SEGRO, Europe's leading owner-manager and developer of industrial property, is today announcing progress on disposals, together with a valuation and trading update ahead of its full year results for the year ended December 31, 2012, which will be published on February 27, 2013.
Recent disposal progress includes the sale of two large non-strategic assets and a small portfolio of non-core regional assets, as follows:
Thales campus in Crawley for £80 million (approx. 98 million) - sale completed in January 2013 to a large UK institutional investor;
MPM site in Munich for £53 million (approx. 65 million) - contracts exchanged with a private German investor with completion expected in March 2013;
Four regional UK industrial estates for £26 million (approx. 32 million) - sale completed in December 2012 to a joint venture between two UK/Swedish pension funds.
The Thales campus is fully let and comprises two offices and a bespoke industrial building, totaling approximately 35,000 m² of lettable space.
The MPM site is also fully let and is a 155,000 m² engineering and manufacturing facility, acquired by SEGRO as part of a sale and lease back agreement with Krauss Maffei (formerly named MPM) in 2007. This is the first of the large non-strategic assets (identified as non-core at SEGRO's Investor Day in November 2011) to be sold in Continental Europe.
The four regional UK industrial estates are located in Runcorn, Lymedale, Pucklechurch and at East Midlands Airport and total 84,000 m². At September 30, 2012, the portfolio had a vacancy rate of 8.1%.
Combined sale proceeds for the assets of £159 million (approx. 195 million) are 2.4% below June 30, 2012 book values, net of rental top-ups. As part of the MPM site disposal, SEGRO has committed to manage and fund a roof refurbishment program at the facility during 2013 which is estimated to cost approximately £6 million; these costs have been allowed for in the comparison of its net sale price to the June valuation, above.
Based on the disposal prices, the combined net initial yield of these transactions is 8.0%, or 8.2% including rental top-ups.
Since January 1, 2012, SEGRO has now announced or completed approximately £680 million of non-core disposals, including three of the 'big six' assets.
Based on the preliminary portfolio valuation at 31 December 2012, and taking into account the disposals announced today, SEGRO has approximately £610 million of non-core assets remaining, of which approximately £175 million relates to the three remaining large non-strategic assets: Pegasus Park in Belgium, Vimercate in Italy and Neckermann in Germany.