SEGRO has posted a 6.7% fall in NAV per share to 317p, as it continues to reshape its portfolio in favour of London and the South East.
In its interim half-year results for the six months to 30 June, the industrial REIT said the NAV decline reflected “valuation reductions on the non-core portfolio”.
Values on the core portfolio declined by 1%, compared with an IPD UK Industrials Index decline of 1.7%, while values on the “big five” office and industrial campus non-core assets and smaller non-core holdings reduced by 11.6% overall.
EPRA profit before tax was up by 5.3% TO £74.9m.
Net rental income fell by 3.4% on the back of the company’s disposals programme, with like-for-like rental income down by 1%.
SEGRO disposed of £503m of non-core assets in the period, including the sale of a £111m portfolio of 10 non-core UK regional industrial estates to Threadneedle, which was confirmed today.
Today’s sale was at a 3.1% average discount to December 2011 book values, with an average exit yield of 7%.
Chief executive David Sleath said the company had made an “encouraging start” to the reshaping strategy, predicting the pace of disposals would now slow as it had already achieved its full-year target.
SEGRO has also spent £195m on new acquisitions since December, including a 50% stake in the UK Logistics Fund and £130m acquisition of 13 prime logistics in Paris and Lyon, due to complete in September 2012 with an average yield of 7.7%.
The REIT secured £13.3m of new contracted headline rent, including £2.9m on prelets, during the period.
The group vacancy rate was steady at 9.1%, with the core portfolio now 8.8% empty compared with 10.5% in the remaining non-core assets.
Seven developments have been completed in the past six months, which will generate £3.6m of annualised rental income when fully let. Twenty developments are underway – of which 81% are prelet – which should generate £18.2m of new annualised rental income.
SEGRO expects an average development yield of 9.7% on aggregate capital expenditure of £179m.
Sleath said: “Whilst we expect market conditions to remain challenging for some time to come, our core assets, which represent 81% of the total portfolio are concentrated in those markets and sectors that are outperforming and which are benefitting from the constrained supply of modern warehousing.
“The solid performance of these assets in the first half, both operationally and in terms of capital values, reaffirms our strategic selection of assets and markets.”
jack.sidders@estatesgazette.com
