Join our community of smart investors

Segro-ing fast

Segro has finished its portfolio shuffle and is now growing fast.
February 25, 2015

Segro (SGRO) has spent the last four years repositioning its property portfolio. That entailed disposing of older industrial estates and moving up the quality scale to include modern logistics warehouses. The hard work has finally started to pay off, with adjusted book value rising 23 per cent last year to 384p.

IC TIP: Buy at 416p

Occupier demand improved as retailers responded to changes in their supply chains to cater for increasing online and convenience shopping. In response to this trend, Segro expects to deliver 240,000 square metres of new warehouse space in the coming months. The existing land bank could deliver a further 1.6m square metres over the next few years.

That same demand helped Segro push through like-for-like rental growth of 2.4 per cent, while the annualised value of new rental contracts jumped 16 per cent to £35.4m. Completed developments added £15.4m of rental income, and that will rise to £19.6m when fully leased. On top of this, the committed development pipeline, which is already nearly half pre-let, will deliver a further £17.1m in annualised rental income.

Broker Investec Securities is forecasting adjusted book value of 400p by next December.

SEGRO (SGRO)
ORD PRICE:416pMARKET VALUE:£3.1bn
TOUCH:415.8-416.3p12-MONTH HIGH:428pLOW: 325p
DIVIDEND YIELD:3.6%DEVELOPMENT PROPERTIES:£224m
PREMIUM TO NAV:7%NET DEBT: 58%
INVESTMENT PROPERTIES:£4.1bn*

Year to 31 DecNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201036619728.514.3
2011345-54-4.114.8
2012302-202-26.614.8
201331621228.414.8
201439065492.015.1
% change+23+209+224+2

Ex-div: 26 Mar

Payment: 8 May

*Includes £856m within joint ventures