Schroder Real Estate Investment Trust Limited
ANNOUNCEMENT OF NAV AND DIVIDEND FOR QUARTER TO 31 DECEMBER 2018
Schroder Real Estate Investment Trust (the ‘Company’), the
actively managed UK-focused REIT, announces its net asset value
(‘NAV’) and dividend for the quarter to 31
December 2018.
Net Asset Value
The unaudited NAV as at 31 December
2018 was £358.6 million or 69.2
pence per share ('pps'). This reflects an increase of 0.25%
per share compared with the NAV as at 30
September 2018, or a NAV total return, including the
dividend paid of 0.6355 pps, of 1.2%. A breakdown is set out
below:
|
£m |
pps |
Comments |
NAV as at 30 September
2018 |
357.7 |
69.0 |
|
Unrealised change in valuation of direct property portfolio |
0.0 |
0.0 |
Reflects a quarterly
like-for-like increase in the value of the underlying portfolio of
0.2% before capital expenditure. Note that this includes the
underlying valuation movement in the joint ventures. |
Unrealised gain on joint ventures |
0.6 |
0.1 |
Increase in valuation
of joint ventures net of capital expenditure. |
Capital
expenditure |
(0.6) |
(0.1) |
Capital expenditure
includes £0.3m works completed at Clifton Park, York. Commercial
Road, Portsmouth £0.1m and Swindon of £0.1m. |
Net
revenue |
4.5 |
0.9 |
Includes one-off
dilapidation/surrender premium received in relation to The
Portergate, Sheffield of £1.2m. |
Dividends
paid |
(3.3) |
(0.6) |
Reflects the increased
dividend. |
Others |
(0.3) |
(0.1) |
Adjustment for lease
incentives. |
NAV as at
31 December 2018 |
358.6 |
69.2 |
|
Recurring dividend cover for the quarter was 98%. This increased
to 134% including the one-off dilapidations/surrender premium at
The Portergate, Sheffield.
Dividend payment
The Company announces an interim dividend of 0.65 pence per share (‘pps’) for the period
1 October 2018 to 31 December 2018. This reflects a further 2.5%
increase over the prior quarter.
The dividend payment will be made on 15
March 2019 to shareholders on the register as at
1 March 2019. The ex-dividend date
will be 28 February 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 MSCI Index
Over the quarter to 31 December
2018, the underlying portfolio produced a total return of
1.6% compared with the MSCI Index of 1.0%. For the calendar year
2018, the underlying portfolio produced a total return of 9.5%
compared with MSCI of 7.1%.
Property portfolio
As at 31 December 2018, the
underlying portfolio comprised 46 properties valued at £511.2
million. At the same date the portfolio produced a rent of £27.9
million per annum reflecting a net initial yield of 5.1%. The
portfolio rental value is £35.6 million per annum, resulting in a
reversionary yield of 7.0%.
As at 31 December 2018 the void
rate was 7.5%, calculated as a percentage of rental value. The
average unexpired lease term, assuming all tenants vacate at the
earliest opportunity, was 6.4 years. The tables below summarise the
portfolio information as at 31 December
2018:
Sector weightings |
Weighting
% |
|
SREIT |
MSCI Index* |
Retail |
25.8 |
31.7 |
Offices |
39.3 |
28.9 |
Industrial |
28.6 |
29.1 |
Other |
6.3 |
10.3 |
Regional weightings |
Weighting
% |
|
SREIT |
MSCI Index* |
Central London |
7.1 |
12.8 |
South East excluding Central
London |
29.4 |
40.5 |
Rest of South |
6.8 |
16.2 |
Midlands and Wales |
27.1 |
13.3 |
North |
26.4 |
12.8 |
Scotland |
3.2 |
4.4 |
Transactions
Milton Keynes, Stacey Bushes
Industrial Estate – 31 December 2018
valuation £37.1 million (Industrial)
In December an adjoining vacant ownership was acquired for
£776,000. Since the quarter end the unit has been let to Granemore
Group on a three year lease at £80,000 per annum, reflecting a
yield on cost of 10%.
Portsmouth, Commercial Road –
31 December 2018 valuation £6.7
million (Retail)
Since the quarter end contracts have been exchanged to sell part
of the retail property in Portsmouth for £1.6 million. The disposal
follows asset management activity and the apportioned price is in
line with the independent valuation at 31
December 2018.
Asset management
St. John’s Retail Park, Bedford –
31 December 2018 valuation £31.5
million (Retail Warehouse)
In December Homebase vacated a 36,214 sq ft unit as part of
their Company Voluntary Arrangement (‘CVA’). Homebase were
previously paying £353,000 per annum and their departure
contributed to a 4% quarterly decline in the valuation of St.
John’s Retail Park.
During the quarter a conditional agreement for lease was
exchanged with Lidl for a supermarket totalling 21,630 sq ft.
Subject to securing planning consent and delivering a refurbished
unit, Lidl will complete a new 15 year lease at £335,000 per annum.
Discussions are also ongoing in connection with letting the
remaining space to a complementary retailer. Assuming planning
consent is secured, the former Homebase will be refurbished and
extended at a cost of approximately £3.7 million.
Sheffield, The Portergate –
31 December 2018 valuation £4.8
million (Office)
The Portergate is a 49,489 sq ft office that was let to
Aviva Life and Pension until
June 2019 at £1.02 million per annum.
Aviva were not in occupation and on 21
December 2018 paid £1.2 million to terminate their lease
early. Following lease termination Aviva’s sub-tenants will
continue to pay £355,275 per annum reflecting an average rent of
£10.60 per sq ft. The strategy is to refurbish vacant space
totalling 16,000 sq ft and improve the building’s reception in
order to increase the rental tone to circa £14 per sq ft, which is
in line with comparative assets.
Debt
The Company has two loan facilities, a £129.6 million term loan
with Canada Life and a revolving credit facility (‘RCF’) with Royal
Bank of Scotland International (‘RBSI’). On 30 January 2019, the Company announced that it
had expanded its RCF from £32.5 million to £52.5 million. The
expansion maximises operational flexibility and provides additional
capacity for a pipeline of asset management initiatives and future
income enhancing acquisitions.
As at 31 December 2018, £160.1
million of debt is drawn with an average duration of approximately
8.4 years and an average interest cost of 4.4%. £22 million of the
RCF facility remains undrawn. Fully drawn, the Company’s overall
cost of debt would be 3.9%. The loans are fully compliant with
their covenants.
In addition to the properties secured against the Canada Life
and RBSI loan facilities, the Company has unsecured properties with
a value of £36.5 million and cash of approximately £11.8 million.
This results in a loan to value ratio, net of cash, of
approximately 29%.
-ENDS-
For further information:
Schroder Real Estate Investment
Management Limited:
Duncan Owen / Nick Montgomery / Frank Sanderson |
020 7658 6000 |
Northern Trust:
Sean Walsh / James Machon |
01481 745529 |
FTI Consulting:
Dido Laurimore / Richard Gotla |
020 3727 1000 |