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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
3 March 2021
ANNOUNCEMENT OF NAV AND DIVIDEND
Schroder European Real Estate Investment Trust plc ("SERE" or the "Company") provides a business update and
announces its unaudited net asset value ("NAV") as at 31 December 2020, together with its first interim dividend
for the year ending 30 September 2021:
- Rent collection during the quarter and subsequent period remained stable at c. 89% of contracted rent (as
at 1 March 2021)
- Unaudited NAV as at 31 December 2020 of €201.6 million or 150.7 cents per share, a 0.1% reduction
compared to 30 September 2020
- NAV total return of 0.8% over the quarter and 14.3% for the twelve months to 31 December 2020
- A first interim dividend of 1.57 euro cents per share will be paid for the year ending 30 September 2021
- Portfolio valuation has increased to €276.1 million, reflecting an increase of 1%, net of capital expenditure,
over the quarter
- The 31 December 2020 NAV includes a further impairment to the Company’s 50% interest in the Seville
asset, which is the Company’s only shopping centre. This impairment, which reflects increased uncertainty
as a result of the recently announced vacancy, reduces the net asset value of the 50% interest from c. 3.6%
to c. 2.9% of NAV
- Key asset management activities during the period included:
- Finalisation of the forward sale agreement of the Boulogne-Billancourt, Paris office and receipt of 50%
of the sales price of the purchaser. Refurbishment has now commenced and is forecast to complete in
Q2 2022
- In Hamburg, the Company has secured two new tenants on five year lease terms at a 20% premium to
target rent, for an additional 10% of the space, taking the building to 90% let.
Net Asset Value
The table below provides a breakdown of the movement in NAV during the reporting period:
€m(1) Cps(2) %(3)
Brought forward NAV as at 1 October 2020 201.8 150.9
Unrealised gain in valuation of the property portfolio 7.5 5.6 3.7
Capital expenditure (4.9) (3.7) (2.5)
Impairment to Seville Shopping Centre JV (2.0) (1.5) (1.0)
EPRA earnings 1.5 1.1 0.8
Non-cash items (0.4) (0.3) (0.2)
Dividend paid (1.9) (1.4) (0.9)
NAV as at 31 December 2020 201.6 150.7 (0.1)
(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 exclude non-controlling interests in the Company's
subsidiaries.
(2) Based on 133,734,686 shares
(3) % change based on starting NAV 1 October 2020
Interim dividend
The first interim dividend of 1.57 euro cents per share for the year ending 30 September 2021 represents an
annualised rate of 6.3% based on the current share price of 88 pence per share1. As announced previously, whilst
the refurbishment of Paris Boulogne-Billancourt is being undertaken, the cover from net income reduces to c.
70%. The Board has made the prudent decision to allocate some of the profits out of the net sale proceeds from
the forward-funding disposal of the asset towards covering the shortfall in income whilst it is being refurbished
and pending reinvestment of the remainder of sale proceeds. The Board’s intention is to progressively increase
the dividend back to 1.85 euro cents per quarter as the impact of Covid-19 on the Company's income abates and
proceeds from Boulogne-Billancourt are re-deployed into earnings enhancing initiatives and investments.
The interim dividend payment will be made on Tuesday, 13 April 2021 to shareholders on the register on the
record date of Friday, 26 March 2021. In South Africa, the last day to trade will be Tuesday, 23 March 2021 and
the ex-dividend date will be Wednesday, 24 March 2021. In the UK, the last day to trade will be Wednesday, 24
March 2021 and the ex-dividend date will be Thursday, 25 March 2021.
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, 8 March 2021. 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, 26 March 2021. 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, 29 March
2021.
Shares cannot be moved between the South African register and the UK register between Monday, 8 March
2021 and Friday, 26 March 2021, both days inclusive. Shares may not be dematerialised or rematerialised in
South Africa between Wednesday, 24 March 2021 and Friday, 26 March 2021, 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, 8 March 2021.
Rent collection
Approximately 89% of the rent due for the quarter ending 31 December 2020 has been collected. This is ahead
of the amount collected in the previous two quarters of 87%. Furthermore the rent collected for January and
February 2021 is in line with Q4 2020.
Property portfolio
As at 31 December 2020, the property portfolio was independently valued at €276.1 million, an increase of 2.8%,
or €7.5 million, on the 30 September 2020 valuation of €268.6 million.
Net of capital expenditure the valuation increase was approximately €2.6 million, reflecting a property capital
return of 1.0%. The main drivers of this were:
- The Hamburg office investment saw its value increase (+€1.0m or 6.6% net of cap ex and incentives) as a
result of concluding two new leases
- Yield compression and ERV growth across the industrial assets portfolio. This resulted in a net valuation
increase of €1.4 million, or 3.0%
- The value of the office refurbishment in Paris Boulogne-Billancourt increased by over €4 million driven by
capital spending over the quarter. Net of capital spending, the return was €0.4 million, or 0.6%
- The value of SERE's 50% interest in the Seville shopping centre declined by €50,000. This asset is the only
asset in the portfolio where the valuers continue to adopt a material uncertainty clause. This asset value
does not reflect the lease terminations announced in February 2021. These terminations are expected to
have a negative impact on the value of the asset and the 31 December 2020 NAV has been further impaired
to reflect increased risk for this investment and the expectation of further value decline.
The portfolio generated a net property rental income of €3.4 million, representing an ungeared quarterly
property income return of 1.2% (equating to 4.9% on an annualised basis).
Asset Management update
Key asset management initiatives during the most recent quarter were as follows:
- Signed and commenced the construction contract for the refurbishment of the Boulogne-Billancourt, Paris
office. Remaining costs are forecast to be c. €24 million, with completion forecast for June 2022.
Approximately 50% of the sale proceeds have already been received as part of the forward funding
agreement with the purchaser. The remainder will be received as refurbishment milestones are met through
to completion
- At its Hamburg office investment, the Company has secured two new tenants for an additional 650 sqm of
office space on the seventh floor and 60 sqm of retail space on the ground floor. The new leases have both
been agreed on a five-year term and represent 10% of the Hamburg lettable area. The rents achieved are
at a c. 20% premium to the business target. The building is now 90% let and discussions are ongoing with
potential tenants for the remaining floor
- The Company’s retail exposure in Berlin (DIY) and Frankfurt (Grocery) represents 14% of the portfolio value
and continues to perform strongly, achieving c. 100% rent collection in 2020 and valuation uplifts. SERE
continues to work with retailers to optimise occupancy in the Seville shopping centre including reviewing
alternate use options for vacant space.
Balance sheet and debt
As at 31 December 2020, the Company has investable cash of approximately €25 million and a net loan to value
ratio of approximately 25%. This capital is available for new earnings enhancing initiatives including new
investments.
The Company has seven loans secured by individual assets or groups of assets, with no cross-collateralisation
between loans and recourse back to the Company. The average weighted total interest rate of the loans is 1.4%
per annum and the earliest scheduled loan maturity is in 2023. All loans are currently in compliance with their
default covenants, though there is a cash trap in operation for the Seville loan.
Sustainability
The Company continues to look at ways to improve on its recently awarded three green star global sustainability
benchmark ‘GRESB’. These initiatives include BREEAM in use certification, utilisation of renewable energy, LED
lighting and smart metering.
Participation in the GRESB survey is part of the Company’s broader ESG and positive impact strategy which is
integral in the investment process.
Further information can be found within the Company’s Annual Report.
https://www.schroders.com/en/sysglobalassets/investment-
trusts/sereit/documents/annuals/schroders_sereit_ar20-2-3.pdf
Net Zero Carbon Pathway
The Company, together with Schroder Real Estate Investment Management Limited (“Schroder Real Estate”) as
Investment Manager, is focused on delivering continued improvements in the sustainability performance of the
portfolio. In December 2020, Schroder Real Estate issued its Net Zero Carbon Pathway, a commitment made in
September 2019 as part of the UK Better Buildings Partnership Climate Commitment. This outlines a trajectory
for achieving net zero carbon by 2050 and addresses both operational carbon, covering whole building
performance; and embodied carbon, covering development and refurbishment activities.
Further information can be found within the Schroder Real Estate Pathway to Net Carbon Zero document
at https://www.schroders.com/en/sysglobalassets/investment-trusts/sreit/schroder-real-estate-net-zero-
carbon-pathway-december-2020_1621372_v1.pdf
1. Share price as at 1 March 2021. Exchange rate £1:€1.14
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/Methuselah Tanyanyiwa Tel: 020 3727 1000
FTI Consulting
The Company has a primary listing on the London Stock Exchange and a secondary listing on the JSE Limited.
JSE Sponsor
PSG Capital
Date: 03-03-2021 09:00:00
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