Confidence in UK commercial real estate equities rose last week after SEGRO raised £325m through a share placing.
That was followed this week by Secure Income REIT raising a further £140m to purchase a portfolio of Travelodge hotels (see above).
SEGRO issued its shares to fund a £456m pipeline of developments, which it says is largely prelet and due to be finished within 18 months.
David Brockton, a real estate analyst at Liberum, said that SEGRO’s equity raising reflected the appetite that still exists for assets in strong real estate
markets such as logistics.
He said: “It shows there are calm heads across the market that are surveying the opportunity post the EU vote and are unafraid to deploy further capital across the sector.
“The market is still open, provided that there is a specific opportunity where you can deploy capital accretively or there is a decent long-term story that underpins the sector.”
Among property companies, those investing in logistics have had the biggest stock market recoveries since the referendum because the occupational demand for warehouses and
distribution centres is largely domestic.
Brockton added that further capital raises from other companies should be expected.
David Sleath, chief executive of SEGRO, said: “Having spent the past five years repositioning the portfolio, which involved more than £2.2bn of disposals, we have got to the end of that period. So we did not have too much left that we wanted to sell, and we have got an active development programme that needs funding.
“So we were keen that, as soon as feasible after the Brexit vote and the main summer period was behind us, we would look to raise equity to fund this programme.”
Merrill Lynch and UBS acted as joint bookrunners, placing SEGRO’s shares at 435p per share – a 1.9% discount on the market share price at the time on 2 September.
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