SEGXF Segro PLC REIT (PK)

Segro PLC (SGRO.LN), Europe's largest industrial landlord, Thursday reported a 2.3% increase in the value of its assets in the first half and said it will continue to focus on improving occupancy through letting up vacant space and minimising take backs amid the uncertain economic environment.

Chief Executive Ian Coull said: "We have recently seen an encouraging increase in the levels of enquiries and growing interest in pre-let developments, which we will seek to capitalise on in the second half. The macro-economic environment remains uncertain but Segro is well placed and we will continue to focus on driving operational performance."

Net asset value in the six-month period ended June 30 rose 2.3% to GBP2.65 billion, giving a net asset value per share increase of 1.1% to 358 pence. Net rental income increased 11.3% to GBP144.3 million amid an encouraging leasing momentum and despite challenging occupier markets. Segro generated GBP20 million of new annualised rental income in the first half compared with GBP14.1 million in the same period last year.

Segro, like rival property companies, has been struggling as the credit crunch curbed demand for space, causing property values to fall. While the market turned a corner in August last year, Segro is still facing high vacancy rates, which reached 14%, a slight increase on the 13.5% booked at Dec 31.

Vacancies have been a problem for Segro ever since it took over rival industrial landlord Brixton PLC in August 2009 in an all-share acquisition, making the enlarged group Europe's biggest listed industrial property company by market capitalization with a portfolio of over GBP5 billion.

Brixton's portfolio, although attractive with locations around London's Heathrow Airport, was largely mismanaged and had a lot of empty space. Segro wants to cut Brixton's vacancies to 15% by 2012.

Still, signalling its confidence, the company increased its dividend by 2.2% to 4.7 pence.

Segro shares closed Wednesday at 275 pence, giving the company market capitalization of GBP2.04 billion.

-By Anita Likus, Dow Jones Newswires; +44 20 7842 9407; anita.likus@dowjones.com

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