Schroders International Property Fund is reaping the rewards of its ground-breaking foray into Italian shopping centres. In the year to the end of June, the Centro Commerciale Curno, near Bergamo, showed a total return in guilder terms of 35.6%. In the local currency, the investment yielded 15.8%.
The Amsterdam-quoted fund was the first international purchaser to acquire a modern Italian shopping centre, when it bought Curno in 1994. The company is now negotiating on three more centres in northern Italy, with a view to buying at least one of them by the end of the year, said managing director Jeremy Lewis.
Net rental income of the Schroders International Property Fund rose 17% in the year to June 30, to NLG 39.2m. But with higher interest costs due to increased borrowings, and lower income due to less cash on deposit, net income was only 3.5% higher at NLG 23m.
The higher income was sufficient, however, to permit an increase in the dividend paid by the Amsterdam-quoted company from NLG 2.35 to NLG 2.40 per depository receipt. (The company’s shares are listed in the form of bearer depository receipts, with each receipt representing 10 shares.) Net asset value remained unchanged at NLG 30.6 per depository receipt.
“With the exception of Germany, comparatively high yields remain available, compensating for the lack of strong rental growth,” said Lewis. Terms have been agreed on two offices and a warehouse in the Netherlands at yields which show a positive margin over funding costs.
At the year end, the portfolio value stood at NLG 515m: 39% in France, 20% in the UK, 13% in Italy, 10% in Belgium; 8% each in the Netherlands and Germany; and 2% in Spain. The majority, 58%, was in retail, 36% in offices and 6% in warehouses.
