TIDMSERE
RNS Number : 7716R
Schroder Eur Real Est Inv Trust PLC
14 December 2016
SCHRODER EUROPEAN REAL ESTATE INVESTMENT TRUST PLC
ANNUAL REPORT AND ACCOUNTS
WELL POSITIONED FOR FURTHER INCOME AND ACCRETIVE GROWTH
14 December 2016
Schroder European Real Estate Investment Trust plc (the
"Company"), which invests in European growth cities, hereby submits
its annual financial report for the year ended 30 September 2016 as
required by the UK Listing Authority's Disclosure Guidance and
Transparency Rule 4.1.
The Company's Annual Report and Accounts for the year ended 30
September 2016 are being published in hard copy format and an
electronic copy will shortly be available to download from the
Company's webpage www.schroders.co.uk/sereit. Please click on the
following link to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/7716R_-2016-12-13.pdf
The Company has submitted its Annual Report and Accounts to the
National Storage Mechanism and it will shortly be available for
inspection at www.hemscott.com/nsm.do.
Highlights
-- EUR166.5 million (GBP121.7 million) raised at IPO and two placings
-- Acquired seven commercial property assets yielding 5.6% in
initial target growth cities within Germany and France
-- NAV of EUR157.8 million (GBP136.7 million) at 30 September 2016 (130.2 cps/112.8 pps)
-- Dividends of 1.7 cps declared relating to the year to 30
September 2016 - of which 0.9 cps to be paid by way of second
interim dividend in January 2017
Good progress with assembly of high quality portfolio in winning
cities:
-- Invested in seven retail and office properties with
attractive long term growth characteristics
-- Portfolio valued at EUR148.2 million as at 30 September 2016,
reflecting an uplift on purchase price of approximately 5%
-- 100% let on strong covenants with 6.5 years average lease term
-- Portfolio to benefit from growth trends of urbanisation,
demographics and infrastructure improvements
-- Post period end, a further EUR16.8 million (GBP15 million)
raised through equity placing; and contracts exchanged on an office
investment in Paris for EUR30.1 million yielding 9.5%
Debt strategy accretive to returns
-- Low cost, long duration debt financing at 22% LTV
-- Annual interest cost of 1.19% vs 5.6% property yield
generates geared income return of 7.7% (pre costs and tax)
Well placed to deliver target 5.5% Euro dividend and 7-9%
property total return once fully invested
-- Existing portfolio and attractive investment pipeline on
target to meet performance objectives
-- EUR60 million investment capacity for further accretive acquisitions
Sir Julian Berney, Non-Executive Chairman of the Company,
commented:
"The Company's strategic focus is on track. The acquisition of
well located commercial real estate in large, liquid and
established continental European conurbations is expected to
generate long term income and capital growth for the Company. The
key drivers are the demand/supply imbalance of institutional grade
assets, along with ongoing structural changes such as urbanisation
and infrastructure improvement. We are pleased with the progress we
have made to date, both in building our initial portfolio, as well
as our debt strategy, which is very accretive to shareholder
returns.
"Looking forward, the Company will look to maximise investment
performance from its current portfolio, meet the dividend target
and grow in a disciplined manner. As one of the few public UK
companies with a solely Continental European commercial real estate
portfolio, the Company is ideally positioned to offer investors
access to growth markets, significant portfolio diversification and
a solid income return. Our ability to leverage the strong track
record of the Schroder European investment platform located in the
target markets, coupled with current market conditions support our
strategic ambitions. This underpins our optimism for the future
prospects for the Company as we look to deliver attractive
investments and shareholder value."
Enquiries:
Duncan Owen/Tony Smedley
Schroder Real Estate Investment Management Limited Tel: 020 7658 6000
Ria Vavakis
Schroder Investment Management Limited Tel: 020 7658 2371
Dido Laurimore/Ellie Sweeney/Richard Gotla Tel: 020 3727 1000
FTI Consulting
Chairman's Statement
Overview
Significant progress has been made in the ten months since the
IPO. The equity raised at IPO has been invested in institutional
grade, income producing commercial real estate in identified growth
markets of Continental Europe, helping the Company achieve its
initial objective of building a diversified portfolio generating
regular and attractive income returns and positioning the Company
to deliver its 5.5% dividend target.
Income returns have been enhanced by applying leverage against
assets where borrowing terms are most accretive; the average cost
of our debt is 1.19% which compares favourably with property
acquisition yields of 5.6%. The Company now has leverage of 22%
LTV.
Moving forward, the Company has an identified pipeline of
investment opportunities which are under consideration by the
Investment Manager and the Board and which fit with the stated
investment objectives.
Strategy
The Company's strategic focus on large and established
continental European conurbations is based on the continuing
demand/supply imbalance for good quality space and the ongoing
structural changes such as urbanisation and infrastructure
improvement taking place in those markets. We believe it will also
position the Company well to take advantage of potential occupier
shifts that are likely to arise following the result of the UK
referendum on membership of the EU in June.
Growing the Company in a disciplined way that enhances
liquidity, economies of scale and performance prospects for
shareholders is an important objective for next year and beyond. To
this end, on 28 October 2016 the Company raised a further GBP15
million of equity under the placing programme established at IPO.
The first acquisition using these proceeds was of a new office in
Paris at a net initial yield of 9.5%. As stated at IPO the Company
is targeting significant growth from its current capitalisation and
further capital raisings will be an important component of this
strategy, in order that the Company can take advantage of both
existing and new investment opportunities.
Market
So far there has been little, if any, evidence of a significant
change in occupier or investor behaviour in Continental European
markets following the UK's vote to leave the EU. As a Board we are
not complacent and rationally expect some market volatility as the
negotiations between the UK and the EU continue. We also believe
investor interest in Continental Europe may increase as a result of
both diversification and occupier interest in those markets, as
well as a period of uncertainty for the UK real estate market, all
of which should support our strategy moving forward.
We believe the focus of our strategy on long term growth markets
and backing mega trends such as urbanisation, demographic change
and infrastructure is now even more appropriate. Such environments
are likely to prove more resilient in a downside scenario and have
further upside potential in the scenario where additional growth is
generated through a progressive shift of occupiers from the UK to
EU markets.
Portfolio
Following a concerted period of investment, the Company now owns
a portfolio of seven properties valued at EUR148.2 million as at 30
September 2016, reflecting an increase of approximately 5% on the
purchase price. The assets are all 100% let on strong covenants,
generating EUR8.7 million of annual rental income. The average
unexpired lease term is 6.5 years to first break and 8.2 years to
expiry. All leases are indexed, which is a positive characteristic
supporting the ability to meet the dividend.
The asset in Paris the Company has committed to acquire post
period end is expected to complete in January 2017, increasing the
portfolio value to about EUR178 million.
Dividend
The Company is targeting an annualised euro dividend yield of
5.5% based on the euro equivalent of the issue price as at
Admission.
The Company paid its first dividend of 0.8 euro cents per share
in September 2016. Directors have declared a second interim
dividend in respect of the period to 30 September 2016 of 0.9 euro
cents per share based on the number of shares in issue as at the
publishing date of this Report. This represents an annualised rate
of 2.6% based on the Euro equivalent of the issue price as at
Admission. The interim dividend will be paid on 27 January 2017 to
shareholders on the register on 13 January 2017. The dividend is
fully covered by contractual income receivable from the current
portfolio. The total dividend in respect of the 2016 financial year
is 1.7 euro cents per share.
Balance Sheet and Debt
Prudent leverage is used by the Company with the objective of
improving shareholder returns, whilst maintaining a robust balance
sheet, with overall leverage capped at 35% LTV at portfolio level.
As at 30 September 2016, the Company had three debt facilities in
place totalling EUR48.7 million, secured against six of its assets
and representing a loan to value of 22% against the Company's gross
asset value. The average debt maturity was 7.75 years and the
average interest rate was 1.19% p.a., materially below the average
net initial yield on the portfolio.
Outlook
We are grateful for the support of investors at IPO and in
subsequent new share issuances, which has enabled the Company to
fulfil its initial objective and ensure that we are well positioned
to take advantage of favourable market conditions. As stated at
IPO, there are a number of benefits for shareholders from
disciplined and accretive growth, including greater share
liquidity, portfolio diversification and beneficial economies of
scale and this remains a priority.
Despite the competitive investment environment for yielding
assets in Continental Europe and the volatile macro-economic
environment, the Investment Manager has been successful in
acquiring attractive assets for the Company in the target markets.
The focus remains on finding value in those markets and ensuring
continued portfolio diversification. The Company will continue to
take advantage of Schroders' wider real estate fund management,
research and strategy expertise (GBP11.8 billion AUM and 81 real
estate professionals as at 30 September 2016) to identify, acquire
and actively manage the growing portfolio. The Investment Manager
is based in the target markets and best placed to identify the
growth segments of the market.
This has been a particularly active first reporting period for
the Company and I would like to thank my fellow Directors and the
Investment Manager for their focus, diligence and skill in
navigating this initial phase. The next stage for the Company is to
maximise investment performance from its current portfolio, meet
the dividend target and secure accretive new investments to support
the medium term growth strategy. Current market conditions appear
conducive to such a strategy and we look forward to working
together to deliver this.
Sir Julian Berney Bt.
Chairman
13 December 2016
Investment Manager's Report
Results
The Company declared a NAV as at 30 September 2016 of EUR157.8
million (GBP136.7 million) or 130.2 euro cents per share (112.8
pps). This reflects a decrease in euro terms of -5.2% compared with
the capital raised. The NAV total return including paid dividends
was -4.6%, largely reflecting the costs of new equity issuances and
the acquisition costs of new investments over the reporting
period.
The table below provides a breakdown of the movement in NAV
during the reporting year:
EURmillion* % Capital
raised
---------------------------------- ------------ ----------
Capital raised 166.5 100%
---------------------------------- ------------ ----------
Issue costs - actual (3.4) -2.0%
---------------------------------- ------------ ----------
Issue costs - FX movements on
Rand/EUR exchange (1.6) -1.0%
---------------------------------- ------------ ----------
Transaction costs of investments
made during year (10.0) -6.0%
---------------------------------- ------------ ----------
Unrealised gain in valuation
of the property portfolio 6.6 4.0%
---------------------------------- ------------ ----------
Unrealised FX loss on monetary
items (cash/debtors/creditors) (0.2) -0.1%
---------------------------------- ------------ ----------
Realised FX loss (0.1) -0.1%
---------------------------------- ------------ ----------
Net operating profit 1.1 0.7%
---------------------------------- ------------ ----------
Dividends paid (1.0) -0.6%
---------------------------------- ------------ ----------
Adjustment for lease incentives (0.1) -0.1%
---------------------------------- ------------ ----------
NAV as at 30 September 2016 157.8 94.8%
---------------------------------- ------------ ----------
* Management reviews the performance of the Company principally
on a proportionally consolidated basis. As a result, figures quoted
in this table include the Company's share of joint ventures on a
line-by-line basis and excludes non-controlling interests in the
Company's subsidiaries. The Financial Statements set out on pages
47 to 70 of the 2016 Annual Report are prepared fully in accordance
with IFRS principles and therefore include 100% of any majority
interest on a line by line basis.
Market overview
The Eurozone economy has grown by around 1.5% p.a. (Source:
Eurostat) since mid-2013 and is expected to continue to recover.
The recent vote on the UK's membership of the EU triggered a
downward correction in growth expectations but it is not expected
to de-rail the recovery of the Eurozone. While the boost from
falling oil prices may fade, most countries look set to benefit
from rising employment and robust consumer spending. Low interest
rates mean business confidence has remained strong and low/negative
bond yields should cut governments' borrowing costs and enable them
to raise spending in 2017. Exports are also likely to gather
momentum next year, helped by slightly faster growth in the US and
a revival in emerging markets.
Offices
The improvement in the economy continues to impact on the office
supply/demand imbalance in the Company's favour. Agents' data
(Source: JLL) suggests office take up rose in most of our target
European cities during 2016 with corresponding increases in prime
office rents. Most of the growth has been among the professional
services, technology and media sectors. Office market fundamentals
remain supportive of further rental growth as vacancy continues to
decrease and the supply pipeline is limited.
Retail
Consumer spending continues to support the retail sector despite
the structural change taking place with online sales showing rapid
growth and impacting the demand for physical retail space. Demand
for high street units/flagship stores in core city centre locations
remains high. Dominant shopping centres with a retail, leisure and
food offer also continue to perform well. Secondary high streets
and small to mid-sized shopping centres remain under pressure.
Supermarkets, convenience stores and out-of-town retail warehouses
are, however, expected to be more resistant to online encroachment,
as consumers still prefer the physical aspect of food, furniture,
DIY and homewares and because these stores typically have car
parking and are convenient for click & collect sales.
Industrial
A result of the exponential growth of on-line retail has been
the increasing demand for industrial warehouses. Demand for big
distribution warehouses has increased by 25% since 2013 (Source:
JLL), due mainly to internet retailers and third party logistics
operators. Demand for parcel delivery and fulfilment centres,
including urban logistics, has also seen significant growth with
demand far outpacing supply to date.
Investment market
Although investment volumes have fallen since the start of the
year from the high levels of 2015, the investment market remains
competitive. While capital inflows from Asian and North American
investors have been noticeably lower, European investors remain
active, attracted by the large gap between real estate and bond
yields. There was a notable fall in activity in the UK since the
start of the year related to the UK referendum, with Germany
replacing the UK as the go-to destination for property investment
following the vote on 23 June 2016 (Source: Real Capital
Analytics). Early data suggests that investment activity in
continental Europe is unaffected and could further increase in the
coming months. Looking ahead, we expect investor sentiment will
probably cool ahead of the elections in the Netherlands (March),
France (April/May) and Germany (October). This uncertainty will
affect not only real estate, but also equities and bonds in the
eurozone. However, even if bond yields rise, we expect that real
estate yields will probably be relatively stable, given the
prospects for rental growth.
Strategy
The Company's strategy is set out on page 3 of the 2016 Annual
Report.
Property portfolio
As at 30 September 2016, the Company owned seven properties
independently valued at EUR148.2 million, reflecting a net initial
yield of 5.3% against the independent valuation and 5.6% against
investment cost. The retail properties in Biarritz and Rennes are
owned in a 70/30 joint venture with Mercialys, the French retail
property specialist.
In addition, contracts were exchanged post year end for the
purchase of the EUR30.1 million French office building Le
Directoire in Paris, reflecting a net initial yield of 9.5%. On
completion, this purchase will increase the portfolio value to
approximately EUR178 million. The portfolio's net initial yield
against investment costs will increase to 6.3% as a result of
purchasing Le Directoire.
All portfolio statistics in this section assume, unless stated
otherwise, that the Company completes the purchase of the Le
Directoire asset in Paris. The statistics all reflect the 70%
ownership share of Biarritz and Rennes.
The table below gives an overview of the portfolio:
Property Country Sector Contracted
rents Value
--------------------- --------- -------- ------------- --------------------------------------------------
EURm % total EUR0-EUR20m EUR20m-EUR40m EUR40m-EUR60m >EUR60m
---------------------------------------- ---- ------- ----------- ------------- ------------- -------
Paris France Office 2.3 19.2 X
--------------------- --------- -------- ---- ------- ----------- ------------- ------------- -------
Berlin Germany Retail 1.6 13.2 X
--------------------- --------- -------- ---- ------- ----------- ------------- ------------- -------
Biarritz France Retail 1.3 10.2 X
--------------------- --------- -------- ---- ------- ----------- ------------- ------------- -------
Hamburg Germany Office 1.1 9.0 X
--------------------- --------- -------- ---- ------- ----------- ------------- ------------- -------
Rennes France Retail 0.9 7.7 X
--------------------- --------- -------- ---- ------- ----------- ------------- ------------- -------
Stuttgart Germany Office 0.8 6.6 X
--------------------- --------- -------- ---- ------- ----------- ------------- ------------- -------
Frankfurt Germany Retail 0.7 5.9 X
--------------------- --------- -------- ---- ------- ----------- ------------- ------------- -------
Portfolio at financial
year end 8.7 71.8 EUR148.2 million
------------------------------------------ ---- ------- --------------------------------------------------
Paris, Le Directoire France Office 3.4 28.2 X
--------------------- --------- -------- ---- ------- ----------- ------------- ------------- -------
Portfolio incl. committed
purchase 12.1 100.0 EUR 178.3 million
------------------------------------------ ---- ------- --------------------------------------------------
The portfolio's country and sector allocations, pre and post the
Le Directoire commitment, is specified below.
Country allocation Portfolio at Portfolio Sector allocation Portfolio at Portfolio
(% contracted financial year end including (% contracted financial year end including
rent) committed rent) committed
purchase purchase
------------------ ------------------ ----------------- ------------------ ------------------ -----------------
France 52% 65% Office 48% 63%
------------------ ------------------ ----------------- ------------------ ------------------ -----------------
Germany 48% 35% Retail 52% 37%
------------------ ------------------ ----------------- ------------------ ------------------ -----------------
Total 100% 100% Total 100% 100%
------------------ ------------------ ----------------- ------------------ ------------------ -----------------
The assets are fully let, generating EUR12.1 million in annual
rental income. The average unexpired lease term is 5.2 years to
first break and 7.2 years to expiry (this compares to 6.5 years to
first break and 8.2 years to expiry excluding Le Directoire).
Lease expiry profile
The lease expiry profile to earliest break for the portfolio is
detailed in the 2016 Annual Report. The near term lease expiries in
2017 and 2018 (based on the portfolio including the committed
purchase) provide asset management opportunities to re-negotiate
leases, extend weighted average unexpired lease terms, improve
income security and generate rental growth.
Top ten tenants
The top ten tenants represent a significant proportion of the
total contracted rent generated by the portfolio and comprise a
wide range of occupiers from different industry segments. As at the
financial year end, the ten largest tenants account for 95% of
contracted rents. Post completion of the Le Directoire purchase in
St Cloud, Paris, the ten largest tenants in the portfolio will
account for 71% of the portfolio.
The table below gives an overview of the top ten tenants for the
portfolio as at financial year end.
Tenant Property Tenant Contracted Contracted Unexp.
risk(1) rent rent lease
(EUR'000 (%)(2) term
p.a.) (years)(3
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
1 ALTEN Paris Low 2,308 26 4.5
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
Rennes &
2 Casino Biarritz Low 1,856 21 5.7
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
3 Hornbach Berlin Low 1,607 18 9.3
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
4 City BKK Hamburg High 797 9 8.4
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
5 Land Baden-Württemberg Stuttgart Low 654 7 9.4
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
6 Lidl Frankfurt Low 347 4 10.4
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
7 Boulanger Biarritz Low 262 3 2.7
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
PTS Petereit
8 Services Hamburg Low-Medium 218 2 6.3
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
9 PräventSozial Stuttgart Low 145 2 6.4
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
10 Westside Rödelheim Frankfurt Low-Medium 96 1 9.7
--- ---------------------------- ---------- ----------- ----------- ----------- -----------
Subtotal 8,290 95 6.8
--------------------------------------------- ----------- ----------- ----------- -----------
Remainder current portfolio 452 5 2.1
--------------------------------------------- ----------- ----------- ----------- -----------
Portfolio at financial
year end 8,743 100.0 6.5
--------------------------------------------- ----------- ----------- ----------- -----------
Committed purchase 3,425 2.0
--------------------------------------------- ----------- ----------- ----------- -----------
Portfolio incl. committed
purchase 12,168 5.2
--------------------------------------------- ----------- ----------- ----------- -----------
(1) Regular tenant risk assessments are undertaken for tenants
above EUR100,000 contracted rents. Among other considerations, our
risk assessments are based on D&B ratings and D&B failure
scores.
(2) Percentage based on total contracted rent as at financial year end.
(3) Unexpired lease term until earliest termination in years as at 30 September 2016.
Valuation
The current valuation of EUR148.2 million for the existing
portfolio (excluding the committed Le Directoire purchase) reflects
an increase of 4.7% compared to the combined purchase price of the
seven asset portfolio. Over 60% of the transaction costs have been
recovered through valuation uplifts since acquisition.
Boulevard Jean Jaurès, Boulogne-Billancourt (Paris) 92100,
France
The Group's first acquisition was in Boulogne- Billancourt
(Paris), a 6,788 sqm fully leased office investment acquired in
March 2016 for EUR37.5 million, reflecting a net initial yield of
5.7%. The investment has a number of characteristics consistent
with our strategy; being leased off modest/sustainable rents,
located in a supply constrained area and where there is a high
incidence of competing uses as evidenced by recent office to
residential conversions.
Asset management initiatives include:
-- Managing neighbouring property easements, which have value in our favour;
-- Continuing to work with the tenant regarding their longer
term occupational intentions and considering refurbishment to
generate rental uplift; and
-- Determining local planning potential, particularly the
opportunity for conversion to higher value uses.
Großbeerenstraße, 12107 Berlin, Germany
This Hornbach DIY unit is located in a growing, densely
populated, mixed use area in the southern Berlin suburb of
Mariendorf. It was acquired in March 2016 for EUR24.3 million,
reflecting a net initial yield of 6.2%. The investment is a
relatively defensive long term income play underpinned by four
hectares of land in Germany's capital city, a city whose economic
and population growth is expected to outperform domestic and
European averages.
Subject to tenant and local authority discussions there is
further asset management potential given the large site area.
Initiatives include:
-- Diversifying the retail offer with the addition of
complementary uses such as food and beverage; and
-- Rezoning part of the land for residential use.
Neckarstraße, 70190, Stuttgart, Germany
This attractive office investment is located in central
Stuttgart. It was acquired in April 2016 in a portfolio transaction
with the Hamburg investment for a combined EUR28.9 million,
reflecting a blended net initial yield of 6.0%. The investment is
located in a sub-market with minimal vacancy and is expected to
benefit from favourable rental growth, particularly with completion
of "Stuttgart 21" in 2021, a large infrastructure and urban
development project nearby.
The property provides a long term cash flow underpinned by the
Federal state of Baden-Württemberg and future asset management
potential.
Hammerbrookstraße, 20097, Hamburg, Germany
"Tri-Tower C" is a fully let multi-tenanted office building
located in one of Germany's top seven office markets. It was
acquired in April 2016 in a portfolio transaction with the
Stuttgart investment for a combined EUR28.9 million, reflecting a
blended net initial yield of 6.0%. This asset was acquired for its
value characteristics. Passing rents are less than 50% of that
achieved in the city centre, one metro stop away. The sub-market is
a popular back office location for a broad range of public and
private companies and is increasingly becoming a place where people
want to live and work.
Asset management initiatives include:
-- Extending two smaller office leases that expire during 2016;
-- Discussing with City BKK a potential lease surrender payment
and subsequent direct leasing with sub-tenants.
Lorscher Straße, 60489, Frankfurt - Rodelheim, Germany
A multi let convenience retail centre located in a growing inner
urban region of Frankfurt am Main. It was acquired in May 2016 for
EUR11.1 million, reflecting a net initial yield of 5.6%. A key
point of difference is the 1,600 sqm Lidl supermarket which is
approximately double the size of discount supermarkets in the
region, therein providing for a broader grocery offer. The
investment is a combination of longer term, stable income with
short term asset management potential including:-
-- Improving the retail mix to enhance footfall;
-- Potential to add further lettable area and services to the car park area; and
-- Broadening the retail offer and strengthening the convenience nature of the centre.
Avenue de Bayonne, 64600, Anglet (Biarritz), France
Acquired off-market this investment is a fully let
multi-tenanted retail asset located in a leading regional tourism
destination in France, Biarritz. A 70% interest was acquired in
June 2016 in association with the Rennes hypermarket for a combined
EUR39.9 million, reflecting a blended net initial yield of 5.0%.
The investment rationale is predicated on acquiring well located
retail schemes in growth regions let at affordable rents and with
alternative use potential. We specifically requested that the
vendor, Mercialys, retain a 30% stake as an alignment of
interests.
This is an attractive long term income stream which is rarely
traded in the French market with future asset management potential
to improve the retail offer..
Route de Saint Malo, 35760, Saint-Grégoire (Rennes), France
Acquired off-market with the Biarritz asset, this investment is
a single tenanted hypermarket located in the northern French city
of Rennes. A 70% interest was acquired in June 2016 in association
with the Biarritz centre for a combined EUR39.9 million, reflecting
a blended net initial yield of 5.0%. We specifically requested that
the vendor, Mercialys, retain a 30% stake as an alignment of
interests. The investment rationale is founded on acquiring
dominant retail assets in growth regions. Rennes has a population
of c.700,000 people and its GDP and consumer spending are forecast
to grow above the national average.
This is an attractive long term income stream which is rarely
traded in the French market with future asset management potential
to improve the retail offer.
The combined purchase price of the above seven assets was
EUR141.6 million and EUR151.5 million including acquisition
costs.
Post 30 September 2016, the Group entered into a conditional
contract to acquire a fully leased office building in Paris.
Le Directoire, Saint-Cloud (Paris), France
Fully income producing office investment comprising part of an
established office complex in Saint Cloud, a densely populated
mixed use area in the west of Paris. A conditional contract to
acquire the property was signed in October 2016 at a price of
EUR30.1 million, reflecting a net initial yield of 9.5%. This is
very accretive and, we believe, capable of long term growth given
the relatively modest rents currently being paid and the strong
occupational track record of the property. The new Grand Paris
public transport connection will be completed alongside the
building in 2025, which is expected to provide significantly
improved accessibility to this part of Paris and better property
performance as a result
Finance
As at 30 September 2016, the Company's total debt was EUR48.7
million across three loan facilities. This represents a loan to
value of 22% against the Company's gross asset value.
The use of leverage is assessed on an asset-by-asset basis,
secured only against those properties that are most suitable for
debt financing and where financing costs/terms are attractive.
The loans drawn are secured against the four German properties
in Berlin, Frankfurt, Stuttgart and Hamburg and the two retail
assets in Biarritz and Rennes.
The current blended all-in interest rate is 1.19%, significantly
below the portfolio yield of 5.6% p.a.
The average unexpired loan term is 7.8 years.
Lender Property Maturity Outstanding Interest
Date Principal rate
-------------------- ------------------- ------------ ------------ -----------
Deutsche
Pfandbrief
Bank Berlin/Frankfurt 30/06/2026 16,500,000 1.31%
-------------------- ------------------- ------------ ------------ -----------
Stuttgart/Hamburg 30/06/2023 14,000,000 0.85%
------------------- --------------------------------- ------------ -----------
Credit Agricole(1) Biarritz/Rennes 29/07/2023 18,200,000 3M Euribor
+ 1.35%
-------------------- ------------------- ------------ ------------ -----------
Total* 48,700,000
------------------------------------------------------- ------------ -----------
(1) Reflects 70% ownership share for debt secured against
Biarritz and Rennes properties
The German loans are fixed rate for the duration of the loan
term. The French loan is based on a margin above 3 month Euribor
and the Company has acquired an interest rate cap to limit future
potential interest costs if Euribor were to increase. The strike
rate on the cap is 1.25% p.a. The market value of the interest cap
is positive at EUR0.2 million as at end of September 2016.
Outlook
The current portfolio comprises high quality institutional grade
assets with strong income profiles, located in winning cities such
as Paris and Berlin that are expected to benefit from further
growth. Each asset has a business plan and asset management upside
delivered through teams based in the target markets. Delivering on
the opportunities to grow income and add value to these assets will
be a key driver of the Company's performance.
The next phase of acquisitions will provide further
diversification to the portfolio and additional value-add
potential. The strategy remains unchanged and will focus on
delivering income and capturing growth through investing in major
cities and regions. Favoured locations include those winning cities
with a diverse economic base, expanding populations, improving
infrastructure and deep occupation and investment markets. Within
those cities our expert teams identify supply constrained
locations, areas where there are competing demands for different
uses and affordable rents which are capable of growth.
The Investment Manager remains vigilant to the investment risks
during a time of economic and political change. However, a long
term investment strategy based on strong fundamentals should enable
the delivery of superior returns for shareholders.
As the Investment Manager continues the successful execution of
the Company's strategy, the growth in net income will help drive
the earnings to shareholders and will support the Company as it
continues to build a portfolio of institutional quality assets with
growth potential across Europe.
Tony Smedley
Head of Continental European Investment
Schroder Real Estate Investment Management Limited
13 December 2016
Principal risks and uncertainties
The Board is responsible for the Company's system of risk
management and internal control and for reviewing its
effectiveness. The Board has adopted a detailed matrix of principal
risks affecting the Company's business as an investment trust and
has established associated policies and processes designed to
manage and, where possible, mitigate those risks, which are
monitored by the Audit and Valuation Committee on an ongoing basis.
This system assists the Board in determining the nature and extent
of the risks it is willing to take in achieving its strategic
objectives. Both the principal risks and the monitoring system are
also subject to robust review at least annually. The last review
took place in November 2016.
Although the Board believes that it has a robust framework of
internal control in place this can provide only reasonable, and not
absolute, assurance against material financial misstatement or loss
and is designed to manage, not eliminate, risk.
A summary of the principal risks and uncertainties faced by the
Company which have remained unchanged throughout the period from
listing to 30 September 2016, and actions taken by the Board and,
where appropriate, its Committees, to manage and mitigate these
risks and uncertainties, is set out below.
Risk Mitigation and management
Strategic risk
The Company's investment Appropriateness of the
objectives may become Company's investment remit
out of line with the requirements periodically reviewed
of investors. and success of the Company
in meeting its stated
objectives monitored.
Marketing and distribution
activity is actively reviewed.
Investment management
risk Review of the Investment
The Investment Manager's Manager's compliance with
investment strategy, if the agreed investment
inappropriate, may result restrictions, investment
in the Company underperforming performance and risk against
the market and/or peer investment objectives
group companies, leading and strategy; relative
to the Company and its performance; the portfolio's
objectives becoming unattractive risk profile; and appropriate
to investors. strategies employed to
mitigate any negative
impact of substantial
changes in markets, including
any potential disruption
to capital markets.
Annual review of the ongoing
suitability of the
Investment Manager.
Custody risk
Safe custody of the Company's Depositary verifies ownership
assets may be compromised and legal entitlement,
through control failures, and reports on safe custody
including cyber hacking. of the Company's assets,
including cash.
Quarterly report from
the Depositary on its
activities.
Gearing and leverage risk
The Company utilises credit Gearing is monitored and
facilities. These arrangements strict restrictions on
increase the funds available borrowings imposed.
for investment through
borrowing. While this
has the potential to enhance
investment returns in
rising markets, in falling
markets the impact could
be detrimental to performance.
Accounting, legal and
regulatory risk Confirmation of compliance
In order to continue to with relevant laws and
qualify as an investment regulations by key service
trust, the Company must providers. Shareholder
comply with the requirements documents and announcements,
of Section 1158 of the including the Company's
Corporation Tax Act 2010. published Annual Report,
are subject to stringent
Breaches of the UK Listing review
Rules, the Companies Act processes.
or other regulations with
which the Company is required Procedures have been established
to comply, could lead to safeguard against unauthorised
to a number of detrimental disclosure of inside information.
outcomes.
Service provider risk
The Company has no employees Service providers appointed
and has delegated certain subject to due diligence
functions to a number processes and with clearly
of service providers. documented contractual
Failure of controls and arrangements detailing
poor performance of any service expectations.
service provider could
lead to disruption, reputational Regular reporting by key
damage or loss. service providers and
monitoring of the quality
of services provided.
Review of annual audited
internal controls reports
from key service providers,
including confirmation
of business continuity
arrangements.
Going concern
The Directors have examined significant areas of possible
financial risk and have reviewed cash flow forecasts and compliance
with the debt covenants, in particular the loan to value covenant
and interest cover ratio. They have not identified any material
uncertainties which would cast significant doubt on the Group's
ability to continue as a going concern for a period of not less
than twelve months from the date of the approval of the financial
statements. The Directors have satisfied themselves that the Group
has adequate resources to continue in operational existence for the
foreseeable future.
After due consideration, the Board believes it is appropriate to
adopt the going concern basis in preparing the financial
statements.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report,
the Strategic Report, the Report of the Directors, the Corporate
Governance Statement, the Remuneration Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union. Under company law the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the return or loss of the Company for that period.
In preparing these financial statements, the Directors are required
to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable Accounting Standards have been
followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements and the Remuneration Report comply with
the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Investment Manager is responsible for the maintenance and
integrity of the Company's webpage. Legislation in the United
Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed on
page 26 of the 2016 Annual Report, confirm that to the best of
their knowledge:
-- the financial statements, which have been prepared in
accordance with IFRS, give a true and fair view of the assets,
liabilities, financial position and net return of the Group and the
undertakings included in the consolidation taken as a whole;
-- the Strategic Report contained in the Report and Accounts
includes a fair review of the development and performance of the
business and the position of the Group and the undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that it faces;
and
-- the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's position and performance,
business model and strategy.
Consolidated Statement of Comprehensive Income
Group Group Company Company
30/09/2016 30/09/2015 30/09/2016 30/09/2015
EUR000
EUR000 EUR000 EUR000 (unaudited)
(unaudited)
Rental income 4,891 - - -
Property operating (969) - - -
expenses
Net rental and related 3,922 - - -
income
------------------------------ --- ----------- ------------- ----------- ------------
Net loss from fair (4,537) - - -
value adjustment
on investment property
Realised loss on
foreign exchange (101) - (101) -
Net change in fair (60) - - -
value of financial
instruments at fair
value through profit
or loss
Expenses
Investment management
fee (1,402) - (1,402) -
Valuers' and other
professional fees (425) - (127) -
Administrators and
accounting fee (185) - (114) -
Auditors' remuneration (161) - (139) -
Directors' fees (129) - (129) -
Other expenses (122) - (88) -
Total expenses (2,424) - (1,999) -
----------------------------------- ----------- ------------- ----------- ------------
Operating loss before
net finance costs (3,200) - (2,100) -
Finance income 5 - 5 -
Finance costs (157) - - -
Net finance costs/(income) (152) - 5 -
Loss before income
tax (3,352) - (2,095) -
Income tax expense (47) - - -
------------------------------ --- ----------- ------------- ----------- ------------
Loss for the year
Other comprehensive
loss items that
may be subsequently (3,399) (2,095) -
reclassified to
profit or loss
Currency translation
differences (226) - (226) -
----------------------------------- ----------- ------------- ----------- ------------
Total other comprehensive
loss (226) - (226) -
----------------------------------- ----------- ------------- ----------- ------------
Total comprehensive
loss for the year
attributable to
the equity holders (3,625) - (2,321) -
----------------------------------- ----------- ------------- ----------- ------------
Total comprehensive
loss attributable
to:
Owners of the parent
Non-controlling
interests (2,742) - (2,321) -
(883) - - -
(3,625) - (2,321) -
---------------------------------- ----------- ------------- ----------- ------------
Basic and diluted (2.9c) -
loss per share attributable - -
to the equity holders
during the year
(expressed in EUR
per share)
----------------------------------- ----------- ------------- ----------- ------------
All items in the above statement are derived from continuing
operations. The accompanying notes 1 to 24 of the 2016 Annual
Report form an integral part of the financial statements.
Consolidated Statement of Financial Position
Group Group Company Company
30/09/2016 30/09/2015 30/09/2016 30/09/2015
Assets EUR000 EUR000 EUR'000 EUR'000
Non current assets (unaudited) (unaudited)
----------------------------------------- -------- ------------- ----------- -------------
Investment property 165,365 - - -
Investment in subsidiaries - - 118,583 -
Non-current assets 165,365 - 118,583 -
----------------------------------------- -------- ------------- ----------- -------------
Current assets
Trade and other receivables 2,377 - 34,179 -
Interest rate derivative
contracts 200 - - -
Cash and cash equivalents 58,476 - 6,068 -
----------------------------------------- -------- ------------- ----------- -------------
Current assets 61,053 - 40,247 -
----------------------------------------- -------- ------------- ----------- -------------
Total assets 226,418 - 158,830 -
========================================= ======== ============= =========== =============
Equity
Share capital 13,994 - 13,994 -
Share premium 14,882 - 14,882 -
Retained earnings (3,486) - (3,291) -
Other reserves 132,370 - 132,595 -
----------------------------------------- -------- ------------- ----------- -------------
157,760 - 158,180 -
Non-controlling interest 6,804 - - -
------------------------------ --------- -------- ------------- ----------- -------------
Equity 164,564 - 158,180 -
----------------------------------------- -------- ------------- ----------- -------------
Liabilities
Non current liabilities
Interest-bearing loans 58,724 - - -
and borrowings
Deferred tax 30 - - -
------------------------------ --------- -------- ------------- ----------- -------------
Non-current liabilities 58,754 - - -
------------------------------ --------- -------- ------------- ----------- -------------
Current liabilities
Trade and other payables 3,084 - 650 -
Current income tax 16 - - -
liabilities
Current liabilities 3,100 - 650 -
----------------------------------------- -------- ------------- ----------- -------------
Total liabilities 61,854 - 650 -
----------------------------------------- -------- ------------- ----------- -------------
Total equity and liabilities 226,418 - 158,830 -
========================================= ======== ============= =========== =============
Net Asset Value per
Ordinary Share 135.7c - 130.5c -
----------------------------------------- -------- ------------- ----------- -------------
Consolidated Statement of Changes in Equity
Retained Non-controlling Total
Group Share Share earnings Other Sub-total interests Equity
capital premium reserves
EUR000 EUR000 EUR000 EUR000 EUR000 EUR'000 EUR'000
-------------------------- ---------- ----------- ---------- ---------- ----------- ---------------- ---------
Balance as at - - - - - - -
9 January 2015
Total comprehensive - - - - - - -
profit for the
period
Balance as at - - - - - - -
30 September 2015
Loss for the year - - (2,516) - (2,516) (883) (3,399)
Other comprehensive
loss for the year - - - (226) (226) - (226)
Dividends paid - - (970) - (970) - (970)
New equity issuance 16,576 149,873 (4,977) 161,472 - 161,472
Share premium
reduction - (122,157) - 122,157 - - -
Unrealised foreign
exchange (2,582) (12,834) - 15,416 - - -
Investment from
non-controlling
interest - - - - - 7,687 7,687
--------------------------- ---------- ----------- ---------- ---------- ----------- ---------------- ---------
Balance as at
30 September 2016 13,994 14,882 (3,486) 132,370 157,760 6,804 164,564
--------------------------- ---------- ----------- ---------- ---------- ----------- ---------------- ---------
Retained Non-controlling Total
Company Share Share earnings Other Sub-total interests
capital premium reserves
EUR000 EUR000 EUR000 EUR000 EUR000 EUR'000 EUR'000
----------------------- --- ---------- ----------- ---------- ----------- ------------ ---------------- ---------
Balance as at - - - - - - -
9 January 2015
Total comprehensive - - - - - - -
profit for the
period
Balance as at - - - - - - -
30 September
2015
Total comprehensive
loss for the
year - - (2,321) - (2,321) - (2,321)
Dividends paid - - (970) - (970) - (970)
New equity issuance 16,576 149,873 - (4,978) 161,471 - 161,471
Share premium
reduction - (122,157) - 122,157 - - -
Unrealised foreign
exchange (2,582) (12,834) - 15,416 - - -
----------------------- --- ---------- ----------- ---------- ----------- ------------ ---------------- ---------
Balance as at
30 September 2016 13,994 14,882 (3,291) 132,595 158,180 - 158,180
----------------------- --- ---------- ----------- ---------- ----------- ------------ ---------------- ---------
The accompanying notes 1 to 24 of the 2016 Annual Report form an
integral part of the financial statements.
Consolidated Statement of Cash Flows
Group Group Company Company
30/09/2016 30/09/2015 30/09/2016 30/09/2015
EUR000 EUR000 EUR'000 EUR'000
(unaudited) (unaudited)
--------------------------------------- ----------- ------------- ----------- -------------
Operating activities
Loss before tax
for the year (3,352) - (2,095) -
Adjustments for:
Net valuation loss 4,537 - - -
on fair value adjustment
in investment property
Realised foreign
exchange losses 101 - 101 -
Finance income (5) - (5) -
Finance expense 157 - - -
Movement in fair
value of derivative
interest rate contracts 60 - - -
Operating cash generated/(used)
before changes in
working capital 1,498 - (1,999) -
Increase in trade
and other receivables (2,376) - (422) -
Increase in trade
and other payables 2,728 - 644 -
----------------------------------------- ----------- ------------- ----------- -------------
Cash generated from/(used
in) operations 1,850 - (1,777) -
Interest rate cap (260) - - -
purchased
Finance costs paid (903) - - -
Interest received 5 - 5 -
Net Cash generated/used
in operating activities 692 - (1,772) -
----------------------------------------- ----------- ------------- ----------- -------------
Investing Activities
Acquisition of investment (169,647) - - -
property
Investment in shares - - (118,583) -
of subsidiary companies
Loans to subsidiary - - (33,757) -
companies
Net cash used in
investing activities (169,647) - (152,340) -
----------------------------------------- ----------- ------------- ----------- -------------
Financing Activities
New bank loan advance 56,500 - - -
New loan advance 10,753 - - -
- non-controlling
interest
Loan repayment -
non-controlling
interest
(7,689) - - -
New equity - non 7,687 - - -
controlling interest
Share issue net
proceeds 161,477 - 161,477 -
Dividends paid (970) - (970) -
----------------------------------------- ----------- ------------- ----------- -------------
Net cash generated
from financing activities 227,758 - 160,507 -
----------------------------------------- ----------- ------------- ----------- -------------
Net increase in
cash and cash equivalents
for the year 58,803 - 6,395 -
----------------------------------------- ----------- ------------- ----------- -------------
Opening cash and - - - -
cash equivalents
------------------------------- --- --- ----------- ------------- ----------- -------------
Foreign exchange
losses (327) - (327) -
----------------------------------------- ----------- ------------- ----------- -------------
Closing cash and
cash equivalents 58,476 - 6,068 -
----------------------------------------- ----------- ------------- ----------- -------------
The accompanying notes 1 to 24 of the 2016 Annual Report form an
integral part of the financial statements.
Notes to the Financial Statements
1. Significant accounting policies
Schroder European Real Estate Investment Trust plc ("the
Company") is a closed-ended investment company incorporated in
England and Wales. The condensed consolidated financial statements
of the Company for the year ended 30 September 2016 comprise those
of the Company and its subsidiaries (together referred to as the
"Group"). The Group holds a portfolio of investment properties in
Europe. The shares of the Company are listed on the London Stock
Exchange and the Johannesburg Stock Exchange. The registered office
of the Company is 31 Gresham Street, London, EC2V 7QA.
Statement of compliance
The consolidated financial statements of the group have been
prepared in accordance with the Disclosure, Guidance and
Transparency Rules of the United Kingdom Financial Conduct
Authority and International Financial Reporting Standards ("IFRS")
as issued by, the International Accounting Standards Board (the
"IASB") and interpretations issued by the International Financial
Reporting Interpretations Committee ("IFRIC").
The financial statements give a true and fair view and are in
compliance with applicable legal and regulatory requirements and
the Listing Rules of the UK Listing Authority.
Basis of preparation
The financial statements are presented in euros, rounded to the
nearest thousand. They are prepared on a going concern basis,
applying the historical cost convention except for the measurement
of investment property and derivative financial instruments that
have been measured at fair value.
The accounting policies have been consistently applied to the
results, assets, liabilities and cash flows of the entities
included in the consolidated financial statements and are
consistent with those of the Half Year financial report.
Going concern
The Directors have examined significant areas of possible
financial risk including cash and cash requirements and the debt
covenants. The Directors have not identified any material
uncertainties which would cast significant doubt on the Group's
ability to continue as a going concern for a period of not less
than twelve months from the date of the approval of the financial
statements. The Directors have satisfied themselves that the Group
has adequate resources to continue in operational existence for the
foreseeable future.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and the reported amounts of
assets and liabilities, income and expenses. These estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
judgements about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
The most significant estimates made in preparing these financial
statements relate to the carrying value of investment properties,
including those within joint ventures, which are stated at fair
value. The Group uses external professional valuers to determine
the relevant amounts. Judgements made by management in the
application of IFRS that have a significant effect on the financial
statements and estimates with a significant risk of material
adjustment in the next year are disclosed in note 19 of the 2016
Annual Report.
Basis of consolidation
Subsidiaries
The consolidated financial statements comprise the financial
statements of the Company and all of its subsidiaries drawn up to
30 September each year. Subsidiaries are those entities, including
special purpose entities, controlled by the Company. Control exists
when the Company has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, potential
voting rights that presently are exercisable are taken into
account. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases. Where properties are
acquired by the Group through corporate acquisitions but the
acquisition does not meet the definition of a business combination,
the acquisition has been treated as an asset acquisition.
Transactions eliminated on consolidation
Intra-group balances and any gains and losses arising from
intra-group transactions are eliminated in preparing the
consolidated financial statements. Gains arising from transactions
with joint ventures are eliminated to the extent of the Group's
interest in the entity. Losses are eliminated in the same way as
gains but only to the extent that there is no evidence of
impairment.
Investment property
Investment property is land and buildings held to earn rental
income together with the potential for capital growth.
Acquisitions and disposals are recognised on unconditional
exchange of contracts. Acquisitions are initially recognised at
cost, being the fair value of the consideration given, including
transaction costs associated with the investment property.
After initial recognition, investment properties are measured at
fair value, with unrealised gains and losses recognised in profit
and loss. Realised gains and losses on the disposal of properties
are recognised in profit and loss in relation to carrying value.
Fair value is based on the market valuations of the properties as
provided by a firm of independent chartered surveyors, at the
reporting date. Market valuations are carried out on a quarterly
basis.
As disclosed in note 21 of the 2016 Annual Report, the Group
leases out all owned properties on operating leases. A property
held under an operating lease is classified and accounted for as an
investment property where the Group holds it to earn rentals,
capital appreciation, or both. Any such property leased under an
operating lease is classified as an investment property and carried
at fair value.
Prepayments
Prepayments are carried at cost less any accumulated impairment
losses.
Borrowing costs
Borrowing costs are charge in full to the Statement of
Comprehensive Income as incurred.
Leases
Leases in which a significant portion of the risks and rewards
of ownership are retained by another party, the lessor, are
classified as operating leases. Payments, including pre-payments,
made under operating leases (net of any incentives received from
the lessor) are charged to the income statement on a straight-line
basis over the period of the lease. Properties leased out under
operating leases are included in investment properties.
Properties leased out under operating leases are included in
investment property in the consolidated statement of financial
position (Note 10 of the 2016 Annual Report).
Financial assets and liabilities
Non-derivative financial instruments
Assets
Non-derivative financial instruments comprise trade and other
receivables and cash and cash equivalents. These are recognised
initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition they are measured at
amortised cost using the effective interest rate method less any
impairment losses.
Trade and other receivables
Financial assets recognised in the consolidated statement of
financial position as trade and other receivables are classified as
loans and receivables. They are recognised initially at fair value
and subsequently measured at amortised cost less provision for
impairment.
Cash and cash equivalents
Cash at bank and short-term deposits that are held to maturity
are carried at cost. Cash and cash equivalents are defined as cash
in hand, demand deposits and short-term, highly liquid investments
readily convertible to known amounts of cash and subject to
insignificant risk of changes in value. For the purposes of the
Statement of Cash Flows, cash and cash equivalents consist of cash
in hand and short-term deposits at banks with a term of no more
than three months.
Liabilities
Non-derivative financial instruments comprise loans and
borrowings and trade and other payables.
Loans and borrowings
Borrowings are recognised initially at fair value of the
consideration received, less attributable transaction costs.
Subsequent to initial recognition, interest bearing borrowings are
stated at amortised cost with any difference between cost and
redemption value being recognised in the profit and loss over the
period of the borrowings on an effective interest basis.
Trade and other payables
Financial liabilities included in trade and other payables are
recognised initially at fair value and subsequently at amortised
cost. The fair value of a non-interest bearing liability is its
discounted repayment amount. If the due date of the liability is
less than one year, discounting is omitted.
Derivative financial instruments ("derivatives")
Derivative financial assets and liabilities comprise of an
interest rate cap for hedging purposes (economic hedge). The Group
does not apply hedge accounting in accordance with IAS 39.
Recognition of the derivative financial instruments takes place
when the economic hedging contracts are entered into. They are
measured initially and subsequently at fair value; transaction
costs are included directly in finance costs. Gains or losses on
derivatives are recognised in the profit or loss in net change in
fair value of financial instruments at fair value through profit or
loss.
Share capital
Ordinary shares including treasury shares are classified as
equity when there is no obligation to transfer cash or other
assets.
Dividends
Dividends are recognised as a liability in the period in which
they are approved.
Impairment
Financial assets
A financial asset, other than those at fair value through profit
and loss, is assessed at each reporting date to determine whether
there is any objective evidence that it is impaired. A financial
asset is considered to be impaired if objective evidence indicates
that one or more events have had a negative effect on the estimated
future cash flows of that asset.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the original effective interest rate.
Significant financial assets are tested for impairment on an
individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk
characteristics. All impairment losses are recognised in the profit
and loss.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was
recognised. For financial assets measured at amortised cost, the
reversal is recognised in the profit and loss.
Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than investment property but including joint ventures, are reviewed
at each reporting date to determine whether there is any indication
of impairment. If any such indication exists, then the asset's
recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to that asset.
For the purpose of impairment testing, assets are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the
"cash-generating unit").
An impairment loss is recognised if the carrying amount of an
asset or its cash-generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in the profit and
loss.
Revenue
Rental income
Rental income from operating leases is recognised on a
straight-line basis over the lease term. When the Group provides
incentives to its tenants, the cost of incentives is recognised
over the lease term, on a straight-line basis, as a reduction of
rental income.
Service charges
Revenue from service charges is measured at the fair value of
the consideration received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances, rebates and amounts
collected on behalf of third parties.
The group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity and specific criteria have been met for
each of the group's activities as described below. The group bases
its estimates on historical results, taking into consideration the
type of customer, the type of transaction and the specifics of each
arrangement.
Service charges are recognised in the accounting period in which
the services are rendered.
Finance income and expenses
Finance income comprises interest income on funds invested that
are recognised in the profit and loss. Interest income is
recognised on an accruals basis.
Finance expenses comprise interest expense on borrowings that
are recognised in profit and loss. Attributable transaction costs
incurred in establishing the Group's credit facilities are deducted
from the fair value of borrowings on initial recognition and are
amortised over the lifetime of the facilities through profit and
loss. Finance expenses are accounted for on an effective interest
basis.
Expenses
All expenses are accounted for on an accruals basis. They are
recognised in profit or loss in the year in which they are
incurred, on an accruals basis.
Taxation
The Company and its subsidiaries are subject to UK income tax on
any income arising on investment properties, after deduction of
debt financing costs and other allowable expenses.
Income tax on the profit or loss for the year comprises current
and deferred tax. Current tax is the expected tax payable on the
taxable income for the year, using tax rates enacted or
substantially enacted at the reporting date, and any adjustment to
tax payable in respect of previous periods.
Foreign currency translation
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the "functional
currency").
The functional currency of all the entities in the Group is the
euro, as this is the currency in which the majority of investment
takes place and in which the majority of income and expenses are
incurred. The financial statements are also presented in euros.
Foreign currency transactions are translated into the functional
currency using the exchange rate prevailing at the date of the
transaction. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at the
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss
in the Statement of Comprehensive Income.
Income and expenses are translated into the presentation
currency using average rate monthly rates. Assets and liabilities
held at the end of the reporting period are translated into the
presentation currency at the exchange rate prevailing at that date.
Foreign exchange differences arising on translation to the
presentation currency are recognised in other comprehensive income
in the Statement of Comprehensive Income. Equity held at the end of
the reporting period is translated into the presentation currency
at the exchange rate prevailing at that date. Foreign exchange
differences arising on translation to the presentation currency are
recognised within Equity.
Segmental reporting
The Directors are of the opinion that the Group is engaged in a
single segment of business, being property investment and in one
geographical area, Continental Europe. The chief operating decision
maker is considered to be the Board of Directors who are provided
with consolidated IFRS information on a quarterly basis.
2. New standards and interpretations
Standards, interpretations and amendments to published standards
that are effective for the first time in 2016
The following new standards, interpretations or amendments,
which are relevant to the Company's operations, became effective
during the year:
-- Annual improvements to IFRSs 2010-2012 Cycle (effective for
accounting periods beginning on or after 1 July 2014)
-- Annual improvements to IFRSs 2011-2013 Cycle (effective for
accounting periods beginning on or after 1 July 2014)
New standards and interpretations not yet adopted
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning on or
after 1 January 2017, and have not been applied in preparing these
consolidated financial statements. None of these are expected to
have a significant effect on the consolidated financial statements
of the Group, except the following set out below:
IAS 12, 'Income taxes' was amended to clarify the accounting for
deferred tax where an asset is measured at fair value and that fair
value is below the asset's tax base. This amendment is effective
for annual periods beginning on or after 1 January 2017. The Group
does not expect the amendment to have a material impact on its
financial statements since fair value exceeds the cost for almost
all of its investment properties. The group is monitoring fair
value movements below cost to assess the impact of the amendment in
future periods.
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. The standard is effective for accounting periods
beginning on or after 1 January 2018. Early adoption is permitted.
The group expects IFRS 9 to have an immaterial impact on the
accounting for available-for-sale financial assets and
derivatives.
IFRS 15, 'Revenue from contracts with customers' deals with
revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. The standard is
effective for annual periods beginning on or after 1 January 2019
and earlier application is permitted. The Group expects IFRS 16 to
have an immaterial impact on its current accounting practices.
IFRS 16, 'Leases' was issued in January 2016. For lessees, it
will result in almost all leases being recognised on the statement
of financial position, as the distinction between operating and
finance leases will be removed. Under the new standard, an asset
(the right to use the leased item) and a financial liability to pay
rentals are recognised. The only exceptions are short-term and
low-value leases. The accounting for lessors will not significantly
change. The standard is effective for annual periods beginning on
or after 1 January 2019 and earlier application is permitted. The
Group expects IFRS 16 to have an immaterial impact on its current
accounting practices.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
3. Material agreements
Schroder Real Estate Investment Management Limited is the
Investment Manager to the Company. The Investment Manager is
entitled to a fee together with reasonable expenses incurred in the
performance of its duties. The fee is payable monthly in arrears
and shall be an amount equal to one twelfth of the aggregate of
1.1% of the EPRA NAV of the Company. The Investment Management
Agreement can be terminated by either party on not less than twelve
months written notice, such notice not to expire earlier than the
third anniversary of Admission, or on immediate notice in the event
of certain breaches of its terms or the insolvency of either party.
The total charge to profit and loss during the year was
EUR1,402,000 (2015: EURNil). At the year end EUR438,000 (2015:
EURNil) was outstanding. Details of directors' fees are disclosed
in Note 6 of the 2016 Annual Report, and details of loans from
Mercialys, a related party, are disclosed in Note 16 of the 2016
Annual Report.
4. Other expenses
Group Group Company Company
30/09/2016 30/09/2015 30/09/2016 30/09/2015
EUR000 EUR000 EUR000 EUR000
---------------------- ----------- ----------- ----------- -----------
Directors' and
officers' insurance
premium 9 - 9 -
Regulatory costs 25 - 12 -
Marketing 8 - 8 -
Professional fees 11 - 11 -
Other expenses 69 - 48 -
122 - 88 -
---------------------- ----------- ----------- ----------- -----------
Directors' fees
Directors are the only officers of the Company and there are no
other key personnel. The Directors' annual remuneration for
services to the Group was EUR129,000 (2015: EURNil), equivalent to
GBP97,457 as set out in the Remuneration Report on pages 37 to 38
of the 2016 Annual Report.
5. Earnings per share
Basic earnings per share
The basic loss per share for the Group is calculated by dividing
the net loss attributable to shareholders by the weighted average
number of ordinary shares in issue during the year.
2016 2015
Net loss attributable to (EUR3,399,000)
shareholders -
Weighted average number of 118,319,687
ordinary shares is issue -
Basic earnings per share (2.9)
(cents per share) -
Diluted earnings per share
The Group has no dilutive potential ordinary shares, hence the
diluted loss per share is the same as the basic loss per share.
Headline earnings per share
The headline earnings for the Group is 0.9 euro cents per share
as detailed on page 74 of the 2016 Annual Report.
6. Dividends paid
In respect of Ordinary Rate 30/09/2016
Shares (cents) EUR000
------------------------------------------------ -------- -----------
First interim dividend for
the year ended 30 September
2016, dividend paid 7 September
2016 121,234,686 0.8 970
A second interim dividend for the year ended 30 September 2016
of 0.9 euro cents per share was declared on 13 December 2016 and
will be paid on 27 January 2017 to shareholders on the register on
13 January 2017.
7. Investment property
Group
Leasehold Freehold Total
----------------------------------
EUR000 EUR000 EUR000
---------------------------------- ---------- --------- ---------
Fair value as at 30 September
2015 - - -
---------------------------------- ---------- --------- ---------
Property acquisitions - 158,639 158,639
Acquisition costs - 11,263 11,263
Net valuation loss on investment
property - (4,537) (4,537)
Fair value as at 30 September
2016 - 165,365 165,365
---------------------------------- ---------- --------- ---------
Fair value of investment properties as determined by the valuer
totals EUR165,500,000 (2015: EURNil). The fair value of investment
properties disclosed above includes a tenant incentive adjustment
of EUR135,000 (2015: EURNil).
The net valuation loss on investment property of EUR4,537,000
consists of net property revaluation losses of EUR4,402,000 and the
above mentioned tenant incentive adjustment of EUR135,000.
The fair value of investment property has been determined by
Knight Frank LLP, a firm of independent chartered surveyors, who
are registered independent appraisers. The valuation has been
undertaken in accordance with the RICS Valuation - Professional
Standards January 2014 Global and UK Edition, issued by the Royal
Institution of Chartered Surveyors (the "Red Book") including the
International Valuation Standards.
The properties have been valued on the basis of "Fair Value" in
accordance with the RICS Valuation - Professional Standards
VPS4(1.5) Fair Value and VPGA1 Valuations for Inclusion in
Financial Statements which adopt the definition of Fair Value used
by the International Accounting Standards Board.
The valuation has been undertaken using appropriate valuation
methodology and the Valuer's professional judgement. The Valuer's
opinion of Fair Value was primarily derived using recent comparable
market transactions on arm's length terms, where available, and
appropriate valuation techniques (The Investment Method).
The properties have been valued individually and not as part of
a portfolio.
All investment properties are categorised as Level 3 fair values
as they use significant unobservable inputs. There have not been
any transfers between Levels during the year. Investment properties
have been classed according to their real estate sector.
Information on these significant unobservable inputs per class of
investment property is disclosed below:
Some of the investment properties are leased to tenants under
long-term operating leases with rentals payable monthly.
Quantitative information about fair value measurement using
unobservable inputs (Level 3) as at 30 September 2016
Retail Office Total
(incl retail
warehouse)
------------- ----------- -------------- ---------- ----------
Fair value
(EUR000) 94,000 71,500 165,500
-------------------------- -------------- ---------- ----------
Area
('000 sq
m) 50.273 19.686 69.959
-------------------------- -------------- ---------- ----------
Net passing Range 94.73 - 27.78 27.78
rent EUR 145.32 - 340.64 - 340.64
per sqm
per annum
Weighted 108.67 234.96 163.25
average
(2)
------------------------- -------------- ---------- ----------
Gross ERV Range 96.45 - 126.12 96.45
per sqm 157.80 - 409.91 - 409.91
per annum
Weighted 112.77 291.70 190.07
average
(2)
------------------------- -------------- ---------- ----------
Net initial Range 4.62 - 1.00 - 1.00 -
yield (1) 5.81 6.06 6.06
Weighted 5.28 4.55 4.96
average
(2)
------------------------- -------------- ---------- ----------
Equivalent Range 4.60 - 4.60 - 4.60 -
yield 6.02 5.26 6.02
Weighted 5.31 4.74 5.06
average
(2)
------------------------- -------------- ---------- ----------
Notes:
(1) Yields based on rents receivable after deduction of head
rents, and non-recoverables
(2) Weighted by Market Value
Sensitivity of measurement to variations in the significant
unobservable inputs
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy
of the Group's property portfolio, together with the impact of
significant movements in these inputs on the fair value
measurement, are shown below:
Unobservable Impact on fair Impact on fair
input value measurement value measurement
of significant of significant
increase in input decrease in input
------------------ ------------------- -------------------
Passing rent Increase Decrease
------------------ ------------------- -------------------
Gross ERV Increase Decrease
------------------ ------------------- -------------------
Net initial yield Decrease Increase
------------------ ------------------- -------------------
Equivalent yield Decrease Increase
------------------ ------------------- -------------------
There are interrelationships between the yields and rental
values as they are partially determined by market rate conditions.
The sensitivity of the valuation to changes in the most significant
inputs per class of investment property are shown below:
Estimated movement Retail Office Total
in fair value of EUR'000 EUR'000 EUR'000
investment properties
at 30 September 2016
------------------------- --------- --------- ---------
Increase in ERV by
5% 2,800 3,500 6,300
------------------------- --------- --------- ---------
Decrease in ERV by
5% 2,850 3,500 6,350
------------------------- --------- --------- ---------
Increase in net initial
yield by 0.25% 4,300 2,500 6,800
------------------------- --------- --------- ---------
Decrease in net initial
yield by 0.25% 4,700 6,950 11,650
------------------------- --------- --------- ---------
8. Cash and cash equivalents
Group Group Company Company
30/09/2016 30/09/2015 30/09/2016 30/09/2015
EUR000 EUR000 EUR000 EUR000
--------------------- ------------ ------------ ------------ ------------
Cash at bank and in
hand 58,476 - 6,068 -
---------------------- ------------ ------------ ------------ ------------
9. Issued capital and reserves
Share capital
As at 30 September 2016, the share capital of the Company was
represented by 121,234,686 Ordinary Shares with a par value of
10.00 pence.
Issued share capital
On 9 December 2015 the Company issued 107,500,000 new ordinary
shares under the placing and offer for subscription programme at a
price of GBP1.00 per share. A further 450,000 new ordinary shares
were issued under the placing programme at a price of GBP1.00 per
share on 14 December 2015.
On 12 February 2016, a further 13,284,686 shares were issued
under the placing programme at a price of GBP1.04 per share.
Issue costs in relation to the placings were EUR4,762,000.
On 23 March 2016 a reduction of share premium of GBP96,750,000
(EUR122,157,000) was approved.
As at 30 September 2016, the Company had 121,234,686 ordinary
shares in issue (no shares were held in Treasury). The total number
of voting rights of the Company at 30 September 2016 was
121,234,686.
Following the year end, an additional 12,500,000 ordinary shares
were issued pursuant to the placing programme at an issue price of
GBP1.20 per share, bringing the total number of shares in issue as
at the date of this report to 133,734,686.
10. Net Asset Value per Ordinary Share
The NAV per Ordinary Share of 135.7 cents is based on the net
assets of EUR164,564,000 and 121,234,686 Ordinary Shares in issue
at 30 September 2016.
11. Foreign exchange
During the year the Group incurred the following foreign
currency losses:
A realised currency loss of EUR314,000 arose when GBP51.0
million of share issue proceeds received on 9 December 2015 was
converted into euros on 14 December 2015. A realised currency gain
of EUR210,000 arose on a cash transaction. Other currency gains of
EUR4,000 arose on sundry corporate expense transactions.
A net unrealised currency loss of EUR226,000 arose when GBP0.8m
and R0.8m of cash and other monetary items held by the Group at the
period were retranslated into euros at the period end for reporting
purposes.
Both of these realised and unrealised amounts appear within the
Statement of Comprehensive Income.
On 9 December 2015 the company issued GBP54.7 million of
sterling denominated share capital to its South African investors.
This share capital was valued at EUR75.3 million on the date of
issue. The proceeds of this share issue were settled by investor
funds of R1.18bn valued at EUR73.7 million on the date of issue.
The reason for the difference is that the amount paid by investors
was required to be determined one week in advance of the issue date
by a forward exchange rate provided to South African investors and
could not be hedged by the Company at IPO. The currency loss
arising from this was EUR1.6 million. This amount appears within
the Statement of Changes in Equity as part of total issue costs of
EUR5.0 million. Following IPO the Company is able to hedge currency
when issuing new equity and therefore this is not expected to
reoccur.
At each period end the Group retranslates its sterling
denominated share capital, share premium and other reserves into
euros using the period end exchange rate. At 30 September 2016 the
unrealised currency loss arising on this retranslation was
EUR25.7m. This amount appears within the Statement of Changes in
Equity.
12. EPRA and Headline Performance Measures (unaudited)
As recommended by EPRA (European Public Real Estate
Association), EPRA performance measures are disclosed in the
section below.
EPRA performance measures: Summary Table
31/03/ 30/09/2015
2016
---------------------------- ---------- -----------
Total Total
EUR000 EUR000
---------------------------- ---------- -----------
EPRA earnings 1,013 -
EPRA earnings per share 0.9 -
---------------------------- ---------- -----------
EPRA NAV 157,560
EPRA NAV per share 130.0 -
----------------------------- ---------- -----------
EPRA NNNAV 157,560 -
EPRA NNNAV per share 130.0 -
----------------------------- ---------- -----------
EPRA Net Initial Yield 5.1% -
EPRA topped-up Net Initial 5.1% -
Yield
----------------------------- ---------- -----------
EPRA Vacancy Rate 0% -
----------------------------- ---------- -----------
EPRA earnings and EPS
Total comprehensive income excluding realised and unrealised
gains/ losses on investment property, share of profit on joint
venture investments and changes in fair value of financial
instruments, divided by the weighted average number of shares.
31/03/ 30/09/2015
2016
EUR000 EUR000
--------------------------------- ------------ -----------
IFRS loss after tax (3,625) -
Adjustments to calculate
EPRA Earnings:
Net valuation loss on 4,537 -
investment property
Exchange differences 226 -
on monetary items (unrealised)
Adjustment for Minority (185) -
Interests net revenue
Finance costs: interest 60 -
rate cap
EPRA earnings 1,013 -
---------------------------------- ------------ -----------
Weighted average number 118,319,687 -
of ordinary shares
---------------------------------- ------------ -----------
IFRS earnings per share (2.9) -
(cents per share)
---------------------------------- ------------ -----------
EPRA earnings per share 0.9 -
(cents per share)
---------------------------------- ------------ -----------
a. EPRA NAV per share
The Net Asset Value adjusted to exclude assets or liabilities
not expected to crystallise in a long-term investment property
model, divided by the number of shares in issue.
30/09/2016 30/09/2015
EUR000 EUR000
--------------------------- ------------ -----------
IFRS NAV per financial 164,564 -
statements
Adjustment for Minority
Interests (6,804)
Adjustment for fair value
of financial instruments (200)
EPRA NAV 157,560 -
Shares in issue at end
of year 121,234,686 -
---------------------------- ------------ -----------
IFRS NAV per share 135.7 -
---------------------------- ------------ -----------
EPRA NAV per share 130.0 -
---------------------------- ------------ -----------
b. EPRA NNNAV per share
The EPRA NAV adjusted to include the fair value of debt, divided
by the number of shares in issue.
30/09/2016 30/09/2015
EUR000 EUR000
---------------------------- ----------- -----------
EPRA NAV 157,560 -
Adjustments to calculate
EPRA NNNAV:
Fair value of debt - -
EPRA NNNAV 157,560 -
----------------------------- ----------- -----------
EPRA NNNAV per share 130.0 -
----------------------------- ----------- -----------
c. EPRA Net Initial Yield
Annualised rental income based on the cash rents passing at the
balance sheet date, less non-recoverable property operating
expenses, divided by the grossed up market value of the complete
property portfolio.
The EPRA "topped up" NIY is the EPRA NIY adjusted for unexpired
lease incentives.
30/09/2016 30/09/2015
EUR000 EUR000
------------------------------ ----------- -----------------
Investment property - wholly -
owned 148,160
Investment property - share -
of joint ventures and funds -
------------------------------- ----------- -----------------
Complete property portfolio 148,160 -
Allowance for estimated -
purchasers' costs 9,954
------------------------------- ----------- -----------------
Gross up completed property -
portfolio valuation 159,423
Annualised cash passing 8,088 -
rental income
Property outgoings - -
------------------------------- ----------- -----------------
Annualised net rents 8,088 -
Notional rent expiration - -
of rent free periods
------------------------------- ----------- -----------------
Topped-up net annualised 8,088 -
rent
------------------------------- ----------- -----------------
EPRA NIY 5.1% -
------------------------------- ----------- -----------------
EPRA "topped-up" NIY 5.1% -
------------------------------- ----------- -----------------
d. Headline Earnings Reconciliation
30/09/2016 30/9/2015
EUR000 EUR000
----------------------------------------------------- ------------ ----------
Loss after tax (3,625) -
Adjustments to calculate Headline Earnings exclude:
Net valuation loss on investment property 4,537 -
Adjustment for Minority Interests net revenue (185) -
Finance costs: interest rate cap 60
Headline earnings 787 -
------------------------------------------------------ ------------ ----------
Weighted average number of ordinary shares 118,319,687 -
Headline earnings per share (cents per share) (0.7) -
Headline earnings per share reflect the underlying performance
of the company calculated in accordance with the Johannesburg Stock
Exchange Listing requirements.
13. Status of announcement
2015 Financial Information
The figures and financial information for 2015 are extracted
from the published Annual Report and Accounts for the year ended 30
September 2015 and do not constitute the statutory accounts for
that year. The 2015 Annual Report and Accounts have been delivered
to the Registrar of Companies.
2016 Financial Information
The figures and financial information for 2016 are extracted
from the Annual Report and Accounts for the year ended 30 September
2016 and do not constitute the statutory accounts for the year. The
2016 Annual Report and Accounts include the Report of the
Independent Auditors which is unqualified and does not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The 2016 Annual Report and Accounts will be
delivered to the Registrar of Companies in due course.
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's webpage
(or any other website) is incorporated into, or forms part of, this
announcement.
Note to editors:
Schroder European Real Estate Investment Trust plc is a closed
ended real estate investment company which invests in European
growth cities. The Company has a premium listing on the Main Market
of the London Stock Exchange (ticker: SERE) and a secondary listing
on the Main Board of the Johannesburg Stock Exchange (ticker:
SCD).
The Company is externally managed by Schroder Real Estate
Investment Management Limited (the 'Investment Manager') which has
managed real estate funds since 1971 and currently has GBP11.8
billion* (EUR13.7 billion/ US$15.4 billion) of gross real estate
assets under management as at 30 September 2016.
The Company's primary investment focus is on the core cities and
regions in France and Germany, considered to be well established,
mature and liquid and where the Investment Manager believes there
are positive growth prospects and real estate markets that provide
an opportunity to generate attractive returns. The Company has the
ability to invest in any country in Continental Europe, although
preference will be given to mature and liquid markets.
For further information about Schroders' real estate business
visit www.schroders.com/realestate
*Real Estate AUM includes holdings of Schroder Real Estate
Capital Partners and Schroders Multi-asset Funds.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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