TIDMSERE
RNS Number : 9083Q
Schroder Eur Real Est Inv Trust PLC
03 March 2021
3 March 2021
ANNOUNCEMENT OF NAV AND DIVID
Schroder European Real Estate Investment Trust plc ("SERE" or
the "Company") provides a business update and announces its
unaudited net asset value ("NAV") as at 31 December 2020, together
with its first interim dividend for the year ending 30 September
2021:
- Rent collection during the quarter and subsequent period
remained stable at c. 89% of contracted rent (as at 1 March
2021)
- Unaudited NAV as at 31 December 2020 of EUR201.6 million or
150.7 cents per share, a 0.1% reduction compared to 30 September
2020
- NAV total return of 0.8% over the quarter and 14.3% for the twelve months to 31 December 2020
- A first interim dividend of 1.57 euro cents per share will be
paid for the year ending 30 September 2021
- Portfolio valuation has increased to EUR276.1 million,
reflecting an increase of 1%, net of capital expenditure, over the
quarter
- The 31 December 2020 NAV includes a further impairment to the
Company's 50% interest in the Seville asset, which is the Company's
only shopping centre. This impairment, which reflects increased
uncertainty as a result of the recently announced vacancy, reduces
the net asset value of the 50% interest from c. 3.6% to c. 2.9% of
NAV
- Key asset management activities during the period included:
- Finalisation of the forward sale agreement of the
Boulogne-Billancourt, Paris office and receipt of 50% of the sales
price of the purchaser. Refurbishment has now commenced and is
forecast to complete in Q2 2022
- In Hamburg, the Company has secured two new tenants on five
year lease terms at a 20% premium to target rent, for an additional
10% of the space, taking the building to 90% let.
Net Asset Value
The table below provides a breakdown of the movement in NAV
during the reporting period:
EURm(1) Cps(2) %(3)
Brought forward NAV as at 1 October 2020 201.8 150.9
Unrealised gain in valuation of the property
portfolio 7.5 5.6 3.7
Capital expenditure (4.9) (3.7) (2.5)
Impairment to Seville Shopping Centre
JV (2.0) (1.5) (1.0)
EPRA earnings 1.5 1.1 0.8
Non-cash items (0.4) (0.3) (0.2)
Dividend paid (1.9) (1.4) (0.9)
NAV as at 31 December 2020 201.6 150.7 (0.1)
(1) 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 exclude non-controlling
interests in the Company's subsidiaries.
(2) Based on 133,734,686 shares
(3) % change based on starting NAV 1 October 2020
Interim dividend
The first interim dividend of 1.57 euro cents per share for the
year ending 30 September 2021 represents an annualised rate of 6.3%
based on the current share price of 88 pence per share(1) . As
announced previously, whilst the refurbishment of Paris
Boulogne-Billancourt is being undertaken, the cover from net income
reduces to c. 70%. The Board has made the prudent decision to
allocate some of the profits out of the net sale proceeds from the
forward-funding disposal of the asset towards covering the
shortfall in income whilst it is being refurbished and pending
reinvestment of the remainder of sale proceeds. The Board's
intention is to progressively increase the dividend back to 1.85
euro cents per quarter as the impact of Covid-19 on the Company's
income abates and proceeds from Boulogne-Billancourt are
re-deployed into earnings enhancing initiatives and
investments.
The interim dividend payment will be made on Tuesday, 13 April
2021 to shareholders on the register on the record date of Friday,
26 March 2021. In South Africa, the last day to trade will be
Tuesday, 23 March 2021 and the ex-dividend date will be Wednesday,
24 March 2021. In the UK, the last day to trade will be Wednesday,
24 March 2021 and the ex-dividend date will be Thursday, 25 March
2021.
The interim dividend will be paid in GBP to shareholders on the
UK register and Rand to shareholders on the South African register.
The exchange rate for determining the interim dividend paid in Rand
will be confirmed by way of an announcement on Monday, 8 March
2021. UK shareholders are able to make an election to receive
dividends in Euro rather than GBP should that be preferred. The
form for applying for such election can be obtained from the
Company's UK registrars (Equiniti Limited) and any such election
must be received by the Company no later than Friday, 26 March
2021. The exchange rate for determining the interim dividend paid
in GBP will be confirmed following the election cut off date by way
of an announcement on Monday, 29 March 2021.
Shares cannot be moved between the South African register and
the UK register between Monday, 8 March 2021 and Friday, 26 March
2021, both days inclusive. Shares may not be dematerialised or
rematerialised in South Africa between Wednesday, 24 March 2021 and
Friday, 26 March 2021, both days inclusive.
The Company has a total of 133,734,686 shares in issue on the
date of this announcement. The dividend will be distributed by the
Company (UK tax registration number 21696 04839) and is regarded as
a foreign dividend for shareholders on the South African register.
In respect of South African shareholders, dividend tax will be
withheld from the amount of the dividend noted above at the rate of
20% unless the shareholder qualifies for the exemption. Further
dividend tax information for South African shareholders will be
included in the exchange rate announcement to be made on Monday, 8
March 2021 .
Rent collection
Approximately 89% of the rent due for the quarter ending 31
December 2020 has been collected. This is ahead of the amount
collected in the previous two quarters of 87%. Furthermore the rent
collected for January and February 2021 is in line with Q4
2020.
Property portfolio
As at 31 December 2020, the property portfolio was independently
valued at EUR276.1 million, an increase of 2.8%, or EUR7.5 million,
on the 30 September 2020 valuation of EUR268.6 million.
Net of capital expenditure the valuation increase was
approximately EUR2.6 million, reflecting a property capital return
of 1.0%. The main drivers of this were:
- The Hamburg office investment saw its value increase (+EUR1.0m
or 6.6% net of cap ex and incentives) as a result of concluding two
new leases
- Yield compression and ERV growth across the industrial assets
portfolio. This resulted in a net valuation increase of EUR1.4
million, or 3.0%
- The value of the office refurbishment in Paris
Boulogne-Billancourt increased by over EUR4 million driven by
capital spending over the quarter. Net of capital spending, the
return was EUR0.4 million, or 0.6%
- The value of SERE's 50% interest in the Seville shopping
centre declined by EUR50,000. This asset is the only asset in the
portfolio where the valuers continue to adopt a material
uncertainty clause. This asset value does not reflect the lease
terminations announced in February 2021. These terminations are
expected to have a negative impact on the value of the asset and
the 31 December 2020 NAV has been further impaired to reflect
increased risk for this investment and the expectation of further
value decline.
The portfolio generated a net property rental income of EUR3.4
million, representing an ungeared quarterly property income return
of 1.2% (equating to 4.9% on an annualised basis).
Asset Management update
Key asset management initiatives during the most recent quarter
were as follows:
- Signed and commenced the construction contract for the
refurbishment of the Boulogne-Billancourt, Paris office. Remaining
costs are forecast to be c. EUR24 million, with completion forecast
for June 2022. Approximately 50% of the sale proceeds have already
been received as part of the forward funding agreement with the
purchaser. The remainder will be received as refurbishment
milestones are met through to completion
- At its Hamburg office investment, the Company has secured two
new tenants for an additional 650 sqm of office space on the
seventh floor and 60 sqm of retail space on the ground floor. The
new leases have both been agreed on a five-year term and represent
10% of the Hamburg lettable area. The rents achieved are at a c.
20% premium to the business target. The building is now 90% let and
discussions are ongoing with potential tenants for the remaining
floor
- The Company's retail exposure in Berlin (DIY) and Frankfurt
(Grocery) represents 14% of the portfolio value and continues to
perform strongly, achieving c. 100% rent collection in 2020 and
valuation uplifts. SERE continues to work with retailers to
optimise occupancy in the Seville shopping centre including
reviewing alternate use options for vacant space.
Balance sheet and debt
As at 31 December 2020, the Company has investable cash of
approximately EUR25 million and a net loan to value ratio of
approximately 25%. This capital is available for new earnings
enhancing initiatives including new investments.
The Company has seven loans secured by individual assets or
groups of assets, with no cross-collateralisation between loans and
recourse back to the Company. The average weighted total interest
rate of the loans is 1.4% per annum and the earliest scheduled loan
maturity is in 2023. All loans are currently in compliance with
their default covenants, though there is a cash trap in operation
for the Seville loan.
Sustainability
The Company continues to look at ways to improve on its recently
awarded three green star global sustainability benchmark 'GRESB'.
These initiatives include BREEAM in use certification, utilisation
of renewable energy, LED lighting and smart metering.
Participation in the GRESB survey is part of the Company's
broader ESG and positive impact strategy which is integral in the
investment process.
Further information can be found within the Company's Annual
Report.
https://www.schroders.com/en/sysglobalassets/investment-trusts/sereit/documents/annuals/schroders_sereit_ar20-2-3.pdf
Net Zero Carbon Pathway
The Company, together with Schroder Real Estate Investment
Management Limited ("Schroder Real Estate") as Investment Manager,
is focused on delivering continued improvements in the
sustainability performance of the portfolio. In December 2020,
Schroder Real Estate issued its Net Zero Carbon Pathway, a
commitment made in September 2019 as part of the UK Better
Buildings Partnership Climate Commitment. This outlines a
trajectory for achieving net zero carbon by 2050 and addresses both
operational carbon, covering whole building performance; and
embodied carbon, covering development and refurbishment
activities.
Further information can be found within the Schroder Real Estate
Pathway to Net Carbon Zero document at
https://www.schroders.com/en/sysglobalassets/investment-trusts/sreit/schroder-real-estate-net-zero-carbon-pathway-december-2020_1621372_v1.pdf
(1.) Share price as at 1 March 2021. Exchange rate
GBP1:EUR1.14
Enquiries:
Jeff O'Dwyer
Schroder Real Estate Investment Management Limited Tel: 020 7658 6000
Ria Vavakis
Schroder Investment Management Limited Tel: 020 7658 2371
Dido Laurimore/Richard Gotla/Methuselah Tanyanyiwa Tel: 020 3727 1000
FTI Consulting
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END
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