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Net Asset Value and Dividend Declaration

Released 07:00 07-Feb-2018

Net Asset Value and Dividend Declaration

For release 7 February 2018

Schroder Real Estate Investment Trust Limited

ANNOUNCEMENT OF NAV AND DIVIDEND FOR QUARTER TO 31 DECEMBER 2017

Schroder Real Estate Investment Trust (the ‘Company’), the actively managed UK-focused REIT, announces its net asset value ('NAV') and dividend for the quarter to 31 December 2017.

Net Asset Value

The unaudited NAV as at 31 December 2017 was £345.5 million or 66.6 pence per share ('pps').  This reflects an increase of 1.4% per share compared with the NAV as at 30 September 2017, or a NAV total return, including the dividend of 0.62 pps, of 2.3%.  A breakdown is set out below:  

£m pps Comments
NAV as at 30 September 2017 340.6 65.7
Unrealised change in valuation of direct property portfolio 8.4 1.6 Reflects a quarterly like-for-like increase in the value of the underlying portfolio of 1.8% before capital expenditure.  Note that this includes the underlying valuation movement in the joint ventures.
Capital expenditure (2.4) (0.5) Capital expenditure including the Premier Inn at Leeds Arndale Centre of £1.2 million and Stacey Bushes Industrial Estate in Milton Keynes of £0.3 million.
Realised gains on disposal 0.5 0.1 Profit on the disposal of No. 1 Riverside Exchange in Sheffield.
Net revenue 1.6 0.3 Net revenue impacted by one-off abortive transaction costs of £1.5 million.
Dividends paid (3.2) (0.6) Reflects an annualised dividend of £12.8 million or 2.48 pps.
NAV as at 31 December 2017 345.5 66.6

Quarterly dividend cover, ignoring one-off abortive transaction costs, was 97%.  Dividend cover was also negatively impacted by 11% as a result of the accounting treatment of the rent free relating to the Sheffield office disposal.

Dividend payment

The Company announces an interim dividend of 0.62 pence per share (‘pps’) for the period 1 October 2017 to 31 December 2017.  The dividend payment will be made on 7 March 2018 to shareholders on the register as at 16 February 2018.  The ex-dividend date will be 15 February 2018.  The dividend of 0.62 pps will be designated 35 pps as an interim property income distribution (‘PID’) and 27 pps as an interim ordinary dividend.

Performance versus MSCI Index

Over the quarter to 31 December 2017 the underlying portfolio produced a total return of 3% compared with the MSCI Index at 3.3%.  For calendar 2017 the underlying portfolio produced a total return of 12.9% compared with MSCI of 10.8%.

Property portfolio

As at 31 December 2017, the underlying portfolio comprised 44 properties valued at £468.1 million.  At the same date the portfolio produced a rent of £26.9 million per annum reflecting a net initial yield of 5.4%.  The portfolio rental value is £33.4 million per annum, resulting in a reversionary yield of 7.1%. 

As at 31 December 2017 the void rate was 6.6% and the average unexpired lease term, assuming all tenants vacate at the earliest opportunity, was 6.9 years.  The tables below summarise the portfolio information as at 31 December 2017:

Sector weightings Weighting %
SREIT MSCI Index*
Retail 30.2 35.9
Offices 37.3 30.8
Industrial 26.1 23.3
Other 6.4 10.0

* Latest available MSCI Index data as at 30 September 2017

Regional weightings Weighting %
SREIT MSCI Index*
Central London 7.6 14.5
South East excluding Central London 29.2 38.4
Rest of South 6.9 15.8
Midlands and Wales 27.5 14.1
North and Scotland 28.8 17.2

* Latest available MSCI Index data as at 30 September 2017

Asset management

Milton Keynes, Stacey Bushes Industrial Estate

During the quarter four lettings and lease renewals completed at a total rent of £164,000 per annum, reflecting rents of between £5.75 and £7.95 per sq ft.  The estate provides further income growth potential with an average rent and rental value of £5 and £6 per sq ft respectively. After adjusting for refurbishment expenditure, this contributed to a 7% increase in the capital value over the quarter to £27.8 million.

Leeds, Headingley Arndale Centre

The lease to Premier Inn Hotels Limited completed in December following completion of the works to convert part of the asset from office to hotel use.  Premier Inn took a twenty year lease at a rent of £421,400 per annum with inflation linked rent reviews.  The Premier Inn is expected to positively impact footfall and, after adjusting for capital expenditure, contributed to a 1.8% increase in the value over the quarter to £28.7 million.

Debt

The Company has two loan facilities from Canada Life and Royal Bank of Scotland (‘RBS’) totalling £150.1 million with an average duration of approximately 8.2 years and an average interest cost of 4.4%.  The loans are fully compliant with their covenants. 

In addition to the properties secured against the Canada Life and RBS loan facilities, the Company has unsecured properties with a value of £77.3 million and cash of approximately £30.4 million.   This results in a loan to value ratio, net of cash, of approximately 25.6%.   

-ENDS-

For further information:

Schroder Real Estate Investment Management Limited:
Duncan Owen / Nick Montgomery
020 7658 6000
Northern Trust:
James Machon / Fraser Hiddelston
01481 745529
FTI Consulting:
Dido Laurimore / Ellie Sweeney/Richard Gotla
020 3727 1000

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Net Asset Value and Dividend Declaration - RNS