Schroder Real Estate Inv... Share Discussion Threads

[essentialinvestor] 29/1/2020 14:49

It often pays to buy out of favour, provided fundamentals remain ok.

Much easier to buy when everyone is exited about something and agrees with you,
which can mark a top.

Usually prefer market down days, they are the most productive. Strong bullish sentiment
useful for selling.

[essentialinvestor] 29/1/2020 14:22

CC, thanks for the view and you don't mind a bit of risk, MARS, eh )

[skyship] 29/1/2020 14:17

cc2014 - I do trade RLE from time to time, playing when they fall back into an excessive discount. The problem will always remain there however - a rag-bag of a portfolio, seemingly without any apparent strategy.

Skinny - yes, keep forgetting about the 5p/share cost of the break clause!!!

[skinny] 29/1/2020 13:42

Nicely edited Skyship :-)

[cc2014] 29/1/2020 13:41

The assets we can assess for ourselves. Looks ok to me. Some retail but a balance of things.

The LTV is really low at 22%.

The NAV is £354m of which £90m is cash. But unless they redeploy the cash how do they generate a decent return, so (part of) the raised dividend will be paid from the cash pile I think rather than generated from earnings at least in the short term.

The new long term funding at 2.5% until 2036 will come in useful if ever interest rates rise but I'm not impressed they had to pay a break clause of £28m to get out of the old financing deal. So, it looks a bit like the fund has screwed up on it's long term debt, paid a lump of money to get rid of it and start again with a low headline rate. Of course if previous shareholders have paid for that and you as a new shareholder aren't it won't matter.


My view overall is in 10 years time that interst rate fix at 2.5% might look amazing in which case an entry here will work out well. (or it could look even worse as it seems rates may fall further too). I tend towards believing interest rates will rise in the long term but the market does not agree with me.


I perceive RLE looks better value if you want a REIT with no London assets. The dividend is fully covered and rising and the mood music on RLE is good. Of course RLE only has a market cap of £100m. Which of course if Schroders got their finger out they could use the £90m cash pile and some of their undrawn debt facility to make a bit for RLE. I can only hope. I'm sure Schroders can spend the £90m on something M&G are looking to shift.

I'll wait for the share price to drop as although an entry here is OK and enough to pique my interest I don't see the share price as low enough to make me want to press the buy button. Some clarifation on what the £90m is being spent on might also entice me off the fence. I have the feeling the market is turning on these REITs though and I'm not sure the share price will fall.

[essentialinvestor] 29/1/2020 13:05

Really market difference in performance between SREI and SLI over
the past few months. SLI now sells on a 6% NAV Premium.

Appreciate SLI has a lower retail weighting, however a 15% NAV discount v a 6% premium seems harsh, particularly given similar yield and gearing.

Unless I'm missing something? - which may well be the case! ).

[essentialinvestor] 29/1/2020 12:10

Added this AM.

[nickrl] 28/1/2020 14:04

Had this on the watchlist but not sure selling a load of assets to pay the break costs on the loan refinancing was a good move or not. They just seem to sit there taking the fees currently but there not the only ones.

[spittingbarrel] 28/1/2020 12:24

There's clearly a good seller around, I've just bought some at 52.622p when the spread was 52.6-53p. But agree they look reasonable value here.

[skyship] 28/1/2020 09:59

SREI continue to grind in the 53p-58p range. At an offer price of 53.5p on a f/c prospective yield of 5.6% and a 20% NAV discount. they could well be a buy again.

NB: EDIT - actually discount (post the penalty for debt reduction) is 16% @ 53p.

Low LTV, low borrowing costs, long maturity and institutional status all contribute; so have bought in for a few...

[hugepants] 08/12/2019 20:40

LTV of only 22% is surely a major plus point?

[essentialinvestor] 08/12/2019 16:59

Hopefully a move nicely over 55 pence on the way.

Selling that chunk of property well over NAV looks a shrewd move.

[skyship] 07/12/2019 11:39

CJ - Thnx for posting, though link doesn't work - this one does:

[essentialinvestor] 07/12/2019 11:34

Thanks Jack.

[cousin jack] 07/12/2019 10:55

SREI is one of the trusts covered in an informative article about commercial property trusts published by Citywire yesterday

hxxps://citywire.co.uk/investment-trust-insider/news/investment-trust-watch-special-what-you-need-to-know-about-uk-commercial-property-trusts/a1303071?ea=513123&ref=mobile&utm_source=Watchlist_Comment&utm_medium=Watchlist_Comment&utm_campaign=Watchlist_Comment#1303144

[essentialinvestor] 07/12/2019 09:28

Multiple BOD buys this week.

[essentialinvestor] 05/12/2019 11:35

Thanks. Thought it was around that.

SLI have a lower retail %, discount atm is not enough for me.

There is certainly scope for NAV falls here, as with most REITS.

[colonel a] 05/12/2019 11:29

Just under 25% from their web site.

[essentialinvestor] 05/12/2019 11:09

I think we are late cycle and there are ample reasons for caution.

In terms of SREI, they have sold £95 million of property sinc January,
of which £45 million was sold at a 15% premium to NAV, so with the recent refinancing
they may be in a better position than some.

Retail comprises around 26% of their portfolio from memory would need to double check that.

I've just had another few, but only have a few k invested here. Regional office space is
their largest area.

[my retirement fund] 04/12/2019 15:41

Isn't this stuffed to the gills with over priced retail and commercial crud where rental reductionswill need to be pencilled in for at least a decadepost Brexit. For example the galaxy in Luton ?

[essentialinvestor] 02/12/2019 17:44

Bought a small amount today.

Would prefer if the retail exposure was less, but take what they say
on asset management opportunities etc - although every Propco says the same!.

[essentialinvestor] 27/11/2019 12:19

The annual management costs eat in to returns here.

[essentialinvestor] 26/11/2019 17:27

SKY, appreciated, thanks. Wanted to ensure I was not miscalculating.