NAV and Dividend for Quarter to 30 June 2021

For release 19 July 2021

Schroder Real Estate Investment Trust Limited
LEI Number: 549300ZIJJTMTIIQJP67

ANNOUNCEMENT OF NAV AND DIVIDEND FOR QUARTER TO 30 JUNE 2021

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 2021.

Highlights

· Net asset value (‘NAV’) per share increase of 4.1% and a NAV total return of 5.3% per share based on dividends paid during the quarter.

· Further 3% quarterly dividend increase to 0.675 pence per share (‘pps’) for the period 1 April 2021 to 30 June 2021.

· The portfolio valuation increased by 2.6% net of capital expenditure over the quarter, driven by the performance of industrial, which represents the largest component of the portfolio by value at 40.2%.

· Rent collection levels continue to improve, with 90% of rent due for the quarter ending 30 September 2021 collected as at 16 July 2021, ahead of the equivalent date in the previous quarter.

· High levels of earnings enhancing asset management activity across the portfolio, with 14 leasing transactions generating £1.1 million per annum of rental income. These reflected a £400,000 per annum like for like increase compared with the rental income as at 31 March 2021.

· The Company’s strategy is focused on the acceleration in structural changes and emerging occupier trends through a fully integrated ESG approach, specialist capabilities, hospitality mindset and operational excellence with respect to tenant management to create sustainable income and long term value.

Net Asset Value

The unaudited NAV as at 30 June 2021 was £309.1 million or 62.9 pps, a 4.1% per share increase compared with the NAV as at 31 March 2021. During the quarter the Company paid a dividend of 0.656 pps, which resulted in a NAV total return of 5.3%.

A breakdown of the quarterly NAV movement is set out below:

	£m	pps	Comments
NAV as at 31 March 2021	296.8	60.4
Unrealised net increase in the valuations of the direct real estate portfolio and Joint Ventures	12.3	2.5	Reflecting a gross portfolio capital value uplift of £12.3 million or 2.8%.
Capital expenditure (direct portfolio and share of Joint Ventures)	(0.9)	(0.2)	Capital expenditure included the ongoing industrial planning application at Stanley Green Trading Estate, Cheadle; industrial refurbishments across multi-let estate; and works in connection with the BBC letting at The Tun, Edinburgh. This resulted in a net portfolio capital value uplift of 2.6%.
Realised gains on disposals	Nil	Nil	No disposals made during the quarter.
Net revenue	3.9	0.8	EPRA earnings.
Dividend paid	(3.2)	(0.7)	Dividend for the period 1 January 2021 to 31 March 2021 paid in June 2021 (at 0.656 pence per share).
Others	0.3	0.1	All other items.
NAV as at 30 June 2021	309.1	62.9	A 4.1% increase in the NAV per share over the quarter. The NAV per share movement includes 338,340 shares repurchased over the quarter at an average price of 40.3p.

Dividend payment

The Company today announces an interim dividend of 0.675 pps for the period 1 April 2021 to 30 June 2021. This equates to a 3% increase compared with the prior quarter’s dividend level and reflects progress with rent collection and active asset management. The Board continues to target a sustainable and progressive dividend policy.

The dividend payment will be made on 13 August 2021 to shareholders on the register as at 30 July 2021. The ex-dividend date will be 29 July 2021.  The dividend of 0.675 pps will be wholly designated as an interim property income distribution (‘PID’).

Rent collection

Rent collected that was payable in March 2021 for the quarter ended 30 June 2021 currently totals 88% of contracted rents.

Rent collection levels continue to improve and rent collected that was payable for the quarter ending 30 September 2021 currently totals 90% of contracted rents. The breakdown between sectors for rent collection is 97% for office, 99% for of industrial, 66% for retail and leisure, and 84% for other.

The Company remains in active dialogue with its tenants for outstanding rent as a result of which it continues to see improved rent collection rates.

Investment management fee

As outlined in the year end results, with effect from 1 July 2021 the Investment Management fee has reduced from 1.1% of NAV to a blended (not cliff edge), tiered fee structure set out in the table below:

£ NAV	% p.a. on NAV
<£500 million	0.9%
£500 million - £1 billion	0.8%
> £1 billion	0.7%

Based on the NAV as at 30 June 2021 the fee is 0.9% which results in an annualised saving to the Company of 0.2% or £618,200.

Performance versus latest available MSCI Benchmark Index

Over the quarter to 31 March 2021, the underlying portfolio produced a total return of 2.9%. This compares favourably with the total return for the MSCI Benchmark of 1.9%. The portfolio’s quarterly income return of 1.6% compared with the Benchmark at 1.1%. The MSCI Benchmark Index figures to 30 June 2021 will be available in August 2021.

Property portfolio

As at 30 June 2021, the underlying portfolio comprised 39 properties valued at £451.1 million. At the same date the portfolio produced a rent of £28.8 million per annum reflecting a net initial yield of 6.0%. The portfolio’s estimated rental value is £31.4 million per annum, resulting in a reversionary yield of 7.0%.

The void rate was 4.9% calculated as a percentage of rental value. The average unexpired lease term, assuming all tenants vacate at the earliest opportunity, is 5.1 years. The tables below summarise the portfolio information as at 30 June 2021:

Sector weightings	Weighting %
	SREIT	MSCI Index*
Industrial	40.2	28.5
Offices	33.4	27.2
Retail Warehousing	11.3	9.0
Retail - Mixed-use retail - Retail single use	8.4 4.8 3.6	15.1 n/a n/a
Other	6.7	20.2

Regional weightings	Weighting %
	SREIT	MSCI Index*
Central London	8.7	21.1
South East excluding Central London	20.2	33.3
Rest of South	11.7	14.5
Midlands and Wales	24.1	12.4
North	32.8	13.8
Scotland	2.5	4.5
Northern Ireland	0.0	0.2

*Latest available Index data as at 31 March 2021

Balance sheet and 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 2021, £24.5 million of the RCF was drawn. Fully drawn, the facilities have an average duration of approximately 13 years and an average interest cost of 2.5%.

As at 30 June 2021, the Company has cash of £11.8 million and unsecured property with a value of £39.4 million. This results in a loan to value ratio, net of cash, of 31.5%.

-ENDS-

For further information:

Schroder Real Estate Investment Management Limited: Nick Montgomery	020 7658 6000
FTI Consulting: Dido Laurimore / Richard Gotla / Ollie Parsons	020 3727 1000