Schroder European Real E... Share Discussion Threads

[mirandaj] 07/2/2023 16:01

Bearing in mind the economic outlook, what are the chances of another special dividend this year following the Paris BB development special dividend? They also hope that the dividend cover will be back to 100% by end 2023.

From the Chairman’s Statement for year ending 30th September 2023:

“Financial results

The NAV total return was 7.3% over the year based on an IFRS profit of €13.9 million. Returns were driven primarily by an increase in the valuation of our industrial and DIY investments, together with the German office portfolio. In addition, €1.9 million of the Paris BB development post-tax profit was released following the refurbishment handover during June 2022. There remains approximately €1.2 million of profit from Paris BB; this will flow through the NAV over the remainder of 2022 and 2023. Underlying EPRA earnings were €6.1 million, compared to €6.6 million in 2021. Earnings will further increase with the redeployment of the Paris BB sale proceeds, and the portfolio's indexation. The Company's NAV as at 30 September 2022 decreased by €11.3 million, to €188.2 million, or 140.8 euro cents per share, driven by the payment of €12.8 million in special dividends.”

From the end of Jeff O’Dwyer’s comments from the same document:

“Outlook

The economic outlook remains challenging with the eurozone facing a number of headwinds. The energy crisis, inflationary pressures, increasing interest costs and geopolitical risks are creating a drag on sentiment and recessionary concerns. We are alert to these risks and the combination of a clear strategy, a strong balance sheet, a diversified portfolio in Western Europe with a bias towards the strongest urban conurbations of Berlin, Frankfurt, Hamburg, Stuttgart and Paris provides confidence in navigating such risks.

Although values across the portfolio have been resilient to date, expectations are for values to come under pressure as yields adjust for risk. However, we do not expect Continental European property to face the same downward pressure as the UK.
Looking forward the expectation is that the favourable rental indexation clauses, rental affordability and management's active and local multi-sector expertise will help mitigate value declines and assist in tenant retention. Total returns over the medium term are going to be led by income and the portfolio's high occupancy, attractive net initial yield (circa 6%) and unexpired lease term (circa 5 years) will underpin the maximising of shareholder returns.

Management will continue to be patient in its approach to deployment but expects to return dividend cover back to 100% by the end of 2023. The Company currently has circa €50 million of firepower to deploy (including €25 million of additional debt) and the Manager expects to see an improving pipeline of opportunities over the next six to 12 months that will enable it to further diversify and strengthen its exposure to growth cities, regions and sectors. We will continue to remain patient and any deployment will be assessed in light of economic volatility, balance sheet protection and ensuring the Company remains in a robust position.”

[skyship] 07/2/2023 13:32

Moving ahead - now 84p-85p. At 85p the yield is still 7.65% and the discount to December portfolio valuation = 29%.

So not too late to get aboard. A chartist's dream of a large Reverse Head & Shoulders nearly completed. First target to 90p; then on to 100p at which level the yield would still be 6.5% with a 16.5% NAV discount.


free stock charts from uk.advfn.com

[uapatel] 03/2/2023 16:52

Apologies - should pay more attention.

Thanks for spotting that Skyship, especially as I’m not in SREI.

[skyship] 03/2/2023 16:32

uapatel - wrong - that is a presentation by SREI following their NAV Update.

[uapatel] 03/2/2023 16:25

SERE, doing an investormeetcompany.com on the 8th for those interested.
Just a small starter position for me here. Will try and add more when cash available.

[skyship] 31/1/2023 13:21

13:21 - Actual price here 81.4p - 82.9p

[skyship] 30/1/2023 08:41

I believe that being quite a small REIT, buybacks (see below) may not be on the agenda; more likely to use their cash with expanding the portfolio if suitable opportunities arise. Surely a few deals will present themselves as they have a very wide remit being a generalist player across the three countries of Germany, France and The Netherlands.
======================

Extract from last month's Prelims:

Share price

The shares continue to trade at a discount, which as at 28 November 2022 reflected a circa 35% discount to the 30 September 2022 NAV. The Board and the Investment Manager remain frustrated in the share price performance, particularly given the differentiated strategy, strength of the underlying real estate, attractive dividend, local management expertise, strong balance sheet and cash reserves. Annualising the quarterly dividend of 1.85 euro cps (to 7.4 euro cents per annum) provides an attractive circa 8.0% dividend yield based on current share price. The Board will continue to review the discount, and at its discretion to execute a share buyback programme, as well as new acquisitions consistent with the current strategy.

[skyship] 30/1/2023 08:26

Added at 80.6p this morning. Surprised to get stock at that price, considering the trades on Friday.

[skyship] 29/1/2023 13:42

Same Schroders stable as SREI; but O'Dwyer at SERE failed to lock in long-term debt at ultra-low rates, as done by Nick Montgomery at SREI. The European inflation linked rent rises will accommodate the increase in debt charges as they arise; but surely a major opportunity missed.

Nevertheless, these are extremely attractive at anything below 90p IMO (currently c81.8p)


Lender ………;……̷0;….. Property…̷0;……R30;…........Maturity date…………SUM̷0;…….Interest ………;..

Banque Populaire…R30;. Paris (Saint-Cloud…….15/12/2024230;….EUR17.00m 3M Eur +1.34%
DE. Pfandbriefbank …..Berlin/Frankfurt……..30/06/2026…..EUR16.50m 1.31%
DE. Pfandbriefbank…;..Stuttgart/Hamburg….30/06/2023….EUR14.00m̷0;….0.85%
Münchener Hypo.bank…Seville (50%)………..22/05/2024… EUR11.68m…R30;1.76%
HSBC Bank Plc……230;………NL Industrials………27/09/2023…..EUR9.25m…….3M Eur +2.15%
Landesbank SAAR……….Rennes…………………;..28/03/2024…..EUR8.60m…230;3M Eur +1.40%
Landesbank SAAR……….Rumilly…………;……̷0;.30/04/2023…..EUR3.70m…230;.3M Eur +1.30%
---------------------- -------------------- ----------- ----------- --- ---------
Total ………;……̷0;……R30;……230;……………………………;……̷0;……R30;…..E.80.73m

[skyship] 23/1/2023 14:37

riverman - I would surmise from the presentations that the restored 1.85p/Qtr is pretty secure; most especially as last year also saw a 9.5c Special Dividend on top!

Also we're not seeing a dramatic portfolio valuation write-down. That might have startled the horses somewhat; but no, all rather subdued, steady as she goes.

I own both SERE & EBOX - happy with both.

[riverman77] 22/1/2023 15:33

I was surprised the dividend yield was so high on this one, although reading through the last report it is some way from being fully covered and not clear it will be even after they deploy their dry powder. I think I prefer EBOX right now, which is on a bigger discount and whose dividend was fully covered in the most recent quarter (having previously been uncovered).

[skyship] 21/1/2023 11:46

Parking this post-results Presentation link here as couldn't find it on earlier posts:

[skyship] 21/1/2023 11:43

CWA - I too use iDealing for trading a/c and YouInvest for my SIPP.

Rarely use DMA - though have done so frequently for trading SREI.

I find them excellent; as well as their lightning fast platform.

[cwa1] 21/1/2023 11:22

I use iDealing for DMA mainly, there's a lot to be said for them and I still know the guys on the phones there. II is my main day to day broker. Pension at You invest. Small legacy account at iWeb for £5 dealing in bigger stocks that are readily tradeable.

[skyship] 21/1/2023 09:12

CWA - sure I've asked you before, but can you share which online broker you use?

[cwa1] 21/1/2023 08:48

Happy enough with it. Was lucky to have the online broker account tee'd up on SERE after reading about it on here! Saw the offer appear on the book. Pressed the button, got the price above, which disappeared immediately after I accepted it.

Of course, I'll be thinking why on earth did I pay THAT much in a week or two's time 🙂

[skyship] 21/1/2023 07:22

79.8p! Great trade...

[cwa1] 20/1/2023 14:08

Gave in and bagged a few at 79.8p. Fingers crossed...

[skyship] 20/1/2023 11:59

....& I've added a few more.

At 80.4p the discount is 32.9% to the adjusted NAV of 135.4c (119.8p), whilst the secure yield = 7.94%.

Of course a further cut to the NAV is likely in Q1'23....but perhaps not by much.

Surely makes this a great buy with that near 8% yield.

[skinny] 20/1/2023 11:47

I've also bought a few here.

[lord gnome] 20/1/2023 11:30

In here today with the proceeds of my AWEU sale. Happy to join you. It had been on my watch list for some time. AEWU was fully valued in my view, whereas this has the advantage of a deep discount to nav. Income yield almost identical. Paid 80.436 exc tax, so a good entry point.

[t-trader] 18/1/2023 15:15

Also doubled my holding here today at 82.77p

[skyship] 18/1/2023 14:27

Doubled my position here today; paid 82.75p - though disappointed that I also had to pay darned Stamp Duty - bit strange that!

At that price of 82.75p the discount = 30.9% and the yield = 7.71%.

I've taken the portfolio valuation fall of 3.3% into account by reducing the NAV by 3.8% to 119.8p.

[skyship] 17/1/2023 08:51

Today's RNS reveals a very acceptable Q4'22 performance. A mere 3.3% pv decline which reduces the NAV from 140.8c to 135.4c - that equals 119.8p at forex rate of 1:13.

So at 83.5p the discount = 30.3% and the yield still a very welcome 7.64%.

[speedsgh] 22/12/2022 14:15

Early Refinancing of Largest 2023 Debt Expiry -

Schroder European Real Estate Investment Trust plc, the Company investing in European growth cities and regions, is pleased to announce that it has completed the early refinancing of the Company's largest debt expiry in 2023, a €14 million loan with VR Bank Westerwald, secured against its Hamburg and Stuttgart office investments.

Competitive financing terms were obtained from five different lenders with VR Bank Westerwald being the most competitive. The refinancing is for 4.75 years and based on a margin of 0.85%, in line with the existing margin. Due to the competitive terms, the Company has elected to extend the facility by a further €4 million. The facility will be drawn on 1 April 2023 with expiry 30 December 2027. The total interest cost has been fixed at the time of signing at 3.80% being the 5 year euro swap rate (2.95%) plus 0.85% margin.

With this new facility, the Company's third party debt totals €84.7 million across seven loan facilities. This represents a loan to value ('LTV') of c. 30%1 against the Company's gross asset value (c. 20%1 net of cash) and well below the LTV prospectus limit of 35% net of cash. All facilities are on a non-recourse lending basis.

Following draw down, the weighted average loan term increases by one year from 1.6 years as of December 2022 to 2.6 years. The Company's blended all-in interest rate increases around 60 basis points from 1.9% to 2.5%. The Company is in various discussions with lenders regarding its other two debt expiries which occur within the next 12 months and is confident in its ability to refinance these loans.

Jeff O'Dwyer, Fund Manager for Schroder Real Estate Investment Management Limited, commented:

"The willingness of VR Bank Westerwald and four other lenders to offer very competitive financing terms for a regear of the current loan facility, even extending the existing loan amount, is indicative of our strong relationship with existing financing partners and good reputation in the market with lenders. It is a sign of confidence that they have in our investment management team with its local multi-sector expertise and the portfolio's exposure to indexed linked, high quality real estate in growth locations. The Company has a robust balance sheet which is well positioned to offer flexibility to both strengthen the strategy and react to changing market conditions as opportunities arise."