Schroder Real Regulatory News (SREI)

For issue 18 May 2015 Schroder Real Estate Investment Trust Limited (the `Company') ACQUISITION OF BEDFORD RETAIL WAREHOUSE PARK The Company announces that it has acquired the freehold interest in St.John'sRetail Park in Bedfordfor £31.8million reflecting a net initial yield ofapproximately 6.5%. The property is well located approximately 1.5 milesto thesouth of Bedford town centre and comprises a130,000 sq ft retail warehouse parklet to 12 tenants with an adjoining 11,600 sq ft office building. The retail park produces a rent of £2 million per annum which reflects arelatively low average rent of £16 per sq ft. The average unexpired lease term,assuming all tenants break at the earliest opportunity, is 7.9 years withtenants including DSG Retail Limited (24% of income expiring in September 2020)andHomebase Limited (17% of income expiring in May 2024). There is a singlevacant unit comprising 5,000 sq ft where terms have been agreed for a newletting. Approximately half of the office building islet to DHL GBS (UK)Limited at £61,000 per annum reflecting a low average rent of £9.50 per sq ft,with approximately half of the remaining vacant space under offer. The acquisition satisfies the Company's investment criteria by offering: * An above average initial yield of approximately 6.5% with potential for immediate growth assuming the completion of lettings under offer to new tenants; * Good fundamentals due to tenant demand, affordable rents, low retail warehouse supply and vacancy in Bedford and above average population growth for Bedford and the surrounding area; and * Significant scope for asset management including lease extensions and widening the planning consent in order to increase the rental tone and improve the tenant mix. The property was acquired via the acquisition of shares in a UK company thathad developed the property and therefore had latent capital gains taxliabilities. Following conversion to Real Estate Investment Trust (`REIT')status on 1 May, the Company has been able to extinguish these capital gainstax liabilities. This provided a competitive advantage when bidding for theproperty and resulted in the gross purchase price of £32.2 million. Following the acquisition of St. John's Retail Park the Company expectsitsdividend to be fully covered by recurring earnings with approximately £12million of cash remaining for on-going committed capital expenditure andoperational flexibility. Looking forward, there are further potential capital expenditure initiativesthat should be accretive to earnings and net asset value (`NAV'). The Companyintends to fund these initiatives from selling smaller properties or theissuance of new equity from treasury. The Company is now cautious about pricingin parts of the market but may consider issuing new equity in a disciplinedmannerto fund specific acquisitionsthat are accretive to earnings. Commenting, Duncan Owen, Global Head of Real Estate at Schroders said: "Theacquisition follows the disposal of low or non-income producing property andresults in SREIT being substantially invested with a fully covered dividend.Converting to UK-REIT status has enabled SREIT to be more agile and competitiveby extinguishing the capital gains in the vendor special purpose vehicle andtherefore enhancing SREIT'sinitial income return." -ENDS- For further information: Schroder Real Estate Investment Management 020 7658 6000Limited:Duncan Owen / Nick Montgomery Northern Trust: 01481 745529 David Sauvarin FTI Consulting: 020 3727 1000 Dido Laurimore / Ellie Sweeney