Schroder European Real Estate Investment Trust has €50 million (R910m) of fire-power to deploy on opportunities over six to 12 months to diversify, grow income and strengthen exposure to growth cities, regions and sectors in Europe.
Schroder, which has a secondary listing on the JSE, continued its pre-Covid quarterly dividend payout of 1.85 euro cents a share for the period to the financial year end to September 30, in line with target, while special dividends of €12.8m, reflecting 9.60 euro cents a share, were paid due to the “exceptional” asset management profits from the repositioning of Paris Boulogne-Billancourt (Paris B-B), Schroder’s fund manager, Jeff O’Dwyer, said yesterday.
The net asset value total return of 7.3% was based on a profit of €13.9m, compared with a 3.2% return the previous year based on a €6.2m profit that year.
Profit growth was driven mainly by valuation uplifts in the industrial and DIY portfolio, and the German office portfolio.
The balance sheet was strong. Loan to value was at 29% and 20% net of cash, compared with 28% and 16% net of cash in 2021, and still well below the target of 35%.
About 33% of the company’s debt expires in 2023 and “positive discussions” with lenders regarding these loans were taking place with the company expecting increased financing costs to be offset by rental indexation.
The total direct portfolio valuation came to €218.7m, reflecting a like-for-like increase of 3%. Two acquisitions completed during the year came to €10m, diversifying the portfolio by sub-sector and markets and contributing to replacing the lost income from Paris B-B – the acquisitions were a car showroom in Cannes, France, and an industrial warehouse in Venray in the Netherlands.
Chairperson Sir Julian Berney said the board was pleased with the resilience of the portfolio, sector and winning city allocations as well as the investment manager’s efforts in delivering on its asset management programme.
“We are well aware of the ongoing challenges facing global markets but real estate continues to remain attractive relative to other asset classes.
“By having real asset exposure that is diversified, indexed linked and located in strong, liquid cities like Berlin, Hamburg, Stuttgart and Paris, the company is well positioned to deliver on its strategy longer term. In addition, the balance sheet is robust and the existing cash position provides flexibility to strengthen the strategy, either from accessing new investments, share buy-backs or further de-levering,“ said Berney.
The portfolio now comprises 14 investments across three Western European countries in leading cities including Paris, Berlin, Frankfurt, Hamburg and Stuttgart.
The industrial exposure has increased to 26%, with a focus on supply constrained sub-markets in France and the Netherlands. Most of the retail exposure is in grocery and DIY – both segments have benefited from strong underlying fundamentals, underpinning robust performance.
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