Segro shares dip on mixed trading update

Segro, the industrial property landlord that controls 5.7m sq ft of warehouse space in the North West, reported improved void rates across its portfolio in the nine months to the end of September.

The interim trading statement published this morning gave the first details of performance since the acquisition of rival Brixton in the summer.

The vacancy rate by rental value for the group excluding the Brixton portfolio has improved since June 2009 from 11.3% to 10.9% at 30 September. Including the Brixton portfolio, the overall group vacancy rate was 14.0%. The Brixton portfolio had a vacancy rate of 23.0% at the end of September.

Segro owns the 2.5m sq ft Heywood Distribution Park near Rochdale and acquired 3.2m sq ft at Trafford Park outside Manchester through the Brixton takeover.

The statement went on: "The level of new enquiries for space has continued to trend downwards during the third quarter of the year although some early signs of recovery have emerged over the last few weeks and a number of new and existing customers are looking more actively at new space requirements."

Shares in Segro fell 3% to 333.8p in early trading valuing the business at £2.5bn.

Segro let 710,000 sq ft, worth £3m of annualised rent, in Q3 09 compared to 153,000 sq ft and £11.7m in the same three months of 2008.

Year to date lettings were 3.35m sq ft, worth £17.0m, compared to 3.82m sq ft, or £26.5m in the first nine months of 2008.

Rent reviews, renewals and lettings were settled at an average of 6.7% below their valuation as at 31 December 2008, reflecting market conditions, the company said.

The value of Segro's UK portfolio fell 13.7% in the first six months of 2009 but today's statement said 'investor demand appears to be increasing'.

Local lettings of late include deals with Fowler Welch Coolchain and an extension to JD Sports at Heywood and Selecta UK at Trafford Park.

Segro said net debt at 30 September was £2.6bn, level with last year. Cash in the bank and undrawn debt facilities stood at £940m.

Chief executive Ian Coull said the company was on track to make cost savings of £12m a year across the enlarged business but gave no details of job losses.

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