UK REIT Segro has raised £900 mln (€1.05 bn) through the placing of 110 million new shares in a move aimed at financing 'profitable growth opportunities within its development pipeline'.
The issue was raised from £800 to £900 mln in light of the strong demand received from investors
David Sleath, Chief Executive, said: 'We appreciate the support from our investor base for this equity placing and the confidence it demonstrates in our business. In addition to the profitable growth opportunities within our development pipeline, we expect further exciting opportunities to emerge in the coming months which this additional capital will help us to deliver.'
The placing price of 820 pence represents a discount of 3.4% per cent to the closing price on 27 February 2024, which was 849 pence. The issue represents approximately 9.0% of the existing issued ordinary share capital of Segro prior to the Placing.
Interestingly, retail/individual investors were able to take part in the deal at the same time and at the same share price discount as the big institutions. It is the second time that Segro has asked PrimaryBid to use its technology to include new and existing retail investors.
In a statement, Segro said that it will use the proceeds to fund new and existing development projects and to take advantage of potential acquisition opportunities. Segro has a sizeable development pipeline that it estimates has the potential to deliver over £440 mln of additional rent, requiring development capital expenditure of over £3.8 bn (including buildings under construction).
It expects to develop over a third of this over the next three years, and also intends to commence infrastructure works of £350 mln to unlock future development opportunities. Investment into the development programme, including these spends, is expected to be £600 mlnper annum. The anticipated yield on cost (total development cost including land and infrastructure expenditure) on new developments in the pipeline averages between 7 and 8%.
Segro also said that it has identified 24 sites within its land bank, and also through redevelopment of older industrial space in its existing portfolio, that combine to create potential for 1.2 GW of additional data centre capacity across the UK and Continental Europe. The yield on cost for these projects ranges from 8 to 12%.
'The Group believes it is very well placed to take advantage of the increasing number of development opportunities that are expected to emerge as the macroeconomic environment improves and the supply of new, sustainable warehousing remains constrained,' the company said in a statement.
