Schroder Real Estate Investment Trust Ltd · LSE:SREI
Schroder Real Estate Investment Trust — Shareholder Meeting (September 2024)
35 slides from Schroder Real Estate Investment Trust's shareholder meeting presentation, Sep 16, 2024
Slide 1: Schroder Real Estate Investment Trust Limited
16 September 2024 SCHRODER REAL ESTATE INVESTMENT TRUST LIMITED Thematic focus on sustainability with active management to enhance returns Marketing material. AGM presentation
Slide 2: SREIT well positioned with high income and low debt cost
SREIT well positioned with high income and low debt cost Portfolio focused on higher growth sectors with a reversionary yield of 8.5% (MSCI Benchmark: 6.1%) 02 6.7%1 dividend yield 103% covered by earnings over the quarter to 30 June 20242 Robust balance sheet provides dividend protection: 3.5% curr
Slide 3: Good quality portfolio positioned to capitalise on structural trends
Good quality portfolio positioned to capitalise on structural trends Weighted towards higher growth sectors with an above average income profile Multi-let Industrials Higher Growth Office locations Value and Convenience Retail Stacey Bushes, Milton Keynes (£51.5m) University of Law, Bloomsbury (£38.
Slide 4: NAV movement for the year ended March 2024
NAV movement for the year ended 31 March 2024 NAV per share decrease of -4.4% and a positive NAV total return of +1.1% £m PPS Portfolio value decline of 2.8% (MSCI Benchmark: -5.7%) Value unchanged over quarter to 31 March 2024 (MSCI Benchmark: -0.6%) NAV as at 31 March 2023 300.7 61.5 Unrealised ne
Slide 5: NAV movement for the quarter to June 2024
NAV movement for the quarter to 30 June 2024 NAV per share increase of 0.5% and a positive NAV total return of 2.0% £m PPS Portfolio value increase of 0.4% (MSCI Benchmark: nil%), contributing to a total return of 1.8% (MSCI Benchmark: 1.2%) NAV as at 31 March 2024 287.4 58.8 Unrealised net increase
Slide 6: Income statement for the year ended March 2024
Income statement for the year ended 31 March 2024 4% increase in dividends paid vs. prior year, fully covered at 100% Quarter 4% increase in dividends paid in the financial year, Year ended 31 March (£ million) 2023 2024 Change ended 30 compared to the prior year, with a fully covered dividend June
Slide 7: Opportunity to capture reversion to grow dividend
Opportunity to capture reversion to grow dividend Targeting a sustainable and progressive dividend policy Quarterly dividend payments (pence per share) Term loan Postponed due to Sustainable and progressive dividend policy refinancing market uncertainty 0.900 0.853 0.853 Pre-COVID dividend 0.836 0.8
Slide 8: Balance sheet as at June 2024
Balance sheet as at 30 June 2024 Fixed or capped interest rates for 91% of drawn debt Debt Debt available drawn £204.6m £176.6m Undrawn RCF £28.0m Non-utilisation cost of 0.62% Overall loan to value, net of cash RBSI RCF, £75.0m £16.5m £30.5m Drawn RCF – no interest rate hedge Floating interest cost
Slide 9: SREIT portfolio level returns – one and three years to June 2024
SREIT portfolio level returns – one and three years to 30 June 2024 Sustained outperformance driven by sector allocation, higher income and asset management One year (%) Last three years (% per annum) Performance components Performance components SREIT Benchmark SREIT Benchmark Total return +3.7% To
Slide 10: Market Context
MARKET CONTEXT
Slide 11: UK rates have stabilised
UK rates have stabilised Policy rate changed in August 2024 with markets betting on further cuts in H2 2024 Interest rate & gilt yields (%) Interest rate implied probabilities (%) from options on 13 September 2024 – next decision 19 September 2024 6.00 BoE Interest rate 10Y UK Gilts Bank of England
Slide 12: UK real estate performance
UK real estate performance Capital values stabilise though offices still under pressure - rental growth continues Capital Values by Sector Rental Values and Yields June 2022 = 100 Rental Values, June 2022 = 100 All Property Initial Yield % 100 108 5.8 107 5.6 95 106 5.4 90 105 5.2 104 5.0 85 103 4.8
Slide 13: UK real estate performance
UK real estate performance Positive returns in 2024 with above average returns from 2025 onwards Total return and components % 25 Forecast 20 15.5 15 8.7 9.3 10 8.2 8.0 4.8 5 0 -1.3 -5 -10 -7.6 -15 -20 -25 -30 Income return Capital growth Total return Source: MSCI, Schroders. January 2024. Note the
Slide 14: Strategy
STRATEGY
Slide 15: Sustainability at the centre of SREIT's investment proposition
Sustainability at the centre of SREIT’s investment proposition We have enhanced SREIT’s strategy: Investment policy includes sustainability objectives and two sustainability KPIs Clear governance and proprietary ESG Scorecard We believe this strategy should: Enhance long term total returns for share
Slide 16: Enhancing total return for SREIT shareholders
Enhancing total return for SREIT shareholders Adapt existing buildings with attractive fundamentals, targeting the following sustainable attributes, to achieve the Green Premium: Access to high- quality green Improved natural Progressing towards energy Enhanced health and space and community resourc
Slide 17: Implementation of new strategy
Implementation of new strategy Report to shareholders: Provide an update on progress with the September 2024 interim results 2022 H1 2023 H1 2023 21 Nov 2023 15 Dec 2023 June 2024 June 2024 April 2025 Enhanced Nov 2024 Market analysis: Development of Schroders Circular published investment policy Se
Slide 18: Generating strong returns through value-add investment
Generating strong returns through value-add investment Proof of concept: Stanley Green Trading Estate, Cheadle, Manchester Valuation Acquisition date: 17 Dec 2020 Acquisition price: £17.25m Capex spent to 31 March 2024: £9.1m Valuation at 30 June 2024: £40.2m Increase in valuation: 2.3x Value add Ne
Slide 19: An example of the process: Churchill Way, Salisbury
An example of the process: Churchill Way, Salisbury Implementing NZC audit recommendations into landlord works to secure a strong tenant on better terms Baseline asset ESG Scorecard score: 2.4 New AFL exchanged with international discount supermarket, subject to planning Whole building greenhouse ga
Slide 20: Portfolio Overview
PORTFOLIO OVERVIEW
Slide 21: Portfolio analysis
Portfolio analysis High income return and reversion Diversified portfolio Structure as a % of value¹ SREIT June 2024 95% multi-let industrial Company 50.3 (MSCI June 2024) Industrial estates 32.6 Portfolio value (£m) 461.6 Office - 10.5 100% let to University Number of properties 39 London 13.9 occu
Slide 22: Diversified portfolio of assets with good fundamentals
Diversified portfolio of assets with good fundamentals Offering significant asset management potential # Property Sector Value (£m)¹ % Portfolio1 1 Milton Keynes, Stacey Bushes Ind Est Industrial 51.5 11.2 2 Leeds, Millshaw Park Industrial Estate Industrial 45.5 9.9 3 Cheadle, Stanley Green Trading
Slide 23: Attractive and granular tenant base increases resilience
Attractive and granular tenant base increases resilience Focused on operational excellence to attract occupiers on better terms Annual rent % of # Tenant (£m) portfolio 1 The University of Law Limited 2.02 6.71 2 Buckinghamshire New University 1.30 4.32 3 Siemens Mobility Ltd 1.23 4.09 4 Public Sect
Slide 24: Recent asset management initiatives
Recent asset management initiatives Significant opportunities to add value across the portfolio St John’s Retail Park, Bedford The Tun, Edinburgh Horton Park Industrial Estate, Telford Asset 120,000 sq ft value retail warehouse scheme on Modern office located close to the Scottish Well located, 15 u
Slide 25: Operational excellence in asset management
Operational excellence in asset management Attractive reversionary income yield of 8.5% (Benchmark1 6.1%) £m +30% 3.8 39.2 40.0 2.6 1.8 0.6 30.1 0.3 30.0 20.0 10.0 0.0 Annual rent Fixed uplifts Further fixed uplifts Stanley Green ERV in excess Vacant ERV as at 30 already effective over next 24 month
Slide 26: Summary
SUMMARY
Slide 27: Summary
Summary UK real estate market recovering, supported by limited development, positive rental value growth, slowing inflation and lower interest rates Underlying portfolio continues to deliver strong relative outperformance vs. peers, driven by a higher income return Significant potential to drive ear
Slide 28: Appendix
APPENDIX
Slide 29: Applying Schroders proprietary 'ESG Scorecard'
Applying Schroders proprietary ‘ESG Scorecard’ Holistic approach to assessing asset-level sustainability performance and improvements A B AxB Criteria to assess Sub-topic Sub-topic Sub-topic Area Topic Sub-topic score weighting score weighted score 0-5 1. Fabric, Services and Utilities 5 topics 2. E
Slide 30: Baseline asset scores and portfolio carbon emissions
Baseline asset scores and portfolio carbon emissions Sustainability KPI 1 ESG Scorecard (asset level) Sustainability KPI 2 NZC commitments (portfolio level) Valuation as at ESG scorecard Target reduction in whole building greenhouse gas intensity by 2030 to be aligned to a 1.5 °C Target ESG global w
Slide 31: Sustainability KPIs in the investment policy
Sustainability KPIs in the investment policy Sustainability KPI 1 Sustainability KPI 2 ESG Scorecard (asset level) Net zero carbon commitments (portfolio level) – The Company’s assets will be managed with a view to ensuring – Further, the Company's assets will also continue to be managed that at any
Slide 32: University of Law Campus, Store Street, Bloomsbury (50% interest)
University of Law Campus, Store Street, Bloomsbury (50% interest) Plans for a major asset repositioning promoting sustainable characteristics 32
Slide 33: Risk Considerations
Risk Considerations Prospective Investors should be aware of the associated risks and special factors of the Real Estate asset class which are not related to investments in traditional listed instruments. Attention is drawn to the following specific risks: Credit risk A decline in the financial heal
Slide 34: Important Information
Important Information Marketing material. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. The views and opinions contained herein are those of the author's, or the individual to whom they are attributed, and ma
Slide 35: Thank you
THANK YOU Schroder Real Estate Investment Management Limited 1 London Wall Place London EC2Y 5AU
Schroder Real Estate Investment Trust — Shareholder Meeting (September 2024) on 6ix