Johannesburg - Schroder Real Estate is planning to launch a European real estate investment trust (Reit) with a primary listing on the London Stock Exchange and a secondary listing on the JSE. The company is a real estate fund manager that had £12.1 billion (R257.3bn) of gross real estate assets under management in June.
Both listings are expected to take place next month.
The Schroder European Reit would be focused on investment into continental European property.
Tony Smedley, the head of continental European real estate investment at Schroders Real Estate, said they believed the listing could present an attractive investment opportunity to South African investors seeking an attractive income yield and capital value growth potential generated by real estate assets, located in those cities they expected to benefit the most from the European economic recovery.
“The European market is in the early stages of recovery, with very low interest rates. This provides an excellent potential yield spread to South African investors,” he said.
Equity raise
Up to £150 million is the initial total target equity raise in the UK and South Africa, but the intention is to grow the fund to more than £500m in the medium term, with Schroder Real Estate investing up to 10 percent or a maximum of £15m in the fund.
PSG Capital is acting as corporate advisors and sole book runner to the listing. A fully covered dividend to shareholders of 5.5 percent a year is envisaged once the initial capital was fully invested and debt was drawn down, with the initial equity expected to be invested within about six months.
Smedley said they were active in acquisitions and disposals across the UK and continental Europe and had completed more than 300 transactions since 2010 worth a total of £5.4bn.
Of this amount, £1.8bn was in continental Europe.
Smedley said the current potential investment pipeline for the trust was targeting assets across Brussels, the Paris region, and key German cities such as Berlin, Hannover, Frankfurt and Düsseldorf.
BUSINESS REPORT