REG - Schroder Euro Real - Announcement of NAV and Quarterly Dividend

Schroder European Real Estate Investment TrustAnnouncement

12/09/2024 07:00

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RNS Number : 8541D  Schroder Eur Real Est Inv Trust PLC  12 September 2024

12 September 2024

 

SCHRODER EUROPEAN REAL ESTATE INVESTMENT TRUST PLC

("SEREIT"/ the "Company" / "Group")

 

ANNOUNCEMENT OF NAV AND QUARTERLY DIVIDEND

 

Portfolio valuation increase and asset management initiatives underpin
positive total return and fully covered dividend

 

Schroder European Real Estate Investment Trust plc, the company investing in
European growth cities and regions, provides a business update and announces
its unaudited quarterly dividend and net asset value ("NAV") as at 30 June
2024.

 

-   Third quarterly interim dividend of 1.48 euro cps declared, fully covered
by EPRA earnings, reflecting an annualised dividend yield of c.7.6% based on
the current share price(1);

-   Underlying adjusted quarterly earnings from operational activities ("EPRA
earnings") of €2.0m (quarter ended 30 June 2023: €2.1 million)

-    Total interim dividends declared relating to the nine months of the
current financial year of 4.44 euro cps, 106% covered by EPRA earnings;

-    The direct property portfolio was independently valued at €208.3
million(2), reflecting a marginal like-for-like increase over the quarter of
0.1% (31 March 2024: -1.0%), or €0.2 million, demonstrating valuation
resilience and signalling improving sentiment as a result of falling interest
rates;

-   Unaudited NAV of €164.0 million, or 122.6 euro cents per share ("cps")
as at 30 June 2024 (31 March 2024: €165.3 million, or 123.6 euro cps),
driven primarily by a small property valuation increase, offset by capital
expenditure and deferred taxes;

-     NAV total return of 0.4% for the quarter and -0.9% over the nine
months of the current financial year;

-  The Company remains well positioned with a strong balance sheet, an
available cash balance of approximately €26 million, and a loan to value
ratio ("LTV") of 25% net of cash and 33% gross of cash;

-    Two lease re-gears, totalling 2,242 sqm, completed at the Frankfurt
grocery investment, securing long-term income from high profile tenants and
increasing the unexpired lease term to break by over eight years:

o  a 1,641 sqm 15-year lease extension (from 2027 to 2042) with anchor tenant
Lidl; and

o  an 8-year lease extension (from 2029 to 2037) with pet specialist,
Fressnapf, for 601 sqm

 

 

 

Tax disclosure update

The Group today provides an update further to the inclusion in the 2024
interim report (page 31) that "the Group has identified a potential tax
exposure attributable to the ongoing applicability of tax treatments adopted
in respect of the Group's tax structures. The range of potential outcomes is a
possible outflow of minimum £nil and maximum £9.8 million (excluding
possible interest and penalties). The Directors have not provided for this
amount because they do not believe an outflow is probable". The French tax
authorities have recently commenced a tax audit requesting further disclosure
on tax filings made in the past related to the structure. Having taken
professional advice, the Board has resolved at this stage not to alter its
position as outlined above, other than to update the maximum outflow range,
which has increased to €12 million. The Group will continue to monitor the
situation and provide further updates as required.

 

Interim dividend

Announcement of a third quarterly interim dividend of 1.48 euro cps, which is
fully covered by EPRA earnings. Annualising the dividend provides investors
with a dividend yield of c.7.6%, based on the share price as at 30 August
2024(1).

 

Total dividends declared relating to the nine months of the current financial
year are 4.44 euro cps, 106% covered by EPRA earnings.

 

The interim dividend payment will be made on Friday 1 November 2024 to
shareholders on the register on the record date of Friday 4 October 2024. In
South Africa, the last day to trade will be Tuesday 1 October 2024 and the
ex-dividend date will be Wednesday 2 October 2024. In the UK, the last day to
trade will be Wednesday 2 October 2024 and the ex-dividend date will be
Thursday 3 October 2024.

 

The interim dividend will be paid in British pound sterling ("GBP") to
shareholders on the UK register and Rand to shareholders on the South African
register. The exchange rate for determining the interim dividend paid in South
African Rand ("Rand") will be confirmed by way of an announcement on Tuesday
17 September 2024. UK shareholders are able to make an election to receive
dividends in Euro rather than GBP should that be preferred. The form for
applying for such election can be obtained from the Company's UK registrars
(Equiniti Limited) and any such election must be received by the Company no
later than Friday 4 October 2024. The exchange rate for determining the
interim dividend paid in GBP will be confirmed following the election cut-off
date by way of an announcement on Monday 7 October 2024.

 

Shares cannot be moved between the South African register and the UK register
between Tuesday 17 September 2024 and Friday 4 October 2024, both days
inclusive.

 

Shares may not be dematerialised or rematerialised in South Africa
between Wednesday 2 October 2024 and Friday 4 October 2024, both days
inclusive.

 

The Company has a total of 133,734,686 shares in issue on the date of this
announcement. The dividend will be distributed by the Company (UK tax
registration number 21696 04839) and is regarded as a foreign dividend for
shareholders on the South African register. In respect of South African
shareholders, dividend tax will be withheld from the amount of the dividend
noted above at the rate of 20% unless the shareholder qualifies for the
exemption. Further dividend tax information for South African shareholders
will be included in the exchange rate announcement to be made on Tuesday 17
September 2024.

 

Net Asset Value

The table below provides a breakdown of the movement in NAV during the quarter
ended 30 June 2024:

                                                                 €m((3))    Cps((4))
 Brought forward NAV as at 1 April 2024                          165.3      123.6
 Unrealised movement in the valuation of the property portfolio  0.2        0.1
 Capital expenditure                                             (0.9)      (0.7)
 EPRA earnings                                                   2.0        1.5
 Non-cash items                                                  (0.6)      (0.4)
 Dividend paid                                                   (2.0)      (1.5)
 NAV as at 30 June 2024                                          164.0      122.6

(3) Management reviews the performance of the Company principally on a
proportionally consolidated basis. As a result, figures quoted in this table
include the Company's share of joint ventures on a line-by-line basis and
exclude non-controlling interests in the Company's subsidiaries.

(4) Based on 133,734,686 shares.

 

Property portfolio

The direct property portfolio was independently valued at €208.3 million,
reflecting a marginal increase of 0.1% (31 March 2024 -1.0%), or €0.2
million, over the quarter(2). This signals a stabilisation in values,
particularly for the industrial and retail portfolio, which offset the
continued outward yield movement for offices.

 

Active asset management initiatives and diversification continue to support
portfolio occupancy and valuation resilience. During the quarter, two lease
re-gears were completed at the Frankfurt grocery asset, increasing the average
unexpired lease term to break by over eight years:

-     a 1,641 sqm 15-year lease extension (from 2027 to 2042) with anchor
tenant Lidl; and

-     an 8-year lease extension (from 2029 to 2037) with pet specialist,
Fressnapf, for 601 sqm.

 

The portfolio's income profile remains robust, benefitting from rental growth,
indexation and high occupancy (96%), which is diversified across c.50 tenants.

 

Balance sheet

The Company remains well positioned with cash reserves of approximately €26
million.  Based on 30 June 2024 values, the portfolio LTV is approximately
33% based on gross asset value and 25% net of cash.

 

 

Footnote 1: Based on a share price of c.65.4p as at 30 August 2024

Footnote 2: In addition, the Company has a 50% interest in a joint venture
in Seville which continues to be recognised at nil value.

 

 

 

-Ends-

 

Enquiries:

Jeff O'Dwyer

Schroder Real Estate Investment Management Limited
           Tel: 020 7658 6000

Natalia de Sousa

Schroder Investment Management Limited
                    Tel: 020 7658 6000

Dido Laurimore/Richard Gotla/Ollie Parsons

FTI Consulting
                                              Tel: 020
3727 1000

 

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