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Annual Report & Accounts 2022
Enabling
extraordinary
things
More information Contents
Overview
An ‘at a glance’ look at SEGRO: what we do, where we
do it, who we do it for and what drives performance.
2022 in numbers 01
Our Purpose 01
SEGRO overview 02
Our investment proposition 07
Strategic Report
A deep dive into our business: the key external
factors that impact SEGRO, an overview of our
business model, strategy and KPIs, a review of our
2022 performance, and some thoughts on the
outlook for 2023 and beyond.
Strategic report 09
Chief Executive’s statement 11
Market overview 14
Our strategy 18
Key performance indicators 20
Our business model 24
Responsible SEGRO 33
Performance review 48
Regional updates 55
Financial review 58
Managing risks 64
Viability statement 75
Section 172 statement 76
Non-inancial information and sustainability
statement 77
Streamlined energy and carbon reporting 78
Climate-related inancial disclosures 79
Governance
An overview of our corporate governance structure,
policies and practices as well as the key activities
undertaken by the Board and its Committees.
Governance Report 87
Chair’s introduction to Governance 89
Board of Directors 91
Board leadership and Company purpose 94
Board stakeholder engagement 97
Division of responsibilities 104
Key activities of the Board 106
Internal Board evaluation 109
Nomination Committee Report 111
Audit Committee Report 116
Directors’ Remuneration Report 123
Directors’ Remuneration Policy – summary 143
Directors’ Report 148
Statement of Directors’ responsibilities 150
Financial Statements
Independent Auditors’ Report to the
members of SEGRO plc 151
Group income statement 159
Group statement of comprehensive income 160
Balance sheets 161
Statements of changes in equity 163
Cash low statements 165
Notes to the Financial Statements 166
Five-year inancial results 210
Further Information
Further information 211
Shareholder information 212
Glossary of terms 213
The Directors present the Annual Report for the year ended
31 December 2022, which includes the Strategic Report,
Governance Report and audited Financial Statements for the
year. References to ‘SEGRO’, the ‘Group’, the ‘Company’, ‘we’ or
‘our’ are to SEGRO plc and/or its subsidiaries, or any of them as
the context may require. Pages 09 to 86 inclusive comprise
the Strategic Report; pages 123 to 142 inclusive comprise the
Directors’ Remuneration Report; and pages 148 to 149 inclusive
comprise the Directors’ Report. These have been drawn up and
presented in accordance with English company law and the
liabilities of the Directors, in connection with these sections,
and shall be subject to the limitations and restrictions provided
by such law.
The Annual Report contains forward-looking statements.
For further information see inside back cover.
More information
For more information on SEGRO’s activities
and performance, please visit our website:
www.SEGRO.com
– Estates
– Countries
– Our Purpose
– Responsible SEGRO
– About us
– Investor information
– Careers
– Media
In this report
Throughout this report we use QR codes as
a link to interviews with our key executives
and case studies from our year.
CEO’s Q&A A million more meals
Investing in our communities
and local environments
COO’s Q&A
Once a roof, now a road
Championing low-carbon growth
CFO’s Q&A Chair’s Q&A
2022 in numbers
Rent contracted
£ 98m
2021: £91m
New pre-lets signed
£ 41m
2021: £49m
Development completions
639,200 sq m
2021: 839,200 sq m
Development completions rated BREEAM
‘Very Good’ or better (68% rated ‘Excellent’)
100%
2021: 98%
Net Investment
£ 1.3bn
2021: £1.5bn
New inancing
£ 3.1bn
2021: £1.3bn
Reduced average embodied carbon intensity of
development pipeline
10%
2021: 2%
Increase in solar capacity
24%
2021: 45%
Number of Community Investment Plans
launched
10
2021: N/A
Employee engagement
91%
2020: 94%
Our Purpose
We create the space that enables
extraordinary things to happen.
Our passions include:
1. Creating exceptional buildings
and spaces
Page 8
2. Enabling our customers to do
extraordinary things
Page 32
3. Nurturing talent Page 40
4. Investing in our communities
and local environments
Page 47
5. Championing low-carbon
growth
Page 56
How our governance activities enable extraordinary things
How the Board lives our Purpose and Values 95
How the Board manages and monitors our culture 96
A focused and active Board – key milestones during 2022 106
01 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
What we do
We own, manage and develop
modern and sustainable
warehouses across Europe.
Our portfolio includes both big
box and urban warehouses
and is unique in that two-thirds
of it is focused on the most
supply-constrained urban
markets. We aim to be the best
property company, and the
partner of choice for our
customers and other
stakeholders.
1.
2.
3.
£20.9bn
Total AuM
Asset type by value (SEGRO share)
1. Urban warehousing 67%
2. Big box warehousing 31%
3. Other uses 2%
9.9m sq m
Total loor space
1
1 includes oices and retail uses such as trade counters,
car showrooms and self storage facilities
Big box warehouses
Users of our big box spaces:
– Retailers (online and traditional)
– Third-party logistics and transportation
companies
– Manufacturers
– Distributors and wholesalers
Big box warehouses are typically used for
storage and processing goods for regional,
national and international distribution and are
much larger, both in terms of footprint and
often also height, than urban warehouses.
They are often located far from the end
customer but are situated on major transport
routes (mainly motorways, ports, rail freight
terminals and airports) to allow rapid transit.
Big box warehouses account for 31 per cent of
our portfolio value. They are located in major
logistics hubs and corridors in the UK (South-
East and Midlands); France (the logistics ‘spine’
linking Lille, Paris, Lyon and Marseille); Germany
(Düsseldorf, Berlin, Frankfurt and Hamburg),
Italy (Milan, Bologna and Rome) and Poland
(Warsaw, Łódź, Poznań, and the industrial
region of Silesia). 27 per cent of our big box
warehouses are in the UK and the remaining
73 per cent are in Continental Europe.
Occupier demand for big box warehouses
has remained strong across the UK and
Continental Europe during 2022. Typically it is
easier for supply to catch up with demand in
big box locations due to higher availability of
land, however supply has remained low during
2022, leading to above-average rental growth
in most of our markets. On a medium to
long-term basis we expect market rental
growth for our big box warehouses to be two
to three per cent per annum.
£225m
Headline rent (SEGRO share)
Geographical split of big box warehouses by value
(SEGRO share)
02 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
1.
2.
1. UK 27%
2. Continental
Europe 73%
Big box
warehouses
Urban
warehouses
Major
cities
Urban warehouses
Users of our urban spaces:
– Retailers and supermarkets (online and
traditional)
– Parcel delivery companies
– Food preparation companies
– Data centre operators
– Air cargo handling companies
– Wholesalers
– Film, TV and digital content producers
– Support services
– Pharmaceuticals and life science companies
Urban warehouses are located in, or close to,
population centres and business districts. They
are used by a variety of customers who need
rapid access to end consumers, as well as
labour. Modern urban warehouses have high
eaves and plenty of yard space to allow easy
and safe vehicle circulation. They are generally
situated close to main roads and public
transport. Urban warehouses tend to be smaller
than big box warehouses and are often clustered
in estates, which can comprise terraces of
smaller units (typically less than 3,500 sq m),
larger detached single-let warehouses (typically
larger than 3,500 sq m), or a mixture of both.
Urban warehouses account for 67 per cent of
our portfolio value and are located mainly in
and on the edges of major cities where land
supply is restricted and there is strong demand
for warehouse space and from data centre
users. Our urban portfolio is concentrated in
London and South-East England (79 per cent)
and major cities in Continental Europe (21 per
cent), including Paris, Düsseldorf, Frankfurt,
Berlin and Warsaw.
Land supply in these cities is limited (and
shrinking) and due to growing populations there
are competing pressures from other uses, for
example residential development. We believe
that the dynamics of this enduring occupier
demand and structurally limited supply bodes
well for continued strong rental growth in our
urban portfolio. We expect market rental
growth to be three to six per cent per annum
on a medium-term basis.
£385m
Headline rent (SEGRO share)
Geographical split of urban warehouses by value
(SEGRO share)
From transport hubs to major cities
03 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
1.
2.
1. UK 79%
2. Continental
Europe 21%
1.
5.
6.
2.
3.
4.
Geographical split by value (SEGRO share)
1. Greater London 36%
Park Royal 15%
London Airports 12%
Rest of London 9%
2. Thames Valley 17%
Slough Trading Estate 16%
Rest of Thames Valley 1%
3. National Logistics 10%
Midlands 9%
South East 1%
4. Southern Europe 20%
France 12%
Italy 6%
Spain 2%
5. Northern Europe 12%
Germany 11%
Netherlands 1%
6. Central Europe 5%
Poland 4%
Czech Republic 1%
Milan
85%
of our portfolio is located in UK and Northern
European logistics hotspots (including the two
largest cities in Europe)
In the right markets
Why we are in these markets
The shape of our portfolio has been driven
by a deep understanding of our customers’
needs, as well as our in-depth analysis of key
regional characteristics, such as population
density and infrastructure networks. Our teams
on the ground supplement their knowledge
with our real-time location scoring data tool,
which scores millions of locations across an
ever-evolving European market, helping us to
identify new opportunities.
Key market indicators:
–Good transportation links
–Proximity to end consumers
–Availability of labour
– Suicient power and digital connectivity
Bologna
Where we do it
Our portfolio is located in
densely populated and
supply-constrained cities,
as well as key transportation
corridors and logistics hubs
across eight European
countries. Our market-leading
operating platform has people
on the ground in every country,
providing excellent customer
service, as well as local insights
and helping us to develop
close relationships with
our local stakeholders.
425
people
21
oices
04 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Midlands
Paris
Rome
Madrid
Düsseldorf
Frankfurt
Prague
Katowice
Lódź
Warsaw
Amsterdam
London &
Thames
Valley
Tilburg
Berlin
Wroclaw
Poznań
Cologne
Lille
Hamburg
Munich
Marseille
Lyon
Barcelona
1. Transport and logistics
2. Retail (physical, online and hybrid)
3. Food and general manufacturing
4. Technology, media and telecoms
5. Wholesale retail and distribution
6. Post and parcel delivery
7. Services and utilities
8. Other
22
19
15
11
10
9
7
7
Who we do it for
Modern cities need a huge
array of goods and services to
function. Our warehouses are
used by a diverse customer
base, spanning a wide range of
industries. The spaces that we
create are lexible and can be
adapted for dierent uses. Our
ability to oer big box and urban
warehouses means that we are
able to provide space for
customers throughout their
distribution networks, and in
many cases across borders.
Customer type by headline rent (%)
SEGRO share
32% (£203m)
of headline rent from our top 20 customers
7%
of headline rent from our largest customer
Top 20 customers
Big box Urban
1. Amazon
2. Deutsche Post DHL
3. Royal Mail
4. Fedex
5. Virtus
6. Worldwide Flight Services
7. GXO
8. Geodis
9. La Poste (DPD)
10. Equinix
11. British Airways
12. CEVA
13. Iron Mountain
14. Netlix
15. CyrusOne
16. Ocado
17. Leroy Merlin
18. Evri
19. Tesco Group
20. Menzies
25%
of rent with customers who use both
our urban and big box space
27%
of rent with customers who we work
with across more than one country
05 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
What drives performance
Our purpose-led,
responsible approach to
doing business helps to
drive our performance.
We have a strong company
culture and values, which
inluence our day-to-day
decision making and
behaviour.
Our Purpose
We create the space that enables
extraordinary things to happen.
We are both a creator of exceptional
buildings and an enabler for our
stakeholders; particularly our customers,
employees and local communities, to
achieve extraordinary things.
Our culture and values
We have a special company culture that
permeates through the whole business.
Our culture is underpinned by our Values:
these are our core beliefs about how we do
business, which guide our decision making,
large and small. They are the ways in which
we work together to make things happen.
Our Values:
– Say it like it is
– Stand side by side
– If the door is closed...
– Keep one eye on the horizon
– Does it make the boat go faster?
Say it like it is
We always give
honest feedback,
keep our promises,
and keep messaging
clear and simple.
Keep one eye on
the horizon
We constantly look
ahead to ensure we are
successful in the future.
We do this in part by
taking an active interest
in our customers and
their customers.
If the door is closed...
If one route is closed
to us, we always ind
another way. We
challenge ourselves
to think dierently and
search for new ways
to succeed.
Does it make the boat
go faster?
We keep things simple
and continue to look for
improvements to how
we work.
Stand side by side
We work together
and put the interests
of our business ahead
of our own. We go out
of our way to support
each other and share
knowledge across
the business.
06 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Strong
balance sheet
For more information see
Financial Review
Page 57
Market-leading
pan-European
operating
platform
For more information see
Customers
Page 26
Restricted
land availability
limits supply
response
For more information see
Business Model
Page 27
Supportive
structural trends
For more information see
Our Market Overview
Page 14
Exceptional land
bank for
redevelopment
For more information see
Business Model
Page 28
Prime portfolio
of existing assets
For more information see
Business Model
Page 27
Our investment
proposition
Focused on the industrial and logistics sector
where there are long-term structural trends
driving occupier demand from a diverse
range of sectors
Biased towards urban warehousing where
there are signiicant barriers to entry due to
land supply and increasingly challenging
planning regimes
One of the most modern and sustainable
pan-European portfolios focused on the most
attractive European markets, supported by a
market-leading operating platform that drives
rental growth and unlocks value
Signiicant levers for growth with a rare
land bank and balance sheet with plenty
of irepower – development programme has
doubled the rent roll over the past ive years
and has the potential to do the same again
Experienced management team, following
a clear strategy and with an excellent track
record of delivering growth in earnings
and dividends
07 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
The greenest urban industrial park in London.
When we bought the site that is now SEGRO
Park Tottenham, we made it a priority to
address the concerns that the nearby residents
had before we built anything.
The eight-acre site had previously been home
to a variety of industrial uses that had caused
upset to residents over several years, including:
noise pollution, vehicle parking and out-of-
hours usage. This culminated in a major ire
that destroyed almost all the buildings and
caused further concern to the residents.
Through talking with our neighbours, we set
out to build the greenest urban industrial park in
London. One that ensured no noise or light-glare
reached the residents; that ensured that the new
buildings and landscaping did not overshadow
the adjoining residential premises; and one
that provided a 10m landscaped corridor with
semi-mature trees and a grassed area with
meadow lowers that would also beneit the
wellness of our customers’ employees.
In doing so, we have achieved some
outstanding environmental credentials –
BREEAM “Outstanding” and EPC “A+” – as well
as achieving a carbon negative rating for our
buildings in operation.
Enabling extraordinary things:
Creating exceptional buildings and spaces
For further information
please see
Page 8
08 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
In this section:
We describe how our market
has been inluenced by macro
issues such as inlation, and the
structural drivers that continue to
drive demand for warehouse space.
We also show how our business
model creates value for all of our
stakeholders, how our strategy
drives our performance and how
our belief that our responsibility
goes beyond the space we own
continues to dierentiate us.
Quick links
Market overview 14
Our strategy 18
KPIs 24
Responsible SEGRO 33
Performance review 48
Market overview
Our business performance is driven by both cyclical
and structural factors. The investment market
remains cyclical but the occupier market is being
driven mostly by long-term structural trends, which
are resulting in high levels of occupier demand.
Page 14
Did you know:
Slough Trading Estate has the second-largest hub of
data centres in the world
Our strategy
Our clear strategy has helped us reshape our
business and is central to our goal of being the best
property company, and the partner of choice for all
our stakeholders.
Page 18
Our business model
At the heart of how we do business lies a deep
understanding of our customers’ needs. We rely
on dierent inputs, which combine to give us our
competitive advantage and our ability to create
superior value for all of our stakeholders.
Our prime portfolio and
market-leading operating
platform combine to create
a strong competitive
advantage, and position
us to create value through
the cycle for all our
stakeholders.
David Sleath
CEO
Page 24
Responsible SEGRO
Responsible SEGRO is a key part of our strategy.
It focuses on three strategic priorities which we have
identiied as enabling us to make the greatest
business, environmental and social contribution:
Championing low-carbon growth; Investing in
our local communities and environments; and
Nurturing talent.
Page 33
09 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Strategic report
Our strategy has Responsible
SEGRO at its heart ensuring
we remain a business it for
the future, generating
attractive and sustainable
returns.
CEO’s
Q&A
Scan here
to see video.
To ind out more
about SEGRO visit
www.segro.com
David Sleath covers the following topics:
– SEGRO’s performance in 2022
– Meaningful progress made with Responsible
SEGRO during the year
– The strength of the business and how it is
positioned to perform through the cycle
– Priorities for 2023
10 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Our strong earnings growth
during 2022 and conident
outlook for 2023 means
that we are recommending
a 7.7 per cent increase in
inal dividend to 18.2 pence
per share, resulting in a
total distribution of 26.3
pence for 2022 as a whole.
David Sleath,
Chief Executive
David Sleath reports on SEGRO’s
performance over the past year and looks
to the future.
Our business delivered strong operational results
during 2022, a year where we saw signiicant
geopolitical uncertainty and changes to the
macroeconomic environment. This led to an
unprecedented disconnect between the
occupier and investment markets emerging
over the summer months.
Actions taken by central banks to address high
levels of inlation by sharply raising interest
rates led to signiicantly reduced liquidity in the
property investment markets in the second
half of the year, as both buyers and sellers
reacted to the increased volatility in capital
markets and the higher cost of capital. Valuers
increased yields to relect this higher interest
rate environment, leading to falls in property
valuations across all markets. In contrast to
former property cycles however, occupational
demand and rental performance in the
industrial and logistics sector has remained
strong, supported by long-term structural
tailwinds and tight supply.
The expertise and knowledge of our local
teams on the ground across Europe meant we
could respond quickly to the changing market
environment and deliver progress in all our
operating metrics throughout the year as well
as continued growth in both earnings and
dividends.
Looking back on 2022, our main highlights
include:
– a record £98 million of new rent contracted,
arising from a combination of active asset
management of our existing portfolio, our
expanded development programme, market
rental growth and the beneits of indexation;
– 639,200 sq m of development completions,
and a reduction of ten per cent in the average
embodied carbon intensity of our
development programme;
– the acquisition of key strategic land plots
in some of Europe’s most supply constrained
urban markets such as London, Paris
and Berlin;
– progress towards reducing our portfolio’s
carbon emissions with the introduction
of green lease clauses, and a signiicant
increase in our solar capacity;
– the launch of Community Investment
Plans in ten key markets, providing tangible
economic and social beneits for thousands
of people in the communities closest to
our assets;
– meaningful changes to promote diversity
and inclusion within our workforce and
the wider property sector, including, for
example, changes to our recruitment
process which resulted in a more diverse
2022 graduate intake.
This activity helped us to deliver a 6.5 per cent
increase in Adjusted earnings per share (10.7
per cent excluding the SELP performance fee)
and we are therefore recommending a 7.7 per
cent increase in our inal dividend to 18.2
pence per share, resulting in a total distribution
of 26.3 pence for 2022 (2021: 24.3 pence).
Relecting on 2022, three things stand out for me:
– the performance of our high-quality
portfolio, and the beneits of the decade-
long reshaping of both that and our balance
sheet, particularly in the current market
environment;
– the continued strength and diversity of
occupier demand;
– the tangible progress that we have made
with our Responsible SEGRO strategic
priorities, and the long-term value that we
are creating through our activities.
Delivering increased dividends
26.3 p
26.3p
24.3p
22.1p
2022
2021
2020
Financial Highlights
Adjusted proit
1
before tax
£ 386m +8.4%
2021: £356m
IFRS loss
1
before tax
£ -1,967m
2021: £4,355m proit before tax
Adjusted earnings per share
31.0p +6.5%
2021: 29.1p
IFRS earnings per share
£ -159.7p
2021: 339.0p
Adjusted NAV per share
966p -15.0%
2021: 1,137p
IFRS NAV
1
per share
938p
2021: 1,115p
Portfolio value
£17.9bn -11.0%
2021: £18.4bn
1 EPRA and Adjusted metrics: The Financial Statements are
prepared under IFRS. SEGRO management monitors a
number of adjusted performance indicators in assessing and
managing the performance of the business which they believe
relect the underlying recurring performance of the property
rental business which is the Group’s core operating activity.
These include those deined by EPRA as part of their mission
to establish consistency of calculation across the European
listed real estate sector. Page 171 contains more information
about the adjustments and the reconciliation of these to
IFRS equivalents. SEGRO discloses EPRA alternative metrics
on pages 203-208. Adjusted NAV per share is in line with
EPRA NTA.
11 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Chief Executive’s statement
Over a decade ago, we launched a strategy
centred around an ambition to create a
portfolio focused on the most attractive
industrial and logistics markets across the UK
and Continental Europe, one that would deliver
attractive total returns throughout the cycle.
An important element of this strategy was the
strengthening of our balance sheet to provide
resilience, and to ensure we could take
advantage of opportunities for further growth
even in more challenging market environments.
Since launching that strategy, the industrial
and logistics sector has transformed. Long-
term structural trends of digitalisation and
urbanisation have led to increased occupier
demand, driving down vacancy rates to record
lows. This shortage of supply led to exceptional
levels of rental growth, attracting huge
amounts of investment into our sector and
increased competition.
We adapted our strategy accordingly, selling
non-core assets in secondary locations and
buying new assets in our preferred locations.
As competition for standing assets increased
we moved away from acquiring them on-
market, instead investing capital into
development, where we believed we could
produce better risk-adjusted returns. We also
reduced leverage and worked hard to create
a diverse, long-duration debt proile.
During 2022, our portfolio was not immune
to the sharp rises in interest rates, which
increased the cost of capital and consequently,
yields on commercial properties. This led to a
fall in valuation of 11.0 per cent during the year.
At this time, benchmark information is not
available for the Continent but in the UK our
portfolio has outperformed the MSCI Quarterly
All Industrial index which showed a decline in
capital values of -17.4 per cent during 2022,
versus SEGRO’s UK portfolio which decreased
by 15.5 per cent. This relects the positive
beneit of the changes made to our portfolio
over the past ten years and our continued
focus on Disciplined capital allocation.
As part of the day-to-day management of
our portfolio, our teams prioritise our three
Responsible SEGRO strategic priorities
and in 2022 we saw tangible beneits from
these initiatives.
There were a number of innovations within
our development programme that helped
us to reduce our average embodied carbon
intensity, such as using recycled roof materials
to create asphalt for road surfaces. We have
also signiicantly increased the number of solar
panels installed on our warehouses, with one
project in the Netherlands adding almost 20
per cent to our total Group capacity, which
makes us excited about further similar
opportunities across the portfolio.
We have launched ten Community Investment
Plans (CIPs) in key markets, and projects are
underway across the UK and Continental
Europe that focus on employability, supporting
local economies and improving local
environments, making meaningful changes
to the day-to-day lives of people in our local
communities. Thousands of people have
already beneited from projects linked to these
and this is only the beginning.
We have also made great progress with our
Nurturing talent ambitions, focusing on the
wellbeing of our people (including providing
extra support for those most impacted by
the cost of living crisis) and actioning
recommendations from the National Equality
Standards audit to promote diversity and
inclusion within our workplace and the wider
property sector.
Not only are these initiatives creating additional
value for our stakeholders, they are ensuring
that our business is it for the future and that
it is truly delivering on its Purpose of creating
the space that enables extraordinary things
to happen.
2022 might not have been the year that we
all expected, but our business has shown its
quality and resilience and has continued to
deliver value. I am proud of how everyone at
SEGRO has come together and worked hard
to make this happen.
Importantly, the strength of our balance sheet,
has meant that, as long-term investors, we
have been able to look through the current
volatility, and focus on the areas that we can
control: capitalising on the continued strength
of occupier demand to drive rental growth;
capturing a signiicant amount of the
reversionary potential in our portfolio (which
has grown once again due to further market
rental growth in both the UK and Continental
Europe); and signing pre-lets to build out our
well-located land bank.
Consistent throughout 2022 was the strength
of the occupier market. Demand from our
customers has been, and continues to be, very
resilient. Take-up remained very high and well
above historical averages. Most notably, we
saw increased demand from businesses which
are attempting to make their supply-chains
more resilient during 2022: holding more
inventory locally and therefore requiring more
space; moving parts of their operations back
to Europe and the impacts of businesses
choosing to source materials closer to their
end destination.
We have also seen customers placing greater
importance on the sustainability of the
buildings they occupy. Many of our larger
customers have their own net-zero targets and
want the space that they occupy to contribute
to this. Smaller businesses have been
impacted by recent increases in energy prices
and are recognising the beneits of choosing
more energy eicient buildings and working
with a landlord who will help them to
understand their energy consumption and
can provide solutions to help reduce it.
These structural drivers are resulting in
demand from a diverse range of businesses
and our teams have been working hard to
capitalise on it. In 2022 we leased space to
existing customers who value the excellent
customer service that they receive from
SEGRO, and to new customers who bring
even greater diversity into our rent roll.
Our spaces can be adapted
to a variety of dierent
uses, which means we are
not overly exposed to a
particular sector and also
that we can capitalise on
growth opportunities in
non-traditional industrial
and logistics occupiers,
such as data centres and
life sciences.
David Sleath
Chief Executive
12 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Chief Executive’s statement
continued
Outlook
Our long-standing disciplined approach to
portfolio management means that SEGRO
has one of the best and most modern pan-
European industrial warehouse portfolios,
through which we can serve our customers’
entire regional and local distribution needs.
Two-thirds of this portfolio is located in
Europe’s most attractive urban markets, often
in substantial clusters in key sub-markets,
where the lack of available land means that
supply-demand dynamics are tightest and
where long-term growth and returns are
therefore likely to be the highest. This is
complemented by the remaining one-third
of our portfolio, comprising clusters of
high-quality logistics warehouses situated at
key hubs along major transportation corridors.
Occupier demand for warehouse space
across Europe continues to be positive and is
derived from a wide variety of customer types.
Our space is lexible and can be adapted to
suit businesses from many dierent industries
which, when coupled with our relentless focus
on customer service through our market-
leading operating platform, is relected in high
customer satisfaction and retention rates,
as well as our asset management and leasing
performance. Our business is therefore both
resilient and positioned to support growth
sectors and adapt to trends, including
e-commerce, the digital sector (data centres),
urbanisation and the consequential need
for industrial and distribution space close to
the end customer from a very broad range
of businesses.
Supply and availability of modern, sustainable
warehouse space in the locations most desired
by occupiers remains extremely limited across
Europe. Vacancy levels are at historical lows
and supply is likely to remain constrained given
recent increases in inancing and construction
costs. We expect this contrast between positive
demand and limited supply to drive further
growth in rental levels. We already have £130
million of reversionary potential embedded in
the portfolio (most of which will be captured
through the ive-yearly rent review process),
as well as indexation provisions in almost half
of our leases, both of which underpin future
like-for-like rental income growth even before
any further growth in market rental levels.
Our sizeable, mostly pre-let current
development programme and well-located
land bank, provide us with further potential
to grow our rent roll proitably and allows us
signiicant optionality due to the short
construction periods of our assets. We will
continue to be led by customer demand and
our Disciplined approach to capital allocation
as we make decisions regarding the execution
of future projects.
With modest leverage, a long-average debt
maturity of 8.6 years, no near-term reinancing
requirements and virtually all of our debt at
ixed or capped rates, we have signiicant
inancial lexibility to continue to invest capital
in the development and acquisition
opportunities that oer the most attractive
risk-adjusted returns.
Our strategy
Page 18
Risk management
Page 64
Responsible SEGRO
Page 33
As we enter 2023, there are early signs of
liquidity returning to the investment markets,
as investors see value at current levels of
pricing. As the path of future interest rates
becomes more evident, we believe there is
a signiicant volume of capital ready to be
deployed into the industrial and logistics sector
due to its attractive fundamentals. We will
continue to respond tactically to changes in
market conditions, but our long-term strategic
focus is to ensure that our properties are of the
highest quality and the most sought after, able
to generate superior long-term growth, and
therefore command a valuation premium.
We will also continue to invest in and de-risk
the future of our business via the signiicant
progress we have made with our Responsible
SEGRO strategic priorities.
Our prime portfolio and market-leading
operating platform combine to create a strong
competitive advantage, and position us to
create value through the cycle for all of our
stakeholders. We therefore remain conident
in our ability to deliver attractive returns and
continued growth in earnings and dividends
into the future.
David Sleath
Chief Executive
13 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Performance Review
Page 48
Our strategy
Page 18
Our business model
Page 24
The performance of real estate businesses
are driven by two dierent markets: the
occupier market and the investment market
– these markets are interconnected but not
always aligned.
The occupier market is driven by simple
supply and demand dynamics for our
warehouses. If there is high demand but
limited supply vacancy rates will be low and
the shortage of supply will drive rents higher.
Supply and demand can be driven by cyclical
factors such as the macroeconomic
environment, for example global growth and
therefore whether businesses are growing,
but also structural factors which can drive
continued demand even in a weaker
macroeconomic environment. The occupier
market drives our operational metrics and
also our ability to grow rents and therefore
deliver growth in earnings and dividends.
The investment market on the other hand
is driven by the attractiveness of real estate
as an asset class versus other potential
investments for institutional investors, for
example cash, corporate and government
bonds and equities. Real estate is typically
seen as having a bond-type proile, long-term
and relatively low-risk income streams (as
leases on commercial property are signed for
multiple years). If interest rates increase and
government bond yields (the ‘risk-free rate’)
are higher this can lead to investors wanting
a higher return from their real estate
investments (the yield). If yields increase
asset values typically fall (absent any other
changes). The investment market therefore
has an impact on the value of our assets and
the total valuation of our portfolio.
Where these two interconnect is ultimately
down to the importance of cashlows in the
real estate sector, i.e. the rental income you
expect to receive from the buildings. If
occupier markets are strong and rental
income is growing investors might be
prepared to accept a lower return (yield) than
they would in an environment where the
occupier market is poor and the rental income
is potentially riskier. The occupier market
therefore generally impacts the investment
market but the same is not true in reverse,
as shown during 2022 where we have seen
continued strength in our occupier markets,
driven by structural drivers, but investment
markets have been weaker driven by
macroeconomic uncertainty and higher
interest rates.
The factors that impact our occupier and
investment markets are explained further
in the following pages.
Cyclical drivers
Factors often linked to
the economic cycle that
inluence supply and
demand, and therefore
impact asset values and
rental levels.
14 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Market overview
Economic outlook
Description
Economic outlook is an important driver of
occupier demand for space. A supportive
economic outlook encourages businesses
to grow and therefore to secure extra space.
In a recession, customer insolvencies and
commercial property vacancy rates have
historically increased.
Global economic growth slowed in 2022 as
countries grappled with economic shocks,
including the geopolitical situation and
continued Covid restrictions in China and other
parts of the world. This sent inlation soaring and
weakened economic activity. The IMF expects
global GDP growth of 2.9 per cent in 2023.
What it means for SEGRO
SEGRO has a diverse customer base covering
many dierent sectors, which means we are
not overly exposed to challenges in particular
industries. Occupier demand for warehousing
is supported by long-term structural trends,
resulting in continued elevated levels of
take-up in 2022. In the event of a wider-
recession, demand for space might soften.
However, vacancy rates across our key markets
are also at historic lows, so we expect supply-
demand dynamics to remain favourable.
Inlation has resulted in higher construction
costs across Europe but we have been able to
oset these with higher rents to help protect
development margins. Going into 2023 this
inlation appears to be moderating and
contractors have availability which often
indicates costs will fall. In terms of our rent roll,
inlation has a positive impact as almost half of
our rents are index-linked (with most linked to
consumer price indices).
Interest rate environment
Description
Monetary policy across Europe – and globally
– has changed signiicantly during 2022 as
central banks increased interest rates in
response to high levels of inlation.
The margin between government bond yields
(the ‘risk free benchmark’) and property yields
helps to determine the attractiveness of
property assets to investors. The speed of the
interest rate changes during the second half
of 2022 has caused uncertainty in property
investment markets, with neither buyers nor
sellers wanting to transact until there is more
visibility on where interest rates will settle
longer-term.
This has had an impact on prime industrial real
estate yields, which were between 4.3 and 5.5
per cent at the end of 2022.
What it means for SEGRO
The yield on our portfolio increased during the
second half of 2022 and is currently 4.8 per cent.
This yield expansion was partly oset by high
levels of rental growth, due to the continued
strength of occupier markets. Overall this
resulted in a decrease in our portfolio value
of 11.0 per cent.
There are encouraging early signs of
transactional activity in investment markets as
investors see good value at the current level of
pricing. As the path of future interest rates
becomes clearer, we believe there is signiicant
capital ready to be deployed into the industrial
and logistics sector due to its attractive
fundamentals.
Geopolitical situation
Description
A stable geopolitical situation is important
for businesses as it provides certainty and
conidence when planning for the future.
Today’s international business environment
is less predictable, more volatile.
During 2022 the Russian invasion of Ukraine
created signiicant uncertainty, impacting
supply chains across Europe and causing fear
of energy shortages which resulted in soaring
inlation. There are a number of other
geopolitical situations across the globe that
have the potential to cause further disruption.
What it means for SEGRO
The most immediate impact of the Russian
invasion of Ukraine was on supply chains.
Some materials used in our development
programme were sourced from the Ukraine (for
example steel) so we had to work closely with
our construction partners to ind alternatives.
These supply chain issues contributed to
continued construction cost inlation
throughout 2022.
Energy price rises have put additional pressure
on some of our customers who have seen their
cost bases increase signiicantly. However,
according to research by Savills, rents are
small as a proportion of total costs for most
occupiers and they are able to save on other
costs by leasing energy eicient warehouse
space in highly accessible locations. It has also
increased interest in renewable energy
generated on-site amongst our customer base.
Geopolitical uncertainty is likely to increase
the focus of our customers on supply chain
resilience (see structural drivers on page 17).
Competitive supply
Description
The relatively short construction time for
warehousing means that the availability of
new, speculatively developed buildings can
sometimes create excess supply, leading to
increased vacancy and weaker rents.
Occupier demand moderated during 2022
but remains signiicantly above long-term
average levels.
Supply increased in response to high levels
of take-up, but mainly for pre-let buildings
and the response has been limited by tight
planning laws and low availability of land.
Vacancy rates across Europe therefore remain
at historic low levels.
Increased build and inance costs as well as
economic uncertainty mean that we expect
there to be fewer construction starts in 2023
and that supply should therefore remain in
check.
What it means for SEGRO
Rental growth has increased across our
portfolio during 2022, particularly in Central
Europe where supply has reduced signiicantly.
We continue to take a cautious approach to
speculative development, preferring most of
our developments to be derisked through
pre-letting.
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE
LINK TO RISK:
MACROECONOMIC 1 AND MAJOR EVENT 3
LINK TO STRATEGY:
EFFICIENT CAPITAL AND CORPORATE STRUCTURE,
DISCIPLINED CAPITAL ALLOCATION,
LINK TO RISK:
FINANCING 7, PORTFOLIO STRATEGY 2
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE
LINK TO RISK:
MAJOR EVENT 3 AND DEVELOPMENT 6
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE, DISCIPLINED CAPITAL
ALLOCATION
LINK TO RISK:
OPERATIONAL DELIVERY 10
15 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Digitalisation of society
Description
Digital technologies are changing the way
that we live, work and think. Entire industries
are adapting and new ones are emerging as
a result of this.
One of the most signiicant impacts of
digitalisation on industrial assets is the rise
in e-commerce, with consumers wanting to
receive an increasing array of goods and
services more lexibly. The pandemic
accelerated this need, and although
e-commerce penetration rates have stabilised,
they are signiicantly above pre-pandemic
trend levels. Most European markets are
forecast to reach online sales penetration
levels of more than 20 per cent by 2026.
Distribution networks will need to be
reconigured to facilitate this growth in
a cost eective and sustainable manner
Increased demand for data centres to store
and process the huge amounts of data
generated by both individuals and businesses
is another aspect of digitalisation.
What it means for SEGRO
We are seeing strong occupier demand for
our urban warehouses located on the edge of
cities catering for ‘last-mile’ delivery, and also
for our big boxes, which are used as centralised
fulilment centres.
We are also experiencing strong demand
for data centre space in London and Slough,
and have identiied new sites across our
Continental European portfolio suitable for
this use.
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE, DISCIPLINED CAPITAL
ALLOCATION
LINK TO RISK:
PORTFOLIO STRATEGY 2
Structural drivers
Changes in the way that
an industry or market
functions can result in
longer-term or even
permanent change.
16 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Market overview
continued
Supply chain eiciency
and resilience
Description
Manufacturers, retailers (both traditional and
online) and distributors require eicient, reliable
distribution networks and supply chains to
compete eectively in meeting customer
demands and reducing costs. By investing in
modern, well-located warehouse facilities they
can better serve their customers and gain
access to labour pools to sta their facilities.
These businesses frequently need larger
buildings in central locations with space and
power to support automation, as well as smaller
buildings close to the consumer to support
the ‘last-mile’ of the distribution journey.
The disruption to supply chains caused by the
pandemic and the Russian invasion of Ukraine
has highlighted the importance of supply chain
resilience, leading businesses to hold more
inventory, source more locally and have
multiple suppliers.
Trade routes into Europe are changing with
fewer imports from Asia via Eastern Europe and
the increased importance of European ports in
northern Germany, southern France and Italy.
What it means for SEGRO
There is increased demand for modern,
well-located warehousing for supply chain
eiciency and future resilience.
Our pan-European portfolio has assets on key
transportation routes and in major logistics
hubs and is well-placed to beneit from
additional demand generated by the
transformation of trade routes.
Urbanisation
Description
The populations of most major European cities
continue to grow, leading to increased housing
requirements as well as increased demand for
goods and services, and for warehouse space
from which to supply them, particularly for
‘last-mile’ deliveries.
Land previously used for industrial purposes
in and around major towns and cities can
also be used to construct new residential and
other types of properties required to meet
the demand of the larger urban population.
As a result, land available to meet the need for
increased warehouse demand is being eroded,
leading to higher land prices and increased rents
for well-located urban industrial properties.
What it means for SEGRO
Two-thirds of our portfolio is in urban locations so
we are well-positioned to beneit from this trend.
In London, market rental values for our urban
warehouses increased by ten per cent in 2022,
relecting the supply-demand imbalance.
The shortage of land in urban areas is also
leading us to look at ways to intensify land use,
for example by constructing multi-level
buildings.
Planning can be more challenging in urban areas,
particularly in our Inner City portfolios in London
and Paris, due to concerns of local residents.
Climate change and the need for eicient,
sustainable buildings
Description
The world is facing a climate crisis and
governments, business and consumers across
the world are making commitments and
changing their behaviour to help tackle this
massive challenge and limit global temperature
rise to less than 1.5 degrees.
As a result of this there is increasing focus on
the impact of buildings on the environment.
Our customers also want to minimise their
carbon footprint and reduce overall occupancy
costs. It is therefore important that landlords
and developers own and create buildings that
are sustainable and use natural resources
eiciently.
Major European conurbations are also looking
to reduce traic emissions which means it will
be even more important for businesses to be
located in the properties that help them reach
their customers by low-carbon means.
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE, DISCIPLINED CAPITAL
ALLOCATION
LINK TO RISK:
PORTFOLIO STRATEGY 2
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE, DISCIPLINED CAPITAL
ALLOCATION
LINK TO RISK:
PORTFOLIO STRATEGY 2, DEVELOPMENT 6
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE
LINK TO RISK:
ENVIRONMENTAL SUSTAINABILITY AND CLIMATE
CHANGE 5
Responsible SEGRO
Page 33
What it means for SEGRO
We have ambitious targets for reducing our
carbon emissions and aim to be net-zero
carbon (including the emissions of our
customers) by 2030.
We factor a building’s sustainability into our
investment decisions, not only for potential
acquisitions and developments but also for
deciding whether to dispose of or refurbish
assets. We have also assessed our portfolio
under dierent climate scenarios.
Our urban portfolio is located on the edge of
major European cities which makes reaching
the city centre possible via electric vehicles
and our newer inner city assets also facilitate
delivery by means such as cargo bicycles.
A number of our urban estates are also located
close to canals and waterways which
customers are starting to use in innovative
ways as part of their distribution networks.
Two of the UK big box parks that we have
developed in the Midlands have strategic rail
freight interchange terminals which allow our
customers to transport goods by rail rather
than more carbon-intensive trucks.
17 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
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Responsible SEGRO
Page 33
Driven by
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Market overview
Page 14
Measured by
KPIs and linked to
remuneration
Key performance indicators
Page 20
Our goal is to be the best property company
and the partner of choice for our customers and
other stakeholders.
18 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Our strategy
Maximising the returns from
our business
Disciplined capital allocation
Using our in-depth knowledge of our
customers and the trends impacting their
businesses, to pick markets and assets
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Eicient capital and corporate structure
Underpin the property level returns from
our portfolio with a lean overhead
structure, the best technology-enabled
processes, an eicient capital structure
and appropriate inancial leverage.
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Responsible SEGRO
Embedded in the way that we manage our
business day-to-day are our Responsible
SEGRO strategic priorities. They inluence
the way we manage our portfolio, how we
create new space, and the investments
that we make into our business to make
sure that it is it for the future.
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A clear strategy that creates shared value for all our stakeholders
We have been following a clear and consistent
strategy for the past decade. It is key to our
success in delivering our Purpose of ‘creating
the space that enables extraordinary things to
happen’, which enables us to create signiicant
inancial and non-inancial value for all our
stakeholders.
Financial
Adjusted earnings per share
31.0 p +6.5%
2021: 29.1p
Dividend per share
26.3p +8.2%
2021: 24.3p
Non-inancial
Customer satisfaction
85%
2021: 90%
Employee engagement
91%
2020: 94%
Portfolio carbon intensity
22.5 kgCOe p/sq m
2021: 29.7 kgCOe
Our goal is to be the best property company
and the partner of choice for our customers
and other stakeholders. Best can mean many
things and it relects that our stakeholders
have dierent priorities. We need to take their
diering, and sometimes conlicting, interests
into consideration when making decisions
about how we run our business, balancing
both short-term and long-term interests. The
use of the words of choice relects that we
recognise that our customers, employees
and other partners have the option to choose
who they work with. By taking both of these
things into account, and by striving to
continuously improve and adapt to stay ahead
of emerging trends, we believe that we will
ensure the long-term success of SEGRO.
Our goal relects our ambition to create a
portfolio of high-quality industrial properties
in the strongest markets: a portfolio that
generates attractive, low risk, income-led
returns; provides above-average growth
(both in terms of rent and capital values) when
market conditions are positive and proves to
be resilient in a downturn. We seek to enhance
returns through development, while ensuring
that the short-term income ‘drag’ associated
with holding land does not outweigh the
long-term potential beneits.
Fundamental to our strategy are four key pillars
of activity, which combine to deliver the value
we seek to create:
– Disciplined capital allocation
– Operational excellence
– Eicient capital and corporate structure
– Responsible SEGRO
These key pillars drive both our day-to-day
decision making as well as our long-term
strategic thinking, and are supported by our
strong company culture and Values. They
provide clear guidance and help to align
priorities. The actions taken under each pillar
also need to be lexed depending on the wider
environment and circumstances we are
operating in at a given time.
The close relationships we build with our
customers help us understand our key markets
and inluence our daily decisions (for example,
how we design our warehouses and how much
of our land bank to bring forward at a given
time). They also help us anticipate long-term
trends so we can make the right strategic
decisions to shape our portfolio and ensure the
continued success of our business. Relationships
with other key stakeholders are also an important
source of information.
We take a proactive approach to risk
management (for more information on how we
manage risk see pages 64 to 74) to ensure that
we are positioning our business to respond to
potential threats. We also regularly carry out
ESG materiality assessments (see page 34) to
ensure we understand the wider priorities of
our stakeholders, as well as to highlight
potential opportunities.
The insights we gain from our day-to-day
interactions, combined with our regular risk
and ESG materiality assessments, help us to
adapt to suit changing market conditions
(allowing us to respond quickly if needed) and
also to ensure that we are positioning the
business for long-term success. This should
translate into not only sustainable, attractive
returns for all our shareholders, but also
signiicant value for all other stakeholders.
Financial KPIs
Page 20
Non-inancial KPIs
Page 22
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19 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
(46)%
55%
9%
2022
2021
2020
(10)%
33%
14%
2022
2021
2020
(13)%
43%
19%
2022
2021
2020
We measure our success by tracking Key
Performance Indicators (KPIs) that relect our
strategic, operational and inancial progress
and performance. They drive the internal
management of the business, and some are
used to determine how management and
employees are remunerated.
Financial
All our inancial KPIs are based on proportionally
consolidated metrics incorporating our share
of joint ventures and associates.
1. The TPR has been calculated independently by MSCI Real
Estate in order to provide a consistent comparison with an
appropriate MSCI benchmark. It is calculated as the change
in capital value, less any capital expenditure incurred, plus net
income, expressed as a percentage of capital employed over
the period concerned for standing investments held
throughout the year, excluding land.
Total
shareholder
return (TSR)
(46)%
%
LINKED TO REMUNERATION
LINK TO STRATEGY:
ALL STRATEGIC PILLARS
Description: TSR measures the change in
our share price over the year, assuming that
dividends paid are reinvested. This relects our
commitment to delivering enhanced returns
for our shareholders through executing our
strategy over the medium term. TSR is a key
metric used in setting the long-term incentive
plan remuneration for both the Executive
Directors and senior managers.
Our performance: TSR was -45.8 per cent,
compared with -33.3 per cent for the FTSE 350
Real Estate index. This relects a combination
of the 25.0 pence dividend (16.9 pence 2021
inal dividend and 8.1 pence 2022 interim
dividend) paid during the year, and a reduction
in the share price from 1,436.5 pence at
31 December 2021 to 763.6 pence at
31 December 2022.
Total
accounting
return (TAR)
(13)%
%
LINKED TO REMUNERATION
LINK TO STRATEGY:
ALL STRATEGIC PILLARS
Description: TAR is the growth in Adjusted
NAV per share plus dividends paid, expressed
as a percentage of Adjusted NAV per share at
31 December 2021. It measures the return on
capital and is a key metric used in setting the
long-term incentive plan remuneration for
both the Executive Directors and senior
managers.
Our performance: The TAR for the Group
was -12.8 per cent (2021: +42.5 per cent). This
performance relects a combination of the
171 pence decrease in Adjusted NAV from
1,137 pence at December 2021 to 966 pence
at 31 December 2022 and the 25.0 pence
dividend (16.9 pence 2021 inal dividend and
8.1 pence 2022 interim dividend) paid during
the year.
Total
property
return (TPR)
(10)%
%
1
LINKED TO REMUNERATION
LINK TO STRATEGY:
DISCIPLINED CAPITAL ALLOCATION
Description: TPR is the ungeared combined
income and capital return from our portfolio
of standing investments held throughout the
year. It is an important measure of the success
of our strategy in terms of asset selection and
management. MSCI Real Estate prepares the
calculation, as well as providing benchmark
TPR data for similar properties in their wider
universe. We aim to outperform the benchmark
over the long term. Details on how TPR impacts
short- and long-term incentives are provided
on pages 126 to 127.
Our performance: The TPR of the Group’s
standing assets held throughout 2022 was
-10.3 per cent (2021: +33.7 per cent). The UK
portfolio generated a TPR of -13.0 per cent,
performing ahead of the benchmark
calculated by MSCI Real Estate UK All
Industrial Quarterly of -14.6 per cent. The TPR
of our Continental Europe portfolio was -5.4
per cent. Benchmark data for Continental
Europe will be received later in the year.
20 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Key performance indicators
3 1.0p
29.1p
25.4p
2022
2021
2020
77.0 m
72.0m
60.1m
2022
2021
2020
32%
23%
24%
2022
2021
2020
Our strategy
Page 18
Risk management
Page 64
We recognise that the management of risk has a role to play
in the achievement of our strategy and KPIs. Risks can hinder
or help us meet our desired level of performance.
Remuneration
Page 126
Where relevant we have linked our KPIs directly to SEGRO’s
incentive schemes.
Rent roll
growth
£77m
%
1
LINKED TO REMUNERATION
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE
Description: The headline annualised rent
contracted during the year less income lost
from takebacks. There are two elements: to
grow income from our standing assets by
reducing vacancy and increasing rents from
lease renewals and rent reviews; and to
generate new rent by developing buildings,
either on a pre-let or speculative basis. Rent
from acquisitions is not included.
Our performance: In total, we generated a
record £77 million of net new annualised rent
during the year (2021: £72 million). The increase
was driven by higher rents on review and
renewal in the UK, indexation provisions mainly
in Continental European leases, and by the
increased volume of rent from development
completions and pre-let agreements secured
during the year.
Adjusted
earnings per
share (EPS)
31. 0p
PENCE
LINKED TO REMUNERATION
LINK TO STRATEGY:
ALL STRATEGIC PILLARS
Description: Our Adjusted EPS relects
earnings from our operating business: rental
income less operating, administrative and
inancing costs and tax. It is the primary
determinant of the level of the annual dividend.
IFRS EPS includes the impact of realised and
unrealised changes in the valuation of our
assets, which can often mask the underlying
operating performance. The reconciliation
between Basic EPS and Adjusted EPS can be
found in Note 12(i) on page 178.
Our performance: Adjusted EPS increased
by 6.5 per cent to 31.0 pence during the year
(10.7 per cent excluding the 1.1 pence SELP
performance fee relected in the 2021
comparator), relecting higher rental income
from our standing assets and new income
from acquisitions and developments, partially
oset by higher inancing costs.
Loan
to value
(LTV)
32%
%
LINK TO STRATEGY:
DISCIPLINED CAPITAL ALLOCATION
EFFICIENT CAPITAL AND CORPORATE STRUCTURE
Description: The proportion of our property
assets funded by borrowings, including joint
ventures and associates at share. The timing
of investment decisions and disposals, as well
as movement in the value of our assets, may
cause the LTV to luctuate. We believe that
REITs with lower through-cycle leverage oer
a lower risk and less volatile investment
proposition for shareholders.
Our performance: Our LTV ratio increased
to 32 per cent during 2022. This was due to a
combination of the £2.2 billion unrealised fall
in the value of our portfolio and £1.3 billion of
net investment in our business. We recognise
that this is above recent levels, but given
where we are in the cycle we are comfortable
with this level. We retain signiicant headroom
to covenants as well as liquidity to fund both
visible investment and potential opportunities
that may arise.
For further information see the Financial
Review (page 58).
21 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
85%
90%
87%
2022
2021
2020
91%
92%
94%
2022
2020
2018
353
391
400
2022
2021
2020
Non-inancial
Our non-inancial KPIs help to measure the
shared value our business creates to ensure
that our business is positioned for long-term
success.
Our non-inancial KPIs link to our Responsible
SEGRO strategic priorities.
Given where we are in our journey towards
these goals we anticipate that our non-inancial
KPIs will evolve as we progress towards our
stated ambitions.
Customer
satisfaction
85%
%
LINKED TO REMUNERATION
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE
What it is: The percentage of our customers
who rate their experience as occupiers of our
buildings as ‘good’ or ‘excellent’ as opposed to
‘poor’ or ‘average’. Our customers are at the
heart of our business and we strive to ensure
that we are providing the best level of service
possible to maximise customer retention.
Our performance: Satisfaction as an occupier
of our buildings was rated as ‘good’ or
‘excellent’ by 85 per cent of the 286 customers
who participated in the 2022 survey (2021: 90
per cent). The continued high satisfaction rate
relects our focus on communication, being
responsive and understanding the needs of
our customers and is particularly pleasing
given the cost pressures that some of them
are under (including recent increases in rents).
We intend to target similarly high levels in the
future. 98 per cent of our customers said that
they would recommend SEGRO to others.
Employee
engagement
91%
%
LINKED TO REMUNERATION
LINK TO STRATEGY:
RESPONSIBLE SEGRO
What it is: We carry out an employee survey
(annually from this year) asking all our people
to comment on various aspects of their work
at SEGRO. We share the results of this with the
Board, Leadership team and all our people.
Our performance: Our 2022 employee
engagement score was 91 per cent and 94 per
cent of employees said that they are proud to
work at SEGRO and care about its future. 94
per cent of employees felt that SEGRO
respects individual dierences.
Embodied
carbon
intensity
3 53
KGCO
2
EM
2

LINKED TO REMUNERATION
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE
RESPONSIBLE SEGRO
What it is: The largest source of carbon
emissions within our control is the embodied
carbon in our newly developed buildings.
Within our science-based targets, we are
committed to reducing the average carbon
intensity of all new developments by 20 per
cent by 2030 (compared to a 2020 baseline
of 400 kgCO
2
e/m
2
). We calculate this metric
based on completed developments over
the past two years for which a life cycle
assessment has been completed.
Our performance: The average embodied
carbon intensity in our development
programme was 353 kgCO
2
e/m (2021: 391
kgCO
2
e/m) relecting a 12 per cent
improvement from the 2020 baseline. We
reduced this by trialling low carbon or recycled
materials, including concrete, steel and timber
across multiple projects.
For more information see page 36.
Our strategy
Page 18
Risk management
Page 66
We recognise that the management of risk has a role to play
in the achievement of our strategy and KPIs. Risks can hinder
or help us meet our desired level of performance.
Remuneration
Page 134
Where relevant we have linked our KPIs directly to SEGRO’s
incentive schemes.
22 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Key performance indicators
continued
272,218
280,575
312,115
2022
2021
2020
68%
54%
41%
2022
2021
2020
102022
2021
2020
Responsible SEGRO commitments
Page 33
Corporate and
customer carbon
emissions
272K
TONNES CO
2
E
LINKED TO REMUNERATION
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE
RESPONSIBLE SEGRO
What it is: Our corporate and customer
carbon emissions cover our own operations
under Scope 1 and 2 and our customer
emissions under Scope 3. We have visibility of
two-thirds of the energy use from our buildings
by loorspace. For buildings where we do not
receive data we have estimated energy use.
Within our science-based targets, we are
committed to reducing the absolute corporate
and customer carbon emissions of our
portfolio by 42 per cent by 2030 (compared
to a 2020 baseline of 312,115 tCO
2
e), in line
with a 1.5 degree scenario.
Our performance: During 2022, we reduced
the corporate and customer emissions of our
portfolio to 272,218 tCO
2
e (2021: 280,575
tCO
2
e), relecting a 13 per cent improvement
from the baseline. This reduction was largely
due to greater visibility of energy use and
also the type of energy (renewable) sourced
by our customers.
For more information see page 37.
Visibility of
customer
energy use
68%
%
LINKED TO REMUNERATION
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE
RESPONSIBLE SEGRO
What it is: Under the terms of most of our
leases we do not have automatic visibility of
customer energy usage data. We recognise
the importance of having good visibility of this
data so we can accurately assess our Scope 3
emissions and help our customers to reduce
their own carbon footprint as well as improving
their energy eiciency. We are therefore
proactively engaging with our customers,
requesting access to this data and have
introduced green clauses requiring energy
use visibility to all new leases.
Our performance: The visibility of our
customers’ energy use improved to 68 per
cent (2021: 54 per cent) of our total property
footprint by area.
For more information see page 37.
Number
of community
investment plans
10
NUMBER
LINKED TO REMUNERATION
LINK TO STRATEGY:
OPERATIONAL EXCELLENCE
RESPONSIBLE SEGRO
What it is: The target for the Investing in our
local communities and environments pillar of
our Responsible SEGRO framework is to create
and implement Community Investment Plans
(CIPs) for every key market in our portfolio by
2025. As we are at an early stage of this
programme the KPI involves the number of
plans created. Once the plans are in place in
most markets, this KPI will evolve towards
measuring their impact.
Our performance: During 2022, we launched
our irst ten CIPs, including one in every
Business Unit: Heathrow, Park Royal, East
London, Slough, East Midlands, Coventry,
Northampton, Paris, Łódź, and Düsseldorf.
For more information on the projects within
these plans see page 44.
23 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
What
we need
to enable
extraordinary
things
Long-term
value creation
for all
stakeholders
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Development
Customer
relationships
Focusing on
sustainability
Active asset
management
Portfolio
review
Asset
recycling
Market
analysis
Acquisitions
Enabling
extraordinary things,
driven by a clear
understanding of customer
needs and expertise of an
evolving market.
A deep understanding of our customers’
needs and the markets in which we operate
lies at the heart of how we do business. This
allows us to create the space that enables
extraordinary things to happen.
We create inancial and non-inancial value,
which is either distributed to our key
stakeholders or re-invested in our business.
24 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Our business model
What we need to enable extraordinary things
A deep understanding of our customer
needs
We pride ourselves on the strength of our
customer relationships and use insights that
we gain from them to make better, mutually
beneicial business decisions.
Diverse, motivated, talented and engaged
people
We employ 425 people with expert skills
across all aspects of real estate, corporate
functions and newer areas, such as data
analytics.
A portfolio of prime sustainable assets
We buy and build warehouse properties located
inside or on the edge of major cities, key
transportation corridors and logistics hubs.
Land to fuel our development pipeline
Our extensive land bank is a signiicant
competitive advantage and an important
source of growth.
Collaborative partnerships with suppliers
We work with suppliers whose aims
complement our own.
Future-proong through innovation
We embrace technology and use it to ensure
our business is it for the future, including
ensuring we have eicient, technology-
enabled processes and systems.
An eicient capital structure
We forge strong relationships with our
shareholders as well as our banks and
bondholders who provide equity and
debt funding.
Strong community relationships
As a long-term investor, we are committed
to contributing to the long-term vitality of the
areas in which we operate.
A zero-tolerance approach to poor
health and safety is central to all our business
activities, and we are committed to the
prevention of harm to our people and
throughout our supply chain.
Long-term value creation for all stakeholders
Employees Customers Suppliers Communities Investors
Employee engagement Recommendation to others Spend Contributions to charity Full-year dividend
91% 2020: 94% 98% 2021: 97% £941m 2021: £962m £2.5m 2021: £1.3m 26.3p 2021: 24.3p
Training hours Retention rate Average UK payment time Employee volunteering days Total shareholder return
5,299 2021: 4,656 76% 2021: 77% 15days 2021: 16 days 387 2021: 234 (46)% 2021: 55%
Disciplined capital allocation
Market analysis
We take into account long-term trends and
our customers’ needs when deciding where
and what to invest in.
Acquisitions
We buy assets and land in key strategic
markets and source opportunities o-market
where possible.
Portfolio review
We undertake a detailed analysis of our
portfolio every year to ensure we understand
the risk-return proile of every asset.
Asset recycling
We dispose of assets where we believe we
have optimised returns.
Operational excellence
Development
We build prime, sustainable warehouses
in key locations.
Customer relationships
We manage our portfolio internally which
helps us to provide an excellent service and
develop partnerships with our customers.
Focusing on sustainability
Through the day-to-day management of our
portfolio and our development programme,
we actively look for ways to reduce carbon
emissions and improve biodiversity around
our estates.
Active asset management
We actively manage our assets to strike
a balance between occupancy and rental
growth.
25 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
What we need to enable extraordinary things:
A deep understanding of our customers’ needs
Understanding our customers and their
evolving needs is crucial to SEGRO’s success.
Our knowledge of their businesses helps to
shape our decisions on where and what to
invest in, so it is at the heart of how we actively
manage our portfolio.
We look to build and maintain strong and
meaningful customer relationships, allowing
us to work in partnership – whether that be
with small, owner-managed start-ups or global
businesses. These close relationships are
facilitated day-to-day by our asset and
property managers as we manage the majority
of our portfolio internally. We supplement the
knowledge gained through these relationships
with our Customer App, which provides
important data and updates. We also organise
regular Customer Futures Forums that bring
together our customers to discuss important
topics and emerging trends, and help us to
keep one eye on the horizon.
By understanding their diering priorities and
challenges, we are able to oer tailored and
creative solutions to each customer’s
individual real estate requirements. From
oering additional, larger or smaller premises
to align with their own growth aspirations, or
helping them to enter a new market, our
service often also involves going beyond
simple real estate transactions. For example,
we may give our customers advice on
managing their warehouse more eiciently
to reduce their energy consumption. Many
of our customers share an environmental
sustainability strategy as a key focus of their
business. We also partner with customers on
projects that form part of our Community
Investment Plans.
Our close relationships with our existing
customers also help to create new
opportunities. The knowledge and
understanding of various industries that
we gain provides valuable insights into
developing our warehouses so they are
future-it and suitable for evolving needs. We
sometimes also leverage these relationships
to create opportunities in new geographies,
deepening and strengthening our
connection. 27 per cent of our headline rent
comes from customers with whom we have
leases in more than one country and our
dedicated cross-border customer account
teams help us to ensure that we oer a
streamlined approach to these businesses.
By working closely with our customers to
understand their needs and issues, we aim
to provide a irst-class service and real estate
solutions long into the future. We also hope
that this approach will continue to encourage
customer loyalty and help us to generate
new business.
Customers who would recommend SEGRO to others
98%
2021: 97%
Customer retention rate
76%
2021: 77%
26 SEGRO plc
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Our business model
continued
What we need to enable extraordinary things:
A portfolio of prime, sustainable assets
What we need to enable extraordinary things:
Diverse, talented, motivated and engaged people
Our prime, modern portfolio is a result of an
ambitious portfolio reshaping programme and
we now own what we believe to be one of the
highest-quality portfolio of industrial property
in Europe.
We continue to review and reine our portfolio,
carrying out an annual asset review process
looking at the opportunities, risks and potential
returns for every single asset. We identify
assets (and sometimes markets) where we
believe we have maximised the potential or
where we believe the risk of holding an asset
outweighs the potential beneits. This also
forms the basis of our disposal list and ensures
that the portfolio remains focused on prime
assets in the markets with the strongest rental
growth potential.
We also make asset acquisitions when they
oer attractive returns, taking advantage of
our market knowledge and local networks to
source opportunities o-market where
possible and therefore achieve better pricing.
The focus of our investment over recent years
has been on our development programme,
allowing us to add more modern, sustainable
space to the portfolio and expanding our
pipeline of opportunities. This has allowed us
to gain competitive advantage by leveraging
the skills, local knowledge and technical
expertise of our teams across Europe. It has
Although real estate is a physical asset class,
the business of acquiring, developing and
managing it requires great people. The
strength of our operating platform is
dependent on the expertise, commitment
and motivation of our workforce and this is
why Nurturing talent is one of our Responsible
SEGRO priorities and is a key element of
our strategy.
We have 425 employees working together
across Europe, with expertise in all aspects
of real estate, and we want to make sure that
every one of those employees is able to fulil
their potential. Our employees help us to create
a working environment that encourages
collaboration, open communication,
continuous improvement and innovation.
Our top priority is to make sure that our people
can work in a healthy, safe and secure
environment, and this extends to their general
wellbeing outside of the workplace. We have a
comprehensive health and safety programme,
and have expanded our wellbeing programme.
We invest signiicantly in training and
development, and oer secondments as well
as other project-based opportunities to
enhance employees’ wider experience.
also helped us to generate superior returns
than from buying dry assets with limited
growth potential and given us access to
opportunities that would not be available
on the investment market.
We refurbish and redevelop existing
warehouses that have a prime location but
need modernising to meet customers’
requirements. Increasingly this involves
retroitting sustainability features to improve
their energy eiciency.
The constant reinement and modernisation
of our portfolio aims to ensure that our assets
are the warehouses of choice for our
customers, helping us to grow rents and keep
vacancy low. Combined, this should mean
that in the long term our portfolio will
outperform the benchmark and create value.
We believe that to get the best out of our
people they need to feel comfortable and free
to be themselves, so we work hard to make
sure our working environment is inclusive,
supportive and free from bias with
opportunities for all. The National Equality
Standards (NES) audit that we participated in
during 2021 commended our robust policies
and practices for equal opportunities and
inclusion. We acted on their recommendations
to make further improvements during 2022,
including additional training and improvements
in how we collect diversity data and how
we recruit.
Our workforce is gender diverse but while we
are making progress, we know that there is
more to do to ensure gender diversity in our
senior teams and to encourage broader
diversity. This is a sector-wide challenge, but
we hope that through the changes we are
making we will start to encourage people from
dierent backgrounds to join our industry and
over time this will start to have the impact that
we desire.
We believe that the approach we take to
rewarding, developing and looking after our
people is an investment in the longer-term
success of our business as it helps us to ensure
that SEGRO is the employer of choice for a
diverse range of talented, motivated and
engaged people.
Number of employees
425
2021: 385
Employee engagement
91%
2020: 94%
Total AUM
£20.9bn
2021: £21.3bn
27 SEGRO plc
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What we need to enable extraordinary things:
Land to fuel our development pipeline
Our extensive land bank is a signiicant
competitive advantage and an important
source of growth, both in terms of the physical
assets that it allows us to develop and the rental
income that those buildings generate.
We have been building this land bank for a
number of years and it is now a rare and valuable
asset. At the current rate of development, our
land bank should last us three to ive years. It
is therefore important that we replenish it,
so we can meet anticipated future demand
from customers.
Sourcing industrial land requires both in-
depth knowledge of the markets and good
relationships with local planning authorities
and communities to ensure that our plans
meet their expectations and ambitions for the
area. Our Community Investment Plans (CIPs)
help to enhance these relationships and show
our commitment to the communities around
our estates.
Our teams on the ground in each region carry
out extensive research, leverage their strong
local relationships and think creatively to
source opportunities, such as acquiring older
warehouses with short-term income and
redevelopment potential (‘covered land’) or
where we can repurpose assets intended for
alternative uses.
Where possible we acquire land o-market
or under option, until it is zoned for industrial
usage and we can progress with our
development plans. Increasingly, we are
looking at ways to create additional space
from redevelopment opportunities within
our existing portfolio.
Potential development from land bank
3.5m sq m
2021: 3.1m sq m
Land acquired in 2022
1.
2.
1. Land acquired in 2022 £712m
2. Land acquired in 2021
1
£829m
What we need to enable extraordinary things:
Collaborative partnerships with our suppliers
Our relationships with our suppliers are key to
helping us create value. We invest in developing
these to ensure that our aims and objectives
are aligned and mutually beneicial.
We work with over 2,800 suppliers across the
Group, ranging from small local businesses
to multinational companies. We want to work
with suppliers who share our Values and our
approach to matters such as health and safety,
compliance, anti-bribery and corruption. Our
Supplier Code of Conduct and Modern
Slavery and Labour Standards Supplier Code
consolidate and set out in full the principles
and standards that we expect and outline how
we can work side by side to create real change.
We are committed to ensuring that our supply
chain is safe, secure and eicient. We follow a
strict supplier assurance process so we can be
conident that our supply chain is maintained
to a high standard. This process requires all
suppliers to provide information appropriate to
their service, including health and safety policies
and evidence of insurance. They must explain
how they ensure bribery, corruption and fraud
are not happening in their organisation or
supply chain, and how they safeguard against
modern slavery and human traicking. This
screening exercise is repeated regularly. In
addition, each year our legal team meets with
a number of suppliers across the Group. There
were no concerns or issues arising out of the
meetings conducted during 2022.
We have regular service review sessions with
professional services suppliers (for example,
with our lawyers and agents), while those
involved in construction activities have regular
visits from our Health and Safety team.
Our relationships with our suppliers are
important in us achieving our Responsible
SEGRO ambitions. We work closely with our
construction partners to reduce the embodied
carbon intensity of our development
programme. We also expect our suppliers to
work with us to support local businesses and
economies; this includes proactively sourcing
labour, goods and services from the local
community and contributing to our
Community Investment Plans.
In the spirit of partnership, we treat our
suppliers well and ensure that they are paid
on time. We are a signatory to the UK Prompt
Payment Code (average UK payment time
is 15 days). We are also an accredited Living
Wage employer, and are working with
our suppliers to help ensure everyone
working in our supply chain to support
us is paid a real Living Wage.
Number of suppliers
2,807
2021: 2,286
Supplier spend
£941m
2021: £962m
1 2021 amount has been restated to relect £503 million of
covered land that was recategorised from asset acquisitions
to land during 2022.
28 SEGRO plc
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Our business model
continued
The world around us is changing at a rapid
pace. We are in continuous dialogue with our
customers, suppliers and other business
partners so that we position ourselves to take
advantage of longer-term trends. Technology
and digitalisation is becoming a crucial part of
how we manage our existing portfolio and how
we design, build and plan our assets.
We see the changes resulting from technology
and digitalisation as not just a challenge but
also an opportunity.
We have long recognised the value of
technology and our investment over a number
of years has created the strong foundations of
our digital strategy. This focuses on: providing
our people with the digital skills, tools and
processes to be eective; using data and
analytics to provide actionable insights and
enable better decisions; digital innovations
which dierentiate our assets and services to
customers; and providing secure and scalable
digital infrastructures that enable all of our
digital services.
To ensure that our portfolio is it for the future
and meets the ever-changing needs of our
customers, we are also continually innovating
within our development programme. This is
also crucial to meeting our net-zero carbon
targets as a signiicant part of our emissions
result from our development activity.
Finally, with land in short supply in most of our
markets and particularly in urban locations
such as London or Paris, we are increasingly
innovating to maximise the space that we can
create. For example the addition of mezzanine
levels over loading bay areas can create
additional lexible space; going up rather
than out. We are also developing multi-level
warehousing, such as our V-Park development
in West London, and thinking creatively by
re-purposing assets such as underground
rail terminals for inner-city logistics.
To help us remain at the forefront of innovation
in the real estate sector, we contribute to
industry-wide collaboration initiatives,
including the British Property Federation’s
Technology and Innovation Working Group
and the LandAid Tech Network, and we are
active participants in and supporters of
open source technology communities.
We also maintain active partnerships
with the ‘PropTech’ irms Fifth Wall and
Concrete Ventures.
What we need to enable extraordinary things:
Future-prooing through innovation
29 SEGRO plc
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What we need to enable extraordinary things:
Strong community relationships
What we need to enable extraordinary things:
An eicient capital structure
As a long-term investor, we are committed to
contributing to the long-term vitality of the
areas in which we operate. One of our three
Responsible SEGRO priorities is to Invest in our
local communities and environments.
To do this eectively, we work with local
stakeholder partners to better understand
the needs of a local community so we can
contribute positively to its growth and
development. We work closely with local
authorities in our key markets to ensure we
understand their priorities and support these
with our own plans. This is also key to our
understanding of the challenges around
zoning and planning, and forms an important
part of our decision on where to invest.
Much of our urban warehouse development
programme involves regenerating older
industrial sites and brownield land to attract
new businesses investment into local areas,
creating diverse and high-quality employment
opportunities and driving economic prosperity.
We also try to encourage innovation and the
growth of small local businesses by oering
lexible space with all-inclusive leases in our
Enterprise Quarters and providing additional
support services to help them to develop
their networks, learn from each other and
grow together.
We fund our investment activities through a
combination of equity, debt and the proceeds
of disposals. The relationships with our
shareholders, as well as with our banks and
bond holders who provide our equity and debt
funding, are therefore crucially important.
As a listed company we have a responsibility
to those individuals and institutions who have
invested money in our business to deliver
long-term and sustainable returns on their
investment.
We ensure regular communication with our
investors through an extensive programme,
mainly managed by a dedicated Investor
Relations team. This includes roadshow and
other ad hoc meetings, attendance at investor
conferences, as well an active programme of
asset tours.
The Annual General Meeting also provides us
with an excellent opportunity to meet our retail
shareholders and answer their questions about
the business.
We seek to go beyond local planning
requirements when designing new
development projects, so that we can improve
employability opportunities for the local
community, upgrading local road networks
and infrastructure, and contributing to
improvements in local public transport that
beneit everyone in the surrounding area.
Increasingly, we are creating outdoor spaces
close to both our urban and big box parks to
improve biodiversity and beneit the local
environment and to promote health and
wellbeing both for our customers and for
local residents.
The impact of our development programme
is enhanced when we involve our business
partners in this process. We regularly work
with our suppliers to help create opportunities
for local businesses: for example, we
encourage contractors to source services and
materials from local suppliers and to use local
labour during the construction stages of our
projects. Working closely with customers
and local authorities can also help to create
employment opportunities, and we invest in
the provision of training to help local residents
access job vacancies created through our
new developments.
Our website contains comprehensive
information about our strategy and
performance, regulatory news and press
releases, information about our debt and our
approach to Environmental, Social and
Governance (ESG) issues (including
Responsible SEGRO). The Investors section
of the site also includes investor tour
presentations, analyst inancial forecasts
(consensus) and webcasts of the Full-Year
and Half-Year results presentations.
During 2022, the Executive Directors and the
Investor Relations team held meetings with
representatives from over 280 institutions
(including 14 of our top 20 shareholders – the
remaining six are passive institutions) across
over 230 meetings to update them on our
performance and to provide an opportunity
for them to ask questions. We also held a series
of one-on-one and group meetings with our
lending banks and investors in SEGRO and
SELP’s bonds during the year.
These investor interactions update our
investors on our business and allow us to
understand their priorities and any concerns.
This feedback is vital to help shape our strategy
and our communications and disclosure to
make sure that we are meeting their expectations
of us.
Number of community investment plans
launched during 2022
10
New inancing in 2022
1.
2.
1. 2022 £3.1bn
2. 2021 £1.3bn
Number of investor meetings in 2022
230
Number of employee volunteering days
1.
2.
1. 2022 387
2. 2021 238
30 SEGRO plc
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Our business model
continued
What we need to enable extraordinary things:
A zero-tolerance approach to poor health and safety
We continue to support local charities to help
improve the lives of vulnerable members of
the local community and fund a range of
training and education programmes that
help these members of society on the
pathway into employment.
We support causes close to the hearts of our
own people and encourage them to
participate in charitable activities, providing
their time and skills. A record number of our
people took part in our Company-wide ‘Day
of Giving’ during 2022, which allows our
employees to volunteer to work with one of
the local charities that SEGRO supports
corporately.
Our people run, cycle, swim, skydive, walk
and ‘sleep out’ overnight to raise money for
a range of great causes, for which SEGRO
will match the funds raised.
Investing in and supporting our local
communities is something that we have
done for over 100 years. The establishment
of the £10 million SEGRO Centenary Fund in
2020 provides the funding for many of these
projects. Our Community Investment Plans
are helping us to think more strategically
about how we allocate our charitable
contributions and other eorts so that we
can maximise the impact of our eorts and
the value created.
Health and safety is central to all our business
activities. It is our responsibility to ensure that
we provide and promote a healthy, safe and
secure environment in which our people and
customers can work, extending throughout
our supply chain, and in particular on our
development projects.
We aim to achieve our high standards through
a combination of risk mitigation, training and
promoting a widespread awareness and
culture of health and safety. We only want to
work with businesses that share our approach
of zero-tolerance of poor health and safety
practices. We require all our suppliers to
conirm that they meet our Health and Safety
Standards, and we undertake particularly
rigorous assessments of those companies
working on our development sites. We support
our contractors by providing additional
guidance, signage and undertake health and
safety visits of all our development sites
throughout each project.
Our health and safety commitment does not
end when we complete a project, but extends
to the ongoing day-to-day life of our estates.
Many of our estates are accessed by both our
customers and the public, and we assess and
mitigate a variety of risks. By providing training
and raising awareness we ensure our customers
and communities are well informed and able
to make appropriate decisions.
Whenever incidents occur, we fully investigate
to understand the causes, involving external
consultants where appropriate. Findings and
learnings are disseminated across the Group,
including to the Board and Executive
Committee, to ensure that we (and where
appropriate, third-parties) respond and
improve our processes where necessary.
For example, following an incident on an
estate within our Greater London Business
Unit in August 2017 we took steps to improve
the safety at the site concerned. We carried
out an additional risk assessment, making
amendments to procedures where necessary,
at other SEGRO owned sites with similar
characteristics. Following their investigation
the Health & Safety Executive (HSE) brought
a prosecution against SEGRO Administration
Limited as the managing agent for the site at
the time and two occupiers, for health and
safety breaches in connection with this
incident. We consider appropriate actions
were taken to address any deiciencies in the
health and safety regime at the site, but will
continue to share lessons learnt across the
business and wider industry.
We continue to be recognised for our safety
performance through the RoSPA (Royal Society
for the Prevention of Accidents) Awards,
relecting our Group commitment to, and
practical application of, health and safety
procedures across all our business operations.
Accident incident rate
1
2022
0.25
2021: 0.13
1 An industry standard rate calculated by number of employee
incidents, divided by number of hours worked, multiplied
by 100,000.
31 SEGRO plc
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Karl Storz is the world’s leading endoscope
manufacturers and a long-standing customer
of SEGRO.
The primary function of their unit on the Slough
Trading Estate is as a sales and distribution
centre for their UK business. However, in 2021,
they added their Training and Technology
Centre within their premises, to enhance their
training facilities and showcase their operating
theatre solutions. The Centre houses one of
the most technologically advanced integrated
operating theatres in the UK, boasting the very
latest in keyhole surgery imaging systems
and innovations in operating theatre design.
Surgical skills training courses are hosted in
the facility and complemented by hands-on
training techniques using training models and
virtual reality training stations. There is also an
Out-Patient examination zone and a dedicated
Anaesthetic Room for airway management
skills training.
The open plan space, meeting areas and
technology zones lend themselves to a
relaxed environment where the Surgeons,
Anaesthetists, Theatre Nurses and technicians
of tomorrow can train.
Enabling extraordinary things:
Enabling our customers to do extraordinary things
32 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
To ind out more
about SEGRO visit
www.segro.com
ESG is taken very seriously at SEGRO.
Responsible SEGRO demonstrates
how our environmental and social
contributions are embedded within
our business strategy, and are
fundamental to how we enable
extraordinary things to happen –
whether that is the space that
we create for our customers,
or enabling our people and the
communities and environments
close to our warehouses
to lourish.
We are committed to being a force for societal
and environmental good and this has been at
the heart of how our business operates since
it was founded. It has been instrumental in
the success of the Company over the past 102
years and will be just as important for the next
100 years. This commitment is led by our Board
but lived by SEGRO colleagues every day. It is
about doing the right thing and making a positive
impact wherever we operate.
We have long-held commitments to leadership
in health and safety, stakeholder engagement,
corporate governance and being a good
corporate citizen.
Our Responsible SEGRO framework helps us to
articulate our sustainability goals and address
our stakeholders’ most material concerns.
Within this we have focused in on three
enduring strategic priorities, which were
determined through engagement with our
stakeholders. These priorities cover the areas
where we believe we can make the greatest
business, environmental and social
contribution. They are:
Championing low-carbon growth
Investing in our local communities and
environments
Nurturing talent
For each of these areas we have established
challenging targets that are linked to six
non-inancial KPIs and to the annual bonus
for all employees.
We report a summary of our progress with these
during 2022 in the following section and discuss
our priorities for 2023 – more detailed information
(along with full datasets) can be found in our 2022
Responsible SEGRO Report and Data Pack.
We intend to set additional, more speciic,
supporting targets as necessary and expect
our actions and approach to evolve over time
to relect our achievement, technological
change and the priorities of our stakeholders
and wider society.
ESG reporting and ratings
We monitor our performance across various
Environmental, Social and Governance (ESG)
indices and review trends to ensure our
approach and the information we disclose
meets the needs of our stakeholders.
There are a number of dierent frameworks
that we use to report on our wider ESG metrics,
including:
– Global Reporting Initiative (GRI)
– Sustainability Accounting Standards Board
(SASB)
– Task Force on Climate-related Financial
Disclosures project (TCFD)
– EPRA sustainable Best Practice Reporting
(EPRA sBPR): Gold
– Better Building Partnership – Climate Change
Commitment
– Workforce Disclosure Initiative: 80%
There are also various agencies who
review and assess our ESG reporting and
performance, including:
– MSCI: AAA
– Carbon Disclosure Project (CDP): A-
– Global Real Estate Sustainability Benchmark
(GRESB)
– Standing investments: three-star
– Development: four-star
– Public disclosure: A
– Dow Jones Sustainability Index (DJSI):
6th Percentile
– FTSE4GOOD – 3.2 (sub-sector average 2.4)
33 SEGRO plc
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Responsible SEGRO
Materiality
To help us ensure that our strategic priorities
and the targets within them are appropriate
and relect our stakeholders’ expectations
we believe it is good practice to periodically
assess our assumptions. During 2022 we
undertook a materiality review, following
guidelines by the Global Reporting Initiative
(GRI) and the Sustainability Accounting
Standards Board (SASB).
This review built on a previous materiality
assessment undertaken in 2019, and included
a review of benchmarks and standards, peer
reporting and aligned with internal risk
management processes. The aim was to identify
those issues (both risks and opportunities) that
are most important to the Company and its
primary stakeholders, to ensure that they are
considered within our Responsible SEGRO
strategic priorities, and to inform the structure
of our sustainability reporting. Emerging issues
were also identiied and considered.
In total, 18 material issues were identiied,
considered through four lenses – environmental,
societal, economic and governance – but
with recognition that the issues may well be
inter-dependent. We then reined these to
eight priority material issues (PMIs). We did this
to surface the priority issues which are both
important to our stakeholders and where we
intend to focus our immediate eorts. We
recognise, however, that while developing a
ranking is important to be able to demonstrate
priority issues for SEGRO and our stakeholders,
this does represent their relative importance
at a point in time and is based on the views of
a small number of informed participants.
Each issue identiied has been allocated to
the relevant team within SEGRO for further
attention and embedding into business
processes. All inancially material PMIs are
governed by the SEGRO business risk process
(see page 68).
These issues are outlined in the table to the
right and remain aligned with our current
Responsible SEGRO priorities. We intend to
conduct materiality reviews annually.
Our material issues
Alignment with the UN SDGs
We have reviewed the United Nations
Sustainable Development Goals against our
Responsible SEGRO strategic priorities to
understand which goals are particularly
signiicant to our business. Elements of our
business are aligned with all of the goals but
we believe we are able to make the greatest
contribution to six of them:
SEGRO is committed to reducing the
embodied carbon in its development
programme as well as reducing the carbon-
intensity of our properties. We want to play
our part in tackling climate change and have
a target to be net-zero carbon by 2030.
SEGRO has a strong track-record of
supporting local communities and
employment (including training) is one of
the areas that our Community Investment
Plans (CIPs) focus on. We want to play our
part in reducing inequalities and ensuring
more people have the right skills to access
meaningful work.
SEGRO is committed to being a good
neighbour and to enhancing the spaces
beyond our buildings. Our CIPs also include
projects to support the local economy and
enhance the natural environment. We want to
play our part in ensuring that our buildings are
part of thriving, sustainable communities.
Championing low carbon growth
Driving a pathway to net-zero through eective energy management (including embodied
carbon), and by enabling a transition to renewable energy for SEGRO and our customers.
Ensuring environmental compliance, today and in anticipation of future regulatory changes,
and ongoing certiication against relevant standards.
Understanding the need and opportunity for climate adaptation, and building resilience to
climate change, for SEGRO and our customers.
Identifying and executing business and diversiication strategies in the renewables sector,
that build on our unique positioning and strengths.
Understanding our biodiversity impacts and supporting urban greening.
Responsible water management.
Nurturing talent
Attracting, developing and nurturing talent for rewarding careers.
Ensuring the safety and health of our employees, our suppliers and those who use our
facilities.
Promoting diversity, equity and inclusion, including and beyond succession planning and
compliance.
Investing in our local communities and environments
Implementing smart technology that makes lives better, and protects the environment.
Leading in the development and implementation of ethical building standards.
Engaging with and investing in local communities for mutual positive impact.
Operating in the context of sound governance
Ensuring sound and ethical business conduct, including through the eective management
of our supply chain, and in our customer base (to the extent that this is possible).
Ensuring ongoing and increasing ESG disclosure and transparency.
Protecting and upholding human rights (including Modern Slavery) within SEGRO and
amongst customers and suppliers.
Protecting and preserving our reputation, by doing the right thing and anticipating
stakeholder concerns.
Promoting and preserving a positive and caring culture, which is mindful of economic
equality and hardship.
Being mindful of cyber security and the ethical use of information and data.
Priority Material Issues
Material Issues
34 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Responsible SEGRO
continued
Championing low-carbon growth
SEGRO recognises that the world faces a climate
emergency and we are living in a shrinking
window of time when our awareness of climate
change can still be matched by our ability to
act. We therefore need to shape SEGRO to live
up to the challenge of this, whilst still continuing
to grow our business and develop the space
that is much needed by our customers.
In recognition of this we have joined many
of our sector peers in signing a pledge to
be net-zero carbon by 2050, and have
announced that we will be going further and
faster by reaching that aim by 2030. These
commitments cover SEGRO’s own business
activity (including lettings, refurbishments,
development and acquisitions) as well as the
emissions that our customers make whilst
using our buildings.
The SEGRO Carbon Pathway sets out our
ambition and approach and can be found in
the Responsible SEGRO Report and Data Pack.
It is our responsibility, as a long-term investor,
to use the latest technologies and construction
techniques to ensure that our buildings are
eicient to use and stand the test of time. We
want to bring sustainability to the design stage,
and – working with our construction partners
– we are continuously evaluating and adopting
new approaches, technologies and techniques
to reduce the carbon footprint of our existing
properties and our developments. We take a
materiality-based approach to our
environmental strategy, focusing on the areas
where our footprint is greatest.
The Investment Committee considers the
environmental impact of all capital investment
decisions to ensure that they are consistent
with our environmental targets and ambitions.
We continue to see value in developing policies
and reward mechanisms to embed the
behaviours we need to be a sustainable
business. We believe it is important to equip
our business with the best framework to deliver
against our stretching emission targets.
During 2022 we launched our ambitious
Mandatory Sustainability Policy which sets
out six key commitments:
– Embodied carbon: use Building information
Modelling (BiM) and life cycle assessments
(LCAs) on all developments over 5,000 sq m
– Solar: maximise coverage on all our buildings
(subject to planning, power, customer),
ensure all new buildings can take 100 per
cent solar on the roof, and investigate local
grid capacity for solar export
– Energy data: identify where gaps in customer
energy data exist and where possible
implement SEGRO’s green lease to mandate
the use of renewable energy and sharing
of data
– Building certiications: deliver BREEAM
‘Excellent’ or equivalent on all new
developments over 5,000 sq m, implement
refurbishment standards to EPC B or better
(or local equivalent)
– Electric vehicle charging: install at least
20 per cent of all parking with electric
charging capability
– Biodiversity and wellbeing: at least meet
the Biodiversity Net Gain commitments (UK
only), implement at least ive biodiversity or
wellbeing features on all new developments
over 5,000 sq m, and at least one for each
refurbishment.
Average embodied carbon intensity
353 kgCO
2
e sq m
2021: 391 kgCO
2
e sq m
Corporate and customer carbon emissions
272,218 tCO
2
e
2021: 280,575 tCO
2
e
Visibility of customer energy data
68%
2021: 54%
Key achievements during 2022:
– Launch of our Mandatory
Sustainability Policy
– Signiicant increase in our solar capacity
– Green leases introduced, underpinning the
collaborative approach we take with our
customers on carbon reduction
Priorities for 2023:
– Understanding the impact that our
investment into biodiversity is having on
our local communities
– Increasing the automation of the retrieval
of our customers’ energy data
– Progressing our large scale solar
installation strategy
Scan the QR code to hear our Director of Sustainability talk
about our progress with Championing low-carbon growth.
35 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Approximately 40 per cent of our carbon
emissions relate to the embodied carbon from
our development programme. For our existing
buildings, we can work to improve their
eiciency in operational terms, but it is in our
development programme where we can make
the greatest impact. In many cases, once we
hand a building over to a customer, they
control all operational aspects, so it is our
responsibility to provide them with an eicient
building and the tools to operate it eectively.
Our science-based targets, aligned to the
Science Based Target initiative (SBTi)
framework, include a goal to reduce the
embodied carbon intensity of our
development programme by 20 per cent by
2030, compared to a 2020 baseline of 400 kg
CO
2
e per sq m. We are one of very few property
companies who currently have an embodied
carbon target.
The average embodied carbon intensity of our
developments in 2022 was 353 kg CO
2
e per
sq m of delivered loor space, representing a
12 per cent reduction from the 2020 baseline.
Our sustainability strategy requires that we
drive down the embodied carbon and transport
emissions of the construction materials of our
capital projects. This is in line with the
methodology used by the UK Green Buildings
Council in their Whole Life Carbon roadmap.
We carry out Life Cycle Assessments (LCAs)
on our larger development projects to track
performance against our embodied carbon
KPI and to identify opportunities to make
further reductions to our buildings’ carbon
footprint over their full life cycle – from
procuring materials through to deconstruction
at the end of the building’s useful life. We
believe this holistic approach to embodied
carbon is the most impactful.
However, simply procuring sustainable
materials is not enough, this process is starting
to aect how we think about the shape of our
buildings – considering alternative layouts that
are less carbon and material-intensive.
Our new Mandatory Sustainability Policy
commits us to carrying out LCAs on all eligible
projects greater than 5,000 sq m (roughly 98
per cent of our current development pipeline)
and apply lessons learned across the wider
development programme as we progress
against our target. During the year we have also
agreed to share the data from our UK LCA’s with
the UK Net Zero Carbon Buildings Standard.
We mandate the use of Building information
Monitoring (BiM) in our development projects,
which greatly improves the accuracy of our
embodied carbon data. BiM allows us to assess
more accurately the amount of material
needed for the construction (reducing waste)
and the carbon emissions from the materials.
We will continue to adopt the latest techniques
to reduce embodied carbon within our
developments, including low-carbon concrete
and timber or recycled steel beams which we
are already using in several of our current
developments. The availability of such
materials is not yet consistent across our
markets, and they are not always suited to the
design of our buildings, but we are determined
to work with our partners in identifying
low-carbon options.
The sustainability credentials of a building are
increasingly important for potential customers
deciding on where to locate their businesses.
Since the start of 2022 we have been targeting
BREEAM ‘Excellent’ certiication (or equivalent)
for all our new developments unless local
circumstances (such as supply chains) prevent
it. All of our development completions in 2022
have, or are expected to be, accredited
BREEAM ‘Very Good’ (or local equivalent) or
better and 68 per cent were BREEAM
‘Excellent’ or above.
Carbon in our developments
Embodied carbon intensity reduction goal
-20%
by 2030 from a 2020 baseline
Average embodied carbon intensity
reduction versus 2020 baseline
-12%
Development completions rated BREEAM
‘Very Good’ or better (or local equivalent)
100%
Our emissions
1.
3.
2.
1. Corporate
and customer
emissions
41%
2. Embodied
carbon from
developments
41%
3. Other scope 3 18%
36 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Responsible SEGRO
continued
We have chosen to include
our customer emissions in
our science-based carbon
reduction targets, which
we believe sets us apart
from much of the real
estate sector.
Gabriella Zepf
Director – Sustainability
Carbon in our standing assets
Aim to reduce absolute corporate and
customer carbon emissions
-42%
by 2030 from a 2020 baseline
Corporate and customer carbon emissions
reduction versus 2020 baseline
-13%
Increased visibility of customer energy use
during 2022
+26%
Corporate and customer carbon intensity
-19%
22.5kgCO
2
e per sq m
Our corporate emissions are less than one
per cent of our total Scope 1, 2 and 3 carbon
emissions. In contrast, the emissions
generated by the activity of our customers
inside our warehouses amounts to
approximately 40 per cent.
Responsibility for sourcing energy and
monitoring use falls with our customers for
the majority of our portfolio due to the nature
of traditional warehouse lease structures.
However, given the signiicant contribution of
these customer emissions to our Scope 3 we
have chosen to include them in our science-
based targets. We aim to reduce our absolute
corporate and customer emissions by 42 per
cent by 2030 (compared to a 2020 baseline
of 312,115 tonnes CO
2
e). This also captures the
organic growth of the business and is explained
further in the SEGRO Carbon Pathway.
We made good progress during 2022, with
a 3 per cent absolute reduction in corporate
and customer emissions to 272,218 tonnes
CO
2
e (2021: 280,575 tonnes CO
2
e). We have
also reduced our corporate and customer
carbon intensity to 22.5 kg CO
2
e per sq m
(2021: 27.9 kg CO
2
e).
With the inclusion of our customers’ emissions
in our science-based targets, obtaining good
quality energy data and prompting our
customers to source renewable energy is
paramount. During 2022 we have improved
our energy visibility, collecting data on 68 per
cent of our total property loor area (up from
54 per cent during 2020). This helps to
increase the accuracy of our carbon data and
allows us to better identify opportunities to
help our customers operate their buildings
more eiciently. For the remaining part of the
portfolio where we do not yet have the data
we apply estimation methodologies.
All of SEGRO controlled electricity (both for
our own operations and for those markets
where we procure energy on behalf of our
customers) is procured in a way which reduces
emissions (generally via renewable taris) and
is zero carbon. This certiied renewable energy
helps SEGRO and our customers reduce their
carbon footprint.
Transitioning away from heating our spaces
with fossil fuels to eicient low-carbon
electrical heat sources, such as heat pumps,
will be a key part of our strategy going forward.
During 2022 we introduced a standardised
green lease, asking our customers to share
their energy data with us and commit to
procuring a zero-carbon electricity tari where
possible. We are moving to automatic meters
to facilitate the data collection process. Over
200 customer meters were upgraded during
the year. We are introducing the contractual
clauses as part of lease negotiations and will
be monitoring their adoption going forward.
Another way to reduce customer carbon
emissions is to make our buildings more
energy eicient. The majority of our portfolio is
modern and built to the highest sustainability
standards but there are still some older assets
where we can make improvements. We do
this through an ongoing maintenance and
refurbishment programme, normally after
a lease expiry .This not only helps with our
progress towards our net-zero carbon targets
but also makes the space more attractive to a
potential customer and we are starting to see
it make a dierence to rental levels achieved.
Changes that we make include installing LED
lighting, solar panels, air source heat pumps
and automatic metering. We aim to have our
entire portfolio Energy Performance Certiicate
(EPC) rated at least ‘B’ or equivalent. At the end
of 2022, 58 per cent of the portfolio now had
an EPC rating of B or better.
In addition to the installation of solar panels
on new developments and existing buildings
during refurbishment, we also have a project to
retroit solar onto leased assets. During 2022
we added almost 6 MW of capacity at a single
site in the Netherlands, helping to take our total
capacity to 44 MW (2021: 35 MW). We have
identiied a pipeline of other projects, which we
anticipate will deliver a signiicant increase in
installed capacity over the next two years.
Our emissions
1.
3.
2.
1. Corporate
and customer
emissions
41%
2. Embodied
carbon from
developments
41%
3. Other scope 3 18%
37 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Climate change adaptation
Acknowledging that our planet is facing a
climate emergency, we must be alert to the fact
that our business too will inevitably be aected
by certain aspects of a changing climate.
Risks posed by climate change and our
governance approach are set out in our
Business Risk section. Our Climate-related
Financial Disclosure provides a full explanation
of our approach and the outcome of our
research and engagement with external
specialists, who guided us through this year’s
assessment.
We are moving from a once-a-year approach
to assessing certain climate hazards to a more
dynamic process which should allow us to
investigate speciic locations in more detail,
informing our asset management and
valuation processes in turn.
See our Climate-related Financial Disclosure
Page 79
An ecosystem approach
Biodiversity
We think carefully about the landscape
surrounding our existing and new buildings to
ensure that they are pleasant environments for
people to work in, meet the needs of our local
communities and have a positive impact on
local biodiversity.
During the year, we have created green spaces
within our estates, including woodland areas
with public walking trails around our big box
parks or small ‘pocket parks’ and green walls in
our urban estates. We plant indigenous trees
and have even renatured stream beds. On
many of our estates we have introduced
beehives and now have 342 of them across
our portfolio encouraging pollination of local
plants and crops. We have also added bird
boxes, bat boxes and other locally appropriate
biodiversity features that help contribute to
a healthy ecosystem. On land that is awaiting
development in Italy we pay local farmers to
manage the plots and graze livestock which
have yielded risotto rice, bualo mozzarella
and wool whilst also keeping the grass
well maintained.
Biodiversity is playing an increasingly broader
role as nature-related and climate-related
topics are understood to be entirely
interrelated. Our reporting will increasingly
recognise nature-related risks and opportunities
and we intend to develop targets and metrics
to ensure we lead on this topic. Our immediate
aim is to ensure we meet or exceed the
Biodiversity Net Gain planning requirements.
Water
Our use of water is not material. However,
water as a topic looked at in conjunction with
biodiversity and climate change is clearly
critical to our communities and the
environment we operate in. We therefore
take measures, such as rainwater harvesting,
to ensure this precious resource is used
responsibly. All SEGRO owned properties
are separately metered or sub-metered for
water supplies.
Waste
Most of our waste is created as a result of our
construction and demolition projects. Our
target is to send zero waste to landill by 2025.
For demolition waste, which makes up the
bulk of our total waste, we reuse as much as
possible on-site to avoid the carbon emissions
related to transportation of waste o-site and
the import of new materials from elsewhere.
We undertake pre-demolition audits to identify
waste materials taking into consideration the
quantity and quality of waste to be re-used on
site as aggregate. Hazardous waste is dealt
with in the appropriate manner, fully in line
with relevant regulation. In 2022, almost all
(99.9 per cent) of construction, demolition
and operational waste controlled by SEGRO
was diverted from landill.
While we operate mostly out of oices owned
by our landlords, tertiary waste reporting is
undertaken by them.
We believe the triple
bottom line of climate,
community and
biodiversity plays to
SEGRO’s strengths and
allows us to build on our
existing Responsible
SEGRO framework.
Gabriella Zepf
Director – Sustainability
38 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Responsible SEGRO
continued
Nurturing talent
We believe that our long-term success as
a business will be achieved through building
a diverse, engaged and high-performing
workforce, ensuring a strong pipeline of future
talent and expertise for the business.
Our goal is to have an inclusive and supportive
culture, with a motivated workforce of talented
people. We aim to create an environment
where everyone can thrive and realise their
full potential.
During 2022 ,our workforce continued to grow
as we added resource and capabilities to
support our customers and growing portfolio.
We welcomed 81 new employees to SEGRO
and, at the end of 2022, had increased our
workforce by 9.4 per cent to 425.
Our culture
Our people tell us that they highly value their
working environment, which encourages
collaboration and care for each other. Our
Purpose and Values, which were co-created
with input from the entire workforce a number
of years ago, have stood the test of time and
underpin everything that we do. While we
continue to grow, our focus is on ensuring that
we retain this unique and positive culture.
During 2022, we have continued to listen to
our people. 95 per cent of them responded to
our employee survey (Your Say), showing their
interest in helping us to shape the Company.
Our engagement score was 91 per cent, which
is top quartile relative to the benchmark of
our employee research provider. We also
conducted a series of focus groups and a
separate survey to understand how eectively
our communications across the Company are
working. Our Board employee engagement
sessions (see page 99) have also continued
during 2022.
We encourage honest and open feedback
across SEGRO, but in the event that an
employee (or third-party supplier) wishes
to raise a concern on a conidential and
anonymous basis, we oer a whistle-blowing
helpline operated by an independent company.
Enabling extraordinary things:
Our Values
Our Values are our core beliefs about how we do business. They guide our decision making,
large and small. They are the way in which we work together to make things happen.
Say it like it is
We think straight and talk straight.
If the door is closed...
If one route is closed to us we always ind
another way.
Stand side by side
We work together as One SEGRO, and we put
the interests of the business ahead of our own.
Does it make the boat go faster?
We challenge the way we work to ind
a better way.
Keep one eye on the horizon
We are focused on today but are constantly
looking ahead to ensure we are successful
in the future.
‘Your Say’ engagement score
91%
2020: 94%
Key achievements during 2022:
– Top quartile employee engagement
– Increased number of women in senior
positions
– Launch of the Management Academy
– More diverse graduate programme
– Launch of the Wellbeing Fund
Priorities for 2023:
– Build a career development framework
and focus on succession planning
– Refresh our policies that support diversity
and inclusion
– Bring together our people at our irst
in-person conference since Covid
– Involve our people to help shape future
ways of working as our business grows
We are proud of the culture
at SEGRO, which values the
contributions of all our
people.
Margaret Murphy
Group Human Resources Director
Voluntary sta turnover
1.
2.
1. 2022 8.7%
2. 2021 7.0%
Number of employees
1.
Female: 218
Female: 192
Male: 207
Male: 193
2.
1. 2022 425
2. 2021 385
Scan the QR code to hear our Group HR Director talk
about our progress with Nurturing talent.
39 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Enabling extraordinary things:
Nurturing talent
2022 was a landmark year for us in terms of
delivering on our promise to foster a more
inclusive culture and build a more diverse
workforce. All of our senior management
completed D&I training; we hosted Ashanti
and Danielle – our irst intake from the
#10000BlackInterns programme; Stephen
Frost, former Head of D&I for the 2012 London
Olympics and Paralympics spoke to the business
about the case for Inclusion; and – for the irst
time ever – we changed our policy so that 50%
of our graduate recruits are now selected from
a non-property background.
Interview with Harveet Thethy who joined
SEGRO in 2022 as a non-cognate graduate:
You studied economics at university, so how
did you end up at SEGRO?
Initially when I was searching for graduate jobs,
I was mostly on the lookout for consulting roles,
but inding a job in real estate was always in the
back of my mind. However, when attending
career events on campus there were no
companies that represented the property sector,
which led me to apply to the ‘typical’ roles that
Economics students usually apply for, such as
inance and consulting. I then received an email
from Sanctuary Graduates who assisted with the
recruitment process for SEGRO. I read the job
description and I was instantly fascinated and
wanted to know more about the company and
the industry. After going through all the stages
and understanding the job role, I felt that the grad
scheme would be a good opportunity for me to
learn more about the industrial logistics sector,
and how SEGRO develop innovative spaces for
their customers. So far, I have been able to apply
my Economics knowledge by understanding the
current climate, such as the supply and demand
imbalance in the sector, and how this has an
impact on our rental growth.
Why did you choose real estate and,
speciically SEGRO?
I chose to go into real estate as I thought it would
be a great way to kickstart my career and get out
of my comfort zone by learning about a ield that
I had limited knowledge on. When researching
SEGRO, I found that it was a company that is
always striving to nurture talent and invest in
young people. Therefore, I knew that the
company would provide me with the best
learning experience, especially having not come
from a property background. The graduate
scheme is also very structured, enabling me to
rotate in asset management and development.
This will allow me to gain the relevant
competencies for my APC (Assessment of
Professional Competence). Additionally,
SEGRO is a leading company in the industrial
logistics sector so it’s a great way to learn from
the professionals and get stuck into dierent
projects. From the few months that I have been
at SEGRO, I have already been given lots of
responsibility, such as asset managing my own
estate. This has been a great way for me to
develop my skills and understand the leasing
process. The company culture at SEGRO also
appealed to me, especially the fact that anyone
can get involved in charity and fundraising
events, such as the Day of Giving.
Would you recommend a career in real
estate to other “non-cogs”?
I would deinitely recommend a career in real
estate to those that did not study a property
related degree, especially at SEGRO. This is due
to the endless opportunities and projects that
you can get stuck into. I have to say it was
daunting at the start but the culture at SEGRO
has made me feel comfortable enough to ask
any questions if I am unsure about anything.
The company is a place to grow and is a
constant learning environment, so there will
always be something to get involved in and gain
practical experience in. I am also studying a
Masters in Real Estate alongside my job, which
has helped me to apply my knowledge to my
day to day tasks. Hence, I don’t feel that I am in
the dark about anything as the Masters goes
through all the basics, building the foundations
of how the property sector works. Furthermore,
I think real estate is a really interesting sector to
get into especially with the current issues we
are facing in the economy. So, it is intriguing to
see, irst-hand, the inlux of demand we receive
to occupy units, despite the constrain in supply.
Therefore, I would recommend a career in real
estate to anyone as you are constantly adapting
to the market and learning.
40 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Responsible SEGRO
continued
Business conduct and ethics
In everything we do at SEGRO, we recognise
that we need to behave morally, ethically and
lawfully. Our Code of Business Conduct and
Ethics (www.segro.com/about/policies) sets
out the high ethical standards expected of all
our people in their daily work. It also guides
how to put those standards into practice so we
can act with honesty and integrity. Included
within the Code are policies on bribery and
corruption (including fraud, tax evasion and
money laundering); gifts and hospitality; political
and charitable donations; conlicts of interest;
insider trading and market abuse; conidentiality
and data protection; anti-slavery and human
traicking; and our whistleblowing procedure.
Compliance with the Code of Business
Conduct and Ethics is a condition of each
employee’s employment, and all employees
are obliged to make a mandatory annual
certiication that they continue to understand
and adhere to the principles set out within it.
We are committed to building employee
awareness on ethical business practices, and
provide training on subject matters covered
to raise awareness and to help all employees
understand what behaving ethically means
in practice.
Any breaches of the Code of Business
Conduct and Ethics are fully investigated
and managed by the Head of Legal or Group
Human Resources Director as appropriate.
There were no material reported incidents of
breaches during 2022.
Diversity and inclusion
We have set ourselves the goal of increasing
the diversity of our workforce at SEGRO so that
we better relect the diversity of the populations
where we operate. During 2022, we continued
to put in place measures that will help us
improve our position in the coming years.
Last year, SEGRO was accredited the National
Equality Standard. This conirmed that we have
robust policies and procedures in place with
regards to equal opportunities and inclusion.
This includes appropriate support, retraining
and facilities for employees who are disabled
or who become disabled whilst in our
employment. During 2022 we have made great
progress on the areas that it highlighted where
improvements could be made:
Early careers recruitment
Our goal in 2022 was to improve diversity
in our graduate recruitment intake. We have
expanded our reach to universities via
partnership with external diversity specialists,
improved our use of social media to increase
brand awareness and application numbers,
and modiied selection methods to reduce
potential bias. Thanks to this process, a diverse
group of graduates joined in September 2022,
with a good mix of gender, ethnicity, education
and social background. In addition, we
participated in the #10,000BlackInterns
programme. We supported a six-week
placement to help two students, both from
non-property backgrounds, gain an
understanding of our industry.
Diversity data collection and monitoring
During 2022 we sought to better understand
the demographics of our workforce and
conducted a company-wide survey across
the geographies where we are legally
permitted to gather such data. Insights from
the survey will help us build targeted action
plans to improve diversity and inclusion.
Diversity training for all employees
In 2022, we concluded a programme of
inclusivity training for our senior managers
and have mandated diversity and inclusion
training for all our people as part of an ongoing
programme. We also commenced a speaker
series and are establishing an Inclusion
Steering Committee, led by a member of
the Leadership Team.
Leadership team representation
In addition to these initiatives, we have
continued to focus on improving gender
and ethnic diversity in our leadership teams.
We have made good progress since 2020
in increasing the number of women in senior
director and manager level roles.
Across the Group the number of women in
senior manager/director roles has increased
to 27 per cent (2021: 25 per cent, 2020: 18 per
cent) and women in manager roles has
increased to 38 per cent (2021: 34 per cent,
2020: 24 per cent).
UK Gender and Ethnicity Pay Gap
We believe that analysing diversity data and
being transparent is an important step towards
creating meaningful change. We have
voluntarily published our UK Gender Pay Gap
data since 2017 and our UK Ethnicity Pay Gap
data since 2020.
Our Pay Gap data can be found in the tables to
the right. During 2022 both our mean Gender
Pay and Bonus Gaps improved. Our Ethnicity
Pay Gap has increased slightly by 0.4 per cent
and our Ethnicity Bonus Pay Gap was 22.6 per
cent versus -36.0 per cent in 2021 (the latter
being due to the result of speciic share
schemes vesting).
As part of our salary review process we
undertake checks to ensure employees are
paid equally for doing equivalent jobs across
our business. Our reported Pay Gaps are
therefore a direct result of our employee proile
– we have more men than women and more
white than ethnic minority employees in senior
roles – and do not represent pay discrimination.
A core element of our Responsible SEGRO
framework is to improve diversity at all levels.
This is crucial for ensuring the future success
of our business and should also be relected in
our Gender and Ethnicity Pay Gaps reducing
over time.
UK Gender and Ethnicity Pay Gap
progression tables
Gender Pay Gap (mean)
2018 2019 2020 2021 2022
51.1% 51.6% 50.9% 46.2% 43.3%
Gender Bonus Gap (mean)
2018 2019 2020 2021 2022
66.5% 78.8% 77.3% 74.5% 68.9%
Ethnicity Pay Gap (mean)
2020 2021 2022
26.9% 25.3% 25.7%
Ethnicity Bonus Gap (mean)
2020 2021 2022
58.0% -36.0% 22.6%
41 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Health, safety and wellbeing
One of our key priorities as a business is to
ensure that our people can work in a healthy,
safe and secure environment. As we have
adapted to an agile working approach, it has
become even more critical that we support
our people, wherever they are.
We have a comprehensive health and safety
training programme, which starts when an
employee joins SEGRO and is refreshed
regularly depending on the requirements
of their role.
Over the past two years, we have extended
our approach and now incorporate dierent
aspects into our Wellbeing strategy,
supported by our 29 Wellbeing Ambassadors
across the Company.
The launch of our new Wellbeing Fund in
2022 was very well received by colleagues,
particularly as it allows them to invest up to
£500 or equivalent in something wellbeing
related, tailored to their own needs and
interests. 92 per cent of employees took up
the Wellbeing Fund during 2022 and it will
continue in 2023.
We provide, via our intranet, resources with
support and information on wellbeing. Our
enhanced beneits package also includes
access to a 24/7 conidential external helpline
oering counselling support.
Mental health
To facilitate a workplace environment that
promotes and supports the mental wellbeing
of all employees
Social wellbeing
To support continued connectivity, in an
environment of increased agile and remote
working
Physical wellbeing
To facilitate a workplace environment (in the
oice, at home or on site) that promotes the
beneits of physical activities to contribute to
positive wellbeing
Work life balance
To facilitate work life balance, through
promotion of SEGRO policies and practices
Skills and training
To provide continued awareness and
upskilling across a range of wellbeing topics
Developing our people
We want all our people to have the opportunity
to fulil their potential and this in turn will ensure
that we have an experienced and talented
workforce.
We have implemented a regular people
planning process that helps us identify
opportunities for career development. Twice
a year, we run a formal promotions process.
In 2022, we promoted 42 employees.
We have invested in our graduate programme
and oer secondment opportunities across
the business. Towards the end of 2022, we
kicked o an ongoing programme of
secondments to support transformation work
for up to six months at a time, helping us to
innovate and improve the business for the
future whilst developing our people’s
experiences and careers.
All our people have an interim and full-year
performance review, where we discuss training
and development opportunities. We oer
sponsorship for professional qualiications
Number of promotions
42
21 Female / 21 Male
Training hours
5,299
2021: 4,656
relevant to an individuals role or ambitions and
support ongoing development to help people
achieve their objectives.
We have a programme of mandatory training
to help our people understand their
responsibilities. These include topics such as
health and safety, anti-bribery and corruption
and cyber security as well as training to
support our Nurturing talent goals around
diversity and inclusion. During 2022,
employees carried out 5,299 hours of training
(2021: 4,656 hours).
In 2022, we invested in the development of our
leaders with the launch of a new Management
Academy, targeted at our middle and junior
managers. This training focused on getting the
best out of people, including recruitment and
performance management. 91 managers
participated in this programme during 2022.
42 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Responsible SEGRO
continued
Reward
Every permanent employee is entitled to
variable compensation, based on their own
and the business‘ performance against targets
and objectives. In 2022, we revised bonus
scheme metrics and aligned everyone across
SEGRO to Group-wide performance,
incorporating metrics linked to our
Responsible SEGRO strategic priorities.
SEGRO operates two types of all-employee
share schemes, to encourage employees to
own shares in the Company. All eligible
employees can receive an award of up to
£3,600 worth of SEGRO shares each year,
depending on the Company achieving certain
performance goals (in 2022 this was Adjusted
proit before tax). We also oer a Sharesave
scheme for all UK employees who can save up
to £500 per month across all open schemes.
82 per cent of SEGRO employees were
participating in one or more all-employee
share schemes at the end of 2022.
In addition to ixed and variable compensation,
we also provide a generous beneits package,
including health insurance, relective of market
competitive packages in each of our
geographies.
In 2022 we provided an additional payment of
£1,250 (or equivalent in local currency) to our
lower paid colleagues, to support the current
cost of living challenges.
Employees participating in share schemes
82%
2021: 79%
Additional payment to lower paid colleagues
£1,250
See remuneration targets
Pages 134 to 135
43 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Investing in our local communities and environments
Enabling the areas around our warehouses
to thrive is central to our strategic priority of
Investing in our local communities and
environments, and this year we launched our
irst ten Community Investment Plans (CIPs) –
seven in the UK and three in Continental
Europe. The tailored plans are part of a
commitment to create and implement CIPs
in all our key markets by 2025.
Our long-term commitment is to help
communities that live close to our estates that
face health, social, economic and inequality
challenges, and to help improve the lives, and
prospects, for thousands of people. Each plan
will aim to help young and disadvantaged
people into sustainable employment, contribute
to a thriving economy and enhance the local
environment by improving biodiversity and the
health and wellbeing of residents.
We are working with a range of charity and
public sector partners who have knowledge
and insight of the most pressing local
challenges our communities face as well as
the expertise to ensure we deliver an impactful
and outcome-driven programme, which will
make a real long-term dierence for those
that need our help the most.
To make the greatest impact we have put our
customers and suppliers at the heart of the
CIP programme to enable more members of
the community to beneit. We have had a
fantastic response in the irst year with over
50 customers and suppliers participating
in a range of programmes.
Our employees will play a critical role in the
delivery and success of the CIPs. To help
embed the plans into our business and
broaden engagement with partners,
customers and suppliers, 52 Community
Champions have stepped forward voluntarily
to promote and drive forward the programme.
We have also created three new roles in
Continental Europe, to complement the
existing roles in the UK, to lead the success
and growth of the CIP programme and
maintain high levels of service delivery as
well as positive and measurable outcomes.
To encourage greater employee participation,
there is no limit to the number of days employees
can volunteer in a year. 2022 saw more
employees volunteer and commit time than
ever before. 271 employees (68 per cent of the
workforce) dedicated 387 days by participating
in our annual Day of Giving and organised CIP
projects. They were accompanied by a further
95 volunteers from our customers and suppliers.
The CIPs are funded by the £10 million
Centenary Fund that we established on our
100-year anniversary in 2020. This money
will be invested in impactful projects that
align to the themes of employment, economy,
and environment over a longer period to
maximise outcomes.
Video
still here
7,000
young people inspired about the world of work
35
students mentored by SEGRO employees
780
unemployed individuals supported through
employability training
62
unemployed people into employment
26
projects delivered that enhanced the
environment, biodiversity or health and
wellbeing of our local communities
387
employee volunteering days
Number of Community Investment Plans
10
implemented in 2022
Charitable giving in 2022
£2.5m
2021: £1.3m
Key achievements during 2022:
– Launch of our irst ten Community
Investment Plans (CIPs)
– Record number of SEGRO employees
volunteering
– Signing of the irst Community Charter,
bringing together local authorities,
customers and charities in southern Paris
– First phases of SEGRO mentoring
programme in the UK and France.
Priorities for 2023:
– Expanding and enhancing the outcome
of our current CIPs and launching more
in some of our other markets (including
Southern Europe and the UK Midlands)
– Involving more of our customers and
suppliers in our CIP projects to maximise
their impact.
Scan the QR code to hear our Partnership Development
Director talk about our progress with Investing in our local
communities and environments.
44 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Responsible SEGRO
continued
Career Ready is delighted
to be working with SEGRO
to invest in young talent in
the East Midland’s Gateway
Region. Our mission to is
provide young people in
the area with workplace
opportunities and skills,
helping them successfully
go from education into
rewarding employment.
Tokunbo Ajasa-Oluwa
CEO, Career Ready
Community investment plans (CIPs)
Each CIP sets out how SEGRO will invest in its
local communities and environments through
a range of programmes designed to improve
training and employment opportunities for
young and unemployed people, enable the
economy to thrive and enhance the
environment to support biodiversity as well
as the health and wellbeing of local people.
The CIP programme provides a framework
that enables the teams in our key markets to
respond to the needs of the local community
with a range of highly impactful community
and environmental programmes by:
– creating a strategic coherent and outcome-
driven approach across SEGRO;
– empowering the local teams to respond to
local needs;
– maximising the impact by putting
collaboration with customers and suppliers
at the heart of the programme;
– working in partnership with local
stakeholders such as charity partners, local
government, business groups and the
community;
– delivering excellence with the support of our
Partnership Development Team.
The irst key markets are: Heathrow, Park Royal,
East London, Slough, East Midlands, Coventry,
Northampton, Paris, Łódź, and Düsseldorf.
Employment
Helping local people to beneit from skills,
training and job brokerage programmes,
especially those that are unemployed or face a
barrier to employment. Inspiring young people
about the world of work through a range of
career talks, work experience and mentoring
programmes. For example:
Slough
In partnership with Learning to Work, we used
a range of face-to-face and online platforms
from assemblies, site visits and competitions,
to help bring the world of work to life for over
3,500 young people from 16 secondary
schools. Outcomes from the SEGRO Futures
Assembly include: 87 per cent of students are
more aware of job opportunities in their local
area, and 83 per cent of students have a better
understanding of work environments.
Paris
We signed our irst Community Charter along
with eight partners in the territories of Bonneuil-
sur-Marne and Sucy-en-Brie to promote
economic and social development in these
regions to help deliver employability training
opportunities for the local community. To
support the delivery of the programme, 35
customers have signed up to provide mentoring,
training and work experience opportunities.
The project will launch in 2023.
West London (Heathrow and Park Royal)
42 unemployed people found employment
having successfully participated in our skills
and training programme in collaboration with
Action West London (AWL). A dedicated
Personal Advisor was assigned to support
each participant to develop their training plan,
which included mentoring, coaching and
specialist guidance.
We also launched our irst mentoring
programme with educational charity, Spark!,
supporting young people in West London. 35
employees participated in the programme,
each dedicating ten hours of their time to work
with a young person to help build conidence.
The programme culminated in a graduation
ceremony at SEGRO’s London headquarters.
Düsseldorf
In December we hosted our irst schools
programme at SEGRO Park Düsseldorf City,
welcoming 120 students. The students
beneited from visits to our customers,
including DHL, Sonepar, Shop LC GmbH,
World Courier and Wine Ainity. These
customer visits helped to bring to life career
opportunities and showcase a range of
exciting sectors to work in.
Alongside these projects that are unique to
particular CIPs, we are also continuing to work
with our legacy charity partners to deliver vital
community programmes that support
vulnerable people. We expanded our
partnership with LandAid to design and pilot a
new training and employability programme to
help young homeless people around the UK to
move into sustainable employment. The
project has been welcomed by both homeless
charities and beneiciaries resulting in LandAid
announcing it will roll out the programme in
2023. SEGRO will be one of the Founding
Partners of the programme.
45 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Economy
Enabling the growth of the local economy to
thrive by helping local businesses to connect
to our customers, suppliers, and partner with
stakeholders to deliver programmes that
help to enhance productivity and innovation.
For example:
Slough
We piloted our irst construction supply chain
programme with our contractor Wates at the
Slough Trading Estate during the construction
of one of our data centre projects. Designed to
promote ‘work packages’ to local businesses,
over £1.5 million was invested into the local
economy. Due to the success of this pilot we
will be rolling out similar programmes on other
development schemes during 2023.
East London
Launched in December 2021, the Future Cube
Centre located at SEGRO Park Rainham was
created in partnership with the Mayor of
London, London Borough of Havering, and the
Manufacturing Technology Centre (MTC) is
helping small- to medium-sized businesses to
grow through a programme of technology,
innovation, and productivity improvements.
Environment
Delivering environmental projects that improve
the biodiversity of the local area and the health
and wellbeing of the community.
Through a combination of funded projects
and SEGRO employee volunteering activity,
we delivered a total of 26 environmental
community projects across the UK and
Continental Europe. These projects included
a range of activities from planting trees to
cleaning rivers, as well as improving communal
gardens to create safe and essential play space
for young vulnerable children.
In the UK, ten community outdoor spaces were
revitalised in partnership with Groundwork, to
enhance biodiversity and improve the health
and wellbeing of local people. The projects
were delivered by unemployed people, helping
them to gain practical skills in horticulture and
landscaping, with many receiving
qualiications such as Horticulture and Land
Management, Health and Safety and Carbon
Literacy. A total of 60 unemployed people
beneited from the programme.
Wider community support
Our buildings have always enabled
extraordinary things to happen and they play
an important role in supporting our local
communities by providing critical space for
training vulnerable people, supporting cultural
projects and the distribution of food for those
living in poverty.
The cost-of-living crisis has highlighted the
importance of working with foodbanks and
we continue to support charities such as City
Harvest, through providing space at reduced
rents. Since our partnership began in 2016,
the charity has delivered over 33 million meals.
Over 24 million of those meals were delivered
since the start of the pandemic.
In response to the humanitarian crisis in
Ukraine and the displacement of millions of
people to neighbouring countries, including
Poland, SEGRO along with our joint venture
SELP donated 150,000 to two organisations
helping to support the refugee eort: The
Ocalenie Foundation in Poland and the UN
Refugee Agency, UNHCR. Our people in
Poland also donated their time to help sort
donations and transport them to the border,
and organised an additional Day of Giving,
during which they made 1,000 sandwiches
for refugees arriving in Warsaw.
46 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Responsible SEGRO
continued
Enabling extraordinary things:
Investing in our communities and local environments
For more
information
see
Page 47
In February 2020, our customer City Harvest
was providing about 300,000 meals a month
for those in need.
As the pandemic escalated, more people
were going hungry. City Harvest told us that
they desperately needed bigger premises.
In the space of a month, we tore up their old
lease and moved them into another of our
buildings in West London. Crucially, this new
building was a cross-dock and that meant
that City Harvest could deal with both more
food coming in and going out.
Our ability to move them has resulted in
a million more meals each month being
distributed from City Harvest’s premises
to those people that need them the most.
Scan here
to see video.
47 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Unrealised losses on whole portfolio
-£1,232m -£148m -£296m -£238m -£296m -£2m -£2,212m
Greater
London
Total
Thames
Valley
National
Logistics
Northern
Europe
Southern
Europe
Central
Europe
Assets under management
£20.9bn
2021: £21.3bn
Portfolio valuation
£17.9bn
2021: £18.4bn
Portfolio valuation change
-11.0%
2021: +28.8%
ERV growth
+10.9%
2021: +13.1%
Portfolio Performance
Summary
Valuation declines from market-driven yield
expansion were partly oset by gains from
strong rental growth, asset management
and development.
Warehouse property values continued to rise
during the irst six months of 2022, but sharp
increases in interest rates resulted in market
uncertainty and volatility. This led to a higher
cost of capital, which was relected by the
valuers through signiicant yield expansion
during the second half of the year.
Occupier demand was strong throughout,
and supply remained at historically low levels,
driving further market rental growth. Along
with asset management and development
gains, this helped to oset some of the impact
of yield expansion, but not enough to prevent
property values falling over the year.
The Group’s property portfolio was valued at
£17.9 billion at 31 December 2022 (£20.9 billion
of assets under management). The portfolio
valuation, including completed assets, land
and buildings under construction, decreased
by 11.0 per cent (adjusting for capital expenditure
and asset recycling during the year), osetting
some of the 28.8 per cent growth achieved in
2021. The valuation fell 16.6 per cent in the
second half of 2022.
Valuation: what to expect in 2023
Forecasting yields over any period is
notoriously diicult given the multitude of
economic and inancial drivers (particularly
interest rates and credit spreads), most of
which are outside our direct control.
Nevertheless, the operating prospects for our
portfolio are strong, supported by structural
drivers of occupational demand and limited
supply, therefore we are optimistic about the
potential for further rental value growth,
particularly in our urban warehouse portfolio.
These attractive fundamentals mean we
anticipate investors will return to the market to
invest in industrial and logistics assets once
there is more clarity over the interest rate
trajectory. We have seen encouraging early
signs that this activity is increasing.
We believe that our high-quality portfolio and
focus on active asset management will enable
us to outperform the wider industrial and
logistics markets in the countries in which we
operate through the cycle.
In total, our portfolio generated a total property
return (TPR) of -8.1 per cent (2021: 35.6 per
cent). The UK delivered a TPR of -10.6 per cent
which compared favourably to its MSCI
calculated benchmark of -14.4 per cent. The
Continental European TPR was -3.7 per cent,
however the MSCI calculated benchmark will
not be available until later in the year.
The reduction in valuation of our portfolio
primarily comprises a 13.1 per cent decrease
in the assets held throughout the year (2H22:
-19.6 per cent, 2021: +29.0 per cent), driven by
yield expansion in most markets (100 basis
points across the whole portfolio), but this was
partly oset by a 10.9 per cent increase in our
valuer’s estimate of the market rental value of
our portfolio (2021: 13.1 per cent).
Assets held throughout the year in the UK
decreased in value by 15.5 per cent (2H22: -21.4
per cent, 2021: +34.5), outperforming the MSCI
Real Estate UK All Industrial Quarterly index
which decreased by 17.4 per cent over the
same period. The outperformance was due
to the prime quality of our portfolio providing
resilience on capital values along with the
signiicant embedded reversionary potential.
The true equivalent yield applied to our UK
portfolio was 4.8 per cent, 110 basis points
higher than at 31 December 2021 (3.7 per cent)
Rental values improved by 11.5 per cent (2021:
18.8 per cent).
Assets held throughout the year in Continental
Europe decreased in value by 8.8 per cent
(2H22: -12.4 per cent, 2021: +18.7 per cent)
on a constant currency basis, relecting
a combination of yield expansion to 4.8 per
cent (31 December 2021: 4.0 per cent) and
rental value growth of 9.9 per cent (2021:
4.1 per cent).
More details of our property portfolio can be
found in Note 26 to the Financial Statements
and in the 2022 Property Analysis Report at
www.SEGRO.com/investors.
2022 was a year of
contrasts with very
dierent dynamics in
the investment and
occupier markets.
Soumen Das
Chief Financial Oicer
48 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Performance review
Scan here
to see video.
To ind out more
about SEGRO visit
www.segro.com
COO’s
Q&A
Enabling extraordinary things in 2022
To ensure we are able to consistently
deliver the extraordinary we stay close to
our customers, helping us to understand
their changing requirements.
Andy Gulliford addresses:
– Outlook for rental growth
– Development strategy going forward
– Operational priorities for 2023
49 SEGRO plc
Annual Report & Accounts 2022
Overview Strategic Report Governance Financial Statements Further Information
Strong occupier demand
and low levels of vacancy
across our markets created
the perfect conditions for
rental growth during 2022.
Andy Gulliford
Chief Operating Oicer
Asset management update
Portfolio passing rent
£587m
2021: £518m
Rent contracted during the year
£98m
2021: £95m
Customer satisfaction
85%
2021: 90%
Corporate and customer carbon emissions
272,218 tonnes COe