Segro (SGRO) is showing encouraging signs of turning a corner. Its property portfolio was marked up rather than down for a change, and its leasing performance in the second quarter was the best since 2010. The real estate investment trust (Reit) has also rapidly reduced its debt load: if various deals announced but not completed are included, its loan-to-value ratio falls to 44 per cent - comfortably below the 50 per cent level lenders now consider acceptable.
The biggest deal was the creation of a 50:50 joint venture with a large Canadian pension fund, into which Segro will sell all its major European logistics assets - a portfolio worth roughly €1bn (£870m). Its smaller European distribution centres and UK portfolio will remain on the balance sheet. Segro also continues to sell off the troublesome 'non-core' assets it identified in the strategic review 18 months ago. These include a large bespoke site leased to Neckerman, a mail order company that went bust a year ago, which the company sold empty to a consortium of private investors for €46m. Two major non-core assets remain.
Adjusted book value per share remained flat at 294p, reflecting the payment of a generous dividend and portfolio growth of just 0.3 per cent. But chief executive David Sleath is notably upbeat, stressing the potential for growth in both rents and property values as e-commerce drives the modernisation of supply chains.
Brokerage Investec expects year-end adjusted net asset value to rise from 294p to 298p.
SEGRO (SGRO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 300p | MARKET VALUE: | £2.22bn | |
| TOUCH: | 300-301p | 12M HIGH / LOW | 311p | 221p |
| DIVIDEND YIELD: | 4.9% | TRADING PROP: | £154m | |
| PREMIUM TO NAV: | 1% | |||
| INVESTMENT PROP: | £3.1bn | NET DEBT: | 97% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 322 | -81.8 | -10.8 | 4.9 |
| 2013 | 297 | 20.3 | 2.2 | 4.9 |
| % change | -8 | - | - | - |
Ex-div: 4 Sep Payment: 4 Oct | ||||
