REG - Schroder Real Estate - NAV update for the quarter to 31 December 2025

Schroder Real Estate Investment TrustAnnouncement

26/02/2026 07:00

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RNS Number : 4417U  Schroder Real Estate Inv Trst Ld  26 February 2026

For release 26 February 2026

 

Schroder Real Estate Investment Trust Limited

NAV UPDATE FOR THE QUARTER TO 31 DECEMBER 2025

1.1% QUARTERLY NAV TOTAL RETURN WITH ACTIVE MANAGEMENT REDUCING THE VOID AND
SUPPORTING FUTURE EARNINGS

 

Schroder Real Estate Investment Trust Limited ('SREIT' or the 'Company'), the
actively managed REIT focused on improving the sustainability performance of
buildings to generate higher income and capital growth, announces its 31
December 2025 net asset value ('NAV'), an asset management update, and further
progress selling smaller non-core assets on completion of business plans.

 

Delivering income to shareholders

·    Annualised dividend yield of 6.4% on 25 February closing share price
of 55.9p

·    NAV total return for the quarter of 1.1%

·    Quarterly EPRA earnings of £4.1 million, or 0.8 pps

·    Current annual rent of £30.4 million

·    30% rent reversion to the portfolio's estimated rental value ('ERV')
of £39.6 million

 

Underpinned by attractive debt profile

·    Interest cost of 3.4% on drawn debt

·    Weighted average maturity of 7.7 years

·    Fair value of the fixed-rate loan is £17.7 million, which is not
reflected in the Company's NAV

·    Net loan to value 36.6% (30 September 2025: 36.7%)

 

Long-term portfolio investment outperformance

·    Portfolio allocated to higher growth sectors, 65% industrial and
retail warehouse

·    Outperforming MSCI Benchmark over one, three, and five years

·    Quarterly Portfolio total return of 1.3% (MSCI Benchmark: 1.4%)

 

Sustainability-led asset management initiatives drive 250 basis points
reduction in portfolio vacancy

·    Since the Company announced its interim results on 27 November 2025,
11 deals completed totalling £1.3 million across 170,000 sq ft:

o  Five lettings of vacant units totalling £577,000 of annualised rent, 1%
ahead of 31 December 2025 ERV

o  Four lease renewals generating total annualised rent of £420,000, 22%
ahead of the previous passing level

o  Two rent reviews with a total annualised rent of £343,000, 21% ahead of
the previous passing level

·    Portfolio void rate reduced to 9.7% (30 September 2025: 12.2%),
including the impact of exchanged agreements for lease

·    Completed two non-core disposals for £5.2 million, 7% ahead of book
value as at 31 March 2025

 

Dividends

·    Quarterly dividends paid of £4.4 million, or 0.897 pps (30 September
2025: 0.897 pps)

·    Quarterly dividends 93% covered by EPRA earnings, impacted by delayed
leasing activity that has progressed post quarter end

·    Interim dividend of 0.897 pps for the period 1 October 2025 to 31
December 2025 to be paid in March 2026

 

Alastair Hughes, Chair of the Board, commented: "A key focus has been
executing on the asset management programme to reduce the portfolio void and
drive income, and the team has delivered a number of successes on this front,
including since the quarter end. Our portfolio alignment to higher growth
sectors, combined with an active asset management strategy should continue to
support the delivery of attractive returns for shareholders."

 

NAV

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

 

                                                                                £m     pps    Comments
 NAV as at 30 September 2025                                                    302.9  61.9   Calculation based on 489,110,576 shares
 Unrealised increase in the valuations of the direct real estate portfolio and  2.0    0.4    Portfolio capital growth, like-for-like, net of capex, of -0.2%
 Joint Ventures
 Capital expenditure (direct portfolio and share of Joint Ventures)             (2.8)  (0.5)  Relating to various projects across the portfolio that are expected to drive
                                                                                              earnings growth
 EPRA earnings                                                                  4.1    0.8    Resulting in dividend cover of 93%
 Dividend paid                                                                  (4.4)  (0.9)  Dividend for the quarter ended 30 September 2025 was paid on 19 December 2025
                                                                                              at 0.897 pps
 Gain on disposal of asset                                                      0.3    0.1    Sale of Marlow and Haydock on 21 October 2025 and 28 November 2025. Gross sale
                                                                                              prices of £1.665m and £4.5m. Fair values of £1.5m and £4.3m. Sales fees
                                                                                              totalling £0.05m
 Unrealised fair value movement on the interest rate collar                     0.0    0.0    There was an immaterial movement on the interest rate collar in the quarter
 Others                                                                         (0.3)  (0.1)  All other items including lease incentives and rounding
 NAV as at 31 December 2025                                                     301.8  61.7   Calculation based on 489,110,576 shares

 

Property portfolio

As at 31 December 2025, the underlying portfolio comprised 33 properties
valued at £477.8 million. It generated annual rent of £30.4 million,
reflecting a net initial yield of 6.0% (MSCI Benchmark: 5.0%). The portfolio's
ERV is £39.6 million, reflecting a reversionary yield of 8.3% (MSCI
Benchmark: 6.2%).

 

Including the impact of agreement for leases that have exchanged, the
portfolio void rate has improved to 9.7% as at today (30 September 2025:
12.2%), calculated as a percentage of ERV. In addition:

·    0.3% of this void is currently under offer and in advanced legal
negotiations.

·    2.2% is undergoing refurbishment including major sustainability works
at Union Park Industrial Estate in Norwich (0.9%), Clifton Park in York (0.5%)
and St Ann's House in Manchester (0.4%), all of which are expected to generate
material increases in rent compared to the previous level when let.

 

The weighted average unexpired lease term, assuming all tenants vacate at the
earliest opportunity, is 5.4 years.

 

The tables below summarise portfolio information as at 31 December 2025:

 

Sector weighting

                               Sector as a % of total value
                               SREIT 1  (#_edn1)  MSCI Benchmark(1)

                                                  (as at 31 December 25)
 Industrial                    52.1               32.7
 Office                        22.7               21.7
 Retail warehouse              13.0               10.0
 Retail                        6.6                9.9
 Retail ancillary to main use  4.8                -
 Retail single use             1.8                -
 Other                         5.7                20.3
 Shopping centres              -                  2.2
 Unattributable                -                  3.3

 

Region weighting

                                      Region as a % of total value
                                      SREIT            MSCI Benchmark

                                                       (as at 31 December 25)
 Central London                       8.0              17.4
 South East excluding Central London  16.9             35.6
 Rest of South                        11.7             6.4
 Midlands and Wales                   20.9             23.2
 North                                40.0             13.3
 Scotland                             2.5              4.0
 Northern Ireland                     -                0.1

 

Balance sheet and debt

The weighted average interest rate for total debt drawn at the quarter end was
3.4%, with an average maturity of 7.7 years, with 87% either fixed or hedged
against movements in interest rates. The Company has significant headroom on
all covenants. A summary of the key terms as at 31 December 2025 is in the
table below:

 

 Lender       Drawn loan (£m)   Maturity                    Total interest rate
 Canada Life  129.6             50%: 15/10/32               2.5%                 Fixed rate loan

                                50%: 15/10/39
 RBSI         54.5              06/06/27                    5.4%                 £75 million revolving credit facility ('RCF'), of which £54.5 million is
                                                                                 drawn. Loan margin is 1.65% over SONIA. £30.5 million benefits from an
                                                                                 interest rate collar to maturity, with a cap at 4.25% and a floor at 3.25%.
                                                                                 The balance of the loan is floating. The RCF is a 'Green Loan', with criteria
                                                                                 linked to reduced energy consumption, future improvements in the GRESB rating
                                                                                 and certification linked to building improvements.
 Total        184.1             Weighted average 7.7 years  3.4%

 

As at 31 December 2025, the Company had cash, including cash held in joint
ventures, of £9.1 million and a net loan to value ratio of 36.6%, slightly
above the long-term strategic target range of 25% to 35%. The Company is
taking steps to reduce the net loan to value ratio back in line with the
target range, with several disposals in progress or planned.

 

Asset management

The Company continues to deliver on its asset management programme, with key
activity since the Company announced its interim results on 27 November 2025
including:

 

Millshaw Park Industrial Estate, Leeds

·    Agreement for lease ('AFL') exchanged on Unit 22 with Slazenger Padel
Clubs, for a 15-year term without breaks at a rent of £465,363 per annum or
£9.00 per sq ft. This is an increase of 86% compared to the previous passing
rent. There will be five-yearly rent reviews to CPI compounded annually with a
cap and collar at 3% and 1% per annum respectively. Sportsdirect.com Retail
Limited guarantees the Tenant's obligations for the first 5 years of the term.

·    This follows a £1.9 million refurbishment to enhance the
sustainability credentials of the asset, improving the EPC to an 'A' rating
from a 'C'.

·    Similar size un-refurbished units are currently let at around £6.50
per sq ft, providing significant rental growth potential.

 

Stanley Green Trading Estate, Manchester

·    A new 10-year lease has completed on Unit 6D to ABB Limited at a rent
of £252,250 per annum, or £15.50 per sq ft. The tenant is a large
manufacturing business who will use the property for electrification and
automation engineering. The unit's 'A+' EPC rating and BREEAM New Construction
Excellent accreditation were a key selling point.

·    There is a rent review on the fifth anniversary to the higher of open
market rental value or CPI compounded annually with a cap and collar at 4% and
2% per annum respectively.

 

Churchill Way West, Salisbury

·    Exchanged an AFL on Unit 2 with The Gym Limited, for a 15-year term
without breaks at a rent of £155,000 per annum, or £19.89 per sq ft. There
will be five-yearly rent reviews to CPI compounded annually with a cap and
collar at 3% and 1% per annum respectively.

·    Combined with the previously reported AFL on Unit 1 with Lidl Great
Britain Limited, this is a rent of £595,000, which reflects an increase of
68% compared to the previous passing rent for the two units.

·    This follows a £1.5 million refurbishment to reconfigure the units
and enhance the sustainability credentials of the asset, with the EPC for Unit
1 improving to an 'A+' rating from a 'D'.

 

City Tower, Manchester (SREIT owns a 25% interest)

·    The hotel is let until 2060 at a current annual rent of £2.6 million
(SREIT share £650,000 per annum) and the next seven-yearly rent review, which
is linked to RPI, is on 11 March 2030.

·    An assignment of the hotel tenant completed on 26 January 2026, with
the lease transferring from Jupiter Hotels Limited to Venus Hotels Limited
('Venus').

·    Venus is currently on site implementing a £10 million refurbishment
project.

 

Disposals

On 21 October 2025 the company completed the sale of Pacific House in Marlow,
a vacant freehold office asset, for £1.7 million, reflecting a capital value
of £108 per sq ft and an 11% premium to the 31 March 2025 independent
valuation.

 

On 28 November 2025 the company completed the sale of Haydock Industrial
Estate for £4.5 million reflecting a net initial yield of 7.1% and a 5%
premium to the 31 March 2025 independent valuation.

 

Investment Manager

On 12 February 2026, Schroders plc and Nuveen announced that they have agreed
the terms of a recommended all-cash offer by Pantheon LLC 2  (#_edn2) , a
wholly-owned subsidiary of Nuveen, to acquire the entire issued and to be
issued share capital of Schroders.

 

The transaction, which is subject to shareholder and regulatory approvals, is
expected to close toward the end of the year.

 

 

 

-ENDS-

 

For further information:

 Schroder Real Estate Investment Management Limited:

 Nick Montgomery / Bradley Biggins / Katherine Fyfe   020 7658 6000
 FTI Consulting:

 Richard Gotla / Oliver Parsons                       020 3727 1000

 

 1  Column does not sum due to rounding.

 2  Pantheon LLC is a wholly-owned subsidiary of Nuveen.

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