Schroder Eur Real Est Inv Trust PLC Announcement of NAV and Dividend (6584F)

TIDMSERE

RNS Number : 6584F

Schroder Eur Real Est Inv Trust PLC

22 February 2018

22 February 2018

aNNOUNCEMENT OF NAV AND DIVID

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 31 December 2017, together with its first interim dividend for the year ending 30 September 2018.

Net Asset Value (NAV)

The Company generated an unaudited NAV as at 31 December 2017 of EUR180.1 million or 134.7 euro cents per share (119.6 pence per share based on 31 December 2017 exchange rates). This represents an uplift of 1.1% over the quarter and an NAV total return of 2.2%.

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

 
                                   EURm(1)    Cps(2)  %(3) 
===============================  =========  ========  ===== 
  NAV as at 1 October 2017          178.3     133.3 
===============================  =========  ========  ===== 
  Unrealised gain in valuation 
   of the property portfolio         1.9       1.4     1.1 
===============================  =========  ========  ===== 
  EPRA earnings                      2.3       1.8     1.3 
===============================  =========  ========  ===== 
  Non-cash items                    (0.4)     (0.3)   (0.2) 
===============================  =========  ========  ===== 
  Approved dividend payable 
   (4)                              (2.0)     (1.5)   (1.1) 
===============================  =========  ========  ===== 
  NAV as at 31 December 
   2017                             180.1     134.7    1.1 
===============================  =========  ========  ===== 
 

(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 the starting NAV at 1 October 2017

(4) This dividend is in respect of the fourth interim dividend for the year ended 30 September 2017 that was fully approved by the Board and thereafter announced to the market on 6 December 2017, had an ex-dividend date of 4 January 2018, a record date of 5 January 2018, and a payment date of 19 January 2018. The Company has followed IAS 10 and IAS 32 in its presentation and recognition of the dividend.

As announced on 1 February 2018, French retailer Casino Group has exercised a buy-back option on SERE's 70% share in two retail assets in France. The sale price reflects a 10% premium to 31 December 2017 valuation and will take place on 31 July 2018. The impact is not reflected in the NAV per 31 December 2017 although valuing the two retail assets at the sale price would be accretive to NAV by approximately EUR4.1 million, reflecting 3.1 euro cents per share.

Interim Dividend

The Company announces an increase in its quarterly dividend to 1.85 euro cents per share, being the first interim dividend in respect of the year ending 30 September 2018. The dividend reflects a 23% increase against the previous quarters' dividend and an annualised rate of 5.5% based on the euro equivalent of the issue price as at admission of 137 euro cents per share, achieving the target dividend stated at IPO. At current FX rates, the dividend equates to 6.5% yield on GBP issue price of 100 pence per share.

The dividend is 92% covered from net income received during the quarter. Since the quarter end the Company has announced a number of changes to the portfolio including the acquisition of Apeldoorn for EUR20 million at a 10% income yield, which took the Company to full investment, as well as the surrender of the City BKK lease at Hamburg and the future sale of two retail properties in France. It is expected the net income of the Company will fully cover the dividends paid out by the Company during the financial year to September 2018.

The interim dividend payment will be made on Friday, 13 April 2018 to shareholders on the register on the record date of Friday, 23 March 2018. In South Africa, the last day to trade will be Monday, 19 March 2018 and the ex-dividend date will be Tuesday, 20 March 2018. In the UK, the last day to trade will be Wednesday, 21 March 2018 and the ex-dividend date will be Thursday, 22 March 2018.

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, 5 March 2018. 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, 23 March 2018. 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, 26 March 2018.

Shares cannot be moved between the South African register and the UK register between Monday, 5 March 2018 and Friday, 23 March 2018, both days inclusive. Shares may not be dematerialised or rematerialised in South Africa between Tuesday, 20 March 2018 and Friday, 23 March 2018, 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, 5 March 2018.

Property Portfolio

As at 31 December 2017, the Company owned nine properties, independently valued at EUR213.7 million (independent valuation as at 31 December 2017 reflecting the Company's ownership share in the properties), up from EUR211.7 million as at 30 September 2017, representing an increase of 0.9% net of capital expenditure.

The current valuation reflects an increase of 8.1% compared to the combined purchase price of the nine assets in the portfolio. The rent on all leases is indexed to inflation and individual asset business plans are being implemented to improve future earnings and capital growth potential.

The portfolio is 99% occupied and generates EUR14.4 million p.a. of contracted rental income, representing a real estate net initial yield of 5.6% on valuation and a geared property yield of over 8%. The average unexpired lease term is 4.4 years to first break and 6.6 years to expiry.

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

 
Country          Portfolio  Sector allocation  Portfolio 
 allocation        at 31     (% contracted       at 31 
 (% contracted    December   rent)              December 
 rent)              2017                          2017 
===============  =========  =================  ========= 
 
France              56%     Office                54% 
===============  =========  =================  ========= 
Germany             30%     Retail                46% 
===============  =========  =================  ========= 
Spain               14% 
===============  =========  =================  ========= 
Total              100%     Total                100% 
===============  =========  =================  ========= 
 

Since quarter end, the company has committed to three transactions:

- Purchase: As announced on 21 February 2018, the Company has acquired a three storey office building and data center in Apeldoorn, Netherlands, for an all-in cost of EUR22 million and generating a net income yield of approximately 10%.

- Lease surrender: As announced on 9 February 2018, the Company has agreed terms for City BKK to surrender its lease at the Hamburg office asset in Germany, in return for a cash payment to the Company of EUR3.9 million. This cash payment represents 4.7 years of annual rental income from City BKK. Negotiating a surrender with City BKK was a key initiative within the acquisition strategy. The agreement gives SERE the opportunity to re-position the property and re-lease the space into a strengthening office sub-market which will also diversify the property's income profile.

- Sale: As announced on 1 February 2018, the Casino Group has exercised a buy-back option for SERE's two retail assets in Biarritz and Rennes with a combined value of EUR40.7 million for SEREIT's 70% ownership. The strike/sale price is at 10% premium to the current valuation and will complete on 31 July 2018. The Company will continue to receive rental income from the properties until the sale completes.

Investment Progress

Including the Apeldoorn acquisition in the first quarter of 2018, the Company has invested over EUR233 million since IPO, constructing a property portfolio with a diversified income profile across key growth cities in Continental Europe. A total of EUR73.4 million of debt has been drawn, equating to an LTV of ca 30% at an average weighted interest rate of 1.31% p.a. and an average weighted duration of approximately six and half years.

As of today, the Company's capital is fully deployed. The sale of Rennes and Biarritz will provide the Company with investment capacity of approximately EUR45m-EUR50m (including further gearing). The Investment Manager is reviewing and in negotiations on a number of new investment opportunities that could be suitable for redeployment of this capital when it is received later in the year.

Jeff O'Dwyer, Fund Manager at Schroder REIM, said:

"We are pleased to have increased the dividend again and in doing so, achieving the target set at IPO. The Company is now fully invested and our property portfolio, located across Europe's growth cities, is already demonstrating good valuation performance. There are a number of opportunities to grow returns through asset management across the portfolio and we are encouraged by the speed at which we are being able to unlock these, driven by our extensive local market teams. Against a backdrop of positive economic sentiment across Europe we look forward to the rest of 2018 with confidence."

Enquiries:

Duncan Owen/Jeff O'Dwyer

   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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February 22, 2018 06:02 ET (11:02 GMT)