Investor Schroder improves its net asset value by 5.9% in 12 months

SCHRODER European Real Estate Investment Trust, which invests in European cities, said yesterday that its net asset value (NAV) had improved 2.4 percent over the quarter to December 31 and 5.9 percent over a 12-month period.

NAV came to €184 million (R3.14 billion) or 137.6 euro cents per share as at December 31.

A maiden interim dividend for the year ending September 30, 2020, of 1.85 euro cents per share is expected.

“We expect dividend cover to reduce while we undertake asset management activity across the portfolio.

“These initiatives are expected to improve the longer-term income profile of the company and its dividend cover,” said Jeff O’Dwyer, Schroder Real Estate Investment Management’s director.

The portfolio valuation, net of capex, increased by 1.1 percent over the quarter to €246.3m.

Asset management successes included securing a new tenant on a 5-year lease in Hamburg for an additional 670m2, and lease renewals with two tenants at St Cloud, Paris, covering 3 150m2, at rents above the previous level paid.

O’Dwyer said investing in a diversified real estate portfolio in cities such as Paris, Berlin, Hamburg and Frankfurt had supported an uplift in NAV and portfolio valuation as well as a stable dividend.

The re-development of the largest asset in the company, Boulogne-Billancourt, in Paris, was under way.

As at December 31, the company owned 13 properties independently valued at €246.3m, at a blended net initial yield of 5.9 percent.

Over the quarter, the portfolio generated property rental income of €3.9m, representing an ungeared quarterly property income return of 1.6 percent.

At its Paris office investment Boulogne-Billancourt, there had been progress with planning, detailed design and debt financing.

Initial planning approval had been received, with final planning confirmation expected in April.

A construction contract was expected to be finalised in the second quarter of this year with the main works starting from June and expected to last 18 months.

The intention was to fund this project using debt, which would take gearing up to 35 percent (net of cash) and within its stated range.

In Hamburg, a new tenant, food delivery specialist Takeaway, had been secured on a 5-year lease, for an additional 670m2 of space on the ground floor.

In total, 60 percent of the City BKK space had been leased, at a 17 percent premium to the target rent, with positive discussions ongoing with potential tenants for the other three floors.