Listed Real Estate Asia, KT Capital Group

Jacob Cheng

Listed Real Estate Asia

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Equity Bottom-Up

<ul>
<li>Gridlock creates monopolies: European 10-year grid queues block new data center supply, giving landlords with secured power immense pricing leverage over hyperscale tenants.</li>
<li>Yield arbitrage unlocked: Segro leverages its 3.0 GVA power bank to generate 8% to 10% development yields, vastly outperforming standard logistics returns and accelerating earnings.</li>
<li>Massive valuation discount: Segro trades at a depressed industrial multiple, offering investors a rare multiple expansion catalyst compared to expensive US data center peers.</li>
</ul>


Gridlock creates monopolies: European 10-year grid queues block new data center supply, giving landlords with secured power immense pricing leverage over hyperscale tenants.
Yield arbitrage unlocked: Segro leverages its 3.0 GVA power bank to generate 8% to 10% development yields, vastly outperforming standard logistics returns and accelerating earnings.
Massive valuation discount: Segro trades at a depressed industrial multiple, offering investors a rare multiple expansion catalyst compared to expensive US data center peers.


AI Boom and The Substation Squeeze: Segro's Hyperscale Monopoly in Europe

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>The agreed Scheme values SEGRO at 1,054.3p including the retained 2026 final dividend, effectively matching our 1,055p target price and validating our original standalone valuation.</li>
<li>Using current market prices, the live completion value is 1,030.9p, leaving a 7.3% gross spread and an estimated 8.1% annualised return to our assumed 30 June 2027 settlement.</li>
<li>We raise our completion probability to 88%, above the market-implied 75.8%, and now favour a conventional long SEGRO/short Prologis merger-arbitrage position over an outright long SEGRO exposure.</li>
</ul>


The agreed Scheme values SEGRO at 1,054.3p including the retained 2026 final dividend, effectively matching our 1,055p target price and validating our original standalone valuation.
Using current market prices, the live completion value is 1,030.9p, leaving a 7.3% gross spread and an estimated 8.1% annualised return to our assumed 30 June 2027 settlement.
We raise our completion probability to 88%, above the market-implied 75.8%, and now favour a conventional long SEGRO/short Prologis merger-arbitrage position over an outright long SEGRO exposure.


Prologis/SEGRO: Agreement Reached at Fair Value

<ul>
<li>Prologis increased its Best and Final proposal to 0.0920x shares and expanded the Partial Cash Alternative, bringing consideration within 2% of our 1,055p target price.</li>
<li>We raise our probability of a successful transaction to 75%, as negotiations appear to have shifted from valuation towards agreeing the remaining terms of a recommended offer.</li>
<li>Despite a weaker Prologis share price reducing implied consideration to around 1,019p, the proposal remains close to our valuation, limiting the case for further Board resistance.</li>
</ul>


Prologis increased its Best and Final proposal to 0.0920x shares and expanded the Partial Cash Alternative, bringing consideration within 2% of our 1,055p target price.
We raise our probability of a successful transaction to 75%, as negotiations appear to have shifted from valuation towards agreeing the remaining terms of a recommended offer.
Despite a weaker Prologis share price reducing implied consideration to around 1,019p, the proposal remains close to our valuation, limiting the case for further Board resistance.


SEGRO: Prologis Moves Closer to a Recommended Offer

<ul>
<li>Prologis' third proposal narrows the valuation gap to 62p/share and increases deal credibility, but negotiations remain focused on price ahead of the Rule 2.6 deadline.</li>
<li>SEGRO's willingness to engage on improved terms raises the probability of a recommended transaction, although today's proposal still appears insufficient to secure Board support.</li>
<li>After a strong share price reaction, the opportunity has shifted from deep value to merger arbitrage, favouring outright SEGRO exposure over a fully hedged position.</li>
</ul>


Prologis' third proposal narrows the valuation gap to 62p/share and increases deal credibility, but negotiations remain focused on price ahead of the Rule 2.6 deadline.
SEGRO's willingness to engage on improved terms raises the probability of a recommended transaction, although today's proposal still appears insufficient to secure Board support.
After a strong share price reaction, the opportunity has shifted from deep value to merger arbitrage, favouring outright SEGRO exposure over a fully hedged position.


Prologis/SEGRO: The Gap Narrows, but the Negotiation Continues

<ul>
<li>Prologis' original 925p proposal now implies only 858p/share after the fall in its own share price, leaving SEGRO trading above the current exchange ratio and signalling expectations of higher terms.</li>
<li>We estimate SEGRO's intrinsic value at 1,055p/share by adding conservative values for the development pipeline and data-centre option to reported EPRA NTA, leaving a 197p valuation gap versus today's proposal.</li>
<li>Prologis' strongest argument is cost of capital. SEGRO can fund its pipeline, but likely over six to seven years. Prologis could accelerate development materially through its larger balance sheet platform.</li>
</ul>


Prologis' original 925p proposal now implies only 858p/share after the fall in its own share price, leaving SEGRO trading above the current exchange ratio and signalling expectations of higher terms.
We estimate SEGRO's intrinsic value at 1,055p/share by adding conservative values for the development pipeline and data-centre option to reported EPRA NTA, leaving a 197p valuation gap versus today's proposal.
Prologis' strongest argument is cost of capital. SEGRO can fund its pipeline, but likely over six to seven years. Prologis could accelerate development materially through its larger balance sheet platform.


United Kingdom

SEGRO is a UK Real Estate Investment Trust (REIT) that owns, manages, and develops modern warehouses and industrial properties across the UK and seven other European countries. Its portfolio includes big box and urban warehouses, as well as data centers, serving diverse customers from various industry sectors. The company was founded in 1920 and is headquartered in London, England.

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SEGRO (SGRO LN)

AI Boom and The Substation Squeeze: Segro's Hyperscale Monopoly in Europe

The AI Boom and Gridlock creates monopolies: European 10-year grid queues block new data center supply, giving landlords with secured power immense...

Jacob Cheng

Prologis/SEGRO: Agreement Reached at Fair Value

The agreed terms close one opportunity and create another. We update our valuation, probabilities and investment view accordingly.

Jesus Rodriguez Aguilar

SEGRO: Prologis Moves Closer to a Recommended Offer

Prologis' revised Best and Final proposal brings consideration close to our target price and increases the likelihood of a recommended offer. We...

Jesus Rodriguez Aguilar

Prologis/SEGRO: The Gap Narrows, but the Negotiation Continues

Prologis' third proposal increases deal credibility and narrows the valuation gap, but investors are now paying for an advanced negotiation rather...

Jesus Rodriguez Aguilar

SEGRO: What Is Prologis Really Buying?

A week after the approach became public, the numbers look different. Updating the valuation with current market prices raises questions that...

Jesus Rodriguez Aguilar

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