Real estate investment trust Segro reported a swing into the black for its 2013 year thanks in part to property gains. Ongoing portfolio reshaping and tough investment market conditions are expected to be a challenge over 2014 but the company is confident in its ability to deliver sustainable growth.
On an IFRS basis pretax profits for its year to December 2013 came in at £212m versus a loss of £202m in 2012. Revenue fell to £339.8m from £371m as net rental income declined 12.3% to £223.4m.
Net asset value or NAV per share grew to 316p from 302p last time. The 2013 results include consideration of property gains of £145.6m, compared to a loss of £353.2m last time.
On a European Public Real Estate Association or EPRA basis, which better reflects underlying, recurring performance of the property rental business, full-year pre-tax profit slipped 7.5% to £134m last time. EPRA NAV per share rose 6.1% to 312 pence.
The company said the fall in EPRA profit reflects lower net rental income, largely due to disposals, partly offset by reductions in EPRA net finance costs and increased income from joint ventures.
David Sleath, Segro's Chief Executive, hailed the "strong" 2013 year for SEGRO adding: "Our actions over the last two years have significantly improved the group's property portfolio and financial position. We have established a strong platform from which to deliver sustainable growth."
Commenting on outlook, Sleath said: "The strategic portfolio reshaping programme will continue to have an earnings impact in 2014. However, we have started the year with good momentum from our acquisition, leasing and development programmes and we expect that the marked improvement in investor appetite for high quality warehouse and logistics assets, which has driven significant capital value growth in the second half of 2013, will be sustained in 2014."
He added: "Whilst investment market conditions are likely to become increasingly competitive in the year ahead, we are confident in our ability to continue sourcing attractive acquisition opportunities over time to offset the loss of income associated with the disposal of the remaining non-core assets."
More broadly, the company believes its repositioned portfolio is now well placed to benefit from both general economic recovery and specific structural drivers including ongoing growth in online retailing and increasing occupier demand for 'last mile delivery and shortage of new space available in most of its key markets.
Segro declared a final and total dividend of 9.9p, unchanged from 2012.
In late morning trade Segro shares
were down 0.9% or 3.3p to 354.5p.