Segro Share Discussion Threads

[nexusltd] 20/10/2022 11:43

Debt profile excellent: LTV 26%. Cost of debt 2.1%
- A further 100bp rise in benchmark rates from current levels would increase SEGRO’s cost of debt by 24 bps.
- We have no further material refinancing requirements until 2026 and an 8.2year average debt maturity (79 per cent of which is fixed or capped1; the floating rates exposure is mostly to three-month EURIBOR).

- Occupancy rate (%) 96.7, stable
- Customer retention (%) 76, stable
- Uplift on rent reviews and renewals (%) 22
- Development build yield on cost 6.3 %

Rental contracted: Q3/22 GBP20mn, Q3/21 GBP26mn.
Rental contracted: Quarterly 9mFY22 average run-rate GBP25mn.

This may be showing a declining trend, or is it availability?

[jonwig] 20/10/2022 08:03

Trading update:



So is the gloom misplaced? Probably, but I'm not adding just yet.

[1nf3rn0] 20/9/2022 11:07

Getting interesting around these levels, but we are yet to be officially confirmed in recession so could still be a fair amount of downside. This is just one on my watchlist, I'm not a holder, although I think the more diversified IUKP etf could be a better place for me to start drip feeding at this point, of which Segro is around 1/6th of portfolio.

[nexusltd] 28/7/2022 16:32

@jonwig Thanks.

IFRS NAV up 8.7% on December 2021 valuation, Interim divi up 9.46%, LTV 23%. Tough to find a reason not to add.

[jonwig] 28/7/2022 07:16

H1 results:



Should dispel any lingering doubts about ex-growth. NAV is 1212p, so it's moved from a big premium to a discount of 15% in the last three months. Should recover most of that.

[jonwig] 20/6/2022 11:49

Here is his bio:



there used to be - many years ago - a rule that you couldn't chair more than one PLC at the same time. No longer, evidently.

[nexusltd] 20/6/2022 11:44

NED Andy Harrison 17 June buy of 40,199 shares @ GBP9.876325 = GBP397,018.39.

[jonwig] 26/5/2022 15:29

FT just now;

The UK’s booming warehouse market can withstand a pullback from Amazon, the boss of a leading logistics property developer has said, as ecommerce fuels demand for space.

The ecommerce giant took a quarter of all UK warehouse space leased in 2020 and 2021, but said earlier this month that it had overextended during the pandemic. That announcement wiped about 10 per cent off the value of the largest shed developers in the US and UK.

But Andrew Jones, chief executive of urban warehouse owner LondonMetric Property, said that demand was likely to continue to outstrip supply, thanks to a rush to onshore supply chains and the growth of smaller ecommerce businesses.

More here:

[nexusltd] 16/5/2022 19:52

@jonwig : Agreed. A prolonged recession is a risk to SGRO.

[jonwig] 16/5/2022 19:38

Nor I, but if the ECB goes into tightening mode, it's likely company investment plans (including SGRO's) will be put on hold in the face of recession. So no need for further debt isuance!

[nexusltd] 16/5/2022 19:09

@jonwig : That Italy and others can borrow @ lower rates than they would if not in the Euro currency domain is without question true; and was indeed the prime reason Prodi, Mario Monti & Berlusconi gave to the Italians to persuade them move on from the Lira in the 1996-2002 years. It is likely that the ECB will start quantitative tightening in Q3/4 2022. Euro bond interest rates will rise as a consequence. In the short to medium term SEGRO is insulated from this with its long duration bonds, and interest rate hedges. I'm still not clear as to the foreseeable risks to SGRO's debt metrics.

[jonwig] 16/5/2022 18:39

The ECB's bond buying program has meant some countries (Italy, etc.) can borrow at lower than free market rates.

What would Italy's rates be without this support?

[nexusltd] 16/5/2022 18:14

@jonwig : Indeed, bond buyers view SGRO as a high quality name. What ECB "corrections" are you alluding to & how might they adversely affect SGRO's debt profile?

[jonwig] 16/5/2022 16:46

nexusltd - SGRO can issue debt with a lower coupon than many sovereigns, though the ECB will intervene to make "corrections".

[nexusltd] 16/5/2022 16:18

@m-kerr SGRO LTV 24%, cost of debt March 2022 1.6%, maturity 8+ years. Segro market cap is such that it can issue its own bonds @ advantageous rates. Euro bonds to match continental European assets.

Do you know of any other UK REIT with the debt profile quality I have outlined?

[m_kerr] 16/5/2022 15:55

no surprise at all to me the recent fall. not a great time to be holding property yielding 3-3.5% when the cost of debt is likely to increase substantially in the short to medium term. one of the risks of buying stocks priced for perfection.

[sogoesit] 13/5/2022 04:27

Thanks for comments posted, much appreciated.

Am struggling with this one’s valuation or, more precisely, change in perception of the company.
At opposite ends of scale (valuation/structure) to my AEWU REIT, which has been re-rating recently, it looks out of kilter and way oversold.
Having been long USD this is now looking cheap for accumulation. The dilemma is that sentiment/technicals could take it to the next round number down. Hmmm…

[jonwig] 11/5/2022 15:31

Yup - both SGRO and BBOX have released very strong trading statements recently, then Amazon lobbed a spanner which took the market by surprise.

As the FT article says, Amazon's size in the market can be over-publicised.

[nexusltd] 11/5/2022 14:50

@jonwig . I agree; logistics warehouses have further to go as businesses seek greater security of supply & trade politics / borders become more sharply defined. The markets are supposed to look ahead and at present all they see is recession.

The CBRE data I posted on the CP+ thread today is backward looking; however for April, albeit at reduced pace as compared to March, there have been further advances in capital values and rental income in all sectors including industrials. May's CBRE data will be telling, as Fed and BoE intentions have been made abundantly clear to all businesses.

[jonwig] 11/5/2022 07:03

FT suggests the Amazon effect is overdone:


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The UK market is under-warehoused on a per capita basis compared with other countries. (The US, which starts from a much higher base per capita, is currently building more warehouse space than the UK’s entire standing stock, says Savills).

UK planning makes new space hard to come by: “There is substantial undersupply embedded in the system because local authorities didn’t plan enough in advance or recognise the change in demand”, says Matthew Griffith, director of policy at Business West.

That is all translating into healthy rental growth for developers and landlords. Some big developers won’t quote rents or take offers early in a speculative build to avoid having underpriced relative to market once it completes.

[wskill] 06/5/2022 10:30

Shareprice at around 2021 net asset value with borrowings at 23% of net assets value not a lot of leverage so I picked up a fair few for my SIPP today .
Dont believe that we will go away from online shopping now its only going to grow in the long term.

[jonwig] 03/5/2022 16:06

That's a blow - put down to Amazon's problems with spare capacity.

Unclear whether that means slower development growth for SGRO or worse.

[sogoesit] 21/4/2022 10:53

Construction supply chain and inflationary pressures....

However....

"At the same time, we expect these pressures will further tighten the supply-demand imbalance for industrial assets and place further upward pressure on rents across our portfolio."

[jonwig] 21/4/2022 08:27

Trading Update:



Positive, as always. (Personally, I have fears for recession in germany, spreading to the rest of the EU.)