Schroder Real Estate Investment Trust Limited the actively managed UK-focused REIT, announces its net asset value (‘NAV’) and dividend for the quarter to 31 December 2022 and provides an update on portfolio activity.

Key points

  • NAV decreased to £303.3 million or 62.0 pence per share (‘pps’) (30 September 2022: £366.0 million or 74.8 pps), which, together with dividends paid, resulted in a NAV total return of -16.1%
  • Dividends paid during the quarter of 0.803 pps, 105% covered by recurring earnings
  • Execution of asset management initiatives underpinning a further 2% increase in the dividend to 0.819 pps for the quarter to 31 December 2022, payable on 31 March 2023
  • On an annualised basis, the new level of dividend represents a yield of 6.9% on the 2 February closing share price of 47.65p
  • Net loan to value of 35.4%, with an average interest cost of 2.8%, an average loan duration of 11.0 years and no debt maturities until 2027
  • Like-for-like portfolio valuation movement of -11.8% over the quarter caused by upward yield movement across all sectors (MSCI UK Monthly Property Index capital growth -15.6%)
  • Portfolio net initial yield of 5.8% and reversionary yield of 7.6% as at 31 December 2022
  • Disposed of an office asset, Beech House, in Fleet for £2.1 million, a 17% premium to the independent valuation as at 30 September 2022
  • Continued leasing momentum since 1 October 2022 with 22 new lettings, renewals and rent reviews completed across 222,989 sq ft totalling £2.6 million per annum, reflecting an uplift of £0.6 million compared to the previous rent
  • Continued outperformance vs. MSCI UK Balanced Portfolios Quarterly Property Index (the ‘Benchmark’) over three months, 12 months, three years and since inception in 2004 (based on latest available Benchmark data to 30 September 2022)

Alastair Hughes, Chairman of SREIT, commented: “The correction in real estate valuations through the quarter was in line with our guidance in the interim report. The relative outperformance of the portfolio through this period, and a further increase in the fully covered dividend, is testament to the progress made with asset management across the portfolio and the Company’s long term, fixed rate debt.”

Nick Montgomery, Fund Manager of SREIT, commented: “Sustainability led, value add investments into the existing portfolio have partly offset the negative impact on valuations caused by rising yields. We have a robust and diverse tenant base that we expect to be resilient through a recessionary period and the strength of the underlying portfolio should enable us to continue delivering an attractive and growing income return.”