Segro sells two UK portfolios for a total EUR 138m

UK-based logistics property company Segro said on Wednesday that it has agreed the sale of two industrial portfolios, one to The Crown Estate for £64.4 mln (EUR81 mln), and the other to a client of Protego Real Estate Investors LLP for £45.8 mln (EUR57.5 mln).

The proceeds will initially be used to reduce borrowings and then be reinvested in the future growth of the business, Segro's managing director of UK property Ian Sutcliffe said. The Crown Estate transaction reflects an initial yield of 7.2% and comprises a total of 63,247 m² of space located within estates in Basildon, Croydon, Isleworth, Oxford, Swindon and Wimbledon. The Protego transaction reflects an initial yield of 7.1% and comprises a total of 44,505 m² located within estates in Chelmsford, Croydon, Epsom and Welwyn Garden City. The two portfolios had a vacancy of 4% and a combined rental income of £8.2 mln pa.

'Segro's UK operations today are focused on major trading estates and on business "clusters" where we have real critical mass. These 11 individually small estates were located outside our core locations, with little scope for further development,' Sutcliffe said.

Segro announced the disposals during the presentation of the company’s first-half results, which revealed a loss for the period of £324.6 mln, compared with a profit of £226.3 mln in the year-earlier period. The adjusted and diluted net asset value was down 11.5% at 623p per share. The company's UK activities were hardest hit by the economic downturn, with the UK portfolio dropping in value by 10% to £3 bn, compared with an 0.7% gain for the European portfolio to £1.2 bn. In addition, UK land bank values were written down on average by 21.4%.

Commenting on the results, Segro CEO Ian Coull said: 'The difficulties in the financial and capital markets have, as expected, negatively impacted the value of our UK property portfolio but there have been few signs to date that the economic conditions are having a significant impact on our customer base. Our strategic move into Continental Europe has delivered the expected benefits of diversifying the risk profile of our portfolio and giving us the flexibility to target our investments in the locations where we can achieve the best returns.'