REG-SEGRO PLC SEGRO plc Trading Update

SEGROAnnouncement

21/04/2022 07:00

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SEGRO plc Trading Update

 

SEGRO plc (“SEGRO” or the “Group”) today publishes a trading update
for the period from 1 January 2022 to 20 April 2022(1).

David Sleath, Chief Executive, said:

“Our business has had a strong start to the year with continued demand from
a broad range of customers enabling us to capture further rental growth
through rent reviews and the re-letting of space. We have significantly
increased our largely pre-let development pipeline and have secured future
opportunities for growth in some of our most supply-constrained urban markets
through the acquisition of land, as well as income-producing assets with
medium-term redevelopment potential.

“We continue to monitor the tragic events unfolding in Ukraine, offering
humanitarian support through the efforts of our Polish team and via donations
to relevant relief agencies. There have been no direct effects of the invasion
on our business, however it has added to construction supply chain and
inflationary pressures and we are working closely with our construction
partners so as to minimise the impact on our development programme. At the
same time, we expect these pressures will further tighten the supply-demand
imbalance for industrial assets and place further upward pressure on rents
across our portfolio.

“The industrial sector continues to benefit from highly supportive and
long-term structural tailwinds, which are leading to sustained strong occupier
and investor demand, despite the challenges that the world is facing. We are
alert to ongoing geopolitical and macro-economic risks but remain confident in
the outlook for our business in 2022 and beyond.”

Financial calendar

The 2022 half year results will be published on Thursday 28 July 2022.

OPERATING SUMMARY & KEY METRICS
                                                                                          Q1 2022                      Q1 2021    
 ACTIVE ASSET MANAGEMENT CAPTURING RENTAL GROWTH AND GROWING THE RENT ROLL (see                                                   
 Appendix 1):                                                                                                                     
 Good progress in capturing accumulated reversion in the portfolio through rent                                                   
 reviews and renewals and continued strong lettings performance.                                                                  
 Total new headline rent(2) signed during the period (£m)                                 25                           18         
 Pre-lets signed during the period (£m)                                                   11                           11         
 Uplift on rent reviews and renewals (%)                                                  23                           12         
 Vacancy rate (%)                                                                         3.3                          4.4        
 Customer retention (%)                                                                   79                           82         
 FURTHER ACQUISITIONS TO SECURE POTENTIAL FUTURE GROWTH:                                                                          
 Capital investment continues to focus on development and acquisition of assets                                                   
 with opportunities for future growth, as well as sourcing land and assets with                                                   
 short-term income and redevelopment potential to extend our development                                                          
 pipeline. Development capex for 2022, including infrastructure, expected to be                                                   
 c.£700 million.                                                                                                                  
 Development capex (£m)                                                                   151                          143        
 Acquisitions(4) (£m)                                                                     175                          37         
 Disposals(4) (£m)                                                                        73                           -          
 EXECUTING AND GROWING OUR DEVELOPMENT PIPELINE:                                                                                  
 Development programme has grown significantly since year end with 1.4 million                                                    
 sq m of space, equivalent to £108 million of new rent, under construction or                                                     
 in advanced discussions.                                                                                                         
 Development completions:                                                                                                         
 – Space completed (sq m)                                                                 121,900                      14,200     
 – Potential rent (£m) (Rent secured, %)                                                  3 (100%)                     1 (86%)    
 Current development pipeline potential rent (£m) (Rent secured, %)                       73 (63%)                     67 (71%)   
 Near-term development pipeline potential rent (£m)                                       35                           20         
                                                                                                                                  
                                                                                          31 Mar 22                    31 Dec 21  
 BALANCE SHEET POSITIONED TO SUPPORT FURTHER DEVELOPMENT-LED GROWTH                                                               
 Issuance of €1.15 billion Green bonds during the period at a blended coupon                                                      
 of 1.5 per cent helped to strengthen the balance sheet and maintain low                                                          
 average cost of debt.                                                                                                            
 Net debt (£bn)                                                                           4.4                          4.2        
 Cost of debt (%)                                                                         1.6                          1.5        
 LTV(3) (%)                                                                               24                           23         
 Cash and available facilities (£bn)                                                      1.9                          1.1        


(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, 31 March unless otherwise
indicated. The exchange rate applied is €1.19:£1 as at 31 March 2022.

(2) Headline rent is annualised gross passing rent receivable once incentives
such as rent free periods have expired.

(3) Based on values at 31 December 2021, adjusted for acquisitions, disposals
and other capital expenditure during the first quarter.

(4) Includes both assets and land

Appendices

Leasing data for the period to 31 March (£million)(1 2)
                                                                                 Q1 2022  Q1 2021  
 Take-up of existing space (A)                                                   5        3        
 Space returned(2) (B)                                                           (5)      (6)      
 NET ABSORPTION OF EXISTING SPACE (A-B)                                          -        (3)      
 Other rental movements (rent reviews, renewals, indexation) (C)                 7        2        
 RENT ROLL GROWTH FROM EXISTING SPACE                                            7        (1)      
 Take-up of developments completed in the period – pre-let space (D)             2        1        
 Take-up of speculative developments completed in the past two years (E)         2        1        
 TOTAL TAKE UP (A+C+D+E)                                                         16       7        
 Less take-up of pre-lets and speculative lettings signed in prior periods       (2)      -        
 Pre-lets and lettings on speculative developments signed in the period for      11       11       
 future delivery                                                                                   
 RENTAL INCOME CONTRACTED IN THE PERIOD(2)                                       25       18       
 Take-back of space for redevelopment                                            (1)      (1)      


1 All figures reflect headline rent (annualised gross rental income, after the
expiry of any rent-free periods), exchange rates at 31 March and include joint
ventures at share.

2 Excluding space taken back for redevelopment.

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 / Claire Turvey / Eve Kirmatzis  Tel: +44 (0) 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
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.segro.com%2Finvestors&esheet=52691958&newsitemid=20220420005895&lan=en-US&anchor=www.segro.com%2Finvestors&index=1&md5=0aadcfdc241fdabdc0d86cdde3f757d0)
.

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'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.

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 9.6 million
square metres of space (103 million square feet) valued at £21.3 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 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
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.SEGRO.com&esheet=52691958&newsitemid=20220420005895&lan=en-US&anchor=www.SEGRO.com&index=2&md5=f639c23298e7cb768aa1c60bb9fbabf2)
for further information.



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