Schroder intent on growing its portfolio

SCHRODER European Real Estate Investment Trust (Sereit) reported yesterday that it had made its fifth acquisition since listing in December.

The company, which is listed on the London Stock Exchange and the JSE, said contracts had been signed for the purchase of a convenience retail property located in Germany for € 11.05 million (R180.23m). It said the asset was a grocery supermarket, multi-let convenience retail centre located in a growing inner urban region of Frankfurt am Main.

Schroder said it was built in 2004 and modernised last year and comprises 4 525 square metres of lettable area and anchored by a 1 600m2 Lidl supermarket with an initial lease term exceeding 10 years.

It said the acquisition was fully in line with its strategy of investing in defensive, income producing assets in major cities with the potential for long-term growth.

Julian Berney, the chairman of Schroder, said the investment took the company’s committed capital deployment to about e110m at a blended net initial yield of about 5.9 percent.

“Acquiring good retail assets in prime German cities is challenging and competitive, hence being able to secure this long let investment within a growing urban area of Germany’s financial capital is a credit to our local sourcing capabilities,” he said.

Tony Smedley, the head of Continental European Investment at Schroder, said convenience retail in growth cities was a key target of the company given its relative resilience in a rapidly changing retail environment.

Change tenant mix

Smedley said Lidl was the key anchor tenant on this scheme and Schroder had plans to change the tenant mix over time to further improve footfall at the centre.

The purchase is subject to the standard land registry notification and, therefore, expected to be completed during June.

The latest acquisition follows Schroder earlier this month confirming that it had concluded the purchase of two office investments located in Stuttgart and Hamburg in Germany for a total price of e28.9m.

Schroder said then the company owned a portfolio of four assets acquired at a total purchase price of € 90.7m, but continued to pursue negotiations on a number of other potential transactions.

Schroder raised £13.8m (R289.9m) in February, through a placement of 13.28 million new shares in the company.

Shares in Schroder dropped by 1.32 percent yesterday to close at R23.90 on the JSE.