Segro, the UK’s largest property company by market capitalisation, will push ahead with plans to deploy £600 million this year on new developments as the shift to online retail which has boosted demand for its warehouse space in the UK and Europe shows no sign of abating.
“Our development programme continues apace, capitalising on the ongoing, positive occupier demand across our markets,’’ David Sleath, Segro chief executive said on a call with analysts. “As anticipated, the structural trends of e-commerce and urbanisation that have been driving performance in our UK business for some time are now increasingly evident in our Continental European markets.’’
Segro, which has £11.7 billion of warehouses and logistics assets in the UK and Europe, raised £450m of fresh capital in February to fund new developments and has so far spent £220m of an allocated £600m for new pipeline this year. The company has 34 developments underway comprising 450,000 sq m, or the size of around 80 football pitches, in the UK and Europe.
The projects represent £36m of potential rent, of which 65% has been secured through pre-lets. Completions in the second half of 2019 will potentially generate £29m of annual rent, of which £21m has already been secured.
“There isn’t a lot of very good product to buy, most of it is being developed by us,’’ Sleath said. “We want to grow in all of our markets and we have scope and ambition to grow in continental Europe.”
Segro’s top European markets are France Germany and Poland, where it has around a €1bn of assets in each country and it’s looking to expand its presence in Spain and Italy.
The company, which has 66% of its assets in the UK, reported a 19% jump in pre-tax profit and increased its dividend by 14% to 6.3p per share.