Schroder Real Estate Inv Trst Ld NAV and Dividend (8033E)

TIDMSREI

RNS Number : 8033E

Schroder Real Estate Inv Trst Ld

21 July 2016

For release 21 July 2016

Schroder Real Estate Investment Trust Limited

ANNOUNCEMENT OF NAV AND DIVIDEND FOR QUARTER TO 30 JUNE 2016

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 30 June 2016.

Net Asset Value

The unaudited NAV as at 30 June 2016 was GBP325.6 million or 62.9 pence per share ('pps'). This reflects an increase of 1.1% per share compared with the NAV as at 31 March 2016, or a NAV total return, including the dividend of 0.62 pps, of 2.1%. A breakdown is set out below:

 
                         GBPm     pps    Comments 
----------------------  ------  ------  -------------------------------- 
 NAV as at 31 
  March 2016             322.6   62.2 
----------------------  ------  ------  -------------------------------- 
                                         Reflects a quarterly 
 Unrealised                               like-for-like increase 
  change in valuation                     in the value of the underlying 
  of direct property                      portfolio of 1.6% before 
  portfolio               7.0     1.4     capital expenditure 
----------------------  ------  ------  -------------------------------- 
                                         Relating to refurbishment 
                                          work at Cardiff, Bristol 
 Capital expenditure     (3.2)   (0.6)    and Liverpool 
----------------------  ------  ------  -------------------------------- 
 Unrealised              (0.1)     -     Capital expenditure relating 
  loss on joint                           to City Tower in Manchester 
  ventures 
----------------------  ------  ------  -------------------------------- 
 Loss on disposals       (0.1)     -     Loss reflects costs in 
                                          connection with the previously 
                                          announced disposals in 
                                          Bath, Nottingham and 
                                          New Malden 
----------------------  ------  ------  -------------------------------- 
                                         Results in quarterly 
 Net revenue              3.3     0.6     dividend cover of 104% 
----------------------  ------  ------  -------------------------------- 
                                         Reflects an annualised 
                                          dividend of GBP12.8 million 
 Dividends paid          (3.2)   (0.6)    or 2.48 pps 
----------------------  ------  ------  -------------------------------- 
                                         Principally relating 
 Others                  (0.4)   (0.1)    to lease incentives 
----------------------  ------  ------  -------------------------------- 
 NAV as at 30 
  June 2016              325.6   62.9 
----------------------  ------  ------  -------------------------------- 
 

Following the EU referendum result, and in common with other independent valuers, Knight Frank has stated that (i) the UK real estate market is now in a period of uncertainty in relation to many factors that impact the property investment and letting markets; (ii) it has not been possible to gauge the effect of the vote to leave the EU by reference to transactions in the market place; and (iii) the probability of the value coinciding with the price achieved, were there to be a disposal, has reduced.

Dividend payment

The Company announces an interim dividend of 0.62 pps for the period 1 April 2016 to 30 June 2016. The dividend payment will be made on 31 August 2016 to shareholders on the register as at 12 August 2016. The ex-dividend date will be 11 August 2016.

The dividend of 0.62 pps will be designated 0.39 pps as an interim property income distribution ('PID') and 0.23 pps as an interim ordinary dividend.

Strategy

The investment strategy remains focussed on winning cities and towns, meaning those with a competitive advantage in terms of:

   --      Higher levels of GDP, employment and population growth; 
   --      Well developed infrastructure; and 
   --      Being places where people want to live as well as work. 

A concentration of assets in these locations combined with active management and long term fixed rate debt supports the potential for long term sustainable earnings growth. The portfolio also has no exposure to the City of London, Canary Wharf or European financial institutions as tenants, which could be the most impacted by the uncertainty arising from the UK's exit from the EU. As a consequence the Company is well positioned whilst remaining vigilant to potential challenges as well as opportunities following the referendum.

Performance versus MSCI (formerly IPD) Index

The latest available performance data for the quarter to 31 March 2016 showed that the Company's portfolio produced a total return of 1.4%, outperforming the MSCI peer group on a like-for-like basis, which delivered a return of 1.1%.

Property portfolio

As at 30 June 2016, the underlying portfolio comprised 50 properties valued at GBP459.4 million. Adjusting for transactions since the quarter end, the portfolio produced a rent of GBP27.6 million per annum reflecting a net initial yield of 5.6%. The portfolio rental value is GBP34.2 million per annum, resulting in a reversionary yield of 7.4%.

On the same basis the portfolio void rate as a percentage of rental value was 9.5%, falling to 8.5% including lettings that have exchanged but not yet completed. The average unexpired lease term, assuming all tenants vacate at the earliest opportunity, is seven years, increasing to approximately 7.5 years including lettings that have exchanged but not yet completed. The tables below summarise the portfolio information as at 30 June 2016:

 
Sector weightings        Weighting % 
------------------  --------------------- 
                    SREIT  MSCI (formerly 
                             IPD) Index* 
------------------  -----  -------------- 
      Retail        32.4        37.8 
------------------  -----  -------------- 
     Offices        39.6        32.5 
------------------  -----  -------------- 
    Industrial      22.6        20.3 
------------------  -----  -------------- 
      Other          5.4        9.4 
------------------  -----  -------------- 
 

* Latest available MSCI (formerly IPD) Index data as at 31 March 2016

 
Regional weightings         Weighting % 
---------------------  --------------------- 
                       SREIT  MSCI (formerly 
                                IPD) Index* 
---------------------  -----  -------------- 
Central London          7.1        15.9 
---------------------  -----  -------------- 
South East excluding 
 Central London        29.1        37.9 
---------------------  -----  -------------- 
Rest of South           8.7        13.5 
---------------------  -----  -------------- 
Midlands and Wales     26.8        14.2 
---------------------  -----  -------------- 
North and Scotland     28.3        18.5 
---------------------  -----  -------------- 
 

* Latest available MSCI (formerly IPD) Index data as at 31 March 2016

Asset management

During the quarter and since the quarter end 20 new leases and lease renewals have exchanged or completed. Three recent letting transactions are set out below:

Sheffield, Riverside East

On 22 June a seven year lease extension with solicitors Irwin Mitchell was completed at the prevailing rent of GBP555,000 per annum. As a result the quarterly independent valuation increased 77% to GBP5.8 million as at 30 June 2016.

Warwick, Seton House

Since the quarter end the remaining vacant office space has been let to Tulip Limited, the existing tenant. Tulip has taken a ten year lease of the entire property at GBP339,355 per annum, 16% above with the independent valuation rental value of GBP293,900 per annum.

Leeds, Millshaw Industrial Estate

Since the quarter end, contracts have been exchanged to let a 48,916 sq ft warehouse unit to Oxygen Freejumping on a 15 years lease at GBP293,000 per annum, 17% above the independent valuation rental value of GBP250,000.

Debt

The Company has two loan facilities from Canada Life and Royal Bank of Scotland ('RBS') totalling GBP150.1 million with an average duration of approximately 10 years and an average interest cost of 4.4%. The loans are fully compliant with covenants.

In addition to the properties secured against the Canada Life and RBS loan facilities, the Company has unsecured properties with a value of GBP77.6 million and cash as at 30 June 2016 of approximately GBP20.5 million. This results in a loan to value ratio, net of cash, of approximately 28%.

-ENDS-

For further information:

 
 Schroder Real Estate Investment 
  Management Limited: 
  Duncan Owen / Nick Montgomery     020 7658 6000 
---------------------------------  -------------- 
 Northern Trust: 
  David Sauvarin                    01481 745529 
---------------------------------  -------------- 
 FTI Consulting: 
  Dido Laurimore / Ellie Sweeney    020 3727 1000 
---------------------------------  -------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

NAVDGGDRRUDBGLG

(END) Dow Jones Newswires

July 21, 2016 02:00 ET (06:00 GMT)