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The UK’s largest REIT has put together a land bank that will allow it to vastly increase its data centre portfolio, taking advantage of demand in the fast-growing asset class.
Segro said it has assembled UK and European land and secured access to power that would allow it to build out a data centre portfolio with 2.3 gigawatts of power capacity. Its current portfolio stands at 0.5 GW across 34 UK data centres totalling 2.5M SF.
Segro's current data centre portfolio is valued at £1.3B, the company said in full-year results for 2024. That is about 8% of its overall portfolio, which is primarily made up of urban and big-box logistics in the UK and Europe.
The data centres generate £55M of headline rent per year at an average of £22 per SF. The portfolio is 100% leased, and it has an estimated rental value of £76M per year if predicted increases come through.
Segro's 7M SF Slough Trading Estate, 25 miles west of London, contains the largest concentration of data centres in Europe, the company said. It also includes urban logistics assets.
In terms of access to power for new sites, Segro said it will have secured 0.4 GW of power before the end of 2027. It has also reserved 0.3 GW of power between 2027 and 2030 and has applications in progress for a further 1.1 GW.
The company currently builds “powered-shell” data centres, but it is considering moving into offering fully-fitted centres for tenants.
Both strategies provide a yield on cost of about 8%-12%, it said. And in both cases, it would be unlikely to retain and manage the schemes it builds, instead selling them on.
Segro saw its portfolio return to growth in 2024, rising 1% to £18B. The company’s net rental income increased by 8% to £500M. Income from joint ventures added £128M on top of that figure.
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