Transforming segro s performance. Property analysis 2011

Transcription

1 Transforming segro s performance Property analysis 2011

2 CONTENTS Overview 02 Combined property portfolio and yield reconciliation 03 Summary analysis 04 Analysis of completed portfolio 05 Supplementary data 07 Customers 10 Development pipeline 11 Glossary of Terms 14 ABOUT SEGRO SEGRO is Europe s leading owner-manager and developer of industrial property. We serve over 1,600 customers across a range of industry sectors and geographies. Our portfolio comprises 5.1 billion of assets concentrated in and around major conurbations and transportation hubs such as airports, ports and motorway intersections. SEGRO is a Real Estate Investment Trust (REIT) and is listed on the London Stock Exchange. 1

3 OVERVIEW Asset Type Geographic split Logistics Warehousing 17 Industrial 54 Offices and other business space 21 Land and development 8 Thames Valley and regions 35 Greater London, 34 France 8 Germany 9 Poland and Czech Republic 7 Benelux and other 7 Split by property portfolio value per financial statements. The buildings we provide include: 1. LOGISTICS WAREHOUSING 2. LIGHT INDUSTRIAL AND SMALL WAREHOUSE UNITS 1 3. MANUFACTURING FACILITIES 1 4. SELF STORAGE FACILITIES 1 5. TRADE COUNTERS 2 6. CAR SHOWROOMS 2 7. DATA CENTRES 2 8. RESEARCH AND DEVELOPMENT FACILITIES 2 9. SUBURBAN OFFICES 2 1 COLLECTIVELY REFERRED TO AS INDUSTRIAL IN THIS DOCUMENT. 2 COLLECTIVELY REFERRED TO AS OFFICES AND OTHER BUSINESS SPACE IN THIS DOCUMENT. 2 Property analysis booklet 31 December 2011

4 COMBINED PROPERTY PORTFOLIO AND YIELD RECONCILIATION AS AT 31 DECEMBER 2011 Combined property portfolio Continental Europe Total properties per financial statements (see below for analysis) 3, , ,093.9 Add properties accounted as finance leases Add valuation surplus not recognised on wholly owned trading properties Add valuation surplus not recognised on joint venture trading properties Other items (3.7) (0.1) (3.8) Combined property portfolio per external valuers reports 3, , ,112.8 Less development properties (investment, trading and joint ventures) (165.1) (257.5) (422.6) Owner occupied properties (5.1) (1.4) (6.5) Net valuation of completed properties 3, , ,683.7 Add notional purchasers costs Gross valuation of completed properties including notional purchasers costs A 3, , ,935.6 Total Income Gross passing rent Less irrecoverable property costs (12.9) (5.4) (18.3) Net passing rent B Adjustment for notional rent in respect of rent frees Topped up net rent C Yields Net initial yield 3 B/A Topped up net initial yield 3 C/A Net true equivalent yield Trading properties are recorded in the financial statements at the lower of cost and net realisable value, therefore valuations above cost have not been recognised. 2 Gross passing rent excludes short term lettings and licences. 3 In accordance with the Best Practices Recommendations of EPRA. Analysis in financial statements: Investment properties completed 2, , ,982.6 development Trading properties completed development Owner occupied properties Sub-total: wholly owned properties 3, , ,584.5 Joint ventures: Investment properties completed development Trading properties completed development Sub-total: joint venture properties Total 3, , ,093.9 Note: all references to joint ventures within this document are to the Group s share thereof. 3

5 SUMMARY ANALYSIS AS AT 31 DECEMBER 2011 Lettable area sq m Completed Owner occupied Land & development Combined property portfolio Net initial yield 2 Net true equivalent yield 2 Valuation movement 1 2 Vacancy by ERV 2 By geography Thames Valley and Regions Slough Trading Estate 619, (2.0) 5.4 Rest of Thames Valley 216, (3.0) 13.9 Midlands & North 487, (17.6) 18.5 South & West 271, (6.9) 4.9 1,595,426 1, , (5.1) 9.3 Greater London Heathrow wholly owned 176, (9.6) 26.0 Heathrow joint ventures 3 235, Park Royal 408, Rest of Greater London 395, (2.5) 9.1 1,215,560 1, , (1.1) ,810,986 3, , (3.2) 10.2 Continental Europe By geography France 667, Germany 1,013, (10.9) 4.1 Poland and Czech Republic 617, Benelux and Other 385, (15.4) ,683,958 1, , (6.6) 6.4 Group total 5,494,944 4, , (4.2) The valuation movement percentage is based on the difference between the opening and closing valuations for completed properties, allowing for capital expenditure, acquisitions and disposals. 2 In relation to the completed properties only. 3 Comprises APP and Big Box joint ventures and includes 14 by value which is outside Heathrow. 4 Property analysis booklet 31 December 2011

6 ANALYSIS OF COMPLETED PORTFOLIO AS AT 31 DECEMBER 2011 Valuation Yields by asset type 31 December 2011 Net initial yield Net true equivalent yield By asset type Logistics warehousing Industrial Offices and other business space Continental Europe By asset type Logistics warehousing Industrial Offices and other business space Group By asset type Logistics warehousing Industrial Offices and other business space By ownership Wholly owned Joint ventures Group total

7 ANALYSIS OF COMPLETED PORTFOLIO AS AT 31 DECEMBER 2011 Rental data Lettable area sq m Vacancy by ERV Gross passing rent Topped up rent Topped up rent 1 per sq m ERV 2 ERV per sq m 2 By asset type Logistics warehousing 224, Industrial 2,156, Offices and other business space 429, ,810, By geography Thames Valley and Regions 1,595, Greater London 1,215, ,810, Continental Europe By asset type Logistics warehousing 1,421, Industrial 1,147, Offices and other business space 114, ,683, By geography France 667, Germany 1,013, Poland and Czech Republic 617, Benelux and Other 385, ,683, Group By asset type Logistics warehousing 1,645, Industrial 3,304, Offices and other business space 544, Completed portfolio 5,494, By ownership Wholly owned 5,205, Joint ventures 289, Completed portfolio 5,494, In respect of occupied space only. 2 On a fully occupied basis. Note that the vacancy rate excluding short term lettings for the Group at 31 December 2011 is 11.0 (December 2010: 13.5). 6 Property analysis booklet 31 December 2011

8 SUPPLEMENTARY DATA AS AT 31 DECEMBER 2011 Valuation data completed properties Investment properties Trading properties Valuation Joint ventures Total Value per sq m Valuation movement 1 By asset type Logistics warehousing (0.3) Industrial 1, , ,028.7 (3.8) Offices and other business space ,137.0 (2.5) 2, , ,195.0 (3.2) By geography Thames Valley and Regions 1, , ,081.5 (5.1) Greater London 1, , ,343.8 (1.1) 2, , ,195.0 (3.2) Continental Europe By asset type Logistics warehousing Industrial (11.1) Offices and other business space ,407.6 (15.8) 1, , (6.6) By geography France Germany (10.9) Poland and Czech Republic Benelux and Other (15.4) 1, , (6.6) Group total 3, , (4.2) 1 The valuation movement percentage is based on the difference between the opening and closing valuations, allowing for capital expenditure and disposals. 2 At a Group level Offices are valued at million, with a net initial yield of 6.3 and true equivalent yield of 7.7. Data Centres are valued at million, with a net initial yield of 6.2 and true equivalent yield of

9 SUPPLEMENTARY DATA AS AT 31 DECEMBER 2011 Take-up and pre-lets analysis Area (000 s sq m) Rent pa () 2 Take-up 1 Space returned Take-up 1 Space returned Continental Europe Group total Pre-lets completed (9.1) (5.2) Pre-lets signed for delivery in later periods Rental income contracted in the period Take-up excludes lease renewals, break options not exercised and income from short term license agreements. 2 Annualised rental income, after the expiry of any rent free periods. Gross and net rental income in the period Gross rental income () 2011 Net rental income () 2011 Thames Valley and Regions Greater London Continental Europe France Germany Poland and Czech Republic Benelux and Other Group total Group Wholly owned Investment properties Trading properties Joint venture Investment properties Trading properties Group total Property analysis booklet 31 December 2011

10 SUPPLEMENTARY DATA AS AT 31 DECEMBER 2011 Weighted average lease length 1 Lease length Continental Europe Group total Weighted by topped up net rent. Break years Expiry years Reconciliation between passing rent and ERV Continental Europe Total gross passing rent as at 31 December ERV of space occupied on a short term basis Rent frees on let properties at 31 December ERV of vacant properties Reversion to ERV of occupied properties (8.4) (8.7) (17.1) ERV of entire portfolio Group Lease expiries & break options Gross passing rent subject to break options Thames Valley and Regions Greater London Continental Europe France Germany Poland and Czech Republic Benelux and Other Group total break options Gross passing rent subject to lease expiry Thames Valley and Regions Greater London Continental Europe France Germany Poland and Czech Republic Benelux and Other Group total lease expiries assuming no breaks are exercised Deduction assuming all breaks are exercised - (3.4) (5.5) (8.4) (13.3) Group total expiries and potential breaks

11 CUSTOMERS AS AT 31 DECEMBER 2011 By Customer type (Topped up net rent by customer industry) Agriculture and food 5 Automotive 5 Building and construction 5 Chemicals and commodities 4 Engineering and electrical 11 Finance and media 6 Communications and technology 11 Leisure and entertainment 2 Retail 15 Timber, paper & printing 2 Transport and distribution 23 Utilities and services 10 Unclassified 1 Top 30 customers* Customer (by topped up rent) Neckermann.de GmbH Telefonica O2 Thales Properties Limited Alcatel-Lucent British Airways Plc Krauss-Maffei Mars Chocolate Limited UCB SA Royal Mail Group Limited Jacobs Engineering Limited Ducros Express Fluor Limited Equinix Tesco Group Barclays Bank Plc Sainsbury's Supermarkets DAHER International Federal Express Group Cisco Systems Casino Harris Systems Limited Lonza Biologics Plc DHL Solutions British Sky Broadcasting Limited Worldwide Flight Services Intel Corporation Smiths News Group Deutsche Poste (DHL) Research In Motion Limited HJ Heinz Company Limited Customer type Retail Communications and technology Engineering and electrical Communications and technology Transport and distribution Engineering and electrical Agriculture and food Chemicals and commodities Transport and distribution Engineering and electrical Transport and distribution Engineering and electrical Communications and technology Retail Finance and media Retail Transport and distribution Transport and distribution Communications and technology Retail Engineering and electrical Chemicals and commodities Transport and distribution Finance and media Transport and distribution Communications and technology Finance and media Transport and distribution Communications and technology Agriculture and food * The top 30 customers represent annual topped up rent of 99.4 million in aggregate, 26.9 of the Group's total topped up net rent at 31 December Property analysis booklet 31 December 2011

12 DEVELOPMENT PIPELINE AS AT 31 DECEMBER 2011 Hectarage ha Space to be built sq m Current book value 1 Estimated cost to completion 2 Total estimated book value at completion ERV when complete 3 Indicative yield 4 Current projects , Continental Europe , , Percentage pre-let 78 Potential projects , Continental Europe , ,084, Development Pipeline , Continental Europe ,063, ,288, Residual land bank Continental Europe Total development pipeline & residual land bank Continental Europe Group total ,139.1 Analysed as Wholly owned Joint ventures 32.2 Group total Includes land plus all costs incurred to date which are revalued during the development period. 2 Estimated costs to completion include estimated finance charges which are capitalised to the end of the construction period. 3 ERV based upon market rents as at 31 December Indicative yield is the expected gross yield based on estimated rental value when fully let, divided by the current book value, plus estimated remaining costs to complete. 5 Comprises predominantly of non core land for disposal. Note that, as developments are revalued during the construction phase, yields will tend towards the yield for a completed investment property as each property nears completion. 11

13 DEVELOPMENT PIPELINE AS AT 31 DECEMBER 2011 Projects completed in 2011 Customer Asset class Space completed sq m Let space sq m Total ERV ERV of let space Completed/ Comments West London, Southall - Western Point GeoPost Industrial 3,400 3,400 Sold May 11 Slough Trading Estate, Farnham Road Selco Trade counter 3,679 3,679 June 11 Enfield, Building 5 GeoPost Industrial 3,490 3,490 Sept 11 Poyle, Horton Road Heathrow Cargo Handling Industrial 5,712 5,712 Oct 11 Slough Trading Estate, Building 309 KFC Industrial Oct 11 Slough Trading Estate, Building 635 Selig Industrial 7,009 7,009 Dec 11 23,535 23, Percentage let Continental Europe Czech Republic, Ostrava Adler/ Templin Industrial 8,715 8,715 Jan 11 Germany, Hamburg Takko Logistics 20,700 20,700 Jun 11 Poland, Silesia - Gliwice HL Displays Logistics 9,708 9,708 Jan 11 Poland, Lodz - Rokicinska ABB Industrial 3,245 1,822 Mar 11 Poland, Silesia - Gliwice General Motors/ S&T Logistics 25,875 22,600 Dec 11 Daewoo/ Muller/ Kaufland France, Gonesse Aeropark Casino Logistics 27,988 27,988 Aug 11 Poland, Tychy Navo/ Nexteer Logistics 15,865 11,706 Sept 11 Belgium, Rumst Cummins Office 1,250 1,250 JV share, Dec , , Percentage let Group total 136, , Total percentage let Property analysis booklet 31 December 2011

14 DEVELOPMENT PIPELINE AS AT 31 DECEMBER 2011 Current projects as at 31 December 2011 Customer Asset class Space to be built sq m Expected start Expected completion wholly owned Slough Trading Estate Infinity Data Centre 11,428 Nov-11 Nov-12 Slough Trading Estate - Farnham Road Family Bargains Industrial 1,214 Aug-11 Feb-12 Slough Trading Estate - Ajax Avenue Data centre operator Data Centre 5,628 Jun-11 Feb-12 Slough Trading Estate - Galvin Road Speculative development Industrial 3,055 Nov-11 Jun-12 Slough Trading Estate - Galvin Road Speculative development Industrial 2,846 Jul-11 Feb-12 Slough Trading Estate - Yeovil Road Ragus Sugars Industrial 3,274 Mar-11 Jan-12 Slough Trading Estate - Bath Road Lonza Industrial 5,517 Apr-11 May-12 32,962 joint ventures APP - Portal, Heathrow DB Schenker Industrial 9,918 Jan-12 Sep-12 APP - Portal, Heathrow Rolls-Royce Industrial 8,498 Feb-12 Dec-12 At share 9,208 Continental Europe wholly owned France, Paris - La Courneuve Speculative development Industrial 8,243 Jul-11 May-12 Poland, Silesia - Gliwice French sports retailer Logistics 31,290 Dec-11 Sep-12 Poland, Poznan - Komorniki Eurocash Office 1,235 Sep-11 Jan-12 Poland - Lodz OPEK Logistics 7,606 Dec-11 Jun-12 Poland - Tychy Zabka Logistics 18,861 Sep-11 Feb-12 Germany - Krefeld Wir Packens/ Spec Logistics 11,275 Jan-12 Jul-12 Germany - Frankfurt Pro Tex/ Spec Logistics 14,270 Nov-11 Jul-12 Germany - Berlin Speculative development Industrial 12,151 Oct-11 May-12 Germany - Dusseldorf Speculative development Industrial 12,239 Sep-11 Apr-12 Italy - Vimercate Esprinet/ Spec Office 11,168 Jun-11 Nov-12 Italy - Vimercate Alcatel-Lucent Office 33,984 Sep-11 Dec ,322 Group total 204,492 Percentage let

15 DEVELOPMENT PIPELINE AS AT 31 DECEMBER 2011 Basis points A unit that is equal to 1/100th of 1 per cent. Combined property portfolio Consists of the completed portfolio, the development portfolio and owner occupied properties. Completed portfolio The completed investment and trading properties and the Group s share of joint ventures completed investment and trading properties. Development pipeline The Group s current programme of developments authorised or in the course of construction at the balance sheet date, together with potential schemes not yet commenced on land owned or controlled by the Group. Development portfolio Includes land and development property (both investment and trading) and the Group s share of joint venture land and development property. EPRA The European Public Real Estate Association, a real estate industry body who have issued Best Practices Recommendations in order to provide consistency and transparency in real estate reporting across Europe. Estimated cost to completion Costs still to be expended on a development or redevelopment to practical completion (not to complete lettings), including attributable interest. Estimated rental value (ERV) The estimated annual market rental value of lettable space as determined biannually by the Company s valuers. This will normally be different from the rent being paid. Gross rental income Contracted rental income recognised in the period, including surrender premiums and interest receivable on finance leases. Lease incentives, initial costs and any contracted future rental increases are amortised on a straight line basis over the lease term. Hectares (Ha) The area of land measurement used in this analysis. The conversion factor used, where appropriate, is 1 hectare = acres. Investment property Completed land and buildings held for rental income return and / or capital appreciation. Joint venture An entity in which the Group holds an interest and which is jointly controlled by the Group and one or more partners under a contractual arrangement whereby decisions on financial and operating policies essential to the operation, performance and financial position of the venture require each partner s consent. Net equivalent yield The internal rate of return from an investment property, based on the value of the property assuming the current passing rent reverts to ERV and assuming the property becomes fully occupied over time. Net initial yield Annualised current passing rent less non-recoverable property expenses such as empty rates, divided by the property valuation plus notional purchasers costs. This is in accordance with EPRA s Best Practices Recommendations. Net rental income Gross Rental Income less ground rents paid, net service charge expenses and property operating expenses. Net true equivalent yield Net Equivalent Yield assuming rent is received quarterly in advance. Passing rent The annual rental income currently receivable on a property as at the balance sheet date (which may be more or less than the ERV). Excludes rental income where a rent free period is in operation. Excludes service charge income (which is netted off service charge expenses). Pre-let A lease signed with an occupier prior to completion of a development. REIT A qualifying entity which has elected to be treated as a Real Estate Investment Trust for tax purposes. In the, such entities must be listed on a recognised stock exchange, must be predominantly engaged in property investment activities and must meet certain ongoing qualifications. SEGRO plc and its subsidiaries achieved REIT status with effect from 1 January Square metres (sq m) The area of buildings measurements used in this analysis. The conversion factor used, where appropriate, is 1 square metre = square feet. Topped up net initial yield Net Initial Yield adjusted to include notional rent in respect of let properties which are subject to a rent free period at the valuation date. This is in accordance with EPRA s Best Practices Recommendations. Trading property Property being developed for sale or one which is being held for sale after development is complete. 14 Property analysis booklet 31 December 2011

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