Schroder Real Estate Inv... Share Discussion Threads

[spectoacc] 22/11/2023 16:07

I've a policy of selling into ramper Tommo tips/comments, but pleased with him for this one - out at 45.39p, when 45.25p to buy. Don't see that very often.

@giltedge1 - probably would be good value at 50p, but unfortunately for SREI even at 45p there's a great deal else (IMO) at better value. (Tries to resist mentioning GCP & SEIT).

[giltedge1] 22/11/2023 15:45

Thanks Simon Thompson of IC, pushed price to 45p, all helps. Even at 50p would be good value.

[skyship] 22/11/2023 13:47

Certainly not SREI. API have a small investment which they've just marked up in value.

[cwa1] 22/11/2023 11:08

And which company would that be MRF? :-)

[my retirement fund] 22/11/2023 09:14

I wouldn't touch any company involved with Scotish Moorland with a barge pole. Insane !

[giltedge1] 22/11/2023 08:55

Pleasing results, extra ERV 8m, which would add 2% to yield, good to read stanley green 60% under offer extra 1m in rent Advised in previous updates small businesses slow to commit, obviously have to exit existing leases, hope to complete next 6 months. Nice chunky 40% gain on Hotel lease to £2.6m Manchester Tower to 2060 don't know if I will be around to see out this lease! Positive cash flow at current yield almost 8%, with more to come hopefully. A lot of rent frees to come through 2024 mainly offices, obvious good leasing even at rent frees, saves on voids. A lot to come 2024 IXYS, office rent frees announced, 2 Starbucks + usual portfolio reviews. Obviously office exposure A worry 25%, but lucky to have 2 universities on board with long leases. No gain in NAV for 3% fixed loan, must be at least £30m. Also valuer capitalisation rate 8%, seems very high, NAV seems very Conservative. A strong hold.

[mirandaj] 22/11/2023 08:47

Schroder Real Estate Investment Trust - Simon Thompson

Starts

portfolio continues to outperform its MSCI benchmark, delivering an above-average 3.1 per cent income return over the six months to 30 September 2023.

Ends:

The shares trade on a 28 per cent discount to NAV and offer a 7.6 per cent dividend yield, but the real discount to NAV is deeper. That’s because the £16.8mn (3.4p) fair value benefit of a £129.6mn loan fixed at 2.5 per cent with Canada Life until 2036 is not included in the group’s NAV of £296mn (60.5p). So, although the share price is little changed since I covered the annual results in June 2023, the high dividend and reversionary potential of the portfolio make the shares worth locking away. Buy.

[my retirement fund] 21/11/2023 20:39

I've taken my filippo off the table. May take some back lower

[nickrl] 21/11/2023 20:30

@sky it maybe an impressive ERV but if it isn't realised its worthless so be good to see some of those negotiations translating into firm leases as they have 15% of NRI up for a break/expire over next 12mths so plenty of risk on vacancy levels. Couple of things i spotted is that Buckinghamshire New University rent steps up an additional 0.7m from Jan 24. Also i see that one of the new leases on City Tower for 809k pa (i suspect this is full cost so only 25% comes to SREI) promoted as 10% ahead of ERV actually has a 19 Mth rent free! Thats a big concession but at least they are presumably liable for service charge and rates now.

[eeza] 21/11/2023 19:50

@Sky

Have sent PM.

[skinny] 21/11/2023 16:23

The recording :-

[skyship] 21/11/2023 16:14

Re the presentation. Much of course just a repeat of previous ones. However, a lot more on rent increases & the dichotomy between plunging valuations due to DCF; and the continuing upward move in rents.

The Good yield and impressive ERV does tend to make this a core holding; and I'll buy back most of the 50% I've sold if they pullback to the 42p level again.

[fred177] 21/11/2023 14:28

On the plus side another 60% of Stanley green under offer, but what are the incentives? Lots of talk about rents achieved 7% over ERV but again are these headline rents ? I think it’s one to tuck away for reasonable yield assuming we are near a bottom with valuations based on current base rates irrespective of financing

[skyship] 21/11/2023 13:59

Top-sliced quite a few at c43.7p average. Just about to listen to the IM presentation...

[pavey ark] 21/11/2023 11:36

I am of the same mind....I hold but not with any conviction.
My dealings here have been greatly helped by not really being into SREI...sold at 47/48p bought back in at 41p average.
Was attracted back in by the high void rate as I reasoned that if they could get that under 5% things would look good !!???

Gearing is higher than I would like and once again we are asked to look, wonder, be in awe of the the long term debt deal.

I prefer API and was very much into UKCM until the current rather farcical deal/no deal situation ....sold at 59p but watching with interest.

EBOX: bought in without due diligence so will suck it up....getting close to my purchase price so may make a decision soon.

[nickrl] 21/11/2023 10:27

Listened to the webinar at 9 too much "hope" from Montgomery for my liking anyhow they reckon moving to better ESG properties is where the growth is. He reckons there will be distressed sellers in lower quality offices and they can add value by upgrading them but that needs CAPEX. His Portfolio Mgr then tells us LTV is above the agreed range and sounds like disposals are a foot to pay for said capex as they need to eliminate the uncapped element of the RCF(6.83%). Vacancy rate is still high (11%) and say oh its better if you exclude Stanley Green but thats the showcase ESG asset that should be flying off the shelves!! Anyhow if all the interest comes to fruition will drop back to 4%.

Been keeping the faith here as they keep telling us extra rental income is coming from rent frees contracted step ups but NRI keeps drifting down. Im not so much interested in divi growth but divi coverage is getting low so we need a buffer if/when things turn down. Now looks like that income is going to be recycled elsewhere as they decide to competed with API on being an ESG REIT.

These been treading water for sometime but i suppose they showed some resilience 6-8wks back when many of its peers kept dropping every day so on balance will keep them for now.

[spectoacc] 21/11/2023 08:13

@Garbetklb - you're right, thanks - getting my minor REITs mixed up.

[speedsgh] 21/11/2023 08:12

From Chairman's outlook...

"...The Board and Manager also recognise that we need to be proactive addressing the current share price discount to NAV. This has driven the decision to announce an evolution of the strategy. As sustainability considerations become even more important for investors and occupiers, we have a strong conviction that it will clearly help to differentiate the Company and drive more sustainable, risk-adjusted returns."

[speedsgh] 21/11/2023 08:11

Balance sheet

The average interest rate for total debt drawn at the interim period end was 3.5%, with an average maturity of 10.2 years, and 91% either fixed or hedged against movements in interest rates.

The debt refinancing with Canada Life in 2019 is providing a significant benefit in a higher interest rate environment. This long-term loan, which represented £129.6 million of the £175.6 million total borrowings at the period end, has an average loan maturity of 12.6 years, with a fixed average interest rate of 2.5%. At the period end, the incremental positive fair value benefit of this fixed rate loan was £20.8 million, which is not reflected in the Company’s NAV.

The balance of borrowings at the period end totalling £46.0 million comprised a revolving credit facility (‘RCF’) from RBS. This facility totals £75.0 million and can be drawn and repaid at any time up to maturity in July 2027. The RCF is a ‘Green Loan’, with criteria linked to reduced energy consumption, future improvements in the GRESB rating and certification linked to building improvements.

£30.5 million of the £46.0 million drawn on the RCF benefits from an interest rate collar, which protects the Company from interest rates above 4.25%, whilst also allowing the Company to benefit from future falls in interest rates down to a 3.25% floor. The collar matches the loan duration and, due to interest rates currently being above the upper limit, had a positive fair value of £0.8 million at the period end.

At the period end, the Company had a net loan to value (‘LTV’) ratio of 36.6%, slightly above the long-term strategic target range of 25% to 35%. The Company has significant headroom against all loan covenants, and steps are being taken to reduce the LTV back in line with the target range.

[garbetklb] 21/11/2023 08:04

SpectoAcc - that's API. But the Scottish moorland looks bonkers for API - suspect it will come back to bite them. And eye watering price. I live in the Highlands....

[spectoacc] 21/11/2023 07:36

Doubling down on ESG. Perhaps they want to buy more Scottish moorland.

[skinny] 21/11/2023 07:06

Sector leading debt profile underpinning earnings and fully covered dividend