SEGRO PLC (SGRO)

[idpickering]

Results for the Year Ended 31 December 2021

HIGHLIGHTS:

Adjusted pre-tax profit of £356 million up 20 per cent compared with the prior year (2020: £296 million). Adjusted EPS is 29.1 pence, up 15 per cent (2020: 25.4 pence) including 1.1 pence relating to recognition of performance fees from our SELP joint venture.
Adjusted NAV per share up 40 per cent to 1,137 pence (31 December 2020: 814 pence) driven by portfolio valuation growth of 29 per cent, including ERV growth of 13.1 per cent (2020: 2.5 per cent), yield compression, portfolio asset management initiatives and development profits.
Strong occupier demand, our customer focus and active management of the portfolio generated £95 million of new headline rent commitments during the period,including £49 million of new pre-let agreements, and a 13 per cent average uplift on rent reviews and renewals (2020: £78 million)
Net capital investment of £1.5 billion (2020: £1.3 billion)in asset acquisitions, development projects and land purchases, less disposals.
Continued momentum in the development pipeline with 1.1 million sq m of projects under construction or in advanced pre-let discussionsequating to £82 million of potential rent, of which 70 per cent has been pre-let, providing growth in earnings this year and next.
Balance sheet well positioned to support further, development-led growth with access to £1.1 billion of available liquidity and an LTV of 23 per cent at 31 December 2021 (31 December 2020: 24 per cent).
2021 full year dividend increased 10 per cent to 24.3 pence (2020: 22.1 pence). Final dividend increased by 11 per cent to 16.9 pence (2020: 15.2 pence).

And later;

The Board recommends a final dividend for 2021 of 16.9 pence which is estimated to result in a distribution of up to £203 million. The total dividend paid and proposed per share in respect of the year ended 31 December 2021 is 24.3 pence (2020: 22.1 pence).

https://www.investegate.co.uk/segro-plc ... 0000Z7407/

[Dod101]

Results for the Year Ended 31 December 2021

HIGHLIGHTS:

Adjusted pre-tax profit of £356 million up 20 per cent compared with the prior year (2020: £296 million). Adjusted EPS is 29.1 pence, up 15 per cent (2020: 25.4 pence) including 1.1 pence relating to recognition of performance fees from our SELP joint venture.
Adjusted NAV per share up 40 per cent to 1,137 pence (31 December 2020: 814 pence) driven by portfolio valuation growth of 29 per cent, including ERV growth of 13.1 per cent (2020: 2.5 per cent), yield compression, portfolio asset management initiatives and development profits.
Strong occupier demand, our customer focus and active management of the portfolio generated £95 million of new headline rent commitments during the period,including £49 million of new pre-let agreements, and a 13 per cent average uplift on rent reviews and renewals (2020: £78 million)
Net capital investment of £1.5 billion (2020: £1.3 billion)in asset acquisitions, development projects and land purchases, less disposals.
Continued momentum in the development pipeline with 1.1 million sq m of projects under construction or in advanced pre-let discussionsequating to £82 million of potential rent, of which 70 per cent has been pre-let, providing growth in earnings this year and next.
Balance sheet well positioned to support further, development-led growth with access to £1.1 billion of available liquidity and an LTV of 23 per cent at 31 December 2021 (31 December 2020: 24 per cent).
2021 full year dividend increased 10 per cent to 24.3 pence (2020: 22.1 pence). Final dividend increased by 11 per cent to 16.9 pence (2020: 15.2 pence).

And later;

The Board recommends a final dividend for 2021 of 16.9 pence which is estimated to result in a distribution of up to £203 million. The total dividend paid and proposed per share in respect of the year ended 31 December 2021 is 24.3 pence (2020: 22.1 pence).

https://www.investegate.co.uk/segro-plc ... 0000Z7407/

Excellent thank you, Ian. Segro just keeps giving!

Dood

[tjh290633]

A further quote from https://www.investegate.co.uk/segro-plc ... 0000Z7407/

DIVIDEND INCREASE REFLECTS A STRONG YEAR AND CONFIDENCE FOR THE FUTURE

Under the UK REIT rules, we are required to pay out 90 per cent of UK-sourced, tax-exempt rental profits as a ‘Property Income Distribution’ (PID). Since we also receive income from our properties in Continental Europe, our total dividend should normally exceed this minimum level and we target a pay-out ratio of 85 to 95 per cent of Adjusted profit after tax. We aim to deliver a progressive and sustainable dividend which grows in line with our profitability in order to achieve our goal of being a leading income-focused REIT.

The Board has concluded that it is appropriate to recommend an increase in the final dividend per share by 1.7 pence to 16.9 pence (2020: 15.2 pence) which will be paid as a PID. The Board’s recommendation is subject to approval by shareholders at the Annual General Meeting, in which event the final dividend will be paid on 4 May 2022 to shareholders on the register at the close of business on 19 March 2022.

In considering the final dividend, the Board took into account:

the policy of targeting a pay-out ratio of between 85 and 95 per cent of Adjusted profit after tax;

the desire to ensure that the dividend is sustainable and progressive throughout the cycle; and

the results for 2021 and the outlook for earnings.

The total dividend for the year will, therefore, be 24.3 pence, a rise of 10 per cent versus 2020 (22.1 pence) and represents distribution of 84 per cent of Adjusted profit after tax.

The Board has decided to retain a scrip dividend option for the 2021 final dividend, allowing shareholders to choose whether to receive the dividend in cash or new shares. In 2021, 36 per cent of the 2020 final dividend and 31 per cent of the 2021 interim dividend was paid in new shares, equating to £94 million of cash retained on the balance sheet.

TJH

[Dod101]

A further quote from https://www.investegate.co.uk/segro-plc ... 0000Z7407/

DIVIDEND INCREASE REFLECTS A STRONG YEAR AND CONFIDENCE FOR THE FUTURE

Under the UK REIT rules, we are required to pay out 90 per cent of UK-sourced, tax-exempt rental profits as a ‘Property Income Distribution’ (PID). Since we also receive income from our properties in Continental Europe, our total dividend should normally exceed this minimum level and we target a pay-out ratio of 85 to 95 per cent of Adjusted profit after tax. We aim to deliver a progressive and sustainable dividend which grows in line with our profitability in order to achieve our goal of being a leading income-focused REIT.

The Board has concluded that it is appropriate to recommend an increase in the final dividend per share by 1.7 pence to 16.9 pence (2020: 15.2 pence) which will be paid as a PID. The Board’s recommendation is subject to approval by shareholders at the Annual General Meeting, in which event the final dividend will be paid on 4 May 2022 to shareholders on the register at the close of business on 19 March 2022.

In considering the final dividend, the Board took into account:

the policy of targeting a pay-out ratio of between 85 and 95 per cent of Adjusted profit after tax;

the desire to ensure that the dividend is sustainable and progressive throughout the cycle; and

the results for 2021 and the outlook for earnings.

The total dividend for the year will, therefore, be 24.3 pence, a rise of 10 per cent versus 2020 (22.1 pence) and represents distribution of 84 per cent of Adjusted profit after tax.

The Board has decided to retain a scrip dividend option for the 2021 final dividend, allowing shareholders to choose whether to receive the dividend in cash or new shares. In 2021, 36 per cent of the 2020 final dividend and 31 per cent of the 2021 interim dividend was paid in new shares, equating to £94 million of cash retained on the balance sheet.

TJH

Thanks. I missed that. That looks like a very high take up of the scrip dividend for 2020. It presumably reflects shareholders' confidence in the growth of the share price.

Dod

[idpickering]

SEGRO plc Trading Update.

SEGRO plc (“SEGRO” or the “Group”) today publishes a trading update for the period from 1 January 2022 to 20 April 20221.

David Sleath, Chief Executive, said:

“Our business has had a strong start to the year with continued demand from a broad range of customers enabling us to capture further rental growth through rent reviews and the re-letting of space. We have significantly increased our largely pre-let development pipeline and have secured future opportunities for growth in some of our most supply-constrained urban markets through the acquisition of land, as well as income-producing assets with medium-term redevelopment potential.

“We continue to monitor the tragic events unfolding in Ukraine, offering humanitarian support through the efforts of our Polish team and via donations to relevant relief agencies. There have been no direct effects of the invasion on our business, however it has added to construction supply chain and inflationary pressures and we are working closely with our construction partners so as to minimise the impact on our development programme. At the same time, we expect these pressures will further tighten the supply-demand imbalance for industrial assets and place further upward pressure on rents across our portfolio.

“The industrial sector continues to benefit from highly supportive and long-term structural tailwinds, which are leading to sustained strong occupier and investor demand, despite the challenges that the world is facing. We are alert to ongoing geopolitical and macro-economic risks but remain confident in the outlook for our business in 2022 and beyond.”

https://www.investegate.co.uk/segro-plc ... 0000Z7001/

[Dod101]

SEGRO plc Trading Update.

SEGRO plc (“SEGRO” or the “Group”) today publishes a trading update for the period from 1 January 2022 to 20 April 20221.

David Sleath, Chief Executive, said:

“Our business has had a strong start to the year with continued demand from a broad range of customers enabling us to capture further rental growth through rent reviews and the re-letting of space. We have significantly increased our largely pre-let development pipeline and have secured future opportunities for growth in some of our most supply-constrained urban markets through the acquisition of land, as well as income-producing assets with medium-term redevelopment potential.

“We continue to monitor the tragic events unfolding in Ukraine, offering humanitarian support through the efforts of our Polish team and via donations to relevant relief agencies. There have been no direct effects of the invasion on our business, however it has added to construction supply chain and inflationary pressures and we are working closely with our construction partners so as to minimise the impact on our development programme. At the same time, we expect these pressures will further tighten the supply-demand imbalance for industrial assets and place further upward pressure on rents across our portfolio.

“The industrial sector continues to benefit from highly supportive and long-term structural tailwinds, which are leading to sustained strong occupier and investor demand, despite the challenges that the world is facing. We are alert to ongoing geopolitical and macro-economic risks but remain confident in the outlook for our business in 2022 and beyond.”

https://www.investegate.co.uk/segro-plc ... 0000Z7001/

Thanks Ian. That sounds like a decent protection against inflation.

Dod

[idpickering]

Result of AGM.

https://www.investegate.co.uk/segro-plc ... 5400Z8402/

Ian.

[Dod101]

Amongst a number of half year result announcements was a release from Segro as follows

''Half year results to 30 June 2022

Adjusted pre-tax profit of £216 million up 29 per cent compared with the prior year (H1 2021: £168 million). Adjusted EPS is 16.9 pence, up 22 per cent (H1 2021: 13.8 pence) including 1.3 pence relating to recognition of performance fees from our SELP joint venture.
Adjusted NAV per share is up 10 per cent to 1,249 pence (31 December 2021: 1,137 pence) driven by a 7.2 per cent increase in the valuation of the portfolio, reflecting asset management initiatives, a 5.9 per cent estimated rental value (ERV) growth and profitable development activity.
Our customer focus and active management of the portfolio, supported by strong and diverse occupier demand, generated £55 million of new headline rent commitments during the period (H1 2021: £38 million), including £28 million of new pre-let agreements, and a 24 per cent average reletting spread on rent reviews and renewals.
Further growth in the development pipeline with 1.3 million sq m of projects under construction or in advanced pre-let discussions equating to £118 million of potential rent (31 December 2021: £82 million), of which 70 per cent is associated with pre-lets, substantially de-risking the 2022-2023 pipeline.
Delivering on our Responsible SEGRO commitments including progress with our renewable energy strategy; the formation of our first Community Investment Plan in Slough; and the enhancement of our early careers programme to help improve diversity within our business.
£2.1 billion of new financing, including a €1.15 billion Green bond and €225 million US private placement helping to maintain our long-term debt structure and providing high visibility on funding costs with no significant debt maturities until 2026. 94 per cent of our debt is fixed or capped.
Balance sheet positioned to support further, development-led growth with access to over £2 billion of available liquidity (including the US private placement debt signed in July) and a low level of gearing reflected in an LTV of 23 per cent at 30 June 2022 (31 December 2021: 23 per cent).
Interim dividend increased by 9 per cent to 8.1 pence (2021: 7.4 pence), in line with our usual practice of setting the interim dividend at one-third of the previous full year dividend.''

All sounds good. NAV at 30 June £12.49 v today's share price of £10.56 (up 2% on the day)

Dod

[daveh]

Have issued a green bond to replace debt due next year

https://www.investegate.co.uk/segro-plc ... 0000Z7600/

SELP JOINT VENTURE PRICES €750 MILLION 3.75 PER CENT
UNSECURED GREEN BOND ISSUE

SEGRO plc (‘SEGRO’), in its role as venture adviser to the SEGRO European Logistics Partnership (‘SELP’) joint venture, announces the pricing of a 5 year, €750 million senior unsecured Green bond issue for SELP. The order book at peak totalled approximately €2.5 billion and the bonds were priced at 245 basis points above euro mid-swaps, equating to an annual coupon of 3.75 per cent.

The proceeds of the issue will principally be used to refinance the existing (non-green) €500 million bond expiring in 2023, which are subject to an ongoing tender offer. In due course, they will be allocated to financing and/or refinancing Eligible Green Projects as outlined in the SEGRO Green Finance Framework, including the continued development programme, as well as providing funding for general corporate purposes.

[idpickering]

Trading Update.

SEGRO plc (“SEGRO” or the “Group”) today publishes a trading update for the period from 1 July 2022 to 19 October 20221.

David Sleath, Chief Executive, said:
“SEGRO has performed well throughout the third quarter of 2022, delivering excellent operational results with momentum continuing into the final quarter.

“Occupier demand remains strong across all of our markets, driven by long-term structural trends, whilst supply remains limited and this should continue to support high levels of rental growth. These factors have helped us to grow the rent roll by £20 million in the third quarter (bringing the total increase to £76 million so far in 20221) through new lettings, indexation and the capture of reversion, as well as from additions to our profitable development programme.

“Over the past decade, the successful execution of our strategy has created an irreplaceable portfolio of modern, sustainable assets focused on markets with the tightest supply-demand dynamics, underpinning significant reversionary potential and future rental growth. Increases in interest rates and the volatile macro-economic environment have reduced volumes in the investment markets, causing asset prices to soften in the third quarter. However, we remain focused on the fundamentals of our business – owning, managing and developing the highest-quality buildings whilst maintaining low leverage and a strong balance sheet, thereby supporting the delivery of attractive growth in earnings and dividends for our shareholders.”

https://www.investegate.co.uk/segro-plc ... 0000Z7408/

Ian.

[Dod101]

Thanks Ian. Makes a nice change to get some investment news, not that this update tells us much. More or less 'steady as we go', although clearly the effect of the interest rate rises will affect them, like everyone else.

Dod

[idpickering]

Thanks Ian. Makes a nice change to get some investment news, not that this update tells us much. More or less 'steady as we go', although clearly the effect of the interest rate rises will affect them, like everyone else.

Dod

You're welcome Dod. I admit that I've looked at this company with interest before. I wish they offered a higher dividend yield, then maybe they'd get a look in?

Ian.

[Dod101]

Thanks Ian. Makes a nice change to get some investment news, not that this update tells us much. More or less 'steady as we go', although clearly the effect of the interest rate rises will affect them, like everyone else.

Dod

You're welcome Dod. I admit that I've looked at this company with interest before. I wish they offered a higher dividend yield, then maybe they'd get a look in?

Ian.

I do not think they are much of an income play but they have steadily increased their dividend over the years. I have held them off and on back to the days when it was Slough Estates, long before 'big box' was fashionable. They have a good geographical spread of assets and I suspect that the share price is now a better reflection of the NAV (I have not checked) and now could be a good time to buy for the long term.

Dod

[idpickering]

I do not think they are much of an income play but they have steadily increased their dividend over the years. I have held them off and on back to the days when it was Slough Estates, long before 'big box' was fashionable. They have a good geographical spread of assets and I suspect that the share price is now a better reflection of the NAV (I have not checked) and now could be a good time to buy for the long term.

Dod

Thanks for your continued offerings Dod. I will certainly mull this over. Even in HYP land, one needs a solid base to ones' HYP imho. Which how I regard the likes of Unilever which I hold already. Anyway. that's enough about HYPing hereabouts.

Ian.

[tjh290633]

Segro has fallen to one above bottom place in my rankings by weight. All of the property shares have suffered and I have topped up BLND and PHP as far as my rules allow. SGRO's lower yield has put it lower in the top-up ranking, but it's time will come.

I read this update as very favourable, which is what one would expect with its business model.

TJH

[daveh]

Thanks Ian. Makes a nice change to get some investment news, not that this update tells us much. More or less 'steady as we go', although clearly the effect of the interest rate rises will affect them, like everyone else.

Dod

You're welcome Dod. I admit that I've looked at this company with interest before. I wish they offered a higher dividend yield, then maybe they'd get a look in?

Ian.

I do not think they are much of an income play but they have steadily increased their dividend over the years. I have held them off and on back to the days when it was Slough Estates, long before 'big box' was fashionable. They have a good geographical spread of assets and I suspect that the share price is now a better reflection of the NAV (I have not checked) and now could be a good time to buy for the long term.

Dod

I'm assuming they were a decent income play in the past as they are in my Income portfolio. Looking at my spreadsheet I bought them at ~£4 pre consolidation in 2008 and tail swallowed the very large rights issue (to buy Brixton estates?), which the after the rights issue and consolidation sems to work out at ~720p per share, bought more in 2011 and 2012 at prices around £2 to £2.50 a share and took up the 2017 rights issue in full. I then started top slicing in 2018 and 2019 as it was well above 2x median in capital terms so was making up too large a proportion of the portfolio.

Doing a quick back of the envelope calculation it looks to have been yielding 5.1% in 2008 (23p dividend and £5.50 share price); 6.6% in 2011 (14.5p dividend and £2.20 share price) and 7.2% in 2012 (14.8p and a share price of £2.00).

The dividend is the cash per share paid in a calendar year so is one year's final and next year's interim. The share price is the approx price I paid per share for purchases that year. The drop in dividend between 09 and 11 and 12 is due to the share consolidation after the big rights issue.

So, for me, it has been a very good purchase with a XIRR of 11.9% as of now (but this time last year the XIRR was 16.5% and the share price seems well down on then).

[idpickering]

SEGRO Prices £350 Million, 19 Year Bond.

SEGRO plc (‘SEGRO’) announces the launch and pricing of a £350 million, 19-year senior unsecured bond issue, priced at 175 basis points above gilts, with an annual coupon of 5.125 per cent.

The bond issuance, which was carried out under SEGRO’s Medium Term Note Programme, was almost six times oversubscribed.

The proceeds of the issue will principally be used for general corporate purposes.

The pro forma cost of debt based on the position at 30 September 2022 is 2.2 per cent (30 September 2022: 2.1 per cent) and the average debt maturity increases to 9.1 years (30 September 2022: 8.2 years). This transaction also increases the fixed element of our interest rate exposure to 78 per cent (86 per cent including interest rate caps).

Soumen Das, SEGRO Chief Financial Officer, commented:

“We appreciate the strong support from investors for our first Sterling bond issuance since 2017, which provides valuable, long-duration liquidity to fund our development pipeline to support the continued occupier strength we are seeing across our markets. The strength of SEGRO’s investment case and capital markets access means we have been able to raise £2.1 billion of new, long-term debt funding at SEGRO and SELP this year, at an average cost of debt of 3.0 per cent with an average duration of almost nine years.”

https://www.investegate.co.uk/segro-plc ... 0000Z1611/

Ian.

[idpickering]

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022.

Commenting on the results David Sleath, Chief Executive of SEGRO said:

“SEGRO is today reporting strong operational results for 2022, including a record level of rent roll growth driven by our active asset management and a strong leasing performance. Our modern, well-located and highly sustainable warehouses continue to be in high demand from a diverse range of occupiers, underpinned by long-term structural drivers.

“Our strategy over the past decade has focused on cultivating a unique portfolio located in the most supply-constrained European urban and logistics markets, backed by a strong balance sheet to enable SEGRO to outperform through the property cycle. Our portfolio valuation fell in the second half of 2022 as investment yields rose and values weakened across the sector in response to macroeconomic conditions. However, the impact on our portfolio was mitigated by its high quality and the strong rental growth we delivered across all of our markets.

“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.”

HIGHLIGHTS:

Adjusted pre-tax profit of £386 million up 8.4 per cent compared with the prior year (2021: £356 million). Adjusted EPS increased by 6.5 per cent to 31.0 pence (2021: 29.1 pence, 28.0 pence excluding the 1.1 pence SELP performance fee recognised in 2021 resulting in a 10.7 per cent increase).
Adjusted NAV per share down 15.0 per cent to 966 pence (31 December 2021: 1,137 pence) driven by a portfolio valuation decline of 11.0 per cent (2021: 13.1 per cent increase, H2 2022 16.6 per cent decrease). This was primarily driven by market-wide yield expansion in the second half, partly offset by estimated rental value growth (ERV) of 10.9 per cent, portfolio asset management successes and development profits.
Net rental income of £522 million, up 18.9 per cent (2021: £439 million), driven by strong like-for-like rental growth of 6.7 per cent anddevelopment completions.
Strong occupier demand, with our customer focus and active management of the portfolio generating a record £98 million of new headline rent commitments during the period (2021: £95 million), including £41 million of new pre-let agreements, and a 23 per cent average uplift on rent reviews and renewals.
Net capital investment of £1.3 billion (2021: £1.5 billion)in asset acquisitions, development projects and land purchases, less disposals.
639,200 sq m of development completions delivered during 2022, at a yield on cost of 7.4 per cent. 80 per cent of this is already let to customers from a diverse range of sectors.
Continued momentum in the development pipeline with 915,600 sq m of projects under construction or in advanced pre-let discussions equating to £86 million of potential rent, of which 75 per cent has been or is expected to be pre-let, supporting growth in earnings over the year ahead and into 2024.
Significant progress with our Responsible SEGRO strategic priorities, de-risking and investing in the future of our business, including a ten per cent reduction in the average embodied carbon intensity of our development programme; the launch of ten Community Investment Plans (CIPs); and meaningful changes to promote diversity and inclusion across our business.
£3.1 billion of new financing helping to maintain our long-average debt maturity of 8.6 years and providing high visibility on funding costs with no significant near-term debt maturities. Average cost of debt at 31 December 2022 of 2.5 per cent, and interest cover of 4.5 times.
Strong balance sheet providing capacity to invest in our development programme and allowing us flexibility to make further commitments. We have access to £2.2 billion of available liquidity and a modest level of gearing reflected in LTV of 32 per cent at 31 December 2022 (31 December 2021: 23 per cent).
2022 full year dividend increased 8.2 per cent to 26.3 pence (2021: 24.3 pence). Final dividend increased by 7.7 per cent to 18.2 pence (2021: 16.9 pence)

And later;

The Board recommends a final dividend for 2022 of 18.2 pence which is estimated to result in a distribution of up to £220 million. The total dividend paid and proposed per share in respect of the year ended 31 December 2022 is 26.3 pence (2021: 24.3 pence).

https://www.investegate.co.uk/segro-plc ... 0000Z5901/

Ian (No holding).

[daveh]

and the dates for the dividend are:

FINANCIAL CALENDAR

2022 full year dividend ex-div date 16 March 2023

2022 full year dividend record date 17 March 2023

2022 full year dividend scrip dividend price announced 23 March 2023

Last date for scrip dividend elections 12 April 2023

2022 full year dividend payment date 4 May 2023

2023 Q1 Trading Update 20 April 2023

Half Year 2023 Results (provisional) 27 July 2023

[idpickering]

Scrip Dividend Scheme – Scrip Calculation Price.

The Board has recommended a Final Dividend of 18.2 pence per share (to be paid entirely as an Ordinary Dividend) to shareholders and the Scrip Dividend Scheme will be offered in respect of this payment.

The Scrip Calculation Price which will be used in determining the number of New Ordinary Shares is 743.20 pence. It has been determined by the average of the closing middle market quotations of the Company’s ordinary shares as derived from the London Stock Exchange Daily Official List over the five dealing days commencing on and including the ex-dividend date of 16 March 2023.

The application deadline for applying for the Scrip Dividend Scheme is 5.00 pm (London time) on 12 April 2023.

https://www.investegate.co.uk/segro-plc ... 0000Z6422/

Ex dividend 16 Mar 23, paid 04 May 23.

Ian (No holding).