Schroder European REIT grows earnings, but NAV hit by yield expansion

Schroder European REIT (SERE) reported a 8.9% fall in net asset value (NAV) to 128.2 euro cents per share in annual results to 30 September 2023, reflecting the impact that challenging economic and geo-political risks have had on asset valuations.

The group’s portfolio of European real estate declined in value by 8.5% to €214.1m, reflecting between a 50 to 200 basis points of outward yield shift.

Underlying EPRA earnings increased 31% to €8.0m, or 6.0 euro cents per share (30 September 2022: €6.1m or 4.5 cps), driven by rental growth and income from its recently acquired Alkmaar asset, also underpinned by its low cost, fixed rate debt position.

The company completed two refinancings and repaid a third debt facility, extending average loan maturity to 2.6 years. The group’s debt has a low average interest cost of 2.9%, with 100% fixed or hedged against interest rate movements. Loan to value (LTV) was 24% (net of €30m of cash).

Dividends declared for the year totaled 6.66 euro cents (FY22: 7.40 euro cents), with dividends declared in the six months to 30 September 2023 106% covered by EPRA earnings.


During the year the company acquired an industrial property in Alkmaar, the Netherlands, for €11m at a 5.6% net initial yield.

Portfolio occupancy level was maintained at 97%, with an average portfolio lease term to break of 3.9 years, while 100% of rent due was collected.

Contracted rent on a like for like basis (excluding the Alkmaar acquisition) increased 5.3% to €16.1m (30 September 2022: €15.3m).

The group concluded 15 new leases and re-gears generating €1.5m of contracted rent, at a weighted lease term of 3.6 years.

Further improvement to the portfolio’s sustainability credentials was achieved, with GRESB score improving from 83 to 85, while maintaining the 4 star rating.


Sir Julian Berney Bt., chairman, commented: “A resilient balance sheet, significant cash reserves and a covered dividend, coupled with offering unique exposure to a diversified Continental European portfolio, underpins our conviction that the Company continues to be a compelling investment proposition. The attractive portfolio income characteristics, exposure to high growth sectors and pipeline of asset management activity should contribute to further earnings growth and enable us to progress the dividend over time.”

Jeff O’Dwyer, fund manager, added: “Our operational asset management expertise and diversified investment strategy centred on liquid growth cities has helped to drive earnings and offset macroeconomic volatility-led value erosion. We have remained prudent, retaining cash and maintaining a low LTV. Coupled with the decision to rebase the dividend and move to full cover, the company is in a strong position. We continue to have conviction that investments with green certification will outperform and that poorer quality assets will become increasingly obsolete and illiquid.”

SERE : Schroder European REIT grows earnings, but NAV hit by yield expansion

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