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SEGRO Plc - Final Results

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Earnings momentum continues, driven by rental growth and a record year of development completions

Commenting on the results, David Sleath, Chief Executive, said:

"2019 was another successful year for SEGRO, with our clear strategy delivering excellent financial and operational results. Our high-quality, well-located portfolio of urban and big box warehouses continues to attract a broad range of customers, benefitting from the structural drivers of e-commerce and urbanisation. As anticipated, these trends are now having an increasing impact on the Continent as well as in the UK.

"We have started 2020 in a strong position. Our substantial, mostly pre-leased development pipeline, along with the ongoing results from the active asset management of our existing portfolio, should enable us to drive further sustainable, compound growth in rental income, earnings and dividends over the coming years.

"This year SEGRO celebrates its one hundred year anniversary. We will continue to take a long-term view, reflecting the interests of our financial stakeholders and our wider responsibilities, as we look to position the business for further success in its next century."


  • Adjusted pre-tax profit, up 10.8 per cent, reflecting a record year of development completions, high customer retention rates, like-for-like rental growth and a low vacancy rate.
  • Adjusted EPS of 24.4 pence, an increase of 4.3 per cent compared to 2018 (23.4 pence) or 9.9 per cent excluding the impact of the SELP performance fee received in 2018 (payable every five years). IFRS EPS of 79.3 pence (2018: 105.4 pence) reflects the 7.5 per cent increase in the value of our portfolio (2018: 10.7 per cent increase).
  • EPRA NAV per share up 8.9 per cent to 708 pence (31 December 2018: 650 pence). IFRS NAV per share was 697 pence (31 December 2018: 644 pence).
  • Future earnings prospects underpinned by 1.2 million sq m of development projects under construction or in advanced pre-let discussions. This equates to an additional 15 per cent of space and £70 million of potential rent, 71 per cent of which relates to pre-lets and lettings prior to completion.
  • 2019 full year dividend increased by 10.1 per cent to 20.7 pence (2018: 18.8 pence). Final dividend increased by 8.7 per cent to 14.4 pence (2018: 13.25 pence).


Valuation gains and rental growth across the portfolio with Continental Europe outperforming the UK

  • Portfolio capital valuation surplus of 7.5 per cent driven by a 2.5 per cent increase in the like-for-like value of our UK portfolio (2018: 12.0 per cent) and 13.5 per cent in Continental Europe (2018: 5.1 per cent). Valuation gains were driven mainly by asset management, rental value growth (UK: 2.6 per cent, Continental Europe: 3.0 per cent), development gains and further yield compression in Continental Europe.

Operational metrics at record levels thanks to active asset management and strong occupier demand  

  • £65.8 million in annualised new rent commitments in the period (2018: £66.4 million), of which £33.2 million (2018: £41.5 million) is from new development.
  • 4.7 per cent like-for-like net rental income growth (5.7 per cent in the UK, 3.1 percent in Continental Europe) aided by an average 17.8 per cent uplift on rent reviews and renewals. The UK figures include the significant impact of lease re-gears and renewals at the Heathrow Cargo Centre.
  • Vacancy rate remains low at 4.0 per cent (31 December 2018: 5.2 per cent) reflecting strong lettings of recently completed speculative developments and some vacant asset disposals. Our continued focus on customer service has kept customer retention high at 88 per cent (2018: 89 per cent).

Capital allocation focused on funding further development-led growth

  • £692 million of investment in our portfolio, including £556 million invested in development capex, infrastructure and land as well as £136 million of asset acquisitions. This was partially offset by £442 million of asset and land disposals (including sales of assets to our SELP joint venture).
  • Total development capex for 2020, including infrastructure and land acquisitions, expected to exceed £600 million.
  • £50 million of potential rent from current development pipeline, 60 per cent of which has been secured. This includes £10 million of potential rent from speculative urban warehouse developments in the very attractive London market.
  • £20 million of potential rent from further 'near-term' pre-let projects which are in advanced stages of negotiation. Our land bank and additional land under our control through option agreements provide significant potential for further growth.

Balance sheet

  • SEGRO continues to be appropriately and efficiently financed. The average cost of debt remains attractive at 1.7 per cent (2018: 1.9 per cent), the long average debt maturity has been maintained at 10.0 years (2018: 10.2 years) and look-through LTV ratio has reduced to 24 per cent (31 December 2018: 29 per cent).
  • Equity placing of £451 million completed in February 2019, providing capacity to continue to invest for growth.
  • SEGRO has almost £1.4 billion of cash and available facilities at its disposal.