Segro makes 'strong start' to 2022 amid continued demand

Real estate investment company Segro said on Thursday that it had made "a strong start to the year", with continued demand from a broad range of customers enabling it to capture further rental growth through rent reviews and the re-letting of space.

Segro said total new headline rent signed during the period increased to £25.0m from £18.0m a year earlier, while pre-lets were flat year-on-year at £11.0m but uplifts from rent reviews and renewals almost doubled from £12.0m in 2021 to £23.0m twelve months later.

The FTSE 100-listed firm stated it had "significantly increased" its largely pre-let development pipeline as capital investment continued to focus on development and acquisition of assets with opportunities for future growth, as well as sourcing land and assets with short-term income and redevelopment potential to extend its development pipeline.

Development capex was up from £143.0m in 2021 to £151.0m, while acquisition costs soared from £37.0m to £175.0m and disposal income came to £73.0m. Development capex for 2022, including infrastructure, was expected to be approximately £700.0m.

Segro also said that there had been no direct impacts stemming from Russia's invasion of Ukraine on its business, however, it noted that it has added to construction supply chain and inflationary pressures and said it was working closely with construction partners so as to minimise the impact on its development programme.

At the same time, Segro warned that it expects these pressures to further tighten the supply-demand imbalance for industrial assets and place further upward pressure on rents across its 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," said chief executive David Sleath.