Russ Mould, investment director at AJ Bell, comments:
“SEGRO announced a 5.4% increase in net asset value per share and a 5% increase in its dividend, buoyed by rising rents and a vacancy rate of just 5.5% across its portfolio of properties in the UK and Europe.
“The Real Estate Investment Trust (REIT) specialises in big box sites and urban warehouses situated near transport hubs.
“Just under a third of its assets are found in Europe, with over half of its properties sitting in and around London or the Thames Valley.
“Shares in the company, known as Slough Estates until 2007, wobbled back in March when management sought to take advantage of a strong share price with what looked like a rather opportunistic-looking £557 million rights issue, designed to raise money to fund its acquisition of the 50% it did not already own of a site near Heathrow.
“However, that swoop looks to be paying off, judging by strong pre-letting activity across the company and the subsequent rise in the share price.
“At 527p, SEGRO trades at a 4.5% premium to its stated net asset value per share figure of 504p, as investors price in further growth in both property values and rents before they actually happen, such is their confidence in the strategic positioning of the company’s assets and the online shopping boom.
“This is a marked contrast to the big discounts to net asset value per share on show at other REITs, notably those with big exposure to retail, to the City or to speculative building projects in the nation’s capital, where fears of an economic slowdown and retrenchment by overseas investment banks in the wake of Brexit continue to linger.
Share price (pence)
Historic NAV per share (pence)
Premium / (discount)
TRITAX Big Box
Capital & Counties
Town Centre Securities
Great Portland Estates
Source: Company accounts, Thomson Reuters Datastream. Based on last published net asset value per share.