SEGRO half-year results: rent growth, data centres and a softer property valuation

SEGRO PLC has reported a solid operating performance for the six months ended 30 June 2026, with rental growth, new leasing activity and cost control supporting higher adjusted earnings.

The warehouse and industrial property owner also increased its interim dividend by 4.5%. However, property valuation pressure remained visible, with the portfolio value declining by 1.2% and EPRA net tangible assets per share falling by 2.5%.

Meanwhile, SEGRO is expanding its development and data centre pipeline while recycling capital through disposals. Investors must also consider the possible takeover by Prologis, which remains subject to due diligence and other conditions.

SEGRO's first-half results at a glance

Metric	H1 2026	H1 2025	Change
Adjusted profit before tax	£268 million	£252 million	6.3%
Adjusted earnings per share	19.3p	18.1p	6.6%
IFRS profit before tax	£9 million	£264 million	Not disclosed
IFRS earnings per share	-0.4p	18.3p	Not disclosed
Interim dividend per share	10.14p	9.7p	4.5%
Like-for-like net rental income growth	5.3%	7.8%	Not applicable
Occupancy	94.5%	94.3%	0.2 percentage points
EPRA NTA per share	902p	925p at 31 December 2025	-2.5%
Portfolio valuation	£18.7 billion	£18.96 billion at 31 December 2025	-1.2%

Adjusted figures exclude items such as realised and unrealised property valuation movements. That distinction is particularly important here. Adjusted profit before tax rose to £268 million, but IFRS profit before tax was only £9 million because the statutory result includes losses recognised on the property portfolio.

The full figures and accompanying disclosures are available in the original company announcement.

Rental growth is doing the heavy lifting

SEGRO secured £53 million of new headline rent during the period, up from £31 million a year earlier. This included £27 million from leasing and capturing rent reversion within the existing portfolio, plus £26 million from development signings.

Rent reversion is the potential to increase rents when existing leases are reviewed, renewed or replaced at current market levels. SEGRO's UK properties achieved an average 44% uplift on rent reviews and renewals, excluding index-linked increases.

That helped produce like-for-like net rental income growth of 5.3%. The UK delivered 6.6% growth, while Continental Europe contributed 3.3%.

Estimated Rental Value, or ERV, increased by 1.8% across the group. UK ERV rose by 2.3%, while Continental Europe recorded growth of 1.1%.

The pace of like-for-like income growth was lower than the 7.8% reported in H1 2025, but SEGRO still has a substantial amount of income left to capture. Management identified £157 million of potential additional rent from the standing portfolio, comprising £101 million of rent reversion and £56 million from letting vacant space.

Occupancy remained within SEGRO's 94% to 96% target range at 94.5%, although this was slightly below the 94.9% recorded at the end of 2025. Customer retention also fell to 77% from 90% in the comparable period.

Development activity is accelerating

SEGRO signed £24 million of new pre-lets, compared with £3 million in H1 2025. Pre-lets are lease agreements signed before a building is completed, reducing the risk that new developments remain empty.

Projects completed during the half-year added £12 million of potential headline rent. Some 58% of that rent had already been secured, and the projects produced an average development yield of 6.5%.

The current and near-term development pipelines offer £90 million of potential rent, with 75% associated with pre-lets. SEGRO expects an average development yield of 7.4% from this pipeline.

Development expenditure is expected to reach £500 million to £550 million in 2026, including approximately £150 million of infrastructure spending. That is a meaningful commitment, but management is seeking to make the pipeline self-funding through disposals and partnerships.

SEGRO completed £213 million of disposals during the first half above book value. A further £95 million had been exchanged and was due to complete later in 2026.

Data centres are becoming a bigger part of the story

SEGRO added 0.5GVA of capacity to its strategic power bank, taking the total to 3.0GVA. GVA is a measure of electrical power capacity, an essential constraint when developing large data centres.

The company signed a powered-shell pre-let at Slough Trading Estate and received planning approval for its first fully fitted data centre lease in Park Royal, London. It also formed a second joint venture with Pure Data Centres Group to build its first fully fitted data centre in Continental Europe, located in Paris.

SEGRO is targeting leases covering 1.4GVA of power over the next seven years. Management estimates this could support £464 million of potential rent, with another 1.1GVA representing a longer-term opportunity.

These are potential figures rather than contracted income. Delivery depends on planning, infrastructure, customer commitments, construction and capital allocation. Even so, the size of the stated opportunity helps explain why data centres feature so prominently in SEGRO's growth plans.

Why net asset value moved backwards

EPRA net tangible assets, or NTA, declined from 925p to 902p per share. EPRA NTA is a property-sector measure intended to represent the value of a company's tangible real estate assets after liabilities.

The portfolio valuation fell by 1.2%, including a 2.0% decline in the UK and a 0.1% increase in Continental Europe. SEGRO said the overall decline was driven mainly by its incoming UK valuer applying higher property yields.

A higher valuation yield generally implies a lower property value when rental income is unchanged. This accounting pressure explains the sharp gap between adjusted earnings and the IFRS result.

For investors, the encouraging point is that rental values and income continued to rise despite the lower portfolio valuation. The less comfortable point is that further yield movement could continue to affect reported asset values and statutory profits.

Balance sheet remains stable, but funding costs have edged up

SEGRO's loan-to-value ratio was unchanged at 31%, while net debt was also unchanged at £5.92 billion. Net debt to EBITDA improved slightly from 8.4 times to 8.3 times.

The average cost of debt increased from 2.6% at the end of 2025 to 2.8%. SEGRO said it had refinanced all 2026 debt maturities at group level and within its SELP joint venture.

The combination of stable leverage, disposals above book value and greater use of joint ventures should provide support for the development programme. Nevertheless, higher investment spending and a growing pipeline mean disciplined capital allocation will remain important.

The Prologis proposal adds another major consideration

On 22 July, Prologis announced its fourth and "Best and Final" possible proposal to acquire SEGRO. The SEGRO board said it would be minded to recommend the financial terms if Prologis announces a firm intention to make an offer on those terms.

That position remains subject to satisfactory confirmatory due diligence, agreement on the other terms and conditions, and definitive transaction documentation. Prologis has until 5pm on 12 August 2026 either to announce a firm offer or confirm that it does not intend to proceed.

Investors should therefore distinguish between the proposal and a completed transaction. A firm offer had not been announced within these half-year results.

What matters next for SEGRO investors

The first-half numbers show a business generating higher rental income and adjusted earnings while expanding its development pipeline. The 4.5% dividend increase and £53 million of new headline rent are clear positives.

The main counterweight is the decline in asset values, which reduced EPRA NTA and left statutory earnings well below adjusted earnings. Occupancy remains within target, but the lower customer retention rate and reduced proportion of completed development rent already secured are also worth monitoring.

SEGRO expects adjusted EPS to progress from 36.6p in 2025 to approximately 50.0p by 2030. Achieving that ambition will depend on capturing rent reversion, leasing vacant properties and successfully delivering the industrial, logistics and data centre pipelines.

In the near term, however, the Prologis deadline may prove just as significant for shareholders as the underlying operational progress.