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Publication of Prospectus
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
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO,
THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF IRELAND.
This announcement is an advertisement and not a prospectus. Investors should not purchase or
subscribe for any transferable securities referred to in this announcement except on the basis of
information in the prospectus (the "Prospectus") published by Schroder European Real Estate
Investment Trust PLC in connection with the initial public offering and the admission of its ordinary
shares (the "Ordinary Shares") to the premium segment of the Official List of the Financial Conduct
Authority (the "Official List"), to trading on London Stock Exchange plc's main market for listed securities
(the "London Stock Exchange") and to trading on the Johannesburg Stock Exchange's ("JSE") main
board for listed securities. A copy of the Prospectus is available from the Company’s website at
www.schroders.co.uk/sereit and is available for inspection during usual business hours on any day
(Saturdays, Sundays and public holidays excepted) at the offices of Stephenson Harwood LLP, 1
Finsbury Circus, London EC2M 7SH and at the offices of PSG Capital, 1st Floor Ou Kollege, 35 Kerk
Street, Stellenbosch, 7600 and 1st Floor, Building 8, Inanda Greens Business Park, 54 Weirda Road
West, Wierda Valley, Sandton, 2196 from the date of his announcement until 10 November 2016. This
announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United
States or in any other jurisdiction. Neither this announcement nor any part of it shall form the basis of or
be relied on in connection with or act as an inducement to enter into any contract or commitment
whatsoever.
In South Africa, this announcement is considered to be an abridged prospectus and is not an invitation
to the public to subscribe for Ordinary Shares and is issued in compliance with the listings requirements
of the JSE (“JSE Listings Requirements”), for the purpose of providing information to the public with
regard to the Company.
SCHRODER EUROPEAN REAL ESTATE INVESTMENT TRUST PLC
Publication of prospectus in relation to the initial placing and offer of up to 150 million ordinary
shares at 100 pence per ordinary share (“Initial Placing and Offer”), a placing programme,
admission to the premium segment of the Official List of the UK Listing Authority under Chapter
15 of the Listing Rules, admission to trading on the main market of the London Stock Exchange
and admission to the main board of the JSE under section 15 of the JSE Listings Requirements
11 November 2015
Schroder European Real Estate Investment Trust PLC (the “Company") today announces the
publication of a prospectus in relation to an initial public offering (“IPO”) of shares on the main market of
the London Stock Exchange and the main board of the JSE.
The Company is seeking to raise up to £150 million by way of an Initial Placing and an Offer for
Subscription of Ordinary Shares. The Company aims to provide Shareholders with a regular and
attractive level of income return together with the potential for long term income and capital growth
through investing in commercial real estate in Continental Europe.
The Company is targeting institutional grade commercial real estate assets in the growth cities and
regions of Continental Europe. The Investment Manager has identified key target centres in the
Eurozone region where there is evidence of rental growth as a consequence of constrained supply and
rising demand. The strategy will be to invest into assets where these market dynamics, combined with
active asset management, provides the opportunity for strong income returns, as well as capital growth.
Once fully invested, the Company is targeting a dividend yield of 5.5% p.a. based on the issue price.
The Company plans to use modest gearing to improve shareholder returns, capping leverage at 35%
LTV.
Schroder Real Estate Investment Management Ltd (the “Investment Manager”) will be the investment
manager of the Company. The Investment Manager has been managing real estate funds since 1971
and as at 30 June 2015 managed £11.9 billion of real estate assets across the UK and Europe,
including 4 listed real estate funds. The team comprises over 100 real estate professionals providing on
the ground expertise, located in offices including London, Paris, Frankfurt, Stockholm, Zurich and
Luxembourg. The Schroders Group will be subscribing for 10% of the Ordinary shares of the Company,
strengthening the alignment of interest between the Investment Manager and the Company.
Applications will be made to the UK Listing Authority and the London Stock Exchange for all of the
Ordinary Shares of the Company to be admitted to the premium segment of the Official List and to
trading on the London Stock Exchange’s main market for listed securities as a primary listing. In
addition, application will be made to the JSE for all of the Ordinary Shares of the Company to be
admitted to trading on the JSE’s main board for listed securities, as a secondary listing (conditional
approval has already been obtained).
The IPO is being structured as (i) a placing primarily targeted at institutional and professionally-advised
private investors (“Initial Placing”) and (ii) an offer for subscription available to UK investors (“Offer for
Subscription”), who are likely to be eligible to hold such investment via an ISA. The Ordinary Shares
should also qualify as a permissible asset for inclusion in a SIPP.
The latest time and date for receipt of Application Forms under the Offer for Subscription is 11 a.m. on
Monday 30 November 2015. The latest time and date for placing commitments under the Initial Placing
is 12 noon (UK time) and 2.00 p.m. (South Africa time) on Wednesday 2 December 2015. First
Admission and dealings are expected to commence at 8.00 a.m. (UK time) and 10.00 a.m. (South Africa
time) on Wednesday 9 December 2015. Numis Securities is acting as sponsor, broker and placing agent
in the UK. PSG Capital Proprietary Limited is acting as sponsor and placing agent in South Africa.
Following the Initial Placing and Offer, the directors intend to implement a placing programme in terms
of which the directors will be authorised to issue up to 250 million Ordinary Shares (less the number of
Ordinary Shares issued pursuant to the Initial Placing and Offer) without having to first offer those
Ordinary Shares to existing Shareholders (“Placing Programme”). The Placing Programme is being
implemented to enable the Company to raise additional capital in the period from 10 December 2015 to
10 November 2016 as and when it identifies properties that are suitable for acquisition and the directors
intend to apply the net proceeds of the Placing Programme in making investments in accordance with
the Company’s investment objective and policy.
Investment objective
The investment objective of the Company is to provide Shareholders with a regular and attractive level
of income return together with the potential for long term income and capital growth through investing in
commercial real estate in Continental Europe.
Investment Rationale
The Investment Manager believes there is an attractive opportunity to invest in income producing,
institutional grade commercial property in the growth cities and regions of Continental Europe:
- The strategy will focus on major cities in Continental Europe which are seeing above average
economic growth and which have large, liquid and transparent investment markets. Smaller
cities in Continental Europe can also be considered.
- Many property markets are starting to recover from a low point in their rental cycles, which
provides interesting upside potential in the medium-long term. Rental growth should also be
supported by the low level of development over the last 7 years, which has resulted in
constrained supply of new accommodation in certain markets.
- The Investment Manager believes that pricing is currently attractive, based on long run trading
levels, the ability to acquire assets off relatively low rents and on the significant yield gap
relative to government bonds. Investing in a recovery cycle should enable the Company to
acquire commercial properties at relatively low capital values.
- Low historical correlation between UK and Continental European property markets results in
diversification benefits and facilitates exposure to markets at different points in their cycle.
- There is significant disparity in this recovery across Continental Europe, necessitating a
targeted investment strategy using detailed knowledge of local markets through the local
offices of the Investment Manager.
The investment philosophy of the Investment Manager is founded on a belief that property markets are
inherently cyclical and imperfect, which creates opportunities for long term investors who are focussed
on property fundamentals and who operate a disciplined business plan approach to active asset
management.
While predicting the timing of a sustained recovery or a turning point is difficult, the view of the
Investment Manager is that following a long period of economic dislocation and concerns about a
Eurozone break-up, growth in property values is returning to the strongest cities and regions of
Continental Europe. In the short-term the increase in capital values is likely to be due mainly to a
favourable decline in property yields, but the Investment Manager believes that the key driver over the
medium term will be a recovery in rents. The recovery in rents will be led by those cities and regions
whose GDP outperforms national averages and where the supply of good quality, institutional grade
accommodation is constrained. Within those cities the Investment Manager will focus on those areas
where people wish to both live and work and where there are a range of competing uses and which
have good public transport.
When combined with an active asset management strategy, the Investment Manager believes that this
is an attractive entry point in the target markets.
Investment Policy
The Company intends to hold a diversified portfolio of commercial real estate in Continental Europe with
good property fundamentals. The Company may invest directly in real estate assets (both listed and
unlisted) or through investment in special purpose vehicles, partnerships, trusts or other structures.
Diversification
The Company intends to invest in a portfolio of institutional grade income-producing properties with low
vacancy and creditworthy tenants. In addition, the portfolio will be diversified by location, use, size, lease
duration and tenant concentration.
Once the proceeds of the Initial Placing and Offer have been fully invested and the Company has
implemented its borrowing policy, the value of any individual property at the date of its acquisition will
not exceed 20 per cent. of the Company’s gross assets.
A preference will be given to multi-let properties over single-occupier properties to diversify exposure to
underlying tenant risk.
Asset class and geographic restrictions
Initially, the Company’s focus will predominantly be on the core cities in France and Germany where the
Investment Manager believes there are positive growth prospects and real estate markets which are
considered to be well established, mature and liquid. However, the Company will have the ability to
invest in any country in Continental Europe, although preference will be given to mature and liquid
markets.
The Company will invest principally in the office, retail, logistics and light industrial property sectors. It
may also invest in other sectors including, but not limited to, leisure, residential, healthcare, hotels and
student accommodation.
Other restrictions
The Company will not undertake the development of new property, however completed newly developed
properties may be acquired under forward commitments where such acquisitions do not expose the
Company to underlying development risk. The Company may also refurbish or improve existing
properties with such refurbishments and improvements typically covering the replacing, improving or
reconfiguring of a property that is already in existence and would typically be internal and within the
existing envelope of that property. Any more substantial refurbishment or improvement of an existing
property exposing the Company to development risk would not exceed 20 per cent. of the Company’s
gross assets.
Pending deployment of the net proceeds of any fundraising, the Company intends to invest cash held in
cash deposits and cash equivalents for cash management purposes.
Borrowing policy
The Company intends to use gearing with the objective of improving Shareholder returns. Borrowings
will be non-recourse and secured against individual assets or groups of assets and, at the time of
borrowing, gross debt (net of cash) shall not exceed 35 per cent. of the Company’s gross assets. Where
borrowings are secured against a group of assets, such group of assets shall not exceed 25 per cent. of
the Company’s gross assets in order to ensure that investment risk remains suitably spread.
The Board will determine the appropriate level and structure of gearing for individual assets or groups of
assets on a deal by deal basis and gearing against individual assets or groups of assets may exceed 35
per cent. LTV at the time of borrowing, provided total gearing of the Company does not exceed 35 per
cent. LTV overall. Higher gearing will only be considered against individual assets or groups of assets if
the Board considers the particular characteristics of those assets would be suitable for higher gearing.
No material change will be made to the investment policy without the approval of the Financial Conduct
Authority and Shareholders by ordinary resolution.
The Investment Manager
The Company’s investment manager is Schroder Real Estate Investment Management Limited. The
Investment Manager will be responsible for the management of the Company’s portfolio of properties.
The Investment Manager has managed property in Continental Europe since 2007. The Investment
Manager currently manages £2 billion of mandates in Continental Europe. These funds have assets
located in Germany, France, Italy, Spain, Belgium, Sweden, Denmark, Finland and Switzerland. Since
2010 it has undertaken approximately €2.4 billion of transactions across continental Europe.
The Investment Manager operates a fully integrated property investment management platform across
the UK and Continental Europe. The team is comprised of over 100 staff in seven offices across Europe
with expertise in fund management, research, transactions, asset management, financing and other
specialist property activities. The senior management team each have over 20 years of property
experience, including extensive experience of managing property in Continental Europe and managing
listed property funds.
The team in Continental Europe is headed by Tony Smedley who has over 24 years’ real estate
investment experience and has lived and worked in Continental Europe for 17 years. Tony will be the
Company’s principal fund manager and is a member of the Investment Manager’s Investment
Committee.
The Board
The Board will comprise three independent non-executive directors who will be responsible for the
determination of the Company’s investment policy and strategy and have overall responsibility for the
Company’s activities including the review of investment activity and performance and the control and
supervision of the Investment Manager.
The Board is chaired by Sir Julian Berney Bt. who has 39 years’ real estate experience. During this
period he has worked on property investment portfolios in the UK, Scandinavia, and Continental Europe.
In recent years he has assisted Cityhold, part of the National Pension Fund of Sweden, to acquire and
manage its property investment portfolio in the UK and Continental Europe. Formerly he was a director
at BNP Paribas Real Estate Investment Management with responsibilities to its European Fund and with
Aberdeen Property Investors to develop its property funds. A large part of his career was at Jones Lang
LaSalle where he was an International Director and held a number of senior appointments including
Chairman of the Scandinavian businesses, a director of the European Business Team, and a member of
the European Capital Markets Board. He is a Fellow of the Royal Institution of Chartered Surveyors.
Mark Patterson is an international banker with over 25 years’ experience in investment banking and
strategic planning. He has recently retired from Standard Chartered Bank where he had been
responsible for the development and execution of Standard Chartered’s inorganic growth strategy and
where he led a number of the Bank’s acquisitions and investments as well as its own equity
fundraisings. He had previously held senior investment banking positions with Australia and New
Zealand Bank and with Deutsche Bank. He graduated from Oxford University, qualified as a solicitor and
worked with Slaughter and May prior to his move into banking.
Jonathan Thompson was appointed chairman to the Argent group of real estate regeneration,
development and investment businesses on 1 January 2015 having previously been a non-executive
director and chairman of the audit committee. He is a non-executive director at Strutt & Parker where he
chairs the remuneration committee, is chairman of the finance & investment committee and non-
executive board member of the South West London & St George’s Mental Health Trust and is a past
member of the board of the British Property Federation. An accountant by background he spent 32
years at KPMG including 12 years as Chairman of KPMG’s International Real Estate & Construction
business. He is a member of the Institute of Chartered Accountants and a Fellow of the Royal Institute
of Chartered Surveyors.
The business address of the board members is 31 Gresham Street, London, EC2V 7QA.
Major Shareholders
The Schroders Group has agreed, conditional on First Admission, to subscribe for 10 per cent. of the
Ordinary Shares being issued pursuant to the Initial Placing and Offer, capped at 15,000,000 Ordinary
Shares. The Directors believe that this investment strongly aligns the interests of the Investment
Manager with Shareholders.
Share Capital
As at the date of this announcement, the issued share capital of the Company is 10 Ordinary Shares
with a nominal value of £0.10 each and 50,000 management shares with a nominal value of £1.00 each.
Assuming the Initial Placing and Offer is fully subscribed, the issued share capital of the Company
immediately following completion of the Initial Placing and Offer will be 150,000,000 Ordinary Shares of
£0.10 each (the management shares will be redeemed). Assuming the Initial Placing and Offer and the
Placing Programme is fully subscribed, the issued share capital of the Company immediately following
completion of the Placing Programme will be 250,000,000 Ordinary Shares of £0.10 each.
Company Registration Details
The Company was incorporated in England and Wales on 9 January 2015 with registered number
09382477 as a private company limited by shares under the Companies Act 2006, as amended. The
Company was re-registered as a public company limited by shares on 30 October 2015. The Company
is registered as an investment company under section 833 of the Act.
Expected timetable
Latest time and date for receipt of completed application forms 11.00 a.m. (GMT) on 30 November
in respect of the Offer for Subscription 2015
Latest time and date for commitments under the Initial Placing 12.00 noon (GMT) or 2.00 p.m.
(SAST) on 2 December 2015
Publication of results of the Initial Placing and the Offer for 3 December 2015
Subscription
First Admission and dealings in Ordinary Shares commence 8.00 a.m. (GMT) or 10.00 a.m.
(SAST) on 9 December 2015
CREST, CSDP or brokerage accounts credited with 8.00 a.m. (GMT) or 10.00 a.m.
uncertificated Ordinary Shares (SAST) on 9 December 2015
Where applicable, definitive share certificates despatched by 14 December 2015
post in the week commencing
Any changes to the expected timetable set out above will be notified by the Company through a
Regulatory Information Service and a SENS announcement. All references to times are to London times
unless specified otherwise.
Capitalised terms in this announcement shall (unless expressly stated otherwise) have the meaning
given to them in the Prospectus.
For further details contact:
Sponsor, Broker and Placing Agent in the UK
Numis Securities (UK investors) 020 7260 1000
Katherine Miller (Sales)
David Benda (Corporate)
Sponsor and Placing Agent in South Africa
PSG Capital (SA investors) +27 21 887 9602
David Tosi
Willie Honeyball
Other advisers
Legal Adviser to the Company as to English law Stephenson Harwood LLP
Legal Adviser to the Company as to South African law Cliffe Dekker Hofmeyr Inc
Legal Adviser to the Sponsor and Placing Agent in the UK as to Norton Rose Fulbright LLP
English law
Reporting Accountant in the UK PricewaterhouseCoopers LLP
Reporting Accountant in South Africa PricewaterhouseCoopers Inc.
Important Information
This announcement has been prepared by, and is the sole responsibility of, Schroder European Real
Estate Investment Trust PLC.
Numis Securities Limited is acting only for the Company in connection with the matters described in this
announcement and is not acting for or advising any other person, or treating any other person as its
client, in relation thereto and will not be responsible for providing the regulatory protection afforded to
clients of Numis Securities Limited or advice to any other person in relation to the matters contained
herein.
PSG Capital is acting only for the Company in connection with the matters described in this
announcement and is not acting for or advising any other person, or treating any other person as its
client, in relation thereto and will not be responsible for providing the regulatory protection afforded to
clients of PSG Capital or advice to any other person in relation to the matters contained herein.
This announcement is being issued for the purposes of Section 21 of the Financial Services and
Markets Act 2000 by Schroder Real Estate Investment Management Limited which is authorised and
regulated by the Financial Conduct Authority.
The Company is not and will not be registered under the US Investment Company Act of 1940, as
amended. The Ordinary Shares have not been, nor will they be, registered under the US Securities Act
of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or
other jurisdiction of the United States or under the applicable securities laws of Australia, Canada,
Japan or the Republic of Ireland. Subject to certain exceptions, the Ordinary Shares may not be offered
or sold in the United States, Australia, Canada, Japan or the Republic of Ireland or to or for the account
or benefit of any national, resident or citizen of Australia, Canada, Japan or the Republic of Ireland or
any person located in the United States. The Placing and the Offer for Subscription and the distribution
of this announcement in other jurisdictions may be restricted by law and the persons into whose
possession this announcement comes should inform themselves about, and observe, any such
restrictions.
This announcement does not constitute, envisage or represent an offer to the public in South Africa, as
envisaged in the South African Companies Act. In South Africa, only persons who are invited to
participate in the Initial Placing and who fall within any of the categories envisaged in section 96(1)(a) of
the South African Companies Act or who subscribe for a minimum amount of R1,000,000 (one million
Rand) per single addressee acting as principal, as contemplated in section 96(1)(b) of the South African
Companies Act, are entitled to participate in the Initial Placing.
This announcement may include "forward-looking statements". All statements other than statements of
historical facts included in this announcement, including, without limitation, those regarding the
Company's financial position, business strategy, plans and objectives of management for future
operations (including development plans and objectives relating to the Company's products and
services) are forward-looking statements.
Forward-looking statements are subject to risks and uncertainties and accordingly the Company's actual
future financial results and operational performance may differ materially from the results and
performance expressed in, or implied by, the statements. These factors include but are not limited to
those described in the Prospectus.
These forward-looking statements speak only as at the date of this announcement. The Company and
Schroder Real Estate Investment Management Limited expressly disclaim any obligation or undertaking
to update or revise any forward-looking statements contained herein to reflect actual results or any
change in the assumptions, conditions or circumstances on which any such statements are based
unless required to do so by the Financial Services and Markets Act 2000, the Listing Rules or
Prospectus Rules of the Financial Conduct Authority, the JSE Listings Requirements or other applicable
laws, regulations or rules.
Date: 11/11/2015 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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