SEGRO : 2021 Half Year Results

PRESS RELEASE

29 July 2021

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021

SEGRO reports a strong performance in H1 2021 and remains well-positioned to deliver further growth.

Commenting on the results, David Sleath, Chief Executive, said:

"SEGRO has delivered another strong set of results, which reflect the high quality of our portfolio and increased demand from a diverse range of occupiers and investors. Together with our active approach to asset management, rental growth and further progress with our development pipeline, these factors have driven significant valuation increases and earnings growth.

"We have also made important progress on our Responsible SEGRO priorities, putting the necessary framework in place to enable us to deliver on our long-term commitments, whilst continuing to work with our local teams and partners to embed our approach into our day-to-day business.

"SEGRO is well-placed to continue benefitting from the structural tailwinds driving the industrial property sector with our unique portfolio of prime warehouses, two-thirds of which are located in the most supply constrained urban markets, and an enviable land bank capable of supporting our profitable and expanding development programme. The combination of our established pan-European,customer-focused operating platform and our relationships and reputation with other key stakeholders, give us a significant competitive advantage which further enhances our ability to secure opportunities for future growth."

HIGHLIGHTSA:

• Adjusted pre-taxprofit of £168 million up 19 per cent compared with the prior year (H1 2020: £141 million). Adjusted EPS is 13.8 pence, up 10 per cent (H1 2020: 12.5 pence).
• Adjusted NAV per share is up 12 per cent to 909 pence (31 December 2020: 814 pence) driven by portfolio asset management initiatives, yield compression, rental growth and our development activity delivering a 10 per cent increase in the valuation of the portfolio.
• Strong occupier demand, our customer focus and active management of the portfolio generated £38 million of new headline rent commitments during the period, including £21 million of new pre-let agreements, and a 12 per cent average uplift on rent reviews and renewals (UK: 16 per cent, CE: 2 per cent).
• Further growth in the development pipeline with 1.3 million sq m of projects under construction or in advanced pre-letdiscussions equating to £96 million of potential rent, of which 75 per cent has been pre-let, substantially de-risking the 2021-2022 pipeline.
• Balance sheet positioned to support further, development-ledgrowth with access to over £1.2 billion of available liquidity and a low level of gearing reflected in an LTV of 21 per cent at 30 June 2021 (31 December 2020: 24 per cent).
• Interim dividend increased by 7 per cent to 7.4 pence (2020: 6.9 pence), in line with our usual practice of setting the interim dividend at one-third of the previous full year dividend.

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FINANCIAL SUMMARY

	6 months to	6 months to	Change
	30 June 2021	30 June 2020	per cent
Adjusted1 profit before tax (£m)	168	141	19.1
IFRS profit before tax (£m)	1,413	221	-
Adjusted2 earnings per share (pence)	13.8	12.5	10.4
IFRS earnings per share (pence)	110.3	19.5	-
Dividend per share (pence)	7.4	6.9	7.2
Total Accounting Return (%)3	13.5	4.6
	30 June 2021	31 December	Change
	2020	per cent
Portfolio valuation (SEGRO share, £m)	14,446	12,995	10.24
Adjusted5 6 net asset value per share (pence, diluted)	909	814	11.7
IFRS net asset value per share (pence, diluted)	897	809	10.9
Net debt (SEGRO share, £m)	3,092	3,088
Loan to value ratio including joint ventures at share (per
cent)	21	24

1. A reconciliation between Adjusted profit before tax and IFRS profit before tax is shown in Note 2 to the condensed financial information.
2. A reconciliation between Adjusted earnings per share and IFRS earnings per share is shown in Note 11 to the condensed financial information.
3. Total Accounting Return is calculated based on the opening and closing adjusted NAV per share adding back dividends paid during the period.
4. Percentage valuation movement during the period based on the difference between opening and closing valuations for all properties including buildings under construction and land, adjusting for capital expenditure, acquisitions and disposals.
5. A reconciliation between Adjusted net asset value per share and IFRS net asset value per share is shown in Note 11 to the condensed financial information.
6. Adjusted net asset value is in line with EPRA Net Tangible Assets (NTA) (see Table 4 in the Supplementary Notes for a NAV reconciliation).

1. Figures quoted on pages 1 to 17 refer to SEGRO's share, except for land (hectares) and space (square metres) which are quoted at 100 per cent, unless otherwise stated. Please refer to the Presentation of Financial Information statement in the Financial Review for further details.

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OUTLOOK

SEGRO continues to be positioned well for further growth, benefiting from a unique portfolio of assets and a development pipeline located in areas which are highly sought after and where land is in increasingly short supply. Our ability to provide our customers with modern, sustainable premises in prime locations, two-thirds of which are in Europe's major cities, combined with the extensive experience and networks of our local teams, give us a strong competitive advantage.

Our buildings are adaptable to many different uses and serve a wide range of customers and sectors. A significant portion of occupier demand continues to arise from the increased use of digital channels by retailers and consumers which, in turn, is driving increased e-commerce penetration and consumption of data across Europe. Although internet sales penetration levels have understandably fallen from their highs as physical retail has reopened, they remain significantly higher than pre-pandemic levels as cultural barriers have been overcome and habits have changed. We believe that the long-term trend towards increased on-line shopping has been amplified and accelerated by the pandemic and this has given a new impetus to demand for space.

Coupled with that, many customers and logistics suppliers are placing renewed emphasis on supply chain resilience, near-shoring and local sourcing, improved customer service and cost or inventory efficiency which are fuelling increased demand for modern, well-located warehouses - both urban and big box. We expect these themes to continue for some time. More recently we have also seen demand arising from emerging new sectors including creative industries and q-commerce (including rapid food delivery providers).

Record levels of take-up across Europe have resulted in low vacancy rates and in most of our markets supply currently equates to less than a year of take-up. This is resulting in rental growth in our core markets, most notably in urban areas where the combination of a shortage of modern warehouse space, a shortage of land suitable for development and the diversity of the occupier base is most prevalent.

Given these strong market dynamics investor demand for well-located, modern industrial assets is likely to continue to grow, putting further upward pressure on asset values.

These factors, combined with our active approach to asset management, are enabling us to drive strong returns from the existing portfolio, supplemented by our profitable, de-risked development programme which generates additional rental income and allows us to further modernise the portfolio to help our customers meet their own sustainability requirements.

We remain confident in the outlook for the remainder of 2021 and beyond given the strong levels of occupier demand and the competitive position of our business, but remain alert to macro risks, not least the ongoing Covid-19 pandemic.

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SUMMARY & KEY METRICS

H1 2021

H1 2020

FY2020

STRONG PORTFOLIO PERFORMANCE (see page 8):

Valuation increase driven by yield compression, rental value growth and active asset management of the standing portfolio, supplemented by development gains.

Portfolio valuation uplift (%)		10.2	0.7	10.3
Like-for-like portfolio valuation growth (%)	UK	8.6	0.1	9.2
	CE	8.3	0.8	10.2
Estimated rental value (ERV) growth (%)	UK	3.6	1.0	3.1
	CE	1.5	0.4	1.5

ACTIVE ASSET MANAGEMENT DRIVING OPERATIONAL PERFORMANCE (see page 9):

Strong performance in capturing new rent, including leases signed with customers from new sectors, highlighting the versatility of our urban portfolio. Our approach to asset management and customer focus has also resulted in continued capture of reversionary potential.

Total new rent contracted during the period (£m)	38	34	78
Pre-lets signed during the period (£m)		21	19	41
Like-for-like net rental income growth (%):	Group	4.7	(0.2)	2.1
	UK	4.8	0.6	0.9
	CE	4.6	(0.7)	4.3
Uplift on rent reviews and renewals (%)		12.1	10.4	19.1
Vacancy rate (%)		4.3	5.2	3.9
Customer retention (%)		83	88	86

INVESTMENT ACTIVITY CONTINUES TO FOCUS ON DEVELOPMENT (see page 14):

Investment continues to focus on development and we sourced further land to secure future opportunities. Development capex for 2021, including infrastructure, expected to be c.£750 million.

Development capex (£m)	364	265	531
Acquisitions (£m)	92	426	889
Disposals (£m)	154	59	139

EXECUTING ON AND GROWING OUR DEVELOPMENT PIPELINE (see page 12):

Continuing to add to our development pipeline with a further 770,000 sq m expected to complete by year end and £96m of potential rent from developments under construction or in advanced discussions.

Development completions:	104,000	358,500	835,900
- Space completed (sq m)
- Potential rent (£m) (Rent secured, %)	8	(75%)	22 (64%)	47 (84%)
Current development pipeline potential rent	74	(72%)	45 (85%)	54 (66%)
(£m) (Rent secured, %)		22	33	27
Near-term development pipeline potential rent
(£m)

FINANCING (see page 15):

Strong balance sheet and low cost of debt provides significant capacity to invest for future growth.

Cost of debt (%)	1.5	1.7	1.6
Average debt maturity (years)	9.7	9.4	9.9
Cash and available facilities (£m)	1,230	1,541	1,189

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WEBCAST / CONFERENCE CALL FOR INVESTORS AND ANALYSTS

A live webcast of the results presentation will be available from 08:30am (UK time) at:

https://www.investis-live.com/segro/60e718e680fc931000313c84/hy21

The webcast will be available for replay at SEGRO's website at: http://www.segro.com/investorsshortly after the live presentation.

A conference call facility will be available at 08:30 (UK time) on the following number:

Dial-in:	[phone]
	[phone]
Access code:	933901

An audio recording of the conference call will be available until 5 August 2021 on:

UK:	[phone]
Access code:	713190

A video of David Sleath, Chief Executive discussing the results will be available to view on www.segro.com, together with this announcement, the Half Year 2021 Property Analysis Report and other information about

SEGRO.

CONTACT DETAILS FOR INVESTOR / ANALYST AND MEDIA ENQUIRIES:

SEGRO	Soumen Das	Tel: + 44 (0) 20 7451 9110
	(Chief Financial Officer)	(after 11am)
	Claire Mogford	Mob: [phone]
	(Head of Investor Relations)	Tel: [phone]
		(after 11am)
FTI Consulting	Richard Sunderland / Claire Turvey /	Tel: [phone]

Eve Kirmatzis

FINANCIAL CALENDAR
2021 interim dividend ex-div date		12 August 2021
2021 interim dividend record date		13 August 2021
2021 interim dividend scrip dividend price announced		19 August 2021
Last date for scrip dividend elections	3	September 2021
2021 interim dividend payment date	24	September 2021
2021 Third Quarter Trading Update		20 October 2021
Full Year 2021 Results (provisional)	18 February 2022

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