Net Asset Value & Dividend-Quarter to 30 Ju...
For release 19 July 2019
Schroder Real Estate Investment Trust Limited
ANNOUNCEMENT OF NAV AND DIVIDEND FOR QUARTER TO 30 JUNE 2019
Schroder Real Estate Investment Trust (the ‘Company’ or ‘SREIT’), the actively managed UK-focused REIT, announces its net asset value (‘NAV’) and dividend for the quarter to 30 June 2019.
Net Asset Value
The unaudited NAV as at 30 June 2019 was £355.7 million or 68.6 pence per share ('pps'). This reflects a decrease of 0.15% per share compared with the NAV as at 31 March 2019, or a positive NAV total return, including the dividend paid of 0.65 pps, of 0.8%. A breakdown is set out below:
| £m | pps | Comments | |
| NAV as at 31 March 2019 | 356.4 | 68.7 | |
| Unrealised valuation loss on investment property | (1.4) | (0.3) | Portfolio decline before capital expenditure and excluding joint ventures and profit on disposal, shown separately below. |
| Unrealised loss in joint ventures | (0.2) | - | Decrease due to capital expenditure at City Tower Unit Trust. |
| Profit on disposal of investment property | 1.3 | 0.3 | Relating to the disposal of the Booker Unit in Acton that exchanged during the quarter and completes on 15 November 2019 at £18.9 million. The £1.3 million profit on disposal reflects the premium over the 31 March independent valuation of £17.2 million less an adjustment for disposals costs and a non-cash lease incentive. |
| Capital expenditure | (0.8) | (0.2) | Includes £400,000 in connection with the pre-let to JD Sports Gyms at Millshaw Industrial Estate in Leeds. |
| Net revenue | 3.6 | 0.7 | Quarterly net revenue reflecting dividend cover of 105%, and 102% from recurring revenues. |
| Dividends paid | (3.4) | (0.7) | Reflects the 0.65 pps March 2019 quarterly dividend paid in June 2019. |
| Others | 0.2 | 0.1 | Lease incentive adjustments and all other items. |
| NAV as at 30 June 2019 | 355.7 | 68.6 |
Dividend payment
The Company announces an interim dividend of 0.65 pence per share (‘pps’) for the period 1 April 2019 to 30 June 2019.
The dividend payment will be made on 16 August 2019 to shareholders on the register as at 2 August 2019. The ex-dividend date will be 1 August 2019. The dividend of 0.65 pps will be designated 0.35 pps as an interim property income distribution (‘PID’) and 0.30 pps as an interim ordinary dividend.
Performance versus latest available MSCI Index
Over the quarter to 31 March 2019, the underlying portfolio produced a total return of 1% compared with the MSCI Index of 0.4%. For the 12 months to 31 March 2019 the underlying portfolio produced a total return of 7.2% compared with MSCI of 5.2%.
Property portfolio
As at 30 June 2018, the underlying portfolio comprised 43 properties valued at £461.1 million. At the same date the portfolio produced a rent of £26.8 million per annum reflecting a net initial yield of 5.4%. The portfolio estimated rental value is £33 million per annum, resulting in a reversionary yield of 7.1%.
As at 30 June 2019 the void rate was 8%, calculated as a percentage of rental value. The average unexpired lease term, assuming all tenants vacate at the earliest opportunity, is 6.1 years. The tables below summarise the portfolio information as at 30 June 2019:
| Sector weightings | Weighting % | |
| SREIT | MSCI Index* | |
| Offices | 36.0 | 28.7 |
| Industrial | 32.7 | 28.6 |
| Retail (including the retail component of mixed use assets) | 24.5 | 31.4 |
| Other | 6.8 | 11.3 |
| Regional weightings | Weighting % | |
| SREIT | MSCI Index* | |
| Central London | 7.9 | 12.6 |
| South East excluding Central London | 22.4 | 40.3 |
| Rest of South | 6.9 | 16.3 |
| Midlands and Wales | 29.6 | 13.7 |
| North and Scotland | 33.2 | 17.1 |
*Latest available Index data as at 31 March 2019
Disposals
In May unconditional contracts were exchanged to sell a warehouse let to Booker Limited in Acton for £18.9 million, which compared with the independent valuation as at 31 March 2019 of £17.2 million. The disposal is due to complete on 15 November 2019 and the buyer has paid a non-refundable deposit of £1.89 million.
Since 31 December 2018 SREIT has completed or unconditionally exchanged contracts to sell five assets for £68.9 million, reflecting an average net initial yield of 3.1%. The disposals are consistent with SREIT’s strategy to sell lower yielding assets and to realise gains from asset management. These disposals, combined with the recently extended (but undrawn) revolving credit facility, provides SREIT with balance sheet capacity approaching £100 million and therefore valuable operational flexibility.
Asset management
Leeds, Millshaw Industrial Estate
Millshaw Industrial Estate increased in value by 4.3% over the quarter to £33 million as a result of the positive letting activity. Three new lettings have been completed since 31 March 2019, generating £291,000 per annum, whilst works in connection with the conversion of a 31,000 sq ft warehouse to a JD Sports Gym will complete in June. This will trigger completion of a new 10 year lease, without tenant break, at a rent of £204,750 per annum.
Peterborough, Southgate Way
The 81,121 sq ft distribution warehouse unit increased in value by 26% over the quarter to £4.8 million. This followed the exchange of a lease agreement with EPD Insulation at a rent of £450,000 per annum which compares with the previous rent of £245,000 per annum. The lease should complete in August following ongoing refurbishment works costing approximately £480,000.
Leicester, East Gates
A prime retail unit at Eastgates, Leicester, has been let to Tim Hortons on a ten year lease at £95,000 per annum. The letting is subject to planning and a landlord capital contribution of £80,000. The contribution should be recovered by a dilapidations payment from the outgoing tenant.
Debt
The Company has two loan facilities, a £129.6 million term loan with Canada Life and a £52.5 million revolving credit facility (‘RCF’) with Royal Bank of Scotland. As at 30 June 2019, the full Canada Life facility and £29.0 million of the RCF was drawn with an average duration of approximately eight years and an average interest cost of 4.2%.
Since the quarter end the RCF has been fully repaid. Following this repayment the Company has cash of £27.7 million and unsecured property with a value of £36.5 million. This results in a loan to value ratio, net of cash, of approximately 22%.
-ENDS-
For further information:
| Schroder Real Estate Investment Management Limited: Duncan Owen / Nick Montgomery / Frank Sanderson |
020 7658 6000 |
| Northern Trust: James Machon |
01481 745529 |
| FTI Consulting: Dido Laurimore / Richard Gotla |
020 3727 1000 |
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