Sereit is selling its biggest asset
• Building set to be handed over in 2022, after extensive refurbishment
JSE-listed Schroder European Real Estate Investment Trust (Sereit) is selling its largest asset, a high-end office in Paris called BoulogneBillancourt, as it looks to cash in and diversify into other Western European cities.
JSE-listed Schroder European Real Estate Investment Trust (Sereit) is selling its largest asset, a high-end office in Paris called Boulogne-Billancourt, as it looks to cash in and diversify into other Western European cities to manage risk better while its tenants battle through the Covid-19 pandemic.
Sereit, which does not have assets in SA, said on Thursday it had agreed to a forward sale of the Paris office asset for 104m
€
(R2bn), intending to use the proceeds to strengthen its finances and enhance revenue generation.
The building will be handed over to the purchaser in the first half of 2022.
Sereit is a landlord that gives SA investors exposure to West European capital cities. It had a portfolio valued at 247.3m at
€
the end of March, with assets in cities including Paris, Hamburg, Stuttgart, Berlin, Frankfurt and Seville.
The company pays out eurodenominated dividends, thereby acting as a rand hedge for SA investors. It only invests in Western Europe and does not have a mandate for the UK or for Central or Eastern Europe. We believe this is a good
“
time to recycle a top-end asset and to enhance returns to our shareholders. We need to diversify into other high-growth cities in the region,” Sereit fund manager Jeff O Dwyer said.
’
“These are cities which can grow at 10%-15% faster than the countries they are in,” he said.
The final sale price of about 104m for Boulogne-Bil
€
lancourt will deliver net sale proceeds of 70m when com
€
pleted, after deducting about
30m for the costs of refurbish
€
ing and re-letting the building, O Dwyer said.
’
This represents a profit of about 35%. The building was originally acquired in 2016 for
37.5m and was subsequently
€
revamped and managed by a new agent.
It gives us funds to work
“
with. The net sale proceeds will strengthen the balance sheet while providing significant operational and financial flexibility,” O Dwyer said.
’
I d like the fund to diversify
“’
into smaller strong cities in Europe such as Amsterdam and parts of Spain other than Seville,” he said.
Sereit s chair, Sir Julian
’
Berney, said Sereit has shown an ability to sell assets at the right time and that the company understands its overall purpose is to provide value to shareholders.
It is a strong endorsement of
“
the company s strategy, to iden
’
tify real estate that can create significant value for shareholders through asset management, benefiting from our team s local
’
expertise inside the key markets,” he said.
On September 15, Sereit announced it will pay an interim dividend for the period to endSeptember of 1.39 a share,
€
equating to 75% of its targeted dividend.
The group pays four dividends a year and expects to reach 100% of its targeted dividend by the end of 2020. Sereit s share price closed
’
7.04% higher at R14.90 on Thursday. The group s share has
’
fallen about 28% so far in 2020.
I D LIKE THE FUND TO ’ DIVERSIFY INTO SMALLER STRONG CITIES IN EUROPE SUCH AS AMSTERDAM AND PARTS OF SPAIN OTHER THAN SEVILLE