SREI Schroder Real Estate Investment Trust Limited

 
TIDMSREI 
 
For release 8 October 2019 
 
Schroder Real Estate Investment Trust Limited 
("SREIT"/ the "Company" / "Group") 
 
REFINANCING OF LONG TERM DEBT AND DIVIDEND INCREASE 
 
Schroder Real Estate Investment Trust, the actively managed UK-focused REIT, is 
implementing a strategy focused on growing net operating income which delivered 
a 5% dividend increase in the financial year to March 2019. Today the Company 
announces a significant refinancing and a further dividend increase: 
 
  * GBP129.6 million fixed rate loan with Canada Life Investments extended from 
    8.5 to average 16.5 years 
  * Reduction in the total interest rate from 4.4% to approximately 2.3% per 
    annum, generating an immediate interest saving of approximately GBP2.8 
    million per annum 
  * Negotiated break cost of approximately GBP28 million funded by cash realised 
    from disposals 
  * Interest saving to be paid to shareholders as an increased dividend of 
    approximately GBP16.2 million per annum, equating to an increase of 
    approximately 20% 
  * The transaction is due to complete on 15 October 2019. The final interest 
    rate and break cost will be based on the closing reference Gilt rates on 14 
    October 2019 
 
Background to the refinancing 
 
The Company's strategy is focused on growing net operating income to continue 
the progressive dividend policy. This has included asset management, selective 
acquisitions and, over the last 12 months, a disposal programme totalling GBP85.6 
million, reflecting an average net initial yield of 3.1%. These disposals 
crystallised gains from asset management and contributed to sustained 
outperformance of the underlying portfolio against the IPD/MSCI Benchmark of 
2.0% and 2.3% per annum over one and three years to June 2019 respectively. 
This activity resulted in the Board increasing the Company's dividend by 5% in 
the financial year to March 2019. 
 
In order to lock into low finance costs for a longer term as well as to further 
increase the net income return to our shareholders, the Company announces that 
it has refinanced its GBP129.6 million term loan with Canada Life Investments and 
extended its maturity with 50% of the loan maturing in 13 years and 50% of the 
loan maturing in 20 years. The transaction reduces the cost of debt on the loan 
from 4.4% to approximately 2.3% resulting in interest savings of approximately 
GBP2.8 million per annum. The interest savings will be used to increase the 
Company's dividend by approximately 20%, starting at the period 1 October 2019. 
The refinancing has resulted in a negotiated break cost of approximately GBP28 
million, equating to a reduction in the NAV per share of 5.5 pence. The 
transaction is due to complete on 15 October 2019 at which point the Company 
will confirm the final terms. The final interest rate and break cost will be 
based on the closing reference Gilt rates on 14 October 2019. 
 
Future growth in earnings 
 
Following this activity and on completion of contracted disposals in November, 
the Company will have approximately GBP80 million of cash and undrawn revolving 
credit facilities. This provides the Company with operational flexibility to 
invest in the underlying portfolio and take advantage of more attractively 
priced investment opportunities that deliver further sustainable growth in 
earnings. 
 
Duncan Owen, Global Head of Schroder Real Estate, commented: 
 
"The transaction increases net operating income post all costs and debt 
reduction, and leads to a material increase in the dividend, thereby increasing 
shareholder's returns. In addition, it reduces risk with long term and low cost 
debt. The Company is well positioned; it has long term debt with a conservative 
LTV and the capacity to take advantage of lower pricing in the real estate 
markets, with available cash and undrawn revolving debt facilities." 
 
                                    -ENDS- 
 
For further information: 
 
Schroder Real Estate Investment Management       020 7658 6000 
Limited: 
Duncan Owen / Nick Montgomery / Frank Sanderson 
 
Northern Trust:                                  01481 745529 
Andy Dovey / James Machon 
 
FTI Consulting:                                  020 3727 1000 
Dido Laurimore / Richard Gotla 
 
 
 
END 
 

(END) Dow Jones Newswires

October 08, 2019 02:00 ET (06:00 GMT)

Grafico Azioni Schroder Real Estate Inv... (LSE:SREI)
Storico
Da Mar 2024 a Apr 2024

Grafico Azioni Schroder Real Estate Inv... (LSE:SREI)
Storico
Da Apr 2023 a Apr 2024