Industrial property company Segro pushed up adjusted profits by 26 per cent in 2017 as a shortage of warehouse space boosted demand for its sites.
The FTSE 100 company, which owns a £8bn portfolio of warehouse properties in the UK and continental Europe, reported adjusted pre-tax profits — which exclude changes in property value — of £194m, up from £154.5m at the end of 2016.
Segro has tapped into the booming demand for warehouses near major transport routes as consumers shift towards online purchases and convenience stores.
The value of its property portfolio rose by 14 per cent to £8bn in the 12 months to 31 December 2017. Statutory pre-tax profit – a figure which incorporates additional factors such as changes in portfolio value – more than doubled between 2016 and 2017, reaching £976m.
The group acquired £702m of new buildings and development land over the year, including a portfolio of assets around Heathrow airport.
Like-for-like rental income growth was up by 2.6 per cent to £224m, pushed up especially by a 5.1 per cent rise in the UK. The group saw rental income fall by 2.5 per cent in Europe.
David Sleath, chief executive, said that occupier demand in early 2018 remained “strong” and the supply of modern warehouse space remained “constrained”.
He added: “The prospects for rental growth, particularly in the UK, remain good, and rental values are improving in our continental Europe urban warehouse portfolio. Investor appetite for prime warehouses remains unsated, attracted by the occupational market fundamentals.
"The structural drivers of demand in our sector (urbanisation, growth of the digital economy and e-commerce) are likely to underpin occupier demand for some time to come and these, coupled with our modern, well-located assets, our current development pipeline and our land bank all offer significant opportunities for future growth."
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