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:
|
£m |
pps |
Comments |
NAV as at 31 March
2019 |
356.4 |
68.7 |
|
Unrealised valuation loss on investment property |
(1.4) |
(0.3) |
Portfolio decline
before capital expenditure and excluding joint ventures and profit
on disposal, shown separately below. |
Unrealised loss in joint ventures |
(0.2) |
- |
Decrease due to
capital expenditure at City Tower Unit Trust. |
Profit on
disposal of investment property |
1.3 |
0.3 |
Relating to the
disposal of the Booker Unit in Acton that exchanged during the
quarter and completes on 15 November 2019 at £18.9 million.
The £1.3 million profit on disposal reflects the premium over the
31 March independent valuation of £17.2 million less an adjustment
for disposals costs and a non-cash lease incentive. |
Capital
expenditure |
(0.8) |
(0.2) |
Includes £400,000 in
connection with the pre-let to JD Sports Gyms at Millshaw
Industrial Estate in Leeds. |
Net
revenue |
3.6 |
0.7 |
Quarterly net revenue
reflecting dividend cover of 105%, and 102% from recurring
revenues. |
Dividends
paid |
(3.4) |
(0.7) |
Reflects the 0.65 pps
March 2019 quarterly dividend paid in June 2019. |
Others |
0.2 |
0.1 |
Lease incentive
adjustments and all other items. |
NAV as at
30 June 2019 |
355.7 |
68.6 |
|
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:
Sector weightings |
Weighting
% |
|
SREIT |
MSCI Index* |
Offices |
36.0 |
28.7 |
Industrial |
32.7 |
28.6 |
Retail (including the retail
component of mixed use assets) |
24.5 |
31.4 |
Other |
6.8 |
11.3 |
Regional weightings |
Weighting
% |
|
SREIT |
MSCI Index* |
Central London |
7.9 |
12.6 |
South East excluding Central
London |
22.4 |
40.3 |
Rest of South |
6.9 |
16.3 |
Midlands and Wales |
29.6 |
13.7 |
North and Scotland |
33.2 |
17.1 |
*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-
For further information:
Schroder Real Estate Investment
Management Limited:
Duncan Owen / Nick Montgomery / Frank Sanderson |
020 7658 6000 |
Northern Trust:
James Machon |
01481 745529 |
FTI Consulting:
Dido Laurimore / Richard Gotla |
020 3727 1000 |