Slough: SEGRO raises cash to acquire stake in APP

The investment in the development pipeline provides some two years of capacity at a current rate of spend of around £300m per year, of which £165m has already been allocated to specific projects and the balance is for anticipated further projects on land that SEGRO owns or controls via options.

APP comprises a £1.1bn portfolio of airside and landside assets at and around London’s major airports, of which 87% are located at Heathrow, the UK’s only hub airport.

SEGRO has owned 50% of the asset in a JV with Aviva Investors since 2010 and, has concluded that it would be better to own it outright rather than hold it in a joint venture.

At its recent FY2016 results the company reiterated that development is a very important growth driver for the business and added a further circa £165m of development projects to its current and near-term pipeline, while referring to further, substantial opportunities from the land bank its owns and controls.

David Sleath, CEO, said: “The new capital we are seeking to raise will allow us to further progress the implementation of our development and income growth strategy, taking advantage of a very favourable occupier market backdrop. In addition to refinancing the acquisition of the 50% stake in APP we have announced today, the proceeds will fund further attractive development projects over and above those we funded with the proceeds of the placing in September last year.

“Our Heathrow portfolio is one of the jewels in our crown and by acquiring full ownership of the assets within APP we are able to add further scale in this supply-constrained market."

Ed Casal, Chief Executive Officer, Aviva Investors Real Estate, said: “This is a very positive deal for our clients, and in line with our broader real estate strategy to have direct control of assets and focus on core markets where we are able to drive performance through expert local market knowledge. We see real upside in the assets we have acquired through this transaction, and are confident they will contribute strong performance for our clients.”