British business park developer Segro plc (LON:SGRO) said its first half profits were given a leg up by the full takeover of the Airport Property Partnership portfolio.
The company announced in March that it bought the remaining 50% stake that it did not already own in its joint venture with Aviva for £365mln. The APP has assets worth £1.1bn in London’s Heathrow.
Segro paid for part of the portfolio by selling some of its other assets to Aviva, including four London buildings, while the rest was funded through a £557mln rights issue at 345p per share.
Adjusted pre-tax profit rose 23% to £91.2mln in the six months to 30 June and adjusted earnings per share increased 3.2% to 9.7p, incorporating the new shares issued in the March rights issue.
Segro said the rights issue had created a “significant capacity for growth” with three quarters of the proceeds being deployed or allocated to investment opportunities, including the APP portfolio.
Segro shrugs off Brexit uncertainty
"Segro has delivered another strong set of results in the first half, underpinned by active development and asset management as well as further portfolio valuation growth,” said chief executive David Sleath.
"Whilst political and economic uncertainty has increased in the UK, we are encouraged by the continued leasing momentum across our portfolio.
“Furthermore, business confidence in Continental Europe has picked up in recent months and there is no sign of any slowdown in the growth of internet retailing which is an important driver of demand for modern warehouse space across our markets, both in big boxes used for logistics and smaller, urban warehouses used for last mile delivery.”
Following the expansion of its portfolio, Segro’s net asset value per share rose 5.4% to 505p. It also saw a 28% increase in new rent contracted in the period and a 3.9% rise in like-for-like net rental income.
Segro lifts dividend as it sounds confident note on outlook
The interim dividend was raised 5.0% to 5.25p
“With few signs of any meaningful new supply of speculatively developed space and investor appetite for good quality warehouse assets remaining strong, our business is well-placed to continue outperforming the wider market,” said Sleath.
Shares rose 3.81% to 526.50p