Segro notes strong end to 2016 in trading update

Segro said that, since its update in October 2016, it has continued to deliver a strong operational performance, with good leasing activity and strong like for like rental growth, particularly in the UK, and further encouraging progress with the development pipeline.

It said 19 of the 27 development projects in the active programme at 30 June 2016 have been completed and the pipeline at 31 December 2016 includes a number of new pre-let agreements, with further agreements under discussion.

As a result, Segro expects Adjusted EPS for the year to 31 December 2016 to be at the upper end of the range of analysts' estimates.

PORTFOLIO

The independent valuation of Segro's assets as at 31 December 2016 indicates a like for like increase in the value of its portfolio during the year of 4.8 per cent, or 3.0 per cent in H2 2016.

This is a result of a combination of strong rental value growth in the UK portfolio, supported by modest yield compression (which reflects active management of our assets as well as strong investor demand for good quality warehousing), the generation of development gains in the UK and Continental Europe and an uplift in the value of a former industrial estate in Park Royal which SEGRO has conditionally agreed to sell to a residential developer.

Factoring in the total valuation uplift, as well as the impact of the equity placing in September 2016, Segro expects its EPRA NAV per share at 31 December 2016 to be at the upper end of the range of analysts' estimates.