Segro snaps up Heathrow property and taps investors for £556m

INDUSTRIAL property developer Segro has bought the remaining £365m stake in a portfolio around Heathrow Airport, as well as raising £556m to fund the purchase and its development pipeline.

The company has reached a deal with Aviva, which owned the stake in the Airport Property Partnership portfolio, to take total control of the buildings, which include the majority of Heathrow’s airside cargo facilities. Segro already owned 50pc of the portfolio.

Segro will be looking to benefit from the Government’s support for a third runway at Heathrow, which increases the likelihood of expansion at the airport and more cargo passing through.

David Sleath, chief executive of Segro, called the portfolio “one of the jewels in our crown”.

Segro paid for part of the portfolio by selling some of its other assets to Aviva, including four London buildings.

The rest of the purchase will be funded through a £556m rights issue, which was priced at 345p per share on the basis of one new share for every five held. Segro’s shares closed down 5.6pc at 468.6p yesterday.

Mr Sleath said that the buoyant industrial property market had pushed the company to raise capital to fund an extended development programme.

“What we have seen in all of our markets is that occupier demand seems to be being fed by the revolution in internet retailing,” he explained, adding that companies such as Amazon have continued to expand in the UK.

“Companies need big central warehouses in locations such as the Midlands,” Mr Sleath said. “But they in- creasingly also need warehouses in more urban locations to fulfil shorter delivery times.”

Mr Sleath said that the £325m raised through a previous rights issue in September had already been spent or allocated to particular projects as the firm tries to capitalise on the supply shortage in the industrial sector.