UK's Segro signals improving asset value, Q1 rent roll up 21%

By Anchal Rana

(Reuters) - British warehouse developer Segro on Thursday said industrial and logistics asset values are stabilising and signalled further improvement, as it reported a near-21% growth in first-quarter rental income.

Warehousing specialists have outperformed the broader UK commercial property market, at a time when landlords remain wary of falling property values and tighter credit conditions.

Real estate developers like Segro, which grappled with elevated costs and interest rates last year, are optimistic about higher rents and improved valuations for their properties, amid increased hopes of monetary policy easing in the near term.

While volumes are still relatively low across most real estate sectors, Segro has sold assets in the period at a "very healthy price", chief financial officer Soumen Das told Reuters.

The company disposed 159 million pounds ($198.5 million) in assets so far this year, at prices above December 2023 book values, Das said.

"The sentiment in particular, I would say, in the market is improving," he added.

Segro, which operates in Britain and seven other European countries, signed 29 million pounds in headline rent in first quarter ended March 31, compared to 24 million pounds in the year-ago period.

"The pan-European logistics occupier dynamics remain favourable, but occupancy slipped 50 basis points from 95% on development initiations," brokerage Jefferies said in a note.

Segro logged an occupancy rate of 94.5% in the quarter, compared to 95.7% last year.

($1 = 0.8012 pounds)

(Reporting by Aby Jose Koilparambil and Anchal Rana in Bengaluru; Editing by Varun H K)