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Investing.com -- Segro (LON:SGRO) on Friday reported strong financial results for the year ending December 31, 2024, driven by strong leasing activity, rental growth, and improved market conditions.
The real estate investment trust saw its net rental income rise by 7% to £628 million, up from £587 million in 2023, reflecting a combination of like-for-like rental increases and development completions.
The company recorded a 5.5% increase in adjusted earnings per share, reaching 34.5 pence compared to 32.7 pence the previous year.
This was supported by a 14.9% jump in adjusted pre-tax profit, which stood at £470 million, up from £409 million in 2023.
Segro’s rental income growth was boosted by £91 million in new headline rent commitments, including a 43% uplift from UK rent reviews and renewals.
A key development in 2024 was the stabilisation of property valuations after a decline in the prior year.
The company's portfolio value rose by 1.1%, reversing the 4.0% drop recorded in 2023. This was accompanied by a 3.2% increase in estimated rental value, indicating continued strength in the underlying asset base.
The UK segment outperformed, with a 2.1% rise in valuations, while Central Europe saw a slight decline of 0.8%.
Segro maintained a disciplined approach to portfolio management, completing £896 million in asset disposals and making £431 million in acquisitions.
It also invested £471 million in development projects, which delivered £37 million in new potential rent at an average yield on cost of 6.9%.
The UK-based company expects to unlock an additional £51 million in rent from ongoing development projects, with a forecast yield on cost of 7.9%.
The company continued to strengthen its financial position, reducing its loan-to-value ratio to 28%, down from 34% a year earlier.
The cost of debt also declined, with the average interest rate dropping to 2.5% from 3.1%. This financial flexibility, alongside over £1.5 billion in new equity and debt financing, positions Segro for further growth in the coming years.
Segro also announced an increase in its full-year dividend, raising it by 5.4% to 29.3 pence per share, while the final dividend grew by 5.8% to 20.2 pence.
The company remains confident in its outlook, citing strong occupier demand and a significant pipeline of development opportunities, particularly in the data centre sector.
“We expect leasing and pre-letting activity to increase. This would support attractive, compounding earnings and dividend growth in the medium-term, with significant additional value upside from our data centre pipeline,” said Segro's chief executive David Sleath in a statement.
With rising demand for logistics and data centre space, Segro sees a substantial opportunity to capitalise on its 2.3GW European data centre pipeline.
The company plans to pursue the most attractive risk-adjusted returns in this segment, including potential partnerships for fully fitted developments.