SEGRO chief executive David Sleath has been rewarded with a bumper £1m increase in his total pay as the company embarks on a second equity raise in six months to capitalise on the buoyant industrial market.
Sleath, who has held the top job since 2011, has been awarded a pay package totalling £3.34m for 2016, up from £2.38m in the previous year, according to SEGRO’s annual report.
The main reason for the higher payout was that Sleath received the maximum reward of £1.65m under the company’s long-term incentive plan. This was thanks to the outperformance of the company’s shares and its total property return.
SEGRO has benefited from the continued strength of the industrial market since the EU referendum and has sought to take advantage by ramping up its development activity.
Last week, the company announced a rights issue to raise £573m, having already raised £325m last September.
SEGRO will use £340m from the latest fundraising to finance development projects.
It has already invested or allocated the bulk of the £465m in capital expenditure it earmarked at the time of the September equity placing for development projects.
The money from the new fundraise will help fund new projects that SEGRO’s directors have since approved while still leaving substantial funds for other potential schemes.
The remaining funds from the equity raise will help finance the £365m buyout of the company’s joint venture partner Aviva Investors in the Airport Property Partnership (APP), which owns 21 assets around Heathrow Airport.
The deal is also being funded through the sale of £149m of property to Aviva.
Although the yield on the APP purchase is only 3.6%, Sleath said that he expected this to rise to 5.5% once a number of peppercorn leases expire in 2019.
SEGRO also plans to expand through development at Heathrow. The scale of these plans will be increased if the expansion of Heathrow Airport goes ahead.
However, the deal was not predicated on construction of a third runway.
“The way we’ve appraised this was to not take account of that possibility,” said Sleath.
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