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Segro acquires £133mln London warehouse

The firm issued 600,000 new shares to pay 7% of the interim dividend, which totalled 6.9p per share

Segro - Segro pays dividend with shares, acquires £133mln London warehouse

Segro PLC (LON:SGRO) announced it has acquired a new warehouse in London from asset manager Schroders for £133mln.

The 13-acre urban warehouse estate, called Electra Park, is located near Canary Wharf and London City Airport, being bordered by the A12 and A13 main roads connecting it directly to central London, while it is also at a walking distance from underground stations.

READ: Segro raises dividend almost 10% and says logistics property demand is booming

It provides 21,200 square metres of lettable space across 10 units of which nine are let, with the final unit currently under offer, generating a topped-up passing rent of £3.4mln, reflecting a low average in-place rent of approximately £14 per square foot.

In the quarter to October 20, the warehouse operator signed contracts worth £15.8mln of new headline rent, while rent roll growth from existing space, net of take-backs was £5.6mln.

The vacancy rate was 5.2%, same at as at the end of June, while customer retention was 88%.

Segro has collected 85% of the total rent billed for the fourth quarter to next January, as well as 96% and 95% of the rent for the second and third quarter respectively.

Net debt at the end of September was £2.7bn.

The firm issued 600,000 new shares to pay 7% of the interim dividend, which totalled 6.9p per share. Earnings per share for 2020 are expected to be based on an average of 1bn shares.

"We expect sector-leading total returns as structural trends continue to drive rental growth enhanced by profits from a high quality development pipeline," analysts at Liberum noted.

Shares, which are trading on a 29% premium and a 2.3% dividend yield, dipped 1% to 930.4p early on Wednesday.

Quick facts: Segro

Price: 907.2 GBX

LSE:SGRO
Market: LSE
Market Cap: £10.81 billion
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