SEGRO’s profit has swelled 19% over the past six months to £168m, as its portfolio value rose by 10%.
The industrial leader announced a portfolio valuation of £14.5bn in its half-year results this morning, up from £13bn in December.
Net debt stood static at £3bn, while NAV per share rose 11.7% 909p from 814p. SEGRO has increased its interim dividend by 7% to 7.4p.
Boss David Sleath said that “SEGRO has delivered another strong set of results”, noting the industrial giant’s “significant valuation increases and earnings growth”.
He added that SEGRO was “well-placed to continue benefitting from the structural tailwinds driving the industrial property sector”. Sleath said that having two-thirds of its prime warehouses located in “the most supply-constrained urban markets”, along with its “enviable” land bank and 1.3m sq ft development pipeline, meant that SEGRO had a “significant competitive advantage”.
The group’s property portfolio – 80% of which is in London and the South East of England – was valued at £14.4bn at 30 June 2021, with £17.1bn of assets under management. The portfolio valuation, including completed assets, land and buildings under construction, increased by 10.2%, adjusted for capital expenditure and asset recycling during the period, compared with just 0.7% in the first half of 2020.
While 2.8% of that uplift was as a result of rising valuations, 8.5% was driven by strong yield compression in most markets. UK assets increased in value by 8.6%, against 0.1% in 2020, with yields falling to 4.1% from 4.3% in December.
Rental values improved by 3.6%, up from the 1% seen in the first half of last year.
Passing rent for the half stood at £461m, rising to £503m once rent free periods expire. An additional £38m of new headline rent and prelet agreements in H1 contributed £21m to the rents collected.
SEGRO said it had spent £456m on its development pipeline during H1, comprising £364m of development spend and a further £92m to replenish the land bank, which stands 597 hectares. Just over 100,000 sq ft of new space was added to the portfolio during H1, a marked drop on the previous year’s total of 835,000 sq ft. However, it noted that a further 1.1m sq ft is in the pipeline at a cost of £337m and worth £74m a year in rent. Over 70% of that space is prelet.
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