Schroder Real Estate refinances debt and increases dividend – Schroder Real Estate (SREI) has this morning announced a refinancing of its debt and an increase in the dividend paid out to shareholders.
Highlights from the announcement include:
- £129.6m fixed rate loan with Canada Life Investments extended from 8.5 to average 16.5 years;
- Reduction in the total interest rate from 4.4% to approximately 2.3% per annum, generating an immediate interest saving of approximately £2.8m per annum;
- Interest saving to be paid to shareholders as an increased dividend of approximately £16.2m per annum, equating to an increase of approximately 20%.
Background to the refinancing
SREI’s strategy is focused on growing net operating income to continue growing the dividend. This has included asset management, selective acquisitions and, over the last 12 months, a disposal programme totalling £85.6m, at a average net initial yield of 3.1%. SREI note in the announcement that the board increased the dividend by 5% in the financial year to March 2019.
Following this activity and on completion of contracted disposals in November, the company will have approximately £80m of cash and undrawn revolving credit facilities. SREI says this provides it with the operational flexibility to invest in the underlying portfolio and take advantage of more attractively priced investment opportunities that deliver further sustainable growth in earnings.
Duncan Owen, global head of Schroder Real Estate, commented: “The transaction increases net operating income post all costs and debt reduction, and leads to a material increase in the dividend, thereby increasing shareholder’s returns. In addition, it reduces risk with long term and low cost debt. The company is well positioned; it has long term debt with a conservative loan-to-value and the capacity to take advantage of lower pricing in the real estate markets, with available cash and undrawn revolving debt facilities.”
SREI:Schroder Real Estate refinances debt and increases dividend