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Investing.com -- Barclays downgraded Segro (LON:SGRO) to “underweight” from “equal weight” and cut its price target to 550p from 700p, citing weaker cash flow yields, slowing growth, and limited acquisition activity compared with peers, in a note dated Monday.
Segro shares closed at 639.40p on Aug. 15, making the new target a 21% downgrade, equivalent to a 14% downside from the current price.
The brokerage said Segro’s half-year results in 2025 confirmed risks of lower annual capital spending caused by slower warehouse take-up and tenant decision-making delays.
The British property investment and development company had guided for a turnaround after the 2024 results and reiterated expectations of a recovery in the first-half 2025 call, but Barclays noted the improvement has not materialized.
Segro’s forecast cash flow yield is 5.6% in fiscal 2025, rising to 6.3% by 2029. That trails the simple average of its overweight-rated peers, which Barclays projects at 6.1% in 2025 and 7.7% in 2029.
Recurring earnings per share are forecast at 36.1p in 2025 and 37.1p in 2026. Dividend yield is expected at 4.8% in 2025, rising gradually to 5.4% by 2029.
Net asset value per share is set to grow modestly, from 906.6p in 2024 to 964.2p by 2027, equivalent to an average 2.1% growth rate.
Total accounting return is forecast at 6.47% over the 2025-2029 period, lagging behind CTP, WDP, and Tritax Big Box.
Segro’s net loan-to-value ratio is expected to rise from 28.4% in 2024 to 33.5% by 2027, while the implied capitalization rate remains flat at about 6.8% over the same period.
Barclays said the downgrade reflects the company’s slower earnings and return growth relative to its peers.
It also noted that Segro had raised £900 million in equity in February 2024 with the expectation of pursuing aggressive acquisitions, but activity has been limited since.
By contrast, Warehouses de Pauw has been more active in shifting from development to acquisitions.
The brokerage said peers offer more compelling alternatives. CTP and WDP provide exposure to Central and Eastern Europe, where development yields are higher.
Tritax Big Box and WDP present stronger acquisition-led strategies. Barclays said that at its new price target, Segro screens as expensive relative to its low growth profile.