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Schroder Real Estate Investment Trust Limited LSE:SREI London Ordinary Share GB00B01HM147 ORD SHS NPV
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Real Estate Investment & Services 21.8 4.5 0.9 55.9 249

Schroder Real Estate Full Year Results for the year ended 31 March 2021

02/06/2021 7:00am

UK Regulatory (RNS & others)


 
TIDMSREI 
 
For release 2 June 2021 
 
                 Schroder Real Estate Investment Trust Limited 
 
                      ("SREIT"/ the "Company" / "Group") 
 
              FULL YEAR RESULTS FOR THE YEARED 31 MARCH 2021 
 
 PORTFOLIO WELL PLACED TO MEET EVOLVING OCCUPIER NEEDS WITH INCREASED EXPOSURE 
             TO HIGHER GROWTH SECTORS AND ACTIVE ASSET MANAGEMENT 
 
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 
2021. 
 
Key financial highlights 
 
·      Net Asset Value ('NAV') of £296.8 million or 60.4 pps (31 March 2020: 
309.8 million or 59.7 pps), supported by an accretive share buy-back programme. 
 
·      Net asset value ('NAV') total return for the year to 31 March 2021 of 
3.9% (31 March 2020: -1.5%). 
 
·      EPRA earnings of £11.6 million, a decrease of 9% (31 March 2020: £12.7 
million), reflecting the impact of the pandemic on rent collection rates and a 
prudent approach to recognising bad debts. 
 
·      IFRS profit of £4.5 million (31 March 2020: loss of £32.5 million, due 
to one-off refinancing costs). 
 
·      Continued outperformance of the underlying portfolio with a total return 
of 4.6% vs. the MSCI Benchmark Index at 1.8%. 
 
·      Loan to Value ('LTV'), net of all cash, of 32.3%, within the long-term 
strategic range of 25% to 35% 
 
·      £12.2 million of cash and £28 million of undrawn debt facilities 
provides operational and financial flexibility. 
 
·      Dividends totalling £8 million or 1.59 pps paid during financial year, 
reflecting dividend cover of 145% based on EPRA earnings. The Company will 
institute a further 5% increase in the quarterly dividend to 0.656 pps, to be 
paid in the quarter ending June 2021. 
 
·      Post year end reduction in the Investment Manager's fees to generate an 
annualised saving of approximately £600,000 per annum with effect from 1 July 
2021. 
 
Key operational highlights 
 
·      Robust collection rate of 90% of rents due over the financial year. 
 
·      Two multi-let industrial acquisitions in December 2020 for £36.5 
million, reflecting an above average net initial yield of 6.8% 
 
·      80 new lettings, renewals and reviews completed from 1st April 2020 to 
2nd June 2021, which totalled £7.9 million per annum of rental income and 
underpinned a significant reduction in portfolio vacancy to 4.8% (31 March 
2020: 7.3%) 
 
·      73% of the portfolio weighted to the industrial and office sectors (31 
March 2020: 68%), with a below Benchmark retail weighting and no shopping 
centres 
 
·      Successful execution of Responsible and Impact Investment strategy 
recognised with the retention of a three Green Star rating in the 2020 Global 
Real Estate Sustainability Benchmark ('GRESB') survey, with the Company top in 
its GRESB peer group of UK Diversified Listed Companies. 
 
Lorraine Baldry, Chairman of the Board, commented: 
 
"Despite the severe financial and societal impacts of the global pandemic, the 
outlook for the Company is positive. This is due to the UK's faster than 
expected economic recovery, the underlying quality of the portfolio and its 
tenant base and the steps taken to minimise the impact of Covid-19 and maximise 
shareholder returns during the financial year. This activity included a 
successful share buyback programme which, combined with attractively priced new 
investments, enabled dividends to be reinstated in a progressive manner. 
 
"Whilst the recovery from the pandemic will be uneven and have a differential 
impact on sectors within the economy, the Board and Manager expect the Company 
to build on the resilience of the past year, underpinned by its strong balance 
sheet, exposure to higher growth assets and balance sheet capacity to invest 
and deliver attractive returns." 
 
Nick Montgomery, Fund Manager, added: 
 
"The Company has a good quality, diversified portfolio that is weighted towards 
higher growth parts of the UK real estate market, with cash and undrawn credit 
facilities also providing balance sheet capacity to make further investments 
and deliver capital expenditure initiatives to enhance total returns. 
 
"Whilst the Company is therefore well placed, the pandemic has provided an 
opportunity to reassess the strategy in light of the acceleration in structural 
changes and emerging occupier trends.  This will lead to greater focus on the 
four areas of: Environmental, Social and Governance; a hospitality mindset and 
operational excellence; reinvestment into larger assets offering more 
sustainable income and total returns; and leveraging Schroders' sector 
specialist resources to invest across all parts of the UK market. These four 
areas highlighted represent an evolution of the current strategy which, whilst 
remaining income focussed, will place greater emphasis on the delivery of long 
term sustainable total returns." 
 
A webcast presentation for analysts and investors will be hosted today at 09.00 
am. In order to register, please visit: 
 
https://registration.duuzra.com/form/feedback/SREIannualresults 
 
For further information: 
 
Schroder Real Estate Investment Management    020 7658 6000 
Nick Montgomery / Frank Sanderson 
 
Northern Trust                                01481 745352 
Jingjing Qi 
 
FTI Consulting                                020 3727 1000 
Dido Laurimore / Richard Gotla / Meth 
Tanyanyiwa 
 
Annual Report and Consolidated Financial Statements 
for the year ended 31 March 2021 
 
Contents 
 
      Overview.. 3 
 
Company Summary. 3 
 
Highlights. 4 
 
Portfolio Overview 5 
 
Investment Philosophy. 7 
 
Our Strategic Objectives. 8 
 
Performance Summary. 9 
 
            Strategic Report. 11 
 
Chairman's Statement. 11 
 
Investment Manager's review... 15 
 
Sustainability Report. 31 
 
Task Force for Climate-Related Financial Disclosure.. 38 
 
Business Model 41 
 
Our Stakeholders. 44 
 
Risk and Uncertainties. 46 
 
            Governance Report. 49 
 
Board of Directors. 49 
 
Report of the Directors. 51 
 
Corporate Governance.. 59 
 
Remuneration Report. 63 
 
Report of the Audit Committee.. 65 
 
Independent Auditor's report. 68 
 
            Financial Statements. 76 
 
Consolidated Statement of Comprehensive Income.. 76 
 
Consolidated Statement of Financial Position.. 77 
 
Consolidated Statement of Changes in Equity. 78 
 
Consolidated Statement of Cash Flows. 79 
 
Notes to the Financial Statements. 80 
 
            Other information. 101 
 
EPRA Performance Measures (unaudited). 101 
 
Alternative Performance Measures (unaudited) 105 
 
AIFM disclosures (unaudited) 106 
 
EPRA Sustainability Reporting Performance Measures (unaudited). 108 
 
Report of the Depositary to the Shareholders. 125 
 
Glossary  126 
 
Notice of Annual General Meeting. 127 
 
            Corporate Information. 130 
 
Overview 
 
Schroder Real Estate Investment Trust Limited aims to provide shareholders with 
an attractive level of income together with the potential for income and 
capital growth through investing in UK commercial property. 
 
Company Summary 
 
Schroder Real Estate Investment Trust Limited (the 'Company' and together with 
its subsidiaries the 'Group') is a real estate investment company with a 
premium listing on the Official List of the Financial Conduct Authority and 
whose shares are traded on the premium segment of the Main Market of the London 
Stock Exchange (ticker: SREI). 
 
The Company is a Real Estate Investment Trust ('REIT') and benefits from the 
various tax advantages offered by the UK REIT regime. The Company continues to 
be declared as an authorised closed-ended investment scheme by the Guernsey 
Financial Services Commission under section 8 of the Protection of Investors 
(Bailiwick of Guernsey) Law, 1987, as amended and the Authorised Closed-ended 
Investment Schemes Rules 2008. 
 
Objective 
 
The Company aims to provide shareholders with an attractive level of income and 
the potential for income and capital growth as a result of its investments in, 
and active management of, a diversified portfolio of UK commercial real 
estate. 
 
The portfolio is principally invested in the three main UK commercial real 
estate sectors of industrial, office and retail, and may also invest in other 
sectors including mixed-use, residential, hotels, healthcare and leisure. The 
Company believes that a diversified portfolio by location, sector, size and 
tenant will outperform specialist strategies over the long term. Over the 
duration of the property market cycle, the portfolio aims to generate an above 
average income return with a diverse spread of lease expiries. 
 
The Board has established a gearing guideline for the Investment Manager, which 
seeks to target debt, net of cash, at a level reflecting a loan to value of 
between 25% to 35%. This relatively low level of gearing is used to enhance 
income and total returns for shareholders with the level dependent on the 
property cycle and the outlook for future returns. 
 
The dividend policy adopted by the Board is to pay a sustainable level of 
quarterly dividends to shareholders. The Board keeps the dividend policy under 
active review with a view to ensuring the Company can deliver a sustainable 
level of cover whilst having due regard to current and anticipated future 
market conditions. It is intended that the successful execution of the 
Company's strategy will enable a progressive dividend policy. 
 
Investment strategy 
 
The Company's strategy is to own and actively manage a diversified portfolio of 
properties located in the UK's Winning Cities and Regions.[1] These locations 
are benefitting from higher economic growth resulting from structural changes 
such as urbanisation, rapid changes and growth of technology, changing 
demographics and social as well as positive impact themes. These locations have 
diversified local economies, sustainable occupational demand and favourable 
supply and demand characteristics. These properties offer good long-term 
fundamentals in terms of location, specification and sustainability 
performance, and are let at affordable rents, with the potential for income and 
capital growth due to good stock selection and asset management. We aim to grow 
income and enhance shareholder returns through active management and 
operational excellence. 
 
Highlights for the period to 31 March 2021 
 
·      Sustained total return outperformance of the real estate portfolio 
comprising +2.8% versus the MSCI Benchmark Index (the 'Benchmark') over the 
past 12 months, +2.4% per annum over the past three years and +1.1% per annum 
since IPO in July 2004[2] 
 
·      Net asset value ('NAV') total return of 3.9%[3] for the year to 31 March 
2021 
 
·      Active asset management strategy, leveraging sector specialist 
capabilities, completing 80 new lettings, renewals and reviews from 1st April 
2020 to 2nd June 2021, which totalled £7.9 million per annum of rental income 
 
·      Share buyback programme undertaken with £9.5 million of shares purchased 
during the financial year, delivering 1.3 pence per share ('pps') of accretion 
to shareholders 
 
·      88% of the portfolio located in Winning Cities and Regions[4] 
 
·      73% of the portfolio weighted to the industrial and office sectors 
(2020: 68%), with a below Benchmark retail weighting and no shopping centres 
 
·      First in peer group of UK Diversified Listed Companies in terms of 
sustainability performance, retaining three Green Stars in the 2020 GRESB 
survey 
 
·      Loan to Value[5] ('LTV'), net of all cash, of 32.3% at a low average 
cost of 2.4% per annum 
 
Supporting Information: 
 
·      Net asset value of £296.8 million (2020: £309.8 million) 
 
·      Amount spent on shares repurchased of £9.5 million 
 
·      Net asset value per share of 60.4 pence (2020: 59.7 pence) 
 
·      Net asset value ('NAV') total return of 3.9% (2020: -1.5%[6]) 
 
·      Value of property assets and share of joint ventures £438.8[7] million 
(2020: £406.2 million) 
 
·      Underlying earnings of £11.6[8] million (2020: £12.7 million) 
 
·      Portfolio total return1 
 
                o  One year: 4.6% SREIT vs. 1.8% MSCI Benchmark Index 
 
                o  Three years: 4.6% per annum SREIT vs. 2.2% per annum MSCI 
Benchmark Index 
 
·      Portfolio income return1 
 
                o  One year: 6.5% SREIT vs. 4.4% MSCI Benchmark Index 
 
                o  Three years: 6.1% per annum SREIT vs. 4.4% per annum MSCI 
Benchmark Index 
 
Portfolio Overview - at a glance 
 
The investment policy of the Company is to own a diversified portfolio of UK 
real estate underpinned by good fundamental characteristics. The Group invests 
principally in the industrial, office and retail sectors and will also consider 
other sectors including mixed-use, residential, hotels, healthcare and leisure. 
 
Sector weightings 
 
Industrial - The Company owns a range of industrial warehouses, the largest 
being multi-let estates in the densely populated urban areas of Leeds, 
Manchester and Milton Keynes which are positively impacted by structural trends 
and where there are significant asset management opportunities to capture 
rental growth. 
 
Offices - The Company owns offices with good fundamentals in terms of 
specification and location in those Winning Cities and Regions that are 
attractive to a diverse occupier base. The largest office investments are in 
London (Bloomsbury and Uxbridge), Manchester and Edinburgh. 
 
Retail - The retail assets in the portfolio are predominantly well-managed, 
bulky goods retail warehouses let at sustainable rents, and convenience retail 
as part of mixed-use assets which are complementary to broader schemes and have 
multiple uses such as offices and hotels. The Company does not own any shopping 
centres. 
 
Other - Other sectors are hotels and leisure properties. At present, the 
apportioned value of the hotels at City Tower, Manchester and Headingley 
Central, Leeds and a leisure scheme in Luton represent the Other weighting in 
the portfolio. 
 
Sector weightings 
 
Sector weightings by value                                    2021                2020 
                                                               (%)                 (%) 
 
Industrial                                                    38.8                28.6 
 
Offices                                                       34.4                39.6 
 
Retail                                                        20.0                24.6 
            Retail                                            11.3                12.8 
warehouse                                                      5.0                 6.6 
            Retail part of                                     3.7                 5.2 
mixed-use 
            Retail single 
use 
 
Other                                                          6.8                 7.2 
 
Top ten properties 
 
The top ten properties, including the share of the joint venture properties at 
City Tower in Manchester and Store Street in Bloomsbury, are set out below and 
comprise 66% of the portfolio value: 
 
Top ten properties                                   Sector Value (£m)         (% of 
                                                                   [9]    portfolio) 
 
1   Milton Keynes, Stacey Bushes Industrial      Industrial       46.0          10.5 
    Estate 
 
2   Leeds, Millshaw Industrial Estate            Industrial       41.8           9.5 
 
3   Manchester, City Tower (25% share)              Office/       40.2           9.2 
                                                  mixed-use 
 
4   London, Store Street, Bloomsbury (50%            Office       39.4           9.0 
    share) 
 
5   Bedford, St. John's Retail Park                  Retail       26.6           6.1 
                                                  warehouse 
 
6   Leeds, Headingley Central                     Mixed-use       24.0           5.5 
 
7   Chippenham, Langley Park Industrial          Industrial       19.8           4.5 
    Estate 
 
8   Norwich, Union Park Industrial Estate        Industrial       18.9           4.3 
 
9   Cheadle, Stanley Green Trading Estate        Industrial       18.0           4.1 
 
10  Uxbridge, 106 Oxford Road                        Office       16.0           3.6 
 
    Total as at 31 March 2021                                    290.7          66.3 
 
 
 
 
 
88% of the portfolio by value in higher growth locations 
 
                                                    SREIT[10]          % of UK GDP 
 
Fastest growing centres                                   40%                  52% 
 
Second quartile                                           48%                  22% 
 
Third quartile                                             7%                  14% 
 
Slowest growing centres                                    5%                  12% 
 
Investment Philosophy 
 
 
A disciplined approach to investment 
Schroder Real Estate Investment Trust aims to provide shareholders with an 
attractive level of income, with the potential for income and capital growth, 
from owning a diversified portfolio focused on higher growth assets benefiting 
from structural changes which are evident across the economy and real estate 
markets. The portfolio is managed in accordance with an investment philosophy 
centred on consistent principles which are to invest in strong asset 
fundamentals and to actively manage assets in order to enhance value. 
 
Mega themes 
Long-term performance of real estate assets will be driven by structural 
changes or 'mega themes' arising from demographic changes, urbanisation, 
technological change, environmental and social changes and other factors that 
are outside of the normal real estate market cycle.  These include: 
 
·      Climate Change and Decarbonisation: The world is not yet on course to 
meet the Paris targets. The Net Zero Carbon pathway at asset and fund level a 
key priority. 
 
·      Urbanisation: The decline of retail stores will create opportunities for 
more mixed use development in town and city centres. 
 
·      Demographics: The UK population is ageing.  The number of people over 80 
years old will increase by a third by 2030. 
 
·      Technology: Covid-19 will accelerate the growth of life sciences in the 
UK and benefit cities and town with strong universities and knowledge based 
economies. 
 
·      Emerging markets: Beijing now has more billionaires than New York. China 
forecast to be the biggest economy by 2030 with likelihood of growing demand 
for UK real estate. 
 
·      Impact investing: Positively impacting the environment and society with 
the potential to benefit investment returns. 
 
High quality research 
Research is focussed on cyclical and structural trends in order to determine 
market strategy and exploit mispricing. In addition, to better understand real 
estate fundamentals, our research focuses on occupational demand at a town and 
city level and other factors such as construction starts, infrastructure 
investment and pricing relative to other assets. 
 
Business plan-led approach 
Every asset is managed as a business with a detailed plan that is the key focal 
point for identifying and implementing active management strategies that will 
maximise returns. 
 
Responsible and Positive Impact Investment 
Sustainability and Environmental Social Governance ('ESG') and Impact 
Investment considerations are integral to good investment management and should 
generate better long-term returns, contribute to our tenants' business 
performance and create tangible benefits to the communities where we are 
invested. The Company's work in this area was recognised by an EPRA Gold award 
for Sustainability Best Practice Reporting in the 2020 year end accounts and 
retention of Three Green Stars in the 2020 GRESB survey. 
 
Winning Cities and Regions 
Occupier demand is increasingly concentrated in 'Winning Cities and Regions', 
those that offer a competitive advantage in terms of higher levels of GDP, 
employment and population growth; differentiated local economies with higher 
value industries; well-developed infrastructure; and places where people want 
to live and work. Winning Cities and Regions will change over time and 
investments will be made in other locations where we see higher rates of future 
growth that could lead to mispricing opportunities. 
 
·      Differentiated economy: Globally facing, financial services, TMT hubs, 
life sciences and value add manufacturing. 
 
·      Infrastructure improvements: Transport, distribution, energy and 
technology. 
 
·      Employment growth: High value new jobs, wealth effect and population 
growth. 
 
·      Environment: Live and work, tourism and amenities, universities, 
cathedral cities, dominant retail and leisure. 
 
Our Strategic Objectives 
 
Exposure to Winning Cities and Regions experiencing higher levels of GDP, 
employment and population growth 
 
The strategy focuses on Winning Cities and Regions which offer a competitive 
advantage in terms of higher levels of GDP per capita, employment and 
population growth; differentiated local economies with higher value industries; 
well developed infrastructure; and places where people want to live and work. 
 
Increasing net income through transactions and asset management 
 
Disciplined acquisition strategy focused on investing primarily in industrial 
and regional office assets in Winning Cities and Regions, combined with active 
asset management initiatives and operational excellence to drive net income 
growth and dividend cover. The intention is to pursue a progressive dividend 
policy. 
 
Increasing exposure to assets and sectors with strong fundamentals 
 
Post completion of asset business plans, the Company will seek to dispose of 
assets where strong returns have been crystallised and that are expected to 
underperform, in order to reinvest in assets with stronger fundamentals. A more 
active approach to selling smaller, non-core assets on completion of business 
plans, with proceeds reinvested into larger, more resilient assets in higher 
growth sectors which offer a high standard of operational and sustainability 
performance, should deliver more sustainable income and total returns over the 
long term. 
 
Managing portfolio risk in order to enhance the portfolio's defensive qualities 
 
The Company has a diversified tenant base of 299 occupiers and an average 
weighted lease term of 5.3 years. Priority is given to continue efforts to let 
the vacant space, improve covenants and increase the average lease length 
through new lettings and lease restructurings, alongside prudent management of 
our balance sheet, targeting a Loan to Value ratio of between 25% and 35%. 
 
The Company remains focused on delivering sustainable and growing income and 
total returns 
 
The key strategic steps are: 
 
-       Deliver a progressive dividend policy together with attractive and 
sustainable total returns; 
 
-       Maintain the long-term track record of outperformance of the underlying 
portfolio; 
 
-       Increase exposure to assets with strong fundamentals in higher growth 
locations; 
 
-       Provide climate change leadership with ESG fully integrated and 
relevant to the strategy; 
 
-       Actively manage the Company and its assets to maximise shareholder 
returns; 
 
-       Evolve the Company's active asset management approach to include a 
hospitality mindset and operational excellence; and 
 
-       Maintain a strong balance sheet. 
 
Performance Summary 
 
Property performance 
 
                                                      31 March 2021  31 March 2020 
 
Value of Property Assets and Joint Venture Assets           £438.8m        £406.2m 
[11] 
 
Annualised rental income [12]                                £28.3m         £24.9m 
 
Estimated open market rental value [13]                      £31.2m         £29.5m 
 
Underlying portfolio total return                              4.6%           1.9% 
 
MSCI Benchmark total return [14]                               1.8%           0.2% 
 
Underlying portfolio income return                             6.5%           6.1% 
 
MSCI Benchmark income return                                   4.4%           4.4% 
 
Financial summary 
 
                                                      31 March 2021  31 March 2020 
 
Net Asset Value ("NAV")                                     £296.8m        £309.8m 
 
NAV per Ordinary Share                                        60.4p          59.7p 
 
EPRA Net Tangible Assets [15]                               £296.8m        £309.8m 
 
Profit/(loss) for the year                                    £4.5m       (£32.5m) 
 
EPRA earnings [16]                                           £11.6m         £12.7m 
 
Dividend cover [17]                                            145%            90% 
 
Capital values 
 
                                                      31 March 2021  31 March 2020 
 
Share price                                                   39.9p          38.9p 
 
Share price discount to NAV                                 (33.9%)        (34.8%) 
 
NAV total return [18]                                          3.9%         (1.5%) 
 
FTSE All-Share Index                                       3,831.05       3,107.42 
 
FTSE EPRA/NAREIT UK Real Estate Index                      1,635.89       1,402.39 
 
Earnings and dividends 
 
                                                      31 March 2021  31 March 2020 
 
EPRA earnings[19] (pps)                                         2.3            2.5 
 
Dividends paid (pps)                                           1.59           2.72 
 
Annualised dividend yield on 31 March share price              4.0%           7.0% 
 
Bank borrowings 
 
                                                     31 March 2021   31 March 2020 
 
On-balance sheet borrowings [20]                           £154.1m         £129.6m 
 
Loan to Value ratio (LTV), net of                            32.3%           23.7% 
all cash [21] 
 
Ongoing charges 
 
                                                      31 March 2021  31 March 2020 
 
Ongoing charges (including fund and property                   2.5%           2.3% 
expenses) [22] 
 
Ongoing charges (including fund only expenses) [23]            1.4%           1.4% 
 
From 1 July 2021, the Board and the Manager have agreed a change to the 
Manager's fees which will result in an initial saving of approximately £600,000 
per annum, with tiering providing scope for a further ad valorem fee reduction 
with growth of the Company. Pro forma, this equates to a 0.2% reduction in the 
ongoing charges shown above for the period to 31 March 2021. 
 
Strategic Report 
 
Chairman's Statement 
 
Overview 
 
The past year has been a tumultuous period for the global economy, dominated by 
the financial and societal impact of the Covid-19 pandemic. In response to the 
pandemic, governments and central banks have provided significant policy 
support together with unprecedented levels of investment in public health and 
vaccination programmes. As a result, the global economy is emerging from a deep 
recession, with expectations of a strong recovery reflected in elevated 
financial markets. 
 
Levels of expected growth are predicated on the rollout of vaccines and the UK 
is currently benefiting from being at a more advanced stage compared with the 
majority of other economies. Activity levels have also improved during the 
recent UK lockdown as companies and households found ways of coping with 
restrictions, leading to improved business confidence and household spending. 
As a result, real UK Gross Domestic Product growth is forecast to be above 5% 
for both 2021 and 2022, with this bounce back in stark contrast to the period 
following the global financial crisis. 
 
Against this backdrop, our strategy over the financial year to 31 March 2021 
was initially focussed on mitigating the impact of the pandemic and improving 
the portfolio's defensive qualities. As the effects and impact of the pandemic 
were better understood, the strategy focussed on selective higher yielding 
acquisitions and maximising shareholder returns through active asset management 
and the share buyback programme. 
 
The underlying property portfolio continued to deliver strong relative 
performance compared with its peer group, with an underlying portfolio total 
return of 4.6% for the financial year to 31 March 2021, compared with the MSCI 
Benchmark Index (the 'Benchmark) of 1.8%. The portfolio's performance comprised 
a 6.5% income return and a 1.8% decline in capital values, with both components 
outperforming the Benchmark. The portfolio is now ranked on the 13th percentile 
of the Benchmark since its launch in 2004. 
 
The outperformance was driven by an above-average income return as result of 
active asset management by the Manager's sector specialist teams focused on 
rental collection and delivering long-term sustainable income. As a result of 
this activity, the Company's void rate is at historic lows and the strongly 
performing industrial sector now represents the portfolio's largest weighting. 
 
The portfolio also performed best in its peer group of UK Diversified Listed 
Companies in terms of sustainability performance, retaining Three Green Stars 
in the 2020 GRESB survey. 
 
The successful delivery of the strategy resulted in a net asset value ('NAV') 
of £296.8 million or 60.4 pence per share ('pps') at 31 March 2021, an increase 
of 1.2% compared with 59.7 pps as at 31 March 2020. This resulted in a NAV 
total return, including dividends paid of 1.5 pps, of 3.9%. During the year £ 
9.5 million was invested in the share buyback programme which contributed 1.3 
pps to the NAV. 
 
Strategy 
 
The immediate focus in response to the pandemic was on the safety and wellbeing 
of our occupiers, suppliers and other stakeholders, whilst protecting 
shareholders' long-term interests. The Investment Manager worked with the 
Government and other industry participants to bring forward the Covid-19 Code 
of Practice for commercial property, which set out the principles of behaviour 
and responses to tenant difficulties in a proportionate and measured way. These 
principles have been applied consistently and, alongside extensive occupier 
engagement, supported a collection rate of 90% of rents due over the financial 
year, a figure that we expect to increase in line with the roll out of the 
vaccination programme and easing of lockdown restrictions. As Government 
measures protecting tenants for non-payment of rent are lifted, it is important 
that any further intervention fairly treats the interests of both landlords and 
tenants. This is important such that parties can work towards mutually 
beneficial solutions, securing sustainable long-term income and value for all 
stakeholders. 
 
The pandemic has accelerated structural changes such as the penetration of 
online retail and adoption of flexible working practices. This has driven 
polarisation in performance across real estate sectors, with strong demand for 
warehousing during lockdowns contrasting with a challenging environment for 
high street retail and shopping centres. Whilst the rate of this polarisation 
will slow down as the economy opens up and social distancing restrictions ease, 
continued divergence in returns is expected. At the same time, cities and 
regions with knowledge-based economies, which has been a central component of 
our strategy, will benefit disproportionally from stronger occupational demand. 
These Winning Cities and Regions should also benefit from the Governments 
'levelling up' strategy and increased fiscal spending to boost growth. 
 
The steps taken by the Company during the past few years mean that the 
underlying portfolio is well positioned to benefit from these structural 
changes, with an above average and growing exposure to the industrial sector, 
and significant office holdings in Winning Cities such as London and 
Manchester. In addition, the portfolio has a below average weighting to retail, 
with the majority of our retail weighting comprised of retail warehousing, 
which has proven to be a more resilient retail format during the pandemic. The 
Company also has no exposure to shopping centres, the most challenging part of 
the retail market. Overall, the portfolio comprises high quality, multi-let 
assets which, together with a strong income return, offer scope to add value 
through asset management and capital expenditure. 
 
Whilst it is too early to make accurate predictions regarding the long term 
impact of the pandemic on occupational demand, we retain a strong conviction 
that physical offices will remain core to future plans of businesses of all 
shapes and sizes. However, it is clear that occupiers require greater levels of 
flexibility in terms of service levels and contract terms. This means that real 
estate will become increasingly operational. Landlords will therefore be 
required to think innovatively around services to be offered within the assets, 
invest in new technologies to reduce energy consumption and deliver operational 
excellence. Schroders, as Manager, is increasing investment in these areas and 
has specialist asset management teams focused on delivering increased service 
levels to occupiers. An example of this is City Tower in Manchester, where 
fitted out office space is being leased on flexible terms to drive higher 
revenue growth compared with more traditional office lettings. 
 
More broadly, the most significant structural change that the pandemic serves 
to highlight is the required level of global co-ordination to address climate 
change and the transition to net zero. This presents both a significant 
challenge and an opportunity for the real estate industry, which is widely 
considered to be responsible for approximately 40% of global carbon emissions. 
The Company's approach to sustainability is outlined below. 
 
Sustainability 
 
The Board and Manager believe that focusing on sustainability throughout the 
real estate lifecycle will deliver enhanced long-term returns for shareholders 
as well as a positive impact to the environment and the communities where the 
Company is investing. As a result, key sustainability objectives have been 
agreed for the current financial year, which include the Company issuing its 
own Net Zero Carbon Pathway. Work has already begun in this area with a 
proposed operational net zero carbon industrial development at Stanley Green, 
Manchester, the first of its type in the North West. Further detail is 
contained within the Manager's report. 
 
During the current financial year the Board and Manager also intend to align 
the Company's sustainability objectives with the principles contained within 
the EU Sustainable Finance Disclosure Regulation, or 'SFDR'. This is a new 
investment disclosure standard applying in the European Union which is expected 
to be replicated in the UK by the FCA, during 2021 or 2022. SFDR requires 
complying companies to report on the extent to which sustainability risk is 
part of the investment considerations. The reporting is intended to include 
both the considered risk of climate change on the portfolio itself as well the 
intended impact of the investment strategy. The Board and Manager expect to be 
able to demonstrate, based on current activity, that these considerations are 
fully integrated and relevant to the Company's strategy. This will include 
binding commitments relating to the portfolio's environmental and social 
characteristics, as well as demonstrating good governance. 
 
Share buybacks 
 
In September 2020 the Company announced a share buyback due to the prevailing 
share price offering attractive value for shareholders. During the financial 
year, 27.1 million shares were acquired for £9.5 million, which reflected an 
average price of 35.1 pps and an average discount to the last prior financial 
year end NAV of -41%. This resulted in NAV accretion of 1.3 pps. Since the 
financial year end a further 340,000 shares have been acquired at an average 
discount to the March 2021 NAV of -33%. 
 
Since the start of the buyback in September, the share price has increased by 
53% to 46.15 pps as at 28 May 2021, which now reflects a discount of 24% to the 
latest reported NAV. The share buyback is one of a range of measures that the 
Board has undertaken to address the share price discount to NAV, with others 
including the major refinancing in 2019 which reduced the average financing 
costs by £2.5 million. The Board will review the potential for further buybacks 
in the future depending on movements in the share price and alternative uses 
for the Company's investment capacity. 
 
Dividend 
 
In April 2020, due to uncertainty relating to the pandemic, the Board withheld 
the dividend payment originally due to be paid in June 2020. We are pleased 
that progress with rent collection and implementing the strategy enabled 
dividends to be reinstated and progressively increased to 0.625 pps for the 
dividend paid in the quarter ended 31 March 2021. As a result, during the 
financial year, dividends totalling £8 million or 1.59 pps were paid, 
reflecting dividend cover of 145% based on EPRA earnings. 
 
The Board and Manager have prudently considered both EPRA and cash earnings as 
part of determining dividend payments, with the latter impacted as a result of 
tenant incentives and arrears.  The Board's objective is to deliver a 
sustainable and progressive dividend policy and therefore, adopting this 
approach, the Company has today announced a further 5% increase in the dividend 
to 0.656 pps, to be paid in the quarter ending 30 June 2021. 
 
Debt 
 
The Company has two loan facilities, a £129.6 million term loan with Canada 
Life and a £52.5 million revolving credit facility ('RCF') with Royal Bank of 
Scotland International ('RBSI') of which £24.5 million was drawn at 31 March 
2021. These facilities provide a low all-in average cost of debt of 2.4% and a 
blend of maturities in 2023, 2032 and 2039, reducing refinancing risk. 
 
In addition to the properties secured against the Canada Life and RBSI loan 
facilities, the Company has unsecured properties with a value of £39.4 million 
and cash and undrawn debt of approximately £40 million. The Company has 
significant headroom on all debt covenants. The Company's Loan to Value ratio, 
net of cash, is 32%, within the long term strategic range of 25% to 35%. 
 
The Investment Manager 
 
The Board and the Manager have agreed a change to the Manager's fees which will 
result in an initial saving of approximately £600,000 per annum, with tiering 
providing scope for a further ad valorem fee reduction with growth of the 
Company. This is in the process of being documented and will take effect from 1 
July 2021. The Board are pleased with the performance of the management team 
over the financial year and are satisfied that they have the necessary skills 
and resources to deliver the future strategy. 
 
Nick Montgomery is the Fund Manager of the Company, supported by the Manager's 
specialist asset management teams and Group infrastructure. In July 2020, the 
Company announced that Duncan Owen had decided to step down from his role as 
Joint Fund Manager of the Company and Global Head of Real Estate at Schroder 
Real Estate. Since 1 January 2021, Sophie van Oosterom has been appointed as 
Global Head of Real Estate of Schroder Real Estate, and Duncan Owen has acted 
as Special Advisor to the Board. 
 
Outlook 
 
Despite the severe financial and societal impacts of the global pandemic, the 
outlook for the Company is positive. This is due to the UK's faster than 
expected economic recovery, the underlying quality of the portfolio and its 
tenant base, and the steps taken to minimise the impact of Covid-19 and 
maximise shareholder returns during the financial year. This activity included 
a successful share buyback programme which, combined with attractively priced 
new investments, enabled dividends to be reinstated in a progressive manner. 
Looking forward, the objective is to deliver a progressive dividend policy 
together with attractive and sustainable total returns supported by asset 
management. 
 
Whilst the recovery from the pandemic will be uneven and have a differential 
impact on sectors within the economy, the Board and Manager expect the Company 
to build on the resilience of the past year, underpinned by its strong balance 
sheet, exposure to higher growth assets and balance sheet capacity to invest 
and deliver attractive returns. Furthermore, the Company is well placed to 
capitalise on the trends that have accelerated as a result of the pandemic, 
including responding to changes in occupier demand, a focus on operational 
excellence and ensuring that sustainability priorities are fully integrated 
within the Company's investment process. 
 
Lorraine Baldry 
Chairman 
Schroder Real Estate Investment Trust Limited 
1 June 2021 
 
Investment Manager's review 
 
Investment Manager's report 
 
Good progress has been made during the financial year to 31 March 2021 
delivering on the strategy against the backdrop of significant volatility and 
uncertainty caused by the Covid-19 pandemic. At the outset of the pandemic, and 
across the first half of the financial year, our efforts were focussed on 
mitigating the effects of the pandemic on our portfolio, tenants and wider 
stakeholders. The second half of the financial year has been characterised by a 
high level of positive activity including new investments, active asset 
management and evolving the strategy to deliver sustainable outperformance as 
the economy reopens and real estate markets adjust to a new normal. 
 
The Company's Net Asset Value ('NAV') as at 31 March 2021 was £296.8 million or 
60.4 pence per share ('pps'), which reflects an increase over the financial 
year of 0.7 pps or 1.2%, and a NAV total return of 3.9%.  A detailed analysis 
of the NAV is set out below: 
 
                                                                    £m        pps 
 
NAV as at 31 March 2020                                          309.8       59.7 
 
Unrealised change in valuation of direct real estate               2.5        0.5 
portfolio and Joint Ventures[24] 
 
Capital expenditure[25]                                          (7.1)      (1.4) 
 
Acquisition costs                                                (2.3)      (0.4) 
 
Realised gains on disposals                                        0.1          - 
 
Net revenue/EPRA earnings                                     11.6[26]        2.3 
 
Dividends paid                                                   (8.0)      (1.5) 
 
Others                                                           (0.3)      (0.1) 
 
NAV as at 31 March 2021 (excluding the share buyback)            306.3   59.1[27] 
 
Share buyback                                                    (9.5)        1.3 
 
NAV as at 31 March 2021                                          296.8   60.4[28] 
 
The underlying portfolio, including joint ventures and the impact of capital 
expenditure, decreased in value by -1.8% over the 12 months to March 2021, 
which compared favourably with the MSCI Benchmark (the 'Benchmark') of -2.5%. 
The pandemic had a negative impact on values during the first half of the 
financial year, with a capital value decline of -3.4% (Benchmark -3.4%) 
comparing with a capital value increase of 1.7% over the second half (Benchmark 
+1.0%). 
 
This capital value movement includes the dilutive impact of acquisitions costs, 
totalling £2.3 million, associated with the purchase of two industrial estates 
in Manchester and Chippenham in December for £36.5 million.  These acquisitions 
reflected an above average net initial yield of 6.8% and were revalued to £37.8 
million as at March 2021, an uplift of £1.3 million or 4%. 
 
Net revenue for the year totalled £11.6 million, or 2.3 pps, which was 8% below 
the previous financial year and due to the impact of the pandemic on rent 
collection rates, which were 90% of rents due for the financial year.  This 
figure also reflects what we believe was a prudent approach to recognising bad 
debt provisions, which totalled £1.1 million at the year end. 
 
Dividends totalled £8 million for the financial year comprising of three 
payments, with the first interim dividend withheld due to pandemic related 
uncertainty. The subsequent payments comprised £2 million (0.39 pps) for the 
quarter ended September 2020, £2.9 million (0.575 pps) for the quarter ended 
December 2020 and £3.1 million (0.625 pps) for the quarter ended March 2021. 
This reflected dividend cover of 145% based on EPRA earnings. 
 
As part of determining dividend payments, the Board and Manager prudently 
considered both EPRA and cash earnings, with the latter lower as a result of 
smoothing tenant incentives and arrears. On a cash basis, the dividend cover 
over the financial year was fully covered. Cash dividend cover over the next 
financial year should be boosted by the recovery of arrears and the potential 
reversal of bad debt provisions. 
 
During the year £9.5 million was invested buying back shares at an average 
discount to the 31 March 2020 NAV of 41.2%. This added 1.3 pps to the NAV as 
well as enhancing the dividend cover by reducing the number of shares in issue 
(excluding shares held in treasury) from 518.5 million to 491.4 million. 
 
Review of strategy and activity during the financial year 
 
The strategy and activity over the financial year focused on delivering the 
following key objectives: 
 
-       Mitigating the impact of the Covid-19 pandemic on the portfolio, 
tenants and wider stakeholders; 
 
-       Delivering attractive and sustainable shareholder income and total 
returns; 
 
-       Outperforming the MSCI Benchmark Index at an underlying portfolio level 
over one and three years, including generating an above average income return; 
 
-       Increasing exposure to higher growth sectors in Winning Cities and 
Regions; 
 
-       Delivering best-in-class Environmental, Social and Governance ('ESG') 
performance; and 
 
-       Maintaining a strong balance sheet with significant headroom on loan 
covenants. 
 
Good progress has been made executing this strategy, reflected in the 
highlights below: 
 
-       High level of occupier engagement resulted in robust rent collection 
rates and new lease agreements, with a small number of tenants most adversely 
impacted by the pandemic; 
 
-       NAV total return of 3.9% supported by a high level of activity across 
the portfolio as well as share buybacks and efficient balance sheet management. 
A recovery in capital values contributed to a NAV total return of 3.8% for the 
quarter to March 2021, with acquisitions and improving rent collection rates 
supporting a further 5% increase in the dividend to be paid in the quarter 
ending June 2021; 
 
-       The underlying portfolio delivered a total return of 4.6% over the 
financial year compared with the Benchmark of 1.8%. Over three years the 
portfolio also delivered a total return of 4.6% per annum compared with the 
Benchmark of 2.2% per annum. The outperformance over the year was driven by an 
income return of 6.5% (Benchmark 4.4%), an above average weighting to the 
industrial sector and active management across the portfolio; 
 
-       During the financial year steps were taken to increase exposure to 
higher growth sectors.  This is reflected in an increase in the portfolio's 
industrial weighting, now the highest sector exposure, to 38.8% (March 2020 
28.6%), a reduction in the single use retail weighting to 15% (March 2020: 18%) 
and a reduction in the void rate to 4.8% (March 2020: 7.3%); 
 
-       The Company achieved a three star rating in the GRESB sustainability 
survey and was top of its peer group of UK Diversified Listed Companies.  The 
Company also achieved a GRESB Public Disclosure A Rating and the EPRA Best 
Practice Sustainability Reporting Gold Award for the third consecutive year; 
and 
 
-       The Company has a strong and stable balance sheet with a net loan to 
value of 32%, an average interest cost of 2.4%, and a long weighted maturity 
profile of 13 years.  The Company, factoring in cash and unsecured properties, 
could withstand a valuation decline in the underlying portfolio of 
approximately 42% before breaching covenants. 
 
This activity means the Company is well positioned to continue delivering 
attractive returns for shareholders whilst evolving the strategy in response to 
the structural changes and occupier trends emerging following the pandemic. 
These are outlined in more detail following the market overview below. 
 
Market overview 
 
The impact of the pandemic has been polarised across the real estate sectors, 
with an average capital value decline of -2.5% for the MSCI Benchmark over the 
year to March 2021 masking a historically high divergence between the three 
main sectors of offices, industrial and retail. This is illustrated by the best 
performing subsector, south east industrial, enjoying a capital value increase 
of 10.9%, compared with shopping centres as the worst sub-sector which 
experienced a -9.8% capital value decline. Whilst polarisation in performance 
is expected to continue, the divergence is likely to narrow and capital values 
are starting to recover. By the end of September 2020, overall UK commercial 
real estate had seen negative capital growth for 23 consecutive months. Since 
then, the market has seen positive capital growth for seven consecutive months. 
By the end of April 2021 (the latest available data point) the rolling 
three-month capital growth of 1.5% was the highest the market had seen since 
February 2018. All three main sectors of offices, industrial and retail 
delivered a positive total return during the quarter to March 2021. 
 
Whilst unprecedented Government and central bank policy support has kept 
interest rates low and supported real estate values and asset prices more 
generally, Government intervention has enabled tenants to withhold rental 
payments and diluted income returns. This has been accompanied by corporate 
insolvency measures enabling tenants to restructure landlord liabilities. The 
retail and leisure sectors have been most adversely impacted by the pandemic, 
to which the Company has a low weighting. It is important that as measures to 
protect tenants are lifted, any proposals relating to the treatment of historic 
arrears fairly treats the interests of both landlords and tenants. 
 
Assuming the successful completion of the vaccine rollout programme and a 
reopening of the economy, UK GDP should return to its pre-virus level in the 
second half of 2022. The main driver will be consumer spending, with consumers 
accumulating an extra £150 billion in savings during lockdown. In addition, 
2021 should see a recovery in business investment and the Chancellor has 
postponed tax rises until 2022. The rebound in energy and food prices means 
that inflation is likely to accelerate to 2.5% in the next few months, before 
easing to 1.5% next year. Higher unemployment as the furlough scheme ends 
should limit inflationary pressures, with base rates remaining at 0.1% until 
the end of 2022. 
 
The pandemic response will change Government policy in a number of areas, 
notably with greater emphasis on 'levelling up', which came to prominence after 
the 2019 general election. In its broadest terms, levelling up is a commitment 
to address regional inequalities with a focus on visible infrastructure 
projects such as road-building and high-street regeneration. Whilst this will 
benefit poorer areas of the UK, the £4.8 billion fund will also be targeted at 
higher multiplier industries which is likely to benefit stronger regional 
cities such as Manchester and Leeds, where the Company has significant 
investments. 
 
The biggest beneficiary of the acceleration in structural trends during the 
pandemic was the industrial sector, with record demand for warehousing due to 
on-line sales growth and stockpiling ahead of a possible no-deal Brexit. While 
the latter will unwind, demand from Amazon, traditional retailers and parcels 
companies has remained strong in 2021. This year should see a recovery in 
demand from manufacturers as the economy improves and the Government's 
announcement of eight new freeports could attract more inward investment over 
the long term. We expect industrial rental growth to average 2% per annum over 
the next three years, with multi-let estates seeing faster growth than regional 
distribution and big box warehouses, because of more constraints on new 
development. Following recent acquisitions in Manchester and Chippenham, the 
Company's largest sector exposure is to multi-let industrial estates, which 
offer significant potential for income and capital growth from asset 
management, refurbishment and development. 
 
The shift to online retailing during the pandemic means that in-store retail 
sales are unlikely to return to pre-virus levels. At the same time, retailer 
insolvencies and the closure of stores by John Lewis, banks and restaurant 
chains have reduced the attractiveness of many retail destinations. 15% of 
retail units across the UK were empty at the end of 2020, and vacancy in many 
less affluent towns was over 20%, reflecting fewer independent retailers and 
the fact that house prices and commercial values are too low to make 
redevelopment viable. Shopping centre rental values could fall by a further 20% 
over the next three years, and the Company will continue to benefit from having 
no exposure to this segment of the market.  More interestingly, sentiment 
towards retail warehousing is improving, particularly bulky goods retail parks 
that have been preferred by shoppers during the pandemic. These parks are 
expected to be more resilient due to lower rental levels and the ability to 
support multi-channel retailing through click and collect as well as last mile 
delivery. The majority of the Company's remaining single use retail exposure 
comprises retail warehousing with these characteristics in good locations such 
as Bedford, Salisbury and Chester. 
 
The office market continues to assess the relative merits of being in the 
office and working from home with little consensus. While occupiers such as BP 
and HSBC have decided to cut their office space, others such as BT, Goldman 
Sachs, Google and major law firms have signed new leases or re-affirmed their 
commitment to their existing offices. In the short-term, demand will remain 
subdued with an increase in sub-let space suppressing rental values. However, 
demand is polarising and we expect rents on well specified, modern offices in 
city centres and close to leading universities to recover from 2022 onwards. 
The key driver will be an increase in employment in IT, life sciences, media 
and professional services. A low volume of new office buildings will also be 
supportive but we expect tenants to require greater flexibility as the economy 
recovers. By contrast, rents on older, out of town offices and back office 
space will continue to decline as administrative functions such as call centres 
are disrupted by changing working patterns and technology. The Company's office 
weighting now represents 34.4% of portfolio value with a focus on assets 
offering the above mentioned strong fundamentals in London and stronger 
regional centres including, Manchester, Edinburgh and Leeds. 
 
Future strategy 
 
Whilst there remain risks and uncertainties relating to the pandemic, the 
Company has a good quality, diversified portfolio that is weighted towards 
higher growth parts of the UK real estate market. The Company's cash and 
undrawn credit facilities also provide balance sheet capacity to make further 
investments and deliver capital expenditure initiatives to enhance total 
returns. 
 
Whilst the Company is therefore well placed, the pandemic has provided an 
opportunity to reassess the strategy in light of the acceleration in structural 
changes and emerging occupier trends. This will lead to greater focus on the 
four areas below: 
 
1.     Environmental, Social and Governance ('ESG') leadership 
 
While the Company has made significant progress delivering sustainability 
performance over recent years, the pandemic has increased focus on climate 
change and the requirement to act on net zero commitments and evidence positive 
social impact. The Company came first in its peer group of UK Diversified 
Listed Companies in the 2020 GRESB rating and has an opportunity to consolidate 
its leadership in this area which should enhance long-term returns for 
shareholders, and deliver a positive impact to the environment and the 
communities where the Company is investing. Alongside continued participation 
in GRESB, a range of ESG-related objectives have been agreed with the Board 
which include the Company issuing its own net zero pathway and alignment with 
more demanding regulations that are set out in more detail below. The Company 
benefits from the Manager's dedicated Sustainability team and broader Schroders 
Group infrastructure and will continue to leverage this resource and 
thought-leadership to support the management and sector specialist teams. 
 
2.     Hospitality mindset and operational excellence 
 
The pandemic has accelerated pre-existing trends such as the growth of 
e-commerce and changed occupier behaviour. Examples include altered working 
habits driving growth in flexible working concepts, changing health 
considerations affecting user-density and ESG regulation impacting building 
development, operation and reporting requirements. In response to these trends, 
real estate owners must adapt and innovate in order to attract and retain 
tenants. An active management approach has driven the Company's long-term 
outperformance but, looking forward, an increasingly hospitality-driven 
approach will be required which optimises the building services to cater to the 
tenant's business model and sustainability objectives. The level of flexibility 
and services required will, in turn, govern the contractual terms between 
landlord and tenant. 
 
The sharing of cost and data with tenants will be key to delivering operational 
excellence and facilitate improvements such as ensuring the optimal usage of 
space and minimising the scarce use of resources like electricity and water. 
This will require more specialist real estate resource to drive operational 
performance, closer management of supply chains and investment in new 
technologies. Schroders as Manager is increasing investment in these areas and 
adapting business plans to provide greater levels of flexibility and service, 
best illustrated by the Elevate concept at City Tower in Manchester, explained 
in more detail in the case study below. 
 
3.     Reinvestment into larger assets offering more sustainable income and 
total returns 
 
The Company's top ten assets represent 66% of portfolio value and offer strong 
fundamentals in terms of location and specification, with opportunities to add 
value through active management. The balance of the portfolio comprises 29 
assets, of which 15 are valued at below £5 million. 
 
Whilst these smaller assets provide diversification benefits, the Company's 
larger assets, often with multiple competing uses, typically offer higher 
returns from active management due to being multi-let with a range of lease 
expiries. These assets are more likely to include corporate occupiers demanding 
higher service levels and sustainability performance, creating more 
opportunities to improve assets and deliver sustainable earnings growth. 
 
For example, during the financial year the Company sold two office and retail 
assets for £6.6 million and increased its industrial weighting through two 
attractively priced acquisitions totalling £36.5 million in the multi-let 
industrial sector with significant asset management potential. The Company 
delivered outperformance from its larger multi-let estates by implementing 
phased refurbishments and new developments. This is reflected in the 
performance of the Company's industrial assets over the financial year which 
generated a total return of 14.9%, including the dilutive impact of acquisition 
costs, compared with the Benchmark's industrial average of 14.2%. 
 
A more active approach to selling smaller, non-core assets on completion of 
business plans, with proceeds reinvested into larger, more resilient assets in 
higher growth sectors which offer a high standard of operational and 
sustainability performance, should deliver more sustainable income and total 
returns over the long term. 
 
4.     Balanced portfolio, specialist capabilities 
 
Looking forward, whilst the industrial portfolio should continue to deliver 
attractive returns, the divergence in performance between the main sectors is 
expected to narrow and create opportunities to invest in sectors that are 
currently out of favour. This should present an opportunity for the Company 
which, as a diversified strategy, can invest across all parts of the UK market 
to maximise returns through the cycle. Applying Schroders' sector specialist 
resources, who have a deep understanding of their respective investment and 
occupier markets to larger assets has, and should continue to, drive the long 
term outperformance of the underlying portfolio. 
 
These four areas highlighted represent an evolution of the current strategy 
which, whilst remaining income focussed, will place greater emphasis on 
sustainable total returns. This, together with the Company's other strategy 
objectives, are set out below: 
 
-       Deliver a progressive dividend policy together with attractive and 
sustainable total returns; 
 
-       Maintain the long-term track record of outperformance of the underlying 
portfolio; 
 
-       Increase exposure to assets with strong fundamentals in higher growth 
locations; 
 
-       Actively manage the Company and its assets to maximise shareholder 
returns; 
 
-       Provide climate change leadership with ESG fully integrated and 
relevant to the strategy; 
 
-       Evolve the Company's active asset management approach to include a 
hospitality mindset and operational excellence; and 
 
-       Maintain a strong balance sheet. 
 
Real estate portfolio 
 
As at 31 March 2021 the portfolio comprised 39 properties valued at £438.8 
million. This includes the Company's share of joint venture properties at City 
Tower in Manchester (25% share) and Store Street in Bloomsbury, London (50% 
share). 
 
The portfolio produces an annualised rental income of £28.3 million per annum, 
reflecting a net initial income yield of 6.0% which compares with the MSCI 
Benchmark (the 'Benchmark') at 4.4%. The portfolio also benefits from fixed 
contractual annual rental uplifts of £1.8 million over the next 24 months. The 
independent valuers' estimate that the current rental value of the portfolio is 
£31.2 million per annum, reflecting a reversionary income yield of 7.1%, which 
compares with the Benchmark at 5.2%. The Company's void rate is 4.8%, 
calculated as a percentage on estimated rental value, with a weighted average 
lease length to the earlier of lease expiry or break of 5.3 years. 
 
The data tables below summarise the portfolio information as at 31 March 2021: 
 
                                                Weighting (% of portfolio) 
 
Sector weightings by value                        SREIT                 Benchmark 
 
South Eastern                                      11.3                      17.9 
 
Industrial Rest of UK                              27.5                      10.2 
 
Industrial                                         38.8                      28.1 
 
City                                                0.0                       3.7 
 
Mid-town and West End                               9.0                       7.2 
 
Rest South East                                     6.2                       8.7 
 
Office Rest of UK                                  19.2                       7.7 
 
Offices                                            34.4                      27.3 
 
South East                                          0.9                       7.9 
 
Rest of UK                                          7.8                       4.3 
 
Shopping centres                                    0.0                       3.2 
 
Retail warehouse                                   11.3                       9.2 
 
Retail                                             20.0                      24.6 
 
Other                                               6.8                      20.0 
 
 
 
                                                   Weighting (% of portfolio) 
 
Regional weightings by value                          SREIT             Benchmark 
 
Central London[29]                                      9.0                  21.1 
 
South East excluding Central London                    20.3                  33.3 
 
Rest of South                                          11.8                  14.5 
 
Midlands and Wales                                     23.7                  12.4 
 
North                                                  32.6                  13.8 
 
Scotland                                                2.6                   4.5 
 
Northern Ireland                                        0.0                   0.2 
 
The top ten properties, including the share of the joint venture properties at 
City Tower in Manchester and Store Street in Bloomsbury, are set out below and 
comprise 66% of the portfolio value: 
 
Top ten properties                                   Sector Value (£m)         (% of 
                                                                          portfolio) 
 
1   Milton Keynes, Stacey Bushes Industrial      Industrial       46.0          10.5 
    Estate 
 
2   Leeds, Millshaw Industrial Estate            Industrial       41.8           9.5 
 
3   Manchester, City Tower (25% share)              Office/       40.2           9.2 
                                                  mixed-use 
 
4   London, Store Street, Bloomsbury (50%            Office       39.4           9.0 
    share) 
 
5   Bedford, St. John's Retail Park                  Retail       26.6           6.1 
                                                  warehouse 
 
6   Leeds, Headingley Central                     Mixed-use       24.0           5.5 
 
7   Chippenham, Langley Park Industrial          Industrial       19.8           4.5 
    Estate 
 
8   Norwich, Union Park Industrial Estate        Industrial       18.9           4.3 
 
9   Cheadle, Stanley Green Trading Estate        Industrial       18.0           4.1 
 
10  Uxbridge, 106 Oxford Road                        Office       16.0           3.6 
 
    Total as at 31 March 2021                                    290.7          66.3 
 
The Company's income is diverse with 299 tenants of which the top twenty 
tenants represent 41.2% of the portfolio as a percentage of annual rent: 
 
Top twenty tenants                                      Rent p.a. (£m)       (% of 
                                                                        portfolio) 
 
1     University of Law Limited                                   2.00         7.1 
 
2     Buckinghamshire New University                              1.15         4.1 
 
3     Siemens Mobility Limited                                    0.97         3.4 
 
4     The Secretary of State                                      0.88         3.1 
 
5     Matalan Retail Limited                                      0.57         2.0 
 
6     Express Bi Folding Doors Limited                            0.53         1.9 
 
7     TJX UK Limited (T/A Homesense)                              0.51         1.8 
 
8     Jupiter Hotels Limited (T/A Mercure)                        0.46         1.6 
 
9     Premier Inn Hotels Limited                                  0.42         1.5 
 
10    Lidl                                                        0.42         1.5 
 
11    Geldards LLP                                                0.41         1.5 
 
12    Schneider Electric Limited                                  0.41         1.4 
 
13    Wickes Building Supplies Limited                            0.40         1.4 
 
14    Sportsdirect.Com Retail Limited                             0.40         1.4 
 
15    Morgan Sindall Construction &                               0.38         1.3 
      Infrastructure Limited 
 
16    Cineworld Cinema Properties Limited                         0.37         1.3 
 
17    The Gym Limited                                             0.36         1.3 
 
18    IXYS UK Limited                                             0.36         1.3 
 
19    Lloyds Banking Group                                        0.35         1.2 
 
20    Pilgrim's Pride Limited                                     0.34         1.2 
 
      Total as at 31 March 2021                                  11.69        41.2 
 
Portfolio performance 
 
A high level of asset management has led to continued outperformance of the 
underlying property portfolio compared with the MSCI Benchmark Index. The table 
below shows the performance to 31 March 2021 with the portfolio ranked on the 
13th percentile of the Benchmark since IPO in 2004: 
 
            SREIT total return p.a. (%)   MSCI Benchmark Index          Relative p.a. (%) 
                                          total return p.a. (%) 
 
Period to   One year    Three    Since   One year    Three Since IPO One year    Three    Since 
31 March                years IPO [30]               years                       years      IPO 
2021 
 
Office           3.6      5.2      7.8       -0.5      3.0       7.1      4.1      2.2      0.6 
 
Industrial      14.9     14.0      9.9       14.2     11.1       9.0      0.6      2.6      0.8 
 
Retail          -5.1     -5.7      3.8       -6.7     -6.0       3.2      1.7      0.3      0.6 
 
Other          -11.8     -5.0      1.9       -0.6      3.1       7.3    -11.2     -7.9     -5.1 
 
All sectors      4.6      4.6      7.2        1.8      2.2       6.0      2.8      2.4      1.1 
 
 
Transactions 
 
During the financial year the Company sold two non-core assets for £6.6 million 
which generated a small profit of £0.1 million, after adjusting for disposals 
costs. Following a more cautious investment approach during the initial stage 
of the pandemic, two significant new industrial acquisitions were completed in 
December 2020 that are summarised below. Over the next twelve to twenty-four 
months the Company intends to continue to actively recycle smaller non-core 
assets into larger assets in growth sectors and regions with strong 
sustainability credentials. 
 
Manchester, Cheadle, Stanley Green Trading Estate (Industrial) 
 
On 17 December 2020 the Company acquired Stanley Green Trading Estate ('the 
Estate') together with an adjoining development site ('the Site') in Cheadle, 
South Manchester, for a total consideration of £17.25 million, reflecting a 
blended net initial yield of 5.2%. As at 31 March 2021 the asset is 
independently valued at £18 million. 
 
Asset overview 
 
The freehold Estate and Site are located in a prime South Manchester location 
at the junction of the A34 and the A555 which is the recently upgraded 
Manchester Airport Eastern Link Road (Ringway Road). This provides a direct 
link to Manchester city centre, Manchester Airport, and the M60 orbital 
motorway. The local road network also connects to affluent suburbs such as 
Cheadle, Bramhall, Wilmslow and Alderley Edge. The Estate is located close to 
established major grocery stores and retail parks. 
 
The Estate comprises approximately 150,000 sq ft of warehouse accommodation 
across 14 units on a nine acre site and is fully let to thirteen tenants 
generating a total contracted rent of £960,000 per annum or an average rent of 
£6.55 per sq ft. The estimated market rental value ('ERV') is approximately £ 
1.1 million per annum. The average unexpired lease term, assuming all tenant 
breaks are exercised, is three years. 100% of the rent due during the financial 
year has been collected reflecting the resilience of the occupier base.  The 
apportioned price for the Estate of £14.4 million reflected a net initial yield 
of 6.3% and a reversionary yield, based on the acquisition ERV, of 7.1%. 
 
The Estate has a strong tenant line up of local, regional and national trade 
occupiers including Apex Self Storage Limited (19% of rental income), Howden 
Joinery Properties Limited (9.4% of rental income), Screwfix Direct Limited 
(7.3% of rental income) and Toolstation Limited (7.1% of rental income). 
 
The site comprises a 3.4 acre, regular shaped and serviced plot which is 
currently non-income producing. The apportioned site price was £2.85 million. 
The site has a historic planning consent for 48,000 sq ft of trade counter and 
warehouse space and is allocated for industrial development in the local 
development plan. 
 
Asset strategy 
 
The strategy identified on acquisition for the existing Estate was to work 
closely with the occupiers to align their occupation with various estate 
management improvements. The strategy for the site is to obtain an improved 
planning consent and develop a high quality trade centre and warehouse units 
during 2021. 
 
Key activity 
 
-       Submitted a planning application for a reconfigured, 85,000 sq ft 
operational net zero carbon ('NZC') warehouse scheme with a decision expected 
in July 2021. This will be the first operational NZC in the north west. 
 
-       Scheme fully designed and tendered with estimated construction costs of 
approximately £8 million. 
 
-       Subject to planning consent being achieved, the intention is to start 
on site in the summer and deliver a completed scheme during mid-2022. 
 
-       Target rent for the new scheme of approximately £950,000 per annum with 
marketing to commence for pre-lets once work starts on site. This could 
generate an attractive yield on cost, including the apportioned site price, of 
approximately 7.5%. 
 
-       Progressing re-gear discussions on the existing Estate which may lead 
to phased refurbishments to deliver higher rents. 
 
Chippenham, Langley Park Industrial Estate (Industrial) 
 
On 18 December 2020 the Company acquired Langley Park Industrial Estate in 
Chippenham for £19.25 million, reflecting an attractive net initial yield of 
8.2%. As at 31 March 2021 the asset is independently valued at £19.75 million. 
 
Asset overview 
 
The asset is located in Chippenham town centre close to the railway station and 
four miles south of junction 17 of the M4 motorway. It is near to the cities of 
Bristol and Bath and serves both metropolitan areas. The estate comprises 
approximately 400,000 sq ft of warehouse and ancillary office accommodation on 
a 28 acre site, equating to a low site cover of approximately 30%. Langley Park 
is let to five tenants generating a total net rent of £1.68 million per annum 
or an average rent of £4.21 per sq ft. 100% of the rent due during the Covid-19 
pandemic has been collected. The estimated market rental value is approximately 
£1.8 million per annum. The average unexpired lease term, assuming all tenant 
breaks are exercised, is four years. 
 
The largest tenant is Siemens Mobility Limited, representing 53% of the rental 
income, which employs approximately 800 people at the site. Langley Park is the 
global headquarters for Siemens Mobility who, through corporate acquisitions, 
have occupied the site for over 85 years as a facility for manufacturing and 
servicing rail technology and traffic systems. Siemens pays a net rent of £ 
965,000 per annum with a lease expiry in June 2026. Other tenants include a UK 
subsidiary of Littlefuse Inc., a global manufacturer of power systems for the 
transport industry (20% of rental income), Schneider Electric Limited (11% of 
rental income) and NHS Property Services Limited (8% of rental income). 
 
Asset strategy 
 
The strategy identified on acquisition was to work closely with the occupiers 
to align their occupation with various estate management improvements. The 
current low site density also supported the creation of new accommodation. 
Longer term, it was considered that several large-scale infrastructure and 
related investments in Chippenham, including rail improvements and additional 
housing allocations, should support alternative use values and improve the 
desirability of the surrounding area. 
 
Key activity 
 
-      Targeting lease re-gear opportunities to rationalise investment and 
improvements to the existing quality of accommodation. 
 
-      Ongoing discussions with Siemens and Littlefuse regarding lease re-gears 
in return for carrying out building and energy efficiency improvements. 
 
-      Carrying out initial viability studies of development options to 
increase massing and potentially provide a small unit warehouse scheme. Part of 
the site could also be reconfigured for alternative uses. 
 
-      Exploring the installation of additional photo-voltaic ('PV') panels and 
electric vehicle charging points to enhance the overall quality of the estate 
from a sustainability perspective. 
 
Asset Management 
 
Leeds, Millshaw Industrial Estate (Industrial) 
 
Asset strategy 
 
The strategy over the year was to refurbish units to drive a higher rental 
income return and explore the potential for acquiring adjoining interests and 
change of use over the longer term. 
 
Asset overview and performance 
 
463,400 sq ft multi-let industrial estate in a prominent location comprising 27 
units strategically located south of Leeds city centre close to the M62 and 
M621 motorways. The estate is the largest, single-owned industrial estate in 
Leeds with a range of unit sizes from 2,000 to 50,000 sq ft and a low site 
cover of only 37%. As at 31 March 2021, the asset was valued at £41.8 million 
reflecting a net initial income yield of 5.1% and a reversionary yield of 
5.5%. During the year to 31 March 2021, the property delivered a 24.5% total 
return comprising an income return of 5.7% and capital growth of 17.9%. 
 
Key activity 
 
-       Re-letting of the refurbished units to set a higher rental tone has 
boosted returns and ensured Millshaw remains the dominant multi-let industrial 
estate in Leeds. 
 
-       8 leasing transactions completed since March 2020 at rents up to £7 per 
sq ft, which compares with the average rent and rental value as at March 2021 
of £4.92 psf and £5.25 per sq ft respectively. This contributed to strong 
rental growth of 18.7% over the financial year which compared with the MSCI 
Benchmark industrial average of 9.6%. 
 
-       34,446 sq ft unit under refurbishment and being marketed. There is 
strong interest and targeting a rent of £207,000 per annum which compares with 
the March 2021 rental value of £155,000 per annum. 
 
-       LED lighting has been incorporated into refurbishments and there is 
potential to increase the number of EV charging points across the estate. 
 
London, University of Law (Office, 50% share) 
 
Asset strategy 
 
The strategy over the year was to agree the outstanding rent review from 
December 2019 and develop a feasibility study for a future redevelopment. 
 
Asset overview and performance 
 
86,000 sq ft of educational space across two freehold buildings that are let to 
The University of Law on a lease expiring December 2026. The buildings are 
located in an area of Central London benefitting from Crossrail and surrounding 
developments at Tottenham Court Road, as well as public realm improvements as 
part of the West End Project. As at 31 March 2021, the Company's share of the 
asset was valued at £39.4 million reflecting a net initial income yield of 4.4% 
and a reversionary yield of 4.7%. During the year to 31 March 2021, the 
property delivered an 11.6% total return comprising an income return of 4.8% 
and capital growth of 6.5%. 
 
Key activity 
 
-       The rent review with the University of Law completed at a new rent of £ 
1.85 million per annum or £42 per sq ft delivering a £415,500 or 30% increase 
(the Company's 50% share); and 
 
-       The feasibility study also commenced with the appointment of a design 
team. There is also continued engagement with the adjoining building owners to 
explore the opportunities for a wider site assembly. 
 
Manchester, City Tower (Office and Mixed-Use, 25% share) 
 
Asset strategy 
 
The office strategy over the year was to refurbish and re-let vacant office 
space on conventional leases as well as explore a more flexible, hybrid leasing 
strategy. The retail, hotel and leisure strategy remains focussed on 
repositioning the ground floor space to attract more complementary operators. 
 
Asset overview and performance 
 
City Tower comprises a 610,000 sq ft mixed-use office, convenience retail and 
hotel asset on a three-acre site in the Manchester city centre. As at 31 March 
2021, the Company's share of the asset was valued at £40.2 million reflecting a 
net initial income yield of 5.5% and a reversionary yield of 7.0%. During the 
year to 31 March 2021 the property delivered a 2.8% total return comprising an 
income return of 5.9% and capital growth of  -2.9%. 
 
Key activity 
 
-      Launch of Elevate, a Schroder-managed 'plug-and-play' flexible office 
strategy, which includes a tenant lounge, event space and meeting rooms on the 
28th floor. The first phase of Elevate has been completed with 12,400 sq ft 
delivered and 8,400 sq ft let or under offer; 
 
-      Ground floor retail line-up being improved to provide mix of leisure and 
retail operators more suited to the current office tenant requirements; 
 
-      Negotiations underway with Jupiter Hotels for a lease extension which 
may support a refurbishment programme and hotel rebrand. A lease extension 
could involve Jupiter taking additional space on the ground floor for a new 
reception and the basement to create a new wellness facility; 
 
-      As the largest energy consuming asset in the Company's portfolio, 
sustainability objectives are focussed on identifying ways to save energy. This 
is done by ensuring refurbishment works fully incorporate energy saving 
technologies, continued engagement with tenants and ongoing upgrade of energy 
metering infrastructure; 
 
-      Tenants are encouraged to travel in a green and active way. A new cycle 
facility was recently opened which provides upgraded cycle storage, showers and 
changing facilities; and 
 
-      City Tower achieved a BREEAM In-Use certification of Good for Part 2 
Building Management and is rated Wiredscore Platinum. 
 
Bedford, St. John's Retail Park 
 
Asset strategy 
 
The strategy over the year was to improve the retailer mix and to negotiate new 
longer leases in order to preserve the rental income and manage void risk. A 
key element of the continuing strategy was to work with existing tenants to 
minimise the impact of Covid-19 and to ensure continued income generation. 
 
Asset overview and performance 
 
St. John's Retail Park comprises a 130,000 sq ft retail warehouse park 1.5 
miles from the town centre underpinned by income from strong covenants 
including Lidl, Home Bargains, Costa and TK Maxx. As at 31 March 2021, the 
asset was valued at £26.6 million reflecting a net initial income yield of 5.1% 
and a reversionary yield of 6.6%. During the year to 31 March 2021, the 
property delivered a -3.7% total return comprising an income return of 5.3% and 
capital growth of -8.5%. 
 
Key activity 
 
-       Completed new 15 year leases with Lidl (£335,000 per annum/£15.50 per 
sq ft) and Home Bargains (£190,000 per annum or £13.62 per sq ft) in September 
2020. Sustainability factors were included in the Landlord's shell works for 
these tenants' units; and 
 
-       Simultaneously surrendered the Majestic Wine lease and completed a new 
10 year letting to Easy Bathrooms at the existing passing rent of £64,200 per 
annum or £22.00 per sq ft. 
 
Sustainability and Responsible Investment 
 
Sustainability and responsible investment are integral to Schroder Real Estate 
Investment Management's investment process. We believe that by understanding, 
managing and measuring the impact of Environmental, Social and Governance 
('ESG') considerations, we will deliver enhanced long term returns for 
shareholders as well as deliver a positive impact to the environment and the 
communities where the Company is investing. 
 
In November 2020, the Company issued a Sustainability Guide which sets out how 
sustainability considerations, risks and opportunities are integrated within 
the investment process. This was followed in December 2020 by Schroders 
publishing its own Pathway to Net Zero Carbon by 2050. 
 
Good progress has been made during the financial year with the Company 
achieving a three star rating in the GRESB sustainability survey, which placed 
it top in its GRESB peer group of UK Diversified Listed Companies.  The Company 
also achieved a GRESB Public Disclosure A Rating and the EPRA Best Practice 
Sustainability Reporting Gold Award for the third consecutive year. 
 
The Board and Manager have agreed updated sustainability objectives for the 
Company during the current financial year, which are set out in the table 
below. These are summarised below together with the strategy for delivering the 
objectives and details of how performance will be monitored. 
 
Objective    Management Strategy                     Initial Reporting Metrics 
 
Governance   The Manager's process includes          - Manager's Investment Risk Report 
and          oversight on sustainability by its      - Annual Report 
Oversight    Investment Committee and Group          - Number of assets where health & 
             Investment Risk Committee.              safety impacts assessed/reviewed/ 
             The Board reviews the objectives and    improved 
             progress of the sustainability          - Number of incidents of non-compliance 
             programme at least annually.            with regulations and/or voluntary codes 
             This includes maintaining good health & identified 
             safety and managing compliance with     - Compliance assurance from Property 
             regulations.                            Managers at building level 
 
Net Zero     Determine portfolio alignment with NZC  - % of assets under management Paris 
Carbon       and Paris Agreement to limit climate    Aligned 
('NZC')      change to 1.5C. Asset analysis to       - Energy and carbon targets set for 
             determine energy/carbon targets and     assets and portfolio 
             offsetting.                             - Investment in energy efficiency 
             Determine new energy and carbon targets initiatives 
             to 2022, 2025 and 2030 through Impact   - Energy intensity (kWh/m2/yr) 
             and Sustainability Action Plans (ISAPs) - Carbon intensity (CO2e/m2/yr) 
             for buildings to assess understanding   - % of occupied occupier space with 
             of improvement and opportunities and    green lease clauses (by floor area) 
             Net Zero analysis to enable target      - % of occupied occupier space with 
             setting.                                data 
             Improve collaboration with occupiers to - kgCO2e/m2/year modelled during design 
             support whole building performance.     - kWh/m2/year modelled during design 
             Assess 'whole life carbon' on major     - kgCO2e/m2/year achieved during early 
             projects. Use Schroders Refurbishment   operation 
             and Development brief on projects to    - kWh/m2/year achieved during early 
             set and manage ambitions. Use NABERS UK operation 
             Design for Performance to support       - % kWh landlord-procured electricity 
             improved operational in-use outcomes.   from green tariff 
             Procure 100% landlord-controlled        - kWh onsite renewable energy generated 
             electricity on certified green tariffs  - tCO2e offset 
             by 2022 (December 2020 at 97%).         - £ or ?/tCO2e unit cost per offset 
             Assess potential for onsite renewable 
             energy generation. 
             Purchase independently verified offsets 
             that align with best practice industry 
             guidance. Reduce the use of offsets to 
             zero over appropriate time frame. 
 
Third Party  GRESB - Continue to target              - GRESB star rating and % score 
Verification opportunities to improve the GRESB      achieved 
             score year on year.                     - % data assured 
             Data Assurance - Continue to obtain     - % portfolio certified through third 
             third party assurance of sustainability party scheme 
             data in line with the independent       - EPRA Gold Award 
             assurance process.                      - Annual report SDG aligned 
             Asset Certification - Obtain third 
             party certification to validate Net 
             Zero Carbon or related energy/carbon 
             efficiency claims or health and 
             wellbeing. 
             EPRA Reporting - Maintain EPRA Gold 
             Sustainability Best Practice Reporting 
             Award. 
             SDG alignment - Integrate into annual 
             reporting for 2022 by mapping social 
             and environmental contributions to the 
             Schroder Real Estate Investment 
             Management Limited ('SREIM') Pillars of 
             Impact and UN SDGs and set targets for 
             improvement. 
 
Climate Risk Determine a climate risk profile,       - Portfolio climate risk profile 
and TCFD     adaptation strategy and reporting in 
             line with TCFD through asset and 
             portfolio scenario analysis. 
 
Operational  Set standards for operational           - Net Promoter Score 
excellence   excellence for managed assets           - Occupier satisfaction surveys 
             incorporating the hospitality mindset   - % assets with BIU certification 
             in our strategy at each asset.          - % assets with Good/Very Good/ 
             Improve BREEAM In-Use ('BIU')           Excellent ratings 
             certification across the portfolio to   - % assets with EPCs 
             support improvement across nine         - % assets with A to E ratings 
             aspects: Management, Health and         - % assets where IEQ assessed 
             Wellbeing, Energy, Transport, Water     - % assets with good bicycle provisions 
             Resources, Resilience, Land Use and     (storage, repair stations, electric 
             Ecology and Pollution.                  charging) 
             Improve the EPC profile of the          - % assets with electric vehicle 
             portfolio through asset management      charging 
             including refurbishment. Potential to   - % assets with green travel plan 
             adopt NABERS Energy for Offices which   - Water consumed by assets managed by 
             rates base building actual energy       the Company m3 per year 
             efficiency.                             - Tonnes waste produced per year 
             Assess the approach to monitor indoor   - % waste recycled per year 
             environment quality (IEQ) and set new   - % of schemes with waste management 
             standard.                               plans 
             Promote and facilitate our occupiers'   - % of schemes with waste storage and 
             use of bicycles, buses and electric     separation site 
             vehicles as transport methods to our    - % of schemes with green space 
             assets.                                 available to occupiers, on site and in 
             Minimise water demand in line with best close proximity 
             practice industry benchmarks.           - % of schemes with green space 
             Provide dedicated space for waste/      available to occupiers, on site and in 
             recycling segregation and storage.      close proximity 
             Integrate biophilic design into assets. 
Finance 
 
The Company has two loan facilities, a £129.6 million term loan with Canada 
Life and a £52.5 million revolving credit facility ('RCF') with Royal Bank of 
Scotland International ('RBSI'), of which £24.5 million was drawn at 31 March 
2021. In addition to the properties secured against the Canada Life and RBSI 
loan facilities, the Company has unsecured properties with a value of £39.4 
million and cash at 31 March 2021 of £12.2 million. This results in a Loan to 
Value ratio, net of cash, of 32.3% at an average interest cost of 2.4%, and a 
long weighted maturity profile of 13 years. 
 
£129.6 million term loan with Canada Life 
 
The loan is fully compliant with all covenants as summarised below: 
 
Lender  Loan Maturity    Total Asset   Loan to      LTV Interest      ICR Projected Projected 
        (£m)          Interest Value     Value    ratio    cover    ratio  Interest       ICR 
                          rate  (£m)   ('LTV') covenant    ratio covenant     cover     ratio 
                           (%)        ratio[1]      (%)  ('ICR')      (%)     ratio  covenant 
                                           (%)            (%)[2]             (%)[3]       (%) 
 
Canada 129.6 50%: 15/   2.5[4] 273.6      47.4       65      562      185       423       185 
  Life        10/2032                (47.4 net 
                 50%:                  of cash 
               15/10/                       in 
                 2039                facility) 
 
[1] Loan balance divided by property value as at 31 March 2021. 
 
[2] For the quarter preceding the Interest Payment Date ('IPD'), ((rental 
income received - void rates, void service charge and void insurance)/interest 
paid). 
 
[3] The projected ICR covenant for contracted the four quarters following the 
IPD deducting assumed non-recoverable costs (void rates, void service charge 
and void insurance)/interest paid) based on average of the past four quarters 
 
[4] Fixed total interest rate for the loan term. 
 
The Company has significant headroom with its LTV and ICR covenants summarised 
below: 
 
·      The net Loan to Value on the secured assets against this loan is 47.4%. 
On this basis the properties charged to Canada Life could fall in value by 27% 
prior to the 65% LTV covenant being reached; 
 
·      The interest cover ratio is 562% based on actual net rents for the 
quarter to March 2021. A 67% fall in net income could be sustained prior to the 
loan covenant of 185% being breached; and 
 
·      After utilising available cash and uncharged properties, the valuation 
and actual net rents could fall by 42% and 74% respectively prior to either the 
LTV or interest cover ratio covenants being breached. 
 
£52.5 million RCF with RBSI 
 
The RCF is an efficient source of funding that can be repaid and redrawn as 
often as required. At 31 March 2021, £24.5 million was drawn of the £52.5 
million RCF. The loan is fully compliant with its covenants as summarised 
below: 
 
Lender Loan Maturity    Total Asset Loan to      LTV Interest      ICR Projected Projected 
       (£m)          Interest Value   Value    ratio    cover    ratio  Interest       ICR 
                         rate  (£m) ('LTV') covenant    ratio covenant     cover     ratio 
                          (%)         ratio      (%)  ('ICR')      (%)     ratio  covenant 
                                        [1]            (%)[2]             (%)[3]       (%) 
                                        (%) 
 
 RBS   24.5   03/07/   1.7[5] 125.9    19.5    65[6]    1,151      185       864       250 
 RCF    [4]     2023 
 
[1] Loan balance divided by property value as at 31 March 2021. 
 
[2] For the quarter preceding the Interest Payment Date ('IPD'), ((rental 
income received - void rates, void service charge and void insurance)/interest 
paid). 
 
[3] The projected ICR covenant for contracted the four quarters following the 
IPD deducting assumed non-recoverable costs (void rates, void service charge 
and void insurance)/interest paid) based on average of the past four quarters 
 
[4] Facility drawn at 31 March 2021 from a total available facility of £52.5 
million. 
 
[5] Total interest rate as at 31 March 2021 comprising 3 months LIBOR of 0.09% 
and the margin of 1.6% at an LTV below 60% and a margin of 1.90% above 60% LTV. 
 
[6] This covenant drops to 60% after year three of the five-year term. 
 
The Company has significant headroom within its LTV and ICR covenants. This is 
summarised below: 
 
·      Net Loan to Value on the secured assets against this loan is 19.5%. On 
this basis the properties charged to RBSI could fall in value by 70% prior to 
the 65% LTV covenant being reached; and 
 
·      The interest cover ratio is 1,151% based on actual net rents for the 
quarter to March 2021. A 78% fall in net income could be sustained prior to the 
loan covenant of 185% being breached. 
 
Outlook 
 
Whilst uncertainty relating to the pandemic will continue, the efficient 
vaccine programme in the UK should lead to the economy successfully reopening 
during 2021. This should lead to a surge in consumer spending and business 
investment which will support a strong economic recovery. Whilst inflationary 
pressures are building, fiscal and monetary policy should support real asset 
prices and we expect average real estate values to continue their current 
trajectory and increase over the current financial year. 
 
Other trends include real estate becoming increasingly operational, with 
technology arguably increasing a building's physical life whilst limiting its 
economic life. This could increase obsolescence and therefore favour buildings 
in mixed-use, densely populated urban areas that can be adapted to new 
technologies and changing occupier trends. Occupiers will also require more 
personalised service levels and increased engagement with landlords so that 
both can deliver their sustainability objectives. The Manager is seeking to 
further position the Company's portfolio to benefit from these trends. 
 
Performance between the main sectors is likely to remain polarised over the 
short term, with industrial expected to be the best performing of the three 
main sectors and retail the weakest. However, the divergence will narrow. 
Regional offices are benefiting from a phased return to work and Government 
policy seeking to address imbalances through the levelling up agenda. There is 
also a nascent recovery in more resilient parts of the retail market, most 
notably retail warehousing. The Company is therefore well positioned in this 
context and further recycling of smaller properties into larger, mixed-use 
assets in Winning Cities and Regions will further support the resilience of the 
portfolio. 
 
Nick Montgomery 
 
Fund Manager 
Schroder Real Estate Investment Management Limited 
1 June 2021 
 
Sustainability Report 
 
The Board and the Investment Manager believe that corporate social 
responsibility is key to long-term future business success and that a 
successful sustainable investment programme should deliver enhanced returns to 
investors, improved business performance to tenants and tangible positive 
impacts to local communities, the environment and wider society. 
 
The importance of environmental and social changes are investment factors that 
the Board and Investment Manager must understand to protect Company assets from 
depreciation and optimise the portfolio's value potential. 
 
Offering occupiers resource-efficient and flexible space is critical to ensure 
our investments are fit for purpose and sustain their value over the long 
term.  As a landlord, we have the opportunity to help reduce running costs for 
our occupiers, increase employee productivity and wellbeing, and contribute to 
the prosperity of a location through building design and public realm. 
Ignoring these issues when considering asset management and investments would 
risk the erosion of income and value as well as missing opportunities to 
enhance investment returns. 
 
Through its construction, use and demolition, the built environment accounts 
for more than one-third of global energy use and is the single largest source 
of greenhouse gas emissions in many countries. 
 
The industry's potential to cost-efficiently reduce emissions and the 
consumption of depleting resources, combined with the political imperative to 
tackle issues such as climate change, means the property sector will remain a 
prime target for policy action.  This presents new challenges and opportunities 
for the real estate industry with profound implications for both owners and 
occupiers. 
 
The national lockdowns have had a direct impact on energy use and greenhouse 
gas ('GHG') emissions, water consumption and waste performance, and has 
resulted in significant reductions. Therefore 2020 environmental performance 
should be evaluated in the context of the pandemic. 
 
The Investment Manager has evolved its investment philosophy to incorporate 
"positive impact" investing, which aims to proactively take action to improve 
social and environment outcomes.  Its four pillars of impact are referenced to 
the UN Sustainable Development Goals and used to consider impacts for funds and 
assets. 
 
A good investment strategy must incorporate environmental, social and 
governance factors alongside traditional economic considerations.  The Board 
and the Investment Manager believe a complete approach should be rewarded by 
improved investment decisions and performance. 
 
Further information on the Investment Manager's Sustainable Investment Real 
Estate with Impact approach and its  Sustainability Policy: Real Estate with 
Impact can be found here: 
 
https://www.schroders.com/en/uk/realestate/products--services/sustainability/ 
 
Environmental Management System 
 
The Investment Manager operates an Environmental Management System ('EMS') 
which in January 2021 achieved external certification in accordance with ISO 
14001 for the asset management of direct real estate investments in the UK and 
across Europe. 
 
The EMS provides the framework for how sustainability principles (environmental 
and social) are managed throughout all stages of its investment process 
including acquisition due diligence, asset management, property management 
provided by third parties, refurbishments and developments. 
 
The Investment Manager reviews its Sustainability Policy annually and which is 
approved by the Investment Committee. Key aspects of the Policy and its 
objectives, and progress during 2020, as well as objectives and targets for the 
year ahead, are set out below. 
 
Schroders' investment management process requires annual fund strategy 
statements and business plans to include sustainability considerations and an 
Impact and Sustainability Action Plan to be prepared for all acquisitions. 
 
Property Manager Sustainability Requirements 
 
Property Managers play an integral role in supporting the sustainability 
program. The Investment Manager has established a set of Sustainability 
Requirements for Property Managers to adhere to in the course of delivering 
their property management services. This includes a set of key performance 
indicators (KPIs) to help improve the Property Manager's sustainability related 
services to the Company and which are assessed on a six-monthly and annual 
basis. 
 
The Investment Manager is pleased to report that MAPP, its principal property 
manager, performed well against the targets set for both the six-monthly and 
annual indicators. 
 
Objectives and Targets 
 
Net Zero Carbon 
 
Recognising the need for the real estate industry to address its carbon impact, 
the Investment Manager joined other members of the Better Buildings Partnership 
(BBP) in September 2019 to sign the Member Climate Change Commitment, and in 
December 2020, published its 'Pathway to Net Zero Carbon' - which can be found 
here: 
 
https://www.schroders.com/en/sysglobalassets/email/uk/realestate/2020/ 
schroder-real-estate-net-zero-carbon-pathway-december-2020_1621372_v1.pdf 
 
The Investment Manager's 'Pathway to Net Zero Carbon' includes a commitment to 
net zero carbon by 2050 or sooner, in line with The Paris Agreement - to pursue 
efforts to limit global warming to 1.5°C. The Pathway involves beginning to set 
new energy and carbon targets during 2021 to include interim milestones, and to 
replace existing targets which come to an end in March 2021. The pathway will 
evolve over time as the Investment Manager and the wider industry develops its 
understanding of how to address the carbon impact of real estate activities and 
as regulatory initiatives develop. It is widely expected that policy 
requirements will become more stringent and society will increasingly demand 
all market participants to actively demonstrate their carbon responsibility to 
support the delivery of a low carbon society. 
 
Schroders Plc, in recognition of the importance of climate change and its 
responsibilities as a global asset manager, became a founding member of the Net 
Zero Asset Managers Initiative in December 2020. The initiative commits us to 
working with asset owner clients, setting and regularly reviewing targets for 
assets aligned with and ultimately achieving the goal of net zero greenhouse 
gas emissions by 2050 or sooner, in line with global efforts to limit warming 
to 1.5°C. 
 
Impact Assessment 
 
The Investment Manager evolved its investment philosophy to incorporate 
"positive impact" investing, with the aim to proactively take action to improve 
social and environmental outcomes, and established four pillars of impact: 
people, place, planet and prosperity with key performance indicators for each 
pillar. The pillars are referenced to the UN Sustainable Development Goals: 8 
Decent work and Economic Growth, 11 Sustainable Cities and Communities and 13 
Climate Action. 
 
The Investment Manager has developed an impact measurement framework to assess 
impacts within portfolios. This framework supports analysis of social aspects 
for which examples include tenant satisfaction, selection of suppliers, 
enhancements to amenities at and around buildings and community support and 
involvement together with environmental aspects for example energy reduction 
and use of renewables. This initial baselining exercise was completed in 2020 
and the results reviewed to identify risks and opportunities in order to set 
improvement targets for the Company. Progress against these targets will be 
reviewed in 2021. 
 
Energy and Greenhouse Gas Emissions 
 
Active management of energy consumption and greenhouse gas emissions is a key 
component of responsible asset and building management. Improving energy 
efficiency and reducing energy consumption will benefit tenants' occupational 
costs and may support tenant retention and attraction, in addition to 
mitigating environmental impacts and helping to futureproof the portfolio 
against future legislation. Therefore, where the landlord retains operational 
control responsibilities, the Investment Manager monitors the Company's energy 
usage and efficiency on a quarterly basis. 
 
The Investment Manager has an energy and greenhouse gas emissions performance 
reduction target to achieve an 18% reduction in landlord-controlled energy 
consumption by 2020/21 (2015/16 baseline) across all UK-managed assets. This is 
accompanied by a target of a 32% reduction in landlord-controlled greenhouse 
gas (GHG) emissions by 2020/21 (2015/16 baseline); this target is inclusive of 
decarbonisation of the UK electricity grid over recent years. 
 
In support of achieving these targets and improving the efficiency of the 
portfolio, the Investment Manager has continued to work with sustainability 
consultants Evora Global and property manager MAPP to identify and deliver 
energy and greenhouse gas emissions' reductions on a cost-effective basis. The 
programme involves reviewing all managed assets within the Company and 
identifying and implementing improvement initiatives, where viable. 
 
The Investment Manager can report for the 2020 calendar year for the managed 
assets held within the Company a reduction in landlord-procured energy 
consumption of 20% on a like-for-like basis. This translates to a Scope 1 and 
Scope 2 GHG emissions reduction of 26% on a like-for-like basis. Please note, 
changes in occupancy and building operations during the COVID-19 period will 
have had an impact on performance and so the 2020 reporting year is not 
directly comparable to 2019. Energy performance improvement initiatives 
continued to be considered across the portfolio. Initiatives undertaken during 
the reporting year include replacement and upgrades to boilers and hot water 
systems, wall and roof insulation upgrades, upgrades to Automatic Meter Readers 
for improved energy monitoring, LED lighting upgrades and the installation of 
lighting and ventilation occupancy sensors. 
 
For detailed energy performance data covering the reporting period and the 
prior year, please see the EPRA Sustainability Reporting Performance Measures. 
 
Net Zero Carbon is a natural next step to our energy and carbon programme. The 
Investment Manager's targets expired in March 2021 and new energy and carbon 
targets will be set for the Company in the context of Net Zero Carbon. 
 
The Investment Manager also has an objective to procure 100% renewable 
electricity for landlord-controlled supplies by 2025. At December 2020, 97% of 
the Company's landlord-controlled electricity was on renewable tariffs. 
 
Energy Performance Certificates ("EPCs") for the portfolio are regularly 
reviewed for alignment with the 2015 Minimum Energy Efficiency Standards 
(England and Wales) legislation. The Investment Manager is actively managing 
the potential risk of this legislation to the portfolio. This legislation 
brought in a minimum EPC standard of "E" for new leases and renewals for 
non-domestic buildings from 1 April 2018; this minimum standard applies to all 
leases from 1 April 2023.  The EPC profile for the portfolio is set out within 
the EPRA Sustainability Reporting Performance Measures. 
 
Water 
 
Fresh water is a finite resource of increasing importance for the environment 
and society and reductions in consumption can deliver operational cost 
efficiencies. The Investment Manager monitors water consumption where the 
landlord has supply responsibilities and encourages active management of 
asset-level consumption. Where the Company had such responsibilities, a 28% 
reduction in like-for-like water consumption is reported for the calendar year 
2020 compared to the calendar year 2019. Please note, changes in occupancy and 
building operations during the COVID-19 period will have had an impact on 
performance and so the 2020 reporting year is not directly comparable to 2019. 
 
Waste 
 
Effective waste management decreases pollution and resource consumption, as 
well as improving operational efficiency and associated costs. To this end, 
waste should be minimised and disposal should be as sustainable as possible. 
The Investment Manager therefore has set an objective to send zero waste 
directly to landfill and to achieve optimal recycling. During 2020 the Company 
sent zero waste directly to landfill, 53% of waste was recycled and 47% 
incinerated with energy recovery. Please note, changes in occupancy and 
building operations during the COVID-19 period will have had an impact on 
performance and so the 2020 reporting year is not directly comparable to 2019. 
 
Improvements, Refurbishments and Green Building Certifications 
 
The Investment Manager seeks to deliver developments and refurbishments to 
sustainable standards and deliver good performance against building 
certifications, including EPCs and BREEAM (the Building Research Establishment 
Environmental Assessment Methodology: an environmental assessment method and 
rating system for buildings). Standards required are set for each project in 
context for the asset and the Investment Manager's guiding principles. 
 
BREEAM In-Use 
 
BREEAM In-Use is a performance-based assessment method for the certification of 
existing buildings. BREEAM In-Use helps assess operational performance against 
nine categories: Management, Health & Wellbeing, Energy, Transport, Water, 
Resources, Resilience, Land Use and Ecology, and Pollution. The framework 
supports the overall sustainability programme for the Company with improvement 
actions integrated into the responsibilities of the Investment Manager and 
Property Managers. 
 
During 2020, the Investment Manager commissioned two BREEAM In-Use assessments 
for the Company. 
 
Health Wellbeing and Productivity 
 
The real estate industry has a good appreciation of the importance of the built 
environment on human health and wellbeing. There has been considerable 
development in understanding on what building aspects matter as well as how 
certification schemes, including the Well Building and Fitwel Certifications, 
can support landlords and tenants to address these. The Investment Manger has 
developed a Health and Wellbeing Framework to identify improvements across 
managed assets and within refurbishments and developments. This framework is 
being applied to the Company assets with improvements incorporated into 
property management plans. 
 
Stakeholder Engagement and Community 
 
The Investment Manager seeks active engagement with tenants to ensure a good 
occupational experience to help retain and attract tenants. As the day-to-day 
relationship is with the Property Manager, the Property Manager Sustainability 
Requirements include a key performance indicator on tenant engagement. Tenant 
engagement initiatives undertaken by the Property Manager include incorporating 
sustainability as an agenda item during tenant meetings and where a tenant 
handbook exists include information on sustainability. At City Tower, 
Manchester the Property Manager held an Environmental Awareness Week to address 
and engage with tenants on issues such as waste management, sustainable 
transport, fair trade products and clothes recycling and hosted an 
International Women's Day breakfast event with a guest speaker. At City Tower, 
the Property Manager has also rolled out the interactive occupier and community 
engagement platform 'Locale' to help deliver a best in class customer 
experience. 
 
SREIM believes in the importance of understanding a building's relationship 
with the community and its contribution to the well-being of society. 
Positively impacting on local communities helps create successful places that 
foster community relationships, contribute to local prosperity, attract 
building users and, ultimately, lead to better, more resilient investments. 
SREIM looks to understand and develop the community relationship to ensure 
investments provide sustainable social solutions for the long term. 
 
Sustainability in Action (Case Studies) 
 
The Promenade, Cheltenham 
 
The Promenade is a 32,500 sq ft multi-let office located in a prime location in 
Cheltenham town centre. Understanding the needs and expectations of existing 
and prospective tenants is essential to maintaining occupiers and attracting 
higher rental levels. A comprehensive review focusing on sustainability 
credentials has been undertaken. 
 
The review included building efficiencies in terms of electricity and water 
usage, ventilation and tenant facilities. Identified improvements have been 
implemented including: 
 
-      Promoting green behaviours: new shower facilities to promote green and 
active travel. 
 
-      Energy efficiency: The decommissioning of two existing large floor 
standing boilers which were oversized for the requirement and downsizing to 
correctly sized efficient boilers and point-of-use solutions. Replacements and 
upgrades to the boiler and hot water systems are estimated to produce savings 
in excess of 25% on energy consumption. In addition, passive infrared sensors 
('PIR') for lighting and ventilation and new LED fittings are being installed 
throughout the toilet areas and to the new showers to reduce electricity 
consumption. 
 
-      Water efficiency: non-concussive basin taps, dual toilet flushing 
systems, solenoid water shut-off values and PIR sensor urinals with flushing 
linked to usage to increase water usage efficiency. 
 
-      Disability facilities: revamped disabled access WC to improve the 
facilities and accessibility. We continue to develop our understanding of the 
tenants' sustainability experience to further improve the efficiency of the 
building and sustainability credentials. 
 
Headingley Central, Leeds 
 
Headingley Central is a 125,000 sq ft multi-let hotel, retail, leisure and 
office property located in a densely populated suburb of Leeds. Sustainability 
and impact reviews form a key part of major capital expenditure projects. At 
Headingley Central, 24,000 sq ft of office accommodation was converted into a 
shell and core configuration suited to use by a gym operator, providing 
additional amenity to the local community and complementary to the other 
occupiers onsite including retail, restaurants, office and hotel uses. 
 
This project incorporated various works to enhance the sustainability of the 
unit and neighbouring parts of the property. These included: 
 
-      Energy efficiency: Insulation to thermal elements, including the 
external walls and roof, was upgraded to a level that surpassed the 
requirements of current building regulations. Where replaced, external lighting 
comprise sensor controlled LED fixtures. 
 
-      Recycling: During the removal of the previous tenant's fit out by the 
landlord, a deliberate focus was maintained on correctly segregating materials 
for recycling, to minimise waste sent to landfill. 
 
-      Water efficiency: The works provided an opportunity in which inefficient 
water pumps serving the adjoining office accommodation were replaced with 
modern, lower consumption units. 
 
-      Repurposing and ethically sourcing: Where possible, components, such as 
timber joists, were repurposed for use on-site and all new timber specified was 
PEFC labelled, to help ensure sourcing from environmentally well managed 
forests. 
 
-      Promoting green behaviours: A dozen electric vehicle charging points 
have been introduced to the outdoor car park. 
 
We continue to review sustainability and impact initiatives across major 
capital expenditure projects to ensure the assets are performing to their best 
ability and to identify any gaps where further progress on sustainability 
credentials could be made. 
 
Compliance with Legislation 
 
The Investment Manager continues to monitor requirements and guidance in 
relation to managing and reporting environmental matters and developments in 
legislation at all stages of the investment lifecycle - from acquisition, 
through ownership, to disposal. This process is supported by a legal register 
within the EMS, as well as through appropriate devolution of responsibility to 
key personnel involved in the day-to-day operation of buildings, including 
asset, property and facilities' managers. 
 
Streamlined Energy and Carbon Reporting (SECR) 
 
An Energy and Carbon Report for the Company, aligned with the UK Streamlined 
Energy and Carbon Reporting regulations, is included on page 121. 
 
Energy Savings Opportunity Scheme 
 
The Company did not qualify for participation in the 2015 Phase 1 of the Energy 
Savings Opportunity Scheme and did not fall within scope of the Scheme's 2019 
Phase 2 requirements. 
 
Industry Initiatives 
 
EPRA Sustainability Reporting Performance Measures 
 
The Company Report includes environmental performance indicator data for the 
portfolio. The disclosures are aligned with EPRA Best Practices Recommendations 
on Sustainability Reporting 2017 and are included in the Company EPRA 
Performance Measures report. The Company was awarded an EPRA Gold Award for 
Sustainability Reporting in 2020, for the third consecutive year. 
 
Sustainability Assurance Statement 
 
Schroders' sustainability consultants, Evora Global, have prepared an Assurance 
Statement in relation to the sustainability matters reported in this Annual 
Report. The full statement can be found on the following link, please see the 
Sustainability Page for full assurance statement: 
 
https://www.schroders.com/en/uk/adviser/fund-centre/funds-in-focus/ 
investment-trusts/schroders-investment-trusts/ 
schroder-real-estate-investment-trust/sustainability/ 
 
Global Real Estate Sustainability Benchmark (GRESB) 
 
The Investment Manager has participated in GRESB, the dominant global standard 
for assessing Environmental, Social and Governance (ESG) performance for real 
estate funds and companies, since 2011. Through its annual questionnaire, GRESB 
evaluates the sustainability performance of reporting entities against seven 
sustainability aspects and contains approximately 50 indicators. 
 
The Company has participated in GRESB for the past five years. In 2020 the 
Company achieved a score of 71 (out of 100), came first in its peer group (1st 
out of 9), secured a 3-star status (out of 5 stars) and maintained its Green 
Star rating. A Green Star rating is achieved where the scores for the two 
components of Management and Performance both score higher than 50% of the 
points allocated to each component. 
 
The Investment Manager intends to participate in the survey on behalf of the 
Company in 2021 with the objective of continual improvement to its score, as 
well as retaining its Green Star rating. 
 
The Investment Manager continues to work with third party Property Management 
providers to improve sustainability performance across all assets. 
 
UN PRI (Principles for Responsible Investment) 
 
Schroders plc has been a signatory to UN PRI since 2007 and intends to remain 
an active and engaged member for the PRI and to meet its ongoing membership 
commitments. Schroders achieved the highest possible ESG score of A+ in 2020, 
for the sixth year running, for its overarching ESG approach from the 
Principles for Responsible Investment. Schroders has completed the Direct 
Property Segment for four years achieving an A rating in all four years. 
Schroders' public UN PRI Transparency Report is available here:  https:// 
www.unpri.org/signatory-directory/schroders/1746.article. 
 
Industry Participation 
 
Schroders supports, and collaborates with, several industry groups, 
organisations and initiatives including the United Nations Global Compact and 
Net Zero Asset Managers Initiative (for which it is a founding member). Further 
details of Schroders' industry involvement are listed at pages 44 - 47 of 
Schroders 2020 Annual Sustainable Investment Report: 
 
(https://publications.schroders.com/view/1010922180/44/). 
 
The Investment Manager is a member of several industry bodies including the 
European Public Real Estate Association (EPRA), INREV (European Association for 
Investors in Non-Listed Real Estate Vehicles), British Council for Offices and 
the British Property Federation.  It was a founding member of the UK Green 
Building Council in 2007 and in 2017 became a member of the Better Buildings 
Partnership and a Fund Manager Member of GRESB. 
 
Employee Policies and Corporate Responsibility 
 
Employees 
 
The Company is an externally-managed real estate investment trust and has no 
direct employees. The Investment Manager is part of Schroders PLC which has 
responsibility for the employees that support the Company. Schroders believes 
diversity of thought and an inclusive workplace are key to creating a positive 
environment for their people. The Investment Manager's real estate team have a 
sustainability objective within their annual objectives. 
 
Further information on Schroders' principles in relation to people including 
diversity and inclusion, gender pay gap, values, employee satisfaction survey, 
well-being and retention can be found on the dedicated Schroders webpage here: 
 
 https://www.schroders.com/en/working-here/our-people/. 
 
Corporate Responsibility 
 
Schroders' commitment to corporate responsibility is to ensure that its 
commitment to act responsibly, support clients, deliver value to shareholders 
and make a wider contribution to society is embedded across its business in all 
that it does. 
 
Full information about Schroder's Corporate Responsibility approach including 
its economic contribution, environmental impacts and community involvement, can 
be found here: 
 
https://www.schroders.com/en/sustainability/corporate-responsibility/. 
 
Slavery and Human Trafficking Statement 
 
The Company is not required to produce a statement on slavery and human 
trafficking pursuant to the Modern Slavery Act 2015 as it does not satisfy all 
the relevant triggers under that Act that require such a statement. 
 
SREIM, the Investment Manager to the Company, is part of Schroders PLC, whose 
statement on Slavery and Human Trafficking has been published in accordance 
with the Modern Slavery Act 2015 (the 'Act'). It sets out the steps that 
Schroders PLC and other relevant group companies ('Schroders' or the 'Group') 
has made during 2020 and plans for 2021 to prevent any form of modern slavery 
and human trafficking from taking place in our business, supply chain and 
investments. SREIM is part of the Schroders Group. 
 
Schroders' Slavery and Human Trafficking Statement can be found here: 
 
https://www.schroders.com/en/sustainability/corporate-responsibility/ 
slavery-and-human-trafficking-statement/. 
 
Task Force for Climate-Related Financial Disclosure (TCFD) 
 
The Task Force on Climate-related Financial Disclosure (TCFD) aims to 
mainstream reporting on climate-related risks and opportunities in an 
organisations' annual financial filings. Launched in 2017, TCFD has so far been 
a voluntary framework. However, it becomes mandatory in the UK across a range 
of market participants on a phased timeline beginning in 2021. The Company is 
expected to be captured by this regulation in the near future. 
 
The TCFD recommendations are structured around four themes: Governance, 
Strategy, Risk Management, and Metrics and Targets. Key concepts within the 
framework include so-called 'transition' and 'physical' risks. The former 
encapsulates the risks arising from society's transition to a low carbon 
economy (changing regulation and market expectations, new technologies etc), 
and the latter relates to the acute (storms, floods and wildfires etc) and 
chronic (rising sea levels, increasing heat stress etc) physical effects of a 
changing climate. Additional principles within TCFD include the importance of 
the forward-looking assessment of climate-related risks and opportunities, and 
'scenario analysis'. Scenario analysis is a process of identifying and 
assessing the potential implications of a range of plausible future states 
under conditions of uncertainty. The recommendations note that the scenario 
analysis for climate-related issues is a relatively new concept and that 
practices will evolve over time. 
 
In 2020, the Investment Manager, SREIM, completed a review of its policies and 
practices against TCFD criteria and developed a roadmap towards increased 
alignment. Building on our established consideration of sustainability within 
the investment process, Schroder's believes it will be important to further 
integrate the assessment of climate-related risks and opportunities into 
decision-making and reporting processes. The outcome of our review and progress 
towards further alignment is set out below. 
 
Governance 
 
In investing for the long term, we recognise the increasing importance of both 
a forward-looking assessment of the potential impacts of climate change and the 
likely action necessary to support the assets and cities in which we invest 
resilience as we transition to a low-carbon economy. In line with the 
Schroders' Investing with Impact approach, we are also seeking to promote a 
fair and socially conscious low-carbon transition, that supports social, as 
well as economic and physical, resilience within local communities. As real 
estate investment time horizons can be relatively long term, we have a 
responsibility and opportunity to affect real change in preparing the Company 
and its assets to build resilience to climate change. 
 
Climate change is an established component of our sustainability programme. 
Responsibility for the assessment and management of climate-related risk and 
opportunity is delegated to key members of the Investment Management team, 
supported by regular reporting to the Investment Committee. Schroder's Head of 
Sustainability and Impact Investing recommends the Investment Manager's annual 
Sustainability Policy and Objectives, which are reviewed and approved by the 
Investment Committee. The Investment Manager incorporates climate-related 
considerations into key stages of the investment process, including acquisition 
proposals, annual Asset Business Plans and annual Fund Strategy Statements. 
Each of these steps of the investment process requires approval by the 
Investment Committee. The Investment Manager also prepares the annual report 
and financial accounts for the Company, which include climate-related metrics 
and supports the Investment Manager and Board's monitoring of performance and 
progress towards climate-related goals and targets. 
 
We are reviewing our approach to ensure climate-related metrics and targets are 
sufficiently forward-looking and cover the full range and depth of 
climate-related issues. For example, we are in the process of assessing all 
managed assets against Paris Aligned 1.5oC carbon and energy intensity 
performance benchmarks, to the year 2050 using the Carbon Risk Real Estate 
Monitor (CRREM) tool[41] as well as physical climate risks to support a net 
zero pathway for the Company. 
 
We will continue to evolve our approach to ensure oversight and management of 
exposure to material risks, together with identifying opportunities, across the 
asset life cycle to support resilient long-term returns. 
 
Strategy 
 
Our investment philosophy and process is underpinned by fundamental research 
and an analytical approach that considers economic, demographic and structural 
influences on the market. We are considering how climate change may impact on 
these factors over time, as well as how government policies may enable 
mitigation of and adaption to climate change. 
 
In the short term, energy and carbon emissions performance of our assets is a 
critical climate-related strategic issue. We recognise the need and opportunity 
presented by climate change to improve operational efficiency, maintenance 
costs and generate new income streams (e.g. onsite energy) and which all 
support asset values. These actions also support the Company with increasing 
investor expectations in relation to climate action and preparing portfolio 
assets for new and emerging energy efficiency regulations, increases in energy 
costs, carbon taxes, changing tenant preferences and valuation considerations. 
In the short, medium and longer term, the physical effects of changing climate 
also present potential material financial impacts to the Company, for example 
in relation to heating or cooling buildings in changing climates, weather 
events and availability of water. 
 
Since 2016, assets of the Company have been included in the Investment 
Manager's UK energy consumption and carbon emission reduction targets for 
assets where landlord operational control is retained. As signatories of the 
Better Buildings Partnership (BBP)[42] Member Climate Change Commitment, the 
Investment Manager has committed to achieving net zero carbon by 2050 at the 
latest. Schroder Real Estate published its pathway to Net Zero Carbon in 2020, 
which is available here: 
 
https://www.schroders.com/en/sysglobalassets/email/uk/realestate/2020/ 
schroder-real-estate-net-zero-carbon-pathway-december-2020_1621372_v1.pdf. 
 
As part of implementing the Net Zero Carbon strategy, the Investment Manager is 
working to set new portfolio and asset energy and carbon emissions targets to 
align with 'science-based' Paris Aligned benchmarks using the CRREM tool1. 
 
The Investment Manager's acquisition and asset business planning processes 
include consideration of climate-related issues, and will include a 
forward-looking assessment of asset alignment to Paris Aligned energy and 
carbon performance benchmarks, where information permits. We are also reviewing 
our existing processes for screening acquisitions and standing investments for 
climate-related physical risks (e.g. flooding). 
 
Engaging tenants to collaborate to reduce building energy and carbon emissions 
is an increasingly important element of our sustainability and business 
strategy. We have green lease provisions within our standard lease agreement 
and in 2020 launched Schroders Sustainable Occupier and Fit Out Guides for 
tenants. 
 
Scenario analysis has begun to feature in our energy and carbon performance 
analyses through use of the 1.5oC reduction pathways set out in the CRREM tool. 
 
Risk Management 
 
The existing portfolio-wide sustainability programme covers the life cycle of 
assets and enables systematic and continual appraisal of potentially material 
climate related risks. Risk criteria assessed within acquisition due diligence 
inform our investment decisions (e.g. Energy Performance Certificates and Flood 
Risk), as well as featuring in business and sustainability plans such as 
building technology upgrades. Pre-acquisition assessment of Paris Alignment 
using the CRREM tool, where information permits, will also support 
consideration of so called 'stranding risk' from increasing energy efficiency 
regulation and changing market expectations. 
 
For existing investments, potential climate-related risks are tracked and 
managed through ongoing monitoring (e.g. energy and greenhouse emissions 
trends), action plans (e.g. energy efficiency improvement measures), 
certification programmes (e.g. Energy Performance Certificates) and technical 
energy audits. Impact and Sustainability Action Plans also promote and track 
initiatives relating to climate opportunities (e.g. on site renewables and 
electric vehicle charging provision). Applying an assessment of the Paris 
Alignment using the CRREM tool as part of our Net Zero Pathway enables 
consideration of 'stranding risk' which will also feed into our asset action 
plans for managed standing investments. 
 
Schroder's environmental management system (EMS) is certified to ISO 14001 and 
applies to the asset management of the Company's real estate assets. Key 
components of the EMS include a detailed materiality assessment of risks and 
opportunities, and a register to monitor existing and emerging regulatory 
requirements related to energy and carbon emissions. 
 
On physical risk, Schroders has licenced a proprietary physical risk database 
through a third-party provider. The tool assesses vulnerability to physical 
risk hazards, including those related to climate change. The strategy will be 
to use this database to screen acquisitions, assess standing investment 
portfolios and identify required risk mitigation (i.e. enhanced defences, 
divestment), adaptation, or transfer (i.e. revised insurance policies) 
strategies. 
 
Our understanding of the future potential impacts and risks from climate change 
is constantly evolving.  Therefore, we are seeking to further embed the 
forward-looking identification and assessment of climate related issues into 
our research process. This will support ongoing monitoring of emerging risks 
and identify possible enhancements to core components of our investment 
process, such as our risk assessment and management framework. 
 
Metrics & Targets 
 
In the 'EPRA Sustainability Reporting Performance Measures (unaudited)' and the 
'Streamlined Energy and Carbon Reporting' sections of this report, we report 
detailed performance trend data, intensity ratios and assessment methodologies 
covering energy consumption, GHG emissions, water consumption and waste 
generation. Measuring energy, GHG emissions, water and waste supports our 
assessment and management of risks from transitioning to a low carbon economy 
(e.g. efficiency regulation) and to a new climate (e.g. increased water 
scarcity). 
 
As also referenced in 'EPRA Sustainability Reporting Performance Measures 
(unaudited)' section of this report, we have ambitious energy and GHG emissions 
reduction targets against which we have made good progress. These targets 
expired in March 2021 and we are assessing the outcomes of these targets, 
noting that COVID-19 has had an impact on our ability to properly identify 
improvements in building performance due to interruptions to building operation 
and occupation. During 2021, we will use the science based CRREM analysis to 
develop asset level Paris Aligned targets to 2025 and 2030. These asset-level 
targets will then be compiled to create portfolio reduction targets for the 
Company. 
 
Historically we have focussed on monitoring and targeting reductions where we 
have operational control - i.e. landlord-procured energy consumption only (so 
called 'Scope 1 and 2' GHG emissions). As the transition to a low carbon 
economy presents risks and opportunities for entire assets - i.e. landlord and 
tenant-controlled areas - we are reviewing how we may also support performance 
improvement in tenant-controlled areas (so called 'Scope 3' GHG emissions). 
Similarly, we are exploring opportunities to reduce GHG emissions associated 
with building materials consumed during construction and fit-out (so called 
'embodied' 'Scope 3' GHG emissions). 
 
All investment staff of the Investment Manager are required to have ESG-related 
performance objectives. 
 
Business Model 
 
Company's business 
 
The Company is a real estate investment company with a premium listing on the 
Official List of the Financial Conduct Authority and whose shares are traded on 
the premium segment of the Main Market of the London Stock Exchange. On 1 May 
2015 the Company converted to a Real Estate Investment Trust ('REIT') which 
means that it is able to benefit from exemptions from UK tax on profits and 
gains in respect of certain qualifying property rental business activities. The 
Company continues to be an authorised closed-ended investment scheme registered 
in Guernsey. 
 
The Board 
 
The Board of Directors is responsible for the overall stewardship of the 
Company, including investment and dividend policies, corporate strategy, 
gearing, corporate governance and risk management. 
 
The Company has no executive directors or employees. 
 
Investment objective and purpose 
 
The investment objective and purpose of the Company is to provide shareholders 
with an attractive level of income together with the potential for income and 
capital growth from owning and actively managing a diversified portfolio of 
real estate. Corporate social responsibility is deemed to be key to long-term 
business success together with overseeing positive stakeholder relationships. 
 
The portfolio is principally invested in the three main UK commercial real 
estate sectors of office, industrial and retail, and may also invest in other 
sectors including office, retail, and industrial and will also invest in other 
sectors including mixed use, residential, hotels, healthcare and leisure. Over 
the real estate market cycle the portfolio aims to generate an above average 
income return with a diverse spread of lease expiries. 
 
Relatively low levels of debt are used to enhance returns for shareholders with 
the level of debt dependent on the real estate cycle and the outlook for future 
returns. 
 
Investment strategy 
 
The current investment strategy is to grow income and enhance shareholder 
returns through proactive asset management by our specialist teams, and 
selective acquisitions and disposals. and selling smaller properties on 
completion of the asset business plan. 
 
Our objective is to own a portfolio of larger properties in Winning Cities and 
Regions with high growth, diversified local economies, sustainable occupational 
demand and favourable supply and demand characteristics. These properties 
should offer good long-term fundamentals in terms of location and 
specification, be let at affordable rents with the potential for income and 
capital growth from good stock selection and asset management, and offer a high 
standard of operational and sustainability performance. The issuance of new 
shares will also be considered if this is consistent with the strategy. 
 
The Board has delegated investment management and accounting services to the 
Investment Manager with the aim of delivering the Company's investment 
objective and strategy. Details of the Investment Manager's investment 
approach, along with other factors that have affected performance during the 
year, are set out in the Investment Manager's Report. 
 
Diversification and asset allocation 
 
The Board believes that in order to maximise the stability of the Group's 
income, the optimal strategy for the Group is to invest in a portfolio of 
assets diversified by location, sector, asset size and tenant exposure with low 
vacancy rates and creditworthy tenants. The value of any individual asset at 
the date of its acquisition may not exceed 15% of gross assets and the 
proportion of rental income deriving from a single tenant may not exceed 10%. 
From time to time the Board may also impose limits on sector, location and 
tenant types together with other activity such as development. 
 
The Company's portfolio will be invested and managed in accordance with the 
Listing Rules of the Financial Conduct Authority ('Listing Rules' and 'FCA' 
respectively) taking into account the Company's investment objectives, policies 
and restrictions. 
 
Borrowings 
 
The Board has established a gearing guideline for the Investment Manager, which 
seeks to limit on-balance-sheet debt, net of cash, to 35% of on-balance-sheet 
assets while recognising that this may be exceeded in the short term from time 
to time. It should be noted that the Company's Articles limit borrowings to 65% 
of the Group's gross assets, calculated as at the time of borrowing. The Board 
keeps this guideline under review and the Directors may require the Investment 
Manager to manage the Group's assets with the objective of bringing borrowings 
within the appropriate limit while taking due account of the interests of 
shareholders. Accordingly, corrective measures may not have to be taken 
immediately if this would be detrimental to shareholder interests. 
 
Interest rate exposure 
 
It is the Board's policy to minimise interest rate risk, either by ensuring 
that borrowings are on a fixed rate basis, or through the use of interest rate 
swaps/derivatives used solely for hedging purposes. 
 
Investment restrictions 
 
As the Company is a closed-ended investment fund for the purposes of the 
Listing Rules, the Group will adhere to the Listing Rules applicable to 
closed-ended investment funds. The Company and, where relevant, its 
subsidiaries will observe the following restrictions applicable to closed-ended 
investment funds in compliance with the current Listing Rules: 
 
-       Neither the Company nor any subsidiary will conduct a trading activity 
which is significant in the context of the Group as a whole and the Group will 
not invest in other listed investment companies; and 
 
-       Where amendments are made to the Listing Rules, the restrictions 
applying to the Company will be amended so as to reflect the new Listing Rules 
 
In addition, the Board will ensure compliance with the UK REIT regime 
requirements. 
 
Performance 
 
The Board uses principal financial Key Performance Indicators ('KPIs') to 
monitor and assess the performance of the Company being the net asset value 
('NAV') total return, the performance of the Company's underlying property 
portfolio relative to its MSCI Benchmark Index and the share price: 
 
1.      NAV total return 
 
For the year to 31 March 2021 the Company delivered a NAV total return of 3.9% 
(-1.5%[43]  for the year to 31 March 2020). 
 
2.      Underlying property portfolio performance relative to peer group 
Benchmark 
 
The performance of the Company's property portfolio is measured against a 
specific Benchmark defined as the MSCI (formerly Investment Property Databank) 
UK Balanced Portfolios Quarterly Property Index (the 'Benchmark'). As at 31 
March 2021 the Benchmark Index comprised 183 member funds. 
 
Underlying property portfolio performance 
 
Total return for 12 months to 31 March   Total return for 12 months to 31 March 
2021                                     2020 
 
SREIT (%)           MSCI Benchmark (%)   SREIT (%)            MSCI  Benchmark (%) 
 
4.6%                1.8%                 1.9%                 0.2% 
 
The analysis above has been prepared by MSCI and takes account of all direct 
property-related transaction costs. 
 
3.      Share price performance 
 
The Board monitors the level of the share price compared to the NAV. As at 31 
March 2021, the share price of 39.9p was at a 33.9% discount to the NAV of 60.4 
pps. Where appropriate on investment grounds, the Company may from time to time 
repurchase its own shares, but the Board recognises that movements in the share 
price premium or discount are driven by numerous factors, including investment 
performance, gearing and market sentiment. Accordingly, we focus our efforts 
principally on addressing the sources of risk and return as the most effective 
way of producing long-term value for shareholders. 
 
Our stakeholders 
 
Section 172 statement 
 
Although the Company is registered in Guernsey, in accordance with the guidance 
set out in the AIC code a Section 172 statement is required. Section 172 of the 
Companies Act 2006 requires a Director of a company to act in the way he or she 
considers, in good faith, would be most likely to promote the success of the 
company for the benefit of its members as a whole. In doing this, section 172 
requires a Director to have regard, among other matters, to: the likely 
consequences of any decision in the long term; the interests of the company's 
employees; the need to foster the company's business relationships with 
suppliers, customers and others; the impact of the company's operations on the 
community and the environment; the desirability of the company maintaining a 
reputation for high standards of business conduct; and the need to act fairly 
with members of the company. The Directors give careful consideration to the 
factors set out above in discharging their duties under section 172. 
 
The Board is focused on ensuring that the Company delivers on its strategic 
objectives, while taking into account the impact on its stakeholders as a 
whole. It is our firm belief that prioritising positive stakeholder 
relationships is central to delivering long-term, sustainable returns. The 
Board is focused on ensuring that it understands its stakeholders' needs. 
 
Shareholders 
 
The Board is committed to maintaining high standards of corporate governance in 
order to protect shareholder interests. The Manager undertakes an active 
investor relations schedule in London and the regions throughout the year, 
which includes one-on-one and group meetings with shareholders, site visits to 
key assets as well regular presentations to the sell-side analyst community. 
Shareholder feedback is encouraged either through the broker or directly to the 
Manager or Board. 
 
Occupiers 
 
The Company has a diverse range of tenants occupying space across the 
portfolio. This includes a wide range of businesses who operate out of our 
office or industrial space and the retailers and shoppers who work at or visit 
our retail and leisure properties. Active and constant engagement with these 
groups, either directly or through property managers or agents, is required to 
gather intelligence as to what is important to them. Understanding changing 
needs, both at an individual company level, as well as on a sectoral and 
broader economic level, is a key tenet informing both our individual asset 
management investment decisions as well as the longer-term strategic direction 
of the Company. 
 
Communities 
 
Our assets are located across the UK in range of urban environments. The 
buildings and their occupiers are part of the fabric of local communities. The 
Company works hard to ensure that it is engaging with local communities, 
councils and individuals and that our asset strategies are sensitive to the 
unique heritage of each location. 
 
Environment 
 
The built environment is generally accepted to be responsible for 40% of global 
carbon emissions, which places great responsibility on those companies that are 
direct or indirect contributors. The Board is sensitive to the Company's role 
and is committed to continually improving and protecting the environment by 
using resources such as energy, water and materials in a sustainable manner for 
the prevention of greenhouse gas emissions and climate change mitigation. 
Environmental, Social and Governance ('ESG') considerations are integrated into 
the Company's investment processes and each individual asset benefits from 
specific ESG-related objectives. The Board constantly reviews its approach to 
sustainable investing and believes that this is integral in delivering better 
long-term returns for our investors and for safeguarding the future of 
the environment that we live and work in. 
 
Service providers 
 
As an externally managed real estate investment trust, the Board is reliant on 
a range of service providers who have a direct working or contractual 
relationship or share a mutual interest with the Company. This includes, but is 
not limited to, the Manager, property managers, company secretary and 
administrator, depositary, auditor, tax advisers, solicitors, property valuers 
and banks. The Company regularly reviews these relationships as part of its 
commitment to transparency and corporate best practice. 
 
Lenders 
 
Borrowing allows the Company's shareholders to increase exposure to assets 
consistent with the strategy and generate enhanced returns in at a low cost. 
These lenders have a financial interest in the success of the Company. 
 
Decision making 
 
The Board makes decisions on, among other things, the principal matters set out 
under the paragraph above headed 'Role of the Board' on page 59. 
 
Risk and Uncertainties 
 
The Board is responsible for the Company's system of risk management and 
internal control and for reviewing its effectiveness. The Board has carried out 
a robust assessment of the principal risks and emerging risks facing the 
Company including those that would threaten its business model, future 
performance, solvency or liquidity. A framework of internal controls has been 
designed and established to monitor and manage those risks. This internal 
control framework provides a system to enable the Directors to mitigate these 
risks as far as possible, which assists in determining the nature and extent of 
the significant risks the Board is willing to take in achieving its strategic 
objectives. 
 
Although the Board believes that it has a robust framework of internal controls 
in place this can provide only reasonable, and not absolute, assurance against 
material financial misstatement or loss and is designed to manage, not 
eliminate, risk. 
 
A summary of the principal risks and uncertainties faced by the Company, many 
of which have remained unchanged throughout the year ended 31 March 2021, and 
actions taken by the Board to manage and mitigate these risks and 
uncertainties, are set out below. 
 
              Key risks                            Mitigation of risk 
 
Investment policy and strategy 
 
An inappropriate investment strategy, The Board seeks to mitigate these risks by: 
or failure to implement the strategy, -   Diversification of its property 
could lead to underperformance and    portfolio through its investment 
the share price being at a larger     restrictions and guidelines which are 
discount, or smaller premium, to NAV  monitored and reported on by the Investment 
than the property market generally.   Manager. 
This under performance could be       -   Determining a borrowing policy and the 
caused by incorrect sector and        Investment Manager operates within borrowing 
geographic weightings or a loss of    restrictions and guidelines. 
income through tenant failure, both   -   Receiving from the Investment Manager 
of which could lead to a fall in the  timely and accurate management information 
value of the underlying portfolio.    including performance data, attribution 
This fall in values would be          analysis, property level business plans and 
amplified by the Company's external   financial projections. 
borrowings.                           -   Monitoring the implementation and 
                                      results of the investment process with the 
                                      Investment Manager with a separate meeting 
                                      devoted to strategy each year. 
 
Investment management 
 
The Investment Manager's investment   Review of the Investment Manager's 
strategy, if inappropriate, may       compliance with the agreed investment 
result in the Company underperforming restrictions, investment performance and 
the market and/or peer group          risk against investment objectives and 
companies, leading to the Company and strategy; relative performance; the 
its objectives becoming unattractive  portfolio's risk profile; and appropriate 
to investors.                         strategies employed to mitigate any negative 
                                      impact of substantial changes in markets, 
                                      including any potential disruption to 
                                      capital markets. 
 
Economic and property market risk 
 
The performance of the Company could  The Board considers economic conditions and 
be affected by economic and property  the uncertainty around political events when 
market risk.  In the wider economy    making investment decisions. The Board 
this could include inflation or       mitigates property market risk through the 
deflation, economic recessions,       review of the Group's strategy on a regular 
movements in interest rates, Brexit   basis and discussions are held to ensure the 
impact or other external shocks. The  strategy is still appropriate or if it needs 
performance of the underlying         updating. 
property portfolio could also be 
affected by structural or cyclical 
factors impacting particular sectors 
or regions of the property market. 
 
Covid-19 and emerging risks 
The global pandemic has accentuated   The Investment Manager is in close contact 
the economic and property market      with all the property managers and tenants 
risks, highlighted above.             with a continued focus on rent collection, 
                                      reducing risk and implementing new property 
                                      management procedures to ensure tenants can 
                                      return safely to our buildings. 
 
Gearing and leverage 
 
The Company utilises credit           Gearing is monitored and strict restrictions 
facilities. These arrangements        on borrowings have been imposed. 
increase the funds available for 
investment through borrowing. While 
this has the potential to enhance 
investment returns in rising markets, 
in falling markets the impact could 
be detrimental to performance. 
 
Accounting, legal and regulatory 
 
The risk that the NAV and financial   The Investment Manager has robust processes 
statements could be inaccurate.       in place to ensure that accurate accounting 
                                      records are maintained and that evidence to 
                                      support the financial statements is 
                                      available to the Board and the auditors. The 
                                      Investment Manager operates established 
                                      property accounting systems and has 
                                      procedures in place to ensure that the 
                                      quarterly NAV and Gross Asset Value are 
                                      calculated accurately. 
                                      The Board has appointed the Investment 
                                      Manager as Alternative Investment Fund 
                                      Manager (AIFM) in accordance with the 
                                      Alternative Investment Fund Managers 
                                      Directive (AIFMD). 
                                      The quarterly and annual NAV has numerous 
                                      levels of reviews including by the Board. 
                                      Additional support is produced by the Fund 
                                      Accountants to ensure financial data is 
                                      complete and accurate. 
                                      An internal controls review is performed by 
                                      Ernst & Young in accordance with ISAE 3402 
                                      annually to provide assurance on Schroders' 
                                      service organisations' control procedures 
                                      and an external audit is completed to 
                                      provide an opinion on the financial 
                                      statements which have been reviewed by the 
                                      board of directors. 
                                      The Administrator monitors legal 
                                      requirements to ensure that adequate 
                                      procedures and reminders are in place to 
                                      meet the Company's legal requirements and 
                                      obligations. The Investment Manager 
                                      undertakes full legal due diligence with 
                                      advisors when transacting and managing the 
                                      Company's assets. All contracts entered into 
                                      by the Company are reviewed by the Company's 
                                      legal and other advisors. 
                                      Processes are in place to ensure that the 
                                      Company complies with the conditions 
                                      applicable to property investment companies 
                                      set out in the Listing Rules. The 
                                      Administrator attends all Board meetings to 
                                      be aware of all announcements that need to 
                                      be made and the Company's advisors are aware 
                                      of their obligations to advise the 
                                      Administrator and, where relevant, the Board 
                                      of any notifiable events. Finally, the Board 
                                      is satisfied that the Investment Manager and 
                                      Administrator have adequate procedures in 
                                      place to ensure continued compliance with 
                                      the regulatory requirements of the FCA and 
                                      the Guernsey Financial Services Commission. 
 
Valuation risk 
 
Property valuations are inherently    External valuers provide independent 
subjective and uncertain. This        valuation of all assets. 
uncertainty is heightened due to the  Members of the Audit Committee meet with the 
Covid-19 pandemic.                    external valuers to discuss the basis of 
                                      their valuations and their quality control 
                                      processes. 
 
Tax risk 
 
The Group is exposed to changes in    We regularly monitor proposed and actual 
the tax regime affecting the cost of  changes in tax legislation with the help of 
corporate tax, VAT, Stamp Duty and    Deloitte, and through direct liaison with 
Stamp Duty Land Tax.                  HMRC, to understand and, if possible, 
                                      mitigate their impact. 
 
The UK's exit from the EU creates     HMRC has designated the Group as having a 
uncertainty over the future UK tax    low-risk tax status, and we hold regular 
and regulatory environment.           meetings with them. We carry out detailed 
                                      planning ahead of any future regulatory and 
The Group is exposed to potential tax tax changes using Deloitte as our tax 
penalties, or loss of its REIT        advisors. 
status, by failing to comply with the 
REIT legislation.                     The Group has internal monitoring procedures 
                                      in place to ensure that the appropriate REIT 
                                      rules and legislation are complied with. To 
                                      date, all REIT regulations have been 
                                      complied with, including projected tests. 
 
Service providers 
 
The Company has no employees and has  Service providers are appointed subject to 
delegated certain functions to a      regular reviews and with clearly documented 
number of service providers. Failure  contractual arrangements detailing service 
of controls and poor performance of   expectations. 
any service provider could lead to    Regular reporting by key service providers 
disruption, reputational damage or    and monitoring of the quality of services 
loss.                                 provided. 
                                      Review of internal controls reports from key 
                                      service providers, including confirmation of 
                                      business continuity and cyber security 
                                      arrangements. 
 
Governance Report 
 
Board of Directors 
 
Lorraine Baldry (Chairman) 
Status: Independent Non-Executive Director 
Date of appointment: 13 January 2014 
 
Aged 72, Lorraine is Chair of Hydroxyl Technologies Limited and Inventa 
Partners Limited. She has also been the Chair of London & Continental Railways 
and Sellafield Limited, a Governor at The University of the Arts London and a 
Director of Thames Water Utilities Limited. She was Chief Executive of 
Chesterton International plc and prior to that held various senior positions at 
Prudential Corporation, Morgan Stanley and Regus. She is also an Honorary 
Member of the Royal Institution of Chartered Surveyors and a Past President of 
the British Property Federation. 
 
Current remuneration: £50,000 per annum 
 
Material interests in any contract which is significant to the Company's 
business: None 
 
Graham Basham 
Status: Independent Non-Executive Director 
Date of appointment: 11 September 2015 
 
Aged 63, Graham is a director of a number of Investment and Fiduciary regulated 
companies in Guernsey. He also sits on the boards of the SREIT subsidiaries, a 
position he has held for more than ten years. He has more than 40 years' 
experience in fiduciary and fund work, most of these spent in several offshore 
locations. He was Group partner and Head of Guernsey for Aspida Group Limited, 
prior to retiring in May 2021.  He holds a Trustee Diploma as an Associate of 
Chartered Institute of Banks and is a member of both the Society of Trust and 
Estate Practitioners and the Institute of Directors. 
 
Current remuneration: £30,000 per annum 
 
Material interests in any contract which is significant to the Company's 
business: Was a Director of Computershare Services (Guernsey) Ltd, which acts 
as Registrar to the Fund, resigning in May 2021. 
 
Stephen Bligh (Chairman of the Audit Committee) 
Status: Independent Non-Executive Director 
Date of appointment: 28 April 2015 
 
Aged 64, Stephen was previously with KPMG for 34 years, specialising in the 
audit of FTSE 350 companies in property and construction. He is a fellow of the 
Institute of Chartered Accountants in England & Wales and was previously a 
non-executive Board Member of the Department of Business, Innovation & Skills. 
 
Current remuneration: £35,000 per annum 
 
Material interests in any contract which is significant to the Company's 
business: None 
 
Alastair Hughes (Senior Independent Director) 
Status: Independent Non-Executive Director 
Date of appointment: 26 April 2017 
 
Aged 55, Alastair has over 25 years of experience in real estate markets and 
currently holds Directorships with British Land PLC, Tritax Big Box and Quad 
Real Property Group. He was previously the Managing Director of Jones Lang 
LaSalle (JLL) in the UK before becoming the CEO for Europe, Middle East and 
Africa and then latterly becoming the CEO for Asia Pacific. Alastair is a 
Chartered Surveyor and sat on the Global Executive Board of JLL. 
 
Current remuneration: £35,000 per annum 
 
Material interests in any contract which is significant to the Company's 
business: None 
 
No Director has any entitlement to pensions and the Company has not awarded any 
share options or long-term performance incentives to any of them. No element of 
Directors' remuneration is performance-related. There were no payments to 
Directors for loss of office. 
 
No Director has a service contract with the Company. However, each of the 
Directors has a letter of appointment with the Company. The Directors' letters 
of appointment, which set out the terms of their appointments, are available 
for inspection at the Company's registered office address during normal 
business hours and will be available for inspection at the AGM. 
 
Report of the Directors 
 
The Directors of the Company and its subsidiaries, together the 'Group', 
present the annual report and audited consolidated financial statements of the 
Group for the year ended 31 March 2021 (the 'Annual Report and Consolidated 
Financial Statements'). The Company is incorporated in Guernsey, the Channel 
Islands under The Companies (Guernsey) Law, 2008 (the 'Companies Law'). 
 
Results and dividends 
 
The results for the year under review are set out in the attached financial 
statements. 
 
During the year the Company has declared and paid the following interim 
dividends to its shareholders in accordance with the solvency test (contained 
in the Companies Law): 
 
Dividend for quarter ended  Date Paid                   Rate 
 
30 June 2020                18 August 2020              0.38575 pence per share 
 
30 September 2020           11 December 2020            0.575 pence per share 
 
31 December 2020            12 March 2021               0.625 pence per share 
 
Subject to the solvency test provided for in the Companies Law being satisfied, 
all dividends were declared and paid as interim dividends. The Directors 
recommend a final dividend for the year ended 31 March 2021 of 0.656 pence per 
share. 
 
All dividends paid during the year were allocated and paid as Property Income 
Distributions (PIDs). 
 
Share capital 
 
As at 31 March 2021 the Company had 565,664,749 (2020: 565,664,749) Ordinary 
Shares in issue of which 74,246,108 Ordinary Shares (representing 13.1% of the 
Company's total issued share capital) were held in treasury (2020: 47,151,340). 
Further to the share buyback programme which commenced in September 2020, the 
total number of voting rights of the Company was 491,418,641 at the year end 
(2020: 518,513,409) and this figure may be used by shareholders as the 
denominator for the calculations by which they will determine if they were 
required to notify their interest in, or a change in their interest of, the 
Company, under the Disclosure Guidance and Transparency Rules as at the year 
end. 
 
Key services providers 
 
The Board has adopted an outsourced business model and has appointed the 
following key service providers: 
 
Investment Manager 
 
The Board reviews the Investment Manager's performance at its quarterly Board 
meetings. In addition, the Board conducted its annual strategic review with the 
Investment Manager in May 2021 to consider the portfolio strategy and the 
Investment Manager's capabilities in more depth. Subsequently, the Directors 
formally discussed the performance of the Investment Manager at a meeting of 
the Management Engagement Committee. 
 
On the basis of this review, the Board remains satisfied that the Investment 
Manager has the appropriate capabilities required to support the Company and 
believes that the continuing appointment of the Investment Manager under the 
terms of the current investment management agreement, the details of which are 
set out below, is in the interest of shareholders. 
 
The Investment Manager received a fee of 1.1% per annum of the Company's NAV 
during the financial year for providing investment management and accounting 
services. The fee is payable monthly in arrears. There is no performance fee. 
The Investment Management Agreement can be terminated by either party on not 
less than nine months' written notice or on immediate notice in the event of 
certain breaches of its terms or the insolvency of either party. 
 
The Management Engagement Committee has agreed a revision to the Investment 
Management Agreement, whereby the Investment Manager has reduced its fee to 
0.9% on NAV up to £500 million, 0.8% on NAV between £500 million to £1 billion 
and 0.7% on NAV over £1 billion. The termination notice period has increased 
from nine to twelve months, with effect from 1 July 2021. 
 
The Company has appointed the Investment Manager as its AIFM under the AIFM 
Directive. There is no additional fee paid to the Investment Manager for this 
service. 
 
Administration 
 
The Board appointed Northern Trust International Fund Administration Services 
(Guernsey) Limited as the administrator to the Company (the 'Administrator'). 
The Administrator is entitled to an annual fee of £120,000.  Northern Trust 
(Guernsey) Limited has been appointed by the Board to provide depositary 
services, as required under the AIFM Directive, at an annual fee of £40,000. 
 
Going concern 
 
The Directors have examined significant areas of possible financial risk 
including the non-collection of rent and service charges as a result of the 
Covid-19 pandemic; considered potential falls in property valuations; reviewed 
cash flow forecasts; and have analysed forward-looking compliance with third 
party debt covenants, in particular the Loan to Value covenant and interest 
cover ratios. 
 
Overall, after utilising available cash, excluding the cash balance undrawn 
against the RBS facility, and uncharged properties and units in Joint Ventures, 
and based on the reporting period to 31 March 2021, property valuations would 
have to fall by 42% before the relevant Canada Life Loan to Value covenants 
were breached, and actual net rental income would need to fall by 74% before 
the interest cover covenants were breached.  Furthermore, the properties 
charged to RBSI could fall in value by 70% prior to the 65% LTV covenant being 
reached and, based on actual net rents for the quarter to March 2021, a 78% 
fall in net income could be sustained prior to the RBSI  loan covenant of 185% 
being breached. 
 
As at the financial year end, the undrawn capacity of the RBS facility was £28 
million. This facility is an efficient and flexible source of funding due to 
the margin of 1.6% and its ability to be repaid and redrawn as often as 
required. It is noted that this facility expires in July 2023. 
 
The Board and Investment Manager continue to closely monitor the ongoing impact 
that the Covid-19 pandemic may have on the Company's rental collection and the 
requirement to distribute dividends in accordance with the REIT regulations. 
All future dividends will be kept under constant review to ensure the Company's 
liquid resources will be sufficient to cover any working capital requirements. 
 
The Directors have not identified any matters which would cast significant 
doubt on the Group's ability to continue as a going concern for the period to 1 
June 2022. ( In addition to the matters described above, in arriving at their 
conclusion the Directors have also considered: 
 
·      The current cash balance at 1 June 2021 of £13.5 million; 
 
·      The nature and timing of the Company's income and expenses; and 
 
·      That the Investment Manager and Administrator have successfully invoked 
their business continuity plans to help ensure the safety and well-being of 
their staff thereby retaining the ability to maintain the Company's business 
operations over the course of the financial year and to date. 
 
The Directors have satisfied themselves that the Group has adequate resources 
to continue in operational existence for at least the next twelve months from 
the date of approval of the financial statements.  After due consideration, the 
Board believes it is appropriate to adopt the going concern basis in preparing 
the financial statements. 
 
Viability statement 
 
The Board has assessed the viability of the Company, which considers the 
Company's current position and principal risks and uncertainties together with 
an assessment of future prospects. 
 
The Board conducted this review over a five year time horizon which was deemed 
appropriate as it matches the period over which the Board monitors and reviews 
its financial performance and forecasting and the Investment Manager prepares 
five year total return forecasts for the UK commercial real estate market. The 
Investment Manager uses its forecasts as part of analysing acquisition 
opportunities as well as for its annual asset level business planning process. 
At the annual Strategic Review the Board receives an overview of the asset 
level business plans which the Investment Manager uses to assess the 
performance of the underlying portfolio and to therefore make investment 
decisions such as disposals and investing in capital expenditure. The Company's 
principal borrowings are for a weighted duration of 15 years and the average 
unexpired lease term, assuming all tenants vacate at the earliest opportunity, 
is 5.3 years. 
 
The Board's assessment of viability considers the principal risks and 
uncertainties faced by the Company and, in the current period specifically, the 
additional risks arising as a result of Covid-19, as detailed on page 47 of the 
Strategic Report, which could negatively impact its ability to deliver the 
investment objective, strategy, liquidity and solvency of the Company. This 
includes considering a cash flow model prepared by the Manager that analyses 
the sustainability of the Company's cash flows, dividend cover, compliance with 
bank covenants, REIT compliance and general liquidity requirements for the five 
year period to 31 March 2026. 
 
These metrics are subject to a sensitivity analysis which involves flexing a 
number of the main assumptions including macroeconomic scenarios, delivery of 
specific asset management initiatives, rental growth and void/re-letting 
assumptions. 
 
The Board has considered, and will continue to monitor, the downside risks 
arising from the ongoing Covid-19 pandemic and expects to remain compliant with 
all banking covenants throughout the viability period, assuming rental 
collection rates return to their pre-Covid levels later in 2021. It is assumed 
that the revolving debt facility, which is due to expire in 2023, will be 
successfully renegotiated during the viability assessment period with the 
calculation assuming the same covenant conditions as previously. 
 
Based on its assessment, the Board has formed the reasonable expectation that 
the Company will be able to continue in operation and meet its liabilities as 
they fall due over the next five years. 
 
Anti-bribery policy 
 
The Company continues to be committed to carrying out its business fairly, 
honestly and openly. Appropriate policies are considered to be in place to 
ensure compliance with the Bribery Act. 
 
Directors 
 
The Directors of the Company, together with their beneficial interests in the 
Company's ordinary share capital as at the date of this report, are given 
below: 
 
Director                  Number of ordinary shares             Percentage (%) 
 
Lorraine Baldry           100,597                               Less than 0.1 
 
Graham Basham             -                                     - 
 
Stephen Bligh             100,000                               Less than 0.1 
 
Alastair Hughes           101,518                               Less than 0.1 
 
Substantial shareholdings 
 
As at 31 March 2021, the Directors were aware that the following shareholders 
each owned 3% or more of the issued Ordinary Shares of the Company. 
 
                                       Number of ordinary shares       Percentage (%) 
 
Investec Wealth & Investment (UK)      79,994,009                      16.3 
 
Schroders PLC                          68,183,737                      13.9 
 
Witan Investment Trust (UK)            38,750,000                      7.9 
 
Embark Investment Services (UK)        34,207,624                      7.0 
 
Premier Miton Investors (UK)           25,889,263                      5.3 
 
BlackRock Inc                          22,042,890                      4.5 
 
Hargreaves Lansdown Asset Management   15,640,577                      3.2 
(UK) 
 
Independent auditors 
 
Resolutions to reappoint Ernst & Young LLP, and to give the Directors authority 
to determine the Auditor's remuneration for the coming year, will be put to 
shareholders at the Annual General Meeting ('AGM') of the Company. 
 
The Audit Committee's evaluation of the Auditors is described in the Report of 
the Audit Committee on page 65. 
 
Disclosure of information to auditors 
 
The Directors who held office at the date of approval of this Directors' Report 
confirm that, so far as they are each aware, there is no relevant audit 
information of which the Company's Auditors are unaware and each Director has 
taken all the steps that they ought to have taken as a Director to make 
themselves aware of any relevant audit information and to establish that the 
Company's Auditors are aware of that information. 
 
Status for taxation 
 
The Director of Income Tax in Guernsey has granted the Company exemption from 
Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 
1989 and the income of the Company may be distributed or accumulated without 
deduction of Guernsey Income Tax. Exemption under the above-mentioned Ordinance 
entails the payment by the Company of an annual fee of £1,200. 
 
The Group's tax charge remains low because it has tax exempt status in the UK 
as a UK Real Estate Investment Trust (REIT). The Group has been a UK REIT since 
2015 and the Group's property income and gains are exempt from UK corporate 
taxes provided a number of conditions in relation to the Group's activities are 
met including, but not limited to, distributing at least 90% of the Group's UK 
tax exempt profit as property income distributions (PIDs). As far as the 
Directors are aware, the Group remains in full compliance with the REIT 
requirements. 
 
Shareholders who are in any doubt concerning the taxation implications of a 
REIT should consult their own tax advisors. 
 
Key information document 
 
A Key Information Document ("KID") for the Company is published on at least an 
annual basis, in accordance with the Packaged Retail and Insurance-Based 
Investment Products Regulation ("PRIIPs"), and made available on the Company's 
website. The calculation of figures and performance scenarios contained in the 
KID are prescribed by PRIIPS and have neither been set nor endorsed by the 
Board. In fact, the Board is of the opinion that PRIIPS has been inconsistently 
applied by market participants and hence creates confusion amongst investors. 
 
AIFMD remuneration disclosures for Schroder Real Estate Investment Management 
Limited ('SREIM') for the year to 31 December 2020. 
 
Quantitative remuneration disclosures to be made in this Annual Report in 
accordance with FCA Handbook rule FUND 3.3.5 are published on the following 
website: 
 
https://www.schroders.com/en/investor-relations/results-and-reports/ 
annual-report-and-accounts-2020/ 
 
Statement of Directors' Responsibilities 
 
The Directors are responsible for preparing the Annual Report and Consolidated 
Financial Statements in accordance with applicable law and regulations. 
 
The Companies Law requires the Directors to prepare the Annual Report and 
Consolidated Financial Statements for each financial year. Under the Companies 
law the Directors have elected to prepare the Annual Report and Consolidated 
Financial Statements in accordance with International Financial Reporting 
Standards and applicable law. 
 
The Annual Report and Consolidated Financial Statements are required by law to 
give a true and fair view of the state of affairs of the Group and of the 
profit or loss of the Group for the relevant period. 
 
In preparing the Annual Report and Consolidated Financial Statements, the 
Directors are required to: 
 
-       Select suitable accounting policies and then apply them consistently; 
 
-       Make judgements and estimates that are reasonable and prudent; 
 
-       State whether applicable accounting standards have been followed, 
subject to any material departures disclosed and explained in the financial 
statements; 
 
-       Assess the Company's ability to continue as a going concern, disclosing 
as applicable matters relating to going concern; and 
 
-       Use the going concern basis of preparation unless they intend to either 
liquidate the Company or cease operations or have no realistic alternative to 
do so. 
 
The Directors are responsible for keeping proper accounting records which 
disclose with reasonable accuracy at any time the financial position of the 
Group and enable them to ensure that the Annual Report and Consolidated 
Financial Statements comply with the Companies Law. They also have general 
responsibility for taking such steps as are reasonably open to them to 
safeguard the assets of the Company and to prevent and detect fraud, error and 
non-compliance with law and regulations. 
 
As part of the preparation of the Annual Report and Consolidated Financial 
Statements, the Directors have received reports and information from the 
Company's Administrator and Investment Manager. The Directors have considered, 
reviewed and commented upon the Annual Report and Consolidated Financial 
Statements throughout the drafting process in order to satisfy themselves in 
respect of the content. 
 
The Directors are responsible for the maintenance and integrity of the 
corporate and financial information included on the Company's website and for 
the preparation and dissemination of the Annual Report and Consolidated 
Financial Statements. 
 
Legislation in Guernsey governing the preparation and dissemination of the 
Consolidated Financial Statements may differ from legislation in other 
jurisdictions. 
 
Responsibility Statement of the Directors in respect of the Annual Report 
 
We confirm to the best of our knowledge: 
 
-       The Consolidated Financial Statements, prepared in accordance with 
International Financial Reporting Standards, give a true and fair view of the 
assets, liabilities, financial position and profit of the Group and the 
undertakings included in the consolidation taken as a whole and comply with the 
Companies Law; and 
 
-       The Strategic Report on pages 11 to 48 and Governance Report on pages 
49 to 67 include a fair review of the development and performance of the 
business and the position of the Group and the undertakings included in the 
consolidation taken as a whole, together with a description of the principal 
risks and uncertainties it faces. The Directors consider that the Annual Report 
and Consolidated Financial Statements, taken as a whole, are fair, balanced and 
understandable and provides the information necessary for shareholders to 
assess the Company's position and performance, business model and strategy. 
 
By order of the Board 
 
Lorraine Baldry, Chairman 
 
1 June 2021 
 
Resolutions at 2021 Annual General Meeting 
 
THIS SECTION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. 
 
If you are in any doubt about the contents of this section of the document or 
the action you should take, you are recommended to seek immediately your own 
personal financial advice from an appropriately qualified independent advisor 
authorised pursuant to the Financial Services and Markets Act 2000 (as 
amended). 
 
If you have sold or otherwise transferred all your shares in the Company, 
please send this document (including the Notice of AGM) and the accompanying 
documents at once to the purchaser, transferee, or to the stockbroker, bank or 
other person through whom the sale or transfer was effected for onward 
transmission to the purchaser or transferee. However, such documents should not 
be distributed, forwarded or transmitted in or into the United States, Canada, 
Australia or Japan or into any other jurisdiction if to do so would constitute 
a violation of applicable laws and regulations in such other jurisdiction. 
 
The Notice of the Annual General Meeting of Shareholders is set out on pages 
126 to 127. The following paragraphs explain the resolutions to be put to the 
AGM. 
 
Ordinary resolutions 1-8 
 
Ordinary Resolutions 1-8 are being proposed to approve the ordinary business of 
the Company to: (i) consider and approve the consolidated Annual Report and the 
remuneration report of the Company for the year ended 31 March 2021; (ii) 
re-elect the Directors; and (iii) appoint the Auditors and to authorise the 
Directors to determine the Auditor's remuneration. 
 
Ordinary Resolution 9: Approval of the Company's dividend policy 
 
The Company's dividend policy is to pay a sustainable level of quarterly 
dividends to shareholders (in arrears). It is intended that successful 
execution of the Company's strategy will enable a progressive dividend policy. 
 
The Company's objective and strategy, outlined in the Chairman's Statement and 
Investment Manager's Report, is to deliver sustainable net income growth in due 
course through active management of the underlying portfolio. Any future 
decision to increase the dividend will be determined by factors including 
whether it is sustainable over the long term, current and anticipated future 
market conditions, rental values and the potential impact of any future debt 
refinancing. 
 
As the Company is a REIT, the Board must also ensure that dividends are paid in 
accordance with the requirements of the UK REIT regime (pursuant to part 12 of 
the UK Corporation Tax Act 2010) in order to maintain the Company's REIT 
status. Shareholders should note that the dividend policy is not a profit 
forecast and dividends will only be paid to the extent permitted in accordance 
with the Companies Law and the UK REIT regime. 
 
The Board acknowledges that the dividend policy is fundamental to shareholders' 
income requirements as well as the Company's investment and financial planning. 
Therefore, in accordance with the principles of good corporate governance and 
best practice relating to the payment of interim dividends without the approval 
of a final dividend by a company's shareholders, a resolution to approve the 
Company's dividend policy will be proposed annually for approval. 
 
Special Resolution 1: Authority to repurchase shares 
 
The Board recognises that movements in the ordinary share price, premium or 
discount, are driven by numerous factors, including investment performance, 
gearing and market sentiment. Accordingly, it focuses its efforts principally 
on addressing sources of risk and return as the most effective way of producing 
long-term value for Shareholders. 
 
However, the Directors may consider repurchasing ordinary shares if they 
believe it to be in Shareholders' interests as a whole and as a means of 
correcting any imbalance between supply and demand for the ordinary shares. The 
making and timing of any repurchase of ordinary shares will be at the absolute 
discretion of the Board, although the Board will have regard to the effects of 
any such repurchase on long-term shareholders in exercising its discretion. Any 
repurchase of ordinary shares will be subject to compliance with the Companies 
law and within any guidelines established from time to time by the Board. 
 
During the year ended 31 March 2021 the Company repurchased 27,094,768 shares 
(5,713,017 were repurchased between 8 September 2020 and the date of the prior 
AGM on 25 September 2020 and a further 21,381,751 shares were purchased between 
26 September 2020 and 31 March 2021). Further details of the buyback, its 
impact and rationale are disclosed on page 13. 
 
Annually the Company passes a resolution granting the Directors general 
authority to purchase in the market up to 14.99% of the number of shares in 
issue. The Directors intend to seek a renewal of this authority from the 
Shareholders at the AGM. 
 
In the event that the Board decides to repurchase ordinary shares, purchases 
will only be made through the market for cash at prices not exceeding the 
prevailing NAV of the ordinary shares (as last calculated) where the Directors 
believe such purchases will enhance shareholder value. Such purchases will also 
only be made in accordance with the Listing Rules and the Disclosure Guidance 
and Transparency Rules which provide that the maximum price to be paid for each 
ordinary share must not be more than the higher of: (i) 5 per cent above the 
average mid-market value of the ordinary shares for the five business days 
before the purchase is made; and (ii) an amount equal to the higher of (a) the 
price of the last independent trade; and (b) the highest current independent 
bid for an ordinary share on the trading venues where the market purchases by 
the Company pursuant to the authority conferred by that resolution will be 
carried out. The Companies Law also provides, among other things, that any such 
purchase is subject to the Company passing the solvency test contained in the 
Companies Law at the relevant time. Any ordinary shares purchased under this 
authority may be cancelled or held in treasury. 
 
This authority will expire at the conclusion of the annual general meeting of 
the Company to be held in 2022 unless varied, revoked or renewed prior to such 
date by ordinary resolution of the Company. 
 
Special Resolution 2: Authority to disapply pre-emption rights 
 
The Directors require specific authority from shareholders before allotting new 
ordinary shares for cash (or selling shares out of treasury for cash) without 
first offering them to existing shareholders in proportion to their holdings. 
Special Resolution 2 empowers the Directors to allot new ordinary shares for 
cash or to sell ordinary shares held by the Company in treasury for cash, 
otherwise than to existing shareholders on a pro rata basis, up to such number 
of ordinary shares as is equal to 10% of the ordinary shares in issue 
(including treasury shares) on the date the resolution is passed. No ordinary 
shares will be issued without pre-emption rights for cash (or sold out of 
treasury for cash) at a price less than the prevailing net asset value per 
ordinary share at the time of issue or sale from treasury. 
 
The Directors do not intend to allot or sell ordinary shares other than to take 
advantage of opportunities in the market as they arise and will only do so if 
they believe it to be advantageous to the Company's existing shareholders and 
when it would not result in any dilution of the net asset value per ordinary 
share (owing to the fact that no ordinary shares will be issued or sold out of 
treasury for a price less than the prevailing net asset value per ordinary 
share). 
 
This authority will expire on the earlier of the conclusion of the annual 
general meeting of the Company to be held in 2022 or on the expiry of 15 months 
from the passing of this Special Resolution 2. 
 
The Board considers that the resolutions to be proposed at the AGM are in the 
best interests of the Company's shareholders as a whole. The Board therefore 
recommends unanimously to shareholders that they vote in favour of each of the 
resolutions, as they intend to do in respect of their own beneficial holdings. 
 
Lorraine Baldry, Chairman 
1 June 2021 
 
Corporate Governance 
 
The Directors are committed to maintaining high standards of corporate 
governance. Insofar as the Directors believe it to be appropriate and relevant 
to the Company, it is their intention that the Company should comply with best 
practice standards for the business carried on by the Company. 
 
The Guernsey Financial Services Commission (the 'GFSC') states in the Finance 
Sector Code of Corporate Governance (the 'Code') that companies which report 
against the UK Corporate Governance Code or the Association of Investment 
Companies Code of Corporate Governance (the 'AIC Code') are deemed to meet the 
Code, and need take no further action. 
 
The Board has considered the principles and recommendations of the Association 
of Investment Companies Code of Corporate Governance published in February 2019 
( the 'AIC Code'), which applies to accounting periods beginning on or after 1 
January 2019. The AIC Code, addresses all the principles set out in the UK 
Corporate Governance Code, as well as setting out additional principles and 
recommendations on issues that are of specific relevance. A copy of the AIC 
Code can be found at www.theaic.co.uk. 
 
It is the Board's intention to continue to comply with the AIC Code and we will 
continue to report the Company's compliance with the principles and 
recommendations of the AIC Code, which has been endorsed by the Financial 
Reporting Council ('FRC'). 
 
Statement of compliance 
 
The Company has complied with the recommendations of the AIC Code and the 
relevant provisions of the UK Corporate Governance Code, except as set out 
below. 
 
The UK Corporate Governance Code includes provisions relating to: 
 
-       The role of the chief executive; 
 
-       Executive directors' remuneration; and 
 
-       Internal audit function. 
 
The Board considers that these provisions are not relevant to the Company, 
being an externally managed investment company. In particular, all of the 
Company's day-to-day management and administrative functions are outsourced to 
third parties. As a result, the Company has no executive directors, employees 
or internal operations. The provision in relation to the internal audit 
function is referred to in the Audit Committee report. The Company has 
therefore not reported further in respect of these provisions. 
 
Role of the Board 
 
The Board has determined that its role is to consider and determine the 
following principal matters which it considers are of strategic importance to 
the Company: 
 
-       The overall objectives of the Company, as described under the paragraph 
above headed 'Investment Policy and Strategy' and the strategy for fulfilling 
those objectives within an appropriate risk framework, in light of market 
conditions prevailing from time to time; 
 
-       The capital structure of the Company, including consideration of an 
appropriate policy for the use of borrowings both for the Company and in any 
joint ventures in which the Company may invest from time to time; 
 
-       The appointment of the Investment Manager, Administrator and other 
appropriately skilled service providers and to monitor their effectiveness 
through regular reports and meetings; and 
 
-       The key elements of the Company's performance including NAV growth and 
the payment of dividends. 
 
Board decisions 
 
The Board makes decisions on, among other things, the principal matters set out 
under the paragraph above headed 'Role of the Board'. Issues associated with 
implementing the Company's strategy are generally considered by the Board to be 
non-strategic in nature and are delegated either to the Investment Manager or 
the Administrator, unless the Board considers there will be implementation 
matters significant enough to be of strategic importance to the Company and 
should be reserved to the Board. Generally these are defined as: 
 
-       Large property decisions affecting 10% or more of the Company's assets; 
 
-       Large property decisions affecting 5% or more of the Company's rental 
income; and 
 
-       Decisions affecting the Company's financial borrowings. 
 
Evaluation of the Board and Audit Committee 
 
In January 2020 the Board appointed Stogdale St James Limited to independently 
oversee an external performance evaluation of the Board; there were no 
conflicts of interest identified. The report findings were presented and 
discussed with the Board. The composition of the Board, its dynamics, its 
oversight of strategy and the management of the Board meetings were all highly 
regarded. 
 
In the spring of 2021 the Board carried out an internal evaluation of the Board 
and its Chairman, which involved questionnaires being completed by 
Non-Executive Directors, representatives of the Investment Manager and the 
Company Secretary. It was concluded that the Board and its Chairman both 
operate effectively and constructively. Ongoing consideration continues to be 
given towards succession planning, relationships with key shareholders and the 
format and length of board papers. 
 
Non-Executive Directors, rotation of Directors and Directors' tenure 
 
The UK Corporate Governance Code recommends that Directors should be appointed 
for a specified period. The Board has resolved in this instance that Directors' 
appointments need not comply with this requirement as all Directors are 
non-executive and their respective appointments can be terminated at any time 
without penalty. The Board has approved a policy that all Directors will stand 
for re-election annually and it is the intention that no Director will serve 
for more than nine years. 
 
The appointment and replacement of Directors is governed by the Company's 
Articles, the Companies Law, related legislations and the Listing Rules. The 
Articles may only be amended by a special resolution of the shareholders. When 
a vacancy arises the Board selects the best candidate taking into account the 
skills and experience required, while taking into consideration board diversity 
as part of a good corporate governance culture. 
 
Board composition and diversity 
 
The Board currently consists of four non-executive Directors. The Chairman is 
Lorraine Baldry. Alastair Hughes is the Senior Independent Director. The 
biography of each of these Directors is set out on page 49 of the report. The 
Board considers each of the Directors to be independent. 
 
The independence of each Director is considered on a continuing basis. The 
Board has determined that all the Directors are independent of the Investment 
Manager. The Board is satisfied that it is of sufficient size with an 
appropriate balance of skills and experience, independence and knowledge of 
both the Company and the wider investment company sector, to enable it to 
discharge its respective duties and responsibilities effectively and that no 
individual or group of individuals is, or has been, in a position to dominate 
decision making. Accordingly the Board approves the nomination for re-election 
of each of the Directors at the forthcoming annual general meeting. 
 
Board committees 
 
The Board has delegated certain of its responsibilities to its Audit, 
Nomination, and Management Engagement Committees. Each of these committees has 
formal terms of reference established by the Board which are available on the 
Company's website. The Board believes that its committees have an appropriate 
composition and blend of backgrounds, skills and experience to discharge their 
duties effectively. 
 
Audit committee 
 
Details of the Audit Committee are set out in the Report of the Audit 
Committee. 
 
Nomination committee 
 
The role of the Nomination Committee, chaired by Lorraine Baldry, is to 
consider and make recommendations to the Board on its composition and with 
regard to any adjustments that may be appropriate, including in connection with 
the re-election of the Board, so as to maintain an appropriate balance of 
skills, experience and diversity, including gender, and to ensure progressive 
refreshing of the Board. On individual appointments, the Nomination Committee 
leads the process and makes recommendations to the Board. 
 
Before the appointment of a new director, the Nomination Committee prepares a 
description of the role and capabilities required for a particular appointment. 
While the Nomination Committee is dedicated to selecting the best person for 
the role, it aims to promote diversification and the Board recognises the 
importance of diversity. The Board agrees that its members should possess a 
range of experience, knowledge, professional skills and personal qualities as 
well as the independence necessary to provide effective oversight of the 
affairs of the Company. 
 
Remuneration committee 
 
As all the Directors are non-executives, the Board has resolved that it is not 
necessary to have a Remuneration Committee. 
 
Management Engagement committee 
 
A Management Engagement committee has been established to review the 
performance and terms of engagement of, in particular, the Investment Manager, 
as well as the Administrator, Depositary, Valuers and other service providers 
(other than the Auditors, who are the responsibility of the Audit Committee). 
 
Following discussions with the Investment Manager, the Investment Manager has 
agreed to reduce its annual management fee from 1.1% of NAV to 0.9% up to £500m 
of NAV, to 0.8% for NAV between £500m to £1bn and to 0.7% for NAV over £1bn. 
The termination notice period has been extended from nine to twelve months, 
with effect from 1 July 2021. Further details are disclosed on pages 99 and 
100. 
 
Board meetings and attendance 
 
The Board meets at least four times each year. Additional meetings are also 
arranged as required and regular contact between Directors, the Investment 
Manager and the Administrator is maintained throughout the year. 
Representatives of the Investment Manager and Company Secretary attend each 
Board meeting and other advisors also attend when requested to do so by the 
Board. At least once a year the Board carries out a site visit to properties 
owned by the Company. 
 
Attendance records for the four quarterly Board meetings and three Audit 
Committee meetings during the year under review are set out in the table below. 
 
                                            Board              Audit committee 
 
Lorraine Baldry (Chairman)                  4/4                3/3 
 
Alastair Hughes                             4/4                3/3 
 
Graham Basham                               4/4                3/3 
 
Stephen Bligh                               4/4                3/3 
 
Number of meetings during the year          4                  3 
 
In addition to its regular quarterly meetings, the Board met on sixteen other 
occasions during the year, attended by all or the majority of Directors. 
 
Information flows 
 
All Directors receive, in a timely manner, relevant management, regulatory and 
financial information and are provided, on a regular basis, with key 
information on the Company's policies, regulatory requirements and internal 
controls. The Board receives and considers reports regularly from the 
Investment Manager and other key advisors and ad hoc reports and information 
are supplied to the Board as required. 
 
Data protection and security 
 
The Board has reviewed its systems and controls in light of the implementation 
of the General Data Protection Regulation (EU Regulation 2016/679) (the "GDPR") 
in 2018 to ensure that the Company is compliant with the requirements of the 
GDPR. As part of that process the Board took steps to update its contracts and 
policies accordingly and is comfortable that it meets its obligations as a 
controller of personal data. The Board also requires its Investment Manager and 
Administrator to have a robust information security and data protection 
environment in place. This is reviewed with the Investment Manager at the 
annual Manager's visit day. All Board communication of a confidential nature is 
managed via a secure Board application. The Company's privacy notice is 
available on its webpage. 
 
Directors' and Officers' Liability Insurance 
 
During the year, the Company has maintained insurance cover for its Directors 
under a liability insurance policy. 
 
Relations with shareholders 
 
The Board believes that the maintenance of good relations with both 
institutional and retail shareholders is important for the long-term prospects 
of the Company. The Board receives feedback on the views of shareholders from 
its corporate broker, the Investment Manager and from the Chairman. Through 
this process the Board seeks to monitor the views of shareholders and to ensure 
an effective communication programme. 
 
The Board believes that the Annual General Meeting provides an appropriate 
forum for investors to communicate with the Board and it encourages 
participation. The Notice of the next Annual General Meeting on page 126 sets 
out the business of the Annual General Meeting to be held on 9 September 2021. 
 
Remuneration Report 
 
The Company's Articles currently limit the aggregate fees payable to the Board 
of Directors to a total of £250,000 per annum. Subject to this overall limit, 
it is the Board's policy to determine the level of Directors' fees having 
regard to the fees payable to non-executive directors in the industry 
generally, the role that individual directors fulfil in respect of Board and 
Committee responsibilities, and time committed to the Company's affairs. 
 
Directors receive a base fee of £30,000 per annum, and the Chairman receives £ 
50,000 per annum. The Chairman of the Audit Committee and the Senior 
Independent Director each receive an additional fee of £5,000 respectively. The 
fees were reviewed by an external consultant during 2015, which led to the 
recommendation adopted and the current level of fees taking effect from 1 
October 2015. 
 
No Director past or present has any entitlement to pensions and the Company has 
not awarded any share options or long-term performance incentives to any of 
them. No element of Directors' remuneration is performance-related. 
 
The Board believes that the principles of Section D of the UK Corporate 
Governance Code relating to remuneration do not apply to the Company, except as 
outlined above, as the Company has no executive directors. 
 
No Director has a service contract with the Company. However, each of the 
Directors has a letter of appointment with the Company. The Directors' letters 
of appointment, which set out the terms of their appointment, are available for 
inspection at the Company's registered office address during normal business 
hours and will be available for inspection at the AGM. 
 
All Directors are appointed for an initial term covering the period from the 
date of their appointment until the first AGM thereafter, at which they are 
required to stand for re-election in accordance with the Articles.  When 
recommending whether an individual Director should seek re-election, the Board 
will take into account the provisions of the UK Corporate Governance Code, 
including the merits of refreshing the Board and its Committees. 
 
The Board has approved a policy that all Directors will stand for re-election 
annually. 
 
Performance 
 
The performance of the Company is described on page 42 in the Business Model 
Report. 
 
The following amounts were paid by the Company for services as non-executive 
Directors: 
 
Director                                   31 March 2021 (£)     31 March 2020 (£) 
 
Lorraine Baldry (Chairman)                            50,000                50,000 
 
Stephen Bligh#                                        35,000                35,000 
 
Graham Basham##                                       30,000                30,000 
 
Alastair Hughes^                                      35,000                35,000 
 
 Total                                               150,000               150,000 
 
^     Senior Independent Director 
 
#      Chairman of the Audit Committee. 
 
##   Graham Basham remains a director of a majority of the subsidiary 
companies, £23,000 was paid to his former employer, Aspida Group Limited, for 
their provision of another director for the subsidiaries. Mr Basham owned 13% 
of Aspida Group Limited during that time.  However, this holding has now been 
sold following his retirement. 
 
Information to be disclosed in accordance with Listing Rule 9.8.4R 
 
Listing Rule 9.8.4C requires the Company to include certain information about 
the Company in a single identifiable section of this annual report or a cross 
reference table indicating where the information required under Listing Rule 
9.8.4 R is set out. 
 
The Directors confirm that there are no disclosures to be made in this regard. 
 
Lorraine Baldry, Chairman 
1 June 2021 
 
Report of the Audit Committee 
 
Composition 
 
The Audit Committee is chaired by Stephen Bligh with Graham Basham and Alastair 
Hughes as members. The Board considers that Stephen Bligh's professional 
experience makes him suitably qualified to chair the Audit Committee, and his 
continuing professional commitments provide him with recent relevant financial 
experience. The Company's Chairman is invited to attend all meetings. 
 
Responsibilities 
 
The Audit Committee ensures that the Company maintains the highest standards of 
integrity in financial reporting and internal control. This includes 
responsibility for reviewing the half-year and annual financial statements 
before their submission to the Board. In addition, the Audit Committee is 
specifically charged under its terms of reference to advise the Board, inter 
alia, on the terms and scope of the appointment of the Auditors, including 
their remuneration, independence, objectivity and reviewing with the Auditors 
the results and effectiveness of the audit and the interim review. 
 
Work of the Audit Committee 
 
The Audit Committee meets no less than twice a year. If required, meetings are 
also attended by the Investment Manager, the Administrator and the Auditor. 
During the year under review, the Audit Committee met on three occasions to 
consider: 
 
-       The contents of the interim and annual financial statements and to 
consider whether, taken as a whole, they were fair, balanced and understandable 
and provided the information necessary for shareholders to assess the Company's 
performance, business model and strategy; 
 
-       The effectiveness of the Company's system of internal control; 
 
-       The external Auditor's terms of appointment, audit plan, half year 
review findings and year end report; 
 
-       The management representation letters to the Auditors; 
 
-       The effectiveness of the audit process; 
 
-       The independence, effectiveness and objectivity of the external 
Auditor; 
 
-       The risk assessment of the Company; and 
 
-       Compliance with the UK REIT regime. 
 
As noted in the Corporate Governance report, an evaluation of the Audit 
Committee was completed by Stogdale St James in early 2020, in which "the 
overall performance of the Audit Committee was very highly rated".  In 2021, 
the Audit Committee performed an internal evaluation of its performance, which 
it considers continues to be very satisfactory. 
 
Significant matters considered by the Audit Committee in relation to the 
financial statements 
 
Matter                          Action 
 
Property valuation 
Property valuation is central   The Audit Committee reviewed the outcomes of the 
to the business and is a        valuation process throughout the year and 
significant area of judgement   discussed the detail of each quarterly valuation 
which is inherently subjective, with the Investment Manager at the Board meetings. 
although the valuations are 
performed by independent firms  Members of the Audit Committee met with Knight 
of valuers: Knight Frank LLP    Frank LLP and BNP Paribas Real Estate UK to 
and BNP Paribas Real Estate UK  discuss the process, assumptions, independence and 
for the two joint ventures.     communication with the Investment Manager. Their 
                                approach to the 31 March 2021 valuations in light 
Errors in valuation could have  of the current Covid-19 pandemic was also 
a material impact on the        discussed and the Committee was satisfied that 
Company's net asset value.      both firms had taken a considered approach. 
 
Impact of Covid-19 on ongoing 
rent collection and Going 
Concern                         The Audit Committee has been closely monitoring 
There is a risk that the        rent collections over the course of the financial 
ongoing Covid-19 pandemic may   year. The Investment Manager and property managing 
impact Company liquidity and    agents have taken a proactive approach to tenants 
investment returns in the short who have had cash flow difficulties and have 
to medium term which could      agreed amended terms where possible. The Audit 
impact the Going Concern        Committee has also considered the potential 
assumption and the viability of reduction in 2021 rentals and its impact on the 
the Group.                      Company's liquidity, and the prospects for the 
                                next five years. 
                                As disclosed in the Going Concern and Viability 
                                Statements on pages 52 and 53, the Audit Committee 
                                has considered various stress tests and 
                                sensitivities to the normal cash flow forecasts, 
                                and is confident that the Company will be able to 
                                continue in operation and meet its liabilities as 
                                they fall due over the five year period of its 
                                assessment. 
 
Internal control 
 
The UK Corporate Governance Code requires the Board to conduct, at least 
annually, a review of the adequacy of the Company's systems of internal control 
and to report to shareholders that it has done so. The Audit Committee, on 
behalf of the Board, also regularly reviews a detailed 'Risk Map' identifying 
significant strategic, investment-related, operational and service 
provider-related risks and ensures that risk management and all aspects of 
internal control are reviewed at least annually. 
 
The Company's system of internal controls is substantially reliant on the 
Investment Manager's and the Administrator's own internal controls and internal 
audit processes due to the relationships in place. 
 
Although the Board believes that it has a robust framework of internal controls 
in place, this can provide only reasonable and not absolute assurance against 
material financial misstatement or loss and is designed to manage, not 
eliminate, risk. No significant issues were identified from the internal 
controls review. 
 
Internal audit 
 
The Audit Committee considered the need for an internal audit function and 
concluded that this function is provided by the Schroders Group's Internal 
Audit reviews, which cover the functions provided by the Investment Manager, 
Schroder Real Estate Investment Management Limited. 
 
In addition, the Investment Manager prepares an ISAE 3402/AAF 01/06 Internal 
Controls Report which includes the Company within the scope of the review. This 
report is reviewed by Ernst & Young LLP (EY) which issued an unqualified 
opinion for the year ended December 2020. The Audit Committee has considered 
both the Investment Manager's internal controls report and the review by EY. 
 
External Auditor remuneration, independence and effectiveness 
 
Annually, the Audit Committee considers the remuneration and independence of 
the external auditor. The Committee recommends the remuneration of the external 
auditor to the Board and keeps under review the ratio of audit to non-audit 
fees to ensure that the independence and objectivity of the external auditor 
are safeguarded. 
 
Effectiveness of the independent audit process 
 
The Audit Committee evaluated the effectiveness of Ernst & Young prior to 
making a recommendation on its reappointment at the forthcoming Annual General 
Meeting. As part of the evaluation, the Committee considered feedback from the 
Investment Manager on the audit process and the half year and year end report 
from the Auditor, which details the auditor's compliance with regulatory 
requirements, on safeguards that have been established and their own internal 
quality control procedures. The Audit Committee had discussions with the audit 
partner on audit planning, accounting policies and audit findings, and met the 
audit partner both with and without representatives of the Investment Manager 
present. The Chairman of the Audit Committee also had informal discussions with 
the audit partner during the course of the year. The Committee is satisfied 
with the effectiveness of the auditors. 
 
Non-audit services 
 
In order to help safeguard the independence and objectivity of the auditor, the 
Audit Committee maintains a policy on the engagement of the external auditor to 
provide non-audit services. The Audit Committee's policy for the use of the 
external auditor for non-audit services recognises that there are certain 
circumstances where, due to Ernst & Young's expertise and knowledge of the 
Company, it will often be in the best position to perform non-audit services. 
Under the policy, the use of the external auditor for non-audit services is 
subject to pre-clearance by the Audit Committee. Clearance will not be granted 
if it is believed it would impair the external auditor's independence or where 
provision of such services by the Company's auditor is prohibited. Prior to 
undertaking any non-audit service, Ernst & Young also completes its own 
independence confirmation processes which are approved by the audit partner. 
 
During the year, the non-audit services fees paid to Ernst & Young were £17,525 
in relation to the interim review. 
 
Stephen Bligh, Director 
1 June 2021 
 
Independent Auditor's report to the members of Schroder Real Estate Investment 
Trust Limited 
 
Opinion 
 
We have audited the consolidated financial statements (the "financial 
statements") of Schroder Real Estate Investment Trust Limited (the "Company") 
and its subsidiaries (together the "Group") for the year ended 31 March 2021 
which comprise the Consolidated Statement of Comprehensive Income, the 
Consolidated Statement of Financial Position, the Consolidated Statement of 
Changes in Equity, the Consolidated Statement of Cash Flows and the related 
notes 1 to 24, including a summary of significant accounting policies. The 
financial reporting framework that has been applied in their preparation is 
applicable law and International Financial Reporting Standards ('IFRS'). 
 
In our opinion, the financial statements: 
 
-      give a true and fair view of the state of the Group's affairs as at 31 
March 2021 and of its profit for the year then ended; 
 
-      have been properly prepared in accordance with International Financial 
Reporting Standards; and 
 
-      have been properly prepared in accordance with the requirements of The 
Companies (Guernsey) Law, 2008. 
 
Basis for opinion 
 
We conducted our audit in accordance with International Standards on Auditing 
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards 
are further described in the Auditor's responsibilities for the audit of the 
financial statements section of our report. We are independent of the Group in 
accordance with the ethical requirements that are relevant to our audit of the 
financial statements, including the UK FRC's Ethical Standard as applied to 
listed public interest entities, and we have fulfilled our other ethical 
responsibilities in accordance with these requirements. 
 
We believe that the audit evidence we have obtained is sufficient and 
appropriate to provide a basis for our opinion. 
 
Conclusions relating to going concern 
 
In auditing the financial statements, we have concluded that the Directors' use 
of the going concern basis of accounting in the preparation of the financial 
statements is appropriate. To evaluate the Directors' assessment of the Group's 
ability to continue to adopt the going concern basis of accounting, we have: 
 
·      obtained an understanding of the process followed by management to make 
its going concern assessment; 
 
·      obtained the cash flow forecasts which support the Directors' assessment 
of going concern and  have challenged the sensitivities and assumptions used in 
the forecasts and evaluated the impact of these  forecasts on the Group's 
ability to continue to meet financial covenants and financial commitments as 
they fall due; 
 
·      challenged the stress testing performed and validated the static data 
assumptions used by agreement to supporting documentation; 
 
·      recalculated the debt covenants on external loans to validate compliance 
within the accounting period; 
 
·      held discussions with the Audit Committee and the Investment Manager to 
determine whether, in their opinion, there is any material uncertainty 
regarding the Group's ability to pay liabilities and commitments as they fall 
due and challenged this assessment through our audit procedures in relation to 
the liquidity assessment; and 
 
·      assessed the disclosures in the Annual Report and Financial Statements 
relating to going concern to ensure they were fair, balanced and understandable 
and in compliance with IAS 1. 
 
Based on the work we have performed, we have not identified any material 
uncertainties relating to events or conditions that, individually or 
collectively, may cast significant doubt on the Group's ability to continue as 
a going concern for the period to 1 June 2022 from when the financial 
statements are authorised for issue. 
 
In relation to the Group's reporting on how they have applied the UK Corporate 
Governance Code, we have nothing material to add or draw attention to in 
relation to the Directors' statement in the financial statements about whether 
the Directors considered it appropriate to adopt the going concern basis of 
accounting. 
 
Our responsibilities and the responsibilities of the Directors with respect to 
going concern are described in the relevant sections of this report.  However, 
because not all future events or conditions can be predicted, this statement is 
not a guarantee as to the Group's ability to continue as a going concern. 
 
Overview of our audit approach 
 
 Audit scope  ·      We have audited the financial statements of the Group for the 
                                   year ended 31 March 2021. 
 
Key audit     ·      Risk of misstatement in the fair value of directly or 
matters       indirectly held investment property portfolio 
              ·      Risk of incomplete or inaccurate rental revenue recognition 
              and related year-end receivables 
 
Materiality   ·      Overall Group materiality of £3.0m which represents 1% of 
              equity. 
 
An overview of the scope of our audit 
 
Tailoring the scope 
 
Our assessment of audit risk, our evaluation of materiality and our allocation 
of performance materiality determine our audit scope for the Group. This 
enables us to form an opinion on the financial statements. We take into account 
size, risk profile, the organisation of the Group and effectiveness of 
group-wide controls and changes in the business environment when assessing the 
level of work to be performed. 
 
All audit work performed for the purposes of the audit was undertaken by the 
Group audit team. 
 
Changes from the prior year 
 
There have been no significant changes in scope from the prior year audit. 
 
Key audit matters 
 
Key audit matters are those matters that, in our professional judgement, were 
of most significance in our audit of the financial statements of the current 
period and include the most significant assessed risks of material misstatement 
(whether or not due to fraud) that we identified. These matters included those 
which had the greatest effect on: the overall audit strategy, the allocation of 
resources in the audit; and directing the efforts of the engagement team. These 
matters were addressed in the context of our audit of the financial statements 
as a whole, and in our opinion thereon, and we do not provide a separate 
opinion on these matters. 
 
Risk                     Our response to the risk          Key observations 
                                                           communicated to the Audit 
                                                           Committee 
 
Risk of misstatement in  We have performed the following   The results of our 
the fair value of        procedures:                       procedures are: 
directly or indirectly   -    obtained an understanding of Based on our procedures 
held investment property the process and controls          performed over the risk of 
portfolio                surrounding property valuation by misstatement in the fair 
Refer to the Report of   performing our walkthrough        value of directly and 
the Audit Committee      procedures and evaluating the     indirectly held investment 
(page 65);               implementation and design         property portfolio, we 
Significant accounting   effectiveness of controls;        concluded that the 
policies (page 82); and                                    methodology applied was 
Note 11 of the Financial -    assessed the independence    appropriate and that the 
Statements (pages 87 to  and competence of the independent external valuations were a 
90)                      valuers as required by auditing   reasonable assessment of the 
The Group's investment   standards;                        fair value of the directly 
property portfolio       -    read the valuation report    and indirectly held 
consists of UK           provided by the Group's           investment properties at 31 
properties held directly independent valuers to agree the  March 2021. 
and through joint        appropriateness and suitability   The disclosure set out in 
ventures, with a         of the reported values and the    the notes to the financial 
combined fair value of £ changes in value from the         statements are fundamental 
438.8m (2020: £406.2m).  previous accounting period;       to users understanding of 
There is a risk of       -    engaged our EY property      this matter. We conclude 
incorrect valuation of   valuation specialists to perform  that the balances and 
the property portfolio   review of a judgmentally selected disclosures in the financial 
which could result in    sample of property valuations to  statements and notes 
the Consolidated         assess whether the reported value appropriately reflect the 
Statement of Financial   fell within a range of reasonable risk factors identified. 
Position and the         outcomes, which included:         In relation to the specific 
Consolidated Statement                                     properties that were 
of Comprehensive Income  -    validating the assumptions   selected for testing by our 
being materially         used by the independent valuers   EY property valuation 
misstated.               in undertaking their valuation    specialists, we have 
                         and assessment of the valuation   concluded that the 
                         methodologies adopted;            assessment of fair values 
                         -    challenging the key inputs   performed by the valuers are 
                         and assumptions relating to       within an acceptable range. 
                         equivalent yield and rental rates 
                         with reference to published 
                         market data and comparable 
                         transaction evidence through 
                         market activity; 
                         -    assessing the 
                         appropriateness of market related 
                         inputs and reasonableness of 
                         valuation methods, by comparing 
                         against our own market data and 
                         understanding of the property 
                         market; 
                         -    performed analytical review 
                         procedures across the portfolio 
                         of investments, focusing on 
                         correlations with market data and 
                         any significant movements; 
                         -    with respect to key 
                         objective inputs to the 
                         valuation, comprising rental 
                         income and length of lease, 
                         agreed the inputs to lease 
                         agreements or rent review 
                         schedules on a sample basis; 
                         -    verified that the fair 
                         values derived by the Group's 
                         independent valuers for the 
                         entire portfolio were correctly 
                         included in the financial 
                         statements 
 
                         assessed the adequacy of the 
                         additional disclosures of 
                         estimates and valuation 
                         assumptions as disclosed in the 
                         notes were made in accordance 
                         with IFRS 13 - Fair Value 
                         Measurement. 
 
Risk of incomplete or    We have performed the following   The results of our 
inaccurate rental        procedures:                       procedures are: 
revenue recognition and  -    obtained an understanding of Based on our procedures 
related year-end         the process and controls for each performed over the risk of 
receivables              revenue stream by performing our  incomplete or inaccurate 
Refer to the Significant walkthrough procedures and        rental revenue recognition 
accounting policies      evaluating the implementation and and related year-end 
(page 83) in the         design effectiveness of controls; receivables, we concluded 
Financial Statements.    -    performed substantive        that revenue and related 
                         analytical review procedures over year-end receivables are 
Revenue is earned in the rental revenue for each property. fairly stated. 
form of rental income    We formed an expectation of the 
from the investment      rental income for each property, 
properties and is        and compared this expectation to 
recognised on an accrual the actual revenue recognised 
basis.                   during the year; 
During the year, the     -    agreed a sample of rental 
Group recognised £21.5m  rates to tenancy agreements and 
of rental income (2020:  recalculated rental revenue 
£22.2m) and rent         earned by the property for the 
receivable of £4.1m      period; 
(2020: £2.4m).           -    recalculated a sample of 
There is a risk of       lease incentives based on the 
incomplete or inaccurate terms within the lease agreement 
rental revenue           to assess the appropriateness of 
recognition and related  the amount recorded; this 
year-end receivables     included, on a sample basis, 
through failure to       verifying lease modifications 
recognise proper income  through agreement of the updated 
entitlements or to apply terms to amended and restated 
the appropriate          lease agreements and performing 
accounting treatment.    an independent assessment as to 
The recoverability of    whether they have been 
year-end receivable is   appropriately treated in 
based on a number of     accordance with IFRS 16 - Leases 
assumptions.             ('IFRS 16'); 
                         -    reviewed management's 
                         assessment of the recoverability 
                         of the overdue rent receivables, 
                         and challenged the judgments 
                         involved. For a sample of 
                         tenants, we have inspected  the 
                         cash receipt subsequent to the 
                         year-end date; and 
                         -    tested the risk of 
                         management override of controls, 
                         we tested a sample of rental 
                         revenue journals to identify 
                         unauthorised or inappropriate 
                         journals. We enquired as to the 
                         nature of each transaction 
                         sampled and obtained 
                         corroborating evidence to 
                         conclude on whether the journals 
                         were reasonable and in line with 
                         our expectations. We selected 
                         journals by applying criteria and 
                         thresholds based on our 
                         professional judgment. 
 
Prior year comparison 
 
In the prior year, our auditor's report included a key audit matter in relation 
to the 'Impact of COVID-19 on Going Concern'. This is not considered to be a 
key audit matter in the current year as the impact of COVID-19 on the Group is 
less uncertain given the changes in the external environment since the last 
reporting date. 
 
Our application of materiality 
 
We apply the concept of materiality in planning and performing the audit, in 
evaluating the effect of identified misstatements on the audit and in forming 
our audit opinion. 
 
Materiality 
 
The magnitude of an omission or misstatement that, individually or in the 
aggregate, could reasonably be expected to influence the economic decisions of 
the users of the financial statements. Materiality provides a basis for 
determining the nature and extent of our audit procedures. 
 
We determined materiality for the Group to be £3.0m (2020:£3.1m), which is 1% 
(2020:1%) of equity. We believe that equity provides us with a materiality 
aligned to the key measurement of the Group's performance. 
 
During the course of our audit, we reassessed initial materiality and 
considered there to be no change from the basis determined at the audit 
planning stage, we have updated the value based on equity as at 31 March 2021. 
 
Performance materiality 
 
The application of materiality at the individual account or balance level.  It 
is set at an amount to reduce to an appropriately low level the probability 
that the aggregate of uncorrected and undetected misstatements exceeds 
materiality. 
 
On the basis of our risk assessments, together with our assessment of the 
Group's overall control environment, our judgement was that performance 
materiality was 75% (2020:50%) of our planning materiality, namely £2.2m (2020: 
£1.6m).  We have used a higher threshold than in our first-year audit because 
we now have prior experience as to the likelihood of misstatements and the 
effectiveness of the control environment and accounting processes. 
 
Reporting threshold 
 
An amount below which identified misstatements are considered as being clearly 
trivial. 
 
We agreed with the Audit Committee that we would report to them all uncorrected 
audit differences in excess of £0.15m (2020:£0.16m), which is set at 5% of 
planning materiality, as well as differences below that threshold that, in our 
view, warranted reporting on qualitative grounds. 
 
We evaluate any uncorrected misstatements against both the quantitative 
measures of materiality discussed above and in light of other relevant 
qualitative considerations in forming our opinion. 
 
Other information 
 
The other information comprises the information included in the annual report 
set out on pages 3 to 67 and pages 101 to 130, other than the financial 
statements and our auditor's report thereon.  The Directors are responsible for 
the other information contained within the annual report. 
 
Our opinion on the financial statements does not cover the other information 
and, except to the extent otherwise explicitly stated in this report, we do not 
express any form of assurance conclusion thereon. 
 
Our responsibility is to read the other information and, in doing so, consider 
whether the other information is materially inconsistent with the financial 
statements or our knowledge obtained in the course of the audit or otherwise 
appears to be materially misstated. If we identify such material 
inconsistencies or apparent material misstatements, we are required to 
determine whether there is a material misstatement in the financial statements 
themselves. If, based on the work we have performed, we conclude that there is 
a material misstatement of the other information, we are required to report 
that fact. 
 
We have nothing to report in this regard. 
 
Matters on which we are required to report by exception 
 
We have nothing to report in respect of the following matters in relation to 
which The Companies (Guernsey) Law, 2008 requires us to report to you if, in 
our opinion: 
 
-    proper accounting records have not been kept by the Group; or 
 
-    the financial statements are not in agreement with the Group's accounting 
records and returns; or 
 
-    we have not received all the information and explanations we require for 
our audit. 
 
Corporate Governance Statement 
 
The Listing Rules require us to review the Directors' statement in relation to 
going concern, longer-term viability and that part of the Corporate Governance 
Statement relating to the Group's compliance with the provisions of the UK 
Corporate Governance Code specified for our review. 
 
Based on the work undertaken as part of our audit, we have concluded that each 
of the following elements of the Corporate Governance Statement is materially 
consistent with the financial statements or our knowledge obtained during the 
audit: 
 
-    Directors' statement with regards to the appropriateness of adopting the 
going concern basis of accounting and any material uncertainties identified set 
out on page 52; 
 
-    Directors' explanation as to its assessment of the Group's prospects, the 
period this assessment covers and why the period is appropriate set out on page 
52; 
 
-    Directors' statement on fair, balanced and understandable set out on page 
56; 
 
-    Board's confirmation that it has carried out a robust assessment of the 
emerging and principal risks set out on page 46; 
 
-    The section of the annual report that describes the review of 
effectiveness of risk management and internal control systems set out on page 
66; and 
 
-    The section describing the work of the audit committee set out on page 65. 
 
Responsibilities of Directors 
 
As explained more fully in the Statement of Directors' Responsibilities set out 
on page 55, the Directors are responsible for the preparation of the financial 
statements and for being satisfied that they give a true and fair view, and for 
such internal control as the Directors determine is necessary to enable the 
preparation of financial statements that are free from material misstatement, 
whether due to fraud or error. 
 
In preparing the financial statements, the Directors are responsible for 
assessing the Group's ability to continue as a going concern, disclosing, as 
applicable, matters related to going concern and using the going concern basis 
of accounting unless the Directors either intend to liquidate the Group or to 
cease operations, or have no realistic alternative but to do so. 
 
Auditor's responsibilities for the audit of the financial statements 
 
Our objectives are to obtain reasonable assurance about whether the financial 
statements as a whole are free from material misstatement, whether due to fraud 
or error, and to issue an auditor's report that includes our opinion. 
Reasonable assurance is a high level of assurance, but is not a guarantee that 
an audit conducted in accordance with ISAs (UK) will always detect a material 
misstatement when it exists. Misstatements can arise from fraud or error and 
are considered material if, individually or in the aggregate, they could 
reasonably be expected to influence the economic decisions of users taken on 
the basis of these financial statements. 
 
Explanation as to what extent the audit was considered capable of detecting 
irregularities, including fraud 
 
Irregularities, including fraud, are instances of non-compliance with laws and 
regulations. We design procedures in line with our responsibilities, outlined 
above, to detect irregularities, including fraud.  The risk of not detecting a 
material misstatement due to fraud is higher than the risk of not detecting one 
resulting from error, as fraud may involve deliberate concealment by, for 
example, forgery or intentional misrepresentations, or through collusion.  The 
extent to which our procedures are capable of detecting irregularities, 
including fraud is detailed below. 
 
However, the primary responsibility for the prevention and detection of fraud 
rests with both those charged with governance of the Group and management. 
 
-    We obtained an understanding of the legal and regulatory frameworks that 
are applicable to the Group and determined that the most significant are the 
Companies (Guernsey) Law, 2008, the UK Corporate Governance Code, REIT 
requirements set out in part 12 of the Corporation Tax Act (CTA) 2010  ('REIT 
rules') and the Listing Rules of the UK Listing Authority ; 
 
-    We understood how the Group is complying with those frameworks by making 
enquiries of the Investment Manager, the Administrator and those charged with 
governance regarding: 
 
-    their knowledge of any non-compliance or potential non-compliance with 
laws and regulations that could affect the financial statements; 
 
-    the Group's methods of enforcing and monitoring non-compliance with such 
policies; 
 
-    the Investment Manager's process for identifying and responding to fraud 
risks, including programs and controls the Group has established to address 
risks identified by the Group, or that otherwise prevent, deter and detect 
fraud; and 
 
-    how the Group monitors those programs and controls. 
 
-    We assessed the susceptibility of the Group's financial statements to 
material misstatement, including how fraud might occur by: 
 
-    obtaining an understanding of entity-level controls and considering the 
influence of the control environment; 
 
-    obtaining management's assessment of fraud risks including an 
understanding of the nature, extent and frequency of such assessment documented 
in the Group's Risk Matrix; 
 
-    making inquiries with those charged with governance as to how they 
exercise oversight of management's processes for identifying and responding to 
fraud risks and the controls established by management to mitigate specifically 
those risks the entity has identified, or that otherwise help to prevent, deter 
and detect fraud; 
 
-    making inquiries with management and those charged with governance 
regarding how they identify related parties including circumstances related to 
the existence of a related party with dominant influence; and 
 
-    making inquiries with management and those charged with governance 
regarding their knowledge of any actual or suspected fraud or allegations of 
fraudulent financial reporting affecting the Group. 
 
-    Based on this understanding we designed our audit procedures to identify 
non-compliance with such laws and regulations. Our procedures involved: 
 
-    Through discussion, gaining an understanding of how those charged with 
governance and the Investment Manager identify instances of non-compliance by 
the Group with relevant laws and regulations; 
 
-    Inspecting the relevant policies, processes and procedures to further our 
understanding; 
 
-    Reviewing Board minutes and internal compliance reporting; 
 
-    Inspected management's specialist's assessment of the Group's compliance 
with the REIT rules. We have tested through recalculating and corroborating, to 
supporting information, the Group's compliance with each of the REIT rules, 
including the proportion of dividend distributed in the form of property income 
distributions; 
 
-    Inspecting correspondence with regulators; and 
 
-    Obtaining relevant written representations from the Board of Directors. 
 
A further description of our responsibilities for the audit of the financial 
statements is located on the Financial Reporting Council's website at https:// 
www.frc.org.uk/auditorsresponsibilities. This description forms part of our 
auditor's report. 
 
Other matters we are required to address 
 
-      Following the recommendation from the audit committee we were appointed 
by the Company on 5 November 2019 to audit the financial statements for the 
year ending 31 March 2020 and subsequent financial periods. 
 
The period of total uninterrupted engagement including previous renewals and 
reappointments is 2 years, covering the years ending 2020 to 2021. 
 
-      The non-audit services prohibited by the FRC's Ethical Standard were not 
provided to the Group and we remain independent of the Group in conducting the 
audit. 
 
-      The audit opinion is consistent with the additional report to the audit 
committee. 
 
Use of our report 
 
This report is made solely to the Company's members, as a body, in accordance 
with Section 262 of The Companies (Guernsey) Law 2008. Our audit work has been 
undertaken so that we might state to the Group's members those matters we are 
required to state to them in an auditor's report and for no other purpose. To 
the fullest extent permitted by law, we do not accept or assume responsibility 
to anyone other than the Group and the Group's members as a body, for our audit 
work, for this report, or for the opinions we have formed. 
 
Richard Geoffrey Le Tissier 
 
for and on behalf of Ernst & Young LLP 
 
Guernsey, Channel Islands 
 
1 June 2021 
 
Financial Statements 
 
Consolidated Statement of Comprehensive Income 
 
                                                             31/03/2021   31/03/2020 
 
                                                    Notes          £000         £000 
 
Rental income                                                    21,458       22,160 
 
Other income                                          4             205        1,333 
 
Property operating expenses                           5         (3,038)      (2,248) 
 
Net rental and related income, excluding joint                   18,625       21,425 
ventures 
 
Share of net rental income in joint ventures                      2,452        2,567 
Net rental and related income, including joint                   21,077       23,812 
ventures 
 
Profit on disposal of investment property            11             121        1,897 
 
Net unrealised valuation loss on investment          11         (8,286)     (17,364) 
property 
 
Expenses 
 
Investment management fee                             3         (2,906)      (3,470) 
 
Valuers' and other professional fees                            (1,698)      (1,629) 
 
Administrators' fee                                   3           (120)        (120) 
 
Auditor's remuneration                                6           (150)        (140) 
 
Directors' fees                                       7           (150)        (150) 
 
Other expenses                                        7           (278)        (303) 
 
Total expenses                                                  (5,302)      (5,812) 
 
Net operating profit/(loss) before net finance                    5,158         (34) 
costs 
 
Refinancing costs                                    16               -     (27,364) 
 
Finance costs                                                   (4,203)      (5,271) 
 
Net finance costs                                               (4,203)     (32,635) 
 
Share of net rental income in joint ventures         12           2,452        2,567 
 
Share of valuation gain/(loss) in joint ventures     12           1,135      (2,357) 
 
Profit/(loss) before taxation                                     4,542     (32,459) 
 
Taxation                                              8               -            - 
 
Profit/(loss) and total comprehensive income for                  4,542     (32,459) 
the year attributable to the equity holders of 
the parent 
 
Basic and diluted earnings/(loss) per share           9            0.9p       (6.3p) 
 
 
All items in the above statement are derived from continuing operations. The 
accompanying notes 1 to 24 form an integral part of the financial statements. 
 
Consolidated Statement of Financial Position 
 
                                                      31/03/2021         31/03/2020 
 
                                           Notes            £000               £000 
 
Investment property                          11          351,776            321,382 
 
Investment in joint ventures                 12           79,120             77,985 
 
Non-current assets                                       430,896            399,367 
 
Trade and other receivables                  13           17,028             15,115 
 
Cash and cash equivalents                    14           12,175             33,051 
 
Current assets                                            29,203             48,166 
 
Total assets                                             460,099            447,533 
 
Issued capital and reserves                  15          332,811            336,258 
 
Treasury shares                              15         (35,967)           (26,452) 
 
Equity                                                   296,844            309,806 
 
Interest-bearing loans and borrowings        16          153,370            128,667 
Lease liability                              11            1,988              2,416 
 
Non-current liabilities                                  155,358            131,083 
 
Trade and other payables                     17            7,897              6,644 
 
Current liabilities                                        7,897              6.644 
 
Total liabilities                                        163,255            137,727 
 
Total equity and liabilities                             460,099            447,533 
 
                                                           60.4p              59.7p 
Net Asset Value per Ordinary Share           18 
 
 
The financial statements on pages 76 to 79 were approved at a meeting of the 
Board of Directors held on 1 June 2021 and signed on its behalf by: 
 
Lorraine Baldry, Chairman 
 
Stephen Bligh, Director 
 
 
The accompanying notes 1 to 24 form an integral part of the financial 
statements. 
 
Consolidated Statement of Changes in Equity 
 
                           Notes        Share      Treasury       Revenue         Total 
                                      premium share reserve       reserve 
 
                                         £000          £000          £000          £000 
 
Balance as at 31 March                219,090      (26,452)       163,738       356,376 
2019 
 
Loss for the year                           -             -      (32,459)      (32,459) 
 
Dividends paid              10              -             -      (14,111)      (14,111) 
 
Balance as at 31 March                219,090      (26,452)       117,168       309,806 
2020 
 
Share buyback               18              -       (9,515)             -       (9,515) 
 
Profit for the year                         -             -         4,542         4,542 
 
Dividends paid              10              -             -       (7,989)       (7,989) 
 
Balance as at 31 March               219,090       (35,967)       113,721       296,844 
2021 
 
 
The accompanying notes 1 to 24 form an integral part of the financial 
statements. 
 
Consolidated Statement of Cash Flows 
 
                                                          31/03/2021    31/03/2020 
 
                                                                £000          £000 
 
Operating activities 
 
Profit/(loss) for the year                                     4,542      (32,459) 
 
Adjustments for: 
 
Profit on disposal of investment property                      (121)       (1,897) 
 
Net valuation loss on investment property                      8,286        17,364 
 
Share of profit of joint ventures                            (3,587)         (210) 
 
Net finance cost                                               4,202        32,635 
 
Operating cash generated before changes in working            13,322        15,433 
capital 
 
Increase in trade and other receivables                      (1,923)       (1,645) 
 
Increase/(decrease) in trade and other payables                1,254       (2,743) 
 
Cash generated from operations                                12,653        11,045 
 
Finance costs paid                                           (3,990)       (5,698) 
 
Cash flows from operating activities                           8,663         5,347 
 
Investing activities 
 
Proceeds from sale of investment property                      6,409        80,034 
 
Acquisition of investment property                          (36,500)             - 
 
Additions to investment property                             (8,896)       (6,504) 
 
Addition to joint ventures                                         -         (496) 
 
Capital redemptions in joint ventures                              -           319 
 
Net income distributed from joint ventures                     2,452         2,567 
 
Cash flows from investing activities                        (36,535)        75,920 
 
Financing activities 
 
Additions/(repayments) to debt                                24,500      (29,000) 
Refinancing fees paid                                              -      (26,147) 
Dividends paid                                               (7,989)      (14,111) 
Share buyback                                                (9,515)             - 
 
Cash flows used in financing activities                        6,996      (69,258) 
 
Net (decrease)/increase in cash and cash                    (20,876)        12,009 
equivalents for the year 
 
Opening cash and cash equivalents                             33,051        21,042 
 
Closing cash and cash equivalents                             12,175        33,051 
 
 
The accompanying notes 1 to 24 form an integral part of the financial 
statements. 
 
Notes to the Financial Statements 
 
1.   Significant accounting policies 
 
Schroder Real Estate Investment Trust Limited ("the Company") is a closed-ended 
investment company registered in Guernsey. The consolidated financial 
statements of the Company for the year ended 31 March 2021 comprise the Company 
and its subsidiaries (together referred to as the "Group"). 
 
Statement of compliance 
 
The financial statements have been prepared in accordance with International 
Financial Reporting Standards ("IFRS") issued by the International Accounting 
Standards Board (the "IASB"), and interpretations issued by the International 
Financial Reporting Interpretations Committee. 
 
The financial statements give a true and fair view and are in compliance with 
The Companies (Guernsey) Law, 2008, applicable legal and regulatory 
requirements and the Listing Rules of the UK Listing Authority. 
 
Basis of preparation 
 
The financial statements are presented in sterling, which is the Company's 
functional currency, rounded to the nearest thousand. They are prepared on the 
historical cost basis except that investment property and derivative financial 
instruments are stated at their fair value. 
 
The accounting policies have been consistently applied to the results, assets, 
liabilities and cash flows of the entities included in the consolidated 
financial statements and are consistent with those of the previous year. 
 
Going concern 
 
The Directors have examined significant areas of possible financial risk, 
including the non-collection of rent and service charges as a result of the 
Covid-19 pandemic; have considered potential resulting falls in property 
valuations; have reviewed cash flow forecasts; and have analysed 
forward-looking compliance with third party debt covenants, in particular the 
Loan to Value covenant and interest cover ratios. 
 
Overall, after utilising available cash, excluding the cash undrawn against the 
RBS facility, and uncharged properties and units in Joint Ventures, and based 
on the reporting period to 31 March 2021, property valuations would have to 
fall by 42% before the relevant Canada Life Loan to Value covenants were 
breached, and actual net rental income would need to fall by 74% before the 
interest cover covenants were breached.  Furthermore, the properties charged to 
RBSI could fall in value by 70% prior to the 65% LTV covenant being reached 
and, based on actual net rents for the quarter to March 2021, a 78% fall in net 
income could be sustained prior to the RBSI loan covenant of 185% being 
breached. 
 
As at the financial year end the undrawn capacity of the RBS facility was £28 
million. This facility is an efficient and flexible source of funding due to 
the margin of 1.6% and its ability to be repaid and redrawn as often as 
required. 
 
The Board and Investment Manager are closely monitoring the potential impact 
the Covid-19 pandemic may have on the Company's rental collection and the 
requirement to distribute dividends in accordance with the REIT regulations. 
All future dividends will be kept under constant review to ensure the Company's 
liquid resources will be sufficient to cover any working capital requirements. 
 
The Directors have not identified any matters which would cast significant 
doubt on the Group's ability to continue as a going concern for the period to 1 
June 2022 . In addition to the matters described above, in arriving at their 
conclusion the Directors have also considered: 
 
·      The current cash balance at 1 June 2021 of £13.5 million; 
 
·      The nature and timing of the Company's income and expenses; and 
 
·      That the Investment Manager and Administrator have successfully invoked 
their business continuity plans to help ensure the safety and well-being of 
their staff thereby retaining the ability to maintain the Company's business 
operations. 
 
The Directors have satisfied themselves that the Group has adequate resources 
to continue in operational existence for at least the next twelve months from 
the date of approval of the financial statements.  After due consideration, the 
Board believes it is appropriate to adopt the going concern basis in preparing 
the financial statements. 
 
Use of estimates and judgements 
 
The preparation of financial statements in conformity with IFRS requires 
management to make judgements, estimates and assumptions that affect the 
application of policies and the reported amounts of assets and liabilities, 
income and expenses. These estimates and associated assumptions are based on 
historical experience and various other factors that are believed to be 
reasonable under the circumstances, the results of which form the basis of 
making judgements about the carrying values of assets and liabilities that are 
not readily apparent from other sources. Actual results may differ from these 
estimates. The estimates and underlying assumptions are reviewed on an ongoing 
basis. Revisions to accounting estimates are recognised in the period in which 
the estimates are revised and in any future periods affected. 
 
The most significant estimates made in preparing these financial statements 
relate to the carrying value of investment properties, including those within 
joint ventures, which are stated at fair value. The Group uses external 
professional valuers to determine the relevant amounts. Judgements made by 
management in the application of IFRS that have a significant effect on the 
financial statements and estimates with a significant risk of material 
adjustment in the next year are disclosed in note 19. 
 
Another significant estimate is the amount of expected credit losses as per 
IFRS 9 from rent demanded during the period which has not yet been collected. 
Management has considered rental debtors on a quarterly basis and made 
provisions and write offs where it has been deemed that these amounts are 
irrecoverable. As at 31 March 2021 total provisions of £1.1m were recognised 
and rental debtors are shown net of this provision in notes 13 and 19. In 
addition to bad debt provisions recognised relating to rent recognised during 
the period, an additional judgement has been made relating to rent demanded at 
the end of March relating to the subsequent quarter from April and to June. Any 
amounts which are deemed to be potentially irrecoverable have been removed from 
the deferred income and rental debtor balances reported as at 31 March. 
 
Basis of consolidation 
 
Subsidiaries 
 
The consolidated financial statements comprise the financial statements of the 
Company and all of its subsidiaries drawn up to 31 March each year. 
Subsidiaries are those entities controlled by the Company. Control exists where 
the investor has the following; 
 
-power over the investee, 
 
-exposure, or rights, to variable returns from its involvement with the 
investee, 
 
-the ability to use its power over the entity to affect the amount of the 
investor's returns. 
 
The financial statements of subsidiaries are included in the consolidated 
financial statements from the date that control commences until the date that 
control ceases. Where properties are acquired by the Group through corporate 
acquisitions but the acquisition does not meet the definition of a business 
combination, the acquisition has been treated as an asset acquisition. 
 
Joint ventures 
 
Joint ventures are those entities over whose activities the Group has joint 
control, established by contractual agreement. The consolidated financial 
statements include the Group's share of profit or loss of jointly controlled 
entities on an equity accounted basis. When the Group's share of losses exceeds 
its interest in an entity, the Group's carrying amount is reduced to nil and 
recognition of further losses is discontinued except to the extent that the 
Group has incurred legal or constructive obligations or is making payments on 
behalf of an entity. 
 
Transactions eliminated on consolidation 
 
Intra-group balances, and any gains and losses arising from intra-group 
transactions, are eliminated in preparing the consolidated financial 
statements. Gains arising from transactions with joint ventures are eliminated 
to the extent of the Group's interest in the entity. Losses are eliminated in 
the same way as gains but only to the extent that there is no evidence of 
impairment. 
 
Investment property 
 
Investment property is land and buildings held to earn rental income together 
with the potential for capital growth. 
 
Acquisitions and disposals are recognised on the unconditional exchange of 
contracts. Acquisitions are initially recognised at cost, being the fair value 
of the consideration given, including transaction costs associated with the 
investment property. 
 
After initial recognition, investment properties are measured at fair value, 
with unrealised gains and losses recognised in the statement of comprehensive 
income. Realised gains and losses on the disposal of properties are recognised 
in the statement of comprehensive income in relation to carrying value. Fair 
value is based on the market valuations of the properties as provided by a firm 
of independent chartered surveyors at the reporting date. Market valuations are 
carried out on a quarterly basis. 
 
As disclosed in note 20, the Group leases out all owned properties on operating 
leases. A property held under an operating lease is classified and accounted 
for as an investment property where the Group holds it to earn rentals, capital 
appreciation, or both. Any such property leased under an operating lease is 
classified as an investment property and carried at fair value. 
 
Leases 
 
For any material leases for which the Group is a lessee, the leasehold interest 
is measured at fair value and included in investment properties with the 
corresponding liability being shown as a non-current liability. The fair value 
is calculated as the present value of the future lease payments. 
 
Financial instruments 
 
Non-derivative financial instruments 
 
Financial assets 
 
Non-derivative financial instruments comprise trade and other receivables and 
cash and cash equivalents. These are recognised initially at fair value plus 
any directly attributable transaction costs. Subsequent to initial recognition 
they are measured at amortised cost using the effective interest rate method 
less any impairment losses. 
 
Cash and cash equivalents 
 
Cash at bank and short-term deposits that are held to maturity are carried at 
cost. Cash and cash equivalents are defined as cash in hand, demand deposits 
and short-term, highly liquid investments readily convertible to known amounts 
of cash and subject to insignificant risk of changes in value. For the purposes 
of the Consolidated Statement of Cash Flows, cash and cash equivalents consist 
of cash in hand and short-term deposits at banks with a term of no more than 
three months. 
 
Financial liabilities 
 
Non-derivative financial instruments comprise loans and borrowings and trade 
and other payables. 
 
Loans and borrowings 
 
Borrowings are recognised initially at fair value of the consideration 
received, less attributable transaction costs. Subsequent to initial 
recognition, interest bearing borrowings are stated at amortised cost with any 
difference between cost and redemption value being recognised in the statement 
of comprehensive income over the period of the borrowings on an effective 
interest basis. 
 
Trade and other payables 
 
Trade and other payables are stated at amortised cost. 
 
Share capital 
 
Ordinary shares, including treasury shares, are classified as equity. 
 
Share buyback 
 
Shares purchased are recognised on the trade date and debited to the existing 
treasury reserve in the statement of changes in equity. Any broker's fees 
relating to the share buyback are debited to other expenses. 
 
Dividends 
 
Dividends are recognised in the period in which they are paid. 
 
Rental income 
 
Rental income from investment properties is recognised on a straight-line basis 
over the term of ongoing leases and is shown gross of any UK income tax. Lease 
incentives are spread evenly over the lease term. 
 
Surrender premiums and dilapidations are recognised in line with individual 
lease agreements when cash inflows are certain. 
 
Impairment 
 
Financial assets 
 
Financial assets at amortised cost are subject to impairment. 
 
The Group's significant financial assets that are subject to IFRS 9's expected 
credit loss model are trade receivables from the leasing of investment 
properties.  The credit risk associated with unpaid rent has increased due to 
Covid 19 and management have done a detailed analysis over the recoverability 
of expected rents. Rents received in advance have been closely monitored and 
any rents deemed irrecoverable discussed by management. Note 19 provides 
further details on the measurement of the loss allowance and amount recognised 
at 31 March 2021. 
 
Non-financial assets 
 
The carrying amounts of the Group's non-financial assets, being the investment 
in joint ventures, are reviewed at each reporting date to determine whether 
there is any indication of impairment. If any such indication exists, then the 
asset's recoverable amount is estimated. 
 
The recoverable amount of an asset or cash-generating unit is the greater of 
its value in use and its fair value less costs to sell. In assessing value in 
use, the estimated future cash flows are discounted to their present value 
using a pre-tax discount rate that reflects current market assessments of the 
time value of money and the risks specific to that asset. 
 
For the purpose of impairment testing, assets are grouped together into the 
smallest group of assets that generates cash inflows from continuing use that 
are largely independent of the cash inflows of other assets or groups of assets 
(the "cash-generating unit"). 
 
An impairment loss is recognised if the carrying amount of an asset or its 
cash-generating unit exceeds its estimated recoverable amount. Impairment 
losses are recognised in the statement of comprehensive income. 
 
Provisions 
 
A provision is recognised in the Consolidated Statement of Financial Position 
when the Group has a legal or constructive obligation as a result of a past 
event and it is probable that an outflow of economic benefits will be required 
to settle the obligation. 
 
Finance costs 
 
Finance costs comprise interest expense on borrowings that are recognised in 
the statement of comprehensive income. Attributable transaction costs incurred 
in establishing the Group's credit facilities are deducted from the fair value 
of borrowings on initial recognition and are amortised over the lifetime of the 
facilities through the statement of comprehensive income. Finance costs are 
accounted for on an effective interest basis. 
 
Expenses 
 
All expenses are accounted for on an accruals basis. The costs recharged to 
occupiers of the properties are presented net of the service charge income as 
management consider that the property agent acts as principal in this respect. 
 
Taxation 
 
SREIT elected to be treated as a UK real estate investment trust ("REIT"). The 
UK REIT rules exempt the profits of SREIT and its subsidiaries' (the "Group") 
UK property rental business from corporation tax. Gains on UK properties are 
also exempt from tax, provided they are not held for trading or sold in the 
three years after completion of development. The Group is otherwise subject to 
corporation tax. 
 
As a REIT, SREIT is required to pay Property Income Distributions equal to at 
least 90% of the Group's exempted net income. To retain UK REIT status there 
are a number of conditions to be met in respect of the principal company of the 
Group, the Group's qualifying activity and its balance of business. The Group 
continues to meet these conditions. 
 
Segmental reporting 
 
The Directors are of the opinion that the Group is engaged in a single segment 
of business, being property investment and in one geographical area, the United 
Kingdom.  There is no one tenant that represents more than 10% of group 
revenues. SREIM acts as advisor to the Board, who then make management 
decisions following their recommendations. As such the Board of Directors are 
considered to be the chief operating decision maker. A set of consolidated IFRS 
information is provided on a quarterly basis. 
 
2.   New standards and interpretations 
 
Standards, interpretations and amendments to published standards that are not 
yet effective 
 
Annual Improvements cycle - Effective date of 2018 - 2020 
 
On 14 May 2020, the IASB issued 'Annual Improvements to IFRS Standards 
2018-2020'. The pronouncement contains amendments to four International 
Financial Reporting Standards (IFRSs) as result of the IASB's annual 
improvements project. The amendments are effective for annual reporting periods 
beginning on or after 1 January 2022. 
 
It is Management's expectation that there will be no material impact on the 
financial statements when these amendments become effective. 
 
Management are satisfied that there are no other standards that are published 
and not yet effective that will have a material effect on the accounts. 
 
3.   Material agreements 
 
Schroder Real Estate Investment Management Limited is the Investment Manager to 
the Company. The Investment Manager is entitled to a fee together with 
reasonable expenses incurred in the performance of its duties. The fee is 
payable monthly in arrears at one twelfth of the aggregate of 1.1% of the NAV 
of the Company. The Investment Management Agreement can be terminated by either 
party on not less than nine months written notice or on immediate notice in the 
event of certain breaches of its terms or the insolvency of either party. The 
total charge to the Consolidated Statement of Comprehensive Income during the 
year was £2,906,000 (2020: £3,470,000). At the year end £20,000 (2020: £ 
295,000) was outstanding. As noted in the Report of the Directors, the terms of 
the Investment Management Agreement have been revised with effect from 1 July 
2021. 
 
Northern Trust International Fund Administration Services (Guernsey) Limited is 
the Administrator to the Company. The Administrator is entitled to an annual 
fee equal to £120,000 (2020: £120,000) of which £nil (2020: £nil) was 
outstanding at the year end. In addition to this £40,000 (2020: £40,000) was 
paid for depository fees of which £3,000 (2020: £nil) was outstanding at year 
end. 
 
4.   Other income 
 
                                                              31/03/2021   31/03/2020 
 
                                                                    £000         £000 
 
Dilapidations                                                        192          482 
 
Surrender premiums                                                     -          840 
 
Miscellaneous income                                                  13           11 
 
                                                                     205        1,333 
 
5.   Property operating expenses 
 
                                                             31/03/2021   31/03/2020 
 
                                                                   £000         £000 
 
Agents' fees                                                        122           81 
 
Repairs and maintenance                                              92          130 
 
Advertising                                                          33           97 
 
Rates - vacant                                                      400          342 
 
Service charge, insurance and utilities on                        1,445          933 
vacant units 
 
Ground rent                                                         109          137 
 
Bad debt provisions and write offs                                  837          528 
 
                                                                  3,038        2,248 
 
6.   Auditor's remuneration 
 
The total expected audit fees for the year are £122,475 (2020: £116,500) and £ 
17,525 (2020: £16,500) for the half year interim review of the financial 
statements.  An additional £10,000 was paid to the auditors during the year 
ended 31 March 2021 in respect of additional costs incurred during the 2020 
audit, primarily as a result of the COVID pandemic. 
 
7.   Other expenses 
 
                                                              31/03/2021   31/03/2020 
 
                                                                    £000         £000 
 
Professional fees                                                    248          235 
 
Other expenses                                                        30           68 
 
                                                                     278          303 
 
Directors' fees 
 
Directors are the only officers of the Company and there are no other key 
personnel. The Directors' annual remuneration for services to the Group was £ 
150,000 (2020: £150,000), as set out in the Remuneration Report on page 63. 
 
8.   Taxation 
 
                                                             31/03/2021   31/03/2020 
 
                                                                   £000         £000 
 
Tax expense in year                                                   -            - 
 
Reconciliation of effective tax rate 
 
Profit/(loss) before tax                                          4,542     (32,459) 
 
Effect of: 
 
Tax using the UK corporation tax rate of 19%                        863      (6,167) 
 
Revaluation loss not taxable                                      1,574        3,299 
 
Share of profit of associates and joint                           (682)         (40) 
ventures not taxable 
 
Profit on disposal of investment property not                      (23)        (360) 
taxable 
 
UK REIT exemption                                               (1,732)        3,268 
 
Current tax expense in the year                                       -            - 
 
SREIT elected to be treated as a UK real estate investment trust ("REIT"). The 
UK REIT rules exempt the profits of SREIT and its subsidiaries' (the "Group") 
UK property rental business from corporation tax. Gains on UK properties are 
also exempt from tax, provided they are not held for trading or sold in the 
three years after completion of development. The Group is otherwise subject to 
corporation tax. 
 
As a REIT, SREIT is required to pay Property Income Distributions equal to at 
least 90% of the Group's exempted net income. To retain UK REIT status there 
are a number of conditions to be met in respect of the principal company of the 
Group, the Group's qualifying activity and its balance of business. The Group 
continues to meet these conditions. 
 
9.   Basic and diluted earnings per share 
 
The basic and diluted earnings per share for the Group are based on the profit 
for the year of £4,542,000 (2020: loss of £32,459,000) and the weighted average 
number of Ordinary Shares in issue during the year of 508,699,880 (2020: 
518,513,409). 
 
10. Dividends paid 
 
In respect of                                         Ordinary     Rate   31/03/2021 
 
                                                        shares  (pence)         £000 
 
Q/e 30 June 2020 (dividend paid 18 August 2020)         518.51  0.38575        2,002 
                                                       million 
 
Q/e 30 September 2020 (dividend paid 11 December        503.30    0.575        2,894 
2020)                                                  million 
 
Q/e 31 December 2020 (dividend paid 12 March            495.00    0.625        3,093 
2021)                                                  million 
 
                                                                   1.59        7,989 
 
In respect of                                         Ordinary     Rate   31/03/2020 
 
                                                        shares  (pence)         £000 
 
Q/e 31 March 2019 (dividend paid 7 June 2019)           518.51     0.65        3,370 
                                                       million 
 
Q/e 30 June 2019 (dividend paid 16 August 2019)         518.51     0.65        3,370 
                                                       million 
 
Q/e 30 September 2019 (dividend paid 18 December        518.51     0.65        3,370 
2019)                                                  million 
 
Q/e 31 December 2019 (dividend paid 11 March            518.51     0.77        4,001 
2020)                                                  million 
 
                                                                   2.72       14,111 
 
 
A dividend for the quarter ended 31 March 2021 of 0.656 pence per share was 
approved and will be paid on the 25 June 2021. 
 
11. Investment property 
 
                                                Leasehold      Freehold         Total 
 
                                                     £000          £000          £000 
 
Fair value as at 31 March 2019                     39,822       331,275       371,097 
 
Additions                                              34         6,470         6,504 
 
Gross proceeds on disposals                             -      (43,168)      (43,168) 
 
Realised gain on disposals                              -         1,897         1,897 
 
Fair Value leasehold adjustment *                   2,416             -         2,416 
 
Net unrealised valuation loss on investment       (5,454)      (11,910)      (17,364) 
property 
 
Fair value as at 31 March 2020                     36,818       284,564       321,382 
 
Additions                                           8,856            40         8,896 
 
Acquisitions                                            -        36,500        36,500 
 
Gross proceeds on disposals                       (4,116)       (2,293)       (6,409) 
 
Realised gain on disposals                             65            56           121 
 
Fair value leasehold adjustment movement            (428)             -         (428) 
 
Net unrealised valuation loss on investment       (4,819)       (3,467)       (8,286) 
property 
 
Fair value as at 31 March 2021                     36,376       315,400       351,776 
 
* Relates to the fair value of the leasehold element of The Galaxy, Luton. The 
corresponding lease liability is included on the Balance Sheet under 
non-current liabilities. 
 
The balance above includes: 
 
                                               Leasehold       Freehold       Total 
 
                                                    £000           £000        £000 
 
Investment property                               34,388        315,400     349,788 
 
Fair value leasehold adjustment                    1,988              -       1,988 
 
Fair value as at 31 March 2021                    36,376        315,400     351,776 
 
 
 
                                               Leasehold      Freehold       Total 
 
                                                    £000          £000        £000 
 
Investment property                               34,402       284,564     318,966 
 
Fair value leasehold adjustment                    2,416             -       2,416 
 
Fair value as at 31 March 2020                    36,818       284,564     321,382 
 
No investment properties have been deemed to meet the criteria of a held for 
sale asset at the year end (31 March 2020: £nil). 
 
The fair value of investment properties, as determined by the valuer, totals £ 
359,300,000 (2020: £328,300,000). In addition to this, £9,512,000 (2020: £ 
9,334,000) relating to lease incentives is included within trade and other 
receivables. 
 
The fair value of investment property has been determined by Knight Frank LLP, 
a firm of independent chartered surveyors, who are registered independent 
appraisers. The valuation has been undertaken in accordance with the RICS 
Valuation - Professional Standards global January 2019, issued by the Royal 
Institution of Chartered Surveyors (the "Red Book") including the International 
Valuation Standards. 
 
The properties have been valued on the basis of "Fair Value" in accordance with 
the RICS Valuation - Professional Standards VPS4(7.1) Fair Value and VPGA1 
Valuations for Inclusion in Financial Statements which adopt the definition of 
Fair Value used by the International Accounting Standards Board. The properties 
have been valued individually and not as part of a portfolio. 
 
The valuation has been undertaken using an appropriate valuation methodology 
and the Valuer's professional judgement. Consistent with the prior year, the 
Valuer's opinion of Fair Value was primarily derived using recent comparable 
market transactions on arm's length terms, where available, and appropriate 
valuation techniques (The Investment Method). 
 
All investment properties are categorised as Level 3 fair values as they use 
significant unobservable inputs. There have not been any transfers between 
levels during the year. Investment properties have been classed according to 
their real estate sector. Information on these significant unobservable inputs 
per class of investment property is disclosed below: 
 
Quantitative information about fair value measurement using unobservable inputs 
(Level 3) as at 
31 March 2021 
 
31 March 2021                 Industrial       Retail       Office       Other         Total 
                                     (1)       (incl. 
                                               retail 
                                           warehouse) 
 
  Fair value (£                  170,400       87,050       85,350      16,500       359,300 
           000) 
 
  Area ('000 sq                    1,963          506          414         177         3,060 
            ft) 
 
    Net passing         Range  £4.20 - £  £0 - £32.85  £0 - £29.10  £0 -£13.00 £0 - £32.85 £ 
 rent per sq ft      Weighted 8.36 £5.16       £11.46       £16.46       £6.95          7.55 
      per annum       average 
 
  Gross ERV per         Range  £3.50 - £    £7.40 - £     £12.00-£    £2.10 -£     £2.10 - £ 
sq ft per annum      Weighted      13.00 32.85 £13.40        24.00       13.00   32.85 £8.40 
                      average      £5.70                    £17.59       £7.98 
 
    Net initial         Range    4.40% - 2.72% -9.45% 5.77%-11.00% 4.75%-9.27%       2.72% - 
      yield (1)      Weighted      7.02%        6.24%        7.47%       7.00%  11.00% 6.25% 
                      average      5.57% 
 
     Equivalent         Range    5.10% - 5.80%-10.04%  5.72%-9.25%       4.75% 4.75%-10.04% 
          yield      Weighted      7.41%        7.38%        7.74%      -8.96%         6.65% 
                      average      6.16%                                 7.25% 
 
Notes: 
 
(1)     Yields based on rents receivable after deduction of head rents but 
gross of non-recoverables. 
 
Quantitative information about fair value measurement using unobservable inputs 
(Level 3) as at 
31 March 2020 
 
   31 March 2020              Industrial      Retail      Office      Other        Total 
                                     (1)      (incl. 
                                              retail 
                                          warehouse) 
 
   Fair value (£                 116,150      98,400      95,100     18,650      328,300 
            000) 
 
   Area ('000 sq                   1,398         527         463        177        2,565 
             ft) 
 
Net passing rent        Range     £0 - £ £0 - £38.50 £0 - £29.10 £0 -£13.00  £0 - £38.50 
   per sq ft per     Weighted      10.00      £11.72      £15.02      £8.22        £8.22 
           annum      average      £4.64 
 
Gross ERV per sq        Range  £3.75 - £   £4.30 - £    £10.00-£   £2.10 -£    £2.10 - £ 
    ft per annum     Weighted      10.00       31.80       26.00      13.00        31.80 
                      average      £5.50      £14.36      £17.05      £8.49        £9.61 
 
     Net initial        Range    4.75% -  0% -11.50%     5.36% -      4.85%  0% - 11.50% 
       yield (1)     Weighted      6.52%       5.88%       9.58%     -8.31%        6.01% 
                      average      5.23%                   6.85%      7.33% 
 
Equivalent yield        Range    5.30% - 5.71%-9.82% 5.56%-9.93%      4.85% 4.85%-9.93% 
                     Weighted      6.75%       6.97%       7.48%     -7.99%        6.87% 
                      average      6.25%                              6.84% 
 
Notes:  (1) Yields based on rents receivable after deduction of head rents but 
gross of non-recoverables 
 
Sensitivity of measurement to variations in the significant unobservable inputs 
 
The significant unobservable inputs used in the fair value measurement 
categorised within Level 3 of the fair value hierarchy of the Group's property 
portfolio, together with the impact of significant movements in these inputs on 
the fair value measurement, are shown below: 
 
                   Impact on fair value measurement  Impact on fair value 
Unobservable input of significant increase in input  measurement of significant 
                                                     decrease in input 
 
Passing rent       Increase                          Decrease 
 
Gross ERV          Increase                          Decrease 
 
Net initial yield  Decrease                          Increase 
 
Equivalent  yield  Decrease                          Increase 
 
 
There are interrelationships between the yields and rental values as they are 
partially determined by market rate conditions. 
 
The sensitivity of the valuation to changes in the most significant inputs per 
class of investment property are shown below: 
 
Estimated movement in fair value of  Industrial    Retail    Office     Other       All 
investment properties at 31 March         £'000     £'000     £'000     £'000   sectors 
2021                                                                              £'000 
 
Increase in ERV by 5%                     8,119     2,536     3,822       706    15,183 
 
Decrease in ERV by 5%                   (7,955)   (3,497)   (3,809)     (501)  (15,762) 
 
Increase in net initial yield by        (7,320)   (3,355)   (2,763)     (569)  (13,821) 
0.25% 
 
Decrease in net initial yield by          8,008     3,635     2,954       611    14,973 
0.25% 
 
 
 
Estimated movement in fair value of  Industrial    Retail    Office     Other       All 
investment properties at 31 March         £'000     £'000     £'000     £'000   sectors 
2020                                                                              £'000 
 
Increase in ERV by 5%                     5,611     4,238     4,520       638    15,007 
 
Decrease in ERV by 5%                   (5,589)   (3,894)   (4,221)     (392)  (14,096) 
 
Increase in net initial yield by        (5,303)   (4,015)   (3,347)     (615)  (13,107) 
0.25% 
 
Decrease in net initial yield by          5,836     4,371     3,600       659    14,245 
0.25% 
 
12. Investment in joint ventures 
 
                                                                              £000 
 
Closing balance as at 31 March 2019                                         80,165 
 
Purchase of interest in City Tower Unit Trust                                  496 
 
Capital distribution from Store Unit Trust                                   (319) 
Valuation loss on JV                                                       (2,357) 
 
Closing balance as at 31 March 2020                                         77,985 
 
Valuation gain on JV                                                         1,135 
 
Closing balance as at 31 March 2021                                         79,120 
 
 
 
                                                              31/03/2021    31/03/2020 
Summarised joint venture financial information                      £000          £000 
not adjusted for the Group's share - City 
Tower Unit Trust 
 
Investment properties                                            160,700       163,750 
 
Other assets                                                       1,494         3,270 
 
Total liabilities1                                               (3,240)       (2,745) 
 
Revenues for the year                                              8,271         8,313 
 
Total comprehensive rental income                                  4,769         5,397 
 
Net asset value attributable to the Group                         39,739        41,069 
 
Total comprehensive income attributable to the                     1,266         1,349 
Group 
 
1 Liabilities are non-recourse to the Group. 
 
                                                              31/03/2021    31/03/2020 
Summarised joint venture financial information                      £000          £000 
not adjusted for the Group's share - Store 
Street Unit Trust 
 
Investment properties                                             78,725        73,900 
 
Other assets                                                         241            38 
 
Total liabilities1                                                 (203)         (106) 
 
Revenues for the year                                              2,922         2,882 
 
Total comprehensive rental income                                  2,395         2,497 
 
Net asset value attributable to Group                             39,381        36,916 
 
Total comprehensive income attributable to the                     1,186         1,249 
Group 
 
1 Liabilities are non-recourse to the Group. 
 
The Company owns 25% of City Tower Unit Trust and 50% of Store Unit Trust. The 
remaining units in the City Tower and Store Unit Trusts are owned by other 
Schroders' funds. 
 
The fair value of investment property owned by the two Joint Ventures has been 
determined by BNP Paribas Real Estate, who are registered independent 
appraisers. The two valuations were undertaken on the same basis as that 
described under Note 11, Investment Property. 
 
13. Trade and other receivables 
 
                                                              31/03/2021   31/03/2020 
                                                                    £000         £000 
 
Rent receivable                                                    4,094        2,365 
 
Other debtors and prepayments                                     12,934       12,750 
 
                                                                  17,028       15,115 
 
Other debtors and prepayments includes £9,512,000 (2020: £9,334,000) in respect 
of lease incentives. 
 
As per Note 1 the rent receivable balance at 31 March 2021 included a bad debt 
adjustment relating to rent demanded at the end of March 2021 relating to the 
April to June 2021 quarter of £354,000 (2020: £nil). 
 
14. Cash and cash equivalents 
 
As at 31 March 2021 the Group had £12.2 million (2020: £33.1 million) in cash 
and none of this amount is held with Canada Life (2020: £22.7 million). 
 
15. Issued capital and reserves 
 
Stated Capital 
 
The share capital of the Company is represented by an unlimited number of 
Ordinary Shares of no par value. As at the date of this Report, the Company has 
565,664,749 ordinary shares in issue (2020: 565,664,749) of which 74,246,108 
Ordinary shares are held in treasury (2020: 47,151,340). The total number of 
voting rights of the Company was 491,418,641 (2020: 518,513,409) at the 
financial year end. 
 
Treasury capital 
 
74,246,108 (2020: 47,151,340) Ordinary Shares, which represent 13.1% (2020: 
8.3%) of the Company's total issued share capital, are held in treasury. 
 
Revenue reserve 
 
This reserve represents an accumulated amount of the Group's prior earnings net 
of dividends. 
 
16. Interest-bearing loans and borrowings 
 
This note provides information about the contractual terms of the Group's 
interest-bearing loans and borrowings. For more information about the Group's 
exposure to interest rate risk, see note 19. 
 
                                                 31/03/2021               31/03/2020 
 
                                                       £000                     £000 
 
Non-current liabilities 
 
Loan facility                                       154,085                  129,585 
 
Unamortised arrangement fees                          (715)                    (918) 
 
                                                    153,370                  128,667 
 
The Group has in place a £129.6 million loan facility with Canada Life. This 
has been in place since 16 April 2013 and has been refinanced several times, 
most recently in October 2019. As part of this most recent refinancing, a break 
fee of £25.8 million was paid and all previously unamortised finance costs of £ 
1.6 million were written off. 
 
The loan is split in to two equal tranches of £64.8 million as follows: 
 
-       Facility A matures in October 2032 and attracts an interest rate of 
2.36% 
 
-       Facility B matures in October 2039 and attracts an interest rate of 
2.62% 
 
The Company also has in place a revolving credit facility ('RCF') with Royal 
Bank of Scotland. In January 2019 the RCF limit was increased from £32.5 
million to £52.5 million. As at 31 March 2021 there was a balance of £24.5 
million drawn (2020: £nil). This facility expires on 3 July 2023. 
 
The interest rate is based on the Loan to Value ratio as set out below: 
 
-       LIBOR + 1.60% if the Loan to Value is less than or equal to 60%­­; and 
 
-       LIBOR + 1.85% if the Loan to Value is greater than 60% 
 
During both the current and prior year, the Loan to Value has remained less 
than 60%. Since this loan has variable interest, an interest rate cap for £32.5 
million of the loan was entered into and this comes in to effect if GBP 3 month 
LIBOR reaches 1.5%. As at the reporting date GBP 3 month LIBOR has not reached 
1.5%. 
 
The Canada Life facility has a first charge security over all the property 
assets in the ring-fenced Security Pool (the 'Security Pool') which at 31 March 
2021 contained properties valued at £273.6 million (2020: £262.8 million). 
Various restraints apply during the term of the loan although the facility has 
been designed to provide significant operational flexibility. 
 
The RBS facility has a first charge security over all the property assets held 
in SREIT No.2 Limited which at 31 March 2021 contained properties valued at £ 
125.9 million (2020: £105.3 million). 
 
The principal covenants for Canada Life and RBS are that the loan should not 
comprise more than 65% of the value of the assets in the Security Pool nor 
should estimated rental and other income arising from assets in the Security 
Pool, calculated on any interest payment date and one year projected from any 
interest payment date, comprise less than 185% of the interest payments. 
 
As at the Interest Payment Date, the Canada Life interest cover, calculated in 
accordance with the ICR covenant was 562% (2020: 548%) and the forward-looking 
interest cover was 423% (2020: 436%), with the Loan to Value ratio of 47.4% 
(47.4% net of all cash) (2020: 49.3%, 40.7% net of all cash). 
 
As at the Interest Payment Date, the RBS interest cover, calculated in 
accordance with the ICR covenant was 1,151% (2020: 2,135%) and the 
forward-looking interest cover was 864% (2020: 1,712%), with the Loan to Value 
ratio of 19.5% (2020: 0%). 
 
Please see a reconciliation of financing movements for the year below split in 
to cash and non cash items: 
 
                                                                     31/03/2021 
                                                                           £000 
 
Loan balance brought forward                                            128,667 
 
Drawdown on RBS RCF (cash)                                               37,000 
 
Repayment of RBC RCF (cash)                                            (12,500) 
 
Movement in fair value                                                      203 
 
Loan balance carried forward                                            153,370 
 
17. Trade and other payables 
 
                                                              31/03/2021   31/03/2020 
                                                                    £000         £000 
 
Deferred income                                                   3,701*        3,885 
 
Rental deposits                                                    1,448        1,166 
 
Interest payable                                                     780          728 
 
Other trade payables and accruals                                  1,968          865 
 
                                                                   7,897        6,644 
 
*As per Note 1 this balance includes a bad debt adjustment relating to rent 
demanded at the end March for the April to June quarter of £354k 
 
18. NAV per Ordinary Share and share buyback 
 
On 8 September 2020 the Company announced that it was commencing a share 
buyback programme. From 8 September 2020 to 31 March 2021 the Company purchased 
a sum of 27,094,768 shares for a sum of £9.52 million and at an average price 
of 35 pence per share. 
 
As a consequence of the buyback the number of ordinary shares in issue fell 
from 518,513,409 to 491,418,641 during the reporting period. 
 
The NAV per Ordinary Share is based on the net assets of £296,844,000 (2020: £ 
309,806,000) and 491,418,641 (2020: 518,513,409) Ordinary Shares in issue at 
the reporting date. 
 
19. Financial instruments, properties and associated risks 
 
Financial risk factors 
 
The Group holds cash and liquid resources as well as having debtors and 
creditors that arise directly from its operations. The Group uses interest rate 
contracts when required to limit exposure to interest rate risks, but does not 
have any other derivative instruments. 
 
The main risks arising from the Group's financial instruments and properties 
are market price risk, credit risk, liquidity risk and interest rate risk. The 
Group has no exposure to foreign currency exchange risk. The Board regularly 
reviews and agrees policies for managing each of these risks and these are 
summarised below: 
 
Market price risk 
 
Rental income and the market value for properties are generally affected by 
overall conditions in the economy, such as changes in gross domestic product, 
employment trends, inflation and changes in interest rates. Changes in gross 
domestic product may also impact employment levels, which in turn may impact 
the demand for premises. Furthermore, movements in interest rates may also 
affect the cost of financing for real estate companies. Both rental income and 
property values may also be affected by other factors specific to the real 
estate market, such as competition from other property owners, the perceptions 
of prospective tenants of the attractiveness, convenience and safety of 
properties, the inability to collect rents because of bankruptcy or the 
insolvency of tenants, the periodic need to renovate, repair and re-lease space 
and the costs thereof, the costs of maintenance and insurance, and increased 
operating costs. 
 
The Directors monitor the market value of investment properties by having 
independent valuations carried out quarterly by a firm of independent chartered 
surveyors. Note 11 sets out the sensitivity analysis on the market price risk. 
Concentration risk, based on industry and geography, is set out in the tables 
on pages 20 and 21. Included in market price risk is interest rate risk which 
is discussed further below. 
 
Credit risk 
 
Credit risk is the risk that an issuer or counterparty will be unable or 
unwilling to meet a commitment that it has entered into with the Group. In the 
event of default by an occupational tenant, the Group will suffer a rental 
income shortfall and incur additional costs, including legal expenses, in 
maintaining, insuring and re-letting the property. The Investment Manager 
reviews reports prepared by Dun & Bradstreet, or other sources, to assess the 
credit quality of the Group's tenants and aims to ensure there is no excessive 
concentration of risk and that the impact of any default by a tenant is 
minimised. 
 
In respect of credit risk arising from other financial assets, which comprise 
cash and cash equivalents, exposure to credit risk arises from default of the 
counterparty with a maximum exposure equal to the carrying amounts of these 
instruments. In order to mitigate such risks, cash is maintained with major 
international financial institutions with high quality credit ratings. During 
the year, and at the reporting date, the Group maintained a relationship with 
branches and subsidiaries of HSBC. HSBC has a Credit Rating of AA negative 
(provided by Standard and Poor). 
 
The maximum exposure to credit risk for rent receivables at the reporting date 
by type of sector was: 
 
                                                         31/03/2021      31/03/2020 
                                                    Carrying amount Carrying amount 
                                                               £000            £000 
 
Office                                                          545             468 
 
Industrial                                                    1,916             973 
 
Retail                                                        3,100           1,443 
 
                                                             5,561*          2,884* 
 
*Note that this is the gross rental debtors, this is shown in note 13 as £ 
4,094k (2020: £2,365k)  which is the above figure net of bad debt provision of 
£1,113k (2020: £519k) and deferred income adjustment of £354k (2020: £nil) as 
per Note 1 significant estimates and judgements. 
 
Rent receivables which are past their due date were: 
 
                                                         31/03/2021      31/03/2020 
                                                    Carrying amount Carrying amount 
                                                               £000            £000 
 
0-30 days                                                     2,952           2,490 
 
31-60 days                                                       77              92 
 
61-90 days                                                      201              38 
 
91 days plus                                                  2,331              64 
 
                                                             5,561*          2,884* 
 
*Note that this is the gross rental debtors, this is shown in note 13 as £ 
4,094k (2020: £2,365k)  which is the above figure net of bad debt provision of 
£1,113k (2020: £519k) and deferred income adjustment of £354k (2020: £nil) as 
per Note 1 significant estimates and judgements. 
 
Management has considered rental debtors on a quarterly basis and made 
provisions where it has been deemed that these amounts are unrecoverable. As at 
31 March 2021 total provisions of £1.1m were recognised and rental debtors are 
shown net of this provision in the balance sheet. 
 
On initial recognition the Group calculates the expected credit loss for 
debtors based on the lifetime expected credit losses under the IFRS 9 
simplified approach. Management consider aged debtors' analyses, the strength 
of tenant covenants, macroeconomic factors and any rental deposits held when 
considering this. 
 
Liquidity risk 
 
Liquidity risk is the risk that the Group will encounter difficulties in 
meeting obligations associated with its financial obligations. 
 
The Group's investments comprise UK commercial property.  Property and 
property-related assets are inherently difficult to value due to the individual 
nature of each property.  As a result, valuations are subject to substantial 
uncertainty.  There is no assurance that the estimates resulting from the 
valuation process will reflect the actual sale price even where such sales 
occur shortly after the valuation date. Investments in property are relatively 
illiquid.  However, the Group has tried to mitigate this risk by investing in 
properties that it considers to be good quality. 
 
In certain circumstances, the terms of the Group's debt facilities entitle the 
lender to require early repayment and in such circumstances the Group's ability 
to maintain dividend levels and the net asset value could be adversely 
affected. The Investment Manager prepares cash flows on a rolling basis to 
ensure the Group can meet future liabilities as and when they fall due. 
 
The following table indicates the maturity analysis of the financial 
liabilities. 
 
As at 31 March 2021       Carrying    Expected    6 mths   6 mths -      2-5        More 
                            amount  cash flows   or less    2 years    years      than 5 
                              £000        £000      £000       £000     £000       years 
                                                                                    £000 
 
Financial liabilities 
 
Interest-bearing loans     153,370     204,800     1,813      5,438  35,377*     162,173 
and borrowings and 
interest 
 
Leasehold liability          1,988      10,717        46        139      278      10,254 
 
Trade and other payables     3,416       3,416     1,968          -      -         1,448 
 
Total financial            158,774     218,934     3,827      5,577   35,655     173,875 
liabilities 
 
 
*Please note that this 
assumes that the £24.5 
million facility is 
repaid in 2023. 
 
As at 31 March 2020       Carrying    Expected    6 mths   6 mths -      2-5        More 
                            amount  cash flows   or less    2 years    years      than 5 
                              £000        £000      £000       £000     £000       years 
                                                                                    £000 
 
Financial liabilities 
 
Interest-bearing loans     129,395     181,533     1,614      4,840    9,680     165,399 
and borrowings and 
interest 
 
Leasehold liability          2,416      13,442        57        173      346      12,866 
 
Trade and other payables     2,031       2,031       865          -        -       1,166 
 
Total financial            133,842     197,006     2,536      5,013   10,026     179,431 
liabilities 
 
 
Interest rate risk 
 
Exposure to market risk for changes in interest rates relates primarily to the 
Group's long-term debt obligations and to interest earned on cash balances. As 
interest on the Group's long-term debt obligations is payable on a fixed-rate 
basis the Group is not exposed to interest rate risk in relation to this loan 
facility.  As at 31 March 2021 the fair value of the Group's £129.6 million 
loan with Canada Life was £128.4 million (2020: £131.1 million). 
 
The RBS revolving credit facility is a low margin flexible source of funding 
with a margin of 1.6% above 3 month LIBOR and it is considered by management 
that the carrying value is equal to fair value (sum of £24.5m drawn as at year 
end). 
 
A 1% increase or decrease in short-term interest rates would increase or 
decrease the annual income and equity by £122,000 based on the cash balance as 
at 31 March 2021. 
 
Fair values 
 
The fair values of financial assets and liabilities are not materially 
different from their carrying values, unless disclosed below, in the financial 
statements. 
 
The fair value hierarchy levels are as follows: 
 
-       Level 1 - quoted prices (unadjusted) in active markets for identical 
assets and liabilities; 
 
-       Level 2 - inputs other than quoted prices included within level 1 that 
are observable for the asset or liability, either directly (i.e. as prices) or 
indirectly (i.e. derived from prices); and 
 
-       Level 3 - inputs for the assets or liability that are not based on 
observable market data 
(unobservable inputs). 
 
There have been no transfers between Levels 1, 2 and 3 during the year (2020: 
none). 
 
The following summarises the main methods and assumptions used in estimating 
the fair values of financial instruments and investment property. 
 
Investment property - level 3 
 
Fair value is based on valuations provided by an independent firm of chartered 
surveyors and registered appraisers. These values were determined after having 
taken into consideration recent market transactions for similar properties in 
similar locations to the investment properties held by the Group. The fair 
value hierarchy of investment property is level 3. See Note 11 for further 
details. 
 
Interest-bearing loans and borrowings - level 2 
 
Fair values are based on the present value of future cash flows discounted at a 
market rate of interest. Issue costs are amortised over the period of the 
borrowings. As at 31 March 2021, the fair value of the Group's £129.6 million 
loan with Canada Life was £128.4 million (2020: £131.1 million). 
 
Capital management 
 
The Board's policy is to maintain a strong capital base to maintain investor, 
creditor and market confidence and to sustain future development of the 
business. The objective is to ensure that it will continue as a going concern 
and to maximise the return to its equity shareholders through an appropriate 
level of gearing. The Company's capital management process ensures it meets its 
financial covenants in its borrowing arrangements. Breaches in meeting the 
financial covenants could permit the lenders to immediately accelerate the 
repayment of loans and borrowings. The Company monitors as part of its 
quarterly board meetings that it will adhere to specific leverage, interest 
cover and rental cover ratios. There have been no breaches in the financial 
covenants of any loans and borrowings during the financial year. 
 
The Company's debt and capital structure comprises the following: 
 
                                                              31/03/2021    31/03/2020 
                                                                    £000          £000 
 
Debt 
 
Fixed-rate loan facility                                         129,585       129,585 
 
Floating rate loan facility *                                     24,500             - 
 
                                                                 154,085       129,585 
 
Equity 
 
Called-up share capital                                          183,123       192,638 
 
Reserves                                                         113,721       117,168 
 
                                                                 296,844       309,806 
 
Total debt and equity                                            450,929       439,391 
 
 
There were no changes in the Group's approach to capital management during the 
year. 
 
* This amount refers to the amount drawn. The total facility as at 31 March 
2021 was £52.5m (2020: £52.5m). 
 
20. Operating leases 
 
The Group leases out its investment property under operating leases. At 31 
March 2021 the future minimum lease receipts under non-cancellable leases are 
as follows: 
 
                                                             31/03/2021  31/03/2020 
                                                                   £000        £000 
 
Less than one year                                               24,623      20,916 
 
Between one and five years                                       69,917      62,642 
 
More than five years                                             58,123      61,871 
 
                                                                152,663     145,429 
 
 
The total above comprises the total contracted rent receivable as at 31 March 
2021. 
 
The Group has entered into leases on its property portfolio. The commercial 
property leases typically have lease terms between 5 and 15 years and include 
clauses to enable periodic upward revision of the rental charge according to 
prevailing market conditions. Some leases contain options to break before the 
end of the lease term. 
 
21. List of Subsidiary and Joint Venture Undertakings 
 
The companies listed below are those which were part of the Group at 31 March 
2021 and 31 March 2020: 
 
Undertaking                    Category      Country of            Ultimate 
                                             incorporation         ownership 
 
SREIT No.2 Ltd                 Subsidiary    Guernsey              100% 
 
SREIT Holding (No.2) Ltd       Subsidiary    Guernsey              100% 
 
SREIT Holding Company Limited  Subsidiary    Guernsey              100% 
 
SREIT Property Ltd             Subsidiary    Guernsey              100% 
 
SREIT (Portergate) Ltd         Subsidiary    Guernsey              100% 
 
SREIT (Victory) Ltd            Subsidiary    Guernsey              100% 
 
SREIT (Uxbridge) Ltd           Subsidiary    Guernsey              100% 
 
SREIT (City Tower) Ltd         Subsidiary    Guernsey              100% 
 
SREIT (Store) Ltd              Subsidiary    Guernsey              100% 
 
SREIT (Bedford) Ltd            Subsidiary    Guernsey              100% 
 
SREIT Holding Company (No.3)   Subsidiary    Guernsey              100% 
Limited 
 
SREIT No.3 Finance Limited     Subsidiary    Guernsey              100% 
 
City Tower Unit Trust          Joint Venture Jersey                25% 
 
Store Unit Trust               Joint Venture Jersey                50% 
 
The registered address for all 100% owned entities is the same as for the group 
and can be found on page 130. 
 
22. Related party transactions 
 
Material agreements and transactions with the Investment Manager are disclosed 
in note 3. Transactions with regard to joint ventures are disclosed in note 12. 
Transactions with the directors are shown in the directors' remuneration 
report. 
 
23. Capital commitments 
 
As at 31 March 2021 the Group had capital commitments of £3.2 million (2020: £ 
6.0 million). 
 
24. Post balance sheet events 
 
 
Between the period of the 1 April and 12 April 2021, the Company purchased a 
further 338,340 shares pursuant to its buyback programme, to be held in 
treasury, for a sum of £136,000 at an average price of 40.3 pence per share. 
 
As noted in the Chairman's Statement, the Board and Investment Manager have 
agreed a change to the Investment Manager's fees which will result in an 
initial saving of approximately £600,000 per annum. This will take effect from 
1 July 2021. 
 
The current annual investment management fee is 1.1% of net asset value ('NAV') 
and equates to an annualised fee, based on the audited NAV as at 31 March 2021, 
of £3.3 million per annum. The fee covers all of the appointed services of the 
Investment Manager and there are standard provisions for reimbursement of 
expenses. Additional fees can be agreed for out of scope services on an ad hoc 
basis. The new fee agreement includes a blended (not cliff edge), tiered fee 
structure as follows: 
 
NAV                                      Management fee percentage per annum of NAV 
 
<£500 million                            0.9% 
 
£500 million - £1 billion                0.8% 
 
£1 billion+                              0.7% 
 
Based on the most recent NAV at 31 March 2021, the impact of this fee reduction 
would be to reduce the current annualised fee from £3.3 million to £2.7 million 
per annum, a reduction of £600,000 per annum or 18%. In consideration for 
agreeing the fee reduction, the notice period for non-fault termination of the 
Investment Manager's appointment will be increased from nine to twelve months. 
 
Other information (unaudited) 
 
EPRA Performance Measures (unaudited) 
 
As recommended by the European Public Real Estate Association, EPRA performance 
measures are disclosed in the section below. 
 
EPRA performance measures: summary table 
 
                                                             31/03/2021    31/03/2020 
 
 
EPRA earnings                                               £11,572,000   £12,729,000 
 
EPRA earnings per share                                          2.3pps        2.5pps 
 
 
EPRA Net Tangible Assets                                   £296,844,000  £309,806,000 
 
EPRA Net Tangible Assets per share                              60.4pps       59.7pps 
 
EPRA Net Disposal Value                                    £297,806,000  £308,253,000 
 
EPRA Net Disposal Value per share                               60.6pps       59.4pps 
 
EPRA Net Initial Yield                                             5.4%          5.3% 
 
EPRA "topped-up" Net Initial Yield                                 5.7%          5.6% 
 
EPRA vacancy rate                                                  4.8%          7.3% 
 
EPRA cost ratios - including direct                               34.6%         32.2% 
vacancy costs 
 
Adjusted EPRA cost ratios - including                             26.8%         27.2% 
direct vacancy costs 
 
EPRA cost ratios - excluding direct                               34.6%         32.2% 
vacancy costs 
 
Adjusted EPRA cost ratios - excluding                             26.8%         27.2% 
direct vacancy costs 
 
a.      EPRA earnings and EPS 
 
Total comprehensive income or loss excluding realised and unrealised gains and 
losses on investment property, share of profit or loss on joint venture 
investments and changes in the fair value of financial instruments, divided by 
the weighted average number of shares. 
 
                                                            31/03/2021    31/03/2020 
 
                                                                  £000          £000 
 
IFRS profit/(loss) after tax                                     4,542      (32,459) 
 
Adjustments to calculate EPRA Earnings: 
 
Profit on disposal of investment property                        (121)       (1,897) 
 
Net valuation loss on investment property                        8,286        17,364 
 
Share of valuation (gain)/loss in associates and               (1,135)         2,357 
joint ventures 
 
Refinancing costs                                                    -        27,364 
 
EPRA earnings                                                   11,572        12,729 
 
Weighted average number of Ordinary shares                 508,699,880   518,513,409 
 
IFRS earnings/(loss) per share (pence)                             0.9         (6.3) 
 
EPRA earnings per share (pence)                                    2.3           2.5 
 
b.            EPRA Net Tangible Assets per share 
 
The IFRS equity attributable to shareholders adjusted for items including 
deferred tax, the fair value of financial instruments and intangible assets. 
 
                                                           31/03/2021   31/03/2020 
 
                                                                 £000         £000 
 
IFRS NAV per financial statements                             296,844      309,806 
 
EPRA Net Tangible Assets                                      296,844      309,806 
 
Shares in issue at the end of the year                    491,418,641  518,513,409 
 
IFRS NAV per share (pence)                                       60.4         59.7 
 
EPRA Net Tangible Assets per share                               60.4         59.7 
(pence) 
 
c.            EPRA Net Disposal Value per share 
 
The IFRS equity attributable to shareholders adjusted for items including 
goodwill as a result of deferred tax, intangibles and the fair value of fixed 
interest rate debt. 
 
                                                              31/03/2021    31/03/20 
 
                                                                    £000        £000 
 
IFRS NAV per the Financial Statements                            296,844     309,806 
 
Adjustments to calculate EPRA Net Disposal Value: 
 
The fair value of fixed interest rate debt                           962     (1,553) 
 
EPRA Net Disposal Value                                          297,806     308,253 
 
EPRA Net Disposal Value per share (pence)                           60.6        59.4 
 
d.      EPRA Net Initial Yield 
 
Annualised rental income based on the cash rents passing at the Balance Sheet 
date, less non-recoverable property operating expenses, divided by the 
grossed-up market value of the complete property portfolio. The EPRA "topped 
up" NIY is the EPRA NIY adjusted for unexpired lease incentives. 
 
                                                             31/03/2021   31/03/2020 
 
                                                                   £000         £000 
 
Investment property - wholly-owned                              359,300      328,300 
 
Investment property - share of joint ventures                    79,538       77,888 
and funds 
 
Complete property portfolio                                     438,838      406,188 
 
Allowance for estimated purchasers' costs                        25,453       23,559 
 
Gross up completed property portfolio                           464,291      429,747 
valuation 
 
Annualised cash passing rental income                            28,327       24,878 
 
Property outgoings                                              (3,041)      (2,251) 
 
Annualised net rents                                             25,286       22,627 
 
Notional rent expiration of rent free periods                     1,165        1,518 
(1) 
 
Topped-up net annualised rent                                    26,451       24,145 
 
EPRA NIY                                                           5.4%         5.3% 
 
EPRA "topped-up" NIY                                               5.7%         5.6% 
 
(1) The period over which rent free periods expire is 2 years (2020: 2 years). 
 
e.            EPRA cost ratios 
 
Administrative and operating costs as a percentage of        31/03/2021   31/03/2020 
gross rental income calculated including and excluding 
direct vacancy costs. 
 
 
                                                                   £000         £000 
 
Administrative/property operating expense line per IFRS           8,340        8,059 
income statement 
 
Ground rent costs                                                 (110)        (138) 
 
EPRA Costs (including direct vacancy costs)                       8,230        7,921 
 
Direct vacancy costs                                            (1,844)      (1,232) 
 
EPRA Costs (excluding direct vacancy costs)                       6,386        6,689 
 
Company adjustments                                                   -            - 
 
Adjusted EPRA Costs (including company adjustment costs)          8,230        7,921 
 
Direct vacancy costs                                            (1,844)      (1,232) 
 
Adjusted EPRA Costs (excluding direct vacancy costs)              6,386        6,689 
 
Gross Rental Income less ground rent costs                       21,349       22,022 
 
Share of Joint Ventures income less ground rent costs             2,452        2,567 
 
Gross Rental Income                                              23,801       24,589 
 
EPRA cost ratio (including direct vacancy costs)                  34.6%        32.2% 
 
EPRA cost ratio (excluding direct vacancy costs)                  26.8%        27.2% 
 
EPRA vacancy rate                                                  4.8%         7.3% 
 
Adjusted EPRA cost ratio (including company adjustment            34.6%        32.2% 
costs) 
 
Adjusted EPRA cost ratio (excluding direct vacancy                26.8%        27.2% 
costs) 
 
Alternative Performance Measures (unaudited) 
 
The Company uses the following Alternative Performance Measures ("APMs") in its 
annual report, financial statements and notes to the financial statements. The 
APMs are reconciled to the financial statements through the narrative below. 
The Board believes that each of the APMs provides additional useful information 
to the shareholders in order to assess the Company's performance. 
 
Dividend Cover - the ratio of EPRA Earnings (page 101) to dividends paid (note 
10) in the period. 
 
Dividend Yield - the dividends paid, expressed as a percentage relative to its 
share price. 
 
EPRA Earnings - the earnings excluding all capital components not relevant to 
the underlying net income performance of the portfolio, such as the realised 
and unrealised fair value gains or losses on investment properties. See page 
101 for a reconciliation of this figure. 
 
EPRA Net Tangible Assets - the IFRS equity attributable to shareholders 
adjusted for items including deferred tax, the fair value of financial 
instruments and intangible assets. 
 
Gross LTV - the value of the external loans unadjusted for unamortised 
arrangement costs (note 16) expressed as a percentage of the market value of 
property investments as at the Balance Sheet date. The market value of property 
investments includes joint venture investments and are as per external 
valuations and have not been adjusted for IFRS lease incentive debtors nor the 
fair value of the head lease at Luton. 
 
LTV net of cash - the value of the external loans unadjusted for unamortised 
arrangement costs (note 16) less cash held (note 14) expressed as a percentage 
of the market value of the property investments as at the Balance Sheet date. 
The market value of property investments includes joint venture investments and 
are as per external valuations and have not been adjusted for IFRS lease 
incentive debtors or the fair value of the head lease at Luton. 
 
Ongoing charges including Fund expenses - all operating costs expected to be 
regularly incurred and that are payable by the Company expressed as a 
percentage of the average quarterly NAVs of the Company for the financial 
period. No capital costs, including capital expenditure or acquisition/disposal 
fees, are included as costs. 
 
Ongoing charges including Fund and property expenses - all operating costs 
expected to be regularly incurred and that are payable by the Company expressed 
as a percentage of the average quarterly NAVs of the Company for the financial 
period. Any capital costs, including capital expenditure and acquisition/ 
disposal fees, are excluded as costs, as well as interest costs and any other 
costs considered to be non-recurring. In the current period the material 
non-recurring costs include non-cash bad debt expenses of £0.8m. 
 
Share discount/premium - the share price of an Investment Trust is derived from 
buyers and sellers trading their shares on the stock market. This price is not 
identical to the NAV per share of the underlying assets less liabilities of the 
Company. If the share price is lower than the NAV per share, the shares are 
trading at a discount. Shares trading above the NAV per share are said to be at 
a premium. The discount/premium is calculated as the variance between the share 
price as at the Balance Sheet date and the NAV per share (page 77) expressed as 
a percentage. 
 
NAV total return - the return to shareholders calculated on a per share basis 
by adding dividends paid (note 10) in the period on a time-weighted basis to 
the increase or decrease in the NAV per share (page 77). 
 
AIFMD Disclosures (unaudited) 
 
The Alternative Investment Fund Managers Directive ('AIFMD') remuneration and 
leverage disclosures for Schroder Real Estate Investment Manager ('SREIM') for 
the year to 31 December 2020 
 
Remuneration disclosures 
 
These disclosures form part of the non-audited section of this Annual Report 
and Consolidated Financial Statements and should be read in conjunction with 
the Schroders plc Remuneration Report on pages 75 to 102 of the 2020 Annual 
Report & Accounts (available on the Group's website - https://www.schroders.com 
/en/investor-relations/results-and-reports/annual-report-and-accounts-2020/), 
which provides more information on the activities of our Remuneration Committee 
and our remuneration principles and policies. 
 
The AIF Material Risk Takers ('AIF MRTs') of SREIM are individuals whose roles 
within the Schroders Group can materially affect the risk of SREIM or any AIF 
fund that it manages. These roles are identified in line with the requirements 
of the AIFM Directive and guidance issued by the European Securities and 
Markets Authority. 
 
The Remuneration Committee of Schroders plc has established a remuneration 
policy to ensure the requirements of the AIFM Directive are met for all AIF 
MRTs. The Remuneration Committee and the Board of Schroders plc review 
remuneration strategy at least annually. The directors of SREIM are responsible 
for the adoption of the remuneration policy, for reviewing its general 
principles at least annually, for overseeing its implementation and for 
ensuring compliance with relevant local legislation and regulation. During 2020 
the Remuneration Policy was reviewed to ensure compliance with the UCITS/AIFMD 
remuneration requirements and no significant changes were made. 
 
The implementation of the remuneration policy is, at least annually, subject to 
independent internal review for compliance with the policies and procedures for 
remuneration adopted by the Board of SREIM and the Remuneration Committee. The 
most recent review found no fundamental issues but resulted in a range of more 
minor recommendations, principally improvements to process and policy 
documentation. 
 
The total spend on remuneration is determined based on a profit share ratio, 
measuring variable remuneration charge against pre-bonus profit, and from a 
total compensation ratio, measuring total remuneration expense against net 
income. This ensures that the interests of employees are aligned with 
Schroders' financial performance. In determining the remuneration spend each 
year, the underlying strength and sustainability of the business is taken into 
account, along with reports on risk, legal, compliance and internal audit 
matters from the heads of those areas. 
 
The remuneration data that follows reflects amounts paid in respect of 
performance during 2020. 
 
·      The total amount of remuneration paid by SREIM to its staff is nil as 
SREIM has no employees. Employees of SREIM or other Schroders Group entities 
who serve as Directors of SREIM receive no additional fees in respect of their 
role on the Board of SREIM. 
 
·      The following disclosures relate to AIF MRTs of SREIM. Those AIF MRTs 
were employed by and provided services to other Schroders group companies and 
clients. In the interests of transparency, the aggregate remuneration figures 
that follow reflect the full remuneration for each SREIM AIF MRT. The aggregate 
total remuneration paid to the 76 AIF MRTs of SREIM in respect of the financial 
year ended 31 December 2020 is £56.30 million, of which £36.33 million was paid 
to senior management, £14.75 million was paid to MRTs deemed to be taking risk 
on behalf of SREIM or the AIF funds that it manages and £5.22 million was paid 
to other AIF MRTs including control function MRTs. 
 
For additional qualitative information on remuneration policies and practices 
see www.schroders.com/rem-disclosures. 
 
Leverage disclosure 
 
In accordance with AIFMD the Company is required to make available to 
investors information in relation to leverage. Under AIFMD, leverage is any 
method by which the exposure of the Company is increased through the borrowing 
of cash or securities, leverage embedded in derivative positions or by another 
means. It is expressed as a ratio between the total exposure of the Company and 
its net asset value and is calculated in accordance with the "Gross method" and 
the "Commitment method" as described in the AIFMD. The Gross method represents 
the aggregate of all the Company's exposures other than cash balances held in 
the base currency, while the Commitment method, which is calculated on a 
similar basis, may also take into account cash and cash equivalents, netting 
and hedging arrangements, as applicable. 
 
The Investment Manager has set the expected maximum leverage percentages for 
the Company and calculated the actual leverages as at 31 December 2020 as shown 
below (the Company calculates and externally reports its leverage one quarter 
in arrears): 
 
                                      Maximum limit set      Actual as at 
                                                             31.12.2020 
 
Gross leverage                        195                    152 
 
Commitment leverage                   220                    160 
 
There have been no changes to the maximum levels of leverage employed by the 
Company during the financial year nor any breaches of the maximum levels during 
the financial reporting period. 
 
Sustainability Performance Measures (Environmental) (unaudited) 
 
SREIT reports sustainability information in accordance with EPRA Best Practice 
Recommendations on Sustainability Reporting (sBPR) 2017, 3rd Edition for the 12 
months, 1st January 2020 - 31st December 2020, presented with comparison 
against 2019. As permitted by the EPRA Sustainability Reporting Guidelines, 
environmental data has been developed and presented in line with the Global 
Real Estate Sustainability Benchmark (GRESB). 
 
The reporting boundary has been scoped to where SREIT has operational control 
being managed properties where SREIT is responsible for payment of utility 
invoices and/or arrangement of waste disposal contracts. 'Operational control' 
has been selected as the reporting boundary (as opposed to 'financial control' 
or 'equity share') as this reflects the portion of the portfolio where the 
Company can influence operational procedures and, ultimately, sustainability 
performance. The operational control approach is the most commonly applied 
within the industry. 
 
As at 31 December 2020, there were 25 managed properties within the portfolio 
of which two properties were purchased towards the end of the reporting period 
and so have not been captured in the reported data. This compares to 22 managed 
properties in the portfolio during 2019 which have been included in the 
reporting. 
 
Where data coverage is less than 100%, a supporting explanation is provided 
within the data notes immediately below the relevant table. Energy and water 
consumption data is reported according to automatic meter reads, manual meter 
reads or invoice estimates. Where required, missing consumption data has been 
estimated by prorating data from other periods using recognised techniques. The 
proportion of data that is estimated is presented in the footnotes to the data 
tables. Historic consumption data has been restated where more complete and/or 
accurate records have become available. 
 
SREIT does not contain any managed assets that consume energy from district 
heating or cooling sources. Therefore, the EPRA sBPR DH&C-Abs and DH&C-LfL 
indicators are not applicable and not presented in this report. Furthermore, 
the Company does not have any direct employees; it is served by the employees 
of the Investment Manager (Schroder Real Estate Investment Management). 
Accordingly, the EPRA Overarching Recommendation for companies to report on the 
environmental impact of their own offices is not relevant/material and not 
presented in this report. 
 
There have been significant reductions in consumption due to the COVID-19 
pandemic which has affected the majority of the 2020 reporting year. The 
reductions are due to changes in occupancy and building operations during the 
COVID-19 period. 
 
This report has been prepared by EVORA Global, retained sustainability and 
energy management consultants to Schroder Real Estate Investment Management. 
The Sustainability Performance Measures have been assured in accordance with 
AA1000 to provide a Type 2 Moderate Assurance unqualified audit of the 
sustainability content located within the SREIT annual report for the year 
ending 31st December 2020. The full assurance statement can be found on the 
following link, please see the Sustainability Page for full assurance 
statement: 
 
https://www.schroders.com/en/uk/adviser/fund-centre/funds-in-focus/ 
investment-trusts/schroders-investment-trusts/ 
schroder-real-estate-investment-trust/sustainability/ 
 
Total energy consumption (Elec-Abs; Fuels-Abs) 
 
The table below sets out total landlord obtained energy consumption from the 
Company's managed portfolio by sector: 
 
                                                     Total electricity    Total fuel consumption         Energy Intensity 
                                                           consumption                     (kWh)                 (kWh/m2) 
                                                                 (kWh) 
 
Sector                                                2019         2020        2019          2020        2019       2020 
 
Industrial, Distribution Warehouse                  87,758      134,716         105        21,021         0.8        1.4 
 
Coverage                                               5/5          6/6         2/2           4/4         5/5        6/6 
 
Leisure                                            268,140      218,056      72,697                      24.6       15.7 
 
Coverage                                               1/1       1/1          1/1                        1/1         1/1 
 
Mixed use, Office/Retail                           285,074   279,179                                   121.7       119.2 
 
Coverage                                               1/1       1/1                                     1/1         1/1 
 
Mixed use, Other                                 2,528,805 1,795,726        1,234                      109.8        77.9 
 
Coverage                                               2/2       2/2          1/1                        2/2         2/2 
 
Office, Low-Rise                                 2,106,939 1,699,887    1,819,356    1,514,969         135.3       110.8 
 
Coverage                                             10/10     10/10          9/9          9/9         10/10       10/10 
 
Office, Mid-Rise                                   308,871   279,792      431,247      378,210         184.0       163.6 
 
Coverage                                               1/1       1/1          1/1          1/1           1/1         1/1 
 
Retail High Street                                  17,618    16,795                                     9.2         8.8 
 
Coverage                                               1/1       1/1                                     1/1         1/1 
 
Retail Warehouse                                    39,377    63,987                    23,955           3.4         7.7 
 
Coverage                                               1/1       1/1                       1/1           1/1         1/1 
 
Sub-Total                                        5,642,582 4,488,140    2,324,640    1,938,154 
 
  Coverage                                           22/22     23/23        14/14        15/15 
 
Total (Electricity and fuel)                     7,967,222 6,426,294 
 
  Coverage                                           22/22     23/23 
 
Renewable electricity %                                98%       97% 
 
                                                     22/22     23/23 
Coverage 
 
 
-       Consumption data relates to the managed portfolio only: 
 
-       Industrial, Distribution Warehouse: Tenant Space and Outdoor/Exterior 
Area/Parking; 
 
-       Leisure: Common Areas, Tenant Space and Outdoor/Exterior Area/Parking; 
 
-       Mixed-use, Office/Retail: Whole Building; 
 
-       Mixed-use, Other: Whole Building, Common Areas, Tenant Space; 
 
-       Office, Low-Rise: Whole Building, Shared Services, Common Areas, Tenant 
Space and Outdoor/Exterior/Parking; 
 
-       Office, Mid-Rise Office: Shared Services; 
 
-       Retail High Street: Common Areas; and 
 
-       Retail Warehouse: Tenant Space and Outdoor/Exterior Area/Parking 
 
-       Energy procured directly by tenants is not reported. 
 
-       Estimation: 0% electricity and gas data have been estimated through 
prorating. 
 
-       Where appropriate (for relevant assets) consumption data has been 
adjusted to reflect the Company's share of asset ownership. 
 
-       Coverage relates to the number of managed assets for which data is 
reported. 
 
-       Renewable electricity (%) is calculated according to the attributes of 
energy supply contracts as at 31 December 2020 and only reflects renewable 
electricity procured under a 100% 'green tariff' (i.e. where generation is from 
100% renewable sources). The renewables percentage of standard (non-'green 
tariff') energy supplies are not currently known and therefore has not been 
included within this number. As far as we know, no renewable fuel was consumed 
during the reporting period and therefore a percentage renewable fuel figure is 
not presented here. 
 
-       All energy was procured from a third-party supplier. No 
'self-generated' renewable energy was consumed during the reporting period and 
is therefore not presented here. 
 
-       Intensity: An energy intensity kWh/m2 is reported for assets. The 
numerator is landlord-managed energy consumption and the denominator is net 
lettable floor area (m2). For Retail High Street, common parts' energy 
consumption is divided by common parts area (m2). 
 
-       Please see the Objectives and Targets section in the CSR Report page 32 
for narrative commentary on historical trends and programmes in place to 
improve performance. 
 
Like-for-like energy consumption (Elec-LfL; Fuels-LfL; Energy-Int) 
 
The table below sets out the like-for-like landlord-obtained energy consumption 
from the Company's managed portfolio by sector. 
 
                                                          Total electricity                Total fuel consumption     Energy 
                                                                consumption                                 (kWh)  Intensity 
                                                                      (kWh)                                         (kWh/m2) 
 
Sector                                               2019      2020       %      2019      2020  % Change    2019     2020 
                                                                     Change 
 
Mixed-use, Office/Retail                          285,074   279,179     -2%                                 121.7    119.2 
 
Coverage                                              1/1       1/1                                                    1/1 
 
Mixed-use, Other                                2,424,786 1,690,178    -30%                                 169.5    118.2 
 
Coverage                                              1/1       1/1                                                    1/1 
 
Office, Low-Rise                                1,994,121 1,620,182    -19% 1,758,557 1,477,145 -16%        129.4    106.8 
 
Coverage                                              9/9       9/9               8/8       8/8                      10/10 
 
Office, Mid-Rise                                  308,871   279,792     -9%   431,247   378,210 -12%        184.0    163.6 
 
Coverage                                              1/1       1/1               1/1       1/1                        1/1 
 
Retail, High Street                                17,618    16,795     -5%                                   9.2      8.8 
 
Coverage                                              1/1       1/1                                                    1/1 
 
Retail, Warehouse 
 
Coverage 
 
Sub-Total                                       5,030,471 3,886,127    -23% 2,189,805 1,855,355 -15% 
 
  Coverage                                          13/13     13/13               9/9       9/9 
 
Total (Electricity and fuel)                    7,220,275 5,741,482    -20% 
 
  Coverage                                          14/14     14/14 
 
Renewable electricity %                              100%      100% 
 
                                                    14/14     14/14 
Coverage 
 
 
-       Like-for-like excludes assets that were purchased, sold, under 
refurbishment or subject to a significant change in the scope of reported data 
during the two years reported. 
 
-       Consumption data relates to the managed portfolio only: 
 
-       Industrial, Distribution Warehouse: Tenant Space and Outdoor/Exterior 
Area/Parking; 
 
-       Leisure: Common Areas, Tenant Space and Outdoor/Exterior Area/Parking; 
 
-       Mixed use, Office/Retail: Whole Building; 
 
-       Mixed use, Other: Whole Building, Common Areas, Tenant Space; 
 
-       Office, Low-Rise: Whole Building, Shared Services, Common Areas, Tenant 
Space and Outdoor/Exterior/Parking; 
 
-       Office, Mid-Rise Office: Shared Services; 
 
-       Retail High Street: Common Areas; and 
 
-       Retail Warehouse: Tenant Space and Outdoor/Exterior Area/Parking 
 
-       Estimation: 0% electricity and gas data have been estimated through 
prorating. 
 
-       Where appropriate (for relevant assets), consumption data has been 
adjusted to reflect the Company's share of ownership. 
 
-       Coverage relates to the number of managed assets for which data is 
reported. 
 
-       Intensity: An energy intensity kWh/m2 is reported for assets within the 
like-for-like portfolio. The numerator is landlord-managed energy consumption 
and the denominator is net lettable floor area (m2). For Retail High Street, 
common parts energy consumption is divided by the common parts area (m2). 
 
Refer to Objectives and Targets section in the CSR Report on page 32 for 
narrative commentary on historical trends and programmes in place to improve 
performance. 
 
Greenhouse gas emissions (GHG-Dir-Abs; GHG-Indir-Abs; GHG-Int) 
 
The table below sets out the Company's greenhouse gas emissions by sector. 
 
                    Absolute         Absolute     Like for like emissions     Like for like 
                   emissions        intensity             (tCO²e)               intensity 
                    (tCO²e)        (kg CO2e/m2)                               (kg CO2e/m2) 
 
Sector             2019     2020    2019     2020      2019   2020 Change           2019   2020 
 
Industrial, 
Distribution 
Warehouse 
 
Scope 1                      3.9     0.2      0.3 
 
Scope 2            22.5     31.4 
 
Coverage            5/5      6/6     5/5      6/6 
 
Leisure 
 
Scope 1            13.4              5.9      3.7 
 
Scope 2            68.6     50.9 
 
Coverage            1/1      1/1     1/1      1/1 
 
Mixed use, 
Office/Retail 
 
Scope 1                             31.2     27.8                                   31.2   27.8 
 
Scope 2            73.0     65.1                       73.0   65.1   -11% 
 
Coverage            1/1      1/1     1/1      1/1       1/1    1/1                          1/1 
 
Mixed use, 
Other 
 
Scope 1             0.2             28.1     18.2                                   43.4   27.6 
 
Scope 2           647.4    419.0                      620.7  394.3   -36% 
 
Coverage            2/2      2/2     2/2      2/2       1/1    1/1                          1/1 
 
Office, 
Low-Rise 
 
Scope 1           334.8    278.8    30.1     23.3     323.6  271.8   -16%           28.8   22.4 
 
Scope 2           539.4    396.6                      510.5  378.0   -26% 
 
Coverage          10/10    10/10   10/10    10/10     10/10  10/10                        10/10 
 
Office, 
Mid-Rise 
 
Scope 1            79.3     69.6    39.4     33.5      79.3   69.6   -12%           39.4   33.5 
 
Scope 2            79.1     65.3                       79.1   65.3   -17% 
 
Coverage            1/1      1/1     1/1      1/1       1/1    1/1                          1/1 
 
Retail, High 
Street 
 
Scope 1                              2.4      2.1                                    2.4    2.1 
 
Scope 2             4.5      3.9                        4.5    3.9   -13% 
 
Coverage            1/1      1/1     1/1      1/1       1/1    1/1                          1/1 
 
Retail, 
Warehouse 
 
Scope 1                      4.4     0.9      1.7 
 
Scope 2            10.1     14.9 
 
Coverage            1/1      1/1              1/1 
 
Total Scope 1       428      357                        403    341   -15% 
 
Total Scope 2     1,445    1,047                      1,288    907   -30% 
 
Total Scope 1 &   1,872    1,404                      1,691  1,248   -26% 
2 
 
Coverage          22/22    23/23                      14/14  14/14 
 
 
-       Like-for-like excludes assets that were purchased, sold, under 
refurbishment or subject to a significant change in the scope of reported data 
during the two years reported. 
 
-       Scope 1 GHG emissions relate to the use of onsite natural gas. 
 
-       Scope 2 GHG emissions relate to the use of electricity. 
 
-       The Company's greenhouse gas (GHG) inventory has been developed as 
follows: 
 
-       Fuels/electricity GHG emissions factors taken from the UK government's 
Greenhouse Gas Reporting Factors for Company Reporting (2019 and 2020). 
 
-       GHG emissions from electricity (Scope 2) are reported according to the 
'location-based' approach. 
 
-       GHG emissions are presented as tonnes of carbon dioxide equivalent (tCO 
²e) and GHG intensity is presented as kilograms of carbon dioxide equivalent 
(kgCO2e), where available greenhouse gas emissions conversion factors allow. 
 
-       Emissions data relates to the managed portfolio only: 
 
-       Industrial, Distribution Warehouse: Tenant Space and Outdoor/Exterior 
Area/Parking 
 
-       Leisure: Common Areas, Tenant Space and Outdoor/Exterior Area/Parking 
 
-       Mixed-use, Office/Retail: Whole Building 
 
-       Mixed-use, Other: Whole Building, Common Areas, Tenant Space 
 
-       Office, Low-Rise: Whole Building, Shared Services, Common Areas, Tenant 
Space and Outdoor/Exterior/Parking 
 
-       Office, Mid-Rise Office: Shared Services 
 
-       Retail High Street: Common Areas 
 
-       Retail Warehouse: Tenant Space and Outdoor/Exterior Area/Parking 
 
-       Emissions associated with energy procured directly by tenants is not 
reported. 
 
-       Estimation: 0% electricity and gas data have been estimated through 
prorating. 
 
-       Where appropriate (for relevant assets), emissions data has been 
adjusted to reflect the Company's share of asset ownership. 
 
-       Coverage relates to the number of managed assets for which data is 
reported. 
 
-       Intensity: An intensity kgCO2e/m2 is reported for absolute consumption 
and for assets within the like-for-like portfolio. The numerator is 
landlord-managed GHG emissions from energy consumption and the denominator is 
net lettable floor area (m2). For Retail High Street, GHG emissions from common 
parts energy consumption is divided by common parts area (m2). 
 
-       Refer to the Objectives and Targets Section in the CSR report on page 
32 for the narrative commentary on historical trends and programmes in place to 
improve performance. 
 
Water (Water-Abs; Water-LfL; Water-Int) 
 
The table below sets out water consumption for assets managed by the Company. 
 
                  Absolute water      Absolute          Like-for-like       Like-for-like 
                       (m³)          intensity           water (m³)           intensity 
                                      (m³/m²)                                  (m³/m²) 
 
Sector               2019     2020    2019    2020    2019    2020   Change    2019    2020 
 
Leisure               144      136    0.06    0.05     144     136      -6%    0.06    0.05 
 
Coverage              1/1      1/1     1/1     1/1     1/1     1/1                      1/1 
 
Mixed use, Other    5,644    4,280    0.30    0.30   5,644   4,280     -24%    0.39    0.30 
 
Coverage              2/2      1/1     2/2     1/1     1/1     1/1                      1/1 
 
Office, Low-Rise   13,231    9,726    0.63    0.47  13,231   9,726     -26%    0.63    0.47 
 
Coverage              8/8      8/8     8/8     8/8     8/8     8/8                      8/8 
 
Office, Mid-Rise       13      143    0.00    0.04 
 
Coverage              1/1      1/1     1/1     1/1 
 
Retail, High        2,309    1,194    1.21    0.62   2,309   1,194     -48%    1.21    0.62 
Street 
 
Coverage              1/1      1/1     1/1     1/1     1/1     1/1                      1/1 
 
Retail,                        129            0.01 
Warehouse 
 
Coverage                       1/1             1/1 
 
Total              21,342   15,608                  21,328  15,337     -28% 
 
Coverage            13/13    13/13                   11/11   11/11 
 
 
-       Like-for-like excludes assets that were purchased, sold, under 
refurbishment or subject to a significant change in the scope of reported data 
during the two years reported. 
 
-       Consumption data relates to the managed portfolio only: 
 
-       Leisure: Common Areas 
 
-       Mixed-use, Other: Whole Building and Common Areas 
 
-       Office, Low-Rise: Whole Building, Tenant Space and Common Areas 
 
-       Office, Mid-Rise: Tenant Space 
 
-       Retail, High Street: Common Areas 
 
-       Retail, Warehouse: Tenant Space 
 
-       Estimation: 0.8% water data have been estimated through prorating. 
 
-       Where appropriate (for relevant assets), consumption data has been 
adjusted to reflect the Company's share of ownership. 
 
-       Coverage relates to the number of managed assets for which data is 
reported. 
 
-       Intensity: An intensity m3/m2 is reported for absolute consumption and 
for assets within the like-for-like portfolio. For Office, Mid-rise, and 
Retail, Warehouse the numerator is landlord-managed whole building water 
consumption and the denominator is net lettable floor area (m2). For Mixed-use, 
Other and Office, Low Rise landlord-managed whole building or common parts 
water consumption is divided by net lettable area or common parts area (m2). 
For Leisure and Retail, High Street landlord-managed common parts' water 
consumption is divided by common parts area (m2). 
 
-       All water was procured from a municipal supply. As far as we are aware, 
no surface, ground, rainwater or wastewater from another organisation was 
consumed during the reporting period and therefore is not presented here. 
 
-       Refer to the Objectives and Targets Section in the CSR report on page 
33  for the narrative commentary on historical trends and programmes in place 
to improve performance. 
 
Waste (Waste-Abs; Waste-LfL) 
 
The table below sets out waste managed by the Company by reported disposal 
route and sector. 
 
                                 Absolute tonnes                       Like for like tonnes 
 
                                       2019           2020                2019           2020 
                                                                                                % change 
                        Tonnes            %  Tonnes      %   Tonnes      %    Tonnes        % 
 
Leisure    Recycled      143.9        44.8%    85.1  44.5%    143.9  44.8%     85.06    44.5%     -40.9% 
 
           Incineration  177.0        55.2%   106.0  55.5%    177.0  55.2%     106.0    55.5%     -40.1% 
           with energy 
           recovery 
 
           Unknown         0.0         0.0%     0.0   0.0%      0.0   0.0%       0.0     0.0%       0.0% 
 
           Landfill        0.0         0.0%     0.0   0.0%      0.0   0.0%       0.0     0.0%       0.0% 
 
           Total         320.9                191.0           320.9            191.0              -40.5% 
 
           Coverage        1/1                  1/1             1/1              1/1 
 
Mixed-use, Recycled        0.2         4.0%     3.2  31.4%      0.2   4.0%      3.20    31.4%    2033.3% 
Office/ 
Retail     Incineration    3.6        96.0%     7.0  68.6%      3.6  96.0%      7.00    68.6%      94.4% 
           with energy 
           recovery 
 
           Landfill 
 
           Total           3.8                 10.2             3.8             10.2              172.0% 
 
           Coverage        1/1                  1/1             1/1              1/1 
 
Mixed-use, Recycled      284.2        45.8%   204.4  51.9%    284.2  45.8%     204.4    51.9%     -28.1% 
 Other 
           Incineration  336.0        54.2%   189.6  48.1%    336.0  54.2%     189.6    48.1%     -43.6% 
           with energy 
           recovery 
 
           Landfill 
 
           Total             620.16          394.0               620.1               394.0        -36.5% 
 
           Coverage         2/2               2/2            2/2                    2/2 
 
Office,    Recycled        63.5   40.2%      54.1    54.4%  63.5       40.2%       54.1   54.4%   -14.9% 
Low-Rise 
           Incineration    94.7   59.9%      45.3    45.6%  94.7       59.8%       45.3   45.6%   -52.1% 
           with energy 
           recovery 
 
           Landfill 
 
           Total          158.2              99.4          158.22                   99.4           -37.2% 
 
           Coverage         9/9               9/9            9/9                    9/9 
 
Office,    Recycled        18.2   70.3%      20.6    69.5% 
Mid-Rise 
           Incineration     7.7   29.7%       9.1    30.5% 
           with energy 
           recovery 
 
           Landfill 
 
           Total           25.9              29.6 
 
           Coverage         1/1               1/1 
 
Retail,    Recycled        82.9   96.5%      49.8    83.1%   82.       96.5%       49.8   83.1%   -39.9% 
High                                                           9 
Street 
           Incineration    3.00    3.5%      10.2    16.9%  3.00        3.5%       10.2   16.9%   239.7% 
           with energy 
           recovery 
 
           Landfill 
 
           Total           85.9              60.0           85.9                   60.0           -30.2% 
 
           Coverage         1/1               1/1            1/1                    1/1 
 
Total      Recycled       592.8   48.8%     417.1    53.2%  574.6       48.3%      396.5   52.5%   -31.0% 
 
           Incineration   621.9   51.2%     367.1    46.8%  614.2       51.7%      358.1   47.5%   -41.7% 
           with energy 
           recovery 
 
           Landfill 
 
           Total          1,215               784          1,189                    755           -36.5% 
 
           Coverage       15/15             15/15          14/14                  14/14 
 
 
-       Whilst zero waste is sent directly to landfill, a residual component of 
the 'recycled' and 'incineration with energy recovery' waste streams may end up 
in landfill. 
 
-       Like-for-like excludes assets that were purchased, sold, under 
refurbishment or subject to a significant change in the scope of reported data 
during the two years reported. 
 
-       Waste data relates to the managed portfolio only. 
 
-       Waste management procured directly by tenants is not reported. 
 
-       The Company has no waste management responsibilities for Industrial or 
Retail, Warehouse 
 
-       Where appropriate (for relevant assets), waste data has been adjusted 
to reflect the Company's share of asset ownership. 
 
-       Coverage relates to the number of managed assets for which data is 
reported. 
 
-       Reported data relates to non-hazardous waste only. Hazardous waste is 
not reported as due to the low volumes produced it is not considered material. 
Furthermore, robust tonnage data on the small quantities that are produced is 
not available. 
 
-       Refer to the Objectives and Targets Section in the CSR report on page 
34 for the narrative commentary on historical trends and programmes in place to 
improve performance. 
 
Sustainability certification (Cert-Tot): Green building certificates 
 
The table below sets out the proportion of the Company's total portfolio with a 
Green Building Certificate by floor area. 
 
Rating                                                 Portfolio by floor area (%) 
 
Mixed-use, Other (BREEAM Fit Out/ Refurbishment,                    3% 
BREEAM In Use) 
 
Offices, Low and Mid-rise (BREEAM In-Use)                           6% 
 
All other sectors                                                   0% 
 
Total                                                               9% 
 
Coverage                                                           100% 
 
-       Green building certificate records for the Company are provided as at 
31st March 2021 by portfolio floor area. 
 
-       Data provided includes managed and non-managed assets (i.e. the whole 
portfolio), excluding two assets that were bought at the end of the reporting 
period, which will be onboarded and captured in next year's reporting. 
 
-       Where appropriate (for relevant assets), floor area coverage data has 
been adjusted to reflect the Company's share of ownership. 
 
Sustainability certification (Cert-Tot): Energy performance certificates 
 
The table below sets out the proportion of the Company's total portfolio with 
an Energy Performance Certificate by floor area. 
 
Energy performance certificate rating                    Portfolio by floor area (%) 
 
A                                                                     1 
 
B                                                                     4 
 
C                                                                     31 
 
D                                                                     25 
 
E                                                                     9 
 
F                                                                     2 
 
G                                                                     1 
 
Exempt                                                                2 
 
No EPC                                                                25 
 
Coverage                                                             100% 
 
-       Energy Performance Certificate (EPC) records for the Company are 
provided as at 31st March 2021 by portfolio floor area. 
 
-       Data provided includes managed and non-managed assets (i.e. the whole 
portfolio), excluding two assets that were bought at the end of the reporting 
period, which will be onboarded and captured in next year's reporting. 
 
-       Where appropriate (for relevant assets), floor area coverage data has 
been adjusted to reflect the Company's share of asset ownership, including 25% 
of the net lettable area of City Tower, Manchester (reflecting the Company's 
25% ownership share) and 50% of Store Street, London (reflecting the Company's 
50% ownership share). 
 
-       EPCs are available for 76% of the portfolio by floor area. In general 
terms, since the introduction of the EPC Regulations in 2008, EPCs are required 
for the letting of units or buildings or the sale of buildings. In addition, 
the UK Minimum Energy Efficiency Standards regulations ('MEES') came into force 
for commercial buildings on 1st April 2019 and require a minimum EPC rating of 
E for new lettings; the rules apply to all leases from 1 April 2023. The EPCs 
for the portfolio will be managed to ensure compliance with the MEES 
regulations. The F&G EPCs relate to six units in six assets. These are being 
reviewed in 2021 and 2022 to improve the EPC ratings where feasible. 
 
Sustainability Performance Measures (Social) 
 
EPRA's Sustainability Best Practices Recommendations Guidelines 2017 ("EPRA's 
Guidelines") include Social and Governance reporting measures to be disclosed 
for the entity i.e. the Company. The Company is an externally managed Real 
Estate Investment Trust and has no direct employees. A number of these Social 
Performance measures relate to entity employees and therefore these measures 
are not relevant for reporting at the entity level. The Investment Manager to 
the Company, Schroder Real Estate Investment Management Limited, is part of 
Schroders PLC which has responsibility for the employees that support the 
Company. The Company aims to comply with EPRA's Guidelines and therefore has 
included Social and Governance Performance Measure disclosures in this report. 
However, these are presented as appropriate for the activities and 
responsibilities of Schroder Real Estate Investment Trust Limited (the 
"Company"), Schroders PLC or the Investment Manager, Schroder Real Estate 
Investment Management Limited. 
 
The Schroders PLC Annual Report and Accounts for the 12 months to 31 December 
2020 supports the performance measures in relation to the Investment Manager as 
set out below. Schroders PLC's principles in relation to people including 
diversity, gender pay gap, values, employee satisfaction survey, wellbeing and 
retention can be found at: 
 
-  https://www.schroders.com/en/sysglobalassets/annual-report/2020/documents/ 
Schroders_2020AnnualReport.pdf 
 
-  https://www.schroders.com/en/working-here/inclusion-and-diversity/ 
 
-  https://www.schroders.com/en/working-here/inclusion-and-diversity/ 
gender-pay-gap-report-2020/ 
 
Employee gender diversity (Diversity-Emp) 
 
As at 31 March 2021 the Company Board comprised of four members: 1 (25% 
female); 3 (75% male). 
 
For further information on Schroders PLC employee gender diversity, covering 
more employee categories, please refer to Schroders 2020 Annual Report and 
Accounts (page 37): 
 
https://www.schroders.com/en/sysglobalassets/annual-report/2020/documents/ 
Schroders_2020AnnualReport.pdf 
 
Gender pay ratio (Diversity-Pay) 
 
The remuneration of the Company Board is set out on page 63 of this Report and 
Accounts document. 
 
Schroders PLC female representation and gender pay report can be found in 
Schroders 2020 Annual Report and Accounts (pages 37, 87 and 93): 
 
https://www.schroders.com/en/sysglobalassets/annual-report/2020/documents/ 
Schroders_2020AnnualReport.pdf 
 
Information on Diversity and Inclusion at Schroders can be found at: 
 
-        https://www.schroders.com/en/people/diversity-and-inclusion 
 
-        https://www.schroders.com/en/working-here/inclusion-and-diversity/ 
gender-pay-gap-report-2020/ 
 
The following are reported for Schroders in relation to the Investment 
Management of the Company: 
 
Training and development (Emp-Training) 
 
Schroders requires employees to complete mandatory internal training. Schroders 
encourages all staff with professional qualifications to maintain the training 
requirements of their respective professional body. 
 
Employee performance appraisals (Emp-Dev) 
 
The Schroders' performance management process requires annual performance 
objective setting and annual performance reviews for all staff. The Investment 
Manager confirms that performance appraisals were completed for 100% of 
investment staff relevant to the Company in 2020. 
 
The following are reported for Schroders PLC: 
 
Employee turnover and retention (Emp-Turnover) 
 
For Schroders' PLC turnover and retention rates please refer to Schroders 
Annual Report and Accounts (page 22): https://www.schroders.com/en/ 
sysglobalassets/annual-report/2020/documents/Schroders_2020AnnualReport.pdf 
 
Employee health and safety (H&S-Emp) 
 
Schroders PLC does not include employee health and safety performance measures 
in its Annual Report and Accounts. 
 
The following are reported in relation to the assets held in the Company's 
portfolio over the reporting period to 31 December 2020: 
 
Asset health and safety assessments (H&S-Asset) 
 
The table below sets out the proportion of the Company's total portfolio where 
health and safety impacts were assessed or reviewed for compliance or 
improvement. 
 
                             Portfolio by floor area (%) 
 
                             2019                      2020 
 
All sectors                  100%                      100% 
 
Asset health and safety compliance (H&S-Comp) 
 
The table below sets out the number of incidents of non-compliance with 
regulations/and or voluntary codes identified. 
 
                             Number of incidents 
 
                             2019                      2020 
 
All Sectors                  0                         0 
 
Community engagement, impact assessments and development programmes (Comty-Eng) 
 
The table below sets out the proportion of the Company's total portfolio that 
completed local community engagement, impact assessments and/or development 
programs. 
 
                             Portfolio by number assets (%) 
 
                             2019                       2020 
 
Industrial, Distribution     0%                         7.5% 
Warehouse 
 
Mixed-use, Other             2.5%                       2.5% 
 
Office, Low-rise             12.5%                      12.5% 
 
Office, Mid-rise             0%                         2.5% 
 
All other sectors            0%                         0% 
 
Total                        15%                        25% 
 
Sustainability Performance Measures (Governance) 
 
Composition of the highest governance body (Gov-Board) 
 
The Board of the Company comprised 4 Non-Executive independent Directors (0 
executive board members) for the 12 months to 31 March 2021. 
 
·      The average tenure of the four directors to 31 March is five years and 
ten months; and 
 
·      The number of directors with competencies relating to environmental and 
social topics is two and their experience can be seen in their biographies. 
 
Nominating and selecting the highest governance body (Gov-Select) 
 
The role of the Nomination Committee, chaired by Lorraine Baldry, is to 
consider and make recommendations to the Board on its composition so as to 
maintain an appropriate balance of skills, experience and diversity, including 
gender, and to ensure progressive refreshing of the Board. On individual 
appointments, the Nomination Committee leads the process and makes 
recommendations to the Board. 
 
Before the appointment of a new director, the Nomination Committee prepares a 
description of the role and the capabilities required for a particular 
appointment. While the Nomination Committee is dedicated to selecting the best 
person for the role, it aims to promote diversification and the Board 
recognises the importance of diversity. The Board agrees that its members 
should possess a range of experience, knowledge, professional skills and 
personal qualities as well as the independence necessary to provide effective 
oversight of the affairs of the Company. 
 
Process for managing conflicts of interest (Gov-Col) 
 
The Company's Conflicts of Interest Policy sets out the policy and procedures 
of the Board and the Company Secretary for the management of conflicts of 
interest. 
 
Streamlined Energy and Carbon Reporting 
 
Schroder Real Estate Investment Trust plc (the "Company") is a real estate 
investment company with a premium listing on the Official List of the Financial 
Conduct Authority and whose shares are traded on the Main Market of the London 
Stock Exchange (ticker: SREI). 
 
The Company is a Real Estate Investment Trust ('REIT') and benefits from the 
various tax advantages offered by the UK REIT regime. The Company continues to 
be declared as an authorised closed-ended investment scheme by the Guernsey 
Financial Services Commission under section 8 of the Protection of Investors 
(Bailiwick of Guernsey) Law, 1987, as amended and the Authorised Closed-ended 
Collective Investment Schemes Rules 2008. 
 
The Board and Investment Manager, in recognition of the importance it places on 
sustainability, has voluntarily included a report for the Company aligned with 
the UK Companies (Directors' Report) and Limited Liability Partnerships (Energy 
and Carbon Report) Regulations 2018, (the Regulations) on its UK energy use, 
associated Scope 1 and 2 greenhouse gas (GHG) emissions, an intensity metric 
and, where applicable, global energy use. This reporting is also referred to as 
Streamlined Energy and Carbon Reporting (SECR). 
 
This Energy and Carbon Report applies for the Company's annual report for the 
12 months to 31 March 2021. The statement has, however, been prepared for the 
calendar year, the 12 months to 31 December 2020, to report annual figures for 
emissions and energy use for the available period for which such information is 
available. In addition, the regulations advise providing a narrative on energy 
efficiency actions taken in the previous financial year. 
 
As a property company, energy consumption and emissions result from the 
operation of buildings. The reporting boundary has been scoped to those held 
properties where the Company retained operational control: where the Company is 
responsible for operating the entire building, shared services (e.g. common 
parts' lighting, heating and air conditioning), external lighting and/or void 
spaces. 'Operational control' has been selected as the reporting boundary (as 
opposed to 'financial control' or 'equity share') as this reflects the portion 
of the portfolio where the Company can influence operational procedures and, 
ultimately, sustainability performance. This incorporates consumption in tenant 
areas, where the landlord procures energy for the whole building. As at 31 
December 2020, there were 25 managed properties within the portfolio, of which 
two properties were purchased at the end of the reporting period and so have 
not been captured in the reported data. This compares to 22 managed properties 
in the portfolio during 2019 which have been included in the reporting. All 
Company assets are located in the UK. 
 
The Company is not directly responsible for any GHG emissions/energy usage at 
single let/FRI assets nor at multi-let assets where the tenant is a 
counterparty to the energy contract. These emissions form part of the wider 
value chain (i.e. 'Scope 3') emissions, which are not monitored at present. As 
a real estate company with no direct employees or company owned vehicles as at 
31 December 2020, there is no energy consumption or emissions associated with 
travel or occupation of corporate offices to report. Fugitive emissions 
associated with refrigerant losses from air conditioning equipment are widely 
understood by the industry to be less material than other sources of emissions 
and data is often not collected. The Company received fugitive emissions data 
for the reporting year and this confirmed that they are de minimis and 
consequently these have been excluded from the reporting. 
 
In addition to reporting absolute energy consumption and GHG emissions, the 
Company has reported separately on performance within the 'like-for-like' 
portfolio, as well as providing intensity ratios, where appropriate. The 
like-for-like portfolio includes buildings where each of the following 
conditions is met: 
 
.             Owned for the full 24-month period (sales/acquisitions are 
excluded); 
 
.             No major renovation or refurbishment has taken place; 
 
.             At least 24 months data is available; 
 
Note also that buildings where tenant voids may have led to additional utility 
responsibility being temporarily met by the Landlord are also excluded. 
 
For the intensity ratios, the denominator determined to be relevant to the 
business is square metres of net lettable area for most sectors, including 
Industrial Distribution Warehouses, Leisure, Mixed-use, Offices and Retail 
Warehouses. For Retail High street, the most relevant denominator is the common 
parts area. The intensity ratio is expressed as: 
 
.             Energy: kilowatt hours per metre squared (net lettable area or 
common parts area) per year or kWh/m2/yr. 
 
.             GHG: kilograms carbon dioxide equivalent per metre square (net 
lettable area or common parts area) per year or kgCO2e/m2/yr. 
 
Energy Consumption and Greenhouse Gas Emissions 
 
The table below sets out the Company's energy consumption. 
 
                                Absolute Energy      Like-for-like Energy (kWh) 
                                     (kWh) 
 
                                   2019      2020       2019       2020   % change 
 
Gas                           2,324,640 1,938,154  2,189,805  1,855,355       -15% 
 
Electricity                   5,642,582 4,488,140  5,030,471  3,886,127       -23% 
 
Total                         7,967,222 6,426,294  7,220,275  5,741,482       -20% 
 
The table below sets out the Company's greenhouse gas emissions. 
 
                                           Absolute       Like-for-like Emissions 
                                       Emissions (tCO2e)          (tCO2e) 
 
                                          2019      2020     2019     2020 % change 
 
Scope 1 (Direct emissions from gas         428       357      403      341     -15% 
consumption) 
 
Scope 2 (Indirect emissions from         1,445     1,047    1,288      907     -30% 
electricity) 
 
Total                                    1,872     1,404    1,691    1,248     -26% 
 
The like-for-like energy consumption for the 2020 calendar year for the managed 
assets held within the Company has decreased by 20%; the greenhouse gas 
emissions have decreased by 26%. Please note, changes in occupancy and building 
operations during the COVID-19 period will have had an impact on performance 
and so the 2020 reporting year is not directly comparable to 2019. However, 
energy performance improvement opportunities continued to be considered across 
the portfolio. Initiatives undertaken during the reporting year include boiler 
and hot water system replacements/upgrades, wall and roof insulation upgrades, 
LED lighting upgrades and installation of lighting and ventilation occupancy 
sensors. Automatic meter readers are also being rolled out to all landlord 
electricity supplies for improved energy monitoring. 
 
The table below sets out the Company's energy and greenhouse gas emissions 
intensities by sector. 
 
                                   Energy Intensities (kWh    Emissions Intensities 
                                           per m2)               (tCO2e per m2) 
 
                                         2019          2020          2019        2020 
 
Industrial Distribution                   0.8           1.4           0.2         0.3 
Warehouses 
 
Leisure                                  24.6          15.7           5.9         3.7 
 
Mixed-use, Office/Retail                121.7         119.2          31.2        27.8 
 
Mixed-use, Other                        109.8          77.9          28.1        18.2 
 
Office, Low Rise                        135.3         110.8          30.1        23.3 
 
Office, Mid Rise                          184         163.6          39.4        33.5 
 
Retail High Street                        9.2           8.8           2.4         2.1 
 
Retail Warehouse                          3.4           7.7           0.9         1.7 
 
Methodology 
 
·      All energy consumption and GHG emissions reported occurred at the 
Company assets, all of which are located in the UK. 
 
·      Energy consumption data is reported according to automatic meter 
readings, manual meter readings or invoice estimates. Historic energy and 
consumption data have been restated where more complete and/or accurate records 
have become available. Where required, missing consumption data has been 
estimated through pro rata extrapolation. Data has been adjusted to reflect the 
Company's share of asset ownership, where relevant. 
 
·      The sustainability content located on throughout the SREIT annual report 
for the year ending 31st December 2020 has been assured in accordance with 
AA1000. The same data set has been used to compile this data report. The full 
Assurance Statement can be found at the following link: 
 
https://www.schroders.com/en/uk/adviser/fund-centre/funds-in-focus/ 
investment-trusts/schroders-investment-trusts/ 
schroder-real-estate-investment-trust/sustainability/ 
 
·      The Company's GHG emissions are calculated according to the principles 
of the Greenhouse Gas (GHG) Protocol Corporate Standard. 
 
o  The Company's Greenhouse Gas Emissions are reported as tonnes of carbon 
dioxide equivalent (tCO2e), which includes the following emissions covered by 
the GHG Protocol (where relevant and available greenhouse gas emissions factors 
allow): carbon dioxide (CO2), methane (CH4), hydrofluorocarbons (HFCs), nitrous 
oxide (N20), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen 
triflouride (NF3). 
 
o  GHG emissions from electricity (Scope 2) are reported according to the 
'location-based' approach. 
 
o  The following greenhouse gas emissions conversion factors and sources have 
been applied: 
 
Country      Emissions     GHG Emissions Emissions Factor Data Source 
             Source        Factor 
 
United       Electricity   0.2560kgCO2e  UK Government's GHG Conversion Factors for 
Kingdom      2019                        Company Reporting (2019) 
 
             Electricity   0.2333kgCO2e  UK Government's GHG Conversion Factors for 
             2020                        Company Reporting (2020) 
 
             Gas           0.184kgCO2e 
 
Energy Efficiency Actions 
 
Environmental data management system and quarterly reporting 
 
Environmental data for the Company is collated by sustainability consultants 
Evora Global, supported by their proprietary environmental data management 
system SIERA. Energy, water, waste and greenhouse gas emissions' data are 
collected and validated for all assets where the portfolio has operational 
control on a quarterly basis. 
 
Energy target, improvement programme and net zero carbon 
 
The Investment Manager has an energy and greenhouse gas emissions performance 
reduction target to achieve an 18% reduction in landlord-controlled energy 
consumption by 2020/21 (2015/16 baseline) across all UK-managed assets which 
includes assets of the Company. This is accompanied by a target of a 32% 
reduction in landlord-controlled greenhouse gas emissions by 2020/21 (2015/16 
baseline); this target is inclusive of decarbonisation of the UK electricity 
grid over recent years. 
 
The Investment Manager together, with sustainability consultants Evora Global 
and property manager MAPP, looks to identify and deliver energy and greenhouse 
gas emissions reductions on a cost-effective basis. The programme involves 
reviewing all managed assets within the Company and identifying and 
implementing improvement initiatives, where viable. The process is of continual 
review and improvement. 
 
Energy performance improvement initiatives undertaken at several assets during 
the reporting period include boiler replacements/upgrades, wall and roof 
insulation upgrades, upgrades to Automatic Meter Readers for improved energy 
monitoring, LED upgrades and installation of lighting and ventilation occupancy 
sensors. 
 
Recognising the need for the real estate industry to address its carbon impact, 
the Investment Manager joined other members of the Better Buildings Partnership 
(BBP) in September 2019 to sign the Member Climate Change Commitment and in 
December 2020 published its 'Pathway to Net Zero Carbon' - which can be found 
here: 
 
https://www.schroders.com/en/sysglobalassets/email/uk/realestate/2020/ 
schroder-real-estate-net-zero-carbon-pathway-december-2020_1621372_v1.pdf. 
 
New energy and carbon targets will be established for the Company in 2021 in 
the context of a net zero carbon ambition. 
 
Renewable electricity tariffs and carbon offsets 
 
The Investment Manager has an objective to procure 100% renewable electricity 
for all landlord-controlled supplies for which it has responsibility, which 
includes the assets of the Company, by 2025. As at 31 December 2020, 97% of the 
Company's landlord-controlled electricity was on renewable tariffs. No carbon 
offsets were purchased during the reporting period. 
 
Report of the Depositary to the Shareholders 
 
Northern Trust (Guernsey) Limited has been appointed as Depositary to Schroder 
Real Estate Investment Trust Limited (the "Company") in accordance with the 
requirements of Article 36 and Articles 21(7), (8) and (9) of the Directive 
2011/61/EU of the European Parliament and of the Council of 8 June 2011 on 
Alternative Investment Fund Managers and amending Directives 2003/41/EC and 
2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the "AIFM 
Directive"). 
 
We have enquired into the conduct of Schroder Real Estate Investment Management 
Limited (the "AIFM") for the year ending 31st March 2021, in our capacity as 
Depositary to the Company. 
 
This report, including the review provided below, has been prepared for and 
solely for the Shareholders in the Company. We do not, in giving this report, 
accept or assume responsibility for any other purpose or to any other person to 
whom this report is shown. 
 
Our obligations as Depositary are stipulated in the relevant provisions of the 
AIFM Directive and the relevant sections of Commission Delegated Regulation 
(EU) No 231/2013 (collectively the "AIFMD legislation"). 
 
Amongst these obligations is the requirement to enquire into the conduct of the 
AIFM and the Company and their delegates in each annual accounting period. 
 
Our report shall state whether, in our view, the Company has been managed in 
that period in accordance with the AIFMD legislation. It is the overall 
responsibility of the AIFM to comply with these provisions. If the AIFM or 
their delegates have not so complied, we as the Depositary will state why this 
is the case and outline the steps which we have taken to rectify the situation. 
 
The Depositary and its affiliates is or may be involved in other financial and 
professional activities which may on occasion cause a conflict of interest with 
its roles with respect to the Company. The Depositary will take reasonable care 
to ensure that the performance of its duties will not be impaired by any such 
involvement and that any conflicts which may arise will be resolved fairly and 
any transactions between the Depositary and its affiliates and the Company 
shall be carried out as if effected on normal commercial terms negotiated at 
arm's length and in the best interests of Shareholders. 
 
Basis of Depositary Review 
 
The Depositary conducts such reviews as it, in its reasonable discretion, 
considers necessary in order to comply with its obligations and to ensure that, 
in all material respects, the Company has been managed (i) in accordance with 
the limitations imposed on its investment and borrowing powers by the 
provisions of its constitutional documentation and the appropriate regulations 
and (ii) otherwise in accordance with the constitutional documentation and the 
appropriate regulations. Such reviews vary based on the type of Company, the 
assets in which a Company invests and the processes used, or experts required, 
in order to value such assets. 
 
Review 
 
In our view, the Company has been managed during the year, in all material 
respects: 
 
(i)            in accordance with the limitations imposed on the investment and 
borrowing powers of the Company by the constitutional document; and by the 
AIFMD legislation; and 
 
(ii)           otherwise in accordance with the provisions of the 
constitutional document; and the AIFMD legislation. 
 
For and on behalf of 
Northern Trust (Guernsey) Limited 
 
Glossary 
 
Articles                means the Company's articles of incorporation, as amended 
                        from time to time. 
 
Companies Law           means The Companies (Guernsey) Law, 2008. 
 
Company                 is Schroder Real Estate Investment Trust Limited. 
 
Directors               means the directors of the Company as at the date of this 
                        document whose names are set out on page 49 of this 
                        document and "Director" means any one of them. 
 
Disclosure Guidance and means the disclosure guidance and transparency rules 
Transparency Rules      contained within the FCA's Handbook of Rules and Guidance. 
 
Earnings per share      is the profit after taxation divided by the weighted 
("EPS")                 average number of shares in issue during the period. 
                        Diluted and adjusted EPS per share are derived as set out 
                        under NAV. 
 
Estimated rental value  Is the Group's external valuers' reasonable opinion as to 
("ERV")                 the open market rent which, on the date of the valuation, 
                        could reasonably be expected to be obtained on a new 
                        letting or rent review of a property. 
 
EPRA                    is the European Public Real Estate Association. 
 
EPRA Net Tangible       is the IFRS equity attributable to shareholders adjusted 
Assets                  for items including deferred tax, the fair value of 
                        financial instruments and intangible assets. 
 
EPRA Net Disposal Value is the IFRS equity attributable to shareholders adjusted 
                        for items including goodwill as a result of deferred tax 
                        and the fair value of interest rate debt 
 
FCA                     is the UK Financial Conduct Authority. 
 
Gearing                 is the Group's net debt as a percentage of adjusted net 
                        assets. 
 
Group                   is the Company and its subsidiaries. 
 
Initial yield           is the annualised net rents generated by the portfolio 
                        expressed as a percentage of the portfolio valuation. 
 
Interest cover          is the number of times Group net interest payable is 
                        covered by Group net rental income. 
 
Listing Rules           means the listing rules made by the FCA under Part VII of 
                        the UK Financial Services and Markets Act 2000, as amended. 
 
Market Abuse Regulation means regulation (EU) No.596/2014 of the European 
                        Parliament and of the Council of 16 April 2014 on market 
                        abuse. 
 
MSCI                    (formerly Investment Property Databank or 'IPD') is a 
                        Company that produces an independent benchmark of property 
                        returns. 
 
Net Asset Value and NAV is shareholders' funds divided by the number of shares in 
per share               issue at the period end. 
 
NAV total return        is calculated taking into account both capital returns and 
                        income returns in the form of dividends paid to 
                        shareholders. 
 
Net rental income       is the rental income receivable in the period after payment 
                        of ground rents and net property outgoings. 
 
REIT                    is a Real Estate Investment Trust. 
 
Reversionary yield      is the anticipated yield which the initial yield will rise 
                        to once the rent reaches the estimated rental value. 
 
Notice of Annual General Meeting 
 
Notice is hereby given that the Annual General Meeting of the Company will be 
held at 1 London Wall Place, EC2Y 5AU on 9 September 2021 at 11a.m. 
 
The Board takes the well-being of its Shareholders and colleagues seriously and 
has been closely monitoring the evolving Covid-19 pandemic. At present it is 
the intention of the Board to hold this meeting with Shareholders given the 
option of attending in person. In the event that the UK Government's guidance 
on social distancing and public gatherings nearer to the time of the AGM does 
not permit this, the Board will make such arrangements as it deems necessary to 
the format of the AGM to comply with Government guidance and regulations. 
 
Resolution on        Agenda 
Form of Proxy        1.     To elect a Chairman of the Meeting. 
 
                     To consider and, if thought fit, pass the following Ordinary 
                     Resolutions: 
 
Ordinary Resolution  2.       To receive, consider and approve the Consolidated 
1                    Annual Report and Financial Statements of the Company for the 
                     year ended 31 March 2021. 
 
Ordinary Resolution  3.       To approve the Remuneration Report for the year ended 
2                    31 March 2021. 
 
Ordinary Resolution  4.       To re-elect Ms Lorraine Baldry as a Director of the 
3                    Company. 
 
Ordinary Resolution  5.       To re-elect Mr Stephen Bligh as a Director of the 
4                    Company. 
 
Ordinary Resolution  6.       To re-elect Mr Alastair Hughes as a Director of the 
5                    Company. 
 
Ordinary Resolution  7.       To re-elect Mr Graham Basham as a Director of the 
6                    Company. 
 
Ordinary Resolution  8.       To appoint Ernst and Young LLP as Auditor of the 
7                    Company until the conclusion of the next Annual General 
                     Meeting. 
 
Ordinary Resolution  9.       To authorise the Board of Directors to determine the 
8                    Auditor's remuneration. 
 
Ordinary Resolution  10.     To receive and approve the Company's Dividend Policy 
9                    which appears on page 51 of the Annual Report. 
 
                     To consider and, if thought fit, pass the following Special 
                     Resolutions: 
 
Special Resolution 1 11.      That the Company be authorised, in accordance with 
                     section 315 of The Companies (Guernsey) Law, 2008, as amended 
                     (the "Companies Law"), to make market acquisitions (within the 
                     meaning of section 316 of the Companies Law) of ordinary shares 
                     in the capital of the Company ("Ordinary Shares") either for 
                     retention as treasury shares, insofar as permitted by the Law 
                     or cancellation, provided that: 
 
                     a.     the maximum number of ordinary shares hereby authorised 
                     to be purchased shall be 14.99% of the issued ordinary shares 
                     on the date on which this resolution is passed; 
 
                     b.     the minimum price which may be paid for an ordinary 
                     share shall be £0.01; 
 
                     c.      the maximum price (exclusive of expenses) which may be 
                     paid for an ordinary share shall be an amount equal to the 
                     higher of (i) 5% above the average of the mid-market value of 
                     the ordinary shares (as derived from the regulated market on 
                     which the repurchase is carried out) for the five business days 
                     immediately preceding the date of the purchase; and (ii) the 
                     higher of (a) the price of the last independent trade; and (b) 
                     the highest current independent bid at the time of purchase, in 
                     each case on the regulated market where the purchase is carried 
                     out; 
 
                     d.     such authority shall expire at the conclusion of the 
                     annual general meeting of the Company to be held in 2022 unless 
                     such authority is varied, revoked or renewed prior to such date 
                     of the general meeting; and 
 
                     e.     the Company may make a contract to purchase ordinary 
                     shares under such authority prior to its expiry which will or 
                     may be executed wholly or partly after its expiration and the 
                     Company may make a purchase of ordinary shares pursuant to any 
                     such contract. 
 
Special Resolution 2 12.     That the Directors of the Company be and are hereby 
                     empowered to allot ordinary shares of the Company for cash as 
                     if the pre-emption provisions contained under Article 13 of the 
                     Articles of Incorporation did not apply to any such allotments 
                     and to sell ordinary shares which are held by the Company in 
                     treasury for cash on a non-pre-emptive basis provided that this 
                     power shall be limited to the allotment and sales of ordinary 
                     shares: 
 
                     a.      up to such number of ordinary shares as is equal to 10% 
                     of the ordinary 
                     shares in issue (including treasury shares) on the date on 
                     which this resolution is passed; 
 
                     b       at a price of not less than the net asset value per 
                     share as close as practicable to the allotment or sale; 
 
                     provided that such power shall expire on the earlier of the 
                     conclusion of the annual general meeting of the Company to be 
                     held in 2022 or on the expiry of 15 months from the passing of 
                     this Special Resolution, except that the Company may before 
                     such expiry make offers or agreements which would or might 
                     require ordinary shares to be allotted or sold after such 
                     expiry and notwithstanding such expiry the Directors may allot 
                     or sell ordinary shares in pursuance of such offers or 
                     agreements as if the power conferred hereby had not expired. 
 
                     Close of Meeting. 
 
By Order of the Board 
 
For and on behalf of 
Northern Trust International Fund Administration Services (Guernsey) Limited 
Secretary 
 
1 June 2021 
 
Notes 
 
1.      To be passed, an ordinary resolution requires a simple majority of the 
votes cast by those shareholders voting in person or by proxy at the AGM 
(excluding any votes which are withheld) to be voted in favour of the 
resolution. 
 
2.      To be passed, a special resolution requires a majority of at least 75% 
of the votes cast by those shareholders voting in person or by proxy at the AGM 
(excluding any votes which are withheld) to be voted in favour of the 
resolution. 
 
3.      A member who is entitled to attend and vote at the meeting is entitled 
to appoint one or more proxies to exercise all or any of their rights to 
attend, speak and vote instead of him or her. A proxy need not be a member of 
the Company. More than one proxy may be appointed provided that each proxy is 
appointed to exercise the rights attached to different shares held by the 
member. 
 
4.      A form of proxy is enclosed for use at the meeting and any adjournment 
thereof. The form of proxy should be completed and sent, together with the 
power of attorney or other authority (if any) under which it is signed, or a 
notarially certified copy of such power or authority, so as to reach the 
Company's Registrars, Computershare Investor Services (Guernsey) Limited, at 
The Pavilions, Bridgwater Road, Bristol, BS99 6ZY at least 48 hours before the 
time of the AGM (excluding any part of a day that is not a working day). 
 
5.      Completing and returning a form of proxy will not prevent a member from 
attending in person at the meeting and voting should he or she so wish. 
 
6.      To have the right to attend and vote at the meeting or any adjournment 
thereof (and also for the purpose of calculating how many votes a member may 
cast on a poll) a member must have his or her name entered on the register of 
members not later than at close of business of 23 September 2020. 
 
7.      Pursuant to Article 41 of the Uncertificated Securities (Guernsey) 
Regulations 2009, entitlement to attend and vote at the meeting and the number 
of votes which may be cast thereat will be determined by reference to the 
register of members of the Company at close of business on 23 September 2020. 
Changes to entries in the register of members of the Company after that time 
shall be disregarded in determining the rights of any member to attend and vote 
at such meeting. 
 
Corporate Information 
 
Registered Address                           Independent Auditor 
PO Box 255                                   Ernst & Young LLP 
Trafalgar Court                              PO Box 9 
Les Banques                                  Royal Chambers 
St. Peter Port                               St. Julian's Avenue 
Guernsey GY1 3QL                             St. Peter Port 
                                             Guernsey GY1 4AF 
 
Directors (all Non-executive)                Property Valuer 
Lorraine Baldry (Chairman)                   Knight Frank LLP 
Graham Basham                                55 Baker Street 
Stephen Bligh                                London 
Alastair Hughes                              W1U 8AN 
 
Investment Manager and Accounting Agent      Sponsor and Brokers 
Schroder Real Estate Investment Management   J.P. Morgan Securities plc 
Limited                                      25 Bank Street 
1 London Wall Place                          Canary Wharf 
London                                       London E14 5JP 
EC2Y 5AU 
 
Secretary and Administrator                  Tax Advisors 
Northern Trust International Fund            Deloitte LLP 
Administration Services (Guernsey) Limited   2 New Street Square 
PO Box 255                                   London EC4A 3BZ 
Trafalgar Court 
Les Banques                                  Receiving Agent and UK Transfer/Paying 
St Peter Port                                Agent 
Guernsey GY1 3QL                             Computershare Investor Services 
                                             (Guernsey) Limited 
Depositary                                   13 Castle Street 
Northern Trust (Guernsey) Limited            St Helier 
PO Box 255                                   Jersey 
Trafalgar Court                              JE1 1ES 
Les Banques 
St Peter Port 
Guernsey GY1 3QL 
 
Solicitors to the 
Company               as to Guernsey Law: 
as to English Law:    Mourant Ozannes 
Stephenson Harwood    (Guernsey) LLP 
LLP                   Royal Chambers 
1 Finsbury Circus     St Julian's Avenue 
London EC2M 7SH       St. Peter Port 
                      Guernsey GY1 4HP 
 
FATCA GIIN 
5BM7YG.99999.SL.831 
 
 
[1] Winning Cities defined as higher growth locations - Source: Oxford 
Economics/Schroders. 
 
[2]Source: MSCI property level returns gross of fees on a like-for-like basis 
including direct and indirect property investments. Past performance is not a 
guide to future performance and may not be repeated. 
 
[3] This is an APM, please see page 105 for details. 
 
[4] Winning Cities defined as higher growth locations - Source: Oxford 
Economics/Schroders. 
 
[5] This is an APM, please see page 105 for details. 
 
[6] Excluding one-off refinancing costs related to the Canada Life loan of £ 
27.4m in the year ended 31 March 2020. 
 
[7] As reconciled to valuation reports from Knight Frank for the portfolio and 
BNP for the joint ventures. Does not include any IFRS adjustments for lease 
incentives nor the fair value of leasehold adjustments. 
 
[8] Adjusted EPRA earnings is an APM and please see page 105 for details. 
 
[9] As per third party valuation reports unadjusted for IFRS lease incentive 
amounts 
 
[10] Source: Oxford Economics, Schroders March 2021. 
 
[11] Reconciles to the valuation reports from Knight Frank for the direct 
portfolio and BNP for the Joint Ventures. Does not include any IFRS adjustments 
for lease incentives nor the fair value of the leasehold adjustment for The 
Galaxy, Luton. 
 
[12] Represents the annualised contracted income as at 31 March 2021 of the 
portfolio, including rents from joint venture assets. 
 
[13] Represents the ERV of the portfolio as estimated by the valuers, including 
rents for the joint venture assets. 
 
[14] Source: MSCI Quarterly Version of Balanced Monthly Index Funds including 
joint venture investments on a like-for-like basis as at 31 March 2021. 
 
[15] This is an Alternative Performance Measure ("APM"). EPRA calculations are 
included in the EPRA Performance measures section on page 102. 
 
[16] This is an APM. EPRA calculations are included in the EPRA Performance 
measures section on page 101. 
 
[17] This is an APM. Details are included in the APM section on page 105. 
 
[18] This is an APM. Details are included in the APM section on page 105. The 
prior year figure represents the NAV total return excluding one-off refinancing 
costs of £27.4m. NAV total return including finance costs in the prior year of 
-9.4% 
 
[19] This is an APM. EPRA calculations are included in the EPRA Performance 
measures section on page 105. 
 
[20] On-balance sheet borrowings reflect the loan facilities with Canada Life 
and RBS without the deduction of unamortised finance costs of £0.7m. 
 
[21] This is an APM. Details are included in the APM section on page 105. 
 
[22] This is an APM. Details are included in the APM section on page 105. 
 
[23] This is an APM. Details are included in the APM section on page 105. 
 
[24] Please note that this is net of all capital expenditure, acquisition costs 
and movement in IFRS16 lease incentives. 
 
[25] Includes £0.5m relating to JV capital expenditure 
 
[26] Net revenue is equal to EPRA earnings as per the reconciliation on page 
103. 
 
[27] Calculation of pence per share is based on shares in issue as at 31 March 
2020 to enable comparison to 31 March 2020 data 
 
[28] Calculation of pence per share is based on shares in issue as at 31 March 
2021 
 
[29] Note Central London is defined by MSCI as City, Mid-Town, West End and 
Inner London. 
 
[30] The Company listed in July 2004. 
 
[31] Loan balance divided by property value as at 31 March 2021. 
 
[32] For the quarter preceding the Interest Payment Date ('IPD'), ((rental 
income received - void rates, void service charge and void insurance)/interest 
paid). 
 
[33] The projected ICR covenant for contracted the four quarters following the 
IPD deducting assumed non-recoverable costs (void rates, void service charge 
and void insurance)/interest paid) based on average of the past four quarters 
 
[34] Fixed total interest rate for the loan term. 
 
[35] Loan balance divided by property value as at 31 March 2021. 
 
[36] For the quarter preceding the Interest Payment Date ('IPD'), ((rental 
income received - void rates, void service charge and void insurance)/interest 
paid). 
 
[37] The projected ICR covenant for contracted the four quarters following the 
IPD deducting assumed non-recoverable costs (void rates, void service charge 
and void insurance)/interest paid) based on average of the past four quarters 
 
[38] Facility drawn at 31 March 2021 from a total available facility of £52.5 
million. 
 
[39] Total interest rate as at 31 March 2021 comprising 3 months LIBOR of 0.09% 
and the margin of 1.6% at an LTV below 60% and a margin of 1.90% above 60% LTV. 
 
[40] This covenant drops to 60% after year three of the five-year term. 
 
[41] The Carbon Risk Real Estate Monitor (CRREM) tool converts internationally 
agreed climate change mitigation goals (e.g. Paris Agreement) into geography 
and sector-specific carbon emission and energy intensity minimum performance 
benchmarks. 
 
[42] The BBP is an industry association of leading UK commercial property 
owners committed to improving building sustainability. 
 
[43] Excludes refinancing costs of £27.4m 
 
 
 
END 
 
 

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