Warehouse giant Segro makes £21.2m in new headline rent after share placing

Property group Segro secured £21.2m in new headline rent in the first quarter of 2019, as it followed up on a fundraising designed to help it keep up with increasing demand in the ecommerce sector.

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The company, which invests in warehouses located in the UK and continental Europe, said it secured £21.2m of headline rent in the first quarter, lower than the £27.3m it made in the first three months of 2018. It said the figure was lower because it had already filled much of its portfolio. New business came from having more properties occupied than before, increased income from hiking rents and more development activity.

Shares fell one per cent in early morning trading.

Only 4.4 per cent of its properties were vacant at the end of the period, down from 5.2 per cent at the end of December. Segro said the fall in vacancies reflects strong lettings of speculative space, as well as the impact of disposals.

Rent roll growth – a snapshot figure of income from rents – was “particularly strong” at £6m, it said, up from just £500,000 this time last year. Segro said it benefited from renegotiating the terms of a number of leases in its Heathrow portfolio.

In February, the firm raised around £450m via a share placing as it looked to ramp up development amid a boom in demand for storage space from online retailers.

Analysts at Liberum said the performance came “despite moderating economic activity across Europe and an increasing supply response in the UK”.

David Sleath, chief executive, said: “The new equity raised in February provides the capacity to pursue further growth opportunities and we have a number of additional pre-let development projects at advanced stages of negotiation.

“Whilst we remain mindful of macroeconomic and political risks, we believe that our high quality portfolio of assets in prime locations across the UK and continental Europe positions us well to continue to benefit from the structural drivers of e-commerce and urbanisation.”

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Segro said the proceeds from the placing had caused its net debt to fall over the last three months, from £2.7bn at the end of last year to £2.2bn at the end of March.