UK warehouse group Segro outlines £1bn plan to tap online shopping boom

FTSE 100-listed firm seeks funds to buy new warehouse and distribution infrastructure across Europe and UK

Segro, a UK property group that specialises in warehouses, has unveiled plans to raise £650m to fund the acquisition of new distribution facilities.

The firm hopes the move will allow it to tap into the consumer shift to online shopping during the coronavirus lockdown.

The FTSE 100 company said the Covid-19 crisis had “accelerated the adoption of technology and e-commerce across society” and it planned to invest more than £1bn in developing new warehouses by 2021 to take advantage of the shift.

“The data on e-commerce penetration during the current Covid-19 pandemic underpins the importance of Segro’s high-quality, well-located big box and urban warehouse portfolio,” the company said in a stock market announcement.

“In the UK, e-commerce volumes in April represented 31% of retail sales, 16% higher than the previous month. And online grocery sales almost doubled, representing 13% of the market, up from 7% previously. Similar trends have been observed across continental Europe.”

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Segro, which on Monday bought a vast west London warehouse complex for £203m, said the new equity, raised through a private share placement, would allow the company to “take advantage of additional investment opportunities across the UK and Europe”.

David Sleath, Segro’s chief executive, said: “The Covid-19 pandemic has accelerated the adoption of technology and e-commerce across society. Alongside a renewed focus by many occupiers on the critical importance of best-in-class logistics supply chains, this is likely to help drive strong occupier and investor demand for modern, high-quality warehouses.”

Sleath said Segro’s business “continues to progress well” in the face of the pandemic and “new lettings and pre-let development agreements [are] at levels above our expectations at the beginning of the year”.

He said Segro was already in “advanced negotiations” to spend about £600m on new warehouse projects this year.

Segro’s shares closed down 3% at 858.8p before the announcement on Tuesday. The shares have recovered to roughly the level seen before the crisis, having fallen as low as 660p in March.

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Rupert Neate

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