TIDMSGRO
SEGRO plc ("SEGRO" or the "Group") today publishes a trading
update for the period from 1 July 2022 to 19 October 2022(1) .
David Sleath, Chief Executive, said:
"SEGRO has performed well throughout the third quarter of 2022,
delivering excellent operational results with momentum continuing
into the final quarter.
"Occupier demand remains strong across all of our markets,
driven by long-term structural trends, whilst supply remains
limited and this should continue to support high levels of rental
growth. These factors have helped us to grow the rent roll by GBP20
million in the third quarter (bringing the total increase to GBP76
million so far in 2022(1) ) through new lettings, indexation and
the capture of reversion, as well as from additions to our
profitable development programme.
"Over the past decade, the successful execution of our strategy
has created an irreplaceable portfolio of modern, sustainable
assets focused on markets with the tightest supply-demand dynamics,
underpinning significant reversionary potential and future rental
growth. Increases in interest rates and the volatile macro-economic
environment have reduced volumes in the investment markets, causing
asset prices to soften in the third quarter. However, we remain
focused on the fundamentals of our business -- owning, managing and
developing the highest-quality buildings whilst maintaining low
leverage and a strong balance sheet, thereby supporting the
delivery of attractive growth in earnings and dividends for our
shareholders."
(1) 9M 2021 rent roll growth: GBP64 million.
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
EUR1.14:GBP1 as at 30 September 2022.
OPERATING SUMMARY & KEY METRICS Q3 2022 Q3 2021
ACTIVE ASSET MANAGEMENT CAPTURING RENTAL GROWTH AND GROWING THE RENT ROLL
(see Appendix):
Continued strong occupier demand has supported our ability to let new space
and grow rents in the standing portfolio through indexation-linked increases
and capturing accumulated reversion in the portfolio. Occupancy and
retention have both remained high.
Total new headline rent(1) signed during the period
(GBPm) 20 26
Pre-lets signed during the period (GBPm) 8 9
Uplift on rent reviews and renewals (%) 22 13
Occupancy rate (%) 96.7 96.8
Customer retention (%) 76 76
CAPITAL INVESTMENT FOCUSES ON DEVELOPMENT PIPELINE:
SEGRO's investment activity continues to be focused on the development
programme. Development capex for 2022, including infrastructure, still
expected to be c.GBP700 million. We note that CBRE UK Monthly Property Index
has shown a 10 per cent decline in UK industrial values during Q3.
Acquisitions(2) (GBPm) 424 140
Disposals (GBPm) 109 98
EXECUTING AND GROWING OUR DEVELOPMENT PIPELINE:
New pre-lets signed since half year have helped to expand development
pipeline with 1.3 million sq m of space, equivalent to GBP118 million of new
rent, under construction or in advanced discussions. Yield on cost for these
projects is 6.3 per cent (approximately 10 per cent yield on new money).
Development completions year-to date:
-- Space completed (sq m, at 100%) 419,100 450,000
-- Potential rent (GBPm, at share) (Rent secured) 20 (92%) 25 (93%)
Current development pipeline potential rent (GBPm) (Rent
secured) 86 (64%) 68 (66%)
Near-term development pipeline potential rent (GBPm) 32 24
(1) Headline rent is annualised gross passing rent receivable
once incentives such as rent-free periods have expired.
(2) All acquisitions during the period were land.
BALANCE SHEET 30 Sep 22 30 Jun 22
LONG-TERM, DIVERSIFIED DEBT PROFILE PROVIDES CERTAINTY AND FLEXIBILITY
Issuance of EUR750 million of five-year debt at a coupon of 3.75 per cent
for our SELP joint venture in early August to refinance 2023 SELP bonds. We
also drew down EUR225 million of US Private Placement notes (average
maturity 19 years) at an average coupon of 4.08 per cent during the period.
We have no further material refinancing requirements until 2026 and an 8.2
year average debt maturity (79 per cent of which is fixed or capped(1) ; the
floating rates exposure is mostly to three-month EURIBOR). A further 100bp
rise in benchmark rates from current levels would increase SEGRO's cost of
debt by 24 bps.
Net debt (GBPm) 5,414 4,764
Cost of debt (%) 2.1 1.6
LTV(2) (%) 26 23
Cash and available facilities (GBPm) 1,739 1,983
(1) 71 per cent is fixed, a further 8 per cent is capped once
3-month EURIBOR reaches 1.5 per cent.
(2) Based on values at 30 June 2022, adjusted for acquisitions,
disposals and other capital expenditure during the third
quarter.
Appendix
Leasing data for the period to 30 September(1 2)
Q3 2022 Q3 2021 9M 2022 9M 2021
Take-up of existing space (A) GBPm 5 9 15 19
Space returned(2) (B) GBPm (4) (7) (14) (17)
NET ABSORPTION OF EXISTING SPACE
(A-B) GBPm 1 2 1 2
Other rental movements (rent
reviews, renewals, indexation)
(C) GBPm 5 2 19 6
RENT ROLL GROWTH FROM EXISTING
SPACE GBPm 6 4 20 8
Take-up of developments completed
in the period -- pre-let space
(D) GBPm 2 15(3) 13 20
Take-up of speculative developments
completed in the past two years
(E) GBPm 4 6 9 10
TOTAL TAKE UP (A+C+D+E) GBPm 16 32 56 55
Less take-up of pre-lets and
speculative lettings signed in
prior periods GBPm (4) (15) (16) (21)
Pre-lets and lettings on
speculative developments signed in
the period for future delivery GBPm 8 9 36 30
RENTAL INCOME CONTRACTED IN THE
PERIOD(2) GBPm 20 26 76 64
Take-back of space for
redevelopment GBPm (1) (1) (3) (2)
(1) All figures reflect headline rent (annualised gross rental
income, after the expiry of any rent-free periods), exchange rates
at 30 September 2022 and include joint ventures at share.
(2) Excluding space taken back for redevelopment.
(3) 2021 comparator is high as development completions were
heavily weighted towards H2.
Financial calendar
The 2022 full year results will be published on Friday 17(th)
February 2023.
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 9.7 million square metres of space (104 million
square feet) valued at GBP23.8 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 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. 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 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 / Ellie Strickland / Eve Kirmatzis
Tel: +44 (0) 20 3727 1000
View source version on businesswire.com:
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CONTACT:
SEGRO
SOURCE: SEGRO PLC
Copyright Business Wire 2022
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