Schroder European Real Estate Investment Trust – SERE

SERE provided a NAV update today:

Schroder Eur Real Est Inv Trust PLC

Publish Date

18 March 2025

Time Period

As at and for the quarter/year to 31 December 2024

• Unaudited NAV as at 31 December 2024: €161.2 million or 120.5 cps, compared to €164.1 million or 122.7 cps as at 30 September 2024

• NAV total return: -0.6% for the quarter and +1.3% for the twelve months to 31 December 2024

• Underlying adjusted quarterly earnings (EPRA earnings) before exceptional items: €1.9 million (quarter ended 30 September 2024: €2.0 million)

• First interim dividend of 1.48 euro cents per share declared, 100% covered by EPRA earnings before exceptional items

• Direct property portfolio independently valued at €206.2 million (31 December 2024), reflecting a like-for-like decrease of -0.9% over the quarter (i.e. -€1.9 million)

• Disposal of Frankfurt grocery investment for €11.80 million agreed, in line with 30 September 2024 valuation; expected to complete by 31 March 2025

• Post-period sale of 50% stake in Metromar joint venture completed, lowering net loan-to-value ratio from 25% to c.20%

• Group received a notice of adjustment from the French Tax Authority (c. €14.2m including interest and penalties). Board’s opinion remains that an outflow is not probable; no provision recognised

Quote:

Sir Julian Berney Bt., Chairman:

"The Company continues to provide shareholders with unique access to a diversified Continental European portfolio, a market where, near-term geopolitical-led uncertainty aside, the underlying fundamentals look very appealing, which is being reflected in a further stabilising of yields. We have a clear focus on executing on our asset management initiatives, which will drive the portfolio valuation and earnings."

Please see the fuller RNS update here: https://www.londonstockexchange.com/news-article/SERE/announcement-of-nav-and-dividend/16944929

It is interesting that Schroder European Real Estate Investment Trust (SERE) continues to experience a decline in its NAV.

Between September and December, the NAV dropped by 1.76%, which is quite significant for such a short period. In contrast, other REITs (at least many that are UK based) appear to have stabilized their property values, but this is not the case for SERE.

Additionally, I was disappointed to see that the company disposed of its Frankfurt grocery investment for €11.8 million. While they claim this aligns with their valuation, it does not seem like they achieved a good return on the investment over the holding period.

Another concern is the €14.2 million charge imposed by the French tax authorities. Although the board believes this charge is unlikely to be enforced, it remains a potential overhang on the company’s valuation—especially since the amount represents 8.8% of the net NAV.

This NAV update puts the NAV at 84p which gives it a NAV discount to share price of -19%, quite a sensible level for a company that is losing NAV value, albeit with a 7.35% yield.