Segro (SGRO) ticked all the right boxes in 2017, and a combination of higher rental income and an £889m valuation uplift on the property portfolio helped to boost adjusted net asset value by 16.3 per cent to 556p a share.
One of the key developments was the purchase of the remaining 50 per cent of the Airport Property Partnership for £365m, giving it virtual control over all the storage facilities at London’s Heathrow airport. This was funded through cash and disposals, but the balance sheet was significantly strengthened by a rights issue and refinancing which reduced the cost of debt to just 2.1 per cent.
Earnings visibility is underpinned by 1.2m sq ft of development projects under construction or in advanced pre-let discussions, equivalent to around one-fifth of the existing portfolio and capable of generating rental income of £43m. And on top of this, further pre-let projects are at an advanced stage of negotiation and could be worth a further £22m in rental income.
As well as the valuation uplift, profits were boosted by a 22 per cent rise in rental revenue, highlighting the fact that the supply of modern warehouse space remains constrained.
Analysts at Peel Hunt have upgraded their estimate for adjusted net asset value at the December 2018 year-end to 595p a share.
| SEGRO (SGRO) | ||||
| ORD PRICE: | 588.4p | MARKET VALUE: | £ 5.9bn | |
| TOUCH: | 588-588.4p | 12-MONTH HIGH: | 591p | LOW: 444p |
| DIVIDEND YIELD: | 2.8% | TRADING PROPERTIES: | £12.5m | |
| PREMIUM TO NAV: | 6% | |||
| INVESTMENT PROP: | £7.54bn | NET DEBT: | 35% | |
| Year to 31 Dec | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p)* | Dividend per share (p)* |
| 2013 | 303 | 212 | 27.3 | 14.2 |
| 2014 | 374 | 654 | 88.3 | 14.5 |
| 2015 | 449 | 687 | 88.0 | 15 |
| 2016 | 480 | 426 | 51.6 | 15.7 |
| 2017 | 554 | 976 | 98.5 | 16.6 |
| % change | +15 | +129 | +91 | +6 |
| Ex-div: | 22 Mar | |||
| Payment: | 3 May | |||
| *Previous figures adjusted for one-for-five rights issue in March 2017 | ||||
