Market's view on Schroder Eur.r
Published on April 2024
- The direct property portfolio was independently valued at €208.1 million, reflecting a marginal like-for-like decrease over the quarter of -1.0% primarily due to continued outward yield movement in offices and select retail sectors, despite stable rental income and high occupancy rates of 96%.
- SERE has an outstanding principal of EUR11.68 million on a 50% share of external debt in a Seville joint venture, with a loan maturity date of 22/5/2024. Two loans against properties in France were refinanced during the current financial year.
- A Seville retail asset is written down to zero value, with €11.7 million of debt secured against it. The debt is structured with no recourse to other assets, and all income from the asset is used to pay interest, effectively isolating financial risk from the rest of the portfolio.
- SERE’s dividend yield is reported at 6.3%, fully covered following a rebasing in 2023. The portfolio benefits from explicit inflation links via CPI in European lease terms, referred to as ‘indexation’.
- The company’s financial results show a net asset value (NAV) of 124.8c, with dividend coverage at 110%, reflecting strong financial health with a net LTV of 24% and €27 million in cash.
- Shares are currently trading at a significant discount, with a 40%+ discount noted, indicating a perceived undervaluation by some investors.
- Concerns were raised about the strategic decision to invest in a southern Spanish shopping centre, which has been written down to zero, indicating a potential misstep in investment strategy.
- There is a general sentiment of resilience among investors, with some content to hold shares based on yield performance and anticipated recovery.