David Sleath, Chief Executive, said:
"We have made further encouraging progress in the first half of the year, both operationally and with our strategic repositioning programme. We have made significant further disposals, continued to actively reinvest and announced a new joint venture to facilitate the growth of our Continental European logistics property business.
Whilst the general sentiment of many industrial occupiers across Europe remains somewhat cautious, we have seen good demand for modern, well located warehousing property from a range of users, including parcel delivery companies, data centre operators and third party logistics providers. This, combined with a shortage of available new supply in most of our markets, has supported a strong leasing performance across the portfolio and a successful, active development programme. Within the investment market, we have observed an increased level of investor interest in industrial assets and suburban offices which has caused investment yields to stabilise in the first half of the year and may result in yields tightening in the months ahead."
Strong operational performance
· 122 new lettings completed in the period, generating £16.7m of new annualised rental income, 30% higher than H1 2012. A further £2.6m of annualised rental income in solicitors' hands as at 30 June 2013
· Highly profitable active development programme: 8 developments completed in the period and 14 projects under construction worth, in aggregate, £13.8m of new annualised rental income when fully let (75% already leased); 4 additional pre-let developments signed subject to planning consent or in advanced discussions with customers representing £2.2m of new annualised rental income
· Continued focus on operational and cost efficiency leading to 7.6% reduction in administration expenses
· As expected, EPRA profit before tax was down on H1 2012, by £5.9m to £69.0m, principally reflecting the sale of non-core assets and the net loss of the Neckermann site rent, partially offset by the impact of developments and new acquisitions
Further significant progress with strategic repositioning
· £437m of disposals in the year to date, including IQ Winnersh and the Neckermann site (for which contracts were exchanged in July 2013); sold on a 6.2% average exit yield and 5.6% premium to December 2012 values
· £126m invested in or committed to development projects completed and/or started during the first half of the year; 9.0% average expected yield on total development cost. £25m of further land acquisitions in the UK, France and Poland to support future development
· £55m invested in the acquisition of modern distribution warehouses with a 7.5% average entry yield
· Announcement of the creation of a €1bn Continental European logistics joint venture to accelerate growth and take advantage of market consolidation, to be seeded with 1.6m sq m of SEGRO's existing logistics assets
· Overall increase in look through net debt of £48m to £2,436m in H1 2013. On a pro forma basis, allowing for the disposals announced after the end of H1 2013, look through net debt reduced by £604m to £1,784m, with pro forma look through LTV reducing to 44%
Completed portfolio valuation up by 0.3 per cent - outperforming IPD Industrial index
· Core portfolio of well located, modern warehouse, light industrial and data centre properties up 0.8% on a like for like basis; suburban offices unchanged, non-core assets down 2.4%