Slide 1: 2021 Half Year Results
2021 HALF YEAR RESULTS 29 JULY 2021
Slide 2: We create the space that enables extraordinary things to happen
WE CREATE THE SPACE THAT ENABLES EXTRAORDINARY THINGS TO HAPPEN Strong financial Capitalising on Important Confident results favourable progress with outlook market Responsible dynamics SEGRO
Slide 3: We create the space that enables extraordinary things to happen
WE CREATE THE SPACE THAT ENABLES EXTRAORDINARY THINGS TO HAPPEN Strong financial Capitalising on Important Confident results favourable progress with outlook market Responsible dynamics SEGRO
Slide 4: Strong financial results
STRONG FINANCIAL RESULTS £168m 13.8p 7.4p Adjusted profit before tax Adjusted earnings per share Dividend per share +19% +10% +7% £14.4bn 909p 21% Portfolio valuation (at Adjusted NAV per share Loan to value share) +10% +12% 4
Slide 5: 16% growth in net rental income
16% GROWTH IN NET RENTAL INCOME Proportionally consolidated net rental income (excluding joint venture fees), H1 2020-21, £ million £10m £2m £219m Like for like NRI Group +4.7% JVs UK +4.8% £11m £48m CE +4.6% £8m £188m JVs £43m Group Group £145m £171m H1 20 net Like-for-like Completed Acquisitions O
Slide 6: 19% increase in adjusted PBT
19% INCREASE IN ADJUSTED PBT Adjusted income statement H1 2021 H1 2020 Change £m £m Gross rental income 220 187 Property operating expenses (49) (42) Net rental income 171 145 +18% Share of joint ventures’ adjusted profit after tax1 32 29 Joint venture fee income 12 11 Total cost ratio lower at 19.8
Slide 7: £1.3bn valuation surplus drives increase in NAV
£1.3BN VALUATION SURPLUS DRIVES INCREASE IN NAV Portfolio UK Continental Europe +10.2% +9.6% +11.1% £1,600m Whole portfolio valuation uplift £1,400m £1,200m 650p £1,000m £800m £600m £400m £200m £0m Total London Thames Valley UK Big Box Germany France Poland Italy Spain Held throughout 8.5% 8.4% 8.5%
Slide 8: Yield shift, asset management gains and rental growth across the portfolio
YIELD SHIFT, ASSET MANAGEMENT GAINS AND RENTAL GROWTH ACROSS THE PORTFOLIO1 Property yield2: 4.2% (-30bp) ERV growth: 2.8% London 3.9% -10bp +4.2% London ERV Thames 4.4% -30bp +3.0% UK: Heathrow +2.3% Valley +3.6% Park Royal +5.0% National +2.1% 4.3% -30bp Other London +7.5% Logistics Germany 3.8% -
Slide 9: Total property return – consistently outperforming the benchmark
TOTAL PROPERTY RETURN – CONSISTENTLY OUTPERFORMING THE BENCHMARK MSCI bespoke SEGRO industrial benchmark 25 18.0 +167ps 16.0 +350bps +185bps +182bps 15.4 20 14.0 14.3 14.7 14.2 All Assets Total Property Return (%) 13.6 Total Property Return (%) 650p 12.0 12.2 12.2 15 10.0 10.8 8.0 10 6.0 4.0 5 2.0 0
Slide 10: Balance sheet positioned to support further growth
BALANCE SHEET POSITIONED TO SUPPORT FURTHER GROWTH New €500m SELP Green Bond LTV ratio and average cost of debt 0.875% coupon, 8 year maturity (incl share of joint ventures), 2016-21 Net debt £3.1bn 60% 4.0% (FY 2020: £3.1bn) 3.4% Debt maturity 9.7 years 3.0% (9.9 years at end-2020) Average cost of
Slide 11: Strong financial results
STRONG FINANCIAL RESULTS Strong earnings growth driven by the capture of reversion, lettings and development 10% increase in the value of the portfolio Balance sheet positioned to support future growth 2021 interim dividend increased by 7% 11 SEGRO Park Enfield, London
Slide 12: We create the space that enables extraordinary things to happen
WE CREATE THE SPACE THAT ENABLES EXTRAORDINARY THINGS TO HAPPEN Strong financial Capitalising on Important Confident results favourable progress with outlook market Responsible dynamics SEGRO
Slide 13: Favourable market dynamics
FAVOURABLE MARKET DYNAMICS Continued strong take 33 million sqm of space up across Europe needed over next 5 years across Europe to support growth of e-commerce1 Less than a year of Record levels of investment supply in major European into industrial assets logistics markets2 1 Source: CBRE. 13 2 So
Slide 14: High demand from an increasingly diverse range of occupiers
HIGH DEMAND FROM AN INCREASINGLY DIVERSE RANGE OF OCCUPIERS Contracted rent1 Net new rent on existing space New rent contracted 50 45 40 Annualised rental income, £m 35 30 25 20 15 10 5 0 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 1 Net new rent on existing space reflects headl
Slide 15: Actively managing the existing portfolio
ACTIVELY MANAGING THE EXISTING PORTFOLIO High levels of customer retention and Capturing reversion from continued low vacancy1 renewals and reviews2 9 100 25 8 90 Rent change on review and renewal, % 80 20 7 Customer retention rate, % 70 +19.1% Vacancy rate, % 6 +17.8% 60 15 5 50 4 40 10 +12.1% 3 30
Slide 16: Investment activity to capitalise on favourable market conditions
INVESTMENT ACTIVITY TO CAPITALISE ON FAVOURABLE MARKET CONDITIONS LAND ACQUISITIONS DEVELOPMENT DISPOSALS • Securing future development opportunities in • £364m of development capex • SEGRO sales to SELP London, Paris, Lyon, Venice, Bologna, Madrid • Including £42m of infrastructure • Freehold sale
Slide 17: £82m of potential rent from H1 completions and current development pipeline
£82M OF POTENTIAL RENT FROM H1 COMPLETIONS AND CURRENT DEVELOPMENT PIPELINE 60 Current Pipeline Completed in H1 21 Expected H2 21 Completions 50 Space (sq m) 1.1 million 104,000 Potential new headline rent, £m Number of projects 50 13 40 Potential headline rent 74 8 (£m) 30 Rent secured (%) 72 75 20
Slide 18: Recent development projects
RECENT DEVELOPMENT PROJECTS SEGRO Logistics Park – EMG SEGRO Park Tottenham VAILOG Novara DC1 SEGRO CityPark Cologne SEGRO Park Poznan SEGRO Park Mollet 18
Slide 19: We create the space that enables extraordinary things to happen
WE CREATE THE SPACE THAT ENABLES EXTRAORDINARY THINGS TO HAPPEN Strong financial Capitalising on Important Confident results favourable progress with outlook market Responsible dynamics SEGRO
Slide 20: Making important progress on our Responsible SEGRO priorities
MAKING IMPORTANT PROGRESS ON OUR RESPONSIBLE SEGRO PRIORITIES Championing LOW-CARBON GROWTH Investing in our local COMMUNITIES and ENVIRONMENTS Nurturing TALENT 20
Slide 21: Making important progress on our Responsible SEGRO priorities
MAKING IMPORTANT PROGRESS ON OUR RESPONSIBLE SEGRO PRIORITIES CHAMPIONING LOW- INVESTING IN OUR LOCAL NURTURING TALENT CARBON GROWTH COMMUNITIES AND ENVIRONMENTS • Continuing with carbon reduction • Preparing to launch our first eight • Undertook a National Equality initiatives across existing and n
Slide 22: We create the space that enables extraordinary things to happen
WE CREATE THE SPACE THAT ENABLES EXTRAORDINARY THINGS TO HAPPEN Strong financial Capitalising on Important Confident results favourable progress with outlook market Responsible dynamics SEGRO
Slide 23: Supportive long-term structural drivers
SUPPORTIVE LONG-TERM STRUCTURAL DRIVERS DIGITALISATION OF OUR URBANISATION ECONOMIES SUPPLY CHAIN EFFICIENCY & SUSTAINABILITY RESILIENCE 23
Slide 24: Modern assets in prime locations, established pan-European operating platform
MODERN ASSETS IN PRIME LOCATIONS AN ESTABLISHED PAN-EUROPEAN OPERATING PLATFORM Portfolio split by geography and asset type (at 30 June 2021) Other, £1.2bn Poland £1.1bn London Italy £5.3bn £1.6bn AUM £17.1bn France £2.1bn Thames Valley Germany £2.2bn £2.2bn National Logistics £1.4bn Other (2%) Urba
Slide 25: Creating value through re-development
CREATING VALUE THROUGH RE-DEVELOPMENT CASE STUDY Redevelopment: Ajax Avenue, Slough Trading Estate 72,500 sq ft of 1960s multi-let terraced warehouses Re-located customers to other parts of the portfolio BEFORE Site will be converted into three multi-level data centres, equating to over 400,000 sq f
Slide 26: £280m+ of potential rental income from future development
£280M+ OF POTENTIAL RENTAL INCOME FROM FUTURE DEVELOPMENT SEGRO land bank (30 June 2021) gross rent (£m) Estimated cost Development Development to complete Proportion Expected Potential delivery pipeline pre-let (sq m) yield3 (£m) Area 1-12 Current 1.1m 3372 74 6.5% 72% months Near-term 12-18 183,08
Slide 27: Potential for significant income growth
POTENTIAL FOR SIGNIFICANT INCOME GROWTH Annualised gross cash passing rent1, £ million (as at 30 June 2021) £201m potential from current activity £188m from land bank and land options 4 66 1224 850 22 74 63 42 461 Plus: further growth potential from rising ERVs and indexation Passing rent at Rent in
Slide 28: Confident outlook
CONFIDENT OUTLOOK Supportive structural trends Restricted Strong balance land sheet availability limits supply response Pan-European Prime operating portfolio platform of existing assets Exceptional landbank for development 28
Slide 29: Q&A
Q&A 2021 Half Year Results SEGR°
Slide 30: Appendix: Portfolio and Financial Data
APPENDIX 1 Portfolio and Financial Data
Slide 31: Positioning SEGRO to deliver on its purpose
POSITIONING SEGRO TO DELIVER ON ITS PURPOSE Investing in our local Championing Low-carbon growth Nurturing talent communities and environments Segro recognises that the world faces a climate SEGRO is an integral part of the communities in SEGRO’s people are vital to and inseparable from emergency an
Slide 32: Adjusted income statement
ADJUSTED INCOME STATEMENT (JVS PROPORTIONALLY CONSOLIDATED) H1 2021 H1 2020 Group JVs Total Group JVs Total £m £m £m £m £m £m Gross rental income 220 66 286 187 59 246 Property operating expenses (49) (18) (67) (42) (16) (58) Net rental income 171 48 219 145 43 188 JV management fee income1 12 (5) 7
Slide 33: Pro forma H1 2021 accounting net rental income
PRO FORMA H1 2021 ACCOUNTING NET RENTAL INCOME Group JVs Total £m £m £m - Pro forma H1 2021 net rental income assuming H1 2021 net rental income 171 48 219 disposals, acquisitions and let developments completed as at 1 January 2021 Half year impact of: - One-off items (e.g. rates refunds) removed Di
Slide 34: Total cost ratio
TOTAL COST RATIO Total cost ratio, Half year 2020-21 (proportionally consolidated) Half year to 30 Half year to 30 Incl. joint ventures at share June 2021 June 2020 £m £m Gross rental income (less reimbursed costs) 247 214 Property operating expenses 49 42 Administration expenses 27 25 JV operating
Slide 35: Balance sheet
BALANCE SHEET (JVS PROPORTIONALLY CONSOLIDATED) 30 June 2021 30 June 2020 Group JVs Total Group JVs Total £m £m £m £m £m £m Investment properties 11,850 2,624 14,474 9,208 2,086 11,294 Trading properties 47 - 47 29 - 29 Total properties 11,897 2,624 14,521 9,237 2,086 11,323 Investment in joint vent
Slide 36: 12% increase in adjusted NAV
12% INCREASE IN ADJUSTED NAV1 Components of Adjusted NAV change, 31 December 2020 to 30 June 2021 111p (3)p (5)p (7)p 909p 14p 814p (15)p Standing assets: 80p Land & development: 31p 31 December 2020 H1 2021 Dividends Realised and SIIC entry tax charge Tax charge in respect Exchange rate and 30 June
Slide 37: EPRA performance measures
EPRA PERFORMANCE MEASURES Half year to 30 June 2021 Half year to 30 June 2020 £m £p per share £m £p per share EPRA Earnings 165 13.8 139 12.5 EPRA NTA (Adjusted NAV) 10,929 909 8,569 718 EPRA NRV 11,868 987 9,282 778 EPRA NDA 10,432 868 8,290 695 EPRA net initial yield 3.5% 3.7% EPRA topped-up net i
Slide 38: EPRA vacancy rate
EPRA VACANCY RATE Vacancy rate reconciliation, 31 December 2020 to 30 June 2021 4.3% 0.1% 0.1% 0.1% 3.9% 0.2% (0.1)% Speculative development1 Speculative 1.3% development1 1.4% Existing Existing standing assets standing assets 3.0% 2.5% 31 December 2020 Long-term lettings Short-term lettings New dev
Slide 39: EPRA capital expenditure analysis
EPRA CAPITAL EXPENDITURE ANALYSIS Six months to 30 June 2021 Six months to 30 June 2020 - Just over 60% of completed properties capex was for major Group JVs Total Group JVs Total £m £m £m £m £m £m refurbishment, infrastructure and fit- out costs prior to re-letting which is Acquisitions 90 2 92 420
Slide 40: Further improvements to the debt structure
FURTHER IMPROVEMENTS TO THE DEBT STRUCTURE Debt maturity by type and year, £ millions (as at 30 June 2021) 1,400 1,200 1,000 800 600 400 200 0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 SEGRO bank debt JV undrawn at share SEGRO undrawn JV debt
Slide 41: Euro currency exposure and hedging
EURO CURRENCY EXPOSURE AND HEDGING Balance sheet, £m - €1.17:£1 as at 30 June 2021 (30 June 2021) - € assets 64% hedged by € liabilities 5,000 - €1,994m (£1,704m) of residual exposure – 16% of Group NAV 4,000 Assets 64% - Illustrative NAV sensitivity vs €1.17: hedged 3,000 - +5% (€1.23) = -£81m (-c6
Slide 42: Look-through loan-to-value ratio and cost of debt
LOOK-THROUGH LOAN-TO-VALUE RATIO AND COST OF DEBT 30 June Weighted average cost of 2021 debt, % £m Gross debt, Net debt, including excluding commitment fees commitment fees and non-cash and non-cash interest interest Group gross borrowings 2,353 1.6 Group cash & equivalents (78) Group net borrowings
Slide 43: Urban and big box warehouses – complementary asset types
URBAN AND BIG BOX WAREHOUSES – COMPLEMENTARY ASSET TYPES Urban warehouses (67%) Big boxes (31%) Portfolio by type: - Smaller units, generally <10,000 sq m - Larger units, generally over 10,000 sq m (valuation, SEGRO share) Data as at 30 June 2021 - Diverse range of uses (including ‘last mile’ - Main
Slide 44: A very diversified customer base
A VERY DIVERSIFIED CUSTOMER BASE Customer sectors (headline rent, SEGRO share) 1,408 customers Services & Other utilities 7% 7% Transport and logistics Top 20 customers = Technology, Media and 22% 30% of total group Telecoms 9% headline rent Wholesale and Retail Retail Distribution 18% 10% Post and
Slide 45: Enhanced, de-risked development programme
ENHANCED, DE-RISKED DEVELOPMENT PROGRAMME Development-led growth1 The majority of which is pre-let 600 100% 500 80% Development capex, £m 400 60% 300 40% 200 100 20% 0 0% 1H21 2012 2013 2014 2015 2016 2017 2018 2019 2020 2013 2014 2015 2016 2017 2018 2019 2020 1H21 1 Capex on developments and infras
Slide 46: Land bank provides optionality and opportunity for growth
LAND BANK PROVIDES OPTIONALITY AND OPPORTUNITY FOR GROWTH 800 7.0% 700 Net land utilisation, 2015-H1 2021 Land bank value, £m 6.0% (Based on opening book value or acquisition value) 600 5.0% 400 500 300 4.0% Land value, £m 200 400 134 100 95 3.0% 69 300 0 (28) (74) 54 -100 (97) 2.0% 200 -200 100 1.0
Slide 47: SEGRO European Logistics Partnership (SELP) headline figures
SEGRO EUROPEAN LOGISTICS PARTNERSHIP (SELP) HEADLINE FIGURES Assets under Management (as at 30 June 2021) Land and assets Equivalent yield €1,727m €6.1bn 4.3% 1.8 Assets under management, €bn 1.6 Capital value change ERV growth €1,320m 1.4 €1,223m 7.9% 1.4% 1.2 €1,098m 1.0 Headline rent ERV 0.8 €262
Slide 48: Appendix II: Market Data
APPENDIX II Market Data SEGRO
Slide 49: E-commerce penetration
E-COMMERCE PENETRATION E-commerce penetration grew significantly in 2020…. … and is set to grow further by 2025 50% 2025 2020 30 France Germany 45% Italy Netherlands Internet sales as a % of total retail sales Spain UK 40% Internet sales as a % of total retail sales 25 35% 20 30% 25% 15 20% 10 15% 1
Slide 50: European industrial investment volumes
EUROPEAN INDUSTRIAL INVESTMENT VOLUMES European industrial investment volumes European industrial investment volumes By geography, €bn By quarter, €bn 50 50 45 45 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 1H21 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1H21 20
Slide 51: Prime logistics yields vs 10 year bond yields
PRIME LOGISTICS YIELDS VS 10 YEAR BOND YIELDS 12.0 10.0 8.0 6.0 Warsaw: 5.3% 4.0 London: 4.0% Paris: 3.5% Dusseldorf: 3.4% 2.0 UK 10yr bond: 0.7% 0.0 Germany 10yr bond: (0.2)% -2.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1H21 Source: CBRE, Bloomberg (data
Slide 52: European take-up and availability
EUROPEAN TAKE-UP AND AVAILABILITY European take-up by year European take-up versus supply Years of supply 25 0.86 1.46 0.41 0.82 0.64 0.79 0.97 20 7 6 Take up, m sq m 15 Take up, m sq m 5 10 4 3 5 2 1 0 0 2016 2017 2018 2019 2020 2021 France UK Spain Poland Italy Neth. Germany Q1 Q2-4 5 year average
Slide 53: European logistics vacancy
EUROPEAN LOGISTICS VACANCY Low European big box vacancy rate of 4.7% 6.0 3.6 (Rates at 30 June 2021) 7.9 6.9 5.0 3.5 6.6 2.1 2.6 2.0 2.2 8.4 1 Source: JLL. 53
Slide 54: Favourable demand-supply conditions: UK supply shortage
FAVOURABLE DEMAND-SUPPLY CONDITIONS: UK SUPPLY SHORTAGE UK Big Box supply-demand dynamics1 Speculative UK Big Box completions2 (m sq m) (m sq m) 10.0 4.5 14% 9.0 4.0 8.0 12% Take-up / availability, m sq m Completions, m sq m 3.5 7.0 10% 3.0 6.0 Vacancy 2.5 8% 5.0 2.0 4.0 6% 1.5 3.0 4% 1.0 2.0 2% 0.5
Slide 55: European industrial and logistics supply dynamics
EUROPEAN INDUSTRIAL AND LOGISTICS SUPPLY DYNAMICS Logistics space under construction1 France logistics supply-demand dynamics2 (m sq m) (m sq m) Take-up / availability, m sq m No. of years’ supply 4.5 5.0 2.5 4.0 3.5 4.0 2.0 3.0 3.0 1.5 2.5 2.0 2.0 1.0 1.5 1.0 1.0 0.5 0.5 0.0 0.0 0.0 1H21 2010 2011
Slide 56: European industrial and logistics — take-up statistics
EUROPEAN INDUSTRIAL AND LOGISTICS — TAKE-UP STATISTICS Take-up of warehouse space >100,000 sq ft – UK1 Take-up of warehouse space >5,000 sq m – France2 (m sq m) (m sq m) 3.5 5.0 3.0 4.0 2.5 2.0 3.0 1.5 2.0 1.0 0.5 1.0 0.0 0.0 1H21 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 57: European industrial and logistics — availability statistics
EUROPEAN INDUSTRIAL AND LOGISTICS — AVAILABILITY STATISTICS Availability of Grade A warehouse space >100,000 sq ft– UK1 Availability of warehouse space >5,000 sq m – France2 (m sq m) (m sq m) 3.0 5.0 4.5 2.5 4.0 3.5 2.0 3.0 1.5 2.5 2.0 1.0 1.5 1.0 0.5 0.5 0.0 0.0 1H21 2010 2011 2012 2013 2014 2015 2
Slide 58: Heathrow Airport cargo and passenger volumes
HEATHROW AIRPORT CARGO AND PASSENGER VOLUMES Heathrow Airport cargo volumes Heathrow Airport passenger volumes (million metric tonnes) (millions) 160,000 90 140,000 80 120,000 70 60 100,000 50 80,000 40 60,000 30 40,000 20 20,000 10 0 0 Nov-19 Nov-20 Sep-19 May-19 Sep-20 May-20 Jul-19 Jan-20 May-21
Slide 59: Forward-looking statements and disclaimer
FORWARD-LOOKING STATEMENTS AND DISCLAIMER This document has been prepared by SEGRO plc (SEGRO) solely for use at the presentation of SEGRO’s results announcement in respect of the year ended 30 June 2021 (the Results Announcement). For the purposes of this disclaimer, ‘Presentation’ shall mean this