Segro PLC on Wednesday reported high demand for its product amid ‘good’ progress with disposals, but said that lower headline rent was signed.
London-based Segro owns a pan-European portfolio of industrial warehouses.
In the first nine months of 2023, Segro had £58 million in total new headline rent signed, down 24% from £76 million a year prior. Pre-lets signed declined 36% to £23 million from £36 million. Customer retention improved to 81% from 76%.
The company said it is on track for a ‘strong’ year of rent roll growth, citing demand and active asset management. It added it was prioritising profitable development opportunities with £77 million of potential rent from projects currently on site or expected to start soon, at an anticipated yield on cost of 7.3%. This would be similar to a yield on cost of 7.4% during 2022.
Chief Executive Officer David Sleath said: ‘We have made good progress with disposals in recent months, although the overall volume of investment market transactions remains subdued due to the evolving macro-economic environment. Reassuringly, investors continue to hold conviction over the attractiveness of the sector, with market evidence from indices and recent transactions pointing to relatively stable asset values in the third quarter.
‘In the current environment it is important to remain disciplined in our use of capital. We are prioritising attractive development opportunities on the land we already own, increasingly funding such investment from the proceeds of selective disposals, alongside driving performance and income growth from our existing portfolio of high-quality assets.’
The company will release its 2023 results on February 16.
Segro shares were 0.7% lower at 729.80 pence each on Wednesday morning in London.
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