TIDMSGRO
RNS Number : 2275L
SEGRO PLC
18 April 2018
18 April 2018
SEGRO plc
Trading Update
SEGRO plc ("SEGRO" or the "Group") today publishes its trading
update for the period from 1 January to 17 April 2018(1) .
David Sleath, Chief Executive, said:
"We have had a strong start to 2018, securing GBP27 million of
new headline rent, a record level for a single quarter.
Occupational demand remains encouraging across all our markets,
particularly driven by the growth of online retailing. Our
profitable and largely pre-leased development pipeline is expected
to generate GBP55 million of new rent when fully built and leased,
and there are further projects in advanced discussions which will
add to this in the coming months.
"The combination of attractive yields and rental growth,
resulting from limited supply and the enduring positive structural
drivers of occupier demand, continues to appeal to investors.
Consequently, the investment market remains active with evidence of
some further yield compression in recent urban and big box
warehouse transactions."
Operational Excellence: Delivering profitable growth from active
asset management, development and a record level of pre-let
agreements (Appendix 1)
-- In the first quarter, we contracted GBP27.3 million of new
headline rent (Q1 2017: GBP16.3 million), including GBP23.3 million
of pre-lets (Q1 2017: GBP10.6 million).
-- We completed 146,500 sq m of developments in the quarter,
capable of generating GBP10.9 million of headline rent when fully
let, of which GBP6.8 million (63 per cent) has been secured.
-- 1.0 million sq m of space was approved or under development
at 31 March 2018 (31 December 2017: 693,900 sq m). These projects
equate to potential future annualised headline rent of GBP55
million, 69 per cent of which has been secured (31 December 2017:
GBP43 million, 50 per cent secured), reflecting an estimated,
fully-let yield on total development cost of 7.3 per cent.
-- The development pipeline includes new pre-lets totalling
490,000 sq m, of which 270,000 sq m is to online retailers
including to Zalando in Verona. It also includes the first two
pre-lets at SEGRO Logistics Park East Midlands Gateway (SLPEMG):
122,000 sq m to a major online retailer and 60,000 sq m to a third
party logistics provider. We have also agreed to construct a
warehouse for Shop Direct at SLPEMG which it will acquire on
completion. In Paris, we have secured a 50,000 sq m letting to IKEA
at our two-storey warehouse in Gennevilliers, the inland port close
to the centre of Paris, meaning this 63,000 sq m warehouse is now
fully let six months prior to completion.
-- The vacancy rate has remained low at 5.0 per cent (31
December 2017: 4.0 per cent). The increase since December reflects
the impact of development completions (+0.7 per cent), acquisitions
and disposals (+0.1 per cent) and modest net take-back of existing
space (+0.2 per cent).
Disciplined Capital Allocation: Investment focused on
development (Appendices 2 and 3)
-- Net investment during Q1 2018 totalled GBP50 million,
comprising GBP65 million of asset and land disposals, GBP24 million
of asset acquisitions and GBP91 million of development capex and
land purchases.
-- Our investment activity continues to focus on delivering our
current development pipeline and securing land for near-term
projects. We invested GBP63 million in development capex during the
quarter (including GBP5 million of infrastructure expenditure) and
continue to expect total development capex to exceed GBP350 million
for 2018 as a whole. In addition, we acquired GBP28 million of
development land in Italy, Germany, Spain and London, almost all of
which is connected to pre-let agreements.
-- During the quarter we disposed of GBP65 million of land and
assets, including a small industrial estate in Germany and GBP84
million of Continental European big box warehouses to our SELP
joint venture (GBP42 million net disposal by SEGRO).
-- We took the opportunity to acquire an 18,600 sq m urban
warehouse estate approximately 9km from Warsaw city centre and 6km
from the international airport, helping to build scale in this
attractive location.
-- In the UK, the CBRE Monthly Index reported 3.1 per cent
growth in industrial property capital values during the first
quarter, outperforming the All Property growth rate of 0.9 per
cent.
Balance sheet remains in a strong position to support future
growth
-- Net debt (including our share of debt in joint ventures) at
31 March 2018 remained stable at GBP2.4 billion (31 December 2017:
GBP2.4 billion).
-- The look-through loan to value (LTV) ratio at 31 March 2018
(based on asset values at 31 December 2017, adjusted for
development expenditure, acquisitions and disposals) was 30 per
cent, unchanged from 31 December 2017.
Financial calendar
The 2018 interim results will be published on Thursday 26 July
2018.
(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 2018 was EUR1.14:GBP1 (31 March 2017: EUR1.18:GBP1; 31
December 2017: EUR1.13:GBP1).
Appendices
1. Leasing data for the period to 31 March(1)
Q1 2018 Q1 2017
------------------------------------------- ------ -------- --------
Take-up of existing space(2) (A) GBPm 2.4 2.1
Space returned(3) (B) GBPm (3.1) (1.1)
NET ABSORPTION OF EXISTING SPACE (A-B) GBPm (0.7) 1.0
Other rental movements (rent reviews,
renewals, indexation)(2) (C) GBPm 1.2 1.4
RENT ROLL GROWTH FROM EXISTING SPACE GBPm 0.5 2.4
Take-up of developments completed in
the period - pre-let space(2) (D) GBPm 5.2 0.0
Take-up of speculative developments
completed in the past two years(2) (E) GBPm 2.0 2.8
TOTAL TAKE UP(2) (A+C+D+E) GBPm 10.8 6.3
Less take-up of pre-lets and speculative
lettings signed in prior periods(2) GBPm (6.8) (0.6)
Pre-lets and lettings on speculative
developments signed in the period for
future delivery(2) GBPm 23.3 10.6
RENTAL INCOME CONTRACTED IN THE PERIOD(2) GBPm 27.3 16.3
Take-back of space for redevelopment GBPm 0.0 (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.
2. Acquisitions completed during the three months to 31 March 2018
Asset location / type Purchase price(1) Net initial yield Topped-up
(GBPm, SEGRO share) (%) net initial yield(2) (%)
Continental Europe: Urban warehousing 24.1 6.3 6.5
Continental Europe: Land 25.8 n/a n/a
UK: Land 1.7 n/a n/a
Total acquisitions during the quarter 51.6 6.3(3) 6.5(3)
-------------------------------------- -------------------- ----------------- --------------------------
1 Excluding acquisition costs; purchase price reflects exchange
rate at 31 March 2018 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 31 March 2018
Asset location / type Gross proceeds Net initial yield Topped-up
(GBPm, SEGRO share) (%) net initial yield(1) (%)
-------------------------------------- -------------------- ----------------- -------------------------
Continental Europe: Light Industrial 17.1 3.4 5.2
Continental Europe: Big box warehouse 41.8 5.5 5.9
UK: Land 6.1 n/a n/a
Total disposals during the quarter 65.0 4.9(2) 5.7(2)
-------------------------------------- -------------------- ----------------- -------------------------
1 Topped up net initial yield includes rent due after expiry of
rent-free periods.
2 Yield excludes land disposals.
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
--------------
Lizzie Humphreys (External Tel: +44 (0)
Communications Manager) 20 7451 9118
-------------- ------------------------------ -------------
FTI Consulting Richard Sunderland / Claire Tel: +44 (0)
Turvey / Eve Kirmatzis 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 contains certain
forward-looking statements with respect to SEGRO plc's ('SEGRO')
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 to reflect any 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 or an
invitation or inducement to engage in any 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), and a leading
owner, manager and developer of modern warehouses and light
industrial property. It owns or manages 6.7 million square metres
(72 million square feet) of space valued at GBP9.3 billion (as at
31 December 2017), 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
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