SEGRO has increased its rent roll in the first quarter, citing favourable occupier markets.
The listed owner also said it has completed or unconditionally exchanged on £159m of disposals so far this year, at a premium to December book values. The company highlighted that values in the sector show signs of stabilising.
SEGRO signed £29m of new headline rent during the first quarter, up from £24m in Q1 last year. This was driven by rental uplifts on lease renewals and rent reviews, as well as nearly doubling the value of prelets signed in the same period.
The company posted an 18% uplift on rent reviews and renewals across the group, compared with 14% in the previous year. In the UK, they were up by 21%. Some £17m of prelets were signed during the quarter, up from £9m.
Occupancy edged down to 94.5% in the first quarter, compared with 95.7% in the previous year. SEGRO attributed the slight decrease to speculative development completions, adding that the figure remained within its target range. Customer retention stood at 90%, compared with 82% in the previous year.
Average yield on cost in the company’s near-term development pipeline stood at 7.6%, along with a yield on new money in excess of 10%.
No acquisitions were made during the quarter.
Chief executive David Sleath said: “Market data is showing that industrial and logistics asset values are stabilising and potentially reaching a turning point. Although transaction volumes remain muted, we have disposed of £159m of land and standing assets so far this year (including £134m exchanged since the quarter end), at prices above December 2023 book values, in line with our continued approach to disciplined capital allocation.”
He added that, as initially stated earlier this year, SEGRO’s existing portfolio and landbank offer the potential to grow the company’s passing rents by more than 50% over the next three years by capturing embedded rent reversion, leasing vacant units and developing new space.
The company raised £907m of fresh equity in February.
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