Schroder Real Estate Investment Trust Ltd - Re-financing to Reduce Debt Cost and Extend Duration

04 July 2018

Schroder Real Estate Investment Trust Limited
("SREIT"/ the "Company" / "Group")

RE-FINANCING COMPLETED TO REDUCE DEBT COST AND EXTEND DURATION

Schroder Real Estate Investment Trust, the actively managed UK-focused REIT, announces that it has completed two refinancings in respect of its £129.6 million term loan with Canada Life and its £20.5 million revolving credit facility (“RCF”) with Royal Bank of Scotland (‘RBS’). These initiatives reduce the Company’s interest costs and extend the overall duration of its debt facilities.

Improved terms with the refinancing and part extension of Canada Life term loan:

• The refinancing is in respect of the £25.9 million portion of the loan that was due to expire in April 2023.
• The maturity of this portion has been extended by five years to be co-terminus with the rest of the loan, due to expire in April 2028 and fixing this interest rate for a further five years to remove the risk of rising interest rates.
• The fixed interest rate cost has reduced from a 4.77% to 3.09% on this portion of the loan, saving approximately £435,000 of interest per annum.
• The refinancing has resulted in a negotiated break cost of £2.625 million.

Extension of the revolving credit facility:

• The Company has also extended its RCF with RBS and increased the available facility from £20.5 million to £32.5 million, with £20.5 million already drawn. The additional loan amount available provides the Company with greater funding flexibility, to be used for acquisitions or capital expenditure across the portfolio.
• The RCF is an efficient and flexible source of funding due to the low margin of 1.6% and the ability to be repaid and redrawn as often as required and substitute assets within its security pool.
• The existing RCF had been due to expire in July 2019, and the new five year loan has a maturity in July 2023.
• The Company will also extend its interest rate caps in respect of the RCF to align with the new term of the facility and mitigate the potential risk of interest rate increases.

These transactions capitalise on current low interest rates and reposition the balance sheet for a lower cost and longer term. This active management of the balance sheet results in:

• Competitive financing terms that lengthen both near-term debt maturity dates by five years, and extend the average weighted debt term from 7.7 years to approximately 9 years.
• The overall cost of debt reduces from 4.4% to 4.0% assuming the RCF is fully drawn.
• Over 80 per cent. of the Company’s debt is fixed with the remainder capped.
• Enlarged RCF provides additional liquidity for acquisitions and capital expenditure, with the ability to efficiently de-gear following asset sales or equity issuance.
• The Company’s net LTV post the transactions is approximately 26% based on the 31 March 2018 valuation, within the target ratio of 25% to 35%.

The successful refinancing combined with contemplated acquisitions should allow the Board to consider the Company’s ability to progressively increase the level of dividend.

-ENDS-

For further information:

Schroder Real Estate Investment Management Limited: Duncan Owen / Nick Montgomery / Frank Sanderson	020 7658 6000
Northern Trust: Fraser Hiddelston	01481 745529
FTI Consulting: Dido Laurimore / Richard Gotla	020 3727 1000

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