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NAV and dividend for period to 30 June 2018

Released 07:00 03-Aug-2018

RNS Number : 6968W
Schroder Eur Real Est Inv Trust PLC
03 August 2018

3 August 2018




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 2018, together with its third interim dividend for the year ending 30 September 2018 relating to the three months to 30 June 2018:

·      Unaudited NAV as at 30 June 2018 of €187.2 million or 140.0 cents per share, an uplift of 0.1% over the quarter;

·      Quarterly NAV total return, including the dividend, of 1.4%;

·      An interim dividend of 1.85 euro cents per share relating to the quarter to 30 June 2018;

·      This dividend is in-line with the target dividend stated at IPO of an annualised rate of 5.5% on the IPO issue price


Since quarter end the Company has made progress with its investment strategy, including realising profit with sales at low yields and reinvestment at higher yields:

·      The sale of its investment in two Casino supermarkets in France (as announced on 1 February 2018) for a price of approximately €45 million and a net income yield of sub 5%;

·      Contracted acquisition of a logistics investment in Rumilly, France for a purchase price of €8.6 million, representing a net income yield of 7.0%. This is targeted to complete in mid-August;

·      Exclusivity granted for the acquisition of three Dutch warehouse investments, totalling over €20 million at a net income yield of between 6% - 7%.


Net Asset Value


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


NAV movement 




Brought forward NAV as at 1 April 2018



Capital expenditure




Unrealised gain in valuation of the property portfolio




EPRA earnings




Non-cash items




Dividend paid




NAV as at 30 Jun '18





(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 1 April 2018


Interim Dividend


The third interim dividend of 1.85 euro cents per share for the year ending 30 September 2018 represents an annualised rate of 5.5% based on the Euro IPO issue price of 137 euro cents per share. Based on the GBP IPO issue price of 100 pence per share the annualised yield is 6.7% (based on FX rates as at 30 June 2018). The dividend is 96% covered from income received during the quarter. Dividends for the first nine months of the financial year are 120% covered from net income received.


The interim dividend payment will be made on Friday, 14 September 2018 to shareholders on the register on the record date of Friday, 31 August 2018.  In South Africa, the last day to trade will be Tuesday, 28 August 2018 and the ex-dividend date will be Wednesday, 29 August 2018. In the UK, the last day to trade will be Wednesday, 29 August 2018 and the ex-dividend date will be Thursday, 30 August 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, 13 August 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, 31 August 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, 3 September 2018.


Shares cannot be moved between the South African register and the UK register between Monday, 13 August 2018 and Friday, 31 August 2018, both days inclusive. Shares may not be dematerialised or rematerialised in South Africa between Wednesday, 29 August 2018 and Friday, 31 August 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, 13 August 2018.


Property Portfolio

As at 30 June 2018, the Company owned ten properties located in growth cities of Continental Europe, independently valued at €238.0 million. Over the quarter, the portfolio value has increased €0.4 million, net of capex. This reflects a property capital return of 0.2%.  Over the same period, the portfolio generated a net property income of €3.9 million, representing an ungeared quarterly property income return of 1.7% (on an annualised basis, reflecting an ungeared property income return of 6.7%).

The committed portfolio, which includes the Rumilly purchase and excludes the Casino sales, will comprise nine properties with a value of approximately €202 million. The portfolio will generate contracted rents of €14.6 million and is 97% let with an average unexpired lease term to first break and expiry of 4.7 years and 6.5 years. 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. An example of this is the lease surrender and remarketing of the Company's Hamburg asset, in a strengthening office sub-market, where SERE is refurbishing part of the property and already has interest from potential tenants.

The country and sector allocations for the committed portfolio are set out in the table below:


Country allocation (% contracted rent)

Committed Portfolio (inc Rumilly, exc Casino)

Sector allocation
(% contracted rent)

Committed Portfolio (inc Rumilly, exc Casino)






















The fundamentals of the Eurozone economy remain positive and growth continues. Unemployment is falling, contributing to positive sentiment and increasing consumer spend. The strong economic backdrop is benefiting property markets, with office vacancy rates in some of the Company's existing and target markets at record lows, resulting in strong rental growth. (Source: JLL Office Property Clock Q2 2018)


Investment Progress

The Company has invested over €233 million since IPO, constructing a property portfolio with a diversified income profile across key growth cities in Western Continental Europe. A total of €73.4 million of debt has been drawn, equating to an LTV of c.28% at an average weighted interest rate of 1.3% p.a. and an average weighted duration of approximately 6.1 years.

The sale of the Casino supermarkets provides new investment capacity of approximately €45 million (including further gearing). Approximately €9 million will be deployed with the completion of the Rumilly acquisition and the three Dutch warehouse investments in exclusivity total over €20 million. These acquisitions would provide further sector and tenant diversification and are at income yields that are accretive to the Company's existing portfolio. If all these acquisitions complete the Company would have approximately €15 million of remaining investment capacity and the Investment Manager is reviewing and in negotiation on a number of new opportunities.   

Jeff O'Dwyer, of Schroder REIM, said:


"The Rumilly logistics commitment adds further diversification to the portfolio which now offers a mixture of income and growth through a programme of ongoing and identified asset management initiatives.


"Approximately 90% of the portfolio is situated in Europe's fastest growing conurbations and includes cities such as Berlin, Frankfurt, Hamburg, Stuttgart and Paris, all of which are set to outperform their domestic economies in the medium to long term. Building on the positive Half Year results, the attractive income distribution and continued growth in property values across the portfolio is a reflection of the team's ability to identify, acquire and manage assets that deliver on the Company's stated objectives.


"We remain well positioned to generate long term shareholder value, benefiting from the favorable Eurozone backdrop, as we explore the different options to grow the company over the medium-to-long term."






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   

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NAV and dividend for period to 30 June 2018 - RNS