Schroder Eur.r Regulatory News (SERE)

28 September 2021

ANNOUNCEMENT OF NAV AND DIVIDEND 

Schroder European Real Estate Investment Trust plc ("SERE" or the "Company") provides a business update and announces its unaudited net asset value ("NAV") as at 30 June 2021, together with its third interim dividend for the year ending 30 September 2021:

- Unaudited NAV as at 30 June 2021 of €198.6 million or 148.5 cents per share, a 0.8% increase compared to 31 March 2021

- NAV total return of 1.8% over the quarter and 15.5% for the twelve months to 30 June 2021

- Portfolio valuation has increased to €204.7 million over the quarter, reflecting a 0.9% increase, net of capital expenditure

- A third interim dividend of 1.85 euro cents per share will be paid for the year ending 30 September 2021

- Completed the acquisition of a €6.2 million logistics investment in Nantes, reflecting a NIY of 5.5%, furthering the portfolio exposure to the high growth logistics sector.

- The Company currently has c. €20 million of firepower to deploy into an attractive pipeline of acquisitions and a further c. €35 million to be released as the refurbishment of the Paris, Boulogne-Billancourt is completed  

- Agreed a new letting for the final floor at the Hamburg office, at a c. 10% premium to the business target and taking the building occupancy to 100%

- The Company has previously announced its intention to declare two further distributions with a target of approximately 4.75 cents per share each, by way of special dividend, over the next 9 months, allowing shareholders to benefit from the profit associated with the successful execution of the Paris, Boulogne-Billancourt business plan. 

Net Asset Value

The table below provides a breakdown of the movement in NAV during the reporting period:

(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 starting NAV 1 April 2021

Interim dividend

The Company announces its third interim dividend for the year ending 30 September 2021 of 1.85 euro cents per share, equating to pre-covid dividend level which was reinstated for the quarter ending March 2021. Based on the current share price of 106 pence per share, the June dividend represents an annualised rate of 6.0%[1].

For the nine months ending June 2021 dividends declared total 5.27 euro cents per share and the dividend cover for the financial year will be ca 70%. In line with the business plan, the dividend will continue to be supplemented from the Paris Boulogne Billancourt sale profits with the Company achieving 100% cover from income once all the sale proceeds are re-deployed.

As previously announced, the intention is to declare two further distributions with a target of approximately 4.75 cents per share each by way of special dividend over the next nine months, allowing shareholders to benefit from the exceptional profit associated with the successful execution of the Boulogne-Billancourt business plan.

The third interim dividend payment will be made on Monday, 8 November 2021 to shareholders on the register on the record date of Friday, 22 October 2021. In South Africa, the last day to trade will be Tuesday, 19 October 2021 and the ex-dividend date will be Wednesday, 20 October 2021. In the UK, the last day to trade will be Wednesday, 20 October 2021 and the ex-dividend date will be Thursday, 21 October 2021.

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, 4 October 2021. 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, 22 October 2021. 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, 25 October 2021.

Shares cannot be moved between the South African register and the UK register between Monday, 4 October 2021 and Friday, 22 October 2021, both days inclusive. Shares may not be dematerialised or rematerialised in South Africa between Wednesday, 20 October 2021 and Friday, 22 October 2021, 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, 4 October 2021.

Rent collection

The portfolio has continued to demonstrate its income resilience throughout the Covid-19 pandemic, with rent collection remaining strong at approximately 94% for the first six months of 2021 and subsequent period, ahead of the 89% figure for the last six months of 2020.

Property portfolio valuations

- As at 30 June 2021, the property portfolio was independently valued at €204.7 million, an increase of 0.9%, or €1.8 million, on the 31 March 2021 valuation of €202.9 million. Excluding the 50% interest in Metromar Seville, which has now been reflected at nil in the balance sheet, the portfolio value increased by €2.3 million, or 1.2%

- The valuation increase over the quarter was primarily driven by achieving full occupation at the Hamburg office investment alongside an improved yield re-rating and ERV growth (+€1.9 million, or 9.5%) and ERV growth at the Stuttgart office investment (+€1.0 million, or 5.4%).

Transactions

- The Company currently has c. €20 million firepower to deploy into an attractive pipeline and a further c. €35 million for investment, including debt, released as the refurbishment of the Paris, Boulogne-Billancourt is completed. The Company is in various stages of the acquisition process regarding new investments that will diversify and strengthen its exposure to growth cities and regions and sectors

- Post period, the Company completed two purchases totalling €9 million:

- a €6.2 million logistics investment in Nantes, reflecting a net initial yield of 5.5% and an unexpired lease term of approximately 7 years

- an additional floor at the Paris Saint Cloud office asset which is yielding 7.5%, for €2.4 million.

Asset Management update

Key asset management initiatives during the most recent quarter include:

- Advancing the Paris Boulogne Billancourt office refurbishment. A further €1.5 million was invested over the quarter with a further €19 million remaining to complete the works. Completion remains on track for Q2 2022. There remains a further €6 million of pre tax profit to be released in the NAV. This will be released as the refurbishment nears completion. Approximately 50% of the sale proceeds have already been received as part of the forward funding agreement with the purchaser. The remainder will be received as refurbishment milestones are met through to completion

- At its Hamburg office investment, the Company has leased the final vacant office floor totalling 672 sqm. The new lease has been agreed on a six-year term and represents 14% of the Hamburg lettable area. The rent achieved is at a c. 10% premium to the business target. The building is now 100% let to seven office occupiers

- The Company's retail exposure in Berlin (DIY) and Frankfurt (Grocery) represents 15% of the portfolio value and continues to perform strongly, achieving c. 100% rent collection in 2020 and in the first half 2021 alongside valuation uplifts. SERE continues to work with retailers to optimise occupancy in the Seville shopping centre including reviewing alternate use options for vacant space and a disposal strategy.

Enquiries:

Jeff O'Dwyer

Schroder Real Estate Investment Management Limited Tel: 020 7658 6000

Ria Vavakis

Schroder Investment Management Limited Tel: 020 7658 2371

Dido Laurimore/Richard Gotla Tel: 020 3727 1000

FTI Consulting