Equity markets are finding it hard to make substantial fresh gains and as we move into the trickiest part of the year for investors it may pay to ensure your portfolio has a few dependable picks capable of advancing serenely almost no matter what happens.
European warehouse landlord Segro (SGRO) is poised for completion on its rental income-boosting development pipeline.
The real estate investment trust (REIT) raised £325 million through a placing on 2 September to complete projects that could generate £51 million in rent, Liberum’s analysts estimate. The majority of the pipeline is expected to be accounted for within 18 months and is already 76% let. The project will yield 7.8% of the development costs when all the space is taken.
Segro has a one million square metre land-bank with the potential to generate £163 million of rental income, according to Liberim. The company intends to use some of the placing’s proceeds for further urban warehouse development and speculative projects in the UK and Germany. A 31% loan-to-value gives management a decent amount of headroom.
Segro, which counts Tesco (TSCO) and Amazon (AMZN:NDQ) among its tenants, benefits from European exposure, a lack of adequate supply and tailwinds from online shopping and the rise of convenience stores in urban locations. These factors have helped it to sign £6 million of letting agreements since the end of June.
Segro builds modern premises for major retailers in 10 European countries. Buy at 449.8p, a discount to Liberum’s prospective 464.6p net asset value (NAV) forecast.
