Shares of real estate investment trust Segro jump as profits soar in e-commerce boom
- Segro saw its pre-tax profit for the full year rise 20% to £356million, according to new results
Segro shares jumped sharply on Friday morning, becoming the first rise in the FTSE 100 index.
The property investment trust saw its adjusted pre-tax profit rise 20% to £356million, amid strong growth in rental demand in key cities like London and Paris, where land is scarce.
The group has increased its annual dividend by 10% to 24.3p, its results revealed today.
He’s in charge: David Sleath is Segro’s chief executive
Boss David Sleath said: “2021 has been a very successful year for Segro, as evidenced by our full year results, which include a portfolio valuation increase of £4.1bn and record levels of rental growth. .
“Investor and occupier supply and demand dynamics in the industrial and logistics sector remain very supportive, driven by long-term digitalization trends, supply chain resilience and growing attention focused on sustainability.”
He added: “Our established and experienced pan-European operating platform remains focused on customer service excellence which, combined with the strong relationships and reputation we enjoy with our stakeholders, gives us a distinct advantage in a increasingly competitive industry.
“These capabilities have enabled us to invest nearly £2 billion in 2021 to further expand our pipeline of opportunities to support future growth.
“This pipeline, coupled with the high quality of our existing portfolio, the cumulative effect of rental growth and the strong start we’ve had in 2022, gives us continued confidence in our ability to deliver sustainable earnings growth. and dividends over the next few years.’
The group’s share price rose around 4% earlier in the day but is currently up around 0.5p at 1,278.00p.
The FTSE 100-listed group highlighted that strong occupier demand, customer focus and active management of its portfolio generated £95m of new headline rent commitments during the period.
This included £49million in new pre-lease agreements and an average increase of 13% in rent reviews and renewals.
Segro also recorded a 15% increase in its adjusted earnings per share to 29.1p and a 40% increase in its adjusted net asset value per share to 1,137.0p, thanks to a growth in the valuation of the portfolio of 29% .
Victoria Scholar, Head of Investments at Interactive Investor, said: ‘While the pandemic has accelerated existing changes and created existential questions for many areas of the real estate market, including office space and retail, there are had a boom in demand for industrial property rentals, driven by the rise of e-commerce, a change from which Segro benefited.
“As a result, Segro was able to increase its final dividend by 11% to 16.9p. other assets, should also provide a major tailwind for Segro in the coming year.
“Although stocks have struggled year-to-date, Segro is still up more than 50% since March last year with further upside potential to retest recent highs.”
Colm Lauder, property analyst at Goodbody, said: ‘Segro is performing well ahead of expectations and delivered its most impressive year yet in 2021 given the buoyancy of the logistics property market.
“Strong revaluations continued to be supported by healthy occupier demand and an ambitious development pipeline, all of which added to the rental slate and provided prospects for future growth.
“Growth is expected to be highest where developable land is scarce, for example in urban markets such as London and Paris. Segro also notes that the imbalance of supply and demand has created a significant rental reversion accumulated in the portfolio.
“The high inflationary environment is not a concern and they expect to be able to offset this by capturing significant reversion from lease reviews and renewals as well as benefiting from indexation provisions in its leases. This remains a to own.