SEGRO has signed £18m of new headline rent for its first quarter ending 21 April, with chief executive David Sleath highlighting a “confident” outlook on the back of “highly supportive” tailwinds.
The headline rent signed during Q1 was up by a quarter on the same period in the previous year, when £14.3m was signed.
SEGRO said it expects to generate £87m of new rent from its 14m sq ft development programme. Of 11.8m sq ft under construction as at the end of March, £67m is set to be added to its rent roll, of which 71% has been secured. Once fully let, the pipeline is expected to generate a 6.5% yield on development cost.
However, the REIT made a rent roll loss of £700,000 for the first quarter from its existing space, from £2.7m growth in the same period last year. Total take-up has also decreased to £7m, from £15.2m in Q1 2020.
The industrial giant also reported a slight increase in vacancy rate to 4.4%, up from 3.9% in December. This was driven by taking back space for refurbishment at its London and Paris properties.
New headline rents on review and renewal were up by more than 12% on previous passing rent. Customer retention stood at 82%.
During the period, there were £11.3m of new, unconditional pre-let agreements and lettings of speculative developments prior to completion. These included pre-lets in France, Italy and Poland and a big box warehouse at its East Midlands Gateway logistics park in the UK.
Development capex invested during the quarter totalled £143m, with total investment for the year expected to exceed £700m.
SEGRO said it expects to complete more than 8.5m sq ft of new space, of which 82% has been pre-let.
David Sleath, chief executive, said: “Our sector continues to benefit from highly supportive and structural tailwinds and we therefore remain confident in the outlook for the business, as well as our ability to drive further sustainable growth in rental income, earnings and dividends over the coming years.”
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