NAV and Dividend

RNS Number : 5279N

Schroder Real Estate Inv Trst Ld

01 February 2016

 

For release 1 February 2016

Schroder Real Estate Investment Trust Limited

(the 'Company' / 'Group')

ANNOUNCEMENT OF NAV AND DIVIDEND FOR PERIOD TO 31 DECEMBER 2015

The Schroder Real Estate Investment Trust Limited today announces its unaudited net asset value and dividend for the three months to 31 December 2015.

Net Asset Value

The Company delivered an unaudited net asset value ('NAV') of £323.7 million or 62.4 pence per share ('pps') as at 31 December 2015.  This reflects an increase of 2.5% per share compared with the NAV as at 30 September 2015, or a NAV total return, including the dividend of 0.62 pps, of 3.5%.  A breakdown of the NAV movement over the quarter is set out below:

	£m	pps	Comments
NAV as at 30 September  2015	315.8	60.9
Unrealised change in valuation of direct property portfolio	7.9	1.5	Reflects a quarterly like-for-like increase in the value of the underlying portfolio of 2% before capital expenditure.  Note that this 2% uplift includes the underlying valuation movement of City Tower in Manchester and Store Street in London (shown in joint ventures below) as well as properties in Fleet and New Malden where unconditional disposal contracts have been exchanged
Capital expenditure	(0.8)	(0.2)	Principally relating to the refurbishment works at Church Street in Liverpool and car park works at the Arndale Centre in Leeds
Unrealised profit on joint ventures*	0.6	0.1	Included in the quarterly uplift of 2% above.
Net revenue	3.6	0.7	Results in quarterly dividend cover of 115% after allowing for one-off expenses relating to the RBS revolving credit facility
Dividends paid	(3.2)	(0.6)	Reflects an annualised dividend of £12.8 million or 2.48 pps
Others	(0.2)	-	Principally relating to lease incentives
NAV as at 31 December 2015	323.7	62.4

*City Tower in Manchester and University of Law in London

Dividend payment

The Company announces an interim dividend of 0.62 pps for the period 1 October 2015 to 31 December 2015.  The dividend payment will be made on 29 February 2016 to shareholders on the register as at 12 February 2016.  The ex-dividend date will be 11 February 2016.

The dividend of 0.62 pps will be designated 0.35 pps as an interim property income distribution ('PID') and 0.27 pps as an interim ordinary dividend.

Reporting

On 5 January 2016 the Company announced the following changes to the frequency of reporting quarterly financial results:

·      Interim Management Statements containing the unaudited Net Asset Value will no longer be issued for the quarters to 31 March and 30 September respectively

·      The announcement of the audited year end results to 31 March will be brought forward to mid June for the 2015/16 financial year, with the expectation that this can be brought forward to late May for the 2016/17 financial year

·      The announcement of the interim results to 30 September will continue to be made in November

Following these changes unaudited Interim Management Statements will continue to be issued for the quarters to 30 June and 31 December, in July and late January or early February respectively.  The dividend timetable will also remain unchanged.

Performance versus Investment Property Databank ('IPD') Index

The latest available performance data for the quarter to 30 September 2015 showed that the Company's portfolio produced a total return of 3.7%, outperforming the IPD peer group Quarterly Version of Balanced Monthly Index Funds (the 'IPD Index') on a like-for-like basis, which delivered a return of 3.3%.  This resulted in a total return for the 12 months to 30 September 2015 of 15.2% compared with the IPD Index of 14.5%.

Property portfolio

As at 31 December 2015, the underlying portfolio comprised 54 properties independently valued at £462.8 million.  This includes the share of the joint venture properties, City Tower in Manchester and University of Law Campus in London as well as Technology House in Fleet and St. George's Court in New Malden where unconditional disposal contracts have been exchanged.  At the same date, the portfolio produced a rent of £28.4 million per annum which, based on the independent valuation, reflected a net initial yield of 5.8%.  The portfolio's rental value is £34.7 million per annum, resulting in a reversionary yield of 7.5%.  The portfolio benefits from additional fixed rental uplifts of £2.6 million per annum due by December 2017.  The top ten tenants within the portfolio produce rent of £9.2 million per annum or 32.7% of the total portfolio rent.

As at 31 December 2015 the portfolio void rate as a percentage of rental value was 9.3%.  The void rate should fall by 0.5% on completion of the disposal of Technology House in Fleet.  In addition to this the Company has agreed letting transactions which are currently either under offer or contracted on a conditional basis equating to a further 1.5% of rental value.  The average unexpired lease term, assuming all tenants vacate at the earliest opportunity, is seven years.  The tables below summarise the key portfolio information as at 31 December 2015:

Sector weightings	Weighting %
	SREIT	IPD Index*
Retail	33.6	37.7
Offices	39.5	33.6
Industrial	22.0	20.1
Other	4.9	8.6

* Latest available IPD Index data as at 30 September 2015

Regional weightings	Weighting %
	SREIT	IPD Index*
Central London	7.7	16.0
South East excluding Central London	29.3	36.8
Rest of South	9.4	14.2
Midlands and Wales	26.5	14.0
North and Scotland	27.1	19.0

* Latest available IPD Index data as at 30 September 2015

Top ten properties		Value (£m)	(%)
1	Manchester, City Tower*	42.1	9.1
2	London, University of Law*	35.6	7.7
3	Bedford, St. John's Retail Park	35.0	7.6
4	Brighton, Victory House	31.3	6.8
5	Leeds, Millshaw Industrial Estate	23.8	5.1
6	Leeds, The Arndale Centre	20.4	4.4
7	Milton Keynes, Stacey Bushes Industrial Estate	19.2	4.1
8	Uxbridge, 106 Oxford Road	18.7	4.0
9	Salisbury, Churchill Way West	15.9	3.4
10	Luton, The Galaxy	13.5	2.9
	Total as at 31 December 2015	255.5	55.2

* Group share of joint venture properties

Transactions

Fleet, Technology House

Unconditional contracts have been exchanged to sell Technology House in Fleet for £2.2 million, compared with an independent valuation as at 30 September 2015 of £1.2 million.  The buyer has paid a non-refundable deposit of £220,000 and completion is due on 12 February 2016.  The office property produces a rent of £72,954 per annum and is 77% vacant as a percentage of rental value.  The disposal is consistent with the strategy of selling smaller properties at premium prices to fund value enhancing asset management initiatives.

Asset management

Luton, The Galaxy

During the quarter three new lease agreements were completed at the Galaxy leisure scheme in Luton at a total rent of £432,510 per annum and taking the scheme to 100% occupancy.  The new rent compared with an apportioned average rental value of £296,760 per annum as at 30 September 2015 and increased the average lease term at the property from 11.4 to 13.2 years.  The positive impact of these lettings also increased the value of the scheme from £11.85 million to £13.5 million over the quarter.

Milton Keynes, Stacey Bushes Industrial Estate

During the quarter the rent increased from £1.19 million to £1.45 million per annum as a result of seven new lettings that reduced the void rate to 1.5% as a percentage of rental value, which compared with 20% upon acquisition in 2014.  As a result of this letting progress the rental value of the industrial estate increased from £1.41 million to £1.61 million per annum.  This activity, combined with increased investor demand for multi-let industrial estates, contributed to an increase in the value from £17.4 million to £19.2 million over the quarter. 

Debt

The Company has two loan facilities from Canada Life and Royal Bank of Scotland ('RBS') totalling £150.1 million.  As at 31 December 2015 the loans had an average duration of 10.2 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 £77.7 million and cash as at 31 December 2015 of approximately £13 million.   This results in a loan to value ratio, net of cash, of approximately 30%.   

-ENDS-

For further information:

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

 

END

 

 

NAVBRGDBBBDBGLC