## SCHRODER EUROPEAN REAL ESTATE ## INVESTMENT TRUST PLC ### Annual Report and ### Consolidated Financial Statements For the year ended 30 September 2023 Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Overview ## Uniqueandcompellingopportunitytoinvest ## inadiversifiedportfolioofcommercial ## Continental European real estate. ### Future returns supported by an allocation to higher growth sectors, ### anexperiencedlocalmanagementteam,andapeergroupleadingdebtprofile. | Net asset value (‘NAV’) | Assets | Strength of the balance sheet | | --- | --- | --- | | We seek to deliver strong long-term | We actively manage assets to achieve | Prudent retention of cash and low LTV, | | NAVgrowth. | optimal value, continuing to drive income | providing flexibility to commit capital to | | | and increase exposure tohigher growth | improve the existing portfolio, resolve | | | cities and sectors. | 2024 debt expiries and take advantage of | attractive buying opportunities. | NAV | NAV per | Portfolio value | Number of | Available cash | | Loan to value | | --- | --- | --- | --- | --- | --- | --- | | | ordinaryshare | | tenants | | | (‘LTV’) | | | | | 1 | | 2 | | | €171.4m | 128.2c | €243.0m | 47 | €28.9m | | 24% | net of cash Read more | Page 10 Read more | Page 13 Read more | Page 18 ## Why invest ### 1 6 Sustainable quarterly dividend fully covered by EPRA earnings A track record of successfully executing on asset management initiatives to generate strong shareholder returns ### 2 7 Attractive dividend yield of 7.6% on current share price and Local investment and asset management teams with specialist 3 4.6% on current NAV sector and country knowledge ### 3 8 Strong balance sheet with modest levels of gearing (24% LTV) and Hospitality led approach to asset management and tenant significant investable firepower with available cash of €28.9m relationships enhancing returns ### 4 9 Income considered to be a strong inflation hedge with all Opportunity to improve portfolio sustainability credentials leases subject to indexation and c.80% annually indexed and leverage off Schroders’ market leading expertise ### 5 10 c.90% of the portfolio by value located in higher-growth regions Fully allocated to stable western European markets Past performance is not a guide to future performance and may not be repeated. The value of the investments and the income from them may go down as well as up and investors may not get back the amount originally invested. 1 Reflectsthevalueofdirectlyheldpropertyassetsof€214.1mandavailablecashof€28.9m. 2 Available cash of €28.9m is internally calculated by deducting net assets and liabilities as well as yet to be paid dividends from the cash balance. 3 Reflectstheannualisedlatestannouncedquarterlydividendof1.48cps/1.28ppsbasedonasharepriceof67.4ppsasat29November2023andbasedonanaudited NetAssetValue(‘NAV’)of128.2cpsasat30September2023. Overview Strategic Report Governance Financial Statements Other information (unaudited) Rumilly, France ## Dividends Sustainability We seek to deliver a growing, fully covered dividend. Sustainability is embedded in our investment process, focusing on our three core pillars of People, Planet andPlace. Dividends declared Dividends declared GRESB 4-star rating Number of assets with during the financial year per share specialist sustainability and net zero carbon | €8.9m | 6.66cps | audits in progress | | --- | --- | --- | | (FY22: €16.4m incl. €6.5m | (FY22: 12.25cps incl. 4.85cps | | | special dividend declared) | special dividend declared) | 12 | Read more | Page 42 Read more | Page 20 ## Contents Overview 47 Nominationand 67 Consolidatedand 109 Sustainability Remuneration Committee Company Statements of Performance Measures 02 Performance Summary Report Cash Flows (Social) Strategic Report | | 49 Directors’Remuneration | | 68 NotestotheFinancial | | 111 Sustainability | | | --- | --- | --- | --- | --- | --- | --- | | 06Chairman’sStatement | | Report | | Statements | | Performance Measures | | 10 InvestmentManager’s | 52 StatementofDirectors’ | | | | | (Governance) | Other information Report Responsibilities 112 Streamlined Energy and (unaudited) 20 Sustainability Report 53 IndependentAuditor’s Carbon Report 94 EPRA and Headline 26 BusinessOverview Report to the members 116 AssuranceSummary Performance Measures ofSchroderEuropeanReal Statement 31 Strategic Review (unaudited) EstateInvestmentTrustplc 117 Glossary –Governance 96 AlternativePerformance 118 ExplanationofSpecial Financial Statements Measures(unaudited) Governance Report Business 64 Consolidatedand 97 AIFMD Disclosures 38 Board of Directors 120 NoticeofAnnualGeneral | | | | Company Statements of | | (unaudited) | | | | --- | --- | --- | --- | --- | --- | --- | --- | | 40Directors’Report | | | | | | | Meeting | | | | | Comprehensive Income | 99 Task Force on Climate- | | | | | 44 Audit,ValuationandRisk | | | | | | 122 ExplanatoryNotestothe | | | | | 65 Consolidatedand | | | related Financial | | | | | Committee Report | | | | | | NoticeofMeeting | | | | | Company Statements of | | Disclosures(‘TCFD’) | | | | 46ManagementEngagement | | | | | | 126 ShareholderInformation | | | | | | Financial Position | 102 Sustainability | | | | Committee Report IBC Corporate Information | 66Consolidatedand | | Performance Measures | | --- | --- | --- | | | Company Statements of | (Environmental) | | | ChangesinEquity | (unaudited) | ### 01 Overview # Performance Summary Attractive portfolio income return, modest leverage, competitively re-geared debt facilities and significant cash firepower are positioning the Company well for future growth - Rental indexation, underpinned by low cost fixed-rate debt, boosted EPRA earnings which increased 31% compared to the previous financial year - Successfully re-geared two debt facilities at competitive terms, improving the average debt maturity profile by around 20 months to 2.6 years; average interest cost continues to be low at 2.9%, with 100% either fixed or hedged - Attractive level of sustainable income with a fully covered quarterly dividend of 7.6% on current share price¹ and 4.6% p.a. on current NAV - Maintaining a strong balance sheet with around €29 million available cash and with a prudent LTV of 33% gross of cash and 24% net of cash ¹ Reflects the annualised latest announced quarterly dividend of 1.48 cps/1.28 pps based on a share price of 67.4 pps as at 29 November 2023 and based on an audited Net Asset Value (NAV) of 128.2 cps as at 30 September 2023. Alkmaar, The Netherlands ![img-0.jpeg](img-0.jpeg) Strong rental indexation, exceptional rent collection and high tenant retention - Relatively high yielding underlying property portfolio valued at an average net initial yield of 6.6%. Almost all leases are subject to indexation - Total return of the underlying portfolio was -2.1% and the income return was 6.3% for the 12 months - Maintained a high occupancy level of 97% with an average portfolio lease term to break of 3.9 years and continued 100% rent collection - Contracted rent on a like for like basis (excluding Alkmaar acquisition) increased 5.3% to €16.1 million (30 September 2022: €15.3 million) - Concluded 15 new leases and re-gears generating €1.5 million of contracted rent, at a weighted lease term of 3.6 years - Acquisition of an award winning industrial investment in Alkmaar, the Netherlands in March 2023 with excellent sustainability credentials and an exceptional income profile given the 20 year term, covenant strength and 5.6% net initial yield Strong progress improving sustainability performance as future strategy evolves - Maintained Global Real Estate Sustainability Benchmark ('GRESB') 4-star status - Five assets across the portfolio with BREEAM-in-Use certifications - Sustainability and net zero carbon audits under way for 12 assets across the portfolio - 37% of the portfolio A-C rated as at March 2023 (March 2022: 35%) The attractive portfolio income and pipeline of asset management activity should contribute to continued earnings and dividend growth, further improve the defensive qualities of the portfolio, and enhance returns as the market recovers" Sir Julian Berney Bt. Chairman Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 02 Overview Strategic Report Governance Financial Statements Other Information (unaudited) 03 # **Property performance** | | 30 September 2023 | 30 September 2022 | | --- | --- | --- | | Value of property assets^{1} | €214.1m | €218.7m | | Annualised rental income^{1} | €16.8m | €15.3m | | Estimated market rental value^{1} | €16.0m | €14.7m | | Underlying portfolio total return in the reporting period^{2} | (2.1%) | 6.9% | | Underlying portfolio income return in the reporting period^{2} | 6.3% | 4.1% | # **Financial summary** | | 30 September 2023 | 30 September 2022 | | --- | --- | --- | | NAV | €171.4m | €188.2m | | NAV per ordinary share (euro) | 128.2c | 140.8c | | NAV total return (euro) | (5.0%) | 7.3% | | IFRS (loss)/profit after tax | (€9.4m) | €13.9m | | EPRA earnings^{6} | €8.0m | €6.1m | | Dividend cover^{3} | 89% | 61% | # **Capital values$^{4}$** | | 30 September 2023 | 30 September 2022 | | --- | --- | --- | | Share price | 69.0 pps/ZAR 16.05 | 88.0 pps/ZAR 17.85 | | NAV per share | 111.0 pps/ZAR 25.57 | 123.5 pps/ZAR 24.92 | # **Earnings and dividends$^{5}$** | | 30 September 2023 | 30 September 2022 | | --- | --- | --- | | IFRS earnings per share | (7.0cps) | 10.4cps | | EPRA earnings per share^{4} | 6.0cps | 4.5cps | | Headline earnings per share^{2} | 6.0cps | 4.5cps | | Ordinary dividends declared per share | 6.7cps | 7.4cps | | Special dividends declared per share | – | 4.85cps | # **Bank borrowings** | | 30 September 2023 | 30 September 2022 | | --- | --- | --- | | External bank debt (excluding costs) | €85.5m | €80.7m | | Loan to value ratio based on GAV net of cash/gross of cash | 24%/33% | 20%/29% | # **Ongoing charges$^{4}$** | | 30 September 2023 | 30 September 2022 | | --- | --- | --- | | Ongoing charges (including fund and property expenses) | 2.46% | 2.23% | | Ongoing charges (including fund only expenses) | 3.60% | 3.12% | 1 Excludes the Saville property for which the NAV exposure is nil. 2 These are Alternative Performance Measures ('APMs'). EPRA and Headline earnings are reconciled to IFRS earnings on pages 94 and 95. 3 Dividend cover for the period totalled 89% and 106% for the last six months to 30 September 2023 as a result of the decision to re-base the dividend to a covered approach. 4 Pps refers to pence per share. 5 Cps refers to euro cents per share. 6 Ongoing charges are Alternative Performance Measures ('APMs') calculated in accordance with the AIC recommended methodology as a percentage of the average NAV over a given period. For a definition of this Alternative Performance Measure refer to page 96. Strategic Report ## Strategic ## Report Contents 06 Chairman’sStatement 10 InvestmentManager’sReport 20 Sustainability Report 26 BusinessOverview 31 StrategicReview–Governance Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Houten,TheNetherlands ### 04 Overview Strategic Report Governance Financial Statements Otherinformation(unaudited) ### 05 Strategic Report ## Chairman’sStatement Overview We are today announcing our audited results for the financial year to 30 September 2023, a challenging period given the backdrop of economic andgeopoliticaluncertainty,investors’re-pricingofriskaswellasthe availability and cost of debt. | These factors have resulted in a | Our conservative approach has | | --- | --- | | correction in real estate values, with | enabled us to maintain a robust | | yields deteriorating between 50 and | balance sheet with a modest loan | | 200basispoints(‘bps’),albeitoffset | tovalue(‘LTV’)of24%netofcash. | | byindexation-ledincomegrowth. | Thisprovidesuswiththeflexibility | to commit capital to improve the The increase in government bond Sir Julian Berney Bt. existingportfolio,resolvethe2024 Chairman yields and appeal of other debtexpiriesandtakeadvantage investments has seen a shift in of attractive buying opportunities. investor demand away from real The Investment Manager has estate, substantially impacting successfully re-financed two investment volumes and resulting in loans(GermanofficesandDutch the above-mentioned yield logistics)atmarginsequaltoor deterioration. belowexistingmarginsandisin As a result, our diversified portfolio of positive discussions with lenders 15 investments witnessed a like-for- onre-gearing2024expiries. likevaluationdeclineof8.5%(netof The Company continues to capex)to€214.1million,aresilient exploreseveralsustainability-led performance when benchmarked capitalexpenditureinitiatives againstthewiderUKlistedrealestate and has instructed two specialist peer group. This downward pressure ESGconsultantstoundertake hasbeenmitigatedbythreefactors: sustainability audits and net zero | | 1.theportfolio’sindexation | pathway modelling across the | | --- | --- | --- | | | characteristics underpinning income | majority of the portfolio. The | | | growth; | aspirations are not only to improve | | Performance Summary | | thequalityoftheportfolio,butalso | 2. our focus on Winning Cities such for financial year 2023 to assist in tenant retention and value as Berlin, Hamburg, Stuttgart, enhancement thereby ensuring Frankfurt and Paris, where both the assets remain relevant to the Value of directly held occupierandinvestorliquidity property assets and available occupiers, lenders and investors remainsstrong;and | cash | | who increasingly favour sustainable | | --- | --- | --- | | | 3.ourexposuretohighergrowth | investments. The Investment | | | sectors such as industrial. | Manager’slocaloperational | ## €243.0m expertiseandsustainability In addition, the Company has Net Asset Value (‘NAV’) understanding is increasingly key substantial available cash of c.€29 totenantretention,maximising million,providingtheflexibilityto ## €171.4m occupancy, debt management and manage current headwinds. The driving returns. The result of these valuation movement resulted in a net Share price as at 29 auditsisexpectedintheearlypartof assetvalue(‘NAV’)attheendofthe November 2023 2024, following which the Company financial year of €171.4 million or willprovideanupdateonnextsteps. 128.2eurocentspershare(111.0 ## 67.4pps pencepershare).UnderlyingEPRA We collected 100% of rent due earnings were €8.0 million for the during the period, and portfolio EPRA earnings period, reflecting an increase of 31% occupancy remains strong at 97%, againstthepreviousyear(FY22:€6.1 with c.50 tenants across multiple ## 6.0cps million).Thereremains sectors ensuring income is approximately€1.1millionofpre-tax diversified and resilient. In the Loan to value (net of cash) profit from the Paris, Boulogne- current environment, the portfolio Billancourt(‘ParisBB’)disposaltobe income offers an attractive inflation ## 24% releasedintheNAV. hedge with all leases subject to Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 06 Overview Strategic Report Governance Financial Statements Other information (unaudited) | indexationandc.80%annually | how sustainability-led asset | | --- | --- | | indexed,animportantbenefitof | improvements will deliver enhanced | | Europeanrealestateexposurein | returns for shareholders. | contrastwiththeUK. Thisreflectsourstrongconviction Overall,wecontinuetoseeERV that transforming less sustainable ### A resilient balance sheet, maintaining pace with inflation as a buildings into modern, fit for purpose ### significant cash reserves and result of the allocation to growth assets, will help to deliver enhanced ### sectors and sub-markets that are returns and support the wider real a covered dividend, coupled benefitting from supply constraints estate industry in reaching its net ### withofferinguniqueexposure and competing demands for uses. zero carbon targets. This sustainable ### to a diversified Continental approach will also be beneficial to Following the decision in June to ### our tenants, local communities and European portfolio, underpins rebase the dividend, reflecting the portfolio performance. ### our conviction that the potential impact of higher interest ### costsontheCompany’searnings The portfolio remains diversified, Company continues to be a and more patient capital deployment managed by local sector specialist ### compelling investment strategy,thequarterlydividendhas teams who are recognised for ### proposition” | been maintained at 1.48 euro cents | theiroperationalexcellenceand | | --- | --- | | per share, resulting in the total | hospitalitymindset.Approximately | | dividend declared for the year of | 33% of the portfolio by value is | theshareofthejointventure), 6.66eurocentspershare.Dividend offices, all of which are in supply- representingaLTVnetofcashof cover for the year stood at 89%, constrained locations and leased 24% against the overall gross asset increasingto106%forthelastsix off affordable rents. Our retail value of the Company. months.Annualisingthequarterly exposureof16%comprisesDIY Thislowgearingisanattractive dividend against the current share and grocery investments in densely point of difference relative to other priceof67.4ppsat29November populated urban areas and sectors listedvehicles.TheCompanyhassix 2023 provides an attractive dividend that are performing strongly. During loans secured against individual yieldof7.6%.TheBoardcontinuesto the period, the industrial allocation assets or groups of assets, with no see this as highly appealing in the increased to 29% following cross-collateralisation between current environment particularly theacquisitionofan€11million loans. The average weighted total given the strength of the portfolio, industrial investment in Alkmaar, interest rate of the loans is 2.9% per growthcityexposure,cashposition theNetherlands.Theinvestment annumand100%isfixedorhedged and favourable balance sheet. improves the diversification and against movements in interest rates. qualityoftheportfoliofroma Strategy The weighted average duration of construction, sustainability and theloansis2.6years,withthe Our strategy remains focused on income perspective, particularly earliest loan maturity in March 2024. | delivering shareholders with an | given it is a 20-year sale and | | | --- | --- | --- | | attractive level of income together | leaseback on a strong covenant. | Over the period, two refinancings | | with the potential for income and | 10% of the portfolio is allocated to | were completed on highly | | capital growth through investing in | the alternatives sector, comprising | competitive terms which is | | commercial real estate in | amixed-usedatacentreandacar | testament to the Investment | | Continental Europe. In the Interim | showroom, with the remaining 12% | Manager’sbankingrelationships, | | Report, I highlighted our decision to | in cash. The portfolio maintained | managementexpertiseandportfolio | | maintain a prudent approach, | strong occupancy over the period | strategy.InGermany,therefinancing | | focused on maintaining balance | withallassetsfullyleasedexceptfor | oftheCompany’sofficesin | | sheet strength and improving the | the Saint-Cloud office investment | Hamburg and Stuttgart was | | qualityandliquidityoftheexisting | whichaveragedapproximately | concluded at a margin of 85bps and | | portfolio through active | 85% occupancy over the year. | subject to no covenants. In the | | management and capital investment. | | Netherlands,weswitchedlenders, | Balance sheet and debt | There is a growing consensus that | | resulting in a slight reduction in the | | --- | --- | --- | | there is a meaningful rental and value | Risks around debt management have | margin from 215bps to 200bps. In | | premium for buildings with green | escalated over the year, driven by | both instances, we increased the | | certifications, which we are seeing | the shift in bank lending as lenders | loan principal by c.€4 million each. | | across our own portfolio, and we | become more discerning on the | Thisallowedforthesubsequent | | believe there is an opportunity to | qualityofassets,sectorandthe | repayment of the Rumilly, France | | differentiate our strategy further by | counterparty. At year end, third party | logistics loan and further capacity to | | placing even greater emphasis on | debttotalled€85.5million(including | manage2024expiries. | ### 07 Strategic Report ## Chairman’sStatementcontinued Further detail on the individual loans out a comprehensive review of transaction evidence that supports is provided in the Investment the sustainability characteristics valuations and provides confidence Manager’sReport. of the portfolio encompassing intheCompany’sNAV. building fabric, energy systems, Dividends We retain our conviction in the services and utilities, climate risk strategy and diversified real estate The Board has elected to continue and resilience, water consumption, approach,targetingliquidgrowth withthe1.48eurocpsquarterly waste management, biodiversity cities with a bias towards France and dividend, bringing the total dividend and green infrastructure, transport Germany.Theportfolio’sstrong announced in relation to the financial and mobility, health and wellbeing, occupancy,incomeindexationand yearto6.66eurocentspershare. community and social integration. recent re-financing success support Dividend cover for the period was This analysis will inform a baseline the current dividend, which is now 89%,increasingto106%forthelast scoreacrossarangeofquantitative well covered, and should underpin sixmonths.Thisfollowsthedecision andqualitativefactorsagainst earnings growth for this financial in June to re-base the dividend which we will measure future year and beyond. We will continue to toaquarterlyminimumdividend improvements at an asset level to manage the portfolio conservatively, of 80% of the then current level. enable us to provide transparent maintaining a prudent balance sheet This decision was not taken lightly, reporting to stakeholders. whilst progressing selective capital but as we stated at the time, our investmentintheexistingportfolio Board Succession priority is to protect shareholder or adding attractively priced value over the long term. It provides We recently announced the investment opportunities. significantflexibility,enabling appointment of Mark Beddy to us to pay a covered dividend Finally, as sustainability theBoardfrom1January2024. that can be grown over time. considerations become even more Mark is a former senior audit partner important for investors, lenders and of a leading global accounting firm Sustainability occupiers, we are making good with proven European real estate The Board and the Investment progress evolving our strategy, experience.TheplanisforMark Manager believe that focusing on which we believe should tosucceedJonathanThompson sustainability throughout the real differentiate the Company further attheconclusionoftheAGMin estate lifecycle will deliver enhanced and help to drive more sustainable, March 2024, replacing him as the long-term returns for shareholders long-term returns. We anticipate ChairmanoftheAudit,Valuationand as well as a positive impact to the providing details on this strategy Riskcommittee.Hisexpertiseiswell environment and the communities during the first half of 2024. suited to this role, and we welcome | where the Company is investing. Our | his addition. I would like to take this | | --- | --- | | research and the evidence across | opportunity to thank Jonathan for | | the portfolio demonstrates that | hisworkanddirectionsincethe | | there is a material rental and value | IPOin2015.Wecontinuetolook | | premium for buildings with green | atothercandidatestoimproveand | Sir Julian Berney Bt. certifications. There is increasing diversifytheBoard’sstrategicand Chairman pressure on minimum building governanceexpertise. standards not only from an EPC Outlook 5 December 2023 perspectivebutdatacoverage(for water,gas,electricityandwaste) European economies continue to and ultimately carbon footprint. face headwinds and growth is Demand from occupiers for space expectedtobesubduedforthe is increasingly biased towards short term, particularly given the betterqualitybuildings,driven expectationfortheECBtomaintain not only by legal obligations and its restrictive monetary policy stance tenant environmental aspirations and adverse credit conditions. but as a means to match corporate Although we are seeing inflationary ethos and attract talent. pressures dampen, and despite strong labour markets, the higher Sustainability-led initiatives, which interest rate environment is may include on-site renewable impacting investor sentiment, energy, improved insulation disposable incomes and household and lighting will be increasingly demand. In terms of real estate important to the strategy and the values, we are starting to see Investment Manager is carrying Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 08 Overview Strategic Report Governance Financial Statements Other information (unaudited) Rennes, France ### 09 Strategic Report ## InvestmentManager’sReport ### We continue to have conviction that ### investment with green certification will ### outperformandthatpoorerqualityassetswill ### becomeincreasinglyobsoleteandilliquid.” Thedirectportfolio,netofcapitalexpenditure, Jeff O’Dwyer decreased in value by €18.5 million mainly as a result of Fund Manager ayieldre-ratingoftheunderlyingrealestate. Acquisitioncoststotalling€1.2millionwereincurred Financial Results relatingtotheacquisitionofaDutchindustrialasset Thenetassetvalue(‘NAV’)asat30September2023 inAlkmaar. stoodat€171.4million(£148.7million),or128.2euro HavingcrystallisedmuchoftheprofitfromtheParisBB cents(111pencepershare),comparedwith€188.2 sale last year, an additional €1.5 million of profit was million, or 140.8cps, as at 30 September 2022. releasedintotheNAVthisfinancialyearduetofinal During the period, dividends totalling €7.4 million were development costs remaining significantly below budget. paid,whichresultedinaNAVtotalreturnof-5.0%. Thereremainsapproximately€1.1millionofpre-taxprofit fromtheParisBBdisposaltobereleasedintheNAV. The table below provides an analysis of the movement | inNAVduringthereportingperiodaswellasa | | | | | Non-cashitemsof€0.9millionmainlyresultfrom | | --- | --- | --- | --- | --- | --- | | correspondingreconciliationinthemovementintheNAV | | | | | reduceddeferredtaxesduetolowerrealestate | | euro cents per share. | | | | | portfoliovalues. | | | €m | 1 | cps | 2 | | EPRA earnings for the period totalled €8.0 million, or NAV as at 1 October 2022 188.2 140.8 6.0cps,anincreaseof€1.9millionor31%,ontheprior financialyearof€6.1million.Thisincreasewasdrivenby Unrealised loss in the valuation of the (15.7) (11.7) 3 | realestateportfolio | | | rentalgrowthintheexistingportfolio,apositive | | --- | --- | --- | --- | | | 3 | | contributionfromtheAlkmaarassetacquiredinearly | | Capitalexpenditure | | (2.8) (2.1) | | | | 3 | | 2023andwasunderpinnedbylowcostfixed-ratedebt. | | Transaction costs | | (1.2) (0.9) | | | Paris,Boulogne-Billancourtpost-tax | | 1.5 1.1 | | development profit MovementontheSevilleJVinvestment 0.0 0.0 4 EPRA earnings 8.0 6.0 Non-cash/capitalitems 0.8 0.6 5 Dividends paid (7.4) (5.6) NAV as at 30 September 2023 171.4 128.2 1 Management reviews the performance of the Company principally on aproportionallyconsolidatedbasis.Asaresult,figuresquotedinthis tableincludetheCompany’sshareoftheSevillejointventureon aline-by-linebasis. 2 Basedon133,734,686shares. 3 The unrealised loss in the valuation of the real estate of the portfolio (€15.7m),netofcapitalexpenditure(€2.8m),netoftransactioncosts (€1.2m)reconcilestothe‘net(gain)/lossfromfairvalueadjustmenton investmentproperty’(€19.7m)onpage79ofthefinancialstatements. 4 EPRA earnings as reconciled on page 94 of the financial statements. 5 Dividends of 5.55cps were paid during the financial year. Announced dividendsrelatingtothecurrentfinancialyear,however,were6.66cps withdividendpaymentsforJune2023andSeptember2023quarters areyettobepaidinNovember2023andJanuary2024(i.e.2.96cps areyettobepaid).Formoreinformation,pleaserefertopage42. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 10 Overview Strategic Report Governance Financial Statements Other information (unaudited) ### Our strategy Investment objective Schroder European Real Estate Investment Trust plc (the ‘Company’/‘SEREIT’) aims to provide shareholders with a regular and attractive level of income together with the potential for income and capital growth through investing in commercial real estate in Continental Europe. Investment strategy Thestrategytodeliverthis,andprogressmadeduringtheyearandsinceyearend,issetoutbelow: | 1 | 2 | | --- | --- | | Maximising shareholder value through | Improving the defensive qualities of the | | active asset management | portfolio in light of changing social, | economic and geopolitical risks | 3 | 4 | | --- | --- | | Applying a research-led approach to | Increasing exposure to higher growth | | determine attractive sectors and | Winning Cities and Regions | locations in which to invest in commercial real estate | 5 | 6 | | --- | --- | | Actively managing the Company and its | Advancement of sustainability and net | | assets, drawing on the expertise of our | zero carbon audits across the majority of | | sector specialists to maximise | the portfolio with a view to improving | | shareholder returns and evolve the | asset green certification, rental growth | | Company’s asset management approach | potential and liquidity | that is focused on operational excellence | 7 | 8 | | --- | --- | | Applying our integrated sustainability | Managing the Company prudently and | | and Environmental, Social and | efficiently by controlling costs and | | Governance (‘ESG’) approach at all | maintaining a strong balance sheet | stages of the investment process and asset lifecycle ### 11 Strategic Report ## InvestmentManager’sReportcontinued Portfolio performance Real estate portfolio TheDutchindustrialacquisitionhas increasedtheportfolio’sindustrial Duringthe12months’period,total As at 30 September 2023, the exposureto29%.Otherkey property returns for the underlying portfolio comprised 15 institutional allocations include 33% to offices in property portfolio were negative at grade properties valued at €214.1 leading cities such as Paris, Stuttgart -2.1%, despite healthy property million. In addition, the Company has andHamburgand16%toaBerlin incomereturnsof+6.3%.Thiswas a 50% interest in a joint venture in DIY asset and a convenience retail due to negative property capital Seville, Spain which continues to be centre in Frankfurt. Remaining returnsof-8.0%netofcapexasreal recognised at nil interest and which allocations of 10% are to the estate values decreased over the isthereforeexcludedinallrelevant alternatives sector comprising a period, primarily driven by a 100 statisticsintheChairman’s mixed-usedatacentreandcar basis points outward yield Statement and the Investment showroom and 12% in cash. At the movement, which more than offset Manager’sReport. period end the portfolio void rate the positive impact of rental growth. The portfolio generated rental was 3%, calculated as a percentage The portfolio net initial yield 1 incomeof€16.8 million per annum, of estimated rental value. The increasedto6.6%. | | reflectinganetinitialyieldof6.6%. | portfolio weighted average lease | | --- | --- | --- | | The strongest contributors to | Theindependentvaluers’estimated | length, calculated to the earlier of | | portfolio performance over the last | rentalvalue(‘ERV’)oftheportfoliois | leaseexpiryorbreak,is3.9years. | | 12monthswereVenrayII(17.5% | €16.0millionperannum. | | European leases typically provide for totalreturn‘TR’duetostrong The real estate portfolio is diverse rentstobeindexedtoinflation.The capitalappreciation);Apeldoorn with income from a range of majority(80%)oftheCompany’s (9.8%TRasaresultofverystrong occupiers across different sectors income is subject to annual income);andAlkmaar(5.9%TR and industries. The diversified nature indexationwiththeremaining20% due to income return coupled and the strength of underlying linkedtoahurdle(typically10%), withapositivecapitalreturn). | | tenants, coupled with the fact the | henceweexpectnearlyalltheleases | | --- | --- | --- | | The main detractors from portfolio | assets are typically leased off | to directly benefit from inflation. | | performance were office assets | affordable and sustainable rents, | | | Hamburg(-6.0%TR)andStuttgart | should support relatively resilient | | | (-7.1%TR)andtheindustrialassets | portfolio income in a weaker | | | Rennes(-7.1%TR)andHouten | economic environment and a more | | | (-9.2%)astheseassetswitnessed | challenging period for consumers | | | the largest value declines. | and businesses. | | The real estate portfolio delivered ungeared property returns of 3.7% 1 Represents the annualised contracted rents p.a.overthreeyearsand6.8%p.a. as at 30 September 2023 of the over five years. directportfolio. Evolution by sector by value (%) | 100 | | | 7% | | | | --- | --- | --- | --- | --- | --- | | | 9% | 8% | | | | | | | | | 12% | 12% | 16% 22% 10% 10% 25% 7% 80 29% 17% 16% 21% 18% 60 13% 20% 26% 29% 22% 40 53% 49% 47% 20 33% 35% 33% 0 Q3 2018 Q3 2019 Q3 2020 Q3 2021 Q3 2022* Q3 2023* Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 * PortfolioallocationsexcludetheSevillepropertyforwhichtheNAVexposureisnil. ### 12 Office Industrial/Logistics Retail Other Cash Overview Strategic Report Governance Financial Statements Other information (unaudited) ### At a glance Portfolio Overview ### The Company owns a diversified portfolio of commercial real estate ### inContinentalEuropewithfavourablepropertyfundamentals.The ### CompanyhastargetedassetslocatedinWinningCitiesandRegionsand ### inhigh-growthsectors.WinningCitiesandRegionsarethosethatare ### expectedtogeneratehigherandmoresustainablelevelsofeconomic ### growth,underpinnedbythemessuchasurbanisation,demographics, ### technologyandinfrastructureimprovements. 1 Number of properties No exposure to Eastern Europe | 15 | 7 | | | 3 | | | --- | --- | --- | --- | --- | --- | | | | 14 | 6 | | | | | 11 | | | | 2 | 8, 15 1,2 Portfolio value 9 5 1 ## €243.0m 13 4 1 Number of tenants 10 ## 47 1 Occupancy 12 ## 97% Sector allocation Country allocation ## Top ten properties Value (€m/% | | | | 1,2 | | 12% | | 12% | | --- | --- | --- | --- | --- | --- | --- | --- | | | Property Sector | portfolio) | | | | | | | 1 France,Paris(Saint-Cloud) Office €38.1m/16% | | | | 10% | | 33% | | 32% 2 Germany,Berlin Retail/DIY €28.6m/12% 21% 3 Germany,Hamburg Office €22.9m/9% 16% 4 Germany,Stuttgart Office €19.5m/8% 29% 33% 5 France, Rennes Industrial €18.8m/8% 6 TheNetherlands,Apeldoorn Mixed €15.4m/6% | | Sector | Country | | --- | --- | --- | | 7 TheNetherlands,Alkmaar Industrial €11.5m/5% | Office |  Germany | | 8 TheNetherlands,Venray Industrial €11.1m/5% | Industrial | France | | |  DIYandGrocery |  TheNetherlands | 9 Germany,Frankfurt Retail/Grocery €11.1m/5% Other Cash 10 France, Rumilly Industrial €9.8m/4% Cash Remainingfivepropertiesshownonthemapare: 11 TheNetherlands,Houten–Industrial 12 France, Cannes – Car showroom 13 France,Nantes–Industrial 1 ExcludestheSevillepropertyforwhichtheNAVexposureisnil. 14 TheNetherlands,Utrecht–Industrial 2 Reflects the value of directly held property assets of €214.1m and 15 TheNetherlands,VenrayII–Industrial availablecashof€28.9m(internallycalculated). ### 13 Strategic Report ## InvestmentManager’sReportcontinued Thetablebelowsetsouttheportfolio’stoptentenantsbycontractedrent,whicharefromadiverserangeofindustry 1 segments and represent 70% of the portfolio . Top Ten Tenants Contracted rent WAULT break WAULT expiry Rank Tenant Industry Property (yrs) (yrs)€m % of total 1 KPN Telecom Apeldoorn 3.0 17% 3.3 3.3 2 Hornbach DIY Berlin 1.8 11% 2.3 2.3 3 C-log Logistics Rennes 1.2 7% 7.4 7.4 4 Outscale IT Paris 1.0 6% 5.7 8.8 5 Filassistance Insurance Paris 0.9 6% 0.3 3.3 6 DKL Logistics Venray 0.8 5% 5.0 5.0 7 Cereal Partners Consumer staples Rumilly 0.8 5% 1.6 2.6 8 LandBW Government Stuttgart 0.8 5% 2.8 2.8 9 Schuurman Beheer Manufacturing Alkmaar 0.7 4% 14.5 19.5 10 Inventum Manufacturing Houten 0.7 4% 6.3 6.3 Total top ten tenants 11.7 70% 4.3 5.2 Remaining tenants 5.1 30% 2.8 3.7 Total 16.8 100% 3.9 4.7 1 ExcludestheSevillepropertyforwhichtheNAVexposureisnil. ThelargesttenantisKPN,representing17%oftheportfolio’scontractedrent.KPNarealeadingtelecommunications andITproviderandmarketleaderintheNetherlands.Theyoccupyourmixed-useApeldoornasset(datacentre andoffice). The second largest tenant is Hornbach, the sole occupier of our Berlin DIY asset with a four hectare site that benefits fromalternativeusepotential.Hornbach(presenting11%ofcontractedrents)arealeadingGermany-basedoperatorof Do-it-yourself(‘DIY’)storesandhomecentreswithstrongfinancials. The remaining large tenants, with businesses across a diversified range of industries, each account for between 4%-7%ofportfoliorents.TheseincludeC-log,Outscale,Filassistance,DKL,CerealPartners,Land Badenwürttemberg,SchuurmanBeheerandInventum. Lease Expiry Chart % of income at % of cumulative break (p.a.) income at break 100% 90% 24% 25% 22% 80% 70% 20% 60% 15% 50% 13% 40% 9% 10% 7% 7% 30% 7% 6% 4% 20% 5% 10% 0% 0% 0% 0% 2023 2024 2025 2026 2027 2029 2030 2031 2028 2032 2033+ Break year | | Other | Filassistance | Cereal Partners | Hornbach | Total per year | | --- | --- | --- | --- | --- | --- | | | Land BW | KPN | DKL | Outscale | Cumulative income at break | | | Inventum | C-log Schuurman Beheer | | | “Portfolio Wault” | | Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 | | | | | | ### 14 ## Rent collection update¹ The diversification and granularity of the underlying rental income and ongoing occupier engagement, has again supported full rent collection rates with 100% of the contracted rents collected for the financial year. | As at 30 September 2023 | Office | | Industrial | | Retail | | Mixed | | Total portfolio | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | | Paid | 99.3% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 99.8% | 100.0% | | Deferred | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | | Renegotiated/Outstanding | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | | **Total** | **99.3%** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | **99.8%** | **100.0%** | 1 Rent collection table excludes the Seville property for which the NAV exposure is nil. 2022 refers to the SERBIT 2022 full year period between Q4 2021 and Q5 2022. 2023 refers to the SERBIT 2023 full year period between Q4 2022 to Q5 2023. 2 Payment delayed for one tenant at Paris Saint Cloud for the Q3 2023 period due to a processing error which is being corrected. ## Indexation Across the direct portfolio, almost all of the contracted rents are subject to indexation clauses and all tenants have complied with payments in accordance with their respective indexation clauses. Indexation rules across the portfolio can be summarised as follows: ![img-1.jpeg](img-1.jpeg) Overview Strategic Report Governance Financial Statements Other Information (unaudited) 15 ![img-2.jpeg](img-2.jpeg) Strategic Report ## InvestmentManager’sReportcontinued ## Transaction INDUSTRIAL WAULT ## 20 years Freehold rentable area ## 9,115sqm Alkmaar,TheNetherlands Alkmaar, the Netherlands TheAlkmaarindustrialassetintheNetherlandswas acquiredviaasaleandleasebacktransactionon 16March2023foragrosspriceof€11.15million reflectinganetinitialyieldof5.6%.ThelatestQ32023 valuation is €11.45 million, reflecting a 2.7% uplift to the purchase price. The asset is situated in Alkmaar, an established light industrialanddistributionlocationwithexcellentarterial connectivity including motorway access to Amsterdam andthebroaderRandstadregion;oneoftheNetherlands’ fastest growing regions from a population and manufacturing perspective. Thefreehold,9,115sqmpremisescompriseswarehouse, showroom and office accommodation, together with 48 parking spaces and 10 loading docks. The property, which has won a number of architectural awards for its Alkmaar,TheNetherlands design,hasbeenbuilttoahighstandardwithexcellent sustainability credentials, including on-site renewable energy and an EPC rating of A+. Rationale The asset is 100% occupied by W.A. Schuurman Beheer, an electrical engineering and renewable energy specialist – We have been patient in deploying the proceeds that has been in operation for 100+ years and serves as from the prior Paris BB office disposal to target itsheadquartersandkeydistributionhub.The20-year growth cities and sectors triple net lease, with a break at 15 years, benefits from – Alkmaar was an off-market opportunity that annualindexationwhichissubjecttoasteppedcap. increased our industrial allocation and improved income, covenant and sustainability credentials – The20-yearleaseincreasedtheportfolio’s unexpiredleasetermbyalmosteightmonths – The addition of this investment was instrumental in our ability to refinance the Dutch industrial portfolio at competitive terms Find out more on our website | https://www.schroders.com/en-gb/ uk/individual/funds-and-strategies/investment-trusts/schroder- – Acquiredoffanattractive5.6%netinitialyield Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 european-real-estate-investment-trust/ ### 16 Overview Strategic Report Governance Financial Statements Other information (unaudited) Houten,TheNetherlands Hamburg,Germany Houten, the Netherlands Debt management INDUSTRIAL REFINANCING INITIATIVES Asset overview and performance Portfolio overview and strategy Houten,intheNetherlands,wasacquiredinAugust2018 At the beginning of the current financial year, the for€7.2millionandcomprisesa9,029sqmwarehouse Investment Manager had seven loans across the withancillaryofficeaccommodationona12,100sqm portfolio,threeofwhichwereexpiringduringthe landplotlocated13kmsouthofUtrechtcitycentreinthe currentperiod,reflecting33%oftheloanportfolio. established and popular de Meerpaal business park. The Company successfully navigated these refinancing As at 30 September 2023, the valuation of €9.2 million risks by completing two refinancings on highly reflectedanetinitialyieldof6.5%. competitive terms and repaying the third debt facility. Asset strategy The strategy over the period was to drive value through investing in improving the sustainability credentials of the assetinexchangeforre-gearingtheleasethereby improvingtheunexpiredleasetermandquality ofaccommodation. | Rationale | | Rationale | | | --- | --- | --- | --- | | – Capitalexpenditureofc.€1.6millioninvestedin | | – InGermany,theCompanyrefinanceditsoffices | | | | Q12023toupgradetheHVACsystemand | | inHamburgandStuttgartatamarginof85bps | | | improve the sustainability credentials of the | | and subject to no covenants | buildingbyswitchingexistingfixturestoLED – IntheNetherlands,theCompanyadded lighting, adding solar panels on the roof and unlevered industrial assets and switched lenders, installing an automated building and control system resulting in a reduction in the margin from 215bps – The resulting installation of more efficient systems to 200bps and on-site renewable energy, enhances the – In both instances we increased the loan principal environmental performance of the building, by c.€4 million reducesthetenant’soperatingcostandimproves – Thisallowedforthesubsequentrepaymentof thequalityofspaceforbuildingoccupiers theRumilly,Francelogisticsloan(€3.7million – Inexchangefortheworksundertaken,anew expiredinApril2023)andfurthercapacityto 7.5yearleasewassignedwiththeexistingtenant. manage2024expiries Therentis100%indexedtoCPIwithsuccessive – Refinancingextendedtheportfoliosaverageloan fiveyearextensions maturity by 20 months ### 17 Strategic Report ## InvestmentManager’sReportcontinued Balance sheet wasachievedwithABNAmroon ofcashLTVis33%).Thereisanetof competitive terms and the facility cashLTVcapof35%thatrestricts During the financial year, the wasextendedbyafurther€4.5 concludingnewexternalloansifthe Company successfully completed millionto€13.76millionby Company’snetLTVisabove35%. several initiatives related to its debt adding two unlevered industrial An increase in leverage above 35% portfolio at competitive terms. As a assetsinAlkmaarandVenrayas as a result of valuation decline is result,ithasextendedtheaverage security. The new facility has a excludedfromthiscap.Thecurrent loan maturity by 20 months and has five-year term and the interest blended all-in interest rate is 2.9% established two new funding ratewasfixedatamarginof and the average remaining loan term relationships further complementing 2.0%withall-inrateof5.3%. is2.6years. existingstrongrelationshipswith – A loan facility of €3.7 million financingpartners.Indetail: The Company is in positive secured against the Rumilly asset discussions with lenders regarding – The Company refinanced expiredinApril2023andwas itsdebtexpiriessecuredagainstthe itslargestdebtexpiry,aloan repaid with the additional debt Paris Saint-Cloud and the Rennes secured against its Hamburg raisedfromthenewHamburg/ assets and is confident in its ability to andStuttgartofficeinvestments. Stuttgart loan. refinance these loans. In relation to Theloanfacilitywasalsoextended theParisloanexpiry,management TheCompany’sthirdpartydebt by a further €4 million and have agreed heads of terms with a totals€85.5millionacrosssixloan competitive financing for the new lendertoextendthefinancing. facilities as at 30 September 2023. €18 million loan was obtained Aformalannouncementwillbe This represents a loan to value fromVRBankWesterwald. made once signed. (‘LTV’)netofcashof24%againstthe – RefinancingoftheNetherlands Company’sgrossassetvalue(gross debtexpiryinSeptember2023 The individual loans are detailed in the table below. Each loan is held at the property-owning level instead of the group level and is secured by the individual properties noted in the table. There is no cross-collateralisation between loans. EachloanhasspecificLTVandincomedefaultcovenants.Wedetailtheheadroomagainstthosecovenantsinthe lattertwocolumnsofthetablebelow. Headroom LTV Headroom net default income default Outstanding covenant covenant Lender Property Maturity date principal Interest rate (% decline) (% decline) VRBankWesterwald Stuttgart/Hamburg 30/12/2027 €18.00m 3.80% No covenant No covenant BREDBanquePopulaire Paris(Saint-Cloud) 15/12/2024 €17.0 0m 3M Eur +1.34% 26% 32% DeutschePfandbriefbankAG Berlin/Frankfurt 30/06/2026 €16.50m 1.31% 35% 44% 1 | ABNAmro TheNetherlandsindustrials | | 27/0 9/2028 €13.76m 5.30% 31% 32% | | | | --- | --- | --- | --- | --- | | | 2 | | 3 | | | MünchenerHypothekenbankeG Seville(50%) | | 22/05/2024 €11.68m 1.76% In breach | | In cash trap | Landesbank SAAR Rennes 28/03/2024 €8.60m 3M Eur +1.40% 24% 58% Total €85.54m 1 TheABNAmroloanissecuredagainstfiveoftheNetherlandsindustrialassets:Alkmaar,Venray,Houten,UtrechtandVenrayII. 2 IncludestheCompany’s50%shareofexternaldebtintheSevillejointventureof€11.7millionandexcludesunamortisedfinancecosts. 3 TemporarywaiverforbreachofLTVcovenantinSevilleagreedwiththelender. – At Seville, the loan continues to – TheGerman,DutchandSpanish Details of individual interest be in breach of its loan loansarefixedrateforthe derivativecontractswereasfollows: covenants.Allexcessincome duration of the loan term. – Paris, Saint-Cloud loan with generated by Seville is pledged TheFrenchloansarebasedon BREDBanquePopulaire:two to the lender. The Seville loan is amarginabovethree-month caps totalling the full €17.0 beingmanagedunderanLTV Euribor. millionoftheloanwhichexpire covenant waiver to facilitate a – TheCompanyhasacquired on 15 December 2024 with a sale. The loan is secured solely interest rate caps to limit future strikerateof1.25%;and against the Seville investment, potential interest costs if Euribor – Rennes loan with Landesbank with no recourse back to the were to increase. The combined SAAR:acaptotallingthefull Company or any other entity fair value of the derivative €8.6millionoftheloanwhich withintheGroup. contracts is €0.7 million as at expireson27March2024 30 September 2023. The strike withastrikerateof1%. rates on the interest rate caps are Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 between1.0%p.a.and1.25%p.a. ### 18 Overview Strategic Report Governance Financial Statements Other information (unaudited) Outlook The financial year was characterised by rapid growth in energy prices, persistent inflation, rising interest rates, market volatility and European recession concerns. This led to a shiftawayfromequityinvestments and a sharp correction in real estate values. Despite this, our operational assetmanagementexpertiseand diversified investment strategy centredonliquidgrowthcities hashelpedtoshelterlargevalue erosion. The decision to remain conservative, retaining cash and astrongbalancesheet,together withamovetoacovereddividend approach, has placed the Company inastrongposition. Aswemovethrough2023/24a number of headwinds facing investment markets look to be easing, led largely by inflation and interest rates peaking. We continue to have conviction that investments with green certification will outperformandthatpoorerquality assets will become increasingly obsoleteandilliquid.Assuch,we have commissioned sustainability audits across the majority of the portfolio to identify ways for each investment to remain attractive to occupiers, investors and lenders. The output from these audits over early 2024 will help in our capital deployment, earnings and overall growth potential. We remain committed to the strategy and our ability to position the vehicle to maximiseshareholderreturns. Jeff O’Dwyer Fund Manager 5 December 2023 ### 19 Strategic Report ## Sustainability Report ## Our approach to sustainability ## Our sustainability strategy is delivering operational ## excellenceforoccupiersaswellasdemonstrating ## continued improvements in sustainability performance. ## Keyachievements | Improved 2023 GRESB score of | Completed BREEAM-In-Use | Number of assets with specialist | | --- | --- | --- | | | certifications | sustainability and net zero carbon | | 4-star rating | | audits in progress | | Score of 85 (up from 83 in2022) | 5 assets | | | | One BREEAM-In-Use completed in the | 12 | last reporting year for Stuttgart The Board and the Investment TheInvestmentManager’sreal willbenefittenants’occupational Managerbelievethatfocusingon estate investment strategy, which costs and may support tenant sustainability,andEnvironmental, aims to proactively take action to retention and attraction. In addition, SocialandGovernance(‘ESG’) improve social and environment it will assist in mitigating considerations more generally, outcomes, focuses on the pillars of environmental impacts and help to throughout the real estate ‘People, Planet and Place’ which are future-proof the portfolio against lifecycle, will deliver enhanced referencedtothreecoreUN future legislation. long-term returns for shareholders SustainableDevelopmentGoals This report seeks to present as well as have a positive impact (‘SDGs’):(8)DecentWorkand ourapproachtomanagingESG on the environment and the EconomicGrowth;(13)Climate considerations and performance communities where the Company Actionand(11)SustainableCities against our sustainability objectives. isinvesting.Akeypartofour andCommunities. Asset level initiatives highlighting sustainability strategy is delivering Active management of sustainability ESGinpracticeareusedthroughout operationalexcellencefor performance is a key component of and detailed performance data are occupiers as well as demonstrating responsible asset and building presented with the EPRA sBPR continued improvements in management. Reducing aligned Sustainability Performance sustainability performance. consumption, improving operational Measures sections from page 102. efficiency and delivering higher quality,moresustainablespaces, FurtherinformationontheInvestmentManager’sSustainableInvestmentRealEstatewithImpactapproach,anditsSustainabilityPolicy:RealEstatewith Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Impact, can be found here | https://www.schroderscapital.com/en/global/professional/sustainability-and-impact/our-approach/ ### 20 1 1 EPC performance Increasing number of assets with Portfolio green lease coverage on-site renewables Governance Financial Statements Other information (unaudited)Strategic ReportOverview | 100% | | | 41% | | --- | --- | --- | --- | | | 1,2 | 2 assets with | | | Compliance with regulation | | | By floor area | ## solarPV ## 66% Additional solar PV study being 1,2 EPC coverage undertaken at Berlin Hornbach 1 AsperMarch2023whichisinlinewiththeCompany’sGRESBreportingyear. 2 Partialcoverageat3Frenchand6DutchassetsduetoGRESBEPCcoveragelogicandlimitationofcountryEPCmethodology.ThereisnorecognisedEPC energyassessmentmethodologyfornon-heated/air-conditionedareaswithinbuildings.Industrial/logisticassetstendtobeaffectedthemostwherethe EPCcoversonlytheofficeareawhichexplainswhatcouldoftenbesignificant‘missing’floorareacoverage. ## Environment Social Governance ### Protecting our Supporting people Responsible ### planet. and places. business. Read more on Environment and Read more on Social and ReadmoreonGovernanceand ourinitiatives|Page 22 our initiatives | Page 23 ourinitiatives|Page 24 ### 21 Strategic Report ## Sustainability Report continued ## Environmental Protecting our planet In the real estate sector climate change mitigation actions, such as reducing energy demand and implementingrenewableenergysystems,cancollectivelycontributetoreducingthesector’simpact ontheclimatecrisesbutalsohavethepotentialtoachievewellbeinggainsfromimprovedindoorair qualityandthermalcomfort,reducedfinancialburdenandincreasedproductivity.Acentralfocusof ourrealestateinvestmentstrategyistheresponsetothisbothintermsofresiliencetophysicalimpacts andworkingtoensureresilienceassocietytransitionstoalow-carboneconomy. Performance against objectives Goal March 2023 Outcome Increase use of on-site renewable energy – 2assetswithsolarPV and to source 100% of landlord electricity – 81%oftheCompany’slandlordprocuredelectricitywasonarenewabletariff throughrenewabletariffsby2025 Annual reduction in landlord energy – 6%increaseinlike-for-likelandlordenergyconsumption consumption and associated scope 1 and – 1%increaseinlike-for-likelandlordGHGemissions 2greenhousegas(‘GHG’)emissionsona like-for-like basis Annual reduction in landlord like-for-like – 13% increase in like-for-like landlord water consumption1 water consumption | Send zero waste to landfill and prioritise | – Zero waste directly to landfill | | --- | --- | | waste recycling | – 14%ofwastewasrecycledand86%wasincineratedwithenergyrecovery | | Maintain 100% compliance with EPC | – EPCcoverageis66%2 | | regulations across the portfolio and | – EPCsCandaboveratingis37%(35%inMarch2022) | improve proportion of assets with EPC ratingsCorabove(floorarea) Assess physical climate risk profiles for all Physical climate risk profile determined for all assets using third-party database assets and develop resilience strategies forallrisksidentified Across the portfolio, we have continued to implement a number of initiatives to improve the environmental performanceofourbuildingswhichincludes: – Following installation of smart metering at Utrecht, we have utilised the Healthy Workers sustainability platform to improvemonitoringandanalysisofenergyconsumptionwiththeaimofimprovingthequalityandrobustnessof our whole building consumption data. – SolarPVinstallationatHouten,EVchargingstationsinstalledatApeldoornandLEDupgradesundertakenat Houten,VenrayandVenrayIIovertheyear. – EnergyauditsundertakenacrosstheFrenchsub-portfolioinpreparationforthe2030DécretTertiaire. – OngoingmonitoringofImpact&SustainabilityActionPlans(‘ISAPs’)foreachlandlordmanagedassetincluding measures in Berlin for landscaping, installation of low-flow taps in Paris Saint-Cloud and reviewing options for reducing water usage in Hamburg and Stuttgart. 1 Annual like-for-like performance negatively impacted by impact of Covid-19 on occupancy in previous reporting period 2021. 2 Partialcoverageat3Frenchand6DutchassetsduetoGRESBEPCcoveragelogicandlimitationofcountryEPCmethodology.ThereisnorecognisedEPC energyassessmentmethodologyfornon-heated/air-conditionedareaswithinbuildings.Industrial/logisticassetstendtobeaffectedthemostwherethe Schroder European Real Estate Investment Trust plc Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 EPCcoversonlytheofficeareawhichexplainswhatcouldoftenbesignificant‘missing’floorareacoverage. ### 22 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## Social Supporting people and places In recent years, there has been a growing recognition of the importance of considering social factors in real estateinvestment,asinvestorsseektocreatesustainableandsociallyresponsibleportfolios.Socialfactors, suchasoccupierandcommunitywellbeing,canhaveasignificantimpactonthevalueandsuccessofreal estateinvestments. Performance against objectives Goal March 2023 Outcome Improve proportion of tenant surveys – 67%ofCompanyassets(10outof15buildings) undertaken Improve proportion of assets where occupier – 100%ofCompanyassets(15outof15buildings) engagement activities are implemented Improve proportion of assets where community – 40%ofCompanyassets(6outof15buildings) engagement activities are implemented Improve green lease coverage across the – 41%ofportfoliowithgreenleaseclausesinplace(byfloorarea) portfolio to 100% It is widely reported that people now spend around 90% of their time indoors and so the spaces we create and managehaveasignificantinfluenceoverourphysicalandmentalwellbeing.Equallyimportantinthereturntothe workplacepost-Covidistotheabilitytooffereasyaccesstohighqualityamenities.TheBoardandtheInvestment Manager also recognise that a building is not located in isolation but rather stands as part of its local community. Improving opportunities for interacting with local communities helps create successful places that foster community relationships, contribute to local prosperity, attract building users and, ultimately, lead to better, more resilient investments. Throughout the period, the Investment Manager has continued to implement the following measures acrosstheportfolio: – TenantsatisfactionsurveyssenttooccupiersinBerlin,Houten,VenrayIIandAlkmaartherebybringingthetotal number of assets with tenant satisfaction surveys to 10 buildings. – Ongoingtenantengagementviaregularon-sitemeetings,sharingtheSchrodersTenantSustainabilityGuideand improvedcommunicationofinitiativesacrosstheportfolioincludingESGnewslettersinGermany,placingsignage of building certifications for occupiers and raising awareness on topical issues including the 2023 Earth Hour. – CommunityengagementinitiativesincludeusinglocalcontractorswherepossibleacrosstheGermansub-portfolio thereby prioritising employment within the local community, working with local charities for social integration at Rumilly and improving the parking provision and upgrading the communal outdoor seating area at Utrecht thereby improving safety, accessibility and vibrancy for building users. ### 23 Strategic Report ## Sustainability Report continued Sustainability Report continued ## Governance Responsible Investment TheInvestmentManageroperatesanenvironmentalmanagementsystem(‘EMS’)externallycertifiedin accordancewithISO14001fortheassetmanagementofdirectrealestateinvestmentsacrossEurope.This providestheframeworkforhowsustainabilityprinciples(environmentalandsocial)aremanagedthroughoutall stagesofitsinvestmentprocessandtheInvestmentManagerhasprovidedasuiteoftoolstosupportthedelivery ofsustainabilityconsiderationsatbothassetandportfoliolevelincludinganESGscorecardforacquisitionsand ongoingassetperformancemonitoring,Impact&SustainabilityActionPlans(‘ISAPs’)forstandinginvestments, sustainabledevelopmentbriefforallprojectsandpropertymanagersustainabilityrequirementsforuseinall contractual property manager agreements. TheInvestmentManagercontinuestoworktowardsenhancingitsunderstandingofportfolioassetsustainability credentials,commissioningsustainabilityandnetzerocarbonauditsandcertificationsoverthecourseofthe reportingyearwhichcontributetowardsimprovingourbuildings’holisticsustainabilityperformancewhichwillbe reflectedinindustrybenchmarkingplatformssuchastheGlobalRealEstateSustainabilityBenchmark(‘GRESB’) andmeetingtheCompany’scommitments. Performance against objectives Goal March 2023 Outcome ImproveGRESBrating – 4-starstatus(improvedscoreto85,previously83) – Fourth in peer group of eight Increase coverage of sustainability and net zero – 12 third-party audits currently in progress carbon audits across portfolio Improvecoverageandqualityofsustainability – FiveassetswithBREEAM-In-Usecertifications(includingoneBREEAM-In-Use certifications(e.g.BREEAM)acrossportfolio completedinthelastreportingyearforStuttgart) – Strongfocusonsustainabilitythroughouttheinvestmentprocessincludingacquisitions,annualfundstrategy, assetbusinessplansandadoptionofproprietaryESGScorecardandsustainabilityandNZCaudits(wherefeasible) toensurearobustandconsistentapproachtosustainabilityperformanceanalysisandmonitoringatassetand portfolio level. – The Company continues to strengthen its landlord-tenant relationships through leveraging off the Investment Manager’shospitalitymindsetandoperationalexcellencewhichincludesregulardiscussionswithtenants,raising awarenessofESGmattersandsustainabilitychampionsrepresentedthroughouttheinvestmentandasset management teams responsible for ensuring the continuous integration of sustainability considerations inday-to-dayactivities. – ExpandedRealEstateSustainabilityteamcomprisingfivededicatedpersonnelincludingtheHeadofSustainability andImpactInvestmentalongwithspecialistsinEnergyandNetZeroCarbon,ClimateandSocialImpactwhoare responsible for setting and developing the sustainability and impact investment ambitions, processes and working with the Investment Manager to support the delivery of the programme. – The independent SEREIT board oversees the performance of the investments and the implementation of theinvestmentstrategy,policyandobjectiveoftheInvestmentManager. Schroder European Real Estate Investment Trust plc Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 24 Overview Strategic Report Governance Financial Statements Other information (unaudited) Industry Engagement The Investment Manager is a Slavery and Human Trafficking member of several industry bodies Statement Schroders supports, and includingtheEuropeanPublicReal collaborates with, several industry TheCompanyisnotrequiredto EstateAssociation(‘EPRA’),INREV groups, organisations and initiatives produce a statement on slavery and (‘EuropeanAssociationforInvestors includingtheUnitedNationsGlobal human trafficking pursuant to the inNon-ListedRealEstateVehicles’), Compact,UnitedNationsPrinciples Modern Slavery Act 2015 as it does British Council for Offices and the ofResponsibleInvestment(‘UNPRI’) not satisfy all the relevant triggers British Property Federation. In 2017 andNetZeroAssetManager’s underthatActthatrequiredsuch becameamemberoftheBetter Initiative(ofwhichitisafounding astatement. Buildings Partnership and a Fund member).Furtherdetailsof ManagerMemberofGlobalReal The Investment Manager to the Schroders’industryinvolvementand Estate Sustainability Benchmark Company, is part of Schroders plc compliancewithUNPRIarelistedat (‘GRESB’)ofwhichtheCompanyhas and whose statement on Slavery and pages 55 of Schroders 2022 Annual participated in the annual real estate Human Trafficking has been SustainableInvestmentReporthere: survey for the past seven years. published in accordance with the https://publications.schroders.com/ Modern Slavery Act 2015. view/119863317/. Schroders’SlaveryandHuman Trafficking Statement can be found here:https://www.schroders.com/ en/sustainability/corporate- responsibility/slavery-and-human- trafficking-statement/. ## Sustainability and ## Net Zero Carbon (‘NZC’) Audits Following a global tender process, ItaimstointegrateESG Process the Investment Manager has considerations throughout Each audit comprises a desktop selected and engaged two the full asset lifecycle and analysis and site inspection in externalproviderstocarryout ownership with scoring order to identify the current sustainabilityandNZCauditsfor improving as asset sustainability condition of the asset and twelve assets across the portfolio. measures are undertaken. potential improvement Sustainability Audit scope NZC Audit scope opportunities(includingexpected capitalexpenditurerequired). | The audit is aligned to the | In depth analysis of real estate | | | --- | --- | --- | | InvestmentManager’sproprietary | assets’energyandcarbon | This ongoing audit programme | | ESGScorecard(andvalidated | performance. It aims to provide | will help the portfolio to | | byanexternalsustainability | accurate modelling and specific | identify intervention points | | specialist).Itscoresassets | recommendations in the form | to significantly improve the | | between1to5(5beingbest) | of costed energy conservation | underlying sustainability | | based on 11 key thematic weighted | measures(‘ECMs’1)toachieveNet | credentials of the portfolio in | | areas including energy and | Zero Carbon by 2050 at the latest | ordertodrivevalueandliquidity. | | carbon;climateriskandresilience; | for each asset. The clear report | | The results of these audits biodiversity;transportand outputs will assist in informing will be key to business plans, mobility;healthandwellbeing; asset managers in their asset capital allocation and strategy. communityandsocialintegration; business plans going forward. and building certifications. 1 Anenergyconservationmeasures(‘ECM’)is an intervention action employed to improve the energy performance of a building. The objectiveofECM’sapplicationistoreduce the amount of energy used in buildings by a particular process, technology or installation. ### 25 Strategic Report ## Business Overview ### ThefollowingpagessetouttheCompany’sstrategyfordelivering ### theinvestmentobjective(setoutonpage11),thebusinessmodel, ### the risks involved, and how the Board manages and mitigates those ### risks.ItalsodetailstheCompany’spurpose,valuesandculture,how ### it interacts with shareholders, and its approach to sustainability. Company summary The terms of the appointment Investment strategy and objectives are described more completely DetailsoftheCompany’sinvestment SEREIT invests in European growth intheDirectors’Report.The objective may be found on page 11 citiesandregions.ItisaUKclosed- Investment Manager also promotes anddetailsoftheCompany’s ended real estate investment the Company using its sales and investment strategy may be found company incorporated on 9 January marketing teams. The Board on pages 7 and 11. 2015. The Company has a premium and the Investment Manager listingontheOfficialListoftheUK Diversification and asset allocation work together to deliver the Listing Authority and its shares have Company’sinvestmentobjective, The Board believes that in order to been trading on the Main Market of as demonstrated by the diagram maximisethestabilityofthe theLondonStockExchange(ticker: onthenextpage.Theinvestment Company’sincomeandvalue,the SERE)since9December2015.It and promotion processes set out in optimal strategy for the Company is also has a secondary listing on the the diagram are described in more to invest in a portfolio of institutional Main Board of the Johannesburg detail over the following pages. grade income-producing assets StockExchange(ticker:SCD). diversified by location, use, asset Investment size, lease duration and tenant Business model concentration with low vacancy Investment policy The Board has appointed the rates and creditworthy tenants. The The Company owns a diversified Investment Manager, Schroder Real value of any individual asset at the portfolio of commercial real Estate Investment Management dateofitsacquisitionmaynot estate in Continental Europe with Limited, to implement the exceed20%ofgrossassets. good property fundamentals. investment strategy and to manage The Company may invest From time to time the Board may theCompany’sassetsinlinewiththe directly in real estate assets also impose limits on sector, location appropriate restrictions placed on it (bothlistedandunlisted)or and tenant types together with other by the Board, set out on page 28. through investment in special activity such as development. purpose vehicles, partnerships, trusts or other structures. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Berlin,Germany ### 26 Overview Strategic Report Governance Financial Statements Other information (unaudited) Promotion • Marketing and sales capability of the Investment Manager Strategy • Provision of liquidity through share • Set objectives, issuance strategy and KPIs • Support from the • Appoint Investment corporate broker Competitiveness Board Manager and other with secondary service providers to market intervention • Board is focused on • Responsible for achieve objectives to assist discount ensuring that the: overall strategy and management oversight including • Oversee portfolio Investor value • Fees and ongoing risk management management charges remain • Oversee the use competitive; and • Activities centred on the creation of of gearing Investment • Vehicle remains shareholder value Manager attractive to • Oversee discount management investors • Investment Manager • Oversee increase in implements the the Company’s size investment strategy and the provision by following an of liquidity through investment process share issuance • Support by strong research and risk environment • Regular reporting and interaction with theBoard | Borrowings | groupofassetsshallnotexceed | borrowing, provided total gearing | | --- | --- | --- | | The Company utilises gearing | 25%oftheCompany’sgrossassets | oftheCompanydoesnotexceed | | with the objective of improving | in order to ensure that investment | 35%LTVoverall.Highergearing | | shareholder returns. Borrowings are | risk remains suitably spread. | will only be considered against | | non-recourse and secured against | | individual assets or groups of assets | The Board determines the individual assets or groups of assets if the Board considers the particular appropriate level and structure and, at the time of borrowing, gross characteristics of those assets would of gearing for individual assets or debt(netofcash)shallnotexceed be suitable for higher gearing. groups of assets on a deal-by-deal 35%oftheCompany’sgrossassets. basis, and gearing against individual Where borrowings are secured assets or groups of assets may against a group of assets, such exceed35%LTVatthetimeof ### 27 Strategic Report ## Business Overview continued Interest rate exposure and listed closed-ended investment advertising in the trade press, currency hedging funds which themselves have maintaining relationships with stated investment policies to invest financial journalists and the provision ItistheBoard’spolicytominimise no more than 15% of their gross ofdigitalinformationonSchroders’ interest rate risk, either by ensuring assets in other listed closed-ended website. The Board also seeks active thatborrowingsareonafixed investment funds. Further, the engagement with investors and rate basis, or through the use of Company will not itself invest more meetings with the Chairman are interestrateswaps/derivatives than 15% of its gross assets in other offered to professional investors used solely for hedging purposes. listed closed-ended investment where appropriate. The Company does not currently funds. If the Company invests in Key performance indicators intend to take any currency hedging other companies or closed-ended in respect of the capital value of investment funds, which in turn The Board measures the its portfolio of investments, but invest in a portfolio of investments, development and success of the may choose to do so if the Board the Company will ensure that Company’sbusinessthrough considers it appropriate in the future. the policies and objectives of the achievementoftheCompany’s investee conform to the principal investmentobjective:toprovide The Board has concluded that, objectives of the Company. shareholders with a regular and based on the current cost of attractive level of income together currency hedging, the Company Promotion with the potential for income and will not hedge dividend payments The Company promotes its shares to capital growth through investing in in currencies other than euro. a broad range of investors, including commercial real estate in The Board will continue to discretionary wealth managers, Continental Europe. keep this under review. private investors, financial advisers This is considered to be the most Investment restrictions and and institutions, which have the significant key performance spread of investment risk potential to be long-term supporters indicator for the Company. The of the investment strategy. The Company invests and manages Board regularly reviews its ability to its assets with the objective of The Company seeks to achieve this maintain the level of the dividend spreading risk and in accordance through its Investment Manager and and regularly considers asset with its published investment policy. corporate broker, which promote the valuations and any movements. The Company ensures that the shares of the Company through Comment on performance against objective of spreading risk has been regular contact with both current the investment objective can be achieved by seeking to diversify and potential shareholders. foundintheChairman’sStatement. its portfolio of assets by location, These activities consist of investor The Board continues to review the use, size, lease duration and tenant lunches, one-on-one meetings, Company’songoingchargesto concentration. The properties in the regional roadshows and attendances ensure that the total costs incurred Company’sportfoliodescribedin at conferences for professional by shareholders in the running of theInvestmentManager’sReport investors.Inaddition,theCompany’s the Company remain competitive demonstrate how the objective of shares are supported by the when measured against peer group spreading risk has been achieved. | | InvestmentManager’swider | funds.AnanalysisoftheCompany’s | | --- | --- | --- | | The Company will not invest more | marketing of investment companies | costs, including management | | than 10% of its gross assets in other | targeted at all types of investors. | fees,Directors’feesandgeneral | | listed closed-ended investment | This includes maintaining close | expenses,issubmittedtoeach | | funds,exceptthatthisrestriction | relationships with adviser and | Board meeting. The management | | shall not apply to investments in | execution-onlyplatforms, | fee is reviewed at least annually. | Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 28 Overview Strategic Report Governance Financial Statements Other information (unaudited) Purpose, value and culture TheCompany’sinvestmentobjectiveandpurposeissetoutonpage11.TheCompany’scultureisdrivenbyitsvalues: – Responsibility–recognisingtheimportanceoftheCompany’sroleassteward,ESGconsiderationsareintegrated into the investment process to the benefit of a range of stakeholders including shareholders, tenants and local communities. – Rigour–high-qualityresearchanddetailedanalysisformthebasisofallinvestmentdecisions. – Relationships–buildinglong-termrelationshipswiththeCompany’sserviceproviders,inawaythatencourages collaborationandfostersdeepunderstandingoftheCompany’sbusiness,isapriorityfortheCompany. As the Company acts through its service providers, its culture is represented by the values and behaviour oftheBoardandthirdpartiestowhichitdelegates.TheBoardaimstofulfiltheCompany’sinvestment objective by encouraging a culture of constructive challenge with all key suppliers and openness with all stakeholders.TheBoardisresponsibleforembeddingtheCompany’scultureintheCompany‘soperations. TheBoardrecognisestheCompany’sresponsibilitieswithrespecttocorporateandsocialresponsibilityand engageswithitsserviceproviderstosafeguardtheCompany’sinterests.Aspartofthisongoingmonitoring,the Directorsreceivereportingfromserviceprovidersonmatterssuchastheiranti-briberyandcorruptionpolicies; ModernSlaveryAct2015statements;diversitypolicies;andgreenhousegasandenergyusagereporting.The ManagementEngagementCommitteereviewstheCompany’sserviceproviders.Itsreportisonpage46. Corporate and social responsibility Board composition and diversity As at 30 September 2023, the Board comprised three men and one woman. The biography of each of these Directors is set out on pages 38 and 39 of the report. The Board considers each of the Directors to be independent. The Board has adopted a diversity and inclusion policy. The Board recognises that its debates and decision-making are greatlyenrichedbyawiderrangeofperspectivesandthinking,fosteredbydiversityofexperienceandknowledge, social and ethnic backgrounds, gender, and cognitive and personal strengths. It will encourage any recruitment agencies it engages to find a diverse range of candidates that meet the objective criteria agreed for each appointment. Appointments will always be based on merit alone. Candidates for Board vacancies are selected based on their skillsandexperience,whicharematchedagainstthebalanceofskillsandexperienceoftheoverallBoardtaking into account the criteria for the role being offered. There have been no changes to the Board during the year. Implementation of diversity policy TheBoardhasreportedagainsttheFCA’sListingRules(LR9.8.6R(9)(a)inrelationtodiversitywhichrequiresthat: (i) atleast40%ofindividualsontheboardarewomen; (ii) atleastoneoftheseniorboardpositionsisheldbyawoman;and (iii)atleastoneindividualontheboardisfromaminorityethnicbackground. TheFCAdefinesseniorboardpositionsasChairman,ChiefExecutiveOfficer(‘CEO’),ChiefFinancialOfficer(‘CFO’) orSeniorIndependentDirector(‘SID’).Asaninvestmenttrustwithnoexecutiveofficers,theCompanyhasnoCEOor CFO.TheBoardhasreflectedtheseniorpositionoftheChairmaninitsdiversitytablesonthenextpage. ### 29 Strategic Report ## Business Overview continued TheBoardhaschosentoalignitsdiversityreportingreferencedatewiththeCompany’sfinancialyearendand proposes to maintain this alignment for future reporting periods. As at 30 September 2023, the Company did not meettheexpectedtargets.TheBoardfullysupportsallformsofdiversity,includinggenderandethnicdiversity,and has adopted a diversity and inclusion policy. Whilst the Directors are all independent and have a diverse range of views andexperiences,theBoardisconsciousthatitssmallcompositionwillmakethesetargetschallengingtofully implement. Recognising the benefits of a diverse Board, it is intended that improving diversity will continue to be a key factorwhentheBoardmakesitsnextappointment. The data is set out in the tables below. There have been no changes since 30 September 2023 to the date of publication of the Annual Report and Accounts. Table for reporting on gender Number of Number of Percentage of senior positions Boardmembers theBoard on theBoard Listing Rules target Men 3 75% 1 Women should make up at least Women 1 25% – 40% of the board and hold at least Other – – – one of the senior positions Notspecified/prefernottosay – – – Table for reporting on ethnic background Number of | | | Number of | | Percentage of | | senior positions | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Boardmembers | | | | theBoard | | on theBoard Listing Rules target | | White British or other White | | | 4 100% 1 | | | | | (includingminority-whitegroups) At least one member of the board MixedMultipleEthnicGroups – – – should be from an ethnic minority backgroundexcludingwhiteethnic Asian/AsianBritish – – – groups(assetoutincategories Black/African/Caribbean/BlackBritish – – – usedbytheOfficeforNational Other ethnic group, including Arab – – – Statistics) Notspecified/prefernottosay – – – Financial crime policy The Company continues to be committed to carrying out its business fairly, honestly and openly operates a financial crimepolicy(availableontheCompany’swebsite),coveringbriberyandcorruption,taxevasion,moneylaundering, terroristfinancingandsanctions,aswellasseekingconfirmationsthattheCompany’sserviceproviders’policiesare operating soundly. Relations with shareholders Shareholder relations are given high priority by both the Board and the Investment Manager. The Company communicates with shareholders through its web pages, the Annual and Half Year Reports, and regular market communicationswhichaimtoprovideshareholderswithaclearunderstandingoftheCompany’sactivitiesand its results. In addition to the engagement and meetings held during the year, the Chairmen of the Board and itsCommitteesattendtheAGMandareavailabletorespondtoqueriesandconcernsfromshareholders. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 30 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## StrategicReview–Governance Stakeholder engagement, section 172 of the Companies Act 2006 Directors take their responsibilities under section 172 of the Companies Act seriously and are committed to engaging withand,understandingtheviewsof,theCompany’sstakeholdersandtotakingthoseviewsintoaccountinthe Board’sdecision-makingprocess. The table below outlines this engagement and the impact on decision-making where appropriate, and cross-refers to the decisions made by the Board during the year, detailed elsewhere in this report. Stakeholder Stakeholder considerations, engagement and key decisions Shareholders Without investors, who are willing to commit capital in return for a regular and attractive level of income together with the potential for income and capital growth aspertheCompany’sinvestmentobjectiveandpurpose,theCompanywould notexist. The Company welcomes attendance and participation from shareholders at the AnnualGeneralMeeting.Thiswillprovideanopportunityforshareholdersto engage with the Board and the Investment Manager. The annual and half-year resultspresentationsareavailableontheCompany’swebsite,withresultsandkey updates announced via a regulatory news service. The Directors receive regular updates on the shareholder register, any trading activity and feedback received from investor meetings held by the Investment Manager and the corporate broker. The Board is responsible for discount and premium management, and is alert to thevalueshareholdersplaceonmaintainingaslowalevelofdiscountvolatility aspossible. Asdetailedin‘Promotion’onpage28and‘Relationswithshareholders’onpage30, the Company engages with its shareholders. The Board considered feedback by shareholders when declaring four interim dividends in respect of the year ended 30September2023.TheDirectorsconsideredthelong-termconsequencesof payingupfromtheCompany’sdistributablereserves,notedthefinancialposition of the Company, and determined that the payment of the four interim dividends was in the best interests of its stakeholders. Fromanassetacquisitionperspective,duringtheyear,theBoardapprovedthe InvestmentManager’srecommendationinrelationtotheacquisitionofaDutch industrialassetAlkmaar.TheBoardconsideredthatthisacquisitionwoulddiversify andstrengthentheCompany’sexposuretogrowthregionsandsectorstothe benefitofallstakeholders.FurtherdetailissetoutintheInvestmentManager’s Report on pages 10 to 19. The Investment Manager The Board maintains a constructive and collaborative relationship with the Investment Manager, encouraging open discussion. The Board invites the Investment Manager to attend all Board and certain Committee meetings and receives regular reports on the performance of the investments and the implementation of the investment strategy, policy and objective. The portfolio activities undertaken by the Investment Manager and the impact of decisions affecting investment performance are set out in the Investment Manager’sReviewonpages10to19. The Management Engagement Committee reviews the performance of the Investment Manager, its remuneration and the discharge of its contractual obligations at least annually. ### 31 Strategic Report ## StrategicReview–Governancecontinued Stakeholder Stakeholder considerations, engagement and key decisions Other service providers Asanexternallymanagedinvestmenttrust,theBoardisreliantonserviceproviders who have a direct working or contractual relationship with the Company. This includes,butisnotlimitedto,theDepositary,corporatebrokerandtaxadvisers. The Board maintains regular contact with its key service providers, both at the Board and Committee meetings, and through ad hoc communication throughout the year. The need to foster business relationships with key service providers is centraltotheDirectors’decision-makingastheBoardofanexternallymanaged investmenttrust.Theeffectofsuchengagement,totheextentrelevant,isdetailed intheChairman’sStatement;InvestmentManager’sReport;Audit,Valuationand RiskCommitteeReport;andManagementEngagementCommitteeReport. During the year, the Management Engagement Committee undertook reviews of the third-party service providers and agreed that their continued appointment remained in the best interests of the Company and its Shareholders. In this respect, the Committee periodically reviews the market rates for services received, to ensurethattheCompanycontinuestoreceivehighqualityserviceatacompetitive cost.Subsequenttoareviewduringtheyear,Ernst&YoungLLPwasappointedas thenewAuditorinMarch2023andPanmureGordon(UK)Limitedasthenew corporate broker in October 2023. During the year, Directors attended a meeting to assess the internal controls of certainserviceprovidersincludingtheCompany’sDepositary,LanghamHall,itsUK Registrar,Equiniti,andSchrodersGroupInternalAudit.Thesemeetingsenablethe Board to conduct due diligence on operations and IT risks amongst service providers;andtoreceiveup-to-dateinformationchangesinregulationandmarket practice in the industry. The Company’s lenders BorrowingallowstheCompany’sshareholderstoincreaseexposuretoWinning CitiesandRegions,andmaximisereturnsinfavourablemarketsatalowcost.They have a financial interest in the success of the Company. The Board is responsible forensuringthattheCompanyadherestoallexistingloancovenants.TheBoard has continued to worked closely with its lenders during the year, particularly in relationtotheSevilleasset,whichisbeingmanagedunderanLTVcovenantwaiver to facilitate sale. In addition, the Investment Manager has successfully refinanced twoloans(GermanofficesandDutchlogistics)atmarginsequaltoorbelow existingmarginsandisindiscussionsonre-gearing2024expiries. Occupiers The Company has a diverse range of tenants occupying space across the portfolio. This includes businesses that operate out of our office or industrial space, and the retailers and shoppers who work at or visit our retail properties. Active and constant engagement with occupiers, either directly by the Investment Manager or through property managers or agents, provides intelligence as to what is important to them. Understanding changing needs, both at an individual company level, as well as on a sectoral and broader economic level, is a key tenet informing both individual asset management decisions as well as the longer-term strategicdirectionoftheCompany. Local communities and the Our assets are located across Continental Europe in a range of urban environments. The buildings and their occupiers are part of the fabric of local communities. The environment Company is committed to using resources such as energy, water and materials in a sustainablemannerforthepreventionofGHGandthemitigationofclimate change. TheBoardexpectstheInvestmentManagertoengagewithlocalcommunities, councilsandindividuals,andthattheCompany’sassetstrategiesaresensitiveto theuniqueheritageofeachlocationandtakeintoaccountenvironmental considerations.FurtherinformationontheInvestmentManager’sapproachto these matters is set out in the Sustainability Report on pages 20 to 25. Inlightoftheoutsourcedbusinessmodel(setoutfurtherintheDirectors’Reporton pages40and41),theimpactoftheCompany’soperationsonoccupiers,local communities and the environment is through the delivery of its service providers, in particular,theInvestmentManager(inthisrespectseefurthertheSustainability Reportatpages20to25). Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 32 Overview Strategic Report Governance Financial Statements Other information (unaudited) Principal risks and control in place, this can provide The Board keeps these matters uncertainties only reasonable, and not absolute, under review, particularly in assurance against material financial connection with its decisions The Board is responsible for misstatement or loss and is designed to redeploy investable cash. theCompany’ssystemofrisk to manage, not eliminate, risk. | management and internal control, | | During the year, the Board has | | --- | --- | --- | | and for reviewing its effectiveness. | From an emerging risks and | redefined certain of its principal | | The Board has adopted a detailed | uncertainties perspective, the Board | risks, especially the emerging risk | | matrixofprincipalrisksaffecting | recognises and continues to be | relating to the sustainability and | | theCompany’sbusinessasan | mindful of the changing global | ESGcredentialsoftheportfolio | | investment trust and has established | environment and the risks posed by | as its sustainability becomes a | | associated policies and processes | volatilemarkets;inflationand | greater focus for the Company. | | designed to manage and, where | corresponding interest rate | The Board no longer considers | | possible, mitigate those risks, which | increases;geopoliticaluncertainty; | Covid-19 to be a principal risk | | aremonitoredbytheAudit,Valuation | structuralchanges;sustainability; | as the property markets have | | and Risk Committee on an ongoing | and occupier preferences which | adapted to the threats posed. The | | basis. This system assists the Board | could affect the use and prospects | previously identified principal risk | | indeterminingthenatureandextent | of some real estate sectors. The | of‘Accounting,legalandregulatory | | of the risks it is willing to take in | Board receives regular updates on | (includingtax)’hasnowbeen | | achievingtheCompany’sstrategic | those macro risks from the | consolidated into a single principal | | objectives. Both the principal | Investment Manager. Overall, the | risk,‘Regulatorycompliance’. | | risks and the monitoring system | diversificationoftheCompany’s | | A summary of the principal risks and are also subject to robust review portfolio and its evolving strategy to uncertainties faced by the Company, at least annually. The last review place greater emphasis on and actions taken by the Board to tookplaceinNovember2023. sustainability-led asset manage and mitigate these risks and improvementsisexpectedtohelp Although the Board believes that it uncertainties, are set out below. minimise the impact of these factors. has a robust framework of internal Principal risks Mitigation of risk Investment and strategy TheBoardseekstomitigatetheserisksby: An inappropriate investment strategy, – Diversification of its property portfolio through its investment restrictions and guidelines or failure to implement the strategy, which are monitored and reported on by the Investment Manager. could lead to underperformance in – Receiving from the Investment Manager timely and accurate management information the property portfolio compared to including performance data, attribution analysis, property level business plans and the property market generally by financial projections. incorrect sector or geographic – Monitoring the implementation and results of the investment process with the Investment weightings or a loss of income Manager with a separate meeting devoted to strategy each year. through tenant failure, both of which – Determining a borrowing policy, and ensuring the Investment Manager operates within its could lead to a fall in the value of the borrowing restrictions and guidelines. underlying portfolio. – Reviewing marketing and distribution activity, and considering the use of a discount control mechanism as necessary. – Undertaking an annual review of the ongoing suitability of the Investment Manager. Economic and property market The Board considers economic conditions and the uncertainty around political events when The performance of the Company considering investment decisions. The Board mitigates property market risk through the could be affected by economic, reviewoftheCompany’sstrategyonaregularbasisanddiscussionsareheldtoensurethe currency and property market risk. In strategy is still appropriate or if it needs updating. Diversification of the majority of the the wider economy this could include portfolioacrosstheofficeandindustrial/logisticssectorsingrowthcities,andfocuson inflation, stagflation or deflation functional and affordable space, provides defensive characteristics. (includinginrespectofcostssuchas construction costs and operating Theportfolioalsobenefitsfromahighpercentage(approximately100%)ofinflation-linked expenses),economicrecessions, leases which contributes to rental growth and mitigates value declines. movementsinforeignexchangeand interestratesorotherexternal The assets of the Company are almost all denominated in non-sterling currencies, shocks. The performance of the predominantlytheeuro.Nocurrencyhedgingisplanned,buttheBoardcontinuestoconsider underlying property portfolio could the hedging of dividend payments having regard to availability and cost. also be affected by structural or cyclical factors impacting particular sectors(forexample,retail)orregions of the property market and counterparty solvency. ### 33 Strategic Report ## StrategicReview–Governancecontinued Principal risks Mitigation of risk Sustainability TheManager’sInvestmentCommitteehasacontinuedfocusonsustainabilitytohelpensure Sustainability considerations, sustainabilityandimpact(‘S&I’)risksandopportunitiesareappropriatelyintegratedin including transition risks and physical investment decision-making through the whole asset life cycle. As part of the sustainability risks(asdefinedbytheTaskForceon review, the Investment Manager has commissioned sustainability audits to benchmark the Climate-related Financial Disclosures assets against a scorecard. This seeks to assess physical and transition climate risks alongside a (‘TCFD’),explainedfurtheronpages rangeofotherS&Ifactors,includingforexamplenaturalresourcemanagement,indoor 99to101oftheseaccounts),arenot environmentalqualityandaccesstocommunityfacilities,todevelopaholisticunderstandingof fully considered or properly the sustainability credentials of prospective investments. Each asset scorecard is to be updated understoodintheacquisitionand annually to demonstrate score progress and evaluate any changes to the sustainability risk asset-planning processes leading to profile. Impact and Sustainability Action Plans are completed for all directly managed assets in futureissues(negativeeffecton order to plan and manage sustainability interventions identified through the scorecard. price, valuation or saleability of assets, future costs to remediate, The Board regularly reviews the objectives and progress of the Sustainability programme. meetingtherequirementsof initiativessuchasNetZeroCarbon/ The Investment Manager is in the final stage of successfully transitioning to Deepki, a new ClimateRisk/BREEAM/EPCprofile/ sustainability data management platform, designed to better understand and drive GRESB). sustainability performance through enhanced data analytics. Deepki will be the main system usedforcollatingsustainabilitydatafortheCompany’sportfoliowhichisthenreportedto the Manager, Board and investors. Furthermore, the Board is provided with independent, third-party assurance over the reportedsustainabilityperformancedatadisclosedinannualreportsandotherexternal submissions(e.g.GRESB),whichisdeliveredbyanexternalverificationspecialist. Valuation Externalvaluersprovideindependentvaluationofallassetsatleastquarterly.TheAudit, Property valuations are inherently ValuationandRiskCommitteeincludestwoexperiencedcharteredsurveyors.Membersof subjective and uncertain, due to the theAudit,ValuationandRiskCommitteemeetwiththeexternalvaluerstodiscussthebasis individual nature of each property oftheirvaluationsandtheirqualitycontrolprocessesonaquarterlybasis. anditsliquidity,particularlyunder stressed market conditions. Valuationsalsoincludeannual reinstatement costs for insurance purposes. Inflation and availability of goods and services, could heighten the risk around correct reinstatement values and completion programmes. Gearing and leverage Gearing,includingcovenantcompliance,ismonitoredatquarterlyBoardmeetings,andad The Company utilises credit facilities. hocasrequired,andstrictrestrictionsonborrowingsareimposedbothinternallyandby These arrangements increase the lenders. The overall cost of debt is regularly reviewed with any new debt or refinancing funds available for investment presented to the Schroders Real Estate Investment Committee and Board for approval. through borrowing. While this has the potential to enhance investment Allloansduetoexpireinthe2023financialyearwereeithersuccessfullyrefinancedingood returns in rising markets, in falling time or were repaid. All future loan refinancings are monitored closely and proactive markets the impact and availability of discussionswiththird-partylenderscommencewellinadvanceofexistingloanmaturity financing could be detrimental to datestoreducerefinancingrisk.Furthermore,theGroup’sstrongcashpositioncontinuesto performance, and may also result in provideviablefuturealternativesshouldtheGroupdeemthatloanrepayments,inpartorin potential non-compliance with loan full, would be beneficial. covenants or refinancing risk. In relation to the Seville asset, the Company is working closely with the lender to manage the assetunderanLTVcovenantbreachwaivertofacilitateasale.Theloanissecuredonlybythe assetandthereisnorecoursetotheCompany,oranyotherentityintheGroup. Regulatory compliance The Board has appointed the Investment Manager as its Alternative Investment Fund Manager The Company has to comply with a (‘AIFM’)inaccordancewiththeAlternativeInvestmentFundManagersDirective(‘AIFMD’). wide range of legislation and regulations, covering planning, health TheInvestmentManagermonitorslegalrequirementstoensurethatadequateprocedures and safety, Company law, accounting, andremindersareinplacetomeettheCompany’slegalrequirementsandobligations.The reporting,taxandListingRules. Investment Manager undertakes full legal due diligence with advisers when transacting and managingtheCompany’sassets.AllcontractsenteredintobytheCompanyarereviewedby theCompany’slegalandotheradvisers. TheBoardissatisfiedthattheInvestmentManagerhasadequateproceduresinplaceto ensurecontinuedcompliancewiththeregulatoryrequirementsoftheFinancialConduct Authority,theListingRulesoftheLondonStockExchangeandanyotherrequiredauthority. TheInvestmentManagerhasretainedexternaltaxadvisers,whoareoverseenbythe Schroderstaxteam,toensurecompliancewithrelevantlocaltaxregulations. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 34 Overview Strategic Report Governance Financial Statements Other information (unaudited) Risk assessment and The Board conducted this review These metrics are subject to a internal controls over a five-year time horizon sensitivity analysis which involves commencing from the date of this flexinganumberofthemain Risk assessment includes report which is selected to match assumptions including macro- consideration of the scope and the period over which the Board economic scenarios, delivery qualityofthesystemsofinternal monitors and reviews its financial of specific asset management control operating within key performance and forecasting. The initiatives, rental growth and service providers, and ensures Investment Manager prepares five- void/relettingassumptions.The regular communication of the year total return forecasts for the Board also reviews assumptions results of monitoring by such Continental European commercial regarding capital recycling and the providerstotheAudit,Valuation real estate market. The Investment Company’sabilitytorefinanceor and Risk Committee, including the Manager uses these forecasts extendfinancingfacilities.Steps incidence of significant control aspartofanalysingacquisition which are taken to mitigate these failings or weaknesses that have opportunities as well as for its risks as set out in the Strategic been identified at any time and annual asset level business planning Review on pages 33 and 34 theextenttowhichtheyhave process. The Board receives an are also taken into account. resulted in unforeseen outcomes overview of the asset level business or contingencies that may have a Based on the assessment, and having plans which the Investment Manager materialimpactontheCompany’s considered in detail base and uses to assess the performance performance or condition. downside scenarios modelling, the of the underlying portfolio and Directors have concluded that there Nosignificantcontrolfailings therefore make investment decisions isareasonableexpectationthatthe or weaknesses were identified such as disposals and investing Company will be able to continue in fromtheAudit,Valuationand capitalexpenditure.TheCompany’s operation and meet its liabilities as RiskCommittee’songoingrisk principal borrowings are for a they fall due over the five-year assessment which has been in weighteddurationof2.6yearsand period of their assessment. | place throughout the financial year | theaverageunexpiredleaseterm, | | | --- | --- | --- | | and up to the date of this report. | assuming all tenants vacate at the | Going concern | | The Board is satisfied that it has | earliest opportunity, is 3.9 years. | | The Board believes it is appropriate undertaken a detailed review of TheBoard’sassessmentofviability to adopt the going concern basis in the risks facing the Company. | | considers the principal risks and | preparing the financial statements. | | --- | --- | --- | | A full analysis of the financial risks | uncertainties faced by the Company, | Acomprehensivegoingconcern | | facing the Company and its | as detailed in the Strategic Review | statement setting out the reasons | | subsidiaries is set out in note 22 on | on pages 33 and 34, which could | the Board considers this to be the | | pages 88 to 90. | negatively impact its ability to deliver | caseissetoutinnote1onpage68. | the investment objective, strategy, Viability statement By order of the Board liquidityandsolvency.Thisincludes consideration of scenario stress TheBoardisrequiredtogivea testing and a cash flow model statementontheCompany’sviability Sir Julian Berney Bt. prepared by the Investment whichconsiderstheCompany’s Chairman Manager that analyses the current position and principal risks 5 December 2023 sustainabilityoftheCompany’scash and uncertainties together with an flows, dividend cover, compliance assessment of future prospects. with bank covenants, general liquidityrequirementsandpotential legal and regulatory change for a five-year period. ### 35 Governance ## Governance ## Report Contents 38 Board of Directors 40 Directors’Report 44 Audit,ValuationandRiskCommitteeReport 46 ManagementEngagementCommitteeReport 47 NominationandRemunerationCommitteeReport 49 Directors’RemunerationReport 52 StatementofDirectors’Responsibilities 53 IndependentAuditor’sReporttothemembersof Schroder European Real Estate Investment Trust plc Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Hamburg,Germany ### 36 Strategic Report Financial Statements Other information (unaudited)Overview Governance ### 37 Governance ## Board of Directors No Director has any entitlement to pensions and the Company has not awarded any share options or long-term performance incentives to any of them. No element of Directors’ remuneration is performance-related. There were no payments to Directors for loss of office. NoDirectorhasaservice contract with the Company. However, each of the Directors Sir Julian Berney Bt. Mr Mark Patterson Mr Jonathan Thompson Ms Elizabeth Edwards has a letter of appointment with IndependentNon-ExecutiveChairman IndependentNon-ExecutiveDirector IndependentNon-ExecutiveDirector IndependentNon-ExecutiveDirector theCompany.TheDirectors’ letters of appointment, which Length of service set out the terms of their appointments, are available for Eight years – appointed as a Director Eight years – appointed as a Director Eight years – appointed as a Director on Three years – appointed as a Director on inspectionattheCompany’s andChairmanon6November2015 on 29 October 2015 29 October 2015 1November2020 registered office address during normal business hours and will Biography be available for inspection at Aged71,hasover40years’real Aged69,isaninternationalbanker Aged65,isthenon-executivechairman Aged66,iscurrentlythesenior theAGM. estateexperience.Duringthisperiod withover30years’experiencein of the Argent group of real estate independent director of CLS Holdings AsnotedintheChairman’s he has worked on property investment banking and strategic regeneration, development and plc as well as being a member of the Statement, Mark Beddy has investmentportfoliosintheUK, planning. He is presently an investment businesses. He is also a audit and nominations committee. She is been appointed as a Director Scandinavia, and Continental Europe. operating partner with Corsair non-executivedirectorandchairofthe a Trustee of Refuge and a member of with effect from 1 January 2024. In recent years he has assisted Capital and was formerly with auditcommitteeatPhoenixSpree audit committee, also a Trustee of the Jonathan Thompson will step Cityhold,partoftheNational Standard Chartered Bank where he DeutschlandPLC,non-executivedeputy Central School of Ballet, where she is downattheAGMinMarch PensionFundofSweden,toacquire was responsible for the development chair and chair of the audit and risk also a member of the audit committee. A 2024 and be succeeded by and manage its property investment andexecutionofStandard committeeatTheGovernmentProperty chartered surveyor by background and a MarkBeddyasAudit,Valuation portfoliointheUKandContinental Chartered’sinorganicgrowth Agency and is an independent member Fellow of the Royal Institution of and Risk Chairman. | Europe. Formerly he was a director at | strategy, where he led a number of | of the investment advisory board to three | Chartered Surveyors, she has worked in | | --- | --- | --- | --- | | BNPParibasRealEstateInvestment | thebank’sacquisitionsand | family wealth funds. He is a past | commercial property investment both in | | Management with responsibilities to | investmentsaswellasitsownequity | chairman of the Investment Property | theUKandEuropesince1980,witha | | its European fund and with Aberdeen | fundraisings. He previously held | Forum and a past board member of the | focus on lending. | | Property Investors to develop its | senior investment banking positions | British Property Federation. An | | Committee membership property funds. A large part of his withAustraliaandNewZealand accountant by background, he spent 32 Audit,ValuationandRisk;Management career was at Jones Lang LaSalle Bank, and with Deutsche Bank. He yearsatKPMGincluding12yearsaschair Engagement;andNominationand where he was an international graduatedfromOxfordUniversity, ofKPMG’sInternationalRealEstateand Remuneration Committees director and held a number of senior qualifiedasasolicitorandworked Construction practice. He is a member of Current remuneration appointments including chairman with Slaughter and May prior to his the Institute of Chartered Accountants £40,000perannum of the Scandinavian businesses, move into banking. and an Honorary Fellow of the Royal adirectoroftheEuropeanbusiness Institution of Chartered Surveyors. Material interests in any contract Committee membership team, and a member of the European which is significant to the Company’s Audit,ValuationandRisk; Committee membership Capital Markets board. He is a business ManagementEngagement; Audit,ValuationandRisk;Management Fellow of the Royal Institution of None andNominationandRemuneration Engagement;andNominationand Chartered Surveyors. Shared directorships with any other Committees(Chairman RemunerationCommittees(Chairmanof Committee membership of the Management theAudit,ValuationandRiskCommittee) Director of the Company Audit,ValuationandRisk; EngagementCommittee) None Current remuneration ManagementEngagement; Current remuneration £45,000perannum andNominationandRemuneration £40,000perannum Material interests in any contract Committees(Chairmanof Material interests in any contract which is significant to the Company’s theNominationand which is significant to the business RemunerationCommittee) Company’s business None Current remuneration None Shared directorships with any other £50,000perannum Shared directorships with any Director of the Company Material interests in any contract other Director of the Company None which is significant to the None Company’s business None Shared directorships with any other Director of the Company None Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 38 Overview Strategic Report Governance Financial Statements Other information (unaudited) Sir Julian Berney Bt. Mr Mark Patterson Mr Jonathan Thompson Ms Elizabeth Edwards IndependentNon-ExecutiveChairman IndependentNon-ExecutiveDirector IndependentNon-ExecutiveDirector IndependentNon-ExecutiveDirector Length of service Eight years – appointed as a Director Eight years – appointed as a Director Eight years – appointed as a Director on Three years – appointed as a Director on andChairmanon6November2015 on 29 October 2015 29 October 2015 1November2020 Biography | Aged71,hasover40years’real | Aged69,isaninternationalbanker | Aged65,isthenon-executivechairman | Aged66,iscurrentlythesenior | | --- | --- | --- | --- | | estateexperience.Duringthisperiod | withover30years’experiencein | of the Argent group of real estate | independent director of CLS Holdings | | he has worked on property | investment banking and strategic | regeneration, development and | plc as well as being a member of the | | investmentportfoliosintheUK, | planning. He is presently an | investment businesses. He is also a | audit and nominations committee. She is | | Scandinavia, and Continental Europe. | operating partner with Corsair | non-executivedirectorandchairofthe | a Trustee of Refuge and a member of | | In recent years he has assisted | Capital and was formerly with | auditcommitteeatPhoenixSpree | audit committee, also a Trustee of the | | Cityhold,partoftheNational | Standard Chartered Bank where he | DeutschlandPLC,non-executivedeputy | Central School of Ballet, where she is | | PensionFundofSweden,toacquire | was responsible for the development | chair and chair of the audit and risk | also a member of the audit committee. A | | and manage its property investment | andexecutionofStandard | committeeatTheGovernmentProperty | chartered surveyor by background and a | | portfoliointheUKandContinental | Chartered’sinorganicgrowth | Agency and is an independent member | Fellow of the Royal Institution of | | Europe. Formerly he was a director at | strategy, where he led a number of | of the investment advisory board to three | Chartered Surveyors, she has worked in | | BNPParibasRealEstateInvestment | thebank’sacquisitionsand | family wealth funds. He is a past | commercial property investment both in | | Management with responsibilities to | investmentsaswellasitsownequity | chairman of the Investment Property | theUKandEuropesince1980,witha | | its European fund and with Aberdeen | fundraisings. He previously held | Forum and a past board member of the | focus on lending. | | Property Investors to develop its | senior investment banking positions | British Property Federation. An | | Committee membership property funds. A large part of his withAustraliaandNewZealand accountant by background, he spent 32 Audit,ValuationandRisk;Management career was at Jones Lang LaSalle Bank, and with Deutsche Bank. He yearsatKPMGincluding12yearsaschair Engagement;andNominationand where he was an international graduatedfromOxfordUniversity, ofKPMG’sInternationalRealEstateand Remuneration Committees director and held a number of senior qualifiedasasolicitorandworked Construction practice. He is a member of Current remuneration appointments including chairman with Slaughter and May prior to his the Institute of Chartered Accountants £40,000perannum of the Scandinavian businesses, move into banking. and an Honorary Fellow of the Royal adirectoroftheEuropeanbusiness Institution of Chartered Surveyors. Material interests in any contract Committee membership team, and a member of the European which is significant to the Company’s Audit,ValuationandRisk; Committee membership Capital Markets board. He is a business ManagementEngagement; Audit,ValuationandRisk;Management Fellow of the Royal Institution of None andNominationandRemuneration Engagement;andNominationand Chartered Surveyors. Shared directorships with any other Committees(Chairman RemunerationCommittees(Chairmanof Committee membership of the Management theAudit,ValuationandRiskCommittee) Director of the Company Audit,ValuationandRisk; EngagementCommittee) None Current remuneration ManagementEngagement; Current remuneration £45,000perannum andNominationandRemuneration £40,000perannum Material interests in any contract Committees(Chairmanof Material interests in any contract which is significant to the Company’s theNominationand which is significant to the business RemunerationCommittee) Company’s business None Current remuneration None Shared directorships with any other £50,000perannum Shared directorships with any Director of the Company Material interests in any contract other Director of the Company None which is significant to the None Company’s business None Shared directorships with any other Director of the Company None ### 39 Governance ## Directors’Report The Directors submit their report and the audited Company and services provided by third parties. In consolidated financial statements of the Company and its addition, a strategy meeting is held each year. Additional subsidiaries(together,the‘Group’)fortheyearended meetingsoftheBoardarearrangedasrequired. 30 September 2023. TheBoardhasapprovedapolicyonDirectors’conflicts ofinterest.Underthispolicy,Directorsarerequiredto Directors and officers disclose all actual and potential conflicts of interest to the Chairman Board as they arise for consideration and approval. The TheChairmanisanindependentnon-executiveDirector Board may impose restrictions or refuse to authorise such who is responsible for leadership of the Board and conflicts if deemed appropriate. ensuring its effectiveness in all aspects of its role. The Committees Chairman’sothersignificantcommitmentsaredetailed In order to assist the Board in fulfilling its governance on page 38. He has no conflicting relationships. responsibilities, it has delegated certain functions to Company Secretary Committees. The roles and responsibilities of these Schroder Investment Management Limited provides Committees, together with details of work undertaken company secretarial support to the Board and is duringtheyearunderreview,areoutlinedoverthenext responsible for assisting the Chairman with Board few pages. meetings and advising the Board with respect to ThereportsoftheAudit,ValuationandRiskCommittee, governance.Shareholderswishingtolodgequestionsin ManagementEngagementCommittee,andNomination advanceoftheAGMareinvitedtodosobywritingtothe and Remuneration Committee are incorporated into, and Company Secretary at the address given on the inside formpartof,theDirectors’Report. back cover. Key service providers Role and operation of the Board The Board of four Directors, listed on pages 38 and 39, is The Board has adopted an outsourced business model theCompany’sgoverningbody;itsetstheCompany’s andhasappointedthefollowingkeyserviceproviders: strategy and is collectively responsible to shareholders Investment Manager for its long-term success. The Board is responsible for The Company is an Alternative Investment Fund as appointingandsubsequentlymonitoringtheactivitiesof defined by the Alternative Investment Fund Managers the Investment Manager and other service providers to Directive and has appointed the Investment Manager to ensure that the investment objective of the Company provide investment and asset management services to continues to be met. The Board also ensures that the the Company and its subsidiaries, and to act as its Investment Manager adheres to the investment alternativeinvestmentfundmanager(‘AIFM’)in restrictions set by the Board and acts within the accordance with the terms of an Investment parameters set by it in respect of any gearing. Management Agreement. The Investment Management A formal schedule of matters specifically reserved for Agreement, which is governed by the laws of England decision by the Board has been defined and a procedure and Wales, can be terminated by either party on 12 adopted for Directors, in the furtherance of their duties, months’noticeoronimmediatenoticeintheeventof totakeindependentprofessionaladviceattheexpense certain breaches or the insolvency of either party. of the Company. The Investment Manager is authorised and regulated by The Chairman ensures that all Directors receive relevant theFinancialConductAuthority(‘FCA’)andprovides management, regulatory and financial information in a portfolio management, risk management, accounting timely manner and that they are provided, on a regular and company secretarial services to the Company under basis,withkeyinformationontheCompany’spolicies, the Investment Management Agreement. The Investment regulatoryrequirementsandinternalcontrols.The Manager also provides general marketing support for the Boardreceivesandconsidersreportsregularlyfrom Company and manages relationships with key investors, theInvestmentManagerandotherkeyadvisers;and in conjunction with the Chairman, other Board members adhocreportsandinformationaresuppliedtothe or the corporate brokers as appropriate. The Investment Boardasrequired. Manager has delegated fund accounting and company secretarial services to another wholly owned subsidiary Four Board meetings are usually scheduled each year to of Schroders plc, Schroder Investment Management dealwithmattersincluding:thesettingandmonitoringof Limited. The Investment Manager has in place investmentstrategy;potentialacquisitionsanddisposals; appropriate professional indemnity cover. approvalofborrowings;reviewofinvestment performance;thelevelofdiscountoftheCompany’s sharestounderlyingNAVpershare;promotionofthe Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 40 The Schroders Group (being Schroders plc and its subsidiaries, including the Investment Manager) manages £724.3 billion (as at 30 September 2023) on behalf of institutional and retail investors, financial institutions and high net worth clients from around the world, invested in a broad range of asset classes across equities, fixed income, multi-asset and alternatives. The Investment Manager is entitled to a fee at the rate of 1% of the EPRA (European Public Real Estate Association) NAV of the Group per annum where the EPRA NAV of the Group is less than or equal to £500 million. To the extent that the EPRA NAV of the Group is greater than £500 million, the rate to be applied to such excess shall instead be 1.0% of the EPRA NAV, in each case, exclusive of VAT. The management fee payable in respect of the year ended 30 September 2023 amounted to €1,981,000 (2022: €2,198,000). During the year ended 30 September 2023, the Investment Manager was entitled to receive a fee for secretarial and accounting services provided to the Company. Details of all amounts payable to the Investment Manager are set out in note 5 on page 75. The Board has reviewed the performance of the Investment Manager during the year under review and continues to consider that it has the appropriate capabilities required to allow the Company to achieve its investment objective, and believes that the continuing appointment of the Investment Manager is in the best interest of shareholders as a whole. #### Depository Langham Hall UK Depository LLP, which is authorised and regulated by the FCA, carries out certain duties of a Depository specified in the AIFM Directive including, in relation to the Company, as follows: - safekeeping of the assets of the Company which are entrusted to it; - monitoring of the Company's cash flows; and - oversight of the Company and the Investment Manager. The Company, the Investment Manager or the Depository may terminate the Depository Agreement at any time by giving to the other parties not less than three months' written notice. The Depository may only be removed from office when a new Depository is appointed by the Company. #### Compliance with the AIC Code of Corporate Governance The Board of the Company has considered the principles and provisions of the AIC Code of Corporate Governance, as published in February 2019 (the 'AIC Code'). The AIC Code addresses the principles and provisions set out in the UK Corporate Governance Code (the 'UK Code'), as well as setting out additional provisions on issues that are of specific relevance to the Company. The Board considers that reporting against the principles and provisions of the AIC Code, which has been endorsed by the Financial Reporting Council, provides more relevant information to shareholders. The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adopts the principles and provisions set out in the UK Code to make them relevant for investment companies. The UK Code is available from the Financial Reporting Council's website at www.frc.org.uk. The FCA requires all UK listed companies to disclose how they have complied with the provisions of the UK Code. This statement, together with the Statement of Directors' Responsibilities set out on page 52 and the viability and going concern statements set out on page 35 indicate how the Company has complied with the principles of good governance of the UK Code and its requirements on internal control. The Strategic Report and Directors' Report provide further details on the Company's internal controls (including risk management), governance and diversity policies. The Company has complied with the principles and provisions of the AIC Code, save for the provision relating to the appointment of a senior independent director ('SID'), where departure from the Code is considered appropriate given the Company's position as an investment company. As the Board comprises entirely non-executive Directors, the appointment of a SID has not been considered necessary. However, the Chairman of the Audit, Valuation and Risk Committee effectively acts as the Senior Independent Director, leads the evaluation of the performance of the Chairman and is available to Directors and/or shareholders if they have concerns which cannot be resolved through discussion with the Chairman. Also, the Nomination and Remuneration Committee is responsible for reviewing Directors' remuneration and, accordingly, there is no separate Remuneration Committee. Overview Strategic Report Governance Financial Statements Other information (unaudited) 41 Governance ## Directors’Reportcontinued Dividend and dividend policy Financial risk management DetailsoftheCompany’sfinancialriskmanagement Having already declared and paid interim dividends objectivesandexposuretoriskcanbefoundinnote22 amounting to 5.18 euro cents per share, the Board has onpages86to90. declared a fourth interim dividend of 1.48 euro cents per share for the year ended 30 September 2023 which will Share capital and substantial share interests be payable on 25 January 2024 to shareholders on the Register on 29 December 2023. Thus, dividends As at the date of this report, the Company had declared in respect of the year ended 30 September 133,734,686ordinarysharesof10penceeachinissue. 2023amountto6.66eurocents(2022:12.25euro Nosharesareheldintreasury.Accordingly,thetotal cents)pershare. number of voting rights in the Company at the date of signingthisreportis133,734,686.Therehavebeenno The Company targets to deliver a growing, fully covered changestotheCompany’ssharecapitalduringtheyear dividend.InlinewiththeBoard’spolicy,itisexpected under review. thatinterimdividendsontheCompany’sordinaryshares willcontinuetobedeclaredandpaidquarterly. There are no restrictions on voting rights and no restrictions concerning the transfer of shares in the Other required Directors’ Report disclosures Companyexceptthatcertainrestrictionsmayfrom under laws, regulations and the Code timetotimebeimposedbylawsandregulations(for example,insidertradinglaws).Therearenospecialrights Status with regard to control attached to securities and no The Company carries on business as an investment trust. agreements between holders of securities regarding Its shares are listed and admitted to trading on the premium theirtransferknowntotheCompany;andnoagreements segment of the Main Market of the London Stock to which the Company is a party that might change or Exchange.ItalsohasasecondarylistingontheMain fall away on a change of control or trigger any BoardofJohannesburgStockExchangeLimited((JSE). compensatory payments for Directors, following The Company has been approved by HM Revenue and asuccessfultakeoverbid. Customs as an investment trust in accordance with section1158oftheCorporationTaxAct2010,bywayof The Company has received notifications in accordance a one-off application and it is intended that the Company withtheFCA’sDisclosureGuidanceandTransparency will continue to conduct its affairs in a manner which will Rule 5.1.2R of the below interests in 3% or more of enable it to retain this status. thevotingrightsattachingtotheCompany’sissued sharecapital: TheCompanyisdomiciledintheUKandisaninvestment Number of company within the meaning of section 833 of the ordinary shares | CompaniesAct2006.TheCompanyisnotaclose | | as at | Percentage of | | | --- | --- | --- | --- | --- | | companyfortaxationpurposes. | 30 September | | total voting | | | | | 2023 | | rights | It is not intended that the Company should have a limited Truffle Asset Management 13,374,389 10.001 life, and the Articles of Association do not contain any Pty Limited provisions for review of the future of the Company at Schroders plc 10,750,000 8.04 specified intervals. Rathbones Investment 8,100,226 6.062 As at the date of this report, the Company had 18 ManagementLimited/ Investec Wealth and subsidiaries, details of which are set out in note 15 on Investment Limited page 82, and a branch in France. | | Close Asset Management | 6,775,921 5.07 | | --- | --- | --- | | Listing Rule disclosure | Limited | | | The Company confirms that there are no items which | Wesleyan Assurance Society 4,042,500 3.02 | | requiredisclosureunderListingRule9.8.4Rinrespectof 1 The Board is aware that, since the last notification made to the Company the year ended 30 September 2023. inMarch2016,theinvestor’spercentageoftotalvotingrightshasfallen below 3%. Information included in Strategic Report 2 Ownership includes the combined Rathbones and Investec Wealth interests which were merged on 21 September 2023. TheCompany’sdisclosuresonfuturedevelopmentsand carbon emissions are included in the Strategic Report on There have been no notified changes to the holdings set pages 20 and 25 respectively. out above as at the date of this report. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 42 Overview Strategic Report Governance Financial Statements Other information (unaudited) Provision of information to the Auditor Directors’ and officers’ liability insurance and indemnity The Directors at the date of approval of this report Directors’andofficers’liabilityinsurancecoverhas confirm that, as far as each of them is aware, there is been in place for the Directors throughout the year. norelevantauditinformationofwhichtheCompany’s TheCompany’sArticlesofAssociationprovide,subject Auditorisunaware;andeachDirectorhastakenallthe totheprovisionsofUKlegislation,anindemnityfor steps that he ought to have taken as a Director in order Directors in respect of costs which they may incur tomakehimselfawareofanyrelevantauditinformation relating to the defence of any proceedings brought andtoestablishthattheCompany’sAuditorisaware against them arising out of their positions as Directors, ofthatinformation. inwhichtheyareacquittedorjudgementisgivenin theirfavourbytheCourt.Thisindemnitywasinplace Directors’ attendance at meetings throughout the year under review and to the date of this ThenumberofquarterlymeetingsoftheBoardandits report.Thisisaqualifyingthird-partyindemnityandwas Committees held during the financial year and the in place throughout the year under review for each attendance of individual Directors is shown below. Director and to the date of this report. Whenever possible all Directors attend the Annual Streamlined Energy and Carbon Reporting GeneralMeeting. Streamlined Energy and Carbon Reporting disclosures, Audit, Nomination Valuation and and Management includingdetailsoftheCompany’sgreenhousegas Risk Remuneration Engagement emissions, are set out in the Streamlined Energy and Board Committee Committee Committee Carbon Report on pages 102 to 115. Sir Julian 4/4 4/5 1/1 1/1 Berney Bt. By order of the Board (Chairman) Jonathan 4/4 5/5 1/1 1/1 Thompson Schroder Investment Management Limited Company Secretary | Mark | 4/4 5/5 1/1 1/1 | | | --- | --- | --- | | Patterson | | 5 December 2023 | | Elizabeth | 4/4 5/5 1/1 1/1 | | Edwards In addition to the above meetings, the Board met several times on an ad hoc basis during the year to discuss mattersastheyarose,includingpotentialacquisitions and to hold a strategy meeting. In addition, the NominationandRemunerationCommitteealsomet twice during the year to consider recruitment matters. ### 43 Governance ## Audit,ValuationandRiskCommitteeReport The responsibilities and work carried out by the Audit, The Committee met five times during the year ended ValuationandRiskCommitteeduringtheyearunderreview 30 September 2023. Committee meetings are attended are set out in the following report. The duties and by all members. The Committee discharged its responsibilities of the Committee, which include responsibilitiesby: monitoringtheintegrityoftheCompany’sfinancial – reviewing the property valuations prepared by reporting and internal controls, may be found in the terms KnightFrankLLP; ofreferencewhicharesetoutontheCompany’sweb – undertakinganAuditTenderandselectinganewAuditor; pages at www.schroders.co.uk/sereit. All Directors are – consideringitstermsofreference; members of the Committee. Jonathan Thompson is the – reviewing the Half Year and Annual Report and Accounts Chairman of the Committee. The Chairman of the Board is andrelatedauditplansandengagementletters; a member of the Committee, and was independent on – reviewingenvironmental,socialandgovernance(‘ESG’) appointment. The Board has satisfied itself that at least one matters; oftheCommittee’smembershasrecentandrelevant – reviewingtheindependenceoftheAuditor; financialexperienceandthattheCommitteeasawhole – evaluatingtheAuditor’sperformance;and has competence relevant to the sector in which the – reviewing the principal risks faced by the Company and Company operates. the internal controls system. Annual Report and financial statements DuringitsreviewoftheCompany’sfinancialstatementsfortheyearended30September2023,theAudit,Valuation and Risk Committee considered the following significant issues, including principal risks and uncertainties in light of theCompany’sactivities,andissuescommunicatedbytheAuditorduringitsreporting: Matter Action Property valuation TheAudit,ValuationandRiskCommitteereviewedtheoutcomesofthevaluationprocessthroughout Property valuation is theyearanddiscussedthedetailofeachquarterlyvaluationwiththeInvestmentManageratthe central to the business and Committee meetings. is a significant area of TheAudit,ValuationandRiskCommitteemetwithKnightFrankLLPeachquarteroutsidetheformal judgement. Although meeting structure to discuss the process, assumptions, independence and communication with the valued by an independent Investment Manager. As this is the main area of audit focus, the Auditor contacts the valuers directly and firmofvaluers,Knight independentlyoftheInvestmentManager.TheAudit,ValuationandRiskCommitteereceivesdetailed Frank LLP, the valuation is verbal and written reports from the Auditor on this matter as part of their half year and year end inherently subjective. reportingtotheAudit,ValuationandRiskCommittee. Errors in valuation could Onthebasisoftheabove,theAudit,ValuationandRiskCommitteeconcludedthatthevaluationswere have a material impact on suitable for inclusion in the financial statements. theGroup’sNAV. Overall accuracy of ConsiderationofthedraftHalfYearandAnnualReportandAccountsandtheletterfromtheInvestment the Half Year Manager in support of the letter of representation to the Auditor. Specific matters considered in relation andAnnual Report and to the Half Year Report and Accounts included IFRS 15 revenue recognition in respect of Paris, Accounts Boulogne-Billancourt, and impairment of the Seville joint venture under IFRS 9. Calculation of the Consideration of methodology used to calculate the fee, matched against the criteria set out in the investment Investment Management Agreement. management fee Internal controls and TheUKCorporateGovernanceCoderequirestheBoardtomonitortheCompany'sriskmanagementand risk management internalcontrolsystemsand,atleastannually,carryoutareviewoftheireffectivenessandreportonthat review in the annual report. TheAudit,ValuationandRiskCommittee,onbehalfoftheBoard,also regularlyreviewsadetailed‘riskmatrix’identifyingsignificantstrategic,investment-related,operational and service provider-related risks and ensures that risk management and all aspects of internal control are reviewed at least annually. TheCompany’ssystemofinternalcontrolsissubstantiallyreliantontheInvestmentManager’sown internal controls and internal audit processes due to the relationships in place. Although the Board believes that it has a robust framework of internal controls in place, this can provide only reasonable and not absolute assurance against material financial misstatement or loss and is designed tomanage,noteliminate,risk.Nosignificantissueswereidentifiedfromtheinternalcontrolsreview. Compliance with the ConsiderationoftheInvestmentManager’sReportconfirmingcompliance. investment trust qualifying rules in section 1158 of the Corporation Tax Act2010 Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 44 Overview Strategic Report Governance Financial Statements Other information (unaudited) Independent Auditor RepresentativesoftheAuditor’sattendtheCommittee meeting at which the draft Half Year and Annual Report Inaccordancewithregulatoryrequirements, and Accounts are considered. Having reviewed the PricewaterhouseCoopers LLP would only have been able performance of the Auditor as described above, the to audit the Company for a further three years following Committee considered it appropriate to recommend the the 30 September 2023 year end. In light of this, the firm’sappointment. Committee agreed to commence an audit tender slightly earlierthanrequired. TheAuditorisrequiredtorotatetheseniorstatutory Auditor every five years. This is the first year that the In January 2023, the Committee undertook a formal and senior statutory Auditor, Denise Davidson, has conducted competitive audit tender and invited the current theauditoftheCompany’sfinancialstatements.There incumbent at the time, PricewaterhouseCoopers LLP, and are no contractual obligations restricting the choice of Ernst & Young LLP to present to the Committee. externalauditors. Following this process, the Committee recommended to Provision of non-audit services the Board the appointment of Ernst & Young LLP as the Company’sAuditorfortheyearended30September TheAudit,ValuationandRiskCommitteehasreviewed 2023. Ernst & Young LLP were appointed as Auditor on theFinancialReportingCouncil’sGuidanceonAudit 6June2023.Inreachingitsdecision,theCommitteetook Committees and has formulated a policy on the provision of into account a number of factors including the non-auditservicesbytheCompany’sAuditor.TheAudit, independence,skillsandexperienceofthetwofirms,as ValuationandRiskCommitteehasdeterminedthatthe well as the proposed level of audit fees. A resolution to Company’sappointedAuditormay,ifrequired,providenon- appointErnst&YoungLLPastheCompany’sAuditorand auditservices;however,thiswillbejudgedonacase-by- to authorise the Directors to determine their remuneration case basis, prior to any such services being carried out. willbeproposedattheforthcomingAGM.TheCommittee During the year, the Auditor carried out an interim review has recorded its appreciation for the service provided by which is an assurance related non-audit service. The interim PricewaterhouseCoopers LLP over the years. reviewfeewas€51,000(2022:€51,500).TheAuditordid Effectiveness of the independent audit process not perform any other non-audit services during the year. The Committee evaluated the effectiveness of the Internal audit independent audit firm, Ernst & Young LLP, and its audit TheCompanydoesnothaveaninternalauditfunction;it process prior to making a recommendation on its delegates to third parties most of its operations and only appointmentattheforthcomingAGM.Thisevaluation hasonepart-timeemployee.TheAudit,ValuationandRisk involvedanassessmentoftheeffectivenessoftheAuditor’s Committee will continue to monitor the system of internal performanceagainstagreedcriteriaincluding:qualification; control in order to provide assurance that it operates as knowledge,expertiseandresources;independence intended and the Committee members will annually policies;effectivenessofauditplanning;adherenceto review whether an internal audit function is needed. auditingstandards;andoverallcompetence.Aspartofthe Aspartofthisprocess,theCommitteeChairmanmeets evaluation, the Committee considered feedback from the annuallywithSchrodersGroupInternalAudit. Investment Manager on the audit process and the year end report from the Auditor, which details compliance with Jonathan Thompson Audit,ValuationandRiskCommitteeChairman regulatoryrequirements,onsafeguardsthathavebeen established,andontheirowninternalqualitycontrol 5 December 2023 procedures. The members of the Committee were also given the opportunity to meet with the Auditor without representatives of the Investment Manager present. Recommendations made to, and approved by, the Board: – As a result of the work performed, the Committee has concluded that the Annual Report for the year ended 30 September 2023, taken as a whole, is fair, balanced and understandable and provides the information necessaryforshareholderstoassesstheCompany’sposition,performance,businessmodelandstrategy,and hasreportedonthesefindingstotheBoard.TheBoard’sconclusionsinthisrespectaresetoutinthe StatementofDirectors’Responsibilitiesonpage52. – The Committee recommended that the going concern presumption be adopted in the Annual Report and Accountsandtheexplanationssetoutintheviabilitystatement. – ThattheAuditorberecommendedforappointmentattheAGMandtheDirectorsbeauthorisedtodetermine their remuneration. ### 45 Governance ## Management Engagement Committee Report TheManagementEngagementCommitteeisresponsiblefor:(1)themonitoringandoversightoftheInvestment Manager’sperformanceandfees,andconfirmingtheInvestmentManager’songoingsuitability;and(2)reviewingand assessingtheCompany’sotherserviceproviders,includingreviewingtheirfees.AllDirectorsaremembersofthe Committee.MarkPattersonistheChairmanoftheCommittee.ItstermsofreferenceareavailableontheCompany’s web pages at www.schroders.co.uk/sereit. Approach Oversight of the Investment Manager Oversight of other service providers TheCommittee: The Committee reviews the performance and – reviewstheInvestmentManager’sperformanceandsuitability; competitivenessoftheCompany’sserviceprovidersonat least an annual basis, including the corporate broker, the – considers the reporting it has received from the Investment valuers and the registrars. Manager throughout the year, and the reporting from the Investment Managertoshareholders; TheCommitteenotedtheAudit,ValuationandRisk – assesses management fees on an absolute and relative basis, Committee’sreviewoftheAuditor. receivinginputfromtheCompany’scorporatebroker,including peergroupandindustryfigures,aswellasthestructureofthefees; – reviewstheappropriatenessoftheInvestmentManager’scontract, includingtermssuchasnoticeperiod;and – assesses whether the Company receives appropriate administrative, accounting, company secretarial and marketing support from the Investment Manager. Application during the year Oversight of the Investment Manager Oversight of other service providers The Committee undertook a detailed review of the Investment During the year, the Management Engagement Committee Manager’sperformanceandagreedthatithastheappropriate undertook reviews of the third-party service providers and capabilitiesrequiredtoallowtheCompanytomeetitsinvestment agreed that their continued appointment remained in the objective. best interests of the Company and its shareholders. In this respect, the Committee periodically reviews the market The Committee also reviewed the terms of the Investment rates for services received, to ensure that the Company Management Agreement and agreed they remained fit for purpose. continuestoreceivehighqualityserviceatacompetitive The Committee reviewed the other services provided by the cost.Subsequenttoareviewduringtheyear,Ernst&Young Investment Manager and agreed they were satisfactory. LLP was appointed as the new Auditor in March 2023 and PanmureGordon(UK)Limitedasthenewcorporatebroker in October 2023. TheCommitteenotedthattheAudit,Valuationand RiskCommitteehadundertakenadetailedevaluationof theInvestmentManager,DepositaryandRegistrar’s internal controls. Recommendations made to, and approved by, the Board: – That the ongoing appointment of the Investment Manager on the terms of the Investment Management Agreement, including the fee, was in the best interests of shareholders as a whole. – ThattheCompany’sserviceproviders’performanceremainedsatisfactory. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 46 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## NominationandRemunerationCommitteeReport TheNominationandRemunerationCommitteeisresponsiblefor:(1)therecruitment,selectionandinductionof Directors;(2)theirassessmentduringtheirtenure;and(3)theBoard’ssuccession.AllDirectorsaremembersofthe Committee and the Chairman of the Board is the Chairman of the Committee. Its terms of reference are available on theCompany’swebpagesatwww.schroders.co.uk/sereit. Oversight of Directors Annual review Application Annual Selection Induction of succession of succession evaluation policy policy Approach Selection and induction Board evaluation and fees Succession – Committee prepares a job specification – Committee assesses each Director – TheBoard’ssuccessionpolicyisthat for each role. For the Chairman and the annually as well as the performance of Directors’tenurewillbefornolonger Chairmans of Committees, the the Board as a whole and its thannineyears,exceptin Committee considers current Board Committees. exceptionalcircumstances,andthat members too. – Evaluation focuses on whether each each Director will be subject to – Job specification outlines the knowledge, Director continues to demonstrate annualre-electionattheAGM. professionalskills,personalqualitiesand commitment to their role and provides – CommitteereviewstheBoard’s experiencerequirements. a valuable contribution to the Board current and future needs at least – Potential candidates assessed against the during the year, taking into account annually. Should any need be Company’sdiversitypolicy. time commitment, independence, identified the Committee will initiate conflicts and training needs. the selection process. – Committee discusses the long list, invites a number of candidates for interview and – Following the evaluation, the – Committee will oversee the makes a recommendation to the Board. Committee provides a handover process for retiring recommendation to shareholders with Directors. – Committee reviews the induction and respect to the annual re-election of training of new Directors. DirectorsattheAGM. – AllDirectorsretireattheAGMand their re-election is subject to shareholder approval. – CommitteereviewsDirectors’fees, taking into account comparative data and reports to shareholders. – Any proposed changes to the remuneration policy for Directors are discussed and reported to shareholders. ### 47 Governance ## NominationandRemunerationCommitteeReportcontinued Application during the year Selection and induction Board evaluation and fees Succession | – While no new appointments were made | – The annual Board evaluation was | – The Committee has formulated a | | --- | --- | --- | | duringtheyear,subsequenttotheyear | undertakeninNovember2023. | succession plan which is reviewed | | end, it was agreed that Mark Beddy | – The Committee reviewed each | and maintained through the | | should join the Board with effect from | Director’stimecommitmentand | NominationandRemuneration | | 1January2024.MarkBeddy’s | independence by reviewing a complete | Committee to promote regular | | appointment was made following a | list of appointments, including pro | refreshment and diversity, whilst | | review by the Board of its composition, | bono not for profit roles, to ensure that | maintaining stability and continuity | | diversity, efficacy and length of service. | each Director remained free from | of skill and knowledge on the Board. | | HavingregardtotheCompany’sArticles | conflict and had sufficient time | | | ofAssociationandtheBoard’ssuccession | available to discharge each of their | | | plan, the Board drew up a list of desirable | duties effectively. All Directors were | | | skillsandindustryexperienceforanew | considered to be independent in | | | Director.MarkBeddy’sappointmentwas | character and judgement. | | made following an interview process – The Committee considered each where it was determined that he was the Director’scontributions,andnotedthat bestcandidatefortherole.Noexternal inadditiontoextensiveexperienceas search agency was used in this process. professionalsandnon-executive Directors, each Director had valuable skillsandexperience,asdetailedin their biographies on pages 38 and 39. – Based on its assessment, the Committee provided individual recommendationsforeachDirector’s re-electionorelection,except Jonathan Thompson who will retire from the Board at the forthcoming AGMandbesucceededbyMark BeddyasAudit,ValuationandRisk Chairman. – The Committee last increased Directors’feesin2021.Duringtheyear, theCommitteereviewedDirectors’ fees,usingexternalbenchmarking, and recommended no increase for thecurrentfinancialyearto 30 September 2023. Recommendations made to, and approved by, the Board: – That no fee increase is recommended for the year under review. – That all Directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations of the Board and remain free from conflicts with the Company and its Directors, so should all be recommendedforre-electionorelectionbyshareholdersattheAGM. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 48 Directors' Remuneration Report # Introduction The following remuneration policy is currently in force and is subject to a binding vote every three years. The next vote will take place at the AGM in 2025 and the current policy provisions will continue to apply until that date. The below Directors' Remuneration Report is subject to an annual advisory vote. An ordinary resolution to approve this report will be put to shareholders at the forthcoming AGM. At the AGM held on 8 March 2022, 98.16% of the votes cast (including votes cast at the Chairman's discretion) in respect of approval of the remuneration policy were in favour, while 1.84% were against. 216,515 votes were withheld. At the AGM held on 2 February 2023, 99.80% of the votes cast (including votes cast at the Chairman's discretion) in respect of approval of the Annual Report on Remuneration for the period ended 30 September 2022 were in favour, while 0.20% were against. 249,642 votes were withheld. # Annual Statement from the Chairman of the Committee I am pleased to present the Directors' Remuneration Report for the year 30 September 2023. During the year, the Committee reviewed the Directors' fees and the outcome of this review can be found on the next page. # Directors' remuneration policy The determination of the Directors' fees is considered by the Nomination and Remuneration Committee and the Board. It is the Board's policy to determine the level of Directors' remuneration having regard to amounts payable to non-executive Directors in the industry generally, the role that individual Directors fulfil in respect of Board and Committee responsibilities, and time committed to the Company's affairs, taking into account the aggregate limit of fees set out in the Company's Articles of Association. This aggregate level of fees is currently set at £500,000 per annum and any increase requires approval by the Board and the Company's shareholders. The Chairman of the Board receives fees at a higher rate than the other Directors to reflect his additional responsibilities, as may the Chairman of the Audit, Valuation and Risk Committee should the Board think it appropriate. Directors' fees are set at a level to recruit and retain individuals of sufficient calibre, with the level of knowledge, experience and expertise necessary to promote the success of the Company in reaching its short and long-term strategic objectives. The Board and its Committees exclusively comprise non-executive Directors. No Director past or present has an entitlement to a pension from the Company, and the Company has not, and does not intend to operate a share scheme for Directors or to award any share options or long-term performance incentives to any Director. No Director has a service contract with the Company. However, Directors have a letter of appointment. Directors do not receive exit payments and are not provided with any compensation for loss of office. No other payments are made to Directors other than the reimbursement of reasonable out-of-pocket expenses incurred in attending to the Company's business. The terms of Directors' letters of appointment are available for inspection at the Company's registered office address during normal business hours and during the AGM at the location of such meeting. The Board did not seek the views of shareholders in setting this remuneration policy. Any comments on the policy received from shareholders would be considered on a case-by-case basis. As at the date of this report, the Company had one part-time employee. In light of the fact that the Company's Board is comprised entirely of non-executive Directors without entitlement to a pension, share scheme, share options or long-term performance incentives, the employee's pay and employment conditions were not taken into account when setting this remuneration policy, nor was the employee consulted in its construction. Directors' fees are reviewed annually and take into account research from third parties on the fee levels of Directors of peer group companies, as well as industry norms and factors affecting the time commitment expected of the Directors. New Directors are subject to the provisions set out in this remuneration policy. Overview Strategic Report Governance Financial Statements Other information (unaudited) 49 Governance ## Directors’RemunerationReportcontinued Directors’ Remuneration Report ThisreportsetsouthowtheDirectors’remunerationpolicywasimplementedduringtheyearended 30September2023. Fees paid to Directors Duringtheyearended30September2023,theChairmanoftheBoardwaspaidafeeof£50,000,theChairmanof theAudit,ValuationandRiskCommitteewaspaid£45,000andtheothermembersoftheBoardwereeachpaidafee of£40,000. ThefollowingamountswerepaidbytheCompanytotheDirectorsforservicesasnon-executiveDirectorsinrespect oftheyearended30September2023andthepreviousfinancialyear.TheeuroequivalentoftheDirector’sfeesis disclosed in note 9. | | | | | | | 1 | | | | | | | Annual | | Annual | | Annual | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Fees Taxable benefits | | | | | | | Annual Total | | | | | | | | | | | | | | | | | | | | | | | percentage | | percentage | | percentage | | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | | change | | change | | change | | | £ | | £ | | £ | | £ | | £ | | £ | | 2023 (%) | | 2022 (%) | | 2021 (%)Director | Sir Julian Berney Bt. 50,000 50,000 456 1,835 50,456 51,835 (2.7) 29.5 (2.3) 2 Jonathan Thompson 45,000 42,500 95 – 45,095 42,500 6.1 21.4 (0.5) Mark Patterson 40,000 40,000 644 350 40,644 40,350 0.7 15.3 (0.8) 3 Elizabeth Edwards 40,000 40,000 535 232 40,535 40,232 0.8 25.3 100 Total 175,000 172,500 1,730 2,417 176,730 174,917 1 ComprisesamountsreimbursedforexpensesincurredincarryingoutbusinessfortheCompany. 2 Anadditional£5,000p.a.payablefrom1April2022reflectinghisincreasedresponsibilitiesasChairmanoftheAudit,ValuationandRiskCommittee. 3 AppointedasaDirectoron1November2020. Theinformationintheabovetablehasbeenaudited(seetheIndependentAuditor’sReportonpages53to61). Consideration of matters relating to Directors’ remuneration Directors’remunerationwaslastreviewedbytheBoardandtheNominationandRemunerationCommitteein November2023.ThemembersoftheBoardandtheNominationandRemunerationCommitteeatthetimethat remunerationlevelswereconsideredwereassetoutonpages38and39.Althoughnoexternaladvicewassought inconsideringthelevelsofDirectors’fees,informationonfeespaidtoDirectorsofotherinvestmenttrustsmanaged by Schroders and peer group companies provided by the Investment Manager and corporate broker was taken intoconsideration. Followingthisreview,theBoardagreedthatfeesshouldremainunchanged.Directors’feeswerelastincreasedwith effect from 1 October 2021. Expenditure by the Company on remuneration and distributions to shareholders ThetablebelowcomparestheexpenditurebytheCompanyonremunerationtodistributionsmadetoshareholders during the year under review and the prior financial year. | | Year ended | | Year ended | | | | | --- | --- | --- | --- | --- | --- | --- | | 30 September | | | 30 September | | | | | | | 2023 | | 2022 | Change | | | | | (£’000) | | (£’000) | | (%) | Remuneration payable to Directors 175 173 1 Remuneration payable to part-time employee 21 21 0 Dividends paid to shareholders 6,513 21,342 (69.5) The information in the above table has been audited. Statement of implementation of remuneration policy in respect of the financial year ending 30 September 2023 TheCommitteewill,asusual,reviewDirectors’feesduring2023,includingthetimerequiredtobecommittedtothe businessoftheCompany,andwillconsiderwhetheranyfurtherchangestoremunerationarerequired. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 50 Overview Strategic Report Governance Financial Statements Other information (unaudited) Share price total return ThegraphbelowcomparestheCompany’ssharepricetotalreturnwiththetotalreturnoftheFTSESmallCapTotal ReturnIndex,whichisconsideredtobeanappropriateindexbywhichtoassesstheCompany’srelativeperformance. 210 190 170 150 130 110 90 70 50 Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug 15 16 16 16 17 17 17 18 18 18 19 19 19 20 20 20 21 21 21 22 22 22 23 23 SEREIT Total Return Index (GBP) FTSE Small Cap Total Return Index (GBP) Source:ThomsonReutersDatastream Directors’ share interests TheCompany’sArticlesofAssociationdonotrequireDirectorstoownsharesintheCompany.Theinterestsof Directors,includingthoseofconnectedpersons,intheCompany’sordinarysharesof10penceeach,atthebeginning and end of the financial year under review are set out below. | | | | At | | | At | | --- | --- | --- | --- | --- | --- | --- | | | 30 September | | | 1 October | | | | Director | | 2023 | | | 2022 | | Sir Julian Berney Bt. 19,840 19,840 Jonathan Thompson 25,469 25,469 Mark Patterson 10,000 10,000 Elizabeth Edwards 10,000 – The information in the above table reflects the number of shares held and has been audited. There have been no changes to the interests of any of the Directors since the year end. On behalf of the Board Sir Julian Berney Bt. Chairman 5 December 2023 ### 51 Governance ## StatementofDirectors’Responsibilities The Directors are responsible for preparing the Annual Directors’ confirmations Report and the financial statements in accordance with The Directors consider that the Annual Report and applicable law and regulation. Accounts, taken as a whole, is fair, balanced and CompanylawrequirestheDirectorstopreparefinancial understandable and provides the information necessary statements for each financial year. Under that law the forshareholderstoassesstheGroupandCompany’s DirectorshavepreparedtheGroupandtheCompany position and performance, business model and strategy. financialstatementsinaccordancewithUK-adopted Each of the Directors, whose names and functions are international accounting standards and applicable law. listedintheDirectors’Reportconfirmthat,tothebestof Under company law, Directors must not approve the theirknowledge: financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the – theGroupandCompanyfinancialstatements,which GroupandCompanyandoftheprofitorlossofthe havebeenpreparedinaccordancewithUK-adopted GroupandCompanyforthatperiod.Inpreparingthe international accounting standards, give a true and financialstatements,theDirectorsarerequiredto: fair view of the assets, liabilities, financial position and profitoftheCompany;and – select suitable accounting policies and then apply – the Strategic Report includes a fair review of the themconsistently; development and performance of the business and – statewhetherapplicableUK-adoptedinternational thepositionoftheGroupandtheCompany,together accounting standards have been followed for the with a description of the principal risks and GroupfinancialstatementsandtheCompany uncertainties that it faces. financial statements, subject to any material departuresdisclosedandexplainedinthefinancial On behalf of the Board statements; – make judgements and accounting estimates that are Sir Julian Berney Bt. reasonableandprudent;and Chairman – prepare the financial statements on the going 5 December 2023 concern basis unless it is inappropriate to presume thattheGroupandCompanywillcontinue inbusiness. The Directors are also responsible for safeguarding the assetsoftheGroupandCompanyandhencefortaking reasonable steps for the prevention and detection of fraud and other irregularities. TheDirectorsarealsoresponsibleforkeepingadequate accounting records that are sufficient to show and explaintheGroup’sandCompany’stransactions,and disclose with reasonable accuracy at any time the financialpositionoftheGroupandCompany,andenable them to ensure that the financial statements comply with theCompaniesAct2006. The Investment Manager is responsible for the maintenanceandintegrityoftheCompany’swebpages. LegislationintheUnitedKingdomgoverningthe preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 52 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## IndependentAuditor’sReporttothemembersof ## Schroder European Real Estate Investment Trust plc Opinion Inouropinion: – SchroderEuropeanRealEstateInvestmentTrustplc’sgroupfinancialstatementsandparentcompanyfinancial statements(the“financialstatements”)giveatrueandfairviewofthestateofthegroup’sandoftheparent company’saffairsasat30September2023andofthegroup’slossandtheparentcompany’sprofitfortheyear thenended; – thefinancialstatementshavebeenproperlypreparedinaccordancewithUKadoptedinternationalaccounting standards;and – thefinancialstatementshavebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006. WehaveauditedthefinancialstatementsofSchroderEuropeanRealEstateInvestmentTrustplc(the‘parentcompany’) anditssubsidiaries(the‘group’)fortheyearended30September2023whichcomprise: Group Parent company Consolidated statement of financial position as at Statement of financial position as at 30 September 2023 30 September 2023 Consolidated statement of comprehensive income for the year Statement of comprehensive income for the year then ended then ended Consolidatedstatementofchangesinequityfortheyear Statementofchangesinequityfortheyearthenended thenended Consolidated statement of cash flows for the year then ended Statement of cash flows for the year then ended Related notes 1 to 28 to the financial statements, including Related notes 1 to 28 to the financial statements, including asummaryofsignificantaccountingpolicies asummaryofsignificantaccountingpolicies ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandUKadopted international accounting standards. Basis for opinion WeconductedourauditinaccordancewithInternationalStandardsonAuditing(UK)(ISAs(UK))andapplicablelaw. OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditor’sresponsibilitiesfortheauditofthe financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence Weareindependentofthegroupandparentinaccordancewiththeethicalrequirementsthatarerelevanttoouraudit ofthefinancialstatementsintheUK,includingtheFRC’sEthicalStandardasappliedtolistedpublicinterestentities, andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeserequirements. Thenon-auditservicesprohibitedbytheFRC’sEthicalStandardwerenotprovidedtothegrouportheparent company and we remain independent of the group and the parent company in conducting the audit. ### 53 Governance ## IndependentAuditor’sReporttothemembersof ## Schroder European Real Estate Investment Trust plc continued Conclusions relating to going concern Inauditingthefinancialstatements,wehaveconcludedthatthedirectors’useofthegoingconcernbasisof accountinginthepreparationofthefinancialstatementsisappropriate.Ourevaluationofthedirectors’assessment ofthegroupandparentcompany’sabilitytocontinuetoadoptthegoingconcernbasisofaccountingincluded: – obtaininganunderstandingoftheDirector’sgoingconcernassessmentprocessincludingengagingwiththe Investment Manager to understand the process they followed in supporting the going concern assessment preparedbytheDirectors; – reviewingthecashflowforecastswhichsupporttheDirectors’assessmentofgoingconcernandchallengingthe sensitivitiesandassumptionsusedintheforecastsandevaluatingtheimpactoftheseforecastsontheGroup’s abilitytocontinuetomeetfinancialcovenantsandfinancialcommitmentsastheyfalldue; – challenging the stress testing performed and validating the static data assumptions used by the Investment Managerbyagreementtosupportingdocumentation; – recalculatingthedebtcovenantsonexternalloanstovalidatecompliancefortheyearended30September2023; – holding discussions with the Audit Committee and the Investment Manager to determine whether, in their opinion, thereisanymaterialuncertaintyregardingtheGroup’sabilitytopayliabilitiesandcommitmentsastheyfalldue andchallengingthisassessmentthroughourauditproceduresinrelationtotheliquidityassessment; – confirmedwhetheranysubsequenteventsidentifiedareadjustingornon-adjustingpostbalancesheeteventsand ensuredtherequisitedisclosuresareincludedintheAnnualReportandAccounts;and – assessing the disclosures in the Annual Report and Financial Statements relating to going concern to ensure they were fair, balanced and understandable and in compliance with IFRS. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditionsthat,individuallyorcollectively,maycastsignificantdoubtonthegroupandparentcompany’sabilityto continue as a going concern for a period to 31 December 2024. Inrelationtothegroupandparentcompany’sreportingonhowtheyhaveappliedtheUKCorporateGovernance Code,wehavenothingmaterialtoaddordrawattentiontoinrelationtothedirectors’statementinthefinancial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not aguaranteeastothegroup’sabilitytocontinueasagoingconcern. Overview of our audit approach Audit scope – WehaveauditedthefinancialstatementsoftheGroupfortheyearended30September2023. Keyauditmatters – Riskofincompleteorinaccuraterentalrevenuerecognitionandrelatedyear-endreceivable; – Riskofmisstatementinthefairvalueofdirectlyandindirectlyheldinvestmentpropertyportfolios; and – Risk of incorrect impairment assessment of investments in and loans to subsidiaries (parentcompanyonly). Materiality – Overallgroupmaterialityof€1.7mwhichrepresents1%ofTotalEquity. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 54 Overview Strategic Report Governance Financial Statements Other information (unaudited) An overview of the scope of the parent company and group audits Tailoring the scope Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine ourauditscopeforeachcompanywithintheGroup.Takentogether,thisenablesustoformanopiniononthe consolidated financial statements. We take into account size, risk profile, the organisation of the group and effectiveness of group-wide controls, changes in the business environment, the potential impact of climate change and other factors when assessing the level of work to be performed. Involvement with component teams AllauditworkperformedforthepurposesoftheauditwasundertakenbytheGroupauditteam. Climate change StakeholdersareincreasinglyinterestedinhowclimatechangewillimpacttheGroup.TheGrouphasdetermined thatthemostsignificantfutureimpactsfromclimatechangeareexplainedonpage99intheTaskForceforClimate relatedFinancialDisclosuresandonpage33intheprincipalrisksanduncertainties.Theyhavealsoexplainedtheir climatecommitmentsonpage24.Allofthesedisclosuresformpartofthe“Otherinformation,”ratherthantheaudited financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the auditorotherwiseappeartobemateriallymisstated,inlinewithourresponsibilitieson“Otherinformation”. InplanningandperformingourauditweassessedthepotentialimpactsofclimatechangeontheGroup’sbusiness andanyconsequentialmaterialimpactonitsfinancialstatements. Thegrouphasexplainedinnote13howtheyhavereflectedtheimpactofclimatechangeintheirfinancialstatements. Ourauditeffortinconsideringtheimpactofclimatechangeonthefinancialstatementswasfocusedontheadequacy of the disclosures in the Financial Statements and the conclusion that there was no further impact of climate change to be taken into account as the investment properties are valued at fair value based on open market valuations asdescribedinNote13. The open market valuation assessment includes consideration of environmental matters and the condition of each property with detail on the fair value of properties provided within the notes to the financial statements. We performed our own risk assessment to determine the risks of material misstatement in the financial statements from climate change which needed to be considered in our audit. WealsochallengedtheDirectors’considerationsofclimatechangerisksintheirassessmentofgoingconcernand viability and associated disclosures. Where considerations of climate change were relevant to our assessment of goingconcern,thesearedescribedabove. Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or to impact a key audit matter. ### 55 Governance ## IndependentAuditor’sReporttothemembersof ## Schroder European Real Estate Investment Trust plc continued Key audit matters Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthe financial statements of the current period and include the most significant assessed risks of material misstatement (whetherornotduetofraud)thatweidentified.Thesemattersincludedthosewhichhadthegreatesteffecton:the overallauditstrategy,theallocationofresourcesintheaudit;anddirectingtheeffortsoftheengagementteam.These matterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinouropinionthereon, and we do not provide a separate opinion on these matters. Key observations communicated to the Risk Our response to the risk Audit Committee Risk of misstatement in the fair value of Wehave: Based on the work performed we directly and indirectly held investment – obtained an understanding of the process have no matters to report to the property portfolios and controls for property valuation by AuditCommittee. performing our walkthrough procedures Refer to the Audit, Valuation and Risk and evaluating the implementation and Committee Report (page 44); Accounting design effectiveness of controls. policies (page 70); and Note 13 of the – assessed the independence and Consolidated Financial Statements competence of the independent valuers as (page79) requiredbyauditingstandards. – read the valuation reports provided by the The Group’s investment property portfolio Company’sindependentvaluerstoagree consists of European properties held the appropriateness and suitability of the directly and through joint ventures with a reported values and the changes in value combined fair value of € 213.1m. from the previous accounting period. – engaged our EY property valuation The Group’s accounting policy is for the specialists to perform a review of all fair value of the investment properties to property valuations to assess whether the be determined by independent real estate reported value moved within a range of valuation experts using recognised reasonableoutcomes,whichincluded: valuation techniques. The fair values are – validating the assumptions used by the based on recent real estate transactions independent valuers in undertaking their with similar characteristics and locations valuation and assessment of the to those of the Group’s assets. The valuationmethodologiesadopted; Group’s accounting policy is for the valuation of investment properties to be – challenging the key inputs and reduced by the total of the unamortised assumptionsrelatingtoequivalentyield lease incentive balances. and rental rates with reference to published market data and comparable There is a risk of incorrect valuation of the transaction evidence through market property portfolio which could result in activity;and the Consolidated Statement of Financial – assessing the appropriateness of market Position and the Consolidated Statement related inputs and reasonableness of of Comprehensive Income being valuation methods, by comparing materially misstated. against our own market data and understanding of the property market. – performed analytical review procedures across the portfolio of investments, focusing on correlations with market data and any significant movements. – on a sample basis, with respect to key objective inputs to the valuation, comprising rental income and length of lease, agreed the inputs to lease agreements or rent review schedules. – verified that the fair values derived by theCompany’sindependentvaluersfor the entire portfolio are correctly included in the consolidated financial statements. – assessedtheadequacyoftheadditional disclosures of estimates and valuation assumptions disclosed in the notes are made in accordance with IFRS13 – FairValueMeasurement. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 56 Overview Strategic Report Governance Financial Statements Other information (unaudited) Key observations communicated to the Risk Our response to the risk Audit Committee Risk of incomplete or inaccurate rental Wehave: Based on the work performed we revenue recognition and related – obtained an understanding of the process have no matters to report to the year-end receivable and controls for each revenue stream by AuditCommittee. performing our walkthrough procedures Refer to the Audit, Valuation and Risk and evaluating the implementation and Committee Report (page 44); Accounting designeffectivenessofcontrols; policies (page 72); and Note 3 of the – performed substantive analytical review Consolidated Financial Statements procedures over rental revenue for each (page74) property.Weformedanexpectationofthe rental income for each property, and Revenue is earned in the form of rental comparedthisexpectationtotheactual income from the investment properties revenuerecognisedduringtheyear; and is recognised on an accrual basis. – agreed a sample of rental rates to tenancy agreements and recalculated rental The recoverability of year-end receivables revenue earned by the property for is based on a number of judgments theperiod; andestimates. – recalculated a sample of lease incentives based on the terms within the lease There is a risk of incomplete or inaccurate agreement to assess the appropriateness rental revenue recognition and related oftheamountrecorded;including, year-end receivables through failure onasamplebasis,verifyinglease to recognise proper income entitlements modifications through agreement of the or to apply the appropriate accounting updated terms to amended and restated treatment. lease agreements and performing an independent assessment as to whether they have been appropriately treated inaccordancewithIFRS16–Leases (‘IFRS16’); – assessed the recoverability of the overdue rent receivables, and challenging the judgments involved. For a sample of tenants, we inspected the cash receipt subsequenttotheyear-enddate;and – tested a sample of rental revenue journals to identify unauthorised or inappropriate journals to address the risk of management override.Weenquiredastothenatureof each transaction sampled and obtained corroborating evidence to conclude on whether the journals were reasonable and inlinewithourexpectations.Weselected journals by applying criteria and thresholds based on our professional judgment. Risk of incorrect impairment Wehave: Based on the work performed we assessment of investments in and loans – challengedmanagement’syear-end have no matters to report to the to subsidiaries (parent company only) impairment assessment for investments in AuditCommittee. subsidiaries, ensuring that it meets the There is a risk that an Impairment loss in requirementsofIAS36; either the investment in or loan to – reviewed the intercompany loan subsidiaries is not correctly recognised. agreementsinplace; – calculatedtheexpectedinterestexpense IAS36 Impairment of Assets states that on intercompany loans due to the parent “the carrying amounts of the Company’s company and comparing to the amount non-financial assets are reviewed recorded;and annually irrespective of whether there is – where a loan has been drawdown or repaid any indication of impairment. If any such in the year, we reviewed the relevant indication exists, then the asset’s drawdown or repayment notice and agreed recoverable amount is estimated. An the amount to bank statements. impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount and an impairment loss is recognised in the statement of comprehensive income.”. ### 57 Governance ## IndependentAuditor’sReporttothemembersof ## Schroder European Real Estate Investment Trust plc continued Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. WedeterminedmaterialityfortheGrouptobe€1.7million,whichis1%ofequity.Webelievethatequityprovidesus withamaterialityalignedtothekeymeasurementoftheGroup’sperformance. WedeterminedmaterialityfortheParentCompanytobe€1.5million,whichis1%ofequity. Duringthecourseofouraudit,wereassessedinitialmaterialitybasedonequityasat30September2023and adjusted our audit procedures accordingly. Performance materiality The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceedsmateriality. Onthebasisofourriskassessments,togetherwithourassessmentoftheGroup’soverallcontrolenvironment, ourjudgementwasthatperformancematerialitywas50%ofourplanningmateriality,namely€0.9m.Wehave set performance materiality at this percentage due to this being the first year EY are performing the audit. Reporting threshold An amount below which identified misstatements are considered as being clearly trivial. WeagreedwiththeAuditCommitteethatwewouldreporttothemalluncorrectedauditdifferencesinexcess of €0.09m, which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warrantedreportingonqualitativegrounds. Weevaluateanyuncorrectedmisstatementsagainstboththequantitativemeasuresofmaterialitydiscussedabove andinlightofotherrelevantqualitativeconsiderationsinformingouropinion. Other information The other information comprises the information included in the annual set out on pages 1 to 52 and 92 to 127, includingStrategicreport,GovernanceReportandOtherinformation(unaudited),otherthanthefinancialstatements andourauditor’sreportthereon.Thedirectorsareresponsiblefortheotherinformationcontainedwithinthe annualreport. Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationand,excepttotheextentotherwise explicitlystatedinthisreport,wedonotexpressanyformofassuranceconclusionthereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are requiredtodeterminewhetherthisgivesrisetoamaterialmisstatementinthefinancialstatementsthemselves. If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementoftheotherinformation, wearerequiredtoreportthatfact. We have nothing to report in this regard. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 58 Overview Strategic Report Governance Financial Statements Other information (unaudited) Opinions on other matters prescribed by the Companies Act 2006 Inouropinion,thepartofthedirectors’remunerationreporttobeauditedhasbeenproperlypreparedinaccordance withtheCompaniesAct2006. Inouropinion,basedontheworkundertakeninthecourseoftheaudit: – theinformationgiveninthestrategicreportandthedirectors’reportforthefinancialyearforwhichthefinancial statementsarepreparedisconsistentwiththefinancialstatements;and – thestrategicreportandthedirectors’reporthavebeenpreparedinaccordancewithapplicablelegalrequirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and the parent company and its environment obtained in thecourseoftheaudit,wehavenotidentifiedmaterialmisstatementsinthestrategicreportorthedirectors’report. WehavenothingtoreportinrespectofthefollowingmattersinrelationtowhichtheCompaniesAct2006requiresus toreporttoyouif,inouropinion: – adequateaccountingrecordshavenotbeenkeptbytheparentcompany,orreturnsadequateforouraudithave notbeenreceivedfrombranchesnotvisitedbyus;or – theparentcompanyfinancialstatementsandthepartoftheDirectors’RemunerationReporttobeauditedarenot inagreementwiththeaccountingrecordsandreturns;or – certaindisclosuresofdirectors’remunerationspecifiedbylawarenotmade;or – wehavenotreceivedalltheinformationandexplanationswerequireforouraudit Corporate Governance Statement Wehavereviewedthedirectors’statementinrelationtogoingconcern,longer-termviabilityandthatpartofthe CorporateGovernanceStatementrelatingtothegroupandcompany’scompliancewiththeprovisionsofthe UKCorporateGovernanceCodespecifiedforourreviewbytheListingRules. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the CorporateGovernanceStatementismateriallyconsistentwiththefinancialstatementsorourknowledgeobtained duringtheaudit: – Directors’statementwithregardstotheappropriatenessofadoptingthegoingconcernbasisofaccountingand anymaterialuncertaintiesidentified; – Directors’explanationastoitsassessmentofthecompany’sprospects,theperiodthisassessmentcoversandwhy theperiodisappropriate; – Director’sstatementonwhetherithasareasonableexpectationthatthegroupwillbeabletocontinueinoperation andmeetsitsliabilities; – Directors’statementonfair,balancedandunderstandable; – Board’sconfirmationthatithascarriedoutarobustassessmentoftheemergingandprincipalrisks; – The section of the annual report that describes the review of effectiveness of risk management and internal controlsystems;and – The section describing the work of the audit committee. ### 59 Governance ## IndependentAuditor’sReporttothemembersof ## Schroder European Real Estate Investment Trust plc continued Responsibilities of directors AsexplainedmorefullyintheStatementofDirectors’Responsibilitiessetoutonpage52,thedirectorsareresponsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Inpreparingthefinancialstatements,thedirectorsareresponsibleforassessingthegroupandparentcompany’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concernbasisofaccountingunlessthedirectorseitherintendtoliquidatethegrouportheparentcompanyortocease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs(UK)willalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorand areconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencethe economic decisions of users taken on the basis of these financial statements. Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberateconcealmentby,forexample,forgeryorintentionalmisrepresentations,orthroughcollusion.Theextentto which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company and management. – We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determinedthatthemostsignificantaretheCompaniesAct2006,theUKCorporateGovernanceCode, The2019AICCodeofCorporateGovernance,andtheListingRulesoftheUKListingAuthority; – WeunderstoodhowtheGroupiscomplyingwiththoseframeworksbymakingenquiriesoftheInvestment Manager,theAdministratorandthosechargedwithgovernanceregarding: – their knowledge of any non-compliance or potential non-compliance with laws and regulations that could affectthefinancialstatements; – theGroup’smethodsofenforcingandmonitoringcompliancewithsuchpolicies – theInvestmentManager’sprocessforidentifyingandrespondingtofraudrisks,includingprogramsand controlstheGrouphasestablishedtoaddressrisksidentifiedbytheGroup,orthatotherwiseprevent, deteranddetectfraud;and – howtheGroupmonitorsthoseprogramsandcontrols. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 60 Overview Strategic Report Governance Financial Statements Other information (unaudited) – Weassessedthesusceptibilityofthegroup’sfinancialstatementstomaterialmisstatement,includinghowfraud mightoccurby: – obtaininganunderstandingofentity-levelcontrolsandconsideringtheinfluenceofthecontrolenvironment; – obtainingtheGroup’sassessmentoffraudrisksincludinganunderstandingofthenature,extentandfrequency ofsuchassessmentdocumentedintheGroup’sRiskMatrix; – makinginquirieswiththosechargedwithgovernance,theInvestmentManager,theCompanySecretaryand Administratorastohowtheyexerciseoversightofidentifyingandrespondingtofraudrisksandthecontrols established to mitigate specifically those risks the entity has identified, or that otherwise help to prevent, deter anddetectfraud; – makinginquiriesoftheInvestmentManagerandthosechargedwithgovernanceregardinghowtheyidentify relatedparties;and – makinginquiriesoftheInvestmentManager,theCompanySecretary,Administratorandthosechargedwith governance regarding their knowledge of any actual or suspected fraud or allegations of fraudulent financial reportingaffectingtheGroup. – Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulationsOurproceduresinvolved: – GaininganunderstandingofhowthosechargedwithgovernancetheCompanySecretaryandAdministrator andtheInvestmentManageridentifyinstancesofnon-compliancebytheGroupwithrelevantlawsand regulations; – Inspectingtherelevantpolicies,processesandprocedures; – ReviewingBoardminutesandinternalcompliancereporting; – Inspectingcorrespondencewithregulators; – ObtainingrelevantwrittenrepresentationsfromtheBoardofDirectors;and – Performing tests of journal entries, focusing on unusual transactions, manual journals and journals posted aroundtheyearenddate; A further description of our responsibilities for the audit of the financial statements is located on the Financial ReportingCouncil’swebsiteathttps://www.frc.org.uk/auditorsresponsibilities. This description forms part of ourauditor’sreport. Other matters we are required to address – Following the recommendation from the audit committee, we were appointed by the company on 18 May 2023 to auditthefinancialstatementsfortheyearending30September2023andsubsequentfinancialperiods. – The audit opinion is consistent with the additional report to the audit committee. Use of our report Thisreportismadesolelytothecompany’smembers,asabody,inaccordancewithChapter3ofPart16ofthe CompaniesAct2006.Ourauditworkhasbeenundertakensothatwemightstatetothecompany’smembersthose matterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermitted bylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthanthecompanyandthecompany’smembersas abody,forourauditwork,forthisreport,orfortheopinionswehaveformed. Denise Davidson (Senior Statutory Auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor London 5 December 2023 ### 61 Financial Statements ## Financial ## Statements Contents 64 ConsolidatedandCompanyStatementsof Comprehensive Income 65 ConsolidatedandCompanyStatementsof Financial Position 66 ConsolidatedandCompanyStatementsof ChangesinEquity 67 ConsolidatedandCompanyStatementsof Cash Flows 68 NotestotheFinancialStatements Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Rennes, France ### 62 Overview Strategic Report Governance Other information (unaudited)Financial Statements ### 63 Financial Statements ## Consolidated and Company Statements of Comprehensive Income For the year ended 30 September 2023 | | | Group | | Group | Company | | Company | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | year to | | year to | | year to | | year to | | | 30/09/23 | | 30/09/22 | | 30/09/23 | | 30/09/22 | | | Note | | €’000 | | €’000 | | €’000 | | €’000 | Rental and service charge income 3 19,666 18, 153 – – Propertyoperatingexpenses 4 (5, 3 9 8) (5 , 51 6) – – Net rental and related income 14, 268 12 ,637 – – Netgain/(loss)fromfairvalueadjustmenton 13 (1 9,7 26) 6 , 3 51 – – investment property Development revenue 14 405 1 7, 9 4 2 – – Developmentexpense 14 1 ,1 3 3 (15 , 4 36) – – Realisedgain/(loss)onforeignexchange (1 2) 77 (12) 77 Netchangeinfairvalueoffinancialinstrumentsatfairvalue (26 0) 921 – – through profit or loss Management fee income 5 – – 1,503 1,623 Provision on loan receivable from joint venture 6 – (444) – – Dividends received 8,16 – – 509 1,100 Expenses Investment management fee 5 (1 , 9 8 1) (2 ,1 9 8) (1,981) (2,198) Valuer’sandotherprofessionalfees (78 8) (9 8 1) (347) (495) Administrator’sandaccountingfees (566) (4 5 3) (120) (128) Auditor’sremunerationandassurancefees 7 (335) (333) (324) (313) Directors’fees 9 (232) (2 1 7) (232) (217) Otherexpenses 9 (4 4 2) (613) (313) (312) Total expenses (4 , 3 4 4) (4 , 7 9 5) (3,317) (3,663) Operating (loss)/profit (8,536) 1 7, 2 5 3 (1,317) (863) Finance income 228 4 51 2,086 1,851 Finance costs (1 ,7 1 4) (1 ,1 2 8) – (6) Net finance (costs)/income (1 , 4 8 6) (6 7 7) 2,086 1,845 Share of loss from joint venture 16 – – – – (Loss)/Profit before taxation (10,022) 16 , 5 76 769 982 Taxation 10 640 (2 , 58 5) – (242) (Loss)/Profit for the year (9 ,382) 13,9 91 769 740 Other comprehensive (loss)/income: Other comprehensive (loss)/income items that may be reclassified to profit or loss: Currency translation differences – (73) – (73) Total other comprehensive (loss)/profit – (73) – (73) Total comprehensive (loss)/income for the year (9 ,382) 13, 918 769 667 Basic and diluted earnings per share attributable to 11 (7. 0)c 10.4c – – owners of the parent All items in the above statement are derived from continuing operations. The accompanying notes 1 to 28 form an integral part of the financial statements. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 64 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## Consolidated and Company Statements of Financial Position As at 30 September 2023 Restated (as per note 1) | | | Group | | Group | Company | | Company | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 30/09/23 | | 30/09/22 | | 30/09/23 | | 30/09/22 | | | Note | | €’000 | | €’000 | | €’000 | | €’000 | Assets Non-current assets Investment property 13 213,09 8 2 1 7, 4 5 6 – – Investment in subsidiaries 15 – – 69,921 61,386 Investment in joint venture 16 – – – – Receivables from subsidiaries 1 – – 65,174 69,501 Loans to joint ventures 6,16 – – – – Non-current assets 213,098 2 1 7, 4 5 6 135,095 130,887 Current assets Trade and other receivables 17 8,8 97 16 ,680 1,285 16,200 Interest rate derivative contracts 6 74 93 4 – – Cashandcashequivalents 32,44 5 3 4 , 324 13,548 10,039 Current assets 42 ,0 16 51 ,93 8 14,833 26,239 Total assets 255, 114 26 9,3 9 4 149,928 157,126 Equity Share capital 18 1 7, 9 6 6 1 7, 9 6 6 17,966 17,966 Share premium 18 4 3,005 4 3,005 43,005 43,005 Retainedearnings/(accumulatedlosses) (6 ,1 4 2) 1 0,6 62 (28,818) (22,165) Other reserves 11 6 ,61 0 1 1 6 , 61 0 116,843 116,843 Total equity 17 1, 439 188,243 148,996 155,649 Liabilities Non-current liabilities Interest-bearing loans and borrowings 19 6 5 ,0 23 41 , 7 9 4 – – Deferredtaxliability 10 4 , 2 25 5 ,1 24 – – Non-current liabilities 69, 2 4 8 46,918 – – Current liabilities Interest-bearing loans and borrowings 19 8,60 0 26 ,9 50 – – Trade and other payables 20 4,856 5,857 932 1,477 Currenttaxliabilities 10 97 1 1, 426 – – Current liabilities 14,427 3 4, 233 932 1,477 Total liabilities 83,675 8 1 ,1 5 1 932 1,477 Total equity and liabilities 255, 114 269,3 94 148,928 157,126 Net asset value per ordinary share 21 128. 2 14 0.8c 111.4 116.4c The financial statements on pages 64 to 67 were approved at a meeting of the Board of Directors held on 5 December 2023 and signed on its behalf by: Sir Julian Berney Bt. Chairman The accompanying notes 1 to 28 form an integral part of the financial statements. Registered in England and Wales as a public company limited by shares. Companyregistrationnumber:09382477 ### 65 Financial Statements ## ConsolidatedandCompanyStatementsofChangesinEquity For the year ended 30 September 2023 (Accumulated losses)/ | | Share | | Share | Retained | Other | Total | | --- | --- | --- | --- | --- | --- | --- | | | capital | premium | | earnings | reserves | equity | | Group Note | €’000 | | €’000 | €’000 | €’000 | €’000 | Balance as at 1 October 2021 1 7, 9 6 6 43 ,00 5 2 1, 878 116,6 83 19 9, 53 2 Profit for the year – – 13 ,991 – 13,991 Other comprehensive loss for the year – – – (73) (7 3) Dividends paid 12 – – (25 , 2 07) – (25 , 207) Balance as at 30 September 2022 1 7, 9 6 6 43 ,00 5 1 0,662 116 ,61 0 188,243 – – (9 ,382) – (9 ,382) Loss for the year Othercomprehensiveincome/(loss)fortheyear – – – – – Dividends paid 12 – – ( 7, 4 2 2) – (7, 4 2 2) Balance as at 30 September 2023 1 7, 9 6 6 4 3,0 05 (6 ,1 4 2) 116 ,61 0 171 ,4 39 (Accumulated losses)/ | | Share | | Share | Retained | | | Other | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | capital | premium | | earnings | 1 | reserves | | 1 | equity | | Company Note | €’000 | | €’000 | €’000 | | | €’000 | | €’000 | Balance as at 1 October 2021 17,966 43,005 2,302 116,916 180,189 Profit for the year – – 740 – 740 Other comprehensive loss for the year – – – (73) (73) Dividends paid 12 – – (25,207) – (25,207) Balance as at 30 September 2022 17,966 43,005 (22,165) 116,843 155,649 Profit for the year – – 769 – 769 Othercomprehensiveincome/(loss)fortheyear – – – – – Dividends paid 12 – – (7,422) – (7,422) Balance as at 30 September 2023 17,966 43,005 (28,818) 116,843 148,996 1 ThesereservesformthedistributablereservesoftheCompany(excludinganyaccumulated,unrealisedprofits)andmaybeusedtofunddistributionof profitstoinvestorsviadividendpayments.Totaldistributablereservesamountsto€88.0million(2022:€94.8million).Seenote1forfurtherdetail. The accompanying notes 1 to 28 form an integral part of the financial statements. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 66 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## Consolidated and Company Statements of Cash Flows For the year ended 30 September 2023 | | | Group | | Group | Company | | Company | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 30/09/23 | | 30/09/22 | | 30/09/23 | | 30/09/22 | | | Note | | €’000 | | €’000 | | €’000 | | €’000 | Operating activities (Loss)/Profitbeforetaxfortheyear (1 0,0 2 2) 16,576 769 982 Adjustmentsfor: Netloss/(gain)fromfairvalueadjustmenton 13 19,7 26 (6, 3 51) – – investment property Realisedforeignexchangegain/(loss) 12 (77) 12 (77) Provision of loan made to Seville joint venture 6 – 444 – – Finance income (22 8) (4 5 1) (2,087) (1,852) Finance costs 1 ,71 4 1 ,1 2 8 6 Netchangeinfairvalueoffinancialinstrumentsthrough 260 (9 2 1) – – profit or loss Dividend income classified as investing cash flows – – (509) – Operating cash generated from/(used in) before changes 11, 462 1 0, 34 8 (1,815) (941) in working capital Decrease/(increase)intradeandotherreceivables 7, 5 6 4 958 370 616 Increase/(decrease)intradeandotherpayables (1 , 07 1) 3 24 (450) 157 Cash generated from/(used in) operations 1 7, 9 5 5 11 ,630 (1,895) (168) Finance costs paid (1 , 5 7 3) (897) – – Finance income received 228 8 397 1,042 Tax(paid)/received (7 1 4) (46 9) – (242) Net cash generated from/(used in) operating activities 15,896 10, 27 2 (1,498) 632 Investing activities Proceeds from sale of investment property 14 – 16,900 – – Acquisitionofinvestmentproperty 13 (1 1 ,1 6 7) (1 0 , 8 24) – – Additions to investment property 13 (3,9 84) (69 8) – – Loans to subsidiary companies – – (1,459) (9,585) Loan repayment from subsidiary company – – 19,000 10,310 Investment in subsidiary 16 – – (5,400) – Dividends received – – 300 – Net cash generated from/(used in) investing activities (15, 151) 5,378 12,441 725 Financing activities Repayment of loan facility drawdown – (1 , 8 4 0) – – Proceeds from borrowings 19,20 3 1 ,76 0 – – – Repayment of borrowings 19,20 (2 6 ,9 5 0) Interest paid – – – (6) Dividends paid 12 (7, 4 2 2) (25 , 2 07) ( 7,422) (25,207) Net cash used in financing activities (2 , 61 2) (2 7, 0 47) (7,422) (25,213) Net (decrease)/increase in cash and cash equivalents (1 , 8 6 7) (1 1 , 3 9 7) 3,521 (23,856) for the year Openingcashandcashequivalents 3 4 , 3 24 4 5 ,7 17 10,039 33,891 Effectsofexchangeratechangeoncash (12) 4 (12) 4 Closing cash and cash equivalents 32, 44 5 3 4, 324 13,548 10,039 The accompanying notes 1 to 28 form an integral part of the financial statements. ### 67 Financial Statements ## NotestotheFinancialStatements ### 1. Significant accounting policies Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 68 Schroder European Real Estate Investment Trust plc (the ‘Company’) is a closed-ended investment company incorporated in the United Kingdom. The consolidated financial statements of the Company for the year ended 30 September 2023 comprise those of the Company and its subsidiaries (together referred to as the ‘Group’). The Group holds a portfolio of investment properties in continental Europe. The shares of the Company are listed on the London Stock Exchange (primary listing) and Johannesburg Stock Exchange Limited (secondary listing). The registered office of the Company is 1 London Wall Place, London, England EC2Y 5AU. Statement of compliance The consolidated financial statements of the Group and Company financial statements have been prepared under the UK-adopted ‘International Accounting Standards in accordance with the Companies Act 2006’. The financial statements give a true and fair view and are in compliance with applicable legal and regulatory requirements and the Listing Rules of the UK and JSE Listing Authority. Basis of preparation Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and the Company financial statements in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006. The financial statements are presented in euros, rounded to the nearest thousand. They are prepared on a going concern basis, applying the historical cost convention, except for the measurement of investment property and derivative financial instruments that have been measured at fair value. The accounting policies have been consistently applied to the results, assets, liabilities and cash flows of the entities included in the consolidated financial statements. Going concern The Directors have examined significant areas of possible financial risk including: the ability to refinance certain third-party loans in 2024 with due consideration to current loan market conditions, cash held and the liquidity of the Group’s assets; forward-looking compliance with third-party debt covenants, in particular the loan to value (‘LTV’) covenant and interest cover ratios; the likelihood of any payment of contingent tax liabilities; potential falls in property valuations; the non-collection of rent and service charges; and the existing, and future, anticipated cash requirements of the Group. Furthermore, ongoing geopolitical developments, and macroeconomic variables such as projected interest rates and inflation, have also been considered regarding the Group’s property investments in France, Germany, Spain, and the Netherlands. Cash flow forecasts, based on deemed plausible downside scenarios, have led the Board to conclude that the Group will have sufficient cash reserves to continue in operation for twelve months from the date of the signing of the Annual Report. The Group has six loans secured by individual assets, with no cross-collateralisation. Other than Seville, whereby there is a cash trap in operation and a LTV breach, all loans are in compliance with their debt covenants. More details of the individual loans, and headroom on the LTV and net income default covenants, is provided on page 18. Excluding Seville, for which the Group has already written its investment fully down to nil, there are two loans that fall due for repayment in 2024 totalling €25.6 million. Although the Group has already commenced constructive and positive discussions with third party-lenders for both loans, the Group has considered in its plausible downside scenario whereby refinancing is not achieved, and therefore both loans need to be paid out of cash reserves with there being sufficient cash to do so if required. After due consideration, the Directors have not identified any material uncertainties which would cast significant doubt on the Group’s ability to continue as a going concern for a period of not less than 12 months from the date of the approval of the consolidated annual report and financial statements, which would be 31 December 2024. The Directors have satisfied themselves that the Group has adequate resources to continue in operational existence for the foreseeable future. Overview Strategic Report Governance Financial Statements Other information (unaudited) ### 69 Use of estimates and judgements The preparation of financial statements under the UK adopted international accounting standards, in conformity with the Companies Act 2006, requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The most significant estimates made in preparing these financial statements relate to the carrying value of investment properties, as disclosed in note 13, including those investment properties within joint ventures, which are stated at fair value. The fair value of investment property is inherently subjective because, in the absence of readily-observable market data, the valuer has to make professional judgements on valuation inputs. The Group uses an external professional valuer to determine the relevant amounts. The following are deemed to be the other key areas of judgement: – Accounting for development revenue and variable consideration regarding Paris, Boulogne-Billancourt: When estimating an appropriate level of development revenue to be recognised in the reporting period, the Group considered the contractual penalties of not meeting certain criteria within the agreement; the total development costs incurred; the stage of completion of the refurbishment; the milestones achieved and still to be achieved; the timing of further future cash receipts from the purchaser; and the overall general development risk to form a considered judgement of revenue to be appropriately recognised in the financial statements. Further details of the judgement are disclosed in note 14. – Tax provisioning and disclosure: Management uses external tax advisers to monitor changes in tax laws in countries where the Group has operations. New tax laws that have been substantively enacted are recognised in the Group’s and Company’s financial statements. Where changes to tax laws give rise to a potential contingent liability, the Group discloses the estimated amounts appropriately within the notes to the financial statements (further details are disclosed in note 10). – IFRS 9 expected credit losses: All receivables, inter-company and joint venture loans are considered to be such financial assets and must therefore be assessed for an impairment using the forward looking expected credit loss model. Where any impairment is required to be made, appropriate recognition is required in the consolidated statement of comprehensive income, together with appropriate disclosure and sensitivity analysis in the notes to the financial statements (further details are disclosed in note 6). The Seville joint venture loan has been Level 3 calculated on the lifetime expected credit loss method. The following factors were considered when determining the probability of default used for the impairment provision calculation for the Seville joint venture loan: the property valuation and future potential movements; that there is an LTV breach and a cash trap in place; cash flow forecasts; the longer-term effects of the prior lockdown measures in Spain on tenants and their trading; and rent collection rates. An evaluation of these factors has allowed management to determine that the loan is a Level 3 impairment and is deemed not recoverable. These judgements were also considered within the impairment in the investments held in subsidiaries for the parent company. Financial Statements ## NotestotheFinancialStatementscontinued 1. Significant accounting policies continued Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 70 Basis of consolidation Subsidiaries The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries drawn up to 30 September each year. Subsidiaries are those entities, including special purpose entities, controlled by the Company. Control exists when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Where properties are acquired by the Group through corporate acquisitions, but the acquisition does not meet the definition of a business combination, the acquisition is treated as an asset acquisition. Transactions eliminated on consolidation Intra-group balances, and any gains and losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Gains arising from transactions with joint ventures are eliminated to the extent of the Group’s interest in the entity. Losses are eliminated in the same way as gains but only to the extent that there is no evidence of impairment. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet respectively. Joint arrangements Under IFRS 11, Joint Arrangements, the Group’s investments in joint arrangements are classified as joint ventures. Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost, in the consolidated statement of financial position. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss. When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Investment property Investment property comprises land and buildings held to earn rental income together with the potential for capital growth. Acquisitions and disposals are recognised on an unconditional exchange of contracts. Acquisitions are initially recognised at cost, being the fair value of the consideration including any transaction costs associated with the investment property. After initial recognition, investment properties are measured at fair value with unrealised gains and losses recognised in profit or loss. Realised gains and losses on the disposal of properties are recognised in profit and loss in relation to the carrying value at the beginning of the accounting period. Fair value is based on the market valuations of the properties as provided by a firm of independent chartered surveyors at the reporting date. Market valuations are carried out on a quarterly basis. As disclosed in note 23, the Group leases out all owned properties on operating leases which are classified and accounted for as an investment property where the Group holds it to earn rentals, capital appreciation, or both. Any such property leased under an operating lease is classified as an investment property and carried at fair value. Please refer to note 13 for disclosure of key inputs, assumptions and sensitivities with respect to the fair valuation of investment properties. Overview Strategic Report Governance Financial Statements Other information (unaudited) ### 71 Prepayments Prepayments are carried at cost less any accumulated impairment losses. Leases Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Rental income, including prepayments, received under operating leases (net of any incentives granted by the lessor) are recognised in the statement of comprehensive income on a straight-line basis over the period of the lease. Properties leased out under operating leases are included as investment properties in the consolidated statement of financial position (note 13). Financial assets and liabilities Non-derivative financial assets and liabilities Non-derivative financial assets are measured at amortised cost less impairment whereas financial liabilities are measured at amortised cost. The Group calculates impairment provisions for non-derivative financial assets based on lifetime expected credit losses under the IFRS 9 simplified approach. Cash and cash equivalents Cash at bank, and short-term deposits that are held to maturity, are carried at amortised cost. Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash in hand and short-term deposits at banks with a term of no more than three months. Loans and borrowings Borrowings are recognised initially at the fair value of the consideration received less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the profit and loss over the period of the borrowings on an effective interest basis. Borrowing costs such as arrangement fees are capitalised and amortised over the loan term. Derivative financial assets and liabilities Derivative financial assets and liabilities comprise interest rate caps for hedging purposes (economic hedge). These are initially recognised at cost and subsequently revalued at fair value, with the revaluation gains or losses immediately recorded in the statement of comprehensive income. Share capital Ordinary shares, including treasury shares, are classified as equity when there is no obligation to transfer cash or other assets. The Company’s accounting policy is to fix the share capital at the spot rate at the date of issue. The Company does not retranslate its share capital at the end of each reporting period. Share premium Share premium represents the excess of proceeds received over the nominal value of new shares issued. The Company’s accounting policy is to fix the share premium at the spot rate at the date of issue. The Company does not retranslate its share premium at the end of each reporting period. Other reserves Other reserves mainly consist of a share premium reduction reserve arising from the conversion of share premium into a distributable reserve. Financial Statements ## NotestotheFinancialStatementscontinued 1. Significant accounting policies continued Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 72 Dividends Final dividends to the Company’s shareholders are recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders. Interim dividends are recognised when paid. Impairment Other financial assets The carrying amounts of the Group’s and Company’s other financial assets, including joint ventures and investments held in subsidiaries, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the profit and loss. Revenue Rental income Rental income from operating leases is recognised on a straight-line basis over the lease term. When the Group provides incentives to its tenants, the cost of incentives is recognised over the lease term, on a straight-line basis, as a reduction of rental income. Where a rent incentive fits the definition of a lease modification under IFRS 16, the cost of incentives is recognised over the remaining lease term starting from the effective date of the lease modification, on a straight-line basis, as a reduction of rental income. Service charges These include income in relation to service charges, directly recoverable expenditure and management fees. Revenue from services is recognised over time, as services are rendered as there is a transfer of control of these services over time when services are rendered by third party service providers. Finance income and costs Finance income comprises interest income on funds invested that are recognised in the statement of comprehensive income. Finance income is recognised on an accruals basis. Finance costs comprise interest expenses on borrowings that are recognised in the statement of comprehensive income. Attributable transaction costs incurred in establishing the Group’s credit facilities are deducted from the fair value of borrowings on initial recognition and are amortised over the lifetime of the facilities through profit and loss. Finance expenses are accounted for on an effective interest basis. Overview Strategic Report Governance Financial Statements Other information (unaudited) Taxation The Company and its subsidiaries are subject to income tax on any income arising on investment properties after deduction of debt financing costs and other allowable expenses. Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous periods. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the date of the statement of financial position and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised . ### 73 Expenses All expenses are accounted for on an accruals basis. They are recognised in the statement of comprehensive income in the year in which they are incurred on an accruals basis. Segmental reporting The Directors are of the opinion that the Group is engaged in a single segment of business, being property investment and in one geographical area, continental Europe. The chief operating decision-maker is considered to be the Board of Directors who are provided with consolidated IFRS information on a quarterly basis. Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The functional currency of all the entities in the Group is the euro, as this is the currency in which the majority of investment takes place and in which the majority of income and expenses are incurred. The financial statements are also presented in euros. Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the statement of comprehensive income. Monetary assets and liabilities are translated into the functional currency. Foreign exchange differences arising on translation to the presentation currency are taken to the consolidated statement of comprehensive income. Prior period restatement Prior period restatement had been classified as current assets in the Company’s own Balance Sheet. This included instances where intra-group loan maturity dates were greater than twelve months post the financial year end. Movements in intra-group loan balances are driven by transactional activity, loan refinancings and cash repatriation and repayments have been at the discretion of the Investment Manager and as market conditions allow. As per IAS 1, a number of intra-group loans for the Company should have been recorded as non-current assets. Intra-group loans which mature within twelve months of the Balance Sheet date, or where there is a clear and reasonable expectation of repayment within the next twelve months, should be classified as current assets with all other loans being classified as non-current. For the prior year ended 30 September 2022, a sum of €69,501,000 of inter-company loans and accrued interest receivable, owed by the Company’s subsidiaries, has been reclassified from trade and other receivables within current assets to receivables from subsidiaries within non-current assets in the restated Balance Sheet at Company level. The above prior period restatement is at Company level only and has had no impact on the net asset value, nor wider financial position and performance, of the SEREIT Group itself. Financial Statements Notes to the Financial Statements continued ## 2. New standards and interpretations ### New standards and interpretations adopted by the Group There are no new standards or amendments which have been applied for the first time for its annual reporting period commencing 1 October 2022. ## 3. Rental and service charge income | | Group 30/09/2023 €'000 | Group 30/09/2022 €'000 | Company 30/09/2023 €'000 | Company 30/09/2022 €'000 | | --- | --- | --- | --- | --- | | Rental income | 15,555 | 14,528 | – | – | | Service charge income | 4,111 | 3,625 | – | – | | | **19,666** | **18,153** | – | – | Service charge income is charged in addition to rent payments to cover the landlord's costs. Factors such as the size of the asset, number of occupants, occupancy rates and purpose of the asset can affect the amount and timing of revenue and cash flows. The Group has concluded that it transfers control of these services over time, as services are rendered by the third party service providers, because this is when tenants receive and, at the same time, consume the benefits from these services. The service charge receivable amounts to €3,086,000 (2022: €1,455,000). Payment of service charge income from tenants is impacted by the timing of service charge reconciliations by property managers. ## 4. Property operating expenses | | Group 30/09/2023 €'000 | Group 30/09/2022 €'000 | Company 30/09/2023 €'000 | Company 30/09/2022 €'000 | | --- | --- | --- | --- | --- | | Repairs and maintenance | 2,932 | 2,229 | – | – | | Service charge, insurance and utilities on vacant units | 456 | 1,427 | – | – | | Real estate taxes | 1,410 | 1,326 | – | – | | Property management fees | 376 | 285 | – | – | | Other | 224 | 249 | – | – | | | **5,398** | **5,516** | – | – | All the above amounts relate to either service charge or property operating expenses which are recoverable except for €1,382,000 (2022: €1,174,000). Schroeder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 74 ## 5. Material agreements Schroder Real Estate Investment Management Limited ('SREIM') is the Investment Manager to the Company. The Investment Manager is entitled to a fee together with reasonable expenses incurred in the performance of its duties. The fee is payable monthly in arrears and shall be an amount equal to one 12th of the aggregate of 1.1% of the EPRA NAV of the Group. The Investment Management Agreement can be terminated by either party on not less than 12 months' written notice, such notice not to expire earlier than the third anniversary of admission, or on immediate notice in the event of certain breaches of its terms or the insolvency of either party. The total charge to profit and loss during the year was €1,981,000 (2022: €2,198,000). At the year end €626,000 (2022: €717,000) was outstanding. SREIM provides accounting services to the Group with a minimum contracted annual charge of €81,000 (£70,000). The total charge to the Group was €104,000 (2022: €112,000). These are included in administrator's and accounting fees in the consolidated statement of comprehensive income. At the year end €35,000 (2022: €35,000) was outstanding. SREIM provides administrative and company secretarial services to the Group with a contracted annual charge of €58,000 (£50,000). The total charge to the Group was €58,000 (2022: €58,000). These are included in administrator's and accounting fees in the consolidated statement of comprehensive income. At the year end €19,000 (2022: €19,000) was outstanding. Details of Directors' fees are disclosed in note 9. Details of loans to Urban SEREIT Holdings Spain S.L., a related party, are disclosed in note 16. The Company received management fees of €1,503,000 (2022: €1,623,000) from subsidiary companies during the year. The amounts recharged to subsidiaries and outstanding are provided in the following table. | Subsidiary | Fees recharged in the year to 30 September €'000 | | Fees outstanding as at 30 September €'000 | | | --- | --- | --- | --- | --- | | | 2023 | 2022 | 2023 | 2022 | | SCI SEREIT Rumilly | 53 | 58 | 24 | 29 | | SAS Clarity Developpement | 386 | 428 | 187 | 212 | | SEREIT Berlin DIY Sàrl | 153 | 172 | 74 | 86 | | SEREIT Hamburg Sàrl | 120 | 138 | 57 | 70 | | SEREIT Stuttgart Sàrl | 104 | 119 | 48 | 60 | | SEREIT Frankfurt Sàrl | 58 | 63 | 27 | 32 | | SCI SEREIT Directoire | 194 | 228 | 141 | 113 | | SEREIT Apeldoorn Sàrl | 79 | 95 | 38 | 47 | | SEREIT UV Sàrl | 125 | 132 | 62 | 66 | | SEREIT Alkmaar Sàrl | 42 | - | 28 | - | | SCI SEREIT Plaudinen | 100 | 114 | 72 | 58 | | SCI SEREIT Nantes | 31 | 33 | 15 | 18 | | SCI LC Invest | 38 | 23 | 18 | 23 | | SEREIT Holdings S.a.r.l | 20 | 20 | 10 | 11 | | **Total** | **1,503** | **1,623** | **801** | **825** | Overview Strategic Report Governance Financial Statements Other information (unaudited) 75 Financial Statements # Notes to the Financial Statements continued ## 6. Provision of loan made to Seville joint venture As at 30 September 2023 the Group owned 50% of the Metromar Joint Venture, which owns a shopping centre in Seville, and had advanced €10,000,000 as a loan and was owed interest of €1,941,000 (2022: €1,544,000). The loan carries a fixed interest rate of 4.37% per annum payable quarterly and matures in April 2024. When considering an appropriate level of impairment, the Group primarily considered: the current market liquidity, and achievable market price, for such an asset; the property valuation and future potential movements; debt covenant breaches; cash flow forecasts; the tenants' trading levels; vacancy rates; and the rent collection rates of the asset. The impairment provision booked during the year was €Nil as the loan and interest is now considered a stage 3 impairment (2022: €444,000) bringing the cumulative impairment to €11,537,000 and the Group's investment with regard to Seville now stands at €Nil (2022: €Nil). No further interest income was recognised in the consolidated financial statements in the year to 30 September 2023 as the loan and interest is now considered a stage 3 impairment and therefore a Loss Given Default rate of 100% has been applied. Hence, cumulative interest receivable recognised in the consolidated financial statements previously and subsequently impaired amounts to €1,544,000. Furthermore, Management has separately assessed that if a sale were to be achieved at the current fair value of the property of €25 million then, all else being equal, the Group could reverse c€800,000 of the previously recognised impairment, noting that such an outcome is deemed to be highly unlikely as at the financial year end. The sensitivity of potential impairment reversals, based on potential exit prices, is shown in the table below: | | -10% | 0% | +10% | | --- | --- | --- | --- | | Valuation of Metromar, Seville property | 22,500,000 | 25,000,000 | 27,500,000 | | Potential future impairment reversal | - | 800,000 | 2,050,000 | Underlyingly, and as set out in the above, the Investment Manager does not believe at the current time that ultimately a sale price will be achieved above the carrying value of the third-party debt and thus there has been no reversal of prior impairments in the current financial year. ## 7. Auditor's remuneration and assurance fees The Group's total audit fees for the year are €330,000 (2022: €330,000) which includes the Group audit and the individual statutory audits. The Company's total audit fees for the year were €239,000 (2022: €289,000) which only covers the Group audit. The interim review fee was €51,000 (2022: €51,500) which is an assurance related non-audit service and is included in the total auditor's remuneration for the year. The auditor did not perform any other non-audit services for the Group during the year (2022: €Nil). ## 8. Dividends received During the year the Group did not receive any dividends from its joint venture operation Urban SEREIT Holdings Spain S.L. (2022: €Nil) (see note 15). During the year the Company received dividends from its subsidiary undertakings. €300,000 (2022: €1,100,000) from OPPCI SEREIT France and €209,000 (2022: €Nil) was received from SEREIT Holdings France. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 76 ## 9. Other expenses | | Group 30/09/2023 €'000 | Group 30/09/2022 €'000 | Company 30/09/2023 €'000 | Company 30/09/2022 €'000 | | --- | --- | --- | --- | --- | | Directors' and officers' insurance premium | 14 | 20 | 14 | 20 | | Bank charges | 114 | 156 | 27 | 28 | | Regulatory costs | 89 | 72 | 66 | 53 | | Marketing | 57 | 59 | 60 | 59 | | Other expenses | 167 | 306 | 147 | 152 | | | **442** | **613** | **314** | **312** | Directors are the only officers of the Company and there are no other key personnel. The Group has one employee; for further details see note 27. The Directors' annual remuneration for services to the Group was €203,000 (2022: €198,375), as set out in the Directors' Remuneration Report on pages 49 to 51. The total charge for Directors' fees was €232,000 (2022: €217,000), which included employer's National Insurance contributions. Other expenses include items such as domiciliation fees and registrar fees. ## 10. Taxation | | 30/09/2023 €'000 | 30/09/2022 €'000 | | --- | --- | --- | | Current tax charge | 739 | 1,305 | | Current tax adjustment in respect of prior periods | (480) | – | | Deferred tax (credit)/charge | (899) | 1,280 | | **Tax (credit)/expense in year** | **(640)** | **2,585** | | **Reconciliation of effective tax rate** | | | | (Loss)/Profit before taxation | (10,022) | 16,576 | | Effect of: | | | | Tax charge at weighted average corporation tax rate of 22.65% (2022: 23.40%) | (2,210) | 3,877 | | Tax exempt income or non-deductible losses | 840 | (1,482) | | Tax adjustment on net revaluation loss | 625 | 375 | | Current year loss for which no deferred tax is recognised | – | 15 | | Tax adjustment of share of joint venture loss | 691 | 744 | | Minimum Luxembourg tax charges | 88 | 65 | | Tax effect of property depreciation | (418) | (999) | | Timing differences | – | (73) | | Tax adjustment in respect of prior periods | (480) | – | | Other permanent differences | 224 | 63 | | **Total tax (credit)/expense in the year** | **(640)** | **2,585** | The effective tax rate is a weighted average of the applicable tax rates in the countries the Group has operations. The opening deferred tax liability was €5,124,000, which after a credit of €899,000 leads to a closing liability of €4,225,000. A potential deferred tax asset of €1,306,000 (2022: €845,000) arose on tax losses which has not been provided for. SEREIT plc has elected to be treated as a société d'investissement immobilier cotée ('SIIC') for French tax purposes. Provided that SEREIT plc meets certain requirements, the SIIC should be exempt from French CIT on net rental income and gains arising from interests in property. Management intends that the Group will continue to comply with the SIIC regulations for the foreseeable future. Overview Strategic Report Governance Financial Statements Other information (unaudited) 77 Financial Statements # Notes to the Financial Statements continued # 10. Taxation continued The Group operates in a number of jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business. The tax impact can be uncertain until a conclusion is reached with the relevant tax authority or through a legal process. The Group addresses this uncertainty by closely monitoring tax developments, seeking independent advice and maintaining transparency with the authorities it deals with as and when any enquiries are made. As a result of its monitoring, the Group has identified a potential tax exposure attributable to the ongoing applicability of tax treatments adopted in respect of the Group's tax structures. The range of potential outcomes is a possible outflow of minimum ENII and maximum £9.5 million, excluding possible interest and penalties (2022: minimum ENII and maximum £9.3 million). The Directors have not provided for this amount because they do not believe an outflow is probable. # 11. Earnings per share # Basic earnings per share The basic earnings per share for the Group is calculated by dividing the net profit after tax attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the year. | | 30/09/2023 | 30/09/2022 | | --- | --- | --- | | **Total comprehensive (loss)/income for the year** | **€(9,382,000)** | **€13,918,000** | | Weighted average number of ordinary shares in issue | 133,734,686 | 133,734,686 | | Basic IFRS earnings per share (cents per share) | (7.0) | 10.4 | # Diluted earnings per share The Group has no dilutive potential ordinary shares and hence the diluted earnings per share is the same as the basic earnings per share in both 2022 and 2023. # Headline earnings per share The headline earnings and diluted headline earnings for the Group is 6.2 euro cents per share (2022: 4.5 euro cents per share) as detailed on page 95. # 12. Dividends paid Interim and special dividends of €7,422,000 (2022: €25,207,000) were paid to the shareholders of SEREIT plc during the year as follows: | In respect of | Ordinary shares | Rate (cents) | 30/09/2023 €'000 | | --- | --- | --- | --- | | Interim dividend paid on 13 January 2023 | 133,734,686 | 1.85 | 2,474 | | Interim dividend paid on 5 May 2023 | 133,734,686 | 1.85 | 2,474 | | Interim dividend paid on 11 August 2023 | 133,734,686 | 1.85 | 2,474 | | **Total interim dividends paid** | **133,734,686** | | **7,422** | | In respect of | Ordinary shares | Rate (cents) | 30/09/2022 €'000 | | --- | --- | --- | --- | | Interim dividend paid on 8 November 2021 | 133,734,686 | 1.85 | 2,474 | | Interim dividend paid on 14 January 2022 | 133,734,686 | 1.85 | 2,474 | | First special dividend paid on 14 January 2022 | 133,734,686 | 4.75 | 6,352 | | Interim dividend paid on 20 April 2022 | 133,734,686 | 1.85 | 2,474 | | Interim dividend paid on 5 August 2022 | 133,734,686 | 1.85 | 2,474 | | Second special dividend paid on 5 August 2022 | 133,734,686 | 4.75 | 6,352 | | Interim dividend paid on 30 September 2022 | 133,734,686 | 1.85 | 2,474 | | Final special dividend paid on 30 September 2022 | 133,734,686 | 0.1 | 133 | | **Total interim dividends paid** | **133,734,686** | | **25,207** | Schroeder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 78 ### 13. Investment property | Group | €'000 | | --- | --- | | **Fair value as at 1 October 2021** | **199,727** | | Acquisitions | 9,997 | | Acquisition costs | 868 | | Additions | 513 | | Net gain from fair value adjustment on investment property | 6,351 | | **Fair value as at 30 September 2022** | **217,456** | | Acquisitions | 11,150 | | Acquisition costs | 1,218 | | Additions | 3,000 | | Net loss from fair value adjustment on investment property | (19,726) | | **Fair value as at 30 September 2023** | **213,098** | In 2022 and 2023, the Group held one leasehold property. The value of the respective sectors held were as follows: | Sector | 2023 €'000 | 2022 €'000 | | --- | --- | --- | | Industrial | 78,537 | 63,603 | | Retail (including retail warehousing) | 39,650 | 51,049 | | Offices | 94,911 | 102,804 | | **Total** | **213,098** | **217,456** | The fair value of investment properties, as determined by the valuer, totals €214,125,000 (2022: €218,700,000) with the valuation amount relating to a 100% ownership share for all the assets in the portfolio. None of this amount is attributable to trade or other receivables in connection with lease incentives. The fair value of investment properties per the consolidated financial statements of €213,098,000 includes a tenant incentive adjustment of €1,027,000 (30 September 2022: €1,244,000). The net valuation (loss)/gain on investment property of €(19,726,000) (2022: €6,351,000) consists of net property revaluation (losses)/gains of €19,509,000 (2022: €6,472,000) and a movement of the above mentioned tenant incentive adjustment of €(217,000) (2022: €104,000). The fair value of investment property has been determined by Knight Frank LLP, a firm of independent chartered surveyors, who are registered independent appraisers. The valuation has been undertaken in accordance with the RICS Valuation – Global Standards November 2021, incorporating the International Valuations Standards, and RICS Professional Standards UK, November 2018 (effective January 2019). The properties have been valued on the basis of 'fair value' in accordance with the RICS Valuation – Professional Standards VPS4(1.5) Fair Value and VPGA1 Valuations for Inclusion in Financial Statements which adopt the definition of fair value used by the International Accounting Standards Board. The valuation has been undertaken using an appropriate valuation methodology and the valuer's professional judgement. The valuer's opinion of fair value was primarily derived using recent comparable market transactions on arm's length terms, where available, and appropriate valuation techniques (The Investment Method). The properties have been valued individually and not as part of a portfolio. During the year, the Group acquired Alkmaar, a logistics asset in the Netherlands for a purchase price of €11,150,000 in March 2023. Overview Strategic Report Governance Financial Statements Other information (unaudited) 79 Financial Statements # Notes to the Financial Statements continued # 13. Investment property continued The Group has incorporated Environmental, Social and Governance ('ESG') objectives into its core investment strategy and at every stage of the investment process. It has clearly defined its social and environmental targets into distinct categories, for which each has clear and measurable impact objectives. The values take into account environmental considerations in their assessment of ERV, discount rate and capital expenditure assumptions for each asset. Some examples include: Hamburg office (c.€800k provisioned) for future BMS, HVAC and tenant wellbeing measures in order to continue to keep the asset relevant for occupiers; Stuttgart (c.€600k) primarily ESG related capital expenditure; and Paris Saint-Cloud (c.€2.5 million) relating to fire security enhancements and co-ownership works which will improve ESG ratings in line with Tertiary Decree requirements. A provision or contingent liability would only be recognised in the consolidated financial statements if the ESG factors led to a constructive or legal obligation for the Group. None of the above amounts have been provided for in the 30 September 2023 annual accounts as there is no legal or constructive obligation to perform these works at the reporting date. The Group's total valuation fees for the year are €67,000 (2022: €50,000). The fee payable to Knight Frank LLP is less than 5% of its total revenue in any year. All investment properties are categorised within Level 3 of the fair value hierarchy, as they use significant unobservable inputs. There have not been any transfers between levels during the year. Investment properties have been classed according to their real estate sector. Information on these significant unobservable inputs per class of investment property is disclosed below: # Quantitative information about fair value measurement using unobservable inputs (Level 3) as at 30 September: | 2023 | | Industrial | Retail (incl. retail warehouse) | Office | Total | | --- | --- | --- | --- | --- | --- | | Fair value (€'000)^{1} | | 78,575 | 39,650 | 95,900 | 214,125 | | Area ('000 sqm) | | 95,071 | 21,325 | 54,579 | 170,975 | | Net passing rent | Range | 33.16–125.09 | 108.12–154.66 | 118.63–158.07 | 33.16–158.07 | | € per sqm per annum | Weighted average^{2} | 63.79 | 121.09 | 138.22 | 107.73 | | Gross ERV | Range | 42.00–110.30 | 101.58–162.27 | 79.93–234.01 | 42.00–234.01 | | € per sqm per annum | Weighted average^{2} | 63.20 | 118.50 | 181.29 | 126.33 | | Net initial yield^{3} (%) | Range | 5.42–9.54 | 5.76–5.79 | 4.02–17.09 | 4.02–17.09 | | | Weighted average^{2} | 6.35 | 5.77 | 6.60 | 6.35 | | Equivalent yield (%) | Range | 5.57–9.76 | 5.36–5.40 | 3.87–13.38 | 3.87–13.38 | | | Weighted average^{2} | 5.94 | 5.39 | 7.17 | 6.39 | 1 Weighted by market value. 2 Yields based on rents receivable after deduction of head rents and non-recoverables. | 2022 | | Industrial | Retail (incl. retail warehouse) | Office | Total | | --- | --- | --- | --- | --- | --- | | Fair value (€'000)^{1} | | 71,950 | 69,150 | 104,000 | 245,100 | | Area ('000 sqm) | | 86,421 | 44,433 | 54.58 | 185,434 | | Net passing rent | Range | 28.81–118.10 | 38.33–151.18 | 103.57–145.83 | 28.81–151.18 | | € per sqm per annum | Weighted average^{2} | 55.83 | 85.66 | 136.17 | 98.34 | | Gross ERV | Range | 40.00–104.42 | 101.58–162.27 | 79.93–224.34 | 40.00–224.34 | | € per sqm per annum | Weighted average^{2} | 56.46 | 129.96 | 169.81 | 125.29 | | Net initial yield^{3} (%) | Range | 4.82–8.66 | 2.87–5.38 | 3.34–14.42 | 2.87–14.42 | | | Weighted average^{2} | 5.57 | 4.24 | 5.93 | 5.35 | | Equivalent yield (%) | Range | 4.50–6.68 | 4.95–7.29 | 3.27–12.40 | 3.27–12.40 | | | Weighted average^{2} | 5.19 | 5.87 | 6.26 | 5.84 | 1 This table includes the joint venture investment property valued at €26.4 million which is disclosed within the summarised information within note 16 as part of total assets. 2 Weighted by market value. 3 Yields based on rents receivable after deduction of head rents and non-recoverables. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 80 ## Sensitivity of measurement to variations in the significant unobservable inputs The significant unobservable inputs used in the fair value measurement (categorised within Level 3 of the fair value hierarchy) of the Group's property portfolio, together with the impact of significant movements in these inputs on the fair value measurement, are shown below: | Unobservable input | Impact on fair value measurement of significant increase in input | Impact on fair value measurement of significant decrease in input | | --- | --- | --- | | Passing rent | Increase | Decrease | | Gross ERV | Increase | Decrease | | Net initial yield | Decrease | Increase | | Equivalent yield | Decrease | Increase | There are interrelationships between the yields and rental values as they are partially determined by market rate conditions. The sensitivity of the valuation to changes in the most significant inputs per class of investment property are shown below: | Estimated movement in fair value of investment properties at 30 September 2023 | Industrial €'000 | Retail €'000 | Office €'000 | Total €'000 | | --- | --- | --- | --- | --- | | Increase in ERV by 10% | 4,900 | 2,600 | 7,100 | 14,600 | | Decrease in ERV by 10% | (4,900) | (2,600) | (7,100) | (14,600) | | Increase in net initial yield by 0.5% | (6,200) | (3,400) | (9,000) | (18,600) | | Decrease in net initial yield by 0.5% | 7,400 | 4,100 | 9,800 | 21,300 | ## 14. Recognition of development revenue and profit During the financial year ended 30 September 2021, the Group transferred the legal title of its office asset in Paris, Boulogne-Billancourt to a purchaser. The forward funded sale agreement which the Group entered into is comprised of two key performance obligations: i) to sell the asset as referenced above; and ii) to undertake a comprehensive refurbishment of the asset on behalf of the purchaser. The transaction price for the sale of the asset is determined with regard to the deemed fair value of the asset at the date of the transfer of the legal title to the purchaser. On 16 December 2020 the Group transferred, as part of the sale, the legal title to the purchaser for a deemed sale price of €69.8 million. In return, the Group received on the completion date an initial €52.9 million cash receipt from the purchaser and €16.9 million was paid in the year to 30 September 2022 upon the completion of certain milestones. The forward funded sale contract also included a development element whereby the Group would undertake a comprehensive refurbishment of the asset on behalf of the purchaser over an approximate 18 month period with practical completion occurring in the second quarter of 2022. The amount of revenue the Group will receive for the development of the asset is variable as it is based on the Group achieving certain milestones. When forming a judgement as to an appropriate level of development revenue to be recognised in the reporting period, the Group considered the contractual penalties of not meeting certain criteria within the agreement; the total development costs incurred; the stage of completion of the refurbishment; the milestones achieved and still to be achieved; the timing of further future cash receipts from the purchaser; and the overall general development risk. The Group has estimated that it will receive total development revenue of €30.4 million (2022: €30.2 million). During the year the Group made cost savings of €1.1 million (2022: €15.4 million expenditure) which cumulatively to date, represents 96% of the total project expenditure and a sum of €0.4 million (2022: €17.9 million) of development revenue has been recognised following consideration of the factors identified above. Total development revenue from this contract recognised since inception is €28.1 million, which represents 93% of total development revenue. The cash received in the year was €8.8 million. The remaining development revenue is expected to be recognised in the year-ending 30 September 2024. The lag between development revenue and development cost represents the inherent development risk that is still evident in the project. Overview Strategic Report Governance Financial Statements Other information (unaudited) 81 Financial Statements # Notes to the Financial Statements continued # 14. Recognition of development revenue and profit continued The total amount of the contract asset recognised by the Group that is due from the purchaser thereby totalled €19 million (September 2022: €10.3 million) at the end of the financial year and is included in trade and other receivables. The below sensitivity table presents the change in the total development revenue expected from the purchaser if the variable consideration increases or decreases by 10%. Note that the maximum amount of variable revenue remaining that could be recognised is €2.2 million. This is also the expected amount of revenue to be received therefore no +10% analysis is performed. | | -10% | 0% | +10% | | --- | --- | --- | --- | | Variable development revenue expected from the purchaser (€m) | 1.9 | 2.2 | 2.2 | # 15. Investment in subsidiaries | Company | Company 2023 €'000 | Company 2022 €'000 | | --- | --- | --- | | **Balance as at 1 October** | **61,386** | **61,386** | | Additions | 8,535 | – | | Provision of investment made in subsidiaries | – | – | | **Balance as at 30 September** | **69,921** | **61,386** | During the year to 30 September 2023, SEREIT plc invested €5,400,000 into SEREIT Holdings Sarl as part of the acquisition of the Alkmaar property and the creation of the SPV SEREIT Alkmaar Sarl. The Group made a decision that a dividend of €3,135,000 previously paid to SEREIT plc from SEREIT Holdings Sarl was to be reclassified as a partial repayment of an interest free loan. The subsidiary companies listed below are those which were part of the Group as at 30 September 2023. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the Group and the proportion of ownership of interests held equals the voting rights held by the Group. | Undertaking | Country of incorporation | Group ownership | Registered office address | | --- | --- | --- | --- | | SEREIT (Jersey) Limited | Jersey | 100% | 22 Grenville Street, Jersey, JE4 8PX | | SEREIT Finance Sarl | Luxembourg | 100% | 15, Boulevard F.W. Raiffeisen, 2411 | | SEREIT Holdings Sarl | Luxembourg | 100% | 15, Boulevard F.W. Raiffeisen, 2411 | | OPPCII SEREIT France | France | 100% | 153 Rue Saint Honoré, 75001 Paris | | SCI SEREIT Rumilly | France | 100% | 8-10 Rue Lamennais, 75008 Paris | | SEREIT Berlin DIY Sarl | Luxembourg | 100% | 15, Boulevard F.W. Raiffeisen, 2411 | | SEREIT Hamburg Sarl | Luxembourg | 100% | 15, Boulevard F.W. Raiffeisen, 2411 | | SEREIT Stuttgart Sarl | Luxembourg | 100% | 15, Boulevard F.W. Raiffeisen, 2411 | | SEREIT Frankfurt Sarl | Luxembourg | 100% | 15, Boulevard F.W. Raiffeisen, 2411 | | SCI SEREIT Directoire | France | 100% | 8-10 Rue Lamennais, 75008 Paris | | SEREIT Apeldoorn Sarl | Luxembourg | 100% | 15, Boulevard F.W. Raiffeisen, 2411 | | SEREIT UV Sarl | Luxembourg | 100% | 15, Boulevard F.W. Raiffeisen, 2411 | | SEREIT Alkmaar Sarl | Luxembourg | 100% | 15, Boulevard F.W. Raiffeisen, 2411 | | SEREIT Holdings France SAS (SIIIC) | France | 100% | 8-10 Rue Lamennais, 75008 Paris | | SCI SEREIT Plaudhien | France | 100% | 8-10 Rue Lamennais, 75008 Paris | | SAS Clarity Developpement | France | 100% | 8-10 Rue Lamennais, 75008 Paris | | SEREIT France Invest SAS | France | 100% | 8-10 Rue Lamennais, 75008 Paris | | SCI SEREIT Nantes | France | 100% | 8-10 Rue Lamennais, 75008 Paris | | SCI LC Invest | France | 100% | 8-10 Rue Lamennais, 75008 Paris | Schroeder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 82 Overview Strategic Report Governance Financial Statements Other information (unaudited) ### 17. Trade and other receivables Restated (as per note 1) | Group | Group | Company | | Company | | | --- | --- | --- | --- | --- | --- | | 2023 | 2022 | | 2023 | | 2022 | | €’000 | €’000 | | €’000 | | €’000 | Rent and service charges receivable 4,467 2,763 – – Amounts due from subsidiary undertakings – – 1,221 16,096 VAT receivable 297 891 4 21 Rental and security deposits 1,067 1,569 – – 1 Proceeds receivable from development 1,898 10,346 – – Withholding tax receivable – – – – Other debtors and prepayments 1,168 1,111 60 83 8,897 16,680 1,285 16,200 1 Refer to note 14 for proceeds due from the development of Boulogne-Billancourt in Paris. Other debtors and prepayments includes tenant incentives of €1,027,000 (2022: €1,244,000). There were no provisions against the above amounts in 2023 (2022: Nil) . ### 83 16. Investment in joint venture The Group has a 50% interest in a joint venture called Urban SEREIT Holdings Spain S.L. The principal place of business of the joint venture is Calle Velazquez 3, 4th Madrid 28001 Spain. Group 2023 €’000 2022 €’000 Balance as at 1 October – – Investment in joint venture – – Share of loss for the year – – Balance as at 30 September – – Summarised joint venture financial information: 2023 €’000 2022 €’000 Total assets 28,078 29,290 Total liabilities (50,055) (48,435) Net liabilities (21,977) (19,146) Net asset value attributable to the Group – – Revenues for the year 2,329 4,003 Total comprehensive (loss) (2,832) (4,536) Total comprehensive loss attributable to the Group – – As at 30 September 2023, the joint venture in Seville, of which SEREIT holds a 50% share, had total net liabilities of €21,977,000 (2022: €19,146,000). The Group has therefore recognised a nil interest as its investment in the joint venture and would only recognise its share of net liabilities where certain legal or constructive obligations are in force. No such obligations exist with regard to the Seville joint venture. A reduction in rental income has resulted in a requirement under the minimum net rental income covenant in the loan agreement for the lender to retain all excess rental income generated by the Seville property in the property-owning special purpose vehicle (‘SPV’). This position will continue until the rental income increases sufficiently to meet the level required under the loan. A significant fall in valuation over the last few years has resulted in a ‘Hard LTV’ covenant breach which leads to an automatic increase in the interest margin. The bank have agreed a waiver until the maturity date of the additional interest margin. In 2023 and 2022, within total liabilities of the joint venture, there is also a loan amount of €10,000,000 owed to the Group. The Group has fully impaired the loan and interest receivable from the joint venture and further details are provided in note 6. The loan is expected to mature at the same time as the above-mentioned bank loan and carries a fixed interest rate of 4.37% per annum payable quarterly. Financial Statements # Notes to the Financial Statements continued ## 18. Share capital and share premium | | Group 30/09/2023 €'000 | Group 30/09/2022 €'000 | Company 30/09/2023 €'000 | Company 30/09/2022 €'000 | | --- | --- | --- | --- | --- | | Ordinary share capital | 17,966 | 17,966 | 17,966 | 17,966 | | Share premium | 43,005 | 43,005 | 43,005 | 43,005 | As at 30 September 2023, the share capital of the Company was represented by 133,734,686 ordinary shares (2022: 133,734,686 ordinary shares) with a par value of 10.00 pence. ### Issued share capital As at 30 September 2023, the Company had 133,734,686 ordinary shares (2022: 133,734,686 in issue (no shares were held in treasury). The total number of voting rights of the Company at 30 September 2023 was 133,734,686 (2022: 133,734,686). Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. ## 19. Interest-bearing loans and borrowings This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings. For more information about the Group's exposure to interest rate risk see note 22. | | Group 2023 €'000 | Group 2022 €'000 | Company 2023 €'000 | Company 2022 €'000 | | --- | --- | --- | --- | --- | | **As at 1 October** | **68,744** | **68,589** | **–** | **–** | | Drawdown of new loans | 31,760 | – | – | – | | Repayment of matured debt facilities | (26,950) | – | – | – | | Capitalisation of finance costs | (84) | (15) | – | – | | Amortisation of finance costs | 153 | 170 | – | – | | **As at 30 September** | **73,623** | **68,744** | **–** | **–** | Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. ### Bank loan – HSBC Bank plc The Group had a loan facility of €9.25 million with HSBC Bank plc which was entered into during the year ended 30 September 2018. The total amount had been fully drawn and matured on 27 September 2023. It carried an interest rate which is the aggregate of the applicable Euribor 3 months rate and a margin of 2.15% per annum payable quarterly. The facility was subject to a 1% arrangement fee which is being amortised over the period of the loan. The debt had a LTV covenant of 62.5% and the interest cover should be above 275%. The lender had a charge over properties owned by the Group with a value of €25,050,000. A pledge of all shares in the borrowing Group company is in place. This loan was fully repaid in September 2023. ### Bank loan – ABN AMRO The Group entered into a facility of €13.76 million with ABN AMRO during the year ended 30 September 2023. The loan was fully drawn down on 28 September 2023 and matures on 1 September 2028. It carries an interest rate of 5.3% which is payable quarterly. The debt has a LTV covenant of 62.5%, with a cash trap of 55% which reduces by 1% each year from 1 September 2024 and the debt to yield ratio should be above 12.5%. The lender has a charge over property owned by the Group with a value of €36,475,000. A pledge of all shares in the borrowing Group company will be put in place. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 84 #### **Bank loan – BRED Banque Populaire** The Group entered into a loan facility totalling €13.0 million with BRED Banque Populaire during the year ended 30 September 2018. The total amount was fully drawn and matures on 15 December 2024. The loan carries an interest rate which is the aggregate of the applicable Euribor 3 months rate and a margin of 1.30% per annum payable quarterly. The facility was subject to an arrangement fee of €70,000 which is being amortised over the period of the loan. The debt has a LTV covenant of 60% and the Interest cover ratio ('ICR') should be above 400%. The Group has purchased an interest rate cap to have risk coverage on the variation of the interest rate. During the year ended 30 September 2020, the Group received a further €4.0 million of debt into SCI Directoire under its existing loan facility with BRED Banque Populaire. The additional loan amount carries an interest rate of 1.45% and was subject to a €30,000 arrangement fee which will be amortised over the period of the loan. The total loan facility stands at €17.0 million and matures on the original date of 15 December 2024. The lender has a charge over property owned by the Group with a value of €40,100,000. A pledge of all shares in the borrowing Group company is in place. #### **Bank loan – Deutsche Pfandbriefbank AG** The Group has two loan facilities totalling €30.50 million with Deutsche Pfandbriefbank AG which were entered into during the year ended 30 September 2016. Of the total amount previously drawn, €14.0 million was due to mature on 30 June 2023 and carried a fixed interest rate of 0.85% per annum payable quarterly; the remaining €16.5 million matures on 30 June 2026 and carries a fixed interest rate of 1.31% per annum. An additional fixed fee of 0.30% per annum was payable until certain conditions relating to the Frankfurt property were fulfilled on 30 December 2016. The facility was subject to a 0.35% arrangement fee which is being amortised over the period of the loan. The debt has a LTV covenant of 65% and the debt yield must be at least 8%. The lender has a charge over property owned by the Group with a value of €90,050,000. A pledge of all shares in the borrowing Group companies is in place. The €14.0 million loan was fully repaid in March 2023. #### **Bank loan – Westerwald Bank eG** The Group entered into a facility of €18.0 million with Westerwald Bank eG on 31 March 2023. The loan has been fully drawn and matures on 31 December 2027. It carries an interest rate of 3.8% which is payable quarterly. The lender has a charge over property owned by the Group with a value of €42,400,000. #### **Bank loan – Landesbank Saar** The Group entered into a loan facility of €8.6 million with Landesbank Saar on 27 March 2019. The loan matures on 28 March 2024 and carries an interest rate of 1.40% plus Euribor 3 months per annum, payable quarterly. An additional 25bps is applied to the margin if the LTV is between 56% and 60%, or 50bps if the LTV is above 60%. The facility was subject to a €56,000 arrangement fee which is being amortised over the period of the loan. The debt has a LTV covenant of 64% and the interest cover should be above 220%. A pledge of all shares in the borrowing Group company is in place. This loan was classified as a current liability for the year ended 30 September 2023. #### **Bank loan – Landesbank Saar** On 25 November 2019, SCI Rumilly entered into a new loan facility with Landesbank Saar for €3.7 million. The loan matures on 30 April 2023 and carries an interest rate of 1.30% plus Euribor 3 months per annum payable quarterly. An additional 25bps is applied to the margin if the LTV is between 52% and 56%, or 50bps if the LTV is equal to or above 56%. The facility was subject to a €46,000 arrangement fee which is amortised over the period of the loan. The debt has a maximum LTV covenant of 60% and a minimum ICR covenant of 200%. A pledge of all shares in the borrowing Group company is in place. The Group fully repaid the loan ahead of its maturity in April 2023. Overview Strategic Report Governance Financial Statements Other information (unaudited) 85 Financial Statements # Notes to the Financial Statements continued ## 20. Trade and other payables | | Group 30/09/2023 €'000 | Group 30/09/2022 €'000 | Company 30/09/2023 €'000 | Company 30/09/2022 €'000 | | --- | --- | --- | --- | --- | | Rent received in advance | 880 | 1,333 | – | – | | Rental deposits | 1,393 | 1,568 | – | – | | Interest payable | 206 | 133 | – | – | | Retention payable | 85 | 2 | – | – | | Accruals | 2,194 | 2,428 | 893 | 1,477 | | Trade payables | 98 | 393 | 39 | – | | | **4,856** | **5,857** | **932** | **1,477** | All trade and other payables are interest free and payable within one year. Included within the Group's accruals are amounts relating to management fees of €626,000 (2022: €717,000) and property expenses of €505,000 (2022: €625,000). ## 21. Net asset value per ordinary share The NAV per ordinary share of 128.2 euro cents per share (2022: 140.8 euro cents per share) is based on the net assets attributable to ordinary shareholders of the Group of €171,439,000 (2022: €188,243,000), and 133,734,686 ordinary shares in issue at 30 September 2023 (2022: 133,734,686 ordinary shares). ## 22. Financial instruments, properties and associated risks ### Financial risk factors The Group holds cash and liquid resources as well as having debtors and creditors that arise directly from its operations. The Group uses interest rate caps when required to limit exposure to interest rate risks, but does not have any other derivative instruments. The financial risk profile of the Group has been heightened, in part, due to ongoing geopolitical developments, together with macroeconomic uncertainty. The main risks arising from the Group's financial instruments and properties are market price risk, currency risk, credit risk, liquidity risk and interest rate risk. The Board regularly reviews and agrees policies for managing each of these risks and these are summarised below: ### Market price risk Rental income and the market value for properties are generally affected by overall conditions in the economy, such as changes in gross domestic product, employment trends, inflation and changes in interest rates. Changes in gross domestic product may also impact employment levels, which in turn may impact the demand for premises. Furthermore, movements in interest rates may also affect the cost of financing for real estate companies. The Group's investments comprise of continental European commercial property. Property and property-related assets are inherently difficult to value due to the individual nature of each property. As a result, valuations are subject to substantial uncertainty. There is no assurance that the estimates resulting from the valuation process will reflect the actual sale's price even where such sales occur shortly after the valuation date. Both rental income and property values may also be affected by other factors specific to the real estate market, such as competition from other property owners; the perceptions of prospective tenants of the attractiveness, convenience and safety of properties; the inability to collect rents because of bankruptcy or the insolvency of tenants; the periodic need to renovate, repair and re-lease space and the costs thereof; the costs of maintenance and insurance, and increased operating costs. The Board monitors the market value of investment properties by having independent valuations carried out quarterly by a firm of independent chartered surveyors. See note 13. At the date of signing this report, the conflict in Ukraine continues to have significant societal and economic impact. The Group does not have a material direct exposure to Russia or Ukraine, but continues to monitor the situation closely. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 86 ### Currency risk The Group's policy is for Group entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency. Where Group entities have liabilities in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already in that currency will, where possible, be transferred from elsewhere within the Group. The functional currency of all entities in the Group is the euro. Currency risk sensitivity has not been shown due to the small values of non-euro transactions. The table below details the Group's exposure to foreign currencies at the year end: | Net assets | Group 30/09/2023 €'000 | Group 30/09/2022 €'000 | Company 30/09/2023 €'000 | Company 30/09/2022 €'000 | | --- | --- | --- | --- | --- | | Euros | 171,346 | 188,436 | 148,903 | 155,842 | | Starling | 13 | (223) | 13 | (223) | | Rand | 80 | 30 | 80 | 30 | | | **171,439** | **188,243** | **148,996** | **155,649** | ### Interest rate risk Exposure to market risk for changes in interest rates relates primarily to the Group's long-term debt obligations and to interest earned on cash balances. As interest on the Group's long-term debt obligations is payable on a fixed-rate basis, or is capped, the Group has limited exposure to interest rate risk, but is exposed to changes in fair value of long-term debt obligations such as derivatives which are driven by interest rate movements. As at 30 September 2023, the total carrying value of the Group's loans was €73.9 million (2022: €69.1 million). The Group only has its fixed rate debt fair valued, and as at 30 September 2023, the fair value of the Group's fixed rate debt was €47.3 million (2022: €29.5 million). The carrying value for the fixed rate debt was €48.3 million (2022: €30.5 million). The Group does not fair value variable rate debt. The carrying value of the variable rate debt, which is €25.6 million (2022: €38.6 million) is deemed to approximate the fair value. A 1% increase or decrease in short-term interest rates would decrease or increase the annual income and equity by €0.1 million (2022: €0.1 million) based on the net of cash and variable debt balances as at 30 September 2023. 1% has been chosen as the sensitivity rate to demonstrate the linear relationship to interest rate changes. ### Credit risk Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Group. In the event of default by an occupational tenant, the Group will suffer a rental income shortfall and incur additional costs, including legal expenses, in maintaining, insuring and re-letting the property. With regard to trade and other receivables, sufficient provisions were made against aged tenant receivables where these were doubtful. Management will continue to monitor the ability of the tenants to pay in future. With regard to the loan to the Seville joint venture, the Directors have assessed this for an expected credit loss under IFRS 9 and, consequently, have recognised an impairment against the receivable; see note 6 for further details. The Investment Manager reviews reports prepared by Dun & Bradstreet or other sources, to assess the credit quality of the Group's tenants and aims to ensure there is no excessive concentration of risk and that the impact of any default by a tenant is minimised. In respect of credit risk arising from other financial assets, which comprise cash and cash equivalents and a loan to a joint venture, exposure to credit risk arises from default of the counterparty with a maximum exposure equal to the carrying amounts of these instruments. In order to mitigate such risks, cash is maintained with major international financial institutions with high-quality credit ratings. Overview Strategic Report Governance Financial Statements Other information (unaudited) 87 Financial Statements ## NotestotheFinancialStatementscontinued 22. Financial instruments, properties and associated risks continued Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 88 The table below shows the balance of cash and cash equivalents held with various financial institutions at the end of the reporting year. Bank Ratings as at 30/09/2023 Group balance at 30/09/2023 €’000 Company balance at 30/09/2023 €’000 HSBC Bank plc A- 7,222 1,450 ING Bank N.V. A- 5,123 – BNP Paribas A- 1,274 – BRED Banque Populaire A 1,664 – Santander A- 7,096 7,089 Societe Generale SA A- 3,773 871 Commerzbank AG BBB 2,155 – FirstRand Bank Limited BBB- 80 80 Royal Bank of Scotland International BBB+ 4,058 4,058 32,445 13,548 Bank Ratings as at 30/09/2022 Group balance at 30/09/2022 €’000 Company balance at 30/09/2022 €’000 HSBC Bank plc A+ 2,743 862 ING Bank N.V. A+ 9,994 – BNP Paribas A+ 1,768 – BRED Banque Populaire A 6,671 – Santander A 6,905 6,900 Societe Generale SA A 4,569 2,247 Commerzbank AG BBB+ 1,644 – FirstRand Bank Limited BB- 30 30 34,324 10,039 The maximum exposure to credit risk for rent and service charge receivables at the reporting date by type of sector was: 30/09/2023 Carrying amount €’000 30/09/2022 Carrying amount €’000 Office 3,357 1,701 Retail (including retail warehousing) 561 381 Industrial 550 513 4,468 2,595 Rent receivables which are past their due date, but which were not impaired at the reporting date, were: 30/09/2023 Carrying amount €’000 30/09/2022 Carrying amount €’000 0–30 days 65 2,707 31–60 days 59 – 61–90 days 8 – 91 days plus 712 – 844 2,707 ## Liquidity risk Liquidity risk is the risk that the Group will encounter difficulties in meeting its financial obligations. Investments in property are relatively illiquid. However, the Group has tried to mitigate this risk by investing in properties that it considers to be good quality. In certain circumstances, the terms of the Group's debt facilities entitle the lender to require early repayment and in such circumstances the Group's ability to maintain dividend levels and the net asset value could be adversely affected. The Investment Manager prepares cash flows on a rolling basis to ensure the Group can meet future liabilities as and when they fall due. The following table indicates the undiscounted maturity analysis of the financial liabilities. | As at 30 September 2023 | Carrying amount €'000 | Expected cash flows €'000 | 6 months or less €'000 | 6 months to 2 years €'000 | 2–5 years €'000 | More than 5 years €'000 | | --- | --- | --- | --- | --- | --- | --- | | **Financial liabilities** | | | | | | | | Interest-bearing loans and borrowings and interest | 73,860 | 81,289 | 9,587 | 19,604 | 52,098 | – | | Trade and other payables | 4,856 | 4,856 | 4,856 | – | – | – | | **Total financial liabilities** | **78,716** | **86,145** | **14,443** | **19,604** | **52,098** | **–** | | As at 30 September 2022 | Carrying amount €'000 | Expected cash flows €'000 | 6 months or less €'000 | 6 months to 2 years €'000 | 2–5 years €'000 | More than 5 years €'000 | | **Financial liabilities** | | | | | | | | Interest-bearing loans and borrowings and interest | 69,050 | 70,845 | 461 | 36,459 | 33,925 | – | | Trade and other payables | 5,724 | 5,724 | 5,724 | – | – | – | | **Total financial liabilities** | **74,774** | **76,569** | **6,185** | **36,459** | **33,925** | **–** | ## Fair values The fair values of financial assets and liabilities approximate their carrying values in the financial statements. The fair value hierarchy levels are as follows: - Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities; - Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and - Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). There have been no transfers between Levels 1, 2 and 3 during the year (2022: none). The following summarises the main methods and assumptions used in estimating the fair values of financial instruments and investment property (which is a non-financial asset). ## Investment property – Level 3 Fair value is based on valuations provided by an independent firm of chartered surveyors and registered appraisers. These values were determined after having taken into consideration recent market transactions for similar properties in similar locations to the investment properties held by the Group. The fair value hierarchy of investment property is Level 3. See note 13 for further details. ## Interest-bearing loans and borrowings – Level 2 Fair values are based on the present value of future cash flows discounted at a market rate of interest. Issue costs are amortised over the period of the borrowings. Overview Strategic Report Governance Financial Statements Other information (unaudited) 89 Financial Statements # Notes to the Financial Statements continued # 22. Financial instruments, properties and associated risks continued # Trade and other receivables/payables All receivables and payables are deemed to be due within one year and as such the carrying value approximates the fair value. # Derivatives – Level 2 Fair values of derivatives are based on current market conditions such as the current EURIBOR rate compared to the terms of the derivative agreements. # Capital management The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence, and to sustain future development of the business. The objective is to ensure that it will continue as a going concern and to maximise return to its equity shareholders through an appropriate level of gearing. The Group's debt and capital structure comprises the following: | | 30/09/2023 €'000 | 30/09/2022 €'000 | | --- | --- | --- | | **Debt** | | | | Loan facilities and accrued interest | 73,828 | 68,877 | | **Equity** | | | | Called-up share capital and share premium | 60,971 | 60,971 | | Retained earnings and other reserves | 110,468 | 127,272 | | **Total equity** | **171,439** | **188,243** | | **Total debt and equity** | **245,267** | **257,120** | There were no changes in the Group's approach to capital management during the year. The Company's capital structure is comprised of equity only. # 23. Operating leases The Group leases out its investment property under operating leases. At 30 September 2023, the future minimum lease receipts under non-cancellable leases are as follows: | The Group as a lesser | 30/09/2023 €'000 | 30/09/2022 €'000 | | --- | --- | --- | | Less than one year | 16,511 | 14,426 | | Between one and five years | 41,938 | 41,945 | | More than five years | 13,189 | 7,435 | | | **71,638** | **63,806** | The total above comprises the total contracted rent receivable as at 30 September 2023. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 90 ## 24. Related party transactions Material agreements are disclosed in note 5 and Directors' emoluments are disclosed in note 9. Loans to related parties are disclosed in the consolidated and company statements of financial position and other amounts due from related parties are disclosed in note 17. Details of dividends received from the joint venture are disclosed in note 16. Interest receivable from the joint venture was impaired during the year; refer to note 6 for further details. ## 25. Contingent liability There are no contingent liabilities other than those disclosed in note 10. ## 26. Capital commitments At 30 September 2023 the Group had capital commitments of €400,000 (2022: €1,500,000) with regards to its directly held portfolio. This relates to various small projects across the portfolio. In addition, the Group is expected to incur a further €1.0 million of development expenditure with regards to the comprehensive refurbishment of the Paris, Boulogne-Billancourt asset. ## 27. Employees The Group has one employee who is appointed by the French branch of the Company. The total charge for the employee during the year was €22,000 (2022: €22,000). ## 28. Post balance sheet events There were no significant events occurring after the balance sheet date. Overview Strategic Report Governance Financial Statements Other information (unaudited) 91 Other information (unaudited) ## Other information ## (unaudited) Contents 94 EPRA and Headline Performance Measures(unaudited) 96 AlternativePerformanceMeasures (unaudited) 97 AIFMDDisclosures(unaudited) 99 Task Force on Climate-related Financial Disclosures(‘TCFD’) 102 Sustainability Performance Measures (Environmental)(unaudited) 109 Sustainability Performance Measures (Social) 111 Sustainability Performance Measures (Governance) 112 Streamlined Energy and Carbon Report 116 AssuranceSummaryStatement 117 Glossary 118 ExplanationofSpecialBusiness 120NoticeofAnnualGeneralMeeting 122ExplanatoryNotestothe NoticeofMeeting 126ShareholderInformation IBC Corporate Information Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Berlin,Germany ### 92 Overview Governance Financial Statements Other information (unaudited)Strategic Report ### 93 Other information (unaudited) ## EPRAandHeadlinePerformanceMeasures(unaudited) AsrecommendedbytheEuropeanPublicRealEstateAssociation(‘EPRA’),performancemeasuresaredisclosedinthe section below. a. EPRA earnings and earnings per share RepresentstotalIFRScomprehensiveincomeexcludingrealisedandunrealisedgains/lossesoninvestmentproperty, share of capital profit on joint venture investments and changes in fair value of financial instruments, including the loan made to the joint venture, divided by the weighted average number of shares. | | | Year to | | | Year to | | --- | --- | --- | --- | --- | --- | | 30September 2023 | | | 30September 2022 | | | | | | €’000 | | | €’000 | | | (unaudited) | | | (unaudited) | | TotalIFRScomprehensive(loss)/income (9,382) 13,918 Adjustments to calculate EPRA earnings: Net(gain)/lossfromfairvalueadjustmentoninvestmentproperty 19,726 (6,351) Currencytranslationdifferences(unrealised) – 73 Netdevelopment(revenue)/expenditure (1,538) (2,506) Shareofjointventureloss/profit (209) (561) Deferredtax (899) 1,280 Taxondevelopmentprofit – 702 Netchangeinfairvalueoffinancialinstruments 260 (921) ProvisionofinternalloanmadetoSevillejointventure(excludinginterest) – 444 EPRA earnings 7,958 6,078 Weighted average number of ordinary shares 133,734,686 133,734,686 IFRS earnings and diluted earnings (cents per share) (7.0) 10.4 EPRA earnings per share (cents per share) 6.0 4.5 b. EPRA Net Reinstatement Value | | | Year to | | Year to | | --- | --- | --- | --- | --- | | 30September 2023 | | | 30September 2022 | | | | | €’000 | | €’000 | | | (unaudited) | | | (audited) | IFRSequityattributabletoshareholders 171,439 188,243 Deferredtaxandtaxondevelopmentandtradingproperties 4,225 5,124 Adjustment for fair value of financial instruments (674) (934) Adjustmentinrespectofrealestatetransfertaxes 18,477 17,444 EPRA Net Reinstatement Value 193,467 209,877 Shares in issue at end of year 133,734,686 133,734,686 IFRS Group NAV per share (cents per share) 128.2 140.8 EPRA Net Reinstatement Value per share (cents per share) 144.7 156.9 Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 94 Overview Strategic Report Governance Financial Statements Other information (unaudited) c. EPRA Net Tangible Assets | | | Year to | | | Year to | | --- | --- | --- | --- | --- | --- | | 30September 2023 | | | 30September 2022 | | | | | | €’000 | | | €’000 | | | (unaudited) | | | (unaudited) | | IFRSequityattributabletoshareholders 171,439 188,243 Deferredtax 4,225 5,124 Adjustment for fair value of financial instruments (674) (934) EPRA Net Tangible Assets 174,990 192,433 Shares in issue at end of year 133,734,686 133,734,686 IFRS Group NAV per share (cents per share) 128.2 140.8 EPRA Net Tangible Assets per share (cents per share) 130.8 143.9 d. EPRA Net Disposal Value | | | | | Year to | | | | Year to | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 30September 2023 | | | | 30September 2022 | | | | | | | | | €’000 | | | | €’000 | | | | | (unaudited) | | | | (unaudited) | | | IFRSequityattributabletoshareholders | | | | 171,439 | | | 188,243 | | | Adjustmentforthefairvalueoffixedinterestratedebt | | | | 925 | | | | 987 | | EPRA Net Disposal Value | | | 172,364 | | | | 189,230 | | | Shares in issue at end of year | | 133,734,686 | | | | 133,734,686 | | | | IFRS Group NAV per share (cents per share) | | | | 128.2 | | | | 140.8 | | EPRA Net Disposal Value (cents per share) | | | | 128.9 | | | | 141.5 | e. Headline earnings reconciliation Headline earnings per share reflect the underlying performance of the Company calculated in accordance with the JohannesburgStockExchangeListingrequirements. | | | Year to | | | Year to | | --- | --- | --- | --- | --- | --- | | 30September 2023 | | | 30September 2022 | | | | | | €’000 | | | €’000 | | | (unaudited) | | | (unaudited) | | Total IFRS comprehensive income (9,382) 13,918 Adjustments to calculate headline earnings exclude: Netvaluation(profit)/lossoninvestmentproperty 19,276 (6,351) Netdevelopment(revenue)/expenditure (1,538) (2,506) | Share of joint venture loss on investment property | | (209) | | | (561) | | --- | --- | --- | --- | --- | --- | | Deferredtax | | (899) | | | 1,280 | | Taxondevelopmentprofit | | | – | | 701 | | Netchangeinfairvalueoffinancialinstruments | | 260 | | | (921) | | ProvisionofinternalloanmadetoSevillejointventure(excludinginterest) | | | – | | 444 | | Headline earnings | | 7,958 | | | 6,078 | | Weighted average number of ordinary shares | 133,734,686 | | | 133,734,686 | | | Headline and diluted headline earnings per share (cents per share) | | 6.0 | | | 4.5 | ### 95 Other information (unaudited) ## AlternativePerformanceMeasures(unaudited) TheCompanyusesthefollowingAlternativePerformanceMeasures(‘APMs’)initsAnnualReportandConsolidated Financial Statements. The Board believes that each of the APMs provides additional useful information to the shareholdersinordertoassesstheCompany’sperformance. Dividend Cover –theratioofEPRAEarnings(page94)todividendspaid(note12)intheperiod.Earnings excludescapitalitemssuchasrevaluationmovementsoninvestmentsandgainsorlossesonthedisposalof investment properties. Dividend Yield –thedividendspaid,expressedasapercentage,relativetotheshareprice. EPRA Earnings –earningsexcludingallcapitalcomponentsnotrelevanttotheunderlyingnetincomeperformanceof the Company, such as the unrealised fair value gains or losses on investment properties and any gains or losses from the sales of properties. See page 94 for a reconciliation of this figure. EPRA Net Tangible Assets –theIFRSequityattributabletoshareholdersadjustedtoreflectaCompany’stangible assets and assumes that no selling of assets takes place. EPRA Net Disposal Value –theIFRSequityattributabletoshareholdersadjustedtoreflecttheNAVunderanorderly saleofbusiness,whereanydeferredtax,financialinstrumentsandcertainotheradjustmentsarecalculatedtothefull extentoftheirliability. EPRA Net Reinstatement Value –IFRSequityattributabletoshareholdersadjustedtorepresentthevaluerequiredto rebuild the entity and assumes that no selling of assets takes place. Gross LTV –thevalueoftheexternalloansunadjustedforunamortisedarrangementcosts(page18)expressedasa percentageofthegrossassetsexcludingcashasattheBalanceSheetdate.Thegrossassetsarecalculatedona proportionalbasisandincludestheGroup’s50%shareintheSevillejointventure. LTV Net of Cash –thevalueoftheexternalloansunadjustedforunamortisedarrangementcosts(page18)lesscash held(page65)expressedasapercentageofthegrossassetsincludingcashasattheBalanceSheetdate.Thegross assetsarecalculatedonaproportionalbasisandincludestheGroup’s50%shareintheSevillejointventure. Ongoing Charges (including fund only expenses) –allfundexpenses(pertheconsolidatedstatementof comprehensiveincome)excludinganycapitalcostsincludingcapitalexpenditureoracquisitions/disposalfeesorone offitemsexpressedasapercentageoftheaveragequarterlyIFRSNAVsoftheCompanyforthefinancialperiod. Ongoing Charges (including fund and property expenses) –allfundandpropertyexpenses(pertheconsolidated statementofcomprehensiveincome)excludinganycapitalcostsincludingcapitalexpenditureoracquisitions/disposal feesoroneoffitemsexpressedasapercentageoftheaveragequarterlyIFRSNAVsoftheCompanyforthe financialperiod. Share Discount/Premium – the share price of the Company is derived from buyers and sellers trading their shares on thestockmarket.ThispriceisnotidenticaltotheNAVpershareoftheunderlyingassetslessliabilitiesofthe Company.IfthesharepriceislowerthantheNAVpershare,thesharesaretradingatadiscount.Sharestradingabove theNAVpersharearesaidtobeatapremium.Thediscount/premiumiscalculatedasthevariancebetweentheshare priceasattheBalanceSheetdateandtheNAVpershare(page3)expressedasapercentage. NAV total return –thereturntoshareholderscalculatedonapersharebasisbyaddingdividendspaid(note12)inthe periodonatime-weightedbasistotheincreaseordecreaseintheNAVpershare(page3). Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 96 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## AIFMDDisclosures(unaudited) AIFMD remuneration disclosures for Schroder Real Estate Investment Management Limited (‘SREIM’) for theyear to 31 December 2022 These disclosures form part of the non-audited section of this annual report and accounts and should be read in conjunctionwiththeSchrodersplcRemunerationReportonpages76to107ofthe2022AnnualReportandAccounts (availableontheGroup’swebsite–https://www.schroders.com/en/investor-relations/results-and-reports/annual- report-and-accounts-2022/),whichprovidesmoreinformationontheactivitiesofourRemunerationCommitteeand our remuneration principles and policies. TheAIFMaterialRiskTakers(‘AIFMRTs’)ofSREIMareindividualswhoseroleswithintheSchrodersGroupcan materially affect the risk of SREIM or any AIF fund that it manages. These roles are identified in line with the requirementsoftheAIFMDirectiveandguidanceissuedbytheEuropeanSecuritiesandMarketsAuthority. TheRemunerationCommitteeofSchrodersplchasestablishedaremunerationpolicytoensuretherequirementsof the AIFM Directive are met for all AIF MRTs. The Remuneration Committee and the Board of Schroders plc review remuneration strategy at least annually. The directors of SREIM are responsible for the adoption of the remuneration policy and periodically reviewing its implementation in relation to SREIM. During 2022 the remuneration policy was reviewedtoensurecompliancewiththeUCITS/AIFMDremunerationrequirementsandnosignificantchanges weremade. The implementation of the remuneration policy is, at least annually, subject to independent internal review for compliance with the policies and procedures for remuneration adopted by the Board of SREIM and the Remuneration Committee. The most recent review found no fundamental issues but resulted in minor recommendations relating to process documentation. The ratio of total costs to net income through the market cycle guides the total spend on remuneration each year. ThisisrecommendedbytheRemunerationCommitteetotheBoardofSchrodersplc.Thisapproachaligns remuneration with Schroders financial performance. In determining the remuneration spend each year, the underlying strength and sustainability of the business is taken into account, along with reports on risk, legal, compliance and internal audit matters from the heads of those areas. The remuneration data that follows reflects amounts paid in respect of performance during 2022. – The total amount of remuneration paid by SREIM to its staff is nil as SREIM has no employees. Employees of SREIM orotherSchrodersGroupentitieswhoserveasDirectorsofSREIMreceivenoadditionalfeesinrespectoftheir role on the Board of SREIM. – The following disclosures relate to AIF MRTs of SREIM. Those AIF MRTs were employed by and provided services to other Schroders group companies and clients. In the interests of transparency, the aggregate remuneration figures that follow reflect the full remuneration for each SREIM AIF MRT. The aggregate total remuneration paid to the73AIFMRTsofSREIMinrespectofthefinancialyearended31December2022is£53.67million,ofwhich £33.91millionwaspaidtoseniormanagement,£16.68millionwaspaidtoMRTsdeemedtobetakingriskonbehalf ofSREIMortheAIFfundsthatitmanagesand£3.08millionwaspaidtocontrolfunctionMRTs. Foradditionalqualitativeinformationonremunerationpoliciesandpracticesseewww.schroders.com/rem-disclosures. ### 97 Other information (unaudited) ## AIFMDDisclosures(unaudited)continued Leverage disclosure InaccordancewithAIFMDtheCompanyisrequiredtomakeavailabletoinvestorsinformationinrelationtoleverage. UnderAIFMD,leverageisanymethodbywhichtheexposureoftheCompanyisincreasedthroughtheborrowingof cashorsecurities,leverageembeddedinderivativepositionsorbyanothermeans.Itisexpressedasaratiobetween thetotalexposureoftheCompanyanditsnetassetvalueandiscalculatedinaccordancewiththe‘Grossmethod’and the‘Commitmentmethod’asdescribedintheAIFMD.TheGrossmethodrepresentstheaggregateofallthe Company’sexposuresotherthancashbalancesheldinthebasecurrency,whiletheCommitmentmethod,whichis calculatedonasimilarbasis,mayalsotakeintoaccountcashandcashequivalents,nettingandhedgingarrangements, as applicable. TheInvestmentManagerhassettheexpectedmaximumleveragepercentagesfortheCompanyandcalculatedthe actualleveragesasatJune2023asshownbelow(theCompanycalculatesandexternallyreportsitsleverageone quarterinarrears): Maximum Actual as at limit set 30.06.23 Grossleverage 200 133 Commitment leverage 240 151 TherehavebeennochangestothemaximumlevelsofleverageemployedbytheCompanyduringthefinancialyear noranybreachesofthemaximumlevelsduringthefinancialreportingperiod. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 98 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## TaskForceonClimate-relatedFinancialDisclosures(‘TCFD’) TheTaskForceonClimate-relatedFinancialDisclosures(‘TCFD’)aimstomainstreamreportingonclimate-related risksandopportunitiesinorganisations’annualfinancialfilings. TheTCFDrecommendationsarestructuredaroundfourthemes:Governance,Strategy,RiskManagement,and MetricsandTargets.Keyconceptswithintheframeworkinclude: – ‘transition’risks:arisingfromsociety’stransitiontoalowcarboneconomy(changingregulation andmarketexpectations,newtechnologiesetc.);and – ‘physical’risks:relatingtotheacute(storms,floodsandwildfiresetc.)andchronic(risingsealevels,increasingheat stressetc.)physicaleffectsofachangingclimate. Additional principles within TCFD include the importance of forward-looking assessment of climate-related risks and opportunities,and‘scenarioanalysis’.Scenarioanalysisisaprocessofidentifyingandassessingthepotential implications of a range of plausible future states under conditions of uncertainty. The recommendations note that scenario analysis for climate-related issues is a relatively new concept and that practices will evolve over time. TheCompany,asaninvestmenttrust,isexemptfromtherequirementtoreportagainsttheTCFDregulation.However, during the reporting year the Investment Manager has continued to review its policies and practices against TCFD criteria and developed a roadmap towards increased alignment. Building on our established consideration of sustainability within the investment process, Schroders believes it will be important to further integrate the assessment of climate-related risks and opportunities into decision-making and reporting processes. The outcome of our review and progress towards further alignment is set out below. TCFD Recommendation Approach Governance Describetheboard’soversightof TheBoardformallyreviewstheManager’sperformance,includingESG-relatedactivity,at climate-related risks and quarterlyBoardmeetings.AmoredetailedreviewoftheManager’sapproachtoESGiscarried opportunities. outattheannualstrategyreviewwhichincludesbutisnotlimitedto(i)Fundlevelsustainability performancemeasuredbyboththeManagerandthirdpartiessuchastheGlobalRealEstate SustainabilityBenchmark(‘GRESB’);(ii)assetlevelanalysis;(iii)areviewoftheManager’sESG policiesandproceduresand(iv)presentationsfromsustainabilityspecialists.TheManager reviews a materiality assessment annually to identify and assess material impacts, sustainability risks and opportunities arising from our sustainability aspects alongside severity, likelihood, and ability to influence. Impacts, risks and opportunities are also identified as originating from normal, abnormal or emergency conditions. Describemanagement’srolein Climate change is an established component of our sustainability programme. Responsibility for assessing and managing assessment and management of climate-related risk and opportunity is delegated to key climate-related risks and members of the Investment Management team, supported by regular reporting to the opportunities. Investment Committee. Schroders Head of Sustainability and Impact Investing recommends the Manager’sannualSustainabilityPolicyandObjectives,whicharereviewedandapprovedbythe Investment Committee. The Manager incorporates climate-related considerations into key stagesoftheinvestmentprocess,includingacquisitionproposals,annualAssetBusinessPlans andannualFundStrategyStatements.Eachofthesestepsoftheinvestmentprocessrequire approval by the Investment Committee. The Manager also prepares annual report and financial accounts for the Company, which include climate-related metrics and supports the Manager andBoard’smonitoringofperformanceandprogresstowardsclimate-relatedgoalsandtargets. Duringthefinancialyear,theManager’ssustainabilityteamwasbolsteredwiththerecruitment of an Energy and Carbon Lead, alongside a Climate Lead who maintains oversight of the Manager’sclimateresilienceprogramme.EngagementisacriticalcomponentoftheManager’s climate resilience programme with regular touchpoints with the Schroders Capital Sustainability & Impact working groups ensuring alignment of frameworks and approaches across the business andbenefittingfromthisextensivepoolofresource.TheManagerincludesESGcriteria, includingclimate-relatedrisks,aspartofitsformalquarterlyinvestmentriskmonitoring,whichis overseenbySchrodersGroupInvestmentRiskfunction,theresultsofwhicharepresentedtothe CompanyBoardaspartofthequarterlyBoardmaterialsanddiscussedasnecessary. ### 99 Other information (unaudited) ## TaskForceonClimate-relatedFinancialDisclosures(‘TCFD’) ## continued TCFD Recommendation Approach Strategy Describe the climate-related risks Our investment philosophy and process is underpinned by fundamental research and an andopportunitiestheCompany analytical approach that considers economic, demographic and structural influences on the hasidentifiedovertheshort, market. We are considering how climate change may impact on these factors over time, as well medium,andlongterm. as how government policies may enable mitigation of and adaption to climate change. Energy and carbon emissions performance of our assets is a critical climate-related strategic issue. As part of net zero carbon analysis utilising the industry standard Carbon Risk Real Estate Monitor(‘CRREM’)theManagerhasidentifiedthoseassetswhichmaybeexposedtopotential strandingrisk(includingCarbonValueatRisk(‘cVaR’))intheshort,mediumandlongerterm.The company continues to review asset ratings with respect to Energy Performance Certificates (‘EPC’)andsustainabilitycertifications(e.g.BREEAM)inrecognitionofthelegislative,policyand investor landscape continuing to strengthen over time in this regard. In the short, medium and longer term, the physical effects of changing climate also present potential material financial impacts to the Company. Using a third-party physical risk database the Manager has identified thehighestrisksasfollows:Drought,SevereStorms,CoastalFlooding,Heatingdegreedays, Heat stress, water pollution and water stress. Describetheimpactofclimate- TheManager’sacquisitionandassetbusinessplanningprocessesincludeconsiderationof relatedrisksandopportunities climate-related issues, and will include forward-looking assessment of asset alignment to Paris ontheCompany’sbusinesses, Aligned energy and carbon performance benchmarks, where information permits. We are also strategy, and financial planning. reviewingourexistingprocessesforscreeningacquisitionsandstandinginvestmentsfor climate-relatedphysicalrisks(e.g.flooding). AspartoftheNetZeroCarbonprojectonstandinginvestmentsactionsidentifiedintheasset business plans have been fed through, via the asset Impact and Sustainability Action Plans, into the forward-looking decarbonisation pathways to present the impact of known interventions. Converselythisalsoidentifieswheremoreactionisrequiredtoachievedecarbonisationgoals. We recognise the need and opportunity presented by climate change to improve operational efficiency,maintenancecostsandgeneratenewincomestreams(e.g.on-siteenergy)andwhich all support asset values. These actions also support the Company with increasing investor expectationsinrelationtoclimateactionandpreparingportfolioassetsfornewandemerging energyefficiencyregulations,increasesinenergycosts,carbontaxes,changingoccupier preferences and valuation considerations. With respect to physical risk adaptations considerations will likely include water recycling, overheating and solar gain reduction, cooling load capacity and plant sizing, high-wind protection, and suitable flooding mitigations should be reviewed moving forward. Describe the resilience of the Since2016,assetsoftheCompanyhavebeenincludedintheManager’sUKenergy Company’sstrategy,taking consumption and carbon emission reduction targets for assets where landlord operational intoconsiderationdifferent controlisretained.AspartoftheManagerandCompany’sNetZeroCarboncommitments, climate-related scenarios, during2022,theManagerreviewedtheCompany’sprogressagainstthebaselineexercise including a 2°C or lower scenario. conductedin2021.NetZeroCarbonpathwayshavebeendevelopedusingCRREMtopresent thedecarbonisationrequirementsneededtoachieveNetZeroCarbonby2050orsooner; alignedwitha‘ParisProof’decarbonisationtrajectorytopursueeffortstolimitglobalwarmingto 1.5°C.TheManagerhasdevelopedaNetZeroCarbonauditprogrammetoprovideaccurate modelling and specific recommendations in the form of costed energy conservation measures toachieveNetZeroCarbonby2050atthelatestforeachasset.Theoutputsoftheseauditswill assist in informing the Manager in developing climate-related actions within asset business plans goingforward.FurtherdetailsontheCompany’sapproachtoNetZeroCarbonarepresentedon page 25. On physical risk, Schroders has licenced a physical risk database through a third-party provider. Heat stress, water stress, flood hazard, heating degree days and cooling degree days are presented as both current and future risk scenarios allowing for interpretation of increasing ordecreasingexposureoftheportfolio.ThesearealignedeitherwithRCP4.5orRCP8.5 scenarios,andrangeintimeframesfrom2030,2060and2100.Naturalhazardvulnerability risks are present day assessments. Engaging tenants to collaborate to reduce building energy and carbon emissions is an increasingly important element of our sustainability and business strategy. We have green lease provisions within our standard lease agreement and have developed both a Schroders SustainableOccupierGuideandFitOutGuidesforTenants. The Manager continues to engage with the wider sector to determine and develop best practice withregardstoclimateresilience.OnesuchexamplebeingthesponsorshipoftheULIC-Change project. This aims to determine sector-level definitions and best practices in accounting for transitional risk cost implications for asset valuations, and inclusion of costs within business plan Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 discounted cash flows. ### 100 Overview Strategic Report Governance Financial Statements Other information (unaudited) TCFD Recommendation Approach Risk Management DescribetheCompany’s Schroders’EnvironmentalManagementSystem(‘EMS’)iscertifiedtoISO14001andappliesto processes for identifying and theassetmanagementoftheCompany’srealestateassets.KeycomponentsoftheEMSinclude assessing climate-related risks. adetailedmaterialityassessmentofrisksandopportunities,andaregistertomonitorexisting andemergingregulatoryrequirementsrelatedtoenergyandcarbonemissions.TheEMS includes subscription to a third-party sustainability legal review partner which supports ongoing complianceandfutureresilience.TheCompany’sprocessesforclimate-related(including transitionandphysicalrisks)riskmanagementareasdefinedinthe‘Strategy’sectionabove. DescribetheCompany’s Climate-relatedrisksaretrackedandmanagedthroughongoingmonitoring(e.g.energyand processes for managing climate- greenhouseemissionstrends),actionplans(e.g.energyefficiencyimprovementmeasures), related risks. certificationprogrammes(e.g.EnergyPerformanceCertificates)andtechnicalenergyaudits. Impact and Sustainability Action Plans also promote and track initiatives relating to climate opportunities(e.g.on-siterenewablesandelectricvehiclechargingprovision).Applyingan assessmentofParisAlignmentusingtheCRREMtoolaspartofourNetZeroPathwayenables considerationof‘strandingrisk’whichwillalsofeedintoourassetactionplansformanaged standing investments. On physical risk, the strategy is to utilise the third-party physical risk databasetoscreenacquisitions,assessstandinginvestmentportfoliosandidentifyrequiredrisk mitigation(i.e.enhanceddefences,divestment),adaptation,ortransfer(i.e.revisedinsurance policies)strategies.DuringthereportingyeartheManagerdevelopedanESGScorecardtohelp quantifythesustainabilityperformanceofitsrealestateassetsandmanageopportunitiesfor improvement. The Company has adopted this as part of its sustainability audits programme and willseektorollthisoutuniversallystartingwithmandatoryadoptionforallnewacquisitions. Describe how processes for TheManagerincludesESGcriteria,includingclimate-relatedrisks,aspartofitsformalquarterly identifying, assessing, and investmentriskmonitoring,whichisoverseenbySchrodersGroupInvestmentRiskfunction,the managing climate-related risks are resultsofwhicharepresentedtotheCompanyBoardaspartofthequarterlyBoardmaterials integratedintotheCompany’s and discussed as necessary. overall risk management. Metrics and Targets Disclose the metrics used by the Inthe‘SustainabilityPerformanceMeasures(Environmental)(unaudited)’sectionofthisreport Company to assess climate- we provide detailed performance trend data, intensity ratios and assessment methodologies related risks and opportunities in coveringenergyconsumption,GHGemissions,waterconsumption,wastegeneration,Energy line with its strategy and risk PerformanceCertificate(‘EPC’)profilesandothersustainabilitycertifications(e.g.BREEAM). management process. TheManager’ssubscriptiontoathird-partyphysicalriskdatabaseenablestheCompanyto quantifyitsexposuretophysicalrisksattheassetandportfoliolevelincludingweighted averagesbasedonGrossAssetValue. DiscloseScope1,Scope2,and,if Scope 1 and Scope 2 emissions for operational energy usage for the reporting year are disclosed appropriate, Scope 3 greenhouse inthe‘SustainabilityPerformanceMeasures(Environmental)(unaudited)’. gas(‘GHG’)emissions,andthe related risks. Scope3emissionsarenotcurrentlypresentedinthe‘SustainabilityPerformanceMeasures (Environmental)(unaudited)’.However,whereavailable,emissionsassociatedwithtenantenergy datahavebeenincludedwithintheManager’soperationalNetZeroCarbonbaseline. Describe the targets used by the NetZeroCarbonpathwayshavebeendeveloped,usingtheCarbonRiskRealEstateMethodology Company to manage climate- (‘CRREM’)tool,topresentthedecarbonisationrequirementsneededtoachieveNetZeroCarbon related risks and opportunities and by2050orsooner;alignedwitha‘ParisProof’decarbonisationtrajectorytopursueeffortstolimit performance against targets. globalwarmingto1.5°Candincludeinterimmilestonesat2030.Atportfoliolevelthisequatestoa 41%reductioninGHGemissionstobeachievedby2030,basedona2019baseline,withthe portfolio demonstrating a 35% reduction as of March 2022. The Company adopts the Managers targetaspartofSchrodersPLC’sRE100commitmenttosource100%oflandlordelectricityusing renewablesourcesby2025.TheCompanycontinuestomeasureitsexposuretophysicalclimate risks using a third-party data provider. ### 101 Other information (unaudited) ## SustainabilityPerformanceMeasures(Environmental)(unaudited) The Company reports sustainability information in accordance with EPRA Best Practice Recommendations on SustainabilityReporting(sBPR)2017,3rdEditionforthe12months1April2022–31March2023,presentedwith comparisonagainst2021/22.AspermittedbytheEPRASustainabilityReportingGuidelines,environmentaldatahas beendevelopedandpresentedinlinewiththeGlobalRealEstateSustainabilityBenchmark(‘GRESB’). ThereportingboundaryhasbeenscopedtowheretheCompanyhasoperationalcontrol:managedpropertieswhere theCompanyisresponsibleforpaymentofutilityinvoicesand/orarrangementofwastedisposalcontracts. ‘Operationalcontrol’hasbeenselectedasthereportingboundary(asopposedto‘financialcontrol’or‘equityshare’) as this reflects the portion of the portfolio where the Company can influence operational procedures and, ultimately, sustainability performance. The operational control approach is the most commonly applied within the industry. In2022/23,outofthetotal15assetsheldbytheCompanyat31March2023,fivewerewithintheoperationalcontrol reportingboundaryoftheCompany(i.e.‘managed’).Energyandwaterconsumptiondataisreportedaccordingto automatic meter reads, manual meter reads or invoice estimates. Historic consumption data have been restated where morecompleteandoraccuraterecordshavebecomeavailable.Whererequired,missingconsumptiondatahasbeen estimatedbypro-ratingdatafromotherperiodsusingrecognisedtechniques.Theproportionofdatathatisestimated is presented in the footnotes to the data tables. The Company at 31 March 2023 had one part time direct employee and is served by the employees of Schroder Real EstateInvestmentManagement(‘SREIM’)asInvestmentManagertotheCompany.Accordingly,theEPRA Overarching Recommendation for companies to report on the environmental impact of their own offices is not relevant/materialandnotpresentedinthisreport.Thisreporthasbeenpreparedbyenergyandsustainability consultants,EVORAGlobal. The Sustainability Performance Measures have been assured in accordance with AA1000 to provide a Type 2 ModerateAssuranceunqualifiedauditofthesustainabilitycontentlocatedonpage116oftheSEREITannualreport fortheyearending30September2023.ThefullAssuranceStatementcanbefoundatthefollowinglink: https://mybrand.schroders.com/m/740e9841acfa639d/original/SEREIT-EPRA-Annual-Report-Assurance- statement_Updated-Signed.pdf. Total energy consumption (Elec-Abs; DH&C-Abs; Fuels-Abs) ThetablebelowsetsouttotallandlordobtainedenergyconsumptionfromtheCompany’smanagedportfoliobysector. | | | Total electricity | | Total fuel | Total district heating/ | | | --- | --- | --- | --- | --- | --- | --- | | | | consumption | | consumption | cooling consumption | | | | | | (kWh) | (kWh) | | (kWh) | | Sector | | 2021 2022 2021 2022 2021 2022 | | | | | | Retail: Retail Centres: Warehouse | | 92,133 107,394 267,721 554,537 – – | | | | | | Coverage(landlord-procuredconsumption) | | 100% 100% 100% 100% – – | | | | | | Office: Corporate: Mid-Rise Office | | 733,113 674,449 – – 655,725 527,698 | | | | | | Coverage(landlord-procuredconsumption) | | 100% 100% – – 100% 100% | | | | | | Office: Corporate: High-Rise Office | | 207,315 227,049 1,432,741 1,143,511 1,179,753 1,010,561 | | | | | | Coverage(landlord-procuredconsumption) | | 100% 100% 100% 100% 100% 100% | | | | | | Industrial: Industrial Park | 235,377 200,519 62,655 74,797 – – | | | | | | | Coverage(landlord-procuredconsumption) | | 100% 100% 100% 100% – – | | | | | | Total | 1, 267,938 1,209,411 1,763,118 1,772,845 1,835,478 1,538,259 | | | | | | | Coverage(landlord-procuredconsumption) | | 100% 100% 100% 100% 100% 100% | | | | | | Total electricity, fuels and district heating | 4,866,534 4,520,514 | | | | | | | Coverage(landlord-procuredconsumption) | | 100% 100% | | | | | | Renewable electricity % | | | 84% 81% | | | | | Coverage(landlord-procuredconsumption) | | 100% 100% | | | | | – Consumptiondatarelatestothemanagedportfolioonly: – Retail:RetailCentres:Warehouse:commonpartsandsharedservices. – Office:Corporate:Mid-RiseOffice:commonpartsandsharedservices. – Office:Corporate:High-RiseOffice:commonparts,sharedservicesandtenantspace,whereprocuredby thelandlord. – Industrial:IndustrialPark:wholebuilding. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 102 Overview Strategic Report Governance Financial Statements Other information (unaudited) – Energy procured directly by tenants is not reported. – Percentageofdataestimatedthroughpro-ratingacrossboth2021/22and2022/23reportingperiod:electricity 4.31%,gas8.98%,districtheatinganddistrictheating/cooling6.09%. – Renewableelectricity(%)iscalculatedaccordingtotheattributesofenergysupplycontractsasat31March2023 andonlyreflectsrenewableelectricityprocuredundera100%‘greentariff’.Therenewablespercentageof standard(non‘greentariff’)energysuppliesarenotcurrentlyknownandthereforehasnotbeenincludedwithin this number. – Allenergywasprocuredfromathird-partysupplier.No‘self-generated’renewableenergywasconsumedduring the reporting period and therefore is not presented here. – Coverage(landlord-procuredconsumption)percentagerelatestotheproportionofassetsforwhichlandlord obtaineddatahasbeenreportedbycountoverthenumberofassetswithinscopeforthesector/utility.ForL4L coverage the same rule has been applied, therefore only keeping in scope the assets that are L4L. – Whereappropriate(forrelevantassets),consumptiondataandassetNLA/GIAhasbeenadjustedtoreflectthe Company’sshareofownership. Like for like energy consumption (Elec-LfL; DH&C-LfL; Fuels-LfL; Energy-Int) ThetablebelowsetsoutthelikeforlikelandlordobtainedenergyconsumptionfromtheCompany’smanaged portfolio by sector. | | Total electricity | | | | Total fuel | | | Total district heating | | | | | Like-for-like | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | consumption | | | | consumption | | | | consumption | | | | energy intensity | | | | | | ( kWh) | | | (kWh) | | | | | (kWh) | | | (kWh/m | 2 ) | | | | | | | % | | | % | | | | | % | | | % | | Sector | 2021 2022 | | Change 2021 2022 | | | Change 2021 2022 | | | | | Change 2021 2022 | | | Change | | Retail: Retail Centres: Warehouse 92,133 107,394 17% 267,721 554,537 107% – – – 64 117 84% Coverage (landlord- procured consumption) 100% 100% 100% 100% – – 100% 100% Office: Corporate: Mid-Rise Office 656,139 674,449 3% – – – 655,725.00 527,698.00 (20%) 77 70 (8%) Coverage (landlord- procured consumption) 100% 100% – – 100% 100% 100% 100% Office: Corporate: High-Rise Office 205,208.15 225,267.21 10% 1,432,741.32 1,143,510.55 (20%) 657,167.18 1,010,560.62 54% 136 141 4% Coverage (landlord- procured consumption) 100% 100% 100% 100% 100% 100% 100% 100% Industrial: Industrial Park 235,376.71 200,519.00 (15%) 62,655.35 74,796.92 19% – – – 118 109 (8%) Coverage (landlord- procured consumption) 100% 100% 100% 100% – – 100% 100% Total 1,188,857 1,207,629 2% 1,763,118 1,772,845 1% 1,312,892 1,538,259 17.17% Coverage (landlord- procured consumption) 100% 100% 100% 100% 100% 100% Total electricity, fuels and district heating 4,264,867 4,518,732 6% ### 103 Other information (unaudited) ## SustainabilityPerformanceMeasures(Environmental)(unaudited) ## continued | | Total electricity | | | | Total fuel | | | Total district heating | | | | | Like-for-like | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | consumption | | | | consumption | | | | consumption | | | | energy intensity | | | | | | ( kWh) | | | (kWh) | | | | | (kWh) | | | (kWh/m | 2 ) | | | | | | | % | | | % | | | | | % | | | % | | Sector | 2021 2022 | | Change 2021 2022 | | | Change 2021 2022 | | | | | Change 2021 2022 | | | Change | | Coverage (landlord- procured consumption) 100% 100% Renewable electricity % 83% 81% Coverage (landlord- procured consumption) 100% 100% Likeforlikeexcludesassetsthatwerepurchased,sold,underrefurbishmentorsubjecttoasignificantchangeinthe scope of reported data during the two years reported. – Consumptiondatarelatestothemanagedportfolioonly: – Retail:RetailCentres:Warehouse:commonpartsandsharedservices. – Office:Corporate:Mid-RiseOffice:commonpartsandsharedservices. – Office:Corporate:High-RiseOffice:commonparts,sharedservicesandtenantspace,whereprocuredby thelandlord. – Industrial:IndustrialPark:wholebuilding. – Energy procured directly by tenants is not reported. – Percentageofdataestimatedthroughpro-ratingacrossboth2021/22and2022/23reportingperiod:electricity 4.31%,gas8.98%,districtheatinganddistrictheating/cooling6.09%. – Renewableelectricity(%)iscalculatedaccordingtotheattributesofenergysupplycontractsasat31March2023 andonlyreflectsrenewableelectricityprocuredundera100%‘greentariff’(i.e.wheregenerationisfrom100% renewablesource).Therenewablespercentageofstandard(non‘greentariff’)energysuppliesarenotcurrently known and therefore has not been included within this number. – Intensity:Anintensitymeasureisreportedforassetswithinthelikeforlikeportfolio.Numerators/denominatorsare alignedatthesectorlevelasfollows: – Allsectors:WherethebuildinghasWholeBuildingEnergycoveragetheenergyconsumption(kWh)isdividedby 2 GrossInternalArea(‘GIAm ’). – Allsectors:WhereonlytheCommonareasispresenttheenergyconsumption(kWh)dividedbycommonparts 2 area(‘CPAm ’). – Allenergywasprocuredfromathird-partysupplier.No‘self-generated’renewableenergywasconsumedduring the reporting period and therefore is not presented here. – Coverage(landlord-procuredconsumption)relatestotheproportionofassetsforwhichlandlordobtaineddatahas been reported. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 104 Overview Strategic Report Governance Financial Statements Other information (unaudited) Greenhouse gas emissions (GHG-Dir-Abs; GHG-Indir-Abs; GHG-Int) ThetablebelowsetsouttheCompany’smanagedportfoliogreenhousegasemissionsbysector. | | Absolute emissions | | | Like-for-like emissions | | | Like-for-like intensity | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | (tCO | e) | | (tCO | e) | | (kg CO | e/m | 2 ) | | | | | 2 | | | 2 | | | 2 | | | Sector | | 2021 2022 2021 2022 % Change 2021 2022 % Change | | | | | | | | | Retail: Retail Centres: Warehouse Scope 1 49 101 49 101 106% Scope 2 32 34 32 34 5% 14 24 66% Scopes 1 & 2 81 135 81 135 66% Coverage 100% 100% 100% 100% 100% 100% Office: Corporate: Mid-Rise Office Scope 1 – – – – – Scope 2 417 341 390 341 (13%) 23 20 (13%) Scopes 1 & 2 417 341 390 341 (13%) Coverage(landlord-procuredconsumption) 100% 100% 100% 100% 100% 100% Office: Corporate: High-Rise Office Scope 1 263.62 209.26 263.62 209.26 (21%) Scope 2 302.64 261.28 173.44 261.19 51% 26 28 8% Scopes 1 & 2 566.26 470.54 437.07 470.45 8% Coverage 100% 100% 100% 100% 100% 100% Industrial: Industrial Park Scope 1 12 14 12 14 19% Scope 2 87 61 87 61 (30%) 39 29 (24%) | Scopes 1 & 2 98 74 | | 98 | | 74 (24%) | | --- | --- | --- | --- | --- | | Coverage(landlord-procuredconsumption) 100% 100% | 100% | | 100% 100% 100% | | | Total Scope 1 324 324 | | 324 | 324 0% | | | Total Scope 2 838 697 | | 682 | 697 2% | | | Total Scope 1 & 2 1,162 1,021 | 1,006 | | 1,021 1% | | | Coverage(landlord-procuredconsumption) 100% 100% | 100% | | 100% | | – Likeforlikeexcludesassetsthatwerepurchased,sold,underrefurbishmentorsubjecttoasignificantchangein the scope of reported data during the two years reported. – TheFund’sgreenhousegas(‘GHG’)inventoryhasbeendevelopedasfollows: – Scope1GHGemissionsrelatetotheuseon-siteofnaturalgasonly. – Scope2GHGemissionsrelatetotheuseofelectricity,districtheatinganddistrictcooling. – GHGemissionsfromelectricity(Scope2)arereportedaccordingtothe‘location-based’approach. – GHGemissionsarepresentedastonnesofcarbondioxideequivalent(tCO e)andGHGintensityispresentedas 2 2 kilogramsofcarbondioxideequivalent(kgCO e/m ),whereavailablegreenhousegasemissionsconversion 2 factors allow. – ElectricityGHGemissionsfactorsaretakenfromtheCO Emissions from Fuel Combustion, International Energy 2 Agency(2022and2021). – NaturalgasGHGemissionsfactorsaretakenfromCoMDefaultEmissionFactorsfortheMemberStatesofthe EuropeanUnion(2022) – DistrictHeatingandCoolingGHGemissionsfactorsaretakenfromtheEVORAdefaultdistrictcoolingcarbon emissionsfactorrespectively,whichisthenationalaveragefactorforGermany. – Emissionsdatarelatestothemanagedportfolioonly: – Retail:RetailCentres:Warehouse:commonpartsandsharedservices. – Office:Corporate:Mid-RiseOffice:commonpartsandsharedservices. – Office:Corporate:High-RiseOffice:commonparts,sharedservicesandtenantspace,whereprocuredby thelandlord. – Industrial:IndustrialPark:wholebuilding. ### 105 Other information (unaudited) ## SustainabilityPerformanceMeasures(Environmental)(unaudited) ## continued – Emissions associated with energy procured directly by tenants is not reported. – Intensity:Anintensitymeasureisreportedforassetswithinthelikeforlikeportfolio.Numerators/denominatorsare alignedatthesectorlevelasfollows: – Allsectors:WherethebuildinghasWholeBuildingEnergycoveragetheenergyconsumption(kWh)isdividedby 2 GrossInternalArea(‘GIAm ’). – Allsectors:WhereonlytheCommonareasispresenttheenergyconsumption(kWh)dividedbycommonparts 2 area(‘CPAm ’). – Coverage(landlord-procuredconsumption)relatestotheproportionofassetsforwhichlandlordobtaineddatahas been reported. Water (Water-Abs; Water-LfL; Water-Int) ThetablebelowsetsoutwaterconsumptionfromtheCompany’smanagedportfoliobysector. | | Absolute Water | | | | Like-for-like | | | Like-for-like | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | consumption | | | water consumption | | | | intensity | | | | (m | 3 ) | | | (m | 3 ) | (m³/m²) | | Sector | 2021 2022 2021 2022 % Change 2021 2022 % Change | | | | | | | | Retail: Retail Centres: Warehouse 363 443 363 443 22% 0 0 Coverage(landlord-procured 22% 100% 100% 100% 100% 100% 100% consumption) Office: Corporate: Mid-Rise Office 2,129 2,382 2,129 2,382 12% 0.12 0.14 Coverage(landlord-procured 12% 100% 100% 100% 100% 100% 100% consumption) Office: Corporate: High-Rise Office 26,632 – – – – – – Coverage(landlord-procured – – – – – 100% – consumption) Industrial: Industrial Park 108 116 108 116 8% 0 0 Coverage(landlord-procured 8% 100% 100% 100% 100% 100% 100% consumption) Total 29,232 2,941 2,599 2,941 13% Coverage(landlord-procured 100% 100% 100% 100% consumption) – Likeforlikeexcludesassetsthatwerepurchased,sold,underrefurbishmentorsubjecttoasignificantchangein thescopeofreporteddataduringthetwoyearsreported.Anumberofassetsdonothave2021/22and/or 2022/23dataavailable,andthereforecannotbeincorporatedinthelikeforlikecalculation. – Consumptiondatarelatestothemanageportfolioonly: – Retail:RetailCentres:Warehouse:wholebuilding. – Office:Corporate:Mid-RiseOffice:wholebuilding. – Office:Corporate:High-RiseOffice:wholebuilding. – Industrial:IndustrialPark:wholebuilding. – All water was procured from a municipal supply. As far as we are aware, no surface, ground, rainwater or wastewater from another organisation was consumed during the reporting period and therefore is not presented here. – Percentageofwaterdataestimatedthroughpro-ratingacrossboth2021/22and2022/23reportingperiod:0%. Intensity:Anintensitymeasureisreportedforassetswithinthelikeforlikeportfolio.Numerators/denominatorsare alignedatthesectorlevelasfollows: – Allsectors:WherethebuildinghasWholeBuildingEnergycoveragetheenergyconsumption(kWh)isdividedby 2 GrossInternalArea(‘GIAm ’). – Coverage(landlord-procuredconsumption)relatestotheproportionofassetsforwhichlandlordobtaineddatahas been reported. – Companyownershipshareis100%forallassetsincluded,thereforeconsumptiondataandassetNLA/GIAhasnot beenadjustedtoreflecttheCompany’sshareofownership. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 106 # Waste (Waste-Abs; Waste-LfL) The table below sets out waste from the Company's managed portfolio by disposal route and sector. | | Absolute tonnes | | | | Like-for-like tonnes | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2021 | | 2022 | | 2021 | | 2022 | | | | | Tonnes | % | Tonnes | % | Tonnes | % | Tonnes | % | | Retail: Retail Centres: Warehouse | Recycled | 0 | 0% | 0 | 0% | 0 | 0% | 0 | 0.0% | | | Incineration with energy recovery | 8 | 100% | 8 | 100% | 8 | 100% | 8 | 100.0% | | | Unknown | 0 | 0% | 0 | 0% | 0 | 0% | 0 | 0.0% | | | Landfill | 0 | 0% | 0 | 0% | 0 | 0% | 0 | 0.0% | | | Total | 8 | | 8 | | 8 | | 8 | | | | Coverage | 100% | | 100% | | 100% | | 100% | | | Office: Corporate: Mid-Rise Office | Recycled | 10 | 16% | 10 | 16% | 10 | 16% | 10 | 16% | | | Incineration with energy recovery | 55 | 84% | 55 | 84% | 55 | 84% | 55 | 84% | | | Unknown | 0 | 0% | 0 | 0% | 0 | 0% | 0 | 0% | | | Landfill | 0 | 0% | 0 | 0% | 0 | 0% | 0 | 0% | | | Total | 65 | | 65 | | 65 | | 65 | | | | Coverage (landlord-procured consumption) | 100% | | 100% | | 100% | | 100% | | | Office: Corporate: High-Rise Office | Recycled | 0.00 | - | 0.00 | - | 0.00 | - | 0.00 | - | | | Incineration with energy recovery | 0.00 | - | 0.00 | - | 0.00 | - | 0.00 | - | | | Unknown | 0.00 | - | 0.00 | - | 0.00 | - | 0.00 | - | | | Landfill | 0.00 | - | 0.00 | - | 0.00 | - | 0.00 | - | | | Total | 0.00 | | 0.00 | | 0 | | 0.00 | | | | Coverage | - | | - | | - | | - | | | Industrial: Industrial Park | Recycled | 2 | 36% | 2 | 11% | 0 | - | 0 | - | | | Incineration with energy recovery | 4 | 64% | 13 | 89% | 0 | - | 0 | - | | | Unknown | 0 | 0% | 0 | 0% | 0 | - | 0 | - | | | Landfill | 0 | 0% | 0 | 0% | 0 | - | 0 | - | | | Total | 7 | | 14 | | 0 | | 0 | | | | Coverage (landlord-procured consumption) | 100% | | 100% | | - | | - | | | Total | Recycled | 13 | 15.89% | 12 | 13.6% | 10 | 14.0% | 10 | 14.0% | | | Incineration with energy recovery | 68 | 84.11% | 76 | 86.4% | 64 | 86.0% | 64 | 86.0% | | | Unknown | 0 | 0.00% | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | | | Landfill | 0 | 0.00% | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | | | Total | 81 | | 88 | | 74 | | 74 | | | | Coverage (landlord-procured consumption) | 100% | | 100% | | 100% | | 100% | | - Whilst zero waste is sent direct to landfill, a residual component of the 'recycled' and 'incineration with energy recovery' waste streams may end up in landfill. - Like for like excludes assets that were purchased, sold, under refurbishment or subject to a significant change in the scope of reported data during the two years reported. - Waste data relates to the managed portfolio only. - Waste management procured directly by tenants is not reported. - Reported data relates to non-hazardous waste only, robust tonnage data on the small quantities of hazardous waste produced is not available. Overview Strategic Report Governance Financial Statements Other information (unaudited) 107 Other information (unaudited) # Sustainability Performance Measures (Environmental) (unaudited) continued - Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has been reported. # Sustainability certification: Green building certificates (Cert-Tot) The table below sets out the proportion of the Company's total portfolio with a Green Building Certificate by floor area. | Rating | Portfolio by floor area | | --- | --- | | (BREEAM In Use: Outstanding) | 0% | | (BREEAM In Use: Excellent) | 0% | | (BREEAM In Use: Very Good) | 0% | | (BREEAM In Use: Good) | 30% | | (BREEAM In Use: Pass) | 0% | | (BREEAM In Use: Unclassified) | 0% | | **Coverage** | **30%** | - Green building certificate records for the Company are provided as at 31 March 2023 by portfolio floor area. - Data provided includes managed and non-managed assets (i.e. the whole portfolio). # Sustainability certification: Energy Performance Certificates (Cert-Tot) The table below sets out the proportion of the Company's total portfolio with an Energy Performance Certificate by floor area. | Energy performance certificates Rating | Portfolio by floor area | | --- | --- | | A+ | 1.4% | | A | 7.3% | | B | 16.7% | | C | 11.8% | | D | 18.3% | | E | 1.3% | | F | 9.4% | | G | 0.0% | | Exempt | 0.0% | | No EPC | 33.8% | | **Total** | **100.0%** | | **Coverage** | **100%** | - Energy Performance Certificate ('EPC') records for the Company are provided for the portfolio as at 31 March 2023 by portfolio floor area. - Data provided includes the whole portfolio i.e. managed and non-managed assets. Schroeder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 108 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## SustainabilityPerformanceMeasures(Social) EPRA’sSustainabilityBestPracticesRecommendationsGuidelines2017(‘EPRA’sGuidelines’)includeSocialand Governancereportingmeasurestobedisclosedfortheentityi.e.theCompany.TheCompanyisanexternally managed real estate investment trust and has one part time direct employee. A number of these Social Performance measures relate to entity employees and therefore these measures are not relevant for reporting at the entity level. The InvestmentManagertotheCompany,SchroderRealEstateInvestmentManagementLimited,ispartofSchrodersPLC whichhasresponsibilityfortheemployeesthatsupporttheCompany.TheCompanyaimstocomplywithEPRA’s GuidelinesandthereforehasincludedSocialandGovernancePerformanceMeasuredisclosuresinthisreport. However, these are presented as appropriate for the activities and responsibilities of the Schroder Real Estate InvestmentTrustLimited(the‘Company’),SchrodersPLCortheInvestmentManager,SchroderRealEstate Investment Management Limited. The Schroders PLC Annual Report and Accounts for the 12 months to 31 December 2022 supports the performance measuresinrelationtotheInvestmentManagerassetoutbelow.SchrodersPLC’sprinciplesinrelationtopeople includingdiversity,genderpaygap,values,employeesatisfactionsurvey,wellbeingandretentioncanbefoundat: – https://mybrand.schroders.com/m/50eb9de07f463077/original/Schroders_Annual-Report-and- Accounts_2022.pdf – https://mybrand.schroders.com/m/f0e958d03af2f62/original/Schroders_Inclusion-Report_2022.pdf Inclusion (including diversity and gender pay ratio) Asat30September2023theCompanyBoardcomprisedfourmembers:1(25%female);3(75%male). The remuneration of the Company Board is set out on page 50 of this Report and Accounts document. For further information on Schroders PLC employee gender diversity, female representation and pay covering more employeecategories,pleaserefertoSchroders2022AnnualReportandAccounts(page30): – https://mybrand.schroders.com/m/50eb9de07f463077/original/Schroders_Annual-Report-and- Accounts_2022.pdf;and – https://mybrand.schroders.com/m/f0e958d03af2f62/original/schroders_inclusion-report_2022.pdf/ The following are reported for Schroders in relation to the Investment Management of the Company: Training and development (Emp-Training) Schrodersrequiresemployeestocompletemandatoryinternaltraining.Schrodersencouragesallstaffwith professionalqualificationstomaintainthetrainingrequirementsoftheirrespectiveprofessionalbody. Employee performance appraisals (Emp-Dev) Schrodersperformancemanagementprocessrequiresannualperformanceobjectivesettingandannualperformance reviews for all staff. The Investment Manager confirms that performance appraisals were completed for 100% of investmentstaffrelevanttotheCompanyin2022/23. The following are reported for Schroders PLC: Employee turnover and retention (Emp-Turnover) ForSchrodersPLCturnoverandretentionratespleaserefertoSchrodersAnnualReportandAccounts(page30): https://mybrand.schroders.com/m/50eb9de07f463077/original/Schroders_Annual-Report-and-Accounts_2022.pdf. ### 109 Other information (unaudited) ## Sustainability Performance Measures (Social) continued ### Employee health and safety (H&S-Emp) Schroders PLC does not include employee health and safety performance measures in its Annual Report and Accounts. *The following are reported in relation to the assets held in the Company's portfolio over the reporting period to 30 September 2023:* ### Asset health and safety assessments (H&S-Asset) The table below sets out the proportion of the Company's total landlord-controlled portfolio where health and safety impacts were assessed or reviewed for compliance or improvement. | | Portfolio by floor area (%) | | | --- | --- | --- | | | 2021/22 | 2022/23 | | All sectors | 100% | 100% | | **Coverage** | **100%** | **100%** | ### Asset health and safety compliance (H&S-Comp) The table below sets out the number of incidents of non-compliance with regulations/and or voluntary codes identified across the landlord-controlled portfolio. | | Number of incidents | | | --- | --- | --- | | | 2021/22 | 2022/23 | | All sectors | 0% | 0 | | **Coverage** | **100%** | **100%** | ### Community engagement, impact assessments and development programmes (Comty-Eng) The table below sets out the proportion of the Company's total portfolio completed local community engagement, impact assessments and/or development programs. | | Portfolio by number assets (%) | | | --- | --- | --- | | | 2021/22* | 2022/23* | | Retail: Retail Centres: Shopping Centre | 15% | | | Retail: Retail Centres: Warehouse | | 12% | | Office: Corporate: Mid-Rise Office | | 9% | | Office: Corporate: High-Rise Office | | | | Industrial: Industrial Park | | | | Mixed use: Other | | 16% | | Industrial: Manufacturing | | | | Industrial, Non-Refrigerated Warehouse | 22% | 9% | | Industrial: Manufacturing | | | | Retail: Other | | | | **Total** | **37%** | **47%** | \* Calculated using gross internal area ('GIA'). Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 110 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## SustainabilityPerformanceMeasures(Governance) Composition of the highest governance body (Gov-Board) TheBoardoftheCompanycomprised4non-independentdirectors(0executiveboardmembers)asat 30September2023: – Theaveragetenureofthefourdirectorsto30September2023is6yearsand9months. – Thenumberofdirectorswithcompetenciesrelatingtoenvironmentalandsocialtopicsis4/4andtheirexperience can be seen in their biographies. Nominating and selecting the highest governance body (Gov-Select) TheroleoftheNominationandRemunerationCommittee,chairedbySirJulianBerneyBt.,istoconsiderandmake recommendationstotheBoardonitscompositionsoastomaintainanappropriatebalanceofskills,experienceand diversity, including gender, and to ensure progressive refreshing of the Board. The Committee also ensures the level of Directors’feesremainappropriatetoattractcandidateswithrelevantexperienceandknowledgeandcompetitivewith peersandmarketpractice.Onindividualappointments,theNominationandRemunerationCommitteeleadsthe process and makes recommendations to the Board. Beforetheappointmentofanewdirector,theNominationandRemunerationCommitteepreparesadescriptionofthe roleandcapabilitiesrequiredforaparticularappointment.WhiletheNominationandRemunerationCommitteeis dedicated to selecting the best person for the role, it aims to promote diversification and the Board recognises the importanceofdiversity.TheBoardagreesthatitsmembersshouldpossessarangeofexperience,knowledge, professionalskillsandpersonalqualitiesaswellastheindependencenecessarytoprovideeffectiveoversightofthe affairs of the Company. Process for managing conflicts of interest (Gov-Col) TheCompany’sConflictsofInterestPolicysetsoutthepolicyandproceduresoftheBoardandtheCompany Secretaryforthemanagementofconflictsofinterest:https://www.schroders.com/en/identification-and- management-of-conflicts-of-interest/ TheBoardhasapprovedapolicyonDirectors’conflictsofinterest.Underthispolicy,Directorsarerequiredtodisclose all actual and potential conflicts of interest to the Board as they arise for consideration and approval. The Board may impose restrictions or refuse to authorise such conflicts if deemed appropriate. ### 111 Other information (unaudited) # Streamlined Energy and Carbon Report Schroder European Real Estate Investment Trust plc (the 'Company'/'SEREIT') invests in European growth cities and regions. It is a UK closed ended real estate investment company incorporated on 9 January 2015. The Company has a premium listing on the Official List of the UK Listing Authority and its shares have been trading on the Main Market of the London Stock Exchange (ticker: SERE) since 9 December 2015. It also has a secondary listing on the Main Board of the Johannesburg Stock Exchange (ticker: SCD). The Company is within the scope of the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, (the 'Regulations') and is required to report on its UK energy use, associated Scope 1 (direct) and 2 (indirect) greenhouse gas ('GHG') emissions, an intensity metric and, where applicable, global energy use (as defined in section 92 of the Climate Change Act 2008). This reporting is also referred to as Streamlined Energy and Carbon Reporting ('SECR'). In addition, the Regulations advise providing a narrative on energy efficiency actions taken in the previous financial year. This Energy and Carbon Report applies for the Company's Annual Report for the 12 months to 30 September 2023. The statement has however been prepared for the 12 months to 31 March 2023, to report annual figures for emissions and energy use for the period for which such information is available. The usage for the period 1 April 2022 to 31 March 2023 will be included in the annual report for the 12 months to 30 September 2023. As a property company, energy consumption and emissions result from the operation of buildings. The reporting boundary has been scoped to those held properties where the Company retained operational control: where the Company is responsible for operating the entire building, shared services (e.g. common parts lighting, heating and air conditioning), external lighting and/or void spaces. 'Operational control' has been selected as the reporting boundary (as opposed to 'financial control' or 'equity share') as this reflects the portion of the portfolio where the Company can influence operational procedures and, ultimately, sustainability performance. This incorporates consumption in tenant areas, where the landlord procures energy for the whole building. At 31 March 2023 the Company held five properties with operational control in total all of which are located in Continental Europe (i.e. outside of the UK and offshore area). The Company is not directly responsible for any GHG emissions/energy usage at single let/Full Repairing and Insuring assets nor at multi-let assets where the tenant is counterparty to the energy contract. These emissions form part of the wider value chain (i.e. 'Scope 3') emissions, which are not required to be reported on and not monitored at present. As a real estate company with only one part time direct employee and no company owned vehicles as at 31 March 2023, energy consumption and emissions associated with travel and occupation of corporate offices is either not relevant or material to report. Fugitive emissions associated with refrigerant losses from air conditioning equipment are not typically collected and aggregated across portfolios by the industry, however over the next year will look to improve monitoring emissions associated with refrigerant losses. In addition to reporting absolute energy consumption and GHG emissions, the Company has reported separately on performance within the 'like-for-like' portfolio, as well as providing intensity ratios, where appropriate. The like-for-like portfolio and intensity ratios include buildings where each of the following conditions is met: - Owned for the full 24-month period (sales/acquisitions are excluded). - No major renovation or refurbishment has taken place. - At least 24 months' data is available. Note also that voids where utility responsibility may be temporarily met by the Landlord are excluded. For the intensity ratios, the denominator determined to be relevant to the business is square metres of gross internal area for most sectors, including Offices, Retail Warehouses and Industrial Parks. Intensity ratio is expressed as: - Energy: kilowatt hours per metre square (gross internal area or common parts area) per year, or, kWh/m²/yr. - GHG: kilograms carbon dioxide equivalent per metre square (gross internal area or common parts area) per year, or, kgCO₂e/m²/yr. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 112 # Energy consumption and greenhouse gas emissions The table below sets out the Company's energy consumption. | | Absolute energy (kWh) | | Like-for-like energy (kWh) | | | --- | --- | --- | --- | --- | | | 2021/22 | 2022/23 | 2021/22 | 2022/23 | | Gas | 1,763,118 | 1,772,845 | 1,763,118 | 1,772,845 | | Electricity | 1,267,938 | 1,209,411 | 1,188,857 | 1,207,629 | | District heating/District cooling | 1,635,478 | 1,538,259 | 1,312,892 | 1,538,259 | | Total | 4,866,534 | 4,520,514 | 4,264,867 | 4,518,732 | | Change in energy | | (7%) | | 6% | The table below sets out the Company's greenhouse gas emissions. | | Absolute emissions (tCO₂e) | | Like-for-like emissions (tCO₂e) | | | --- | --- | --- | --- | --- | | | 2021/22 | 2022/23 | 2021/22 | 2022/23 | | Scope 1 (Direct emissions from gas consumption) | 324 | 324 | 324 | 324 | | Scope 2 (Indirect emissions from electricity) | 838 | 697 | 682 | 697 | | Total | 1,162 | 1,021 | 1,006 | 1,021 | | Change in emissions | | (12%) | | 1% | The like for like energy consumption for the 2022 fiscal year for the managed assets held within the Company has increased by 6%, the greenhouse gas emissions have increased by 1%. The table below sets out the Company's like for like energy and GHG intensities by sector. | | Energy intensities (kWh per m²) | | Emissions intensities (tCO₂e per m²) | | | --- | --- | --- | --- | --- | | | 2021/22 | 2022/23 | 2021/22 | 2022/23 | | Retail: Retail Centres: Warehouse | 64 | 117 | 14 | 24 | | Office: Corporate: Mid-Rise Office | 77 | 70 | 23 | 20 | | Office: Corporate: High-Rise Office | 136 | 141 | 26 | 28 | | Industrial: Industrial Park | 118 | 109 | 39 | 29 | Overview Strategic Report Governance Financial Statements Other information (unaudited) 113 Other information (unaudited) ## Streamlined Energy and Carbon Report continued Methodology – AllenergyconsumptionandGHGemissionsreportedoccurredattheCompany’sassetsallofwhicharelocatedin ContinentalEurope(i.e.outsideUKandoffshorearea). – Energy consumption data is reported according to automatic meter reads, manual meter reads or invoice estimates. Historic energy and consumption data have been restated where more complete and or accurate recordshavebecomeavailable.Whererequired,missingconsumptiondatahasbeenestimatedthroughpro-rata extrapolation.DatahasbeenadjustedtoreflecttheCompany’sshareofassetownership,whererelevant. – Data reported aligns with that reported under the EPRA Sustainability Reporting Performance Measures also disclosedwithintheCompany’sReportandAccounts.EPRASustainabilityReportingPerformanceMeasureshave been assured by an independent third party, in accordance with AA1000 Assurance Standard. The short form AssuranceStatementcanbefoundonpage116. – TheCompany’sGHGemissionsarecalculatedaccordingtotheprinciplesoftheGreenhouseGas(‘GHG’)Protocol Corporate Standard. – TheCompany’sGreenhouseGasEmissionsarereportedastonnesofcarbondioxideequivalent(tCO e),which 2 includesthefollowingemissionscoveredbytheGHGProtocol(whererelevantandavailablegreenhousegas | emissionsfactorsallow):carbondioxide(CO | ),methane(CH | | ),hydrofluorocarbons(‘HFCs’),nitrousoxide(N | | 0), | | --- | --- | --- | --- | --- | --- | | | 2 | | 4 | | 2 | | perfluorocarbons(‘PFCs’),sulphurhexafluoride(SF | | )andnitrogentrifluoride(NF | | ). | | | | | 6 | | 3 | | – GHGemissionsfromelectricity(Scope2)arereportedaccordingtothe‘location-based’approach. – Thefollowinggreenhousegasemissionsconversionfactorsandsourceshavebeenapplied: GHG emissions | Country Emissions source | | factor perkWh Emissions factor data source | | | | --- | --- | --- | --- | --- | | France | Electricity 2021 0.0542kgCO | | e CO | Emissions from Fuel Combustion, International Energy Agency | | | | | 2 | 2 | (2021),(2022) Electricity 2022 0.0514kgCO e 2 District Cooling 2022 0.247kgCO e EVORAdefaultdistrictcoolingcarbonemissionfactor–National 2 averagefactorforGermany. Germany Electricity 2021 0.3476kgCO e CO Emissions from Fuel Combustion, International Energy Agency 2 2 (2021),(2022) Electricity 2022 0.3127gCO e 2 District heating 0.247kgCO e EVORAdefaultdistrictheatingcarbonemissionfactor–National 2 averagefactorforGermany. TheNetherlands Electricity 2021 0.3678kgCO e CO Emissions from Fuel Combustion, International Energy Agency 2 2 (2021),(2022) Electricity 2022 0.3028kgCO e 2 France,Germany, Gas2021 0.1840kgCO e CRREM(2021),(2022)whichalignswithDEGRA/BEIS 2 theNetherlands Gas2022 0.1830kgCO e 2 Energy Efficiency Actions Environmental data management system and quarterly reporting EnvironmentaldatafortheCompanyiscollatedbysustainabilityconsultantsEvoraGlobalsupportedbytheir proprietary environmental data management system SIERA. Energy, water, waste and greenhouse gas emission data arecollectedandvalidatedforallassetswheretheportfoliohasoperationalcontrolonaquarterlybasis. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 114 Overview Strategic Report Governance Financial Statements Other information (unaudited) Energy target, audits and improvement programme TheInvestmentManagerhasanenergyandGHGemissionsperformancereductiontargettoachieve43%reduction inSEREITenergyintensityby2030(2021baseline–calculatedonwholebuildingperformancefromlandlord- controlledassets).Thisisaccompaniedbyatargetof15%reductioninGHGemissionsintensityby2030(2021 baseline–calculatedonwholebuildingperformancefromlandlord-controlledassets);thistargetisinclusiveof decarbonisationofGermany’s,France’sandtheNetherlands’electricitygridoverrecentyears. TheInvestmentManager,togetherwithsustainabilityconsultantsEvoraGlobalandpropertymanagers,looksto identify and deliver energy and greenhouse gas emissions reductions on a cost-effective basis. The programme involves reviewing all managed assets within the Fund and identifying and implementing improvement initiatives, where viable. The process is of continual review and improvement. Energy performance improvement initiatives undertaken at several assets during the reporting period include LED upgrades,BMSupgradestosmartersystems,HVACupgradestoefficienttechnologies.Energyauditstoidentify opportunities and to support the Energy Savings Opportunity Scheme compliance and energy demand monitoring programmes. Recognising the need for the real estate industry to address its carbon impact The Investment Manager joined other membersoftheBetterBuildingsPartnership(‘BBP’)inSeptember2019tosigntheMemberClimateChange Commitment,andinDecember2020,publishedits‘PathwaytoNetZeroCarbon’–whichcanbefound https://www.schroders.com/en/sysglobalassets/email/uk/realestate/2020/schroder-real-estate-net-zero-carbon- pathway-december-2020_1621372_v1.pdf. Renewable electricity tariffs and carbon offsets The Investment Manager has an objective to procure 100% renewable electricity for all landlord-controlled supplies for whichithasresponsibility,whichincludestheassetsoftheFund,by2025.Asat31March2023,81%oftheFund’s landlord-controlledelectricitywasonrenewabletariffs.Nocarbonoffsetswerepurchasedduringthereportingperiod. ### 115 Other information (unaudited) # Assurance Summary Statement S&P Global Sustainable®, a business of S&P Global Inc. ('Sustainable!') was engaged by Schroder Real Estate Investment Management Limited ('SREIM') to provide assurance of the EPRA sustainability content of the Schroder European Real Estate Investment Trust plc's ('SEREIT') Annual report and Consolidated Financial Statements 2023 (the 'Report'). The Report is prepared for the year ended 30 September 2023, however the EPRA sustainability data which forms part of this assurance pertains to the period 1 April 2022 to 31 March 2023. The assurance was provided in accordance with AccountAbility's AA1000 Assurance Standard V3 (AA1000AS) Type 2 moderate level and EPRA Best Practice Recommendations for Sustainability Reporting (sBPR) 2017 3rd Edition. The scope of assurance covered a series of indicators and assertions contained in the report including: - Absolute and Like-For-Like: - Electricity Consumption (kWh) - District Heating/cooling (kWh) - Fuels Consumption (kWh) - Water Consumption (m³) - Greenhouse Gas ('GHG') Emissions (tCO₂e) - Waste (tonnes) - Intensity Calculations: - Energy (kWh/m³) - GHG (kgCO₂e/m³) - Water (m³/m³) - Energy rating coverage (%) - Green Building Certification coverage (%) - Alignment check of SEREIT's reporting against EPRA sBPR Guidelines 2017 across all the performance measures. Sustainable!'s full assurance statement includes certain limitations, findings and recommendations for improvement, adherence to AA1000 Accountability Principles, and a detailed assurance methodology. The full assurance statement with Sustainable!'s independent opinion can be found at https://mybrand.schroders.com/m/740e9841acfa639d/original/SEREIT-EPRA-Annual-Report-Assurance-statement_Updated-Signed.pdf. AA1000 Licensed Report 000-120/V3-8JHGO Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 116 Overview Strategic Report Governance Financial Statements Other information (unaudited) ## Glossary Admission meanstheadmissionoftheCompany’sordinarysharestothepremiumsegmentoftheOfficialList,to tradingontheLSE’smainmarketforlistedsecurities,andtotradingonthemainboardoftheJSEon 9 December 2015. AGM meanstheAnnualGeneralMeetingoftheCompany. Articles meanstheCompany’sArticlesofAssociation,asamendedfromtimetotime. Companies Act meanstheCompaniesAct2006,asamended. Company is Schroder European Real Estate Investment Trust plc. Directors means the Directors of the Company as at the date of this document and their successors and ‘Director’meansanyoneofthem. Disclosure Guidance and meansthedisclosureguidanceandtransparencyrulesmadebytheFCAunderPartVIIoftheUK Transparency Rules Financial Services and Markets Act 2000, as amended. Earnings per share (‘EPS’) istheprofitaftertaxationdividedbytheweightedaveragenumberofsharesinissueduringtheperiod. DilutedandAdjustedEPSpersharearederivedassetoutunderNAV. Estimated rental value (‘ERV’) istheGroup’sexternalvaluers’reasonableopinionastotheopenmarketrentwhich,onthedateof valuation,couldreasonablybeexpectedtobeobtainedonanewlettingorrentreviewofaproperty. EPRA is the European Public Real Estate Association. EPRA earnings representsthenetincomegeneratedfromtheoperationalactivitiesoftheGroup.Itexcludesall capital components not relevant to the underlying net income performance of the portfolio, such as therealisedandunrealisedfairvaluegainsorlossesoninvestmentproperties,anddebtinstruments, and unrealised gains or losses on currency translation. FCA istheUKFinancialConductAuthority. Gearing istheGroup’snetdebtasapercentageofnetassets. Group is the Company and its subsidiaries. Initial yield istheannualisednetrentsgeneratedbytheportfolioexpressedasapercentageoftheportfolio valuation. Interest cover isthenumberoftimesGroupnetinterestpayableiscoveredbyGroupnetrentalincome. IPO istheinitialplacingandoffermadepursuanttoaprospectusdated11November2015. JSE is JSE Limited. Loan to value (‘LTV’) isaratiowhichexpressesthegearingonanassetorwithinacompanyorGroupbydividingthe outstanding loan amount by the value of the assets on which the loan is secured. LSE istheLondonStockExchange. Listing rules meansthelistingrulesmadebytheFCAunderPartVIIoftheUKFinancialServicesandMarketsAct 2000, as amended. Net Asset Value (‘NAV’) isthetotalassets’valueminustotalliabilities. NAV total return is calculated taking into account the timing of dividends, share buybacks and issuance. Net rental income is the rental income receivable in the period after payment of ground rents and net property outgoings. Passing rent is the annual rental income currently receivable on a property as at the Balance Sheet date. This excludesrentalincomeforrentfreeperiodscurrentlyinoperationandservicechargeincome. WAULT istheweightedaverageunexpiredleaseterm.Thisistheaveragetimeremainingtothenextlease breakdateorleaseexpirydate. ### 117 Other information (unaudited) # Explanation of Special Business # **THIS SECTION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.** If you are in any doubt about the action you should take, you should consult an independent financial adviser, authorised under the Financial Services and Markets Act 2000. If you have sold or transferred all of your ordinary shares in the Company, please forward this document with its accompanying form of proxy at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. The AGM of the Company will be held on Monday, 18 March 2024 at 12.00 p.m. at 1 London Wall Place, London EC2Y 5AU. The formal Notice of Meeting is set out on pages 120 to 125. The following paragraphs explain the special business to be put to the AGM. # **Special Business** # **Resolution 10 – Directors' authority to allot ordinary shares (ordinary resolution) and Resolution 11 – Power to disapply pre-emption rights (special resolution)** The Investment Manager believes that there are ongoing opportunities to generate attractive risk-adjusted returns through investing in accordance with the Company's investment policy. In order to facilitate further equity raises to fund such investment opportunities, the Directors are seeking authority to allot up to a specified number of ordinary shares for cash without first offering them to existing shareholders in accordance with statutory pre-emption procedures. Appropriate resolutions will be proposed at the forthcoming AGM and are set out in full in the Notice of AGM. An ordinary resolution will be proposed to authorise the Directors to allot shares up to a maximum aggregate nominal amount of £1,337,346.86 (being 10% of the issued share capital as at the date of the Notice of the AGM). A special resolution will also be proposed to give the Directors authority to allot securities for cash on a non-pre-emptive basis up to a maximum aggregate nominal amount of £1,337,346.86 (being 10% of the Company's issued share capital as at the date of the Notice of the AGM). This authority includes shares that the Company sells or transfers that have been held in treasury. The Board has established guidelines for treasury shares and will only reissue shares held in treasury at a price equal to or greater than the Company's net asset value (inclusive of current year income) plus any applicable costs. The Directors do not intend to allot shares pursuant to these authorities other than to take advantage of opportunities in the market as they arise and only if they believe it to be advantageous to the Company's existing shareholders to do so and when it would not result in any dilution of NAV per share. If approved, both of these authorities will expire at the conclusion of the AGM in 2025 unless renewed, varied or revoked earlier. # **Resolution 12 – Authority to make market purchases of the Company's own shares (special resolution)** At the AGM held on 2 February 2023, the Company was granted authority to make market purchases of up to 20,046,829 ordinary shares of 10 pence each for cancellation or holding in treasury. No ordinary shares have been bought back under this authority and the Company therefore has remaining authority to purchase up to 20,046,829 ordinary shares. This authority will expire at the forthcoming AGM. The Directors believe it is in the best interests of the Company and its shareholders to have a general authority for the Company to buy back its ordinary shares in the market as they keep under review the share price discount to net asset value and the purchase of ordinary shares. A special resolution will be proposed at the forthcoming AGM to give the Company authority to make market purchases of up to 14.99% of the ordinary shares in issue as at the date of the Notice of the AGM. The Directors will exercise this authority only if the Directors consider that any purchase would be for the benefit of the Company and its shareholders, taking into account relevant factors and circumstances at the time. Any ordinary shares so purchased would be held in treasury. If renewed, the authority to be given at the 2024 AGM will lapse at the conclusion of the AGM in 2025 unless renewed, varied or revoked earlier. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 118 Overview Strategic Report Governance Financial Statements Other information (unaudited) Resolution 13 – Notice period for general meetings (specialresolution) Resolution13setoutintheNoticeofAGMisaspecialresolutionandwill,ifpassed,allowtheCompanytohold generalmeetings(otherthanannualgeneralmeetings)onaminimumnoticeperiodof14cleardays,ratherthan21 cleardaysasrequiredbytheCompaniesAct2006.TheapprovalwillbeeffectiveuntiltheCompany’snextAGMto beheldin2025.TheDirectorswillonlycallgeneralmeetingson14cleardays’noticewhentheyconsiderittobeinthe bestinterestsoftheCompany’sshareholdersandwillonlydosoiftheCompanyoffersfacilitiesforallshareholdersto votebyelectronicmeansandwhenthematterneedstobedealtwithexpediently. Recommendation The Board considers that the resolutions relating to the above items of special business and the other items of business setoutintheNoticeofMeeting,includingthere-electionofDirectors,areinthebestinterestsofshareholdersasa whole. Accordingly, the Board unanimously recommends to shareholders that they vote in favour of the above resolutionsandtheotherresolutionstobeproposedattheforthcomingAGM,astheyintendtodoinrespectoftheir own beneficial holdings. Sir Julian Berney Bt. Chairman 5 December 2023 ### 119 Other information (unaudited) # Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of Schroder European Real Estate Investment Trust plc will be held on Monday, 18 March 2024 at 12.00 p.m. at 1 London Wall Place, London EC2Y 5AU to consider the following resolutions of which resolutions 1 to 10 will be proposed as ordinary resolutions and resolutions 11 to 13 will be proposed as special resolutions: # Ordinary Business 1. To receive the Report of the Directors and the audited accounts for the year ended 30 September 2023. 2. To approve the Directors' Remuneration Report for the year ended 30 September 2023. 3. To re-elect Sir Julian Berney Bt. as a Director of the Company. 4. To elect Mr Mark Beddy as a Director of the Company. 5. To re-elect Mr Mark Patterson as a Director of the Company. 6. To re-elect Ms Elizabeth Edwards as a Director of the Company. 7. To appoint Ernst & Young LLP as Auditor to the Company. 8. To authorise the Directors to determine the remuneration of Ernst & Young LLP as Auditor to the Company. 9. To approve the Company's dividend policy as set out on page 42 of the Annual Report and Accounts for the year ended 30 September 2023. # Special Business 10. To consider and, if thought fit, pass the following resolution as an ordinary resolution: 'That in substitution for all existing authorities the Directors be generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the 'Act') to exercise all the powers of the Company to allot relevant securities (within the meaning of section 551 of the Act) up to an aggregate nominal amount of £1,337,346.86 (being 10% of the issued ordinary share capital, at the date of this Notice) for a period expiring (unless previously renewed, varied or revoked by the Company in general meeting) at the conclusion of the next Annual General Meeting of the Company, but that the Company may make an offer or agreement which would or might require relevant securities to be allotted after expiry of this authority and the Board may allot relevant securities in pursuance of that offer or agreement.' 11. To consider and, if thought fit, to pass the following resolution as a special resolution: 'That, subject to and conditional on the passing of Resolution 10 set out above, the Directors be and are hereby empowered, pursuant to sections 570 and 573 of the Act, to allot or sell equity securities (including any ordinary shares held in treasury) (as defined in section 560(1) of the Act) pursuant to the authority given in accordance with section 551 of the Act by Resolution 10 and/or where such allotment constitutes an allotment of equity securities by virtue of section 560(2) of the Act as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities up to an aggregate nominal amount of £1,337,346.86 (representing 10% of the aggregate nominal amount of the share capital in issue at the date of this Notice); and provided that this power shall expire at the conclusion of the next Annual General Meeting of the Company but so that this power shall enable the Company to make offers or agreements before such expiry which would or might require equity securities to be allotted after such expiry.' Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 120 Overview Strategic Report Governance Financial Statements Other information (unaudited) 12.Toconsiderand,ifthoughtfit,topassthefollowingresolutionasaspecialresolution:  ‘ThattheCompanybeandisherebygenerallyandunconditionallyauthorisedinaccordancewithsection701ofthe Acttomakemarketpurchases(withinthemeaningofsection693oftheAct)ofordinarysharesof10penceeachin thecapitaloftheCompany(‘Shares’)atwhateverdiscounttheprevailingmarketpricerepresentstotheprevailing netassetvalueperShareprovidedthat: a. ThemaximumnumberofShareswhichmaybepurchasedis20,046,829,representing14.99%ofthe Company’sissuedordinarysharecapitalasatthedateofthisNotice; b. Themaximumprice(exclusiveofexpenses)whichmaybepaidforaShareshallnotexceedthehigherof: i. 105%oftheaverageofthemiddlemarketquotationsfortheSharesastakenfromtheLondonStockExchange DailyOfficialListforthefivebusinessdaysprecedingthedateofpurchase;and ii. the higher of the last independent bid and the highest current independent bid on the London Stock Exchange; c. Theminimumprice(exclusiveofexpenses)whichmaybepaidforaShareshallbe10pence,beingthenominal valueperShare; d. ThisauthorityherebyconferredshallexpireattheconclusionofthenextAnnualGeneralMeetingofthe Companyin2025(unlesspreviouslyrenewed,variedorrevokedbytheCompanypriortosuchdate); e. The Company may make a contract to purchase Shares under the authority hereby conferred which will or may beexecutedwhollyorpartlyaftertheexpirationofsuchauthorityandmaymakeapurchaseofSharespursuant toanysuchcontract;and f. AnySharessopurchasedwillbecancelledorheldintreasury.’ 13.Toconsiderand,ifthoughtfit,topassthefollowingresolutionasaspecialresolution:  ‘Thatageneralmeeting,otherthananAnnualGeneralMeeting,maybecalledonnotlessthan14cleardays’notice.’ By order of the Board For and on behalf of Schroder Investment Management Limited Registered Number: 09382477 Registered Office: 1 London Wall Place, London EC2Y 5AU 5 December 2023 ### 121 Other information (unaudited) ## ExplanatoryNotestotheNoticeofMeeting Information for shareholders on the UK register 1. Ordinaryshareholdersareentitledtoattendandvoteatthemeetingandtoappointoneormoreproxies,whoneed notbeashareholder,astheirproxytoexercisealloranyoftheirrightstoattend,speakandvoteontheirbehalfat the meeting.  Aproxyformisattached.IfyouwishtoappointapersonotherthantheChairmanasyourproxy,pleaseinsertthe nameofyourchosenproxyholderinthespaceprovidedatthetopoftheform.Iftheproxyisbeingappointedin relationtolessthanyourfullvotingentitlement,pleaseenterintheboxnexttotheproxyholder’snamethenumber ofsharesinrelationtowhichtheyareauthorisedtoactasyourproxy.Ifleftblankyourproxywillbedeemedtobe authorisedinrespectofyourfullvotingentitlement(orifthisproxyformhasbeenissuedinrespectofadesignated accountforashareholder,thefullvotingentitlementforthatdesignatedaccount).Additionalproxyformscanbe obtainedbycontactingtheCompany’sRegistrars,EquinitiLimited,on08000320641,oryoumayphotocopythe attachedproxyform.Pleaseindicateintheboxnexttotheproxyholder’snamethenumberofsharesinrelationto whichtheyareauthorisedtoactasyourproxy.Pleasealsoindicatebytickingtheboxprovidediftheproxy instructionisoneofmultipleinstructionsbeinggiven.Completionandreturnofaformofproxywillnotprecludea memberfromattendingtheAnnualGeneralMeetingandvotinginperson. On a vote by show of hands, every ordinary shareholder who is present in person has one vote and every duly appointedproxywhoispresenthasonevote.Onapollvote,everyordinaryshareholderwhoispresentinpersonor bywayofaproxyhasonevoteforeveryshareofwhichhe/sheisaholder.  The‘VoteWithheld’optionontheproxyformisprovidedtoenableyoutoabstainonanyparticularresolution. Howeveritshouldbenotedthata‘VoteWithheld’isnotavoteinlawandwillnotbecountedinthecalculationof theproportionofthevotes‘For’and‘Against’aresolution.  Aproxyformmustbesignedanddatedbytheshareholderorhisorherattorneydulyauthorisedinwriting.Inthe case of joint holdings, any one holder may sign this form. The vote of the senior joint holder who tenders a vote, whetherinpersonorbyproxy,willbeacceptedtotheexclusionofthevotesoftheotherjointholderandforthis purpose seniority will be determined by the order in which the names appear on the Register of Members in respect ofthejointholding.Tobevalid,proxyform(s)mustbecompletedandreturnedtotheCompany’sRegistrars,Equiniti Limited,AspectHouse,SpencerRoad,Lancing,WestSussexBN996DA,intheenclosedenvelopetogetherwith any power of attorney or other authority under which it is signed or a copy of such authority certified notarially, to arrivenolaterthan48hoursbeforethetimefixedforthemeeting,oranadjournedmeeting.Shareholdersmayalso appointaproxytovoteontheresolutionsbeingputtothemeetingelectronicallyatwww.sharevote.co.uk. ShareholderswhoarenotregisteredtovoteelectronicallywillneedtoentertheVotingID,TaskIDandShareholder ReferenceNumbersetoutintheirpersonalisedproxyform.Alternatively,shareholderswhohavealreadyregistered withEquiniti’sShareviewservicecanappointaproxybyloggingontotheirportfolioatwww.shareview.co.uk using theiruserIDandpassword.Onceloggedinclick‘View’onthe‘MyInvestments’pageandclickonthelinktovote. The on-screen instructions give details on how to complete the appointment process. Please note that to be valid, yourproxyinstructionsmustbereceivedbyEquinitinolaterthan12.00p.m.onThursday,14March2024.Ifyou haveanydifficultieswithonlinevoting,youshouldcontacttheshareholderhelplineon08000320641.Ifan ordinaryshareholdersubmitsmorethanonevalidproxyappointment,theappointmentreceivedlastbeforethe latesttimeforreceiptofproxieswilltakeprecedence.  ShareholdersmaynotuseanyelectronicaddressprovidedeitherinthisNoticeofAnnualGeneralMeetingorany relateddocumentstocommunicatewiththeCompanyforanypurposesotherthanexpresslystated. Representatives of shareholders that are corporations will have to produce evidence of their proper appointment whenattendingtheAnnualGeneralMeeting. 2. Anypersontowhomthisnoticeissentwhoisapersonnominatedundersection146oftheCompaniesAct2006 toenjoyinformationrights(a‘NominatedPerson’)may,underanagreementbetweenhimorherandthe shareholderbywhomheorshewasnominated,havearighttobeappointed(ortohavesomeoneelseappointed)as Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 122 a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he or she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. The statement of the rights of ordinary shareholders in relation to the appointment of proxies in note 1 above does not apply to Nominated Persons. The rights described in that note can only be exercised by ordinary shareholders of the Company. 3. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company has specified that only those shareholders registered in the Register of members of the Company at 6.30 p.m. on Thursday, 14 March 2024, or 6.30 p.m. two days prior to the date of an adjourned meeting, shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to the Register of Members after 6.30 p.m. on Thursday, 14 March 2024 shall be disregarded in determining the right of any person to attend and vote at the meeting. 4. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST manual. The CREST manual can be viewed at www.euroclear.com. A CREST message appointing a proxy (a 'CREST proxy instruction') regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction previously given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID RA19) by the latest time for receipt of proxy appointments. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 12.00 p.m. on Thursday, 14 March 2024 in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity's associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. 5. Copies of the terms of appointment of the non-executive Directors and a statement of all transactions of each Director and of his family interests in the shares of the Company, will be available for inspection by any member of the Company at the registered office of the Company during normal business hours on any weekday (English public holidays excepted) and at the Annual General Meeting by any attendee, for at least 15 minutes prior to, and during, the Annual General Meeting. None of the Directors has a contract of service with the Company. 6. The biography of the Directors offering themselves for re-election is set out in the Company's Annual Report and Accounts for the year ended 30 September 2023. 7. As at 5 December 2023, 133,734,686 ordinary shares of 10 pence each were in issue (no shares were held in treasury). Therefore the total number of voting rights of the Company as at 5 December 2023 was 133,734,686. 8. A copy of this Notice of meeting, which includes details of shareholder voting rights, together with any other information as required under section 311A of the Companies Act 2006, is available from the Company's web page, www.schroders.co.uk/sereit. 9. Pursuant to section 319A of the Companies Act 2006, the Company must cause to be answered at the Annual General Meeting any question relating to the business being dealt with at the Annual General Meeting which is put by a member attending the meeting, except in certain circumstances, including if it is undesirable in the interests of the Company or the good order of the meeting that the question be answered or if to do so would involve the disclosure of confidential information. 10. Members satisfying the thresholds in section 527 of the Companies Act 2006 can require the Company to publish a statement on its website setting out any matter relating to: (a) the audit of the Company's accounts (including the Auditor's Report and the conduct of the audit) which are to be laid before the Annual General Meeting; or (b) any circumstances connected with an auditor of the Company ceasing to hold office since the last Annual General Meeting, that the members propose to raise at the Annual General Meeting. The Company cannot require the members requesting the publication to pay its expenses. Any statement required to be placed on the website must also be sent to the Company's auditor no later than the time it makes its statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required to publish on its website. Overview Strategic Report Governance Financial Statements Other information (unaudited) 123 Other information (unaudited) # Explanatory Notes to the Notice of Meeting continued 11. Any corporation which is a member can appoint one or more corporate representatives. Members can only appoint more than one corporate representative where each corporate representative is appointed to exercise rights attached to different shares. Members cannot appoint more than one corporate representative to exercise the rights attached to the same share(s). 12. The Company's privacy policy is available on its website. Shareholders can contact Equiniti for details of how Equiniti processes their personal information as part of the AGM. # Information for shareholders on the South Africa register # Certificated shareholders and own-name registered dematerialised shareholders 1. Each shareholder is entitled to appoint one or more proxies (none of whom need be a shareholder of the Company) to attend, speak, vote or abstain from voting in place of that shareholder at the Annual General Meeting of shareholders. 2. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder's choice in the space/s provided, with or without deleting 'the Chairman of the Meeting,' but any such deletion must be initialled by the shareholder. The person whose name stands first on the form of proxy and who is present at the Annual General Meeting of shareholders will be entitled to act as proxy to the exclusion of those whose names follow. 3. Forms of proxy must be lodged with or posted to the transfer secretaries, Computershare Investor Services (Pty) Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 (Private Bag X9000, Saxonwold 2132, South Africa), faxed to +27 11 688 5238 or emailed to proxy@computershare.co.za to be received by no later than 2.00 p.m. (Johannesburg time) on Thursday, 14 March 2024. 4. The completion and lodging of a form of proxy will not preclude the shareholder from attending the Annual General Meeting and speaking and voting in person to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so. 5. If the signatory does not indicate in the appropriate place on the face of the proxy how he/she wishes to vote in respect of any resolutions, his/her proxy shall be entitled to vote as he/she deems fit in respect of that resolution. The Chairman intends to vote all available undirected proxies in favour of all resolutions. 6. The Chairman of the Meeting shall be entitled to decline to accept the authority of a person signing this form of proxy: - under a power of attorney; or - on behalf of a company; unless the power of attorney or authority is deposited at the office of the Company's transfer secretaries, not less than 48 hours before the time appointed for the holding of the Annual General Meeting. 7. The Chairman of the Meeting may reject or accept any form of proxy, which is completed and/or received other than in accordance with these notes, provided that the Chairman is satisfied as to the manner in which the shareholder concerned wishes to vote. 8. Subject to note 2 above, a deletion of any printed matter and the completion of any blank spaces on the form of proxy need not be signed or initialled. Any alterations must be signed, not initialled. 9. If the shareholding is not indicated on the form of proxy, the proxy will be deemed to be authorised to vote the total shareholding registered in the shareholder's name. 10. A vote given in terms of an instrument of proxy shall be valid in relation to the Annual General Meeting, notwithstanding the death of the person granting it, or the revocation of the proxy, or the transfer of the shares in the Company in respect of which the vote is given, unless an intimation in writing of such death, revocation or transfer is received by the transfer secretaries no less than 48 hours before the commencement of the Annual General Meeting. 11. Documentary evidence establishing the authority of a person signing the form of proxy in a representative capacity (e.g. for a company, close corporation, trust, pension fund, deceased estate, etc.) must be attached to the form of proxy unless previously recorded by the Company or its transfer secretaries or waived by the Chairman of the Meeting. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 124 Overview Strategic Report Governance Financial Statements Other information (unaudited) 12.Whereaformofproxyissignedunderpowerofattorney,suchpowerofattorneymustaccompanythisformof proxy,unlessithaspreviouslybeenregisteredwiththeCompanyorthetransfersecretaries. 13. Where there are joint holders of shares and if more than one such joint holder is present or represented thereat, thenthepersonwhosenameappearsfirstintheregisterofsuchsharesorhis/herproxy,asthecasemaybe,shall alone be entitled to vote in respect thereof. 14.Wheresharesareheldjointly,alljointholdersarerequiredtosign. 15.Aminormustbeassistedbyhis/herparentorguardian,unlesstherelevantdocumentsestablishinghis/herlegal capacity are produced or have been registered by the transfer secretaries of the Company. Dematerialised shareholders who have not selected ‘own-name’ registrations 16.Dematerialisedshareholderswhohavenotselected‘own-name’registrationandwhowishtoattendtheAnnual GeneralMeetingortovotebywayofproxy,mustadvisetheircentralsecuritiesdepositary(‘CSD’)Participantor brokerwhowillissuethenecessaryletterofrepresentationinwriting,foradematerialisedshareholderorproxyto doso.Dematerialisedshareholderswhohavenotselected‘own-name’registration,whoareunabletoattendthe AnnualGeneralMeetingandwhowishtovotethereatmustprovidetheirCSDParticipantorbrokerwiththeir voting instructions in terms of the custody agreement entered into between such shareholder and their CSD Participant or broker in the manner and time stipulated there in. ### 125 Other information (unaudited) ## Shareholder Information Web pages and share price information TheCompanyhasdedicatedwebpages,whichmaybefoundat:www.schroders.co.uk/sereit. The web pages have beendesignedtobeutilisedastheCompany’sprimarymethodofelectroniccommunicationwithshareholders.They containdetailsoftheCompany’sordinarysharepriceandcopiesofAnnualReportandAccountsandotherdocuments published by the Company as well as information on the Directors, terms of reference of Committees and other governance arrangements. In addition, the web pages contain links to announcements made by the Company to the market,Equiniti’sshareviewserviceandSchroders’website.Thereisalsoasectionentitled‘HowtoInvest’. SharepriceinformationmaybefoundintheFinancialTimesandontheCompany’swebpages. Association of Investment Companies The Company is a member of the Association of Investment Companies. Further information on the Association can befoundonitswebsite:www.theaic.co.uk. ISA status TheCompany’ssharesareeligibleforstocksandsharesISAs. Non-mainstream pooled investments status The Company currently conducts its affairs so that its shares can be recommended by IFAs to ordinary retail investors inaccordancewiththeFCA’srulesinrelationtonon-mainstreaminvestmentproductsandintendstocontinuetodoso fortheforeseeablefuture.TheCompany’ssharesareexcludedfromtheFCA’srestrictionswhichapplytonon- mainstream investment products because they are shares in an investment trust. Alternative Investment Fund Managers Directive (‘AIFMD’) disclosures TheAIFMD,astransposedintotheFCAHandbookintheUK,requiresthatcertainpre-investmentinformationbe madeavailabletoinvestorsinAlternativeInvestmentFunds(suchastheCompany)andalsothatcertainregularand periodic disclosures are made. This information and these disclosures may be found either below, elsewhere in this AnnualReport,orintheCompany’sAIFMDinformationdisclosuredocumentpublishedontheCompany’swebpages. Remuneration disclosures TheinformationrequiredundertheAIFMDtobemadeavailabletoinvestorsintheCompanyonrequestinrespectof remuneration paid by the AIFM to its staff, and, where relevant, carried interest paid by the Company, can be found on theCompany’swebpages. Publication of Key Information Document (‘KID’) by the AIFM PursuanttothePackagedRetailandInsuranceBasedProducts(‘PRIIPs’)Regulation,theInvestmentManager,asthe Company’sAIFM,isrequiredtopublishashortKIDontheCompany.KIDsaredesignedtoprovidecertainprescribed informationtoretailinvestors,includingdetailsofpotentialreturnsunderdifferentperformancescenariosandarisk/ rewardindicator.TheCompany’sKIDisavailableonitswebpages.Thecalculationoffiguresandperformance scenarioscontainedintheKIDhavebeenneithersetnorendorsedbytheBoard. Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 ### 126 ## Corporate Information | Directors | Dealing Codes | | --- | --- | | Sir Julian Berney Bt. | ISIN:GB00BY7R8K77 | | Jonathan Thompson | SEDOL:BY7R8K7 | | Mark Patterson | Ticker(LSE):SERE | | Elizabeth Edwards | Ticker(JSE):SCD | | Investment Manager | Global Intermediary Identification Number (‘GIIN’): | | Schroder Real Estate Investment Management Limited | SU6VCJ.99999.SL.826 | 1 London Wall Place London EC2Y 5AU Legal Entity Identifier (‘LEI’): 549300BHT1Z8NI4RLD52 Registered Office 1 London Wall Place JSE Sponsor London EC2Y 5AU PSG Capital (Pty) Limited 1stFloor,OuKollegeBuilding Company Secretary 35KerkStreet Schroder Investment Management Limited Stellenbosch7600 1 London Wall Place London EC2Y 5AU Corporate Broker – UK Panmure Gordon (UK) Limited Solicitors to the Company 1NewChange Stephenson Harwood LLP London EC4M 9AF 1 Finsbury Circus London EC2M 7SH Transfer Secretary Computershare Investor Services (Pty) Limited | Independent Auditor | Private Bag X9000 | | --- | --- | | Ernst & Young LLP | Saxonwold2132 | | 25 Churchill Place | South Africa | London E14 5EY Registrar | Property Valuers | Equiniti Limited | | --- | --- | | Knight Frank LLP | Aspect House | | 55 Baker Street | Spencer Road | | LondonW1U8AN | Lancing | WestSussexBN996DA ShareholderHelpline: 1 08000320641 Website:www.shareview.co.uk 1 CallstothisnumberarefreeofchargefromUKlandlines. Communications with shareholders are mailed to the addressheldontheregister.Anynotificationsandenquiries relating to shareholdings, including a change of address or otheramendmentshouldbedirectedtoEquinitiLimitedat the address above. PrintedbyaCarbonNeutralOperation(certified:CarbonQuota)underthe PAS2060standard. Printedonmaterialfromwell-managed,FSC™certifiedforestsandother controlledsources.ThispublicationwasprintedbyanFSC™certifiedprinterthat holdsanISO14001certification. 100% of the inks used are HP Indigo ElectroInk which complies with RoHS legislationandmeetsthechemicalrequirementsoftheNordicEcolabel(Nordic Swan)forprintingcompanies,95%ofpresschemicalsarerecycledforfurther use and, on average 99% of any waste associated with this production will be recycled and the remaining 1% used to generate energy. The paper is Carbon Balanced with World Land Trust, an international conservationcharity,whooffsetcarbonemissionsthroughthepurchaseand preservation of high conservation value land. Through protecting standing forests, underthreatofclearance,carbonislocked-in,thatwouldotherwisebereleased. CBP022283 Schroder European Real Estate Investment Trust plc Annual Report and Consolidated Financial Statements for the year ended 30 September 2023 Schroder Real Estate Investment Management Limited 1 London Wall Place London EC2Y 5AU United Kingdom Tel: +44 (0)20 7658 6000