Schroder Eur Real Est Inv Trust PLC New lease, refurbishment and forward sale (6947A)
October 01 2020 - 2:00AM
UK Regulatory
TIDMSERE
RNS Number : 6947A
Schroder Eur Real Est Inv Trust PLC
01 October 2020
1 October 2020
SCHRODER EUROPEAN REIT AGREES NEW LEASE, REFURBISHMENT AND
FORWARD SALE OF A PARIS OFFICE ASSET FOR c. EUR104 MILLION
Schroder European Real Estate Investment Trust plc ("SERE" or
the "Company"), the company investing in European growth cities,
has exchanged contracts to sell its Boulogne-Billancourt office
asset in Paris for approximately EUR104 million, subject to
programme and cost. This significant transaction will:
-- Deliver a profit, post all acquisition and development costs,
of approximately EUR28 million, representing a net profit of c.
35%, subject to programme and cost;
-- Significantly strengthen the balance sheet and Net Asset Value ("NAV") of the Company;
-- Provide additional funds for reinvestment and earnings enhancing initiatives.
The sale is structured as a forward funding, with the building
being handed over to the purchaser in H1 2022, following completion
of a comprehensive refurbishment which is being undertaken by the
Company. The refurbishment and sale follows the agreement of a new
10-year pre-let contract with existing tenant Alten in June this
year. The rental uplift is 39% higher than the previous rent
paid.
The final sale price of approximately EUR104 million will
deliver net sale proceeds of approximately EUR70 million when
completed, after deducting the c. EUR30 million cost of
refurbishing and re-letting the building. This represents a profit
on cost of c. 35%. The sale proceeds will be received in stages and
the Company expects the NAV to increase incrementally as sale
receipts occur. 50% of the price is to be received on exchange of
the definitive deed prior to this calendar year end 2020, with the
remainder payable in installments over the subsequent 18 months as
construction is completed. The overall increase to the most recent
published NAV as at 30 June 2020 is expected to be approximately
15%, subject to programme and cost.
The building was originally acquired in 2016 for EUR37.5 million
with the Company identifying an opportunity to create significant
value by undertaking a major repositioning of the asset whilst
taking advantage of the rapidly improving market dynamics in the
Boulogne-Billancourt sub-market of Paris. The transaction reflects
the Company's ability to add value through active management of
investments acquired in winning high growth locations.
The net sale proceeds strengthen the Company's balance sheet,
providing significant operational and financial flexibility. The
funds will primarily be redeployed into new earnings enhancing
initiatives including new investments.
Sir Julian Berney Bt., Chairman of the Board commented: "This is
a transformational transaction, which will be highly accretive to
shareholder returns. It is a strong endorsement of the Company's
strategy, to identify real estate where we can create significant
value for shareholders through asset management, benefiting from
our team's local expertise inside the key markets.
"Our focus continues to be on driving the performance of the
existing portfolio. This will provide a clear path to income growth
and improving long-term shareholder returns and the Company's
rating."
Enquiries:
Jeff O'Dwyer / Duncan Owen
Schroder Real Estate Investment Management Limited Tel: 020 7658 6000
Ria Vavakis
Schroder Investment Management Limited Tel: 020 7658 2371
Dido Laurimore/Richard Gotla/Methuselah Tanyanyiwa
FTI Consulting Tel: 020 3727 1000
This announcement contains inside information.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
DISEAFNEDDPEEAA
(END) Dow Jones Newswires
October 01, 2020 02:00 ET (06:00 GMT)
Schroder European Real E... (LSE:SERE)
Historical Stock Chart
From Jun 2024 to Jul 2024
Schroder European Real E... (LSE:SERE)
Historical Stock Chart
From Jul 2023 to Jul 2024