Warehouse landlord Segro (SGRO) has acquired the half-share in the Airport Property Partnership (APP) joint venture that it didn't already own for £365m from Aviva Group Entities. APP contains 21 direct property assets valued at £1.097bn, most of which are located at Heathrow airport and include nearly all the airport cargo facilities.
The initial yield of 3.6 per cent looks expensive, but the purchase gives Segro increased exposure to a supply-constrained area in a major expanding transport hub. The deal will be funded through a one-for-five rights issue at 345p a share of 166m shares, at a discount of 29 per cent to the current share price. This will raise around £556m net of expenses, and the proceeds will be used to fund the current pipeline of development projects.
