Over the first half of 2015 SEGRO generated an 8.3% uplift in its EPRA NAV to 416p. Adjusted profits were up 3.7% to £69.2m driving the adjusted EPS up 3.4% to 9.2p. Rental income was up 4.3% like-for-like. the interim dividend is up 2% to 5p.
Capital growth in the portfolio was driven by the UK investments which returned 6.9%, outperforming the IPD UK All Industrial Monthly Index capital return of 4.8%. The returns on their continental European portfolio were lower – about 2.3%. They spent £311m on acquisitions and development. This includes the purchase of a 90% stake in Vailog (northern Italian industrial property). Their SELP joint venture acquired two big box warehouses in Germany for €104m, helping to build scale in logistics hubs such as at Krefeld where the acquisition of the newly-completed DSV campus is adjacent to their existing logistics park. In addition, SELP acquired €67m of land and recently completed big box warehouses from SEGRO.
Eight projects were completed during the first half, totalling 125,200 sqm of new space, of which 62% was let prior to completion. The projects will add £5.2m (SEGRO share) of gross passing rent when fully let. This translates into a yield on total development cost (including land, construction and finance costs) of 9.8 per cent when fully let, substantially higher than yields accessible through acquisitions. Three of the development completions were of big box logistics warehouses in their Continental European portfolio and were pre-let to ASICS in Krefeld, Zabka in Gdansk and Volkswagen in Poznan. The ASICS development was undertaken within SELP while the other two warehouses were sold to the joint venture on completion. They completed 30,500 sq m of light industrial and urban logistics warehouses, including a 4,600 sq m parcel delivery centre for Deutsche Post in Nuremberg and two speculative schemes totalling 12,100 sq m on the Slough Trading Estate, of which 1,400 sq m has already been let.
They say their 26 project development programme will deliver 332,400 sq m of new space and £22m of new rent. The remaining land bank has potential to deliver an additional 2m sqm in the medium term or £73m of new rent. The vacancy rate across the portfolio rose to 7.4% from, 6.3% most of which they attribute to speculative developments that they have undertaken and the impact of the acquisitions and disposals they have completed during the period. The loan to value wasn’t much changed at 39%.
SGRO : SEGRO beats IPD in UK and expands in Europe