REG - SEGRO PLC - Results for the year ended 31 December 2024
14/02/2025 07:15
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RNS Number : 0927X SEGRO PLC 14 February 2025
SEGRO plc's Full Year 2024 Results have been submitted in full unedited text
to the Financial Conduct Authority's National Storage Mechanism and will be
available shortly for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and are also
available on the SEGRO website at: www.segro.com/investors
(http://www.segro.com/investors) . Investors should read the full unedited
text of the Full Year 2024 Results, including the description of the Group's
principal risks and uncertainties, and not rely only on the summarised
information set out in this announcement. Notes or Tables that are not
included herein refer to the full unedited text of the Full Year 2024 Results.
14 February 2025
RESULTS FOR THE year ENDED 31 december 2024
GROWTH IN RENTS, EARNINGS AND DIVIDENDS,
WELL-POSITIONED FOR FUTURE DEVELOPMENT-LED AND DATA CENTRE GROWTH
KEY MESSAGES:
l Strong leasing and asset management activity, including record levels of
rental uplifts, driving 5.5 per cent earnings growth.
l Positive portfolio revaluation due to proactive asset management and improving
investment market conditions.
l Confidence in delivery of further development led-growth and significant
additional value creation opportunity through data centre pipeline.
Commenting on the results David Sleath, Chief Executive of SEGRO, said:
"SEGRO delivered over 5 per cent growth in earnings and dividends per share in
2024. We generated £91 million of new headline rent, our third best year on
record, including a 43 per cent uplift from UK rent reviews and renewals.
"We have created the largest data centre hub in Europe and are increasingly
excited about the exceptional value creation opportunity from our pipeline of
2.3GW European data centre sites in core Availability Zones. We plan to pursue
the most attractive risk-adjusted returns on each opportunity, including
initially working with partners to develop fully-fitted data centres.
"We have strong conviction in the enduring structural trends that are driving
occupier demand for our space. Our business, with its high-quality,
well-located, urban-weighted portfolio, exceptional land bank and strong
balance sheet is primed for further growth. Having seen conversations with
occupiers pick up pace in recent weeks, we expect leasing and pre-letting
activity to increase. This would support attractive, compounding earnings and
dividend growth in the medium-term, with significant additional value upside
from our data centre pipeline."
HIGHLIGHTS(1):
l Proactive and customer-focused management of the portfolio generated new
headline rent commitments of £91 million during the period (2023: £88
million). £26 million of this was driven by the capture of reversion in the
UK portfolio at rent reviews and renewals, reflecting a record 43 per cent
average uplift.
l 7.0 per cent increase in net rental income to £628 million (2023: £587
million), driven by strong like-for-like rental growth of 5.8 per cent and
development completions.
l Adjusted pre-tax profit increased by 14.9 per cent to £470 million (2023:
£409 million), resulting from increased net rental income and lower interest
costs. Adjusted EPS increased by 5.5 per cent to 34.5 pence (2023: 32.7
pence), the impact of the equity placing being broadly neutral as lower
interest costs were offset by the higher share count.
l Adjusted NAV per share of 907 pence (31 December 2023: 907 pence). Over the
full year the portfolio value increased 1.1 per cent (2023: 4.0 per cent
decline) and rental value (ERV) grew by 3.2 per cent.
l Development completions added £37 million of potential new headline rent,
delivered at a yield on cost of 6.9 per cent. 84 per cent of this has been
leased and 97 per cent was, or is expected to be, certified BREEAM 'Excellent'
(or local equivalent) or higher.
l A further £51 million of potential rent from development projects under
construction or in advanced negotiations, 53 per cent relate to pre-lets.
Expected yield on cost for these projects is 7.9 per cent.
l Active portfolio recycling to drive portfolio performance: £431 million
acquisitions of prime assets in core markets with strong growth potential,
£896 million of disposals of assets which we expected to deliver less
attractive risk-adjusted returns.
l Since the period end, our joint venture SEGRO European Logistics Partnership
("SELP") exchanged contracts on the acquisition of a further €470 million of
high-quality assets in Germany and The Netherlands. The transaction is
expected to complete in the first quarter.
l Over £1.5 billion of new equity and debt financing providing the firepower
for further growth. LTV of 28 per cent at 31 December 2024 (31 December 2023:
34 per cent) and net debt:EBITDA 8.6 times (31 December 2023: 10.4 times).
l Attractive cost of debt due to our diverse, long-term debt structure. Average
cost of debt has reduced to 2.5 per cent (31 December 2023: 3.1 per cent).
l 2024 full year dividend increased 5.4 per cent to 29.3 pence (2023: 27.8
pence). Final dividend increased by 5.8 per cent to 20.2 pence (2023: 19.1
pence).
OUTLOOK
We enter 2025 with confidence in SEGRO's prospects for further growth. Our
portfolio is of irreplicable quality, having been purposefully curated over
the past 15 years. Two-thirds of it is located in Europe's largest cities,
with the remaining one-third strategically located near logistics hubs and
along key transportation corridors. Our chosen markets have a shortage of
modern, sustainable space with low land availability and restrictive planning
policies limiting the supply of competing space.
We have strong conviction that demand for our space will continue to be
supported by powerful, enduring structural trends: data and digitalisation,
urbanisation, supply chain optimisation and sustainability. Sentiment in
occupier markets is improving and we saw a pick up in occupier activity during
the final months of the year, as evidenced by our strong leasing activity in
the last quarter. This momentum has carried into the early weeks of 2025, and
we take confidence from the positive conversations we are having with our
customers across all of our markets.
Our portfolio is full of current and future opportunity. We have the potential
to:
l Secure £173 million of additional rental income from our standing portfolio
through capturing the existing rent reversion (£118 million) and leasing
vacant space (£55 million);
l Deliver £422 million of new rent from development on our exceptional land
bank located in the most attractive markets, with a profitable yield on cost
of 7 to 8 per cent;
l Continue delivering compounding annual rental growth on our portfolio in line
with our long-standing guidance of 2 to 6 per cent per annum, thus growing
rents faster than inflation.
Our track record in creating Europe's largest hub of data centres in Slough,
with over 0.5GW of capacity either operational or under construction, has
helped us to develop strong relationships with global data centre players,
which provide us with unique insights into this exciting, high-growth
opportunity.
l We have built a landbank with exceptional access to 2.3GW of potential power
in Europe's key Availability Zones.
l As well as building powered shells, we recognise the potential to create
significant additional value from the development of fully-fitted data centres
in select locations, with projects currently under active consideration.
Our business is therefore well-placed for further attractive, compounding
growth in earnings and dividends in the years ahead, with significant
additional value upside from our data centre pipeline.
FINANCIAL SUMMARY
2024 2023 Change
per cent
Adjusted(2) profit before tax (£m) 470 409 14.9
IFRS(2) profit/(loss) before tax (£m) 636 (263) -
Adjusted(2) earnings per share (pence) 34.5 32.7 5.5
IFRS(2) earnings per share (pence) 44.7 (20.7) -
Dividend per share (pence) 29.3 27.8 5.4
Total Accounting Return (%)(3) 3.1 (3.3) -
2024 2023 Change
per cent
Assets under Management (£m) 20,296 20,677 -
Portfolio valuation (SEGRO share, £m) 17,770 17,762 1.1(4)
Net true equivalent yield (per cent) 5.4 5.3 -
Adjusted(5 6) net asset value per share (pence, diluted) 907 907 -
IFRS net asset value per share (pence, diluted) 889 886 -
Net debt (SEGRO share, £m) 5,000 6,016 -
Loan to value ratio including joint ventures and associates' at share (per 28 34 -
cent)
Net debt:EBITDA(7) 8.6 10.4 -
1 Figures quoted on pages 1 to 18 refer to SEGRO and SEGRO's share of joint
ventures and associates, except for land (hectares) and space (square metres)
which are quoted at 100 per cent, unless otherwise stated. Please refer to the
Presentation of Financial Information statement in the Financial Review for
further details.
2 The primary driver of the difference between Adjusted profit before tax
and IFRS profit before tax (£636 million IFRS profit before tax versus £470
million Adjusted profit before tax and earnings per share (44.7 pence IFRS
earnings per share versus 34.5 pence adjusted earnings per share) is the
realised and unrealised property gains on our portfolio recognised in IFRS but
not recognised in our Adjusted profit and earnings metrics. Further
information and reconciliations between the Adjusted and IFRS metrics can be
found in Note 2 (Adjusted profit) and Notes 11 (Earnings per ordinary share)
to the condensed financial information.
3 Total Accounting Return is calculated based on the opening and closing
adjusted NAV per share adding back dividends paid during the period.
4 Percentage valuation movement during the period based on the difference
between opening and closing valuations for all properties including buildings
under construction and land, adjusting for capital expenditure, acquisitions
and disposals.
5 A reconciliation between Adjusted net asset value per share and IFRS net
asset value per share is shown in Note 11 to the condensed financial
information.
6 Adjusted net asset value is in line with EPRA Net Tangible Assets (NTA)
(see Table 5 in the Supplementary Notes for a NAV reconciliation).
7 Relates to SEGRO Group only. For further information on net debt:EBITDA
see footnote 2 to Table 2 in the Supplementary Notes.
OPERATING SUMMARY & KEY METRICS
2024 2023
PORTFOLIO VALUATION TURNS POSITIVE, DRIVEN BY RENTAL GROWTH AND STABILISATION
OF INVESTMENT MARKETS (see page 12):
Portfolio valuation change (%): Group 1.1 (4.0)
UK 2.1 (3.4)
CE (0.8) (5.1)
ERV growth (%) Group 3.2 6.0
UK 3.7 4.9
CE 2.3 7.9
STRONG GROWTH IN RENTAL INCOME DRIVEN BY RECORD CAPTURE OF REVERSION AND
ACTIVE ASSET MANAGEMENT (see pages 12 and 19):
Total new rent secured in the year (£m) 91 88
Pre-lets signed in the year (£m) 20 27
Like-for-like net rental income growth Group 5.8 6.5
(%):
UK 5.9 5.3
CE 5.7 8.5
Uplift on rent reviews and renewals (%): Group 34 31
(note: excludes uplifts from indexation) UK 43 40
CE 7 8
Occupancy rate (%) 94.0 95.0
Customer retention (%) 80 81
Corporate and customer carbon emission intensity (kgCO(2)e/sq m) 36.4 36.1(2)
Installed solar capacity (MW) 123 59
INVESTING TO SECURE PROFITABLE GROWTH, AND ATTRACTIVE RISK ADJUSTED RETURNS
(see page 15):
Development capex (£m) 471 527
Asset acquisitions (£m) 431 -
Land acquisitions (£m) 23 404
Disposals (£m) 896 356
Development capex for 2025 expected to be c.£500 million.
DEVELOPMENT PIPELINE DELIVERING PROFITABLE GROWTH (see page 16):
Development completions:
- Space completed (sq m) 374,700 625,700
- Potential rent (£m) (Rent secured) 37 (84%) 50 (87%)
- Development yield (%) 6.9 7.0
- BREEAM 'Excellent'(1) or above (% of floorspace 97 92
completed)
- Average embodied carbon intensity of development completions 318 331(2)
(kgCOe/sq m)
Current development pipeline potential rent (£m) (Rent secured) 46 (50%) 51 (62%)
Near-term pre-let development pipeline potential rent (£m) 5 20
1. Or local equivalent
2. The 2023 figures are a restatement of previously reported figures and are
in line with the methodology of our new Science Based Target.
FINANCIAL CALENDAR
2024 final dividend ex-div
date
27 March 2025
2024 final dividend record
date
28 March 2025
2024 final dividend payment
date
14 May 2025
2025 Q1 Trading
Update
30 April 2025
Half Year 2025 Results
(provisional)
31 July 2025
WEBCAST / CONFERENCE CALL FOR INVESTORS AND ANALYSTS
A live webcast of the results presentation will be available from 08:30am (UK
time) at:
https://www.investis-live.com/segro/677f9a2aa4d247000ef05a52/paket
(https://www.investis-live.com/segro/677f9a2aa4d247000ef05a52/paket)
The webcast will be available for replay at SEGRO's website at:
http://www.segro.com/investors (http://www.segro.com/investors) shortly after
the live presentation.
A conference call facility will be available at 08:30am (UK time) on the An audio recording of the conference call will be available until 21 February
following number: 2025 on:
Dial-in: +44 (0)800 279 UK: +44 (0)
3956 203 608 8021
+44 Access code: 20250066
(0) 207 107 0613
Access code: 20250066
A video of David Sleath, Chief Executive discussing the results will be
available to view on www.segro.com (http://www.segro.com) , together with this
announcement, the Full Year 2024 Property Analysis Report and other
information about SEGRO.
CONTACT DETAILS FOR INVESTOR / ANALYST AND MEDIA ENQUIRIES:
SEGRO Soumen Das Tel: + 44 (0) 20 7451 9110
(after 11am)
(Chief Financial Officer)
Claire Mogford Mob: +44 (0) 7710 153 974
(Head of Investor Relations) Tel: +44 (0) 20 7451 9048
(after 11am)
FTI Consulting Richard Sunderland /Eve Kirmatzis Tel: +44 (0) 20 3727 1000
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 (111 million square feet) valued at £20.3 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.
The financial information set out in this announcement does not constitute the
consolidated statutory accounts ("Group Financial Statements") for the years
ended 31 December 2023 and 2024, but is derived from those Group Financial
Statements. Statutory accounts for 2024 have been delivered to the Registrar
of Companies and those for 2024 (approved by the Board on 13 February 2025)
will be delivered following the Company's annual general meeting. The external
auditor has reported on the Group Financial Statements for the year ended 31
December 2024 and their report did not contain any modification.
The Board of Directors of SEGRO plc met on 13 February 2025 and approved the
Group Annual Report and Group Financial Statements for the year ended 31
December 2024. Certain parts of the Group Annual Report and Group Financial
Statements have not been included in this announcement.
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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