UK property company Segro has set its sights firmly on continental Europe in the face of falling gains in its home real estate market. Unlike some of its highly leveraged counterparts who are moving into other European countries, Segro does not have financial difficulties as it has a £1.3 bn (EUR 2 bn) war-chest thanks to the recent sale of its American operations.

UK property company Segro has set its sights firmly on continental Europe in the face of falling gains in its home real estate market. Unlike some of its highly leveraged counterparts who are moving into other European countries, Segro does not have financial difficulties as it has a £1.3 bn (EUR 2 bn) war-chest thanks to the recent sale of its American operations.

'We are continuing to find very attractive acquisitions in Continental Europe where we can exploit the still very positive gap between investment and development yields and the cost of borrowing,' CEO Ian Coull said on Wednesday as the group posted solid results for the first half of 2007.

The industrial real estate company, which is listed as a real estate investment trust in both the UK and France, reported adjusted pre-tax profit at £86.5 mln, up from £68.1 million from the same period a year earlier. Revenue rose 38% to £184.3 mln. The valuation of the UK assets - almost 75% of the company's total portfolio - rose just 2.1% to £3.8 bn (EUR 5.6 bn). In contrast, the value of its European portfolio increased by 9.1% to £631.3 mln. Segro said its 2.2 million m2 development pipeline dwarfs that of any other UK-based industrial group. Highlighting that two thirds of the pipeline is in continental Europe, Coull cautioned that Segro has become a 'net seller' in the UK due to the tougher market conditions for the warehouse, office and retail sectors there.