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Schroder Real Estate Investment Trust (SREI) Fundamentals

Interim Results

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018

REFINANCINGS, ACQUISITIONS AND ASSET MANAGEMENT DRIVE DIVIDEND UPLIFT

Schroder Real Estate Investment Trust, the actively managed UK focussed REIT, today announces its unaudited half year results for the six months ended 30 September 2018.

Highlights

Completed two debt refinancings that reduced interest from 4.4% to 4.0% and the average loan term to approximately nine years
Acquired offices in Edinburgh and Nottingham at a net initial yield of 6.7%, supporting the Company’s strategy to invest in assets with strong fundamentals
5% dividend increase with effect from 1 October 2018
Financial highlights for the six months ended 30 September 2018

Net Asset Value (‘NAV’) of £357.7 million or 69.0 pps, reflecting an increase over the period of 1.2%
NAV total return, including dividends paid, of 3.0% (30 September 2017: 4.5%)
Profit for the six months of £10.6 million (30 September 2017: £14.5 million), including one-off refinancing costs of £3.1 million incurred during the period
Adjusted EPRA earnings of £7.1 million (30 September 2017: £7.5 million)
Dividend cover of 107% (30 September 2017: 117%)
Loan to value (‘LTV’), net of all cash, of 29.2% (31 March 2018: 25.3%)
Property portfolio highlights

Sustained outperformance of real estate portfolio with a total return of 4.5% versus the MSCI/IPD Benchmark Index of 3.8%
95% of the portfolio now located in Winning Cities
Significant asset management initiatives include the new ten-year lease without breaks with BUPA at a rent of £1.09 million per annum, reflecting an uplift of 14%
Letting activity over the period has improved the portfolio void rate to 6.0% (31 March 2018: 7.2%)
Reversionary income yield of 7%, compared with the MSCI Benchmark of 5.6%, supporting income growth over the next 12 to 24 months.
Commenting, Lorraine Baldry, Chairman of the Board, said:

“The UK real estate market has continued to deliver attractive levels of income and total returns despite growing political and economic risk. Looking forward, these risks combined with the late stage in the market cycle means we are more cautious about the outlook and may look to realise some of the capital gains across the portfolio. The Company is well positioned in this environment due to its high quality, diversified portfolio, a high income return, stable balance sheet and potential to enhance income and value from ongoing asset management initiatives.”

Duncan Owen, Global Head of Schroder Real Estate, added:

“In the face of challenges to the UK real estate market presented by current political and economic uncertainty, we will continue to be active managers adopting a disciplined approach. Our broad pipeline of asset management initiatives provide opportunities to add value throughout the cycle. This activity is a mainstay of the Company’s strategic objectives, the delivery of which is intended to sustainably increase net income. We will also sell assets where good performance can be realised and reinvest in opportunities which will generate higher net income.”

-Ends-

DIVIDEND ANNOUNCEMENT

The company announces an interim dividend of 0.6355 pence per share (‘pps’) for the period 1 July 2018 to 30 September 2018. The dividend payment will be made on 5 December 2018 to shareholders on the register as at 23 November 2018. The ex-dividend date will be 22 November 2018.

The dividend of 0.6355 pps will be designated 0.35 pps as an interim property income distribution (‘PID’) and 0.2855 pps as an interim ordinary dividend.