Segro hails 'excellent start' to year

The company said it contracted £16.3m of new rent in the first quarter versus £8.6m in the same period last year, including £10.6m of pre-lets, up from £3.6m in 2016.

The vacancy rate remains low at 5.6% compared to 5.7% the year before, mainly reflecting the impact of acquisitions and disposals, offset by development lettings and by net take-up of existing space.

Segro said 32,500 sq m of speculative developments were completed in the first quarter, capable of generating headline rent of £1.6m when fully let, of which 40% had been secured at 31 March 2017.

The company approved or began the development of 291,200 sq m of space, most of which were projects categorised in the near-term development pipeline at the end of 2016. These projects represent £13.6 million of potential headline rent, of which 76% is pre-let, and include a 46,000 sq m extension to the Leroy Merlin facility in Milan and a 46,600 sq m facility for a discount supermarket chain in Lyon.

Chief executive David Sleath said: "We were delighted to acquire full ownership of our Heathrow assets during the quarter and with the shareholder support for the associated rights issue, which also secured the necessary funding for our high quality development pipeline.

"Investor demand for warehouse and industrial assets remains strong across our markets and this may lead to further yield compression and capital growth in the first half of the year."