Schroder Real Estate Inv... Share Discussion Threads

[ec2] 15/4/2021 11:23

Interesting that there was takeover activity in the European Real Estate sector yesterday. I have pondered for a while on the idea that if the SREI manager sees the most efficient way to invest excess cash is to buy their own shares as apposed to buying properties, then likewise the same thinking would apply to other investors looking to increase their property exposure. A big institutional investor could simply bid for the entire share capital and get the complete property portfolio on the cheap. Depends on how much of a premium over the current share price it would take.

[skyship] 14/4/2021 14:33

frazboy - this from the Feb'20 RNS when they announced a major increase in the qtly divi: "The unaudited quarterly NAV as at 31 December 2019 was GBP321.4 million or 62.0 pence per share ('pps'). During the quarter the Company completed a major refinancing that incurred costs of GBP27.2 million. The refinancing generated an immediate interest saving of GBP2.5 million per annum that will be paid to shareholders as an annualised 19% dividend increase to 0.7715 pps with effect from the forthcoming dividend to be paid on 13 March 2020." So a return to the 0.75p level x 4 for a 3.00p dividend has to be a possibility - a prospective level for 2022 perhaps - all being reasonable on the Covid front of course. A 3.0p dividend would provide a 7.4% yield at the current 40.5p

[frazboy] 14/4/2021 10:30

Splitting hairs a bit Skyship but I make it ~£27.5m although I'm not sure if I've correctly adjusted for the Sheffield office disposal (was it receiving any rent following Aviva's departure?). Churned through the latest AR and half year report again last night - having done so I can't see why in the next 12/18 months we won't be receiving a 3p dividend.

[skyship] 13/4/2021 21:11

Specto - annual rental income is c£27m - so agreed, that is quite a chunk coming down the line - c4% from that one source.

[spectoacc] 13/4/2021 20:08

Easy to lose track of who's doing what when there's so many to hold in the sector, but a reminder of SREI's small development angle - or not so small, when there's c.£1m/year in rent to eventually be added in late 2022: "Cheadle, Stanley Green Trading Estate In December 2020, the Company acquired Stanley Green Trading Estate in South Manchester for £17.25 million, which comprises 150,000 sq ft of existing trade and warehouse accommodation together with an adjoining 3.4 acre, non-income producing, development site. A planning application has been submitted for an 80,000 sq ft, 11 unit trade counter and warehouse scheme on the development site. The proposed scheme will be developed to a high standard of sustainability performance including targeting a BREEAM Excellent accreditation, an EPC A+ specification and being operationally net zero carbon. The site had a historic planning consent for 48,500 sq ft and is already allocated for industrial development in the Local Plan. A decision is expected during the first half of 2021 and, if approved, development should commence shortly afterwards with completion targeted for late 2022. The construction contract will be tendered shortly with an estimated total development cost of £8 million. The ERV for the newly developed units will be approximately £950,000 per annum."

[kenmitch] 09/4/2021 10:13

You’re right SKYSHIP and I chuckled(in a good way and not AT your comment) when reading your post. I’m relaxed holding SREI and the others in the sector.Regardless of whether or not they are buying back and whether or not doing so is a good idea, they all look ripe for further gains in time with big and possibly increasing dividends while we wait.

[badtime] 08/4/2021 21:26

Bought some more last week with the purpose of trading ...will be more than happy with 45pHold some for income

[skyship] 08/4/2021 21:04

3.35m traded....& JP Morgan manages to buyback 1386 shares!!! Will please Ken, but not many others I suspect... Still, without buybacks, SREI looks to be breaking out....short term target 45p.

[kenmitch] 08/4/2021 19:55

Very pleased with 25% dividend increase from EPIC today, and it’s paid monthly. afaiaa EPIC haven’t bought back any of their shares over the last year. SREI (buying back nearly every day) remains the weakest performer of the Investment Trusts Reits I hold and they pay bigger dividends, although the 9% increase in the SREI dividend was welcome. AEWU and EPIC both pay 10% dividends at my buy prices. The sector still looks too cheap, and perhaps SREI especially so?

[nickrl] 07/4/2021 17:31

Surprising there has been no M&A amongst the REITs but most BoDs are on a nice gravy train whatever happens to the share price and many aren't that invested in the shares witness the lack of buying by most when shares were on their knees this time last year. I recollect PCA said they made an offer to CDFF a while back who are one of the smallest but they wouldn't play ball.

[brwo349] 07/4/2021 16:25

big property rally. this has been left behind and is the standout

[spectoacc] 07/4/2021 14:33

Ha ha you're both right - supermarket sale, not purchase, oops. Add to that, the buybacks will tweak things too, as well divergent NAV changes (eg the big retail falls vs Industrial rises). All still look cheap tho IMO, discounts in a generally v strong property market.

[skyship] 07/4/2021 14:23

Whoops - had posted Office & Industrial the wrong way round - have edited. Difficult to keep up as everything alters with every purchase/sale. That 9.6% in supermarkets has now been sold!

[8w] 07/4/2021 14:21

Specto : I thought EPIC had sold a supermarket..... I've been wondering what they were going to do with the proceeds?

[spectoacc] 07/4/2021 14:11

@Skyship - took the Feb RNS from SLI but as their "% of net assets" is not a "per cent", you could be right - tho even if a Dec figure, the £37m industrial estate sale should be included already I think. Tho that might explain it. £m % of net assets Industrial 211.2m 63.8% Office 142.7m 43.0% ......... EPIC also a Dec fig, from last NAV. They've bought a supermarket since: Sector & % Retail warehouse 59.8 Office 26.4 Supermarket 9.6 Development 2.3 Other commercial/ Leisure 1.9 I still wonder if SREI/BREI may fit together? And should note RLE have mentioned the possibility of M&A (RLE need it! Wouldn't touch with a long stick). DRIP is in the process of finding a buyer but it's a special case. Edit - hadn't noticed EPIC nearly 30% Wales - for a Scottish-run Trust.

[skyship] 07/4/2021 14:05

Specto - agreed, extremely unlikely . Incidentally, in my REIT spreadsheet I have: # EPIC R/Whse at 72% # SLI - 33% Office; 48% Industrial

[spectoacc] 07/4/2021 13:38

Can't agree that EPIC and SREI are similar or would fit well together. SREI are about 11% in Retail Warehouse; EPIC are 60%. SREI fairly well spread, with 37% in Industrial. EPIC 0% Industrial. (26% offices, to SREI's 35%, as near as the two come). Most of the smaller REITs (still not that small, all below are well over £100m) are different to each other, in geography (generally whether they target London/South East or not), sectors, or weightings. Be interesting to find the most similar - outside of the warehouse/industrial lot. Can't think anyone else has eg RGL's offices weighting, nor EPIC's Retail Parks, nor BCPT's London retail (mainly St Christopher's Place). SREI & BREI? Similar EPICs too ;) SLI? You'd struggle to put eg UKCM or PCTN with anyone else due to the tighter discounts. Edit - SLI more industrial than I remembered - nearly 64% - with 43% offices, 15% retail [SLI's %'s add up to 132% due to gearing; "Other Commercial" another c.10%]. Edit #2 - mkt caps (mostly yesterday's): SLI £245m BREI £178m SREI £200m EPIC £148m BCPT £570m RGL £333m PCTN £484m UKCM £949m My guess is, few Boards (or managers) would be eager to get off the gravy train. Which doesn't rule out takeovers, but might make voluntary mergers unlikely..

[ec2] 07/4/2021 12:43

Interesting comments regarding the share buybacks. I see them as having short term benefits. The longer term impact of reducing the number of shares in circulation reduces liquidity leading to wider spreads and reduced NMS. This in turn makes the shares less attractive to larger/institutional investors as it's impossible to trade the stock in meaningful size. It's good the asset manager has not wasted excess cash buying overpriced properties, but I would prefer this cash be returned to shareholders. IMO a number of REITs have become too tiny and lack the critical mass to operate efficiently let alone register on larger investors' radar. I've suggested on the EPIC message board that EPIC and SREI would be good candidates to merge. EPIC mkt cap 147m and SREI mkt cap 198m have similar investment styles and both have excess cash. The REITs could be merged leading to: 1) Economies of scale in terms asset management, admin and compliance costs; 2) Improved share price liquidity and attractiveness to larger investors; 3) increased asset/tenant diversification. These points would in turn encourage a narrowing of the discounts, and the excess cash could simply be returned to shareholders.

[skyship] 07/4/2021 12:16

Indeed - 8.25m = 1.68%. Would be nice to see that as a buyback taking out the tap. A single trade costing £3.34m & adding £1.51m to the NAV - 0.3p/share

[spectoacc] 07/4/2021 12:07

Wow yes - SREI never gets trades like that, wonder who the seller is, and if that's the end of the overhang. We're due a move back up..

[sphere25] 07/4/2021 11:54

Still no movement here but an interesting 8.25m gone through at 40.5p. Can't recall anything close to that going through SREI before. It clearly sticks out on the volume charts like a sore thumb. Any more for any more to finally tip the scales here? All imo DYOR

[spectoacc] 07/4/2021 06:45

Felt a bit "new ISA year" yesterday.

[skyship] 06/4/2021 21:01

EI - a strong performance today as SREI consolidates above 40p in 1.66m turnover; though buybacks of only 67k.

[essentialinvestor] 06/4/2021 15:11

BCPT, BREI etc motoring, SREI moribund. It must be overdue some attention, hopefully not the wrong type ).

[hindsight] 06/4/2021 12:31

Thank you EI and SpectoAcc for the detailed replies, much appreciated. My thoughts are very similar