Schroder Real Estate Inv... Share Discussion Threads

[jonwig] 13/12/2012 19:11

topvest - yes, they're doing a great job - the balancing act will be to try to maintain the uncovered divi whilst rejigging the debt.
I'm more confident on that than I was a few weeks ago!

[topvest] 13/12/2012 18:00

Well I suppose this gets them to a LTV of 30% which is more conservative - be helpful if they said what their target was. I guess there will also be some swap breakage costs when the debt is repaid. They have done a good job here to deleverage in a non-dilutive way.

[elmfield] 11/12/2012 18:03

This is not a bad place to rest.

[elmfield] 10/12/2012 09:48

Looks o.k to me.

[eeza] 10/12/2012 09:32

RNS - Sale of Minerva House for £30m.

[jonwig] 20/11/2012 14:51

I was out (at the TCSC AGM, as it happens) so haven't been able to give this much thought.

I see they tell us that the dividend is 60% covered by net rental income (why not "only 60%..."?).
This is a bit of a worry - potentially a bigger one. They are selling properties which yield less than debt interest which will be beneficial to cover, and the resultant paying-down of debt is probably essential in view of upcoming renewal negotiations. However, it has the unfortunate effect of crystallising SWAPs losses.

I suspect there's pressure on them to maintain the dividend from, principally, income funds which hold the shares. As a direct private investor, I can see through their policy of paying me 3.52p pa, of which 1.4p is my own capital.

With a revival of the market and hardening of rents the dividend will become fully covered, of course. We need to hope this will start to happen before debt comes up for renewal.

[djderry] 20/11/2012 11:52

Steady as she goes.

[skinny] 20/11/2012 07:24

Financial Highlights

· Net Asset Value ('NAV') of £172.1m or 48.4 pence per share ('pps') (31 March 2012: £180.0m or 50.6pps) a decline of 4.3% primarily driven by a 1.5% decline in the capital value of the portfolio, comparing favourably to the IPD Benchmark capital value decline of 2.4% over the same period
· £22m of debt repaid during the period with an additional £17m repaid subsequent to the period end, resulting in a reduction of LTV ratio, net of all cash, as at 15 October 2012, of 36% (31 March 2012; 40.6%)
· Debt repayment generates interest cost saving of £2.2m per annum
· Pre-tax dividend cover over the period of approximately 60%
· Loss per share of 1.0p. Recurring earnings per share of 1.0p when the impact of interest swaps are removed
· Dividend declared and paid of 1.76pps (31 March 2012: 1.76pps)
· Total cash of £27.9m following debt repayment on 15 October and related swap break costs. £16.2m of the cash balance is outside the security pool charged to the Group's lenders

Operational Highlights

Good on-going progress in reducing risk, strengthening the balance sheet through debt reduction and driving income through active management of the portfolio. Operational highlights include:

· Disposal of Plantation Place, London EC3 for £11.7m, in line with March 2012 book value
· Disposal of a further five low yielding or non-income producing assets for £25m reflecting a 7.5% premium to book value as 31 March 2012 and an average net initial yield of 4.4%
· Continued progress with asset management activities including a 6.3% uplift secured from rent review negotiations with Ipsos Mori UK Ltd at Minerva House, London SE1, contributing to a 4% uplift in the value of the property over the period

[jonwig] 01/11/2012 07:44

red army - yes, absolutely, but I think SREI are selling assets which generate rental less than the apportioned loan interest.

As for borrowing to maintain an uncovered dividend, I can't look on that with approval!

[red army] 31/10/2012 19:20

jonwig

Reducing debt for reducing debts sake can have a detrimental effet ie selling the very assetts that provide the income for dividend etc.

[jonwig] 31/10/2012 18:00

soi - I suppose we should be discussing this on the UKCM board, but that's a bit quiet, so ...

"I don`t think the dividend is currently covered" confirms what I suggested earlier.
In fact, their gearing has increased substantially over the past 12 months:

06/11 ... £103m
12/11 ... £138m
06/12 ... £198m

... which they say is to finance the purchase of assets at attractive valuations (I'm not quoting verbatim).
In fact, of course, it can finance an uncovered dividend!
They have a sufficiently large distributable reserve, so nobody will notice for a while, I suppose.

While we're at it, SREI has a problem in the dividend cover department, too!
But I'm more confident in that I've a lot of regard for Schroder's property management skills, and they are more in the business of reducing debt than increasing it!
So I'll stick a while with SREI even though I'm not altogether confident the divi will be maintained.

[soi] 31/10/2012 17:46

I hold a few UKCM, bought twice this year.

I liked the yield and low gearing.

The gradual decline in share price not so good though.


Phoenix placed/sold 47 million shares at 69 p on 21/3/12, still obviously leaves them with a lot.
Maybe they will sell more, don`t know, they did get the last lot away OK.

I thought the management charges seemed somewhat high but maybe I have mis read.

On the last report I think it showed some properties had been revalued downwards.

I don`t think the dividend is currently covered.

My holding not particularly big so all the above just based on a quick look before buys, probably worthy of more research.

[colonel a] 31/10/2012 14:46

I know they are not held in high esteem but I always assumed they could read.

[alanji] 31/10/2012 14:42

Now you've gone and told the mm's.

[colonel a] 31/10/2012 14:31

How come no xd drop here today ?

[hugepants] 31/10/2012 11:33

yes I noticed the large Phoenix shareholding but also quite liked the low gearing!

[jonwig] 31/10/2012 11:12

H-P ... certainly looks interesting, I've not seen it before and had a quick look.

Discount to NAV is narrow, explained by low-ish gearing (but seems to be increasing).

Wide spread of property sectors and geography (UK). They call it 'prime', which is a bit optimistic maybe. However, voids are low.

The dividend costs them £63m pa and they talk about (latest IMS), annualised rental income rising to £72m, but a look at the last income statement gives comprehensive income of £44.8m. If we add back non-cash items (revaluation, swaps, that becomes £52m.
Question - how is the whole dividend covered?

I see they aren't a REIT but are registered in Guernsey. Not much material difference.

EDIT: I see Phoenix Life hold over 66% of the stock. Is this stable?

[hugepants] 31/10/2012 09:44

Out of interest has anyone any views on UK Commercial Property Trust (UKCM)? Yielding about 8%.

[eeza] 24/10/2012 08:07

RNS
NAV & Div

Investec added 2mill shares.

[skinny] 24/10/2012 08:04

Schroder Real Estate Investment Trust Limited announces an unaudited net asset value ('NAV') of £172.1 million or 48.3 pence per share ('pps') as at 30 September 2012. This reflects a decrease of 1.7% compared with the NAV as at 30 June 2012 of £175 million. A breakdown of the quarterly movement is set out below: (see link above)

The Company announces an interim dividend of 0.88 pps for the period 1 July 2012 to 30 September 2012. The dividend payment will be made on 16 November 2012 to shareholders on the register on 2 November 2012. The ex-dividend date will be 31 October 2012.

[billy5] 15/10/2012 12:26

It will go ex 31/10 or 1/11, with pay date mid Nov.

That's handy.

[billy5] 15/10/2012 12:09

langland
Thanks for the info but I don't think you have looked at it.

The last ex date is shown as 1/8/12. When is the next one?

Last year it went ex on 22/10/11. I think it will be 1/11/12.

Awaiting a call from SREI, will confirm once I hear.

Thanks again.

PS Yes payday would then be about mid Nov.

[langland] 15/10/2012 11:50

Everyone,

If you click on 'financials' at the top of this page between 'news' and 'toplists' and scroll down nearly till the bottom of the page you will see the dividend paying history. This would suggest next pay day is around mid Nov.

[colonel a] 15/10/2012 11:45

Billy5,
I think those dates are the quarter ends that the dividends relate to.
The XD date is a Wednesday and SREI seem to pay two weeks after the record day {the Friday after the XD date} but on at least one occasion they have paid three weeks after the record day.
So you should qualify for the next payment by about 3 {pss 4} weks.

[billy5] 15/10/2012 11:32

Thanks for the feedback.

I phoned the Company and the ex dates are quarterly, 31/3, 30/6, 30/9 and 31/12.

I bought yesterday thinking that I would qualify on 22/10/12, as per last year.

Should have checked properly, nevermind roll on 31/12.