UK REIT Segro said on Wednesday that it has decided to increase the size of its share offer to £680 mln (€763 mln) ‘in light of the strong demand received both from existing investors and potential new holders.'
The company announced earlier this week that it would be tapping the market to take advantage of accelerating e-commerce trends that have become even more obvious as a consequence of the Covid-19 crisis. It is placing a total of 82 million shares at a price of 820 pence per share representing a discount of 4.5% to the closing share price of 858.8 pence on 9 June 2020.
The placing shares represent 7.5% of the company’s share capital prior to the offer.
Segro plans to use the new equity to take advantage of additional investment opportunities across the UK and Continental Europe through further, mostly pre-let, development projects together with acquisitions of land and investment assets.
The company believes that it will be able to invest more than £1 bn of capital into profitable development activity and further land acquisitions across 2020 and 2021, including in excess of £600 mln this year. Since the beginning of 2020, Segro has acquired £184 mln of land and it has a further £184 mln of land acquisitions under offer or agreed subject to planning consents.
‘While investor demand for warehouse assets remains strong, access to funding has changed, and Segro’s strong balance sheet and unsecured funding structure provides vendors with certainty and speed of execution which the Board believes is a competitive strength in the present environment,’ the company said.
Following the Covid-19 crisis, Segro has not changed its dividend pay-out policy, and it continues to target a pay-out ratio of 85 to 95% of Adjusted profit after tax.
Segro owns modern portfolio covering 7.8 million m2 of space across the UK and Continental Europe, valued at £12.2 bn as at 31 December 2019. The company is also currently building, or has identified, development projects which require capital expenditure of £595 mln to complete. Once fully let, these projects are expected to yield a return on total development cost (including land) of 6.8%, or 8.7% yield on new money (excluding land already on the balance sheet).
Segro recently announced the acquisition of Perivale Park, a 34-acre urban warehouse scheme in West London for £203 mln. The estate provides 55,100 m2 of lettable space as well as 8 acres of land with medium-term development potential.
