SEGRO rental growth slows as investment stays ‘subdued’

SEGRO has posted £24m of new headline rent during Q1 this year, marginally down from an equivalent of £25m last year. The industrial REIT reported an 18% uplift on rent reviews and renewals during the quarter in the UK, compared with a 29% uptick in the same period in 2022. Potential rent from its near-term development pipeline stands at £16m, compared with £35m secured in Q1 2022. The company signed £9m of prelets during the quarter, slightly down from £11m last year. SEGRO said the value of its portfolio declined by around 2% in Q1. Net debt has increased slightly to £5.9bn, up from £5.7bn in the same period in 2022. Cost of debt has risen marginally to 2.7%, from 2.5%. Chief executive David Sleath said the developer has projects equivalent to £84m of additional rent that are either under construction or due to start shortly. Sleath said: “2023 has started well for SEGRO. Occupier demand continues to be high and is coming from a diverse range of customers, whilst supply remains limited across all our markets.” He added: “Market data is showing signs of stabilisation in asset values, although investment activity remains subdued. This is most evident in the UK where the indices show that values are broadly flat over the first quarter, but also in continental Europe, as supported by a valuation exercise relating to the SELP portfolio which indicated only a small decline in values during the first three months of the year. “Despite wider uncertainty arising from recent events in the credit markets, we remain well positioned with significant liquidity, no near-term refinancing requirements and modest leverage. We have considerable capacity to continue investing in our portfolio in a disciplined manner and expect this to deliver further compound growth in earnings and dividends during 2023 and beyond.” To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews Photo from SEGRO