Segro (SGRO.L), a developer and manager of warehousing and light industrial property, said early Wednesday it made a “strong” start to 2018 as new headline rent hit a record level for a single quarter due to “encouraging” occupational demand driven by growth in online retailing.
The company, a real-estate investment trust, said in a trading update that it contracted 27.3 million pounds ($39.1 million) of new headline rent in the three months to March 31 versus 16.3 million pounds a year ago. It included a record 23.3 million pounds worth of pre-let agreements, which more than doubled from 10.6 million pounds.
Operational performance for the quarter included the completion of 146,500 square meters of developments, capable of generating 10.9 million pounds of headline rent when fully let, of which 6.8 million pounds, or 63%, has been secured.
Additionally, the company noted that 1.0 million square meters of space has been approved or was under development as at March 31 versus 693,900 square meters as at December 31. That implies a potential future annualized headline rent of 55 million pounds – 69% of which has been secured – and reflects an estimated, fully-let yield on total development cost of 7.3%.
“There are further projects in advanced discussions which will add to this [55 million pounds] in the coming months,” Chief Executive Officer David Sleath said in the statement.
Segro, which owns or manages 6.7 million square meters of space valued at more than 9 billion pounds, further added that net investment during the first quarter totaled 50 million pounds, comprising 65 million pounds of asset and land disposals, 24 million pounds of asset acquisitions and 91 million pounds of development capital expenditure and land purchases.