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Announcement Of NAV And Dividend
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
22 February 2018
ANNOUNCEMENT OF NAV AND DIVIDEND
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 31 December 2017,
together with its first interim dividend for the year ending 30 September 2018.
Net Asset Value (NAV)
The Company generated an unaudited NAV as at 31 December 2017 of €180.1 million or 134.7 euro cents
per share (119.6 pence per share based on 31 December 2017 exchange rates). This represents an uplift of
1.1% over the quarter and an NAV total return of 2.2%.
The table below provides a breakdown of the movement in NAV during the reporting period:
€m(1) Cps(2) %(3)
NAV as at 1 October 2017 178.3 133.3
Unrealised gain in valuation of the property
1.9 1.4 1.1
portfolio
EPRA earnings 2.3 1.8 1.3
Non-cash items (0.4) (0.3) (0.2)
Approved dividend payable (4) (2.0) (1.5) (1.1)
NAV as at 31 December 2017 180.1 134.7 1.1
(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 the starting NAV at 1 October 2017
(4) This dividend is in respect of the fourth interim dividend for the year ended 30 September 2017 that was fully approved by the
Board and thereafter announced to the market on 6 December 2017, had an ex-dividend date of 4 January 2018, a record date of 5
January 2018, and a payment date of 19 January 2018. The Company has followed IAS 10 and IAS 32 in its presentation and
recognition of the dividend.
As announced on 1 February 2018, French retailer Casino Group has exercised a buy-back option on SERE's
70% share in two retail assets in France. The sale price reflects a 10% premium to 31 December 2017
valuation and will take place on 31 July 2018. The impact is not reflected in the NAV per 31 December 2017
although valuing the two retail assets at the sale price would be accretive to NAV by approximately
€4.1 million, reflecting 3.1 euro cents per share.
Interim Dividend
The Company announces an increase in its quarterly dividend to 1.85 euro cents per share, being the first
interim dividend in respect of the year ending 30 September 2018. The dividend reflects a 23% increase
against the previous quarters’ dividend and an annualised rate of 5.5% based on the euro equivalent of the
issue price as at admission of 137 euro cents per share, achieving the target dividend stated at IPO. At
current FX rates, the dividend equates to 6.5% yield on GBP issue price of 100 pence per share.
The dividend is 92% covered from net income received during the quarter. Since the quarter end the
Company has announced a number of changes to the portfolio including the acquisition of Apeldoorn for
€20 million at a 10% income yield, which took the Company to full investment, as well as the surrender of
the City BKK lease at Hamburg and the future sale of two retail properties in France. It is expected the net
income of the Company will fully cover the dividends paid out by the Company during the financial year to
September 2018.
The interim dividend payment will be made on Friday, 13 April 2018 to shareholders on the register on the
record date of Friday, 23 March 2018. In South Africa, the last day to trade will be Monday, 19 March 2018
and the ex-dividend date will be Tuesday, 20 March 2018. In the UK, the last day to trade will be Wednesday,
21 March 2018 and the ex-dividend date will be Thursday, 22 March 2018.
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, 5 March 2018. 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, 23 March 2018. 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, 26 March 2018.
Shares cannot be moved between the South African register and the UK register between Monday, 5 March
2018 and Friday, 23 March 2018, both days inclusive. Shares may not be dematerialised or rematerialised in
South Africa between Tuesday, 20 March 2018 and Friday, 23 March 2018, 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, 5 March 2018.
Property Portfolio
As at 31 December 2017, the Company owned nine properties, independently valued at €213.7 million
(independent valuation as at 31 December 2017 reflecting the Company’s ownership share in the
properties), up from €211.7 million as at 30 September 2017, representing an increase of 0.9% net of capital
expenditure.
The current valuation reflects an increase of 8.1% compared to the combined purchase price of the nine
assets in the portfolio. The rent on all leases is indexed to inflation and individual asset business plans are
being implemented to improve future earnings and capital growth potential.
The portfolio is 99% occupied and generates €14.4 million p.a. of contracted rental income, representing a
real estate net initial yield of 5.6% on valuation and a geared property yield of over 8%. The average
unexpired lease term is 4.4 years to first break and 6.6 years to expiry.
The portfolio's country and sector allocations are set out in the table below:
Country Portfolio Sector allocation Portfolio
allocation (% at 31 December (% contracted rent) at 31 December
contracted rent) 2017 2017
France 56% Office 54%
Germany 30% Retail 46%
Spain 14%
Total 100% Total 100%
Since quarter end, the company has committed to three transactions:
- Purchase: As announced on 21 February 2018, the Company has acquired a three storey office
building and data center in Apeldoorn, Netherlands, for an all-in cost of €22 million and generating
a net income yield of approximately 10%.
- Lease surrender: As announced on 9 February 2018, the Company has agreed terms for City BKK to
surrender its lease at the Hamburg office asset in Germany, in return for a cash payment to the
Company of €3.9 million. This cash payment represents 4.7 years of annual rental income from City
BKK. Negotiating a surrender with City BKK was a key initiative within the acquisition strategy. The
agreement gives SERE the opportunity to re-position the property and re-lease the space into a
strengthening office sub-market which will also diversify the property's income profile.
- Sale: As announced on 1 February 2018, the Casino Group has exercised a buy-back option for
SERE’s two retail assets in Biarritz and Rennes with a combined value of €40.7 million for SEREIT’s
70% ownership. The strike/sale price is at 10% premium to the current valuation and will complete
on 31 July 2018. The Company will continue to receive rental income from the properties until the
sale completes.
Investment Progress
Including the Apeldoorn acquisition in the first quarter of 2018, the Company has invested over €233 million
since IPO, constructing a property portfolio with a diversified income profile across key growth cities in
Continental Europe. A total of €73.4 million of debt has been drawn, equating to an LTV of ca 30% at an
average weighted interest rate of 1.31% p.a. and an average weighted duration of approximately six and
half years.
As of today, the Company’s capital is fully deployed. The sale of Rennes and Biarritz will provide the
Company with investment capacity of approximately €45m-€50m (including further gearing). The
Investment Manager is reviewing and in negotiations on a number of new investment opportunities that
could be suitable for redeployment of this capital when it is received later in the year.
Jeff O’Dwyer, Fund Manager at Schroder REIM, said:
"We are pleased to have increased the dividend again and in doing so, achieving the target set at IPO. The
Company is now fully invested and our property portfolio, located across Europe’s growth cities, is already
demonstrating good valuation performance. There are a number of opportunities to grow returns through
asset management across the portfolio and we are encouraged by the speed at which we are being able to
unlock these, driven by our extensive local market teams. Against a backdrop of positive economic
sentiment across Europe we look forward to the rest of 2018 with confidence."
Enquiries:
Duncan Owen/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 Tel: 020 3727 1000
FTI Consulting
JSE Sponsor
PSG Capital
Date: 22/02/2018 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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