SREI

Schroder Real Estate – NAV and Dividend for Quarter to 31 December 2023▼

For release 27 February 2024

Schroder Real Estate Investment Trust Limited

(‘SREIT’ or the ‘Company’)

NAV AND DIVIDEND ANNOUNCEMENT FOR THE QUARTER TO 31 DECEMBER 2023

Schroder Real Estate Investment Trust Limited (‘SREIT’ or the ‘Company’), the actively managed REIT focused on improving the sustainability performance of buildings to generate higher income, announces its net asset value (‘NAV’) and dividend for the quarter to 31 December 2023 and provides an update on portfolio activity.

Highlights:

·    NAV decline to £287.0 million or 58.7 pence per share (‘pps’) (30 September 2023: £296.0 million or 60.5 pps), driven by a 1.6% decline in capital growth, which compared to a 2.3% decline in capital growth for the MSCI UK Balanced Portfolios Quarterly Property Index

·    NAV total return of -1.6%

·    Announcement of an interim dividend of 0.836 pps for the period 1 October 2023 to 31 December 2023, and paid on 28 March 2024

·    Net loan to value of 36.6%, with an average interest cost on debt drawn of 3.5%, an average loan duration of 10.0 years and no debt maturities until June 2027

·    Continued leasing momentum since 1 October 2023 with 32 new lettings, renewals and rent reviews completed across 378,159 sq ft. This includes:

o  Two new lettings totalling 24,683 sq ft at the Company’s net zero warehouse on Stanley Green Trading Estate, 31% ahead of underwrite, demonstrating the rental premium for buildings with the highest sustainability credentials

o  85,814 sq ft lease renewal with the University of Law at Bloomsbury, 39% above the previous passing rent by December 2028

·    Disposed of an office asset, Coverdale House, in Leeds, for £3.8 million, at a 16% premium to the independent valuation as at 30 September 2023

·    Sustained outperformance versus the MSCI UK Balanced Portfolios Quarterly Property Index (the ‘Benchmark’) over three months, twelve months, three years and since inception in 2004

·    Strong shareholder support to change the investment objective and policy to formally include sustainability at the centre of the Company’s investment proposition, with a sustainability improvement and decarbonisation strategy focused on adapting existing buildings into those that are both modern and fit for purpose

Alastair Hughes, Chair of the Board, commented: “Despite continuing market uncertainty the Company remains well placed with an above average rental income profile and the longest duration, fixed-rate debt in the peer group. These factors enable us to continue paying an attractive dividend, with good visibility on future earnings growth. I am also delighted shareholders provided strong support to the evolution of our strategy which places sustainability at the centre of our investment proposition, and we will provide a detailed update on progress implementing this strategy in our forthcoming year end results.”

Nick Montgomery, Fund Manager, added: “This has been an encouraging period of leasing activity, with a high volume of deals closed and under offer. We are also working up a pipeline of new asset management initiatives to further grow earnings, with a focus on delivering projects to a high sustainability specification such as our Stanley Green operational net zero warehouse development.”

NAV

The unaudited NAV as at 31 December 2023 was £287.0 million, or 58.7 pps, a decrease of -3.0% compared with the NAV as at 30 September 2023 (£296.0 million, or 60.5 pps).

Including the quarterly dividend of 0.836 pps paid in December 2023, the NAV total return for the quarter was -1.6%.

Dividend payment

The Company announces an interim dividend of 0.836 pps for the period 1 October 2023 to 31 December 2023. The dividend payment will be made on 28 March 2024 to shareholders on the register at the record date of 8 March 2024. The ex-dividend date will be 7 March 2024.

The dividend of 0.836 pps will be wholly designated as an interim property income distribution (‘PID’).

Property portfolio

As at 31 December 2023, the underlying portfolio comprised 39 properties valued at £457.8 million. It generated an annual rent of £29.2 million, reflecting a net initial yield of 6.0%. The portfolio’s estimated rental value (‘ERV’) is £38.5 million per annum, reflecting a reversionary yield of 8.4%.

The void rate was 12.0% calculated as a percentage of ERV, and since the quarter end 2.9% of this has let or is under offer, and a further 0.7% undergoing refurbishment. The weighted average unexpired lease term, assuming all tenants vacate at the earliest opportunity, is 5.3 years.