Slough Trading Estate owner, SEGRO, says it is optimistic about its full-year operating figures as occupational conditions “continue to be favourable”. The real estate investment trust (REIT) still has four months before publishing its annual results.
In a Trading Update, SEGRO — which specialises in developing and asset managing modern warehousing and light industrial property — said that following leasing trends for the first half of 2015, it had contracted £10.6m of new rent during the third quarter. That, compared to £6.5m for the same three months last year, was the REIT’s strongest quarterly performance since 2012.
More than 354,000 sq ft of developments were completed between July and September, added the statement, capable of generating around £1.1m in annual rent when the assets were fully let. And an extra 4.5m sq ft of new space was currently under development.
SEGRO approved or started construction on 1.3m sq ft of units during the third quarter, of which 729,000 sq ft is pre-let. The biggest single project was a 191,597 sq ft parcel delivery centre for TNT in Paris.
The firm is also progressing with 570,487 sq ft of speculative development, including 470,000 sq ft of warehousing units to complete its Rugby logistics park “where the demand-supply dynamics are very favourable”.
Chief executive, David Sleath, also confirmed his company had invested £31m in land during the third quarter “to enhance our future development pipeline”.
Overall, said Sleath: “Occupational conditions continue to be favourable, particularly in our UK portfolio, and we remain optimistic about our full year operating performance.
“We have seen further net absorption of existing space contributing to an improvement in our vacancy rate, and continued strengthening in overall rental terms. Against this positive market backdrop, we have added £1m to our rent roll from letting up speculatively developed space and have further expanded our development pipeline which includes £3.3m of new pre-let agreements, with a number of others in advanced negotiation.
“Investor demand for well-located industrial and logistics assets remains strong in all of our markets, with yields continuing to compress,” he added.
“This should be positive for the value of our portfolio, but it also means that we will remain deliberately selective about acquisition opportunities, whilst continuing to focus on development, which we believe will deliver attractive returns for shareholders.”
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