SEGRO has said it is on track for a strong year of rent roll growth, despite new contracted rents falling by a quarter from last year.
In an update to shareholders for the year so far, the REIT said the year was proving a good one for rental growth, with £58m of new contracted rent added so far.
However, that figure is down from the same period last year, when it reached £76m.
Development capex has also fallen, from £532m for the first three quarters of 2022 to £381m for the same period this year.
Chief executive David Sleath said: “In the current environment it is important to remain disciplined in our use of capital. We are prioritising attractive development opportunities on the land we already own, increasingly funding such investment from the proceeds of selective disposals, alongside driving performance and income growth from our existing portfolio of high-quality assets.”
Acquisitions have also fallen sharply, almost halving from £789m to £397m.
SEGRO has also completed £250m of disposals so far this year as it prioritises development.
The developer said it was “prioritising profitable development opportunities”, with £77m of potential rent from projects currently on site or expected to commence shortly. That equates to an anticipated yield on cost of 7.3%.
Sleath said: “We have made good progress with disposals in recent months, although the overall volume of investment market transactions remains subdued due to the evolving macro-economic environment. Reassuringly, investors continue to hold conviction over the attractiveness of the sector, with market evidence from indices and recent transactions pointing to relatively stable asset values in the third quarter.”
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