LONDON (ShareCast) - Segro reported a 3.3% fall in first half pre-tax profit to £66.7m, reflecting a 13% fall in net rental income.

Net rental income dropped as a result of disposals completed in 2013 and the creation of the Segro European Logistics Partnership joint venture (SELP), slightly offset by a reduction in net finance costs and administrative expenses.

The company achieved like-for-life net rental growth of 4.9% in the UK portfolio, driven by strong leasing activity and improved market sentiment.

The portfolio valuation rose 4.4% to £4.5bn while net as value per share increased 6.7% to 333p.

"We are reporting a strong uplift in net asset value, improved occupancy and an accelerated development programme, supported by stronger occupational and investment markets," said Chief Executive David Sleath.

"We have made further progress in re-shaping our portfolio with the balance of our activities moving from net divestment to net investment, as we signalled at the time of our full year results in February."

Alongside its results, Segro said it had bought the remaining 50% interest in its Logistics Property Partnership (LPP) joint venture from Moorfield Real Estate Fund II for £95.6m.

LPP, established in January 2012 by SEGRO and Moorfield as a 50-50 joint venture to acquire the UK Logistics Fund, includes a portfolio of 12 logistics warehouses mainly in the South East and Midlands.

Occupiers include Sainsbury's, Tesco, Booker, Royal Mail and DHL. The portfolio generates an annualised net rent of £19.1m, with a further £4.3m payable after expiry of rent-free periods.

Based on the purchase price, the gross value of the properties amounts to £349.8m and provides a net initial yield of 5.4% and a topped-up net initial yield of 6.6%. The purchase price is in line with the valuation at June 30th.

RD

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