Segro raises €510m to fund development pipeline

Pan-European industrial specialist Segro has raised approximately £450 mln (€510 mln) through the issue of new ordinary shares at 635 pence per share.

'Since 2016, we have deployed over £1.5 bn into development across the UK and Continental Europe which has generated a cumulative capital value uplift of over 20% and £90 mln of new annualised headline rent,' said David Sleath, chief executive of Segro.

'Occupier and investment market conditions remain supportive and we continue to experience strong demand for new warehousing,' Sleath added.

Segro said it was currently building, or had identified, development projects which require capital expenditure of £429 mln to complete. Of this amount, £211 mln has already been committed and a further £218 mln is associated with a potential pipeline of projects at the pre-let stage.

As of 31 December 2018, Segro had development projects approved, contracted or under construction totalling 827,700 m2. The projects are 73% let or pre-let and should yield approximately 7% on total development cost when fully let. All projects are due to complete in 2019.

Approximately one-third of the potential rent from the current pipeline is associated with urban warehouse developments across the UK and Continental Europe, of which 56% has been secured. the firm said.

These projects include three warehouses for data centre operators on the Slough Trading Estate, a 17,000 m2 urban warehouse near Heathrow Airport let to Do & Co, a new 20,000 m2 estate in north London and over 45,000 m2 of new speculatively-built warehouses in Düsseldorf, Berlin and Frankfurt.

'We are on course to invest over £600 mln in further development projects and additional land purchases this year. We believe using new equity alongside our existing debt facilities and the proceeds from normal course portfolio recycling will ensure that we can continue to deliver the attractive returns from development while retaining a strong balance sheet,' Sleath concluded.


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