Logistics Developer and Investor Sees no End to Strong Rental Growth
Segro reported a £2 billion pre-tax loss for 2022 compared with a £4.4 billion profit in 2021 under International Financial Reporting Standards accounting rules, due to unrealised valuation losses in its portfolio.
The value of its portfolio fell 11% to £17.9 billion last year. The net yield moved out 100 basis points to 4.8% from 3.8%. Adjusted pre-tax profits came in at £386 million last year compared with £356 million in 2021.
Strong rental growth cushioned the blow somewhat. Segro sees no end to rental growth. Net rental income rose 18.9% to £522 million from £439 million in 2021. On a like-for-like basis, rental growth rose 6.7% thanks to strong occupier demand and “extremely limited” supply of modern, sustainable warehouse space across Europe. Segro expects vacancy levels to remain low given increases in financing and construction costs.
The company said it sees £130 million of reversionary potential in the portfolio as well as indexation provisions in almost half of its leases.
“Our prime portfolio, excellent land bank, development expertise, customer focus and balance sheet capacity mean we are well positioned to deliver attractive returns and further growth into the years ahead,” said David Sleath, chief executive of Segro.
Segro reported continued momentum in its development pipeline with 915,600 square metres of projects under construction or in advanced prelet discussions, equating to £86 million of potential rent, of which 75% has been or is expected to be prelet, which will support its earnings growth this year and next year.