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1. Company Snapshot

1.a. Company Description

SEGRO is a UK Real Estate Investment Trust (REIT), and a leading owner, manager and developer of modern warehouses and light industrial property.It owns or manages 8.1 million square metres of space (88 million square feet) valued at £13.3 billion serving customers from a wide range of industry sectors.Its properties are located in and around major cities and at key transportation hubs in the UK and in seven other European countries.

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1.b. Last Insights on SGRO

SEGRO Plc's recent performance was negatively impacted by the acquisition of a 25% stake in the company by a major investor, Brookfield Asset Management, which may lead to a potential takeover bid. This development has sparked concerns among investors, causing a decline in the company's share price. Additionally, the recent Form 8.3 filings suggest that institutional investors are increasing their stakes in the company, potentially indicating a change in control.

1.c. Company Highlights

2. SEGRO: Strong Half-Year 2025 Results with 6.5% Earnings Growth

SEGRO's half-year 2025 results show a strong performance, with a 6.5% growth in earnings and dividends per share. The existing portfolio is performing well, with a 7.8% like-for-like growth in net rental income, driven by active asset management and a 1% increase in asset values. The company's balance sheet remains in good shape, with a loan-to-value ratio of 31% and available liquidity of almost £2 billion.

Publication Date: Aug -09

📋 Highlights
  • Earnings and Dividend Growth: SEGRO reports 6.5% growth in earnings and dividends per share, supported by 7.8% like-for-like net rental income growth and a 1% asset value increase.
  • Development Pipeline Expansion: The pipeline includes £16 million in near-term projects and £356 million from remaining land bank, with development yields of 7.5% or 10% cash-on-cash, offering £884 million total development value.
  • Data Center Strategic Growth: SEGRO targets a 2.3 gigawatt land-enabled power bank and a £1 billion joint venture with Pure Data Centers to develop its first fully fitted data center, leveraging 34 existing data centers with £56 million in annual rent.
  • Portfolio Reversion and Liquidity: The existing portfolio has £255 million of potential from rent frees and vacancies, while the balance sheet holds £2 billion liquidity and a 31% loan-to-value ratio, ensuring financial flexibility.
  • Management Confidence in Growth: Executives highlight strong structural advantages in supply-constrained European markets, with expectations of mid- to high single-digit EPS and dividend growth driven by reversion and development opportunities.

Development Pipeline and Asset Management

The development pipeline is improving, with a near-term pipeline of deals in advanced stages of negotiation. The company has signed £31 million of new rent commitments, with the majority coming from the existing portfolio. The asset management teams have delivered impressive performance from the existing portfolio, with over 60 lettings of existing space and the completion of over 100 rent reviews, renewals, and regears, producing £10 million of new income. As David John Rivers Sleath expressed, "the company is prioritizing development over acquisitions, but will consider accretive opportunities."

Data Center Platform and Growth Opportunities

SEGRO's structural advantage, with a portfolio concentrated in Europe's most attractive submarkets, will continue to drive performance over the medium term. The company is well-positioned to deliver mid- to high single-digit EPS and dividend growth over the medium term, supported by the reversion of the portfolio and new income from the development pipeline. The data center platform is expected to add significant growth, with a 2.3 gigawatt land-enabled power bank and a signed joint venture to develop its first fully fitted data center.

Valuation Metrics

SEGRO's strong performance and growth prospects are reflected in its valuation metrics. The company trades at a P/E Ratio of 14.67, a P/B Ratio of 0.72, and a Dividend Yield of 4.65%. With a ROIC of 2.81% and a ROE of 4.98%, SEGRO's ability to generate profits and returns for shareholders is evident.

3. NewsRoom

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FTSE 100 holds firm amid hefty gold miner losses

Oct -21

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Maritime Transport and DB Cargo UK initiate new rail freight service

Jun -20

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Stocks to watch this week: Broadcom, Lululemon, British American Tobacco, Dr Martens and Rémy Cointreau

May -30

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A new £1 billion data centre at Park Royal 'will power London's digital growth'

Mar -25

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Segro partners with Oaktree-owned Pure on £1bn data centre in London

Mar -25

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Segro PLC (SEGXF) (Q4 2024) Earnings Call Highlights: Strong Rent Commitments and Strategic ...

Feb -15

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UK's Segro plans data centre strategy shift as AI booms

Feb -14

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SEGRO Plc (SEGXF) Faces 21% Stock Decline Despite Ambitious Data Center Growth Plans and 19% Upside Potential

Jan -31

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (15.00%)

6. Segments

Real Estate Investment Trust

Expected Growth: 15%

SEGRO Plc's 15% growth in Real Estate Investment Trust (REIT) is driven by increasing demand for logistics and warehouse space, fueled by e-commerce growth and urbanization. Strong property portfolio management, strategic acquisitions, and rent increases also contribute to growth. Additionally, a solid balance sheet and access to capital enable the company to capitalize on opportunities, further driving growth.

7. Detailed Products

Industrial Logistics

SEGRO Plc provides high-quality industrial logistics facilities for businesses, offering flexible and adaptable spaces for storage, distribution, and manufacturing.

Urban Warehousing

SEGRO Plc offers urban warehousing solutions, providing modern and flexible storage spaces in urban locations, close to city centers and transportation hubs.

Data Centers

SEGRO Plc provides secure and reliable data center facilities, offering high-performance computing and storage solutions for businesses.

Cold Storage

SEGRO Plc offers cold storage facilities, providing temperature-controlled environments for the storage of perishable goods.

Land and Development

SEGRO Plc provides land and development opportunities for businesses, offering bespoke solutions for industrial and logistics projects.

8. SEGRO Plc's Porter Forces

Forces Ranking

Threat Of Substitutes

SEGRO Plc operates in the industrial property sector, which has a moderate threat of substitutes. While there are alternative options for customers, such as building their own warehouses or using third-party logistics providers, SEGRO's specialized services and expertise in logistics and supply chain management reduce the threat of substitutes.

Bargaining Power Of Customers

SEGRO Plc's customers, typically large retailers and manufacturers, have limited bargaining power due to the company's strong market position and diversified customer base. This reduces the risk of customers negotiating lower prices or demanding customized services.

Bargaining Power Of Suppliers

SEGRO Plc relies on a network of suppliers for construction materials, labor, and services. While suppliers have some bargaining power, SEGRO's scale and reputation in the industry mitigate this risk, allowing the company to negotiate favorable terms.

Threat Of New Entrants

The industrial property sector has high barriers to entry, including significant capital requirements, regulatory hurdles, and the need for specialized expertise. This limits the threat of new entrants and allows SEGRO Plc to maintain its market position.

Intensity Of Rivalry

The industrial property sector is highly competitive, with several established players vying for market share. SEGRO Plc faces intense competition from rivals such as Prologis, GLP, and Logicor, which can lead to pricing pressure and increased marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 32.91%
Debt Cost 3.95%
Equity Weight 67.09%
Equity Cost 7.67%
WACC 6.45%
Leverage 49.06%

11. Quality Control: SEGRO Plc passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Tritax Big Box

A-Score: 6.1/10

Value: 4.1

Growth: 5.7

Quality: 6.8

Yield: 8.1

Momentum: 4.0

Volatility: 8.0

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Innovative Industrial Properties

A-Score: 6.1/10

Value: 6.6

Growth: 6.3

Quality: 8.4

Yield: 10.0

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Volatility: 4.7

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Value: 5.2

Growth: 5.8

Quality: 7.4

Yield: 7.5

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WDP

A-Score: 5.6/10

Value: 4.1

Growth: 5.7

Quality: 6.4

Yield: 6.2

Momentum: 3.0

Volatility: 8.3

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Big Yellow

A-Score: 5.2/10

Value: 4.3

Growth: 4.4

Quality: 7.5

Yield: 7.5

Momentum: 2.0

Volatility: 5.7

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SEGRO

A-Score: 4.7/10

Value: 3.0

Growth: 3.4

Quality: 6.2

Yield: 6.2

Momentum: 1.0

Volatility: 8.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

7.07$

Current Price

7.07$

Potential

-0.00%

Expected Cash-Flows