RCS - Schroder Euro Real - Results analysis from Kepler Trust Intelligence

Schroder European Real Estate Investment TrustAnnouncement

Tue 10:30

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RNS Number : 8400K  Schroder Eur Real Est Inv Trust PLC  09 December 2025

Schroder European Real Estate (SERE)

09/12/2025

Results analysis from Kepler Trust Intelligence

Schroder European Real Estate's (SERE) final results to 30/09/2025 show an NAV
total return of 2.0%. The NAV was 119.2 cps (2024: 122.7 cps, -2.8%).
Dividends of 5.92 cps (2024: 5.92 cps) were declared during the year. SERE
currently yields c. 8.2%. SERE trades at a c. 37%  discount. During the year
2.3m shares were bought back, enhancing NAV by 0.5 cps. The board notes that
alongside broader market factors, specific challenges include SERE's largest
tenant's anticipated departure and the French Tax claim (both noted below).

Largest tenant, Dutch telecoms company KPN, which occupies the Apeldoorn asset
accounting for c. 6% of the portfolio value and 19% of contracted rent, has a
lease due to expire in December 2026. KPN have verbally advised that they will
issue their termination notice and leave at the end of December 2026. The
manager continues to work on solutions including re-letting to a replacement
tenant or obtaining planning approval for alternative uses and sale.

Tax disclosure update. As previously disclosed, SERE received a notice of
adjustment from the French Tax Authority amounting to c. €14.2 million,
including interest and penalties. SERE maintains its position that this amount
is not payable and has formally appealed the decision. This is now expected to
be reviewed within a six-month period. If the claim is dismissed, SERE would
escalate the matter to a formal court process, which could take up to two
years to resolve. Based on professional advice, SERE's board has decided not
to make a provision, as they do not believe that an outflow is probable.

Sir Julian Berney Bt., chair, said: "The period has been characterised by a
cautious recovery in economic sentiment across key European markets, with
inflation pressures gradually abating and the outlook for interest rates
remaining broadly stable, creating a more favourable borrowing backdrop. There
are some encouraging signs that liquidity within the European real estate
market is improving,."

Kepler View

As the board notes, alongside broader market factors, two specific factors
play a role in Schroder European Real Estate's (SERE) persistent discount. The
largest tenant, KPN, has already provided verbal confirmation and is expected
to formally confirm shortly its intention not to renew its lease, which
expires in December 2026. We note that this is a large site that, aside from
its current use, could be repositioned for residential development. But it's
current mixed use, particularly as a datacentre, are in an area which is
seeing strong tenant demand across Europe.

We understand from the manager that there is a strong case to believe that the
French tax claim will not be paid, and the board confirms that it has received
professional advice on the same basis. Alongside this change, there is now a
timetable for when we might expect a resolution, and as the board notes, there
is an appeal process should the initial assessment go against SERE.

SERE's significantly wider than average discount, c. 36% , says to us that the
market is taking a wait and see approach on the above issues and while that's
frustrating given that there has been an improvement in sentiment to REITs
more generally, with some of SERE's UK-listed peers turning in very good share
price performances over the last year, taking this approach is understandable
given the binary nature of both issues. Once the outcome of either or both is
known, then SERE's remaining portfolio, wich has maintained a relatively
stable valuation and income, could be significantly undervalued by the share
price.

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