(Alliance News) - Schroder European Real Estate Investment Trust PLC on Wednesday reported a slightly lower net asset value in the first half, but has cut its dividend.
At March 31, the London and Johannesburg-listed property investor's net asset value per share stood at 136.20 euro cents, down slightly from 136.7 cents at the same point the year before.
Schroder European's net assets ended the period at EUR182.1 million, also slightly below on the year before at EUR182.8 million.
The company's portfolio ended March 31 valued at EUR242.3 million. The portfolio's loan-to-value ratio ended the half at 30%.
Net rental income was flat year on year at EUR17.2 million.
Interim pretax profit rose 43% to EUR5.7 million from EUR4.0 million, after the trust recorded a EUR2.9 million net gain from fair value adjustment on investment property compared to a EUR1.6 million loss the year before.
Chair Julian Berney said: "During the first half of the year the company has made good progress with key asset management initiatives, but we enter the second half of the year against an uncertain economic backdrop. We believe the diversification of the portfolio across different countries, sectors and tenants positions it well to withstand a period of market volatility. By reducing the dividend and retaining earnings, we have sought to strengthen the ability of the company to mitigate the impact of Covid-19 and improve our flexibility to be able to capitalise on asset management opportunities going forward."
Schroder European declared a total dividend of 2.775 cents per share, down from 3.7 cents the year before.
Going forward, the trust said it plans to reduced its next quarterly dividend to 0.925 cents - 50% of its target level.
The trust's fund manager Jeff O'Dwyer added: "The impacts of Covid-19 have yet to fully play out and the depth and recovery of global GDP cannot be predicted with any confidence.
"Over the period, the SEREIT portfolio has stood up well, underpinned by our tenant and sector diversity that has led to favourable rent collection rates and valuation resilience. Whilst early indicators are that the easing of the lockdown in our key markets is having a positive impact on our tenants’ operations, we remain alert to the near-term challenges facing all our stakeholders. Longer term, we continue to believe that the portfolio's weighting towards Continental European 'Winning Cities' like Paris, Berlin, Frankfurt and Hamburg will be beneficial to its future performance and liquidity."
Shares in Schroder European Real Estate were 2.8% higher in London on Wednesday at 73.00 pence each. In Johannesburg, the shares were 0.4% lower at ZAR16.12.
By Paul McGowan; paulmcgowan@alliancenews.com
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Schroder Eur.r (SERE)