Schroder European Real Estate Investment Trust plc (“SEREIT” or the “Company”), the company investing in European growth cities, hereby submits its Half Year Report for the period ended 31 March 2017 as required by the UK Listing Authority’s Disclosure Guidance and Transparency Rule 4.2.
Financial Highlights for six months ending 31 March 2017:
- Net Asset Value (“NAV”) total return of 2.5% (30 September 2016: -4.6%);
- NAV of €175.9 million, or 131.5 euro cents (111.7 pence) per share, an increase of 11.4% over the period including a gross equity raise of €16.7 million (FY16: €157.8 million / 130.2 cps);
- EPRA earnings of €2.6 million (10 months to September 2016: €1.0 million), reflecting growth in rental income from acquisitions;
- Total dividends declared relating to half year of 2.2cps (including 1.2cps to be paid by way of a second interim dividend in July 2017) representing a 29% increase on prior half year; Further progress on delivering target dividend yield stated at IPO of 5.5% (based on euro equivalent IPO issue price)once fully invested;
- Profit for 6 months of €4.2 million (10 months to 30 September 2016: -€2.7 million), reflecting additional rental income from acquisitions, property acquisition costs and valuation uplifts of portfolio;
- Loan to Value (‘LTV’) of 22% based on gross asset value of the Company, with a weighted average interest rate of 1.19% and weighted average duration of 7.3 years.
Operational highlights for six months ending 31 March 2017:
- Acquisition of an office building in Paris for €30 million with a net property income yield of 9.5%, taking the portfolio value to €182.7 million (FY16: €148.2 million);
- Portfolio comprises eight retail and office properties with c. 100% occupancy, strong income profile and asset management upside;
- 100% of the portfolio is located in winning cities and regions expected to generate higher levels of economic growth;
- Portfolio to benefit from structural trends of urbanisation, demographics, infrastructure improvements and economic recovery in Europe;
- Portfolio valued at approximately 6.7% above purchase price.
Post period end, €26 million acquisition in Spain:
- Completed acquisition of a 50% share in a JV with Schroder managed Immobilien Europa Direkt of a shopping centre in Seville, Spain for €26.2 million (excluding costs) providing a net property income yield of 6.2%;
- Portfolio now comprises nine assets with a value of €208.9 million and 4.8 years average lease term;
- New loan drawn against Seville acquisition taking overall LTV to 26% at a weighted interest costs of 1.3% and a weighted duration of 7.3 years;
- €30 million remaining investment capacity (including additional debt).
Sir Julian Berney Bt., Non-Executive Chairman of the Company, commented:
“This has been a period of good progress for the Company, against a background of political and economic uncertainty, and we are making further progress on delivering our target 5.5% dividend yield as we complete the investment programme, providing shareholders with sustainable long-term income and the potential for capital growth.”
Tony Smedley, SEREIT Investment Manager, added:
“The Company is now almost fully invested in institutional quality, income-producing commercial real estate, in those cities and regions in western continental Europe that demonstrate above average growth prospects and long term structural themes such as urbanisation.
“We continue to focus on maximising investment performance and diversifying the portfolio through the acquisition of well-located assets that offer an attractive income profile and the potential for long term income and capital growth. This will be supported by a prudent debt strategy that enhances income returns from the portfolio without compromising the balance sheet. With an identified pipeline of properties and an increasingly favourable market backdrop, we look forward to the next stages of the Company’s growth.”