Slide 1: 2015 Half Year Results
2015 Half Year Results 28 July 2015 SEGRO Park Düsseldorf-City
Slide 2: Taking Advantage of Improving Markets
TAKING ADVANTAGE OF IMPROVING MARKETS Adjusted EPS, 9.2p +3% EPRA NAV per Strong operational performance 416p share, +8% Like for like rental Positive portfolio valuation movement across all our +4.3% income growth major markets +6.0% Capital value growth Investing for growth – bias in favour
Slide 3: Financial Review
Financial Review Origin, Park Royal (CGI)
Slide 4: Financial Summary
FINANCIAL SUMMARY Strong like-for-like net rental income growth Disciplined management of operating and financing costs Portfolio valuation driving 8% NAV uplift Modest gearing reduction despite net investment during the period 4
Slide 5: Income Statement
INCOME STATEMENT 3.7% increase in Adjusted PBT (9.3% on constant currency basis) H1 2015 H1 2014 £m £m Gross rental income 101.2 107.5 Property operating expenses (15.8) (20.0) Net rental income 85.4 87.5 Share of joint ventures’ adjusted profit1 23.6 22.6 Joint venture fee income 6.7 5.4 Administra
Slide 6: Drivers of Net Rental Income Change
DRIVERS OF NET RENTAL INCOME CHANGE Like-for-like net rental income +4.3% £4.0m £5.9m £118.9m £11.8m £116.6m £(0.5)m £(6.0)m £(4.5)m £(13.0)m • Group: +4.3% JVs at JVs at • UK: +5.8% share share • CE: –0.5% £31.4m £31.2m Prior year incl. £3.1m payment from Neckermann administrators and £2.7m surrend
Slide 7: Vacancy Rate Reconciliation
VACANCY RATE RECONCILIATION Speculative development completions and Energy Park sale impact vacancy 0.3% 7.4% 0.4% 0.1% 0.6% Speculative 6.3% development1 Speculative 1.8% development1 (0.3%) 1.4% Standing assets Standing assets 4.9% 5.6% 31 December Long-term Short-term take- New Acquisitions Dispo
Slide 8: Pro-forma Accounting Net Rental Income
PRO-FORMA ACCOUNTING NET RENTAL INCOME £0.5m lower after adjusting for major 2015 transaction activity and significant one-off items Group JVs Total Excludes: £m £m £m Full year impact of lower vacancy H1 2015 net rental income 85.4 31.2 116.6 rate and rent roll growth Incremental impact of: £6m
Slide 9: Timing of Current Development Pipeline Completions
TIMING OF CURRENT DEVELOPMENT PIPELINE COMPLETIONS Annualised gross rental income from completed developments, £ millions1 25.0 £11.1m gross rent from pre-let developments 0.9 20.0 £11.3m potential gross rent from 6.5 speculative developments 15.0 4.4 10.0 3.9 5.0 6.7 0.0 H2 2015 H1 2016 H2 2016
Slide 10: Total Cost Ratio
TOTAL COST RATIO Lower cost ratio due to more efficient portfolio; 11% reduction in total costs Incl. joint ventures at share H1 H1 Change Property operating expenses reflect 2015 2014 % lower cost of vacancy £m £m One-off £4.8m pension settlement cost Gross rental income 138.2 144.3 (4.2) exclu
Slide 11: Main Drivers of EPRA NAV Growth
MAIN DRIVERS OF EPRA NAV GROWTH 8% increase in EPRA NAV per share reflects valuation rise, offset by c4p of one-off items 38.2p (0.6)p (3.3)p (1.5)p 416p 9.2p 384p (10.2)p 31 December Adjusted EPS Final dividend Realised and Pension Swap close-out Other 30 June 2015 2014 unrealised gains settlement
Slide 12: Portfolio Value Change and ERV Growth by Business Unit
PORTFOLIO VALUE CHANGE AND ERV GROWTH BY BUSINESS UNIT 1 5.8% completed portfolio valuation movement (UK +6.9%; Continental Europe +2.3%) £300m 5.8% Slough Trading Estate +5.3% £250m Park Royal +8.2% SELP (big box logistics) +2.9% Heathrow +7.5% SEGRO (light industrial) +2.1% £200m UK big box logist
Slide 13: Financial Position
FINANCIAL POSITION Reduced financing costs; enhanced financing capability 30 June 2015 31 Dec 2014 £m £m Net debt (incl JVs) increased £77m Group only reflecting net investment Net borrowings (£m) 1,777 1,679 Secured a further £150m of Group cash and undrawn facilities (£m) 2994 429 facilities p
Slide 14: Euro Currency Exposure and Hedging
EURO CURRENCY EXPOSURE AND HEDGING Balance sheet, £m • €1.41:£1 as at 30 June 2015 30 June 2015 2,000 Assets 88% hedged • € assets 88% hedged by € liabilities • €195m (£138m) of residual exposure – 4% of Group NAV Other Euro 1,500 liabilities • Illustrative NAV sensitivity vs €1.41: Euro currency •
Slide 15: Financial Summary
FINANCIAL SUMMARY Strong like-for-like net rental income growth Disciplined management of operating and financing costs Portfolio valuation driving 8% NAV uplift Gearing expected to fall in second half 15
Slide 16: Taking Advantage of Improving Markets
Taking advantage of improving markets 16 DHL, SEGRO Park Düsseldorf-City
Slide 17: Market Environment Remains Attractive
MARKET ENVIRONMENT REMAINS ATTRACTIVE Economic environment improving1 Structural changes in consumer demand3 20% Online sales as % of GDP CAGR 2014-16 15% 2013 2018 all retail sales 10% 5% Poland 3.6% UK 2.3% Germany 1.9% Euro-zone 1.7% France 1.4% Italy 1.1% 0% UK France Germany Neth. Spain Italy D
Slide 18: Taking Advantage of Attractive Market Conditions
TAKING ADVANTAGE OF ATTRACTIVE MARKET CONDITIONS Improving returns from existing assets Growth from accretive acquisitions Growth through development Further net absorption of existing £174m investment in new assets 125,200 sq m delivered in period space (£5.2m rent; 62% leased) Entry
Slide 19: Slough Trading Estate
SLOUGH TRADING ESTATE Key portfolio data AUM Value (at share) Value movement 1 £1,310m £1,310m +5.3% Average lease length2 Vacancy rate Equivalent yield 7.3 years 8.2% (+300bp)3 6.4% (-20bps) Highlights • LFL rental growth of 3.4% reflects lower average vacancy and higher rental levels (4.6% increas
Slide 20: Greater London
GREATER LONDON Key portfolio data AUM Value (at share) Value movement 1 £2,563m £2,074m +7.8% Average lease length2 Vacancy rate Equivalent yield 7.6 years 9.2% (+140bp) 5.8% (-30bps) John Lewis, Park Royal (CGI) Highlights • Strong occupier demand reflects successful London economy and last mile de
Slide 21: Heathrow Expansion Backed by Airports Commission
HEATHROW EXPANSION BACKED BY AIRPORTS COMMISSION Key portfolio data AUM Value (at share) Value movement 1 £1,417m £928m +7.5% Average lease length2 Vacancy rate Equivalent yield 8.2 years 8.2% (-30bp) 5.9% (-30bps) Heathrow and BA Cargo Centres Stockley Close, Heathrow Heathrow third runway CGI 1 Fo
Slide 22: UK Logistics
UK LOGISTICS Key portfolio data AUM Value (at share) Value movement 1 £604m £604m +7.0% Average lease2 Vacancy rate Equivalent yield 7.0 years 1.2% (+60bp) 5.7% (-30bps) Highlights for the period • Continuing good levels of occupier demand, with limited supply response to date • New-build rental val
Slide 23: UK Logistics: Limited Supply Response to Increased Demand
UK LOGISTICS Limited supply response to increased demand for big box space Completions of speculative UK big box warehouses Supply of Grade A UK big box logistics warehouses Sq m in millions Sq m in millions 1.2 3.0 1.0 New 2.5 0.8 Second-hand Outside SEGRO’s 0.6 2.0 core markets 0.4 1.5 0.2 1.0 0.0
Slide 24: Continental Europe Logistics
CONTINENTAL EUROPE LOGISTICS Key portfolio data AUM1 Value (at share) 1 Value movement 1 £1,413m £758m +2.3% Average lease2 Vacancy rate Equivalent yield 5.2 years 3.9% (-280bp) 7.2% (-40bps) Highlights for the period SEGRO Logistics Park Krefeld Süd • Improving occupancy rates across most markets;
Slide 25: New Markets — Entry into Italy
NEW MARKETS — ENTRY INTO ITALY Vailog acquisition is aligned with strategy and provides a platform for growth Aligned with strategy and investment criteria: Market leading development platform Focused on big box logistics Concentrated in prime locations in Milan and Bologna Customers include
Slide 26: Continental Europe Light Industrial
CONTINENTAL EUROPE LIGHT INDUSTRIAL Key portfolio data AUM Value (at share) Value movement 1 £388m £388m +2.1% Average lease2 Vacancy rate Equivalent yield 4.9 years 11.1% (-60bp) 7.5% (-30bps) Highlights for the period FedEx, La Corneuve Paris • Vacancy reduced, particularly in Paris (2.5% vacancy
Slide 27: Looking to the Future
LOOKING TO THE FUTURE To be the best owner-manager and developer of warehouse OUR and industrial properties and a leading income-focused REIT GOAL Allocate capital to the markets and assets likely to Disciplined produce the best risk-adjusted returns Capital Operational Allocation Excellence Deliver
Slide 28: Developing New Assets
DEVELOPING NEW ASSETS £22m of rent from current pipeline when fully let Current development pipeline by asset type by ERV (30 June 2015) Higher value use, 1% Current pipeline (332,400 sq m) • £134m development cost (exc. land) Light Industrial • Annual rent of £22m 9% Light Industrial 27% • 50% pre-
Slide 29: Adding to the Land Bank in Supply-Constrained Markets
ADDING TO THE LAND BANK IN SUPPLY-CONSTRAINED MARKETS 400 7% Acquired £136m of land in H1 2015: Vailog (100ha; mainly northern Italy); 350 6% France (18ha; Paris); 300 Greater London (16ha; Hayes, Park Royal); 5% Germany (11ha; Cologne, Düsseldorf); Land bank value, £m 250 4% Thames Vall
Slide 30: Future Development Pipeline
FUTURE DEVELOPMENT PIPELINE Strong potential to generate new income over the next three to five years Current land bank Geographic split of future pipeline by ERV1 (30 June 2015) (30 June 2015) Czech Future pipeline (2.0m sq m) 5% • £617m estimated Bel/Neth development costs1 9% Germany • £73m of po
Slide 31: Driving Income Growth
DRIVING INCOME GROWTH Existing assets and development pipeline Annualised gross cash passing rent1, £ millions 72.8 22.4 385.9 21.7 2.1 5.9 290.7 261.0 30 June 2015 Expiry of rent- Reversion to 2014 & H1 Potential Current Future Potential (total) free ERV 2015 (completed pipeline (50% pipeline specu
Slide 32: Taking Advantage of Improving Markets
TAKING ADVANTAGE OF IMPROVING MARKETS Occupational demand and supply constraints expected to remain strong drivers of Portfolio occupancy and rental growth in some markets Development returns Investor demand and shortage of available stock likely to cause further upward pressure on asset val
Slide 33: Q&A
Q&A 33 CWS-Boco, Lodz
Slide 34: Appendix I
Appendix I Portfolio and financial data 34 DHL, Frauenaurach
Slide 35: Adjusted Income Statement
ADJUSTED INCOME STATEMENT JVs proportionally consolidated H1 2015 H1 2014 Group JVs Total Group JVs Total £m £m £m £m £m £m Gross rental income 101.2 37.0 138.2 107.5 36.8 144.3 Property operating expenses (15.8) (5.8) (21.6) (20.0) (5.4) (25.4) Net rental income 85.4 31.2 116.6 87.5 31.4 118.9 JV m
Slide 36: Balance Sheet
BALANCE SHEET JVs proportionally consolidated 30 June 2015 31 December 2014 Group JVs Total Group JVs Total £m £m £m £m £m £m Investment properties 3,905.1 1,173.6 5,078.7 3,477.0 1,230.8 4,707.8 Trading properties 67.3 13.3 80.6 77.8 13.1 90.9 Total properties 3,972.4 1,186.9 5,159.3 3,554.8 1,243.
Slide 37: EPRA Capital Expenditure Analysis
EPRA CAPITAL EXPENDITURE ANALYSIS JVs proportionally consolidated H1 2015 H1 2014 Acquisitions include Heathrow Big Box purchase at 100% and Group JVs Total Group JVs Total acquisition costs £m £m £m £m £m £m Acquisitions 349.0 74.9 423.9 38.8 194.2 233.0 Approximately 60% of completed Developme
Slide 38: 'Look-through' Loan to Value Ratio
‘LOOK-THROUGH’ LOAN TO VALUE RATIO 30 June 2015 Weighted average cost of £m gross debt, %1 Group gross borrowings 1,802.1 4.0 Group cash & equivalents (24.9) Group net borrowings 1,777.2 SELP deferred consideration (109.7) 5.02 Share of JV net borrowings 340.2 3.2 Total properties 5,159.3 Loan to va
Slide 39: Debt Maturity Profile
DEBT MATURITY PROFILE As at 30 June 2015, £ millions 500 450 400 350 300 250 200 150 100 50 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 … 2035 SEGRO Bonds SEGRO Bank Debt JV debt at share SEGRO cash SEGRO Undrawn Note: excludes the £150m of facilities arranged post-period end which mature in
Slide 40: Driving Value Growth Through Intensive Asset Management
DRIVING VALUE GROWTH THROUGH INTENSIVE ASSET MANAGEMENT UK estimated realised and unrealised valuation gains, H1 2015 40% of the H1 2015 UK valuation surplus generated through asset management and development Development (9%) Reflects like-for-like rental growth, improved vacancy rate, longer le
Slide 41: SEGRO Continental Europe Assets Under Management
SEGRO CONTINENTAL EUROPE ASSETS UNDER MANAGEMENT € millions, as at 30 June 2015 1,000 €2,773m AUM at 30 June 2015 900 (£1,967m) 800 Big box logistics assets held within 700 SELP joint venture 600 500 Other European countries include 400 Belgium, Netherlands, Czech 300 Republic and Italy. These
Slide 42: Future Development Pipeline
FUTURE DEVELOPMENT PIPELINE Indicative fully-let gross rental income potential Fully-let annualised gross rental income by year of Progression of future expected development pipeline development completion - indicative1 completion, by annualised gross rent1 (30 June 2015) £30m £30m £25m £25m £20m £2
Slide 43: EPRA Performance Measures
EPRA PERFORMANCE MEASURES 30 June 2015 30 June 2014 31 December 2014 £m £p per share £m £p per share £m £p per share EPRA1 profit after tax 63.9 8.6 65.8 8.9p 127.8 17.2 EPRA NAV 3,100.7 416 2,470.3 333p 2,844.7 384 EPRA NNNAV 2,836.3 380 2,195.4 296p 2,514.6 339 EPRA net initial yield 5.1% 5.9% 5.4
Slide 44: Appendix II
Appendix II Supplementary market data 44 DHL, Frauenaurach
Slide 45: European Industrial Investment Volumes
EUROPEAN INDUSTRIAL INVESTMENT VOLUMES European industrial investment volumes European industrial investment volumes By country, €m By quarter, €m 30,000 30,000 25,000 25,000 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 20
Slide 46: Prime Logistics Yields vs 10 Year Bond Yields
PRIME LOGISTICS YIELDS VS 10 YEAR BOND YIELDS 12.0 10.0 8.0 Warsaw: 7.0% Paris: 6.5% 6.0 Dusseldorf: 5.6% London: 4.5% 4.0 2.0 UK 10yr bond: 1.9% Germany 10yr bond: 0.7% 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2Q15 Source: CBRE, Bloomberg (data correct at 27 July 2015) 46
Slide 47: European Industrial and Logistics Supply of New Space
EUROPEAN INDUSTRIAL AND LOGISTICS SUPPLY OF NEW SPACE Logistics space under construction1 UK logistics availability2 (m sq m) (m sq m) 3.0 5.0 2.5 4.0 2.0 3.0 1.5 1.0 2.0 0.5 1.0 0.0 Germany UK France Poland Belgium Neth. 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 Pre-let Speculative
Slide 48: European Industrial & Logistics Take-up Statistics
EUROPEAN INDUSTRIAL & LOGISTICS Take-up statistics Take-up – UK1 Take-up – France2 (m sq m) (m sq m) 1H15 rolling 1H15 rolling 3.0 12m take-up 4.0 12m take-up 2.0 2.0 1.0 0.0 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 New Second hand
Slide 49: European Industrial & Logistics Availability Statistics
EUROPEAN INDUSTRIAL & LOGISTICS Availability statistics Availability – UK1 Availability – France2 (m sq m) (m sq m) 6.0 6.0 4.0 4.0 2.0 2.0 0.0 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 New / Early Marketed Second hand Grade A O
Slide 50: Heathrow Airport Cargo & Passenger Volumes
HEATHROW AIRPORT CARGO & PASSENGER VOLUMES Heathrow Airport cargo volumes Heathrow Airport passenger volumes (million metric tonnes) (millions) 1.6 80 1.5 75 1.4 1.3 70 1.2 65 1.1 1.0 60 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14 May-15 May-06 May-07 May-08 May-09 May-10 May-11 M
Slide 51: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation may contain certain forward-looking statements with respect to SEGRO’s expectations and plans, strategy, management’s objectives, future performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty