Schroder Real Estate Investment Trust Ltd - Net Asset Value & Dividend-Quarter to 30 June 2019

For release 19 July 2019

Schroder Real Estate Investment Trust Limited

ANNOUNCEMENT OF NAV AND DIVIDEND FOR QUARTER TO 30 JUNE 2019

Schroder Real Estate Investment Trust (the ‘Company’ or ‘SREIT’), the actively managed UK-focused REIT, announces its net asset value (‘NAV’) and dividend for the quarter to 30 June 2019.

Net Asset Value

The unaudited NAV as at 30 June 2019 was £355.7 million or 68.6 pence per share ('pps'). This reflects a decrease of 0.15% per share compared with the NAV as at 31 March 2019, or a positive NAV total return, including the dividend paid of 0.65 pps, of 0.8%. A breakdown is set out below:

Dividend payment

The Company announces an interim dividend of 0.65 pence per share (‘pps’) for the period 1 April 2019 to 30 June 2019.

The dividend payment will be made on 16 August 2019 to shareholders on the register as at 2 August 2019. The ex-dividend date will be 1 August 2019. The dividend of 0.65 pps will be designated 0.35 pps as an interim property income distribution (‘PID’) and 0.30 pps as an interim ordinary dividend.

Performance versus latest available MSCI Index

Over the quarter to 31 March 2019, the underlying portfolio produced a total return of 1% compared with the MSCI Index of 0.4%. For the 12 months to 31 March 2019 the underlying portfolio produced a total return of 7.2% compared with MSCI of 5.2%.

Property portfolio

As at 30 June 2018, the underlying portfolio comprised 43 properties valued at £461.1 million. At the same date the portfolio produced a rent of £26.8 million per annum reflecting a net initial yield of 5.4%. The portfolio estimated rental value is £33 million per annum, resulting in a reversionary yield of 7.1%.

As at 30 June 2019 the void rate was 8%, calculated as a percentage of rental value. The average unexpired lease term, assuming all tenants vacate at the earliest opportunity, is 6.1 years. The tables below summarise the portfolio information as at 30 June 2019:

*Latest available Index data as at 31 March 2019

Disposals

In May unconditional contracts were exchanged to sell a warehouse let to Booker Limited in Acton for £18.9 million, which compared with the independent valuation as at 31 March 2019 of £17.2 million.  The disposal is due to complete on 15 November 2019 and the buyer has paid a non-refundable deposit of £1.89 million.

Since 31 December 2018 SREIT has completed or unconditionally exchanged contracts to sell five assets for £68.9 million, reflecting an average net initial yield of 3.1%.  The disposals are consistent with SREIT’s strategy to sell lower yielding assets and to realise gains from asset management.  These disposals, combined with the recently extended (but undrawn) revolving credit facility, provides SREIT with balance sheet capacity approaching £100 million and therefore valuable operational flexibility.

Asset management

Leeds, Millshaw Industrial Estate

Millshaw Industrial Estate increased in value by 4.3% over the quarter to £33 million as a result of the positive letting activity.  Three new lettings have been completed since 31 March 2019, generating £291,000 per annum, whilst works in connection with the conversion of a 31,000 sq ft warehouse to a JD Sports Gym will complete in June. This will trigger completion of a new 10 year lease, without tenant break, at a rent of £204,750 per annum.     

Peterborough, Southgate Way

The 81,121 sq ft distribution warehouse unit increased in value by 26% over the quarter to £4.8 million.  This followed the exchange of a lease agreement with EPD Insulation at a rent of £450,000 per annum which compares with the previous rent of £245,000 per annum.  The lease should complete in August following ongoing refurbishment works costing approximately £480,000.

Leicester, East Gates

A prime retail unit at Eastgates, Leicester, has been let to Tim Hortons on a ten year lease at £95,000 per annum.  The letting is subject to planning and a landlord capital contribution of £80,000.  The contribution should be recovered by a dilapidations payment from the outgoing tenant.  

Debt

The Company has two loan facilities, a £129.6 million term loan with Canada Life and a £52.5 million revolving credit facility (‘RCF’) with Royal Bank of Scotland.  As at 30 June 2019, the full Canada Life facility and £29.0 million of the RCF was drawn with an average duration of approximately eight years and an average interest cost of 4.2%.

Since the quarter end the RCF has been fully repaid.  Following this repayment the Company has cash of £27.7 million and unsecured property with a value of £36.5 million. This results in a loan to value ratio, net of cash, of approximately 22%.

-ENDS-

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