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To provide the shareholders with an attractive level of income, together with the potential for income and capital growth, from investing in a diversified portfolio of UK commercial real estate.
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I suppose money in the bank is nice to have but is not really earning. The property buy, following the new management strategy has a net initial yield of 8.3%. It should help to close down that divi deficit too
SREI continues to improve and now hopes to grow too. Not too sure about focusing on London properties, is it not a bit of a bubble? Talk of future equity raising instead of debt which is not expected to dilute shareholder value. Divi not increase but expected that after the recent re base lower. The new team, which will get a couple of board changes soon seem to be on track. Voids down, NAV up, EPS up so on track. I will repeat my statement that this will be a hit for me once they are able to grow the divi, its getting closer but its not "just around the corner" I suspect that growth may come at the expense of an increase in the divi, in the mid term at least. Happy to hold, top up on any dips! As always DYOR!
I'll take some at 20% discount. Just cant find them though. Did spot it was "down" on the day but couldn't find any for sale at that price...... pity!
trade at 1650 (1/11/13) showed the sell of 57500 at 48.25p on LSE.co.uk which I cut and pasted to show it wasn't just google. Weird.
Debt As noted above and as previously announced, on 16th April the Company completed a new £129.58 million refinance facility with Canada Life to refinance the previous securitised loan totalling £114.5 million that would otherwise have matured in July 2014. Details of the new loan and compliance with the principal covenants are set out below: Canada Life loan Maturity Interest rate (%) Loan to Value ('LTV') ratio* (%) LTV ratio covenant (%)* Interest cover ratio (%)** ICR ratio covenant (%)** Forward looking ICR ratio (%)*** Forward looking ICR ratio covenant (%)*** 103.7 16/04/2028 4.77 50.3 65 269 185 253 185 25.9 16/04/2023 * Loan balance divided by property value as at 30 June 2013 ** For the quarter preceding the Interest Payment Date ('IPD'), ((rental income received - void rates, void service charge and void insurance) / interest paid) *** For the quarter preceding the IPD, ((rental income received - void rates, void service charge and void insurance) / interest paid) As at 30 June 2013 the Company held cash outside the Canada Life security totalling £25.5 million. This results in a loan to value ratio, net of cash, of 40.4%.
Generally, rate increases are not good for these sort of businesses, the same effect if you had a mortgage really. In this case they have just refinanced their debts and cut the divi. The new management seem to be getting a grip and if things pick up in the economic climate then this should be ok. I cant remember if they are fixed rates but were just under 5% years ahead, check the RNS's. If rate rises start to become an issue, like your mortgage you can do some things to offset, overpay, increase your income etc. They seem to be generating more income, debt is now not seen as a major issue and voids are reducing. Divi is not yet fully covered but it is moving that way. Currently I dont see this as a major issue or becoming one in the near term. I think the google price is wrong, they often have share prices that show large changes only to return to normal when trading starts, really messes with my spreadsheets
What has happened here. After hrs see's this plummet by over 20.28%! Google finance has the drop but not here, but shows a last minute trade tat 1650. 01-Nov-13 16:50:28 38.50 57,500 Sell* 48.2548.5022.14kO
I'm no expert on real estate investments, but at current landlords are increasing their business rents far ahead of inflation. What would the effects of rising interest rates on an investment like this. Its one that caught my eye after reading in Investors Chronicle in Sept to buy when 46p. Hassard was another investment trust to look at though it were 8%, and don't do high yields like that, just doesn't bode well for future so I fell.
SREI has been flagged as a top 10 fund/share to invest in, saying anytthing above 8% is too riskt, and either shows lack of growth.
20 September 2013 For release 20 September 2013 Schroder Real Estate Investment Trust Limited (the 'Company' / 'Group') Planning consents secured at Wembley site The Company announces that it has received resolution to grant planning permission for its two applicationssubmitted to Brent Council in connection with the Olympic Office Centre in Wembley and the adjoining site. As set out in the Company's announcement on 18 September 2013, these comprise an outline consent for a 400,000 sq ft mixed use scheme on the site together with a detailed consent for a new multi-storey car park at the base of the Olympic Office Centre. Brent's Planning Committee resolved to delegate the agreement of the level of affordable housing and the section 106 agreement to planning officers. Also as announced on 18 September, the Company has agreed to sell a one acre plot, comprising part of its Wembley site, for GBP7.4 million to a wholly owned subsidiary of The UNITE Group plc ('UNITE'). As a result of this planning approval, UNITE will now make a detailed planning application for 200,000 sq ft of student accommodation comprising approximately 684 rooms and ancillary retail. Completion of the disposal to UNITE is conditional upon them achieving a detailed planning permission. In parallel with UNITE's detailed planning application the Company will work up plans for its remaining one acre site that is capable of being developed or sold in isolation. The outline consent for this site totals 200,000 sq ft and permits a range of uses including residential, hotel and offices. This resolution to grant consent from Brent Council is a significant step forward for the Company's strategy to maximise value from the substantially non-income producing sites. -ENDS-
So more sales of none income generating assets to reinvest in higher income area. The management seem to be doing well with this strategy so far and might explain the upturn in the share price. I suppose the proof will be in the pudding, as they say, but for me success will be when they can increase the divi...... on a regular basis. Its getting there, bit by bit
It looks like there will be an extra £4M in the pot after the sale of Rynards with the possibility of slightly more to come depending on how the conditional offer goes. Looks like more positive news. Wonder what they are going to spend it on to offset the slight loss of income? Maybe they will consider a reduction in debt or adding something new
The dividend is paid quarterly and has been recently reduced to 0.62 from 0.88. IMO this was a good move as they were paying out more in divis than they were getting in, so you were effectively loosing capital to get the income. Hopefully the new management team are getting on top of things and I would like to think the NAV can stop falling and as improvements continue, divis can slowly increase.
Hey, This weeks Investors Chronicle has this Investment fund as buy. Shrodders have cut the dividend on the last occassion, but the analysts' advise' this is a one-of. To NAV its trading at a premium of 5%, and that's why they suggest to buy, as it has over the last few mths gone from disc - prem. Pays a div of 5.3%, not 7.75% that LSE states... You will receive 1payment of 0.062p, 0.088p & 0.088p.
After the IMS, this fell 4-5% and the price now reflects an amount that is closer to the NAV in the IMS. To me things look to be improving. After announcing the cut in dividend and the long term finance arrangements the new management team seem to be making a difference. Voids are reducing and lease terms extending with expected increase in rents in the future. Whats not to like? I note IC has this rated as a hold but looking forwards, IMO I think this has good potential to continue improving and once the Reynards development is sold things should get even better. The dividend should be fully covered shortly and may be able to be increased in the not too far distant future. The NAV should also start to track back upwards when the rent increases start to filter through. I might use this fall to top up before commercial property comes back in fashion.
Looking at the future ageed increases in income streams, potential development values on some sites and the much more proactive management, the current discount to NAV of c16% looks over harsh and this could be a strong value play over a two year period assuming that the refinancing can be resolved, which seems highly likely gievn the fundamentals. In the meantime, it provides a very useful yield at these levels.
Schroder Real Estate IT: Liberum Capital starts with a target price of 36p and a hold recommendation.
Schroder Reit finished 2012 with 46.5p of net assets per share (NAV), down from 48.3p in September. NAV may continue to slide in the short term. But the shares currently trade some 18 per cent below NAV, giving a generous margin for further falls. And in the longer term the portfolio will recover with the regional property market. If you're a fan of value investing,
That's partly because the portfolio is lighter on shops and heavier on the south-east than the index. But the approach of the fund's manager, Duncan Owen, has probably helped. He aims to sell an asset he would no longer buy, which explains a run of recent disposals. The most notable of these is Minerva House, an office building near the Shard at London Bridge. "When an area's trendy, it's time to get out," he explains. He is using the proceeds to pay down debt ahead of the expiry of a £36.8m loan in July 2014. This involves incurring break costs and crystallising losses on interest-rate swaps. Yet it puts Schroder Reit in a strong position to refinance at attractive rates because its net loan-to-value ratio is now just 31 per cent. In addition, because the rental yields on properties sold were less than the company's interest costs, selling property to pay back debt has boosted earnings and the trust's inadequate dividend cover. Like most property investment trusts, Schroder Reit has been reluctant to cut its dividends even further, so payouts are funded partly from cash reserves, compounding the downward pressure of falling property prices on net asset value.
When the recovery spreads beyond the M25, it may be patchy, favouring well-managed property in better locations. That's why it makes sense to buy Schroder Reit, which has outperformed the market despite its nondescript portfolio: offices in Brighton and Uxbridge, a business park in Brentford, a long tail of high-street shops. Over the nine months to 30 September, the latest full data available, the company’s portfolio produced a total return (income plus capital) of 3 per cent, compared with 1.2 per cent for the IPD index.
Is it time to leave London? That's the big question in the commercial property industry, after a schizophrenic rebound that has buoyed values in the capital and depressed office and shop values elsewhere. If it is, shares in Schroder Real Estate Investment Trust (SREI) is a good way to play the eventual recovery in the provinces. Investors should be under no illusions: the regional waters in which Schroder Reit fishes are murky. The IPD benchmark for property values outside London fell 5.8 per cent last year. Retailers are shrinking their store portfolios, and few businesses are expanding. Where deals are done, they suggest that rents continue to fall. Yet the bottom must be close. Property values have halved from their 2007 peaks in many towns, pushing rental yields to unprecedented levels. Many regional offices are now valued at about half their construction cost and the "more adventurous institutions" are looking for regional deals, says Toby Courtauld of Great Portland Estates, a pure London player.
The company's net loan-to-value following the debt repayment will be approximately 31%, based on the latest property valuation as at September 30th.
The repayment will cut back the company's securitised loan from £134.5m to £114.5m and reduce the annual loan interest cost from £7.7m to £6.5m. It will leave the company with total cash of about £29.8m, of which approximately £9.2m remains outside the security pool. "The repayment of the debt is a continuation of the company's strategy to reduce the overall quantum of borrowings which has reduced from £173.5m during 2012," Schroder said in a statement. "The company continues to pursue refinancing options well in advance of the loan maturing in July 2014."
Schroder Real Estate Investment Trust has served notice to repay 20m pounds of its debt following the disposal of Minerva House in London. The company, which announced it had completed the disposal of the house for £30m on Monday, will make the loan repayment on January 15th. The firm must break a pro-rata proportion of its interest rate swaps, crystallising an estimated break cost of £2.9m as a condition of the repayment. It is also required to reduce the total negative mark-to-market value of the company's interest rate swaps to -£16.3m, adopting the value as at December 20th this year.