TIDMSREI
RNS Number : 7197Q
Schroder Real Estate Inv Trst Ld
30 June 2022
For release 30 June 2022
Schroder Real Estate Investment Trust Limited
("SREIT" / the "Company" / "Group")
DISPOSAL 33% AHEAD OF BOOK VALUE AND ASSET MANAGEMENT UPDATE
Schroder Real Estate Investment Trust Limited, the actively
managed UK-focused REIT, announces further progress with its
capital recycling programme and an asset management update.
Disposal
Southlink, a 26,975 sq ft single let industrial asset in
Portsmouth has been sold for GBP6.5 million. The price compares
with the 31 March 2022 independent valuation of GBP4.9 million and
reflects a net initial yield of 3.2%.
Situated within the Walton Road Industrial area, the Company
acquired Southlink in July 2004. The asset produces a net rent of
GBP225,000 per annum with a lease term of 2.4 years. Based on the
disposal price, the asset has generated an ungeared total return of
13.2% per annum since acquisition, compared with the All Property
MSCI Benchmark for the same period of 6.8% per annum, and MSCI All
Industrial for the same period of 10.6% per annum.
As noted in this month's Full Year results, further disposals
are under consideration, alongside potential acquisitions of
adjoining ownerships where these support delivery of the asset
business plan.
Asset management
Since 31 March 2022 the Company has completed 17 new lettings,
renewals and reviews across 427,121 sq ft. The transactions will
generate GBP2.7 million per annum of rental income and increase
contracted rental income by GBP1.0 million per annum.
Chippenham, Langley Park Industrial Estate (Industrial)
Following the update provided with the Full Year results, two
lettings have completed at Langley Park Industrial Estate, achieved
at 26% and 31% above the previous passing rent respectively:
-- A rent review with Siemens Mobility Limited ('Siemens')
across five units totalling 263,221 sq ft, at GBP1.22 million per
annum, reflecting a rental increase of 26% compared with the
previous rent. The rent review is 17% ahead of the combined 31
December 2021 estimated rental value ("ERV"), and in line with the
ERV as at 31 March 2022. Siemens is now the Company's second
largest tenant.
-- IXYS UK Westcode Limited ('IXYS'), the UK subsidiary of
Littelfuse Inc., a global electronic manufacturing company, who
occupy an 84,584 sq ft warehouse unit due to expire in December
2022, has completed a new ten-year lease renewal without break
options from December 2022 at a rent of GBP465,000 per annum, or
GBP5.50 per sq ft. This reflects a rental increase of 31% compared
with the current rent and is in line with the 31 March 2022 ERV.
IXYS receive 12 months' rent free and a contribution towards
improvement works capped at GBP250,000. The lease includes a rent
review at year five to the higher of open market value or the
retail price index ('RPI'), with a cap of 5% per annum. The lease
is guaranteed by Littelfuse, Inc. and, following completion of the
new lease, IXYS will be the Company's eighth largest tenant.
Based on the contracted rent following the above activity, and
after expiry of the rent free period, the valuation as at 31 March
2022 of GBP27.5 million reflects an attractive net initial yield of
7.4%. The asset was acquired in December 2020 for GBP19.25
million.
The next phase of the business plan at Langley Park is the
development of new warehouse units, to be constructed to an
operational Net Zero Carbon ("NZC") standard, on the site where
there is surplus land with currently no apportioned value. A
pre-planning application to develop 130,000 sq ft of space has been
submitted to Wiltshire County Council.
Bedford, St. John's Retail Park (Retail warehouse)
A 15-year pre-let has completed with Starbucks Coffee Company UK
Limited ("Starbucks"), for a new drive thru at St. John's Retail
Park in Bedford. Subject to securing planning consent, Starbucks
will construct the new unit on the site and will receive a
contribution towards construction costs capped at GBP850,000 and a
12-month rent free period. The rent will be GBP145,000 per annum,
increasing by 10% of any construction cost in excess of GBP750,000,
capped at an additional GBP10,000 of rent per annum.
The conditional letting is line with the valuation assumptions
as at 31 March 2022 and, based on the current apportioned site
value of GBP1.0 million and total estimated costs, reflects an
attractive yield on cost of 8.4%.
Bletchley, Watling Street (Retail warehouse)
A second 15-year pre-let has completed with Starbucks for a
drive thru at Watling Street in Bletchley, Milton Keynes. Subject
to securing planning consent, Starbucks will construct the new unit
on the site and will receive a contribution towards construction
costs capped at GBP850,000 and a 12-month rent free period. The
rent will be GBP100,000 per annum, increasing by 10% of any
construction cost in excess of GBP800,000, capped at an additional
GBP5,000 of rent per annum.
The conditional letting is in line with the valuation
assumptions as at 31 March 2022 and, based on the current
apportioned site value of GBP50,000 and total estimated costs,
reflects an attractive yield on cost of 11.7%.
Planning applications have been submitted for both sites and,
assuming successful, completion of both leases is expected in mid
2023. Starbucks is also required to deliver the buildings to a
minimum BREEAM rating of 'Very Good' and Electric Vehicle charging
points will be provided for customer usage.
-ENDS-
For further information:
Schroder Real Estate Investment Management
Limited:
Nick Montgomery / Bradley Biggins
/ Matthew Riley 020 7658 6000
FTI Consulting:
Dido Laurimore / Richard Gotla / Ollie
Parsons 020 3727 1000
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About Schroder Real Estate Investment Trust
Schroder Real Estate Investment Trust aims to provide
shareholders with an attractive level of income together with the
potential for income and capital growth as a result of its
investments in, and active management of, a diversified portfolio
of UK commercial real estate.
The investment policy of the Company is to own a diversified
portfolio of UK real estate underpinned by good fundamental
characteristics. The Group invests principally in the industrial,
office and retail sectors and will also consider other sectors
including mixed-use, residential, hotels, healthcare and
leisure.
The Company leverages Schroders' specialist capabilities across
strategies, with a strong team of 95 in the UK. SREIT employs a
hospitality-driven approach to improve the operational performance
of its assets, underpinned by a fully integrated ESG strategy, in
order to deliver superior shareholder returns.
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