Schroder Real Estate Investment Trust Ltd · LSE:SREI
Schroder Real Estate Investment Trust — Schroder European Real Estate Investment Trust — FY2024 Earnings Presentation
41 slides from Schroder Real Estate Investment Trust's earnings presentation, December 2024
Slide 1: Schroder European Real Estate Investment Trust Full year results presentation
Schroder European Real Estate Investment Trust Full year results presentation for the period ended 30 September 2024 December 2024 Jeff O’Dwyer Rick Murphy This information is a marketing Fund Manager Finance Manager communication.
Slide 2: Contents
Contents 01 3 02 5 03 11 04 16 Highlights Financial results Portfolio Inflation hedge 05 18 06 20 Appendix 23 Debt strategy Priorities and Summary 1. Financial 2. Team 3. Portfolio 4. Markets 5. Glossary 2
Slide 3: Well positioned to drive further earnings growth, with low LTV and significant cash reserves
Well positioned to drive further earnings growth, with low LTV and significant cash reserves Unique and compelling opportunity to invest in a strongly performing, diversified portfolio of commercial Continental European real estate, against improving valuation backdrop 02 c.100% of leases subject to
Slide 4: Schroder European Real Estate Investment Trust (SEREIT)
Schroder European Real Estate Investment Trust (SEREIT) Discrete yearly performance – numbers & dates being updated Q3 2023- Q3 2022- Q3 2021- Q3 2020- Q3 2019- Q3 2024 Q3 2023 Q3 2022 Q3 2021 Q3 2020 Share Price Total Return (GBP)¹ 8.6% -14.7% -0.8% 77.2% -40.9% NAV Total Return (Euro)² 0.4% -5.0%
Slide 5: Financial Results
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Slide 6: Financial highlights
Financial highlights A fully covered dividend, strong balance sheet, significant cash reserves and modest LTV • Dividend cover of 103% (89% for the y/e 30.09.2023) underpinned by inflation-linked income, 96% portfolio occupancy, offsetting higher interest costs; • 3% increase in EPRA earnings (2024:
Slide 7: NAV movement
NAV movement NAV decline driven by valuation falls in first half of year, due to yield re-rating €m cps % Comments NAV as at 30 September 2023 171.4 128.2 Frankfurt: €0.75m; Venray: €0.275m; Nantes: €0.1m; Pleudihen: €0.1m; Rumilly: Unrealised movements in the valuations of the (6.1) (4.5) (3.5) €0.
Slide 8: Summary income statement
Summary income statement 3% increase in year-on-year EPRA earnings Net income summary Year ended Year ended Year-on-year 30 September 2024 30 September 2023 variance % change (€’000) (€’000) (€’000) Rental income 16,258 16,266 (8) Property operating expenses (1,213) (1,930) 717 Net rental and relate
Slide 9: Dividend
Dividend Fully covered dividend provides protection Quarterly dividend payments (€ cents per share); dividend cover reflects 12 months Disposed Paris BB – dividend cover impacted Rebased to provide full cover, strengthen Covid uncertainty and BB de-risking balance sheet and mitigate refinancing cost
Slide 10: SERE benchmarking favourably vs peer group
SERE benchmarking favourably vs peer group SERE: Low LTV, attractive dividend yield, full cover and significant discount to NAV LSE listed real estate vehicles Net LTV 40.0% 6.9% div. yield 6.6% div. yield 0.97x div. cover 1.04x div. cover 35.0% Schroder European Real Estate Investment No dividend T
Slide 11: Portfolio
PORTFOLIO Highly diversified with a bias to more liquid lot sizes in growth cities and regions
Slide 12: Portfolio – direct held investments
Portfolio – direct held investments Valued at €208m1 across 15 assets in France, Germany and Netherlands Berlin, Germany Stuttgart, Germany Frankfurt, Germany Rumilly, France Rennes, France Nantes, France Cannes, France Retail warehouse €27.7m Office €18.0m Retail €11.8m Logistics €9.9m Logistics €1
Slide 13: Investment strategy aligned with most liquid part of market
Investment strategy aligned with most liquid part of market European real estate transactions biased to sub €30 million part of market Sub €30m transactions grown from 40% 300-400bps premium to bond yields on average 100% 120,000 Net Initial Premium Sector Assets Valuation Yield to 2.4% 90% 10 yr Se
Slide 14: Asset management to support earnings growth
Asset management to support General: advancing sustainability / NZC findings to define potential investment in select sustainability led capex earnings growth initiatives Short, medium and long term initiatives 2024/25 2024 Berlin: 2025 expiry of initial term – four Over year, concluded 16 new lease
Slide 15: SEREIT office markets
SEREIT office markets Prime rents increasing across SEREIT’s office markets HAMBURG – City Sud Q3 2023 Q3 2024 Size of office market sqm 1,354,200 1,354,200 Take-up last 12m sqm 31,600 32,700 PARIS – Southern Bend Q3 2023 Q3 2024 10 year avg annual take-up sqm 61,050 59,780 Size of office market sqm
Slide 16: Inflation Hedge
INFLATION HEDGE c.100% of leases subject to indexation
Slide 17: c.100% of SEREIT income is index-linked
c.100% of SEREIT income is index-linked Occupiers with an average term to break of 3.9 years France Germany Netherlands Hamburg Paris Alkmaar Rennes Berlin Nantes Utrecht 100%1 96%1 100%1 Apeldoorn Houten Rumilly Frankfurt Venray (2) Cannes Stuttgart – All leases subject to annual review and fully i
Slide 18: Debt Strategy
DEBT STRATEGY Strong balance sheet with modest leverage
Slide 19: Low LTV provides flexibility for earnings enhancing initiatives
Low LTV provides flexibility for earnings enhancing initiatives 25% LTV net of cash and 20% excluding Seville Loans summary as at 30 September 2024 Loan Valuation headroom v. Net rental headroom v Loan Lender LTV Maturity Interest rate LTV default covenant default covenant amount (% decline) (% decl
Slide 20: Priorities and Summary
Schroders PRIORITIES AND SUMMARY O
Slide 21: Management-led priorities to drive future returns
Management-led priorities to drive future returns Lease expires Dec. 2025 (Hornbach), Nestle (Apr. 26) and Dec. 2026 (KPN). Focus on re- gearing and potential to create asst management upside through improving asset quality Successfully re-geared Lidl lease on a further 15 years. Currently in exclus
Slide 22: Schroder European REIT summary
LTV 25% net of cash €233.2m portfolio Schroder European REIT Strong balance sheet providing flexibility primarily invested in Paris, Berlin, Frankfurt, Hamburg and Stuttgart Balance sheet strength, indexation and asset Working towards management to drive earnings growth improving portfolio – Unique
Slide 23: Appendix 1: Financial
APPENDIX 1 Financial
Slide 24: Results for the period ended 30 September 2024
Results for the period ended 30 September 2024 Key Income Statement and Balance Sheet metrics Period/year ended Year ended 30 Sep 2024 Year ended 30 September 2023 EPRA1 earnings €8.2m €8.0m EPRA1 earnings per share in cents 6.1 cps 6.0 cps Ordinary dividends declared per share in cents for the fina
Slide 25: Appendix 2: Team
APPENDIX 2 Team
Slide 26: SEREIT Investment Management Team
SEREIT Investment Management Team ESG Specialists Fund Management Team Key Resources Charlie Jacques Christopher Austin Head of RE sustainability Head of tax & impact Jeff O’Dwyer Rick Murphy Milena Niemann 26 years’ experience 26 years’ experience Fund Manager Finance manager European fund analyst
Slide 27: Appendix 3: Portfolio
APPENDIX 3 Portfolio
Slide 28: Portfolio overview
Portfolio overview COUNTRY Institutional grade assets located in growth markets ALLOCATION¹ By value (%) Rent Wault Wault Value Tenants ERV NIY Vacancy 11% Compl. contr. break exp. Property date % of % incl. €m # €m €m % % yrs yrs France portfolio¹ cash¹ 34% Feb 2017 Paris (SC)/Office 37.4 18% 16% 1
Slide 29: Property portfolio performance
Property portfolio performance Active asset management required to continue growing capital value Property returns (rolling returns/before transaction costs) 5.9% 0.2% 6.9% 2.6% 3.1% 5.8% 5.7% -3.0% -3.6% Q3 2024 (12 mths) Q3 2024 (3 yrs / p.a.) Q3 2024 (5 yrs / p.a.) Income return Capital return To
Slide 30: Diversification
Diversification Highly diversified by asset, city, sector and tenant City allocation Sector allocation Tenant industry allocation By value By value By income Berlin Telecommunications Frankfurt Manufacturing Hamburg DIY 1% 6% Stuttgart 9% 10% 13% 18% Logistics 5% 2% Cannes 11% Office 2% IT 7% 6% 33%
Slide 31: Exposure to higher GDP growth, winning centres
Exposure to higher GDP growth, winning centres SEREIT portfolio mostly located in highest growth regions of Western Europe SEREIT’s Investment Universe SEREIT’s portfolio vs. Investment Universe Outer ring shows SEREITs direct exposure as a % of value 9% 13% Inner ring 19% shows 44% average for inve
Slide 32: Growth city strategy
Growth city strategy 91% located in the fastest growing cities and regions Avg % pa Growth 2024-2028 City Sector Population growth GDP Growth Office employment Office / retail 50%1 City Country Difference City Country Difference City Country Difference Paris Office 0.1% 0.2% -0.1% 2.3% 1.4% 0.9% 1.1
Slide 33: Appendix 4: Markets
APPENDIX 4 Markets
Slide 34: Eurozone economy is returning to growth
Eurozone economy is returning to growth - The Eurozone economy returned to growth in 2024 with quarterly growth in Q1, Q2 and Q3. However, there is ongoing weakness in both the French and German economies. Conditions in the Eurozone GDP increased by 0.4% qoq and 0.9% yoy in Q3’24 manufacturing and i
Slide 35: But when it comes to growth and RE, it's still all about the cities
But when it comes to growth and RE, it’s still all about the cities…. Cities with highly educated workforce and diverse economy to see above average growth Average GDP Growth 2024-2028, % pa What makes a “winning” city? 3.0 Diverse Quality of Life Economy 2.5 Cultural attractions, A mix of different
Slide 36: Appendix 5: Glossary
APPENDIX 5 Glossary
Slide 37: Glossary
Glossary – EPRA: European public real estate association, a real estate industry body, which has issued best practices recommendations in order to provide consistency and transparency in real estate reporting across Europe – ERV: Estimated current market rental value from the independent valuations
Slide 38: Important Information
Important Information This information is a marketing communication. For help in understanding any terms used, please visit address https://www.schroders.com/en/insights/invest-iq/investiq/education-hub/glossary/ Past performance is not a guide to future performance and may not be repeated. The valu
Slide 39: Risk considerations
Schroder European Real Estate Investment Trust Risk considerations The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value Concentration risk of the company, both up or down. The
Slide 40: Risk considerations
Schroder European Real Estate Investment Trust Risk considerations Smaller companies risk Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder to buy and sell, and they may also fluctuate in value to a greater extent. Real estate and property risk R
Slide 41: Thank you
Thank you Schroder Investment Management Limited, 1 London Wall, London EC2Y 5AU. schroders.com
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