Segro Regulatory News (SGRO)

23 April 2013

INTERIM MANAGEMENT STATEMENT FOR THE PERIOD 1 JANUARY TO 22 APRIL 2013

Solid operational performance, momentum maintained in developing our land bank and further steps taken to deliver on our strategy

Highlights

·; 50 new lettings completed, generating £5.2 million of new annualised rental income (excluding the re-letting of space at the former Neckermann site)

·; Vacancy increased to 10.4 per cent (31 December 2012: 8.2 per cent). This was largely due to the departure of Neckermann from Frankfurt and the sale of the fully let Thales and MPM sites, as previously indicated

·; Further progress with the development of our well located land bank, with four new schemes approved or signed in the period

·; €43.2 million (£36.9 million) bolt-on acquisition of a modern urban distribution warehouse park in Warsaw, as previously announced - delivering on our strategy to grow in and around selected major conurbations

·; £152 million of non-core asset disposals completed since the start of the year including Thales and MPM, two of the large non-strategic assets, as previously announced

·; Net debt reduced by 6 per cent to £2.0 billion since 31 December 2012

·; Expectations for the year remain unchanged

Leasing

1. All figures cover the period 1 January - 31 March and include joint ventures at share

2. Annualised rental income, after the expiry of any rent free periods

3. Annualised rental income

We have continued to make operational progress during the first quarter, with 50 new lettings signed representing 72,100 sq m of space and generating £5.2 million (Q1 2012: £4.9 million) of new annualised rental income. This includes £0.9 million (Q1 2012: £0.9 million) of new annualised rental income from the take-up of recently completed developments but excludes space re-let at the Neckermann site in Frankfurt (see below). In general, lettings were completed at good rental levels and were ahead of the valuers' December 2012 estimated rental values.

The largest lettings during the first quarter included:

·; 8,900 sq m to Arene (furniture storage and distribution) in Bondoufle, Ile de France

·; 4,000 sq m to Henfield Hire (vehicle rental) in Brentford, West London

·; 3,300 sq m to Hitachi Transport System (logistics provider) in Basingstoke

·; 3,200 sq m to Uti Worldwide (logistics provider) in West Drayton, West London

·; 2,600 sq m to La Poste (parcel courier company) at Heathrow

·; 1,300 sq m to Paragon (data centre provider) on the Slough Trading Estate

In April, after the quarter end, we also let 3,400 sq m of the speculatively refurbished E2 suburban office building at IQ Winnersh, Reading, to BMC, an IT management services group, representing 75 per cent of the lettable floor space.

As expected, takebacks included £12.2 million relating to Neckermann, which fully vacated its Frankfurt premises in January. We have re-let 41,800 sq m of this space to BLG Logistics during the first quarter. Subsequent to the quarter end, we have also agreed the letting of 25,400 sq m of space at Alzenau, Frankfurt, (which had previously been let to a sub-tenant of Neckermann) to a logistics provider in two tranches which will commence in July 2013 and January 2014, respectively. In total, these 67,200 sq m of lettings represent approximately £2.0 million of annualised rental income.

Excluding the loss of income from Neckermann, takebacks of £6.8 million (Q1 2012: £6.2 million) were broadly comparable with the same period in the prior year, with good progress made in securing lease renewals and an encouraging overall level of customer retention.

The Group vacancy rate as at 31 March 2013 increased to 10.4 per cent (31 December 2012: 8.2 per cent). This was largely due to Neckermann's departure from Frankfurt and the sale of the fully let Thales and MPM sites, as previously indicated. In combination, these factors contributed 1.6 per cent to the increase in vacancy. The net take-back of space let on a short-term basis accounted for a further 0.4 per cent of the increase (short-term lettings benefitted the Group vacancy rate by 1.2 per cent as at 31 March 2013, compared with 1.6 per cent as at 31 December 2012 and 2.1 per cent as at 31 March 2012).

Development

After a strong year of development completions in 2012, we are maintaining good momentum in developing our well located land bank. There continues to be a shortage of supply of modern warehousing in most of our markets which, combined with resilient levels of customer demand, provides a good backdrop for further profitable development - both pre-let led and carefully selected speculative schemes. Since the start of the year we have signed four new pre-let schemes, which will produce £1.0 million of annualised rental income when delivered.

In Enfield, North London, we will start construction in July 2013 of a five storey hotel for Premier Inn covering 4,000 sq m, with the opening scheduled for May 2014. This pre-let is an excellent example of our strategy to use former industrial land to develop higher value uses, such as hotels, self-storage and car showroom facilities. In addition, we have approved 7,800 sq m of speculatively developed space adjacent to the hotel, suitable for light industrial or urban distribution usage, which will create a high quality business park.

Following the earlier than anticipated letting of 100 per cent of the first phase of our part pre-let development in Alzenau, Frankfurt, which was completed in August 2012, we have now started the construction of the second phase of the development. This includes a 5,800 sq m pre-let logistics warehouse for textile company, Sauerbrei, in addition to 11,500 sq m of speculatively developed logistics space. The second phase is due to complete in Q3 2013.

In Poland, we signed two further pre-let agreements to build a total of 8,400 sq m of warehouse space for Geodis, a logistics provider, in Strykow, and for a Polish distributor of grocery products in Wroclaw. At the latter site, we have also approved 2,300 sq m of speculatively developed space. These projects are due to complete in Q3 2013.

Since the start of the year we have completed four developments. This includes a 2,300 sq m unit for Karl Storz Endoscopy, together with 1,800 sq m of speculatively developed space, at the Slough Trading Estate. At Tudor Gate, Park Royal, we completed 900 sq m of warehouse and office space for Warmup, in addition to 2,300 sq m of speculatively developed space. In Poland, we completed logistics developments totalling 12,100 sq m for DB Schenker in Gdansk and for DPD in Wroclaw. These four projects will contribute £1.7 million to annualised rental income when fully let.

We are also due to complete 11,900 sq m of speculatively developed logistics space in Krefeld, Dusseldorf, at the end of April and have already let the entire project, ahead of schedule, to parcel courier company, UPS.

At present, we have 13 developments approved, contracted or under construction, representing £9.9 million of future annualised rental income and £54.5 million of future capital expenditure. Our development pipeline is currently 83 per cent let, and a number of further projects are in advanced stages of discussion with prospective customers.

Capital recycling

In line with our strategic objectives, we have continued to take advantage of attractive opportunities to reinvest some of our disposal proceeds in order to build critical mass in and around selected major conurbations.

In April, we completed the acquisition of Zeran Park II in Warsaw for €43.2 million (£36.9 million). This comprises 49,900 sq m of modern warehouses, used for urban distribution, and a small office. This acquisition, together with the purchase of the Ozarow Business Centre (subsequently renamed SEGRO Business Park Warsaw) for €14.1 million (£12.1 million) in September 2012, significantly strengthens our market position in Warsaw and complements our existing portfolio of prime 'big box' logistics assets in Poland.

In the year to date, we have sold £152 million of non-core assets. This includes Thales in the UK and MPM in Munich, two of the large non-strategic assets, and four smaller assets and land holdings in the UK and Continental Europe. We now have £583 million of the originally identified non-core assets remaining, of which £177 million relates to the three remaining large non-strategic assets.

As guided at the full year results on 27 February 2013, we are targeting disposals of between £300-500 million this year, including those completed in the year to date.

Financing

As at 31 March 2013, net borrowings were £1,965.7 million (31 December 2012: £2,090.3 million) and we had approximately £600 million of undrawn facilities and cash. Our weighted average maturity of gross borrowings was 8.4 years at the same date, with no significant debt maturities before 2014.

Outlook

Our expectations for the year remain unchanged from the time of our full year results announcement on 27 February 2013. Despite the continuing macro-economic uncertainty across much of Europe, SEGRO's portfolio benefits from being principally concentrated in and around major conurbations and key transportation hubs and is exposed to sectors of the economy where occupier demand is proving to be relatively resilient. With the availability of modern warehousing remaining constrained, SEGRO is well placed to make further progress against our strategic priorities.

CONFERENCE CALL FOR INVESTORS AND ANALYSTS

There will be a conference call at 08.30 hours (UK time) today on the following number:

Telephone: +44 (0)20 3139 4830

Pin-code: 23197734#

Please note, a playback facility and web-link will also be available shortly after the call as follows:

Telephone: +44 (0)20 3426 2807

Playback pin-code: 638046#

The web-link can be accessed through our website at www.segro.com/investors, shortly after the main conference call.

CONTACT DETAILS FOR INVESTOR / ANALYST AND MEDIA ENQUIRIES:

This IMS, the most recent Annual Report and other information are available on the SEGRO website at http://www.segro.com/investors.

Neither the content of SEGRO's website nor any other website accessible by hyperlinks from SEGRO's website are incorporated in, or form part of, this announcement.

Forward-looking statements: This announcement may contain certain forward-looking statements with respect to SEGRO's expectations and plans, strategy, management objectives, future developments and performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Certain statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Any forward-looking statements made by or on behalf of SEGRO speak only as of the date they are made. SEGRO does not undertake to update forward-looking statements to reflect any changes in SEGRO's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be construed as a profit forecast. Past share performance cannot be relied on as a guide to future performance.

About SEGRO

SEGRO is a leading owner, asset manager and developer of modern warehousing, light industrial and data centre properties, with £4.7 billion of assets (as at 31 December 2012, including our share of joint venture assets) principally concentrated in London's Western Corridor (including the Thames Valley) and in key conurbations in France, Germany and Poland, as well as suburban office buildings in the Thames Valley, Brussels and Milan.

The Group serves over 1,300 customers spread across a diverse range of industry sectors. It has 5.3 million sq m of built space and a passing rent roll of £318 million (as at 31 December 2012). For further information see www.SEGRO.com