(Bloomberg) -- Strong rental growth from companies seeking warehouse and data center space is starting to offset some of the effects of painful write-downs at Europe’s largest publicly traded industrial landlord.
Segro reported a 12.5% increase in net rental income in 2023, thanks to new developments and a 6.5% rise in like-for-like rents, according to a statement Friday. The company says it expects to increase its total rent roll by more than 50% over the next three years as new warehouses are built and old leases are renegotiated on existing buildings at higher levels.
That wasn’t enough to completely stall the impact of rising interest rates, which have pushed up property yields and caused valuations to fall, but the pace of decline slowed rapidly from the previous year. The landlord marked down its portfolio of UK and European properties by 4% in 2023, compared with a markdown of 11% in 2022.
“We are reassured by continued rental growth across our markets,” Chief Executive Officer David Sleath said in the statement. “Market expectations for lower interest rates, if sustained, provide a positive backdrop for a recovery of investment market sentiment as the year progresses.”
