Schroder Real Estate Net Asset Value(s) & Dividend Declaration
17 Febbraio 2020 - 8:00AM
UK Regulatory
TIDMSREI
For release 17 February 2020
Schroder Real Estate Investment Trust Limited
ANNOUNCEMENT OF NAV AND DIVID FOR QUARTER TO 31 DECEMBER 2019
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 2019.
Net Asset Value
The unaudited quarterly NAV as at 31 December 2019 was GBP321.4 million or 62.0
pence per share ('pps'). During the quarter the Company completed a major
refinancing that incurred costs of GBP27.2 million. The refinancing generated an
immediate interest saving of GBP2.5 million per annum that will be paid to
shareholders as an annualised 19% dividend increase to 0.7715 pps with effect
from the forthcoming dividend to be paid on 13 March 2020.
Following the refinancing, the Company has approximately GBP90 million of cash
and undrawn debt facilities to invest in income enhancing asset management and
new acquisitions that are under active consideration.
The NAV of 62.0 pps reflects a like-for-like decrease of 1.7% compared with the
NAV as at 30 September 2019 adjusted for the refinancing costs. Based on the
quarterly dividend paid in December 2019 of 0.65 pps, the NAV total return
excluding the refinancing costs was -0.7%. A breakdown is set out below:
GBPm pps Comments
NAV as at 30 354.3 68.3
September 2019
Refinancing costs (27.2) (5.2) Break costs and related fees of GBP
25.8 million together with writing
off unamortised finance costs of GBP
1.4 million.
NAV at 30 September 327.1 63.1
2019 adjusted for
the refinancing
costs
Unrealised change in (4.6) (0.9)
valuation of direct
real estate
portfolio and joint
ventures
Capital expenditure (1.5) (0.3) GBP800,000 relates to works linked
to pre-lets such as Bedford,
Milton Keynes and Leeds.
Remainder principally relates to
refurbishment of multi-let
industrial estates.
Realised gains on 0.3 0.1 GBP200,000 gain on Peterborough
disposals (completed December 2019) and GBP
100,000 gain on Hinckley
(completed November 2019).
Net revenue 3.4 0.7 Quarterly earnings.
Dividend paid (3.4) (0.7) Reflects the 0.65 pps September
2019 quarterly dividend which was
paid in December 2019, equating to
100% dividend cover.
Others 0.1 Nil Lease incentive adjustments and
rounding.
NAV as at 31 321.4 62.0 Reflects a 1.7% decrease in the
December 2019 NAV adjusted for the refinancing
costs
Dividend payment
The Company announces an interim dividend of 0.7715 pps for the period 1
October 2019 to 31 December 2019. This reflects the previously announced 19%
increase over the prior period following the refinancing in October 2019.
The dividend payment will be made on 13 March 2020 to shareholders on the
register as at 28 February 2020. The ex-dividend date will be 27 February 2020.
The dividend of 0.7715 pps will be designated 0.3500 pps as an interim property
income distribution ('PID') and 0.4215 pps as an interim ordinary dividend.
Performance versus MSCI Index
Over the quarter to 31 December 2019, the underlying portfolio produced a total
return of 0.1%, in line with the MSCI Benchmark Index. The portfolio's
quarterly income return of 1.6% compared with the Benchmark at 1.1%.
For the calendar year 2019, the underlying portfolio produced a total return of
4.0% compared with MSCI of 1.6%, with the sector total return breakdown as
follows:
Calendar year 2019 portfolio Total return %
total return
SREIT MSCI Benchmark
Index
Industrial 8.9 6.8
Offices 6.0 4.7
Retail -4.8 -7.0
Other 2.7 5.5
Total 4.0 1.6
Property portfolio
The underlying portfolio comprised 39 properties valued at GBP413.9 million as at
31 December 2019, which produced a rent of GBP23.7 million per annum reflecting a
net initial yield of 5.4% (MSCI Benchmark Index 4.8%). The portfolio rental
value is GBP30 million per annum, resulting in a reversionary yield of 7.2% (MSCI
Benchmark Index 5.3%).
As at 31 December 2019, the void rate was 7.9%, calculated as a percentage of
rental value. The Company has ongoing totalling annualised rental income of
approximately GBP700,000. Successful completion of these leases under offer
would reduce the void rate to approximately 6%. The average unexpired lease
term, assuming all tenants vacate at the earliest opportunity, was 5.8 years.
The tables below summarise the portfolio information as at 31 December 2020:
Sector weightings Weighting %
SREIT MSCI Benchmark
Index
Industrial 28.0 26.2
Offices 39.2 25.6
Retail 25.2 28.0
Primary use retail 19.2 N/A
Ancillary use retail 6.0 N/A
Other 7.6 20.1
Regional weightings Weighting %
SREIT MSCI Benchmark
Index
Central London 8.9 13.8
South East excluding Central 20.2 38.8
London
Rest of South 8.7 15.1
Midlands and Wales 28.0 12.7
North 31.5 14.7
Scotland 2.7 4.9
Transactions
The Company completed five disposals during the quarter totalling GBP45 million
reflecting a 15% net premium to the valuation at March 2019. These included:
* Edinburgh, Haston House - Completed 1 October 2019. Sale price of GBP6.5
million compared with the 31 March 2019 independent valuation of GBP5.5
million.
* Alfreton, Recticel Unit - Completed 8 October 2019. Sale price of GBP10.4
million compared with the 31 March 2019 independent valuation of GBP10.2
million.
* Acton, Allied Way Estate - Completed 15 November 2019. Sale price of GBP18.9
million compared with the 31 March 2019 independent valuation of GBP17.2
million.
* Hinckley, Coventry Road - Completed 22 November 2019. Sale price of GBP2.2
million compared with the 31 March 2019 independent valuation of GBP2.0
million.
* Peterborough, Finmere Park - Completed 12 December 2019. Sale price of GBP7.0
million compared with the 31 March 2019 independent valuation of GBP3.8
million following the re-letting of the unit on a 10.5 year lease.
Asset management
The Company continues to focus on actively managing the portfolio. Highlights
during the quarter include:
St John's Retail Park, Bedford (Retail warehouse)
The lease to DSG Retail (t/a Curry's PC World) has been extended from 2021 to
2029 at the passing rent of GBP280,000 per annum. DSG will receive an incentive
of 6 months' rent free.
In addition, a simultaneous surrender of Majestic Wine's lease with a new
10-year lease to Easy Bathrooms has completed at the existing rent of GBP64,200
per annum.
These transactions and the previously announced agreements for lease with Lidl
and Home Bargains increase the unexpired term from 3.9 years to 8.2 years and
will support the future trading performance of the asset. The income yield
following completion of the Lidl and Home Bargains lettings will be
approximately 7%.
Horton Park, Telford (Industrial)
A new five year lease for a 6,535 sq ft unit to Evolution Foods completed at GBP
5.50 per sq ft, equating to GBP36,000 per annum.
A five year lease renewal with Activ Projects on a 16,663 sq ft unit at GBP83,315
per annum equating to GBP5.50 per sq ft representing a 39.2% increase on the
previous passing rent.
Post period end activity
Since the calendar year end 15 new lettings, renewals and rent reviews have
completed, generating additional income of approximately GBP135,000 per annum.
The focus is now on completing lettings under offer that have the potential to
generate additional annualised income of GBP700,000 per annum.
Debt
The Company has two loan facilities, a GBP129.6 million term loan with Canada
Life and a revolving credit facility ('RCF') with Royal Bank of Scotland
International ('RBSI').
On 8 October 2019 the Company announced the refinancing of its GBP129.6 million
loan with Canada Life. This extended the average maturity from 8.5 to 16.5
years and reduced the interest rate from 4.4% to 2.5% per annum. The
refinancing generated an immediate interest saving of GBP2.5 million per annum to
be paid to shareholders as an increased dividend of GBP16.0 million per annum,
equating to an increase of 19%, starting at the period 1 October 2019. As at 31
December 2019, the RCF facility of GBP52.5 million remained undrawn. 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 GBP36.9 million
and cash of approximately GBP40.9 million. This results in a loan to value ratio,
net of cash, of approximately 21%.
Duncan Owen, Global Head of Schroder Real Estate, said:
"It has been an active quarter for the Company as we have executed our strategy
with the refinancing enabling the delivery of a 19% increase in dividend. The
underlying portfolio has continued to outperform over the 12 months to 31
December 2019 against the Benchmark by 2.3%. We are continuing our active asset
management programme and have a robust pipeline of reinvestment opportunities
to drive returns and grow net income in a sustainable way."
-ENDS-
For further information:
Schroder Real Estate Investment Management 020 7658 6000
Limited:
Duncan Owen / Nick Montgomery / Frank
Sanderson
Northern Trust: 01481 745 001
Lisa Garnham
FTI Consulting: 020 3727 1000
Dido Laurimore / Richard Gotla / Methuselah
Tanyanyiwa
END
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