TIDMSERE
RNS Number : 9447Y
Schroder Eur Real Est Inv Trust PLC
15 September 2020
15 September 2020
ANNOUNCEMENT OF NAV AND DIVID INCREASE
Schroder European Real Estate Investment Trust plc ("SERE" or
the "Company"), the company investing in European growth cities,
today provides a business update, alongside announcing its
unaudited net asset value ("NAV") as at 30 June 2020 and third
interim dividend for the year ending 30 September 2020:
- Rent collection during the quarter and subsequent period
remained stable at c.84% of contracted rent (as at 15 September
2020);
- An increase in the interim dividend to 1.39 euro cents per
share, equating to 75% of the previous target level pre COVID-19.
This is an increase from 50% of the target level for the prior
quarter. The dividend is 104% covered from income received during
the quarter;
- The dividend increase reflects the positive progress made with the Paris Boulogne-Billancourt refurbishment project and the stabilisation in rent collection levels. The board will continue to keep the dividend level under review;
- Unaudited NAV as at 30 June 2020 of EUR178.4 million or 133.4
cents per share, a 2.1% reduction compared to 31 March 2020, driven
by capital expenditure commitments at Paris Boulogne-Billancourt
and a valuation decrease at the Company's sole shopping centre in
Seville;
- NAV total return of -0.7% over the quarter; and
- Loan to value, net of cash, of 27%, with no debt maturity before 2023.
Jeff O'Dwyer, of Schroder Real Estate Investment Management
Limited, commented:
"The SERE portfolio continues to hold up well, underpinned by
our city, sector and tenant diversification that has led to
favourable rent collection statistics and valuation resilience. Our
primary focus remains to deliver and capitalise on the Paris
Boulogne-Billancourt refurbishment. Successful completion will have
the potential to be accretive to NAV and, subject to disposal,
provide an opportunity to further diversify the portfolio and
provide a path back to the target dividend."
Net Asset Value
The table below provides a breakdown of the movement in NAV
during the reporting period:
EURm(1) Cps(2) %(3)
Brought forward NAV as at 1 April 2020 182.1 136.2
Unrealised gain in valuation of the property
portfolio (2.6) (1.9) (1.4)
Capital expenditure (0.9) (0.7) (0.5)
EPRA earnings 1.9 1.4 1.0
Non-cash items 0.4 0.3 0.2
Dividend paid (2.5) (1.9) (1.4)
NAV as at 30 June 2020 178.4 133.4 (2.1)
(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 the starting NAV as at 1 April 2020
The NAV total return is -0.7% over the quarter, 2.7% over 12
months and 5.2% p.a. over three years.
Interim dividend
The Company announces its third interim dividend for the year
ending 30 September 2020 of 1.39 euro cents per share, equating to
75% of the target dividend.
The dividend is 104% covered from income received over the
quarter. Total dividends declared relating to the nine months are
now 4.16 euro cents per share, with a dividend cover for the nine
months of 113%.
In implementing the dividend strategy, the board has considered
the rent collection and cash position of the Company, alongside
market conditions, current asset management activity and the longer
term sustainable rental income from the portfolio. Further positive
clarity is starting to emerge around these factors, in particular
certain asset management activity and rent collection. However, as
a consequence of COVID-19, uncertainty and risks remain heightened
and by retaining additional cash at this time, the Company will be
better positioned to withstand a downturn in activity. The dividend
will continue to be kept under close review by the board, in
particular as the Paris Boulogne-Billancourt project
progresses.
The interim dividend payment will be made on Friday, 23 October
2020 to shareholders on the register on the record date of Friday,
9 October 2020. In South Africa, the last day to trade will be
Tuesday, 6 October 2020 and the ex-dividend date will be Wednesday,
7 October 2020. In the UK, the last day to trade will be Wednesday,
7 October 2020 and the ex-dividend date will be Thursday, 8 October
2020.
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, 21 September
2020. 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, 9 October
2020. 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, 12 October 2020.
Shares cannot be moved between the South African register and
the UK register between Monday, 21 September 2020 and Friday, 9
October 2020, both days inclusive. Shares may not be dematerialised
or rematerialised in South Africa between Wednesday, 7 October 2020
and Friday, 9 October 2020, 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, 21
September 2020.
Asset management update
During the period the Company made significant progress in
respect of the following key asset management initiatives:
- At its Paris office investment in Boulogne-Billancourt, the
tenant Alten, remains committed to the new pre-let. The Company has
received planning approval and continues to advance construction
tender pricing. The intention is to award and commence the main
works in October 2020. Positive discussions are ongoing with regard
to multiple funding options, including a forward funding/forward
sale or the taking of additional debt, keeping within the stated
gearing level of 35% LTV (net of cash).
- At the Company's sole shopping centre, Metromar in Seville
(50% share), SERE has completed a 400 sqm expansion to the anchor
supermarket and agreed a new 16 year term with Mercadona. This
generates an additional EUR50,000 in annual rent (100% interest).
The Company has also concluded agreements totaling 13,300 sqm,
representing 60% of the building's GLA, with a number of other
retailers to continue occupation, subject to rental discounts.
These discounts are in line with that assumed in the June 2020
valuation. The investment represents 9% of the portfolio value to
the previous June NAV.
Debt
The overall loan to value ('LTV') net of cash is 27%. The
weighted average total interest rate on the loans is 1.4% p.a.
The Company has seven loans secured by individual assets or
groups of assets, with no cross-collateralisation between loans.
Each loan has separate LTV and income covenants, with a range of
headroom against covenants:
- LTV default covenant headroom ranges between 17% (Seville) and 37% (Hamburg and Stuttgart)
- Income default covenant headroom ranges between 18% (Hamburg
and Stuttgart) and 95% (Rumilly). For the Company's sole shopping
centre in Seville, there is no default income covenant for the
loan, however there continues to be a cash trap of net income from
the property due to reduced rental income
Property portfolio
- The Company is well positioned with a diversified portfolio
and pipeline of value-enhancing asset management initiatives
- As at 30 June 2020, the Company owned 13 properties located in
growth cities of Continental Europe, independently valued at
EUR244.7 million at a blended net initial yield of 5.8%. This value
represents a fall of 1.1% led primarily by a deterioration in the
retail sector. The annual contracted rent is EUR17.3 million, with
an average unexpired lease term to first break and expiry of 4.6
years and 5.8 years
- 75% of the portfolio is invested in business space assets
(office/industrial/mixed-use data centre) in cities including
Paris, Berlin, Stuttgart and Hamburg. The country and sector
allocations for the portfolio as at 30 June 2020 are set out in the
table below:
Country Allocation Sector Allocation
France 44% Office 48%
Germany 31% Retail 25%
Netherlands 16% Industrial 19%
Spain 9% Mixed 8%
Total 100% Total 100%
- Over the quarter, total property returns were flat (0.0%).
Over 12 months the underlying property portfolio returned 6.1% and
over three years it returned 8.3% p.a. (excluding the impact from
transaction costs).
Enquiries:
Jeff O'Dwyer / Duncan Owen
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
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