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Announcement of NAV and dividend

Released 07:00 07-Mar-2019

RNS Number : 0847S
Schroder Eur Real Est Inv Trust PLC
07 March 2019

7 March 2019


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 2018, together with its first interim dividend for the year ending 30 September 2019:

-     Unaudited NAV as at 31 December 2018 of €183.5 million or 137.2 cents per share;

-     Annual NAV total return for 12 months to 31 December 2018 of 6%;

-     An interim dividend of 1.85 euro cents per share relating to the quarter to 31 December 2018.

Since the period end the Company has made further progress with its investment strategy and has exchanged contracts to acquire two logistics warehouses in Rennes, France for €17.3 million, reflecting an attractive net initial yield of 5.9%. The acquisition is expected to complete before March quarter end and will be part funded with two new loan facilities totaling €12.3 million secured against both the Rennes asset and the Rumilly logistics property, which was acquired in 2018. Upon completion of the purchase, SERE will have redeployed the net proceeds raised from the sale of the two Casino supermarkets in 2018 into five warehouse investments, growing the portfolio's exposure to the high growth industrial sector to 19%.

Jeff O'Dwyer of Schroder REIM said:

"The portfolio's investments offer strong diversification benefits from a sector, city and tenant perspective, and have an average unexpired lease term of approximately 6.5 years. Our current dividend yield of c. 6% is highly attractive relative to other asset classes and looking forward, we have a number of asset management initiatives that will assist in delivering continued income and capital growth.  

"Recent geo-political uncertainty caused by events such as Brexit and the US-China trade wars have had a dampening effect on global growth. Notwithstanding this, we have invested in 'Winning Cities' such as Berlin, Hamburg, Frankfurt and Paris that will continue to remain attractive irrespective of political risk and where the real estate fundamentals remain compelling. They are cities that are forecast to grow from GDP, tourism numbers and population perspectives at faster rates relative to their respective economies, and with an established footprint in all of them, we believe that there is a real opportunity to build a REIT of significant size and scale that can outperform and deliver attractive shareholder returns."

Net Asset Value

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





Brought forward NAV as at 1 October 2018




Unrealised gain in valuation of the property portfolio




Capital expenditure




EPRA earnings




Non-cash items




NAV as at 31 December 2018




(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 2018

Interim Dividend

The first interim dividend of 1.85 euro cents per share for the year ending 30 September 2019 represents an annualised rate of 5.5% based on the Euro IPO issue price of 137 euro cents per share. This is in line with the Company's target dividend, which is based on paying a sustainable covered dividend from income expected to be generated from the portfolio. Based on the GBP IPO issue price of 100 pence per share the annualised yield is 6.8% (based on FX rates as at 31 December 2018).

The dividend for the period to 31 December 2018 is 75% covered from income received during the quarter. The lower level of dividend cover this quarter is the result of the reduced income being generated at the Company's Hamburg office asset following the lease surrender with City BKK announced last year. The Company has already re-let 20% of the surrendered space, is in advanced discussions on approximately a further 20% of the space and will also receive €1.5m in 2019 in respect of the second tranche of the surrender payment from City BKK. Based on the net income predicted to be generated during the year (including the surrender premium), it is anticipated that the total dividends for the year will be fully covered.

The interim dividend payment will be made on Friday, 12 April 2019 to shareholders on the register on the record date of Friday, 29 March 2019.  In South Africa, the last day to trade will be Tuesday, 26 March 2019 and the ex-dividend date will be Wednesday, 27 March 2019. In the UK, the last day to trade will be Wednesday, 27 March 2019 and the ex-dividend date will be Thursday, 28 March 2019.

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, 11 March 2019. 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, 29 March 2019. 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, 1 April 2019. Conversion to rand will take place two business days following the announcement.

Shares cannot be moved between the South African register and the UK register between Monday, 11 March 2019 and Friday, 29 March 2019, both days inclusive. Shares may not be dematerialised or rematerialised in South Africa between Wednesday, 27 March 2019 and Friday, 29 March 2019, 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, 1 April 2019.

Property Portfolio

As at 31 December 2018, the Company owned 12 properties located in growth cities of Continental Europe, independently valued at €222.7 million. Over the quarter, the portfolio value, net of capex, remained stable. The portfolio generated a net property rental income of €3.6 million, representing an ungeared quarterly property income return of 1.6% (equating to 6.5% on an annualised basis).

Following the purchase of the Rennes asset, the portfolio comprises 13 properties with a value of approximately €240 million and a blended net initial yield of 6.2%.  The annual contracted rent is €17.7 million, with an average unexpired lease term to first break and expiry of 5.0 years and 6.5 years.

The country and sector allocations for the portfolio as at 7 March 2019 are set out in the table below:


(inc committed Rennes purchase)


(inc committed Rennes purchase)


























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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Announcement of NAV and dividend - RNS