File picture: James White
File picture: James White

Schroders Investment Trust reports decline in net asset value total return

By Edward West Time of article published Jun 19, 2019

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CAPE TOWN – Schroders European Real Estate Investment Trust, which invests in property in European growth cities and regions, reported a net asset value return of 1.7 percent in the year to March 31 – a decline compared with the 6.1 percent return for the same period a year ago.

Chairperson Sir Julian Berney said yesterday that the company had seen an active six-month period during which progress had been made to improve the long-term profile of the company and increase its exposure to higher growth regions and sectors.

A second interim dividend for the year ending September 30 of 1.85 euro cents (R0.31) per share was declared.

The first and second interim dividends for the year amount to 3.70 euro cents per share.

The total dividends were in-line with the target of 5.5 percent annualised yield against the euro initial public offering issue price.

Profit for the period declined to 3.2 million, versus 10.8m a year previously, which included a number of one-off gains.

An operational highlight was that 100 percent of the portfolio's 13 institutional grade properties were located in the fastest-growing cities and regions of continental Europe.

Portfolio diversification improved, with exposure to higher growth logistics warehouse sector growing from 13 percent to 19 percent. Portfolio occupancy was maintained at almost 100 percent, with an average 6.5-year lease term to expiry.

Asset management initiatives were being executed across the portfolio.

Shroders fund manager Jeff O’Dwyer said the recent French logistics acquisition was further evidence of a focus to assemble a diversified portfolio in winning cities and regions across continental Europe.

The company now has 20 percent of its assets in industrial warehousing, up from 0percent 12 months ago.

He said the majority of European real estate markets were performing well, particularly in Berlin, Frankfurt, Hamburg, Stuttgart and Paris, those cities where the company has most of its exposure.

The acquisition of the Rennes logistics property - comprising two neighbouring warehouses - in March this year completed the reinvestment of the proceeds from the sale of the Casino supermarkets last year.

The main asset management activity had been agreeing terms (post-period end) with the tenant for the Boulogne-Billancourt office investment in Paris for a new long-term lease.

Schroders aimed to refurbish the building, which had the potential to deliver upside net asset value return and improve the longer-term income and portfolio profile.

This project was a key focus for the rest of the year.

Schroder Europe shares closed unchanged at R20 on the JSE on Tuesday.


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