LONDON - Schroder European Real Estate Investment Trust PLC (SERE) disclosed a net asset value (NAV) total return of 0.4% for the fiscal year ending September 30, 2024, supported by dividends per share of 5.92 euro cents. According to the results analysis from Kepler Trust Intelligence, the dividends were well-covered, at 103% by the European Public Real Estate Association (EPRA) earnings, which saw a 3% increase from the previous year due to rental income growth surpassing interest expenses.
Despite a 3.6% decrease in portfolio value, attributed mainly to yield movement in the first half of the year, the management has signaled a potential stabilization in property values. The trust has also seen a rise in investment volumes for smaller properties in sought-after cities.
SERE has taken steps to fortify its financial position, completing all near-term refinancings, resulting in an average interest cost of 3.2%. The trust reported that it has no debt maturing until June 2025, maintaining a conservative loan-to-value ratio of 25% net of cash.
The company is currently working on divesting its Seville property, which would further reduce its gearing to 22% net of cash. SERE's discount has narrowed over the period but remains at approximately 33%, which is wider than the averages for the AIC Property - Europe and AIC Property - UK Commercial sectors.
The trust's portfolio boasts a high occupancy rate of 96%, with all rent due for the year collected. Management has successfully negotiated 16 new leases or re-gears during the 12-month period, with an average lease life of 8 years.
The trust's portfolio is diversified, with approximately 33% in offices located in areas with limited supply, 30% in industrial properties including distribution warehouses and light industrial spaces, and only 17% in retail, focusing on DIY and grocery stores. The alternatives sector, including a mixed-use data center and a car showroom, accounts for 9% of the portfolio.
SERE's cash reserves of approximately €25 million provide the potential for further investment, share buybacks, or other strategic actions. The trust's performance comes amid a challenging economic environment, with expectations of further rate cuts potentially offering a more favorable landscape for real estate investments.
This news is based on a press release statement and reflects the financial performance and strategic initiatives undertaken by Schroder European Real Estate Investment Trust PLC.
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