Segro maintains 2012 full year dividend at 14.8p

DividendMax Ltd.

Segro maintains 2012 full year dividend at 14.8p

HIGHLIGHTS

Strong operational performance

·  Headline net rental income lower due to impact of disposals; like for like net rental income up 1.9%

·  Group vacancy rate further improved at 8.2% (31 December 2011: 9.1%). On a pro forma basis, Neckermann's departure in January 2013 would have added 1.1% to the Group vacancy rate. Core portfolio vacancy rate 7.6% (31 December 2011: 8.2%)

·  Total cost ratio improved further to 22.9% (2011: 24.5%) through our focus on tight cost control and a reduction in vacancy

·  21 developments completed, generating £16.4m of annualised new rental income when fully let (already 89% leased at year end). 14 developments currently in progress, expected to generate £10.8m of annualised new rental income, of which 70% is pre-leased 

Advancing our strategy to become a leading income-focused REIT

·  £700m of non-core asset disposals (including £152m received in 2013), at a 3.6% average discount to December 2011 book values and an average exit yield of 7.2%.

·  £207m reinvested in acquisitions, mainly comprising two prime logistics portfolios in the UK and in France, enabling us to build critical mass and strengthen our position in both markets. Average entry yield of 7.7%

·  £218m either reinvested in development projects completed during 2012 or committed for projects in our active development pipeline. Estimated yield on total development cost of 9.6%

EPRA NAV lower due to portfolio valuation reductions

·  Overall portfolio valuation reduction of £309m/6.2% on a like for like basis for the year due to the performance of our large non-strategic assets (£144m), remaining smaller non-core holdings (£44m) and South East UK suburban offices (£79m)

·  Core warehouse, light industrial and data centre portfolio like for like valuation reduction of 1.2%, compared with an 3.8% reduction in the IPD UK Industrial Quarterly Index

  

Solid balance sheet

·  £213m reduction in net debt to £2,090.3m; "look through" LTV ratio of 51% (or 50% on a pro forma basis, factoring in £152m of disposals completed in Jan/Feb 2013), with the impact of disposal proceeds being offset by the portfolio valuation reduction and reinvestments

·  Favourable debt profile with approximately £450m of undrawn facilities and cash; a weighted average maturity of borrowings of 8.3 years

·  Net debt/EBITDA 8.1 times (2011: 8.7 times); interest cover of 2.3 times (2011: 2.2 times); weighted average cost of debt 4.6% (31 December 2011: 4.8%)

Commenting on the results and outlook, David Sleath, Chief Executive, said:

"We are pleased with the progress made by the business over the past year. Our strong operational performance in 2012 has driven good earnings growth. Through disposals, selective acquisitions and development, we have taken substantial steps forward with our strategy to build a high quality portfolio of modern, well-located warehouses, light industrial and data centre assets. We are targeting a further £300 million to £500 million of disposals in 2013 (including £152 million, predominantly relating to Thales and MPM, which completed shortly after the year end).

Our portfolio is well-positioned to perform in 2013 both operationally and from an investment perspective. We are seeing a good level of occupier demand in our core markets and we expect to continue to benefit from the growth in e-retailing, local distribution and electronic data storage requirements. With well-located existing assets, an excellent land bank and a general shortage of modern 'grade A' buildings in most of our markets, we are well placed to capitalise on such growth drivers.

We have a clear set of priorities and expect to make further progress against these over the coming year and beyond to create a leading income-focused REIT which produces a high quality and progressive dividend and resilient capital growth."


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