Schroder Real Estate Inv... Share Discussion Threads

[essentialinvestor] 09/6/2020 13:15

No where near the cycle NAV lowpoint imv.
Better idea on that towards the backend of this year.

[spectoacc] 09/6/2020 07:16

Hmm that's some NAV decrease. Reads well otherwise.

[skinny] 09/6/2020 07:07

.

COMPANY WELL POSITIONED WITH STRONG BALANCE SHEET: LONG TERM DEBT, LOW LOAN TO VALUE OF 24% AND CASH FOR FUTURE INVESTMENT

Schroder Real Estate Investment Trust, the actively managed UK focussed REIT, today announces its audited full year results for the 12 months ended 31 March 2020.

Balance sheet strength and defensively positioned portfolio

· £95 million of disposals completed since January 2019 at an average net initial yield of 3.0%.

· Refinancing of £129.6 million term loan with Canada Life in October 2019 resulted in an annual interest saving of £2.5 million per annum, with term extended to an average of 16.5 years.

· Sustained real estate portfolio outperformance of +1.7% total return versus the MSCI/IPD Benchmark Index over the past 12 months, +1.7% p.a. over the past 3 years and +1.0% p.a. since IPO in July 2004.

· 82% of the portfolio located in Winning Cities and Regions.

· 68% of the portfolio weighted to the office and industrial sectors, with a below Benchmark retail weighting and no shopping centres.

· Loan to Value (‘LTV’), net of all cash, of 23.7%.

· Significant headroom to debt and interest cover ratio covenants; the Company could withstand a further valuation fall of 51% and, based on the current tenancy position, a 66% decrease in net rental income.

· Clear strategy for dealing with Covid-19 related risks, with 74% of rent collected for the quarter commencing 1 April 2020.

· Dividend due to be paid in June 2020 postponed due to Covid-19 uncertainty with intention to pay in part or in whole at a later stage once there is greater economic clarity.

Key financial highlights

· Net Asset Value (‘NAV’) of £309.8 million or 59.7 pps (31 March 2019: £356.4 million or 68.7 pps), reflecting a decrease of -5.4% before one-off debt breakage and related costs linked to the refinancing of £27.4 million, and a decrease -13.1% as a result of the refinancing.

· Net asset value (‘NAV’) total return for the period to 31 March 2020, adjusted for the refinancing costs, of -1.5%, and -9.4% as a result of the refinancing.

· Adjusted EPRA earnings of £12.7 million, a decrease of 16% (31 March 2019: £15.2 million), primarily driven by reduced income following asset disposals.

· £14.1 million of dividends paid during the period comprising three interim dividends of £3.4 million, or 0.65 pps, and a fourth, increased, interim dividend of £4.0 million, or 0.7715 pps.

· Loss of £32.5 million (31 March 2019: £15.9 million) primarily due to the one-off debt breakage and related costs of £27.4 million.

Key operational highlights

· 77 new lettings, rent reviews and renewals completed totalling £6.5 million in annualised rental income and an additional £1.4 million above the previous level. This activity and disposals have maintained a stable void rate of 7.3% (31 March 2019: 8.5%).

· Reversionary income yield of 7.3%, compared with the MSCI Benchmark of 5.3%, supporting income growth during a period of negative growth.

· Successful execution of Responsible and Impact Investment strategy recognised by achieving EPRA Best Practice Sustainability Reporting Gold Award for the year-end accounts and a three Green Star rating in the annual Global Real Estate Sustainability Benchmark (‘GRESB’) survey.

· The Manager is working closely with occupiers to mitigate the impacts of the Covid-19 pandemic, to ensure the safety and wellbeing of our tenants, suppliers and other stakeholders, while protecting shareholders’ long-term interests.

more.....

[skinny] 02/6/2020 07:04

Schroder Real Estate Investment Trust, the actively managed UK-focused REIT, will announce its full year results for the period ended 31 March 2020 on Tuesday 9 June 2020.

[essentialinvestor] 17/5/2020 15:19

The LTV numbers will change markedly with valuation declines,
however if you are starting from an LTV of mid 20's it's better than mid 40's,
dependent on what sector asset/s the REIT is holding!.

Prime London office is a very different market to provincial secondary shopping centres.

[nickrl] 15/5/2020 22:38

Essential its already crashed through the floor i set and its low LTV counts for nothing. OK its a bit heavy on retail but its also got some hotel/leisure assets which isn't helping but even if rent drops to 50% they can more than cover outgoings.

[essentialinvestor] 15/5/2020 11:19

On SREI, ig anyone has any insight in to where trough NAV may end up
over the next 18 months?, would be interested to hear.

[essentialinvestor] 14/5/2020 19:44

Spec, guessing the market is not ruling
out an equity raise at some point which would be highly dilutive.
Either that, or it's a complete reset of retail rents sharply downwards,
with significant further falls on the retail portfolio to come.
Falling retail rents feed in lower future dividends.
No BOD buying at Land either.

[spectoacc] 14/5/2020 19:30

Oh yes - and SHB is quality.

Considering LAND LTV not that high, and raising cash would be no problem for them, I see that NAV discount as starting to be tempting. Marked down c.10% recently already, knock off say another 25%..

[essentialinvestor] 14/5/2020 17:42

Had a few today, but not 175k.

Thought this may dip in to the 20's as previously mentioned.

LAND is trading approx 60% below their recently reported NAV,
market anticipating heavy commercial property asset value falls over the next 12/18 months.
Would not take much notice of historic NAV levels across most REITS.
Something like Segro possibly safer than most.


SHB getting hammered.

[spectoacc] 14/5/2020 15:19

Interesting re-reading a few posts above.

Came on to post there was 175k shares went through in a block at 30.1p.

[spectoacc] 17/4/2020 15:38

Incongruous, def ;)

Is a fair point - as a trader (/investor) what matters is P&L, not being "right". Hope I'm not afraid to change my mind if the evidence changes.

Oil the main market right now IMO - govnts can't easily buy it all up when storage capacity nearly full, unlike with equities, with bonds (even junk end), with currencies, with business "loans".

As of right now, the world outlook still looks grim.

[essentialinvestor] 17/4/2020 14:19

Best to stay open-minded imv. Falling in love with a particular perspective
can be costly.

Fundamentals need to be seen in the context of extraordinary CB liquidity.

That being said, would be surprised if there is not one more leg down
and a 50% bounce in many cyclicals over 3 weeks looks incongruous.

[cc2014] 17/4/2020 14:17

Oil now at $17.50 down 12% today and BP. still up!

Tells me people are buying on different time frames here

[spectoacc] 17/4/2020 12:55

@CC2014 - agreed, FOXT even at a premium!

90% in agreement with you re markets/Covid - the world has changed.

The 10% is probably Remdesivir.

[cc2014] 17/4/2020 12:16

#636 I can't believe how many of these placings are getting away so easily.

I think the market has lost the plot and I'm sitting on over 85% cash as I see zero chance of a V shape recovery, zero chance of a hockey stick shaped recovery, zero chance of a U shaped recovery. What I see is problems with consumer and corporate credit leading to a dragged out recovery which will take years to get back to where we were 3 months ago. Clearly the market doesn't agree with me!

(Off topic I know but I see today as all those with FOMO getting pulled in before the next down phase of the market and another load of stop running as we head back to 5000 on FTSE).

[hugepants] 17/4/2020 09:58

This is what they said 2 weeks ago in the trading update.

LARGE CASH RESERVE, LOW LEVERAGE AND LOW RETAIL EXPOSURE


"Cash and Undrawn facilities

Following the significant sales programme and refinance in 2019 the Company has significant operational flexibility and liquidity. As at 31 March 2020 the Company has approximately £35 million of free cash and an undrawn £52.5 million Revolving Credit Facility. The cash and undrawn debt facilities provide capacity of approximately £87.5 million for attractive investment opportunities and income enhancing capital expenditure initiatives."


So this drawdown is for investment opportunities. They were already in a strong position pre this drawdown.

[spectoacc] 17/4/2020 09:49

Agree @CC2014.

Note also the long tail of co's raising cash from placings. Seems the message is finally getting through.

[cc2014] 17/4/2020 09:46

My view is that they believe unless they draw down the RCF now it won't be available when they want to go on a spending free as at that time their EBITDA will have collapsed and they will have (temporarily) breached their banking covenants.

They aren't the first to do this. McCarthy and Stone were the first I noticed who drew down their whole facility and then told the market they could go 18 months with no income whatsoever.

It's not very efficient in terms of profits though. Draw down your facility. Pay a bunch of interest and then keep it in your bank account paying zero.

I don't really approve and believe the banks are going to react by cutting available RCF's at the next negotiation point (or maybe that's already happening?)

Might be a good move for SREI though if their plan is to pick up distressed assets.


Watching and waiting. I don't think we are anywhere near the bottom yet as I don't think rents are likely to get paid in Q2 or Q3 and I'll form an opinion on Q4 nearer the time.

[nickrl] 17/4/2020 09:33

They don't need the cash currently to cover interest and outgoings but this action increases the interest bill by c£1.2m pa on the RCF now its fully drawn. So only logical conclusion is they want to be in a position to pounce.

Also banks are flush with liquidity so don't see them pulling back and in reality with govt policy is to protect integrity of UKs productive capacity some rent forbearance is going to be necessary and the banks will need to play there part.

[spectoacc] 17/4/2020 09:00

Either that, or they genuinely see bargains - and think they can see where Covid-19's heading (they can't).

Or - they realise how desperately the money may be needed in say 6 months time.

Fail to see how there's bargains yet when govnt effectively banning foreclosure by diktat.

[irishmatt] 17/4/2020 08:52

Maybe they suspect that credit line might get pulled

[colonel a] 17/4/2020 08:32

Really don't get this morning's RNS.
Are they planning to be carpet baggers ?

[essentialinvestor] 09/4/2020 11:38

We really don't know the rent outlook until the next Q imv.

So Q 2 ending June. That will be the big tell.

[colonel a] 09/4/2020 11:04

Yes, but the last RNS probably needs a follow up when they think they have all of the rent payments they will get at this pass.