Schroder European real-estate investment trust, a company that invests in European growth cities and regions, says outward yield movement, particularly for offices and select retail, was responsible for a 1% decline in its property portfolio in the last quarter.
The group’s direct property portfolio was independently valued at €208.1m as at the end of March, reflecting a marginal like-for-like decrease over the quarter of 1.0%, it said in a statement on Thursday.
Rental income has remained stable with a continuing high level of rent collection, and the portfolio benefiting from indexation and high occupancy of 96%, it said.
The portfolio office assets witnessed a decline of 1.1%, while the industrial assets portfolio had a valuation increase of 0.4%, driven by index-linked income growth in Rennes, France, and estimated rental value growth in Venray, the Netherlands.
The German retail portfolio valuation declined 2.3% due to 15 basis points of outward yield movement in the Berlin DIY investment, while the Frankfurt grocery asset valuation remained unchanged.
Based on end-March values and after the recent Rennes logistics loan refinancing, the portfolio loan to value (LTV) is about 33% based on gross asset value and 24% net of cash, it said.
The company remains well positioned with significant cash reserves and is continuing to review select sustainability-led capex initiatives in the portfolio, which should optimise earnings growth and asset liquidity, it said.
Earlier in April the company completed the refinancing of a €8.6m loan with the existing lender Saar LB, secured against its Rennes logistics investment in Brittany, France.
In December, Schroder completed the early refinancing of the St Cloud, Paris, office loan based on a margin of 1.9%. In that instance, the company elected to de-lever, reducing the loan principal from €17m to €14m. The loan term was extended by three years to December 15 2027, with the option of a further year extension.
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