Segro Regulatory News (SGRO)

7 July 2014

SEGRO disposes of Pegasus Park for €83.4 million

SEGRO plc ('SEGRO') announces that it has today exchanged contracts for the sale of Pegasus Park in Brussels to funds managed by Ares Management LP for €83.4 million (£66.2 million1).

The sale proceeds are in line with the 31 December 2013 book value2, and represent a yield to SEGRO of 9.0 per cent3. This takes into account the €0.9 million (£0.7 million1) annualised running costs of SEGRO's office at Pegasus Park which will be closed as a result of this transaction.

Pegasus Park comprises a 81,500 sq m office park, 90 per cent of which was developed between 1999 and 2003, and 7 hectares of development land adjacent to Brussels Airport. The asset generates annualised net rental income of €8.7 million (£6.9 million1) with a current vacancy rate (based upon 31 December 2013 ERV) of approximately 20 per cent and a weighted average lease length to earlier of break or expiry of 3.5 years. The asset is the fifth of the six large, non-strategic assets identified for disposal as part of SEGRO's strategic review in November 2011 to be sold.

Completion of the transaction is expected in the third quarter of 2014. Following the disposal, SEGRO will continue to own and manage assets in Belgium, principally two core logistics assets held in the SEGRO European Logistics Partnership joint venture.

Commenting on the disposal, Phil Redding, SEGRO's Chief Investment Officer, said:

"The disposal of Pegasus Park is a further important milestone in the strategic reshaping of our portfolio, reducing our exposure to regional office parks and providing funds to strengthen our balance sheet and build critical mass in our core products.

"In the year to date, we have invested over £200 million in logistics assets in Germany, France, Poland and the UK at an average yield of 7.3 per cent, increasing our focus on more modern, less management-intensive logistics warehouses to drive sustainable, long-term total property returns."

1 Exchange rate as at 4 July 2014: €1.26 / £1

2 December book value adjusted for receipt of a €3.7 million surrender premium (£3.0 million, based on average exchange rate during the half year of €1.22 / £1)

3 EPRA net initial yield on sale is 10.1 per cent

ENDS

Contact:

Harry Stokes, Head of Investor Relations and Research Tel: +44 (0)20 7451 9124

Stephanie Highett / Nick Taylor, FTI Consulting Tel: +44 (0) 20 3727 1000

About SEGRO: 

SEGRO is a leading owner, asset manager and developer of modern warehousing and light industrial properties, with £4.1 billion of assets (at 31 December 2013, including joint ventures at share) principally concentrated in London's Western Corridor (including the Thames Valley) and in key conurbations in France, Germany and Poland. It also develops and owns warehouses in important distribution markets in the UK, Belgium, the Netherlands and the Czech Republic, and offices in Slough and Milan. The Group serves around 1,250 customers spread across a diverse range of industry sectors. It has 5.3 million square metres of built space under management and a gross passing rent roll of £258 million (SEGRO share).

For further information see www.SEGRO.com/investors.