Schroder Real Estate NAV and Dividend for Quarter to 31 December 2020
15 February 2021 - 6:00PM
UK Regulatory
TIDMSREI
For release 15 February 2021
Schroder Real Estate Investment Trust Limited
ANNOUNCEMENT OF NAV AND DIVID FOR QUARTER TO 31 DECEMBER 2020
Schroder Real Estate Investment Trust (the 'Company' or 'SREIT'), the actively
managed UK-focused REIT, announces its net asset value ('NAV') and dividend for
the quarter to 31 December 2020. The Company's rent collection remains strong,
which has underpinned a 9% increase in the quarterly dividend. In addition,
following two signficant acquisitions in December, the portfolio weighting
towards the industrial sector has increased from 30% to 37% over the quarter.
Net Asset Value
The unaudited NAV as at 31 December 2020 was £293.3 million or 58.8 pence per
share ('pps'). This reflects an increase of 1.4% per share compared with the
NAV as at 30 September 2020. Based on the quarterly dividend paid of 0.575 pps,
the NAV total return was 2.4% for the period, with a like for like portfolio
valuation increase offset by capital expenditure and one off acquisition costs.
A breakdown is set out below:
£m pps Comments
NAV as at 30 September 296.8 58.0
2020
Unrealised increase in the 4.5 0.9 Portfolio like-for-like valuation movement,
valuations of the direct net of capital expenditure, of +0.9% over
real estate portfolio and the period to 31 December 2020. Sector
Joint Ventures capital value movements, net of capital
expenditure, were Industrial +4.7%, Offices
0.0%, Retail -1.9% and Other -2.1%
Capital expenditure (1.1) (0.2) Includes asset management activity across
(direct portfolio and the multi-let industrial portfolio to
share of Joint Ventures) capture rental growth (Millshaw Industrial
Estate, Leeds and Union Park, Norwich) and
completing the landlord works in relation
to Lidl and Home Bargains lettings at St
John's Retail Park, Bedford
Acquisition costs (2.3) (0.4) Costs associated with the separate
acquisitions of Langley Park, Chippenham
and Stanley Green, Cheadle, that totalled £
36.5m.
Realised gains on 0.1 - Disposal of small non-core assets including
disposals two units in Commercial Road, Portsmouth
(High Street Retail, £2.0m) and
unconditional exchange of The Portergate,
Sheffield (Office, £4.2m) which has now
completed
Net revenue 2.6 0.5 Quarterly EPRA earnings
Dividend paid (2.9) (0.6) Reflects the 0.575 pps quarterly dividend
which was paid in December 2020
NAV as at 31 December 2020 297.7 58.2 Calculation based on 511,364,955 shares
(excluding the share
buyback)
Share buyback (4.4) 0.6 Purchase of 12.8m shares at an average
price of 34.5 pence per share
NAV as at 31 December 2020 293.3 58.8 Calculation based on 498,516,392 shares
Dividend payment
The Company announces an interim dividend of 0.625 pps for the period 1 October
2020 to 31 December 2020. This equates to a 9% increase compared with the prior
quarter's dividend level and reflects progress with rent collection, asset
management, acquisitions and share repurchases. This dividend level is
anticipated to be fully covered by recurring net income, with further net
income growth potential from asset management and further new investment. The
dividend will continue to be reviewed by the Board targeting a sustainable and
progressive dividend policy.
The dividend payment will be made on 12 March 2021 to shareholders on the
register as at 26 February 2021. The ex-dividend date will be 25 February 2021.
The dividend of 0.625 pps will be wholly designated as an interim property
income distribution ('PID').
Rent collection
Rent collected for the quarter ending 31 March 2021 currently totals 85% of
contracted rents (as at 10 February 2021), which is in-line with the equivalent
date in the previous quarter. The breakdown between sectors is 96% of office
rent collected, 98% of industrial rent collected and 54% relating to retail,
leisure and ancillary uses collected. The Company remains in active dialogue
with its tenants for all rents due to be paid and expects to recover a
significant portion of the outstanding amount.
Performance versus MSCI Benchmark Index
Over the quarter to 31 December 2020, the underlying portfolio produced a total
return of 1.9%. This compares favorably with the total return for the MSCI
Benchmark of 1.3%. The portfolio's quarterly income return of 1.6% compared
with the Benchmark at 1.1%.
For the calendar year 2020, the underlying portfolio produced a total return of
0.7% compared with MSCI of -1.2%, resulting in relative outperformance of 1.8%.
The Company has outperformed the MSCI Benchmark Index over one, three, five, 10
years and since IPO in 2004.
Property portfolio
As at 31 December 2020, the underlying portfolio comprised 40 properties valued
at £432.8 million. At the same date the portfolio produced a rent of £28.3
million per annum reflecting a net initial yield of 6.1% which compares with
the MSCI Benchmark Index of 4.7%. The portfolio estimated rental value is £31.6
million per annum, reflecting a reversionary yield of 7.3%, which compares with
the MSCI Benchmark Index of 5.2%.
The void rate was 5.1% calculated as a percentage of rental value. The average
unexpired lease term, assuming all tenants vacate at the earliest opportunity,
is 5.5 years. The tables below summarise the portfolio information as at 31
December 2020:
Sector weightings Weighting (%)
SREIT MSCI Benchmark Index
Industrial 37.2 28.4
Offices 35.3 27.5
Retail 20.6 24.5
Retail warehouse 11.4
Retail ancillary to main 5.2
use 4.0
Retail single use
Other 6.9 16.6
Regional weightings Weighting (%)
SREIT MSCI Benchmark Index
Central London 9.1 17.6
South East excluding Central 19.2 37.1
London
Rest of South 11.9 14.3
Midlands and Wales 24.9 12.3
North and Scotland 34.9 18.4
Northern Ireland 0.0 0.2
Acquisitions
Two multi-let industrial estates in Cheadle (Greater Manchester) and Chippenham
were acquired, in separate transactions, in December 2020 for £36.5 million.
The two estates generate initial rental income of £2.8 million per annum,
equating to a 6.8% net initial yield. The estates offer significant potential
to grow net income through asset management and development. The acquisitions
increase SREIT's industrial weighting from 30% to 37%, with the majority of
this in high quality, multi-let estates.
The Company has approximately £40 million of cash and undrawn debt facilities
as at 31 December 2020 to make further acquisitions, invest in the existing
portfolio and share repurchases.
Share buy-back programme
During the period to 31 December 2020 12.8 million shares were acquired for £
4.4 million which reflected an average price of 35.5 pps and an average
discount to the September 2020 NAV of -39%. This resulted in NAV accretion of
approximately 1.0%. Since the period end approximately 3.1 million additional
shares have been acquired for £1.2 million.
In total, 23.1 million shares have been repurchased since the share buy-back
programme launched in September 2020, delivering 2.0% of accretion to the 31
March 2020 NAV. In addition, the repurchases are earnings accretive, therefore
increasing dividend cover.
The open market share buyback programme will continue with the Company's
broker, JP Morgan Securities plc.
Balance sheet and debt
As at 31 December 2020, the Company has cash of £25.2 million and a loan to
value ratio, net of cash, of approximately 32%.
The Company has two loan facilities, a £129.6 million term loan with Canada
Life and a £52.5 million revolving credit facility ('RCF') with Royal Bank of
Scotland International. As at 31 December 2020, £37.0 million of the RCF was
drawn. Fully drawn, the facilities have an average duration of approximately 12
years and an average interest cost of 2.2%.
Sustainability
Three Green Stars awarded in annual GRESB survey
The Company retained its three star rating in the GRESB global sustainability
benchmark assessment for real estate assets during the period and came first in
its peer group of nine internally and externally managed listed real estate
investment companies. The 2020 GRESB Assessment structure fundamentally
changed from the 2019 Assessment, establishing a new, more challenging baseline
for measuring sustainability performance.
Participation in the GRESB survey is part of the Company's broader ESG and
positive impact strategy which is integral to the investment process.
Further information can be found within the Company's latest Sustainability
Guide at https://www.schroders.com/en/uk/private-investor/fund-centre/
funds-in-focus/investment-trusts/schroders-investment-trusts/
schroder-real-estate-investment-trust/sustainability/.
Net Zero Carbon Pathway
The Company, together with Schroder Real Estate as Investment Manager, is
focussed on delivering continued improvements in the sustainability performance
of the portfolio. In December 2020, Schroders 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/email/uk/
realestate/2020/
schroder-real-estate-net-zero-carbon-pathway-december-2020_1621372_v1.pdf
-ENDS-
For further information:
Schroder Real Estate Investment Management Limited: 020 7658 6000
Nick Montgomery / Frank Sanderson
Northern Trust: 01481 745529
Jingjing Qi
FTI Consulting: 020 3727 1000
Dido Laurimore / Richard Gotla / Meth Tanyanyiwa
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