REG - Schroder Real Estate - Year End Results <Origin Href="QuoteRef">SREI.L</Origin> - Part 4
13/06/2016 07:05
- Part 4: For the preceding part double click ID:nRSM9376Ac
unobservable inputs (Level 3) as at 31 March 2015
31 March 2015 Industrial Retail (incl retail warehouse) Office Leisure Total
Fair value (£000) 70,850 113,105 114,550 11,700 310,205
Area ('000 sq ft) 1,248 505 657 145 2,555
Net passing rent per sq ft per annum RangeWeighted average £0 - £8.82 £4.03 £0 - £38.50 £13.44 £0 - £25.72 £12.92 £6.97 N/A £0-£38.50 £8.34
Gross ERV per sq ft per annum RangeWeighted average £3.00 - £9.25 £4.59 £7.40-£49.50 £16.31 £9.00 - £26.00 £14.26 £8.72N/A £3.00-£49.50 £9.62
Net initial yield (1) RangeWeighted average 0% - 8.31% 6.71% 0% - 9.20% 5.67% 1.00%-13.99% 7.00% 8.17%N/A 0% - 13.99% 6.49%
Equivalent yield RangeWeighted average 5.74% - 8.53% 7.43% 4.50%-9.84% 6.45% 5.39%-9.67% 7.24% 8.49%N/A 4.50%-9.84% 7.04%
Notes:
(1) Yields based on rents receivable after deduction of head rents, but gross of non-recoverables
Sensitivity of measurement to variations in the significant unobservable inputs
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value
hierarchy of the Group's property portfolio, together with the impact of significant movements in these inputs on the fair
value measurement, are shown below:
Unobservable input Impact on fair value measurement of significant increase in input Impact on fair value measurement of significant decrease in input
Passing rent Increase Decrease
Gross ERV Increase Decrease
Net initial yield Decrease Increase
Equivalent yield Decrease Increase
There are interrelationships between the yields and rental values as they are partially determined by market rate
conditions.
The sensitivity of the valuation to changes in the most significant inputs per class of investment property are shown
below:
Estimated movement in fair value of investment properties at 31 March 2016 Industrial£'000 Retail£'000 Office£'000 Other£'000 Total£'000
Increase in ERV by 5% 4,330 6,617 4,126 240 15,313
Decrease in ERV by 5% (4,265) (5,880) (3,830) (190) (14,165)
Increase in net initial yield by 0.25% (4,134) (6,336) (4,636) (448) (15,554)
Decrease in net initial yield by 0.25% 4,494 6,918 5,033 479 16,924
Estimated movement in fair value of investment properties at 31 March 2015 Industrial£000 Retail£000 Office£000 Other£000 Total£000
Increase in ERV by 5% 3,050 4,300 4,150 300 11,800
Decrease in ERV by 5% (2,750) (4,300) (3,655) (200) (10,905)
Increase in net initial yield by 0.25% (2,550) (4,850) (3,900) (350) (11,650)
Decrease in net initial yield by 0.25% 2,750 5,150 4,300 400 12,600
12. Investment in joint ventures
£000
Closing balance as at 31 March 2014 1,800
Sale of Crendon * (1,800)
Purchase of interest in City Tower Unit Trust 35,000
Purchase of interest in Store Unit Trust 36,000
Share of profit for the year 4,065
Distribution received (2,273)
Closing balance as at 31 March 2015 72,792
Purchase of interest in City Tower Unit Trust 390
Share of profit for the year 8,034
Distribution received (3,257)
Closing balance as at 31 March 2016 77,959
* Crendon Industrial Partnership sold Crendon Industrial Park during the year ended 31 March 2014 giving rise to net proceeds to SREIT of £1.8m, which were received in April 2014.
Summarised joint venture financial information not adjusted for the Group's share 31/03/2016 £000 31/03/2015£000
Total assets 241,757 223,222
Total liabilities1 1,135 692
Revenues for year 10,726 7,396
Total comprehensive income 27,062 10,530
Net asset value attributable to Group 77,958 72,792
Total comprehensive income attributable to the Group 8,034 4,065
1Liabilities that are non-recourse to the Group
13. Trade and other receivables
31/03/2016 31/03/2015
£000 £000
Rent receivable 1,699 1,353
Other debtors and prepayments 16,001 14,834
17,700 16,187
Other debtors and prepayments includes £9,861,000 (2015: £9,216,000) in respect of lease incentives. A further £4,000,000
relates to New Malden (2015: £4,567,500 relating to Woking and Hinckley), that had unconditionally exchanged but had not
completed prior to the year end.
14. Cash and cash equivalents
As at 31 March 2016, the group had £12.8 million (2015: £46.6 million) in cash of which £2.1 million is proceeds from sales
held within the Canada Life security pool. £861,000 is held in respect of tenant deposits (see note 17).
15. Issued capital and reserves
Share capital
The share capital of the Company is represented by an unlimited number of Ordinary Shares of no par value.
As at the date of this Report, the Company has 565,664,749 ordinary shares in issue of which 47,151,340 ordinary shares
(representing 8.3% of the Company's total issued share capital) are held in treasury. The total number of voting rights of
the Company is 518,513,409.
16. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings. For more
information about the Group's exposure to interest rate risk, see note 19.
31/03/2016 31/03/2015
£000 £000 £000 £000
Non-current liabilities
Loan facility 150,085 129,585
Less: Finance costs incurred (2,311) (2,212)
Add: Amortised finance costs 220 (2,091) 189 (2,023)
147,994 127,562
The Group entered into a £129.6 million loan facility with Canada Life on 16 April 2013 that has 20% of the loan maturing
on 15 April 2023 and with the balance of 80% maturing on 15 April 2028, with a fixed interest rate of 4.77%.
On 17 July 2015 the Company entered into a four year, £20.5 million revolving credit facility with the Royal Bank of
Scotland ("RBS") for the purpose of acquiring, Millshaw Park Industrial Estate. The interest rate is based on the loan to
value ratio as below:
· LIBOR + 1.60% if loan to value is less than or equal to 60%
· LIBOR + 1.85% if loan to value is greater than 60%
During the year ended the loan to value has remained less than 60%. Since this loan has variable interest, an interest
rate cap for 100% of the loan was entered into, which comes into effect if GPB 3 month LIBOR reaches 1.5%.
As at 31 March 2016 the group has a loan balance of £150.1 million and £2.1 million of unamortised arrangement fees. (31
March 2015: £129.6 million and £2.0 million of unamortised arrangement fees).
The Canada Life facility has a first charge security over all the property assets in the ring fenced Security Pool (the
'Security Pool') which at 31 March 2016 contained properties valued at £342 million together with £2.1 million cash.
Various restraints apply during the term of the loan although the facility has been designed to provide significant
operational flexibility. The RBS facility has a first charge security over all the property assets held in SREIT No.2
Limited, which at 31 March 2016 contained properties valued at £38.8 million.
The principal covenants for Canada Life and RBS are that the loan should not comprise more than 65% of the value of the
assets in the Security Pool nor should estimated rental and other income arising from assets in the Security Pool,
calculated on any interest payment date and one year projected from any interest payment date, comprise less than 185% of
the interest payments. For the RBS facility, the forward looking interest cover covenant is 250%.
As at the Interest Payment Date, the Canada Life interest cover calculated in accordance with the ICR covenant was 327%
(2015: 334%) and the forward looking interest cover was 297% (2015: 284%), with the Loan to value ratio of 38.1% (33.0% net
of all cash) (2015: 43.8%, 29.0% net of all cash). The RBS interest cover calculated in accordance with the ICR covenant
was 591% and the forward looking interest cover was 523% with the Loan to value ratio of 52.8%.
17. Trade and other payables
31/03/2016 31/03/2015
£000 £000
Rent received in advance 5,035 4,553
Rental deposits 861 229
Interest payable 1,391 1,305
Other trade payables and accruals 1,726 1,179
9,013 7,266
18. NAV per Ordinary Share
The NAV per Ordinary Share is based on the net assets of £322,606,000 (2015: £299,214,000) and 518,513,409 (2015:
518,513,409) Ordinary Shares in issue at the reporting date.
19. Financial instruments, properties and associated risks
Financial risk factors
The Group holds cash and liquid resources as well as having debtors and creditors that arise directly from its operations.
The Group uses interest rate contracts when required to limit exposure to interest rate risks, but does not have any other
derivative instruments.
The main risks arising from the Group's financial instruments and properties are market price risk, credit risk, liquidity
risk and interest rate risk. The Group is only directly exposed to sterling and hence is not exposed to currency risks. The
Board regularly reviews and agrees policies for managing each of these risks and these are summarised below:
Market price risk
Rental income and the market value for properties are generally affected by overall conditions in the economy, such as
changes in gross domestic product, employment trends, inflation and changes in interest rates. Changes in gross domestic
product may also impact employment levels, which in turn may impact the demand for premises. Furthermore, movements in
interest rates may also affect the cost of financing for real estate companies.
Both rental income and property values may also be affected by other factors specific to the real estate market, such as
competition from other property owners, the perceptions of prospective tenants of the attractiveness, convenience and
safety of properties, the inability to collect rents because of bankruptcy or the insolvency of tenants, the periodic need
to renovate, repair and release space and the costs thereof, the costs of maintenance and insurance, and increased
operating costs.
The Directors monitor the market value of investment properties by having independent valuations carried out quarterly by a
firm of independent chartered surveyors.
Included in market price risk is interest rate risk which is discussed further below.
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered
into with the Group. In the event of default by an occupational tenant, the Group will suffer a rental income shortfall and
incur additional costs, including legal expenses, in maintaining, insuring and re-letting the property. The Investment
Manager reviews reports prepared by Dun & Bradstreet, or other sources to assess the credit quality of the Group's tenants
and aims to ensure there is no excessive concentration of risk and that the impact of any default by a tenant is
minimised.
In respect of credit risk arising from other financial assets, which comprise cash and cash equivalents, exposure to credit
risk arises from default of the counterparty with a maximum exposure equal to the carrying amounts of these instruments. In
order to mitigate such risks, cash is maintained with major international financial institutions with high quality credit
ratings. During the year and at the reporting date the Group maintained relationships with branches and subsidiaries of
HSBC. HSBC Credit Rating is AA negative (provided by Standard and Poor).
The maximum exposure to credit risk for rent receivables at the reporting date by type of sector was:
31 March 2016Carrying amount£000 31 March 2015Carrying amount£000
Office 358 349
Industrial 1085 646
Retail 256 358
1,699 1,353
Rent receivables which are past their due date, but which were not impaired at the reporting date were:
31 March 2016Carrying amount£000 31 March 2015Carrying amount£000
0-30 days 1,245 1,192
31-60 days 21 18
61-90 days 2 4
91 days plus 431 139
1,699* 1,353*
*Net of bad debt provisions of £124,000 (2015: £71,000).
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations associated with its financial
obligations.
The Group's investments comprise UK commercial property. Property and property related assets are inherently difficult to
value due to the individual nature of each property. As a result, valuations are subject to substantial uncertainty. There
is no assurance that the estimates resulting from the valuation process will reflect the actual sales price even where such
sales occur shortly after the valuation date. Investments in property are relatively illiquid; however the Group has tried
to mitigate this risk by investing in properties that it considers to be good quality.
In certain circumstances, the terms of the Group's debt facilities entitle the lender to require early repayment and in
such circumstances the Group's ability to maintain dividend levels and the net asset value could be adversely affected. The
Investment Manager prepares cash flows on a rolling basis to ensure the Group can meet future liabilities as and when they
fall due.
The following table indicates the maturity analysis of the financial liabilities.
As at 31 March 2016 Carryingamount £000 ExpectedCash flows £000 6 mthsor less £000 6mths- 2 years 2-5 years £000 Morethan 5 years£000
£000
Financial liabilities
Interest-bearing loans and borrowings and interest 149,385 225,724 3,316 9,947 39,607 172,854
Trade and other payables 2,587 2,587 2,587 - - -
Total financial liabilities 151,972 228,311 5,903 9,947 39,607 172,854
As at 31 March 2015 Carryingamount £000 ExpectedCash flows £000 6 mthsor less £000 6 mths-2 years £000 2-5 years £000 Morethan 5 years£000
Financial liabilities
Interest-bearing loans and borrowings and interest 128,867 209,941 3,090 9,272 18,544 179,035
Trade and other payables 1,408 1,408 1,408 - - -
Total financial liabilities 130,275 211,349 4,498 9,272 18,544 179,035
Interest rate risk
Exposure to market risk for changes in interest rates relates primarily to the Group's long-term debt obligations and to
interest earned on cash balances. As interest on the Group's long-term debt obligations is payable on a fixed-rate basis
the Group is not exposed to interest rate risk, but is exposed to changes in fair value of long-term debt obligations
driven by interest rate movements. As at 31 March 2016 the fair value of the Group's £129.6 million loan with Canada Life
was £140.2 million (2015: £138.1 million). The RBS revolving credit facility is a low margin flexible source of funding
with a margin of 1.6% above 3 month LIBOR therefore it has not been fair valued.
A 1% increase or decrease in short-term interest rates would increase or decrease the annual income and equity by £127,600
based on the cash balance as at 31 March 2016.
Fair values
The fair values of financial assets and liabilities are not materially different from their carrying values in the
financial statements.
The fair value hierarchy levels are as follows:
· Level 1 - quoted prices (unadjusted) in active markets for identical assets and liabilities
· Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
· Level 3 - inputs for the assets or liability that are not based on observable market data (unobservable inputs).
There have been no transfers between Levels 1, 2 and 3 during the year (2015: none).
The following summarises the main methods and assumptions used in estimating the fair values of financial instruments and
investment property.
Investment property- level 3
Fair value is based on valuations provided by an independent firm of chartered surveyors and registered appraisers. These
values were determined after having taken into consideration recent market transactions for similar properties in similar
locations to the investment properties held by the Group. The fair value hierarchy of investment property is level 3.See
Note 11 for further details.
Interest bearing loans and borrowings - level 2
Fair values are based on the present value of future cash flows discounted at a market rate of interest. Issue costs are
amortised over the period of the borrowings. As at 31 March 2016 the fair value of the Group's £129.6 million loan with
Canada Life was £140.2 million.
Trade and other receivables/payables- level 2
All receivables and payables are deemed to be due within one year and as such the notional amount is considered to reflect
the fair value.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The objective is to ensure that it will continue as a going concern and to
maximise return to its equity shareholders through appropriate level of gearing.
The Company's debt and capital structure comprises the following:
31/03/2016 31/03/2015
£000 £000
Debt
Fixed rate loan facility 150,085 129,585
Equity
Called-up share capital 192,638 192,638
Reserves 129,968 106,576
322,606 299,214
Total debt and equity 472,691 428,799
There were no changes in the Group's approach to capital management during the year.
20. Operating leases
The Group leases out its investment property under operating leases. At 31 March 2016 the future minimum lease receipts
under non-cancellable leases are as follows:
31/03/2016 31/03/2015
£000 £000
Less than one year 23,531 20,436
Between one and five years 80,483 67,845
More than five years 91,136 85,866
195,150 174,147
The total above comprises the total contracted rent receivable as at 31 March 2016.
21. List of Subsidiary and Joint Venture Undertakings
The companies listed below are those which were part of the group at 31 March 2016:
Undertaking Category Country of Incorporation Ultimate Ownership
SREIT No.2 Ltd Subsidiary Guernsey 100%
SREIT Holdings No.2 Ltd* Subsidiary Guernsey 100%
SREIT Holdings Ltd Subsidiary Guernsey 100%
SREIT Property Ltd Subsidiary Guernsey 100%
SREIT (Portergate) Ltd Subsidiary Guernsey 100%
SREIT (Victory) Ltd Subsidiary Guernsey 100%
SREIT (Uxbridge) Ltd Subsidiary Guernsey 100%
SREIT (City Tower) Ltd Subsidiary Guernsey 100%
SREIT (Store) Ltd Subsidiary Guernsey 100%
SREIT (Bedford) Ltd* Subsidiary Guernsey 100%
St John's Centre (Bedford) Ltd** Subsidiary UK 100%
Lunar Partnership (Brentford) Ltd Subsidiary Guernsey 100%
LP (Brentford) Ltd Subsidiary Guernsey 100%
City Tower Unit Trust Joint Venture Jersey 25%
Store Unit Trust Joint Venture Jersey 50%
*SREIT Holdings No 2 Limited and SREIT (Bedford) Limited were incorporated during the year to March 2016
**St Johns Centre (Bedford) Limited was acquired during the year to March 2016
22. Related party transactions
Material agreements are disclosed in note 3. Transactions with Directors and the Investment Manager are disclosed in note
7. Transactions with joint ventures are disclosed in note 12.
23. Capital commitments
At 31 March 2016 the Group had no capital commitments.
24. Post balance sheet events
Since the year end, the Group has completed the sale of three properties for a combined price of £10.7 million. The
disposals are summarised as follows:
· Clumber Street, Nottingham - sold on 1 April 2016 for £2 million
· 3 - 6 Abbeygate Street, Bath - sold on 10 May 2016 for £4.7 million
· St. Georges Court, New Malden - sold on 4 April 2016 for £4 million (included in the March 2016 financial statements
as contracts unconditionally exchanged in April 2015)
EPRA Performance Measures (unaudited)
As recommended by EPRA (European Public Real Estate Association), EPRA performance measures are disclosed in the section
below.
EPRA performance measures : Summary Table
31/03/ 2016 31/03/2015
Total£000 Total£000
EPRA earnings 13,130 12,142
EPRA earnings per share 2.5 2.5
EPRA NAV 322,606 299,214
EPRA NAV per share 62.2 57.7
EPRA NNNAV 313,600 288,676
EPRA NNNAV per share 60.5 55.7
EPRA Net Initial Yield 5.2% 5.6%
EPRA topped-up Net Initial Yield 5.3% 5.7%
EPRA Vacancy Rate 8.89% 9.60%
EPRA Cost Ratios - including direct vacancy costs 31.9% 32.3%
EPRA Cost Ratios - excluding direct vacancy costs 25.3% 24.8%
a. EPRA earnings and EPS
Total comprehensive income excluding realised and unrealised gains/ losses on investment property, share of profit on joint
venture investments and changes in fair value of financial instruments, divided by the weighted average number of shares.
31/03/ 2016 31/03/2015
£000 £000
IFRS profit after tax 36,252 54,774
Adjustments to calculate EPRA Earnings:
Profit on disposal of investment property (1,295) (20,696)
Net valuation gain on investment property (17,375) (20,144)
Finance costs: interest rate cap 325 -
Share of valuation gain in associates and joint ventures (4,777) (1,792)
EPRA earnings 13,130 12,142
Weighted average number of Ordinary shares 518,513,409 485,661,354
IFRS earnings per share (pence per share) 7.0 11.3
EPRA earnings per share (pence per share) 2.5 2.5
b. EPRA NAV per share
The Net Asset Value adjusted to exclude assets or liabilities not expected to crystallise in a long-term investment
property model, divided by the number of shares in issue.
31/03/2016 31/03/2015
£000 £000
IFRS NAV per financial statements 322,606 299,214
EPRA NAV 322,606 299,214
Shares in issue at end of year 518,513,409 518,513,409
IFRS NAV per share 62.2 57.7
EPRA NAV per share 62.2 57.7
c. EPRA NNNAV per share
The EPRA NAV adjusted to include the fair value of debt, divided by the number of shares in issue.
31/03/2016 31/03/2015
£000 £000
EPRA NAV 322,606 299,214
Adjustments to calculate EPRA NNNAV:
Fair value of debt (12,706) (10,538)
EPRA NNNAV 309,900 288,676
EPRA NNNAV per share 59.8 55.7
d. EPRA Net Initial Yield
Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating
expenses, divided by the grossed up market value of the complete property portfolio.
The EPRA "topped up" NIY is the EPRA NIY adjusted for unexpired lease incentives.
31/03/2016 31/03/2015
£000 £000
Investment property - wholly owned 385,085 310,205
Investment property - share of joint ventures and funds 77,488 71,938
Complete property portfolio 462,573 382,143
Allowance for estimated purchasers' costs 26,829 22,164
Gross up completed property portfolio valuation 489,402 404,307
Annualised cash passing rental income 28,235 25,367
Property outgoings (2,952) (2,812)
Annualised net rents 25,283 22,555
Notional rent expiration of rent free periods (1) 812 599
Topped-up net annualised rent 26,095 23,154
EPRA NIY 5.2% 5.6%
EPRA "topped-up" NIY 5.3% 5.7%
(1) The period over which rent free periods expire is 1 year (2015: 2 years)
e. EPRA cost ratios
Administrative and operating costs as a percentage of gross rental income calculated including and excluding direct vacancy
costs.
31/03/2016 31/03/2015
£000 £000
Administrative/property operating expense line per IFRS income statement 8,456 7,646
Share of joint venture expenses 552 305
Ground rent costs (108) (108)
EPRA Costs (including direct vacancy costs) 8,900 7,843
Direct vacancy costs (1,843) (1,825)
EPRA Costs (excluding direct vacancy costs) 7,057 6,018
Gross Rental Income less ground rent costs 24,632 22,016
Share of Joint Ventures income less ground rent costs 3,257 2,273
Gross Rental Income 27,889 24,289
EPRA Cost Ratio (including direct vacancy costs) 31.9% 32.3%
EPRA Cost Ratio (excluding direct vacancy costs) 25.3% 24.8%
EPRA Vacancy Rate 8.89% 9.60%
Report of the Depositary to the Shareholders
Northern Trust (Guernsey) Limited has been appointed as Depositary to Schroder Real Estate Investment Trust Limited (the
"Company") in accordance with the requirements of Article 36 and Articles 21(7), (8) and (9) of the Directive 2011/61/EU of
the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives
2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the "AIFM Directive").
We have enquired into the conduct of Schroder Real Estate Investment Management Limited (the "AIFM") for the year ending
31st March 2016, in our capacity as Depositary to the Company.
This report including the review provided below has been prepared for and solely for the Shareholders in the Company. We do
not, in giving this report, accept or assume responsibility for any other purpose or to any other person to whom this
report is shown.
Our obligations as Depositary are stipulated in the relevant provisions of the AIFM Directive and the relevant sections of
Commission Delegated Regulation (EU) No 231/2013 (collectively the "AIFMD legislation").
Amongst these obligations is the requirement to enquire into the conduct of the AIFM and the Company and their delegates in
each annual accounting period.
Our report shall state whether, in our view, the Company has been managed in that period in accordance with the AIFMD
legislation. It is the overall responsibility of the AIFM to comply with these provisions. If the AIFM or their delegates
have not so complied, we as the Depositary will state why this is the case and outline the steps which we have taken to
rectify the situation.
The Depositary and its affiliates is or may be involved in other financial and professional activities which may on
occasion cause a conflict of interest with its roles with respect to the Company. The Depositary will take reasonable care
to ensure that the performance of its duties will not be impaired by any such involvement and that any conflicts which may
arise will be resolved fairly and any transactions between the Depositary and its affiliates and the Company shall be
carried out as if effected on normal commercial terms negotiated at arm's length and in the best interests of
Shareholders.
Basis of Depositary Review
The Depositary conducts such reviews as it, in its reasonable discretion, considers necessary in order to comply with its
obligations and to ensure that, in all material respects, the Company has been managed (i) in accordance with the
limitations imposed on its investment and borrowing powers by the provisions of its constitutional documentation and the
appropriate regulations and (ii) otherwise in accordance with the constitutional documentation and the appropriate
regulations. Such reviews vary based on the type of Company, the assets in which a Company invests and the processes used,
or experts required, in order to value such assets.
Review
In our view, the Company has been managed during the year, in all material respects:
(i) in accordance with the limitations imposed on the investment and borrowing powers of the Company by
the constitutional document; and by the AIFMD legislation; and
(ii) otherwise in accordance with the provisions of the constitutional document; and the AIFMD
legislation.
For and on behalf of
Northern Trust (Guernsey) Limited
Glossary
Articles means the Company's articles of incorporation, as amended from time to time.
Companies Law means The Companies (Guernsey) Law, 2008.
Company is Schroder Real Estate Investment Trust Limited.
Directors means the directors of the Company as at the date of this document whose names are set out on page 23 of this
document and "Director" means any one of them.
Disclosure and Transparency Rules means the disclosure and transparency rules made by the FCA under Part VII of the UK
Financial Services and Markets Act 2000, as amended.
Earnings per share ("EPS") is the profit after taxation divided by the weighted average number of shares in issue during
the period. Diluted and Adjusted EPS per share are derived as set out under NAV.
Estimated rental value ("ERV") is the Group's external valuers' reasonable opinion as to the open market rent which, on the
date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a property.
EPRA is European Public Real Estate Association.
EPRANNNAV is EPRA Triple Net Asset Value.
FCA is the UK Financial Conduct Authority.
Gearing is the Group's net debt as a percentage of adjusted net assets.
Group is the Company and its subsidiaries.
Initial yield is the annualised net rents generated by the portfolio expressed as a percentage of the portfolio valuation.
Interest cover is the number of times Group net interest payable is covered by Group net rental income.
MSCI (formerly Investment Property Databank or 'IPD') is a Company that produces an independent benchmark of property
returns.
Listing Rules means the listing rules made by the FCA under Part VII of the UK Financial Services and Markets Act 2000, as
amended.
Net asset value ("NAV") is shareholders' funds divided by the number of shares in issue at the period end.
NAV total return is calculated on a daily basis taking into account the timing of dividends, share buy backs and issuance.
Net rental income is the rental income receivable in the period after payment of ground rents and net property outgoings.
REIT is Real Estate Investment Trust.
Reversionary yield is the anticipated yield, which the initial yield will rise to once the rent reaches the estimated
rental value.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of the Company will be held at 100 Wood Street, London, EC2V 7ER on
9 September 2016 at 11.00 am.
Resolution on Agenda
Form of Proxy
1. To elect a Chairman of the Meeting.
To consider and, if thought fit, pass the following Ordinary Resolutions:
Ordinary Resolution 1 2. To consider and approve the Consolidated Annual Report and Financial Statements of the Company for the year ended 31
March 2016.
Ordinary Resolution 2 3. To approve the Remuneration Report for the year ended 31 March 2016.
Ordinary Resolution 3 4. To re-elect Ms Lorraine Baldry as a Director of the Company.
Ordinary Resolution 4 5. To re-elect Mr Stephen Bligh as a Director of the Company.
Ordinary Resolution 5 6. To re-elect Mr John Frederiksen as a Director of the Company.
Ordinary Resolution 6 7. To re-elect Mr Keith Goulborn as a Director of the Company.
Ordinary Resolution 7 8. To re-elect Mr Graham Basham as a Director of the Company.
Ordinary Resolution 8 9. To re-appoint KPMG Channel Islands Limited as Auditor of the
Company until the conclusion of the next Annual General Meeting.
Ordinary Resolution 9 10. To authorise the Board of Directors to determine the Auditor's
remuneration.
Ordinary Resolution 10 11. To receive and approve the Company's Dividend Policy which
appears on page 30 of the Annual Report.
To consider and, if thought fit, pass the following Special Resolutions:
Special Resolution 1 11. That the Company be authorised, in accordance with section 315 of The Companies (Guernsey) Law, 2008, as amended (the
"Companies Law"), to make market acquisitions (within the meaning of section 316 of the Companies Law) of ordinary shares in the
capital of the Company ("ordinary shares"), provided that:a) the maximum number of ordinary shares hereby authorised to be
purchased shall be 14.99% of the issued ordinary shares on the date on which this resolution is passed;b) the minimum price
which may be paid for an ordinary share shall be 0.01p;c) the maximum price (exclusive of expenses) which may be paid for an
ordinary share shall be 105% of the average of the middle market quotations on the relevant market where the repurchase is
carried out for the ordinary shares for the five business days immediately preceding the date of a purchase;d) such authority
shall expire at the Annual General Meeting of the Company in 2017 unless such authority is varied, revoked or renewed prior to
such date by ordinary resolution of the Company in general meeting; ande) the Company may make a contract to purchase
ordinary shares under such authority prior to its expiry which will or may be executed wholly or partly after its expiration and
the Company may make a purchase of ordinary shares pursuant to any such contract.
Special Resolution 2 12. That the Directors of the Company be and are hereby empowered to allot ordinary shares of the Company for cash as if the
pre-emption provisions contained under Article 13 of the Articles of Incorporation did not apply to any such allotments and to
sell ordinary shares which are held by the Company in treasury for cash on a non-pre-emptive basis provided that this power
shall be limited to the allotment and sales of ordinary shares:a) up to such number of ordinary shares as is equal to 10%
of the ordinary shares in issue on the date on which this resolution is passed;b) at a price of not less than the net asset
value per share as close as practicable to the allotment or sale; provided that such power shall expire on the earlier
of the Annual General Meeting of the Company in 2016 or on the expiry of 15 months from the passing of this Special Resolution,
except that the Company may before such expiry make offers or agreements which would or might require ordinary shares to be
allotted or sold after such expiry and notwithstanding such expiry the Directors may allot or sell ordinary shares in pursuance
of such offers or agreements as if the power conferred hereby had not expired.
Special Resolution 3 13. That the Articles of Incorporation produced to the meeting and initialled by the chairman of the meeting for the purpose of
identification be adopted as the Company's Articles of Incorporation in substitution for and to the exclusion of the existing
Articles of Incorporation.
14. Close of Meeting.
By Order of the Board
For and on behalf of
Northern Trust International Fund Administration
Services (Guernsey) Limited
Secretary
10 June 2016
Notes
1. To be passed, an ordinary resolution requires a simple majority of the votes cast by those shareholders voting in
person or by proxy at the AGM (excluding any votes which are withheld) to be voted in favour of the resolution.
2. To be passed, a special resolution requires a majority of at least 75% of the votes cast by those shareholders
voting in person or by proxy at the AGM (excluding any votes which are withheld) to be voted in favour of the resolution.
3. A member who is entitled to attend and vote at the meeting is entitled to appoint one or more proxies to exercise
all or any of their rights to attend and, on a poll, speak or vote instead of him or her. A proxy need not be a member of
the Company. More than one proxy may be appointed provided that each proxy is appointed to exercise the rights attached to
different shares held by the member.
4. A form of proxy is enclosed for use at the meeting. The form of proxy should be completed and sent, together with
the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or
authority, so as to reach the Company's Registrars, Computershare Investor Services (Guernsey) Limited, at The Pavilions,
Bridgwater Road, Bristol, BS99 6ZY at least 48 hours before the time of the AGM.
5. Completing and returning a form of proxy will not prevent a member from attending in person at the meeting and
voting should he or she so wish.
6. To have the right to attend and vote at the meeting (and also for the purpose of calculating how many votes a
member may cast on a poll) a member must have his or her name entered on the register of members not later than 48 hours
before the time of the AGM.
7. Changes to entries in the register after that time shall be disregarded in determining the rights of any member to
attend and vote at such meeting.
Corporate information
Registered AddressPO Box 255Trafalgar CourtLes BanquesSt. Peter PortGuernsey GY1 3QL Directors (all Non-executive)Lorraine Baldry (Chairman) Keith GoulbornStephen Independent AuditorKPMG Channel Islands LimitedGlategny CourtGlategny EsplanadeSt. Peter PortGuernsey GY1 1WR Property ValuerKnight Frank LLP55 Baker StreetLondonW1U 8AN Joint Sponsor and BrokersJ.P. Morgan Securities plc25 Bank StreetCanary WharfLondon E14 5JP Numis Securities Limited10
BlighJohn FrederiksenGraham Basham Investment Manager and Accounting AgentSchroder Real Estate Investment Management Limited31, Gresham StreetLondonEC2V 7QA Paternoster SquareLondon EC4M 7LT
Secretary and AdministratorNorthern Trust International Fund Administration Services (Guernsey) LimitedPO Box 255Trafalgar CourtLes BanquesSt Peter PortGuernsey GY1 3QL Tax AdvisersDeloitte LLP2 New Street SquareLondon EC4A 3BZ Receiving Agent and UK Transfer/Paying AgentComputershare Investor Services (Guernsey) LimitedQueensway HouseHilgrove StreetSt HelierJerseyJE1 1ES
DepositoryNorthern Trust (Guernsey) LimitedPO Box 255Trafalgar CourtLes BanquesSt Peter PortGuernsey GY1 3QL
Solicitors to the Companyas to English Law:Stephenson Harwood LLP1 Finsbury CircusLondon EC2M 7SH FATCA GIIN5BM7YG.99999.SL.831 as to Guernsey Law:Mourant Ozannes1 Le Marchant StreetSt. Peter PortGuernsey GY1 4HP
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