SEGRO (SGRO) Investor Update summary

Strategic evolution and market positioning

• SEGRO and Pure Data Centres Group formed a 50:50 joint venture to develop a fully fitted data centre in Park Royal, West London, leveraging SEGRO's 10-acre site and Pure DC's secured 70 MVA power in a highly constrained market.

• The project marks SEGRO's shift from powered shell to fully fitted developments, aiming to capture greater value and returns in response to strong demand from hyperscalers and AI-driven growth.

• The London data centre market is experiencing rapid growth, with public cloud demand expected to grow 2.5x from 2025 to 2030, and a significant supply-demand imbalance in core submarkets.

• Major hyperscalers have announced multi-billion-pound UK investments, and UK government support for data centres as critical infrastructure is attracting foreign investment.

Project details and timeline

• The data centre will be a 56MW, three-storey facility, constructed to high sustainability standards, including closed loop liquid cooling to minimize water impact.

• Site clearance and planning application will commence immediately, with construction targeted to start in 2026 and customer-ready space available from 2029.

• Fit-out will be delivered in phases, with income generation expected to begin as each phase is completed, likely in 2029 and 2030.

• The joint venture aims to sign a long-term (15+ years) net lease with a global hyperscaler before construction commences.

• Lease income will be based on a fixed kilowatt per month model, with inflation protection likely included.

Financial structure and returns

• Total project investment is expected to be around GBP 1 billion, with each partner providing approximately GBP 150 million in cash equity, and the remainder funded by non-recourse bank financing.

• The project targets an unlevered net yield on cost of 9-10%, with significant development gains and attractive IRR anticipated.

• No development, management, or incentive fees will be paid; both partners contribute expertise at no extra cost to the JV.

• Non-recourse bank financing will be sought post pre-lease, with the balance funded equally by both partners.