SEGRO Shares Buoyed by Strong Letting Activity and Data Centre Pipeline

SEGRO (LON: SGRO) shares jumped over 3% in early Tuesday trading after the company released a trading update for the period from January 1, 2025, to September 30, 2025, showcasing robust performance driven by improving occupier sentiment and strategic advancements in its development program.

The update highlights a strong third quarter, particularly in letting activity and the progression of its data centre initiatives.

New headline rent signed reached £22 million in the third quarter, bringing the year-to-date total to £53 million. This compares favorably to the £15 million signed in Q3 2024, indicating a tangible uplift in market confidence and demand for SEGRO's prime, modern portfolio.

The company continues to capture reversion, evidenced by a 37 percent uplift across 170 rent reviews, renewals, and regears year-to-date.

Occupancy remains high at 94.3 percent, with a customer retention rate of 86 percent, underscoring the strength of SEGRO's tenant relationships and the desirability of its properties.

Development completions during the period totaled 34,800 sq m of new space, adding £8 million of headline rent, including a powered shell data centre on the Slough Trading Estate.

SEGRO's disciplined capital allocation strategy is focused on accretive development-led growth. The company invested £286 million into its development pipeline so far in 2025, including £25 million in land purchases, alongside £228 million in asset acquisitions, partially offset by £39 million in disposals. Development capex for 2025 is still expected to be approximately £400 million.

The active development pipeline holds £45 million of future rent through projects currently onsite and in advanced negotiations, with 47 percent secured or associated with pre-lets.

The average development yield stands at 7.1 percent. New pre-lets signed during the quarter amounted to £7 million, including big box warehouses for third-party logistics operators in France and Italy.

A key element of SEGRO's growth strategy is its expanding data centre pipeline. The company is progressing multiple negotiations on both powered shells and fully fitted opportunities in the UK and Continental Europe.

Extra capacity has been added to its land-enabled power bank, including 190MVA of additional power reserved in a key London Availability Zone.

Proactive balance sheet management remains a priority. SEGRO secured a new €360 million five-year term loan facility to partly refinance its upcoming €650 million bond maturity in 2026. Additionally, SELP signed a new €600 million Revolving Credit Facility, extending the maturity for up to five years.

The balance sheet remains strong, with a Loan-to-Value (LTV) ratio of 32 percent and £1.7 billion of cash and undrawn committed facilities.

CEO David Sleath stated, “SEGRO has had a strong third quarter, with improving occupier sentiment reflected in £22 million of new headline rent signed during the period,” reinforcing the company's growth strategy.