Schroder Eur Real Est Inv Trust PLC Announcement of NAV and dividend (9420L)

TIDMSERE

RNS Number : 9420L

Schroder Eur Real Est Inv Trust PLC

25 July 2017

25 July 2017

ANNOUNCEMENT OF NAV AND DIVIDEND FOR PERIOD TO 30 June 2017

Schroder European Real Estate Investment Trust plc ("SERE" or the "Company"), the company investing in European growth cities, today announces its unaudited net asset value ("NAV") for 30 June 2017, together with its dividend relating to the three months from 1 April to 30 June 2017.

Net Asset Value

The Company generated an unaudited NAV as at 30 June 2017 of EUR176.9 million or 132.3 cents per share (116.1 pence per share based on 30 June 2017 exchange rates). This represents an NAV total return of 1.5% over the quarter.

The table below provides a breakdown of the movement in NAV during the reporting period:

 
                                   EURm(1)    Cps(2)   %(3) 
===============================  =========  =========  ===== 
  NAV as at 31 March 2017           175.9      131.5 
===============================  =========  =========  ===== 
  Unrealised gain in valuation 
   of the property portfolio         1.1        0.8     0.6 
===============================  =========  =========  ===== 
  Transaction costs of 
   investments made during 
   quarter                          (0.7)      (0.5)   (0.4) 
===============================  =========  =========  ===== 
  Net operating income               2.3        1.8     1.4 
===============================  =========  =========  ===== 
  Other non-cash items              (0.1)      (0.1)   (0.1) 
===============================  =========  =========  ===== 
  Approved dividend payable         (1.6)      (1.2)   (0.9) 
===============================  =========  =========  ===== 
  NAV as at 30 June 2017            176.9     132.3**   0.6 
===============================  =========  =========  ===== 
 

(1) Management reviews the performance of the Company principally on a proportionally consolidated basis. As a result, figures quoted in this table include the Company's share of joint ventures on a line-by-line basis and excludes non-controlling interests in the Company's subsidiaries.

   (2)    Based on 133,734,686 shares 
   (3)    % change based on starting NAV 31 March 2017 

Interim Dividend

The Company announces a third interim dividend in respect of the year ending 30 September 2017 of 1.5 euro cents per share, its fourth consecutive increase since the Company's IPO. This dividend represents an annualised rate of 4.4% based on the euro equivalent of the issue price as at admission. The dividend is fully covered from income receivable from the current portfolio, reflecting a pay-out ratio of 87% based on net operating income of EUR2.3 million for the quarter ending 30 June 2017.

Once fully invested, including the debt being drawn, the Company's objective is to pay an annualised euro dividend yield of 5.5% based on the euro equivalent of the issue price as at admission.

The interim dividend payment will be made on Friday, 1 September 2017 to shareholders on the register on the record date of Friday, 18 August 2017. In South Africa, the last day to trade will be Tuesday, 15 August 2017 and the ex-dividend date will be Wednesday, 16 August 2017. In the UK, the last day to trade will be Wednesday, 16 August 2017 and the ex-dividend date will be Thursday, 17 August 2017.

The interim dividend will be paid in GBP to shareholders on the UK register and Rand to shareholders on the South African register. The exchange rate for determining the interim dividend paid in Rand will be confirmed by way of an announcement on Monday, 7 August 2017. UK shareholders are able to make an election to receive dividends in Euro rather than GBP should that be preferred. The form for applying for such election can be obtained from the Company's UK registrars (Equiniti Limited) and any such election must be received by the Company no later than Friday, 18 August 2017. The exchange rate for determining the interim dividend paid in GBP will be confirmed following the election cut off date by way of an announcement on Monday, 21 August 2017.

Shares cannot be moved between the South African register and the UK register between Monday, 7 August 2017 and Friday, 18 August 2017, both days inclusive. Shares may not be dematerialised or rematerialised in South Africa between Wednesday, 16 August 2017 and Friday, 18 August 2017, both days inclusive.

The Company has a total of 133,734,686 shares in issue on the date of this announcement. The dividend will be distributed by the Company (UK tax registration number 21696 04839) and is regarded as a foreign dividend for shareholders on the South African register. In respect of South African shareholders, dividend tax will be withheld from the amount of the dividend noted above at the rate of 20% unless the shareholder qualifies for the exemption. Further dividend tax information for South African shareholders will be included in the exchange rate announcement to be made on Monday, 7 August 2017.

Property Portfolio

As at 30 June 2017, the Company owned nine properties, independently valued at EUR210.1 million, up from EUR208.9 million (independent valuation as at 31 March 2017 including the Seville acquisition), representing an increase of 0.6%.

The portfolio generated net property income of EUR3.2 million over the quarter, representing an ungeared quarterly property income return of 1.6%.

The current valuation reflects an increase of 6.2% compared to the combined purchase price of the nine assets in the portfolio. All leases are indexed and individual asset business plans are being implemented to improve future earnings and capital growth.

During the quarter, the Company acquired a 50% interest in the Metromar Shopping Centre, Seville for a purchase price of EUR26.2 million (50% interest), representing a net initial yield of 6.2%. The 23,500 sqm shopping centre is let to 50 tenants, with a significant convenience retail offering, anchored by a 2,300 sqm Mercadona grocery supermarket. Work is already underway to further enhance dwell time at the centre.

The portfolio is 99% occupied and generates EUR14.0 million p.a. of contracted rental income, representing a real estate net initial yield of 5.9% on valuation and a geared property yield of over 8%. The average unexpired lease term is 4.5 years to first break and 6.9 years to expiry.

The portfolio's country and sector allocations are set out in the table below:

 
Country allocation    Portfolio   Sector allocation   Portfolio 
 (% contracted        at 30 June   (% contracted      at 30 June 
 rent)                   2017      rent)                 2017 
===================  ===========  =================  =========== 
 
France                   55%      Office                 53% 
===================  ===========  =================  =========== 
Germany                  30%      Retail                 47% 
===================  ===========  =================  =========== 
Spain                    15% 
===================  ===========  =================  =========== 
Total                   100%      Total                 100% 
===================  ===========  =================  =========== 
 

Investment Progress

The Company has invested over EUR211 million since IPO 18 months ago, constructing a property portfolio with a diversified income profile across key growth cities in Continental Europe. A total of EUR60.4 million of debt has been drawn, equating to an LTV of 26% at an average weighted interest rate of 1.31% p.a. and an average weighted duration of approximately seven years.

The Company has remaining investment capacity of approximately EUR30 million and an attractive pipeline of suitable opportunities in target growth cities and regions. The Company is currently in exclusivity to acquire two logistic investments, totalling approximately EUR20 million, that would provide further sector and tenant diversification and at income yields that are accretive to the Company's existing portfolio.

Tony Smedley, Head of Continental European Investment at Schroder REIM, said:

"It is pleasing to report another quarter of strong progress, following on from the Half Year results in May. The Company's NAV and dividend growth is a reflection of the team's ability to identify, acquire and manage assets that deliver on the Company's stated objectives.

"Over 80% of the portfolio is located in Europe's fastest growing locations by GDP growth. We are well positioned to focus on generating long term shareholder value, as we look at the available options to grow the Company over the medium-to-long term."

Enquiries:

Duncan Owen/Tony Smedley

   Schroder Real Estate Investment Management Limited                  Tel: [phone] 

Ria Vavakis

   Schroder Investment Management Limited                                   Tel: [phone] 
   Dido Laurimore/Richard Gotla                                                     Tel: [phone] 

FTI Consulting

This information is provided by RNS

The company news service from the London Stock Exchange

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July 25, 2017 02:00 ET (06:00 GMT)