Schroder Real Estate NAV and Dividend for Quarter to 31 December 2020

 
TIDMSREI 
 
For release 15 February 2021 
 
                 Schroder Real Estate Investment Trust Limited 
 
       ANNOUNCEMENT OF NAV AND DIVID FOR QUARTER TO 31 DECEMBER 2020 
 
Schroder Real Estate Investment Trust (the 'Company' or 'SREIT'), the actively 
managed UK-focused REIT, announces its net asset value ('NAV') and dividend for 
the quarter to 31 December 2020. The Company's rent collection remains strong, 
which has underpinned a 9% increase in the quarterly dividend. In addition, 
following two signficant acquisitions in December, the portfolio weighting 
towards the industrial sector has increased from 30% to 37% over the quarter. 
 
Net Asset Value 
 
The unaudited NAV as at 31 December 2020 was £293.3 million or 58.8 pence per 
share ('pps'). This reflects an increase of 1.4% per share compared with the 
NAV as at 30 September 2020. Based on the quarterly dividend paid of 0.575 pps, 
the NAV total return was 2.4% for the period, with a like for like portfolio 
valuation increase offset by capital expenditure and one off acquisition costs. 
A breakdown is set out below: 
 
                             £m      pps                     Comments 
 
NAV as at 30 September      296.8    58.0 
2020 
 
Unrealised increase in the   4.5     0.9    Portfolio like-for-like valuation movement, 
valuations of the direct                    net of capital expenditure, of +0.9% over 
real estate portfolio and                   the period to 31 December 2020. Sector 
Joint Ventures                              capital value movements, net of capital 
                                            expenditure, were Industrial +4.7%, Offices 
                                            0.0%, Retail -1.9% and Other -2.1% 
 
Capital expenditure         (1.1)   (0.2)   Includes asset management activity across 
(direct portfolio and                       the  multi-let industrial portfolio  to 
share of Joint Ventures)                    capture rental growth (Millshaw Industrial 
                                            Estate, Leeds and Union Park, Norwich) and 
                                            completing the landlord works in relation 
                                            to Lidl and Home Bargains lettings at St 
                                            John's Retail Park, Bedford 
 
Acquisition costs           (2.3)   (0.4)   Costs associated with the separate 
                                            acquisitions of Langley Park, Chippenham 
                                            and Stanley Green, Cheadle, that totalled £ 
                                            36.5m. 
 
Realised gains on            0.1      -     Disposal of small non-core assets including 
disposals                                   two units in Commercial Road, Portsmouth 
                                            (High Street Retail, £2.0m) and 
                                            unconditional exchange of The Portergate, 
                                            Sheffield (Office, £4.2m) which has now 
                                            completed 
 
Net revenue                  2.6     0.5    Quarterly EPRA earnings 
 
Dividend paid               (2.9)   (0.6)   Reflects the 0.575 pps quarterly dividend 
                                            which was paid in December 2020 
 
NAV as at 31 December 2020  297.7    58.2   Calculation based on 511,364,955 shares 
(excluding the share 
buyback) 
 
Share buyback               (4.4)    0.6    Purchase of 12.8m shares at an average 
                                            price of 34.5 pence per share 
 
NAV as at 31 December 2020  293.3    58.8   Calculation based on 498,516,392 shares 
 
Dividend payment 
 
The Company announces an interim dividend of 0.625 pps for the period 1 October 
2020 to 31 December 2020. This equates to a 9% increase compared with the prior 
quarter's dividend level and reflects progress with rent collection, asset 
management, acquisitions and share repurchases. This dividend level is 
anticipated to be fully covered by recurring net income, with further net 
income growth potential from asset management and further new investment. The 
dividend will continue to be reviewed by the Board targeting a sustainable and 
progressive dividend policy. 
 
The dividend payment will be made on 12 March 2021 to shareholders on the 
register as at 26 February 2021. The ex-dividend date will be 25 February 2021. 
 
The dividend of 0.625 pps will be wholly designated as an interim property 
income distribution ('PID'). 
 
Rent collection 
 
Rent collected for the quarter ending 31 March 2021 currently totals 85% of 
contracted rents (as at 10 February 2021), which is in-line with the equivalent 
date in the previous quarter. The breakdown between sectors is 96% of office 
rent collected, 98% of industrial rent collected and 54% relating to retail, 
leisure and ancillary uses collected. The Company remains in active dialogue 
with its tenants for all rents due to be paid and expects to recover a 
significant portion of the outstanding amount. 
 
Performance versus MSCI Benchmark Index 
 
Over the quarter to 31 December 2020, the underlying portfolio produced a total 
return of 1.9%. This compares favorably with the total return for the MSCI 
Benchmark of 1.3%. The portfolio's quarterly income return of 1.6% compared 
with the Benchmark at 1.1%. 
 
For the calendar year 2020, the underlying portfolio produced a total return of 
0.7% compared with MSCI of -1.2%, resulting in relative outperformance of 1.8%. 
The Company has outperformed the MSCI Benchmark Index over one, three, five, 10 
years and since IPO in 2004. 
 
Property portfolio 
 
As at 31 December 2020, the underlying portfolio comprised 40 properties valued 
at £432.8 million. At the same date the portfolio produced a rent of £28.3 
million per annum reflecting a net initial yield of 6.1% which compares with 
the MSCI Benchmark Index of 4.7%. The portfolio estimated rental value is £31.6 
million per annum, reflecting a reversionary yield of 7.3%, which compares with 
the MSCI Benchmark Index of 5.2%. 
 
The void rate was 5.1% calculated as a percentage of rental value. The average 
unexpired lease term, assuming all tenants vacate at the earliest opportunity, 
is 5.5 years. The tables below summarise the portfolio information as at 31 
December 2020: 
 
Sector weightings                                    Weighting (%) 
 
                                          SREIT                 MSCI Benchmark Index 
 
Industrial                                37.2                          28.4 
 
Offices                                   35.3                          27.5 
 
Retail                                    20.6                          24.5 
    Retail warehouse                      11.4 
    Retail ancillary to main               5.2 
use                                        4.0 
    Retail single use 
 
Other                                      6.9                          16.6 
 
 
 
Regional weightings                                  Weighting (%) 
 
                                          SREIT                 MSCI Benchmark Index 
 
Central London                             9.1                          17.6 
 
South East excluding Central              19.2                          37.1 
London 
 
Rest of South                             11.9                          14.3 
 
Midlands and Wales                        24.9                          12.3 
 
North and Scotland                        34.9                          18.4 
 
Northern Ireland                           0.0                           0.2 
 
Acquisitions 
 
Two multi-let industrial estates in Cheadle (Greater Manchester) and Chippenham 
were acquired, in separate transactions, in December 2020 for £36.5 million. 
The two estates generate initial rental income of £2.8 million per annum, 
equating to a 6.8% net initial yield. The estates offer significant potential 
to grow net income through asset management and development. The acquisitions 
increase SREIT's industrial weighting from 30% to 37%, with the majority of 
this in high quality, multi-let estates. 
 
The Company has approximately £40 million of cash and undrawn debt facilities 
as at 31 December 2020 to make further acquisitions, invest in the existing 
portfolio and share repurchases. 
 
Share buy-back programme 
 
During the period to 31 December 2020 12.8 million shares were acquired for £ 
4.4 million which reflected an average price of 35.5 pps and an average 
discount to the September 2020 NAV of -39%. This resulted in NAV accretion of 
approximately 1.0%. Since the period end approximately 3.1 million additional 
shares have been acquired for £1.2 million. 
 
In total, 23.1 million shares have been repurchased since the share buy-back 
programme launched in September 2020, delivering 2.0% of accretion to the 31 
March 2020 NAV. In addition, the repurchases are earnings accretive, therefore 
increasing dividend cover. 
 
The open market share buyback programme will continue with the Company's 
broker, JP Morgan Securities plc. 
 
Balance sheet and debt 
 
As at 31 December 2020, the Company has cash of £25.2 million and a loan to 
value ratio, net of cash, of approximately 32%. 
 
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.  As at 31 December 2020, £37.0 million of the RCF was 
drawn. Fully drawn, the facilities have an average duration of approximately 12 
years and an average interest cost of 2.2%. 
 
Sustainability 
 
Three Green Stars awarded in annual GRESB survey 
The Company retained its three star rating in the GRESB global sustainability 
benchmark assessment for real estate assets during the period and came first in 
its peer group of nine internally and externally managed listed real estate 
investment companies.  The 2020 GRESB Assessment structure fundamentally 

changed from the 2019 Assessment, establishing a new, more challenging baseline 
for measuring sustainability performance. 
 
Participation in the GRESB survey is part of the Company's broader ESG and 
positive impact strategy which is integral to the investment process. 
 
Further information can be found within the Company's latest Sustainability 
Guide at  https://www.schroders.com/en/uk/private-investor/fund-centre/ 
funds-in-focus/investment-trusts/schroders-investment-trusts/ 
schroder-real-estate-investment-trust/sustainability/. 
 
Net Zero Carbon Pathway 
The Company, together with Schroder Real Estate as Investment Manager, is 
focussed on delivering continued improvements in the sustainability performance 
of the portfolio. In December 2020, Schroders issued its Net Zero Carbon 
Pathway, a commitment made in September 2019 as part of the UK Better Buildings 
Partnership Climate Commitment. This outlines a trajectory for achieving net 
zero carbon by 2050 and addresses both operational carbon, covering whole 
building performance; and embodied carbon, covering development and 
refurbishment activities. 
 
Further information can be found within the Schroder Real Estate Pathway to Net 
Carbon Zero document at https://www.schroders.com/en/sysglobalassets/email/uk/ 
realestate/2020/ 
schroder-real-estate-net-zero-carbon-pathway-december-2020_1621372_v1.pdf 
 
 
 
 
                                    -ENDS- 
 
For further information: 
 
Schroder Real Estate Investment Management Limited:         020 7658 6000 
Nick Montgomery / Frank Sanderson 
 
Northern Trust:                                             01481 745529 
Jingjing Qi 
 
FTI Consulting:                                             020 3727 1000 
Dido Laurimore / Richard Gotla / Meth Tanyanyiwa 
 
 
 
END 
 
 

(END) Dow Jones Newswires

February 15, 2021 02:00 ET (07:00 GMT)