Schroder REIT posted a positive NAV total return in annual results, and reported that the value of its portfolio was stable over the three months to 31 March 2023.
NAV declined by 4.4% to £287.4m, or 58.8p per share, over the year largely driven by an underlying portfolio value decline of 2.8% over the year (unchanged in the final quarter).
With dividends (of 3.34p – up 4% in the year and fully covered by EPRA earnings), the group posted a NAV total return of 1.1%.
The dividend for the first quarter of its 2025 financial year was raised 2% to 0.853p (annualised 3.412p)
The company achieved like-for-like rental growth of 4.8% during the year. It completed 108 new lettings, rent reviews and renewals across 1.0 million sq ft, totalling £10.4 million in annualised rental income, on average 7% ahead of 31 March 2023 estimated rental values.
The company has a long debt maturity profile of 9.7 years and a low average interest cost of 3.5%, with 91% either fixed or hedged against movements in interest rates.
Loan to value, net of all cash, was 37.1% (31 March 2023: 36.0%).
The company has commenced a programme of non-core disposals to reduce its LTV to within a 25-35% target range.
Alastair Hughes, chairman, commented:
“Despite the challenging macroenvironment for UK real estate, with higher for longer interest rates, the occupational markets remain relatively resilient. During the year, asset management-led rental growth delivered a further increase in the fully covered dividend, supported by the Company’s leading low-cost, long-term debt profile and increased allocation to higher growth sectors.
“As occupiers and investors increasingly value the benefits of sustainability, integrating these considerations into the core of investment decision-making will clearly differentiate the Company and its strategy from peers, improving the defensive qualities of the portfolio and driving risk-adjusted returns for shareholders.”
Nick Montgomery, fund manager, added:
“The Company’s balance sheet strength has provided a robust foundation to deliver further dividend growth, underpinned by our asset management expertise and ability to capture reversion. We have identified a pipeline of sustainability-led initiatives across our portfolio, which benefits from a diverse mix of occupiers making it more resilient through the cycle, providing further protection to earnings, meaning the Company is well positioned to continue providing a progressive dividend.”