The investment objective of Schroder Real Estate Investment Trust ('the Company') is to provide shareholders with an attractive level of income together with the potential for income and capital growth as a result of its investments in, and active management of, a diversified portfolio of UK commercial real estate.
Globally facing, financial services and TMT hubs, value-add manufacturing
Transport, distribution, energy, technology
High-value new jobs, wealth effect, population growth
Live and work, tourism andamenities, universities, cathedral cities, dominant retail and leisure
|Performance1||Key initiatives||Portfolio||Balance Sheet|
|1.7% p.a. over the MSCI/IPD Benchmark over the past 1 and 3 years, and 1.0% p.a. since IPO2 in 2004||£95m of assets sold completed since January 2019 at an average net intiial yeild of 3.0%||82% of the Company's portfolio located in Winning Cities3||23.7% net loan-to-value ('LTV')|
|NAV total return, adjusted for the refinancing debt costs, of -1.5% for the year to 31 March 2020||£129.6m of debt refinanced generating an immediate interest saving of £2.5m p.a.||68% of the portfolio weights to the office and industrial sectors Below Benchmark retail weighting||Significant headroom to debt covenants to withstand 51%! and 66% fall in valuation and net rent respectively|
|90% dividend cover5 for year to March 2020 and 74% rent collection for March quarter||77 lettings, rents reviews and renewals totalling £6.5m, generating an uplift of £1.4m p.a.||Reversionary income yield6 of 7.3% compared withe MSCI Benchmark of 5.3%||£86m of cash for investment and operational flexibility|
Source: Schroders, June 2020.
1: Source: MSCI property level returns gross of fees on a like-for-like basis including direct and indirect.. 2: Initial Public Offering 3: Winning Cities defined as higher-growth locations; Source: Oxford Economics/Schroders. 4: A covenant is a promise in an indenture, or any other formal debt agreement, that certain activities will or will not be carried out or that certain thresholds will be met. 5: Dividend cover is the net income as a % of the dividend paid. 6: Reversionary income yield is an independent valuer’s assessment of the market value of the rent of the portfolio, as a % of the independent valuer's portfolio valuation.
|12 months to Mar-2020||12 months to Mar-2019||12 months to Mar-2018||12 months to Mar-2017||12 months to Mar-2016|
|Net Asset Value total return2||-9.4||4.5||10.5||7.2||12.3|
|SREIT Real Estate Total Return3||1.9||7.2||11.8||8.5||12.6|
|MSCI UK Balanced Monthly and Quarterly Funds Quarterly Property Index3||0.2||4.9||10.3||4.7||11.3|
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested.
1 Source: Schroders, Datastream, bid to bid price with net income reinvested in GBP.
2 Source: Schroders, NAV to NAV (per share) plus dividends paid.
3 Source: MSCI Quarterly Version of Balanced Monthly Index Funds (including indirect investments on a like-for-like basis).
Duncan is Global Head of Real Estate at Schroders and chairman of the investment committee. He joined Schroders in January 2012 from Invista Real Estate Investment Management where he was the CEO and managing director of the property division at Insight Investment. Before this he was a founding partner of specialist boutique, Gatehouse Investment Management. During his career, Duncan was also a partner at Jones Lang Wootton and a director at LaSalle Investment Management. Duncan studied at Insead Business School and is an FCA-approved person as well as a member of the Royal Institution of Chartered Surveyors.
Nick Montgomery is Head of UK Investment at Schroder Real Estate. He joined Schroders in January 2012 from Invista Real Estate Investment Management where he was Head of UK Commercial Funds. Previously Nick worked at Gatehouse Investment Management. He started his investment management career in 1999 at LaSalle Investment Management managing institutional pension fund property portfolios. Nick holds a BSc (Hons) in Estate Surveying from Nottingham Trent University. He is a member of the Royal Institution of Chartered Surveyors and an FCA-approved person.
The investment policy of the Company is to own a diversified portfolio of UK property with good fundamental characteristics, as outlined below. The Company invests principally in the UK commercial property sectors including office, retail, and industrial and will also invest in other sectors including mixed use, residential, hotels, healthcare and leisure.
Diversification and asset allocation
The Board believes that, in order to maximise the stability of the Company's income, the optimal strategy is to invest in a portfolio of assets diversified by location, sector, asset size and tenant exposure with low vacancy rates and creditworthy tenants. The value of any individual asset at the date of its acquisition must not exceed 15% of gross assets and the proportion of rental income deriving from a single tenant must not exceed 10%.
The Board has established a gearing guideline for the Investment Manager, which seeks to target debt, net of cash, at a level reflecting a loan to value of between 25-35%.
Interest rate exposure
The Board's policy is to hedge interest rate risk, either by ensuring the borrowings are on a fixed rate basis, or through the use of interest rate swaps/derivatives used solely for hedging purpose.
Investment trusts offer a flexible and effective way to gain exposure to some of the world's most dynamic markets and regions, and can be used to meet a variety of investment outcomes. For more information on how Schroder Real Estate Investment Trust shares can be bought and sold, visit our How to invest page.
Investments in real estate are relatively illiquid and more difficult to realise than equities or bonds.
Yields may vary and are not guaranteed.
The use of gearing is likely to lead to volatility in the Net Asset Value ("NAV") meaning that a relatively small movement either down or up in the value of the Company's total assets will result in a magnified movement in the same direction of that NAV.
There is no guarantee that the market price of shares in a UK Real Estate Investment Trust such as SREIT will fully reflect their underlying NAV.
The value of real estate is a matter of a valuer's opinion rather than fact.
This UK Real Estate Investment Trust should be considered only as part of a balanced portfolio, of which it should not form a disproportionate part.