SEGRO (AO) | Buy | SGRO/PLD - A last and final offer

Research evidence excerpt

SEGRO (AO) | Buy | SGRO/PLD - A last and final offer

SEGRO Buy | Target Price: 1,010.00p

Company description Management

SEGRO is a UK Real Estate Investment Trust (REIT), and a leading owner, asset David Sleath, CEO

manager, and developer of modern warehousing and industrial property across Susanne Schroeter-Crossan, CFO

Europe with a portfolio close to 20.0bn. It is the third largest REIT in Europe. Andy Gulliford, COO

Since 2011, the company has undergone a reorientation of its strategy by selling Key shareholders

non-core assets and focusing on rent roll growth. Rental income has been Free float 73.95%

boosted by own development activities that really started to kick in in 2015. BlackRock 11.01%

Norges Bank 9.05%

APG 5.99%

Investment case Valuation methodology

SEGRO boasts a portfolio that comprises 98% logistics assets, We value SEGRO using a mix of a DCF (70%: 6.4% WACC, 80%

with 67% exposure to the urban warehousing segment and c. OM, 2.2% g) and a NAV-based model adjusted for dividends

33% in "big box" logistics assets. Due to supply constraints, the (30%).

former has seen strong rental growth over the last few years. SEGRO still benefits from a lower WACC of our logistics names to

SEGRO's recent defence against PLD statement showed how reflect the qualitative portfolio.

value crystallisation may happen for the coming, mainly coming Risks to our rating

from its important pipeline in logistics (potential for c. GBP429m Higher-for-longer interest rates in a slow-growth context.

of additional rent in the future) and in data centres. Slowdown in the occupier's market raising questions on rental

Through capital recycling with JV partners, the company outlook and incentives.

intends to step-up its game in the fully-fitted DC construction, PLD pulling off.