Segro agrees €441m sale of Slough offices to AEW Europe

UK REIT Segro is selling a portfolio of offices near the English town of Slough to clients of AEW Europe for £325 mln (€441 mln).

The price represents a net initial yield of 5.6% and a small premium to the book value of the portfolio at end-June 2015. The transaction is expected to complete during January 2016.

The office portfolio, which fronts Segro's Slough Trading Estate business park, comprises 90,330 m2 of leasable area on the Bath Road in Slough. The offices are leased to companies spanning blue-chip, national and international businesses. Another office building is being developed on a speculative basis and Segro will continue to manage the project until practical completion.

Segro said it will use the proceeds of the sale to reduce gearing and to fund its strong development pipeline.

Disposal
'The sale of the Bath Road offices is a key part of our strategy to focus on developing, owning and managing modern warehousing and light industrial property in and around major conurbations and at key transportation hubs. With this disposal, over the past four years, we will have disposed of over £2.2 bn of suburban offices and other, non-core, assets and invested over £1.7 bn in the acquisition or development of new assets,' said Segro CEO David Sleath.

Home base
Slough is located 30 kilometres west of Central London. Sir Percival Perry and Noel Mobbs founded a company in 1921 to buy and develop a site in the town which grew into Slough Trading Estate, now the largest industrial property estate under single ownership in Europe.

The company began life as The Slough Trading Company and was renamed as Slough Estates Ltd five years later. The Segro branding was adopted in 2007 when the industrial property owner-developer became a real estate investment trust (REIT).

Slough Trading Estate remains a key asset for Segro, which owns or manages 5.7 million m2 of space in £6.4 bn of assets across nine European countries. 'We remain fully committed to continued investment in the remainder of the Estate,' Sleath said.