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Bank of America Merrill Lynch Real Estate Conference
27 March 2012
1
Overview
2
SEGRO today – a strong platform for an income-focused REIT
� A leading European REIT � industrial specialist
� an attractive asset class
� Strong market positions with excellent quality assets� UK: London & SE England
� France/Germany/Poland
� High quality, diversified customer base� £333m of annualised rental income; 1,600 customers
� Experienced operational team� Leasing, customer & asset management, development
� Local expertise in each key market
68%
32%
UK Continental Europe
* JVs included at 100%
54%
17%
21%
8%
Industrial Logistics
Offices & other business space Development & land
6.4Net initial yield (%)
7.8Net true equivalent yield (%)
340Adjusted NAV (per share) (pence)
50Gearing (loan to value ratio %)
8.2Weighted average lease term to expiry (years)
Key statistics at 31 December 2011
3
Industrial – an attractive asset class
0
2
4
6
8
10
12
14
16
1986-1995 1996-2004 2005-2010
Industrial Office Retail All Property
0
1
2
3
4
5
6
7
8
9
10
1986-1995 1996-2004 2005-2010
Industrial Office Retail All Property
0
2
4
6
8
10
12
Industrial Office Retail All Property
IPD Total Returns % by Economic Cycle(annualised to 2010)
IPD Total Returns % from 1986 to 2010(annualised to 2010)
IPD Income Returns % by Economic Cycle(annualised to 2010)
0
1
2
3
4
5
6
7
8
9
Industrial Office Retail All Property
IPD Income Returns % from 1986 to 2010(annualised to 2010)
4
Industrial and logistics focus –an attractive asset class
Logistics warehousingLogistics warehousing
Logistics
�Large distribution warehouses – typically
10,000 sq m and above
�International, national and regional distribution
�Ports, airports and transportation corridors
Industrial
�Multi occupier estates with buildings in
various sizes
�Located in and around conurbations
�Light industrial and similar uses
�Urban logistics serving conurbations
Good yield with the potential for rental growth & alternative use upgrade
Higher yield with limited cost leakage &
potential to scale up with 3rd party capital
5
Well-located industrial land provides potential to develop higher value uses
0
5
10
15
20
25
30
35
Older
industrial
Modern
industrial
Other high
value uses
Airport
(landside)
Data
centres
Airport
(airside)
Suburban
Offices
Illustrative rental levels – South East England
(Rent per sq ft)
£6-7
£9-12
£9-15 £12.5-15.5 £16
£24-25
£23-30
6
A clear strategy to create an income-focused REIT
7
A strong platform to create a successful income-focused REIT
GOAL:
STRATEGY TO CREATE VALUE FOR SHAREHOLDERS:
A STRONG PLATFORM FOR SUCCESS:
High
quality,progressive,
sustainable dividends
and NAV growth
Industrial and
logistics focus
Strong
market positions
Experienced
operationalteam
Diversified
customer base
Disciplined Capital
Allocation
Operational Excellence
• Right Portfolio Shape• Active Portfolio Management• Right Capital Structure
• Leasing, Customer & Asset nManagement• Development• Operational Efficiency
8
Disciplined capital allocation
� Critical mass in strongest European markets
� Prime, modern assets
� Low vacancy, sustainable
portfolio
� Modest land holdings
� Moderate gearing levels
• 40% LTV target
� Focused use of third-party
capital
• Enhance risk-adjusted
returns
• Facilitate growth /
achieve competitive scale
Right portfolio shape Active portfolio management Right capital structure
9
Challenges with existing portfolio
*Based on December 2011 valuations with JVs @ 100%
9%
16%
75%
Core
Smaller non-core industrial holdings and land
Large non strategic assets
Split of current portfolio
� Large, long-term development sites
� Sub-urban office parks
� Older & more secondary industrial estates
� Investments in smaller/weaker markets
� Sub-scale investments in certain locations
Mid-long term upside inadequate
to justify short-term dilutionand/or
causes cost inefficiency
10
Four key strategic priorities to create a successful income-focused REIT
Re-shape the existing portfolio
� Divest assets which do not fit our strategic criteria
� Reduce land holdings and other non-income producing assets as a proportion of the total portfolio
Re-invest – grow AUM in a smaller number of markets through development
and acquisition
� Light industrial in the largest and most vibrant conurbations
� Logistics assets in major distribution markets
� Exploit opportunities to create higher value uses on industrial land
Reduce financial leverage over time and introduce third-party capital
� 40% mid-term LTV target
Retain focus on operational excellence and drive further improvements
2
3
4
1
11
Early progress with strategic priorities
� New organisation structure announced and implemented
� COO and CIO roles created
� Non-core disposals
� £111m smaller, secondary estates sold in 2011
� £80m divestment of five estates to Ignis in February 2012
� Guidance: £300-500m disposals in 2012
� Acquisition of UK Logistics Fund in partnership with Moorfield
� £314m portfolio of prime logistics warehouses
12
FY2011 Performance
13
Operational excellence created strong earnings momentum for FY 2011
Leasing,
Customer and Asset
Management
� £38.4m of new annualised rental income from existing space and pre-lets
� Transactional rental values 1.7% above December 2010 ERVs
� Lease incentives of 11%
� Retention rate up to 74%, takebacks down 28% to £21.0m
� Vacancy rate 9.1%
� 14 developments completed; £9m annualised rental income
� 20 developments under construction or contracted – 78% pre-let
� Current pipeline £117m capex and £19m annualised rental income
� Total costs down by 15% year on year (£15m)
� Cost ratio reduced to 24.3%
� New management and operating structure to drive further efficiencies in 2012
and beyond
Development
Operational
Efficiency
14
Key financial highlights
3.514.314.8Dividend per share (pence)
Change
%
20102011
4650LTV (%)
4.52,203.22,303.4Net borrowings (£m)
(9.6)376340EPRA NAV per share¹ (pence)
7.617.118.4EPRA EPS (pence)
8.8127.3138.5EPRA PBT (£m)
Change
%
20102011
1. EPRA NAV per share and excluding fair value of interest rate derivatives but including trading property uplifts
15
Strong operating performance delivered 8.8% EPRA PBT growth
10.816.6Share of joint ventures’ EPRA profit after tax1
(62.5)(54.9)Property operating expenses
282.1271.2Net rental income
1.95.9Joint venture management fee
(39.2)(32.1)Administration expenses
255.6261.6EPRA operating profit
127.3138.5EPRA profit before tax
(128.3)(123.1)Net finance costs (excluding fair value movements on derivatives)
344.6326.1Gross rental income
2010£m
2011£m
1. Net property rental income less administrative expenses, net interest expenses and taxation.
16
Good progress with cost reduction
24.3%
28.1%
29.9%30.4%
20
25
30
35
2008 2009 2010 2011
(18.1)39.232.1Administration expenses
(12.2)62.554.9Property operating costs
Movement
(%)
2010
(£m)
2011
(£m)
To
tal
co
st
rati
o*
(%)
*Total costs as a percentage of gross rental income. Total costs include property operating expenses
(net of service charge income and management fees) and recurring administration expenses.
17
FY 2011 EPRA PBT bridge (£m)
5.84.0
138.55.2
7.1127.3 (10.9)
EPRA PBT 2010 Net rental income JV management fee Share of JV EPRA PBT Administrative expenses Net finance cost EPRA PBT 2011
18
FY 2011 cash flow summary
23.4(8.1)Net settlement of derivatives
(193.5)(15.9)Investment in joint ventures
397.079.9Investment property sales (including joint ventures)
(82.8)(107.4)Dividends paid
(61.1)(187.1)Capital expenditure (excluding trading properties)
193.7(106.5)Net funds flow
4.17.9Other items
106.6124.2Free cash flow
(6.0)(4.9)Tax paid
8.810.4Dividends received (net)
(141.1)(120.3)Net finance costs
244.9239.0Cash flow from operations
2010£m
2011£m
19
FY 2011 EPRA NAV per share bridge (pence)
376
(3)(15)
(35)
19 (1) (1)
340
EPRA NAV per share
as 31 Dec 2010
EPRA PBT Exchange rate
movement
Other Unrecognised
valuation movement
on trading properties
Dividends Realised and
unrealised valuation
movement (including
JVs)
EPRA NAV per share
as 31 Dec 2011
20
FY 2011 core and non-core valuation movements*
-200
-150
-100
-50
0
50
Core Non-Core
Valu
ati
on
mo
ve
men
t (£
m)
(187.0)(33.6)Non-Core
(54.6)19.9Core
(241.6)(13.7)Total
H2 2011 (£m)H1 2011 (£m)Property assets
*Valuation movement relates to the total portfolio (completed properties, land and development).
Joint ventures shown at share.
21
Solid balance sheet
� No significant debt maturities before 2014
� £456m of funds available from cash balances and undrawn facilities
� Weighted average cost of debt now 4.8%
� 74% of net borrowings at fixed rates
� Net borrowings of £2.3bn; adjusted gearing of 89% and LTV of 50%
� SEGRO bonds rated A minus; reaffirmed by Fitch in December 2011
SEGRO debt maturity profile
Average duration of debt 8.8 years
0
100
200
300
400
500
600
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024+
Year
Bonds and Notes Bank Debt drawn Cash Undrawn facilities
£m
22
£954m of new Group and JV debt facilities arranged
SEGRO and Moorfield financing for UKLF JV
� £186.6m five-year facility
� Acquisition completed January 2012
� <4.25% p.a. all-in funding cost; 80% fixed for 5 years
SEGRO and Aviva Investors APP JV refinancing
� £400m five-year debt refinancing package
� Refinanced maturing facility, due March 2012
� c4.0% p.a. all-in funding cost on drawn debt
SEGRO Group refinancing
� €440m of revolving, multi-currency, five-year bank facilities
� Refinanced £270m syndicated facility, due to mature Jan 2013
� c2.75% p.a. funding cost on drawn debt under the facilities
November
2011
September
2011
January
2012
23
Well hedged against the Euro
2,004
566
1,030
105
Balance sheet as at 31 December 2011
Euro gross assets
Euro debt
Euro currency swaps
Other Euro liabilities
€m
illio
n
•€1.20:£1 as at 31 December 2011
•€ assets 85% hedged by € liabilities
•€303m (£252m) of residual exposure – 10% of Group NAV
113
79
Income statement year to 31 December 2011
Euro net income
Euro costs (incl €67m interest)
€m
illio
n
•Average rate for year to 31 December 2011 €1.15:£1
•€ income 70% hedged by € expenditure (including interest)
•Net € income for the period €34m (£30m) – 22% of Group
1,701
Annualised NAV sensitivity versus €1.20:
• +/- 10% (€1.32/€1.08) = +/- c£25m (c3.4p per share)
•Annualised net income sensitivity versus €1.15
•+/- 10% (€1.27/€1.03) = +/- c£3m (c0.4p per share)
24
Summary
� A clear strategy to become a leading income-focused REIT
� Early progress with portfolio reshaping
� Strong FY 2011 operating results due to portfolio quality and
operational focus
� Further momentum to come from mainly pre-let development programme
� A solid balance sheet position and favourable debt maturity profile
� Target to reduce LTV to 40%
25
APPENDICES
26
Significant improvement in retention reflects benefits of working closely with customers
% o
f cu
sto
mers
reta
ined
year
on
year*
55%
75%
63%69%
87%
74%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
UK Continental Europe Group
2010 2011
• Focus on customer satisfaction
• Proactive and commercial approach to upcoming lease events
• Reduced availability of modern space in most markets
*Leases renegotiated ahead of break or expiry
27
Increased retention levels have contributed to the significant reduction in takebacks
£m
an
nu
ali
sed
ren
tal
inco
me l
ost
£16.2m£20.2m
£4.8m
£9.1m
0
5
10
15
20
25
30
35
2010 2011
UK Continental Europe
• Low level of insolvencies (£4.0m versus £7.2m in 2010)
• £41m of income at risk from potential break or expiry in 2012, down from £50m at June 2011
Down 28% in 2011
£29.3m
£21.0m
28
Significant further improvement in Group vacancy from 12% to 9.1% – the lowest level since 2007
9.1%
11.4%12.0%
14.0%13.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
FY 2009 H1 2010 FY 2010 H1 2011 FY 2011
% v
acan
t b
y r
en
tal va
lue
• UK 10.2%, Continental Europe 6.4% (2011)
• Target for Brixton portfolio of 15% by end of 2012 already delivered (2011: 13.4%)
29
FY 2011 Group vacancy bridge
(0.5)%(2.6)%
(0.4)%
12.0%
(12.7)%
9.1%
1.9% (0.1)%
11.5%
Vacancy rate as at
31 December 2010
Space returned Development
completions
Disposals Space made
redundant
Other (ERV
changes)
Development
lettings
Space let Vacancy rate as at
31 December 2011
30
Gliwice, Poland
Selig UK, SloughGeopost, Enfield
14 developments completed in 2011 –£9.0m of rent p.a
• 2 projects for logistics customers across 35,600 sq m
completed January & December 2011
• 3,500 sq m completed September 2011
• 15,900 sq m for logistics customer completed September 2011
• 7,000 sq m completed December 2011
Tychy, Poland
31
Significant earnings momentum from current development programme
• 20 active projects, 78% pre-let
• £19m of annualised rental income and £117m of remaining capex
� 9,900 sq m at APP Portal, expected
completion September 2012
� 5,600 sq m at Slough, expected
completion February 2012
� 33,400 sq m at Vimercate, expected
completion December 2013
� 5,500 sq m at Slough, expected completion May
2012
Data centre operator
Alcatel Lonza
DB Schenker
32
Land bank provides an attractive source of future developments
£170m
£82m
£171m
� Estimated development costs £600m
� Estimated rental value £78m
� Indicative yield on TDC* 9-10%
Current land holdings by value (£m)
Residual land bank
Under construction
Potential projectsPotential projects
Largest development sites
Current BV (£m)
Hectares
5.714.2Poznan
Poland & Czech Rep
5.729.7Prague
6.917.7Warsaw
19.717.2Amsterdam (Schipol)
Netherlands
9.619.2Berlin
9.78.8DüsseldorfGermany
13.07.4Slough
32.08.5Park RoyalUK
229 hectares
*Total development cost
49 hectares
363 hectares
33
Our current development pipeline is 78% pre-let
UK
Speculative developments
3,100n/aGalvin Road, STE
1,200Family BargainsFarnham Road, STE
42,100*Total
2,800Under offer – data centre
Galvin Road, STE
8,500Rolls-RoyceAPP Portal at Heathrow, London
9,900DB Schenker APP Portal at Heathrow, London
Contracted projects
3,300Ragus SugarsYeovil Road, STE
5,500LonzaBath Road, STE
5,600Data centre operator
Ajax Avenue, STE
11,400Infinity STE
Pre-let projects under construction
Space to be built (sq m)
CustomerProject
7,600OPEKLodz, Poland
11,200Esprinet (72%) /speculative
Vimercate, Italy
CONTINENTAL EUROPE
Speculative developments
8,200n/aParis, France
12,200Various – 50% letBerlin, Germany
11,300Wir Packens (80%) /speculative
Krefeld, Germany
162,400Total
12,200n/aDusseldorf, Germany
Contracted projects
1,200EurocashPoznan, Poland
14,300Pro Tex (30%)
/speculative
Frankfurt, Germany
18,900ZabkaTychy, Poland
31,300Sports retailerGliwice, Poland
34,000Alcatel-LucentVimercate, Italy
Pre-let projects under construction
Space to be built (sq m)
CustomerProject
£19m of annualised rental income and £117m of capex
*Includes APP Portal contracted projects at Group share
34
1.211.30.36.50.94.8Net absorption (£m)
(13.0)(0.4)(16.3)0.9(10.5)(0.8)Valuation movement (%)
8.47.68.28.18.67.5True equivalent yield (%)
7.06.17.97.56.45.7Net initial yield (%)
-
12.4
767.6
Non-core
6.0
9.5
2,586.3
Core
UK
3.1
4.0
814.4
Core
Continental Europe
4.9
9.6
515.4
Non-core
9.1
8.2
3,400.7
Core
Group
4.9
11.2
1,283.0
Non-core
Pre-lets signed (£m)
Vacancy (%)
Portfolio value (£m)(completed properties)
Performance of core versus non-core
35
Large non-strategic assets
Pegasus Park (Brussels)
Neckermann site
(Frankfurt)
Vimercate
(Milan)
IQ Farnborough
(Farnborough)
Total value: £515m
Total headline rent: £45m
Data as at 31 December 2011
MPM site(Munich)
Thales site(Crawley)
36
� 50/50 JV partnership with Moorfield Real Estate Fund
� 14 prime logistics warehouses, located predominantly in the Midlands and South
� Excellent customer base, including Tesco, Sainsbury’s, Royal Mail, DHL, GKN, Booker
� High-quality income stream – c £18m in 2011; average 13 years to lease expiry
� 9.4% cash running yield on SEGRO share of equity investment, rising to 12.8%; 6.3% ungeared net initial yield rising to 7.7%
� Potential to add further value through active asset management
UKLF acquisition significantly increases our presence in logistics
Sainsbury’s, Hoddesdon
Booker, Booker, Hatfield
In line with strategy to grow logistics with third-party capital
Royal Mail, Birmingham
37
FY 2011 net rental income bridge (£m)
271.2
0.30.7
1.62.1
5.3
282.1
(6.5)
(9.3)
(5.1)
Net rental
income 2010
Development
(lettings net of
takebacks)
Like-for-like rent Currency
translation
Acquisitions Other income Disposals to
APP
Disposals
(excluding to
APP)
Lease
surrenders
(premium net of
rent lost)
Net rental
income 2011
38
FY 2011 EPRA pro forma profit before tax: JVs proportionally consolidated
(65.2)(57.7)Property operating expenses
303.2301.4Net rental income
1.02.6Joint venture management fee
(39.2)(32.1)Administration expenses
265.0271.9EPRA operating profit
127.3138.5EPRA profit before tax
(137.9)
0.2
(133.6)
0.2
Net finance costs (excluding fair value movements on derivatives)
Joint venture tax
368.4359.1Gross rental income
2010£m
2011£m
39
Forward-looking statements
This presentation may contain certain forward-looking statements with respect to
SEGRO’s expectations and plans, strategy, management’s objectives, future
performance, costs, revenues and other trend information. These statements and
forecasts involve risk and uncertainty because they relate to events and depend
upon circumstances that may occur in the future. There are a number of factors
which could cause actual results or developments to differ materially from those
expressed or implied by these forward looking statements and forecasts. The
statements have been made with reference to forecast price changes, economic
conditions and the current regulatory environment. Nothing in this presentation
should be construed as a profit forecast. Past share performance cannot be relied on
as a guide to future performance.
40
Bank of America Merrill Lynch Real Estate Conference
27 March 2012