 year average debt maturity. The
lower net debt figure reflects the £890 million net proceeds from
the new equity raised in February.
Net debt (£bn)
5.1
6.0
Cost of debt (%)
3.0
3.1
LTV3 (%)
29
34
Cash and available facilities (£bn)
2.8
1.9
Appendix
Leasing data for the period to 31 March (£m)1 2
Q1 2024
Q1 2023
Take-up of existing space (A)
5
4
Space returned2 (B)
(5)
(5)
NET ABSORPTION OF EXISTING SPACE
(A-B)
0
(1)
Other rental movements (rent reviews,
renewals, indexation) (C)
6
7
RENT ROLL GROWTH FROM EXISTING
SPACE
6
6
Take-up of developments completed in the
period – pre-let space (D)
5
7
Take-up of speculative developments
completed (E)
1
4
TOTAL TAKE UP (A+C+D+E)
17
22
Less take-up of pre-lets and speculative
lettings signed in prior periods
(5)
(7)
Pre-lets and lettings on speculative
developments signed in the period for future delivery
17
9
RENTAL INCOME CONTRACTED IN THE
PERIOD2
29
24
Take-back of space for redevelopment
(1)
(1)
1 All figures reflect headline rent (annualised gross rental
income, after the expiry of any rent-free periods), exchange rates
as at 31 March 2024 and include joint ventures at share. 2
Excluding space taken back for redevelopment.
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.
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 10.4 million square metres of space (112 million
square feet) valued at £20.7 billion at 31 December 2023, 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 over 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.
Forward-Looking Statements: This announcement contains
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. All statements other than historical fact are, or may
be deemed to be, forward-looking statements. Forward-looking
statements are statements of future expectations and all
forward-looking 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 you 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. The information
contained in this announcement is provided as at the date of this
announcement and is subject to change without notice. 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
estimate or 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 or 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240417557229/en/
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 / Eve Kirmatzis Tel: +44 (0)
20 3727 1000