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The book value remained stable in Q3 23 following the significant adjustment in H1 23. End-market rents continued to perform extremely well in the UK, with another acceleration in Q3 23.
Companies: SEGRO plc
AlphaValue
After the 17% GAV adjustment in H2 22, the decline was limited to 2% in H1 23. The vacancy rate again rose slightly on a sequential basis. The growth in market rents appears to be slowing.
While the transaction market looks poor, thus questioning the relevance of prices, Segro underlined stabilising values in the UK. The underlying business is showing no real signs of stalling.
Segro registered £2bn of negative revaluations thus offsetting half of the £3.8bn positive revaluation recorded in FY 21. We expect further downward adjustments in FY 23-24.
If one looks through the current interest rate cycle and trusts that inflation will be brought under control at some point within an investable timescale, then the hope is that as the cost of capital reduces real estate values will rise again. Our worst-case scenario of a 200bps move in yields and no rental growth would see valuations fall by a third. Many of the discounts that industrial and logistics property companies are trading on are currently wider than this. Couple this with the strong o
Companies: ASLI SHED WHR EBOX BBOX SGRO LMP
QuotedData Professional
Management quote: “We note that the CBRE UK Monthly Property Index has shown a 10% decline in UK industrial values during Q3”.
Yield compression stalled in H1 22 but rents were robust enough to generate leverage on both GAV and NAV. Segro is now trading at a discount to NAV.
Segro was the first to talk about a significant increase in construction costs although, at pixel time, this has yet to weigh on the operational performance.
The material key figure of the company’s FY 21 set of figures was the 42% bump in NAV attributable to positive revaluations alone. The latter was equivalent to £4bn. The top line was up 5% lfl (+£17m).
The key word of SEGRO’s press release was: “strong”. No material issue was detected in this quarter. End-market figures are still very positive.
GAV was up 8.5% lfl in H1 21 sequentially. It suggests an unprecedented level in FY 21. Deriving from the current 32% premium to NAV, Segro was granted a lower than 2.8% yield by the stockmarket. In relative terms, warehouses are now more expensive than the best locations in the heart of best metropolitan areas.
Vacancy increased in Q1 21 (+50bp vs. December 2020, to 4.4%) for “refurbishment purposes”. Segro took back some ground so that it could raise its standard. Renewals signed were 12% above previous rents: this shows an upside vs. the current rents base on top of the installed base being developed.
Yield compression continued as far as the logistics assets are concerned. The GAV was up 10% lfl in FY 20, resulting in a NAV up 16% (sixteen) from 700p to 814p. The low vacancy observed (3.9% in December 2020 vs. 4.0% in December 2019) doesn’t reflect the increasing portion of retailers facing questions about their own businesses, in the UK especially.
Vacancy, rents and reversion were safe in H1 20. Segro is still very positive as far as the short term is concerned. It is pushing its investment strategy but reducing its speculative developments. However, some first negative revaluations were clearly visible in H1 20 (lfl): cracks (but not a krach) in a long favourable inflationist cycle in the Logistics / Warehouses-beloved thematic.
The difference between the current market cap (£10.3bn) and FY 19 NNNAV (£7.4bn) was £2.8bn or a premium of 38%. This is the equivalent of six years of FY 19 accounted positive revaluations of £477m. The latter was c. half of both FY 18 and FY 17 contributions, i.e.e showed a kind of real softening.
Research Tree provides access to ongoing research coverage, media content and regulatory news on SEGRO plc. We currently have 0 research reports from 10 professional analysts.
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Cavendish
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Canaccord Genuity
FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi
Companies: Frenkel Topping Group plc
The manger comments that, in common with the other trusts in the renewable energy sector, the last six months have continued what has been a challenging period for the Bluefield Solar Income Fund (BSIF). It adds that the trust’s ongoing fundamental performance has failed to reverse a steady slide in its share price which began back in May 2023. Despite this, it says the company has continued to deliver solid NAV growth and market-leading shareholder distributions thanks to a range of contractual
Companies: Bluefield Solar Income Fund Ltd.
QuotedData
2023 results are, as indicated in its February pre-close update, “slightly ahead of market expectations”. Current trading continues to improve, with 1Q24 underlying operating profit up yoy, “reflecting the benefits of the Group’s transformation programme completed in 2023 as well as improving market conditions.” With net cash of £35m at end 2023, the Board approved 7.4p final DPS and £7m buy back.
Companies: LSL Property Services plc
Zeus Capital
S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi
Companies: S&U plc
Edison
The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no
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Hardman & Co
Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web
Companies: Foresight Solar Fund Limited GBP
Henderson Far East Income (HFEL) has consistently delivered on its objective to provide a rising dividend. However, like many investors, HFEL’s managers overestimated the potential for a post-pandemic rebound in China. The trust’s resultant overweight to Chinese consumer and other cyclicals led to a fall in portfolio revenues and underperformance in the financial year ended 31 August 2023 (FY23). With a view to improving future returns, HFEL’s board has since indicated an increased willingness t
Companies: Henderson Far East Income LTD GBP
Companies: PensionBee Group PLC
Liberum
International Public Partnerships’ (INPP’s) FY23 results show that it continues to deliver consistent and predictable returns for investors, while delivering environmental and social benefits for the individuals and communities that are served by its assets. Despite this strong performance and a substantial need for private infrastructure funding, the macroeconomic environment has weighed on INPP’s share price, in common with the wider sector. Regardless, attractive returns are available from th
Companies: International Public Partnerships Ltd
Companies: NewRiver REIT plc
In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.
Companies: Regional REIT Ltd.
Business as usual for WTAN’s executive team, while the board reviews investment management arrangements…
Companies: Witan Investment Trust PLC
Kepler | Trust Intelligence
Companies: PayPoint plc
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