Strong occupier demand drives further growth in rents, earnings and dividends.
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Commenting on the results, David Sleath, Chief Executive, said:
“SEGRO is today reporting strong operational results for 2022, including a record level of rent roll growth driven by our active asset management and a strong leasing performance. Our modern, well-located and highly sustainable warehouses continue to be in high demand from a diverse range of occupiers, underpinned by long-term structural drivers.
“Our strategy over the past decade has focused on cultivating a unique portfolio located in the most supply-constrained European urban and logistics markets, backed by a strong balance sheet to enable SEGRO to outperform through the property cycle. Our portfolio valuation fell in the second half of 2022 as investment yields rose and values weakened across the sector in response to macroeconomic conditions. However, the impact on our portfolio was mitigated by its high quality and the strong rental growth we delivered across all of our markets.
“Our prime portfolio, excellent land bank, development expertise, customer focus and balance sheet capacity mean we are well positioned to deliver attractive returns and further growth into the years ahead.”
- Adjusted pre-tax profit of £386 million up 8.4 per cent compared with the prior year (2021: £356 million). Adjusted EPS increased by 6.5 per cent to 31.0 pence (2021: 29.1 pence, 28.0 pence excluding the 1.1 pence SELP performance fee recognised in 2021 resulting in a 10.7 per cent increase).
- Adjusted NAV per share down 15.0 per cent to 966 pence (31 December 2021: 1,137 pence) driven by a portfolio valuation decline of 11.0 per cent (2021: 13.1 per cent increase, H2 2022 16.6 per cent decrease). This was primarily driven by market-wide yield expansion in the second half, partly offset by estimated rental value growth (ERV) of 10.9 per cent, portfolio asset management successes and development profits.
- Net rental income of £522 million, up 19.0 per cent (2021: £439 million), driven by strong like-for-like rental growth of 6.7 per cent and development completions.
- Strong occupier demand, with our customer focus and active management of the portfolio generating a record £98 million of new headline rent commitments during the period (2021: £95 million), including £41 million of new pre-let agreements, and a 23 per cent average uplift on rent reviews and renewals.
- Net capital investment of £1.3 billion (2021: £1.5 billion) in asset acquisitions, development projects and land purchases, less disposals.
- 639,200 sq m of development completions delivered during 2022, at a yield on cost of 7.4 per cent. 80 per cent of this is already let to customers from a diverse range of sectors.
- Continued momentum in the development pipeline with 915,600 sq m of projects under construction or in advanced pre-let discussions equating to £86 million of potential rent, of which 75 per cent has been or is expected to be pre-let, supporting growth in earnings over the year ahead and into 2024.
- Significant progress with our Responsible SEGRO strategic priorities, de-risking and investing in the future of our business, including a ten per cent reduction in the average embodied carbon intensity of our development programme; the launch of ten Community Investment Plans (CIPs); and meaningful changes to promote diversity and inclusion across our business.
- £3.1 billion of new financing helping to maintain our long-average debt maturity of 8.6 years and providing high visibility on funding costs with no significant near-term debt maturities. Average cost of debt at 31 December 2022 of 2.5 per cent, and interest cover of 4.5 times.
- Strong balance sheet providing capacity to invest in our development programme and allowing us flexibility to make further commitments. We have access to £2.2 billion of available liquidity and a modest level of gearing reflected in LTV of 32 per cent at 31 December 2022 (31 December 2021: 23 per cent).
- 2022 full year dividend increased 8.2 per cent to 26.3 pence (2021: 24.3 pence). Final dividend increased by 7.7 per cent to 18.2 pence (2021: 16.9 pence)