REIT Watch: Segro Swings to Profit in H1

By: James Navarro de Paz
James Navarro de Paz
James is one of our real estate development analysts. James ensures we're constantly reporting on the latest information regarding… read more.
on Jul 31, 2013

**United Kingdom**

**Segro Swings to Profit in H1** Wednesday July 31st: Segro, the UK’s largest publicly traded owner of industrial properties, reported today a first-half pre-tax profit of ₤20.3 million from a loss of ₤81.8 million in the same period a year ago. The REIT said it would pay a 4.9p a share dividend, the same as in 2012.
Net asset value was flat at 294p in the six months ended June 30 as the company continued to reshape its portfolio against the backdrop of weak economic data in Europe. Segro has agreed to sell about ₤437 million worth of properties this year and to invest ₤126 million in development projects.

In June, the REIT used warehouses worth €974 million (₤851 million) to launch a joint venture in Europe with Canada’s Public Sector Pension Investment Board. The JV will attempt to expand the portfolio’s value to at least €2 billion (₤1.75 billion) through developments and acquisitions.
“We have made further encouraging progress in the first half of the year, both operationally and with our strategic repositioning programme,” said CEO David Sleath in a statement. “We have made significant further disposals, continued to actively reinvest and announced a new joint venture to facilitate the growth of our Continental European logistics property business.”

Segro’s share price climbed by 2.67 percent to 308.00p in today’s trading session on the London Stock Exchange.
**United States**
**American Homes 4 Rent to Test U.S. Investors’ Appetite for REITs**
American Homes 4 Rent is preparing for the biggest initial public offering of a U.S. single-family homes REIT at a time when investors’ interest has slumped due to higher-yielding investment alternatives.

The REIT, founded by billionaire B. Wayne Hughes, has set a price range on its shares at $16 to $18 apiece and is planning to raise as much as $750 million (₤493 million) from its floatation. American Home 4 Rent’s portfolio is comprised of about 18,000 properties, making it the second largest in the U.S. home-for-rent market after Blackstone Group.

“We recommend buying at the low end of the range,” Green Street Advisors analysts Dave Bragg said of the REIT’s IPO. “Over the long term, we identify a high-quality problem resulting from home price appreciation, which would bring initial yields down to very low historical levels.”
American Homes 4 Rent says that its portfolio had an occupancy rate of 58 percent with the REIT acquiring properties faster than it could lease them. However, the occupancy rate on its properties owned for 90 days or longer is 97 percent, a factor Hughes believes will make his company’s floatation attractive for investors.
**Summit Industrial Income REIT Acquire C$15.3 Million Worth of Montreal Properties**
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Summit Industrial Income REIT, a real estate investment trust with a portfolio of light industrial properties, said today that it had acquired three light industrial properties and one office building located in Montreal.
The REIT will finance the C$15.3 million (₤9.8 million) purchase with a new C$9.9 million (₤6.6 million) mortgage. The balance will be paid in cash from the REIT’s revolving credit facility.
“We are very pleased to be expanding our presence in the strong and vibrant Montreal market with this high-quality property portfolio,” said chief executive Paul Dykeman in a statement.
**Segro’s share price was 308.70p as of 31.07.2013, 15.02 BST.**
**Summit Industrial Income’s share price was C$5.55 as of 31.07.2013, 15.02 BST.**

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