Segro has renegotiated its debt covenants to give it ‘additional headroom’ in the difficult market.

The industrial REIT has signed agreements with its banks which provide £1.7bn of debt to permanently increase the maximum gearing covenant from 125% to 160%.

As part of the agreement, Segro will pay a one-off fee of £8.6m and the margin over LIBOR and EURIBOR on the credit facilities will increase by around 110 basis points on previous levels, increasing the weighted average cost of Segro’s debt from 5.2% to 5.75%.

Segro said: ‘The group continues to operate within all of its debt covenants even without the amendments, but in the current uncertain economic environment and difficult property market conditions, Segro believes that the amendments provide valuable additional headroom to the company.’

Interest cover covenants remain the same, as do gearing covenants of 175% on Segro’s £1.3bn of corporate bonds.

Segro said that the covenant renegotiation was an important element of its overall financing strategy.