SEGRO (AO) | Hold | PLD/SEGRO - A first detailed scenario analysis

Research evidence excerpt

SEGRO (AO) | Hold | PLD/SEGRO - A first detailed scenario analysis

ity of the balance sheet to pursue this (Capex-intensive) strategy, which requires JVs,

asset recycling (SEGRO's target this year in the high-end of 1-2% of the portfolio) or potentially capital increases (see Merlin).

Accessing to PLD's stronger balance sheet could accelerate data centre deployment, but capital is unlikely to be the only

constraint on monetising SEGRO’s 2.5GW powered land bank (0.5GW already in use). Based on the current pipeline, we estimate

the data centre opportunity could justify roughly 100p per share of additional NTA (computation below), although PLD may be

reluctant to fully reflect this in its Offer given the back-end nature of the cash-flows.

Before the announcement of the deal and since the onset of the Middle-East crisis, the US REITs were up 5.8% on a total return

basis vs -10.2% for the European peers. SEGRO was down 8.9% vs. +3.5% for Prologis.

At this stage, we outline three potential scenarios. While we believe an increase to the offer is the most likely outcome, the extent

of any bump remains difficult to gauge. Prologis must strike a careful balance between offering a price that adequately reflects

SEGRO’s strategic value and avoiding a level that could be perceived as value-destructive by its own shareholders .

Recently, an activist on SEGRO was pushing the idea of spinning off a 20-30% stake in its DC business to deliver growth faster

(click here), and in January 2026, there was some discussion on finding a new partner for part of its UK big box operations (click

here). If the bid does not go through, this could accelerate the pressure on the management to do something to spice things up.

Pros and cons of the deal