02. Juli 2012 
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Segro acquires logistics assets in Paris and Lyon
Segro has agreed the acquisition of a portfolio of eight prime French logistics estates for €160.8 million (£129.7 million) from Foncière Europe Logistique, a subsidiary of Foncière des Régions. The portfolio comprises 13 buildings, which are 10 years old on average, totalling approximately 255,000 m² of lettable space and currently generating €14.2 million (£11.5 million) of annualised rental income. The purchase price represents an attractive net initial yield of 8.4 per cent and reversionary yield of 7.7 per cent.
Five estates are located in established logistics locations in the Ile de France region around Paris, within close proximity to Segro’s existing core logistics and light industrial estates. The remaining three estates are located in Lyon, one of France’s most important logistics and transportation hubs, where Segro already has a presence. All eight estates are fully let to a range of strong covenants, a number of which Segro already has relationships with, including UPS, Geodis, Daher, Sony, DSV and Saint-Gobain. The weighted average lease length is 6.0 years to expiry.
The acquired assets will increase Segro’s portfolio in the Ile de France region by approximately £95 million to over £400 million. Overall, it will have approximately £500 million of assets in France, totalling over 900,000 m² and generating over £40 million of annualised rental income.
The acquisition, which is expected to complete in September 2012, will be funded using part of the proceeds from the £377 million of non-core asset disposals which Segro has announced in the year to date. These proceeds have also been used to pay down debt, consistent with the Group’s objective to reduce leverage over the medium term.
Commenting on the acquisition Chief Investment Officer, Phil Redding, said: “This transaction provides us with a rare opportunity to acquire some of the best logistics assets in the two strongest markets in France. The assets deliver an attractive income yield from strong covenants and will allow us to drive operational efficiencies from greater critical mass with the potential to add value over time.”
Five estates are located in established logistics locations in the Ile de France region around Paris, within close proximity to Segro’s existing core logistics and light industrial estates. The remaining three estates are located in Lyon, one of France’s most important logistics and transportation hubs, where Segro already has a presence. All eight estates are fully let to a range of strong covenants, a number of which Segro already has relationships with, including UPS, Geodis, Daher, Sony, DSV and Saint-Gobain. The weighted average lease length is 6.0 years to expiry.
The acquired assets will increase Segro’s portfolio in the Ile de France region by approximately £95 million to over £400 million. Overall, it will have approximately £500 million of assets in France, totalling over 900,000 m² and generating over £40 million of annualised rental income.
The acquisition, which is expected to complete in September 2012, will be funded using part of the proceeds from the £377 million of non-core asset disposals which Segro has announced in the year to date. These proceeds have also been used to pay down debt, consistent with the Group’s objective to reduce leverage over the medium term.
Commenting on the acquisition Chief Investment Officer, Phil Redding, said: “This transaction provides us with a rare opportunity to acquire some of the best logistics assets in the two strongest markets in France. The assets deliver an attractive income yield from strong covenants and will allow us to drive operational efficiencies from greater critical mass with the potential to add value over time.”
