Segro ticks the big box

The company develops both big central distribution warehouse facilities and also so called 'last mile' distribution sites, which are used to deliver customer orders now made increasingly through the internet. Completed developments added £3.2m of annualised rental income, which will rise to £5.2m when fully leased, and there is a committed development pipeline of 332,400 square metres of new space that is expected to deliver an additional £22.4m. At the end of June around half of this was already pre-let.

Segro invested £311m in new land and assets, but with values rising strongly on completed assets, the group is concentrating on land acquisitions, with 153 hectares added in the first half. Typical of these is the former Nestlé production facility at Hayes, which is adjacent to a new Crossrail station and less than a mile from the M4 motorway, making it ideal for industrial and residential development.

Growing demand for assets helped to boost adjusted net asset value by 8 per cent to 416p per share, while like-for-like rental income grew by 4.3 per cent. Valuation increases trimmed the loan-to-value ratio from 40 per cent to 39 per cent, and this is expected to fall further as some mature assets are sold into a strong investment market. Disposal of older assets totalled £203.5m, and the programme is now largely complete. The vacancy rate rose from 6.3 per cent to 7.4 per cent, as speculative developments reached completion, although this should fall as new lettings are secured.

Outside the UK, Segro increased its presence in Germany with the acquisition of a former Akzo Nobel site in Cologne, and also purchased a former car manufacturing facility covering 18 hectares in Paris.

Analysts at Investec are forecasting adjusted net asset value at the year-end of 445.4p (from 383.8p in 2014).