Schroder Real Estate Inv... Share Discussion Threads

[nexusltd] 11/2/2023 19:03

@nickrl. Those two off-book trades both @ 48.2p totalling 3.45mn shares look like sales. Of course someone has bought at that price. Daily volume is c. 0.75mn shares. Interesting that there was sufficient liquidity for such large trades. Could they be:
1) inter-institutional trades, or
2) mm's replenishing their books, or
3) ?

I seek to learn from your observation.

[nickrl] 11/2/2023 13:07

@mrf two big trades went through just after 1609 totalling 3.45m so we might see an RNS

[my retirement fund] 11/2/2023 11:24

The latest "Spot the Dog" study from bestinvest found that Schroders accounted for nearly a quarter of all mutual funds listed in a report as persistent underperformers. With last year data showing little sign of a turnround.

[my retirement fund] 11/2/2023 10:56

Fridays closing trading volume exceeds daily average by +156.34%

[shieldbug] 09/2/2023 11:00

Rent frees are painful given current inflation.

[nickrl] 08/2/2023 18:46

@Sky the main loan is excellent but thats only 74% of the debt and once the cap expires they will be at 3.3% average cost and potentially higher as they have capex in hand currently that will be funded out of the RCF unless they make more sales. I like them and keep topping up but they really ought to back off over the debt sales pitch as they won't have lowest rate come Jul23 albeit will still have best duration.

Downloading the presentation i also spotted that annual rental income has dropped from 30.7 to 29.1 over 3mths which doesn't correlate with void rate reducing. However, doing a bit of digging i can see they have granted some rent frees with University of Law and a building at Chippenham so will recover in due course but i do wish they would all adopt a consistent way of presenting data.

[skyship] 08/2/2023 16:32

Agreed. Nothing new. Just served to underline the active management initiatives and the great debt position - best in class in terms of both rate and maturity.

[nickrl] 08/2/2023 15:04

Investor Meet too much waffle about stuff investors already know so takes too long to get to questions which is where you get the real insight which was as usual informative. Oh and they gave me an reasonable answer to my q on the RCF if in fact the answer was we aren't sure yet!

[spectoacc] 06/2/2023 14:40

Good point @shieldbug; any which way, boards are also on the hook - witness how many regularly jump from manager to manager with no better results, or how many went over to Baillie Gifford presumably thinking they had the magic source.

[shieldbug] 06/2/2023 14:36

I must admit I thought that Nick Montgomery has been involved with SREI since its inception. He certainly seems to have arrived at Schroders from Invista.

[speedsgh] 03/2/2023 16:51

I hope to be there, in spirit if not in body :-)

[skyship] 03/2/2023 16:30

InvestorMeet Presentation by SREI on 8th Feb 2023 at 2:00pm GMT.

[skyship] 03/2/2023 11:48

riverman - good posts. Things never quite what they seem!

Around the time they took over SREI had a PV of £329m on a 38% LTV; this compares with the current £470m on a 35% LTV.

Quite a few of the REITs we own and talk about didn't exist 10yrs ago; but here is a chart showing the share price performance of a select few:


free stock charts from uk.advfn.com

[riverman77] 03/2/2023 10:56

Quick bit of digging and can see it wasnt even managed by Schroders in the GFC so don't think fair to judge them on poor performance over that period - it was then managed by someone called Invista - here is an extract from the 2011 annual report which mentions the appointment of Schroders.

In March 2011, the Board gave notice to the current manager, Invista Real Estate Investment Management Limited (“IREIM”), of the termination of its investment management contract. As previously announced, the Board subsequently conducted an extensive review of the options open to the Company, culminating in a competitive process in which a number of parties were invited to make proposals to the Board. On 17 August 2011, the Company entered into non-binding Heads of Agreement to appoint Schroder Property Investment Management Limited (“Schroders221;) to manage the Company’s portfolio.

[riverman77] 03/2/2023 10:32

I haven't looked in detail at the full history, but I believe the earlier poor performance was under a completely different team, and like many others they were probably over leveraged going into the GFC. They also took a hit a few years by refinancing the expensive debt - again this was put in place by the previous team but the decision to refinance now looks very smart. I'm more interested in looking forward and the current manager and the team at Schroders look very impressive in my view. Do not currently hold but may consider adding if it dips back.

[cc2014] 03/2/2023 10:12

Thanks Shieldbug. Appreciate your post.

Skyship. Sadly the reason I'm still in this game after 30 years and my pot grows is not that I'm that good at picking stocks, it's more that I'm good at avoiding duds.

The issue with the last valuation is that I care about the long term performance of the Trust and whether the manager is doing a good job. I appreciate that you are a short term trader and happy to flip in and out for 5-10% or whatever as stocks run to extremes on the upside or downside but that style of investing is not for me at this point in my life. On your short term investment horizon the long term performance of the fund manager doesn't matter. On my longer term horizon it does.

So, as a longer term investor I'd want to know whether they bought the asset for £1m or £5m and what improvements have been spent on it.

If I stand back and look at it the fund floated about 20 years ago at 100p and now it's 47p, so I'd have lost over half my money. That's not what I'm looking for. It suggests the fund manager doesn't know what they are doing or are paying too much out in dividends. If I'm more generous and ignore all the loss before 2010 it appears in the last 13 years there has been no capital appreciation. That's not good, at least not in my eyes, not set against a starting point in 2010 which surely should have been a low baseline and then 13 years of low interest and rising property values.

Now there may be more to the story and there probably is and perhaps I'm being unfair but my avoid the duds antenna says keep out unless I have some piece of significant other information. I currently have two pieces of significant other information. The NAV discount which is large and the fixed interest rate which is low (but I suspect this has been frigged around by Schroders and is not quite as it seems, actually I'm sure of that from my previous research but I didn't write any notes).

I have owned this Trust in the past when it was down in the 30's, but given how opaque Schroders can be I really do need a very decent discount to tempt me in as it seems fund managers require as well


As an aside I do not know what they are doing increasing the dividend today. I suspect they are trying to keep investors happy and listening to demands from fund managers but given the current economic backdrop I think they should be holding it and protecting the balance sheet. Again it's another reason for me to require a very large discount.

[nickrl] 03/2/2023 10:10

@cc2014 there not the only ones with an information deficit but to be fair to SREI i requested they provide more transparency on lease expiry/breaks by year and they've included that detail.

@specto they at least acknowledge the cap expires in Jul 23 and based on SONIA being nearer 4% now after IR rise yesterday the RCF will be c5.5% and potentially higher as there are a few more MPC meetings before then. The RCF is bound to creep up a bit further with capex they have committed to so by my calcs the RCF will absorb another 0.8m. OK wont break them but that 800k less for increasing the dividend.

[shieldbug] 03/2/2023 09:57

They might have paid £2m for it before 2008. Not sure it matters much.

[shieldbug] 03/2/2023 09:44

CC2014 - From 2012 annual Report - "On 25 June the Company also sold Cedar House on Ancells Business Park in Fleet to an owner occupier for £1 million. This compared to the independent valuation as at 31 March 2012 of £0.82 million. The secondary office
property was 57% let on a short term basis. The price reflected a yield, on expiry of a rent free period, of 6.3%, reducing to approximately 3.4% after non-recoverable expenditure associated with the vacant space."

From Google maps you can see that Cedar House (now occupied by Nolan Business Solutions) is the same format (mirrored floor plan) as Beech House. Not a conclusive piece of information but it might help.

[skyship] 03/2/2023 09:28

CC - Indeed, there are many annoying aspects with Schroders, including for me the fact that I can't see their website presentations as UK only!!! Why???

Still, I don't fully comprehend your complaint re the Beech House sale. Surely the only really important facts are the sale price and the comparison with the last valuation.

[riverman77] 03/2/2023 09:24

The most impressive of the udpates so far in my view. The debt is long term, low cost and yes predominantly fixed (around 75% from memory) - you wouldn't want to be 100% fixed as wise to have some diversification in your funding as no one knows what will happen to rates.

[cc2014] 03/2/2023 08:57

Could the Schroders boys and girls make it any more difficult for me to assess what's going on. Or, put another way I am tired of their desire to paint an incredibly optimistic picture and I find it difficult to find the time and energy to research their funds properly. It's not just this one but there's a pattern across most of their funds.

"Disposed of an office asset, Beech House, in Fleet for £2.1 million, a 17% premium to the independent valuation as at 30 September 2022"

But what I want to know is something useful like what is the book value or what they paid for it including addtional investment. It tells me nothing. I appreciate I could trawl through endless annual accounts and I could find the information but I don't have the energy.

I give up, Schroders annoy me. But I guess that won't stop me buying SREI provided the discount is high enough. It's just that it's going to have to be a bigger discount than it should be because of this type of messing around.

[skyship] 03/2/2023 07:41

A better performance than many; also a small (2%) dividend increase.