It’s always important to be selective but even more so now, agreed Duncan Owen, global head of real estate at Schroder Reit (SREI). As well as the uncertainties caused by Brexit, there are structural changes taking place in the commercial property market, with growing activity in urban logistics and less attraction in retail property.
Profits for the six months to September 2017 were boosted by a £6.6m valuation gain compared with a £4.47m devaluation a year earlier and, together with a modest increase in rental income, helped to lift net asset value by 8 per cent. Exposure to the City of London and docklands remained at zero, with 92 per cent of the portfolio by value located in strong performing regional centres such as Manchester and Leeds.
And there is plenty of reversionary income yet to be crystallised, with the supply of new purpose-built logistics space continuing to outstrip supply. A total of 42 separate leasing transactions were completed in the half year, equivalent to £1.3m a year, with a further £2m of contracted uplifts to be received over the next two years. Meanwhile, the vacancy rate fell from 9 per cent a year earlier to 5.5 per cent, while the loan-to-value rate eased from 29 per cent to 27 per cent.
| SCHRODER REAL ESTATE INVESTMENT TRUST (SREI) | ||||
| ORD PRICE: | 61.5p | MARKET VALUE: | £319m | |
| TOUCH: | 61-61.5p | 12-MONTH HIGH: | 66p | LOW: 56p |
| DIVIDEND YIELD: | 4% | TRADING PROPERTIES: | £5.8m | |
| DISCOUNT TO NAV: | 6% | NET DEBT: | 36% | |
| INVESTMENT PROPERTIES: | £450m** | |||
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
| 2016 | 61.1 | 0.6 | 0.1 | 1.24 |
| 2017 | 65.7 | 14.5 | 2.8 | 1.24 |
| % change | +8 | +2174 | +2700 | - |
| Ex-div: | 23 Nov | |||
| Payment: | 06 Dec | |||
| *Dividends paid quarterly. XD and pay date refers to second quarter dividend of 0.62p a share **Includes joint ventures | ||||
