Schroder Real Estate Investment Trust (SREI) Investor Update summary

Portfolio strategy and performance

• Focus on high-growth, high-yield UK real estate sectors, with active management to enhance asset value and income.

• Portfolio valued at £474 million with 38 assets and 317 tenants, providing diversified and granular income.

• Multi-let industrial estates now comprise over half of portfolio value, with the remainder in prime offices and value/convenience retail.

• Achieved a 2.5% increase in NAV per share and 4% NAV total return in the latest quarter, outperforming benchmarks.

• Awarded best 10-year return at portfolio level among UK and European peers in the MSCI index.

Financial discipline and capital management

• Dividend yield stands at 6.8% with 104% dividend cover for the quarter, reflecting disciplined payout policy.

• Debt structure is sector-leading, with 75% fixed at 2.5% for 11 years and average interest cost at 3.5%.

• Net loan to value is just under 37%, with plans to reduce to 25%-35% through asset sales and value growth.

• Ongoing costs are 1.2% of NAV, considered highly competitive.

• Share price trades at a 14% discount to NAV, seen as an attractive entry point.

Sustainability and green premium

• Strategic pivot to sustainability, with increasing tenant and investor willingness to pay a green premium for energy-efficient assets.

• Participation in GRESB with improving scores and active portfolio-level sustainability initiatives.

• Multiple case studies show 30-40% higher rents and keener yields for sustainable refurbishments and developments.

• Example: Stanley Green Trading Estate achieved 39% higher rents and lower yields for new EPC A+ units.

• Sustainability expertise within the team is a key differentiator.