Segro Plc (SGRO), the U.K.’s largest publicly traded owner of industrial properties, declined 2.1 percent in London trading after writing down the value of peripheral assets by more than analysts expected.
Net asset value adjusted for share options declined 9.8 percent to 340 pence a share in the second half of 2011, the Slough, England-based company said today in a statement. JPMorgan Chase & Co. had expected 450 pence, while the average analyst estimate was 354 pence, according to a note to investors.
The company wrote down the value of so-called non-core assets by 187 million pounds ($296 million). Chief Executive Officer David Sleath forecast in November that the company might make 150 million pounds of writedowns for older properties or those in peripheral locations.
The writedown was “the key driver of the miss on net asset value,” said Osmaan Malik, an analyst at JPMorgan with an “overweight” rating on the stock.
Segro declined 5 pence to 231.7 pence. The shares advanced more than 13 percent this year to a three-month high yesterday compared with an 8.9 percent gain for the FTSE 350 Real Estate Investment Trust Index. (F3REITS)
In November, Sleath also announced a three-year program to sell 1.6 billion pounds of real estate to cut debt and focus on more profitable assets near major transportation hubs or large cities across Europe.
The properties that Segro plans to retain lost 0.4 percent of their value, Sleath said on a conference call. The decline contributed to a 2011 net loss of 30.4 million pounds, or 4.1 pence a share, compared with a profit of 210.3 million pounds, or 28.5 pence, a year earlier.
Profit excluding changes in property values and one-time items rose to 136.6 million pounds, or 18.4 pence a share, from 126 million pounds, or 17.1 pence, a year earlier. The company cut vacancies to the lowest since 2007, trimmed costs and raised rents.
“There’s been good earnings growth and there’s good momentum in the business,” Sleath said on the conference call.
Segro opened 15 projects last year, adding 9 million pounds of annual rent, while this year 20 more will open to generate annual rental income of 18.9 million pounds.
Sleath said that he plans to raise as much as 500 million pounds this year from disposals. He said the company is in talks with potential buyers that would enable the company to “make significant further progress in coming months.”
Segro sold five industrial estates in southern England to funds run by Ignis Asset Management for about 80 million pounds, according to a statement yesterday.
To contact the reporter on this story: Simon Packard in London at firstname.lastname@example.org.