REG-Segro PLC Trading Update

SEGROAnnouncement

22/04/2021 07:00

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Trading Update

 

SEGRO plc (“SEGRO” or the “Group”) today publishes a trading update
for the period from 1 January 2021 to 21 April 2021(1).

David Sleath, Chief Executive, said:

“2021 has started well for SEGRO, with our ongoing active asset management
strategy and continued strong occupier demand enabling us to sign £18 million
of new headline rent during the quarter by capturing reversionary potential on
the existing portfolio, alongside securing new pre-lets on developments.

“Our expanded, de-risked development programme now comprises 1.3 million sq
m of new space either under construction or in advanced discussions. We have
also been able to secure further land to extend our future development
pipeline.

“Our sector continues to benefit from highly supportive and structural
tailwinds and we therefore remain confident in the outlook for the business as
well as our ability to drive further sustainable growth in rental income,
earnings and dividends over the coming years.”

Continued strong leasing performance and capture of reversionary potential
(Appendix 1)


 * £18.0 million (Q1 2020: £14.3 million) of new headline rent(2) signed during
the quarter. We saw a small increase in the vacancy rate to 4.4 per cent (31
December 2020: 3.9 per cent) largely driven by us taking back space for
refurbishment in our highly sought after London and Paris portfolios.

 * New headline rents on review and renewal up more than 12 per cent on previous
passing rent as ongoing asset management continued to capture reversionary
potential from our existing portfolio. Customer retention remains high at 82
per cent, reflecting our high-quality assets in prime locations and our focus
on excellence in customer service.

 * £11.3 million (Q1 2020: £5.7 million) of new, unconditional pre-let
agreements and lettings of speculative developments prior to completion. These
included pre-lets in France, Italy and Poland and a further big box warehouse
at SEGRO Logistics Park – East Midlands Gateway in the UK.

 * 14,200 sq m (Q1 2020: 105,200 sq m) of new developments completed, capable of
generating £0.7 million (Q1 2020: £9.4 million) of headline rent, 86 per
cent which has been let. During 2021 as a whole we expect to complete over
800,000 sq m of new space (2020: 835,900 sq m), of which 82 per cent has been
pre-leased.

£87 million of potential new headline rent from 1.3 million sq m of new space
under construction or in advanced discussions


 * At 31 March 2021, over 1.1 million sq m of space was under construction,
equating to potential future headline rent of £67 million (31 December 2020:
838,100 sq m, £54 million) of which 71 per cent has been secured (31 December
2020: 66 per cent). Once complete and fully let, the pipeline is expected to
generate a yield on total development cost of approximately 6.5 per cent.

 * Additional ‘near-term’ pre-let projects equating to 170,500 sq m of space
with potential capex of £184 million and associated rent of £20 million are
expected to commence in the coming months.

Net investment of £180 million with the majority of spend focused on our
development pipeline (Appendices 2 and 3)


 * Investment activity continues to focus on delivering the current development
pipeline and securing land for near-term projects. £143 million invested in
development capex in the first quarter with total investment for 2021 still
expected to exceed £700 million.

 * A further £20 million of land for future development was acquired and we
disposed of a small land plot in Poland that was unsuitable for industrial
development.

 * Investment acquisitions during the period totalled £17 million, consisting of
two urban warehouse assets in France (one in Paris and one in Lyon), both of
which were vacant on acquisition and will be redeveloped. There were no asset
disposals.

 * Since the period-end we completed the acquisition of the remaining shares in
Sofibus Patrimoine, such that we now own 100 per cent of its share capital and
it has been de-listed from Euronext Paris.

Balance sheet positioned to support further development-led growth


 * Net debt (including our share of debt in joint ventures) at 31 March 2021
remained stable at £3.0 billion (31 December 2020: £3.1 billion).

 * This equates to a pro forma(3) look-through LTV of 23 per cent (31 December
2020: 24 per cent).

Financial calendar

The 2021 half year results will be published on Thursday 29 July 2021.

(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 €1.17:£1 as at 31 March 2021.

(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 2020, adjusted for acquisitions, disposals
and other capital expenditure during the first quarter.

Appendices

1. Leasing data for the period to 31 March(1 2)
                                                                                  Q1 2021  Q1 2020  
 Take-up of existing space (A)                                               £m   3.3      4.4      
 Space returned(2) (B)                                                       £m   (6.1)    (4.1)    
 NET ABSORPTION OF EXISTING SPACE (A-B)                                      £m   (2.8)    0.3      
 Other rental movements (rent reviews, renewals, indexation) (C)             £m   2.1      2.4      
 RENT ROLL GROWTH FROM EXISTING SPACE                                        £m   (0.7)    2.7      
 Take-up of developments completed in the period – pre-let space (D)         £m   0.3      5.0      
 Take-up of speculative developments completed in the past two years (E)     £m   1.3      3.4      
 TOTAL TAKE UP (A+C+D+E)                                                     £m   7.0      15.2     
 Less take-up of pre-lets and speculative lettings signed in prior periods   £m   (0.3)    (6.6)    
 Pre-lets and lettings on speculative developments signed in the period for  £m   11.3     5.7      
 future delivery                                                                                    
 RENTAL INCOME CONTRACTED IN THE PERIOD(2)                                   £m   18.0     14.3     
 Take-back of space for redevelopment                                        £m   (1.1)    (0.3)    


1 All figures reflect headline rent (annualised gross rental income, after the
expiry of any rent-free periods), exchange rates at 31 March 2021 and include
joint ventures at share.

2 Excluding space taken back for redevelopment.

2. Acquisitions completed during the three months to 31 March 2021
 Asset location / type                  Purchase price(1)    Net initial yield  Topped-up                  
                                        
                    
                  
net initial yield(2) (%)  
                                        (£m, SEGRO share)    (%)                                           
 Continental Europe: Urban warehouses   17.3                                    Vacant on acquisition      
 Continental Europe: Land               19.7                 n/a                n/a                        
 Total acquisitions during the quarter  37.0                 n/a                n/a                        


1 Excluding acquisition costs; purchase price reflects exchange rate at 31
March 2021 and includes joint ventures at share.

2 Topped up net initial yield includes rent due after expiry of rent-free
periods.

3. Disposals completed during the three months to 31 March 2021
 Asset location / type               Gross proceeds(1)    Net initial yield  Topped-up                  
                                     
                    
                  
net initial yield(2) (%)  
                                     (£m, SEGRO share)    (%)                                           
 Continental Europe: Land            0.4                  n/a                n/a                        
 Total disposals during the quarter  0.4                  n/a                n/a                        
                                                                             
                          
                                                                                                        


1 Proceeds reflect exchange rate at 31 March 2021 and include joint ventures
at share.

2 Topped up net initial yield includes rent due after expiry of rent-free
periods.

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=52415821&newsitemid=20210421005877&lan=en-US&anchor=www.segro.com%2Finvestors&index=1&md5=8796c063e7a8f2a5509bb728246ffcc9)
.

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 £15.3 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.

See www.SEGRO.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.SEGRO.com&esheet=52415821&newsitemid=20210421005877&lan=en-US&anchor=www.SEGRO.com&index=2&md5=32036f4708e6eb7e5154235669ec0fe5)
for further information.



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