31 July 2025
If you are covering Segro’s H1 results, please find comments below from Oli Creasey, head of property research at Quilter Cheviot:
“Segro’s half-year results are a little underwhelming. That said, there are reasons for optimism – like-for-like net rental income is up nearly 8%, supporting earnings growth of 6.5% and a corresponding uplift in the dividend. However, the net asset value (NAV) of 910p represents a modest 0.3% increase over the past six months – driven by portfolio growth of 0.5% – and came in slightly below consensus expectations. Notably, CBRE’s UK Industrial Index is up 1.6% year-to-date, while Segro’s UK portfolio has underperformed that benchmark (0.4%), and its European portfolio has only fared marginally better (0.6%).
“Our concern lies in the timing of Segro’s income growth, which largely stems from historic leasing activity and is well-flagged. The structure of UK commercial leases means that rents being reviewed today were last assessed five years ago – during which time inflation and demand have significantly pushed market rents higher (CBRE estimates a 36% rise over that period). These reviews are now materialising and lifting rental income, as anticipated. Looking forward, while Segro still has notable reversionary potential – £91m, plus £44m of vacant space to be let – the current portfolio’s ERV growth in H1 was just 1%. This modest figure raises doubts over whether future rent reviews will continue to deliver the same level of earnings momentum.”
