Segro Regulatory News (SGRO)

Acquisition of the UK Logistics Fund

SEGRO and Moorfield Real Estate Fund II (MREF II) are pleased to announce that their recently established UK Logistics (Jersey) Limited Partnership joint venture has exchanged contracts to acquire the UK Logistics Fund ("UKLF") for £314.7 million in cash on a debt free, cash free basis from Hermes Real Estate Investment Management Limited, Legal & General and LaSalle Investment Management.

The UKLF portfolio comprises 14 prime logistic warehouse units plus one development site in 12 locations on or near main arterial roads in established distribution areas across the UK. The portfolio has a total lettable floor space of 404,100 sq m (4.35 million sq ft) with 64 per cent of the space by value located in the South of England. Current occupiers include Tesco, Sainsbury's, GKN Aerospace, Royal Mail, Booker and Exel UK. The UKLF portfolio currently has a weighted average lease length to expiry of 13.3 years (11.7 years to first break options) and a vacancy rate of 16.0 per cent by rental value. This vacancy comprises two grade A warehouse units in Corby and Sheffield. In 2011, the portfolio will show a net income of around £18 million per annum and, at acquisition, the contracted rent is approximately £21 million per annum.

UK Logistics (Jersey) Limited Partnership is a 50/50 joint venture established by SEGRO and MREF II for the purpose of acquiring UKLF. Under the terms of the joint venture, both Moorfield and SEGRO will undertake strategic investment and asset management roles and SEGRO will become the property manager of the UKLF portfolio. In order to finance the acquisition (including transaction costs), both partners will make a contribution to the UK Logistics (Jersey) Limited Partnership of around £65 million of equity investment. In addition, the joint venture has agreed, subject to due diligence and completion of documentation, a 5 year bank facility of up to £189 million with Metropolitan Life Insurance Company and DekaBank secured on the UKLF assets. Laxfield Capital acted as arranger to Metropolitan Life Insurance Company.

The purchase price represents a net initial yield of 6.3 per cent on acquisition, rising to 7.7 per cent when the two vacant units become occupied. The initial yield on each partners' equity investment in the joint venture is 9.4 per cent, rising to 12.7 per cent when the vacant units become occupied.

The acquisition is currently expected to complete by the end of January 2012.

Commenting David Sleath, SEGRO's Chief Executive, said:

"This transaction represents a material step forward in the execution of our recently announced strategy to expand our logistics portfolio in partnership with third party investors. The purchase of the high quality UKLF portfolio, with its strong customer base and long lease maturity profile, significantly enhances our UK logistics presence and gives us critical mass in one of our core markets. The portfolio offers both a high quality current income stream and the potential to add further value through active asset management."

Marc Gilbard, Chief Executive of Moorfield, added:

"Moorfield is the fund manager of opportunistic capital on behalf of blue chip investors and this acquisition will enable us to participate in an institutional grade real estate portfolio with a very experienced partner where opportunistic returns are possible. The UK market is materially undersupplied with good quality distribution property, yet this is currently one of the few sectors showing growth and rising demand. The UKLF portfolio offers us the opportunity to engage with high quality tenants, improve income profiles and enhance value by proactive asset management."

For further information please contact:

About SEGRO: SEGRO is Europe's leading developer and owner of industrial space. The Group is a Real Estate Investment Trust (REIT), listed on the London Stock Exchange. SEGRO's portfolio comprises £5.4 billion of predominantly industrial and warehouse assets concentrated in and around major business centres and transportation hubs such as ports, airports and motorway intersections. SEGRO currently has £930 million of logistic assets under management in the UK, Germany, France, Benelux, Poland and the Czech Republic. The Group serves over 1,600 customers spread across many geographies and different industry sectors. It has 5.5 million sq m of built space and a passing rent roll of £340 million (as at 30 June 2011). For further information see www.SEGRO.com

About Moorfield: Moorfield Group (Moorfield) is a UK real estate and related private equity fund manager and investor with some £2.5 billion of assets and geared cash under management through the Moorfield Real Estate Funds (MREFs). Moorfield directly acquires single or multiple assets, or indirectly invests through corporate vehicles, including joint ventures. Moorfield supports entrepreneurial management teams that want to grow their real estate businesses or that want to take specific advantage of market circumstances. Moorfield also provides mezzanine and structured finance solutions where appropriate as well as acquiring debt whether related to single asset, multiple asset or corporate structures. For further information, visit: www.moorfield.com.

The UKLF portfolio: The UKLF portfolio comprises assets in the following locations:

·; Western Approach, Avonmouth

·; Bicester Distribution Park, Bicester

·; Birmingham Mail Centre, Birmingham

·; Bardon, Leicestershire

·; DIRFT, Daventry

·; Hatfield Business Park, Hatfield

·; Rye Park Depot, Hoddesdon

·; Snodland, Maidstone

·; Keypoint Distribution Park, Swindon

·; Tunnel Avenue, West Thurrock

·; Mitchell Road, Corby

·; Shepcote Lane, Sheffield Site 8020 - Western Approach, Avonmouth (Development site)