Schroder Real Estate Investment Trust is continuing to focus on reducing its debt, as high borrowing costs take their toll on its net asset value.
The fund, managed by former Invista chief executive Duncan Owen, is holding discussions to secure an early refinancing on its £150m of securitised debt.
It aims to refinance the debt in the next six to 12 months, ahead of its 2014 maturity date, and is in talks with major insurance lenders to secure fresh finance.
The move comes after the vehicle paid down £12m of debt following the sale of its 29% stake in Plantation Place, EC3, in May, bringing its securitised loan down from £163.5m to £151.5m.
Schroders aims to reduce the loan-to-value on SREIT’s £320.9m portfolio from 38% to as low as 25%.
In its full-year results to the end of March, the vehicle’s NAV dropped from 50.9p in March 2011 to 50.6p a share, driven by interest rate swaps costs, which rose from £22m to £26m over the year.
The fund manager this week also received the green light from investors to convert its flagship £1.2bn UK property fund into a property authorised investment trust. This will open it up to a broader investor base, including UK and overseas professional investors, for the first time.
The Schroder Property Unit Trust will be renamed the Schroder UK Property Fund after the conversion, which is expected to take place on 31 July.
