Schroder Real Estate Inv... Share Discussion Threads

[fordtin] 18/12/2022 18:10

It looks to me as though they may have sold a small piece of the site;


"The estate comprises two trade/showroom units together with a prominent 0.5-acre site. The properties are let to longstanding occupiers including Topps Tiles."





0.5 acre is 21,780 sq ft. Stanley Green phase two covers 80,000 sq ft (1.837 acres).










"medium-term redevelopment potential across a prominent 0.5-acre site."


Seems like there may be plans to kick the caravan dealership out. I wonder if it was sold with planning consent.



Stanley Green "Latest Images";

[nickrl] 18/12/2022 13:19

Last weeks update by Kepler has it down as an asset still and given SREI reported on CAPEX on the new build at the interim results

"Development of 80,000 sq ft, operational Net Zero Carbon industrial scheme at Stanley Green, Manchester on track to complete in Q1 2023, with strong occupier interest generated, further net zero industrial developments in progress"

id say something doesn't add up here and wires have been crossed with another location.

[mirandaj] 18/12/2022 10:58

Another comment about it 7th July 2022:

[skyship] 18/12/2022 09:44

Mirandaj - Rather bizarre that piece above. No mention whatsoever by SREI, either as a usual disposal RNS or in their recent Interim Statement.

I'll send them an email for clarification; or have you already done so?

[mirandaj] 18/12/2022 09:10

Just FYI:
Stanley Green Trading Estate

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2.


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July 2022

"Stanley Green Trading Estate in Cheadle Hulme has been sold to Altrincham-based Patrick Properties, changing hands for the second in two years.

Stanley Green Trading Estate comprises 14 units, totalling 150,000 sq ft on a 0.5 acre site off the A34, next to the retail park of the same name. Occupiers including Screwfix, Toolstation and Topps Tiles. 

Investors, Schroder Real Estate Investment Trust, acquired the site in December 2020 for £17.25 million, with historic planning consent already in place for a further 48,000 sq ft of warehouse and trade counter space to be added.

John Burrows of B8 Real Estate, who represented Patrick Properties in the purchase, said:

“The estate is situated in one of the premier trade locations in the North West and offers numerous asset management opportunities, including an immediate lease renewal, significant reversion and medium-term redevelopment potential across a prominent 0.5-acre site.”

Jordan Kennedy of Patrick Properties added:

“It is rare to secure such prime real estate in such an established location. We look forward to working with our new tenants, and the future opportunities this site will bring.”

The vendor was represented by Richard Smith of Fifield Glyn. The sale price of Stanley Green Trading Estate was not disclosed."

[petewy] 16/12/2022 10:42

Buy or sell dude?

[my retirement fund] 16/12/2022 03:19

properties against which the term loan is secured would have to fall in value by 37% for the covenant to be breached, or net income from the properties would have to more than halve. This is also before considering the possible uses of cash and uncharged portfolios to shore up the balance sheet in extremis. The corresponding figures for the RCF are 49% and 54%. In our view these are healthy margins that should provide confidence in SREI's balance sheet, notwithstanding the cloudy immediate outlook for property values.

[my retirement fund] 16/12/2022 03:18

Total debt on a net LTV basis is 31.4%, which amounts to 45.8% on an NAV basis. This increases the sensitivity of the NAV to falls in portfolio values, and may be a factor behind the shares trading on a discount in recent months. However, the low cost of this debt plus the fact it is mostly fixed also has to be taken into consideration, and reduces the risks that can come with being geared in a rising interest rate environment. We note that the sharp rally in rates after the trust arranged its long-term loan has led to a £17.7m current valuation of the loan, which is not reflected in the NAV. Over the long term the board strategically targets 25–35% gearing on a net LTV basis.

[my retirement fund] 16/12/2022 03:14

PortfolioSchroder Real Estate (SREI) owns a diversified portfolio of higher-yielding commercial property which is managed by UK-wide specialist teams to generate a high and growing income together with capital appreciation.Nick and the team at Schroders Capital Real Estate apply a research-led approach to determine attractive asset classes and locations in which to invest, looking ahead to what they think will outperform in the next few years. This dynamic approach to asset allocation is intended to generate a sustainable rising income, as well as capital growth across market cycles.The team forensically model the portfolio to enable them to balance the delivery of a progressive, sustainable dividend in the near term with investing in asset management and redevelopment projects that will drive capital growth and future income increases in the medium to longer term.Sustainability is key to the asset management opportunities the managers are looking for. In their view rising ESG standards and expectations are generating multiple opportunities to carry out value-enhancing asset management activity which can help boost the scarce supply of high-standard property.The focus on opportunities for asset management and rental growth means the portfolio has no exposure to the priciest, lowest-yielding parts of the industrials market, which has helped the portfolio fall less than the benchmark in the sell-off seen this year. SREI's industrial exposure, which was 46.2% at the time of the latest NAV for the end of September, is concentrated in regional, multi-let industrial estates rather than the big-box, single-let warehouses which have come under the most pressure as interest rates have risen. The below chart shows the trust's sector exposure versus that of its MSCI All Property benchmark.A good example of the interest in multi-let industrials and the sustainability strategy is the investment in December 2020 in the Stanley Green Trading Estate in Cheadle, Manchester. This property, with an adjoining 3.4-acre site, was acquired in December 2020 for £17.3m. The current value of £29.5m now makes it a top-ten holding in the portfolio (see table below). Construction of 80,000 sq. ft of operational net-zero carbon (NZC) warehousing, believed to be the first site of its type to achieve this status in the North West, is under way on the 3.4-acre adjoining site.£8.7m is planned to be invested in total on this development, which should generate £1.3m of annual rent once it is complete in January 2023. As at 30 September 2022, the value of the development site was £10m (included within the £29.5m total asset value) and there was a remaining £2.9m to spend on the development. Once complete, the team estimate the value of the development site will increase by £10m to £20m. This assumes a c. 6% yield on the £1.3m in additional annual rent expected to be generated from the new development and means the whole asset would increase in value to £39.5m from £29.5m, all else being equal. Meanwhile the focus has been on regearing leases on the existing accommodation at the estate and negotiating higher rents.We note that as this asset is under development, the £1.3m expected annual rent from the new accommodation has not been included by the valuers in the estimated rental value (ERV) of £35.4m. Before considering the further positive impact of the Cheadle site, this ERV represents a 6.6% yield as at the end-of-September valuation, which already compares favourably to the MSCI benchmark's 4.8%. Similarly, in the last half year the team have completed lease activity with current tenants at Langley Park Industrial Estate in Chippenham at higher rents. A backdated rent review has seen Siemens become the second-largest tenant in the portfolio after a 26% increase in the rent it pays to £1.22m. A new ten-year lease renewal without breaks has been completed with IXYS UK Westcode Ltd, the UK subsidiary of Littelfuse, a global manufacturer which has provided a parent-company guarantee. The rent is £465,000 per annum, or £5.50 per sq. ft, reflecting a 31% increase over the current contracted rent of £355,000 per annum. IXYS received 12 months rent free (until December 2023), and will also receive a contribution to repair works of up to the value of £250,000 if undertaken within two years of lease completion. The lease includes a rent review at year five to the higher of open-market value or RPI, with a collar of 1% per annum and a cap of 5% per annum.There is an application in process to extend the amount of space available on the site from 400,000 to 530,000 sq. ft, while the addition of PV panels and EV chargers should improve the ESG credentials of the asset. The manager is engaging with current tenants on a potential larger scheme.Finally, at 106 Oxford Road in Uxbridge, a lease variation was completed on 25 October 2022 with the sole tenant Buckinghamshire New University (BNU), thus removing the tenant break option in November 2023 and providing certainty of income until the lease expires in November 2028. The tenant received nine months rent free, and the rent will increase by 13% – from £1.15m per annum to a guaranteed £1.3m per annum – in January 2024. Having completed the regear, the team are exploring the potential for a longer-term lease commitment in return for the university carrying out more significant sustainability improvements to the building, which would be in line with both BNU's own ESG-related commitments and SREI's ESG-focussed strategy.In order for the managers to effectively deliver their hands-on active management and development approach, they seek to reinvest proceeds from the sale of smaller, non-core assets into larger assets where more scope is perceived to exist for generating excess investment returns by leveraging the inherent opportunities for development that might exist within larger assets. A relatively higher return on invested capital can be captured by this method compared to acquiring further assets. The manager also seeks to acquire adjoining assets or plots to realise scale benefits. In addition, different uses can be assigned, leases can be managed creatively and tenants with higher-spec requirements can be accommodated, in exchange for higher rents.The real estate team in the UK are based in offices in both London and Manchester. Nick is able to draw on a team of more than 100 people, including experienced, specialist asset managers within each of the real estate sectors in which SREI invests. Being able to access this large team's experience in individual stock selection and using their knowledge to inform judgement of reversionary yield, development initiatives and the cost of capex – along with other investment considerations – is a potential competitive advantage.In addition, the relationships held across the team mean the manager benefits from excellent access to deal flow, including off-market transactions. Real estate is an imperfect market where mispriced and undermanaged assets can be found, but only if there is access to deal flow.Store Street in Bloomsbury, London is an 86,000 sq. ft office property that is currently let to The University of Law and is near the site of the new Crossrail station in an area under redevelopment. Near UCL and surrounded by properties housing tenants in the life sciences, tech and media sectors, there is scope to expand the site, potentially more than double the rent, and seek tenants in these fast-growing areas.These projects indicate the scale SREI is able to operate at and the diversity of the toolsets the manager is able to bring to bear. Stanley Green, Langley Park and Store Street are all actual or prospective examples of purchasing adjoining sites to enable value-accretive developments. This fits with the strategic preference for larger assets which bring a broader scope for diverse asset management opportunities.Transactions over the past year have helped push the allocation outside London and the South East up to 72.6%. We think this is illustrative of the entrepreneurial management spirit: Nick is clearly looking for sites with strong locations and fundamentals but where investment is needed to extract full value. We think it should be noted that while SREI sets out to be a 'core' portfolio, this does not mean steady and dull: the high degree of asset management activity across various verticals offers many ways to add value, and this has contributed to above-market returns. The geographical allocation also reflects the search for purchases with more attractive pricing and asset management opportunities. We note that the net initial yield of 5.4% on the portfolio compares to 4.1% on the benchmark. At the half-year end the portfolio void rate was 8.8%, calculated as a percentage of estimated rental value. This is in the middle of the ten-year range of 5–13% and compares with the benchmark void rate of 7.9%. Of the 8.8% void, 1.4% was under refurbishment and 2.5% was under offer. The portfolio weighted average lease length, calculated to the earlier of lease expiry or break, was 5.1 years.The portfolio is diversified by both tenant type and location. Not having high exposure to a small number of tenants is especially important as we enter a recessionary environment where maintaining rent collection, rent levels and therefore total income should be a performance differentiator.The table below shows the 15 largest tenants by annual rent and shows no exposure to high street fashion or leisure. Only three tenants represent more than 2% of portfolio annual rent, and the manager believes these are profitable businesses and strong covenants.A strong tenant base should lead to SREI's income remaining relatively resilient, and this is reflected in the September quarter rent collection, which was 99%.

[skyship] 12/12/2022 11:58

Playing at numbers whilst pondering a top-up; though in current markets looks to be no rush.

If we see Q4'21 & Q1'23 falls of 6%, that would translate into a 17.4% fall in the NAV, back to 61.8p. That would take the discount down from the current 40.6% at 44.40p, to 28.2%. Combined with the yield of 7.23%, certainly value, but will hold off from adding for the tim-ebeing.

[rambutan2] 11/12/2022 21:57

Paid for research, but I always give it a quick read:

[my retirement fund] 24/11/2022 14:08

Yes excellent

[skyship] 24/11/2022 13:41

Actual price now 46.24p - 46.76p. A good move considering XD today.

[skyship] 19/11/2022 16:48

Thnx for the links guys - all good now.

[spectoacc] 19/11/2022 15:18

Thanks @nicrkl, so still not quite there with telling the truth, but a big improvement on what they'd (particularly NM) previously been saying. Has taken them being challenged to come partially clean.

[skinny] 19/11/2022 10:12

The recording and Q&A is now available on investormeetcompany.

[nickrl] 19/11/2022 09:42

@sky its a pretty poorly laid out website so you haven't missed much although the drone videos of the sites aren't too bad.

[fordtin] 19/11/2022 09:35

SKYSHIP, yours and Skinny's links both worked ok for me.

If Skinny's link doesn't work for you, maybe this link to the cookie prefs will help;



edit -I've tried the links in edge, chrome and firefox. All working ok.

[skinny] 19/11/2022 09:22

Your link works ok on Chrome - maybe you have a cookie issue?

Thence from your link :-

[skyship] 19/11/2022 09:10

Having a major problem finding their website. This link works; but then doesn't as won't respond to my ticking AGREE to their T&C. Grrr - does anyone have a different link I could try.

[nickrl] 18/11/2022 23:03

@nexusltd it gives you the base information but they could have shown the impact of the various permutations on IR costs.

Anyhow we will just have sit back and see what approach they take in the new year.

[nexusltd] 18/11/2022 21:11

@nickrl. [i] a bit more transparency on how the RCF could impact the bottom line after Jul 23 would have been appropriate. [/i]. I believe that the interim presentation pack slide #21 goes someway to answer your question.

Edit: It appears that BBCode tags are not supported by this BB; is that so?

[nickrl] 18/11/2022 20:34

@specto due to ongoing power cuts all week couldn't listen live but glad a question was raised on the RCF. My take is they are saying could swap but reckon that will be quite high (but lot less than API) or they could buy a cap again and will make a decision in the new year as they reckon the curve could still move in their favour. Montgomery still over emphasises the fixed nature of borrowings yes it is 75% at the moment but from Jul 23 will drop back to 60% also the other 25% is exposed to SONIA + 1.65% margin. In reality SREI have got one of the best fixed term debt deals which its fair to brag about but a bit more transparency on how the RCF could impact the bottom line after Jul 23 would have been appropriate.

Anyhow reasonable happy to keep these tucked away for time being.