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LONDON (Alliance News) - Schroder Real Estate Investment Trust Ltd on Monday said its net asset value per share rose in the financial year ended March 31, and said it was well positioned to manage future shocks from events such as a potential Brexit.
The trust said its net asset value per share increased to 62.2 pence, from 57.7p a year earlier, which it said was principally due to a 5.7% rise in the value of the underlying portfolio. This came despite the impact from a rise in UK stamp duty charges, Schroder Real Estate said.
The underlying property portfolio generated a net asset value total return of 12.8%, outperforming the 11.1% of its benchmark, the MSCI Benchmark Index. As a whole, the company posted a net asset value total return of 12.3%.
Schroder Real Estate said it saw a higher level of rental growth in the year, posting rental income of GBP24.7 million, up from the GBP22.1 million reported a year earlier. However the company's pretax profit slipped to GBP36.3 million from GBP55.1 million, as the profit made on disposal of investment properties came in much lower at GBP1.3 million from GBP20.7 million a year earlier.
The trust said this reflected moderating capital growth across the UK real estate market.
"As anticipated, capital growth from UK commercial real estate is now slowing with moderating investor demand. There are a number of factors causing this slowdown including the forthcoming referendum on membership of the European Union. A vote to leave the EU could negatively impact the real estate market and wider economy due to weaker consumer confidence and reduced domestic and foreign direct investment. The risks of a slowdown to the company are mitigated, however, by its diversified portfolio, a stable balance sheet and good quality assets," said Chairman Lorraine Baldry.
"As income becomes a larger component of total returns we expect greater polarisation across the market because winning centres and locations will benefit most. From this perspective, we believe the company's portfolio is well positioned due to an above average income return, a low weighting to parts of the retail sector that are expected to underperform and a pipeline of potentially significant income and value enhancing asset management initiatives," Baldry added.
Shares in Schroder Real Estate were up 0.4% at 57.75 pence on Monday.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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