CAPE TOWN - SCHRODER European Real Estate Investment Trust, the company investing in European growth cities and regions, saw its underlying property portfolio generate a return of 15.7 percent in the year to end September 30.
A quarterly dividend was up by 13 percent to 1.57 euro cents per share, an increase on the last interim dividend of 1.39 euro cents declared in September. Rent collection remained strong at about 87 percent during the period. Total dividends for the six months were 23 percent lower at 5.7 cents compared with September 2019.
“Our operationally strong portfolio provided a solid foundation coming into the pandemic. Through active asset management, in particular, the conditional forward sale of Paris Boulogne-Billancourt, we have further strengthened the balance sheet and prospects over the period,” chairman Sir Julian Berney said in a statement yesterday (Wed).
Occupancy increased to 96 percent from 94 percent at the same time last year, with a 5.5 years average lease term to expiry, lower than 6.4 years last year. Profit increased to €28.4 million (about R514 million) from €7.4m driven primarily by the portfolio valuation uplift.
Loan to value decreased to 24 percent net of cash, from 26 percent.
“We are looking forward to next year with cautious optimism, with a focus on investing the sales proceeds into new acquisition opportunities in high-growth sectors and cities in order to continue growing net income and the dividend and favourably positioning the portfolio to drive the next phase of the company’s growth,” said Berney.
Schroder Real Estate Investment Management fund manager Jeff O’Dwyer said significant progress had been made on strategy in spite of the Covid-19 challenges. While they continued to deal with small pockets of underperformance in the portfolio, the company was “extremely well placed as we move into 2021 to deliver further income and capital growth”.
The board expected to allocate some of the sale proceeds from the disposal of the Boulogne-Billancourt office asset in Paris for about €104m towards covering the shortfall in income from the asset while it was being refurbished and pending reinvestment of the remainder of sale proceeds.
The portfolio was valued at €268.6m, reflecting a 10.7 percent uplift; the like-for-like valuation movements were offices up by 24.9 percent, DIY/grocery up 1.4 percent, Industrial up 0.5 percent, other properties -4.8 percent and shopping centre -9.4 percent. Net asset value as 150.9 cents per share, up 10.8 percent compared with the end of the previous interim period.
BUSINESS REPORT