Schroder European Real Estate Investment Trust has sold a grocery-anchored retail asset in Frankfurt, Germany, for €11.8m (R228m).
The company, which invests in European growth cities, has owned the 4,525m2 asset since April 2016, when it acquired it for about €11m.
The group has recently completed various asset management initiatives, including securing longer-term leases with Lidl and Fresnapf, to help improve the long-term income profile of the asset.
The transaction is expected to be complete at the end of March, allowing Schroder to retain all income until then, it said in a statement on Tuesday.
Jeff O’Dwyer, fund manager for Schroder Real Estate Investment Management, said the asset had provided the company with a stable income stream over the eight years of ownership.
“Following the completion of our asset management plan, and given the limited scope for future rental growth, we felt that now was the right time to sell and crystallise a profit for our shareholders. The sale demonstrates the current investor demand for assets in the grocery sector, and we expect to use the sale proceeds to enhance shareholder returns,” he said.
In December, Schroder reported a 3% increase in EPRA — or earnings from operational activities — to €8.2m for the year ended September, primarily due to rental growth offsetting the effects of higher interest costs.
It said at that time while it has shown “significant resilience” in a fluctuating economic environment, 2025 should be a more supportive backdrop for reits.
Its earnings were driven by high occupancy, a diversified tenant base, “excellent” rent collection and the indexation features of its portfolio delivering income growth, it said.
During the past year the group has strengthened its balance sheet with the completion of all near-term refinancings on attractive terms, with no further debt expiries until June 2026.
Chair Sir Julian Berney said at the release of the full-year earnings that 2024 was characterised by stabilising inflation and the easing of monetary policy by the European Central Bank and those developments would revitalise investor confidence and enhance market liquidity.
“We have a high conviction, shared by our shareholders and supported by the stabilisation in values that we have seen in more recent quarters, that the current strategy and pipeline of value-enhancing asset management initiatives will continue to drive earnings, support a covered and ultimately growing dividend, and deliver risk-adjusted returns for shareholders.”
The group said European occupational markets remained resilient, with most of Schroder’s sub-markets benefiting from supply constraints and modest vacancy levels.
“As inflation eases and interest rates fall, we expect sentiment to continue to improve and larger economies and cities are poised for enhanced growth,” it said.
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