2016 Half Year Results — Summary Strong operational performance – Favourable occupational market fundamentals – Step-up in development – Active asset management Stable investment market – Portfolio outperformance from active management, rental growth and development Substantial de-risked development pipeline – Underpins future earnings growth Too e early ly t to assess ‘B ‘Brexit it’ ’ im impacts but in init itia ial s l sig igns are e encouragin ing 1
Financial Summary Adjusted EPS, +6. 6.5% 5% Good earnings momentum 9.8p Like-for-like net rental – Healthy like-for-like net rental income growth +4. 4.1% 1% income growth – Strong contribution from development Vacancy rate – Offsets loss of income from disposals 4. 4.8% 8% (FY 2015: 4.8%) 2.6% increase in NAV 475p 475p EPRA NAV per share – Capital value growth from asset management Capital value actions, developments and UK ERV growth +1. 1.9% 9% growth – Stable yields Strong financial structure Loan to Value ratio 36% 36% (FY 2015: 38%) – Net divestment during the period 2
Portfolio value change driven by asset management and ERV growth 1 £120m UK UK +1. 1.9% 9% Slough Trading Estate +0.5% Cont ntine nent ntal E Eur urope pe +0. 0.4% 4% £100m Park Royal +4.4% SELP +0.6% Heathrow +1.1% +1.5% SEGRO wholly-owned +0.2% £80m UK big box logistics 2 +1.0% +2.5% £60m £40m +1.1% £20m +1.2% (0.4)% +0.9% £0m (£20m) Greater London Thames Valley & Northern Europe Southern Europe Central Europe Total National Logistics 3. 3.6% 6% 2.1% 2. 1% 0. 0.1% 1% (0.2)% 0.1% 0. 1% ERV gr growth 2. 2.0% 0% UK: 2. 2.9% 9% Cont nt. Eur urope pe: 0 0.0% 1 Percentage change relates to completed properties, including JVs at share. 2 Includes big box warehouses part of the Greater London portfolio 3
Solid financial position Net debt (incl JVs) fell £81m 30 J June une 31 D Dec ecem ember er 2016 2016 2015 2015 reflecting net divestment during the £m £m period Group o up onl nly Attractive marginal cost of Group Net borrowings (£m) 1,707 1,807 bank borrowings of c1.3% (UK) and Group cash and undrawn facilities (£m) 440 234 0.7% (CE) 4 Weighted average cost of debt 1 (%) 3.7 3.7 Interest cover 2 (times) 2.4 2.5 Inc ncludi uding J ng JVs at s sha hare Net borrowings (£m) 2,112 2,193 No scheduled Group debt LTV ratio (%) 36 38 maturities until mid-2018 Average maturity of debt (years) 6.3 6.0 Estimated development capex: Fixed rate debt as proportion of net debt (%) 83 75 FY 2016: c£300m FY 2017: c£250-300m Weighted average cost of debt 3 (%) 3.4 3.5 1 Based on gross debt, excluding commitment fees and amortised costs 2 Net rental income / EPRA net finance costs (before capitalisation) on an annualised basis 3 Fixed for an average period of 6.8 years 4 Marginal borrowing costs after commitment fee 4
Delivering on our strategic priorities in H1 2016 Leased Asset M Mana nage gement nt Dev evel elopmen ent Record low vacancy rate of 4.8% 14 projects completed: £10m • • potential rent, 83% leased 4.1% like-for-like net rental • income growth Leasing of speculative projects • ahead of appraisals Innova Park, Enfield 3.9% uplift from rent reviews and • Acquired renewals 10 pre-let agreements signed in • the period Acqui quisitions ns Disposals Dis als £383m of disposals completed in Lower priority given asset pricing • • Coslada, Madrid the period £14.5m spent on urban Bath Road offices £325m • • Sold SELP transfers €97m 1 warehouses in Continental Europe • Other non-strategic £20m • £44m spent on land and £49m • on land options 1 At 100% Gatwick International Distribution Centre 5
…leading to strong operating and capital performance in H1 Capital value growth of £108m Net rental income growth of £4.3m H1 2016 portfolio realised and unrealised valuation movement, £ millions H1 2016 accounting net rental income, £ millions 20 120 1.9% 0.4% 14.2% 8.8 100 15 (15.9) 80 5.5 1.1% 10 60 (6.7)% 40 3.8 5 20 0 0 Held throughout Acquisitions Development Total portfolio Asset disposals net rental income developments Like-for-like Acquisitions Completed Disposals NAV pe per s sha hare up 2. up 2.6% 6% t to 475p 475p Adj djus usted d EPS up 6. up 6.5% 5% to 9. 9.8p 8p 6
Significant development momentum Compl pleted de d developm pment nts Cur urrent nt pi pipe peline ne ( (c6-8 m 8 mont nths hs) Near-term pi Ne pipe peline ne ( (12 12-18 m 18 mont nths hs) Beam Reach 5, East London 12 Liverpool Road, STE – spec, now let as data centre Navigation Park, Enfield £82m of capital invested £210m invested; £125m cost to £228m of potential capex • • • complete £10m of potential rent, 83% £24m of rent • • secured £26.5m rent, 67% pre-let • 63% of rent associated with pre-lets • Fully-let yield of 7.9% 7.9% yield on cost signed or in advanced discussion • • 7
Further development opportunities Current land bank (30 June 2016) Fut utur ure pi pipe peline ne o on n cur urrent nt land b nd bank nk ( (1-5 ye year ars) • SEGRO-owned land bank • £900m potential capex (excl land) • £100m potential rent Land unde nd under opt ption ( n (1-10 y 10 years) • SEGRO control • £850m potential capex (incl land) • £70m potential rent 8
Substantial opportunity to grow rental income £170m from medium/long-term opportunities Annualised gross cash passing rent 1 , £ millions 70 2 100 2 £93.4m from near-term opportunities 24.3 26.5 369.8 9.8 2.1 30.7 319.0 276.4 30 Jun 16 Rent in Reversion to 2015/16 Potential Rent from Near-term Potential Land bank Land held rent-free ERV speculative (completed current pipeline (total) under option developments properties) pipeline still to let (67% let) 1 Including JVs at share; excludes rental value of vacant properties of £17.5m 2 Estimated. Excludes rent from development projects identified for sale on completion 9
Outlook Optimistic about occupational markets Structural demand drivers, supply likely to remain constrained Too early to assess the impact of the EU referendum Encouraging early signs Asset values likely to out-perform wider real estate market Well positioned to take advantage of suitable investment opportunities Fut utur ure earni nings ngs gr growth h unde underpi pinne nned by d by de developm pment nts 10
APPE PPENDIX IX
Near-term pipeline (12-18 months) Rapid leasing of speculative space Pr Pre-let pro rojects (328, 328,000 s 000 sq m) Spe pecul ulat ative ve pr projects (165,000 sq q m) (Letting status of development completions in 2012-16, %) Involve pre-let agreements signed Significant optionality over timing, • • subject to planning permission or depending on strength of occupier 100% in advanced negotiation demand Continental Europe 68%; Focused on urban warehouses in 80% • • UK 32% Continental Europe (84% potential rent) 60% £160m development capital • expenditure £68m future development capital • 40% expenditure Projected annual rents of £15m • Projected annual rents of £9m • 20% 7.4% yield on TDC • 9.1% yield on TDC • 0% 2012 2013 2014 2015 2016 Pre-let Speculative Let at 30 Jun 16 12
Development projects by type and geography Current development projects, asset type by ERV 1 Future pipeline, geography by ERV 1 3 (30 June 2016) (30 June 2016) Germany Logistics 26% France 28% 8% 3 Logistics Poland 49% 11% UK 21% 3 Italy/Spain 20% 3 q m) 3 Cur urrent nt pi pipe peline ne ( (440,500 sq m q m) Futur Fut ure pi pipe peline ne (2.4m s sq m £125m development cost to complete £950m estimated development costs • • Projected annual rents of £26.5m, 67% pre-let • £106m of potential annual rent, 8.5% estimated yield on TDC 2 • 7.9% estimated yield on total development cost 2 • 40% ERV from urban warehouses • 1 Including joint ventures at share 2 Total development cost includes land 3 Excludes potential developments on land held under option. 13
Building scale in Italy through Vailog • Vailog acquired in June 2015 with €89m of standing assets, land and development in Italy and France • AUM in Italy already projected to be near One Express, Bologna €200m by end-2016 Assets under management from Vailog acquisition, €m • Accretive developments: 250 • Compl pleted: d: 111,000 sq m in Milan and 33.1 200 30.5 Piacenza, pre-let to OVS and Leroy Merlin 150 • Un Underway: way: 147,000 sq m pre-let projects to TNT, One Express, ExorNaturasi, Yoox in 17.5 100 152.5 Paris, Milan and Bologna Geodis, Bologna 50 71.4 • In n the he pi pipe peline ne: 240,000 sq m pre-let agreements in France and Italy 0 Acquisition Investment Value uplift June 2016 Dvpt pipeline • Three assets in Italy transferred into SELP during the period Italy France • 13% capital gains since acquisition Dascher, Paris 14
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