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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Schroder Real Estate Investment Trust Limited | LSE:SREI | London | Ordinary Share | GB00B01HM147 | ORD SHS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.10 | 0.23% | 43.40 | 42.80 | 43.60 | 43.40 | 42.90 | 43.00 | 228,952 | 11:29:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Agents & Mgrs | 25.23M | -54.72M | -0.1114 | -3.90 | 213.13M |
Hot Features
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TIDMSREI
For release 8 November 2017
Schroder Real Estate Investment Trust Limited
("SREIT"/ the "Company" / "Group")
HALF YEAR RESULTS FOR THE PERIODED 30 SEPTEMBER 2017
FOCUS ON WINNING CITIES AND SUCCESSFUL ASSET MANAGEMENT INITIATIVES DRIVE 10%
INCREASE IN EARNINGS GROWTH
Schroder Real Estate Investment Trust, the actively managed UK focussed REIT,
today announces its unaudited half year results for the six months ended 30
September 2017.
Financial highlights for the six months ending 30 September 2017
- Increase in dividend cover to 117% (30 September 2016: 106%)
- Net Asset Value ('NAV') of GBP340.6 million or 65.7 pps, reflecting an
increase over the period of 2.5%
- NAV total return, including dividends paid of GBP6.4 million or 1.24 pps, of
4.5% (30 September 2016: 0.2%)
- 10.3% increase in underlying EPRA earnings to GBP7.5 million (30 September
2016: GBP6.8 million)
- Profit for the six months of GBP14.5 million (30 September 2016: GBP0.6
million)
- Loan to value ('LTV'), net of all cash, of 27% (31 March 2017: 29%)
Operational highlights
- Strong focus on Winning Cities and Regions with 92% of the portfolio by
value located in higher growth locations (source: Oxford economics)
- 42 separate leasing transactions completed with a reduction in void rate
to 5.5% (30 September 2016: 9%)
- Continued outperformance of underlying property portfolio with a total
return of 5.2% versus the MSCI Benchmark Index of 4.9%
- Property portfolio performance driven by higher annualised income return
of 6.2% compared with the Benchmark of 4.8%. Future performance underpinned by
a reversionary yield of 7.2% compared with the Benchmark of 5.9%
- Considering disciplined growth that is accretive to income
Commenting, Lorraine Baldry, Chairman of the Board, said:
"Real estate continues to offer an attractive yield premium compared with other
asset classes. This yield premium combined with relatively low debt and
development means that demand for good quality, well-located assets should
remain strong even as the climate for increasing interest rates evolves. Steps
taken across the portfolio to reduce risk, and increased exposure to higher
income producing assets should deliver outperformance and the potential for
dividend increases. We are positive about the outlook and continue to look at
opportunities for growth."
Duncan Owen, Global Head of Schroder Real Estate Investment Management Limited,
said:
"We have continued to deliver attractive returns during a period of ongoing
political and economic uncertainty. Whilst we expect demand from both
international and domestic investors to continue, we expect greater volatility
across financial markets. The ability to deliver on opportunities identified
within the portfolio is dependent on the availability of capital and being
invested across sectors and locations with robust tenant demand. Therefore, as
previously stated, a disciplined approach to growth will be considered where
equity issuance is accretive to net operating income and investment into growth
sectors.
Our focus continues to be on building a portfolio of good-quality assets that
will deliver sustainable income and that are supported by attractive investment
fundamentals in locations or sectors. Furthermore, a concerted focus on asset
management during the period, leveraging our capabilities, ensures that we have
a pipeline of ongoing activity that should positively impact income and total
returns."
-Ends-
For further information:
Schroder Real Estate Investment Management 020 7658 6000
Duncan Owen / Nick Montgomery
Northern Trust 01481 745212
James Machon / Fraser Hiddleston
FTI Consulting 020 3727 1000
Dido Laurimore / Ellie Sweeney / Richard
Gotla
A presentation for analysts and investors will be held at 10.30am today at the
offices of Schroders plc, 31 Gresham Street, London EC2V 7QA. If you would
like to attend, please contact Jenni Nkomo at FTI on +44 (0)20 3727 1015 or
jenni.nkomo@fticonsulting.com
Alternatively, the dial-in details are as follows: +44 (0)330
336 9411
Participants, Local - London, United Kingdom:
5369322
Schroder Real Estate Investment Trust Limited
Interim Report and Consolidated Financial Statements
For the period 1 April 2017 to 30 September 2017
Contents
Company Summary 2
Performance Summary 3
Chairman's Statement 5
Investment Manager's Report 7
Responsibility Statement of the Directors in respect of the 12
Interim Report
Independent Auditor's Review Report 13
Condensed Consolidated Statement of Comprehensive Income 14
Condensed Consolidated Statement of Financial Position 15
Condensed Consolidated Statement of Changes in Equity 16
Condensed Consolidated Statement of Cash Flows 17
Notes to the Interim Report 18
Corporate Information 27
Schroder Real Estate Investment Trust Limited aims to provide shareholders with
an attractive level of income together with the potential for income and
capital growth through investing in UK commercial real estate.
Company Summary
Schroder Real Estate Investment Trust Limited (the 'Company' and together with
its subsidiaries the 'Group') is a real estate investment company with a
premium listing on the Official List of the UK Listing Authority and whose
shares are traded on the Main Market of the London Stock Exchange (ticker:
SREI).
On 1 May 2015 the Company converted to a real estate investment trust ('REIT')
in order to benefit from the various tax advantages offered by the UK REIT
regime as well as the potential for improved liquidity as a result of being
able to access a wider shareholder base. The Company continues to be declared
as an authorised closed-ended investment scheme by the Guernsey Financial
Services Commission under section 8 of the Protection of Investors (Bailiwick
of Guernsey) Law, 1987, as amended and the Authorised Closed-ended Collective
Investment Schemes Rules 2008.
Objective
The Company aims to provide shareholders with an attractive level of income and
the potential for income and capital growth as a result of its investments in,
and active management of, a diversified portfolio of UK commercial real
estate. The current annualised level of dividend is 2.48 pence per share
('pps') and it is intended that successful execution of the investment strategy
will enable a progressive dividend policy to be adopted over time.
The portfolio is principally invested in the three main UK commercial real
estate sectors of office, industrial and retail, and may also invest in other
sectors including, but not limited to, residential, leisure, healthcare and
student accommodation. Over the real estate market cycle the portfolio aims to
generate an above average income return with a diverse spread of lease
expiries.
Relatively low level gearing is used to enhance income and total returns for
shareholders with the level dependent on the property cycle and the outlook for
future returns.
Investment strategy
The current investment strategy is to grow income and enhance shareholder
returns through a disciplined approach to acquisitions, pro-active asset
management and selling smaller, lower yielding properties on completion of
asset business plans. The issuance of new shares will also be considered if it
is consistent with the strategy.
Our objective is to own a portfolio of larger properties in Winning Cities and
Regions with high growth diversified local economies, sustainable occupational
demand and favourable supply and demand characteristics. These properties
should offer good long-term fundamentals in terms of location and specification
and be let at affordable rents with the potential for income and capital growth
from good stock selection and asset management.
Performance Summary
Financial summary
30 September 30 September 31 March 2017
2017 2016
NAV1 GBP340.6m GBP316.8m GBP332.6m
NAV per Ordinary Share1 (pence) 65.7 61.1 64.1
EPRA NAV GBP340.6m GBP316.8m GBP332.6m
1 Net Asset Value is calculated using International Financial Reporting
Standards.
Capital values
Six months Six months to Year
to 30 30 September to 31 March
September 2016 2017
2017
NAV total return 4.5% 0.2% 7.2%
Profit for the period GBP14.5m GBP0.6m GBP22.8m
EPRA earnings GBP7.5m GBP6.8m GBP13.8m
Share price and index
30 September 30 September 31 March 2017
2017 2016
Share price (pence) 61.5 57.3 61.8
Share price discount to NAV (6.4%) (6.3%) (3.7%)
FTSE All Share Index 4,049.89 3,755.34 3,990.90
FTSE EPRA/NAREIT UK Real Estate Index 1,734.15 1,719.32 1,724.59
Earnings and dividends
Six months Six months to Year
to 30 30 September to 31 March
September 2016 2017
2017
Earnings per share (pence) 2.8 0.1 4.4
EPRA earnings per share (pence) 1.4 1.3 2.7
Dividends paid per share (pence) 1.24 1.24 2.48
Annualised dividend yield on 30 4.0% 4.3% 4.0%
September / 31 March share price
Performance Summary (continued)
Bank borrowings
30 September 30 September 31 March 2017
2017 2016
On-balance sheet borrowings 1 GBP150.1m GBP150.1m GBP150.1m
Loan to value ratio, net of all cash 2 27.2% 30.0% 28.9%
1 On-balance sheet borrowings reflects the loan facility with Canada Life and
RBS, without deduction of finance costs
2 Cash excludes rent deposits and floats held with managing agents
Ongoing charges
Six months Six months to Year
to 30 September to 31 March
30 2016 2017
September
2017
Ongoing charges (including fund only 0.6% 0.7% 1.3%
expenses1)
Ongoing charges (including fund and 1.1% 1.3% 2.5%
property expenses2)
1 Fund only expenses excludes all property operating expenses, valuers' and
professional fees in relation to properties.
2 Ongoing charges calculated in accordance with AIC recommended methodology, as
a percentage of average NAV during the year. The ongoing charges exclude all
exceptional costs incurred during the period.
Chairman's Statement
Overview
The interim period saw continued net asset value and income growth.
Furthermore, dividend cover increased over the period to 117% which compares to
107% in the financial year to March 2017. This was driven by a high level of
asset management activity which has contributed to sustained outperformance
compared with the MSCI (formerly IPD) peer group Benchmark.
Investor and occupier demand for the UK commercial real estate market has
remained relatively stable since the EU Referendum result in June 2016. There
are, however, cyclical risks and other factors which will lead to a widening
divergence in performance between different types of real estate. This is best
illustrated by the structural changes arising from rapid growth of on-line
retail which is driving strong rental growth in the industrial and distribution
sectors, whilst reducing the overall demand for retail property.
Whilst structural changes are expected to have the biggest impact on the long
term demand for real estate, shorter term political and economic uncertainty
may weaken sentiment. Steps taken to reduce risk and increase exposure to
growth sectors such as dominant regional office markets and industrial assets,
mean that the company is well positioned to mitigate the risks of a more
uncertain environment.
Strategy
The Company has a clear and disciplined investment strategy, focused on growing
net income, reducing risk and increasing exposure in Winning Cities and Regions
that are expected to generate higher levels of economic growth. The strategy
has also focused on owning a diversified portfolio of assets which offer good
fundamentals in terms of location and specification. This creates
opportunities to add value through asset management and, over the longer term,
should mean that the portfolio is capable of adapting to future technological
and occupier changes.
In pursuit of this strategy, capital has been invested in initiatives such as
the conversion of an office to a hotel in Leeds and refurbishing City Tower in
Manchester. The pipeline of future asset management initiatives has also
increased through activity such as securing higher value planning consents at
the Milton Keynes and Leeds industrial estates. Conversely, a disciplined
approach to selling assets on completion of business plans has continued. Most
recently and since the period end, an office in Sheffield was sold at a 9.5%
premium to the previous year end valuation.
Across the portfolio there are contracted income and value enhancing
initiatives requiring capital expenditure of GBP3.2 million, with negotiations
ongoing for a further GBP3.3 million. Whilst the company can comfortably fund
this activity from cash resources, disposals may be required to fund the future
pipeline. Consideration is being given to how the future pipeline of activity
can be accelerated and solutions could include a combination of equity issuance
or modest borrowings.
Debt
As at 30 September 2017, the Company had a loan to value, net of cash, of 27%.
The Company's two loan facilities total GBP150.1 million, with an average
duration of nine years and an average interest cost of 4.4%. The loans are
also fully hedged against any movement in interest rates.
Chairman's Statement (continued)
Outlook
Real estate continues to offer an attractive yield premium compared with other
asset classes. This yield premium combined with relatively low debt and
development means that demand for good quality, well-located assets should
remain strong even as the climate for increasing interest rates evolves. Steps
taken across the portfolio to reduce risk, and increased exposure to higher
income producing assets should deliver outperformance and the potential for
dividend increases. We are positive about the outlook and continue to look at
opportunities for growth.
Lorraine Baldry
Chairman
Schroder Real Estate Investment Trust Limited
7 November 2017
Investment Manager's Report
The Company's Net Asset Value ('NAV') as at 30 September 2017 was GBP340.6
million or 65.7 pence per share ('pps') compared with GBP332.6 million or 64.1
pps as at 31 March 2017. This reflected an increase of 1.6 pps or 2.5%, with
the underlying movement in NAV set out in the table below:
Pence per share
('pps')
NAV as at 31 March 2017 64.1
Unrealised change in valuation of direct investment 2.3
property portfolio
Capital expenditure (1.0)
Unrealised gain on joint ventures 0.1
Net revenue 1.4
Dividends paid (1.2)
NAV as at 30 September 2017 65.7
Performance was driven by a 2% increase in the value of the underlying
portfolio which, adjusting for capital expenditure, contributed 1.3 pps to the
NAV. Net revenue over the period was 1.4 pps which, based on dividends paid of
1.2 pps, reflected a dividend cover of 117%. This resulted in a NAV total
return for the period of 4.5%.
Market overview
The MSCI (formerly IPD) Benchmark produced a total return for average
commercial real estate of 4.9% over the period to 30 September 2017, which
includes an income return of 2.4%. There is continued polarisation of returns
between the main real estate sectors.
Average industrial assets delivered a total return of 8.9% over the period,
driven by rental growth of 2.6% and positive market sentiment. The sector is
benefiting from strong demand driven by the rapid growth of e-commerce. Parcel
delivery companies and traditional retailers are re-engineering supply chains
to service on-line orders in increasingly shorter timeframes. Industrial
rental increases are also supported by low supply and rising construction
costs, particularly for smaller multi-let estates. There are limited levels of
new development. For example, the total amount of industrial space in London
has fallen by 14% over the last decade with the North West and West Midlands
regions also experiencing 10% and 8% declines respectively (Source: ONS).
The office sector produced a total return of 3.5% with muted rental value
growth of 0.9%, principally caused by a cyclical slowdown in Central London.
However, whilst vacancy has increased in the City of London and Docklands,
other London markets attracting professional services, technology and media
occupiers such as Kings Cross and Bloomsbury remain positive. Central London
take up is in part being distorted by the strong growth in serviced office
provision, with a risk of oversupply in certain sub-markets potentially leaving
some operators vulnerable. Demand for offices in major regional cities such as
Manchester, Leeds and Bristol has remained stable with limited development.
The retail sector produced a total return of 3.5% due to weak sentiment and
modest rental growth of 0.2%. The sector continues to face headwinds from a
slowdown in consumer spending exacerbated by higher inflation, the shift
towards on-line and the squeeze on retailer's margins due to sterling weakness
and the increase in the living wage.
Investment Manager's Report (continued)
Strategy
The strategy over the period has focused on the following key objectives:
· Increasing net income through transactions and asset management;
· Increasing exposure to assets and sectors with strong fundamentals;
· Increasing exposure to Winning Cities and Regions, being locations
experiencing higher levels of GDP; employment and population growth; and
· Managing portfolio risk in order to enhance the portfolios defensive
qualities.
Good progress has been made executing the strategy and activity over the period
has delivered the following progress against these objectives:
· Dividend cover has increased to 117% compared with 107% over the
financial year to March 2017;
· A portfolio level income return of 3.1% over the period compared with
2.4% for the MSCI Benchmark, with a higher reversionary yield of 7.2% compared
with 5.9% for the Benchmark;
· Portfolio void rate reduced further to 5.5% adjusting for activity post
the period end;
· Average unexpired lease term increased to 6.7 years, assuming all tenant
breaks are exercised at the earliest opportunity; and
· 92% of the portfolio being located in high growth cities and towns
(source: Oxford Economics)
Alongside the focus on driving income and total returns from the existing
portfolio, new opportunities and acquisitions are being actively explored to
accelerate net income growth. These are mainly focused in those sectors where
low supply and growing demand from occupiers provides rental growth and asset
management potential.
Property portfolio
As at 30 September 2017 the property portfolio comprised 45 properties valued
at GBP466 million. This includes the share of joint venture properties at City
Tower in Manchester and Store Street in Bloomsbury, London. Since the period
end an office in Sheffield was sold for GBP6.5 million at a GBP366,000 or 5.9%
premium, compared with the period end valuation and 9.5% premium to the
previous year end valuation. In addition, an acquisition of a small industrial
unit in Milton Keynes for GBP333,000 (included under Asset Management below) took
place.
Adjusting for these transactions, the portfolio produced a rent roll of GBP27.6
million per annum, reflecting a net initial income yield of 5.7%. The portfolio
also benefits from fixed contractual rental uplifts of GBP3.1 million per annum
by September 2019. The independent valuers estimate that the current rental
value of the portfolio is GBP33.3 million per annum, reflecting a reversionary
income yield of 7.2%, which compares favourably with the MSCI benchmark at
5.9%. The data below summarises the portfolio information as at 30 September
2017, adjusted for the post period end transactions:
Weighting (%)
Sector weightings by value SREIT MSCI Benchmark
Retail 30.5 35.9
Offices 37.7 30.8
Industrial 25.6 23.3
Other 6.2 10.0
Investment Manager's Report (continued)
Property portfolio (continued)
Weighting (%)
Regional weightings by value SREIT MSCI Benchmark
Central London 7.8 14.5
South East excluding Central London 29.1 38.4
Rest of the South 6.9 15.8
Midlands and Wales 27.5 14.1
North and Scotland 28.7 17.2
The top ten properties set out below comprise 59.2% of the portfolio value:
Top ten properties Value (GBPm) (%)
1 Manchester, City Tower (25% share) 41.7 9.1
2 Bedford, St. John's Retail Park 35.8 7.8
3 London, Store Street, Bloomsbury 35.7 7.8
(50% share)
4 Brighton, Victory House 31.3 6.8
5 Leeds, Millshaw Industrial Estate 27.5 6.0
6 Leeds, Headingley, The Arndale 27.0 5.9
Centre
7 Milton Keynes, Stacey Bushes 25.7 5.6
Industrial Estate
8 Uxbridge, 106 Oxford Road 18.3 4.0
9 Norwich, Union Industrial Park 14.7 3.1
10 Salisbury, Churchill Way West 14.5 3.1
Total as at 30 September 2017 272.2 59.2
The table below sets out the top ten tenants that generally comprise large
businesses and represent 32.1% of the portfolio:
Top ten tenants Rent p.a. (GBP000) % of portfolio
1 University of Law 1,574 5.4
2 Wickes Building Supplies Ltd 1,092 3.8
3 Aviva Life and Pensions UK Ltd 1,039 3.6
4 Buckinghamshire New University 1,018 3.5
5 Bupa Insurance Services Ltd 961 3.3
6 Mott Macdonald Ltd 790 2.8
7 Recticel Limited 731 2.5
8 The Secretary of State 717 2.5
9 Booker Ltd 700 2.4
10 Matalan Retail Ltd 676 2.3
Total as at 30 September 2017 9,298 32.1
Investment Manager's Report (continued)
Portfolio performance
A high level of asset management has led to continued outperformance of the
underlying property portfolio compared with the MSCI Benchmark. The table
below shows the performance to 30 September 2017 with the portfolio ranked on
the 14th percentile of the Benchmark since inception:
SREIT total return p.a. MSCI Benchmark total Relative p.a. (%)
(%) return p.a. (%)
Period Six Three Since Six Three Since Six Three Since
month years inception month years inception months years inception*
* *
Retail 3.3 7.0 5.8 3.5 5.6 4.7 -0.2 1.3 1.0
Office 5.1 11.1 8.3 3.5 9.6 6.8 1.5 1.3 1.4
Industrial 9.1 17.4 8.5 8.9 13.9 7.7 0.2 3.1 0.7
Other -6.8 12.3 3.2 5.3 9.6 7.4 -11.5 2.4 -3.9
Total 5.2 11.3 7.5 4.9 9.0 6.2 0.3 2.1 1.3
* Inception was July 2004
Asset management
Milton Keynes, Stacey Bushes Industrial Estate
Stacey Bushes is a 317,000 sq ft multi-let industrial estate comprising 42
units in a good location west of Milton Keynes. The asset is valued at GBP25.7
million reflecting a net initial yield on contracted rents of 6% and a
reversionary income yield of 7.4%. The estate has benefitted from increased
demand in the multi-let industrial sector. The strategy is to refurbish units
as leases expire in order to achieve higher rents. During the period the
following progress has been made:
· Six units refurbished or upgraded at a total cost of GBP150,000, net of
dilapidations payments;
· Completed seven new lease agreements that increased the annual rent by
11.4 % to GBP1.5 million p.a.; and
· Rental value increased by 8% to GBP1.8 million p. a.
This activity has delivered strong performance with a total return for the
period of 14.5% compared with the Benchmark average for South East industrial
of 10.1%.
Leeds, Millshaw Industrial Estate
Millshaw is a 463,400 sq ft multi-let industrial estate comprising 27 units
strategically located south of Leeds city centre close to the M62 and M621
motorways. The asset is valued at GBP27.5 million reflecting a net initial income
yield of 5.6% and a reversionary income yield of 7.9%. The strategy is to
refurbish units to drive rents and deliver higher value uses for the units
fronting the Leeds ring road. Once again this estate has benefitted from its
location and growing demand from a range of tenants in the multi-let industrial
sector. During the period the following progress has been made:
· Three units refurbished or upgraded at a total cost of GBP120,000, net of
dilapidations payments;
· Completed three new lease agreements that increased the contracted rent
by 2.3% to GBP1.6 million p.a.;
· Rental value increased by 7% to GBP2.2 million p.a. and
· Secured planning consent for change of use from warehouse to gym use as
part of a pre-let to JD Sports Gyms.
This activity has delivered strong performance with a total return for the
period of 7.6% compared with the Benchmark average for rest of UK industrial of
7.0%.
Investment Manager's Report (continued)
Finance
The Company has an overall net loan to value of 27% with details of the two
loans and compliance with principal covenants set out below:
Lender Loan Maturity Interest Loan to LTV Interest ICR ratio Forward Forward
(GBPm) rate (%) Value ratio cover covenant looking looking
('LTV') covenant ratio (%)** ICR ICR
ratio* (%)* (%)** ratio ratio
(%) (%)*** covenant
(%)***
Canada 103.7 15/04/2028 4.77$ 37.4 65 340 185 314 185
Life
25.9 15/04/2023
RBS 20.5 17/07/2019 2.00 49.3 65 N/A N/A 417 250
* Loan balance divided by property value as at 30 September 2017.
** For the quarter preceding the Interest Payment Date ('IPD'),
((rental income received - void rates, void service charge and void insurance)
/ interest paid).
*** For the quarter following the IPD, ((rental income received -
void rates, void service charge and void insurance) / interest paid).
$ Fixed total interest rate for the loan term
- Total interest rate as at 30 September 2017 comprising 3 months
LIBOR of 0.40% and the margin of 1.6% at an LTV below 60% and a margin of 1.85%
above 60% LTV.
In addition to the secured property, the joint venture properties City Tower in
Manchester and Store Street in London are uncharged with a combined value of GBP
77.4 million. The cost of debt is fixed or capped so short term increases in
interest rates will not affect the cost of the debt facilities.
Outlook
We have continued to deliver attractive returns during a period of ongoing
political and economic uncertainty. Whilst we expect demand from both
international and domestic investors to continue, we expect greater volatility
across financial markets. The ability to deliver on opportunities identified
within the portfolio is dependent on the availability of capital and being
invested across sectors and locations with robust tenant demand. Therefore, as
previously stated, a disciplined approach to growth will be considered where
equity issuance is accretive to net operating income and investment into growth
sectors.
Our focus continues to be on building a portfolio of good-quality assets that
will deliver sustainable income and that are supported by attractive investment
fundamentals in locations or sectors. Furthermore, a concerted focus on asset
management during the period, leveraging our capabilities, ensures that we have
a pipeline of ongoing activity that should positively impact income and total
returns.
Duncan Owen
Schroder Real Estate Investment Management Limited
7 November 2017
Responsibility Statement of the Directors in respect of the Interim Report
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting; and
* the interim management report (comprising the Chairman's and the Investment
Manager's report) includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related
party transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
We are responsible for the maintenance and integrity of the corporate and
financial information included on the Company's website, and for the
preparation and dissemination of financial statements. Legislation in Guernsey
governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
By order of the Board
Lorraine Baldry
Chairman
7 November 2017
Independent Review Report to Schroder Real Estate Investment Trust Limited
Conclusion
We have been engaged by Schroder Real Estate Investment Trust Limited (the
"Company") to review the condensed set of financial statements in the Interim
Report for the six months ended 30 September 2017 of the Company, its
subsidiaries and its interests in joint ventures (together the "Group") which
comprises the Condensed Consolidated Statement of Comprehensive Income,
Condensed Consolidated Statement of Financial Position, Condensed Consolidated
Statement of Changes in Equity, Condensed Consolidated Statement of Cash Flows
and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Interim Report
for the six months ended 30 September 2017 is not prepared, in all material
respects, in accordance with IAS 34 Interim Financial Reporting and the
Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial
Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
We read the other information contained in the Interim Report and consider
whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Directors' responsibilities
The Interim Report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the Interim Report in
accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards. The
directors are responsible for preparing the condensed set of financial
statements included in the Interim Report in accordance with IAS 34.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the Interim Report based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Lee C Clark
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants, Guernsey
7 November 2017
Condensed Consolidated Statement of Comprehensive Income
Six months Six months Year
to to to
30/09/2017 30/09/2016 31/03/2017
Notes GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Rental income 12,390 12,148 24,079
Other income 985 473 1,283
Property operating expenses (1,017) (1,286) (2,561)
Net rental and related income, 12,358 11,335 22,801
excluding joint ventures
Share of net rental income in joint 1,409 1,673 3,273
ventures
Net rental and related income, 13,767 13,008 26,074
including joint ventures
(Loss)/profit on disposal of 6 - (143) 3,709
investment property
Net valuation gain/(loss) on 6 6,573 (4,466) 6,987
investment property
Expenses
Investment management fee 2 (1,772) (1,740) (3,391)
Valuers' and other professional fees (678) (663) (1,256)
Administrators fee 2 (60) (60) (120)
Auditor's remuneration (64) (69) (127)
Directors' fees (90) (105) (180)
Other expenses 3 (169) (135) (356)
Total expenses (2,833) (2,772) (5,430)
Net operating profit before net 16,098 3,954 28,067
finance costs
Finance costs payable (3,410) (3,434) (6,893)
Net finance costs (3,410) (3,434) (6,893)
Share of net rental income in joint 7 1,409 1,673 3,273
ventures
Share of net valuation gain/(loss) in 7 367 (1,557) (1,603)
joint ventures
Profit and total comprehensive income 14,464 636 22,844
for the period attributable to the
equity holders of the parent
Basic and diluted earnings per share 4 2.8p 0.1p 4.4p
All items in the above statement are derived from continuing operations. The
accompanying notes 1 to 16 form an integral part of the Interim Report.
Condensed Consolidated Statement of Financial Position
30/09/2017 30/09/2016 31/03/2017
Notes GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Investment property 6 372,323 362,347 366,227
Investment in joint ventures 7 77,617 76,946 76,900
Non-current assets 449,940 439,293 443,127
Trade and other 8 17,112 17,564 26,502
receivables
Cash and cash equivalents 9 24,887 14,540 20,127
Investment property held for 6 5,777 1,228 -
sale
Current assets 47,776 33,332 46,629
Total assets 497,716 472,625 489,756
Issued capital and reserves 367,076 343,264 359,042
Treasury shares (26,452) (26,452) (26,452)
Equity 340,624 316,812 332,590
Interest-bearing loans and 10 148,386 148,113 148,266
borrowings
Non-current liabilities 148,386 148,113 148,266
Trade and other payables 11 8,483 7,682 8,900
Taxation payable 223 18 -
Current liabilities 8,706 7,700 8,900
Total liabilities 157,092 155,813 157,166
Total equity and liabilities 497,716 472,625 489,756
Net Asset Value per ordinary 12 65.7p 61.1p 64.1p
share
The financial statements on pages 15-27 were approved at a meeting of the Board
of Directors held on 7 November 2017 and signed on its behalf by:
Lorraine Baldry
Chairman
The accompanying notes 1 to 16 form an integral part of the Interim Report.
Condensed Consolidated Statement of Changes in Equity
For the period from 1 April 2016 to 30 September 2016 (unaudited)
Notes Share Treasury Revenue Total
premium share reserve
reserve
GBP000 GBP000 GBP000 GBP000
Balance as at 31 March 2016 219,090 (26,452) 129,968 322,606
Profit and total comprehensive - - 636 636
income for the period
Dividends paid 5 - - (6,430) (6,430)
Balance as at 30 September 219,090 (26,452) 124,174 316,812
2016
For the year ended 31 March 2017 (audited) and for the period from 1 April 2017
to 30 September 2017 (unaudited)
Notes Share Treasury Revenue Total
premium share reserve
reserve
GBP000 GBP000 GBP000 GBP000
Balance as at 31 March 2016 219,090 (26,452) 129,968 322,606
Profit and total comprehensive - - 22,844 22,844
income for the year
Dividends paid 5 - - (12,860) (12,860)
Balance as at 31 March 2017 219,090 (26,452) 139,952 332,590
Profit and total comprehensive - - 14,464 14,464
income for the period
Dividends paid 5 - - (6,430) (6,430)
Balance as at 30 September 2017 219,090 (26,452) 147,986 340,624
The accompanying notes 1 to 16 form an integral part of the Interim Report.
Condensed Consolidated Statement of Cash Flows
Six months Six months Year
to to to
30/09/2017 30/09/2016 31/03/2017
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Operating activities
Profit for the period/year 14,464 636 22,844
Adjustments for:
Loss/(profit) on disposal of investment - 143 (3,709)
property
Net valuation (gain)/loss on investment (6,573) 4,466 (6,987)
property
Share of profit of joint ventures (1,776) (116) (1,670)
Net finance cost 3,410 3,434 6,893
Operating cash generated before changes in 9,525 8,563 17,371
working
capital
Increase in trade and other receivables (3,209) (2,202) (172)
Decrease in trade and other payables (195) (1,432) (113)
Cash generated from operations 6,121 4,929 17,086
Finance costs paid (3,290) (3,434) (6,622)
Tax - - (33)
Net cash from operating activities 2,831 1,495 10,431
Investing Activities
Proceeds from sale of investment 12,600 10,680 15,485
property
Additions to investment property (5,300) (5,097) (8,421)
Investment in joint ventures (350) (544) (544)
Net income distributed from joint 1,409 1,673 3,273
ventures
Net cash from investing activities 8,359 6,712 9,793
Financing Activities
Dividends paid (6,430) (6,430) (12,860)
Net cash used in financing activities (6,430) (6,430) (12,860)
Net increase/(decrease) in cash and cash 4,760 (34,261) 7,364
equivalents for the period/year
Opening cash and cash equivalents 20,127 12,763 12,763
Closing cash and cash equivalents 24,887 14,540 20,127
The accompanying notes 1 to 16 form an integral part of the Interim Report.
Notes to the Interim Report
1. Significant accounting policies
Schroder Real Estate Investment Trust Limited ("the Company") is a closed-ended
investment company incorporated in Guernsey. The condensed interim financial
statements of the Company for the period ended 30 September 2017 comprise the
Company, its subsidiaries and its interests in joint ventures (together
referred to as the "Group").
Statement of compliance
The condensed interim financial statements have been prepared in accordance
with the Disclosure and Transparency Rules of the United Kingdom Financial
Conduct Authority and IAS 34 Interim Financial Reporting. They do not include
all the information required for the full annual financial statements, and
should be read in conjunction with the consolidated financial statements of the
Group as at and for the year ended 31 March 2017. The condensed interim
financial statements have been prepared on the basis of the accounting policies
set out in the Group's annual financial statements for the year ended 31 March
2017. The financial statements for the year ended 31 March 2017 have been
prepared in accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board. The Group's
annual financial statements refer to new Standards and Interpretations none of
which had a material impact on the condensed interim financial statements.
Going concern
The Directors have examined significant areas of possible financial risk
including cash and cash requirements and the debt covenants, in particular the
loan to value covenants and interest cover ratios on the loans with Canada Life
and Royal Bank of Scotland. 80% of the Canada Life loan matures on 15 April
2028 and 20% matures on 15 April 2023. The Royal Bank of Scotland loan matures
on 17 July 2019. The Directors have not identified any material uncertainties
which would cast significant doubt on the Group's ability to continue as a
going concern for a period of not less than twelve months from the date of the
approval of the condensed interim financial statements. The Directors have
satisfied themselves that the Group has adequate resources to continue in
operational existence for the foreseeable future.
After due consideration, the Board believes it is appropriate to adopt the
going concern basis in preparing the condensed interim financial statements.
Use of estimates and judgments
The preparation of financial statements requires management to make judgements,
estimates and assumptions that affect the application of policies and the
reported amounts of assets and liabilities, income and expenses. Actual results
may differ from these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and in any future periods
affected. There have been no changes in the judgements and estimates used by
management as disclosed in the last annual report and financial statements for
the year ended 31 March 2017.
Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being property investment and in one geographical area, the United
Kingdom. There is no one tenant that represents more than 10% of group
revenues. The chief operating decision maker is considered to be the Board of
Directors who are provided with consolidated IFRS information on a quarterly
basis.
Notes to the Interim Report (Continued)
2. Material agreements
Schroder Real Estate Investment Management Limited is the Investment Manager to
the Company.
The Investment Manager is entitled to a fee together with reasonable expenses
incurred in the performance of its duties. The fee is payable monthly in
arrears and shall be an amount equal to one twelfth of the aggregate of 1.1% of
the NAV of the Company. The Investment Management Agreement can be terminated
by either party on not less than twelve months written notice or on immediate
notice in the event of certain breaches of its terms or the insolvency of
either party. The total charge to profit during the period was GBP1,772,000
(year to 31 March 2017: GBP3,391,000) (6 months to 30 September 2016: GBP
1,740,000). At the period end GBP230,000 (31 March 2017: GBP216,000) (30 September
2016: GBP293,000) was outstanding.
The Board appointed Northern Trust International Fund Administration Services
(Guernsey) Limited as the Administrator to the Company with effect from 25 July
2007. The Administrator is entitled to an annual fee equal to GBP120,000 of which
GBP30,000 (31 March 2017: GBP30,000) (30 September 2016: GBP30,000) was outstanding
at the period end.
3. Other expenses
Six months to Six months to Year to
30/09/2017 30/09/2016 31/03/2017
GBP000 GBP000 GBP000
Directors' and officers' insurance - - 11
premium
Regulatory costs 22
11 11
Professional fees 88 80 166
Other expenses -
70 44
169 135 356
4. Basic and Diluted Earnings per share
The basic and diluted earnings per share for the Group is based on the profit
for the period of GBP14,464,000 (31 March 2017: GBP22,844,000), (30 September 2016:
GBP636,000) and the weighted average number of ordinary shares in issue during
the period of 518,513,409 (31 March 2017: 518,513,409 and 30 September 2016:
518,513,409).
EPRA earnings reconciliation
Six months to Six months Year to
30/09/2017 to 31/03/2017
30/09/2016
GBP000 GBP000 GBP000
Profit after tax 14,464 636 22,844
Adjustments to calculate EPRA Earnings
exclude:
Loss/(profit) on disposal of investment - 143 (3,709)
property
Net valuation (gain)/loss on investment (6,573) 4,466 (6,987)
property
Share of valuation (gain)/loss in joint (367) 1,557 1,603
ventures
EPRA earnings 7,524 6,802 13,751
518,513,409 518,513,409
Weighted average number of ordinary 518,513,409
shares
EPRA earnings per share (pence per 1.4 1.3 2.7
share)
Notes to the Interim Report (continued)
4. Basic and Diluted Earnings per share (continued)
European Public Real Estate Association ('EPRA') earnings per share reflect the
underlying performance of the Group calculated in accordance with the EPRA
guidelines.
5. Dividends paid
Number of 01/04/2017 to
In respect of ordinary Rate 30/09/2017
shares (pence) GBP000
Quarter 31 March 2017 dividend paid 31 518.51 0.62 3,215
May 2017 million
Quarter 30 June 2017 dividend paid 31 518.51 0.62 3,215
August 2017 million
1.24 6,430
Number of 01/04/2016 to
In respect of ordinary Rate 30/09/2016
shares (pence) GBP000
Quarter 31 March 2016 dividend paid 31 518.51 0.62 3,215
May 2016 million
Quarter 30 June 2016 dividend paid 31 518.51 0.62 3,215
August 2016 million
1.24 6,430
Number of 01/04/2016 to
In respect of ordinary Rate 31/03/2017
shares (pence) GBP000
Quarter 31 March 2016 dividend paid 31 May 518.51 0.62 3,215
2016 million
Quarter 30 June 2016 dividend paid 31 518.51 0.62 3,215
August 2016 million
Quarter 30 September 2016 dividend paid 02 518.51 0.62 3,215
December 2016 million
Quarter 31 December 2016 dividend paid 28 518.51 0.62 3,215
February 2017 million
2.48 12,860
A dividend for the quarter ended 30 September 2017 of 0.62p (GBP3.2 million) was
declared on 7 November 2017 and will be paid on 6 December 2017.
6. Investment property
For the period 1 April 2016 to 30 September 2016 (unaudited)
Leasehold Freehold Total
GBP000 GBP000 GBP000
Fair value as at 1 April 2016 42,065 329,159 371,224
Additions 1,881 3,216 5,097
Gross proceeds on disposals - (8,137) (8,137)
Realised loss on disposals - (143) (143)
Net valuation loss on investment property (224) (4,242) (4,466)
Fair value as at 30 September 2016 43,722 319,853 363,575
Notes to the Interim Report (continued)
6. Investment property (continued)
For the year 1 April 2016 to 31 March 2017 (audited)
Leasehold Freehold Total
GBP000 GBP000 GBP000
Fair value as at 1 April 2016 42,065 329,159 371,224
Additions 3,031 5,390 8,421
Gross proceeds on disposals (11,358) (12,756) (24,114)
Realised gain/(loss) on disposals 3,942 (233) 3,709
Net valuation (loss)/gain on investment property (277) 7,264 6,987
Fair value as at 31 March 2017 37,403 328,824 366,227
For the period 1 April 2017 to 30 September 2017 (unaudited)
Leasehold Freehold Total
GBP000 GBP000 GBP000
Fair value as at 1 April 2017 37,403 328,824 366,227
Additions 32 5,268 5,300
Net valuation (loss)/gain on investment property (1,286) 7,859 6,573
Fair value as at 30 September 2017 36,149 341,951 378,100
The balance above includes:
Leasehold Freehold Total GBP
GBP000 GBP000 000
Investment property 36,149 336,174 372,323
Investment property held for sale - 5,777 5,777
Fair Value as at 30 September 2017 36,149 341,951 378,100
One of the investment properties has been determined to meet the criteria of a
held for sale asset at the period end at a value of GBP5,777,000 (31 March 2017:
GBPnil, 30 September 2016: GBP1,228,000). This property subsequently
unconditionally exchanged on 20 October 2017.
Fair value of investment property as determined by the valuer totals GBP
388,550,000 (31 March 2017: GBP390,745,000) (30 September 2016: GBP375,340,000). As
at 30 September 2017 there were no amounts relating to the unconditional
exchange of contracts for sale (31 March 2017: GBP14,200,000 relating to Bristol
and Watford) (30 September 2016: GBP1,600,000 relating to Bournemouth) and GBP
10,450,000 (31 March 2017: GBP10,318,000) (30 September 2016: GBP10,165,000) in
connection with lease incentives is included within trade and other
receivables.
The fair value of investment property has been determined by Knight Frank LLP,
a firm of independent chartered surveyors, who are registered independent
appraisers. The valuation has been undertaken in accordance with the RICS
Valuation - Global Standards 2017, incorporating the International Valuation
Standards, and RICS Professional Standards UK January 2014 (revised April
2015), issued by the Royal Institution of Chartered Surveyors (the "Red Book").
The properties have been valued on the basis of "Fair Value" in accordance with
the RICS Valuation - Professional Standards VPS4(7.1) Fair Value and VPGA1
Valuations for Inclusion in Financial Statements which adopt the definition of
Fair Value used by the International Accounting Standards Board.
The valuation has been undertaken using appropriate valuation methodologies and
the valuer's professional judgement. The valuer's opinion of Fair Value was
primarily derived using recent comparable market transactions on arm's length
terms, where available, and appropriate valuation techniques (The Investment
Method).
Notes to the Interim Report (continued)
6. Investment property (continued)
The properties have been valued individually and not as part of a portfolio.
All investment properties are categorised as Level 3 fair values as they use
significant unobservable inputs. There have not been any transfers between
Levels during the period. Investment properties have been classed according to
their real estate sector. Information on these significant unobservable inputs
per class of investment property is disclosed below:
Quantitative information about fair value measurement using unobservable inputs
(Level 3) as at 30 September 2017 (unaudited)
Industrial Retail Office Other Total
(incl
retail
warehouse)
Fair value 117,300 142,330 116,320 12,600 388,550
(GBP000)
Area ('000 1,711 599 586 145 3,041
sq ft)
Net passing Range GBP0 - GBP8.82 GBP0 - GBP38.50 GBP0 - GBP25.72 GBP7.56 GBP0 - GBP38.50
rent Weighted GBP4.18 GBP14.03 GBP12.39 N/A GBP7.86
psf per average
annum
Gross ERV Range GBP3.50 - GBP GBP7.40 - GBP GBP9.50 - GBP GBP8.33 GBP3.50 - GBP38.50
psf Weighted 11.25 38.50 GBP 27.50 GBP15.25 N/A GBP9.43
per annum average GBP5.21 16.06
Net initial Range 0% - 7.35% 0% - 8.83% 0.00%-16.24% 8.15% 0% - 16.24%
yield (1) Weighted 5.71% 5.53% 5.84% N/A 5.76%
average
Equivalent Range 5.01% - 4.75%-9.70% 5.62%-10.58% 7.95% N/ 4.75%-10.58%
yield Weighted 8.30% 6.80% 6.10% 7.01% A 6.64%
average
Notes: (1) Yields based on rents receivable after deduction of head rents, but
gross of non-recoverables.
Notes to the Interim Report (continued)
6. Investment property (continued)
Quantitative information about fair value measurement using unobservable inputs
(Level 3) as at 31 March 2017 (audited)
Industrial Retail (inc. Office Leisure Total
retail
warehouse)
Fair value 110,700 140,100 125,800 14,150 390,750
(GBP000)
Area ('000 1,711 603 619 145 3,078
sq ft)
Net passing Range GBP0 - GBP8.82 GBP8.40 - GBP GBP0 - GBP25.72 GBP9.88 GBP0 - GBP38.50
rent per sq Weighted GBP4.12 38.50 GBP13.98 GBP10.76 N/A GBP7.66
ft per average
annum
Gross ERV Range GBP3.50 - GBP GBP7.40 - GBP GBP9.50 - GBP GBP9.60 GBP3.50-GBP38.50
per sq ft Weighted 10.83 GBP5.06 38.50 GBP16.22 27.50 GBP15.28 N/A GBP9.52
per annum average
Net initial Range 0% - 7.70% 3.38% - 8.99% 0.00%-15.35% 9.49% 0% - 15.35%
yield (1) Weighted 5.88% 5.32% 4.27% N/A 5.25%
average
Equivalent Range 5.25% - 8.65% 4.37%-9.75% 5.04%-10.27% 8.61% 4.37%-10.27%
yield Weighted 7.02% 6.14% 6.81% N/A 6.69%
average
Notes: (1) Yields based on rents receivable after deduction of head rents, but
gross of non-recoverables.
Sensitivity of measurement to variations in the significant unobservable inputs
The significant unobservable inputs used in the fair value measurement
categorised within Level 3 of the fair value hierarchy of the Group's property
portfolio, together with the impact of significant movements in these inputs on
the fair value measurement, are shown below:
Unobservable input Impact on fair value Impact on fair value
measurement of measurement of
significant increase in significant decrease in
input input
Passing rent Increase Decrease
Gross ERV Increase Decrease
Net initial yield Decrease Increase
Equivalent yield Decrease Increase
There are interrelationships between the yields and rental values as they are
partially determined by market rate conditions.
Notes to the Interim Report (continued)
6. Investment property (continued)
The sensitivity of the valuation to changes in the most significant inputs per
class of investment property are shown below:
Estimated movement in fair Industrial Retail Office Other Total
value of investment GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
properties at 30 September
2017 (unaudited)
Increase in ERV by 5% 5,440 6,644 5,117 369 17,570
Decrease in ERV by 5% (5,182) (5,693) (4,872) (280) (16,027)
Increase in net initial yield (4,919) (6,157) (4,775) (375) (16,156)
by 0.25%
Decrease in net initial yield 5,369 6,741 5,202 399 17,622
by 0.25%
Estimated movement in fair Industrial Retail Office Other Total
value of investment properties GBP000 GBP000 GBP000 GBP000 GBP000
at 31 March 2017 (audited)
Increase in ERV by 5% 5,002 6,405 5,765 271 17,442
Decrease in ERV by 5% (4,832) (5,882) (5,009) (198) (15,921)
Increase in net initial yield (4,454) (5,952) (6,032) (363) (16,553)
by 0.25%
Decrease in net initial yield 4,844 6,505 6,672 383 18,086
by 0.25%
7. Investment in joint ventures
For the period 1 April 2016 to 30 September 2016 (unaudited)
GBP000
Opening balance as at 1 April 2016 77,959
Purchase of units in City Tower Unit Trust to fund capital 544
expenditure
Share of profit for the period 116
Distributions received (1,673)
Amounts recognised as joint ventures at 30 September 2016 76,946
For the year 1 April 2016 to 31 March 2017 (audited)
GBP000
Opening balance as at 1 April 2016 77,959
Purchase of units in City Tower Unit Trust to fund capital 544
expenditure
Share of profit for the period 1,670
Distribution received (3,273)
Closing balance as at 31 March 2017 76,900
For the period 1 April 2017 to 30 September 2017 (unaudited)
GBP000
Opening balance as at 1 April 2017 76,900
Purchase of units in City Tower Unit Trust to fund capital 350
expenditure
Share of profit for the period 1,776
Distributions received (1,409)
Amounts recognised as joint ventures at 30 September 2017 77,617
Notes to the Interim Report (continued)
8. Trade and other receivables
Six months to Six months Year to
30/09/2017 to 31/03/2017
30/09/2016
GBP000 GBP000 GBP000
Rent receivable 1,830 1,962 933
Sundry debtors and prepayments 15,282 15,602 25,569
17,112 17,564 26,502
Other debtors and receivables includes GBP10,450,000 (31 March 2017: GBP10,318,000,
30 September 2016: GBP10,165,000) in respect of lease incentives. At the period
end no amounts relate to properties that had unconditionally exchanged but not
completed prior to period end (31 March 2017: GBP12,629,000 Watford and Bristol,
30 September 2016: GBP1,700,000 Bournemouth).
9. Cash and cash equivalents
As at 30 September 2017 the group had GBP24.9 million in cash (31 March 2017:GBP
20.1 million, 30 September 2016: GBP14.5 million) of which GBP2.5 million is held
within the Canada Life security pool. (31 March 2017: GBP1 million, 30 September
2016: GBP0.5 million)
10. Interest-bearing loans and borrowings
The Group entered into a GBP129.6 million loan facility with Canada Life on 16
April 2013 that has 20% of the loan maturing on 15 April 2023 and with the
balance of 80% maturing on 15 April 2028, with a fixed interest rate of 4.77%.
On 17 July 2015 the Company entered into a four year, GBP20.5 million revolving
credit facility with the Royal Bank of Scotland, for the purpose of acquiring,
Millshaw Park Industrial Estate. The interest rate is based on the loan to
value ratio as below:
- LIBOR + 1.60% if loan to value is less than or equal to 60%
- LIBOR + 1.85% if loan to value is greater than 60%
During the period the loan to value has remained less than 60%. Since this loan
has variable interest, an interest rate cap for 100% of the loan was entered
into, which comes into effect if GBP 3 month LIBOR reaches 1.5%.
As at 30 September 2017 the group has a loan balance of GBP150.1 million and GBP1.7
million of unamortised arrangement fees (31 March 2017: GBP150.1 million and GBP1.8
million of unamortised arrangement fees, September 2016: GBP150.1 million and GBP
2.0 million of unamortised arrangement fees).
Fair values are based on the present value of future cash flows discounted at a
market rate of interest. Issue costs are amortised over the period of the
borrowings. As at 30 September 2017 the fair value of the Group's GBP129.6
million loan with Canada Life was GBP143.6 million (31 March 2017: GBP143.9
million, 30 September 2016: GBP144.8 million).
Notes to the Interim Report (continued)
11. Trade and other payables
Six months to Six months to Year to
30/09/2017 30/09/2016 31/03/2017
GBP000 GBP000 GBP000
Rent received in advance 4,804 4,878 4,854
Rental deposits 1,037 481 982
Interest payable 1,391 1,391 1,391
Other payables and accruals 1,251 932 1,673
8,483 7,682 8,900
12. NAV per ordinary share
The NAV per ordinary share is based on the net assets of GBP340,624,000 (31 March
2017: GBP322,590,000, 30 September 2016: GBP316,820,000) and 518,513,409 ordinary
shares in issue at the Statement of Financial Position reporting date (31 March
2017: 518,513,409 and 30 September 2016: 518,513,409).
13. Financial risk factors
The Directors are of the opinion that there have been no significant changes to
the financial risk profile of the Group since the end of the last annual
financial reporting period ended 31 March 2017 of which it is aware.
The main risks arising from the Group's financial instruments and properties
are market price risk, credit risk, liquidity risk and interest rate risk. The
Group is only directly exposed to sterling and hence is not exposed to currency
risks. The Board regularly reviews and agrees policies for managing each of
these risks.
14. Related party transactions
Material agreements are disclosed in note 2. The Directors' remuneration for
the period for services to the Group was GBP90,000 (31 March 2017: GBP180,000, 30
September 2016: GBP105,000). Transactions with joint ventures are disclosed in
note 7.
15. Capital Commitments
At 30 September 2017 the Group had capital commitments of GBP3.2 million (31
March 2017: GBP4.9 million, 30 September 2016: GBP9.3 million).
16. Post balance sheet events
Since the end of the period the Group has completed on the sale of one
property, Riverside Exchange, Sheffield for a price of GBP6.5 million, which
completed on the 20 October 2017 (included in the September 2017 financial
statements as an investment property held for sale).
Corporate information
Registered Address Independent Auditor
PO Box 255 KPMG Channel Islands Limited
Trafalgar Court Glategny Court
Les Banques Glategny Esplanade
St. Peter Port St. Peter Port
Guernsey GY1 3QL Guernsey GY1 1WR
Directors Property Valuers
Lorraine Baldry (Chairman) Knight Frank LLP
Keith Goulborn (Senior Independent Director) 55 Baker Street
Stephen Bligh London
Graham Basham W1U 8AN
Alastair Hughes
(All Non-Executive Directors) Joint Sponsor and Brokers
J.P. Morgan Securities plc
Investment Manager and Accounting Agent 25 Bank Street
Schroder Real Estate Investment Management Canary Wharf
Limited London E14 5JP
31, Gresham Street
London Numis Securities Limited
EC2V 7QA 10 Paternoster Square
London EC4M 7LT
Secretary, Administrator and Depository
Northern Trust International Fund Tax Advisers
Administration Services (Guernsey) Limited Deloitte LLP
PO Box 255 2 New Street Square
Trafalgar Court London EC4A 3BZ
Les Banques
St Peter Port Receiving Agent and UK
Guernsey GY1 3QL Transfer/Paying Agent
Computershare Investor
Services
(Guernsey) Limited
Queensway House
Hilgrove Street
St Helier
Jersey
JE1 1ES
Solicitors to the
Company as to Guernsey Law:
as to English Law: Mourant Ozannes
Stephenson Harwood LLP 1 Le Marchant Street
1 Finsbury Circus St. Peter Port
London EC2M 7SH Guernsey GY1 4HP
ISA
The Company's shares are eligible for
Individual Savings Accounts (ISAs).
FATCA GIIN
5BM7YG.99999.SL.831
END
(END) Dow Jones Newswires
November 08, 2017 02:00 ET (07:00 GMT)
1 Year Schroder Real Estate Inv... Chart |
1 Month Schroder Real Estate Inv... Chart |
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