Schroder European REIT posted a NAV total return of 7.3% in the year to 30 September 2022, as shareholders reaped the rewards of exceptional asset management profits achieved from the repositioning of its office in Paris Boulogne-Billancourt.
NAV was 140.8 cents per share (down from 149.2 cents) reflecting the payment of the special dividend (totalling €12.8m or 9.60 euro cents per share) following the €104m sale of the Paris Boulogne-Billancourt asset.
The group’s total direct portfolio valuation increased 3% on a like-for-like basis to €218.7m. EPRA earnings were 4.5 cents per share, which will increase as the company deploys the proceeds from the Paris Boulogne-Billancourt sale.
Dividends were back to pre-COVID levels of 1.85 cent per quarter, equating to 7.40 cent for the financial year.
Balance sheet
The group’s loan to value (LTV) was 29% and 20% net of cash, considerably below its target of 35%. The average cost of drawn debt was 1.9%.
Around a third of the company’s debt expires in 2023, with discussions with lenders regarding these loans ongoing. The company said that it expects the increased financing costs to be offset by rental indexation.
Operational highlights:
- Two acquisitions completed totalling €10m (a car show room in Cannes, France and an industrial warehouse in Venray, the Netherlands);
- Concluded 14 new leases and regears across the portfolio totalling 19,065 sqm at a weighted unexpired lease term of 6.1 years;
- 100% rent collection;
- 100% of the portfolio leases indexed to inflation, including 80% annually;
- Enhanced ESG performance across the portfolio including improved 2021 Global Real Estate Sustainability Benchmark (GRESB) score from three stars to four, ranking the portfolio second in the peer group.
Sir Julian Berney Bt., chairman, commented:
“The board is pleased with the resilience of the portfolio, sector and winning city allocations as well as the investment manager’s efforts in delivering on its asset management programme. The success of Paris Boulogne-Billancourt is testament to the strategy of acquiring high quality real estate in growth locations and using in-house local active management expertise to create value.
“We are well aware of the ongoing challenges facing global markets but real estate continues to remain attractive relative to other asset classes. By having real asset exposure that is diversified, indexed linked and located in strong, liquid cities like Berlin, Hamburg, Stuttgart and Paris, the company is well positioned to deliver on its strategy longer term. In addition, the company’s balance sheet is robust and the existing cash position provides flexibility to strengthen the strategy, either from accessing new investments, share buybacks or further de-levering.”
SERE : Schroder European REIT returns 7.3% driven by exceptional Paris deal