Schroder Real Estate Investment Trust has reported a 1.4% rise in net asset value per share for the three months to 31 December.
The unaudited NAV as at 31 December 2017 was £345.5m or 66.6 pence per share. This reflects an increase of 1.4% per share compared with the NAV as at 30 September 2017, or a NAV total return, including the dividend of 0.62 pps, of 2.3%.
The company has announced an interim dividend of 0.62 pence per share for the period 1 October 2017 to 31 December 2017. The dividend payment will be made on 7 March to shareholders on the register as at 16 February 2018. The ex-dividend date will be 15 February 2018.
The dividend of 0.62 pps will be designated 35 pps as an interim property income distribution and 27 pps as an interim ordinary dividend.
Over the quarter to 31 December 2017 the underlying portfolio produced a total return of 3% compared with the MSCI Index at 3.3%. For the year 2017 the underlying portfolio produced a total return of 12.9% compared with MSCI of 10.8%.
Underlying portfolio
As at 31 December 2017, the underlying portfolio comprised 44 properties valued at £468.1m. At the same date the portfolio produced a rent of £26.9m pa, reflecting a net initial yield of 5.4%. The portfolio rental value is £33.4m pa, resulting in a reversionary yield of 7.1%.
As at 31 December 2017 the void rate was 6.6% and the average unexpired lease term, assuming all tenants vacate at the earliest opportunity, was 6.9 years.
During the quarter four lettings and lease renewals completed at Stacey Bushes industrial estate in Milton Keynes, a total rent of £164,000 pa, reflecting rents of between £5.75 and £7.95 per sq ft.
The estate provides further income growth potential with an average rent and rental value of £5 and £6 per sq ft respectively. After adjusting for refurbishment expenditure, this contributed to a 7% increase in the capital value over the quarter to £27.8m.
The lease to Premier Inn Hotels completed at the Arndale Centre in Leeds in December following completion of the works to convert part of the asset from office to hotel use. Premier Inn took a 20-year lease at a rent of £421,400 pa with inflation-linked rent reviews.
The Premier Inn is expected to positively impact footfall and, after adjusting for capital expenditure, contributed to a 1.8% increase in the value over the quarter to £28.m.
Schroder has two loan facilities from Canada Life and Royal Bank of Scotland totalling £150.1m with an average duration of 8.2 years and an average interest cost of 4.4%. The loans are fully compliant with their covenants.
In addition to the properties secured against the Canada Life and RBS loan facilities, Schroder has unsecured properties with a value of £77.3m and cash of £30.4 million. This results in a loan-to-value ratio, net of cash, of 25.6%.
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