14 February 2025
If you are covering Segro’s latest financial results, please find below a comment from Oli Creasey, head of property research at Quilter Cheviot:
“Segro’s full year results this morning show the industrial property market turned a corner in the second half of 2024, with property values increasing for the first time in several years. The increase may only be 1% in the period, but the change in direction is an important datapoint, considering the cloud that UK real estate has been operating under since interest rates began increasing.
“Property returns continue to be driven by rental income and income growth, with like-for-like rents growing 6% during the year, and the property equivalent yield remaining stable at 5.3%. The lack of further yield expansion is also a relevant datapoint. If yields can remain steady or even offer some compression, further property valuation growth appears a likely outcome.
“However, while property performance appears strong, the company’s earnings growth was muted. The lack of growth is due to a strong comparison in 2023 when the company earned almost £90m from performance fees. But saying that, the company outlook remains positive. Segro is invested in one of the more exciting property sectors, and the pipeline of European data centre projects is particularly promising.”
