REG-Segro PLC Trading Update
20/10/2021 07:00
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Trading Update
SEGRO plc (“SEGRO” or the “Group”) today publishes a trading update
for the period from 1 July 2021 to 19 October 2021(1).
David Sleath, Chief Executive, said:
“SEGRO has had an active and successful third quarter as we continue to
capitalise on strong occupier and investment market conditions, with high
leasing volumes across the business.
“We have made significant progress with our profitable development programme
and have completed projects equivalent to £25 million of potential rent, of
which over 90 per cent is already let. We currently have 1 million square
meters of space under construction, and during the period have added to the
active pipeline and secured further land to extend our bank of future
development opportunities.
“We head into the final months of 2021 with confidence in our ability to
drive further sustainable growth in rental income, earnings and dividends.”
Strong rent roll growth during the period as a result of a busy period of
lettings and the continued capture of reversionary potential (Appendix 1).
* £26 million (Q3 2020: £16 million) of new headline rent(2) signed during the
quarter, taking the total for the nine months to 30 September 2021 to £64
million (9M 2020: £50 million). This includes £9 million (Q3 2020: £6
million) of new, unconditional pre-let agreements and lettings of speculative
developments prior to completion, taking the nine-month figure to £30 million
(9M 2020: £25 million).
* New headline rents on review and renewal up more than 13 per cent (UK: 18 per
cent, CE: 2 per cent) on previous passing rent in the nine months to 30
September 2021 as ongoing asset management continues to capture reversionary
potential from our existing portfolio.
* Vacancy rate reduced further to 3.2 per cent (30 June 2021: 4.3 per cent)
predominantly due to strong demand for recently completed speculatively
developed space.
* Customer retention is 76 per cent for 2021 to date after we took the
opportunity to take back some space in urban estates in London and Paris with
a view to executing identified asset management initiatives.
Development programme continues to deliver high-quality growth and returns –
potential to increase annualised rent roll by 20 per cent (£92 million) from
the pipeline of space under construction and in advanced discussions.
* So far in 2021 we have completed 450,000 sq m (9M 2020: 695,800 sq m) of new
developments, capable of generating £25 million (9M 2020: £38 million) of
headline rent, 93 per cent which has been let. Developments capable of
generating a further £31 million of rent are expected to complete in the
fourth quarter, £26 million of which has been secured.
* At 30 September 2021, over 998,000 sq m of space was under construction,
equating to potential future headline rent of £68 million (30 June 2021: 1.1
million sq m, £67 million) of which 66 per cent has been secured (30 June
2021: 66 per cent). Once complete and fully let, the pipeline is expected to
generate a yield on total development cost of approximately 6.8 per cent.
* Additional pre-let projects in advanced discussions equating to 196,000 sq m
of space with potential capex of £211 million and associated rent of £24
million are expected to commence in the coming months.
Superior operating platform and local expertise driving growth through
sourcing off-market development and investment opportunities in competitive
markets (Appendices 2 and 3).
* In 2021 so far, we have acquired over £260 million of land to top up our land
bank and provide further growth opportunities. During the third quarter we
acquired £66 million of land for future development, including sites in Italy
and Poland, as well as two further plots of land in London acquired in early
October.
* We took advantage of strong market conditions to dispose of £98 million of
assets including a portfolio of urban warehouses in Italy and a stand-alone
big box warehouse in Spain.
* Earlier this month we also completed an asset swap which resulted in the
acquisition of a significant urban warehouse estate in West London for £140
million. As part of this transaction we disposed of a portfolio of stand-alone
UK big boxes and urban warehouses for £205 million.
* We remain on course to invest in excess of £750 million in our development
pipeline (excluding land acquisitions) during 2021.
Disciplined capital management has reduced the cost of debt further and
balance sheet is well-positioned to fund further growth.
* We issued the first SEGRO Green bond, a ten-year €500 million senior
unsecured bond with a coupon of 0.5 per cent.
* Net debt (including our share of debt in joint ventures) at 30 September 2021
increased to £3.3 billion (30 June 2021: £3.1 billion).
* This equates to a pro forma(3) look-through LTV of 23 per cent (30 June 2021:
21 per cent).
Financial calendar
The provisional date for 2021 Full Year results is Friday 18 February 2022.
(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 2021 unless
otherwise indicated. The exchange rate applied is €1.16:£1 as at 30
September 2021.
(2) Headline rent is annualised gross passing rent receivable once incentives
such as rent-free periods have expired.
(3) Based on values at 30 June 2021, adjusted for acquisitions, disposals and
other capital expenditure during the third quarter.
Appendices
1. Leasing data for the period to 30 September(1 2)
Q3 2021 Q3 2020 9M 2021 9M 2020
Take-up of existing space (A) £m 9.2 2.2 18.7 8.8
Space returned(2) (B) £m (7.1) (2.3) (16.6) (10.5)
NET ABSORPTION OF EXISTING SPACE (A-B) £m 2.1 (0.1) 2.1 (1.7)
Other rental movements (rent reviews, renewals, £m 1.4 5.7 5.8 9.6
indexation) (C)
RENT ROLL GROWTH FROM EXISTING SPACE £m 3.5 5.6 7.9 7.9
Take-up of developments completed in the period – pre- £m 15.3 14.8 20.1 24.9
let space (D)
Take-up of speculative developments completed in the £m 6.2 2.4 10.2 8.6
past two years (E)
TOTAL TAKE UP (A+C+D+E) £m 32.1 25.1 54.8 51.9
Less take-up of pre-lets and speculative lettings signed in £m (15.3) (15.1) (20.8) (26.9)
prior periods
Pre-lets and lettings on speculative developments £m 9.0 5.8 30.3 24.6
signed in the period for future delivery
RENTAL INCOME CONTRACTED IN THE PERIOD(2) £m 25.8 15.8 64.3 49.6
Take-back of space for redevelopment £m (1.6) (2.1)
1 All figures reflect headline rent (annualised gross rental income, after the
expiry of any rent-free periods), exchange rates at 30 September 2021 and
include joint ventures at share.
2 Excluding space taken back for redevelopment.
2. Acquisitions completed during the three months to 30 September 2021
Asset location / type Purchase price(1) Net initial yield Topped-up
net initial yield(2) (%)
(£m, SEGRO share) (%)
UK: Land 20 n/a n/a
Continental Europe: Urban warehouses 9 5.3 5.3
Continental Europe: Big box warehouses 9 4.7 4.7
Continental Europe: Land 46 n/a n/a
Total acquisitions during the quarter 84 5.0(3) 5.0(3)
1 Excluding acquisition costs; purchase price reflects exchange rate at 30
September 2021 and includes joint ventures at share.
2 Topped up net initial yield includes rent due after expiry of rent-free
periods.
3 Yield excludes land acquisitions.
3. Disposals completed during the three months to 30 September 2021
Asset location / type Gross proceeds(1) Net initial yield Topped-up
net initial yield(2) (%)
(£m, SEGRO share) (%)
Continental Europe: Urban warehouses 90 3.8 3.8
Continental Europe: Big box warehouses 8 3.7 3.7
Total disposals during the quarter 98 3.8 3.8
1 Proceeds reflect exchange rate at 30 September 2021 and include joint
ventures at share.
2 Topped up net initial yield includes rent due after expiry of rent-free
periods.
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=52511792&newsitemid=20211019005988&lan=en-US&anchor=www.segro.com%2Finvestors&index=1&md5=bc8be4ab5c3fea78dedbdcb4c4594047)
.
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 performances, 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 SEGRO's shareholders 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. 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 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 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 8.8 million
square metres of space (95 million square feet) valued at £17.1 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=52511792&newsitemid=20211019005988&lan=en-US&anchor=www.SEGRO.com&index=2&md5=4ada023a944e8f4325e1107fa824d736)
for further information.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20211019005988/en/
(https://www.businesswire.com/news/home/20211019005988/en/)
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
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