15th Feb 2019 08:39
LONDON (Alliance News) - SEGRO PLC on Friday hiked its dividend and announced plans to raise GBP450 million through a share placing to fund its development pipeline.
The warehouse investor raised its final dividend for 2018 by 17% to 13.25 pence per share from 11.35p. This took its final dividend for the year to 18.8p per share from 16.6p, an increase of 13%.
Company-compiled consensus had seen its 2018 total payout at 18.0p.
Moreover, SEGRO also announced its intention to raise approximately GBP450 million through a share placing. It has identified development projects which require GBP429 million to complete, of which GBP221 million has already been committed to its current pipeline.
An additional GBP218 million is associated with its potential project pipeline and the company expects to add more development projects to its pipeline in the coming months.
SEGRO said the money from the placing will allow it to take advantage of new development opportunities, more of which are already pre-let, "while maintaining a strong balance sheet".
This development pipeline is "expected to be accretive in the medium term to both earnings and net asset value per share after taking account of the impact of the placing".
"Since 2016, we have deployed over GBP1.5 billion into development across the UK and Continental Europe which has generated a cumulative capital value uplift of over 20% and GBP90 million of new annualised headline rent. Occupier and investment market conditions remain supportive and we continue to experience strong demand for new warehousing," said SEGRO Chief Executive David Sleath.
"We are on course to invest over GBP600 million in further development projects and additional land purchases this year. We believe using new equity alongside our existing debt facilities and the proceeds from normal course portfolio recycling will ensure that we can continue to deliver the attractive returns from development while retaining a strong balance sheet," Sleath added.
SEGRO also said for 2018 it had contracted GBP66.4 million of new headline rent, up 24% from GBP53.5 million in 2017.
Its pretax profit was GBP1.10 billion, up 13% from GBP976.3 million the year before.
Revenue was GBP369.0 million, rising from GBP334.7 million with gross rental income up at GBP297.7 million from GBP272.9 million.
Net rental income was GBP247.6 million, up from GBP220.7 million due to a net benefit from development completions, particularly in Greater London and across southern Europe, and investment activity.
The company's realised and unrealised property gain was GBP852.6 million, down from GBP889.0 million in 2017.
SEGRO's EPRA vacancy rate was 5.2% versus 4.0% in 2017. Its EPRA net asset value per share was up 17% at 650 pence on December 31 from 556p the year prior.
Analysts, according to company-compiled consensus, had expected net asset value per share at 641p.
At present, SEGRO has pre-let 73% of its current pipeline, which is set to complete in 2019.
"Development completions and pre-leasing levels in 2018 both exceeded a record previous year and, with customers already signed up to almost three quarters of our developments under construction, we believe that our significant longer-term pipeline and land bank have substantial potential that will continue to deliver attractive development returns and future income growth," said Sleath.
Shares in SEGRO were up 0.1% at 648.60p on Friday morning.
Related Shares:
Segro