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SEGRO reports sharp valuation decline and rental uplifts

SEGRO’s results for the year to 31 December 2022 reflect the current state of the logistics sector, with valuations falling 11.0% and estimated rents increasing 10.9%.

The group reported adjusted NAV had fallen 15.0% over the year to 966p per share, driven by the 11.0% portfolio valuation decline to £17.925bn. The portfolio equivalent yield expanded by 110 basis points (1.1%) to 4.8% from 3.7%.

On a like-for-like basis, net rental income increased 6.7% compared to 2021 due to strong rental performance across its portfolio, with UK assets seeing a 7.7% increase (in particular in Greater London and Thames Valley region) and Continental Europe seeing a 4.9% increase (in particular in Germany and France).

Adjusted earnings per share was 31p, while dividends paid was 26.3p. The company’s loan to value (LTV) expanded to 32% from 23% a year ago, with the average cost of debt increasing to 2.5% (from 1.5%). The average debt maturity remained at 8.6 years.

Outlook

The company said: “Forecasting yields over any period is notoriously difficult given the multitude of economic and financial drivers (particularly interest rates and credit spreads), most of which are outside our direct control.”

“Nevertheless, the operating prospects for our portfolio are strong, supported by structural drivers of occupational demand and limited supply, therefore we are optimistic about the potential for further rental value growth, particularly in our urban warehouse portfolio.”

“These attractive fundamentals mean we anticipate investors will return to the market to invest in industrial and logistics assets once there is more clarity over the interest rate trajectory. We have seen encouraging early signs that activity is increasing.”

SGRO : SEGRO reports sharp valuation decline and rental uplifts

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