Announcement of NAV
Schroder European Real Estate Investment Trust plc
(Incorporated in England and Wales)
Registration number: 09382477
JSE Share Code: SCD
LSE Ticker: SERE
ISIN number: GB00BY7R8K77
(the “Company”)
3 October 2022
ANNOUNCEMENT OF NAV
Schroder European Real Estate Investment Trust plc (‘Company’) provides a business update and
announces its unaudited net asset value (‘NAV’) as at 30 June 2022:
– Unaudited NAV of €197.8 million or 147.9 euro cents per share (“cps”) as at 30 June 2022,
reflecting a NAV total return of 0.6% over the quarter and 8.0% over a 12 month period.
– The directly held property portfolio value decreased over the quarter by 0.5%, or €1.0 million (net
of capital expenditure (“Capex”) 0.6% or €1.2 million), with inflation-linked rental growth offset by
individual asset activity.
– A further €1.2 million of post-tax development profit from the Boulogne-Billancourt, Paris asset was
recognised in the quarter.
– A third ordinary interim dividend has been previously declared in August 2022 relating to the year
ending 30 September 2022 of 1.85 cps. Total ordinary dividends declared relating to the nine
months of the current financial year are now 5.55 cps.
– In addition, the Company has also announced a third and final special dividend of 0.10 cps in August
2022, associated with the successful execution of the Paris Boulogne-Billancourt business plan.
This brings the final combined special dividends to 9.60 cps, with total dividends of 15.15 cps being
paid to investors in the financial year ended 30 September 2022.
– At the end of June 2022, the Company completed the purchase of a car showroom in Cannes,
France for €8.4 million, reflecting a net initial yield of 5.5%, and a reversionary yield of 6.4%. The
asset also offers longer term alternative use upside.
– As at 30 June 2022, the Company has an available cash balance of €29 million. The loan to value
ratio on the total portfolio is approximately 20% net of cash and 28% gross of cash.
– The Company has a remaining investment capacity of c.€50 million, including €25 million of
additional debt.
– Annualising the ordinary dividend provides investors with a dividend yield exceeding 7%, based on
the 30 September 2022 share price of c.90p.
– The portfolio income, value, and debt is Euro denominated, with 100% of the income subject to
indexation.
Net Asset Value
The table below provides a breakdown of the movement in NAV during the quarter ended 30 June 2022:
€m(1) Cps(2) %(3)
Brought forward NAV as at 1 April 2022 199.1 148.8
Unrealised loss in the valuation of the property portfolio (1.0) (0.7) (0.5)
Transaction costs (0.8) (0.6) (0.4)
Capital expenditure (0.3) (0.2) (0.1)
EPRA earnings 1.7 1.3 0.8
Boulogne-Billancourt, Paris post-tax development profit 1.2 0.9 0.6
Non-cash items 0.4 0.3 0.2
Dividend paid (2.5) (1.9) (1.3)
NAV as at 30 June 2022 197.8 147.9 (0.7)
(1) Management reviews the performance of the Company principally on a proportionally consolidated
basis. As a result, figures quoted in this table include the Company’s share of joint ventures on a
line-by-line basis and exclude non-controlling interests in the Company’s subsidiaries.
(2) Based on 133,734,686 shares.
(3) % change based on starting NAV as at 1 April 2022.
Property portfolio
As at 30 June 2022, the direct property portfolio, including the recently acquired car showroom in
Cannes, France, was independently valued at €218.4 million, reflecting a net initial yield (“NIY”) of 5.9%.
The value of the portfolio decreased over the quarter by 0.5% or €1.0 million (net of Capex 0.6% or
€1.2 million). The majority of the portfolio’s valuation change was driven by:
– increased vacancy assumptions at the Paris, Saint-Cloud office investment, resulting in a valuation
decrease of -€0.5 million, or -1.2%;
– increase in the capital expenditure provision for the upgrading of heating, air conditioning and
renewable energy at the Houten industrial investment in the Netherlands, being the main driver of
a valuation decrease of -€0.5 million, or -5.6%; and
– five year lease extension for c. 1,000 sqm, equating to c.20% of the floorspace, at the Stuttgart
office investment, delivering a valuation increase of €0.3 million, or 1.4%.
With 100% of the portfolio leases subject to indexation, rising inflation is starting to contribute to rental
growth. Furthermore, rent collection remains high, with 100% of rent due for the quarter ended
30 June 2022 collected from the direct property portfolio.
In addition to the direct property portfolio, the Company has a 50% interest in a joint venture in Seville
which continues to be recognised at nil interest.
The portfolio valuation excludes the Boulogne-Billancourt, Paris refurbishment and sale which has been
treated as disposed in the Financial Statements. The refurbishment was delivered to the business plan
in the second quarter of 2022 and a further €1.2 million of post-tax development profit has been
recognised in the accounts in the quarter ended 30 June 2022. The majority of the profit from the
refurbishment and sale has now been recognised in the Financial Statements and a further €1.5 million
of development profit may potentially be released to the NAV over the next 12 months.
Outlook
The economic outlook has continued to worsen over the last three to six months with the Eurozone
facing a number of headwinds. The energy crisis, inflationary concerns and increasing interest costs
are creating a drag on sentiment and recessionary concerns.
Values across the portfolio are holding up well, although recent bond yield rises are likely to put pressure
on this. The Company expects the portfolio’s diversification characteristics, income profile and location
strengths will help in mitigating this pressure. Looking forward the expectation is that rental affordability
and managements local expertise will be an increasing positive regarding retention of occupiers.
The Company currently has c.€50 million of firepower to deploy (including €25 million of additional debt)
and expects to see an improving pipeline of opportunities over the next twelve months that will enable
it to diversify and strengthen its exposure to growth cities, regions and sectors.
Enquiries:
Jeff O’Dwyer
Schroder Real Estate Investment Management Limited Tel: 020 7658 6000
Ria Vavakis
Schroder Investment Management Limited Tel: 020 7658 2371
Dido Laurimore/Richard Gotla/Ollie Parsons
FTI Consulting Tel : 020 3727 1000
The Company has a primary listing on the London Stock Exchange and a secondary listing on the
JSE Limited.
London
JSE Sponsor
PSG Capital
Date: 03-10-2022 08:00:00
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