Segro and Hammerson update the market
Segro today told investors that it had seen a good level of enquiries so far this year, with demand for lettings in its key markets building on the momentum in the second half of 2010. However, it cautioned in a trading update to the London Stock Exchange that occupier markets remained challenging and said the level of takebacks had continued to be relatively high across the portfolio. “Staying close to our customers to help manage these remains a key priority,” it added. Segro said the occupier market in London and the southeast had remained resilient but that more challenging conditions elsewhere had led to a reduction in demand for space.
David Sleath, who takes over as chief executive at Segro at today’s AGM, said that worries about sovereign debt, austerity measures in the UK and higher energy prices were all worrying occupiers, “with many customers remaining focused on cost control and the consolidation of their space requirements.” He added however that the good level of enquiries was pleasing and the pick-up in the group’s retention rate in the first quarter of this year had been encouraging, saying that trading overall had remained in line with expectations.
Segro also said that the limited availability of Grade A space and the lack of new space coming onto the market was driving the growth of its development pipeline. The group has signed a further six pre-let developments since the end of February representing a total of 61,900 sq m.
Hammerson also updated the market today on trading so far this year, saying that its focus on regionally dominant shopping centres and successful retail parks was benefiting results in the current difficult economic climate. It said like-for-like sales at its UK shopping centres were up 1.5% in the first quarter of 2011 and there were just 32 units in administration as of the end of March, representing less than 1% of passing rents.
The group has boosted its flexibility by arranging a new £505m revolving credit facility. It also announced the sale of the Three Spires centre in Lichfield for £33m. The property, which was part of the St Martins retail portfolio bought by Hammerson in March, will now be sold directly from St Martins to a client of Orchard Street Investment Management, reducing the cost to Hammerson of the St Martins portfolio to £188m.
