ii view: data centre firm Segro rallies after strong Q3
Offering a diversity of property type and geographical location, and with the share price at an attractive discount to net asset value. Buy, sell, or hold?
21st October 2025 11:31
by Keith Bowman from interactive investor
Third-quarter and year-to-date trading update to 30 September
- Third-quarter new rent signings of £22 million
- Year-to-date new rent signings of £53 million
- Occupancy rate of 94.3%, up from 94% in early January
Chief executive David Sleath said:
"Segro has had a strong third quarter. We have made good progress in capturing the significant mark-to-market rent potential in our existing portfolio, whilst maintaining occupancy levels and retaining customers.”
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ii round-up:
Property giant Segro (LSE:SGRO) today outlined its best quarter of new rent signs so far in 2025 with the UK’s biggest Real Estate Investment Trust (REIT) by stock market value also confident about prospects for its joint venture data centre business.
New rent signings of £22 million for the third quarter to late September rose from £31 million during the first half, driven by its best quarter of letting activity for buildings under development since the first quarter of 2024.
Shares in the FTSE 100 company rose 3% in UK trading having come into this latest news down by close to a fifth over the last year. That’s similar to storage facility provider Safestore Holdings Ordinary Shares (LSE:SAFE). The FTSE 100 index is up 13% over that time.
Segro owns or manages properties worth around £21.4 billion. These include modern large warehouses used by online sellers, industrial properties and fully fitted data centres.
Segro’s data centre joint venture business is on track to submit a planning application in coming weeks and is progressing multiple negotiations on powered shells and fully fitted opportunities in both the UK and Europe.
Power totalling 190 Megavolt-Ampere has been reserved in a key London availability zone for just such data centre opportunities.
More broadly, rent increases averaging 37% had been secured across 170 property rent reviews year-to-date. An occupancy rate of 94.3% is up from 94% at the start of the year.
Development completions totalled 34,800 square metres of new space during the quarter, adding £8 million of headline rent. That included the build completion of its latest powered shell data centre on the Slough industrial estate.
Broker UBS reiterated its ‘buy’ stance on the shares post the trading update. Full-year results are scheduled for 20 February.
ii view:
Started in 1920, Segro today owns or manages a portfolio of a 10.8 million square metres of space (116 million square feet). Group properties are in and around major cities and at key transportation hubs in the UK and seven other European countries.
Urban warehouses provide its biggest asset type at 55% as of late July. That’s followed by big box warehouses at 35%, data centres 8%, and other uses of industrial land at 2%. Geographically, the UK comes in at 63%, Germany and France each at 11%, with other European countries the balance of 15%. Group tenants include Amazon.com Inc (NASDAQ:AMZN), Tesco (LSE:TSCO), British Airways and FedEx Corp (NYSE:FDX).
For investors, an uncertain economic outlook in the UK and Europe includes growing concerns about stretched government finances and their potential impact on interest rates. An occupancy rate of 94.3% is down from 2023’s 95%. Fellow REITs such as British Land Co (LSE:BLND) are now taking an interest in logistical properties, while a forecast dividend yield of around 4.6% compares to yields of over 6% for fellow REITs Land Securities Group (LSE:LAND) and Primary Health Properties (LSE:PHP).
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More favourably, exposure to expected growth in data centres now sits alongside the structural themes of e-commerce and urbanisation. A current share price of around 696p is less than the group’s estimated adjusted net asset value (NAV) of 910p per share as of late June. The annual dividend payment has risen for more than ten consecutive years, while geographical diversity exists given a portfolio of European properties.
In all, and despite ongoing risks, this giant of the property sector continues to justify its place in many already diversified investor portfolios.
Positives:
- Diversity of both customer or tenant type and geographical location
- Progressive dividend payment
Negatives:
- Uncertain economic outlook
- Increased competition
The average rating of stock market analysts:
Buy
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