TIDMSERE
RNS Number : 6968W
Schroder Eur Real Est Inv Trust PLC
03 August 2018
3 August 2018
ANNOUNCEMENT OF NAV AND DIVID FOR PERIOD TO 30 June 2018
Schroder European Real Estate Investment Trust plc ("SERE" or
the "Company"), the company investing in European growth cities,
today announces its unaudited net asset value ("NAV") for 30 June
2018, together with its third interim dividend for the year ending
30 September 2018 relating to the three months to 30 June 2018:
-- Unaudited NAV as at 30 June 2018 of EUR187.2 million or 140.0
cents per share, an uplift of 0.1% over the quarter;
-- Quarterly NAV total return, including the dividend, of 1.4%;
-- An interim dividend of 1.85 euro cents per share relating to the quarter to 30 June 2018;
-- This dividend is in-line with the target dividend stated at
IPO of an annualised rate of 5.5% on the IPO issue price
Since quarter end the Company has made progress with its
investment strategy, including realising profit with sales at low
yields and reinvestment at higher yields:
-- The sale of its investment in two Casino supermarkets in
France (as announced on 1 February 2018) for a price of
approximately EUR45 million and a net income yield of sub 5%;
-- Contracted acquisition of a logistics investment in Rumilly,
France for a purchase price of EUR8.6 million, representing a net
income yield of 7.0%. This is targeted to complete in
mid-August;
-- Exclusivity granted for the acquisition of three Dutch
warehouse investments, totalling over EUR20 million at a net income
yield of between 6% - 7%.
Net Asset Value
The table below provides a breakdown of the movement in NAV
during the reporting period:
NAV movement EURm(1) Cps(2) %(3)
-------------------------- --------- -------- -----
Brought forward
NAV as at 1 April
2018 187.1 139.9
-------------------------- --------- -------- -----
Capital expenditure (0.3) (0.2) (0.2)
-------------------------- --------- -------- -----
Unrealised gain
in valuation of
the property portfolio 0.7 0.5 0.4
-------------------------- --------- -------- -----
EPRA earnings 2.4 1.9 1.4
-------------------------- --------- -------- -----
Non-cash items (0.2) (0.2) (0.1)
-------------------------- --------- -------- -----
Dividend paid (2.5) (1.9) (1.4)
-------------------------- --------- -------- -----
NAV as at 30 Jun
'18 187.2 140.0 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 excludes non-controlling
interests in the Company's subsidiaries.
(2) Based on 133,734,686 shares
(3) % change based on starting NAV 1 April 2018
Interim Dividend
The third interim dividend of 1.85 euro cents per share for the
year ending 30 September 2018 represents an annualised rate of 5.5%
based on the Euro IPO issue price of 137 euro cents per share.
Based on the GBP IPO issue price of 100 pence per share the
annualised yield is 6.7% (based on FX rates as at 30 June 2018).
The dividend is 96% covered from income received during the
quarter. Dividends for the first nine months of the financial year
are 120% covered from net income received.
The interim dividend payment will be made on Friday, 14
September 2018 to shareholders on the register on the record date
of Friday, 31 August 2018. In South Africa, the last day to trade
will be Tuesday, 28 August 2018 and the ex-dividend date will be
Wednesday, 29 August 2018. In the UK, the last day to trade will be
Wednesday, 29 August 2018 and the ex-dividend date will be
Thursday, 30 August 2018.
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, 13 August
2018. 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, 31 August
2018. 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, 3 September 2018.
Shares cannot be moved between the South African register and
the UK register between Monday, 13 August 2018 and Friday, 31
August 2018, both days inclusive. Shares may not be dematerialised
or rematerialised in South Africa between Wednesday, 29 August 2018
and Friday, 31 August 2018, 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, 13
August 2018.
Property Portfolio
As at 30 June 2018, the Company owned ten properties located in
growth cities of Continental Europe, independently valued at
EUR238.0 million. Over the quarter, the portfolio value has
increased EUR0.4 million, net of capex. This reflects a property
capital return of 0.2%. Over the same period, the portfolio
generated a net property income of EUR3.9 million, representing an
ungeared quarterly property income return of 1.7% (on an annualised
basis, reflecting an ungeared property income return of 6.7%).
The committed portfolio, which includes the Rumilly purchase and
excludes the Casino sales, will comprise nine properties with a
value of approximately EUR202 million. The portfolio will generate
contracted rents of EUR14.6 million and is 97% let with an average
unexpired lease term to first break and expiry of 4.7 years and 6.5
years. The rent on all leases is indexed to inflation and
individual asset business plans are being implemented to improve
future earnings and capital growth potential. An example of this is
the lease surrender and remarketing of the Company's Hamburg asset,
in a strengthening office sub-market, where SERE is refurbishing
part of the property and already has interest from potential
tenants.
The country and sector allocations for the committed portfolio
are set out in the table below:
Country Committed Sector allocation Committed
allocation Portfolio (% contracted Portfolio
(% contracted (inc Rumilly, rent) (inc Rumilly,
rent) exc Casino) exc Casino)
--------------- -------------- ----------------- --------------
France 44% Office 49%
--------------- -------------- ----------------- --------------
Germany 25% Retail 30%
--------------- -------------- ----------------- --------------
Spain 14% Logistics 5%
--------------- -------------- ----------------- --------------
Netherlands 16% Mixed 16%
--------------- -------------- ----------------- --------------
Total 100% Total 100%
--------------- -------------- ----------------- --------------
The fundamentals of the Eurozone economy remain positive and
growth continues. Unemployment is falling, contributing to positive
sentiment and increasing consumer spend. The strong economic
backdrop is benefiting property markets, with office vacancy rates
in some of the Company's existing and target markets at record
lows, resulting in strong rental growth. (Source: JLL Office
Property Clock Q2 2018)
Investment Progress
The Company has invested over EUR233 million since IPO,
constructing a property portfolio with a diversified income profile
across key growth cities in Western Continental Europe. A total of
EUR73.4 million of debt has been drawn, equating to an LTV of c.28%
at an average weighted interest rate of 1.3% p.a. and an average
weighted duration of approximately 6.1 years.
The sale of the Casino supermarkets provides new investment
capacity of approximately EUR45 million (including further
gearing). Approximately EUR9 million will be deployed with the
completion of the Rumilly acquisition and the three Dutch warehouse
investments in exclusivity total over EUR20 million. These
acquisitions would provide further sector and tenant
diversification and are at income yields that are accretive to the
Company's existing portfolio. If all these acquisitions complete
the Company would have approximately EUR15 million of remaining
investment capacity and the Investment Manager is reviewing and in
negotiation on a number of new opportunities.
Jeff O'Dwyer, of Schroder REIM, said:
"The Rumilly logistics commitment adds further diversification
to the portfolio which now offers a mixture of income and growth
through a programme of ongoing and identified asset management
initiatives.
"Approximately 90% of the portfolio is situated in Europe's
fastest growing conurbations and includes cities such as Berlin,
Frankfurt, Hamburg, Stuttgart and Paris, all of which are set to
outperform their domestic economies in the medium to long term.
Building on the positive Half Year results, the attractive income
distribution and continued growth in property values across the
portfolio is a reflection of the team's ability to identify,
acquire and manage assets that deliver on the Company's stated
objectives.
"We remain well positioned to generate long term shareholder
value, benefiting from the favorable Eurozone backdrop, as we
explore the different options to grow the company over the
medium-to-long term."
Enquiries:
Duncan Owen/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 Tel: 020 3727 1000
FTI Consulting
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END
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