LONDON (Alliance News) - Property investment and development company Segro PLC Wednesday reported an increase in profit for the first half, as it continues to benefit from valuation gains.
The company which manages and develops modern warehousing, light industrial and data centre properties posted pretax profit GBP226.5 million for the six months ended June 30, up from GBP20.3 million a year earlier. The company has been boosted by valuation gains in the last 18 months and earlier this year it reported a swing to profit in 2013 after being hit by a GP340.0 million loss on realised and unrealised property in 2012.
Segro reported GBP137.4 million in valuation gains during the first half of 2014, compared with a GBP8.1 million loss a year earlier.
Revenue, however, fell to GBP137.6 million from GBP168.4 million, as gross rental income dipped to GBP107.5 million from GBP144.6 million a year earlier. Rental income from investment properties also fell, to GBP98.4 million from GBP130.9 million a year earlier, while rental income from trading properties dipped to GBP4.2 million from GBP6.4 million.
At an operating level, the company completed the acquisition of GBP224 million worth of logistic warehouse and land during the period. The largest acquisition was a EUR472 million portfolio of big box logistics assets and land in Germany, Poland and France within the SEGRO European Logistics Partnership joint venture.
Big Box assets are large commercial properties which, when let, tend to command at least GBP35 million.
The company also acquired a 38,150 square metre, modern logistics asset in Magna Park, Leicestershire via a property swap with Picton Property Income Ltd. As part of the deal it sold Parkbury Estate in Radlett. As a whole, GBP95 million worth of assets were disposed off during the period.
Overall, Segro said its EPRA net asset value per share rose to 333 pence compared with 312 pence at the end of December. EPRA is the European Public Real Estate Association, the industry body for European REITs.
Segro said the strong investor demand for good quality warehouse and logistics assets it identified in the second half of 2013 continued into 2014, reflecting "supportive structural trends and relatively high income yields."
In turn the portfolio was valued higher at GBP4.52 billion compared with GBP4.15 billion at the end of December.
Despite its improved performance, the company maintained its interim dividend at 4.9 pence per share.
"Looking ahead to the final dividend for 2014, the board will consider next February whether the policy of only maintaining the dividend remains appropriate, taking account of the position of the reshaping programme at that time, the results in the second half of 2014, and the outlook for the business thereafter," Segro said.
In a separate note, Segro said it has total control of its Logsitic Property Partnership joint venture after it acquired the 50% stake it did not own from Moorfield Real Esatte Fund for GBP95.6 million.
Launched in September 2012, Logistics Property Partnership portfolio comprises 12 high quality logistics warehouses totalling 377,000 square metres, predominantly located in the South East and Midlands.
The portfolio is fully let and has an average lease length of 8.6 years to the earliest of break or expiry. It currently generates annualised net rent of GBP19.1 million.
Segro shares were quoted down 0.2% at 359.20 pence Wednesday morning.