Schroder Real Estate has published results for the year ended 31 March 2016. Over this period the asset value increased to GBP322.6 million or 62.2p per share, from GBP299.2 million or 57.7p. This reflects an NAV increase of 7.8% and a total NAV return, including dividends, of 12.3%. Dividends of GBP12.8 million or 2.48p were paid during the year which, based on post tax revenue, resulted in dividend cover of 100%. Dividend cover excluding exceptional items, principally relating to REIT conversion costs, increased to 106%. Schroder Real Estate say average UK commercial real estate produced a total return of 11.1% over the year to 31 March 2016, compared like for like with the company’s ungeared portfolio return of 12.8%.
They say performance was driven by a 5.7% increase in the value of the held portfolio which, adjusting for capital expenditure, contributed 3.9p to the NAV. This included strong performance from properties acquired as part of the growth strategy such as Stacey Bushes Industrial Estate in Milton Keynes and City Tower in Manchester that generated capital growth of 24.7% and 11.2% respectively. The increase in Stamp Duty Land Tax (‘SDLT’) in March 2016 reduced the underlying portfolio valuation by GBP3.6 million and diluted the NAV by 0.7p. Acquisition costs of GBP1.6 million were incurred over the year, reducing the NAV by 0.3p, which represented 3% of the combined price of GBP54.5 million paid for the two assets in Leeds and Bedford. These have been revalued to GBP58.8 million as at 31 March 2016. Separately, GBP4.3 million of capital expenditure was invested in refurbishment projects during the year.
As at 31 March 2016, the property portfolio comprised 53 properties independently valued at GBP462.6 million. This includes the share of joint venture properties, City Tower in Manchester and the University of Law Campus in Bloomsbury. Since the year end three disposals completed totalling GBP10.7 million. Adjusting for these transactions, the portfolio produced a rent of GBP27.8 million per annum, reflecting a net initial yield of 5.8%. The independent valuers estimate that the current rental value of the portfolio is GBP34 million per annum, reflecting a reversionary yield of 7.5%. The portfolio also benefits from additional fixed rental uplifts of GBP3.1 million per annum by March 2018.
As at 31 March 2016, adjusting for post year-end transactions, the Company has an overall net LTV of 28.2%. This remains inside the long term strategic range of 25% to 35%.
SREI : Schroder Real Estate posts 12.3% return