Schroders Real Estate Investment Trust (LON: SREI) said on Tuesday it was disposing of low-yielding assets in the six months ended September 30, 2019, due to declining NAV returns and a “challenging market.” Announced.
The group began its update by informing shareholders that it had disposed of assets worth £45m during and after the period. This reflects a net premium of 15% on the initial valuation and takes the total disposal amount from 1 January to £95m.
Next, the company talked about refinancing to take advantage of “lower long-term interest rates, which reduce the cost of long-term debt from 4.4% to 2.5%, extending the term from 8.5 years to an average of 16.5 years.” This annual interest savings of £2.5m was paid to shareholders in the form of a 19% increase in dividends starting from 1 October 2019.
Despite this strong start, the company maintained somewhat weak fundamentals. NAV was £354.3m or 68.3pps, down 0.6% over the six months, while NAV return was 0.5%, a notable contraction from 3.0% in the same period last year.
However, Schroders REIT was happy to report progress on its portfolio. The company now has 96% of its portfolio located in ‘winning cities’ and has completed 26 new lettings, rent reviews and renewals during the period, paying a further £1.1m in rents above previous levels. said.
Elsewhere in the real estate sector. Land Securities Group plc (LON: LAND) has announced disappointing financial results, Shaftesbury plc (LON: SHB) has recorded solid leasing activity, Berkeley Group Holdings Ltd (LON: BKG) has been in the South East market and Redrow plc (LON: RDW) recorded strong results and completions.
Schroeder REIT comments
Commenting on this update, Lorraine Baldry, Chairman of the Board, said:
“It has been another busy year for the company, with a focus on activities that improve total shareholder return and strengthen our balance sheet. This should support future returns during a period of heightened market uncertainty. Due to the disposal of low-yielding assets, net Although there will be a temporary reduction in profits, we have approximately £90m of capital available to take advantage of more attractively priced investment opportunities and the Board is satisfied with this approach. A fully covered, sustainable and growing dividend policy.”
Duncan Owen, Global Head of Schroders Real Estate, added:
“Due to our interim activity, we are in a strong position with low debt ratios and operational flexibility. We have approximately £90m of additional investment capacity ahead of the expected market correction. Selectively allocating capital to winning cities at higher yields should mean we are well-positioned to deliver continued and sustainable net income growth.”
Memo for investors
Following this update, the company’s share price increased by 1.31% or 0.70 pence to 54.10 pence per share on 11/19/26 15:45 GMT. The group’s P/E ratio is 17.23 times and the dividend yield is 4.71%.
