Net Asset Value(s)

For release 30 January 2017

Schroder Real Estate Investment Trust Limited

ANNOUNCEMENT OF NAV AND DIVIDEND FOR QUARTER TO 31 DECEMBER 2016

Schroder Real Estate Investment Trust (the ‘Company’), the actively managed UK-focused REIT, announces its net asset value (‘NAV’) and dividend for the quarter to 31 December 2016.

Net Asset Value

The unaudited NAV as at 31 December 2016 was £320.3 million or 61.8 pence per share ('pps').  This reflects an increase of 1.1% per share compared with the NAV as at 30 September 2016, or a NAV total return, including the dividend of 0.62 pps, of 2.2%.  A breakdown is set out below:  

	£m	pps	Comments
NAV as at 30 September 2016	316.8	61.1
Unrealised change in valuation of direct property portfolio	5.3	1.0	Reflects a quarterly like-for-like increase in the value of the underlying portfolio of 1.3% before capital expenditure
Capital expenditure	(1.7)	(0.3)	Relating to refurbishment work at Augustine’s Courtyard in Bristol, The Arndale Centre in Leeds and St. John’s Retail Park in Bedford
Net revenue	3.3	0.6	Results in quarterly dividend cover of 105%
Dividends paid	(3.2)	(0.6)	Reflects an annualised dividend of £12.8 million or 2.48 pps
Others	(0.2)	-	Adjustment for lease incentives
NAV as at 31 December 2016	320.3	61.8

Dividend payment

The Company announces an interim dividend of 0.62 pps for the period 1 October 2016 to 31 December 2016.  The dividend payment will be made on 28 February 2017 to shareholders on the register as at 10 February 2017.  The ex-dividend date will be 9 February 2017.

The dividend of 0.62 pps will be designated 0.39 pps as an interim property income distribution (‘PID’) and 0.23 pps as an interim ordinary dividend.

Performance versus MSCI (formerly IPD) Index

The latest available performance data for the quarter to 30 September 2016 showed that the Company’s portfolio produced a total return of -0.5%, outperforming the MSCI peer group on a like-for-like basis, which delivered a return of -2.6%.

Property portfolio

As at 31 December 2016, the underlying portfolio comprised 47 properties valued at £453.6 million.  At the same date the portfolio produced a rent of £26.9 million per annum reflecting a net initial yield of 5.6%.  The portfolio rental value is £34 million per annum, resulting in a reversionary yield of 7.5%. 

Over the quarter the void rate as a percentage of rental value reduced to 7.7%, compared with 9% as at 30 September on a like-for-like basis.  Following successful letting activity over the quarter, the average unexpired lease term, assuming all tenants vacate at the earliest opportunity, is seven years.  The tables below summarise the portfolio information as at 31 December 2016:

Sector weightings	Weighting %
	SREIT	MSCI Index*
Retail	31.1	37.1
Offices	40.3	32.0
Industrial	23.2	21.0
Other	5.4	9.9

* Latest available MSCI Index data as at 30 September 2016

Regional weightings	Weighting %
	SREIT	MSCI Index*
Central London	7.8	15.5
South East excluding Central London	28.1	37.1
Rest of South	8.4	15.4
Midlands and Wales	27.2	13.9
North and Scotland	28.5	18.1

* Latest available MSCI Index data as at 30 September 2016

Transactions

During the quarter three small non-core secondary retail properties were sold for £4 million on completion of asset management initiatives.  The prices achieved were in line with the independent valuation as at 30 September 2016 and reflected a low average net initial yield of 3.8%.

Asset management

During the quarter and since the quarter end 15 new leases and lease renewals have exchanged or completed.  Key activity includes: 

Cardiff, Haywood House North

On 22 December the recently refurbished Haywood House North in Cardiff was let in its entirety to legal firm Slater & Gordon (UK) LLP at a rent of £294,964 per annum.  Slater & Gordon have taken a ten year lease with a break option at year five and receive 12 months rent free.     

Manchester, City Tower (rents stated below reflect the Company’s 25% share)

During the quarter and since the quarter end, five separate letting transactions and rent reviews were completed at City Tower generating a combined rent of £130,662 per annum.  This compared to a combined rental value as at 30 September 2016 of £115,218 per annum. 

Debt

The Company has two loan facilities from Canada Life and Royal Bank of Scotland (‘RBS’) totalling £150.1 million with an average duration of approximately 9.2 years and an average interest cost of 4.4%.  The loans are fully compliant with covenants. 

In addition to the properties secured against the Canada Life and RBS loan facilities, the Company has unsecured properties with a value of £76.9 million and cash of approximately £20 million.   This results in a loan to value ratio, net of cash, of approximately 29%.   

-ENDS-

For further information:

Schroder Real Estate Investment Management Limited: Duncan Owen / Nick Montgomery	020 7658 6000
Northern Trust: Sam Walden / Fraser Hiddelston	01481 745529
FTI Consulting: Dido Laurimore / Ellie Sweeney	020 3727 1000