SEGRO Shares Dip Despite Strong 2025 Results and Record Leasing

Shares in SEGRO (LON: SGRO) experienced a slight dip despite the company reporting robust full-year results for 2025, punctuated by record leasing activity.

The initial stock reaction seemingly contradicts the positive financial performance, highlighting the complex interplay between reported earnings and market expectations.

SEGRO announced a record £99 million in new contracted rent commitments, marking a significant achievement. This performance was underpinned by a 6.0 percent increase in like-for-like net rental income, indicating strong operational efficiency and demand for its properties. Adjusted earnings and dividends per share also saw a healthy 6.1 percent rise.

The company's adjusted pre-tax profit climbed 8.3 percent to £509 million, up from £470 million in the previous year. Adjusted earnings per share reached 36.6 pence, compared to 34.5 pence in 2024. Correspondingly, the full-year dividend increased by 6.1 percent to 31.1 pence per share.

The solid financial results were further bolstered by an increase in occupancy rates, which rose 90 basis points to 94.9 percent. This improvement reflects SEGRO's success in retaining customers and leasing newly developed spaces. Customer retention remained strong at 82 percent, underscoring the company's operational excellence.

SEGRO's development completions added £29 million of potential new headline rent, with 93 percent already leased, delivering a development yield of 8.2 percent. The company's commitment to sustainability was also evident, with a 17 percent reduction in corporate and customer carbon emissions.

Despite these positive indicators, the share price reaction suggests that markets may have already priced in much of this growth or are focusing on other factors. One potential concern could be the moderate increase in the loan-to-value (LTV) ratio, which rose to 31 percent from 28 percent, alongside a slight increase in the average cost of debt to 2.6 percent.

CEO David Sleath commented, “SEGRO delivered a strong performance in 2025. We signed a record level of new rent through the excellent asset management of our existing portfolio and the signing of several large pre-lets…as structural drivers started to re-assert themselves and demand picked up.”

SEGRO's outlook remains positive, with the company well-positioned to capitalize on the increasing demand for industrial, logistics, and data center space. The potential for £152 million of additional rental income from the existing portfolio and £355 million from the development pipeline provides a clear pathway for future growth. The company's significant data center pipeline, with 2.5GW of powered land, offers a substantial long-term opportunity.