TIDMSGRO
18 October 2023
SEGRO plc
Trading Update
SEGRO plc ("SEGRO" or the "Group") (BOURSE:SGRO) today publishes
a trading update for the period from 1 January 2023 to 17 October
2023(1) .
Summary
-- SEGRO on track for a strong year of rent roll growth due to active
asset management and demand for our high-quality product.
-- Good progress with disposals, over GBP250 million completed or
exchanged year to date, above book value.
-- Prioritising profitable development opportunities with GBP77 million of
potential rent from projects currently on site or expected to commence
shortly at an anticipated yield on cost of 7.3 per cent.
David Sleath, Chief Executive, said:
"SEGRO's prime portfolio and market-leading operating platform
generated GBP58 million of new contracted rent so far in 2023,
keeping us on track for a strong year of rent roll growth. Occupier
market conditions remain supportive with demand in line with
longer-term trends and supply constrained in our chosen
sub-markets. This is resulting in continued rental growth, further
increasing the reversionary potential in our existing portfolio,
which we are capturing through our asset management and leasing
activity.
"We have made good progress with disposals in recent months,
although the overall volume of investment market transactions
remains subdued due to the evolving macro-economic environment.
Reassuringly, investors continue to hold conviction over the
attractiveness of the sector, with market evidence from indices and
recent transactions pointing to relatively stable asset values in
the third quarter.
"In the current environment it is important to remain
disciplined in our use of capital. We are prioritising attractive
development opportunities on the land we already own, increasingly
funding such investment from the proceeds of selective disposals,
alongside driving performance and income growth from our existing
portfolio of high-quality assets."
Financial calendar
Full Year 2023 results will be published on Friday 16 February
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, 30
September unless otherwise indicated. The exchange rate applied is
EUR1.15:GBP1 as at 30 September 2023.
2 Headline rent is annualised gross passing rent receivable once
incentives such as rent-free periods have expired.
3 Based on values as at 30 June 2023, adjusted for acquisitions,
disposals and other capital expenditure during the third
quarter.
OPERATING SUMMARY & KEY METRICS 9M 2023 9M 2022
ACTIVE ASSET MANAGEMENT CAPTURING RENTAL GROWTH AND INCREASING THE
RENT ROLL (see Appendix 1):
Standing portfolio continues to contribute significantly to rent roll growth
as we make good progress capturing reversion, benefit from indexation and sign
leases with both new and existing customers. Customer retention remains high
and occupancy is within our target range of 94 to 96 per cent.
Total new headline rent(2) signed (GBPm) 58 76
Pre-lets signed (GBPm) 23 36
Uplift on rent reviews and renewals (%) Group 22 22
UK 32 27
CE 8 1
Occupancy rate (%) 95.3 96.7
Customer retention (%) 81 76
INVESTMENT ACTIVITY REMAINS DISCIPLINED AND FOCUSED ON SECURING PROFITABLE
GROWTH:
Capital investment continues to focus on our development programme through
capex and the acquisition of some rare land opportunities, funded increasingly
by disposals. The GBP251 million of sales completed or exchanged so far in
2023 had attributable rental income of GBP8 million (annualised). Development
capex for 2023, including infrastructure, now expected to be in excess of
GBP500 million (previously c.GBP600 million) with the residual capex expected
to be incurred in 2024.
Development capex (GBPm) 381 532
Acquisitions (GBPm) 397 789
Disposals (GBPm), completed or exchanged 251 290
EXECUTING AND GROWING OUR PROFITABLE DEVELOPMENT PIPELINE:
Our active and largely pre-let development programme remains a key driver of
rent roll growth and attractive returns on capital.
Development completions:
-- Space completed (sq m, at 100%) 432,800 419,100
-- Potential rent (GBPm, at share) (Rent secured) 41 (85%) 20 (92%)
Current development pipeline potential rent (GBPm)
(Rent secured) 68 (64%) 86 (64%)
Near-term development pipeline potential rent (GBPm) 9 32
BALANCE SHEET 30 Sep 23 30 June 23
LONG-TERM, DIVERSIFIED DEBT PROFILE PROVIDES CERTAINTY AND FLEXIBILITY
We retain substantial liquidity, leverage remains stable and 89 per cent of
our debt is fixed or capped. We have no material near-term refinancing
requirements and a 7.2 year average debt maturity.
Net debt (GBPm) 6,200 6,078
Cost of debt (%) 3.0 2.9
LTV(3) (%) 34 34
Cash and available facilities (GBPm) 1,583 1,687
Appendices
1. Leasing data for the period to 30 September (GBPm)(1 2)
Q3 2023 Q3 2022 9M 2023 9M 2022
Take-up of existing space (A) GBPm 3 5 10 15
Space returned(2) (B) GBPm (5) (4) (14) (14)
NET ABSORPTION OF EXISTING SPACE
(A-B) GBPm (2) 1 (3) 1
Other rental movements (rent
reviews, renewals, indexation)
(C) GBPm 6 5 18 19
RENT ROLL GROWTH FROM EXISTING
SPACE GBPm 4 6 15 20
Take-up of developments completed
in the period -- pre-let space
(D) GBPm 11 2 33 13
Take-up of speculative developments
completed in the past two years
(E) GBPm 1 4 7 9
TOTAL TAKE UP (A+C+D+E) GBPm 21 16 68 56
Less take-up of pre-lets and
speculative lettings signed in
prior periods GBPm (11) (4) (33) (16)
Pre-lets and lettings on
speculative developments signed in
the period for future delivery GBPm 4 8 23 36
RENTAL INCOME CONTRACTED IN THE
PERIOD(2) GBPm 14 20 58 76
Take-back of space for
redevelopment GBPm - (1) (1) (3)
1 All figures reflect headline rent (annualised gross rental
income, after the expiry of any rent-free periods), exchange rates
as at 30 September and include joint ventures at share.
2 Excluding space taken back for redevelopment.
2. SELP Performance Fee update
A performance fee is potentially payable by the SELP joint
venture to SEGRO, based on SELP's internal rate of return since
inception as at the vehicle's tenth anniversary, 11 October 2023,
subject to certain hurdle rates. An independent valuation of the
SELP portfolio is being carried out as part of the process to
calculate this fee. SEGRO will announce the amount payable by SELP
after the valuation has been concluded and the performance fee
determined.
The performance fee will be excluded from SEGRO's FY 2023
Adjusted Profit (and Adjusted earnings) as announced with the HY
2023 results. For a sensitivity analysis of the performance fee
please see Note 6 (ii) of SEGRO's HY 2023 Financial Statements.
This Trading Update, the most recent Annual Report and other
information are available on the SEGRO website at
www.segro.com/investors.
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 10.3 million square metres of space (110 million
square feet) valued at GBP21.0 billion as at 30 June 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.
Striving for the highest standards of innovation, sustainable
business practices and enabling economic and societal prosperity
underpins SEGRO's ambition to be the best property company.
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.
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
View source version on businesswire.com:
https://www.businesswire.com/news/home/20231017422977/en/
CONTACT:
SEGRO plc
SOURCE: SEGRO plc
Copyright Business Wire 2023
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