Schroder Real Estate Investment Trust Limited Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
SCHRODER REAL
ESTATE INVESTMENT
TRUST LIMITED
Annual Report
and Consolidated
Financial Statements
For the year ended 31 March 2022
Highlights
As at 31 March 2022
Stacey Bushes Industrial Estate,
Milton Keynes
Front cover image shows
Millshaw Industrial Estate
OVERVIEW
Net initial yield
5.4%
Benchmark: 3.9%
NAV total return
30.9%
(2021: 3.9%)
Reversionary yield
6.4%
Benchmark: 4.6%
Property portfolio value
£523.5m
(2021: £438.8m)
Net asset value (‘NAV’)
£372.2m
(2021: £296.8m)
Property portfolio total return
23.5%
(2021: 4.6%)
OVERVIEW
Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
pps
Dividend declared for the quarter
0.772
0
0.575
0.386
0.625
0.656
0.675
0.726
0.772
0.795
Dividend yield
5.5%
: 3.1%
: 2.8%
Further resources available
£40m
Capex pipeline
£17m
1 Based on share price at 31 March 2022 of 57.8p and an annualised dividend of 3.18pps.
2 As at 31 March 2022.
3 As at 31 March 2022.
4 As at the year end the Company had £12.5 million of cash, including Joint Venture cash, and £19.8 million of undrawn debt
facilities. Taking account of the post year end increase of the revolving credit facility by £22.5 million and the acquisition of
Overview
2 Performance Summary
Strategic Report
14 Sustainability and Responsible Investment
17 UK Commercial Real Estate Market Review
22 Business Model
26 Risk and Uncertainties
Governance
30 Board of Directors
32 Report of the Directors
34 Corporate Governance
36 Audit Committee Report
38 Management Engagement Committee
Report
39 Nomination Committee Report
42 Sustainability Report
45 Net Zero Carbon
46 Task Force on Climate-Related Financial
Financial Statements
53 Consolidated Statement of Comprehensive
Income
55 Consolidated Statement of Changes in Equity
56 Consolidated Statement of Cash Flows
57 Notes to the Financial Statements
Other Information
70 EPRA Performance Measures (unaudited)
73 Alternative Performance Measures
(unaudited)
74 AIFMD Disclosures (unaudited)
75 Sustainability Performance Measures
(unaudited)
87 Streamlined Energy and Carbon Reporting
89 Asset List
90 Report of the Depositary to the Shareholders
91 Glossary
92 Resolutions at 2022 Annual General Meeting
94 Notice of Annual General Meeting
96 Corporate Information
Dividend trend
Dividend declared for the quarter
1
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Property performance
31 March 2022 31 March 2021
Value of property assets and joint venture assets
1
£523.5m £438.8m
Annualised rental income
2
£30.1m £28.3m
Estimated open market rental value
3
£33.8m £31.2m
Underlying portfolio total return 23.5% 4.6%
MSCI Benchmark total return
4
19.9% 1.8%
Underlying portfolio income return 6.3% 6.5%
MSCI Benchmark income return 3.9% 4.4%
Financial summary
31 March 2022 31 March 2021
£372.2m £296.8m
75.8p 60.4p
EPRA Net Tangible Assets
5
£372.2m £296.8m
EPRA Net Reinstatement Value
5
£407.3m £326.3m
EPRA Net Disposal Value
5
£375.9m £297.8 m
£89.4m £4.5m
EPRA earnings
6
£15.7m £11.6m
Dividend cover
7
113% 145%
Capital values
31 March 2022 31 March 2021
Share price
Share price discount to NAV
NAV total return
8
Earnings and dividends
31 March 2022 31 March 2021
EPRA earnings
9
(pps) 3.2 2.3
Dividends paid (pps) 2.83 1.59
Annualised dividend yield on the 31 March share price 4.9% 4.0%
Bank borrowings
31 March 2022 31 March 2021
10
£162.3m £154.1m
11
28.6% 32.3%
Ongoing charges
31 March 2022 31 March 2021
12
2.21% 2.53%
13
1.26% 1.36%
1 Reconciles to the valuation reports from Knight Frank for the direct portfolio and BNP for the Joint Ventures. Does not
2 Represents the annualised rental income as at 31 March 2022 of the portfolio, including rents from joint venture assets.
3 Represents the ERV of the portfolio as estimated by the valuers, including the share of rents for the joint venture assets.
a like-for-like basis as at 31 March 2022.
section on page 70.
6 This is an APM. EPRA calculations are included in the EPRA Performance Measures section on page 70.
7 This is an APM. Details are included in the APM section on page 73.
8 This is an APM. Details are included in the APM section on page 73.
9 This is an APM. EPRA calculations are included in the EPRA Performance Measures section on page 70.
11 This is an APM. Details are included in the APM section on page 73.
12 This is an APM and calculated in accordance with the AIC recommended methodology. Details are included in the APM
section on page 73.
Performance
Summary
2
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
OVERVIEW
From Subject Received Size Categories
City Tower,
Manchester
3
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Lorraine Baldry
Chairman
Chairman’s
Statement
The Company has delivered a
Overview
For the year ended 31 March 2022, Schroder
compared with 60.4 pps as at 31 March 2021.
Supported by positive momentum in the
real estate market, the results were driven
by favourable sector allocation and active
management of our underlying portfolio, which
continues to outperform the MSCI Benchmark
and is now ranked on the 11th percentile since the
The dividend was reinstated to the pre-pandemic
level, having increased every quarter since June
totalled £13.9 million, or 2.83 pps. This, together
with the capital growth in the portfolio, resulted
of 30.9%.
We have today announced a further 3%
in June, and there is scope for further dividend
increases given the reversionary potential of the
portfolio and a growing pipeline of development
opportunities, refurbishment projects and other
income-generating activity.
A continuing focus on sustainability will be a
progress was made over the year implementing
Review. There is now a growing consensus that
there is a meaningful rental and value premium
the Company has integrated sustainability
considerations at all stages of the investment
process and asset life cycle.
Following the strong post-pandemic recovery
in real estate markets, supported by loose
have fallen markedly in recent months due to
in Ukraine and continued lockdowns in China and
other emerging markets.
has been a shock to markets, and increased
to lead to slowing capital values, but do not
an attractive income return and investment
characteristics that have historically acted as a
Strategy
The strategy over the year has focused on
delivering sustainable income growth and
improving the quality of the underlying portfolio
through active management and capital
investment, with a focus on delivering operational
Transactional activity undertaken over recent
years means the portfolio is well positioned with
an above-average weighting to multi-let industrial
growth cities. This contributed to a total return
the Benchmark of 19.9%. Encouragingly, the
higher total return was accompanied by a higher
income return of 6.3% (Benchmark: 4.1%) and
stronger rental value growth of 6.8% (Benchmark:
3.2%). The two industrial acquisitions made
at the end of 2020 in Chippenham and
Cheadle, Manchester, contributed strongly
to this performance, generating total returns
of 47.7% and 42.8% respectively over the
all UK industrial average of 40.5%.
4
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
the main UK real estate sectors is narrowing,
with industrial capital growth slowing, and more
resilient parts of the retail sector enjoying a strong
less certain, but there are clear trends emerging,
that support talent retention and attraction, and
have a lower carbon footprint. Whilst hybrid
reduction in overall demand, a combination of
restrained development, stabilising vacancy
rates and strong growth in sectors such as
legal services, tech and life sciences, means
which is concentrated in higher growth cities
such as London, Manchester and Edinburgh.
The convergence of returns between the
main sectors should enable the Company to
across all sectors. In addition, with a slowdown
in the rate of capital growth, and income
representing a greater proportion of the return,
The strong growth in capital values means the
a loan to value at the year end, net of cash, of
28.6%. The rising interest rate environment
undertaken in 2019, with a low blended interest
average loan term of 14.1 years. Since the year
revolving credit facility to provide capacity
to capitalise on acquisition opportunities
and fund our pipeline of development and
Dividend and earnings
The strong NAV growth was accompanied by
a recovery in EPRA earnings that totalled £15.7
35.3% on the previous year. This was driven by
higher yielding industrial acquisitions, active
management supporting strong rental growth
and rent collection recovering to the pre-
1 July 2021. Earnings per share has also been
enhanced by the £9.5 million of share buybacks
end NAV of 41%, with a small number of shares
Based on total dividends paid of £13.9
million, dividend cover was 113%. Portfolio
activity since the year end, including the
in Manchester city centre, has supported a
further 3% increase in the dividend, which
is higher than the pre-pandemic level.
Sustainability
The Board and Manager believe that focusing
on sustainability and Environmental, Social
generally, throughout the real estate life cycle,
will deliver enhanced long-term returns for
shareholders as well as have a positive impact on
the environment and the communities where the
Company is investing.
In 2019, the built environment was responsible
(source: IPCC), and therefore decarbonising the
real estate sector is a key contributor to reducing
developments will play a key part in the transition
to a Net Zero Carbon future, the majority of the
current UK building stock will still be in use by
2050. The embodied carbon within this building
stock creates a need, and also an opportunity,
buildings to improve sustainability performance.
The Company is well placed to deliver a strategy
performance. Progress has already been made in
this area, with a 52% reduction in carbon intensity
2020, and key ongoing projects across the
portfolio such as our operational Net Zero Carbon
industrial development in Cheadle, Manchester,
progress has been recognised by a year-on-year
improvement in our performance in the Global
Incorporating sustainability as a fundamental part
of our strategy means we are today announcing
includes the following commitments:
–
aligned to a 1.5°C pathway by 2030.
– Embodied emissions for all new developments
and major renovations to be net zero by 2030.
–
emissions to be net zero by 2030.
–
(scope 1, 2 and 3 – landlord and tenant)
emissions to be net zero by 2040.
These are ambitious targets, as our strategy to
a proportion of the portfolio will be undergoing
a transition whilst sustainability performance is
improved. This approach is an environmental
necessity and, importantly, should also support
the delivery of enhanced returns through
acquiring and actively managing potentially
mispriced assets.
Financial Conduct Authority provided further
details of its plans to develop a sustainability
Sustainable Finance Disclosure Regulations
closely and will align with labelling that clearly
demonstrates sustainability as being a fully
integrated part of our investment strategy.
Debt
had two loan facilities, a £129.6 million term loan
with Canada Life and a £52.5 million revolving
drawn. These facilities provided a low all-in
average cost of debt of 2.5% and a blend of
maturities in 2023, 2032 and 2039, resulting in
the longest weighted debt term in the recognised
peer group. At the year end, the Company had
cash and undrawn debt of £32.3 million, a loan to
value ratio, net of cash, of 28.6%, which is within
the long-term strategic range of 25% to 35%, and
loan facility disclosed on page 65).
with RBSI by £22.5 million to £75.0 million and
has provided the Company with additional
The two loan facilities continue to provide a low
all-in average cost of debt of 2.5%.
Board succession
with best practice I will retire as Chair of the
Board in July 2022. As previously announced,
following a comprehensive succession planning
process led by my fellow independent Non-
Independent Director of the Company, will
well placed to lead the Company into the future.
We are also today announcing the appointment of
8 June 2022. Priscilla has a strong track record
in roles across asset management, alternative
investments, private equity, infrastructure and
real estate. Priscilla is currently Chair of UBS
Asset Management (UK) Limited, with other
Investments, a global sustainable energy provider,
and Embark Group, a digital retirement solutions
that Priscilla will be a strong addition to the Board.
From a personal perspective, I retire from the
Board at a time of great opportunity for the
Company, both in terms of portfolio activity as
well as the potential to evolve the strategy to
deliver more sustainable returns – both from an
Outlook
The strong, post-pandemic recovery in real estate
values is likely to slow, given concerns regarding
term, whilst there is a risk of more persistent
mitigate the negative impact of rising rates on the
real estate sector, albeit with very low yielding
assets potentially at risk of capital value declines
due to rising borrowing costs.
for these risks, with an above-average income
yield, a pipeline of asset management initiatives
that should support returns and long-term,
strategy enables the Investment Manager to act
more attractive returns. Finally, as sustainability
and ESG considerations become even more
important for investors and occupiers, the
Company is well placed to evolve its strategy to
deliver more sustainable, long-term returns.
Lorraine Baldry
Chairman
Schroder Real Estate Investment Trust Limited
6 June 2022
5
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
resulted in a NAV total return of 30.9%. A detailed analysis of the NAV is set out in the table below:
£m PPS
NAV as at 31 March 2021
3
Unrealised change in the valuations of the direct real estate portfolio
and joint ventures
1
Acquisition costs
Realised gain on disposal
EPRA earnings
2
Dividends paid
NAV as at 31 March 2022 (excluding the share buyback)
Share buyback
NAV as at 31 March 2022
4
2 EPRA earnings as per the reconciliation on page 70.
3 The calculation of pps is based on shares in issue as at 31 March 2021 of 491,418,641.
4 The calculation of pps is based on shares in issue as at 31 March 2022 of 491,080,301.
The underlying portfolio, including joint ventures, increased in value by 22.0% on a like-for-like basis
should drive capital growth and future rental increases over the medium to longer term. Acquisition
costs totalling £1.3 million were incurred in December 2021 in connection with the £19.9 million
acquisition of a high yielding portfolio of four industrial assets in the North West of England. This
portfolio was revalued at the year end to £21.6 million.
Investment
Manager’s
Review
These strong results are the outcome of disciplined
investment decisions and active management of the
portfolio. Conviction in our strategy has resulted in a
towards higher growth parts of the UK real estate
market with opportunities to add value through
asset repositioning and development. We are
focused on applying our competitive advantage in
sustainability to the portfolio to deliver outcomes
stakeholders increasingly demand and to capitalise
on the green premium for shareholders.
Nick Montgomery
Fund Manager
6
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Nottingham, was sold for £13.0 million, realising
disposal costs of £0.2m and a 12.4% per annum
total return since acquisition in August 2018.
Net revenue for the period totalled £15.7 million,
or 3.2 pps, an increase of £4.1 million on the prior
been driven by improved rental collection rates,
active asset management driving rental value
growth and a positive contribution from the
industrial acquisitions in December 2020 and
December 2021.
The total return from the underlying portfolio,
including rental income, was 23.5% for the
of 19.9%. The portfolio performance comprised
a 6.3% income return and a 16.2% net increase
in capital values, with both components
outperforming the Benchmark at 4.1% and 15.3%
respectively. The portfolio is ranked on the 11th
launch in 2004.
were repurchased at an average price of 40.3 pps.
Strategy
The Company aims to provide shareholders with
an attractive level of income with the potential
for income and capital growth. The strategy to
deliver this includes:
– Applying a research-led approach to
determine attractive sectors and locations in
which to invest in commercial real estate;
– Actively managing the Company and its
management approach that is focused on
–
with strong fundamentals and inherent
opportunities for active management and
development;
– Applying our integrated sustainability and
approach at all stages of the investment
process and asset life cycle; and
–
controlling costs and maintaining a strong
balance sheet with a loan to value, net of cash,
within the long-term target range of 25%
The following progress has been made delivering
on the strategy:
– The portfolio is allocated to higher growth
sectors, with recent multi-let industrial
transactions contributing strongly to portfolio
performance. The industrial sector now
represents 47.6% of the portfolio, largely
(Benchmark 34.4%), with the remaining
portfolio comprising retail warehousing of
11.6% (Benchmark 9.3%) and good quality
Cities such as in London, Manchester and
Edinburgh of 27.5% (Benchmark 24.9%);
– Portfolio outperformance driven by active
asset management with 72 new lettings, rent
reviews and renewals completed since the
in annualised rental income, generating £1.6
million per annum of additional rent above the
previous level;
– Rent collection rates at pre-pandemic levels,
proving the resilience of the portfolio. Good
progress has been made collecting historical
arrears through constructive engagement
with tenants;
– Continued investment to deliver operational
returns, with progress on key initiatives such
City Tower in Manchester, and construction
underway for an operational Net Zero Carbon
warehouse scheme at Stanley Green Trading
Estate in Cheadle, Manchester;
– Enhanced ESG performance across the
portfolio including an improvement in the
2021 Global Real Estate Sustainability
reductions in energy consumption,
sustainability-led building improvements and
occupier satisfaction initiatives;
–
Net Zero Carbon with these results;
– Consolidated net loan to value of 28.6%
at the year end. Average interest rate of
2.5% with a weighted loan term of 10.4
and unrealised valuation movements on
taken as a percentage of rental and other
income including joint ventures, of 73%
which is competitive within the recognised
peer group; and
– Further progress delivering the strategy since
the year end with the acquisition of a high
Manchester city centre, completion of major
lease agreements at Langley Park Industrial
Estate in Chippenham and conditional
Starbucks drive-through restaurants at retail
parks in Bedford and Milton Keynes.
Rent collection
The diverse and granular underlying rental
income, and a high level of occupier engagement,
has supported improving rent collection rates
with 96% of the contracted rents collected for
the quarter to 31 March 2022. The breakdown
98% of industrial rent collected and 91% of retail,
leisure and other rent collected.
The Company remains in active dialogue with its
tenants for historical arrears which totalled £3.8
which £0.9 million has been categorised as a bad
debt provision. This compares to £4.6 million and
£1.1 million respectively as at the end of the prior
Portfolio performance
As noted above, the underlying portfolio
continues to outperform the MSCI Benchmark,
driven by portfolio sector allocations, active
management and a high income return. The table
below shows performance to 31 March 2022:
SREIT total return MSCI Benchmark total return Relative
Period to 31 March 2022
year
(%)
Three
years
(% p.a.)
Since
(% p.a.)
year
(%)
Three
years
(% p.a.)
Since
(% p.a.)
year
(%)
Three
years
(% p.a.)
Since
(% p.a.)
Retail
Industrial
All sectors
City Tower
Manchester
7
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Investment
Manager’s
Review
Continued
Real estate portfolio
As at 31 March 2022, the portfolio comprised 42
share of joint venture properties at City Tower
in Manchester and the University of Law in
Bloomsbury, London.
As at 31 March 2022, the portfolio generated
rental income of £30.1 million per annum,
compares with the Benchmark of 3.9%. The
annualised rental income uplifts of £1.1 million
of the portfolio is £33.8 million per annum,
which compares favourably with the Benchmark
at 4.6%. The portfolio void rate is 7.0%,
calculated as a percentage of estimated rental
value. This compares with the Benchmark void
rate of 7.8%. The portfolio weighted average
lease length, calculated to the earlier of lease
portfolio, calculated as a percentage of rent,
leases can also be reviewed to open market value,
linked leases should increase with ongoing asset
management activity, summarised below.
The tables below summarise the portfolio
post year-end activity. The property values and
weightings presented represent the year-end
valuations as determined by the independent
valuers as at 31 March 2022:
Top ten properties by value Sector
Value
(£m)
1
% of
portfolio value
Milton Keynes, Stacey Bushes Industrial Estate Industrial
Leeds, Millshaw Park Industrial Estate Industrial
London, Bloomsbury, The University
of Law Campus (50% share)
Manchester, City Tower (25% share)
Retail warehouse
Chippenham, Langley Park Industrial Estate Industrial
Norwich, Union Park Industrial Estate Industrial
Cheadle, Stanley Green Trading Estate Industrial
Total as at 31 March 2022
Sector weightings by value
Weighting (% of portfolio value)
SREIT Benchmark
South East
Rest of UK
Industrial
City
Mid-town and West End
Rest South East
Rest of UK
Retail warehouse
South East
Rest of UK
Standard retail
Standard retail by ancillary/single use
– Retail ancillary to main use
–
– Retail single use
–
Other
Shopping centres
Unattributed indirects –
1 As per third-party valuation reports unadjusted for IFRS lease incentive amounts.
8
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Weighting (% of portfolio value)
Regional weightings by value SREIT Benchmark
Central London
Rest of South
Midlands and Wales
North
Scotland
Northern Ireland
top ten tenants represent 6.6% and 26.3% respectively of the portfolio, calculated as a percentage of annual rent:
Tenant
Rent p.a.
£ million
% of
total rent
1
University of Law Limited
Buckinghamshire New University
Siemens Mobility Limited
The Secretary of State
Matalan Retail Limited
Lidl Great Britain Limited
Top ten
1 Column will not sum due to rounding.
Transactions
the impact of transaction costs:
Acquisition Date of acquisition
31 March 2022 valuation
Total return for 12 months to
31 March 2022 or hold period
for the same period (% p.a.)
Langley Park, Chippenham (Industrial) 18 December 2020
Stanley Green, Cheadle, Manchester (Industrial) 17 December 2020
North West portfolio (Industrial) 17 December 2021 5.2
1
1
Disposal Date of acquisition and disposal
Total return during hold
same period (% p.a.)
Acquisition: 10 August 2018
Disposal: 28 February 2022 12.4
1
1
9
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
TRANSACTIONS
Investment
Manager’s
Review
Continued
1
Manchester,
St. Ann’s House
post year end on 27 May 2022 for £14.7 million,
yield of 9.1% and a low average capital value of
asset generates £1.22 million per annum of
headline rent compared with an ERV of £1.33
million.
The freehold, 51,885 sq ft building, is 96%
basement space. It is prominently located on St.
at an average rent of £18.65 per sq ft, with
the potential to increase rental levels through
refurbishment and improving sustainability
performance. There is also the opportunity to
space.
the subject asset. During the pandemic, rents
were rebased by the previous landlord and there
are currently no arrears. The tenants include
Watches of Switzerland, Russell & Bromley and
Space NK. A vacant unit representing 5% of the
jewellery.
Following completion of the aforementioned
term is 3.4 years to earliest termination and 6.0
10
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
10
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
32
Haydock,
Coral Products,
Haydock Industrial Estate
Birkenhead,
Valley Road
Industrial Estate
Asset strategy
of 6.6% and a low average capital value of
£49 per sq ft. The strategy is to engage with
the occupier on sustainability initiatives.
Asset overview and performance
98,551 sq ft manufacturing and recycling
facility let to Coral Product (Mouldings) Limited
a subsidiary of the Canada-based IPL Plastics
in January 2031, with a tenant break in 2026,
at a rent of £340,000 per annum or £3.45 per
sq ft. This compares with an ERV as at 31 March
2022 of £394,000 per annum or £4.00 per sq
ft. The asset is well located with direct access to
the A580 (East Lancashire Road) and, in turn, the
M6. As at 31 March 2022, the valuation is £4.8
reversionary yield of 7.8%.
Key activity since acquisition
–
adjoining ownerships which may support
long-term redevelopment.
–
developed for the asset and Net Zero Carbon
Asset strategy
Valley Road Industrial Estate in Birkenhead
a net initial yield of 6.8%, a reversionary
yield of 7.8% and a low average capital
value of £60 per sq ft. The strategy is to
lease the void units at or above ERV.
Asset overview and performance
The ten-acre estate comprises 190,000 sq
secure access, low site cover and good
circulation. As at 31 March 2022, the valuation
Key activity since acquisition
–
Limited for a 1,605 sq ft unit at £13,700 per
annum, or £8.54 per sq ft. This letting is in line
with 31 March 2022 ERV.
–
2,473 sq ft unit at £24,750 per annum, or
£10.00 per sq ft. This letting will be in line
–
6,275 sq ft unit at £44,000 per annum, or
uplift on the 31 March 2022 ERV.
4
Cheshire,
Sandbach,
Asset strategy
established in 1965, were acquired for a
value of £42 per sq ft. The strategy since
acquisition is to engage with the occupier
Asset overview and performance
Both assets are in an established industrial area
miles from Junction 17 of the M6. The lease is
conterminous across the two assets with 13.4
years remaining at a combined rent of £283,500
per annum, or £3.30 per sq ft which compares
with the 31 March 2022 ERV of £305,000 per
to the RPI, subject to a collar and cap of 1% per
annum and 4% per annum respectively. As at
31 March 2022, the combined valuation was
and a reversionary yield of 8.1%.
North West industrial portfolio acquisition
(Industrial)
reversionary yield of 8.2%, and a low capital value of £53 per sq ft. As at 31 March 2022,
of 7.2%. Since acquisition the portfolio has delivered a total return of 5.2%, including the
dilutive impact of acquisition costs. Further details of the assets are set out below:
11
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
11
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
1
Manchester, Cheadle,
Stanley Green Trading Estate
(Industrial)
Asset strategy
Stanley Green Trading Estate in Cheadle,
Manchester was acquired in December 2020
for £17.3 million. The strategy over the year was
to crystallise higher rents on the trading estate
and secure planning consent for an 80,000 sq ft,
the adjoining 3.4 acre site.
Asset overview and performance
Stanley Green Trading Estate comprises 150,000
sq ft of trade counter, self-storage and warehouse
accommodation with an adjoining development
3.4 acre site. As at 31 March 2022, the valuation
3.3% and a reversionary yield of 4.1% (4.5% and
return of 42.8% which compared with MSCI All
Industrial over the same period of 40.5%.
Key activity
–
planning committee unanimously resolved
to grant planning permission for 80,000
sq ft of operational NZC accommodation
on the development site on 30 September
2021. The Company is now progressing
the development of 11 warehouse and trade
which is scheduled to complete in early 2023.
The target rental income is £1.1 million per
annum or £13.40 per sq ft, with pre-lets to be
targeted during the construction phase.
–
renewal completed with Factory Kitchens
for a 2,859 sq ft unit at a rent of £40,026 per
annum, or £14.00 per sq ft. This compares
with the previous rent of £8.75 per sq ft and
represents an uplift of £15,010 per annum, or
60.0%. This compares with the average rent
across the trading estate of £6.32 per sq ft.
– Negotiations are progressing with a number
of occupiers to re-gear their leases across
the trading estate which should support
continued income growth.
ACTIVE ASSET
MANAGEMENT
active management initiatives that should
support continued outperformance of the
and sustainability perspective.
Investment
Manager’s
Review
Continued
12
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
12
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
2 3 4
Chippenham, Langley
Park Industrial Estate
(Industrial)
Bedford,
St. John’s Retail Park
(Retail Warehouse)
Manchester,
City Tower
Asset strategy
Langley Park Industrial Estate in Chippenham
was acquired in December 2020 for £19.3
million. The strategy over the year was to drive
net income growth through a key lease renewal
with Littelfuse and a rent review with Siemens to
increase the rental income, WAULT and quality of
accommodation across the estate.
Asset overview and performance
Langley Park Industrial Estate is a multi-let
industrial estate comprising 400,000 sq ft of
on a large site of 28 acres located close to
Chippenham town centre. As at 31 March 2022,
yield of 5.7% and a reversionary yield of 6.9%.
return of 47.7% which compared with the MSCI
All Industrial over the same period of 40.5%.
Key activity
–
review from June 2021 has been agreed and
is being documented at £1,226,241 per annum
in contracted rental income. Following
completion of the rent review Siemens will
(including the tenants of properties held by
joint ventures).
– A new ten-year lease renewal without breaks
has been agreed with IXYS UK Westcode
Littelfuse, a global manufacture of semi-
conductors. The rent agreed is £465,000
31% increase over the current contracted rent
of £365,000 per annum. IXYS will receive
repair works up to the value of £250,000.
The lease will include a rent review at year
with a collar of 1% per annum and a cap of
complete shortly.
– Given the positive discussions with occupiers
accommodation, a master plan has been
prepared for up to 130,000 sq ft of additional
warehouse accommodation at the site. A
pre-planning application has been submitted
in relation to this proposal and was positively
received by the local authority.
Asset strategy
The strategy over the year was to let vacant
negotiating new longer-term leases.
Asset overview and performance
retail warehouse scheme underpinned by income
31 March 2022, the asset was valued at £33.3
32.1% which compared with the MSCI All Retail
Warehousing over the same period of 30.6%.
Key activity
– A conditional agreement for lease has been
restaurant redevelopment on the former
Maplin unit. The terms include a 15-year lease
without breaks at £145,000 per annum, or
£80.55 per sq ft, with rent reviews every
per annum and a cap of 3% per annum.
Due to their economies of scale, Starbucks
contribution from the Company of £850,000,
by the end of 2022.
– Starbucks are required to deliver the
restaurant to a minimum BREEAM rating
charging points for customer usage.
–
Both retailers have traded throughout the
pandemic and driven high volumes of footfall,
supporting the attraction of new occupiers
occupiers.
– Following the completion of these lettings and
the resultant boost in footfall, a vacant 9,919
sq ft unit was let to Bensons for Beds for a
at £130,000 per annum, or £13.00 per sq ft.
Asset strategy
The strategy over the year was to lease
the retail, leisure and hotel element was to
refurbishment strategy ongoing to ensure
the building captures occupier demand and
Asset overview and performance
retail, leisure and hotel accommodation
located on a three-acre island site in a core
location. As at 31 March 2022, the valuation
of 5.4% and a reversionary yield of 7.0%.
a total return of 8.0% which compared with
of 7. 2% .
Key activity
–
increased rent of £44,192 per annum, or
on the previous passing rent.
–
rent of £5,170 per annum, or £18.00 per
previous passing rent.
13
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
13
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
w
Investment
Manager’s
Review
Continued
Sustainability and Responsible Investment
below is a summary of performance against these objectives and the strategy to continue delivering
against these key performance indicators:
1. Governance and oversight: Sustainability and responsible investment are integral to Schroders
deliver enhanced long-term returns for shareholders as well as deliver a positive impact to the
environment and the communities where the Company is investing. The Company achieved a
GRESB Public Disclosure A Rating and the EPRA Best Practice Sustainability Reporting Gold Award
for the fourth consecutive year.
2. Net Zero Carbon (‘NZC’): A central focus of our real estate investment strategy is the response to
the climate crisis both in terms of risk and resilience to climate impacts, and also working to reduce
reduction targets for assets where landlord operational control is retained and have contributed
towards strong performance against these targets which came to an end in March 2021. As part of
the commitment to achieving NZC, aligned with a 1.5°C decarbonisation trajectory, work has been
achieving NZC by 2040 or sooner. This work has included developing Impact and Sustainability
Statement. Encouraging progress is being made with a 2% reduction in landlord-procured energy
UK national energy grid continues to decarbonise, this reduction in energy consumption is also
GRESB sustainability survey and a 6% score improvement.
Stanley Green
Cheadle
4. Climate Risk and Task Force for Climate-Related Financial Disclosures (‘TCFD’): In 2021, we
continued to review our policies and practices against TCFD criteria and developed a roadmap
towards increased alignment. Building on our established consideration of sustainability within the
investment process, we believe it will be important to further integrate the assessment of climate-
part of our NZC commitments, forward looking NZC pathways have been modelled during 2021 and
basis for our new asset and portfolio level operational energy and carbon targets. NZC pathways
have been developed to present the decarbonisation requirements needed to achieve NZC by 2040
database which assesses vulnerability to associated hazards, and those climate-based indicators are
5. Operational Excellence:
for occupiers as well as demonstrating continued improvements in sustainability performance. The
development of ISAPs for all managed assets has supported improvements for occupiers including
of 24 managed assets with a programme for installation). The Company has a programme to increase
sustainability credentials. We are also improving EPC ratings across the portfolio, with a programme
an occupier satisfaction survey in 2021 and the Property Managers have action plans to improve
14
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
w
Finance
million term loan with Canada Life and a £52.5 million revolving credit facility
was drawn. Properties with combined values of £322.9 million and £136.5
million are secured against the Canada Life and RBSI loan facilities respectively.
In addition to the properties secured against the Canada Life and RBSI loan
facilities, the Company has unsecured properties with a value of £64.1 million
and cash of £12.5 million
1
. This resulted in a loan to value ratio, net of cash,
of 28.6% at an average interest cost of 2.5%, and a long weighted maturity
£129.6 million term loan with Canada Life
Lender
Loan
(£m) Maturity
Total
interest rate
(%)
Asset value
(£m) Cash
LTV ratio
(%)
2
LTV ratio
covenant
(%)
2
ICR
(%)
3
ICR
covenant
(%)
3
Projected
ICR
(%)
4
Projected
ICR
covenant
(%)
4
Canada Life
Term Loan
129.6 50%:
50%:
2.5
5
322.9 0.0 40.1
(40.1 net of cash
in facility)
65 650 185 487 185
–
covenant being breached.
– The ICR is 650% based on actual net rents for the quarter to 31 March 2022. A 72% fall in net income could be sustained prior to the loan covenant of 185%
being breached.
– After utilising available cash and uncharged properties, the valuation and actual net rents could fall by 53% and 75% respectively prior to either the LTV or
interest cover ratio covenants being breached.
£52.5 million RCF with RBSI
Lender
(£m) Maturity
Total
interest rate
(%)
Asset value
(£m)
LTV ratio
(%)
6
LTV ratio
covenant
(%)
6
ICR
(%)
7
ICR
covenant
(%)
7
Projected
ICR
(%)
8
Projected
ICR
covenant
(%)
8
RBSI RCF
9
2.5
10
136.5 24.0 60
11
556 185 538 250
–
covenant being breached.
– The interest cover ratio is 556% based on actual net rents for the quarter to 31 March 2022. A 67% fall in net income could be sustained prior to the loan
covenant of 185% being breached.
– After utilising available cash and uncharged properties, the valuation and actual net rents could fall by 83% and 81% respectively prior to either the LTV or
interest cover ratio covenants being breached.
maturity from 2023 to 2027.
Lender
(£m) Maturity
Total
interest rate
(%)
Asset value
(£m)
LTV ratio
(%)
12
LTV ratio
covenant
(%)
11
ICR
(%)
13
ICR
covenant
(%)
13
Projected
ICR
(%)
14
Projected
ICR
covenant
(%)
14
RBSI RCF
15
2.5
16
136.5 33.9 65
17
556 185 374 250
1 Cash held at the balance sheet date includes £0.9 million of cash that is held within the joint ventures.
2 Loan balance divided by the property values as at 31 March 2022.
based on the average of the past four quarters.
6 Loan balance divided by the property values as at 31 March 2022.
based on the average of the past four quarters.
9 Facility drawn as at 31 March 2022 from a total available facility of £52.5 million.
pool as at 31 March 2022.
based on the average of the past four quarters.
15
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Investment
Manager’s
Review
Continued
Outlook
strong NAV growth, sustained outperformance of the underlying portfolio and further increases in the
level of dividend.
evolving occupier trends. A key part of this is demonstrating continued improvements in sustainability
the Company.
Finally, on behalf of Schroders Capital Real Estate, I would like to thank Lorraine Baldry for her enormous
contribution to the Company for more than eight years. I am personally hugely grateful for her guidance
and sound judgement, particularly through the challenging pandemic period. I wish her every success
for the future.
Nick Montgomery
Fund Manager
6 June 2022
Langley Park
Chippenham
Sustainability and Responsible Investment
Continued
16
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Ten-year bond yield
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Yield gap All property initial yield
Forecast
Yield %
-1
0
1
2
3
4
5
6
7
8
-1
0
1
2
3
4
5
6
7
8
Source: Datastream, MSCI, Schroders. April 2022.
UK Commercial Real Estate Market Review
Macro environment
up demand and supply disruptions due to Covid-19. The drop in real incomes
means consumer spending will be weak in 2022, leading to a fall in GDP
growth. Whilst this could lead to a technical recession, this risk is mitigated
by higher government spending and an increase in investment, as businesses
take advantage of temporary capital allowances.
As a result, whilst there may be pressure on the value of the lowest yielding
All property initial yields vs ten-year bonds
17
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
2001
2000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022 Q1*
Multi-let
Rolling annual starts,
million square feet
Distribution warehouses
Source: PMA, Schroders. April 2022.
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
UK Commercial Real Estate Market Review
Continued
Industrial
mainly by growth in online retail. Amazon alone accounted for 25% of take-
parcel deliveries and returns has boosted demand for smaller warehouses
from couriers. In addition, the disruption of supply chains during the
pandemic has prompted manufacturers and retailers to dial down on just-in-
time deliveries and hold more stock.
likely to slow as the growth in online sales moderates and because of a big
increase in construction of distribution warehouses. Two-thirds of this new
space is pre-let, but it could lead to an increase in vacancy as occupiers
leave older units. The revaluation of business rates in 2023, which will shift
to these risks and where there is greater scope to add value through active
Industrial development
18
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
70
80
90
100
110
60
40
50
30
20
10
0
Jan
20
Feb
20
Mar
20
Apr
20
May
20
Jun
20
Jul
20
Aug
20
Sep
20
Oct
20
Nov
20
Dec
20
Jan
21
Feb
21
Mar
21
Apr
21
May
21
Jun
21
Jul
21
Aug
21
Sep
21
Oct
21
Nov
21
Dec
21
High street Retail park
Jan
22
Feb
22
Mar
22
Apr
22
Shopping centre
February 2020 = 100
Source: Springboard, Schroders. April 2022.
Retail
The outlook for town centre retail remains challenging and the Company
has a very low weighting to stand-alone retail of 7.2% by portfolio value.
The number of empty shops and shopping centre units has started to fall
as redundant space is removed through conversions and demolitions.
independent retailers often fail within a few years and demand from banks,
bookmakers and major fashion brands continues to shrink as they close
street shop and shopping centre rents will fall by a further 5-10% through
Retail footfall
By contrast, supermarket and bulky goods retail park rents will probably
increase by 1-2% per annum. Both are relatively insulated from online
competition, and rents and service charges are lower than in shopping
centres. The big grocery chains have ambitious plans to open more small
supermarkets and there is steady demand for retail park units from discount
retailers, including food retailers, gyms and drive-through restaurants. The
portfolio by value invested in retail warehouses.
19
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
20
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
City – prime City – average West End – prime
West End – average
Change in rents %
Forecast
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Q1*
Grade A % London
Grade % of London take-up
City centre % of UK take-up
Lettings by Quality and City Centre vs Out-of-Town
Other grade % London City centre % UK (right-hand axis)
Source: Colliers, PMA, Schroders, April 2022.
0
10
20
30
40
50
60
70
80
90
100
UK Commercial Real Estate Market Review
Continued
emerging. First, there are few signs of companies dispersing to the suburbs
in professional services, tech and media where employment is growing
are either maintaining, or adding to their footprint. Vacancy rates in central
London and major regional cities have stabilised at 10% and 8%, respectively.
foster a shared culture.
20
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Distribution
Warehouse
Retail
Park
Supermarket City
Industrial
50–100,000
sq ft
West End
Birmingham
South East
Industrial <
50,000 sq ft
Shopping
A
B C D E F G A+B
0
10
40
50
60
80
90
100
Sustainability
While the sector range in returns is likely to narrow, the gap between
buildings with strong and weak sustainability features is likely to widen.
of units with poor energy ratings. The recent increase in construction costs
stranded assets, because it is no longer viable to upgrade them.
UK EPC ratings
21
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Company’s business
Schroder Real Estate Investment Trust Limited is a real estate investment
Authority and whose shares are traded on the premium segment of the Main
continues to be declared as an authorised closed-ended investment scheme
by the Guernsey Financial Services Commission under section 8 of the
Protection of Investors (Bailiwick of Guernsey) Law 2020, as amended and the
Authorised Closed-ended Investment Schemes Rules and Guidance, 2021.
Investment objective
The Company aims to provide shareholders with an attractive level of income
and the potential for income and capital growth as a result of its investments
The portfolio is principally invested in the three main UK commercial real
duration of the property market cycle, the portfolio aims to generate an
The Board has established a gearing guideline for the Investment Manager,
between 25% to 35%. This relatively low level of gearing is used to enhance
income and total returns for shareholders with the level dependent on the
property cycle and the outlook for future returns.
The dividend policy adopted by the Board is to pay a sustainable level of
quarterly dividends to shareholders. The Board keeps the dividend policy
under active review with a view to ensuring the Company can deliver a
sustainable level of cover whilst having due regard to current and anticipated
Incorporating sustainability as a fundamental part of our strategy means we
following:
–
by 2030;
– Embodied emissions for all new developments and major renovations to
be net zero by 2030;
–
–
and tenant) emissions to be net zero by 2040.
Investment strategy
1
.
from structural changes such as urbanisation, rapid changes and growth of
technology, changing demographics and social as well as positive impact
occupational demand and favourable supply and demand characteristics.
with the potential for income and capital growth due to good stock selection
and asset management. We aim to grow income and enhance shareholder
The Board
The Board of Directors is responsible for the overall stewardship of the
Company, including investment and dividend policies, corporate strategy,
gearing, corporate governance and risk management.
Operations
The Board has delegated investment management and accounting services
Review.
income, the optimal strategy for the Group is to invest in a portfolio of assets
vacancy rates and creditworthy tenants. The value of any individual asset
10%. From time to time the Board may also impose limits on sector, location
and tenant types together with other activity such as development.
policies and restrictions.
Borrowings
The Board has established a gearing guideline for the Investment Manager,
which seeks to limit on-balance-sheet debt, net of cash, to 35% of on-
time of borrowing. The Board keeps this guideline under review and the
with the objective of bringing borrowings within the appropriate limit while
taking due account of the interests of shareholders. Accordingly, corrective
measures may not have to be taken immediately if this would be detrimental
to shareholder interests.
Interest rate exposure
for hedging purposes.
Investment restrictions
As the Company is a closed-ended investment fund for the purposes of the
Listing Rules, the Group will adhere to the Listing Rules applicable to closed-
ended investment funds. The Company and, where relevant, its subsidiaries
will observe the following restrictions applicable to closed-ended investment
funds in compliance with the current Listing Rules:
– Neither the Company nor any subsidiary will conduct a trading activity
will not invest in other listed investment companies;
– Where amendments are made to the Listing Rules, the restrictions
Rules.
In addition, the Board will ensure compliance with the UK REIT regime
requirements.
Business Model
22
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Performance
monitor and assess the performance of the Company, being the net asset
1. NAV total return
For the year to 31 March 2022 the Company delivered a NAV total return
of 30.9% (3.9% for the year to 31 March 2021).
2. Underlying property portfolio performance relative to peer group
Benchmark
member funds.
Underlying property portfolio performance
Total return for 12 months to 31 March 2022 Total return for 12 months to 31 March 2021
SREIT (%)
MSCI Benchmark
(%)
SREIT
(%)
MSCI Benchmark
(%)
23.5% 19.9% 4.6% 1.8%
The analysis above has been prepared by MSCI and takes account of all
direct property-related transaction costs.
3. Share price performance
The Board monitors the level of the share price compared to the NAV. As
at 31 March 2022, the share price of 57.8 pence was at a 23.7% discount
to the NAV of 75.8 pence per share. Where appropriate on investment
grounds, the Company may from time to time repurchase its own shares,
but the Board recognises that movements in the share price premium
or discount are driven by numerous factors, including investment
performance, gearing and market sentiment. Accordingly, we focus our
Schroders UK headquarters
1 London Wall Place,
London
Manchester
23
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Section 172 statement
Although the Company is registered in Guernsey, in accordance with the
guidance set out in the AIC code a Section 172 statement is required. Section
172 of the Companies Act 2006 requires a Director of a company to act in
the way he or she considers, in good faith, would be most likely to promote
doing this, Section 172 requires a Director to have regard, among other
matters, to: the likely consequences of any decision in the long term; the
business relationships with suppliers, customers and others; the impact
desirability of the company maintaining a reputation for high standards of
business conduct; and the need to act fairly with members of the company.
The Directors give careful consideration to the factors set out above in
discharging their duties under Section 172.
The Board is focused on ensuring that the Company delivers on its strategic
objectives, while taking into account the impact on its stakeholders as a
central to delivering long-term, sustainable returns. The Board is focused on
Shareholders
The Board is committed to maintaining high standards of corporate
governance in order to protect shareholder interests. The Investment
Manager undertakes an active investor relations schedule in London and the
regions throughout the year, which includes one-on-one and group meetings
with shareholders, site visits to key assets, as well regular presentations to
the sell-side analyst community. Shareholder feedback is encouraged either
through the broker or directly to the Investment Manager or Board.
Occupiers
The Company has a diverse range of tenants occupying space across the
portfolio. This includes a wide range of businesses who operate out of our
our retail and leisure properties. Active and constant engagement with these
groups, either directly or through property managers or agents, is required to
gather 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 our individual asset
management investment decisions as well as the longer-term strategic
direction of the Company.
Communities
buildings and their occupiers are part of the fabric of local communities. The
Company works hard to ensure that it is engaging with local communities,
councils and individuals and that our asset strategies are sensitive to the
unique heritage of each location.
Our Stakeholders
Headingley Central
Leeds
24
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Environment
In 2019, the built environment was responsible for 31% of global carbon
emissions, which places great responsibility on those companies that are
and is committed to continually improving and protecting the environment
by using resources such as energy, water and materials in a sustainable
manner for the prevention of greenhouse gas emissions and climate change
reviews its approach to sustainable investing and believes that this is integral
in delivering better long-term returns for our investors and for safeguarding
the future of the environment that we live and work in.
Service providers
on a range of service providers who have a direct working or contractual
relationship or share a mutual interest with the Company. This includes,
but is not limited to, Schroders as Investment Manager and Company
advisers, solicitors, property valuers and banks. The Board has appointed the
Management Engagement Committee to regularly review these relationships
as part of its commitment to transparency and corporate best practice.
Lenders
consistent with the strategy and generate enhanced returns in at a low cost.
Decision making
The Board makes decisions on, among other things, the principal matters set
25
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
system of risk management and internal control
carried out a robust assessment of the principal
risks and emerging risks facing the Company
including those that would threaten its business
model, future performance, solvency or liquidity.
A framework of internal controls has been
designed and established to monitor and manage
those risks. This internal control framework
provides a system to enable the Directors to
mitigate these risks as far as possible, which
achieving its strategic objectives.
Although the Board believes that it has a robust
framework of internal controls in place this
can provide only reasonable, and not absolute,
or loss and is designed to manage, not eliminate,
risk.
A summary of the principal risks and uncertainties
of the removal of Covid-19 as a principal risk, have
remained unchanged throughout the year ended
31 March 2022 and to the date of signature of
this Annual Report, and actions taken by the
Board to manage and mitigate these risks and
uncertainties, are set out below:
Key risks Mitigation of risk
Investment policy and strategy
An inappropriate investment strategy, or
failure to implement the strategy, could
lead to underperformance and the share
price being at a larger discount, or smaller
premium, to NAV than the property market
generally. This underperformance could be
caused by incorrect sector and geographic
weightings or a loss of income through
tenant failure, both of which could lead to a
fall in the value of the underlying portfolio.
The Board seeks to mitigate these risks by:
–
monitored and reported on by the Investment Manager.
– Determining a borrowing policy and the Investment Manager operates within borrowing restrictions
and guidelines.
– Receiving from the Investment Manager timely and accurate management information including
– Monitoring the implementation and results of the investment process with the Investment Manager
with a separate meeting devoted to strategy each year.
Investment management
strategy, if inappropriate, may result in the
Company underperforming the market
the Company and its objectives becoming
unattractive to investors.
investment performance and risk against investment objectives and strategy; relative performance; the
substantial changes in markets, including any potential disruption to capital markets.
Economic and property market risk
The performance of the Company could be
risk. In the wider economy this could
recessions, movements in interest rates,
performance of the underlying property
structural or cyclical factors impacting
particular sectors or regions of the
property market.
The Board considers economic conditions and the uncertainty around political events when making
strategy on a regular basis and discussions are held to ensure the strategy is still appropriate or if it
needs updating.
Gearing and leverage
The Company utilises credit facilities.
These arrangements increase the funds
available for investment through
borrowing. While this has the potential to
enhance investment returns in rising
markets, in falling markets the impact
could be detrimental to performance.
Gearing is monitored and strict restrictions on borrowings have been imposed.
Risk and Uncertainties
26
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Key risks Mitigation of risk
Accounting, legal and regulatory
statements could be incorrect when
released to the market.
The Investment Manager has robust processes in place to ensure that accurate accounting records are
Auditors. The Investment Manager operates established property accounting systems and has
procedures in place to ensure that the quarterly NAV and gross asset value are calculated accurately.
The quarterly and annual NAV has numerous levels of reviews including by the Board. Additional
An internal controls review is performed by Ernst & Young in accordance with ISAE 3402 annually to
of Directors.
The Administrator monitors legal requirements to ensure that adequate procedures and reminders are in
Processes are in place to ensure that the Company complies with the conditions applicable to property
investment companies set out in the Listing Rules. The Administrator attends all Board meetings to be
place to ensure continued compliance with the regulatory requirements of the FCA and the Guernsey
Financial Services Commission.
Valuation risk
Property valuations are inherently
subjective and uncertain. This uncertainty
is heightened due to the Covid-19
pandemic.
and their quality control processes.
Tax risk
regulatory environment.
penalties, or loss of its REIT status, by
failing to comply with the REIT legislation.
The Group has internal monitoring procedures in place to ensure that the appropriate REIT rules and
legislation are complied with. To date, all REIT regulations have been complied with, including
projected tests.
Service providers
The Company has no employees and has
delegated certain functions to a number of
service providers. Failure of controls and
poor performance of any service provider
could lead to disruption, reputational
damage or loss.
Service providers are appointed subject to regular reviews and with clearly documented contractual
Regular reporting is provided by key service providers and monitoring of the quality of services
provided.
continuity and cyber security arrangements.
27
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Risk and Uncertainties
Continued
Risk assessment and internal controls
Risk assessment includes consideration of the scope and quality of the
systems of internal control operating within key service providers, and
ensures regular communication of the results of monitoring by such providers
they have resulted in unforeseen outcomes or contingencies that may have a
it has undertaken a detailed review of the risks facing the Company.
Stacey Bushes Industrial Estate
Milton Keynes
28
STRATEGIC REPORT
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Viability statement
uncertainties together with an assessment of future prospects.
from the date of this report which is selected to match the period over which
the commercial real estate market. The Investment Manager uses these
forecasts as part of analysing acquisition opportunities as well as for its
annual asset level business planning process. The Board receives an overview
of the asset level business plans which the Investment Manager uses to
assess the performance of the underlying portfolio and therefore make
tenants vacate at the earliest opportunity, is 5.0 years.
uncertainties faced by the Company, as detailed in the Strategic Report
on pages 4 to 29, which could negatively impact its ability to deliver
the investment objective, strategy, liquidity and solvency. This includes
collection), dividend cover, compliance with bank covenants, general
year period.
a number of the main assumptions including macroeconomic scenarios,
re-letting assumptions. The Board also reviews assumptions regarding
facilities.
Steps which are taken to mitigate these risks as set out in the Strategic
Report on pages 4 to 29 are also taken into account. Based on the
assessment, and having considered in detail base and downside scenarios
modelling the potential ongoing impact of Covid-19, the Directors have
able to continue in operation and meet its liabilities as they fall due over the
Going concern
including the non-collection of rent and service charges as a result of the
Covid-19 pandemic; have considered potential resulting falls in property
looking compliance with third-party debt covenants, in particular the Loan to
Value covenant and interest cover ratios.
against the RBS facility, and uncharged properties and units in joint ventures,
and based on the reporting period to 31 March 2022, property valuations
would have to fall by 38% before the relevant Canada Life Loan to Value
covenants were breached, and actual net rental income would need to fall
by 72% before the interest cover covenants were breached. Furthermore,
the properties charged to RBSI could fall in value by 60% prior to the 60%
Loan to Value covenant being reached and, based on actual net rents for the
quarter to March 2022, a 54% fall in net income could be sustained prior
to the RBSI loan covenant of 185% being breached. Due to strong valuation
year end. The Company has received a waiver from Canada Life on this until
June 2023.
to its ability to be repaid and redrawn as often as required. Furthermore, this
with an increase in the amount that can be drawn from £52.5m to £75m.
The Board and Investment Manager continue to closely monitor the ongoing
collection and the requirement to distribute dividends in accordance with the
REIT regulations. All future dividends will be kept under constant review to
capital requirements.
30 June 2023. In addition to the matters described above, in arriving at their
conclusion the Directors have also considered:
– The current cash balance at 6 June 2022 of £10.3 million.
–
– That the Investment Manager and Administrator continue to successfully
invoke their business continuity plans to help ensure the safety and
2023. After due consideration, the Board believes it is appropriate to adopt
By order of the Board
Lorraine Baldry
Chairman
6 June 2022
29
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Board of Directors
Lorraine Baldry
Chairman
Status:
Date of appointment: 13 January 2014
of Angel Trains Group Limited and associated companies. She was Chief
positions at Prudential Corporation, Morgan Stanley and Regus. She is also
succession policy, and best practice, Lorraine will retire as Chair of the Board
in July 2022, to be replaced by the current Senior Independent Director,
Current remuneration: £50,000 per annum
business: None
Key skills and contributions to the Board:
Graham Basham
Status:
Engagement Committee)
Date of appointment: 11 September 2015
Aged 64, Graham is a Director of a number of Investment and Fiduciary
Institute of Banks and is a member of both the Society of Trust and Estate
Practitioners and the Institute of Directors.
Current remuneration: £35,000 per annum
business: None
Key skills and contributions to the Board:
board member of fund administrators and registrars, which assists with the
30
G OVERNANCE
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Stephen Bligh
Chairman of the Audit Committee
Status:
Date of appointment: 28 April 2015
Aged 65, Stephen was previously with KPMG for 34 years, specialising
fellow of the Institute of Chartered Accountants in England & Wales and was
Innovation & Skills.
Current remuneration: £35,000 per annum
business: None
Key skills and contributions to the Board:
Alastair Hughes
Senior Independent Director
Status:
Date of appointment: 26 April 2017
Alastair will become Chair of the Company from July 2022.
Current remuneration: £35,000 per annum
business: None
Key skills and contributions to the Board:
of both real estate management, strategic leadership, and governance from
independent valuer.
No Director has any entitlement to pensions and the Company has not
awarded any share options or long-term performance incentives to any of
letters of appointment, which set out the terms of their appointments, are
normal business hours and will be available for inspection at the Annual
General Meeting.
in roles across asset management, alternative investments, private equity,
infrastructure and real estate. Priscilla is currently Chair of UBS Asset
Sustainable Investments, a global sustainable energy provider, and Embark
Group, a digital retirement solutions provider.
31
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Report of the Directors
of the Group for the year ended 31 March 2022 (the ‘Annual Report and
Results and dividends
statements.
During the year, the Company has declared and or paid the following interim
dividends to its shareholders in accordance with the solvency test (contained
in the Companies Law):
Dividend for quarter ended Date paid Rate
31 March 2021 25 June 2021 0.656 pence per share
30 June 2021 13 August 2021 0.675 pence per share
30 September 2021 17 December 2021 0.726 pence per share
31 December 2021 25 March 2022 0.772 pence per share
With the solvency test provided for in the Companies Law having being fully
0.795 pence per share to be paid on 30 June 2022.
All dividends paid during the year were allocated and paid as Property
Share capital
As at 31 March 2022, the Company had 565,664,749 (2021: 565,664,749)
(2021: 74,246,108). The total number of voting rights of the Company was
by shareholders as the denominator for the calculations by which they will
determine if they were required to notify their interest in, or a change in their
interest of, the Company, under the Disclosure Guidance and Transparency
Rules as at the year end.
Key services providers
The Board has adopted an outsourced business model and has appointed the
following key service providers:
Investment Manager
Board meetings. In addition, the Board conducted its annual strategic review
with the Investment Manager in May 2022 to consider the portfolio strategy
Directors formally discussed the performance of the Investment Manager at
a meeting of the Management Engagement Committee.
Manager has the appropriate capabilities required to support the Company
and believes that the continuing appointment of the Investment Manager
under the terms of the current investment management agreement, the
details of which are set out below, is in the interest of shareholders.
For the period of 1 April 2021 to 30 June 2021 the Investment Manager
reduced to 0.9% for the period of 1 July 2021 to 31 March 2022 post
an updating of the Investment Management Agreement, for providing
year. The new investment management and fund accounting fee is now
structured as follows: 0.9% on NAV up to £500 million; 0.8% on NAV
between £500 million to £1 billion; and 0.7% on NAV over £1 billion. The fee
is payable monthly in arrears. There is no performance fee. The Investment
Management Agreement can be terminated by either party on not less than
breaches of its terms or the insolvency of either party.
The Company has appointed the Investment Manager as its AIFM under the
AIFM Directive. There is no additional fee paid to the Investment Manager
for this service.
Administration
Northern Trust International Fund Administration Services (Guernsey)
Limited served as the administrator to the Group for a fee of £120,000 per
annum until 30 September 2021, and its sister company, Northern Trust
(Guernsey) Limited, provided depositary services, as required under the
AIFM Directive, to the Group until 30 September 2021 for a fee of £40,000
per annum.
appointed as Company Secretary to the Company for a fee of £50,000
per annum.
Anti-bribery policy
The Company continues to be committed to carrying out its business fairly,
honestly and openly. Appropriate policies are considered to be in place to
ensure compliance with the Bribery Act.
Directors
Director
Number of
ordinary shares
Percentage
(%)
Lorraine Baldry
Graham Basham
Stephen Bligh
32
G OVERNANCE
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Substantial shareholdings
As at 31 March 2022, the Directors were aware that the following
shareholders each owned 3% or more of the issued ordinary shares of the
Company. The position as at 6 June 2022 is unchanged, save for the holding
of Schroders plc, including Cazenove Capital and other Group entities,
reducing on 27 May 2022 to 73,507,581 ordinary shares.
Number of
ordinary shares Percentage (%)
Investec Wealth & Investment (UK)
Schroders plc
Witan Investment Trust (UK)
Embark Investment Services (UK)
Premier Miton Investors (UK)
BlackRock Inc
Connor Broadley Ltd
Asset Management (UK)
Independent Auditors
Resolutions to reappoint Ernst & Young LLP, and to give the Directors
Committee Report on pages 36 to 37.
Disclosure of information to Auditors
Director has taken all the steps that they ought to have taken as a Director
to make themselves aware of any relevant audit information and to establish
Status for taxation
the Company of an annual fee of £1,200.
remains in full compliance with the REIT requirements.
Shareholders who are in any doubt concerning the taxation implications
of a REIT should consult their own tax advisers.
Key information document
least an annual basis, in accordance with the Packaged Retail and Insurance-
contained in the KID are prescribed by PRIIPs and have neither been set
nor endorsed by the Board. In fact, the Board is of the opinion that PRIIPs
has been inconsistently applied by market participants and hence creates
confusion amongst investors.
AIFMD remuneration disclosures for Schroder Real Estate Investment
Management Limited (‘SREIM’) for the year to 31 December 2021
Quantitative remuneration disclosures to be made in this Annual Report in
are published on the following website:
33
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Corporate Governance
The Directors are committed to maintaining high standards of corporate
governance. Insofar as the Directors believe it to be appropriate and relevant
to the Company, it is their intention that the Company should comply with
best practice standards for the business carried on by the Company.
which report against the UK Corporate Governance Code or the Association
of Investment Companies Code of Corporate Governance are deemed to
meet the Code, and need take no further action.
The Board has considered the principles and recommendations of the
Association of Investment Companies Code of Corporate Governance
published in February 2019 ( the ‘AIC Code‘), which applies to accounting
periods beginning on or after 1 January 2019. The AIC Code, addresses
all the principles set out in the UK Corporate Governance Code, as well as
setting out additional principles and recommendations on issues that are
www.theaic.co.uk.
and recommendations of the AIC Code, which has been endorsed by the
Statement of compliance
The Company has complied with the recommendations of the AIC Code and
out below.
The UK Corporate Governance Code includes provisions relating to:
–
–
– Internal audit function.
The Board considers that these provisions are not relevant to the Company,
Directors, employees or internal operations. The provision in relation to the
internal audit function is referred to in the Audit Committee Report. The
Company has therefore not reported further in respect of these provisions.
Role of the Board
The Board has determined that its role is to consider and determine the
following principal matters which it considers are of strategic importance to
the Company:
– The overall objectives of the Company, as described under the paragraph
market conditions prevailing from time to time;
– The capital structure of the Company, including consideration of an
appropriate policy for the use of borrowings both for the Company and in
any joint ventures in which the Company may invest from time to time;
– The appointment of the Investment Manager, Administrator and other
through regular reports and meetings; and
–
and the payment of dividends.
Board decisions
The Board makes decisions on, among other things, the principal matters set
the Board to be non-strategic in nature and are delegated either to the
Investment Manager or the Administrator, unless the Board considers
importance to the Company and should be reserved to the Board. Generally
–
–
income; and
–
Evaluation of the Board and Audit Committee
In January 2020, the Board appointed Stogdale St James Limited to
presented and discussed with the Board. The composition of the Board,
its dynamics, its oversight of strategy and the management of the Board
meetings were all highly regarded.
In 2021, the Board carried out an internal evaluation of the Board and its
Directors, representatives of the Investment Manager and the Company
Secretary. It was concluded that the Board and its Chairman both operate
towards succession planning, relationships with key shareholders and the
format and length of Board papers.
has deferred its annual Board and sub-committee evaluations until 2023.
Non-Executive Directors, rotation of Directors and Directors’ tenure
The UK Corporate Governance Code recommends that Directors should
terminated at any time without penalty. The Board has approved a policy that
all Directors will stand for re-election annually and it is the intention that no
Director will serve for more than nine years.
The appointment and replacement of Directors is governed by the
Listing Rules. The Articles may only be amended by a special resolution
of the shareholders. When a vacancy arises the Board selects the best
taking into consideration Board diversity as part of a good corporate
34
G OVERNANCE
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Board composition and diversity
biography of each of these Directors is set out on pages 30 to 31 of the
report. The Board considers each of the Directors to be independent.
The independence of each Director is considered on a continuing basis.
The Board has determined that all the Directors are independent of the
of both the Company and the wider investment company sector, to enable
no individual or group of individuals is, or has been, in a position to dominate
decision making. Accordingly, the Board approves the nomination for re-
election of each of the Directors at the forthcoming Annual General Meeting.
As at 31 March 2022, the Board comprised three men and one woman.
The Board has adopted a diversity and inclusion policy. Appointments and
succession plans will always be based on merit and objective criteria and,
and ethnic backgrounds, cognitive and personal strengths. The Board will
that meet the objective criteria agreed for each appointment. Candidates
Board Committees
The Board has delegated certain of its responsibilities to its Audit,
Nomination, and Management Engagement Committees. Each of these
Committees has formal terms of reference established by the Board
Committees have an appropriate composition and blend of backgrounds,
of these Committees are available in their respective reports.
necessary to have a Remuneration Committee.
Board meetings and attendance
The Board meets at least four times each year. Additional meetings are
also arranged as required and regular contact between Directors, the
Investment Manager and the Administrator is maintained throughout the
year. Representatives of the Investment Manager and Company Secretary
attend each Board meeting and other advisers also attend when requested
to do so by the Board. At least once a year the Board carries out a site visit to
properties owned by the Company.
Attendance records for the four quarterly Board meetings and committee
meetings during the year under review are set out in the table below:
Board
Audit
Committee
Nomination
Committee
Management
Engagement
Committee
Lorraine Baldry (Chairman)
Graham Basham
Stephen Bligh
Number of meetings
during the year 4 2 2 1
In addition to its regular quarterly meetings, the Board met on 16 other
occasions during the year, attended by all or the majority of Directors.
All Directors receive, in a timely manner, relevant management, regulatory
internal controls. The Board receives and considers reports regularly from
the Investment Manager and other key advisers and ad hoc reports and
information are supplied to the Board as required.
Data protection and security
The Board has reviewed its systems and controls in light of the
implementation of the General Data Protection Regulation (EU Regulation
requirements of the GDPR. As part of that process, the Board took steps
to update its contracts and policies accordingly and is comfortable that it
meets its obligations as a controller of personal data. The Board also requires
its Investment Manager and Administrator to have a robust information
security and data protection environment in place. This is reviewed with
During the year, the Company has maintained insurance cover for its
Directors under a liability insurance policy.
Relations with shareholders
The Board believes that the maintenance of good relations with both
institutional and retail shareholders is important for the long-term prospects
of the Company. The Board receives feedback on the views of shareholders
from its corporate broker, the Investment Manager and from the Chairman.
Through this process the Board seeks to monitor the views of shareholders
The Board believes that the Annual General Meeting provides an appropriate
forum for investors to communicate with the Board and it encourages
94 sets out the business of the Annual General Meeting to be held on
21 September 2022.
35
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Audit Committee Report
Composition
The Audit Committee is chaired by Stephen Bligh with Graham Basham
Committee, and his continuing professional commitments provide him with
webpages.
Responsibilities
The Audit Committee ensures that the Company maintains the highest
before their submission to the Board. In addition, the Audit Committee is
alia, on the terms and scope of the appointment of the Auditors, including
their remuneration, independence, objectivity and reviewing with the
Work of the Audit Committee
The Audit Committee meets no less than twice a year. If required, meetings
are also attended by the Investment Manager, the Administrator and the
Auditor. During the year under review, the Audit Committee met on two
occasions to consider:
–
consider whether, taken as a whole, they were fair, balanced and
understandable and provided the information necessary for shareholders
–
–
– The management representation letters to the Auditors;
–
–
– The risk assessment of the Company; and
– Compliance with the UK REIT regime.
As noted in the Corporate Governance report, an evaluation of the Audit
Committee was completed by the Directors in March 2021 in which it was
discharge the matters for which it is responsible under its terms of reference.
Matter Action
Property valuation
Property valuation is central to the business
is inherently subjective, although the
valuations are performed by independent
Paribas Real Estate UK for the two joint
ventures.
The Audit Committee reviewed the outcomes of the valuation process throughout the year and discussed
the detail of each quarterly valuation with the Investment Manager at the Board meetings.
Errors in valuation could have a material
Members of the Audit Committee met with Knight Frank LLP and BNP Paribas Real Estate UK to
Market volatility
The performance of the Company could be
risk. In the wider economy this could
economic recessions, movements in
performance of the underlying property
structural or cyclical factors impacting
particular sectors or regions of the
As disclosed in the Going Concern and Viability Statements on page 29, the Audit Committee has
[-]year
period of its assessment.
36
G OVERNANCE
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Internal control
The UK Corporate Governance Code requires the Board to conduct,
internal control and to report to shareholders that it has done so. The Audit
Committee, on behalf of the Board, also regularly reviews a detailed ‘Risk
and service provider-related risks and ensures that risk management 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
internal controls review.
Internal audit
The Audit Committee considered the need for an internal audit function and
concluded that this function is not required, as it is provided by the Schroders
Investment Manager, Schroder Real Estate Investment Management Limited.
Internal Controls Report which includes the Company within the scope
report and the review by EY.
Annually, the Audit Committee considers the remuneration and
review the ratio of audit to non-audit fees to ensure that the independence
recommendation on its reappointment at the forthcoming Annual General
Meeting. As part of the evaluation, the Audit Committee considered
feedback from the Investment Manager on the audit process and the
compliance with regulatory requirements, on safeguards that have been
established and their own internal quality control procedures. The Audit
Committee had discussions with the audit partner on audit planning,
with and without representatives of the Investment Manager present. The
Chairman of the Audit Committee also had informal discussions with the
Non-audit services
In order to help safeguard the independence and objectivity of the Auditor,
of the Company, it will often be in the best position to perform non-audit
services is subject to pre-clearance by the Audit Committee. Clearance
is prohibited. Prior to undertaking any non-audit service, EY also completes
During the year, the non-audit services fees paid to EY were £20,000 in
relation to the interim review.
Stephen Bligh
Director
6 June 2022
37
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Management Engagement
fees. All Directors are members of the Management Engagement Committee. Graham Basham is the Chair of the Management Engagement Committee, and
Approach
Oversight of the Investment Manager Oversight of other service providers
The Management Engagement Committee:
–
– Considers the reporting it has received from the Investment
Manager throughout the year, and the reporting from the
Investment Manager to shareholders;
– Assesses management fees on an absolute and relative basis,
–
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.
The Management Engagement Committee reviews the performance and
basis, including the Investment Manager, the Corporate Broker, the Valuers
The Management Engagement Committee receives feedback from the Audit
Committee on its review of the Auditors.
Application during the year
Oversight of the Investment Manager Oversight of other service providers
The Management Engagement Committee undertook a detailed
has the appropriate capabilities required to allow the Company to meet
its investment objective. The Management Engagement Committee
also reviewed the terms of the Investment Management Agreement
Engagement Committee reviewed the other services provided by
Secretary and Administrator took place.
together with Schroder Investment Management Limited. These arrangements
delivered a modest reduction in fees paid by the Company.
The annual review of each of the other service providers was satisfactory. The
Management Engagement Committee noted that the Audit Committee had
undertaken a detailed evaluation of the Investment Manager, Depositary and
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.
–
38
G OVERNANCE
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Nomination Committee Report
The Nomination Committee is responsible for: (i) the recruitment, selection and induction of Directors; (ii) their assessment during their tenure; and (iii) the
Approach
Selection and induction Board evaluation Succession
– The Nomination Committee prepares
For the Chairman and the Chairs of
Committees, the Committee considers
current Board members too.
–
professional skills, personal qualities and
– Potential candidates assessed against the
– The Nomination Committee discusses the
long list, invites a number of candidates for
interview and makes a recommendation to
the Board.
– The Nomination Committee reviews the
induction and training of new Directors.
– The Nomination Committee assess each
Director annually.
– Evaluation focuses on whether each
Director continues to demonstrate
commitment to their role and provides
a valuable contribution to the Board
during the year, taking into account time
training needs.
– Following the evaluation, the Nomination
Committee provides a recommendation
to shareholders with respect to the annual
re-election of Directors at the AGM.
– All Directors retire at the AGM and their re-
election is subject to shareholder approval.
–
tenure will be for no longer than nine years,
each Director will be subject to annual re-
election at the AGM.
– The Nomination Committee reviews the
the Nomination Committee will initiate the
selection process.
– The Nomination Committee will oversee the
handover process for retiring Directors.
Application during the year
Selection and induction Board evaluation Succession
– Lorraine Baldry announced that she would
resign as Chairman of the Company in
July 2022. A sub-committee comprised
of Stephen Bligh and Graham Basham
considered a number of candidates for
the role of Chairman with input from
independent recruitment partners.
the current Senior Independent
–
suitable candidates for the role of Senior
Independent Director, with support from
Reynolds. Following this process, Priscilla
Davies was recommended to be appointed
as a Director of the Company and, in due
course, Senior Independent Director.
– The annual Board evaluation was
undertaken in 2021.
– The Nomination Committee reviewed
independence by reviewing a complete list
of appointments, including pro bono not
were considered to be independent in
character and judgement.
– The Nomination Committee considered
Directors, each Director had valuable
biographies on pages 30 and 31.
– Based on its assessment, the Nomination
Committee provided individual
re-election.
– During the year, the Nomination Committee
considered the need for orderly succession
planning and a suitable plan was agreed.
Recommendations made to, and approved by, the Board:
–
–
– That all Directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations of the Board and remain free
39
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Directors’ Remuneration Report
Introduction
The below remuneration policy is in force and is subject to an advisory vote
every three years.
advisory vote. An ordinary resolution to approve this report will be put to
shareholders at the forthcoming AGM.
At the AGM held on 9 September 2021, 99.77 % of the votes cast (including
Report on Remuneration for the year ended 31 March 2021 were in favour,
while 0.23% were against. No votes were withheld.
The Board believes that the principles of Section D of the UK Corporate
Governance Code relating to remuneration do not apply to the Company,
Directors’ Remuneration Policy
Board of Directors to a total of £250,000 per annum. Subject to this overall
Directors receive a base fee of £30,000 per annum, and the Chair receives
£50,000 per annum. The Chair of the Audit Committee, the Chair of
the Management Engagement Committee and the Senior Independent
Director each receive an additional fee of £5,000 respectively. The fees
fee for the Chair of the Management Engagement Committee which took
No Director, past or present, has any entitlement to pensions and the
Company has not awarded any share options or long-term performance
performance-related.
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.
from third parties on the fee levels of Directors of peer group companies, as
of the Directors. New Directors are subject to the provisions set out in this
remuneration policy.
letters of appointment, which set out the terms of their appointment, are
normal business hours and will be available for inspection at the AGM.
All Directors are appointed for an initial term covering the period from the
required to stand for re-election in accordance with the Articles. When
recommending whether an individual Director should seek re-election, the
Board will take into account the provisions of the UK Corporate Governance
Code, including the merits of refreshing the Board and its Committees.
The Board has approved a policy that all Directors will stand for
Directors’ Remuneration Report
implemented during the year ended 31 March 2022.
Fees paid to Directors
The following amounts were paid by the Company for services as Non-
Director
31 March 2022
(£)
31 March 2021
(£)
Lorraine Baldry (Chairman)
Stephen Bligh
2
Graham Basham
3, 4
1
Total
1 Senior Independent Director.
2 Chair of the Audit Committee.
3 Chair of the Management Engagement Committee.
4 Graham Basham is a Director of the subsidiary companies for which he receives no
additional remuneration, either directly or indirectly.
Performance
The performance of the Company is described on page 22 in the Business
Model.
Lorraine Baldry
Chairman
6 June 2022
40
G OVERNANCE
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and
Consolidated Financial Statements in accordance with applicable law and
regulations.
The Companies Law requires the Directors to prepare the Annual Report
Companies Law the Directors have elected to prepare the Annual Report and
Consolidated Financial Statements in accordance with International Financial
Reporting Standards and applicable law.
The Annual Report and Consolidated Financial Statements are required by
In preparing the Annual Report and Consolidated Financial Statements, the
Directors are required to:
– Select suitable accounting policies and then apply them consistently;
– Make judgements and estimates that are reasonable and prudent;
– State whether applicable accounting standards have been followed,
statements;
–
as applicable matters relating to going concern; and
– Use the going concern basis of preparation unless they intend to either
liquidate the Company or cease operations or have no realistic alternative
to do so.
The Directors are responsible for keeping proper accounting records which
Group and enable them to ensure that the Annual Report and Consolidated
Financial Statements comply with the Companies Law. They also have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent and detect fraud, error
and non-compliance with law and regulations.
As part of the preparation of the Annual Report and Consolidated Financial
Statements, the Directors have received reports and information from
have considered, reviewed and commented upon the Annual Report and
Consolidated Financial Statements throughout the drafting process in order
to satisfy themselves in respect of the content.
The Directors are responsible for the maintenance and integrity of the
for the preparation and dissemination of the Annual Report and Consolidated
Financial Statements.
Legislation in Guernsey governing the preparation and dissemination
Responsibility Statement of the Directors in respect of the Annual Report
– The Consolidated Financial Statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair view of
undertakings included in the consolidation taken as a whole and comply
with the Companies Law; and
– The Strategic Report on pages 4 to 29 and Governance Report on pages
34 to 35 include a fair review of the development and performance of
the business and the position of the Group and the undertakings included
in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties it faces. The Directors consider that the
Annual Report and Consolidated Financial Statements, taken as a whole,
are fair, balanced and understandable and provides the information
performance, business model and strategy.
By order of the Board
Lorraine Baldry
Chairman
6 June 2022
41
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Sustainability Report
The Board and Manager believe that consideration of Environmental, Social
Company and that a successful sustainable investment programme should
deliver enhanced returns to investors, improved business performance to
tenants and tangible positive impacts to local communities, the environment
and wider society.
As a landlord, we have the opportunity to help reduce running costs for our
occupiers, increase employee productivity and wellbeing, and contribute to
the prosperity of a location through building design and public realm.
Ignoring these issues when considering asset management and investments
would risk the erosion of income and value as well as missing opportunities to
enhance investment returns.
consumption of depleting resources, combined with the political imperative
to tackle issues such as climate change, means the property sector will
remain a prime target for policy action. This presents new challenges and
opportunities for the real estate industry with profound implications for both
owners and occupiers.
proactively take action to improve social and environment outcomes, focuses
on the pillars of People, Planet and Place which are referenced to three core
growth; (11) Sustainable cities and communities; and (13) Climate action.
To minimise risk and ensure resilience a good investment strategy must
incorporate ESG factors alongside traditional economic considerations. The
Board and Manager believe a complete approach should be rewarded by
improved investment decisions and performance.
is the response to the climate crisis both in terms of risk and resilience to
aligned with a 1.5°C decarbonisation trajectory, work has been undertaken
milestones at 2025 and 2030. Further details can be found in the ‘Net Zero
Real Estate with Impact approach and its Sustainability Policy: Real Estate
with Impact can be found here:
Environmental Management System
The Investment Manager operates an Environmental Management System
management of direct real estate investments in the UK and across Europe.
The EMS provides the framework for how sustainability principles
(Environmental and Social) are managed throughout all stages of its
investment process including acquisition due diligence, asset management,
property management provided by third parties, refurbishments and
developments.
The Investment Manager reviews its Sustainability Policy annually and which
is approved by the Investment Committee. Key aspects of the policy and its
objectives, and progress during 2021, as well as objectives and targets for
the year ahead, are set out below.
Active management of sustainability performance is a key component
of responsible asset and building management. Reducing consumption,
tenant retention and attraction, in addition to mitigating environmental
impacts and helping to future-proof the portfolio against future legislation.
In support of improving the Environmental and Social characteristics of the
portfolio, the Investment Manager has continued to work with sustainability
identify and deliver sustainability enhancements. The programme involves
reviewing all managed assets held by the Company using the Investment
implement improvement initiatives, where viable.
Where the landlord retains operational control responsibilities, the
on a quarterly basis. Please note, changes in occupancy and building
operations during the Covid-19 period have had an impact on like-for-like
performance and so the reporting year is not directly comparable with the
previous reporting year.
For detailed sustainability performance data covering the reporting period
and the prior year, please see the EPRA Sustainability Reporting Performance
Measures on page 70.
Energy and GHG emissions
The Investment Manager can report for the year to 31 December 2021, for
the managed assets held within the Company, there was a 2% reduction in
landlord-procured energy consumption on a like-for-like basis. This translates
basis.
Energy performance improvement initiatives continued to be considered
across the portfolio. Initiatives undertaken during the reporting year include
monitoring, as well as continued upgrades to lighting systems including
installation of LEDs and passive infrared controls.
The Investment Manager also has an objective to procure 100% renewable
electricity for landlord-controlled supplies by 2025. At 31 December 2021,
during 2021 new energy and carbon targets have been developed in a
42
G OVERNANCE
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Water
and Society, and reductions in consumption can deliver operational cost
the landlord has supply responsibilities and encourages active management
of asset-level consumption. Where the Company had such responsibilities,
a 17% reduction in like-for-like water consumption is reported for the year to
31 December 2021 compared to the previous year.
Waste
end, waste should be minimised and disposal should be as sustainable as
possible. The Investment Manager, therefore, has set an objective to send
to 31 December 2021, the Company achieved a 1% reduction in total landlord
recycled and 44% was incinerated with energy recovery.
Improvements and refurbishments
The Investment Manager seeks to deliver developments and refurbishments
to sustainable standards and deliver good performance against building
BREEAM (the Building Research Establishment Environmental Assessment
Methodology: an environmental assessment method and rating system for
assess operational performance against nine sustainability categories. The
framework supports the overall sustainability programme for the Company
with improvement actions integrated into the responsibilities of the
Investment Manager and property managers.
During the 2021 reporting year, the Investment Manager commissioned two
BREEAM In-Use assessment for the Company.
Health and wellbeing
The real estate industry has a good appreciation of the importance of
the built environment on human health and wellbeing. There has been
considerable development in understanding on what building aspects matter
Property Manager Sustainability Requirements
Property managers play an integral role in supporting the sustainability
programme. The Investment Manager has established a set of Sustainability
Requirements for property managers to adhere to in the course of delivering
their property management services. This includes a set of key performance
and annual basis.
The Investment Manager is pleased to report that the principal property
monthly and annual indicators.
Occupier and community engagement
The Investment Manager seeks active engagement with occupiers to ensure
the Investment Manager undertook an occupier satisfaction survey with
support from a third-party customer satisfaction specialist. Results from this
survey were used to develop and action plans which the Asset and Property
Managers are continuing to implement. As the day-to-day relationship is with
the Property Manager, the Property Manager Sustainability Requirements
include a key performance indicator on occupier engagement.
Tower, Manchester and in response to feedback obtained through the
Manager has worked alongside the principal property manager for the
the Company. The programme will see the introduction of this platform
throughout 2022.
The Investment Manager believes in the importance of understanding
wellbeing of society. Positively impacting on 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. The Investment Manager looks to understand and develop the
community relationship to ensure investments provide sustainable social
solutions for the long term.
Sustainability in action (case studies)
Manchester, Cheadle, Stanley Green Trading Estate (Industrial)
sq ft trading estate across 14 warehouse units on a nine acre site, and a 3.4
acre development site.
When acquired in December 2020, the development site had an historic
planning consent for 48,000 sq ft of trade counter and warehouse space
allocated for industrial development in the local development plan. In
recycled materials, insulated cladding to mitigate heat loss and installation
of LED lighting. Electric vehicle charging and cycle storage facilities will
Sustainable Refurbishment and Redevelopment guide, the contractor is
encouraged to use local suppliers to boost local employment, including
The development cost of £8.5 million is estimated to generate rental income
of £1.1 million per annum. Pre-lets of the scheme will be targeted during the
with lettings at new headline rents of £14 per sq ft and lease regears under
estate will be over roofed and reclad to mitigate heat loss and improve EPC
ratings across the estate. The Investment Manager continues to develop a
portfolio and development opportunities.
43
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Sustainability Report
Continued
Compliance with legislation
The Investment Manager continues to monitor requirements and guidance in
relation to managing and reporting environmental matters and developments
in legislation at all stages of the investment life cycle – from acquisition,
through ownership, to disposal. This process is supported by a legal register
within the EMS, as well as through appropriate devolution of responsibility
to key personnel involved in the day-to-day operation of buildings, including
Regulations
EPCs for the portfolio are regularly reviewed for alignment with the 2015
Investment Manager is actively managing the potential risk of this legislation
new leases and renewals for non-domestic buildings from 1 April 2018; this
the portfolio is set out within the EPRA Sustainability Reporting Measures
section on page 75.
Streamlined Energy and Carbon Reporting (‘SECR’)
An Energy and Carbon Report for the Company, aligned with the UK
Streamlined Energy and Carbon Reporting regulations, is included on
Energy Savings Opportunity Scheme (‘ESOS’)
The Company did not qualify for participation in the 2015 Phase 1 of the
Phase 3 requirements.
Industry Initiatives
EPRA Sustainability Reporting Measures
The Company report includes environmental performance indicator data
for the portfolio. The disclosures are aligned with EPRA Best Practices
Recommendations on Sustainability Reporting 2017, assured to Assurance
Performance Measures report. The Company was awarded an EPRA Gold
Award for Sustainability Reporting in 2021, for the fourth consecutive year.
Global Real Estate Sustainability Benchmark (‘GRESB’)
The Company has participated in GRESB, the leading global standard for
assessing ESG performance for real estate funds and companies, for the
improved its score to 75 (out of 100), came second in its peer group (out of
8) and maintained its Green Star rating. The Investment Manager intends to
participate in the survey on behalf of the Company in 2022.
United Nations Principles of Responsible Investment (‘UN PRI’)
Schroders plc has been a signatory to UN PRI since 2007 and intends to
remain an active and engaged member for the PRI and to meet its ongoing
membership commitments. Schroders achieved the highest possible
ESG approach from the Principles for Responsible Investment. Schroders
has completed the Direct Property Segment for four years achieving an
.
Please note there has been a delay to the 2021 UN PRI reporting cycle.
The PRI have suggested we will receive our updated score for 2021 in the
summer of 2022.
Industry participation
Schroders supports, and collaborates with, several industry groups,
organisations and initiatives including the United Nations Global Compact
and Net Zero Asset Managers Initiative (of which it is a founding member).
.
The Investment Manager is a member of several industry bodies including
the UK Green Building Council in 2007 and in 2017 became a member of the
Better Buildings Partnership and a Fund Manager Member of GRESB.
Employee Policies and Corporate
Responsibility
Employees
which has responsibility for the employees that support the Company.
Schroders believes diversity of thought and an inclusive workplace are key to
real estate team have sustainability within their annual objectives.
diversity and inclusion, gender pay gap, values, employee satisfaction
survey, wellbeing and retention can be found on the dedicated Schroders
.
Corporate responsibility
commitment to act responsibly, support clients, deliver value to shareholders
and make a wider contribution to society is embedded across its business in
all that it does.
including its economic contribution, environmental impacts and community
involvement, can be found here:
.
The Company is not required to produce a statement on slavery and human
the relevant triggers under that Act that required such a statement.
The Investment Manager to the Company, is part of Schroders plc and
.
44
G OVERNANCE
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Net Zero Carbon
The Board and Manager recognise that the Company has a responsibility to
1
and that an active approach to
understanding and managing climate risks and opportunities is fundamental
to delivering resilient investment returns and supporting the transition to a
low carbon society.
Paris Agreement aim to limit warming to 1.5°C. The net zero commitment
addresses carbon emissions from all stages of a buildings life cycle including
well as embodied carbon associated with refurbishment and development.
In 2021, the Investment Manager has been working to establish an
operational Net Zero Carbon baseline and to develop new operational
energy and carbon targets for the Company. Due to the Covid-19 pandemic,
the 2020 year is generally not considered representative of building
performance and so a baseline year of 2019 has been used.
building operational energy and carbon performance at assets where there
is an internal energy supply procured by the Company. For buildings that are
in scope, whole building energy has been taken into account. This means
that for assets where the landlord procures only part of the building energy,
the remaining footprint of the building (tenant procured energy) is also in
scope despite limitations on our ability to reduce their energy use and carbon
performance and so here occupier engagement will be critical to the success
2
e
2
.
Forward-looking asset level Net Zero Carbon pathways have been modelled
have formed the basis for our new asset and portfolio level operational
energy and carbon targets. Net Zero Carbon pathways – aligned with a ‘Paris
1.5°C – have been developed to present the decarbonisation requirements
needed to achieve Net Zero Carbon by 2050 or sooner and include interim
milestones at 2025 and 2030.
New interim operational energy and carbon portfolio targets for the
Company established for 2025 and 2030 using a 2019 baseline and set in
a Net Zero Carbon context
Target
%
Reduction
Annualised
reduction
2025 carbon intensity
2030 carbon intensity
2025 energy intensity
2030 energy intensity
The pathway will evolve over time as the Investment Manager, and the wider
industry, develop their understanding of how to address the carbon impact of
real estate activities, physical risks to locations and assets, and as regulatory
(such as those on FRI leases) of our operational Net Zero Carbon pathway, as
well as account for additional operational Scope 3 emissions (such as those
manage and reduce our embodied carbon associated with developments
and refurbishments. Although this activity in the portfolio has historically
been limited, the Board and Manager recognise that works will be needed to
improve building energy and carbon performance in order to reduce the risk
of stranded assets.
associated with the development, ownership and servicing of a building are zero or
negative.
Net Zero Carbon pathways. Assets in scope of the baseline analysis represent 26% of
as at 31 March 2022.
45
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Task Force on Climate-Related Financial
Disclosures (‘TCFD’)
The TCFD aims to mainstream reporting on climate-related risks and
TCFD recommendations have so far been a voluntary framework, however,
it became mandatory in the UK across a range of market participants on a
phased timeline beginning in 2021.
The TCFD recommendations are structured around four themes:
Governance, Strategy, Risk Management, and Metrics and Targets.
–
–
changing climate.
Additional principles within TCFD include the importance of forward-
looking assessment of climate-related risks and opportunities, and
the potential implications of a range of plausible future states under
for climate-related issues is a relatively new concept and that practices will
In 2021, the Investment Manager 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
oversight of climate-related
risks and opportunities.
which includes but is not limited to: (i) fund level sustainability performance measured by both the Investment Manager and
in assessing and managing
climate-related risks and
opportunities.
Climate change is an established component of our sustainability programme. Responsibility for assessment and
management of climate-related risk and opportunity is delegated to key members of the Investment Management team,
the Investment Committee. The Investment 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 Investment Manager
Strategy
Describe the climate-related
risks and opportunities the
the short, medium, and long
term.
these factors over time, as well as how government policies may enable mitigation of and adaptation to climate change.
In the short term, energy and carbon emissions performance of our assets is a critical climate-related strategic issue. We
and generate new income streams (e.g. on-site energy) and which all support asset values. These actions also support
climates, weather events and availability of water.
Describe the impact of
climate-related risks
and opportunities on the
planning.
issues, and will include forward-looking assessment of asset alignment to Paris aligned energy and carbon performance
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
46
G OVERNANCE
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
TCFD recommendation Approach
Describe the resilience of the
climate-related scenarios,
including a 2°C or lower
scenario.
Net Zero Carbon commitments (detailed on page 45 above), during 2021, forward looking Net Zero Carbon pathways have
new asset and portfolio level operational energy and carbon targets. Net Zero Carbon pathways have been developed to
present the decarbonisation requirements needed to achieve Net Zero Carbon by 2050 or sooner; aligned with a ‘Paris
assesses vulnerability to physical risk hazards, and those climate-based indicators are based on RCP8.5. The strategy will
be to use this 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.
Risk management
processes for identifying and
assessing climate-related
risks.
emissions.
processes for managing
climate-related risks.
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 Carbon pathway enables consideration of
Describe how processes for
identifying, assessing, and
managing climate-related
risks are integrated into
management.
During 2021, the Investment Manager added ESG criteria, including climate-related risks, to its formal quarterly investment
Company Board as part of the quarterly Board materials and discussed as necessary.
Metrics and targets
Disclose the metrics used
by the Company to assess
climate-related risks and
opportunities in line with its
strategy and risk management
process.
Disclose Scope 1, Scope 2,
related risks.
Scope 1 and Scope 2 emissions for the reporting year are disclosed in the ‘EPRA Sustainability Reporting Performance
baseline. Due to the Covid pandemic, the 2020 year is generally not considered representative of building performance and
so a baseline year of 2019 has been used.
Describe the targets
used by the Company to
manage climate-related
risks and opportunities and
performance against targets.
Net Zero Carbon pathways have been developed, using the CRREM tool, to present the decarbonisation requirements
47
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Independent Auditor’s report to the members of
Schroder Real Estate Investment Trust Limited
Opinion
Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related
–
– have been properly prepared in accordance with IFRS; and
– have been properly prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.
Basis for opinion
Independence
accordance with these requirements.
Conclusions relating to going concern
included:
–
process they followed in supporting the going concern assessment prepared by the Directors;
–
fall due;
– challenging the stress testing performed and validating the static data assumptions used by the Investment Manager by agreement to supporting
documentation;
–
– holding discussions with the Audit Committee and the Investment Manager to determine whether, in their opinion, there is any material uncertainty
the liquidity assessment;
–
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 IAS 1.
for issue.
accounting.
Overview of our audit approach
Audit scope –
Key audit matters – Risk of misstatement in the fair value of directly or indirectly held investment property portfolio.
– Risk of incomplete or inaccurate rental revenue recognition and related year-end receivables.
Materiality –
48
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
An overview of the scope of our audit
Tailoring the scope
controls and changes in the business environment when assessing the level of work to be performed.
All audit work was performed directly by the Group audit team.
Changes from the prior year
Climate change
or our knowledge obtained in the course of the audit, or otherwise appear to be materially misstated.
Key audit matters
these matters.
Risk
Our response
to the risk
Key observations
communicated
to the Audit Committee
Risk of misstatement in the fair
investment property portfolio
Refer to the Audit Committee Report
Note 10 of the Financial Statements
(pages 62 to 64).
portfolio consists of UK properties held
directly and through joint ventures, with
a combined fair value of £523.5 million
(2021: £438.8 million).
There is a risk of incorrect valuation
of the property portfolio which could
result in the Consolidated Statement of
Financial Position and the Consolidated
Statement of Comprehensive Income
being materially misstated.
We have performed the following procedures:
–
surrounding property valuation by performing our walkthrough procedures and
– assessed the independence and competence of the independent valuers as
required by auditing standards;
–
the appropriateness and suitability of the reported values and the changes in
value from the previous accounting period;
– engaged our EY property valuation specialists to perform a review of a
judgementally selected sample of property valuations to assess whether the
reported value fell within a range of reasonable outcomes, which included:
– validating the assumptions used by the independent valuers in undertaking
their valuation and assessment of the valuation methodologies adopted;
– challenging the key inputs and assumptions relating to equivalent yield
and rental rates with reference to published market data and comparable
transaction evidence through market activity;
– assessing the appropriateness of market-related inputs and reasonableness
of valuation methods, by comparing against our own market data and
understanding of the property market;
– performed analytical review procedures across the portfolio of investments,
– 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;
–
– assessed the adequacy of the additional disclosures of estimates and valuation
assumptions as disclosed in the notes were made in accordance with IFRS 13 –
Fair Value Measurement.
Based on the work
performed we have no
matters to report to the
Audit Committee.
49
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Independent Auditor’s report to the members of
Schroder Real Estate Investment Trust Limited
Continued
Risk
Our response
to the risk
Key observations
communicated
to the Audit Committee
Risk of incomplete or inaccurate rental
revenue recognition and related year-
end receivables
Revenue is earned in the form of rental
income from the investment properties
and is recognised on an accrual basis.
During the year, the Group recognised
£23.9 million of rental income (2021:
£21.5 million) and rent receivable of £4.5
million (2021: £4.1 million).
There is a risk of incomplete or
inaccurate rental revenue recognition
and related year-end receivables
through failure to recognise proper
income entitlements or to apply the
appropriate accounting treatment. The
recoverability of year-end receivable is
based on a number of judgements and
estimates.
We have performed the following procedures
– obtained an understanding of the process and controls for each revenue stream
by performing our walkthrough procedures and evaluating the implementation
– performed substantive analytical review procedures over rental revenue for each
– agreed a sample of rental rates to tenancy agreements and recalculated rental
revenue earned by the property for the period;
– recalculated a sample of lease incentives based on the terms within the lease
agreement to assess the appropriateness of the amount recorded; this included,
updated terms to amended and restated lease agreements, and performing an
independent assessment as to whether they have been appropriately treated in
– reviewed the report prepared by the Investment Managers assessing the
recoverability of the overdue rent receivables, and challenged the judgements
involved. For a sample of tenants, we have inspected the cash receipt subsequent
to the year-end date; and
– to test the risk of management override of controls, we tested a sample of rental
revenue journals to identify unauthorised or inappropriate journals. We enquired
as to the nature of each transaction sampled and reviewed corroborating
evidence to conclude on whether the journals were reasonable and in line with
on our professional judgement.
Based on the work
performed, we have
no material matters
to report to the Audit
Committee.
Prior year comparison
There have been no changes to our assessment of key audit matters.
Our application of materiality
audit opinion.
Materiality
We determined materiality for the Group to be £3.7 million (2021: £3.0 million), which is 1% (2021: 1%) of equity. We believe that equity provides us with a
During the course of our audit, we reassessed initial materiality based on equity as at 31 March 2022 and adjusted our audit procedures accordingly.
Performance materiality
materiality was 75% (2021: 75%) of our planning materiality, namely £2.8 million (2021: £2.2 million).
Reporting threshold
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
50
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which The Companies (Guernsey) Law, 2008 requires us to report to you if, in our
opinion:
– proper accounting records have not been kept by the Company; or
–
–
Corporate Governance Statement
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
–
on page 29;
–
–
–
–
–
– The section describing the work of the Audit Committee set out on pages 36 to 37.
Responsibilities of Directors
matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
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
detection of fraud rests with both those charged with governance of the Group and management.
–
Companies (Guernsey) Law, 2008, the UK Corporate Governance Code, The 2019 AIC Code of Corporate Governance, REIT requirements set out in part
– We understood how the Group is complying with those frameworks by making enquiries of the Investment Manager, the Administrators and those charged
with governance regarding:
–
–
–
– how the Group monitors those programmes and controls.
–
–
–
–
otherwise help to prevent, deter and detect fraud;
51
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Independent Auditor’s report to the members of
Schroder Real Estate Investment Trust Limited
Continued
– making inquiries of the Investment Manager and those charged with governance regarding how they identify related parties including circumstances
– making inquiries of the Investment Manager, the Company Secretary, Administrator and those charged with governance regarding their knowledge of
–
– through discussion, gaining an understanding of how those charged with governance, the Company Secretary, 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 to further our understanding;
– Reviewing Board minutes and internal compliance reporting;
–
form of Property Income Distributions;
– inspecting correspondence with regulators; and
– obtaining relevant written representations from the Board of Directors.
at
Other matters we are required to address
–
–
initial appointment to 31 March 2022.
– The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
6 June 2022
52
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Consolidated Statement of Comprehensive Income
53
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
All items in the above statement are derived from continuing operations. The accompanying notes 1 to 23 form an integral part of the financial statements.
Notes
31/03/2022
£000
31/03/2021
£000
3 558
Rental income
Other income
Property operating expenses 4 (1,9 1 9 ) (3,0 3 8 )
Net rental and related income, excluding joint ventures 22 , 498 1 8,6 2 5
Net rental and related income, including joint ventures 2 5,2 3 8
10
10 6 6,5 3 6 (8, 2 8 6 )
2 (2,9 9 4 ) (2,9 0 6 )
(1 ,5 4 7 ) (1,6 9 8 )
2
5
6
Profit on the disposal of investment property
Net unrealised valuation gains/(losses) on investment property
Expenses
Investment management fee
Valuers’ and other professional fees
Administrators’ fees
Auditor’s remuneration
Directors’ fees
Other expenses 6
(82 ) (12 0 )
(19 0 ) (1 5 0 )
(15 7 ) (1 5 0 )
(4 2 2 ) (2 7 8 )
Total expenses (5, 3 9 2 ) (5,3 0 2 )
Finance costs (4 , 139 ) (4,2 0 3 )
(4 , 139 ) (4,2 0 3 )
11
Net finance costs
Share of net rental income in joint ventures
Share of valuation gains in joint ventures 11
Taxation 7
Profit and total comprehensive income for the year attributable to the equity holders of the parent
Basic and diluted earnings per share 8
Consolidated Statement of Financial Position
The financial statements on pages 53 to 56 were approved at a meeting of the Board of Directors held on 6 June 2022 and signed on its behalf by:
Lorraine Baldry
Chairman
Stephen Bligh
Director
The accompanying notes 1 to 23 form an integral part of the financial statements.
54
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Notes
31/03/2022
£000
31/03/2021
£000
10Investment property
Investment in joint ventures 11
Non-current assets
12Trade and other receivables
Cash and cash equivalents 13
Current assets
Total assets
14
Issued capital and reserves
Treasury shares 14
Equity
15Interest-bearing loans and borrowings
Lease liability 11
Non-current liabilities
Trade and other payables 16
Current liabilities
Total liabilities
Total equity and liabilities
Net Asset Value per Ordinary Share 17
(36,103 )
(35,967 )
Consolidated Statement of Changes in Equity
Notes
Share premium
£000
Treasury share
reserve
£000
Revenue reserve
£000
Total
£000
Balance as at 31 March 2020
Share buyback
Profit for the year
Dividends paid
Balance as at 31 March 2021
Share buyback 17
Profit for the year
Dividends paid 9
Balance as at 31 March 2022
The accompanying notes 1 to 23 form an integral part of the financial statements.
55
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
(9,515 )
(9,515 )
(7,989 )
(7,989 )
(13,893 )
(13,893 )
Consolidated Statement of Cash Flows
31/03/2022
£000
31/03/2021
£000
Operating activities
Profit for the year
Adjustments for:
Profit on disposal of investment property
Net valuation (gain)/loss on investment property
Share of profit on joint ventures
Net finance cost
Operating cash generated before changes in working capital
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Finance costs paid
Cash flows from operating activities
Investing activities
Proceeds from the sale of investment property
Acquisition of investment property
Additions to investment property
Addition to joint ventures
Net income distributed from joint ventures
Cash flows from investing activities
Financing activities
Repayment of debt
Additions to debt
Dividends paid 9
Share buyback
Cash flows used in financing activities
Net decrease in cash and cash equivalents for the year
Opening cash and cash equivalents
Closing cash and cash equivalents 13
The accompanying notes 1 to 23 form an integral part of the financial statements.
56
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
(3, 1 6 5 )
(12 1 )
(6 6, 5 3 6 )
(6,700 )
(3,5 8 7 )
(3, 8 4 7 )
(3,990 )
(19,850 )
(3 6,5 0 0 )
(4 ,924 ) (8,8 9 6 )
(620 ) –
(9,961 )
(3 6,5 3 5 )
(13 , 000 ) –
(1 3,8 9 3 ) ( 7, 9 8 9 )
(136 ) (9,515 )
(5, 8 2 9 ) 6,9 9 6
(5 74 )
(2 0,8 7 6 )
Notes to the Financial Statements
1. Significant accounting policies
statements of the Company for the year ended 31 March 2022 comprise the Company and its subsidiaries (together referred to as the ‘Group’).
New standard and interpretations
The Company is satisfied that there are no standards that are published and not yet effective that will have a material effect on the accounts.
Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) issued by the International Accounting
Standards Board (the ‘IASB’), and interpretations issued by the International Financial Reporting Interpretations Committee.
The financial statements give a true and fair view and are in compliance with The Companies (Guernsey) Law, 2008, applicable legal and regulatory
requirements and the Listing Rules of the UK Listing Authority.
Basis of preparation
The financial statements are presented in sterling, which is the Company’s functional currency, rounded to the nearest thousand. They are prepared on the
historical cost basis except that investment properties are stated at their 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 and are consistent with those of the previous year.
Going concern
The Directors have examined significant areas of possible financial risk, including the non-collection of rent and service charges as a result of the Covid-19
pandemic; have considered potential resulting falls in property valuations; have reviewed cash flow forecasts; and have analysed forward-looking compliance
with third-party debt covenants, in particular the Loan to Value (‘LTV’) covenant and interest cover ratios.
Overall, after utilising available cash, excluding the cash undrawn against the RBS facility, and uncharged properties and units in joint ventures, and based on
the reporting period to 31 March 2022, property valuations would have to fall by 38% before the relevant Canada Life LTV covenants were breached, and
actual net rental income would need to fall by 72% before the interest cover covenants were breached. Furthermore, the properties charged to RBSI could fall
in value by 60% prior to the 60% LTV covenant being reached and, based on actual net rents for the quarter to March 2022, a 54% fall in net income could be
sustained prior to the RBSI loan covenant of 185% being breached. Due to strong valuation growth in the industrial sector in particular, the Company’s office
sector weighting fell just below its minimum requirement of 20% as at the financial year end. The Company has received a waiver from Canada Life on this until
June 2023.
As at the financial year end, the undrawn capacity of the RBS facility was £19.8 million. This facility is an efficient and flexible source of funding due to its ability
to be repaid and redrawn as often as required. Furthermore, this facility was refinanced in June 2022 with a new five-year term to 2027 and with an increase in
the amount that can be drawn from £52.5 million to £75 million.
The Board and Investment Manager are closely monitoring the potential impact that the continued Covid-19 pandemic may have on the Company’s rental
collection and the requirement to distribute dividends in accordance with the REIT regulations. All future dividends will be kept under constant review to
ensure the Company’s liquid resources will be sufficient to cover any working capital requirements.
The Directors have not identified any matters which would cast significant doubt on the Group’s ability to continue as a going concern for the period to
30 June 2023. In addition to the matters described above, in arriving at their conclusion the Directors have also considered:
– The current cash balance at 6 June 2022 of £10.3 million;
– The nature and timing of the Company’s income and expenses; and
– That the Investment Manager and Administrator continue to successfully invoke their business continuity plans to help ensure the safety and well being of
their staff thereby retaining the ability to maintain the Company’s business operations.
The Directors have satisfied themselves that the Group has adequate resources to continue in operational existence for the period to 30 June 2023. After due
consideration, the Board believes it is appropriate to adopt the going concern basis in preparing the financial statements.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS 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, including those within joint
ventures, which are stated at fair value. The Group uses external professional valuers to determine the relevant amounts. Judgements made by management in
the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are
disclosed in note 18.
57
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
continued
irrecoverable. As at 31 March 2022, total bad debt provisions of £0.9 million had been recognised against rental debtors of c.£3.8 million net of VAT. In
addition to bad debt provisions recognised relating to rent recognised during the period, an additional judgement has been made relating to rent demanded at
the end of March relating to the subsequent quarter from April and to June.
Basis of consolidation
Subsidiaries
– power over the investee;
–
–
the acquisition has been treated as an asset acquisition.
Joint ventures
constructive obligations or is making payments on behalf of an entity.
Transactions eliminated on consolidation
Investment property
Investment property is land and buildings held to earn rental income together with the potential for capital growth.
consideration given, including transaction costs associated with the investment property.
After initial recognition, investment properties are measured at fair value, with unrealised gains and losses recognised in the statement of comprehensive
income. Realised gains and losses on the disposal of properties are recognised in the statement of comprehensive income in relation to carrying value. Fair
carried out on a quarterly basis.
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
Leases
For any material leases for which the Group is a lessee, the leasehold interest is measured at fair value and included in investment properties with the
corresponding liability being shown as a non-current liability. The fair value is calculated as the present value of the future lease payments.
Financial instruments
Financial assets
impairment losses.
Cash and cash equivalents
of the Consolidated 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
58
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Notes to the Financial Statements
Continued
continued
Financial liabilities
Loans and borrowings
Borrowings are recognised initially at fair value of the consideration received, less attributable transaction costs. Subsequent to initial recognition, interest-
Trade and other payables
Trade and other payables are stated at amortised cost.
Share capital
Share buyback
Dividends
Dividends are recognised in the period in which they are paid.
Rental income
incentives are spread evenly over the lease term.
Impairment
Financial assets
Financial assets at amortised cost are subject to impairment.
The credit risk associated with unpaid rent has increased due to Covid-19 and the Company has undertaken a detailed analysis over the recoverability of
further details on the measurement of the loss allowance and amount recognised at 31 March 2022.
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
are recognised in the statement of comprehensive income.
Provisions
A provision is recognised in the Consolidated Statement of Financial Position when the Group has a legal or constructive obligation as a result of a past event
Finance costs
Expenses
management consider that the property agent acts as principal in this respect.
59
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
continued
Taxation
continues to meet these conditions.
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, the
United Kingdom. There is no one tenant that represents more than 10% of Group revenues. SREIM acts as adviser to the Board, who then make management
decisions following their recommendations. As such the Board of Directors are considered to be the chief operating decision maker. A set of consolidated IFRS
information is provided on a quarterly basis.
2. Material agreements
Schroder Real Estate Investment Management Limited is the Investment Manager to the Company. The Investment Manager is entitled to a fee, together
Company. The Investment Management Agreement can be terminated by either party on not less than 12 months written notice or on immediate notice in the
event of certain breaches of its terms or the insolvency of either party.
NAV Management fee percentage per annum of NAV
<£500 million 0.9%
£500 million – £1 billion 0.8%
£1 billion+ 0.7%
can be agreed for out of scope services on an ad hoc basis.
The total charge to the Consolidated Statement of Comprehensive Income during the year was £2,994,000 (2021: £2,906,000 ). At the year end, £nil (2021:
1 July 2021.
Northern Trust International Fund Administration Services (Guernsey) Limited was the Administrator to the Company during the period to 30 September 2021.
The Administrator was entitled to an annual fee equal to £120,000 of which no sum (31 March 2021: £30,000) was outstanding at the year end.
were £37,000.
3. Other income
31/03/2022
£000
£000
Dilapidations and miscellaneous income
60
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Notes to the Financial Statements
Continued
4. Property operating expenses
31/03/2022
£000
£000
Repairs and maintenance
Advertising
Rates – vacant
Service charge, insurance and utilities on vacant units
Ground rent
5. Auditor’s remuneration
6. Other expenses
31/03/2022
£000
£000
Professional fees
Directors’ fees
£156,927 (2021: £150,000), as set out in the Remuneration Report on pages 40 and 41.
7. Taxation
31/03/2022
£000
£000
– –
Current tax expense in the year –
continues to meet these conditions.
8. Basic and diluted earnings per share
average number of ordinary shares in issue during the year of 491,085,850 (2021: 508,699,880).
9. Dividends paid
In respect of
Ordinary
shares
Rate
(pence)
31/03/2022
£000
491.08 million
491.08 million
491.08 million
491.08 million
61
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
9. Dividends paid continued
In respect of
shares
Rate
(pence)
£000
518.51 million
503.30 million
495.00 million
A dividend for the quarter ended 31 March 2022 of 0.795 pence per share was approved and will be paid on the 30 June 2022.
10. Investment property
Leasehold
£000
Freehold
£000
Total
£000
Fair value as at 31 March 2020
Additions
Acquisitions –
Disposal of asset held at fair value
Fair value leasehold movement –
Net unrealised valuation loss on investment property
Fair value as at 31 March 2021
Additions
Acquisition costs –
Acquisitions –
Disposal of asset held at fair value –
Fair value leasehold movement –
Net unrealised valuation gain on investment property
Fair value as at 31 March 2022
The balance above includes:
Leasehold
£000
Freehold
£000
Total
£000
Investment property
Fair value leasehold adjustment –
Fair value as at 31 March 2021
Leasehold
£000
Freehold
£000
Total
£000
Investment property
Fair value leasehold adjustment –
Fair value as at 31 March 2022
The fair value of investment properties, as determined by the valuers, totals £440,100,000 (March 2021: £359,375,000). In addition to this, £8,602,000
(2021: £9,512,000 ) relating to lease incentives is included within trade and other receivables.
appraisers (note 18). The valuation has been undertaken in accordance with the current RICS Valuation – Global Standards, which incorporate the International
Method).
The properties have been valued individually and not as part of a portfolio.
62
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Notes to the Financial Statements
Continued
10. Investment property continued
investment property is disclosed below:
Quantitative information about fair value measurement using unobservable inputs (Level 3) as at 31 March 2022
31 March 2022 Industrial
1
Retail (incl. retail
warehouse) Other Total
Fair value (£000) 248,950 97,450 75,450 18,250 440,100
2,338 499 369 177 3,383
Net passing rent per
sq ft per annum
Range
Weighted average
£0–£14.00
£4.93
£0–£32.85
£12.77
£0–£29.10
£16.49
£1.00–£13.00 £0–£14.00
£4.93
Gross ERV per sq ft
per annum
Range
Weighted average
£2.50–£14.00
£5.93
£7.40–£29.83
£13.86
£10.00–£27.50
£17.80
£2.10– £13.00
£7.91
£2.10–£29.83
£8.50
Net initial yield
1
Range
Weighted average
3.29%–7.25%
4.34%
0%–9.26%
6.12%
4.33%–12.80%
7.56%
4.75%–8.55% 3.29%–7.25%
4.34%
Equivalent yield Range
Weighted average
4.20%–7.76%
5.17%
4.99%–9.97%
6.37%
5.79%–9.36%
7.50%
4.75%–9.21% 4. 20%–7.76%
5.17%
1 Yields based on rents receivable after deduction of head rents but gross of non-recoverables.
Quantitative information about fair value measurement using unobservable inputs (Level 3) as at 31 March 2021
31 March 2021 Industrial
1
Retail (incl. retail
warehouse) Total
Fair value (£000) 170,400 87,0 50 83,350 16,500 357,300
1,963 506 414 177 3,060
Net passing rent per
sq ft per annum
Range
Weighted average
£4.20–£8.36
£5.16
£0–£32.85
£11.46
£0–£29.10
£16.46
£0–£13.00
£6.95
£0–£32.85
£7.5 5
Gross ERV per sq ft
per annum
Range
Weighted average
£3.50–£13.00
£5.70
£7.40–£32.85
£13.40
£12.00–£24.00
£17. 59
£2.10–£13.00
£7.98
£2.10–£32.85
£8.40
Net initial yield
1
Range
Weighted average
4.40%–7.02%
5.57%
2.72%–9.45%
6.24%
5.77%–11.00%
7.47 %
4.75%–9.27% 2.72%–11.00%
6.25%
Equivalent yield Range
Weighted average
5.10%–7.41%
6.16%
5.80%–10.04%
7.38%
5.72%–9.25%
7.74%
4.75%–8.96%
7.25%
4.75%–10.04%
6.65%
1 Yields based on rents receivable after deduction of head rents but gross of non-recoverables.
Unobservable 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.
63
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
10. Investment property continued
Estimated movement in fair value of
investment properties at 31 March 2022
Industrial
£000
Retail
£000
£000
Other
£000
All sectors
£000
Increase in ERV by 5%
Decrease in ERV by 5%
Increase in net initial yield by 0.25%
Decrease in net initial yield by 0.25%
Estimated movement in fair value of
investment properties at 31 March 2021
Industrial
£000
Retail
£000
£000
£000
All sectors
£000
Increase in ERV by 5%
Decrease in ERV by 5%
Increase in net initial yield by 0.25%
Decrease in net initial yield by 0.25%
11. Investment in joint ventures
£000
Closing balance as at 31 March 2021
Purchase of further units in City Tower Unit Trust
Valuation gain on joint venture
Closing balance as at 31 March 2022
31/03/2022
£000
£000
Investment properties
Total liabilities
1
Revenues for the year
Total comprehensive rental income
Net asset value attributable to the Group
Total comprehensive income attributable to the Group
1 Liabilities are non-recourse to the Group.
31/03/2022
£000
£000
Investment properties
Total liabilities
1
Revenues for the year
Total comprehensive rental income
Net asset value attributable to Group
Total comprehensive income attributable to the Group
1 Liabilities are non-recourse to the Group.
The Company owns 25% of City Tower Unit Trust and 50% of Store Unit Trust. The remaining units in the City Tower and Store Unit Trusts are owned by other
The fair value of investment property owned by the two Joint Ventures has been determined by BNP Paribas Real Estate, who are registered independent
appraisers. The two valuations were undertaken on the same basis as that described under note 10.
12. Trade and other receivables
31/03/2022
£000
£000
Rent receivable
64
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Notes to the Financial Statements
Continued
13. Cash and cash equivalents
As at 31 March 2022, the Group held £11.6 million (2021: £12.2 million) in cash.
14. Issued capital and reserves
Stated capital
The share capital of the Company is represented by an unlimited number of ordinary shares of no par value. As at the date of this report, the Company has
565,664,749 ordinary shares in issue (2021: 565,664,749) of which 74,584,448 ordinary shares are held in treasury (2021: 74,246,108). The total number of
Treasury capital
Revenue reserve
15. Interest-bearing loans and borrowings
31/03/2022
£000
£000
Non-current liabilities
Loan facility
Unamortised arrangement fees
The loan is split in to two equal tranches of £64.8 million as follows:
–
–
As at the April 2022 interest payment date, the Canada Life interest cover ratio was 650% (2021: 562%) against a covenant of 185%; the forecast interest cover
ratio was 487% (2021: 423%) against a covenant of 185%; and the Loan to Value ratio was 40.1% (2021: 47.4%) against a covenant of 65%.
valued at £322.9 million (2021: £273.6 million). Various restraints apply during the term of the loan although the facility has been designed to provide
As at the April 2022 interest payment date, the RBS interest cover ratio was 556% (2021: 1,151%) against a covenant of 185%; the forecast interest cover ratio
was 538% (2021: 864%) against a covenant of 250%; and the Loan to Value ratio was 24.0% (2021: 19.5%) against a covenant of 60%.
31/03/2022
£000
Loan balance brought forward
Drawdown on RBS RCF (cash)
Repayment of RBC RCF (cash)
Amortised cost adjustment
Loan balance carried forward
65
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
16. Trade and other payables
31/03/2022
£000
£000
Deferred income
Rental deposits
Interest payable
1 This balance includes a bad debt adjustment relating to rent demanded at the end of March for the April to June quarter of £354k.
17. NAV per Ordinary Share and share buyback
Between the 1 April 2021 to 12 April 2021 the Company purchased a further sum of 338,340 shares for a sum of £0.14 million at an average price of 40 pence
per share.
As a consequence of the buyback, the number of ordinary shares in issue fell from 491,418,641 to 491,080,301 during the reporting period.
at the reporting date.
18. 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 contracts
below:
Market price risk
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.
surveyors. Note 10 sets out the sensitivity analysis on the market price risk. Concentration risk, based on industry and geography, is set out in the tables on
pages 8 to 9. Included in market price risk is interest rate risk which is discussed further below.
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
and re-letting the property. The Investment Manager reviews reports prepared by Dun & Bradstreet, or other sources, to assess the credit quality of the
31/03/2022
Carrying amount
£000
Carrying amount
£000
Industrial
Retail, leisure and other
66
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Notes to the Financial Statements
Continued
18. Financial instruments, properties and associated risks continued
Rent receivables which are past their due date were:
31/03/2022
Carrying amount
£000
Carrying amount
£000
0–30 days
31–60 days
61–90 days
91 days plus
Management has considered rental debtors on a quarterly basis and made provisions where it has been deemed that these amounts are unrecoverable. As at
31 March 2022, total provisions of £0.9 million were recognised and rental debtors are shown net of this provision in the balance sheet.
considering this.
Liquidity risk
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
tried to mitigate this risk by investing in properties that it considers to be good quality.
Group can meet future liabilities as and when they fall due.
As at 31 March 2022
Carrying
amount
£000
Expected
£000
6 months
or less
£000
6 months –
2 years
£000
2–5 years
£000
More than
5 years
£000
Financial liabilities
Interest-bearing loans and borrowings and interest
Leasehold liability
Trade and other payables
As at 31 March 2021
Carrying
amount
£000
£000
6 months
or less
£000
6 months –
2 years
£000
2–5 years
£000
More than
5 years
£000
Financial liabilities
Interest-bearing loans and borrowings and interest
Leasehold liability
Trade and other payables
1 Assumes that the £32.7 million facility is repaid in 2023.
Interest rate risk
value of the loan is equal to its fair value (sum of £37.2 million drawn as at year end).
A 1% increase or decrease in short-term interest rates would increase or decrease the annual income and equity by £541,254 based on the cash balance as at
31 March 2022.
67
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
18. Financial instruments, properties and associated risks continued
Fair values
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
– Level 3 – inputs for the assets 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 (2021: none).
Investment property – Level 3
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 10 for further details.
Interest-bearing loans and borrowings – Level 2
Capital management
covenants could permit the lenders to immediately accelerate the repayment of loans and borrowings. The Company monitors as part of its quarterly Board
The Company’s debt and capital structure comprises the following:
31/03/2022
£000
£000
Debt
Floating rate loan facility
1
Equity
Called-up share capital
Reserves
Total debt and equity
1 This amount refers to the amount drawn. The total facility as at 31 March 2022 was £52.5 million (2021: £52.5 million).
19. Operating leases
The Group leases out its investment property under operating leases. At 31 March 2022, the future minimum lease receipts under non-cancellable leases are
as follows:
31/03/2022
£000
£000
Less than one year
The total above comprises the total contracted rent receivable as at 31 March 2022.
clauses to enable periodic upward revision of the rental charge according to prevailing market conditions. Some leases contain options to break before the end
of the lease term.
68
FINANCIAL STATEMENTS
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Notes to the Financial Statements
Continued
20. List of subsidiary and joint venture undertakings
The companies listed below are those which were part of the Group at 31 March 2022:
Undertaking Category Country of incorporation Ultimate ownership
SREIT No.2 Limited Subsidiary Guernsey 100%
Subsidiary Guernsey 100%
Subsidiary Guernsey 100%
SREIT Property Limited Subsidiary Guernsey 100%
SREIT (Portergate) Limited Subsidiary Guernsey 100%
Subsidiary Guernsey 100%
SREIT (City Tower) Limited Subsidiary Guernsey 100%
SREIT (Store) Limited Subsidiary Guernsey 100%
SREIT (Bedford) Limited Subsidiary Guernsey 100%
City Tower Unit Trust Joint venture Jersey 25%
Store Unit Trust Joint venture Jersey 50%
The registered address for all wholly-owned entities is the same as that of the Parent Company and can be found on page 96.
21. Related party transactions
Material agreements and transactions with the Investment Manager are disclosed in note 2. Transactions with regard to joint ventures are disclosed in note 10.
22. Capital commitments
As at 31 March 2022, the Group had capital commitments of £12.3 million (2021: £3.2 million).
23. Post balance sheet events
balance drawn as at 6 June 2022 stood at £46.3 million.
69
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
EPRA Performance Measures (unaudited)
As recommended by the European Public Real Estate Association, EPRA performance measures are disclosed in the section below.
EPRA performance measures: summary table
31/03/2022
EPRA earnings
EPRA earnings per share
EPRA Net Reinstatement Value
EPRA Net Reinstatement Value per share
EPRA Net Tangible Assets
EPRA Net Tangible Assets per share
EPRA Net Disposal Value
EPRA Net Disposal Value per share
EPRA Net Initial Yield
EPRA vacancy rate
EPRA cost ratios – including direct vacancy costs
a. EPRA earnings and EPS
losses on investment properties and any gains or losses from the sales of properties.
31/03/2022
£000
£000
Earnings per IFRS income statement
Adjustments to calculate EPRA earnings:
EPRA earnings
IFRS earnings per share (pence)
EPRA earnings per share (pence)
b. 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.
31/03/2022
£000
£000
IFRS equity attributable to shareholders
EPRA Net Reinstatement Value
Shares in issue at the end of the period
EPRA NRV per share (pence per share)
70
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
c. EPRA Net Tangible Assets per share
31/03/2022
£000
£000
IFRS equity attributable to shareholders
EPRA Net Tangible Assets
Shares in issue at the end of the year
IFRS NAV per share (pence)
EPRA Net Tangible Assets per share (pence)
d. EPRA Net Disposal Value per share
31/03/2022
£000
£000
IFRS equity attributable to shareholders
Adjustments to calculate EPRA Net Disposal Value:
EPRA Net Disposal Value
Shares in issue at the end of the year
EPRA Net Disposal Value per share (pence)
e. EPRA Net Initial Yield
31/03/2022
£000
£000
Investment property – wholly-owned
Investment property – share of joint ventures and funds
Complete property portfolio
Gross up completed property portfolio valuation
Annualised cash passing rental income
Property outgoings
Annualised net rents
1
Topped-up net annualised rent
EPRA NIY
EPRA ‘topped-up’ NIY
71
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
f. EPRA cost ratios
31/03/2022
£000
£000
Less: ground rent costs
Costs (including direct vacancy costs)
Direct vacancy costs
Costs (excluding direct vacancy costs)
Gross rental income less ground rent costs – per IFRS
Add share of Joint Ventures (gross rental income less ground rent costs)
Gross rental income
EPRA cost ratio (including direct vacancy costs)
g. EPRA vacancy rate
31/03/2022
£000
£000
Estimated rental value of vacant space
Estimated rental value of the whole portfolio
EPRA vacancy rate
EPRA Performance Measures (unaudited)
Continued
72
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Alternative Performance Measures (unaudited)
Dividend cover – the ratio of EPRA earnings (page 70) to dividends paid (note 9) in the period.
Dividend yield
EPRA earnings
EPRA Net Tangible Assets
takes place.
EPRA Net Disposal Value
EPRA Net Reinstatement Value – the 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
have not been adjusted for IFRS lease incentive debtors nor the fair value of the head lease at Luton.
LTV net of cash
the market value of the property investments as at the balance sheet date. The market value of property investments includes joint venture investments and are
Ongoing charges (including Fund expenses)
are included as costs.
Ongoing charges (including Fund and property expenses)
Share discount/premium – the share price of an Investment Trust 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
NAV total return – the return to shareholders calculated on a per share basis by adding dividends paid (note 9) in the period on a time-weighted basis to the
increase or decrease in the NAV per share (page 54).
73
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
AIFMD Disclosures (unaudited)
The Alternative Investment Fund Managers Directive (‘AIFMD’) remuneration and leverage disclosures for Schroder Real Estate Investment
Management Limited (‘SREIM’) for the year to 31 December 2021
Remuneration disclosures
These disclosures form part of the non-audited section of this Annual Report and Consolidated Financial Statements and should be read in conjunction with the
), which provides more information on the activities of our Remuneration
Committee and our remuneration principles and policies.
Authority.
The Remuneration Committee of Schroders plc has established a remuneration policy to ensure the requirements of the SIFMD 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, for reviewing its general principles at least annually, for overseeing its implementation and for ensuring compliance with
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 a range
of more minor recommendations, principally improvements to process and policy documentation.
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.
–
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
million was paid to senior management, £17.16 million was paid to MRTs deemed to be taking risk on behalf of SREIM or the AIF funds that it manages and
£3.99 million was paid to control function MRTs.
For additional qualitative information on remuneration policies and practices see .
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
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.
limit set
Actual as at
31.12.2021
Gross leverage
Commitment leverage
74
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Sustainability Performance Measures (Environmental)
(unaudited)
Edition for the 12 months 1 January 2021 – 31 December 2021, presented with comparison against 2020. As permitted by the EPRA Sustainability Reporting
The reporting boundary has been scoped to where the Company has operational control: managed properties where the Company is responsible for payment
performance. The operational control approach is the most commonly applied within the industry.
In 2021, 46 assets were held by the Company during the reporting year (including one sale), of which four assets were purchased towards the end of the
reporting period and so have not been captured in the reported data. In total, 25 assets were within the operational control reporting boundary of the
consumption data is reported according to automatic meter reads, manual meter reads or invoice estimates. Where required, missing consumption data has
been estimated by prorating data from other periods using recognised techniques. The proportion of data that is estimated is presented in the footnotes to the
ending 31 December 2021. The full Assurance Statement is available upon request.
75
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Total energy consumption (Elec-Abs; DH&C-Abs; Fuels-Abs)
Total electricity
consumption
(kWh)
Total fuel
consumption
(kWh)
cooling consumption
(kWh)
Absolute energy intensities
2
)
%
Change
Sector 2020 2021 2020 2021 2020 2021 2020 2021
Industrial: Distribution
Warehouse – –
Coverage –
– –
Coverage – –
– – – –
Coverage – – – – – –
– –
Coverage – –
Retail: High Street – – – –
Coverage – – – – – –
Retail: Retail Centres:
Warehouse – –
Coverage – –
Lodging, Leisure &
Recreation: Other – – – –
Coverage – – – – – –
Mixed use: Other – – – –
Coverage – – – – – –
Total – – –
Coverage – –
Total electricity, fuels and
district heating
Coverage
Renewable electricity %
– Consumption data relates to the managed portfolio only:
– Industrial park: whole building; outdoor areas; tenant space, where procured by the landlord.
– Lodging, leisure & recreation: common parts; outdoor areas; tenant space, where procured by the landlord.
–
–
–
–
– Retail high street: common parts, tenant space, where procured by the landlord.
– Retail warehouse: outdoor areas; tenant space, where procured by the landlord.
– Energy procured directly by tenants is not reported.
– Percentage of data estimated pro rata across 2020 and 2021: 0%.
–
–
–
2
).
–
–
2
).
–
presented here.
– Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has been reported.
–
Sustainability Performance Measures (Environmental)
(unaudited)
Continued
76
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Like-for-like energy consumption (Elec-LfL; DH&C-LfL; Fuels-LfL; Energy-Int)
Like-for-like electricity
consumption
(kWh)
Like-for-like fuel
consumption
(kWh)
Like-for-like district
heating consumption
(kWh)
Like-for-like
energy intensity
2
)
Sector 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change
Industrial: Distribution Warehouse – – – – –
Coverage – – – – – –
– – –
Coverage – – – –
– – – – – –
Coverage – – – –
– – –
Coverage – –
Retail: High Street – – – – – –
Coverage – – – –
Retail: Retail Centres: Warehouse – – – – – –
Coverage – – – –
Lodging, Leisure & Recreation: Other – – – – – –
Coverage – – – –
Mixed-use: Other – – – – – –
Coverage – – – – – –
Total – –
Coverage – –
Total electricity, fuels and district
heating
Coverage
Renewable electricity %
Coverage
–
years reported.
– Consumption data relates to the manage portfolio only.
– Industrial park: whole building; outdoor areas; tenant space, where procured by the landlord.
– Lodging, leisure & recreation: common parts; outdoor areas; tenant space, where procured by the landlord.
–
–
–
–
– Retail high street: common parts, tenant space, where procured by the landlord.
– Retail warehouse: outdoor areas; tenant space, where percentage of data estimated pro rata across 2020 and 2021: 0%.
–
–
–
2
).
–
–
2
).
–
presented here.
– Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has been reported.
–
77
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Variance commentary
Energy variances throughout the reporting period can be attributed to a multitude of factors including equipment upgrades and varying degrees of occupancy
related to Covid-19.
having a newly refurbished area and a cardboard baling machine.
Greenhouse gas emissions (GHG-Dir-Abs; GHG-Indir-Abs; GHG-Int)
Absolute emissions
2
e)
Absolute
intensities
Like-for-like emissions
2
e)
Like-for-like intensity
2
2
)
Sector 2020 2021 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change
Industrial: Distribution Warehouse
Scope 1 – – –
Scope 2
Scopes 1 & 2
Coverage
Scope 1
Scope 2
Scopes 1 & 2
Coverage
Scope 1 – – – – –
Scope 2
Scopes 1 & 2
Coverage
Scope 1
Scope 2
Scopes 1 & 2
Coverage
Retail: High Street
Scope 1 – – – – –
Scope 2
Scopes 1 & 2
Coverage
Retail: Retail Centres: Warehouse
Scope 1 – – –
Scope 2
Scopes 1 & 2
Coverage
Sustainability Performance Measures (Environmental)
(unaudited)
Continued
78
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Absolute emissions
2
e)
Absolute
intensities
Like-for-like emissions
2
e)
Like-for-like intensity
2
2
)
Sector 2020 2021 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change
Lodging, Leisure & Recreation: Other
Scope 1 – – – – –
Scope 2
Scopes 1 & 2
Coverage
Mixed use: Other
Scope 1 – – – – –
Scope 2
Scopes 1 & 2
Coverage
Total Scope 1
Total Scope 2
Total
Scope 1 & 2
Coverage
–
years reported.
–
–
–
–
–
2
2
–
– Emissions data relates to the managed portfolio only:
– Industrial park: whole building; outdoor areas; tenant space, where procured by the landlord.
– Lodging, leisure & recreation: common parts; outdoor areas; tenant space, where procured by the landlord.
–
–
–
–
– Retail high street: common parts.
– Retail warehouse: outdoor areas; tenant space, where procured by the landlord.
– Emissions associated with energy procured directly by tenants is not reported.
– Percentage of data estimated pro rata across 2020 and 2021: 0% for electricity and gas.
–
–
2
).
–
–
2
).
– Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has been reported.
–
Variance commentary
detailed above.
due to decarbonisation of UK national energy grid.
79
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Water (Water-Abs; Water-LfL; Water-Int)
Absolute water
consumption
(m
3
)
Absolute
intensities
(m
3
)
Like-for-like water
consumption
(m
3
)
Like-for-like
intensity
(m
3
2
)
Sector 2020 2021 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change
Industrial: Distribution Warehouse – – – – – – –
Coverage – – – – – – –
Coverage
– – – – – – – – – –
Coverage – – – – – – – –
– – – –
Coverage
Retail: High Street
Coverage
Retail: Retail Centres: Warehouse – – – – – –
Coverage – – –
Lodging, Leisure & Recreation: Other – – –
Coverage
Mixed use: Other
Coverage
Total
Coverage (landlord-procured
consumption)
–
years reported.
– Consumption data relates to the managed portfolio only:
– Industrial park: tenant space, where procured by the landlord.
– Lodging, leisure & recreation: common parts.
–
–
–
– Retail high street: common parts; tenant space, where procured by the landlord.
– Retail warehouse: tenant space, where procured by the landlord.
– Water procured directly by tenants is not reported.
– 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 data estimated pro rata across both 2020 and 2021: 0%.
–
–
3
) divided by gross internal area (GIA m
2
).
–
3
) divided by Common Parts Area (CPA m
2
).
– Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has been reported.
–
Variance commentary
Sustainability Performance Measures (Environmental)
(unaudited)
Continued
80
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Waste (Waste-Abs; Waste-LfL)
Absolute tonnes Like-for-like tonnes
2020 2021 2020 2021
Tonnes % Tonnes % Tonne s % Tonnes % % Change
Industrial: Distribution
Warehouse
Recycled – – – – –
Incineration with energy recovery – – – – –
Unknown – – – – –
– – – – –
Total –
Coverage – – – –
Recycled
Incineration with energy recovery
Unknown –
–
Total
Coverage
Recycled
Incineration with energy recovery
Unknown –
–
Total
Coverage
Recycled
Incineration with energy recovery
Unknown –
–
Total
Coverage
Retail: High Street Recycled
Incineration with energy recovery
Unknown –
–
Total
Coverage
Retail: Retail Centres:
Warehouse
Recycled – – – – –
Incineration with energy recovery – – – – –
Unknown – – – – –
– – – – –
Total –
Coverage – – – –
81
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Sustainability Performance Measures (Environmental)
(unaudited)
Continued
Absolute tonnes Like-for-like tonnes
2020 2021 2020 2021
Tonnes % Tonnes % Tonne s % Tonnes % % Change
Lodging, Leisure &
Recreation: Other
Recycled
Incineration with energy recovery
Unknown –
–
Total
Coverage
Mixed use: Other Recycled
Incineration with energy recovery
Unknown –
–
Total
Coverage
Total Recycled
Incineration with energy recovery
Unknown –
–
Total
Coverage (landlord-procured
consumption)
–
–
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.
– Coverage (landlord-procured tonnage) relates to the proportion of assets for which landlord obtained data has been reported.
–
Variance commentary
82
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Rating
Portfolio by
Coverage
–
– Data provided includes managed and non-managed assets (i.e. the whole portfolio).
–
Rating
Portfolio by
A+
A
B
C
D
E
F
G
No EPC
Total
Coverage
–
– Data provided includes the whole portfolio i.e. managed and non-managed assets.
–
83
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Sustainability Performance Measures (Social)
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
The Schroders plc Annual Report and Accounts for the 12 months to 31 December 2021 supports the performance measures in relation to the Investment
and retention can be found at:
–
–
–
Employee gender diversity (Diversity-Emp)
As at 31 March 2022, the Company Board comprised four members: 1 (25% female); 3 (75% male).
For further information on Schroders plc employee gender diversity, covering more employee categories, please refer to Schroders 2021 Annual Report and
Accounts (page 41):
–
Gender pay ratio (Diversity-Pay)
The remuneration of the Company Board is set out on page 40 of this Report and Accounts document.
Schroders plc female representation and gender pay report can be found in Schroders 2021 Annual Report and Accounts (page 41) and Schroders plc Gender
Pay Gap Report:
–
–
Information on Diversity and Inclusion at Schroders can be found at:
–
–
The following are reported for Schroders in relation to the Investment Management of the Company:
Training and development (Emp-Training)
requirements of their respective professional body.
Employee performance appraisals (Emp-Dev)
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 23):
– Schroders 2021 Annual Report and Accounts
Employee health and safety (H&S-Emp)
Schroders plc does not include employee health and safety performance measures in its Annual Report and Accounts.
Asset health and safety assessments (H&S-Asset)
improvement.
2020 2021
All sectors
At assets where no assessment was completed, assessments were instructed and completed in early 2022.
84
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Asset health and safety compliance (H&S-Comp)
Number of incidents
2020 2021
All sectors
redevelopment of the site.
Community engagement, impact assessments and development programmes (Comty-Eng)
programmes.
Portfolio by number assets (%)
2020 2021
Industrial, Distribution Warehouse
All other sectors
Total
85
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Sustainability Performance Measures (Governance)
Composition of the highest governance body (Gov-Board)
–
–
Nominating and selecting the highest governance body (Gov-Select)
Nomination Committee leads the process and makes recommendations to the Board.
Before the appointment of a new Director, the Nomination Committee prepares a description of the role and capabilities required for a particular appointment.
86
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
The Board and Manager in recognition of the importance it places on sustainability has voluntarily included a report for the Company aligned with the UK
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.
ultimately, sustainability performance. This incorporates consumption in tenant areas, where the landlord procures energy for the whole building. For the 12
were purchased towards the end of the period and so have not been captured in the reported data. For purposes of comparison, during the previous 12 months
are located in the UK.
company with no direct employees or company owned vehicles as at 31 December 2021, there is no energy consumption or emissions associated with travel or
industry to be less material than other sources of emissions and data is often not collected. The Company received fugitive emissions data in previous reporting
portfolio, as well as providing intensity ratios, where appropriate. The like-for-like portfolio includes buildings where each of the following conditions is met:
–
– No major renovation or refurbishment has taken place.
– At least 24 months data is available.
For the intensity ratios, the denominator determined to be relevant to the business is square metres of net lettable area for most sectors, including Industrial
–
2
–
2
2
Energy consumption and GHG emissions
Absolute energy (kWh) Like-for-like energy (kWh)
2020 2021 2020 2021 % Change
Gas
Electricity
Total
2
e)
2
e)
2020 2021 2020 2021 Change
Scope 1 (Direct emissions from gas consumption)
Scope 2 (Indirect emissions from electricity)
Total
have decreased by 9%. Energy performance improvement opportunities continued to be considered across the portfolio. Initiatives undertaken during
out to all landlord electricity supplies for improved energy monitoring.
Streamlined Energy and Carbon Reporting
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Streamlined Energy and Carbon Reporting
Continued
Energy Intensities (kWh per m
2
)
2
e per m
2
)
2020 2021 2020 2021
Industrial Distribution Warehouses
Leisure
Retail Warehouse
Methodology
–
–
have been restated where more complete and or accurate records have become available. Where required, missing consumption data has been estimated
– In line with best practice EPRA reporting guidelines the methodology for calculating energy and emissions intensities has been updated this year to better
– The sustainability content located on pages 75 to 86 of the SREIT Annual Report for the year ended 31 March 2022 has been assured in accordance with
AA1000. The same data set has been used to compile this data report. The full Assurance Statement is available upon request.
–
–
2
e), which includes the following emissions covered by the
2
4
2
6
3
).
–
–
Country Emissions source Emissions Factor Data Source
United Kingdom
Electricity 2020
2
e
Electricity 2021
2
e
Gas
2
e
Environmental data management system and quarterly reporting
Energy target, improvement programme and Net Zero Carbon
in-scope UK assets demonstrated an energy reduction of -25% (vs. -18% target) and a carbon reduction of -52% (vs. -32% target).
to achieving Net Zero Carbon by 2050 or sooner, aligned with a 1.5°C decarbonisation trajectory, work has been undertaken during 2021 to baseline the
and implementing improvement initiatives, where viable. The process is of continual review and improvement.
replacement and installation of lighting and ventilation occupancy sensors.
The Investment Manager has an objective to procure 100% renewable electricity for all landlord-controlled supplies for which it has responsibility, which
88
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Asset List
end valuations as determined by the independent valuers as at 31 March 2022:
Property Sector Region
Value range
(£m)
1
Milton Keynes, Stacey Bushes Industrial Estate Industrial South East
Leeds, Millshaw Park Industrial Estate Industrial
South East
Manchester, City Tower (25% share) North West
Retail warehouse Eastern
Chippenham, Langley Park Industrial Estate Industrial South West
Norwich, Union Park Industrial Estate Industrial Eastern
Cheadle, Stanley Green Trading Estate Industrial North West
South East
Industrial West Midlands 10-20
Birkenhead, Valley Park Industrial Estate Industrial North West 10-20
Edinburgh, The Tun Scotland 10-20
Salisbury, Churchill Way Retail Warehouses South West 10-20
Eastern 0-10
Cheltenham, The Promenade South West 0-10
Milton Keynes, Matalan Retail Warehouses South East 0-10
Industrial South West 0-10
Chester, Sealand Road Retail Warehouses North West 0-10
Northampton, Century & Peterbridge East Midlands 0-10
Liverpool, 88-94 Church Street Retail North West 0-10
Wales 0-10
Retail 0-10
Portsmouth, Walton Road Industrial South East 0-10
Industrial West Midlands 0-10
Fareham, Delme Place, Cams Estate South East 0-10
York, Clifton Park 0-10
Industrial North West 0-10
0-10
Ilkeston, Albion Centre Retail East Midlands 0-10
West Midlands 0-10
Industrial North West 0-10
West Midlands 0-10
South East 0-10
Retail South East 0-10
Fleet, Ancells Park South East 0-10
Eastern 0-10
South East 0-10
Retail South West 0-10
Retail South East 0-10
Leicester, East Gates Retail East Midlands 0-10
Sandbach, Moston Road Industrial North West 0-10
1 As per third-party valuation reports unadjusted for IFRS lease incentive amounts.
89
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Report of the Depositary to the Shareholders
shareholdings of special purpose vehicles beneath the Company.
to the Investment Manager and the Company, which are then presented to the Board of Directors, setting out our work performed and the corresponding
came to our attention to indicate that controls are not operating appropriately.
Joe Hime
For and on behalf of
90
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Glossary
Alternative performance measure (‘APM’) please see page 73 for full details of the key APMs used by the Company.
Annualised dividend yield
price.
Articles
Companies Law means The Companies (Guernsey) Law, 2008.
Company is Schroder Real Estate Investment Trust Limited.
Directors means the Directors of the Company as at the date of this document whose names are set out on pages 30
Disclosure Guidance and Transparency Rules
Guidance.
Earnings per share (‘EPS’)
Diluted and adjusted EPS per share are derived as set out under NAV.
Estimated rental value (‘ERV’)
EPRA is the European Public Real Estate Association.
EPRA Net Tangible Assets
EPRA Net Disposal Value is the IFRS equity attributable to shareholders adjusted for items including goodwill as a result of deferred
FCA is the UK Financial Conduct Authority.
Gearing
Group is the Company and its subsidiaries.
GFSC is the Guernsey Financial Services Commission.
Initial yield
Interest cover is the number of times Group net interest payable is covered by Group net rental income.
Listing Rules means the listing rules made by the FCA under Part VII of the UK Financial Services and Markets Act 2000,
as amended.
Market Abuse Regulation
market abuse.
MSCI
property returns.
Net Asset Value and NAV per share
NAV total return is calculated taking into account both capital returns and income returns in the form of dividends paid to
shareholders.
Net rental income is the rental income receivable in the period after payment of ground rents and net property outgoings.
REIT is a Real Estate Investment Trust.
Reversionary yield is the anticipated yield which the initial yield will rise to once the rent reaches the estimated rental value.
91
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Resolutions at 2022 Annual General Meeting
THIS SECTION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt about the contents of this section of the document or the action you should take, you are recommended to seek immediately
2000 (as amended).
and the accompanying documents at once to the purchaser, transferee, or to the stockbroker, bank or other person through whom the sale or transfer was
United States, Canada, Australia or Japan or into any other jurisdiction if to do so would constitute a violation of applicable laws and regulations in such other
jurisdiction.
Resolutions 1–9
Resolution 10: Approval of the Company’s dividend policy
in due course through active management of the underlying portfolio. Any future decision to increase the dividend will be determined by factors including
whether it is sustainable over the long term, current and anticipated future market conditions, rental values and the potential impact of any future debt
As the Company is a REIT, the Board must also ensure that dividends are paid in accordance with the requirements of the UK REIT regime (pursuant to part 12
planning. Therefore, in accordance with the principles of good corporate governance and best practice relating to the payment of interim dividends without
Resolution 11: Authority to disapply pre-emption rights (special resolution)
as is equal to 10% of the ordinary shares in issue (including treasury shares) on the date the resolution is passed. No ordinary shares will be issued without
pre-emption rights for cash (or sold out of treasury for cash) at a price less than the prevailing net asset value per ordinary share at the time of issue or sale
The Directors do not intend to allot or sell ordinary shares other than to take advantage of opportunities in the market as they arise and will only do so if they
(owing to the fact that no ordinary shares will be issued or sold out of treasury for a price less than the prevailing net asset value per ordinary share).
the passing of this Resolution 11.
Resolution 12: Authority to repurchase shares (special resolution)
The Board recognises that movements in the ordinary share price, premium or discount, are driven by numerous factors, including investment performance,
long-term value for shareholders.
imbalance between supply and demand for the ordinary shares. The making and timing of any repurchase of ordinary shares will be at the absolute discretion
of ordinary shares will be subject to compliance with the Companies Law and within any guidelines established from time to time by the Board.
During the year ended 31 March 2022, the Company repurchased 243,787 shares (all were repurchased prior to the date of the prior AGM on 9 September
2021).
92
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Annually the Company passes a resolution granting the Directors general authority to purchase in the market up to 14.99% of the number of shares in issue.
The Directors intend to seek a renewal of this authority from the shareholders at the AGM.
prevailing NAV of the ordinary shares (as last calculated) where the Directors believe such purchases will enhance shareholder value. Such purchases will
before the purchase is made; and (ii) an amount equal to the higher of: (a) the price of the last independent trade; and (b) the highest current independent bid
for an ordinary share on the trading venues where the market purchases by the Company pursuant to the authority conferred by that resolution will be carried
out. The Companies Law also provides, among other things, that any such purchase is subject to the Company passing the solvency test contained in the
Companies Law at the relevant time. Any ordinary shares purchased under this authority may be cancelled or held in treasury.
resolution of the Company.
Lorraine Baldry
Chairman
6 June 2022
93
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
12.30 p.m.
Resolution
– To receive, consider and approve the Consolidated Annual Report and Financial Statements of the Company for
the year ended 31 March 2022.
–
– To approve the Remuneration Report for the year ended 31 March 2022.
– To elect Priscilla Davies as a Director of the Company.
– To re-elect Mr Stephen Bligh as a Director of the Company.
–
– To re-elect Mr Graham Basham as a Director of the Company.
–
–
–
Resolution 11 (Special Resolution) That the Directors of the Company be and are hereby empowered to allot ordinary shares of the Company for cash
as if the pre-emption provisions contained under Article 13 of the Articles of Incorporation did not apply to any such
allotments and to sell ordinary shares which are held by the Company in treasury for cash on a non-pre-emptive
basis provided that this power shall be limited to the allotment and sales of ordinary shares:
a. up to such number of ordinary shares as is equal to 10% of the ordinary shares in issue (including treasury shares)
on the date on which this resolution is passed;
b. at a price of not less than the net asset value per share as close as practicable to the allotment or sale;
Resolution 12 (Special Resolution) That the Company be authorised, in accordance with section 315 of The Companies (Guernsey) Law, 2008, as
treasury shares, insofar as permitted by the Companies Law or cancellation, provided that:
ordinary shares on the date on which this resolution is passed;
b. the minimum price which may be paid for an ordinary share shall be £0.01;
the higher of: (i) 5% above the average of the mid-market value of the ordinary shares (as derived from the
date of the purchase; and (ii) the higher of: (a) the price of the last independent trade; and (b) the highest current
independent bid at the time of purchase, in each case on the regulated market where the purchase is carried out;
unless such authority is varied, revoked or renewed prior to such date of the general meeting; and
shares pursuant to any such contract.
Close of Meeting.
For and on behalf of
Schroder Investment Management Limited
Company Secretary
6 June 2022
Notice of Annual General Meeting
94
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Notes
voted in favour of the resolution.
be voted in favour of the resolution.
7 To have the right to attend and vote at the meeting or any adjournment thereof (and also for the purpose of calculating how many votes a member may cast on a poll) a member must have his or
her name entered on the register of members not later than at close of business of 19 September 2022.
determined by reference to the register of members of the Company at close of business on 19 September 2022. Changes to entries in the register of members of the Company after that time
shall be disregarded in determining the rights of any member to attend and vote at such meeting.
9 If all the shares have been sold or transferred by the addressee, the Notice of Annual General Meeting and any other relevant documents should be passed to the person through whom the sale
95
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONOVERVIEW
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Corporate Information
Registered Address
Town Mills
North Suite 2
Rue Du Pré
St. Peter Port
Guernsey
GY1 1LT
Directors (all Non-Executive)
Lorraine Baldry (Chairman)
Graham Basham
Stephen Bligh
Investment Manager and Accounting Agent
Schroder Real Estate Investment Management Limited
1 London Wall Place
London
EC2Y 5AU
Company Secretary
Schroder Investment Management Limited
1 London Wall Place
London
EC2Y 5AU
Depositary
Langham Hall UK Depositary LLP
8th Floor
1 Fleet Place
London
EC4M 7RA
Solicitors to the Company
as to English Law:
Stephenson Harwood LLP
1 Finsbury Circus
London
as to Guernsey Law:
Mourant Ozannes (Guernsey) LLP
Royal Chambers
St. Peter Port
Guernsey
FATCA GIIN
5BM7YG.99999.SL.831
Independent Auditor
Ernst & Young LLP
Royal Chambers
St. Peter Port
Guernsey
GY1 4AF
Property Valuer
Knight Frank LLP
55 Baker Street
London
W1U 8AN
Sponsor and Brokers
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London
E14 5JP
Tax Advisers
Deloitte LLP
2 New Street Square
London
EC4A 3BZ
Receiving Agent and UK Transfer/Paying Agent
Computershare Investor Services (Guernsey) Limited
13 Castle Street
Jersey
JE1 1ES
The Company’s privacy notice is available on its webpage.
96
OTHER INFORMATION
Schroder Real Estate Investment Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
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Schroder Real Estate Investment Trust Limited Annual Report and Consolidated Financial Statements for the year ended 31 March 2022
Schroder Real Estate Investment
Management Limited
1 London Wall Place
London EC2Y 5AU
United Kingdom
Tel: +44 (0)20 7658 6000
Schroder Real Estate Investment Trust Limited Annual Report and Consolidated Financial Statements for the year ended 31 March 2022