Schroder European Real Estate Investment Trust, which has a focus on European growth cities and regions, said yesterday that it would pay out a special dividend to its shareholders as it delivered a strong set of interims.
Sir Julian Berney, the chairperson of the board, said: “We remain confident in the diversified qualities of the portfolio, particularly given the exposure to high growth locations and sub-sectors, alongside access to an unparalleled network of highly experienced local managers.”
In its half-year results for the six months ended March 31, 2022, the JSE and London-listed Reit declared an ordinary dividend of €4.9 million (R78 billion) or 3.7 euro cents per share (cps) up from 3.4 euro cps.
It also said it would pay a second special dividend declared of €6.4m or 4.75 euro cps as it shared the net proceeds from the sale of from Paris Boulogne-Billancourt.
Schroder said its diversification and Western European city exposure had positioned it well to deal with current headwinds.
However, Berney highlighted that the global economy was in a fragile state.
“Although sentiment around the pandemic is improving, and economies are opening up, we are witnessing mounting concerns around supply chains, inflation, low growth and the increasing of interest rates.
“On top of this, the war in Ukraine is delivering further pressures on the European economy. These collective headwinds are making it difficult to have a clear view on forecasts and associated underwriting of investments,” he said.
The Reit reported sharply higher profit of €10.9m from a €0.7m loss the prior corresponding reporting period.
However, earnings per share declined to 1.9 euro cps from 2.1 euro cps.
And net rental income fell to €5.8m, a decrease of 7.9percent despite robust and improved rent collection at 100 percent, excluding Seville, as well as high portfolio occupancy rate of 95 percent.
The portfolio value increased to €247.9m including like-for-like growth of 4 percent.
During the reporting period it acquired of a €1.7m industrial acquisition in Venray, the Netherlands, reflecting a net initial yield of 5.3 percent with a reversion to 7.6 percent, followed by the post-period commitment of a €8.4m car showroom in Cannes, France, reflecting a net initial yield of 5.5 percent with a reversion to 6.4 percent.
Jeff O'Dwyer, a fund manager for Schroder Real Estate Investment Management, said, “While remaining alert to the challenging macroeconomic backdrop, the company is well placed to continue outperforming. The portfolio is modestly leveraged, has a high level of occupancy and is leased off affordable rents.
“This income offers a strong hedge against inflation given the underlying annual indexation clauses, while the majority of exposure is to Europe’s dominant metropolitan centres including Berlin, Hamburg, Stuttgart and Paris. New acquisitions will provide further diversification and help maintain the attractive dividend, as we target full cover from sustainable rental income and seek to maximise shareholder returns.”