Segro Fy2009 Nav Down 21% On 2008 As Vacancy Levels Rise
Segro Plc, Europe's largest industrial landlord, today said it's in a strong position and is well placed to benefit from any recovery, but that it remains cautious about occupier markets, particularly in the U.K.
Net rental income for the year to end-December rose 10% to £269.4 million and adjusted profit before tax rose 16.8% to £104.3 million (which includes Brixton), though on an IFRS basis the firm made a loss of £234.1 million.
Adjusted NAV per share came in at 362 pence, down 21% on last year (462p), but reflecting second half investment property valuation gains of 9.8% in the U.K., excluding the assets of recently-acquired Brixton Plc, and a deficit of 3.1% in Continental Europe. There was a 7.1% valuation uplift on Brixton assets.
Segro became Europe's largest industrial landlord, with a portfolio valued at £5.5 billion, after buying rival Brixton for £165.5 million in an all-share acquisition in August. Segro said Brixton is now fully integrated within Segro.
But the company also inherited high vacancies through Brixton's portfolio. Segro's vacancy rate rose to 13.5%, compared with 10.9% in June and 9.1% in December 2008. Brixton vacancies rose to 22.1% compared with 20.6% at June.
Ian Coull, Chief Executive said:
"Whilst UK commercial property prices have surprised on the upside in the last quarter of the year and the situation in Continental Europe appears to be stabilising, we remain cautious about occupier markets, particularly in the UK where we expect the wider economy to lag much of the Continent for the coming year at least. Nonetheless, the Group is in a strong position and is well placed to benefit from any recovery."
"Our focus remains on staying close to our customers to minimise take-backs, leasing vacant space, financial and risk management and continuing to seek further opportunities to capitalise on the present market conditions."
U.K. property companies have struggled in the past year as the lack of credit curbed demand for space causing property values to fall. The auction market turned a corner in August last year but the rental market still lags behind.
The company declared a final dividend of 9.4 pence making 14 pence for the year.
Segro shares closed yesterday at 325 pence, giving the company a market capitalization of £2.39 billion. The shares have fallen 5.7% year to date on concerns that the company might not be able to reduce vacancy rates across the portfolio.
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