MARKET REPORT: Demand for data centres boosts shares in Segro

Segro ended the week on a high as annual profits rose despite a slump in property valuations.

Commercial property group FTSE 100, which owns warehouses used by businesses, distributors and supermarkets, saw its profits rise 8.4 per cent to £386m for 2022. Rental income shot up nearly 20 per cent to £522m after a record annual rental growth.

There was also strong demand for space as it signed a lease with a multi-storey data center development in Slough.

Segro CEO David Sleath said: “Our modern, well-located and highly sustainable warehouses continue to be in high demand from a diverse group of users, supported by long-term structural factors.”

However, the market turmoil caused by last September’s disastrous mini-budget took its toll on the real estate sector.

Segro saw its net asset value per share fall by 15 percent to 966 pence.

This was due to an 11 percent fall in the value of the portfolio as property yields increased due to rising interest rates. But Segro hopes that investments will pick up. It also increased its dividend by 8.4 percent to 26.3 pence for 2022. Analysts from Liberum said Segro’s “modern portfolio focused on large cities” means it is well positioned to benefit from strong rental growth as demand for warehouse space greater than the supply. Shares rose 3.6 percent, or 30 pence, to 866.2 pence.

The FTSE 100 fell 0.1 percent, or 8.17 points, to 8004.36 and the FTSE 250 fell 0.5 percent, or 92.52 points, to 20088.93.

Danni Hewson, financial analyst at AJ Bell, said: ‘It’s been a strange week with a plethora of mixed economic data to chew on and so many ways investors can interpret that data. We are still in the era in which so much good news is seen as bad news and vice versa.’

Oil prices fell nearly 3 percent amid fears that further rate hikes in the US could dampen demand.

BP was down 1.4 percent, or 7.7 pence, to 559.9 pence and Shell was down 1.8 percent, or 46.5 pence, to 2,541 pence.

Asset manager Legal & General last week sued Glencore for investor losses in connection with the mining giant’s guilty plea to multiple bribery offenses in November.

Investors appeared unnerved by the news as Glencore rose 0.5 percent, or 2.3 pence, to 509.7 pence and L&G rose 0.2 percent, or 0.5 pence, to 260 pence.

Activist investor Nelson Peltz sold more than £70 million worth of Unilever shares through his New York-based investment fund Trian Partners. The 80-year-old billionaire sold 1,661,153 shares in the consumer goods group behind Dove, Magnum and Ben & Jerry’s at an average price of £42.60.

Unilever shares rose 0.1 percent, or 4.5 pence, to 4,235.5 pence.

Superdry’s boss has just two weeks after insisting he did not want to delist the fashion company ‘at the moment’, another piece of shares. Julian Dunkerton, co-founder of Superdry in 2003, bought 340,786 shares for nearly 112 pence. Shares rose 1.7 percent, or 2 pence, to 117.4 pence.

Pod Point remained optimistic about the future growth of the UK electric vehicle market after shipping and installing more charging points compared to the previous 12 months.

The group, which develops charging stations for Tesco (0.3 percent, or 0.8 pence, to 250.9 pence), Lidl and Center Parcs, among others, saw its turnover increase by 16 percent in 2022 to £71.4 million.

But losses spiked by 39 per cent to £19.9m in its first full year as a public company.

Shares, which floated at 225p in November 2021, gained 3.6 per cent, or 2.18p, to 63p.

Meanwhile, bank and floor retailer ScS has returned £7 million to shareholders after completing its £3.1 million share buyback programme. Shares rose 0.9 percent, or 2 pence, to 219 pence.