Schroder Real Estate (SREI)
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Schroder Real Estate Investment Trust (SREI) is a diversified UK commercial property REIT which aims to deliver a mixture of income and capital growth, typically focussing on higher-income assets. In December 2023 shareholders approved changes to the investment objective, adding specific sustainability KPIs, which the manager believes will lead to higher investment returns.
SREI is managed by Nick Montgomery, who has worked on the trust since its IPO in 2004, joining Schroders in 2012 when it took on the management contract, together with his co-manager Bradley Biggins, who joined Schroders in 2014. In the Performance section, we look at the standard NAV and share price performance, but also the underlying property portfolio performance, which has exceeded the relevant benchmark over 1, 3, and 5 years and since inception.
The trust is geared c.37% LTV, higher than the average for its closest comparators, but within the normal range for UK REITS. Gearing is predominantly provided by long-term, low-cost debt with an average maturity of c. 10 years and interest cost of 3.5%. We discuss the effect on long-term performance of gearing in the Performance section.
SREI trades on a c. 24% discount at the time of writing, compared to the Morningstar UK Commercial Property peer group's average of c. 25%. The trust yields c. 7%, compared to its five-year average of c. 6.4% and has a track record of paying a covered Dividend.
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