SEGRO’s share price dropped 7p this week after its largest tenant went into administration.
The industrial REIT saw its share price fall from 241p on Wednesday to 233p on Thursday morning, following confirmation that German internet retailer Neckermann had filed for insolvency.
The group occupies 3.1m sq ft of the REIT’s 3.3m sq ft largely bespoke facility in Frankfurt which includes its headquarters, where it pays £12m pa in rent. It had a lease until October 2017.
SEGRO’s valuer, CBRE, has written down the value of the building by 50% to £43m from its full-year valuation of £86m, which reflected a 14% yield.
The asset was up for sale as one of SEGRO’s “big six” non-strategic properties, which new chief executive David Sleuth announced it was selling in October.
SEGRO said it was seeking to identify both alternative customers and alternative uses for the Frankfurt site in the event that Sun Capital Partners-owned Neckermann exited the facility.
Although Neckermann’s possible failure had been flagged in SEGRO’s April trading update, analysts responded to the news by downgrading forecasts.
Jefferies reduced its first half net asset value from 324p to 320p and full year from 328p to 315p.
Investec, which had already taken some provision for the potential insolvency, did not change its 2012 earnings forecast of 17.9p, but estimates a fall in NAV from 329p to 324p.
Next year, it cut its earnings per share from 18p to 17.5p, but importantly did not change its dividend forecast of 15.25p. Its 2013 NAV comes down from 332p to 326p.
