2022 Half Year Results

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

“SEGRO has delivered both operationally and financially in the first half of 2022. Our prime portfolio of modern, sustainable warehouses focused on key urban markets and logistics corridors across the UK and Europe is in high demand from a diverse range of customers. This strong demand combined with low levels of supply in our key markets, particularly in the urban locations where two-thirds of our assets are located, has helped us to increase rents, capture reversion and indexation, and expand our development programme – resulting in inflation-beating earnings growth.

“Our focus on maintaining close relationships with our customers, our well-located land bank and our prudent capital structure, provide significant opportunities for further profitable growth arising from the ongoing structural changes in our customers’ markets.

“We are confident that by continuing to follow our well-proven strategy of disciplined capital allocation and operational excellence, with Responsible SEGRO at its core, we will be able to navigate the more challenging current macroeconomic environment and drive further sustainable compound growth in rental income, earnings and dividends over the coming years.”

Highlights^A:

• Adjusted pre-tax profit of £216 million up 29 per cent compared with the prior year (H1 2021: £168 million). Adjusted EPS is 16.9 pence, up 22 per cent (H1 2021: 13.8 pence) including 1.3 pence relating to recognition of performance fees from our SELP joint venture.
• Adjusted NAV per share is up 10 per cent to 1,249 pence (31 December 2021: 1,137 pence) driven by a 7.2 per cent increase in the valuation of the portfolio, reflecting asset management initiatives, a 5.9 per cent estimated rental value (ERV) growth and profitable development activity.
• Our customer focus and active management of the portfolio, supported by strong and diverse occupier demand, generated £55 million of new headline rent commitments during the period (H1 2021: £38 million), including £28 million of new pre-let agreements, and a 24 per cent average reletting spread on rent reviews and renewals.
• Further growth in the development pipeline with 1.3 million sq m of projects under construction or in advanced pre-let discussions equating to £118 million of potential rent (31 December 2021: £82 million), of which 70 per cent is associated with pre-lets, substantially de-risking the 2022-2023 pipeline.
• Delivering on our Responsible SEGRO commitments including progress with our renewable energy strategy; the formation of our first Community Investment Plan in Slough; and the enhancement of our early careers programme to help improve diversity within our business.
• £2.1 billion of new financing, including a €1.15 billion Green bond and €225 million US private placement helping to maintain our long-term debt structure and providing high visibility on funding costs with no significant debt maturities until 2026. 94 per cent of our debt is fixed or capped.
• Balance sheet positioned to support further, development-led growth with access to over £2 billion of available liquidity (including the US private placement debt signed in July) and a low level of gearing reflected in an LTV of 23 per cent at 30 June 2022 (31 December 2021: 23 per cent).
• Interim dividend increased by 9 per cent to 8.1 pence (2021: 7.4 pence), in line with our usual practice of setting the interim dividend at one-third of the previous full year dividend.