New lease, refurbishment and forward sale

About this update from Schroder European Real Estate Investment Trust Plc

[{"type":"text","content":"\n \n \n \n RNS Number : 6947A\n Schroder Eur Real Est Inv Trust PLC\n 01 October 2020\n  \n \n \n \n 1 October 2020\n \n \n SCHRODER EUROPEAN REIT AGREES NEW LEASE, REFURBISHMENT AND FORWARD SALE OF A PARIS OFFICE ASSET FOR c. €104 MILLION\n \n \n Schroder European Real Estate Investment Trust plc (\"SERE\" or the \"Company\"), the company investing in European growth cities, has exchanged contracts to sell its Boulogne-Billancourt office asset in Paris for approximately €104 million, subject to programme and cost. This significant transaction will:\n \n \n ·  \n \n Deliver a profit, post all acquisition and development costs, of approximately €28 million, representing a net profit of c. 35%, subject to programme and cost;\n \n \n \n ·\n \n Significantly strengthen the balance sheet and Net Asset Value (\"NAV\") of the Company;\n \n \n \n · \n \n Provide additional funds for reinvestment and earnings enhancing initiatives.\n \n \n \n The sale is structured as a forward funding, with the building being handed over to the purchaser in H1 2022, following completion of a comprehensive refurbishment which is being undertaken by the Company. The refurbishment and sale follows the agreement of a new 10-year pre-let contract with existing tenant Alten in June this year. The rental uplift is 39% higher than the previous rent paid.\n \n \n The final sale price of approximately €104 million will deliver net sale proceeds of approximately €70 million when completed, after deducting the c. €30 million cost of refurbishing and re-letting the building. This represents a profit on cost of c. 35%. The sale proceeds will be received in stages and the Company expects the NAV to increase incrementally as sale receipts occur. 50% of the price is to be received on exchange of the definitive deed prior to this calendar year end 2020, with the remainder payable in installments over the subsequent 18 months as construction is completed. The overall increase to the most recent published NAV as at 30 June 2020 is expected to be approximately 15%, subject to programme and cost. \n \n \n The building was originally acquired in 2016 for €37.5 million with the Company identifying an opportunity to create significant value by undertaking a major repositioning of the asset whilst taking advantage of the rapidly improving market dynamics in the Boulog...

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