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SCHRODER EUROPEAN REAL ESTATE INV TRUST PLC - Announcement Of NAV And Dividend For Period To 30 June 2017

Release Date: 25/07/2017 08:00
Code(s): SCD     PDF:  
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Announcement Of NAV And Dividend For Period To 30 June 2017

SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
Share Code: SRE
ISIN Code: ISIN GG00B1W3VF54


                                                                                                              25 July 2017

                ANNOUNCEMENT OF NAV AND DIVIDEND FOR PERIOD TO 30 JUNE 2017

Schroder European Real Estate Investment Trust plc (“SERE” or the “Company”), the company investing
in European growth cities, today announces its unaudited net asset value (“NAV”) for 30 June 2017,
together with its dividend relating to the three months from 1 April to 30 June 2017.

Net Asset Value

The Company generated an unaudited NAV as at 30 June 2017 of €176.9 million or 132.3 cents per
share (116.1 pence per share based on 30 June 2017 exchange rates). This represents an NAV total
return of 1.5% over the quarter.

The table below provides a breakdown of the movement in NAV during the reporting period:

                                                            €m(1)             Cps(2)                 %(3)

   NAV as at 31 March 2017                                 175.9              131.5

   Unrealised gain in valuation of the
                                                             1.1               0.8                   0.6
   property portfolio

   Transaction costs of investments made
                                                            (0.7)             (0.5)                 (0.4)
   during quarter

   Net operating income                                      2.3               1.8                   1.4

   Other non-cash items                                     (0.1)             (0.1)                 (0.1)

   Approved dividend payable                                (1.6)             (1.2)                 (0.9)


   NAV as at 30 June 2017                                  176.9            132.3**                  0.6

    (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 excludes non-
          controlling interests in the Company’s subsidiaries.
    (2)   Based on 133,734,686 shares
    (3)   % change based on starting NAV 31 March 2017

Interim Dividend

The Company announces a third interim dividend in respect of the year ending 30 September 2017 of
1.5 euro cents per share, its fourth consecutive increase since the Company’s IPO. This dividend
represents an annualised rate of 4.4% based on the euro equivalent of the issue price as at admission.
The dividend is fully covered from income receivable from the current portfolio, reflecting a pay-out
ratio of 87% based on net operating income of €2.3 million for the quarter ending 30 June 2017.

Once fully invested, including the debt being drawn, the Company’s objective is to pay an annualised
euro dividend yield of 5.5% based on the euro equivalent of the issue price as at admission.
The interim dividend payment will be made on Friday, 1 September 2017 to shareholders on the
register on the record date of Friday, 18 August 2017. In South Africa, the last day to trade will be
Tuesday, 15 August 2017 and the ex-dividend date will be Wednesday, 16 August 2017. In the UK, the
last day to trade will be Wednesday, 16 August 2017 and the ex-dividend date will be Thursday, 17
August 2017.

The interim dividend will be paid in GBP to shareholders on the UK register and Rand to shareholders
on the South African register. The exchange rate for determining the interim dividend paid in Rand will
be confirmed by way of an announcement on Monday, 7 August 2017. UK shareholders are able to
make an election to receive dividends in Euro rather than GBP should that be preferred. The form for
applying for such election can be obtained from the Company's UK registrars (Equiniti Limited) and any
such election must be received by the Company no later than Friday, 18 August 2017. The exchange
rate for determining the interim dividend paid in GBP will be confirmed following the election cut off
date by way of an announcement on Monday, 21 August 2017.

Shares cannot be moved between the South African register and the UK register between Monday, 7
August 2017 and Friday, 18 August 2017, both days inclusive. Shares may not be dematerialised or
rematerialised in South Africa between Wednesday, 16 August 2017 and Friday, 18 August 2017, both
days inclusive.

The Company has a total of 133,734,686 shares in issue on the date of this announcement. The dividend
will be distributed by the Company (UK tax registration number 21696 04839) and is regarded as a
foreign dividend for shareholders on the South African register. In respect of South African
shareholders, dividend tax will be withheld from the amount of the dividend noted above at the rate
of 20% unless the shareholder qualifies for the exemption. Further dividend tax information for South
African shareholders will be included in the exchange rate announcement to be made on Monday, 7
August 2017.

Property Portfolio

As at 30 June 2017, the Company owned nine properties, independently valued at €210.1 million, up
from €208.9 million (independent valuation as at 31 March 2017 including the Seville acquisition),
representing an increase of 0.6%.

The portfolio generated net property income of €3.2 million over the quarter, representing an ungeared
quarterly property income return of 1.6%.

The current valuation reflects an increase of 6.2% compared to the combined purchase price of the
nine assets in the portfolio. All leases are indexed and individual asset business plans are being
implemented to improve future earnings and capital growth.

During the quarter, the Company acquired a 50% interest in the Metromar Shopping Centre, Seville for
a purchase price of €26.2 million (50% interest), representing a net initial yield of 6.2%. The 23,500 sqm
shopping centre is let to 50 tenants, with a significant convenience retail offering, anchored by a 2,300
sqm Mercadona grocery supermarket. Work is already underway to further enhance dwell time at the
centre.

The portfolio is 99% occupied and generates €14.0 million p.a. of contracted rental income,
representing a real estate net initial yield of 5.9% on valuation and a geared property yield of over 8%.
The average unexpired lease term is 4.5 years to first break and 6.9 years to expiry.

The portfolio's country and sector allocations are set out in the table below:
Country allocation      Portfolio          Sector allocation            Portfolio
(% contracted rent) at 30 June 2017        (% contracted rent)      at 30 June 2017

France                      55%            Office                         53%
Germany                     30%            Retail                         47%
Spain                       15%
Total                       100%           Total                          100%


Investment Progress

The Company has invested over €211 million since IPO 18 months ago, constructing a property portfolio
with a diversified income profile across key growth cities in Continental Europe. A total of €60.4 million
of debt has been drawn, equating to an LTV of 26% at an average weighted interest rate of 1.31% p.a.
and an average weighted duration of approximately seven years.

The Company has remaining investment capacity of approximately €30 million and an attractive
pipeline of suitable opportunities in target growth cities and regions. The Company is currently in
exclusivity to acquire two logistic investments, totalling approximately €20 million, that would provide
further sector and tenant diversification and at income yields that are accretive to the Company’s
existing portfolio.

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

"It is pleasing to report another quarter of strong progress, following on from the Half Year results in
May. The Company’s NAV and dividend growth is a reflection of the team’s ability to identify, acquire
and manage assets that deliver on the Company’s stated objectives.

“Over 80% of the portfolio is located in Europe’s fastest growing locations by GDP growth. We are well
positioned to focus on generating long term shareholder value, as we look at the available options to
grow the Company over the medium-to-long term.”


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/Richard Gotla                                     Tel: 020 3727 1000
FTI Consulting

JSE Sponsor:
PSG Capital

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