SEGRO lifts new annualised rent contracted by 32% to £70 million
Key Facts
SEGRO reported total new annualised rent contracted of £70 million in the nine months ended 30 September 2026, up 32% from the corresponding period. The company said in its trading update that this measure calculates rent after tenant incentives, including rent-free periods, expire. The increase reflects the value of annual rent contracted and does not mean the number of leases rose by the same percentage. When reporting its first-half 2026 results, SEGRO had announced £53 million of new annualised rent contracted. The company recorded like-for-like net rental income growth of 5.3% during that half as part of its property portfolio results.
On development, SEGRO said projects under construction or in advanced negotiations represented £103 million in potential rent in its September update. Potential rent from current and near-term projects stood at £90 million when the company announced its first-half results. Management attributed leasing progress to supportive supply and demand conditions for modern, well-located space. In its presentation of growth opportunities alongside the first-half results, the company cited "limited availability of land and power" as factors supporting its portfolio. SEGRO identified industrial and logistics properties and data centres among the areas offering these opportunities, alongside projects under construction or in negotiations.
On the balance sheet, the loan-to-value ratio stood at 33% in the September update, compared with 31% at the end of the first half on 30 June 2026, according to SEGRO's disclosures. The average cost of debt at the end of the first half was 2.8%, according to the company's results for that period. SEGRO reported available liquidity of £1.2 billion in its trading update as leasing and development activity continued. On property disposals, the company completed £223 million of transactions from the start of 2026 through the September update. It said prices achieved on those disposals exceeded the carrying values of the properties concerned, while other contracted disposals remained pending completion.
These operational developments come against the backdrop of Prologis' agreement to acquire SEGRO, which valued the company's issued and to-be-issued ordinary share capital at about $18.8 billion when announced on 4 August 2026. According to Prologis' announcement, the transaction's base consideration consists of new shares in the acquiring company issued to SEGRO shareholders in exchange for their shares. The terms set an exchange ratio of 0.0920 new Prologis shares for each SEGRO share. Prologis said it expected the acquisition to expand its European operating footprint by 47% upon completion. That expected expansion relates to Prologis' operating presence in Europe following the combination of the two companies, under a transaction that remains subject to the announced closing conditions.
Alongside the base share-exchange consideration, the acquisition terms include a partial cash alternative for SEGRO shareholders, according to Prologis' announcement of the agreement. The maximum aggregate cash available under this alternative is about £3.5 billion. A shareholder electing only their basic entitlement under the cash alternative would receive a combination of cash and new Prologis shares for each SEGRO share held. The terms set the cash portion of this entitlement at 258 pence per share, accompanied by 0.0690 new Prologis shares. The share consideration accompanying the basic cash entitlement is therefore tied specifically to that election, while the share exchange remains the base consideration specified in the acquisition terms.
In Prologis' latest results for the third quarter of 2026, its chief executive described SEGRO shareholder approval as "an important milestone in bringing our two companies together". On SEGRO's schedule through the end of 2026, the company has exchanged contracts on a further £57 million of property disposals expected to complete by year-end. Prologis' acquisition of the company is targeted for completion in the first half of 2027, according to the timetable in the transaction announcement. Completion of the acquisition remains subject to regulatory approvals and court sanction, alongside the satisfaction of closing conditions. Shareholder approval thus marks one stage in the process of combining the two companies, with regulatory and court procedures and other conditions still required before the targeted completion.