SCHRODER EUROPEAN REAL ESTATE INV TRUST PLC - Acquisition Of Two Grocery Retail Investments Located In Rennes And Anglet (Near Biarritz), France

Acquisition Of Two Grocery Retail Investments Located In Rennes And Anglet (Near Biarritz), France

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

                                                                                 29 June 2016


        ACQUISITION OF TWO GROCERY RETAIL INVESTMENTS LOCATED IN RENNES AND
                          ANGLET (NEAR BIARRITZ), FRANCE

The Board of Schroder European Real Estate Investment Trust plc (the "Company")
announces the completion of the acquisition of two grocery anchored retail investments
located in Rennes and Anglet (near Biarritz), France. The freehold properties are located in
established retail parks which benefit from strong local catchments. The acquisition has been
made in a joint venture with the vendor, with the Company acquiring 70% of the investments
and the vendor Mercialys retaining a 30% interest. The joint venture has an initial term of six
years, during which time a sale of the investment requires the consent of both parties.

The combined purchase price (including costs) for the 70% interest is €43.2 million, reflecting
a net initial yield of 5%. The assets are 100% income producing and let on the basis of 12
year commercial leases to Casino and Boulanger, subject to market standard break clauses.
The majority of income is from Casino, one of France's leading hypermarket operators.

The investments are subject to a one-time purchase option, exercisable by the Casino Group
on the second anniversary of the acquisition date. This is exercisable only under specific
conditions. The net-to-seller strike price for exercising this option is €44.8 million for the
Company’s 70% interest.

The acquisition is in line with the Company’s strategy to acquire dominant retail investments
in growth regions.

Following this transaction, the Company has invested over €150 million of capital at a
blended net initial yield of approximately 5.6%, completing the deployment of the initial equity
and a substantial proportion of total investment capacity. The portfolio now comprises seven
assets located in key target markets of France and Germany which demonstrate favourable
growth characteristics. The Company continues to pursue negotiations on a number of other
potential transactions.

Commenting on the acquisition, Sir Julian Berney, Non-Executive Chairman of the Company
commented:

"We are pleased to have secured this off-market opportunity in a sector that has been
notoriously difficult for pan-European investment funds to access effectively. It is a strong
addition to the portfolio and adds further diversification at the same time as maintaining a
foundation of long term income for the Company."

Tony Smedley, Head of Continental European Investment at Schroder REIM commented:

"Against the background of the significant changes taking place in the retail markets across
Europe, we have been focusing on sub-sectors which we believe are likely to be less
impacted by the shift towards e-commerce, together with those locations which are dominant
in their catchment. These two investments fit such criteria and are a positive diversifier to the
existing retail assets in Berlin and Frankfurt. This transaction completes the deployment of
the initial equity. We are in negotiations to draw debt against selected assets in the portfolio,
which will be accretive to shareholder returns.”

The Board and the Manager are monitoring the impact of the UK vote to leave the EU which
took place last week and any impact this may have on the portfolio and the Company’s
strategy. It is positive that the assets of the Company are denominated in Euros and that the
Company owns income producing assets in cities/regions which have traditionally proven to
be stable and resilient over the long term. The Board remains focused on the real estate
fundamentals of our portfolio and generating attractive income and capital returns through
active management. Furthermore, the Company has additional investment capacity which
means it is well positioned to take advantage of any short term market dislocation that may
arise as a result of last week’s decision.

The Company has a long term investment strategy, targeting investments in large, liquid
Continental European cities whose growth prospects exceed their domestic economies. We
will continue to invest in accordance with the strategy without compromising on
fundamentals.


Enquiries:

Duncan Owen/Tony Smedley
Schroder Real Estate Investment Management Limited                   Tel: 020 7658 6000


Ria Vavakis
Schroder Investment Management Limited                               Tel: 020 7658 2371


Dido Laurimore/Ellie Sweeney/Richard Gotla                           Tel: 020 3727 1000
FTI Consulting

Sponsor: PSG Capital Proprietary Limited

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