Segro reports robust rent roll growth in first quarter

18th Apr 2024 08:29

(Sharecast News) - Segro reported robust growth in its rent roll in a trading update for the March quarter on Thursday, driven by favourable occupier market dynamics.

The FTSE 100 company said that in the quarter, it achieved significant growth in its rent roll, supported by ongoing positive trends in the occupier market.

Additionally, it said it had completed or unconditionally exchanged on £159m of disposals in 2024, at prices surpassing December book values.

The board said market data suggested that industrial and logistics asset values were stabilising.

Segro said it was well-positioned to invest in profitable development opportunities, boasting an average yield on cost of 7% to 8%.

The group also had the capacity to pursue additional growth opportunities, further bolstered by the proceeds of its recent equity raise.

Segro said it would publish its half-year results on 26 July.

"2024 has started well for Segro - our prime urban and big box portfolio and market-leading operating platform, supported by favourable occupier markets, have enabled us to sign £29m of new headline rent during the first quarter," said chief executive officer David Sleath.

"This was achieved through capturing rental uplift on lease renewals and rent reviews, as well as the signing of £17m of new pre-let developments.

"Market data is showing that industrial and logistics asset values are stabilising and potentially reaching a turning point."

Sleath said that although transaction volumes remained muted, Segro had disposed of £159m of land and standing assets so far this year, including £134m exchanged since the quarter ended, at prices above December book values, in line with its continued approach to disciplined capital allocation.

"As stated in our full-year 2023 results, our existing portfolio and land bank offer us the potential to grow our passing rents by more than 50% over the next three years, through capturing embedded rent reversion, leasing vacant units and developing new space.

"The £907m of new equity raised in February provides us with the capacity to pursue further attractive growth opportunities, both through development and asset acquisitions.

"This gives us confidence in our ability to deliver further compound growth in earnings and dividends during 2024 and beyond."

At 0815 BST, shares in Segro were up 1.01% at 836p.

Reporting by Josh White for Sharecast.com.