Segro (SGRO) was, until recently, the stock that the real-estate recovery left behind. A £2.4bn debt pile, hefty property write-downs and the failure of a major tenant held the industrial specialist back last year, even as the big office and retail players were dramatically rerated. A shock profit warning in January seemed to confirm the company's reputation as a value trap.
- 4.7 per cent well-covered dividend yield
- Geared into UK and European recovery
- E-commerce should drive growth
- Low risk development pipeline
- Ongoing restructuring programme
- Shares trade at a premium after a strong year
But January turned out to be the darkest hour before dawn. The shares are up 27 per cent year-to-date - well ahead of the other large real-estate investment trusts - and now trade on a 3 per cent premium to forecasts for year-end adjusted book value. We would not normally recommend buying shares at a premium, but Segro's property portfolio has been written down so far, even as its dividends have remained both generous and generously covered, that we believe the shares offer value.