26 July 2024
If you are covering Segro’s latest results, please see the following comment from Oli Creasey, property analyst at Quilter Cheviot:
"Segro’s half year results appear to mark an inflection point in the values of its UK industrial property portfolio, with property values nudging up +1% during the period. It’s a relatively small move, but with values having been on a downward trajectory since mid-2022, it’s a welcome return to growth, nonetheless. Segro also has a European property portfolio, where values fell marginally over the same period, meaning the overall property revaluation was flat over the HY. The indication is that values are expected to find a trough in Europe in the very near future – it’s possible that this data set will prove to be the low point. However, it’s clear that Continental valuation trends are trailing those in the UK by several quarters, despite rate cuts first occurring in Europe.
"The company’s Net Asset Value (NAV) has slightly underperformed these metrics, down -1.8% because of an equity raise that took place in February. But the company’s operations remain strong, with rents up over +5% on a like-for-like basis, and development completions adding a further £27m of new rent to the income statement as well. Earnings have increase by +7%, and the company’s dividend has grown by +5%.
"These are the results that a lot of property & REIT investors have been waiting for – providing further evidence that property values in the right sectors and right geographies have bottomed out and returned to positive growth. Those previously concerned with catching a falling knife can now start to buy with increased confidence that the danger of further capital losses (assuming no shocks such as spiking inflation/higher interest rates) are over, at least for the time being."
