Schroder Real Estate Investment Trust Limited Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

SCHRODER REAL ESTATE INVESTMENT

TRUST LIMITED

Annual Report and Consolidated

Financial Statements

For the year ended 31 March 2023

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategy to drive income and value

growththrough active management,

operational excellence and an

integratedsustainability approach.

Future returns supported by an allocation to higher growth sectors,

anexperienced management team, and a peer group leading debt profile.

Overview

Read more | Page 10 Read more | Page 16

NAV

£300.7m

NAV per ordinary share

61.5p

Portfolio value

£470.4m

Number of tenants

312

Net Asset Value (“NAV”)

We seek to deliver strong long-term NAV growth,

measured against our financial Key Performance

Indicators.

Assets

We actively manage assets to achieve optimal value,

continuing to drive income and increase exposure

tohigher growth sectors.

Why invest in Schroder Real Estate Investment Trust Limited (“SREIT”)

Good quality, diversified, higher yielding portfolio

7.5%

dividend yield fully covered by earnings at 101%

Robust balance sheet provides dividend protection: 3.4%

current average interest cost of which 90% isfixed rate or

capped with 10.6 years average maturity

Share price at a 28% discount to NAV offers a compelling

value

Thematic focus on sustainability – manufacture green

premium, address embodied carbon

Past performance is not a guide to future performance and may not be

repeated. The value of the investments and the income from them may go

down as well as up and investors may not get back the amount originally

invested.

1 Based on share price of 44.35p as at close 6 June 2023 and an

annualised latest quarterly dividend of 3.344pps.

2 Based on EPRA earnings and dividends paid for the year ended

31March2023.

3 Based on share price of 44.35p as at close 6 June 2023 and audited

NetAsset Value (“NAV”) of 61.5pps as at 31 March 2023.

Contents

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Overview

02 Performance Summary

Strategic Report

06 Chair’s Statement

10 Investment Manager’s

Report

22 Sustainability Report

32 Business Model

34 Our Stakeholders

35 Risks and Uncertainties

Governance Report

40 Board of Directors

42 Report of the Directors

44 Corporate Governance

48 Audit Committee Report

50 Management Engagement

Committee Report

51 Nomination Committee

Report

52 Directors’ Remuneration

Report

53 Statement of Directors’

Responsibilities

54 Independent Auditor’s

Report to the members of

Schroder Real Estate

Investment Trust Limited

Financial Statements

64 Consolidated Statement

of Comprehensive Income

65 Consolidated Statement

of Financial Position

66 Consolidated Statement

of Changes in Equity

67 Consolidated Statement

of Cash Flows

68 Notes to the Financial

Statements

Other information

(unaudited)

88 EPRA Performance

Measures (unaudited)

92 Alternative Performance

Measures (unaudited)

93 AIFMD Disclosures

(unaudited)

95 Task Force on Climate-

related Financial

Disclosures (“TCFD”)

98 Sustainability

Performance Measures

(Environmental)

(unaudited)

111 Sustainability

Performance Measures

(Social)

113 Sustainability

Performance Measures

(Governance)

114 Streamlined Energy and

Carbon Reporting

117 Asset list

118 Report of the Depositary

to the Shareholders

119 Glossary

120 Resolutions at 2023

Annual General Meeting

122 Notice of Annual General

Meeting

124 Corporate Information

Read more | Page 6 Read more | Page 22

Dividends paid during

financial year

£15.8m

(2022: £13.9m)

Dividends paid

per share

3.22pps

(2022: 2.83pps)

Reduction in whole

building operational

GHGintensity

-19%

First in GRESB peer group

Dividends

We seek to deliver a growing, fully covered dividend,

with our policy under active review from the Board.

Sustainability

Sustainability is embedded in our investment process,

focusing on our three core pillars of People, Planet and

Place.

Performance Summary

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Overview

High income return and

asector leading debt

profileunderpinning

furtherdividendincrease

– Net asset value (“NAV”)

decreased to £300.7 million

or61.5pps (31 March 2022:

£372.2 million, or 75.8pps),

withequivalent yield expansion

of 152 bps to 7.8%, partially

offset by ERV growth of 9.2%

(MSCI Benchmark: 3.4%)

– 14% increase in dividends paid

during the financial year to £15.8

million, or 3.22pps, (31 March

2022: £13.9 million, or 2.83pps),

fully covered by EPRA earnings

– NAV total return -15.1% (31 March

2022: 30.9%)

– Long debt maturity profile of

10.6 years and a low average

interest cost of 2.9%, with 90%

either fixed or hedged

– Loan to value, net of all cash, of

36.0% (31 March 2022: 28.6%)

– 12 month total return from the

underlying portfolio of -7.9%

(MSCI Benchmark -13.5%)

– Further 2% increase in the

quarterly dividend to 0.836pps

for the quarter ended 31 March

2023

Long term outperformance

against the MSCI Benchmark,

strong rental value growth

andan improvement in

defensive qualities

– Total return of 6.0% per annum

on a rolling three year basis

(MSCI Benchmark Index: 1.9%

per annum)

– 65 new lettings, rent reviews and

renewals across 973,000 sq ft,

totalling £6.7 million in

annualised rental income and

generating £2.3 million per

annum of additional rent

– Acquisition of mixed-use office

and retail asset in Manchester

City Centre for £14.7 million,

reflecting a net initial yield of

7.8% and a reversionary yield of

9.1%

– Three disposals totalling £12.6

million at 13% average premium

to book valuation

Strong progress improving

sustainability performance

asfuture strategy evolves

– Further improvement in the

Company’s Global Real Estate

Sustainability Benchmark

(“GRESB”) score, placing first

amongst a group comprising

seven diversified REITs

– 58% of the portfolio A-C rated

(31 March 2022: 41%), with first

“A+” ratings achieved at Stanley

Green Trading Estate

– Announced “Pathway to Net

Zero Carbon”, includes

operational whole buildings

emissions to bealigned to a

1.5°Cpathway by2030

The attractive portfolio

income and pipeline of

assetmanagement activity

should contribute to

continued earnings and

dividend growth, further

improve thedefensive

qualities of theportfolio,

andenhance returns as

themarket recovers”

Alastair Hughes

Chair of the Board

Governance Financial Statements Other information (unaudited)Strategic ReportOverview

Property performance

31 March 2023 31 March 2022

Value of Property Assets and Joint Venture Assets

£470.4m £523.5m

Annualised rental income

£29.3m £30.1m

Estimated open market rental value

£37.8m £33.8m

Underlying portfolio total return (7.9%) 23.5%

MSCI Benchmark total return

(13.5%) 19.9%

Underlying portfolio income return 6.0% 6.3%

MSCI Benchmark income return 4.1% 3.9%

Financial summary

31 March 2023 31 March 2022

Net Asset Value (“NAV”) £300.7m £372.2m

NAV per Ordinary Share 61.5p 75.8p

EPRA Net Tangible Assets

£300.7m £372.2m

EPRA Net Reinstatement Value

£332.2m £407.3m

EPRA Net Disposal Value

£317.4m £375.9m

IFRS (loss)/profit for the year (£54.7m) £89.4m

EPRA earnings

£16.0m £15.7m

Dividend cover

101% 113%

Capital values

31 March 2023 31 March 2022

Share price 43.6p 57. 8p

Share price discount to NAV (29.1%) (23.7%)

NAV total return

(15.1%) 30.9%

Earnings and dividends

31 March 2023 31 March 2022

EPRA earnings

(pps) 3.3 3.2

Dividends paid (pps) 3.22 2.83

Annualised dividend yield on the 31 March share price 7.4% 4.9%

Bank borrowings

31 March 2023 31 March 2022

On-balance sheet borrowings

£177.90m £162.25m

Loan to Value ratio (“LTV”), net of all cash

36.0% 28.6%

Ongoing charges

31 March 2023 31 March 2022

Ongoing charges (including fund and property expenses)

2.28% 2.21%

Ongoing charges (including fund only expenses)

1.32% 1.26%

1 Reconciles to the valuation reports from CBRE for the direct portfolio and BNP for the two Joint Ventures. Does not include any IFRS adjustments

for lease incentives, nor the fair value of the leasehold adjustment for The Galaxy, Luton. Includes £4.0 million relating to the unconditional

exchange of contracts before the year end to dispose of the Group’s Rugby asset as per notes 12 and 23.

2 Represents the annualised rental income as at 31 March 2023 of the portfolio, including the share of 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.

4 Source: MSCI Quarterly Version of Balanced Monthly Index Funds including the share of rents for the joint venture assets on a like-for-like basis as

at 31 March 2023.

5 This is an Alternative Performance Measure (“APM”). EPRA calculations are included in the EPRA Performance measures section on page 92.

6 This is an APM with further details on page 92.

7 This is an APM with further details on page 92.

8 On-balance sheet borrowings reflect the loan facilities with Canada Life and RBSI without the deduction of unamortised finance costs of £1.0 million.

9 This is an APM. Details are included in the APM section on page 92.

10 This is an APM and calculated in accordance with the AIC recommended methodology. Details are included in the APM section on page 92.

11 This is an APM and calculated in accordance with the AIC methodology. Details are included in the APM section on page 92.

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Schroder Real Estate Investment Trust Limited

Contents

06 Chair’s Statement

10 Investment Manager’s Report

22 Sustainability Report

32 Business Model

34 Our Stakeholders

35 Risks and Uncertainties

Strategic

Report

Strategic Report

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Chair’s Statement

As expected, the rising interest rate

environment has led to a re-rating in

real estate yields, contributing to a

-13.1% valuation decline in our

underlying portfolio over the year.

Whilst this compared favourably

with the MSCI peer group

Benchmark (the “Benchmark”) at

-16.9% over the same period, the

valuation movement resulted in a net

asset value (“NAV”) as at 31 March

2023 of £300.7 million, or 61.5

pence per share (“pps”), a decline

of-18.9%.

More positively, a high level of

portfolio activity contributed to an

above average income return of

6.0% over the year, comparing

favourably with the Benchmark at

4.1%. Earnings growth, underpinned

by low cost, long-term, fixed rate

debt, boosted the dividend to £15.8

million, a 14% increase compared

with the prior financial year, and we

are the only member of our peer

group where the dividend is above

the pre-pandemic level. Importantly,

the dividend was fully covered by

recurring earnings and, combined

with the movement in the NAV,

resulted in a NAV total return for

thefinancial year of -15.1%.

As a result of income focused asset

management activity, the Company

has today separately announced a

further 2% increase in its quarterly

dividend to 0.836pps, to be paid

inJune 2023. This reflects an

attractive yield of 7.5% based on the

share price of 44.35pps as at close

on 6 June 2023.

Overview

Schroder Real Estate Investment Trust Limited (the “Company”) today

announces its audited results for the financial year to 31 March 2023,

achallenging period that has seen financial market volatility, and a

significant correction in UK real estate values.

Performance Summary

for FY2023

Value of Property Assets and

Joint Venture Assets

£470.4m

Net Asset Value (“NAV”)

£300.7m

Share price

43.6p

EPRA earnings

3.3pps

Consolidated net

loan to value

36.0%

Whilst the decline in NAV over

thefinancial year is, of course,

unwelcome, it is encouraging that

the underlying portfolio continues

todeliver long term relative

outperformance compared with the

Benchmark, with an annualised total

return of 6.0% per annum over the

past three years, compared with

theBenchmark at 1.9% per annum,

placing the portfolio on the fifth

percentile of its peer group.

Market context

My statement in the interim report

highlighted the risk of average UK

commercial real estate values falling

15% to 20% from the half year point,

resulting in an overall decline from

mid 2022 of approximately 20% to

25%. Average values have now fallen

-17.7% between 1 July 2022 and

31 March 2023, with the Company’s

portfolio value falling by -14.1% over

the same period.

The principal cause of this correction

is more persistent core inflation,

driven by high energy and food

prices, leading to increasing interest

rates, with the Bank of England base

rate currently 4.5%, the highest

level since October 2008. Tighter

fiscal and monetary conditions,

combined with a withdrawal of

pandemic related business support

programmes, have led to a rise

in business insolvencies and a

slowdown in consumer spending.

Inreal estate markets, higher interest

rates have impeded debt-backed

buyers and increased refinance risk

for many borrowers, with a related

fall in equity and bond prices leaving

some institutions over-allocated

to real estate. This environment

has led to weaker sentiment and a

sharp fall in transaction volumes.

Alastair Hughes

Chair

Overview Strategic Report Governance Financial Statements Other information (unaudited)

The resultant decline in values has

increased average real estate net

initial yields from 3.8% in June 2022

to 4.7% today, the highest level since

June 2020, with our portfolio now

yielding 5.8%. As expected, lower

yielding, higher growth real estate

sectors such as South East and

London industrial have been most

adversely impacted by this rerating,

resulting in a reversal in the

unprecedented polarisation of

returns over recent years. Higher

yielding sectors – such as retail

warehousing, and offices in stronger

regional centres – have been less

adversely impacted, leading to a

convergence in returns across the

main sectors. Against this backdrop,

our well diversified portfolio has

outperformed the Benchmark due to

the active management of the higher

yielding, regional industrial estates,

as well as higher-yielding retail

warehousing and offices in stronger

regional centres.

Occupational markets have, so

far, remained more resilient, with

average nominal rental value growth

for UK real estate of 2.5% per

annum since June 2022. Although

below current inflation levels, there

remains a strong positive long-

term correlation between rental

growth rates and inflation, with

sectors benefiting from structural

demand drivers and lower vacancy

rates delivering rental growth well

above the long-term average of

approximately 0.9%. For example,

in contrast with the sharp decline

in capital values, average industrial

rental values have increased

by 5.9% since June 2022.

There are initial signs that the

investment market is now stabilising,

with a capital value decline from our

underlying portfolio of -0.5% over

the quarter to March 2023

(Benchmark: -1.3%), contrasting with

-11.9% over the quarter to December

(Benchmark: -13.2%). The extent of

any subsequent recovery will

depend on falling inflation, with the

Bank of England currently

forecasting a return to its target rate

in 2024. In this seemingly benign

scenario, interest rates should fall,

but probably to a higher equilibrium

rate of around 3%, above the

ultra-low levels of the recent past.

Agap of approximately 2% between

property yields and 10 year gilts is

approaching the long term average

for fair value, which, combined with

a more a stable political backdrop

and currency, should attract

domestic and international capital

flows back to the sector.

Looking forward, long term

structural trends such as

urbanisation, technological change,

demographics and sustainability

should continue to drive returns, with

multi-let industrial estates, retail

warehousing, certain London office

sub-markets and some alternative

sectors expected to outperform.

These sectors should also benefit

from limited new development. This

contrasts with secondary office and

weaker retail assets, where

obsolescence, higher vacancy and

lower levels of occupational demand

will negatively impact returns.

Strategy

Our strategy is focused on delivering

sustainable dividend growth and

improving the quality of the

underlying portfolio through a

disciplined, research-led approach

to transactions, capital investment

and active management. This activity

will be complemented by

maintaining a robust balance sheet

and continuing to manage costs

efficiently. Furthermore, with a

growing consensus that there is a

meaningful rental premium for

buildings with a green certification,

which we are seeing across our own

portfolio, we believe there is an

opportunity to differentiate our

strategy by placing even greater

emphasis on how sustainability-led

asset improvements will deliver

enhanced returns for shareholders.

This reflects our strong conviction

that only by transforming less

sustainable buildings into modern,

fitfor purpose assets, will we deliver

these enhanced returns and the

wider real estate industry reach its

net zero carbon targets.

The relative outperformance of the

underlying portfolio during the

market correction has demonstrated

the benefits of owning a diversified

portfolio, with expertise to invest

across all sectors. The portfolio

remains diversified, but with a higher

weighting to sectors and assets

expected to deliver higher total

returns and income growth.

Approximately half the portfolio by

value comprises multi-let industrial

estates, and exposure to retail

warehousing increased slightly to

11.6% during the year. The exposure

to offices was unchanged at 27.5%

and, although the occupational

market remains more challenging,

progress has been made reducing

risk through lease extensions to

retain existing tenants, targeted

refurbishment programmes to

improve letting prospects, including

by improving environmental and

social credentials, and to support

potential disposals.

During the year, we acquired a

higher yielding mixed-use office and

retail building in Manchester and,

post year end, a small adjoining

ownership in Chelmsford. Three

disposals completed or contracted

totalling £12.6 million at a 13%

average premium to the valuation

atthe start of the financial year, with

We believe there is an

opportunity to differentiate

our strategy by placing

evengreater emphasis on

how sustainability-led asset

improvements will deliver

enhanced returns for

shareholders”

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

one office asset having exchanged

contracts at the year end, due to

complete in June. The primary focus

has been on optimising earnings

across the existing portfolio through

an extensive asset management

andtargeted capital expenditure

programme, targeting growth areas

and sustainability improvements.

The ongoing development at Stanley

Green Trading Estate in Manchester,

the first operational net zero scheme

in the North West, completed post

year end, has contributed strongly to

performance with approximately

40% already let or in legals. Other

examples include pre-lettings to

Starbucks for “drive-thrus” at two

retail warehouse assets which are

currently under construction.

Successful implementation of

thestrategy means we are well

positioned in terms of income

characteristics. As noted in the

overview, the portfolio generates

amaterially higher income return

compared with the Benchmark, with

the high reversionary yield of 8.0%

also comparing favourably with the

Benchmark at 5.7%. Furthermore,

the portfolio is highly diversified,

with 312 tenants across 41 assets.

The Manager’s active approach,

leveraging the wider Schroders

Capital Real Estate platform of

42sector and regional specialists,

resulted in 65 lettings exchanging

orcompleting since the start of the

financial year, totalling £6.7 million of

annualised rental income. Improving

the portfolio’s defensive qualities has

been a key focus, with major lease

agreements completed during the

year with large corporate occupiers

and educational providers such as

Siemens, IXYS Westcode, and

Buckinghamshire New University.

This active approach has supported

high rental collection rates, with 99%

collected over the financial year and

a reduction in the portfolio void rate

on a like-for-like basis.

The market correction and weak

investor sentiment means virtually

alllisted real estate owners are

now trading at material discounts

to asset value. Although our share

price rating improved over the

year, driven by a high, fully covered

dividend, and a sector leading debt

profile, theBoard and Manager

are highly focused on delivering

a further improvement by clearly

articulating the opportunities

within the portfolio and attracting

a more diverse shareholder base.

Sustainability

Our strategic focus on improving

sustainability performance, where

the Manager has a strong track

record, has delivered positive results

at both an asset and portfolio level.

The Company achieved a further

improvement in its Global Real

Estate Sustainability Benchmark

(“GRESB”) score, placing it first

amongst a group comprising seven

diversified REITs. The EPC profile of

the portfolio has improved markedly

and the Company‘s first “A+” ratings

were achieved at the development

atStanley Green Trading Estate.

We are also making progress

withour pathway to net zero

commitments, with a 10% and 19%

reduction in the Company’s energy

intensity and greenhouse gas

intensity targets over the most

recent reporting period. The

Company also retained its Gold

levelcompliance with the EPRA

Sustainability Best Practice

Recommendations for the fifth

successive year.

Balance sheet

The average interest rate for total

debt drawn at the year end was

2.9%, with an average maturity of

10.6 years, and 90% either fixed

orhedged against movements in

interest rates.

The debt refinancing with Canada

Life in 2019 is now providing a

significant benefit in a higher interest

rate environment. This long term

loan, that represented £129.6 million

of the £177.9 million total borrowings

at the year end, has an average loan

maturity of 13.1 years, with a fixed

average interest rate of 2.5%. At the

year end, incremental positive fair

value benefit of this fixed rate loan

was £16.8 million, which is not

reflected in the Company’s NAV.

The balance of borrowings at the

year end totalling £48.3 million

comprised a revolving credit facility

“RCF”) from RBSI. This is used as a

tactical facility that can be drawn

and repaid at any time. To provide

additional capacity to invest into

theportfolio and pursue market

opportunities, during the year the

total amount that can be drawn was

increased to £75.0 million, with the

loan maturity extended by 4.2 years

to June 2027. £30.5 million of the

RCF benefitted from an interest rate

cap at 1.5%, which was due to expire

in July 2023 and, together with the

RCF margin of 1.65%, resulted in an

average interest rate on the drawn

RCF of 4.1% at the year end.

Since the year end, this cap has been

replaced with a hedging instrument

termed an interest rate “collar” which

applies to £30.5 million of the £48.3

million now drawn. The collar, which

runs to the end of the RCF term in

June 2027, allows the Company to

benefit from future falls in interest

rates down to a 3.25% floor, whilst

atthe same time protecting the

Company from rate increases above

4.25%. After netting off the value of

the interest rate cap, the net cost of

the collar was £567,000.

Chair’s Statement continued

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Since the year end, the RCF has also

been converted into a “Sustainability

Linked Loan”, with criteria linked to

reduced energy consumption, future

improvements in the GRESB rating

and building certification linked to

building improvements.

At the year end, the Company had

anet loan to value (“LTV”) ratio of

36.0%, which is slightly above the

long-term strategic target range

of25% to 35%. The Company has

significant headroom against all loan

covenants, but steps are being taken

to bring the net LTV back in line

withthe target range, including

contracted and further planned

disposals, which are set out in the

Manager’s Report.

Board succession

Since Lorraine Baldry’s retirement as

Chair in July 2022, I have continued

our comprehensive succession

planning process. Following

Graham Basham’s subsequent

retirement in November 2022,

theCompany appointed Alexandra

Innes as an Independent Non-

Executive Director. Alexandra

has a strong track record across

investment banking and investment

management, with relevant non-

executive roles at the Bank of

England, Securities Trust of Scotland

PLC and Knight Frank LLP. As

part of the succession process,

the Board asked the appointed

specialist search firm to review

Board remuneration levels, which

were last reviewed and increased in

2015. This resulted in an aggregate

increase of £20,000, or 13%. On

behalf of my fellow directors and

the Manager, we would like to

thank Lorraine and Graham again

for their service to theCompany.

Independent valuers

It is expected that the Standards

andRegulation Board of the Royal

Institution of Chartered Surveyors

(the “RICS”) will adopt the

recommendations relating to

governance and valuer rotation

outlined in the independent review

of January 2022, although final

details are still to be confirmed

bythe RICS.

In preparation for these changes,

and following a comprehensive

tender process, CBRE Limited

(“CBRE”) have replaced Knight

FrankLLP, the Company’s principal

independent valuer since 2004.

CBRE prepared the valuation used

within these accounts and have

entered into a three year contract at

a material fee saving. CBRE will also

replace BNP Paribas as valuer of

theCompany’s two joint venture

investments with effect from

30 June 2023. On behalf of my

fellow directors and the Manager,

Iwould like to thank Knight Frank

fortheir service to the Company.

Outlook

The UK economy continues to

faceheadwinds this year as higher

inflation and interest rates cause

consumers to retrench, reducing

disposable incomes and hitting

household demand for goods

andservices. Although inflation

pressures are expected to ease, and

recent surveys indicate improved

business confidence, an imbalanced

UK labour market means wage

growth remains a significant burden.

On a more positive note, there

aresigns that real estate values are

stabilising, and approaching long

term fair value. The attractive

portfolio yield profile and pipeline

ofasset management activity should

contribute to continued earnings and

dividend growth, further improve the

defensive qualities of the portfolio,

and enhance returns asthe market

recovers.

Whilst a relaxation in monetary

policy is expected in 2024, interest

rates will remain elevated compared

with recent past. The prudent

balance sheet management

implemented by the Company,

resulting in the lowest cost, longest

duration debt in the peer group,

largely removes this risk to earnings,

and provides a solid foundation to

deliver future dividend growth.

Finally, as sustainability

considerations become even

moreimportant for investors and

occupiers, we are making good

progress evolving our strategy,

which we believe should clearly

differentiate the Company and

helpto drive more sustainable,

long-term returns. We anticipate

providing further details on this later

in theyear.

Alastair Hughes

Chair

Schroder Real Estate Investment

Trust Limited

7 June 2023

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Investment Manager’s Report

Financial results

Schroder Real Estate Investment Trust Limited’s (“SREIT”,

or “theCompany”) net asset value (“NAV”) as at 31 March

2023 was£300.7million or 61.5 pence per share (“pps”),

compared with £372.2million, or75.8pps, asat

31 March 2022. This reflected a decrease over the

financial year of -14.3pps or -18.9%. During the period,

dividends totalling £15.8 million were paid, which

resulted in aNAV total return of-15.1%. A detailed

analysis of the NAV movement isset out in the table

below:

£m pps

NAV as at 31 March 2022

372.2 75.8

Unrealised change in the valuations of

the direct real estate portfolio and

joint ventures

(61.1) (12.4)

Capital expenditure

(10.2) (2.1)

Acquisition costs (1.0) (0.2)

Realised gain on disposals, net of

disposal costs

1.2 0.2

EPRA earnings

16.0 3.3

Dividends paid (15.8) (3.2)

Others 0.4 0.0

NAV as at 31 March 2023

(excluding the share buyback) 301.7 61.4

Share buyback (1.0) 0.1

NAV as at 31 March 2023

300.7 61.5

1 The calculation of pence per share is based on shares in issue as at

31 March 2022 of 491,080,301.

2 Prior to all capital expenditure, acquisition costs and movement in

IFRS16 lease incentives.

3 Comprises capital expenditure of £10.1 million on the directly held

portfolio and £0.1 million invested for the joint ventures.

4 EPRA earnings as per the reconciliation on page 88.

5 The calculation of pence per share is based on shares in issue as at

31 March 2023 of 489,110,576.

Nick Montgomery

Fund Manager

The underlying portfolio, including joint ventures

and net of capital expenditure, decreased in

value by -13.1% on a like-for-like basis over

the financial year to 31 March 2023.

£10.2 million of capital expenditure was invested in asset

management and redevelopment projects, including

joint ventures, that should drive capital growth and

future rental increases over the medium to longer

term. £7.5 million of this related to the operational

net zero warehouse development at Stanley Green

Trading Estate in Cheadle, Greater Manchester.

Acquisition costs totalling £900,000 were incurred

relating to the acquisition of St. Ann’s House, a

mixed-use office and retail asset in Manchester

for £14.7 million in May 2022. Acquisition costs

totalling £58,792 were incurred relating to the

acquisition of 68 High Street, Chelmsford, for

£800,000, which adjoins an existing asset, where

the rationale is to create a more liquid investment.

During the financial year two sales were completed for

a combined price of £8.6 million, which was a 28.4%

increase on the 31 March 2022 combined independent

valuation of £6.7 million. After transaction costs of

£200,000, the aggregate realised gain on disposal was

£1.7 million. During the year unconditional contracts

were exchanged to sell an office for £4.0 million which

compared with a valuation at the start of the financial

year of £4.5 million and £4.0 million at the year end.

EPRA earnings for the period totalled £16.0 million,

or 3.3pps, an increase of £300,000 or 1.9%, on the

prior financial year of £15.7 million. This increase was

driven by asset management-led rental value growth,

a positive contribution from the off-market, higher

yielding industrial portfolio acquired in December

2021, and the St. Ann’s House acquisition.

Between 28 July 2022 and 15 September 2022

the Company acquired 1,969,725 shares under

its share buyback programme for £1.0 million,

which reflected an average cost of 50.6pps and

a discount to the 31 March 2022 NAV of 33%.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Our strategy

Investment objective

The Company aims to provide shareholders with an attractive level of income with the potential for long term,

sustainable income and capital growth.

Investment strategy

The strategy to deliver this, and progress made during the year and since year end, is set out below:

Apply a research-led

approach to determine

attractive sectors and

locations in which to

invest in commercial

realestate

Increased allocation to higher

growth sectors, with industrial,

predominately multi-let estates,

and retail warehousing now

comprising 58.6% by value

Sell smaller, secondary

assets with higher

sustainability

performance risk

Sold three small assets (two

completed, one unconditionally

exchanged) at a 12.5% premium

to the value at thestart of the

year, with further small disposals

expected

Apply our integrated

sustainability and ESG

approach at all stages of

the investment process

and asset life cycle,

targeting improvement

in the sustainability

performance of assets

to manufacture the

green premium for

shareholders

Further improvement in the

Global Real Estate Sustainability

Benchmark (“GRESB”) score to

77 out of 100 in2022 (2021: 75),

achieving the maximum possible

result for the management

aspects of the assessment and

placing SREIT first amongst a

group comprising seven

diversified REITs (2021: second

of eight)

Increase exposure to

larger assets with strong

fundamentals and

inherent opportunities

for active management

and development

Acquired St. Ann’s House in

Manchester, made significant

investment into Stanley Green

Trading Estate also in Manchester.

Our top 15 assets now represent

78.5% of value

Drive income and value

growth through a

hospitality approach in

tenant management

(optimising tenant

services and lease

terms) and operational

excellence in all sectors

(optimising operations in

the assets, minimising

use of scarce resources

and waste)

Operationally net zero carbon

developments at two industrial

estates, collaborating with

Starbucks to develop “drive-

thru” restaurants at two retail

parks, negotiating regears with

major tenants Buckinghamshire

New University and University of

Law in return for sustainability

related asset improvements

Control costs and

maintain a strong

balance sheet with

along-term strategic

target loan to value,

netof cash, within the

range of 25% to 35%

The Company has a peer group

leading debt profile, with a clear

strategy to reduce the net LTV

back to within the strategic

range from 36.0% at the year

end.

Ongoing charges (including fund

and property expenses) of

2.28% broadly in line with 2.21%

for the prior financial year and

below the five year average of

2.30%

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Investment Manager’s Report continued

Portfolio performance

The underlying portfolio continues to

deliver strong relative

outperformance, with a total return

for the financial year of -7.9%

compared to -13.5% for the MSCI

Benchmark (the “Benchmark”). This

relative outperformance was partly

due to a stronger income return from

the portfolio at 6.0% compared to

4.1% for the Benchmark.

Targeted capital expenditure in larger

assets to improve sustainability

performance and benefit from

structural trends led to significantly

stronger rental value growth for the

portfolio at 9.2% compared to 3.4%

for the Benchmark. A key example of

this strategy is the operationally net

zero carbon development at Stanley

Green Trading Estate in Cheadle,

Greater Manchester, which

completed this May. A smaller

proportionate increase in yields

resulted in a lower fall in capital

values of -13.1% for the portfolio

compared to -16.9% for the

Benchmark, which was mainly driven

by the higher yielding regional

industrial portfolio.

The table below shows performance

to 31 March 2023.

SREIT Total Return MSCI Benchmark* Total Return Relative

Period to 31 March

2023

One year

(%)

Three years

(% p.a.)

Since IPO**

(% p.a.)

One year

(%)

Three years

(% p.a.)

Since IPO**

(% p.a.)

One year

(%)

Three years

(% p.a.)

Since IPO**

(% p.a.)

Retail -6.9 1.4 3.9 -8.1 -0.1 3.1 1.4 1.5 0.7

Office -8.9 1.4 7.0 -12.7 -2.5 5.9 4.4 4.0 1.0

Industrial -8.0 13.4 10.1 -21.0 8.3 8.6 16.4 4.7 1.4

Other 0.3 6.0 3.4 -6.4 1.0 6.5 7.2 4.9 -2.9

All sectors -7.9 6.0 7.1 -13.5 1.9 5.6 6.4 4.0 1.5

* MSCI Benchmark is formally “MSCI UK Balanced Portfolios Quarterly Property Index (unfrozen).

** IPO in July 2004.

Real estate portfolio

As at 31 March 2023, the portfolio

comprised 41 properties valued at

£470.4 million. This includes the

share of joint venture properties at

City Tower in Manchester and the

University of Law in Bloomsbury,

London. The portfolio generated

rental income of £29.3

million per

annum, reflecting a net initial yield of

5.8%, which compared with the

Benchmark 4.8%. The portfolio also

benefits from fixed contractual

annualised rental income uplifts of

£2.0 million perannum over the next

24 months. The independent valuers’

estimated rental value (“ERV”) of the

portfolio is £37.8million per annum,

reflecting a reversionary income

yield of 8.0%, which compares

favourably with the Benchmark

at5.7%.

The portfolio is diverse and granular

should support more resilient

portfolio income in a weaker

economic environment and a more

challenging period for consumers

and businesses. The portfolio is also

both higher yielding with potential

for more rental growth relative to the

Benchmark which positions it well

for a higher interest rate environment

and where capital growth is muted in

the short term.

The portfolio is overweight multi let

industrial estates where we consider

supply and demand dynamics to be

favourable given there has been

relatively limited development. This

is evidenced by the rent reviews and

lease renewals that we have

completed since the beginning of

the financial year, where rents were

agreed 24% higher than the previous

level. In addition, there is an

overweight position in retail

warehouses, where we have

sustainable levels ofrent and limited

exposure to fashion. This is the only

part of the market which has seen a

meaningful fall in vacancy since the

pandemic and we expect continued

rental growth.

At the period end the portfolio void

rate was 11.1%, calculated as a

percentage of estimated rental

value. Excluding therecently

completed Stanley Green Trading

Estate developed units, the portfolio

void rate reduced on a like for like

basis from 8.6% to 7.9%, in the

middle of the ten year range of

5-13% and compares with the

Benchmark void rate of 8.0%. The

portfolio weighted average lease

length, calculated to the earlier of

lease expiry or break, is 5.0 years.

Approximately 11% of the portfolio

by contracted rent is inflation linked,

typically structured as five yearly

reviews to either the Retail Price

Index (“RPI”) or the Consumer Price

Index (“CPI”). In some cases these

inflation-linked leases can also be

reviewed to open market value, if

higher, or include fixed guaranteed

increases. A further 12% of rent

benefits from fixed uplifts without an

inflation link. The proportion of the

portfolio with inflation-linked leases

should increase with ongoing asset

management activity.

1 Represents the annualised rental income as at 31 March 2023 of the portfolio, including share of rents for the joint venture assets.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Stacey Bushes Industrial Estate, Milton Keynes

The tables below summarise the portfolio information as at 31 March 2023. The property values and weightings

represent the year end valuations as determined by the independent valuers as at 31 March 2023:

Portfolio metric

SREIT

31 March 2023

(MSCI 31 March

2023)

SREIT

31 March 2022

(MSCI 31 March

2022)

Portfolio value (£m) 470.4 523.5

Number of properties 41 42

Number of tenants 312 315

Average lot size (£m) 11.5 12.5

Net initial yield (%) 5.8 (4.8) 5.4 (3.9)

Reversionary yield (%) 8.0 (5.7) 6.4 (4.6)

Annual rent (£m) 29.3 30.1

Estimated rental value (£m) 37.8 33.8

Annual rent with inflation linked uplifts (%) 11 15

Annual rent with fixed uplifts (%) 12 5

WAULT (years to earliest of break or expiry) 5.0 (11.2) 5.4 (11.4)

Void rate (%) 11.1 (8.0) 7.0 ( 7.8)

Top 15 properties by value Sector Value (£m)

% of portfolio value

1 Milton Keynes, Stacey Bushes Industrial Estate Industrial

50.5 10.7

2 Leeds, Millshaw Park Industrial Estate Industrial

45.5 9.7

3 London, Store Street, The University of Law Campus

(50% share)

Office/university

37.8 8.0

4 Cheadle, Stanley Green Trading Estate Industrial

35.5 7.5

5 Manchester, City Tower (25% share) Office/hotel/retail/leisure/

carpark

34.0 7.2

6 Bedford, St. John’s Retail Park Retail warehouse

31.0 6.6

7 Chippenham, Langley Park Industrial Estate Industrial

24.7 5.3

8 Norwich, Union Park Industrial Estate Industrial

21.6 4.6

9 Leeds, Headingley Central Retail/hotel/leisure

20.8 4.4

10 Manchester, St. Ann’s House Office/retail

12.6 2.7

11 Uxbridge, 106 Oxford Road Office/university

12.5 2.7

12 Telford, Horton Park Industrial Park Industrial

12.1 2.6

13 Birkenhead, Valley Park Industrial Estate Industrial

12.0 2.6

14 Edinburgh, The Tun Office

9.4 2.0

15 Milton Keynes, Matalan Retail warehouse

9.4 2.0

Total as at 31 March 2023

369.4 78.5

1 As per third-party valuation reports unadjusted for IFRS lease incentive amounts.

2 Column does not sum due to rounding.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Investment Manager’s Report continued

Sector weighting by value as at

31 March 2023

Like-for-like net of capex capital growth for

the 12 month period ended 31 March 2023

SREIT

Benchmark

SREIT Benchmark

South East 10.7% 19.6%

Rest of UK 36.1% 11.7%

Industrial 46.8% 31.2% -12.6% -23.8%

City 0.0% 3.6%

Mid-town and West End 8.0% 6.9%

Rest of South East 4.5% 7.3%

Rest of UK 15.0% 7.3%

Offices 27.5% 25.2% -14.7% -15.8%

Retail warehouse 11.8% 9.8% -9.1% -12.0%

South East 0.9% 6.7%

Rest of UK 6.7% 3.0%

Standard retail 7.7% 9.7% -17.7% -14.1%

Standard retail by ancillary/single use

– Retail ancillary to main use 4.9% –

– Retail single use 2.8% –

Other 6.2% 18.1% -9.5% -10.3%

Shopping centres – 2.1%

Unattributed indirects – 3.8%

1 Note: columns do not sum due to rounding.

Regional weighting by value as at

31 March 2023

SREIT Benchmark

Central London 8.0% 17.1%

South East excluding Central London 18.2% 34.5%

Rest of South 10.5% 16.2%

Midlands and Wales 21.0% 13.2%

North 40.3% 14.4%

Scotland 2.0% 4.4%

Northern Ireland 0.0% 0.2%

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Rental income is diverse and as at 31 March 2023 comprised 312 tenants, including the tenants of properties heldby

joint ventures. The largest and top 15 tenants represent 7.06% and 33.04% of the portfolio respectively, calculated as

a percentage of annual rent, and there are only two tenants that represent more than 3% of annualrent.

Top 15 tenants by annual rent

Annual rent

(£ million)

% of total

annual rent

University of Law Limited 2.07 7.06%

Siemens Mobility Limited 1.22 4.16%

Express Bi Folding Doors Limited 0.65 2.22%

The Secretary of State 0.59 2.01%

Buckinghamshire New University 0.58 1.98%

Matalan Retail Limited 0.57 1.95%

Cineworld Cinema Properties Limited 0.52 1.77%

TJX UK t/a HomeSense 0.51 1.74%

IXYS UK Westcode Limited 0.47 1.60%

Jupiter Hotels Limited 0.46 1.57%

Premier Inn Hotels Limited 0.42 1.43%

Lidl Great Britain Limited 0.42 1.43%

Ingeus (UK) Limited 0.41 1.40%

Wickes Building Supplies Limited 0.40 1.37%

Balfour Beatty Group Limited 0.39 1.33%

Total as at 31 March 2023 9.68 33.04%

Note: column does not sum due to rounding.

Rent collection

The diversification and granularity

ofthe underlying rental income, and

ahigh level of occupier engagement,

has supported improving rent

collection rates with 99% of the

contracted rents collected for the

quarter to 31 March 2023.

The breakdown between sectors is

100% of office rent collected, 100%

of industrial rent collected and 97%

ofretail, leisure and other rent

collected.

The Company has made good

progress collecting historical arrears

during the year which totalled £3.3

million, net ofVAT, at the year end, of

which £360,000 is provided against

as a bad debt. This compares to £3.8

million and £900,000 respectively as

at 31 March 2022.

Manchester, St. Ann’s House

St. Ann’s House in Manchester was acquired on

27 May2022 for a gross headline price of £14.7 million,

reflecting a net initial yield of 7.8%, a reversionary yield of

9.1% and a low average capital value of £283 per sqft.

The mixed-use office and retail asset generates £1.22

million per annum of headline rent compared with an ERV

of £1.33 million.

The freehold, 51,754 sq ft building, is97% occupied by

ERV and comprises 40,277 sq ft of office space over five

upper floors with five retail units at the ground floor level

and ancillary basement space. It is prominently located

on St. Ann’s Square, near to the prime retail core.

St.Ann’s Square features a listed church, the Royal

Exchange theatre, a mix of office occupiers and

high-quality luxury retail as well as leisure operators.

Thebuilding benefits from its close proximity

totwotramstations.

The office space is fully let to four office tenants at

anaverage rent of £18.48 per sq ft, with the potential

toincrease rental levels through refurbishment and

improving sustainability performance. There is also

theopportunity to enhance income by offering

fittedoutoffice space.

The appeal of St. Ann’s Square to high quality luxury

retailers is reflected in the current tenant mix with

complementary retailers located in close proximity.

During thepandemic rents were rebased by the

previouslandlord and there are currently no arrears.

Atacquisition, the tenants were Watches of Switzerland,

Russell & Bromley and Space NK. Since acquisition,

wehave let a unit to David M Robinson Limited, a

north-west based retailer of luxury watches and

jewellery, for £70,000 per annum, or £76.75 per sq ft.

The weighted average unexpired lease term is 2.2 years

to earliest termination and 4.8 years to lease expiries.

58% of the property by floor area currently has an EPC

rating of “B” with the remainder rated“C”.

The strategy is to undertake a rebranding of the building,

introduce additional amenities for the offices such as bike

and shower facilities and refurbish the property as floors

become available with a focus on improving sustainability

performance. This will increase the rental tone of the

offices. We will aim to leverage the close proximity of

luxury jewellers and watch retailers to attract similar

occupiers to the subject asset at higher rents.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Investment Manager’s Report continued

Transactions

MIXED-USE OFFICE

AND RETAIL

Generates

£1.22m

Freehold rentable area

51,885 sq ft

Find out more on our website | www.schroders.com/schroder-real-estate-investment-trust

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Chelmsford, 68 High Street

RETAIL

Rugby, Morgan Sindall House

OFFICE

Portsmouth, Southlink

INDUSTRIAL

Beech House, Fleet

OFFICE

In March 2023, 68 High Street in Chelmsford was

acquired for £800,000, reflecting a net initial yield of

11.1%. This is an adjoining ownership to 67 High Street,

with both units let to Esquire Retail on a lease expiring in

September 2023. Simultaneously, an agreement for lease

was reached with Co-operative Bank plc for them to take

anew ten year lease without breaks with effect from

September at a new rent of £175,000. There will be12

months rent free and we will make a capital contribution

of £110,000. The acquisition and letting areexpected to

facilitate a profitable disposal of the combined units.

In March 2023, contracts were exchanged to sell

Morgan Sindall House, a 34,334 sq ft single let office

asset in Rugby for £4.0 million. The price is in line with

the year end independent valuation.

The asset produces a net rent of £375,378 per annum

with a lease term of 5.9 years. Based on the disposal

price, the asset has generated an ungeared total return of

7.2% per annum since acquisition, compared with the All

Property MSCI Benchmark for the same period of 6.2%

per annum, and MSCI All Office for the same period of

5.7% per annum.

In June 2022 Southlink, a 26,975 sqft single let industrial

asset in Portsmouth, was sold for £6.5 million. The price

compares with the31 March 2022 independent valuation

of £4.9 million and reflectsa net initial yield of 3.2%.

Situated within the Walton Road Industrial area, Southlink

was acquired in July 2004. The asset produced a net rent

of £225,000 per annum with a lease term of 2.4 years.

Based on the disposal price, the asset has generated an

ungeared total return of 13.2% per annum since acquisition,

compared with the All Property MSCI Benchmark for the

same period of 6.8% per annum, and MSCI All Industrial

for the same period of 10.6% per annum.

Beech House, a 13,174 sq ft office asset in Fleet, was

soldon 24 November 2022 for £2.1 million, 17% ahead

ofthe 30 September 2022 independent valuation of

£1.8million and reflecting a net initial yield of 7.8%. The

asset was acquired in 2004 as part of a bigger interest

that has been broken up, and hence there is no asset

levelperformance data.

Further disposals of lower value, non-core properties are

under consideration and being progressed.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Investment Manager’s Report continued

Active asset management

In aggregate, 65 new lettings, rent reviews and renewals completed since the start of the period totalling £6.7 million

in annualised rental income and generating £2.3 million per annum of additional rent above the previous level.

Set out below are examples of ongoing active asset management initiatives that should support continued

outperformance of the underlying portfolio from both a financial and sustainability perspective.

Manchester, Cheadle, Stanley Green Trading Estate

INDUSTRIAL

Asset overview and performance

Stanley Green Trading Estate in Cheadle, Manchester

was acquired in December 2020 for £17.3 million.

Following completion of a new warehouse development

this May, the asset comprises 233,730 sq ft of trade

counter, self-storage and warehouse accommodation

across 25 units on a nine acre site.

As at 31 March 2023 the valuation was £35.5 million,

reflecting a net initial yield of 2.6% and a reversionary

yield of 6.9%. Over the financial year the asset delivered

a total return of 14.1% which compared with MSCI All

Industrial over the same period of -21.0%.

Asset strategy

The strategy over the financial year was to crystallise

higher rents, develop the 80,000 sq ft, operational net

zero carbon (“NZC”) scheme on the 3.4 acre site and

begin marketing to pre-let the new accommodation.

Key activity

– The speculative development of 11 warehouse

and trade units has completed with £8.1 million

ofcapital expenditure incurred on the project

from inception to the year end. The target rental

income is £1.3million per annum, or £16.41 per

sqft.

– The new units have achieved an “A+” EPC rating

and we are targeting a BREEAM Excellent

accreditation.

– Approximately 40% of the new estate is already

let or in legals. The objective is for the entire

scheme to be let this calendar year.

– Negotiations are progressing with a number of

occupiers to re-gear their leases across the

original trading estate which should support

continued income growth.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Chippenham, Langley Park Ind. Estate

INDUSTRIAL

Bedford, St. John’s Retail Park

RETAIL WAREHOUSE

Asset overview and performance

Langley Park Trading Estate in Chippenham was acquired

in December 2020 for £19.3 million and comprises a

multi-let industrial estate comprising 400,000 sq ft of

warehouse and ancillary office accommodation on a large

site of 28 acres located close to Chippenham town centre.

As at 31 March 2023, the valuation of £24.7 million

reflected a net initial yield of 6.5% and a reversionary yield

of 8.4%. Over the financial year the asset delivered a total

return of -3.4%, which compared with the MSCI All

Industrial Benchmark over the same period of -21.0%.

Asset strategy

The strategy over the period was to drive net income

growth, the average unexpired lease term, and quality

ofaccommodation across the estate.

Asset overview and performance

St. John’s Retail Park comprises a 120,000 sq ft retail

warehouse scheme underpinned by income from tenants

including Lidl, Home Bargains, Bensons for Beds,

TKMaxx and Costa, with an average lease term, to the

earlier of lease expiry of break, of 6.5 years. The asset

benefits from an affluent catchment and has good

parking. As at 31 March 2023, the asset was valued at

£31.0 million reflecting a net initial income yield of 6.2%

and a reversionary yield of 6.1%. Over the financial year

the asset delivered a total return of -1.4% which

compared with the MSCI All Retail Warehousing over

thesame period of -7.0%.

Asset strategy

The strategy over the year was to let vacant units,

improve retailer mix and retain tenants by negotiating

new longer term leases.

Key activity

– Siemens Mobility Limited (“Siemens”) rent review

completed in June 2022 at £1.2 million per annum

or£4.64 per sq ft, reflecting a 26% increase in

contracted rental income. Following completion

ofthe rent review, which was backdated to June

2021, Siemens became the Company’s second

largest tenant.

– A new ten year lease renewal without breaks

completed in May 2022 with IXYS UK Westcode

Limited (“IXYS”), the UK subsidiary of Littelfuse, a

global manufacturer which has provided a parent

company guarantee. The rent is £465,000 per

annum, or £5.50 per sq ft, reflecting a 31%

increase over the previous contracted rent of

£355,000 per annum. IXYS receive 12 months’

rent free which ends in December 2023, and will

receive a contribution to repair works up to the

value of £250,000 if undertaken within two years

of lease completion. Thelease includes a rent

review at year five to the higher of open market

value or RPI, with a collar of 1%per annum and a

cap of 5% per annum.

– The next phase of the business plan at Langley

Park isto consider longer term development plans

which could involve the creation of new space

forexisting tenants. Any development of new

warehouse units would be to an operational net

zero carbon (“NZC”) standard and a pre-planning

application to develop 130,000 sq ft of space has

been submitted to Wiltshire County Council.

Key activity

– Resolution to grant planning consent has been

received from Bedford Borough Council for a

new “drive-thru” at St. John’s Retail Park. As

previously reported, a 15-year pre-let has

completed with Starbucks Coffee Company UK

Limited (“Starbucks”) who are now constructing a

new unit on the site and will receive a

contribution towards construction costs capped

at £850,000. The rent is £145,000 per annum,

increasing by 10% of any construction cost in

excess of £750,000, capped at an additional

£10,000 of rent per annum. The yield on cost

assuming the maximum construction cost,

including the current site value of £1.3 million,

istherefore 7.2%.

– Starbucks are required to deliver the restaurant

to a minimum BREEAM rating of “Very Good”

andinstall electric vehicle charging points for

customer usage.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Investment Manager’s Report continued

Balance sheet

At the year end, the average interest

rate for drawn debt was 2.9%, with

an average loan term of 10.6 years,

and 90% of total drawn debt was

either fixed or hedged against

movements in interest rates.

The debt refinancing with Canada

Life in 2019 is now providing a

significant benefit in a higher interest

rate environment. This long term

loan, that represented £129.6 million

of the £177.9 million total borrowings

at the year end, has an average loan

maturity of 13.1 years, with a fixed

average interest rate of 2.5%. At the

year end, the incremental positive

fair value benefit of this fixed rate

loan was £16.8 million, which is not

reflected in the Company’s NAV.

The balance of drawn debt at the

year end totalling £48.3 million

comprised a revolving credit facility

(“RCF”) from Royal Bank of Scotland

International (“RBSI”).

At the year end, the Company had a

net loan to value (“LTV”) ratio of

36.0%, which is slightly above the

long-term strategic target range of

25% to 35%. The Company has

significant headroom against all loan

covenants, but steps are being taken

to bring the net LTV back in line with

the target range, including

contracted and further planned

disposals.

Details of the loans are set out

below, together with cover against

covenants.

£129.6 million term loan with Canada Life

Lender

Loan

(£m) Maturity

Total

interest

rate

(%)

Asset

value

(£m)

Cash

(£m)

LTV ratio

(%)

LTV ratio

covenant

(%)

ICR

(%)

ICR

covenant

(%)

Projected

ICR

(%)

Projected

ICR

covenant

(%)

Facility A

64.8 15/10/2032 2.4

271.8 2.0 46.9 65 480 185 449 185

Facility B

64.8 15/10/2039 2.6

Canada Life Term Loan

129.6 2.5

– Net LTV on the secured assets

against this loan is 46.9%. On this

basis the properties charged to

Canada Life could fall in value by

28% prior to the 65% LTV

covenant being breached;

– The interest cover ratio is 480%

based on actual net rents for the

quarter to 31 March 2023. A 61%

fall in net income could be

sustained prior to the loan

covenant of 185% being

breached;

– The projected interest cover ratio

is 449% based on projected net

rents for the year to 31 March

2023. A 59% fall in net income

could be sustained prior to the

loan covenant of 185% being

breached; and

– After utilising available cash and

uncharged properties, the

valuation and actual net rents

could fall by 40% and 66%

respectively prior to either the

LTV or interest cover ratio

covenants being breached.

£75.0 million revolving credit facility (“RCF”) with RBSI

The Company has headroom with both LTV and ICR covenants as summarised below:

Lender

Loan/

amount

drawn

(£m) Maturity

Total

interest

rate

(%)

Asset

value

(£m)

LTV ratio

(%)

LTV ratio

covenant

(%)

Projected

ICR

(%)

Projected

ICR

covenant

(%)

RBSI RCF

75.0/48.3

06/06/2027 5.8

160.8 30.0 60

351 250

1 The projected ICR covenant for the contracted four quarters following the IPD deducting assumed non-recoverable costs (void rates, void service charge

and void insurance)/interest paid, based on the average of the past four quarters.

2 Fixed total interest rate for the loan term.

3 Loan balance divided by the property values as at 31 March 2023.

4 For the quarter preceding the IPD, (rental income received – void rates, void service charge and void insurance)/interest paid.

5 The projected ICR covenant of the contracted four quarters following the IPD deducting assumed non-recoverable costs (void rates, void service charge

and void insurance)/interest paid) based on the average of the past four quarters.

6 Facility drawn as at 31 March 2023 from a total available facility of £48.3 million.

7 Total interest rate as at 31 March 2023 comprising the SONIA rate of 4.18% and the margin of 1.65% at a LTV below 60%. Should the LTV be above 60%,

themargin increases to 1.95%.

8 LTV ratio covenant of 65% for years one to three, then 60% for years four and five.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

– Net LTV on the secured assets

against this loan is 30.0%. On this

basis the properties charged to

RBSI could fall in value by 54%

prior to the 65% LTV covenant

being breached;

– The projected interest cover ratio

is 351% based on actual net rents

for the quarter to 31 March 2023.

A 39% fall in net income could be

sustained prior to the loan

covenant of 250% being

breached;

– After utilising available cash and

uncharged properties, the

valuation and actual net rents

could fall by 69% and 51%

respectively prior to either the

LTV or projected interest cover

ratio covenants being breached;

– At the year end, £30.5 million of

the RCF benefited from an

interest rate cap with a strike rate

of 1.5%, which was due to expire

on 3 July 2023 and, together with

the RCF margin of 1.65%, resulted

in an interest rate of 3.15% on the

capped element of the RCF;

– At the year end, the uncapped

element of the RCF was subject

to the SONIA rate of 4.18% which,

together with the RCF margin of

1.65%, resulted in an interest rate

of 5.83% on the uncapped

element of the RCF; and

– This resulted in an average

interest rate on the drawn RCF

of4.1%.

Since the year end, the cap, which

was due to expire on 3 July 2023, has

been replaced with a hedging

instrument termed an interest rate

“collar” which applies to £30.5 million

of the £48.3 million now drawn. The

collar, which runs tothe end of the

RCF term in June 2027, allows the

Company to benefit from future falls

in interest rates down to a 3.25%

floor, whilst at the same time

protecting the Company from rate

increases above 4.25%. After netting

off the value of the interest rate cap,

the net cost of the collar was

£567,000.

Since the year end, the RCF has also

been converted into a “Sustainability

Linked Loan”, with performance

measured against KPIs, with each

KPI having the potential to either

reduce the margin by 1.65 basis

points, increase it by 1.65 basis

points or have no impact:

– Change in landlord energy

consumption (year on year)

- A reduction by 5% or more:

reduce the margin

- No change or a reduction

below 5%: no change

- An increase: increase the

margin

– GRESB rating

- 4 stars or above: reduce the

margin

- 3 stars: no change

- 2 stars or below: increase the

margin

– Development or refurbishment

projects that improve EPC or

BREEAM rating to a minimum of

EPC B or BREEAM Very Good

- If all new developments or

major renovations of the

properties meet the

requirement: reduce the

margin

- If no property has been

refurbished or developed:

nochange

- If one or more new

developments or major

renovations of the properties

carried out during the term of

the facility does not meet the

requirement: increase the

margin

Outlook

The financial year was characterised

by persistent inflation, rising interest

rates, market volatility and lower

levels of economic growth. This led

to the sharpest correction in real

estate values since the global

financial crisis. Whilst our asset values

were impacted, a diversified portfolio

combined with good progress over

the period delivering on the strategy

resulted in sustained relative

outperformance of the underlying

portfolio and a further increase in the

fully covered dividend level.

The strength of the balance sheet,

with long term, mainly fixed rate,

debt is a key competitive advantage

and there will be limited impact on

the Company from higher interest

rates.

Looking forward, our programme of

sustainability-led value add

investments into the existing

portfolio, and an active approach to

asset management is leading to

further income growth, with a

pipeline of new opportunities under

active consideration. We have a

robust and diverse tenant base that

we expect to be resilient in a weaker

economic environment.

Against this backdrop, our

combination of a clear strategy with

increased emphasis on sustainability,

a diversified portfolio and a strong

balance sheet should enable us to

maintain relative outperformance

compared with our peers and

continue delivering attractive

income and total returns for

shareholders.

Nick Montgomery

Fund Manager

7 June 2023

The Board and Manager believe

thatfocusing on sustainability,

andEnvironmental, Social and

Governance (“ESG”) considerations

more 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. A key part

ofour sustainability strategy is

delivering operational excellence for

occupiers as well as demonstrating

continued improvements in

sustainability performance.

The Manager’s real estate

investment strategy, which aims to

proactively take action to improve

social and environment outcomes,

focuses on the pillars of “People,

Planet and Place” which are

referenced to three core UN

Sustainable Development Goals

(“SDGs”): (8) Decent Work and

Economic Growth; (13) Climate

Action and (11) Sustainable Cities

andCommunities.

Active management of sustainability

performance is a key component of

responsible asset and building

management. Reducing

consumption, improving operational

efficiency and delivering higher

quality, more sustainable spaces,

willbenefit tenants’ occupational

costs and may support tenant

retention and attraction, in addition

to mitigating environmental impacts

and helping to future-proof the

portfolio against future legislation.

This report seeks to present

ourapproach to managing ESG

considerations and performance

against our sustainability objectives.

Case studies highlighting ESG in

practice are used throughout and

detailed performance data are

presented with the EPRA sBPR

aligned Sustainability Performance

Measures sections from page 98.

Strategic Report

Sustainability Report

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Our approach to sustainability

Our sustainability strategy is delivering operational

excellence for occupiers as well as demonstrating

continued improvements in sustainability performance.

Progress towards net

zero Carbon by 2040

-19%

reduction in whole building

operational GHG intensity

(between 2019/20 and

2021/22)

Improved GRESB

score of

3-star rating;

77 score

(up from 75 in 2021); First in peer group

EPRA sBPR Awards for

Sustainability Reporting

GOLD

For fifth year running

Number of specialist

sustainability audits

Key achievements

Further information on the Manager’s Sustainable Investment Real Estate with Impact approach, and its Sustainability Policy: Real Estate with Impact,

can be found here | https://www.schroderscapital.com/en/global/professional/sustainability-and-impact/our-approach/

Protecting our

planet.

CASE STUDY

Decarbonising the

Industrial Sector

Supporting people

and places.

CASE STUDY

Creating social

value

Responsible

business.

CASE STUDY

Sustainability

Audits

Read more on Governance and

the case study | Page 30

Environment Social Governance

Governance Financial Statements Other information (unaudited)Strategic ReportOverview

Improved EPC performance

100%

MEES Compliance

97%

EPC coverage

58%

EPCs above “c” rating

Sustainability Linked Loan tied

to RCF agreed with RBSI

Increasing number of assets with

on-site renewables/total kWp

2 assets with solar PV*

* Additional solar PV installed as part

of Stanley Green development

due to PC May 2023.

Completed specialist

sustainability audits

+3 BREEAM In-Use

+2 WiredScore

(Nine assets total)

(Total number of assets with

sustainabilitycertifications)

Strategic Report

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Sustainability Report continued

Protecting our planet

In the real estate sector climate change mitigation actions, such as reducing energy demand and

implementingrenewable energy systems, can collectively contribute to reducing the sector’s impact

ontheclimate crises but also have the potential to achieve wellbeing gains from improved indoor air

qualityandthermal comfort, reduced financial burden and increased productivity. A central focus of

ourrealestateinvestment strategy is the response to this both interms of resilience to physical impacts

andworking to ensure resilience as society transitions to a low-carbon economy.

Performance against objectives

Goal FY23 Outcome

Net Zero Carbon (Scopes 1, 2 and 3)

by2040

-19% reduction in whole building GHG intensity (between baseline year and 2021/2022)

Annual reduction in landlord energy

consumption and associated scope 1 and

2 greenhouse gas (“GHG”) emissionson a

like-for-like basis

– Energy = <2% increase*

– GHG emissions = -5% reduction

* Annual like-for-like performance negatively impacted by impact of Covid-19 on occupancy in

previous reporting period 2021.

Increase use of on-site renewable energy

and to source 100% of landlord electricity

through renewable tariffs by2025

– 2 assets with solar PV

– 74% of the Company’s landlord procured electricity was on arenewable tariff.

* Additional solar PV installed as part of the Stanley Green development due to PC in May 2023.

Annual reduction in landlord like-for-like

water consumption

27% increase

* Annual like-for-like performance negatively impacted by impact of Covid-19 on occupancy in

previous reporting period 2021.

Send zero waste to landfill and prioritise

waste recycling

– Zero waste directly to landfill

– 54% of waste was recycled and 46% was incinerated with energy recovery.

Maintain 100% MEES compliance and

improve proportion of assets with EPC

ratings B or above (floor area)

– EPC coverage = 97%*

– EPCs above C rating = 58%

– EPCs above B rating = 18%

* Remaining footprint without EPCs relates to assets where improved works have been scheduled.

Please note that the Company remains compliant with MEES regulations.

Assess physical climate risk profiles for all

assets and develop resilience strategies

for allrisks identified

Physical climate risk profile determined for all assets using third-party database.

Improve biodiversity opportunities across

the portfolio

13 assets where biodiversity opportunities have been completed (including bird boxes,

beehives or bug hotels).

Environmental

As part of our commitment to net

zero carbon (“NZC”) by 2040

(see“Pathway to Net Zero Carbon”

on page 26) throughout the portfolio

we have continued to undertake

improvement initiatives including

replacement and upgrades to

heating, ventilation and air

conditioning (“HVAC”) systems,

continued utility smart meter roll-out

for improved energy monitoring,

aswell as continued upgrades to

lighting systems, including

installation of LEDs and passive

infrared controls. Alongside the

electrification of heating supplies,

these measures are key contributors

to the energy performance

certificate (“EPC”) improvements

realised. Such measures also support

the resilience of the strategy with

respect to transition and physical

climate risks which are detailed

within our Taskforce on Climate-

related Financial Disclosures

(“TCFD”) response on page 95.

Intrinsically linked to the climate

crisis, the nature crisis also presents

significant risks and opportunities to

the real estate sector. As such, policy

is rapidly evolving to mitigate and

reverse negative impacts on nature

including mandatory biodiversity

netgain (“BNG”) in the UK from

November 2023 and the expected

adoption of the Taskforce on

Nature-related Financial Disclosures

(“TNFD”). The Company has

progressed with nature positive

initiatives including the installation of

bird boxes, beehives and bug hotels,

as well as the protection of mature

trees and planting of wildflowers

during the reporting year across

theportfolio.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Progress

Forward-looking NZC pathways

have been developed, using the

industry accepted Carbon Risk

RealEstate Monitor (“CRREM”),

topresent the decarbonisation

requirements aligned with a

“ParisProof” decarbonisation

trajectory to pursue efforts to limit

global warming to 1.5°C. During the

reporting year the Manager has been

assessing progress against the

operational NZC baseline for the

Company which was determined in

2021 (using 2019/2020 data). Please

note that whilst decarbonisation

pathways have been developed for

34% of assets (by Gross Property

value (“GPV”), assets in-scope of

theportfolio’s fund level targets

currently represent 29% by GPV.

Between 2019/2020 and

2021/2022 the Company, through

continued improvement initiatives

including heating, ventilation and air

conditioning (“HVAC”) upgrades and

LED lighting improvements, has

made good progress towards its

energy and greenhouse gas (“GHG”)

intensity targets achieving

reductions of 10% and 19%

respectively.

The current trajectory indicates the

Company may strand – the point

atwhich the GHG intensity of the

portfolio is above the CRREM

derived target – in 2033. This may

be delayed by one year (2034)

through identified improvement

actions indicating further works

required to meet the Company’s

2040 net zero commitment. Figure

A and the table below present

further details of the outcome of

thisassessment.

Current performance and reduction requirements to 2030 for both GHG and energy intensity

Current

performance

% Progress against

baseline period

2030

target

% Change required

toreach

2030 target

Portfolio

average year

of stranding

Energy Intensity (kWh/m

) 188.3 -10% 154.0 -18%

2033

GHG Intensity (kgCO

e/m

) 41.3 -19% 32.5 -21%

2019

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050

Carbon Intensity (KgCO

)

Business as usual (grid corrected) 2019 Baseline Science Based Target Performance pathway with planned initiatives

BAU – Stranding Point

Reduction needed to 2030

Intensity target from 2021

New Stranding Point

-21%

Figure A: Decarbonisation trajectory for the Company derived using the Carbon Risk Real Estate Monitor (“CRREM”)

which demonstrates the GHG intensity reduction required to align with CRREM at 2030 (-21%).

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Schroder Real Estate Investment Trust Limited

Sustainability Report continued

1 World Green Building Council: Bringing Embodied Carbon Upfront. https://worldgbc.org/article/bringing-embodied-carbon-upfront/

2 Intergovernmental Panel on Climate Change (IPCC): Sixth Assessment Report. https://www.ipcc.ch/assessment-report/ar6/

3 “Net Zero Carbon” is when the carbon emissions emitted as a result of allactivities associated with the development, ownership and servicing of abuilding

are zero or negative.

4 Better Buildings Partnership Climate Commitment available here: https://www.betterbuildingspartnership.co.uk/member-climate-commitment

Environmental continued

Strategic Report

Pathway to net zero carbon

According to the World Green Building Council

(“WGBC”) buildings are responsible for 39% of global

energy related carbon emissions

. In April 2022 the

Intergovernmental Panel on Climate Change (“IPCC”)

identified that global carbon emissions must peak by

2025 at the very latest to effectively limit global

temperature rise to 1.5°C, in line with the Paris

Agreement

The Board and Manager recognise that the Company has

a responsibility to embark on a journey to net zero carbon

(“NZC”)

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.

In 2019 the Manager signed the Better Building

Partnership’s (“BBP”) Climate Commitment

and wehave

a net zero ambition aligned to the Paris Agreement aim to

limit warming to 1.5°C. The Manager’s commitment was

further underlined bytheCompany who last year

announced their “Pathwayto Net Zero Carbon”

committing to:

– Operational whole buildings emissions to be aligned

to a 1.5°C pathway by 2030.

– Embodied emissions for all new developments

andmajor renovations to be net zero by 2030.

– Operational Scope 1 and 2 (landlord) emissions to be

net zero by 2030.

– Operational and embodied whole building (Scope 1, 2

and 3 – landlord and tenant) emissions to be net zero

by 2040.

Next steps

The pathway will evolve over time as the 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

initiatives develop. Over time we will seek to bring more

assets into scope (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 associated with water and waste). A key next step

will be to also assess, 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 to reduce the risk of

stranded assets.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Decarbonising the

Industrial Sector

In October 2021, planning was secured for

80,000sqft of operationally Net Zero Carbon

(“NZC”) industrial, storage and distribution space

across eleven units at the Stanley Green Trading

Estate, Cheadle.

In line with the Company’s commitment to

incorporating high sustainability standards and

building certifications across all new development

activity, the scheme has been delivered to BREEAM

Excellent, EPC A+ rating – afirst for the Company –

and operational NZC specification – another first for

the Company and one of the first in the North West.

Operational NZC as built has been achieved through

utilising solar photovoltaics, insulated cladding to

mitigate heat loss and installation of LED lighting.

Electric vehicle charging and cycle storage facilities

have been installed to promote active, low carbon

travel. Through construction local suppliers have

been used to boost local employment and

partnership with local colleges have supported

students in the area.

Read more | Page 18

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Schroder Real Estate Investment Trust Limited

Social

Supporting people and places

In recent years, there has been a growing recognition of the importance of considering social factors in real

estateinvestment, as investors seek to create sustainable and socially responsible portfolios. Social factors,

suchas occupier and community wellbeing, can have a significant impact on the value and success of real

estateinvestments.

Performance against objectives

Goal FY23 Outcome

Ensure the health, safety and wellbeing of

building occupiers and users

100% of managed assets where health and safety assessments were completed.

Improve proportion of assets where occupier

engagement activities are implemented

32 Company assets.

Improve proportion of assets where community

engagement activities are implemented

29% of Company assets.

Improve availability of low carbon transport

(active transport facilities; electric vehicle

charging etc.) facilities

Support provision of bicycle infrastructure for 15 assets.

Support provision of electric vehicle charging for six assets.

It is widely reported that many now

spend around 90% of their time

indoors and so the spaces we create

and manage have a significant

influence over our physical and

mental wellbeing. Additionally, a lack

of access to amenities is often cited

as a deterrent in the return to the

workplace post-Covid. As such, the

Board and Manager are committed

to offering working environments

which provide solutions to such

issues. For example, the provision of

outdoor breakout spaces and

improved ventilation to optimise

indoor environmental quality. We

believe by doing so can help to

attract and retain occupiers.

Furthermore, the Board and

Manager recognise that a building is

not located in isolation but rather

stands as part of its local community.

Improving opportunities for

interacting with local communities

helps create successful places that

foster community relationships,

contribute to local prosperity, attract

building users and, ultimately, lead to

better, more resilient investments.

For example, offering rent-free

space for local community groups

such as food banks as was provided

at our Norwich asset.

The UK government has

implemented a number of policies

and initiatives aimed at promoting

sustainable transport and the Board

and Manager understand that real

estate has a significant role to play in

supporting this. The Company

iscommitted to improving the

availability and quality of active

transport facilities such as cycle

storage and changing facilities, as

well as the installation of electric

vehicle charging points.

Sustainability Report continued

Strategic Report

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Creating social value

Located in the centre of the local community,

Headingley Central seeks to add to and enrich the

wider amenity offer in the local area for residents,

business and visitors alike. Through the Manager’s

active asset management approach, in collaboration

with third-party property manager, MAPP, the team

have worked to strengthen this mixed-use asset’s

sustainability credentials with aparticular focus on

social considerations over the reporting year

including:

– Engaged with the local community via Headingley

Development Trust – excellent feedback to lights

in trees, general site improvements (cleaning and

painting benchesand paving);

– Formed a “Town Team” for Headingley to work

together to make Headingley a better place to

visit and encourage spending into local

businesses; and

– Worked with Leeds Art School students to dress

vacant units and decorate concrete benches

which was well received by the community.

Strategic Report

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Sustainability Report continued

Governance

Responsible Investment

The Manager operates an environmental management system (“EMS”) externally certified in accordance with

ISO14001 for the asset management of direct real estate investments in the UK and across Europe. This provides

the framework for how sustainability principles (environmental and social) are managed throughout all stages of

itsinvestment process and the Manager has provided a suite of tools to support the delivery of sustainability

considerations at both asset and portfolio level including an ESG scorecard for acquisitions, Impact and

sustainability action plan for standing investments, sustainable development brief for all projects and property

manager sustainability requirements for use inall contractual property manager agreements.

The Manager continues to work towards enhancing itsunderstanding of portfolio asset sustainability credentials,

commissioning an increasing number of sustainability audits and certifications over the course ofthe reporting

year which contribute towards improving performance in industry benchmarking platforms such asthe Global

Real Estate Sustainability Benchmark (“GRESB”) and meeting the Company’s commitments, forexample our

Sustainability Linked Loan agreement.

Performance against objectives

Goal FY23 Outcome

Improve GRESB rating – 1st in peer group

– 3-star status

– Improved score to 77

Increase coverage of sustainability audits

across portfolio

10 third-party audits commissioned

Improve coverage and quality of sustainability

certifications

(e.g. BREEAM) across portfolio

Nine assets with sustainability certifications*

(+5 in reporting year: 3x BREEAM In-Use; 2x WiredScore)

* Does not include BREEAM Excellent secured for Stanley Green development due to PC

May2023.

Maintain EPRA Gold Award for Sustainability

Reporting

Gold Award for fifth year running

Sustainability Linked Loan tied to RCF agreed

with RBSI

Agreed in FY23

Sustainability Report continued

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Industry Engagement

Schroders supports, and

collaborates with, several industry

groups, organisations and initiatives

including the UnitedNations Global

Compact, United Nations Principles

of Responsible Investment (“UN

PRI”) and Net Zero AssetManagers

Initiative (of which it is a founding

member). Further details of

Schroders’ industry involvement and

compliance with UN PRI are listed at

pages 51–56 of Schroders 2022

Annual Sustainable Investment

Report here: https://publications.

schroders.com/view/119863317/.

The Manager is a member of several

industry bodies including

theEuropean Public Real Estate

Association (“EPRA”), INREV

(“European Association for Investors

inNon-Listed Real Estate Vehicles”),

British Council for Offices and the

British Property Federation. It was a

founding member of the UK Green

Building Council in 2007 and in 2017

became amember of the Better

Buildings Partnership and a Fund

Manager Member of Global Real

Estate Sustainability Benchmark

(“GRESB”) ofwhich the Company

has participated in the annual real

estate survey for the past seven

years.

Slavery and Human Trafficking

Statement

The Company is not required to

produce a statement on slavery and

human trafficking pursuant to the

Modern Slavery Act 2015 as it does

not satisfy all the relevant triggers

under that Act that required such

astatement.

The Manager to the Company, is

part of Schroders plc and whose

statement on Slavery and Human

Trafficking has been published in

accordance with the Modern Slavery

Act 2015. Schroders’ Slavery and

Human Trafficking Statement can be

found here: https://www.schroders.

com/en/sustainability/corporate-

responsibility/slavery-and-human-

trafficking-statement/.

Sustainability Audits

External auditors recently carried

out a comprehensive audit of ten

key assets within theCompany’s

portfolio against the Investment

Manager’s proprietary ESG

scorecard to help understand

thecurrent ESG performance of

selectedassets in the portfolio.

The review covered the range

oftopics from thescorecard

(e.g.building fabric, services

andutilities, energy and carbon,

climate risk and resilience,

wateruse and efficiency, waste

management, biodiversity and

green infrastructure, transport

mobility, health and wellbeing,

community and social integration)

witheach asset scored.

Eachaudit comprised adesktop

analysis and site inspection, which

identified the current condition of

the assets and identifiable

improvement opportunity themes

across the portfolio.

This recent audit programme

helped to identify actions which

would help to improve the

understanding of buildings to drive

change across the portfolio, as

well as common asset-level

improvement opportunities which

include the following.

1. Improving the building fabric:

Improve building fabric through

the provision of better insulation

and/or roof and cladding

repairment toreduce theneed for

space heating whilst addressing

overheating/overcooling

concerns.

2. Phasing out fossil fuels:

Replace inefficient and energy

intensive heating systems fuelled

by fossil fuels with new more

efficient electric led systems.

3. Installing on-site renewables:

Utilise roof space where solar PV

panels can be installed togenerate

electricity on site, reduce

emissions andenergy bills.

The ESG scorecard will be used to

manage, measure and monitor the

ESG performance and progress of

assets in the portfolio against the

Company’s sustainability

objectives. This will alsoallow

theCompany to focus on realistic

and achievable targets, and

demonstrate the achievement

ofsubstantial positive impacts

overtime.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Business Model

Company’s business

Schroder Real Estate Investment

Trust Limited is a real estate

investment company with a premium

listing on theOfficial List of the

Financial Conduct Authority and

whose shares are traded on the

premium segment of theMain

Market of the London Stock

Exchange (ticker:SREI).

The Company is a Real Estate

Investment Trust (“REIT”) and

benefits from the various tax

advantages offered by the UK REIT

regime. The Company 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 in, and

active management of, a diversified

portfolio of UK commercial real

estate.

The portfolio is principally invested

in the three main UK commercial real

estate sectors of industrial, office

and retail, and may also invest in

other sectors including mixed-use,

residential, hotels, healthcare and

leisure. The Company believes that a

diversified portfolio by location,

sector, size and tenant will

outperform specialist strategies over

the long term. Over the duration of

the property market cycle, the

portfolio aims to generate an

above-average income return with a

diverse spread of lease expiries.

The Board has established a gearing

guideline for the Investment

Manager, which seeks to target debt,

net of cash, at a level reflecting a

loan to value of 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 future market conditions.

It is intended that the successful

execution of the Company’s strategy

will enable a progressive dividend

policy.

Incorporating sustainability as a

fundamental part of ourstrategy

means we are committing to our

own “Pathway to Net Zero Carbon”

which includes the following:

– Operational whole buildings

emissions to be aligned to a 1.5°C

pathway by 2030;

– Embodied emissions for all new

developments and major

renovations to be net zero by

2030;

– Operational Scope 1 and 2

(landlord) emissions to be net

zero by 2030; and

– Operational and embodied

whole building (scope 1, 2 and 3

– landlord and tenant) emissions

to be net zero by 2040.

Investment strategy

The Company’s current strategy

istoown and actively manage a

diversified portfolio of properties

located in the UK’s Winning Cities

and Regions

. These locations are

benefitting from higher economic

growth resulting from structural

changes such as urbanisation, rapid

changes and growth of technology,

changing demographics and social

as well as positive impact themes.

These locations have diversified

local economies, sustainable

occupational demand and favourable

supply and demand characteristics.

These properties offer good

long-term fundamentals in terms

oflocation, specification and

sustainability performance, and

arelet at affordable rents, with the

potential for income and capital

growth due to good stock selection

and asset management. Weaim to

grow income and enhance

shareholder returns through active

management and operational

excellence. As discussed in the

Chair’s statement on page 6, and

theManager’s review on page 10,

the Board is looking todifferentiate

the Company’s strategy by placing

evengreater emphasis on how

sustainability-led asset improvements

will deliver enhanced returns for

shareholders.

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.

The Company has no executive

directors or employees.

Operations

The Board has delegated investment

management and accounting

services to the Investment Manager

with the aim of delivering the

Company’s investment objective and

strategy. Details of the Investment

Manager’s investment approach,

along with other factors that have

affected performance during the

year, are set out in the Investment

Manager’s Report.

1 Winning Cities defined as higher growth locations – Source: Oxford Economics/Schroders.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Diversification and asset

allocation

The Board believes that in order to

maximise the stability of the Group’s

income, the optimal strategy for the

Group is to invest in a portfolio of

assets diversified by location, sector,

asset size and tenant exposure with

low vacancy rates and creditworthy

tenants. The value of any individual

asset at the date of its acquisition

may not exceed 15% of gross assets

and the proportion of rental income

deriving from a single tenant may not

exceed 10%. From time to time the

Board may also impose limits on

sector, location and tenant types

together with other activity such

asdevelopment.

The Company’s portfolio will be

invested and managed inaccordance

with the Listing Rules of the Financial

Conduct Authority (“Listing Rules”

and “FCA” respectively), taking into

account the Company’s investment

objectives, 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-balance-sheet assets

while recognising that this may be

exceeded in theshort term from

time to time. It should be noted that

the Company’s Articles limit

borrowings to 65% of the Group’s

gross assets, calculated as at the

time of borrowing. The Board keeps

this guideline under review and the

Directors may require the Investment

Manager to manage the Group’s

assets 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

It is the Board’s policy to minimise

interest rate risk, to the extent

commercially appropriate, either by

ensuring that borrowings are on a

fixed-rate basis, or through the use

of interest rate swaps/derivatives

used solely 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 which is significant in the

context of the Group as a whole

and the Group will not invest in

other listed investment

companies; and

– Where amendments are made to

the Listing Rules, the restrictions

applying to the Company will be

amended so as to reflect the new

Listing Rules

In addition, the Board will ensure

compliance with the UKREIT regime

requirements.

Performance

The Board uses principal financial

Key Performance Indicators

(“KPIs”)to monitor and assess the

performance of the Company. These

are the net asset value (“NAV”) total

return, the performance of the

Company’s underlying property

portfolio relative to its MSCI

Benchmark Index and the

shareprice:

1. NAV total return

For the year to 31 March 2023

the Company delivered aNAV

total return of -15.1% (30.9% for

theyear to 31 March 2022).

2. Underlying property portfolio

performance relative to peer

group Benchmark

The performance of the

Company’s property portfolio

ismeasured against a specific

Benchmark defined as the MSCI

(formerly Investment Property

Databank) UK Balanced

Portfolios Quarterly Property

Index (the “Benchmark”). As at

31 March 2023 the Benchmark

comprised 168 member funds.

3. Share price performance

The Board monitors the level of

the share price compared to the

NAV. As at 31 March 2023, the

share price of 46.2p was at a

24.9% discount to the NAV of

61.5pps. 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 efforts

principally on addressing the

sources of risk and return as the

most effective way of producing

long-term value for shareholders.

Underlying property portfolio performance

Total return for 12 months to 31 March 2023 Total return for 12months to 31 March 2022

SREIT

(%)

MSCI Benchmark

(%)

SREIT

(%)

MSCI Benchmark

(%)

-7.9% -13.5% 23.5% 19.9%

The analysis above has been prepared by MSCI and takes account of all

direct property-related transaction costs.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Our Stakeholders

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 the success

of the company forthe benefit of its

members as a whole. In 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

interests of the company’s

employees; the need to foster the

company’s business relationships

with suppliers, customers and

others; the impact of the company’s

operations on the community and

the environment; the 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 whole. It isour

firmbelief that prioritising positive

stakeholder relationships is central

todelivering long-term, sustainable

returns. The Board is focused on

ensuring that it understands its

stakeholders’ needs.

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 as well as 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

office or industrial space and the

retailers and shoppers who work at

or visit our retail and leisure

properties. Active and constant

engagement with these groups,

either directly through site visits 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

Our assets are located across the UK

in a range of urban environments.

The 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.

Environment

In 2019, the built environment was

responsible for 31%ofglobal carbon

emissions, which places great

responsibility on those companies

that are direct or indirect

contributors. The Board is sensitive

to the Company’s role 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 mitigation.

Environmental, Social and

Governance (“ESG”) considerations

are integrated into the Company’s

investment processes and each

individual asset benefits from

specific ESG-related objectives.

TheBoard constantly 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

As an externally managed real estate

investment trust, the Board is reliant

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 Secretary, Property

Managers, the Administrator,

Depositary, Auditor, Tax advisors,

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

Borrowing allows the Company’s

shareholders to increase exposure to

assets consistent with the strategy

and generate enhanced returns in at

a low cost. These lenders have a

financial interest in the success of

the Company.

Decision making

The Board makes decisions on,

among other things, theprincipal

matters set out under the paragraph

aboveheaded “Role of the Board”

onpage 44.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Risks and Uncertainties

The Board is responsible for

theCompany’s system of risk

management and internal control

andfor reviewing its effectiveness.

The Board has 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 assists indetermining the

nature and extent of the significant

risks the Board is willing to take in

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,

assurance against material financial

misstatement or loss and is designed

to manage, noteliminate, risk.

During the year, the Board has

redefined certain of its principal

risks, especially the emerging risk

relating to the sustainability and ESG

credentials of the portfolio as its

sustainability becomes a greater

focus for the Company. The Board

no longer considers Covid-19 to be a

principal risk as the property markets

have adapted to the threats posed.

The previously identified principal

risks Accounting, Legal and

regulatory and Tax have now been

consolidated into a single Principal

Risk, “Regulatory Compliance”.

A summary of the principal risks and

uncertainties faced by the Company,

and actions taken by the Board to

manage and mitigate these risks and

uncertainties, are set out below:

Key risks Mitigation of risk

Investment and strategy

An inappropriate investment strategy, or

failure to implement the strategy, could lead

to underperformance in the property

portfolio compared to the property market

generally by incorrect sector or 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:

– Diversification of its property portfolio through its investment restrictions and

guidelines which are monitored and reported on by the Investment Manager.

– Receiving from the Investment Manager timely and accurate management

information including performance data, attribution analysis, property-level

business plans and financial projections.

– Monitoring the implementation and results of the investment process withthe

Investment Manager with a separate meeting devoted to strategy each year.

– Determining a borrowing policy and the Investment Manager operates within

borrowing restrictions and guidelines.

Economic and property market

The performance of the Company could be

affected by economic and property market

risk. In the wider economy this could include

inflation, stagflation or deflation, economic

recessions, movements in interest rates,

Brexit impact, the war in Ukraine, or other

external shocks. The performance of the

underlying property portfolio could also be

affected by 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 investment decisions. The Board mitigates property market

risk through the review of the Group’s strategy on a regular basis and discussions

are held to ensure the strategy is still appropriate or if it needs updating. The

Board and Investment Manager reviews the progress of implementing the

strategy on a regular basis and provides the market with clear communications.

Sustainability

Sustainability considerations, including

transition risks and physical risks (as defined

by the Task Force on Climate-related

Financial Disclosures (“TCFD”), explained

further on page 95 of these accounts), are not

fully considered or properly understood in the

acquisition and asset-planning processes

leading to future issues (negative effect on

price, valuation or saleability of assets, future

costs to remediate, meeting the requirements

of initiatives such as Net Zero Carbon/

Climate Risk/BREEAM/EPC profile/GRESB.

The Manager’s Investment Committee has a continued focus on sustainability to

help ensure appropriate approvals are made.

Impact and Sustainability Action Plans identify asset improvement requirements

in context of the investment strategy.

The Board regularly reviews the objectives and progress of the Sustainability

programme.

Evora has been appointed as a supplier to the Fund to help collate and provide key

Sustainability data which is then reported to the Manager, Board and investors.

Furthermore, the Board is provided with an assurance letter from Standard and

Poor’s with regard to the underlying work that it has conducted on behalf of the

Company.

Valuation/liquidity

Property valuations are inherently subjective

and uncertain. This uncertainty is heightened

by geo-political and macroeconomic factors

such as high inflation and increasing interest

rates.

External reputable valuers provide an independent quarterly valuation of all the

property assets, including those held in joint ventures, which are reviewed at

thequarterly Board meetings.

The valuation process is reviewed by the Audit Committee every year and

members of the Audit Committee directly meet with the valuers.

Risks and Uncertainties continued

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Strategic Report

Key risks Mitigation of risk

Valuation/liquidity continued

External valuers are provided with copies of all transactions and lease events by

SREIT’s lawyers and with a quarterly updates by Asset Managers to ensure that

information used to value the portfolio is complete, accurate and up-to-date.

Gearing/leverage

The Company utilises credit facilities to

increase the funds available for investment.

While this has the potential to enhance

investment returns in rising markets, in falling

markets the impact may be detrimental to

performance, and may also result in potential

non-compliance with loan covenants.

Gearing and compliance with covenants is monitored; at each Board meeting

against strict restrictions set internally and by lenders, and is regularly announced

to the market.

Service provider

The Company has no employees and has

delegated its operations to a number of service

providers. Failure of controls and/or the poor

performance of any service provider could

lead to disruption, reputational damage, or loss.

Service providers subject to regular reviews by both the Investment Manager

andthe Management Engagement Committee against clearly documented

contractual arrangements detailing service expectations, including confirmation

of business continuity and cyber security arrangements.

Regulatory compliance

The Company has to comply with a wide

range of legislation and regulations, covering

planning, health and safety, Company law,

accounting, reporting, tax and Listing Rules.

The Board has appointed the Investment Manager as its Alternative Investment

Fund Manager (“AIFM”) in accordance with the Alternative Investment Fund

Managers Directive (“AIFMD”).

The Company Secretary monitors legal requirements to ensure that adequate

procedures and reminders are in place to meet the Company’s legal requirements

and obligations. The Investment Manager undertakes full legal due diligence with

advisors when transacting and managing the Company’s assets. All contracts

entered into by the Company are reviewed by the Company’s legal and other

advisors.

The Board is satisfied that the Investment Manager and Administrator have

adequate procedures in place to ensure continued compliance with the

regulatory requirements of the Financial Conduct Authority and the Guernsey

Financial Services Commission, the Listing Rules of the London Stock Exchange,

and the UK REIT regulations to maintain the Company’s REIT status.

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 to the

Audit Committee, including the

incidence of significant control

failings or weaknesses that have been

identified at any time and the extent

to which they have resulted in

unforeseen outcomes or

contingencies that may have a

material impact on the Company’s

performance or condition.

No significant control failings or

weaknesses were identified from

theAudit Committee’s ongoing risk

assessment which has been in place

throughout the financial year and up

to the date of this report. The Board

issatisfied that it has undertaken a

detailed review of the risks facing

theCompany.

A full analysis of the financial risks

facing the Company and its

subsidiaries is set out in note 18 on

pages 81 to 84.

Viability statement

The Board is required to give a

statement on the Company’s viability

which considers the Company’s

current position and principal risks

and uncertainties together with an

assessment of future prospects.

The Board conducted this review

over a five-year time horizon

commencing from the date of this

report which is selected to match the

period over which the Board monitors

and reviews its financial performance

and forecasting. The Investment

Manager prepares five-year total

return forecasts for 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

investment decisions such as

disposals and investing capital

expenditure.

The Company’s principal borrowings

with Canada Life are for a weighted

duration of 13.1 years and the average

unexpired lease term, assuming all

tenants vacate at the earliest

opportunity, is 4.7 years.

The Board’s assessment of viability

considers the principal risks and

Overview Strategic Report Governance Financial Statements Other information (unaudited)

uncertainties faced by the Company,

as detailed in the Strategic Review on

pages 35 to 37, which could negatively

impact its ability to deliver the

investment objective, strategy, liquidity

and solvency. This includes

consideration of scenario stress testing

and a cash flow model prepared by the

Investment Manager that analyses the

sustainability of the Company’s cash

flows, dividend cover, compliance with

bank covenants, general liquidity

requirements and potential legal and

regulatory changes for a five-year

period.

These metrics are subject to a

sensitivity analysis which involves

flexing a number of the main

assumptions including

macroeconomic scenarios, delivery

of specific asset management

initiatives, rental growth and void/

reletting assumptions. The Board also

reviews assumptions regarding

capital recycling and the Company’s

ability to refinance or extend

financing facilities.

Steps which are taken to mitigate

these risks as set out in the Strategic

Review on pages 35 to 37 are also

taken into account. Based on the

assessment, the Directors have

concluded that there is a reasonable

expectation that the Company will be

able to continue in operation and meet

its liabilities as they fall due over the

five-year period of their assessment.

Going concern

The Directors have examined

significant areas of possible financial

risk including liquidity (with a view to

both cash heldand undrawn debt

facilities); the rates of both rent and

service charge collections from

tenants; have considered potential

falls in property valuations; have

reviewed cash flow forecasts; have

analysed forward-looking compliance

with third party debt covenants and in

particular the Loan to Value covenant

and interest cover ratios; and have

considered the Group’s ongoing tax

compliance with the REIT regime.

Overall, after utilising available cash,

excluding the cash undrawn against

the RBSI facility and uncharged

properties and units in Joint Ventures,

and based on the reporting period to

31 March 2023, property valuations

would have to fall by 28% before the

relevant Canada Life Loan to Value

covenants were breached, and actual

net rental income would need to fall

by 61% before the interest cover

covenants were breached.

Furthermore, the properties charged

to RBSI could fall in value by 54%,

prior to the 65% LTV covenant being

breached, and based on projected

net rents for the quarter to March

2023, a 31% fall in net income could

be sustained prior to the RBSI

projected interest loan cover

covenant of 250% being breached.

As at the financial year end the

undrawn capacity of the RBSI facility

was £26.7 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

£75.0million.

Regarding the Canada Life loan of

£129.6million, 50% matures in 2032

and 50% matures in 2039

respectively.

The Board and Investment Manager

also continue to closely monitor

structural changes from Covid-19,

together withthe ongoing changing

macroeconomic and geopolitical

environments, on the Group.

The Board and Investment Manager

have considered the impact of climate

change risk as an emerging risk as set

out on page 35. In line with IFRS,

investment properties are valued at

fair value based on open market

valuations as described in note 10.

Theassessment of the open market

valuation includes consideration of

environmental matters and the

condition of each property.

Theinvestment properties continue

tobemonitored by the Investment

Manager and key considerations

include EPC ratings and their impact

on the properties’ forecast

compliance with forthcoming

minimum energy efficiency standards.

Having assessed the impact of climate

change on the Group, the Directors

concluded that it is not expected to

have a significant impact on the

Group’s going concern or viability

assessment.

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 2024. In addition

to the matters described above, in

arriving at their conclusion the

Directors have also considered:

– The cash balance at 2 June 2023

of £6.5 million; and

– The nature and timing of the

Company’s income and expenses.

The Directors have satisfied

themselves that the Group has

adequate resources to continue in

operational existence for the period

to 30 June 2024. After due

consideration, the Board believes it

isappropriate to adopt the going

concern basis in preparing the

financial statements.

By order of the Board

Alastair Hughes

Chair

7 June 2023

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Schroder Real Estate Investment Trust Limited

Contents

40 Board of Directors

42 Report of the Directors

44 Corporate Governance

48 Audit Committee Report

50 Management Engagement CommitteeReport

51 Nomination Committee Report

52 Directors’ Remuneration Report

53 Statement of Directors’ Responsibilities

54 Independent Auditor’s Report to the members of

Schroder Real Estate Investment Trust Limited

Corporate

Governance

Strategic Report Financial Statements Other information (unaudited)Overview Governance

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Board of Directors

Alastair Hughes

Chair

Stephen Bligh

Chair of the Audit Committee

Priscilla Davies

Senior Independent Director

Alexandra (“Ali”) Innes

Chair of the Management Engagement

Committee

Status

Independent Non-Executive Chair Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director

Date of appointment

26 April 2017 28 April 2015 7 June 2022 16 November 2022

Biography

Alastair has over 30 years of

experience in real estate markets and

currently holds directorships with

British Land PLC, Tritax Big Box and

Quad Real Property Group. He was

previously the Managing Director of

Jones Lang LaSalle (JLL) in the UK

before becoming the CEO for

Europe, Middle East and Africa and

then latterly becoming the CEO for

Asia Pacific. Alastair is a Chartered

Surveyor and sat on the Global

Executive Board ofJLL.

Current remuneration

£55,000 per annum

Material interests in any

contractwhich is significant

totheCompany’s business

None

Key skills and contributions to

theBoard

Alastair has extensive experience of

both real estate management,

strategic leadership, and governance

fromhis previous senior executive

roles. His experience as a chartered

surveyor assists with scrutiny of asset

purchases and oversight of the

Company’s independent valuer.

Stephen was previously with KPMG

for 34 years, specialising in the audit

of FTSE 350 companies inproperty

and construction. He is a fellow of

the Institute of Chartered

Accountants in England & Wales and

was previously a non-executive

Board Member of the Department of

Business, Innovation &Skills.

Current remuneration

£40,000 per annum

Material interests in any

contractwhich is significant

totheCompany’s business

None

Key skills and contributions to

theBoard

Stephen’s experience as a property

and construction audit partner enables

him to effectively oversee the

performance of the Investment

Manager’s fund accounting function,

and the Company’s Auditor. The

Board considers Stephen to have

recent and relevant financial expertise

to chair the Audit Committee.

Priscilla has over 25 years of financial

services experience across a range of

sectors including asset management

andalternative investments covering

realestate, private equity, infrastructure

and renewables. She is currently a

Non-Executive Director and Chair at

UBSAsset Management UK Ltd,

Non-Executive Director and Chair of

Audit and Risk at Cubico Sustainable

Investments, and Non-Executive

Directorat Embark Group Limited and

itsregulated subsidiaries.

Priscilla previously held various senior

positions at JanusHenderson, most

latterly as Managing Director ofthe

Private Equity business. She is also a

Chartered Accountant andamember

ofthe Chartered Accountants Australia

and NewZealand.

Current remuneration

£40,000 per annum

Material interests in any

contractwhich is significant

totheCompany’s business

None

Key skills and contributions to

theBoard

Priscilla brings extensive experience

asasenior executive working for asset

management businesses. She also has

relevant and recent financial experience.

Alexandra’s executive career has spanned

investment banking, global capital

markets, and investment management,

most latterly as Managing Director,

Barclays plc, andprior to that as Director

of Global Capital Markets at Bank of

America Merrill Lynch.

Alexandra is a member of the Group

Executive Board at Knight Frank LLP,

aNon-executive Committee Member at

theBank of England, and a Non-executive

Director of Dowlais Group plc, Securities

Trust of Scotland plc, and Waverton

Investment Management Limited.

Alexandra is also Senior Independent

Director of Facilities by ADF plc, and is

aNon-executive Director of the UCI

Cycling World Championships Ltd.

Alexandra previously served on the

boardof the All England Lawn Tennis

Club (Championships) Ltd and the AELT

Ground plc.

Alexandra holds an M.A. Hons

Economics from Cambridge University,

and is a Fellow of Chapter Zero. She

isaGreen and Sustainable Finance

Professional, Chartered Banking Institute

(CCBI GSFP), a Member of theChartered

Institute for Securities &Investments

(Chartered MCSI), and holds the CFA

Institute Certificate in ESG investing.

Current remuneration

£40,000 per annum

Material interests in any

contractwhich is significant

totheCompany’s business

None

Key skills and contributions to

theBoard

Alexandra brings experience as an

economist, and in capital markets to the

Board, alongside sustainability expertise.

No Director has any

entitlement to pensions and

the Company has not awarded

any share options or long-term

performance incentives to any

of them. No element of

Directors’ remuneration is

performance-related. There

were no payments to Directors

for loss of office.

No Director has a service

contract with the Company.

However, each of the Directors

has a letter of appointment with

the Company. The Directors’

letters of appointment, which

set out the terms of their

appointments, are available for

inspection at the Company’s

registered office address during

normal business hours and will

be available for inspection at

theAGM.

Lorraine Baldry served as Chair

of the Company during the year

until 26 July 2022, and Graham

Basham served as an

Independent Non-Executive

Director of the Company during

the year, until 15 November 2022.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Alastair Hughes

Chair

Stephen Bligh

Chair of the Audit Committee

Priscilla Davies

Senior Independent Director

Alexandra (“Ali”) Innes

Chair of the Management Engagement

Committee

Status

Independent Non-Executive Chair Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director

Date of appointment

26 April 2017 28 April 2015 7 June 2022 16 November 2022

Biography

Alastair has over 30 years of

experience in real estate markets and

currently holds directorships with

British Land PLC, Tritax Big Box and

Quad Real Property Group. He was

previously the Managing Director of

Jones Lang LaSalle (JLL) in the UK

before becoming the CEO for

Europe, Middle East and Africa and

then latterly becoming the CEO for

Asia Pacific. Alastair is a Chartered

Surveyor and sat on the Global

Executive Board ofJLL.

Current remuneration

£55,000 per annum

Material interests in any

contractwhich is significant

totheCompany’s business

None

Key skills and contributions to

theBoard

Alastair has extensive experience of

both real estate management,

strategic leadership, and governance

fromhis previous senior executive

roles. His experience as a chartered

surveyor assists with scrutiny of asset

purchases and oversight of the

Company’s independent valuer.

Stephen was previously with KPMG

for 34 years, specialising in the audit

of FTSE 350 companies inproperty

and construction. He is a fellow of

the Institute of Chartered

Accountants in England & Wales and

was previously a non-executive

Board Member of the Department of

Business, Innovation &Skills.

Current remuneration

£40,000 per annum

Material interests in any

contractwhich is significant

totheCompany’s business

None

Key skills and contributions to

theBoard

Stephen’s experience as a property

and construction audit partner enables

him to effectively oversee the

performance of the Investment

Manager’s fund accounting function,

and the Company’s Auditor. The

Board considers Stephen to have

recent and relevant financial expertise

to chair the Audit Committee.

Priscilla has over 25 years of financial

services experience across a range of

sectors including asset management

andalternative investments covering

realestate, private equity, infrastructure

and renewables. She is currently a

Non-Executive Director and Chair at

UBSAsset Management UK Ltd,

Non-Executive Director and Chair of

Audit and Risk at Cubico Sustainable

Investments, and Non-Executive

Directorat Embark Group Limited and

itsregulated subsidiaries.

Priscilla previously held various senior

positions at JanusHenderson, most

latterly as Managing Director ofthe

Private Equity business. She is also a

Chartered Accountant andamember

ofthe Chartered Accountants Australia

and NewZealand.

Current remuneration

£40,000 per annum

Material interests in any

contractwhich is significant

totheCompany’s business

None

Key skills and contributions to

theBoard

Priscilla brings extensive experience

asasenior executive working for asset

management businesses. She also has

relevant and recent financial experience.

Alexandra’s executive career has spanned

investment banking, global capital

markets, and investment management,

most latterly as Managing Director,

Barclays plc, andprior to that as Director

of Global Capital Markets at Bank of

America Merrill Lynch.

Alexandra is a member of the Group

Executive Board at Knight Frank LLP,

aNon-executive Committee Member at

theBank of England, and a Non-executive

Director of Dowlais Group plc, Securities

Trust of Scotland plc, and Waverton

Investment Management Limited.

Alexandra is also Senior Independent

Director of Facilities by ADF plc, and is

aNon-executive Director of the UCI

Cycling World Championships Ltd.

Alexandra previously served on the

boardof the All England Lawn Tennis

Club (Championships) Ltd and the AELT

Ground plc.

Alexandra holds an M.A. Hons

Economics from Cambridge University,

and is a Fellow of Chapter Zero. She

isaGreen and Sustainable Finance

Professional, Chartered Banking Institute

(CCBI GSFP), a Member of theChartered

Institute for Securities &Investments

(Chartered MCSI), and holds the CFA

Institute Certificate in ESG investing.

Current remuneration

£40,000 per annum

Material interests in any

contractwhich is significant

totheCompany’s business

None

Key skills and contributions to

theBoard

Alexandra brings experience as an

economist, and in capital markets to the

Board, alongside sustainability expertise.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Report of the Directors

The Directors of the Company and its subsidiaries,

together the “Group”, present the annual report and

audited consolidated financial statements of the Group

for the year ended 31 March 2023 (the “Annual Report

and Consolidated Financial Statements”).

Results and dividends

The results for the year under review are set out in the

attached financial 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 2022

30 June

2022

0.795 pence

per share

30 June 2022

19 August

2022

0.803 pence

per share

30 September 2022

9 December

2022

0.803 pence

per share

31 December 2022

7 March 2023 0.819 pence

per share

With the solvency test provided for in the Companies

Law having been fully satisfied, all dividends were

declared and paid as interim dividends. The Directors

recommend a final dividend for the year ended

31 March2023 of 0.836 pence per share to be paid

on30 June 2023.

All dividends paid during the year were allocated and

paid as Property Income Distributions (“PIDs”).

Share capital

As at 31 March 2023 the Company had 565,664,749

(2022: 565,664,749) ordinary shares in issue of which

76,554,173 ordinary shares (representing 13.5% of the

Company’s total issued share capital) were held in

treasury (2022: 74,584,448). The total number of voting

rights of the Company was 489,110,576 at the year end

(2022: 491,080,301) and this figure may be used 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

The Board reviews the Investment Manager’s

performance at its quarterly Board meetings. In addition,

the Board conducted its annual strategic review with

theInvestment Manager in May 2023 to consider the

portfolio strategy and the Investment Manager’s

capabilities in more depth. Subsequently, the Directors

formally discussed the performance of the Investment

Manager at a meeting of the Management Engagement

Committee.

On the basis of this review, the Board remains satisfied

that the Investment 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.

The Investment Manager received a fee of 0.9% of the

Company’s NAV for providing investment management

and accounting services during the financial 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 12 months’

written notice or on immediate notice in the event of

certain 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

Schroder Investment Management Limited, an affiliate

ofthe AIFM, is Company Secretary to the Company for

which it is paid a fee of £50,000 per annum. Langham

Hall (Guernsey) Limited was appointed as the Company

Secretary to the Group’s subsidiaries, and as Designated

Manager, for a fee of £57,000 per annum and Langham

Hall UK Depositary LLP is the Company’s depositary for

afee of £39,000 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.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Directors

The Directors of the Company, together with their

beneficial interests in the Company’s ordinary share

capital as at the date of this report, are given below:

Director

Number of

ordinary shares Percentage (%)

Alastair Hughes 190,579 Less than 0.1

Stephen Bligh 165,000 Less than 0.1

Priscilla Davies 0 Nil

Ali Innes 0 Nil

Substantial shareholdings

The Company has received notifications in accordance

with the Financial Conduct Authority’s (“FCA”) Disclosure

Guidance and Transparency Rule 5.1.2R of the below

interests in 5% or more of the voting rights attaching to

the Company’s issued share capital. The Company is

reliant on investors to comply with these regulations, and

certain investors may be exempted from providing these.

As such, this should not be relied on as an exhaustive list

of shareholders holding above 5% of the Company’s

voting rights.

Number of

ordinary shares Percentage (%)

Investec Wealth & Investment

(UK) 78,375,224 16.0

Schroders PLC 67,842,383 13.8

Premier Fund Managers

Limited 41,680,575 8.0

Embark Investment Services

(UK) 34,207,624 7.0

Witan Investment Trust plc 32,250,000 6.2

Independent Auditors

Resolutions to reappoint Ernst & Young LLP, and to

givethe Directors authority to determine the Auditors’

remuneration for the coming year, will be put to

shareholders at the Annual General Meeting (“AGM”)

ofthe Company.

The Audit Committee’s evaluation of the Auditors is

described in the Report of the Audit Committee on

page48.

Disclosure of information to Auditors

The Directors who held office at the date of approval of

this Directors’ Report confirm that, as far as they are each

aware, there is no relevant audit information of which the

Company’s Auditors are unaware and each 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 that the Company’s Auditors

are aware of that information.

Status for taxation

The Director of the Revenue Service in Guernsey has

granted the Company exemption from Guernsey income

tax under the Income Tax (Exempt Bodies) (Guernsey)

Ordinance, 1989 and the income of the Company may

bedistributed or accumulated without deduction of

Guernsey Income Tax. Exemption under the above-

mentioned Ordinance entails the payment by the

Company of an annual fee of £1,200.

The Group continues to pay no corporation or income

tax because it has tax exempt status in the UK as a UK

Real Estate Investment Trust (“REIT”). The Group has

been a UK REIT since 2015 and the Group’s property

income and gains are exempt from UK corporate taxes

provided a number of conditions in relation to the

Group’s activities are met including, but not limited to,

distributing at least 90% of the Group’s UK tax exempt

profit as property income distributions (“PIDs”). As far

asthe Directors are aware, the Group 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 advisors.

Key information document

A Key Information Document (“KID”) for the Company

ispublished on at least an annual basis, in accordance

with the Packaged Retail and Insurance-Based

Investment Products Regulation (“PRIIPs”), and made

available on theCompany’s website. The calculation of

figures and performance scenarios 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 2022

Quantitative remuneration disclosures to be made in this

Annual Report in accordance with FCA Handbook rule

FUND 3.3.5 are published on the following website:

https://www.schroders.com/en/investor-relations/

results-and-reports/annual-report-and-accounts-2022/

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

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.

The Guernsey Financial Services Commission (“GFSC”)

states in the Finance Sector Code of Corporate

Governance (the “Code”) that companies 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 (“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 of specific relevance. A copy of the AIC Code can be

found at www.theaic.co.uk.

It is the Board’s intention to continue to comply with the

AIC Code and we will continue to report the Company’s

compliance with the principles and recommendations of

the AIC Code, which has been endorsed by the Financial

Reporting Council (“FRC”).

Statement of compliance

The Company has complied with the recommendations

of the AIC Code and the relevant provisions of the UK

Corporate Governance Code, except as set out below.

The UK Corporate Governance Code includes provisions

relating to:

– The role of the chief executive;

– Executive directors’ remuneration; and

– Internal audit function.

The Board considers that these provisions are not

relevant to the Company, being an externally managed

investment company. In particular, all of the Company’s

day-to-day management and administrative functions are

outsourced to third parties. As a result, the Company has

no executive 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 above headed “Investment

Policy and Strategy” and the strategy for fulfilling

those objectives within an appropriate risk

framework, in light of 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 appropriately skilled service

providers and to monitor their effectiveness through

regular reports and meetings; and

– The key elements of the Company’s performance

including NAV growth and the payment of dividends.

Board decisions

The Board makes decisions on, among other things,

theprincipal matters set out under the paragraph above

headed “Role of the Board”. Issues associated with

implementing the Company’s strategy are generally

considered by the Board to be non-strategic in nature

and are delegated either to the Investment Manager or

the Administrator, unless the Board considers there will

be implementation matters significant enough to be of

strategic importance to the Company and should be

reserved to the Board. Generally these are defined as:

– Large property decisions affecting 10% or more of

the Company’s assets;

– Large property decisions affecting 5% or more of

theCompany’s rental income; and

– Decisions affecting the Company’s financial

borrowings.

Evaluation of the Board and Audit Committee

In 2023 the Board carried out an internal evaluation of

the Board and its Chair, which involved questionnaires

being completed by Non-Executive Directors. It was

concluded that the Board and its Chair both operate

effectively and constructively. Ongoing consideration

continues to be given towards succession planning,

relationships with key shareholders and the format and

length of board papers.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

In January 2020 the Board appointed Stogdale

St.JamesLimited to independently oversee an external

performance evaluation of the Board; there were no

conflicts of interest identified. The composition of the

Board, its dynamics, its oversight of strategy and the

management of the Board meetings were all highly

regarded.

Non-Executive Directors, rotation of Directors

and Directors’ tenure

The UK Corporate Governance Code recommends that

Directors should be appointed for a specified period.

TheBoard has resolved in this instance that Directors’

appointments need not comply with this requirement

asall Directors are non-executive and their respective

appointments can be 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 Company’s Articles, the Companies

Law, related legislations and 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 candidate taking into account the skills

and experience required, while taking into consideration

board diversity as part of a good corporate governance

culture.

Board composition and diversity

The Board currently consists of four Non-Executive

Directors. The biography of each of these Directors is

setout on pages 40 and 41 of the report. The Board

considers each of the Directors to be independent. As at

31 March 2023, 50% of the individuals on the Board of

Directors were women, exceeding the 40% target as set

out in the Listing Rules, and at least one of the senior

positions on the Board of Directors was held by a woman.

There were no Board members from a minority ethnic

background. This is due to the relatively small size of

theBoard.

The Company believes in the benefits of diversity and

places importance on broad diversity of the Board as part

of its succession planning. The Company’s diversity and

inclusion policy, outlined below, was applied throughout

the recruitment process for the two recent Board

appointments.

The below tables set out the gender and ethnic diversity

composition of the Board as at 31 March 2023 and at the

date of this report.

Number of

Board members

Percentage of

the Board

(%)

Number of

senior positions

on the Board

(Chair)

White British

orother White

(including

minority-white

groups) 4 100 100

Mixed/

Multiple Ethnic

Groups – – –

Asian/Asian

British – – –

Black/African/

Caribbean/

Black British – – –

Other ethnic

group,

including Arab – – –

Not specified/

prefer not to

say – – –

Number of

Board members

Percentage of

the Board

(%)

Number of

senior positions

on the Board

(Chair)

Men 2 50 1

Women 2 50 1

Not specified/

prefer not to

say – – –

Given that the Company is a real estate investment trust

with no executive board members, the columns and

references regarding executive management have not

been included. The approach to collecting this data was

consistent for the purposes of reporting under Listing

Rule LR 9.8.6(9) and (10), and was consistent across all

four individuals in relation to whom data is being

reported, which was that all Directors confirmed that

theabove disclosures were correct.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Corporate Governance continued

The Board has adopted a diversity and inclusion policy,

which applies to both the Board and its Audit and

Nomination committees. Appointments and succession

plans will always be based on merit and objective criteria

and, within this context, the Board seeks to promote

diversity of gender, social, ethnic, professional and

educational backgrounds, sexual orientation, cognitive

and personal strengths. The Board will encourage any

independent recruitment agencies it engages to find a

range of candidates that meet the objective criteria

agreed for each appointment. Candidates for Board

vacancies are selected based on their skills and

experience, which are matched against the balance of

skills and experience of the overall Board taking into

account the criteria for the role being offered.

The independence of each Director is considered on a

continuing basis. The Board has determined that all the

Directors are independent of the Investment Manager.

The Board is satisfied that it is of sufficient size with

anappropriate balance of skills and experience,

independence and knowledge of both the Company and

the wider investment company sector, to enable it to

discharge its respective duties and responsibilities

effectively and that 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.

The Board also considers the diversity and inclusion

policies of its key service providers.

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 which are available

on the Company’s website. The Board believes that its

committees have an appropriate composition and blend

of backgrounds, skills and experience to discharge their

duties effectively. Details of the work of these

committees are available in their respective reports.

As all the Directors are non-executives, the Board has

resolved that it is not 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 advisors 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.

Director Board

Audit

Committee

Nomination

Committee

Management

Engagement

Committee

Alastair Hughes 4/4 3/3 2/2 1/1

Stephen Bligh 4/4 3/3 2/2 1/1

Priscilla Davies

3/3 1/2 0/0 0/0

Alexandra Innes

1/1 0/1 0/0 0/0

Lorraine Baldry

2/2 0/1 1/1 1/1

Graham Basham

2/2 1/1 1/1 1/1

Number of

meetings during

the year 4 3 2 1

1 Priscilla Davies was appointed as a Director on 7 June 2022, and

therefore did not attend any meetings during the year held prior to her

appointment.

2 Alexandra Innes was appointed as a Director on 16 November 2022, and

therefore, did not attend any meetings during the year held prior to her

appointment.

3 Lorraine Baldry was Chair of the Company until she retired as a Director

on 26 July 2022.

4 Graham Basham retired as a Director on 15 November 2022.

In addition to its regular quarterly meetings, the Board

met on three other occasions during the year, attended

by all or the majority of Directors.

Information flows

All Directors receive, in a timely manner, relevant

management, regulatory and financial information and

are provided, on a regular basis, with key information on

the Company’s policies, regulatory requirements and

internal controls. The Board receives and considers

reports regularly from the Investment Manager and

otherkey advisors and ad hoc reports and information

are supplied to the Board as required.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

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 2016/679) and the Data

Protection (Bailiwick of Guernsey) Law, 2017

(the“GDPR”) in 2018 to ensure that the Company is

compliant with the 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 to have a robust

information security and data protection environment in

place. This is reviewed with the Investment Manager at

the annual Manager‘s visit day. All Board communication

of a confidential nature is managed via a secure Board

application. The Company’s privacy notice is available

onits webpage.

Directors’ and officers’ liability insurance

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 Chair. Through this process the

Board seeks to monitor the views of shareholders and to

ensure an effective communication programme.

The Board believes that the Annual General Meeting, due

to be held at 1.30 p.m. on 27 September 2023, provides

an appropriate forum for investors to communicate with

the Board and it encourages participation. The Notice of

the next Annual General Meeting can be found on

page122 of this document.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Audit Committee Report

Composition

The Audit Committee is chaired by Stephen Bligh with

Alastair Hughes, Priscilla Davies, and Alexandra Innes as

members. The Board considers that Stephen Bligh’s

professional experience makes him suitably qualified

tochair the Audit Committee, and his continuing

professional commitments provide him with recent

relevant financial experience. Its terms of reference

areavailable on the Company’s webpages.

Responsibilities

The Audit Committee ensures that the Company

maintains the highest standards of integrity in financial

reporting and internal control. This includes responsibility

for reviewing the half-year and annual financial

statements before their submission to the Board. In

addition, the Audit Committee is specifically charged

under its terms of reference to advise the Board, inter

alia, on the terms and scope of the appointment of the

Auditors, including their remuneration, independence,

objectivity and reviewing with the Auditors the results

and effectiveness of the audit and the interim review.

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 three

occasions to consider:

– The contents of the interim and annual financial

statements and to consider whether, taken as a

whole, they were fair, balanced and understandable

and provided the information necessary for

shareholders to assess the Company’s performance,

business model andstrategy;

– The effectiveness of the Company’s system of

internal control;

– The external Auditor’s terms of appointment, audit

plan, and year end report;

– The management representation letters to the

Auditors;

– The effectiveness of the audit process;

– The independence, effectiveness and objectivity

ofthe external Auditor;

– 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 May 2023 in which it was concluded that the

Audit Committee continued to function effectively and

to discharge the matters for which it is responsible under

its terms of reference.

Significant matters considered by the Audit Committee in relation to the financial statements

Matter Action

Property valuation

Property valuation is central to the business

andis asignificant area of judgement which is

inherently subjective, although the valuations

areperformed by independent firms of valuers:

Knight Frank LLP (replaced by CBRE on

31 March 2023) for the Company’s wholly-

owned portfolio of properties, and BNP 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 impact

on the Company’s net asset value.

Members of the Audit Committee meet with CBRE to discuss the process,

assumptions, independence and communication with the Investment Manager. Their

approach to the 31 March 2023 valuations was discussed with CBRE in light of the

impact of the pandemic and subsequent economic volatility, and the Committee was

satisfied that the firm had taken a considered approach.

Market volatility

The performance of the Company could be

affected byeconomic and property market

risk. In the wider economy this could include

inflation, stagflation or deflation, economic

recessions, movements in interest rates, the

warin Ukraine, or other external shocks.

Theperformance of the underlying property

portfolio could also be affected by structural

orcyclical factors impacting particular sectors

or regions of the property market.

As disclosed in the Going Concern and Viability Statements on pages 36 to 37, the

Audit Committee has considered various stress tests and sensitivities to the normal

cash flow forecasts, and is confident that the Company will be able to continue in

operation and meet its liabilities as they fall due over the five year period of its

assessment.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Internal control

The UK Corporate Governance Code requires the

Boardto conduct, at least annually, a review of the

effectiveness of the Company’s systems of 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 Matrix” identifying

significant strategic, investment-related, operational

andservice provider-related risks and ensures that risk

management and all aspects of internal control are

reviewed at least annually.

The Company’s system of internal controls is

substantially reliant on the Investment Manager’s and

theAdministrator’s own internal controls and internal

audit processes due to the relationships in place.

Although the Board believes that it has a robust

framework of internal controls in place, this can provide

only reasonable and not absolute assurance against

material financial misstatement or loss and is designed

tomanage, not eliminate, risk. No significant issues were

identified from the internal controls review.

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 Group’s

Internal Audit reviews, which cover the functions

provided by the Investment Manager, Schroder Real

Estate Investment Management Limited.

In addition, the Investment Manager prepares an ISAE

3402/AAF 01/06 Internal Controls Report which

includes the Company within the scope of the review.

This report is reviewed by Ernst & Young LLP (“EY”)

which issued an unqualified opinion for the period ended

September 2022. The Audit Committee has considered

both the Investment Manager’s internal controls report

and the review by EY.

External Auditors’ remuneration, independence

and effectiveness

Annually, the Audit Committee considers the

remuneration and independence of the external auditor.

The Audit Committee recommends the remuneration of

the external auditor to the Board and keeps under review

the ratio of audit to non-audit fees to ensure that the

independence and objectivity of the external auditor are

safeguarded.

Effectiveness of the independent audit process

The Audit Committee evaluated the effectiveness of EY

prior to making a 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 year end report from the Auditor, which

details the auditor’s 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, accounting policies and audit findings,

and met the audit partner both with and without

representatives of the Investment Manager present.

TheChair of the Audit Committee also had informal

discussions with the audit partner during the course of

the year. The Audit Committee is satisfied with the

effectiveness of the auditors.

Non-audit services

In order to help safeguard the independence and

objectivity of the auditor, the Audit Committee maintains

a policy on the engagement of the external auditor to

provide non-audit services. The Audit Committee’s

policy for the use of the external auditor for non-audit

services recognises that there are certain circumstances

where, due to EY’s expertise and knowledge of the

Company, it will often be in the best position to perform

non-audit services. Under the policy, the use of the

external auditor for non-audit services is subject to

pre-clearance by the Audit Committee. Clearance will

not be granted if it is believed it would impair the external

auditor’s independence or where provision of such

services by the Company’s auditor is prohibited. Prior to

undertaking any non-audit service, EY also completes its

own independence confirmation processes which are

approved by the audit partner.

During the year, there were no non-audit services fees

paid to EY.

Stephen Bligh

Director

7 June 2023

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Management Engagement Committee Report

The Management Engagement Committee is responsible for: (1) the monitoring and oversight of the Investment

Manager’s performance and fees, and confirming the Investment Manager’s ongoing suitability; and (2) reviewing

andassessing the Company’s other service providers, including reviewing their fees. All Directors are members of

theManagement Engagement Committee. Alexandra Innes is the Chair of the Management Engagement Committee.

Its terms of reference are available on the Company’s webpages.

Approach

Oversight of the Investment Manager Oversight of other service providers

The Management Engagement Committee:

– Reviews the Investment Manager’s performance and suitability;

– 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,

receiving input from the Company’s corporate broker, including peer

group and industry figures, as well as the structure of the fees;

– Reviews the appropriateness of the Investment Manager’s contract,

including terms such as notice period; and

– Assesses whether the Company receives appropriate administrative,

accounting, company secretarial and marketing support from the

Investment Manager.

The Management Engagement Committee reviews the

performance and competitiveness of the Company’s service

providers on at least an annual basis including the Property

Managers, the Depositary, the Administrator in Guernsey,

the Tax Advisor, the Corporate Broker, the Valuer, the

Solicitors and the Registrar.

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 review

of the Investment Manager’s performance and agreed that it 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 and

agreed they remained fit for purpose. The Management Engagement

Committee reviewed the other services provided by the Investment

Manager and agreed they were satisfactory.

The annual review of service providers was satisfactory.

TheManagement Engagement Committee noted that the

Audit Committee had undertaken a detailed evaluation of

the Investment Manager, Depositary and Registrar’s

internalcontrols

Recommendations made to, and approved by, the Board:

– That the ongoing appointment of the Investment Manager on the terms of the Investment Management

Agreement, including the fee, was in the best interests of shareholders as a whole; and

– That the Company’s service providers’ performance remained satisfactory.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Nomination Committee Report

The Nomination Committee is responsible for: (1) the recruitment, selection and induction of Directors; (2) their

assessment during their tenure; and (3) the Board’s succession. The Committee is chaired by Alastair Hughes, and

Stephen Bligh, Alexandra Innes, and Priscilla Davies are members. Its terms of reference are available on the

Company’s webpages.

Approach

Selection and induction Board evaluation Succession

– The Nomination Committee prepares

ajobspecification for each role, and

anindependent recruitment firm is

appointed. For the Chair and the chairs

ofcommittees, the Committee considers

current Board members too.

– Job specification outlines the knowledge,

professional skills, personal qualities and

experience requirements.

– Potential candidates assessed against the

Company’s diversity policy.

– 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 assesses

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

commitment, independence, conflicts

and 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.

– The Board’s succession policy is that

Directors’ tenure will be for no longer

than nine years, except in exceptional

circumstances, and that each director

will be subject to annual re-election

atthe AGM.

– The Nomination Committee reviews

the Board’s current and future needs

at least annually. Should any need be

identified 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 Chair 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 Chair with input from independent

recruitment partners. Following this

process, Alastair Hughes, the Senior

Independent Director, was identified as

themost suitable candidate.

– The Nomination Committee identified

suitable candidates for the role of Senior

Independent Director, with support from

independent executive search firm Russell

Reynolds. Following this process, Priscilla

Davies was recommended to be appointed

as a Director of the Company and Senior

Independent Director.

– The Nomination Committee identified

suitable candidates for the role of

independent Director, with support from

independent executive search firm Russell

Reynolds. Following this process,

Alexandra Innes was recommended to be

appointed as a director of the Company.

– The annual Board evaluation was

undertaken in 2023.

– The Nomination Committee reviewed

each Director’s time commitment and

independence by reviewing a complete

list of appointments, including pro bono

not-for-profit roles, to ensure that each

Director remained free from conflict and

had sufficient time available to discharge

each of their duties effectively. All

Directors were considered to be

independent in character and judgement.

– The Nomination Committee considered

each Director’s contributions, and noted

that in addition to extensive experience

as professionals and Non-Executive

Directors, each Director had valuable

skills and experience, as detailed in their

biographies on pages 40 and 41.

– Based on its assessment, the Nomination

Committee provided individual

recommendations for each Director’s

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 Priscilla Davies be appointed as a Non-Executive Director with effect from 7 June 2022.

– That Alastair Hughes be appointed as Chair of the Company with effect from 26 July 2022.

– That Alexandra Innes be appointed as a Non-Executive of the Company with effect from 16 November 2022.

– That all Directors continue to demonstrate commitment to their roles, provide a valuable contribution to the

deliberations of the Board, and remain free from conflicts with the Company and its Directors, so should all

be recommended for re-election by shareholders at the AGM.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Directors’ Remuneration Report

Introduction

The below remuneration policy is in force and is subject

to an advisory vote every three years. At the AGM held

on 21 September 2022, the remuneration policy was

approved by shareholders, with 99.71% of votes for,

0.29% of votes against, and 80,570 withheld.

The below Directors’ Annual Report on Remuneration is

subject to an annual advisory vote. An ordinary resolution

to approve this report will be put to shareholders at the

forthcoming AGM.

At the AGM held on 21 September 2022, 99.72% of the

votes cast (including votes cast at the Chair’s discretion) in

respect of approval of the Annual Report on Remuneration

for the year ended 31 March 2022 were infavour, while

0.28% were against. 213,823 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, except asoutlined above, as the

Company has no executive directors.

Directors’ Remuneration Policy

The Company’s Articles currently limit the aggregate fees

payable to the Board of Directors to a total of £250,000

per annum. Subject to this overall limit, it is theBoard’s

policy to determine the level of Directors’ fees having

regard to the fees payable to non-executive directors in

the industry generally, the role that individual Directors

fulfil in respect of Board and Committee responsibilities,

and time committed to the Company’s affairs.

Directors receive a base fee of £35,000 per annum,

andthe Chair receives £55,000 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 were reviewed during the year

toensure that they were competitive against peers with

advice from Russell Reynolds as part of the Board

Succession process.

No Director past or present has any entitlement to

pensions and the Company has not awarded any share

options or long-term performance incentives to any

ofthem. No element of Directors’ remuneration is

performance related.

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.

Directors’ fees are reviewed periodically and take into

account research from third parties on the fee levels of

Directors of peer group companies, as well as industry

norms and factors affecting the time commitment

expected of the Directors. New Directors are subject

tothe provisions set out in this remuneration policy.

No Director has a service contract with the Company.

However, each of the Directors has a letter of appointment

with the Company. The Directors’ letters ofappointment,

which set out the terms of their appointment, are available

for inspection at the Company’s registered office address

during 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 date of their appointment until the first

AGM thereafter, at which they are 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 re-election annually.

Directors’ Remuneration Report

This Report sets out how the Directors’ remuneration

policy was implemented during the year ended

31 March2023.

Fees paid to Directors

The following amounts were paid by the Company for

services as Non-Executive Directors:

Director

31 March 2023

(£)

31 March 2022

(£)

Alastair Hughes (Chair) 47,300 35,000

Stephen Bligh

37,100 35,000

Priscilla Davies

30,100 –

Alexandra Innes

14,400 –

Lorraine Baldry

16,700 50,000

Graham Basham

5, 3

26,300 36,927

Total 171,900 156,927

1 Chair of the Audit Committee.

2 Senior Independent Director.

3 Chair of the Management Engagement Committee.

4 Lorraine Baldry was Chair of the Company until she retired as a director

on 26 July 2022.

5 Graham Basham retired as a director on 15 November 2022. He was

adirector of the subsidiary companies listed in note 20 for which he

received no additional remuneration, either directly or indirectly.

Performance

The performance of the Company is described on

page32 in the Business Model Report.

Alastair Hughes

Chair

7 June 2023

Overview Strategic Report Governance Financial Statements Other information (unaudited)

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 and Consolidated Financial

Statements for each financial year. Under the 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 law to give a true and fair

view of the state of affairs of the Group and of the profit

or loss of the Group for the relevant period.

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, subject to any material departures

disclosed and explained in the financial statements;

– Assess the Company’s ability to continue as a going

concern, disclosing 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 disclose with reasonable

accuracy at any time the financial position of the 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 the Company’s

Administrator and Investment Manager. The Directors

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 corporate and financial information

included on the Company’s website and for the

preparation and dissemination of the Annual Report

andConsolidated Financial Statements.

Legislation in Guernsey governing the preparation and

dissemination of the Consolidated Financial Statements

may differ from legislation in other jurisdictions.

Responsibility Statement of the Directors in

respect of the Annual Report

We confirm to the best of our knowledge:

– The Consolidated Financial Statements, prepared in

accordance with International Financial Reporting

Standards, give a true and fair view of the assets,

liabilities, financial position and profit of the Group

and the undertakings included in the consolidation

taken as a whole and comply with the Companies

Law; and

– The Strategic Report on pages 4 to 37 and

Governance Report on pages 38 to 53 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 necessary for shareholders to assess

theCompany’s position and performance, business

model and strategy.

By order of the Board

Alastair Hughes

Chair

7 June 2023

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Independent Auditor’s Report to the members of

Schroder Real Estate Investment Trust Limited

Opinion

We have audited the consolidated financial statements (the “Financial Statements”) of Schroder Real Estate Investment

Trust Limited (the “Company”) and its subsidiaries (together the “Group”) for the year ended 31 March 2023 which

comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position,

the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes 1

to 23, including a summary of significant accounting policies. The financial reporting framework that has been applied

in their preparation is applicable law and International Financial Reporting Standards as issued by the International

Accounting Standards Board (“IFRS”).

In our opinion, the financial statements:

– give a true and fair view of the state of the Group’s affairs as at 31 March 2023 and of its loss for the year then ended;

– have been properly prepared in accordance with International Financial Reporting Standards as issued by the

International Accounting Standards Board; and

– have been properly prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the

financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the

financial statements, including the UK FRC’s Ethical Standard as applied to listed public interest entities, and we have

fulfilled our other ethical responsibilities in accordance with these requirements.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group and we remain

independent of the Group in conducting the audit.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of

accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment

ofthe Group’s ability to continue to adopt the going concern basis of accounting included:

– obtaining an understanding of the Director’s going concern assessment process including engaging with the

Investment Manager to understand the process they followed in supporting the going concern assessment

prepared by the Directors;

– reviewing the factors and assumptions, including the cost of delivering the Group’s sustainability strategy and the

impact of external market factors, as applied to the revenue and expenses forecast which support the Directors’

assessment of going concern. We have challenged the sensitivities and assumptions used in the forecasts and

determined, through testing, that the methods, inputs and assumptions utilised were appropriate to be able to

make an assessment for the Group;

– challenging the stress testing performed and validating the static data assumptions used by the Investment

Manager by agreement to supporting documentation;

– in relation to the Group’s borrowing arrangements, inspecting the Directors’ assessment of the risk of breaching

the debt covenants. We recalculated the debt covenants based on the stress scenarios assessed by the Directors

and reperformed reverse stress testing in order to identify what factors would lead to the Group breaching the

financial covenants;

– holding discussions with the Audit Committee and the Investment Manager to determine whether, in their opinion,

there is any material uncertainty regarding the Group’s ability to pay liabilities and commitments as they fall due

and challenging this assessment through our audit procedures in relation to the liquidity assessment;

– confirmed whether any subsequent events identified are adjusting or non-adjusting post balance sheet events and

ensured the requisite disclosures are included in the Annual Report and Accounts; and

– assessing the disclosures in the Annual Report and Financial Statements relating to going concern to ensure they

were fair, balanced and understandable and in compliance with IFRS.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Based on the work we have performed, we have not identified any material uncertainties relating to events or

conditions that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going

concern for the period to 30 June 2024 from when the financial statements are authorised for issue.

In relation to the Group’s reporting on how they have applied the UK Corporate Governance Code, we have nothing

material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether

the Directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant

sections of this report. However, because not all future events or conditions can be predicted, this statement is not a

guarantee as to the Group’s ability to continue as a going concern.

Overview of our audit approach

Audit scope – We have audited the financial statements of the Group for the year ended 31 March 2023.

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 – Overall Group materiality of £3.0m which represents 1% of equity.

An overview of the scope of our audit

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our

audit scope for the Group. This enables us to form an opinion on the financial statements. We take into account size,

risk profile, the organisation of the Group and effectiveness of controls, changes in the business environment and the

potential impact of climate change when assessing the level of work to be performed.

All audit work was performed directly by the Group audit team which includes our real estate valuation specialists.

Changes from the prior year

There have been no significant changes in scope from the prior year audit.

Climate change

Stakeholders are increasingly interested in how climate change will impact the Group. The Group has determined

thatthemost significant future impacts from climate change are explained on page 95 in the Task Force for Climate

related Financial Disclosures and on page 35 in the principal risks and uncertainties. They have also explained their

climate commitments on page 24. All of these disclosures form part of the “Other information (unaudited)”, rather

thanthe audited financial statements. Our procedures on these unaudited disclosures therefore consisted solely

ofconsidering whether they are materially inconsistent with the financial statements, or our knowledge obtained

inthecourse of the audit, or otherwise appear to be materially misstated, in line with our responsibilities on “Other

information (unaudited)”.

In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business

andany consequential material impact on its Financial Statements.

The Group has explained in note 1 and 10 how they have reflected the impact of climate change in the financial

statements. Our audit effort in considering the impact of climate change on the financial statements was focused on

the adequacy of the disclosures in the Financial Statements and the conclusion that there was no further impact of

climate change to be taken into account as the investment properties are valued at fair value based on open market

valuations as described in note 10.

The open market valuation assessment includes consideration of environmental matters and the condition of each

property with detail on the fair value of properties provided within the notes to the financial statements. As part of this

evaluation, we performed our own risk assessment to determine the risks of material misstatement in the financial

statements from climate change which needed to be considered in our audit.

We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and

viability and associated disclosures. Where considerations of climate change were relevant to our assessment of

goingconcern, these are described above.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Independent Auditor’s Report to the members of

Schroder Real Estate Investment Trust Limited continued

Based on our work we have considered the impact of climate change on the financial statements to be a key audit

matter or to impact certain key audit matters. Details of our procedures and findings are included in our explanation

ofkey audit matters below.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the

overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These

matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon,

and we do not provide a separate opinion on these matters.

Risk Our response to the risk

Key observations

communicated to

theAudit Committee

Risk of misstatement in the fair

value of directly or indirectly held

investment property portfolio

Refer to the Report of the Audit

Committee (page 48);

Significant accounting policies

(page68); and

Note 10 of the Financial Statements

(pages 75 to 77)

The Group’s investment property

portfolio consists of UK properties

held directly and through joint

ventures, with a combined fair

valueof £458.5m (2022:£515.2m).

The Group’s accounting policy is for

the fair value of the investment

properties to be determined by

independent real estate valuation

experts, CBRE Limited (‘CBRE’) and

BNP Paribas Real Estate (‘BNP’) using

recognised valuation techniques. The

fair values are based on recent real

estate transactions with similar

characteristics and locations to those

of the Group’s assets. The Group’s

accounting policy is for the valuation

of investment properties to be

reduced by the total of the

unamortised lease incentive

balances.

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 misstatement.

We have performed the following procedures:

– obtained an understanding of the process and controls

surrounding property valuation by performing our walkthrough

procedures and evaluating the implementation and design

effectiveness of controls.

– assessed the independence and competence of the Group’s

independent valuers as required by auditing standards.

– read the valuation reports provided by the Group’s independent

valuers to agree the appropriateness and suitability of the

reported values and the changes in value from the previous

accounting period.

– performed enquiries of the Group’s independent valuers to

obtain an understanding of their valuation process methods and

assumptions used in their analysis, including challenging them

as to the extent to which market transactions and expected

rental values take into account the impact of climate change;

– engaged our EY property valuation specialists to perform a

review of a sample of property valuations (81% of the total value

(2022: 80%)) to assess whether the reported value fell within a

range of reasonable outcomes, which included:

– validating the assumptions used by the Group’s 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; and

– 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, focusing on correlations with market data and any

significant movements;

– on a sample basis, with respect to key objective inputs to the

valuation, comprising rental income and length of lease, agreed

the inputs to lease agreements or rent review schedules on a

sample basis;

– verified that the fair values derived by the Group’s independent

valuers for the entire portfolio were correctly included in the

consolidated financial statements; and

– assessed the adequacy of the additional disclosures of

estimates and valuation assumptions 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.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

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 £25.2m of rental

income (2022: £23.9m) and rent

receivable of £3.9m (2022:£4.5m).

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

judgments 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 and design effectiveness of

controls;

– performed substantive analytical review procedures over rental

revenue for each property. We formed an expectation of the

rental income for each property, and compared this

expectation to the actual revenue recognised during the year;

– 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; including, on a sample basis, verifying lease

modifications through agreement of the updated terms to

amended and restated lease agreements and performing an

independent assessment as to whether they have been

appropriately treated in accordance with IFRS 16 – Leases

(‘IFRS 16’);

– reviewed the report prepared by Schroder Real Estate

Investment Management Limited (the “Asset Manager”)

assessing the recoverability of the overdue rent receivables,

and challenged the judgments involved. For a sample of

tenants, we have inspected the cash receipt subsequent to

theyear-end date; and

– tested a sample of rental revenue journals to identify

unauthorised or inappropriate journals to address the risk of

management override. We enquired as to the nature of each

transaction sampled and reviewed corroborating evidence to

conclude on whether the journals were reasonable and in line

with our expectations. We selected journals by applying criteria

and thresholds based on our professional judgment.

Based on the work

performed, we have

no 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

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified

misstatements on the audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to

influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining

the nature and extent of our audit procedures.

We determined materiality for the Group to be £3.0m (2022: £3.7m), which is 1% (2022: 1%) of equity. We believe

thatequity provides us with a materiality aligned to the key measurement of the Group’s performance.

During the course of our audit, we reassessed initial materiality based on equity as at 31 March 2023 and adjusted

ouraudit procedures accordingly.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Independent Auditor’s Report to the members of

Schroder Real Estate Investment Trust Limited continued

Performance materiality

The application of materiality at the individual account or balance level. It is set at an amount to reduce to an

appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds

materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment,

ourjudgement was that performance materiality was 75% (2022: 75%) of our planning materiality, namely £2.3m

(2022:£2.8m).

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of

£0.15m (2022: £0.19m), which is set at 5% of planning materiality, as well as differences below that threshold that,

inour view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above

and in light of other relevant qualitative considerations in forming our opinion.

Other information

The other information comprises the information included in the annual report set out on pages 4 to 53 and pages 88

to 124, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other

information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in this report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially

inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears

to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are

required to determine whether this gives rise to a material misstatement in the financial statements themselves. If,

based on the work we have performed, we conclude that there is a material misstatement of the other information,

weare required to report that fact.

We have nothing to report in this regard.

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

– the financial statements are not in agreement with the Company’s accounting records and returns; or

– we have not received all the information and explanations we require for our audit.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Corporate Governance Statement

We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the

Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate

Governance Code specified for our review by the Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained

during the audit:

– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and

any material uncertainties identified set out on page 37;

– Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why

the period is appropriate set out on page 36;

– Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in

operation and meets its liabilities set out on page 36;

– Directors’ statement on fair, balanced and understandable set out on page 53;

– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on

page35;

– The section of the annual report that describes the review of effectiveness of risk management and internal control

systems set out on page 35; and

– The section describing the work of the audit committee set out on page 48.

Responsibilities of Directors

As explained more fully in the Statement of Directors’ Responsibilities set out on page 53, the Directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view,

and for such internal control as the Directors determine is necessary to enable the preparation of financial statements

that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as

agoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic

alternative but to do so.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Governance

Independent Auditor’s Report to the members of

Schroder Real Estate Investment Trust Limited continued

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and

are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

Explanation as to what extent the audit was considered capable of detecting irregularities, includingfraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line

with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material

misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve

deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent

towhich our procedures are capable of detecting irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with

governance of the Group and Management.

– We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and

determined that the most significant are the Companies (Guernsey) Law, 2008, the UK Corporate Governance

Code, The 2019 AIC Code of Corporate Governance, REIT requirements set out in part 12 of the Corporation

TaxAct (CTA) 2010 (‘REIT rules’) and the Listing Rules of the UK Listing Authority;

– We understood how the Group is complying with those frameworks by making enquiries of the Investment

Manager, the Administrator and those charged with governance regarding:

- their knowledge of any non-compliance or potential non-compliance with laws and regulations that could affect

the financial statements;

- the Group’s methods of enforcing and monitoring non-compliance with such policies

- the Investment Manager’s process for identifying and responding to fraud risks, including programs and controls

the Group has established to address risks identified by the Group, or that otherwise prevent, deter and detect

fraud; and

- how the Group monitors those programs and controls.

– We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud

might occur by:

- obtaining an understanding of entity-level controls and considering the influence of the control environment;

- obtaining the Group’s assessment of fraud risks including an understanding of the nature, extent and frequency

of such assessment documented in the Group’s Risk Matrix;

- making inquiries with those charged with governance, the Investment Manager, the Company Secretary and

Administrator as to how they exercise oversight of identifying and responding to fraud risks and the controls

established to mitigate specifically those risks the entity has identified, or that otherwise help to prevent,

deterand detect fraud;

- making inquiries of the Investment Manager and those charged with governance regarding how they identify

related parties including circumstances related to the existence of a related party with dominant influence; and

- making inquiries of the Investment Manager, the Company Secretary, Administrator and those charged with

governance regarding their knowledge of any actual or suspected fraud or allegations of fraudulent financial

reporting affecting the Group.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and

regulations. Our procedures involved:

- Through discussion, gaining an understanding of how those charged with governance the Company Secretary

and Administrator and the Investment Manager identify instances of non-compliance by the Group with relevant

laws and regulations;

- Inspecting the relevant policies, processes and procedures to further our understanding;

- Reviewing Board minutes and internal compliance reporting;

- Inspected management’s specialist’s assessment of the Group’s compliance with the REIT rules. We have tested

through recalculating and corroborating, to supporting information, the Group’s compliance with each of the

REIT rules, including the proportion of dividend distributed in the form of property income distributions;

- Inspecting correspondence with regulators; and

- Obtaining relevant written representations from the Board of Directors.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our

auditor’s report.

Other matters we are required to address

Following the recommendation from the audit committee, we were appointed by the Company on 5 November 2019

to audit the financial statements for the year ending 31 March 2020 and subsequent financial periods.

The period of total uninterrupted engagement including previous renewals and reappointments is 3 years and

5months, covering the period from initial appointment to 31 March 2023.

The audit opinion is consistent with the additional report to the audit committee.

Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Section 262 of The Companies

(Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those

matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted

by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as

a body, for our audit work, for this report, or for the opinions we have formed.

Richard Geoffrey Le Tissier

for and on behalf of Ernst & Young LLP

Guernsey, Channel Islands

7 June 2023

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Schroder Real Estate Investment Trust Limited

Contents

64 Consolidated Statement of Comprehensive Income

65 Consolidated Statement of Financial Position

66 Consolidated Statement of Changes inEquity

67 Consolidated Statement of Cash Flows

68 Notes to the Financial Statements

Financial

Statements

Financial Statements

Overview Strategic Report Governance Other information (unaudited)Financial Statements

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Consolidated Statement of Comprehensive Income

Notes

31/03/2023

£000

31/03/2022

£000

Rental income 25 ,1 7 1 23,85 9

Other income 3 58 558

Property operating expenses 4 (2, 25 8) (1,919)

Net rental and related income, excluding joint ventures 22,971 22, 498

Share of net comprehensive rental income in joint ventures 3,5 15 2 , 74 0

Net rental and related income, including joint ventures 26,4 86 25, 238

Profit on the disposal of investment property 10 1 ,1 8 4 3 ,1 6 5

Net unrealised valuation (loss)/gain on investment property 10 (6 0 ,1 0 7) 66 ,536

Expenses

Investment management fee 2 (2,75 5) (2 , 9 9 4)

Valuers’ and other professional fees (1, 875) (1,54 7)

Administrators’ fees 2 (7 1) (82)

Auditor’s remuneration 5 (1 8 5) (1 9 0)

Directors’ fees 6 (172) (15 7)

Other expenses 6 (3 46) (42 2)

Total expenses (5 , 4 0 4) (5, 3 9 2)

Net operating (loss)/profit before net finance costs (41 , 3 5 6) 86, 807

Refinancing costs 15 (247) –

Finance costs (5 ,1 1 4) (4 ,1 3 9)

Net finance costs (5 , 3 61) (4 ,1 3 9)

Share of net comprehensive rental income in joint ventures 11 3 , 51 5 2,740

Share of valuation (loss)/gain in joint ventures 11 (1 1 , 51 3) 3,960

(Loss)/profit before taxation (5 4 ,7 1 5) 89,3 68

Taxation 7 – –

Profit and total comprehensive (loss)/income for the year attributable

to the equity holders of the parent

(5 4 ,7 1 5) 89, 36 8

Basic and diluted (loss)/earnings per share 8 (1 1 . 2p) 18. 2p

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.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Consolidated Statement of Financial Position

Notes

31/03/2023

£000

31/03/2022

£000

Investment property 10 388,0 30 433,486

Investment in joint ventures 11 72, 187 8 3,70 0

Non-current assets 460, 21 7 5 1 7,1 8 6

Trade and other receivables 12 21 ,626 16, 169

Cash and cash equivalents 13 8, 41 9 1 1,601

Current assets 30,04 5 2 7, 7 7 0

Total assets 490,26 2 544, 956

Issued capital and reserves 14 3 3 7, 7 9 0 40 8, 28 6

Treasury share reserve 14 (3 7,1 0 1) (36,103)

Equity 300,6 89 3 7 2 ,1 8 3

Interest-bearing loans and borrowings 15 17 6,933 161 ,7 9 1

Lease liability 10 1,668 1 ,9 87

Non-current liabilities 178,601 1 63 ,7 78

Trade and other payables 16 1 0, 97 2 8 ,995

Current liabilities 10, 972 8 ,995

Total liabilities 18 9, 57 3 173,670

Total equity and liabilities 49 0, 262 544,956

Net asset value per ordinary share 17 61 . 5p 75. 8p

The financial statements on pages 64 to 67 were approved at a meeting of the Board of Directors held on 7 June 2023

and signed on its behalf by:

Alastair Hughes Stephen Bligh

Chair Director

The accompanying notes 1 to 23 form an integral part of the financial statements.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Consolidated Statement of Changes in Equity

Notes

premium

£000

Treasury share

reserve

£000

Revenue

reserve

£000

Total

£000

Balance as at 31 March 2021 219, 090 (35,967) 113,721 296,844

Share buyback 17 – (136) – (136)

Profit for the year – – 89, 36 8 8 9,3 68

Dividends paid 9 – – (13,893) (13,893)

Balance as at 31 March 2022 219, 090 (3 6 ,1 0 3) 1 8 9,1 9 6 3 7 2 ,1 8 3

Share buyback 17 – (9 9 8) – (99 8)

Loss for the year – – (54 ,7 1 5) (5 4 ,7 1 5)

Dividends paid 9 – – (15,781) (15,781)

Balance as at 31 March 2023 219 ,090 (3 7,1 0 1) 1 18 ,70 0 3 00,6 89

The accompanying notes 1 to 23 form an integral part of the financial statements.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Consolidated Statement of Cash Flows

31/03/2023

£000

31/03/2022

£000

Operating activities

(Loss)/profit for the year (5 4,7 1 5) 89, 36 8

Adjustments for:

Profit on the disposal of investment property (1, 184) (3 ,1 6 5)

Net valuation loss/(gain) on investment property 60,107 (66 , 5 3 6)

Share of loss/(profit) on joint ventures 7, 9 9 8 (6 ,70 0)

Net finance cost 5, 3 61 4 ,1 3 9

Operating cash generated before changes in working capital 1 7, 5 6 7 1 7, 1 0 6

(Increase)/decrease in trade and other receivables (1 , 8 61) 8 59

Increase in trade and other payables 1,9 78 1,0 98

Cash generated from operations 17 ,684 1 9, 06 3

Investing activities

Proceeds from the sale of investment property 8,303 12,835

Acquisition of investment property (16, 058) (19,85 0)

Additions to investment property (1 0 ,1 3 3) (4,924)

Additions to joint ventures – (62 0)

Net income distributed from joint ventures 3,63 8 2, 59 8

Cash flows used in investing activities (14,250) (9, 9 6 1)

Financing activities

Repayment of debt – (13,000)

Additions to debt 15 ,600 21,200

Finance costs paid (4,4 79) (3 , 8 47)

Refinancing costs paid (9 58) –

Dividends paid 9 (1 5,781) (13,893)

Share buyback (9 9 8) (1 36)

Cash flows used in financing activities (6 ,6 1 6) (9 ,6 76)

Net decrease in cash and cash equivalents for the year (3 ,1 8 2) (5 74)

Opening cash and cash equivalents 1 1,601 1 2 ,1 7 5

Closing cash and cash equivalents 13 8 , 41 9 11,601

The accompanying notes 1 to 23 form an integral part of the financial statements.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Notes to the Financial Statements

Financial Statements

1. Significant accounting policies

Schroder Real Estate Investment Trust Limited (the “Company”) is a closed-ended investment company registered in

Guernsey. The consolidated financial statements of the Company for the year ended 31 March 2023 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 pound 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 liquidity (with a view to both cash held

and undrawn debt facilities); the rates of both rent and service charge collections from tenants; have considered

potential falls in property valuations; have reviewed cash flow forecasts; have analysed forward-looking compliance

with third party debt covenants and in particular the Loan to Value covenant and interest cover ratios; and have

considered the Group’s ongoing tax compliance with the REIT regime.

Overall, after utilising available cash, excluding the cash undrawn against the RBSI facility and uncharged properties

and units in Joint Ventures, and based on the reporting period to 31 March 2023, property valuations would have to

fall by 28% before the relevant Canada Life Loan to Value covenants were breached, and actual net rental income

would need to fall by 61% before the interest cover covenants were breached.

Furthermore, the properties charged to RBSI could fall in value by 54%, prior to the 65% LTV covenant being

breached, and based on projected net rents for the quarter to March 2023, a 31% fall in net income could be sustained

prior to the RBS projected interest loan cover covenant of 250% being breached.

As at the financial year end the undrawn capacity of the RBSI facility was £26.7 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 £75.0 million.

Regarding the Canada Life loan of £129.6 million, 50% matures in 2032 and 50% matures in 2039 respectively.

The Board and Investment Manager also continue to closely monitor structural changes from Covid-19, together

with the ongoing changing macroeconomic and geopolitical environments, on the Group.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

The Board and Investment Manager have considered the impact of climate change risk as an emerging risk as set out

on page 35. In line with IFRS, investment properties are valued at fair value based on open market valuations as

described in note 10. The assessment of the open market valuation includes consideration of environmental matters

and the condition of each property. The investment properties continue to be monitored by the Investment Manager

and key considerations include EPC ratings and their impact on the properties’ forecast compliance with forthcoming

minimum energy efficiency standards. Having assessed the impact of climate change on the Group, the Directors

concluded that it is not expected to have a significant impact on the Group’s going concern or viability assessment

as described on pages 36 and 37.

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 2024. In addition to the matters described above, in arriving at their

conclusion the Directors have also considered:

– The cash balance at 2 June 2023 of £6.5 million; and

– The nature and timing of the Company’s income and expenses.

The Directors have satisfied themselves that the Group has adequate resources to continue in operational existence

for the period to 30 June 2024. 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.

Another significant estimate is the amount of expected credit losses as per IFRS 9 from rent demanded during the

period which has not yet been collected. On initial recognition the Group calculates the expected credit loss for

debtors based on the lifetime expected credit losses under the IFRS 9 simplified approach. Management consider

aged debtors’ analyses, the strength of tenant covenants, macroeconomic factors and any rental deposits.

Management has considered rental debtors on a quarterly basis and made provisions and write offs where it has

been deemed that these amounts are irrecoverable.

Basis of consolidation

Subsidiaries

The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries

drawn up to 31 March each year. Subsidiaries are those entities controlled by the Company. Control exists where the

investor has the following:

– power over the investee;

– exposure, or rights, to variable returns from its involvement with the investee; and

– the ability to use its power over the entity to affect the amount of the investor’s returns.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Notes to the Financial Statements continued

1. Significant accounting policies continued

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control

commences until the date that control ceases. Where properties are acquired by the Group through corporate

acquisitions, but the acquisition does not meet the definition of a business combination, the acquisition has been

treated as an asset acquisition.

Joint ventures

Joint ventures are those entities over whose activities the Group has joint control, established by contractual

agreement. The consolidated financial statements include the Group’s share of profit or loss of jointly controlled

entities on an equity accounted basis. When the Group’s share of losses exceeds its interest in an entity, the Group’s

carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group

has incurred legal or constructive obligations or is making payments on behalf of an entity.

Transactions eliminated on consolidation

Intra-group balances, and any gains and losses arising from intra-group transactions, are eliminated in preparing the

consolidated financial statements. Gains arising from transactions with joint ventures are eliminated to the extent of

the Group’s interest in the entity. Losses are eliminated in the same way as gains but only to the extent that there is no

evidence of impairment.

Investment property

Investment property is land and buildings held to earn rental income together with the potential for capital growth.

Acquisitions and disposals are recognised on the unconditional exchange of contracts. Acquisitions are initially

recognised at cost, being the fair value of the 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 value is based on the market valuations of

the properties as provided by a firm of independent chartered surveyors at the reporting date. Market valuations are

carried out on a quarterly basis.

As disclosed in note 19, the Group leases out all owned properties on operating leases. A property held under an

operating lease is classified and accounted for as an investment property where the Group holds it to earn rentals,

capital appreciation, or both. Any such property leased under an operating lease is classified as an investment

property and carried at fair value.

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

Non-derivative financial instruments

Financial assets

Non-derivative financial instruments comprise trade and other receivables and cash and cash equivalents. These are

recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition they

are measured at amortised cost using the effective interest rate method less any impairment losses. The SPPI and

Business model test have been met.

Cash and cash equivalents

Cash at bank and short-term deposits that are held to maturity are carried at cost. Cash and cash equivalents are

defined as cash in hand, demand deposits and short-term, highly liquid investments readily convertible to known

amounts of cash and subject to insignificant risk of changes in value. For the purposes of the Consolidated Statement

of Cash Flows, cash and cash equivalents consist of cash in hand and short-term deposits at banks with an initial term

of no more than three months.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Financial liabilities

Non-derivative financial liabilities comprise loans and borrowings and trade and other payables.

Loans and borrowings

Borrowings are recognised initially at fair value of the consideration received, less attributable transaction costs.

Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference

between cost and redemption value being recognised in the Statement of Comprehensive Income over the period of

the borrowings on an effective interest basis.

Trade and other payables

Trade and other payables are stated at amortised cost.

Share capital

Ordinary shares, including treasury shares, are classified as equity.

Share buyback

Shares purchased are recognised on the trade date and debited to the existing treasury reserve in the Statement of

Changes in Equity. Any broker’s fees relating to the share buyback are debited to other expenses.

Dividends

Dividends are recognised in the period in which they are paid. A final dividend will be paid following the period end.

Rental income

Rental income from investment properties is recognised on a straight-line basis over the term of ongoing leases and is

shown gross of any UK income tax. Lease incentives are spread evenly over the lease term.

Surrender premiums and dilapidations are recognised in line with individual lease agreements when cash inflows are

certain.

Impairment

Financial assets

Financial assets at amortised cost are subject to impairment.

The Group’s significant financial assets that are subject to IFRS 9’s expected credit loss model are trade receivables

from the leasing of investment properties. The credit risk associated with unpaid rent has increased in recent years due

to macroeconomic factors and the Company has undertaken a detailed analysis over the recoverability of expected

rents. Deferred income has been closely monitored and any rents deemed irrecoverable discussed by management.

Non-financial assets

The carrying amounts of the Group’s non-financial assets, being the investment in joint ventures, are reviewed at each

reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s

recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs

to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to that asset.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates

cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets

(the “cash-generating unit”).

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated

recoverable amount. Impairment losses are recognised in the statement of comprehensive income.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Notes to the Financial Statements continued

1. Significant accounting policies continued

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 and it is probable that an outflow of economic benefits will be

required to settle the obligation.

Finance costs

Finance costs comprise interest expenses on borrowings that are recognised in the Statement of Comprehensive

Income. Attributable transaction costs incurred in establishing the Group’s credit facilities are deducted from the fair

value of borrowings on initial recognition and are amortised over the lifetime of the facilities through the Statement of

Comprehensive Income. Finance costs are accounted for on an effective interest basis.

Expenses

All expenses are accounted for on an accruals basis and the Company does not capitalise overheads and operating

expenses. The costs recharged to occupiers of the properties are presented net of the service charge income as

management consider that the property agent acts as principal in this respect.

Taxation

SREIT elected to be treated as a UK real estate investment trust (“REIT”). The UK REIT rules exempt the profits of

SREIT and its subsidiaries’ (the “Group”) UK property rental business from corporation tax. Gains on UK properties are

also exempt from tax, provided they are not held for trading or sold in the three years after completion of development.

The Group is otherwise subject to corporation tax.

As a REIT, SREIT is required to pay Property Income Distributions equal to at least 90% of the Group’s exempted net

income. To retain UK REIT status there are a number of conditions to be met in respect of the principal company of the

Group, the Group’s qualifying activity and its balance of business. The Group 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 advisor to the Board, who then may 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 financial information is provided to the Board on a quarterly basis.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

2. Material agreements

SREIM is the Investment Manager to the Company. The Investment Manager is entitled to a fee, together with

reasonable expenses incurred in the performance of its duties. The current fee is payable monthly in arrears at one

twelfth of the aggregate of 0.9% of the NAV of the Company (where NAV is less than £500 million). The Investment

Management Agreement can be terminated by either party on not less than twelve months written notice or on

immediate notice in the event of certain breaches of its terms or the insolvency of either party.

The tiered fee structure is as follows:

NAV Management fee percentage per annum of NAV

<£500 million

0.9%

£500 million–£1 billion 0.8%

£1 billion+ 0.7%

The fee covers all of the appointed services of the Investment Manager and there are standard provisions for the

reimbursement of expenses. Additional fees 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 £2,755,000

(2022: £2,994,000). At the year end £Nil (2022: £Nil) was outstanding.

Langham Hall (Guernsey) Limited and Langham Hall UK Depositary LLP provide Administration, Designated

Manager and Depositary services to the Group respectively. Administration fees during the year were £96,000

(2022: £157,000).

Schroder Investment Management Limited provides company secretarial services to the Company with an annual

fee equal to £50,000. Company secretarial fees for the period 1 April 2022 to 31 March 2023 were £50,000

(2022: £50,000).

3. Other income

31/03/2023

£000

31/03/2022

£000

Dilapidations, surrender premiums and all other miscellaneous income 58 558

58 558

4. Property operating expenses

31/03/2023

£000

31/03/2022

£000

Agents’ fees 133 124

Repairs and maintenance 51 180

Advertising 70 78

Rates 369 323

Service charge, insurance and utilities on vacant units 1,657 1,269

Ground rent 68 95

Bad debt write offs, provisions and write backs (90) (150)

2,258 1,919

5. Auditor’s remuneration

The total expected audit fees are £185,000 for the financial year ended 31 March 2023 (2022: £170,000). Non-audit

fees of £Nil (2022: £20,000). The prior year non-audit fee related to the interim review conducted for the period

ended 30 September 2021. There was no interim review conducted for the period ended 30 September 2022.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Notes to the Financial Statements continued

6. Other expenses

31/03/2023

£000

31/03/2022

£000

Professional fees 285 356

Other expenses 61 66

346 422

Directors’ fees

Directors are the only officers of the Company and there are no other key personnel. The Directors’ annual

remuneration for services to the Group was £171,900 (2022: £157,000), as set out in the Directors’ Remuneration

Report on page 52.

7. Taxation

31/03/2023

£000

31/03/2022

£000

Tax expense in the year – –

Reconciliation of effective tax rate

(Loss)/profit before tax (54,715) 89,368

Effect of:

Tax using the UK corporation tax rate of 19% (10,396) 16,980

Revaluation loss/(gain) not taxable 11,420 (12,642)

Share of capital loss/(profit) of associates and joint ventures not taxable 2,187 (1,273)

Profit on the disposal of investment property not taxable (225) (601)

Loss on refinancing costs 47 –

UK REIT exemption (3,033) (2,464)

Current tax expense in the year – –

SREIT elected to be treated as a UK real estate investment trust (“REIT”). The UK REIT rules exempt the profits of

SREIT and its subsidiaries’ (the “Group”) UK property rental business from corporation tax. Gains on UK properties are

also exempt from tax, provided they are not held for trading or sold in the three years after completion of development.

The Group is otherwise subject to corporation tax.

As a REIT, SREIT is required to pay Property Income Distributions equal to at least 90% of the Group’s exempted net

income. To retain UK REIT status there are a number of conditions to be met in respect of the principal company of

the Group, the Group’s qualifying activity and its balance of business. The Group continues to meet these conditions.

8. Basic and diluted earnings per share

The basic and diluted earnings per share for the Group are based on the loss for the year of £54,715,000 (2022: profit

of £89,368,000) and the weighted average number of ordinary shares in issue during the year of 489,951,223

(2022: 491,085,850).

Overview Strategic Report Governance Financial Statements Other information (unaudited)

9. Dividends paid

In respect of:

Ordinary

Rate

(pence)

31/03/2023

£000

Q/e 31 March 2022 (dividend paid 30 June 2022) 491.08 million 0.795 3,904

Q/e 30 June 2022 (dividend paid 19 August 2022) 491.02 million 0.803 3,943

Q/e 30 Sept 2022 (dividend paid 9 December 2022) 489.11 million 0.803 3,928

Q/e 31 Dec 2022 (dividend paid 7 March 2023) 489.11 million 0.819 4,006

3.220 15,781

In respect of:

Ordinary

Rate

(pence)

31/03/2022

£000

Q/e 31 March 2021 (dividend paid 25 June 2021) 491.08 million 0.656 3,222

Q/e 30 June 2021 (dividend paid 13 August 2021) 491.08 million 0.675 3,315

Q/e 30 Sept 2021 (dividend paid 17 December 2021) 491.08 million 0.726 3,565

Q/e 30 Dec 2021 (dividend paid 25 March 2022) 491.08 million 0.772 3,791

2.829 13,893

A dividend for the quarter ended 31 March 2023 of 0.836 pence per share was approved and will be paid on the

30 June 2023.

10. Investment property

Leasehold

£000

Freehold

£000

Total

£000

Fair value as at 31 March 2021 36,376 315,400 351,776

Additions 118 3,669 3,787

Acquisition costs – 1,138 1,138

Acquisitions – 19,850 19,850

Disposal of asset held at fair value – (9,600) (9,600)

Fair value leasehold movement (1) – (1)

Net unrealised valuation gain on investment property 3,300 63,236 66,536

Fair value as at 31 March 2022 39,793 393,693 433,486

Additions 32 10,101 10,133

Acquisitions – 16,058 16,058

Disposal of assets held at fair value – (12,405) (12,405)

Gain on the sale of assets – 1,184 1,184

Fair value leasehold movement (319) – (319)

Net unrealised valuation loss on investment property (4,093) (56,014) (60,107)

Fair value as at 31 March 2023 35,413 352,617 388,030

The balance above includes:

Leasehold

£000

Freehold

£000

Total

£000

Investment property 37,806 393,693 431,499

Fair value leasehold adjustment 1,987 – 1,987

Fair value as at 31 March 2022 39,793 393,693 433,486

Leasehold

£000

Freehold

£000

Total

£000

Investment property 33,745 352,617 386,362

Fair value leasehold adjustment 1,668 – 1,668

Fair value as at 31 March 2023 35,413 352,617 388,030

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Notes to the Financial Statements continued

10. Investment property continued

The fair value of investment properties, as determined by the valuer as at 31 March 2023, totals £398,560,000

(March 2022: £440,100,000). Of this total valuation, £4,000,000 relates to an unconditional exchange of contracts

for Morgan Sindall House, Rugby which is included within trade and other receivables and which is due to complete to

be sold in June 2023. In addition to this, £8,198,000 (2022: £8,602,000) relating to lease incentives is included within

trade and other receivables.

The fair value of investment property has been determined by CBRE, a firm of independent chartered surveyors, who

are registered independent appraisers (note 18). The valuation has been undertaken in accordance with the current

RICS Valuation – Global Standards, which incorporate the International Valuation Standards, issued by the Royal

Institution of Chartered Surveyors (the “Red Book”). CBRE replaced previous valuers Knight Frank with effect from

March 2023 (see page 9 for further detail).

The properties have been valued on the basis of “Fair Value” in accordance with the RICS Valuation – Professional

Standards VPS4(7.1) Fair Value and VPGA1 Valuations for Inclusion in Financial Statements which adopt the definition

of Fair Value used by the International Accounting Standards Board.

The valuation has been undertaken using appropriate valuation methodology and the Valuer’s professional judgement.

The Valuer’s opinion of Fair Value was primarily derived using recent comparable market transactions on arm’s length

terms, where available, and appropriate valuation techniques (The Investment Method).

The properties have been valued individually and not as part of a portfolio.

As highlighted within the Group’s investment management strategy on page 11, developments and refurbishments

form a key element of the Groups commitment to sustainability. During the year the Group has spent £10.1 million on

capital expenditure. This sum included both capital works which enhanced the environmental performance of the

assets amongst other key strategies. The primary focus has been on optimising earnings across the existing portfolio

through an extensive asset management and targeted capital expenditure programme, targeting growth areas and

sustainability improvements.

All investment properties are categorised as Level 3 fair values as they use significant unobservable inputs. There have

not been any transfers between Levels during the year. Investment properties have been classed according to their

real estate sector. Information on these significant unobservable inputs per class of investment property is disclosed

below:

Quantitative information about fair value measurement using unobservable inputs (Level 3)

as at 31 March 2023

31 March 2023 Industrial

Retail

(incl. retail

warehouse) Office Other Total

Fair value (£000)

220,110 85,850 72,950 19,650 398,560

Area (’000 sq ft)

2,396 448 424 198 3,466

Net passing rent

per sq ft per annum

Range

Weighted

average

£2.36–£14.00

£4.84

£2.99–£70.39

£14.06

£10.50–£26.14

£12.87

£1.05–£26.70

£8.96

£0–£32.85

£7. 22

Gross ERV per sq ft

per annum

Range

Weighted

average

£2.50–£17.50

£6.88

£4.00–£80.56

£15.35

£8.47–£27.00

£18.57

£2.10–£13.00

£7.98

£3.50–£32.85

£9.51

Net initial yield

Range

Weighted

average

3.00%–13.12%

4.87%

3.68%–21.60%

6.71%

4.90%–13.35%

6.6%

6.00%-10.82%

8.06%

3.00%–21.6%

5.70%

Equivalent yield Range

Weighted

average

5.35%–10%

6.53%

5.50%–14.00%

7.33%

7.25%–13.00%

9.38%

6.04%–11.35%

8.82%

5.35%–14.00%

7.51%

Notes:

1 Yields based on rents receivable after deduction of head rents but gross of non-recoverables.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Quantitative information about fair value measurement using unobservable inputs (Level 3)

as at 31 March 2022

31 March 2022 Industrial

Retail

(incl. retail

warehouse) Office Other Total

Fair value (£000)

248,950 97,450 75,450 18,250 440,100

Area

(’000 sq ft)

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–£27.50

£17.80

£2.10–£13.00

£7.91

£2.10–£29.83

£8.50

Net initial yield

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%

Notes:

1 Yields based on rents receivable after deduction of head rents but gross of non-recoverables

Sensitivity of measurement to variations in the significant unobservable inputs

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value

hierarchy of the Group’s property portfolio, together with the impact of significant movements in these inputs on the

fair value measurement, are shown below:

Unobservable input

Impact on fair value measurement of significant

increase in input

Impact on fair value measurement of significant

decrease in input

Passing rent Increase Decrease

Gross ERV Increase Decrease

Net initial yield Decrease Increase

Equivalent yield Decrease Increase

There are interrelationships between the yields and rental values as they are partially determined by market rate

conditions.

The sensitivity of the valuation to changes in the most significant inputs per class of investment property are shown

below:

Estimated movement in fair value of investment properties

at 31 March 2023

Industrial

£000

Retail

£000

Office

£000

Other

£000

All sectors

£000

Increase in ERV by 5% 9,852 3,280 3,039 161 16,332

Decrease in ERV by 5% (9,764) (3,018) (5,195) (161) (18,138)

Increase in net initial yield by 0.25% (8,774) (3,119) (2,263) (627) (14,783)

Decrease in net initial yield by 0.25% 9,678 3,374 2,717 673 16,442

Estimated movement in fair value of investment properties

at 31 March 2022

Industrial

£000

Retail

£000

Office

£000

Other

£000

All sectors

£000

Increase in ERV by 5% 11,240 3,307 3,378 605 18,530

Decrease in ERV by 5% (11,372) (3,462) (3,609) (416) (18,859)

Increase in net initial yield by 0.25% (13,574) (3,825) (2,416) (645) (20,460)

Decrease in net initial yield by 0.25% 15,236 4,152 2,582 694 22,664

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Notes to the Financial Statements continued

11. Investment in joint ventures

£000

Closing balance as at 31 March 2021 79,120

Purchase of further units in City Tower Unit Trust 620

Valuation gain on joint venture 3,960

Closing balance as at 31 March 2022 83,700

Purchase of further units in City Tower Unit Trust –

Valuation loss on joint venture (11,513)

Closing balance as at 31 March 2023 72,187

Summarised joint venture financial information not adjusted for the Group’s share – City Tower Unit Trust

31/03/2023

£000

31/03/2022

£000

Investment properties 136,100 163,450

Other assets 3,779 4,489

Total liabilities

(2,070) (3,120)

Revenues for the year 9,025 9,369

Total comprehensive rental income 7,570 4,219

Net asset value attributable to the Group 34,452 41,204

Total comprehensive income attributable to the Group 1,893 1,083

Summarised joint venture financial information not adjusted for the Group’s share – Store Street Unit Trust

31/03/2023

£000

31/03/2022

£000

Investment properties 75,550 85,000

Other assets 446 691

Total liabilities

(527) (699)

Revenues for the year 3,700 3,728

Total comprehensive rental income 3,242 3,291

Net asset value attributable to Group 37,735 42,496

Total comprehensive income attributable to the Group 1,621 1,657

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 Schroders’ funds.

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, Investment Property.

12. Trade and other receivables

31/03/2023

£000

31/03/2022

£000

Rent receivable 3,578 3,608

Other debtors and prepayments 14,048 12,561

Other capital debtors 4,000 –

21,626 16,169

Other debtors and prepayments includes £8,198,000 (2022: £8,602,000) in respect of lease incentives.

Other capital debtors relates to the sale proceeds receivable of £4,000,000 for the post period completion of Rugby,

Morgan Sindall House which unconditionally exchanged for sale in March 2023 and is due to complete on 23 June 2023.

As at 31 March 2023 total bad debt provisions of £0.4 million (2022: £0.9 million) had been recognised against rental

debtors of £3.3 million (2022: £3.8 million) net of VAT.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

13. Cash and cash equivalents

As at 31 March 2023 the Group held £8.4 million (2022: £11.6 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 (2022: 565,664,749) of

which 76,554,173 Ordinary shares are held in treasury (2022: 74,584,448). The total number of voting rights of

the Company was 489,110,576 (2022: 491,080,301) as at the financial year end.

Treasury capital

76,554,173 (2022: 74,584,448) ordinary shares, which represent 13.5% (2022: 13.2%) of the Company’s total issued

share capital, were held in treasury as at the financial year end.

Revenue reserve

This reserve represents an accumulated amount of the Group’s prior earnings net of dividends.

15. Interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings.

For more information about the Group’s exposure to interest rate risk, see note 18.

31/03/2023

£000

31/03/2022

£000

Non-current liabilities

Loan facilities 177,885 162,252

Unamortised arrangement fees (952) (461)

176,933 161,791

The Group has in place a £129.6 million loan facility with Canada Life. This has been in place since 16 April 2013 and

has been refinanced several times, most recently in October 2019.

The loan is split into two equal tranches of £64.8 million as follows:

– Facility A matures in October 2032 and attracts an interest rate of 2.36%; and

– Facility B matures in October 2039 and attracts an interest rate of 2.62%.

As at the April 2023 Interest Payment Date, the Canada Life interest cover ratio was 480% (2022: 650%) against

a covenant of 185%; the forecast interest cover ratio was 449% (2022: 487%) against a covenant of 185%; and the

Loan to Value ratio was 46.9% (2022: 40.1%) against a covenant of 65%.

The Canada Life facility has a first charge of security over all the property assets in the ring-fenced security pool which

at 31 March 2023 contained properties valued at £271.80 million (2022: £322.90 million). Various restraints apply

during the term of the loan although the facility has been designed to provide significant operational flexibility.

On 6 June 2022 the Group successfully completed a refinancing of its facility with RBSI which had been due to expire

in July 2023. The new five-year term will run to June 2027 and the maximum amount able to be drawn down has

subsequently increased from £52.5 million to £75.0 million. The facility carries an interest rate of a 1.65% margin plus

three-month SONIA rate with a 0.64% non-utilisation fee. An interest rate cap for £30.5 million of the loan has been

entered into and this comes into effect if the three-month SONIA rate reaches 1.5% and expires in July 2023.

As part of this refinancing process an amount of £247,000 previously unamortised loan fees were written off.

As at the April 2023 Interest Payment Date, the RBSI projected interest cover ratio was 411% (2022: 538%) against

a covenant of 250% and the Loan to Value ratio was 30% (2022: 24.0%) against a covenant of 65%.

The RBSI facility has a first charge security over certain property assets which at 31 March 2023 contained properties

valued at £160.8 million (2022: £136.5 million).

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Notes to the Financial Statements continued

15. Interest-bearing loans and borrowings continued

A reconciliation of financing movements for the year is presented below split in to cash and non-cash items:

31/03/2023

£000

Loan balance brought forward 161,791

Drawdown on RBSI RCF (cash) 15,600

Amortised cost adjustment (458)

Loan balance carried forward 176,933

31/03/2022

£000

Loan balance brought forward 153,370

Drawdown on RBSI RCF (cash) 21,200

Repayment of RBSI RCF (cash) (13,000)

Amortised cost adjustment 221

Loan balance carried forward 161,791

16. Trade and other payables

31/03/2023

£000

31/03/2022

£000

Deferred income 5,131 4,123

Rental deposits 1,850 1,744

Interest payable 1,101 840

Other trade payables and accruals 2,890 2,288

10,972 8,995

17. NAV per Ordinary Share and share buyback

Between the 28 July 2022 to 15 September 2022 the Company purchased a further sum of 1,969,725 shares for a

sum of £1.0 million at an average price of 50.6 pence per share.

As a consequence of the buyback, the number of ordinary shares in issue fell from 491,080,301 to 489,110,576 during

the reporting period.

The NAV per Ordinary Share is based on the net assets of £300,689,000 (2022: £372,183,000) and 489,110,576

(2022: 491,080,301) ordinary shares in issue as at the reporting date.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

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 when required to limit exposure to interest rate risks, but does not

have any other derivative instruments.

The main risks arising from the Group’s financial instruments and properties are market price risk, credit risk, liquidity

risk and interest rate risk. The Group has no exposure to foreign currency exchange risk. The Board regularly reviews

and agrees policies for managing each of these risks and these are summarised below:

Market price risk

Rental income and the market value for properties are generally affected by overall conditions in the economy,

such as changes in gross domestic product, employment trends, inflation and changes in interest rates. Changes

in gross domestic product may also impact employment levels, which in turn may impact the demand for premises.

Furthermore, movements in interest rates may also affect the cost of financing for real estate companies. Both rental

income and property values may also be affected by other factors specific to the real estate market such as

competition from other property owners; the perceptions of prospective tenants of the attractiveness, convenience

and safety of properties; the inability to collect rents because of bankruptcy or the insolvency of tenants; the periodic

need to renovate, repair and re-lease space and the costs thereof; and the costs of maintenance and insurance, and

increased operating costs.

The Directors monitor the market value of investment properties by having independent valuations carried out

quarterly by a firm of independent chartered 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 13 to 15. 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 default by an occupational tenant, the Group will suffer a rental income shortfall

and incur additional costs, including legal expenses, in maintaining, insuring and re-letting the property. The

Investment Manager reviews reports prepared by Dun & Bradstreet, or other sources, to assess the credit quality of

the Group’s tenants and aims to ensure there is no excessive concentration of risk and that the impact of any default by

a tenant is minimised.

In respect of credit risk arising from other financial assets, which comprise cash and cash equivalents, exposure to

credit risk arises from default of the counterparty with a maximum exposure equal to the carrying amounts of these

instruments. In order to mitigate such risks, cash is maintained with major international financial institutions with high

quality credit ratings. During the year, and at the reporting date, the Group maintained a relationship with branches and

subsidiaries of HSBC. HSBC has a credit rating of A- (provided by Standard and Poor).

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Notes to the Financial Statements continued

18. Financial instruments, properties and associated risks continued

The maximum exposure to credit risk for rent receivables at the reporting date by type of sector was:

31/03/2023

Carrying amount

£000

31/03/2022

Carrying amount

£000

Office 568 445

Industrial 2,496 2,080

Retail, leisure and other 874 1,980

3,938* 4,505*

Rent receivables which are past their due date were:

31/03/2023

Carrying amount

£000

31/03/2022

Carrying amount

£000

0–30 days 2,940 2,274

31–60 days 62 118

61–90 days 4 193

91 days plus 932 1,920

3,938* 4,505*

* Rental debtors gross of VAT and excluding bad debt provisions.

Management has considered rental debtors on a quarterly basis and made provisions where it has been deemed that

these amounts may be unrecoverable. As at 31 March 2023 total provisions of £0.36 million (2022: £0.9 million) were

recognised and rental debtors are shown net of this provision in the Balance Sheet.

On initial recognition the Group calculates the expected credit loss for debtors based on the lifetime expected credit

losses under the IFRS 9 simplified approach. Management consider aged debtors’ analyses, the strength of tenant

covenants, macroeconomic factors and any rental deposits held when considering this.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations associated with its financial

obligations.

The Group’s investments comprise UK commercial property. Property and property-related assets are inherently

difficult to value due to the individual nature of each property. As a result, valuations are subject to substantial

uncertainty. There is no assurance that the estimates resulting from the valuation process will reflect the actual sale

price even where such sales occur shortly after the valuation date. Investments in property are relatively illiquid.

However, the Group has tried to mitigate this risk by investing in properties that it considers to be of good quality.

In certain circumstances, the terms of the Group’s debt facilities entitle the lender to require early repayment and

in such circumstances the Group’s ability to maintain dividend levels and the net asset value could be adversely

affected. The Investment Manager prepares cash flows on a rolling basis to ensure the Group can meet future

liabilities as and when they fall due.

The following table indicates the maturity analysis of the financial liabilities.

As at 31 March 2023

Carrying

amount

£000

Expected

cash flows

£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* 176,933 232,303 3,044 9,131 64,417 155,711

Leasehold liability 1,668 11,961 52 157 313 11,439

Trade and other payables 5,841 5,841 3,990 – – 1,851

Total financial liabilities 184,442 250,105 7,086 9,288 64,730 169,001

Overview Strategic Report Governance Financial Statements Other information (unaudited)

As at 31 March 2022

Carrying

amount

£000

Expected

cash flows

£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 161,791 208,490 1,880 5,105 42,558 158,946

Leasehold liability 1,987 11,401 50 149 298 10,904

Trade and other payables 5,769 5,769 4,025 – – 1,744

Total financial liabilities 169,547 225,660 5,955 5,254 42,856 171,594

* Assumes that the £48.3 million facility is repaid in 2027.

Interest rate risk

Exposure to market risk for changes in interest rates relates primarily to the Group’s long-term debt obligations and to

interest earned on cash balances. As interest on the Group’s long-term debt obligations is payable on a fixed-rate

basis, the Group is not exposed to near-term interest rate risk in relation to its Canada Life loan facility. As at 31 March

2023 the fair value of the Group’s £129.6 million loan with Canada Life was £112.8 million (2022: £125.8 million).

The RBSI revolving credit facility is a low margin flexible source of funding with a margin of 1.65% plus 3-month SONIA

and it is considered by management that the carrying value of the loan is equal to its fair value (sum of £48.3 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

£84,000 based on the cash balance as at 31 March 2023.

Fair values

The fair values of financial assets and liabilities are not materially different from their carrying values, unless disclosed

below, in the financial statements.

The fair value hierarchy levels are as follows:

– Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities;

– Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

– Level 3 – inputs for the 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 (2022: none).

The following summarises the main methods and assumptions used in estimating the fair values of financial

instruments and investment property:

Investment property – level 3

Fair value is based on valuations provided by an independent firm of chartered surveyors and registered appraisers.

These values were determined after having taken into consideration recent market transactions for similar properties

in similar locations to the investment properties held by the Group. The fair value hierarchy of investment property is

level 3. See note 10 for further details.

Interest-bearing loans and borrowings – level 2

Fair values are based on the present value of future cash flows discounted at a market rate of interest. Issue costs are

amortised over the period of the borrowings. As at 31 March 2023, the fair value of the Group’s £129.6 million loan

with Canada Life was £112.8 million (2022: £125.8 million).

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Financial Statements

Notes to the Financial Statements continued

18. Financial instruments, properties and associated risks continued

Capital management

The Board’s policy is to maintain a strong capital base to maintain investor, creditor and market confidence and to

sustain future development of the business. The objective is to ensure that it will continue as a going concern and

to maximise the return to its equity shareholders through an appropriate level of gearing. The Company’s capital

management process ensures it meets its financial covenants in its borrowing arrangements. Breaches in meeting

the financial covenants could permit the lenders to immediately accelerate the repayment of loans and borrowings.

The Company monitors as part of its quarterly board meetings that it will adhere to specific leverage, interest cover

and rental cover ratios. There have been no breaches in the financial covenants of any loans and borrowings during

the financial year.

The Company’s debt and capital structure comprises the following:

31/03/2023

£000

31/03/2022

£000

Debt

Fixed-rate loan facility 129,585 129,585

Floating rate loan facility* 48,300 32,667

177,885 162,252

Equity

Called-up share capital 181,989 182,987

Reserves 118,700 189,196

300,689 372,183

Total debt and equity

478,574 534,435

* This amount refers to the amount drawn. The total facility as at 31 March 2023 was £75.0 million (2022: £52.5 million).

There were no changes in the Group’s approach to capital management during the year.

19. Operating leases

The Group leases out its investment property under operating leases. At 31 March 2023 the future minimum lease

receipts under non-cancellable leases are as follows:

31/03/2023

£000

31/03/2022

£000

Less than one year 22,850 22,435

Between one and five years 66,194 51,513

More than five years 58,829 39,531

147,873 113,479

The total above comprises the total contracted rent receivable as at 31 March 2023.

The Group has entered into leases on its property portfolio. The commercial property leases typically have lease terms

between 5 and 15 years and include 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.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

20. List of subsidiary and joint venture undertakings

The companies listed below are those which were part of the Group as at 31 March 2023:

Undertaking Category Country of incorporation Principal Activities Ultimate ownership

SREIT No.2 Limited Subsidiary Guernsey

Property ownership

with external finance

100%

SREIT Holding (No.2) Limited Subsidiary Guernsey Holding Company 100%

SREIT Holding Company Limited Subsidiary Guernsey

Holding Company

with external finance

100%

SREIT Property Limited Subsidiary Guernsey Property ownership 100%

SREIT (Portergate) Limited Subsidiary Guernsey Property ownership 100%

SREIT (Uxbridge) Limited Subsidiary Guernsey Property ownership 100%

SREIT (City Tower) Limited Subsidiary Guernsey Joint ownership of

underlying property

unit trust

100%

SREIT (Store) Limited Subsidiary Guernsey Joint ownership of

underlying property

unit trust

100%

SREIT (Bedford) Limited Subsidiary Guernsey Property ownership 100%

City Tower Unit Trust Joint Venture Jersey Property ownership 25%

Store Unit Trust Joint Venture Jersey Property ownership 50%

The registered addresses for all wholly-owned entities are the same as that of the parent company and can be found

on page 124.

The registered address for both Joint Venture entities is 47 Esplanade, St. Helier, Jersey, JE1 0BD, Channel Islands.

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. Transactions with the directors are shown in the directors’ remuneration

report.

22. Capital commitments

As at 31 March 2023 the Group had capital commitments of £7.7 million (2022: £12.3 million).

23. Post balance sheet events

On 6 March 2023 the Group unconditionally exchanged contracts to dispose of Morgan Sindall House, Rugby for

a gross sale price of £4.0 million. Completion of the transaction will take place on 23 June 2023.

On 1 June 2023 the Group completed on the acquisition of an interest rate collar for a net price payable of

£0.57 million. This was to replace existing interest rate caps totalling £30.5 million with RBSI, which mature in

July 2023, and which come in to effect when the three-month SONIA rate exceeds 1.5%. The new interest rate

collar is also for £30.5 million of the loan and has a cap of 4.25% and a floor of 3.25% and will expire on 6 June 2027.

On 1 June 2023 the RBSI RCF was converted in to a “Sustainability Linked Loan” with performance measured against

KPIs, with each KPI having the potential to either reduce the margin by 1.65 basis points, increase it by 1.65 basis points

or have no impact. Please see page 21 for further detail.

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Schroder Real Estate Investment Trust Limited

Contents

88 EPRA Performance Measures (unaudited)

92 Alternative Performance Measures (unaudited)

93 AIFMD Disclosures (unaudited)

95 Task Force on Climate-related Financial Disclosures (“TCFD”)

98 Sustainability Performance Measures (Environmental) (unaudited)

111 Sustainability Performance Measures (Social)

113 Sustainability Performance Measures (Governance)

114 Streamlined Energy and Carbon Reporting

117 Asset list

118 Report of the Depositary to the Shareholders

119 Glossary

120 Resolutions at 2023 Annual General Meeting

122 Notice of Annual General Meeting

124 Corporate Information

Other information

(unaudited)

Other information (unaudited)

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Other information (unaudited)

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

31/03/2023 31/03/2022

EPRA earnings £15,968,000 £15,707,000

EPRA earnings per share 3.3pps 3.2pps

EPRA Net Reinstatement Value £332,178,000 £407,317,000

EPRA Net Reinstatement Value per share 67.9p 82.9p

EPRA Net Tangible Assets £300,689,000 £372,183,000

EPRA Net Tangible Assets per share 61.5p 75.8p

EPRA Net Disposal Value £317,448,000 £375,933,000

EPRA Net Disposal Value per share 64.9p 76.6p

EPRA Net Initial Yield 5.4% 5.0%

EPRA “topped-up” Net Initial Yield 5.8% 5.1%

EPRA vacancy rate 11.1% 7.0%

EPRA cost ratios – including direct vacancy costs 28.0% 30.5%

EPRA cost ratios – excluding direct vacancy costs 21.1% 24.7%

EPRA LT V 36.0% 28.6%

a. EPRA earnings and earnings per share

Earnings excluding all capital components not relevant to the underlying net income performance of the Company,

such as the unrealised fair value gains or losses on investment properties and any gains or losses from the sales of

properties.

31/03/2023

£000

31/03/2022

£000

(Loss)/profit per IFRS income statement (54,715) 89,368

Adjustments to calculate EPRA Earnings:

Profit on disposal of investment property (1,184) (3,165)

Net valuation loss/(gain) on investment property 60,107 (66,536)

Share of valuation loss/(gain) in associates and joint ventures 11,513 (3,960)

Refinancing costs 247 –

EPRA earnings 15,968 15,707

Weighted average number of ordinary shares 489,951,224 491,085,850

IFRS earnings per share (pence) (11.2) 18.2

EPRA earnings per share (pence) 3.3 3.2

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.

31/03/2023

£000

31/03/2022

£000

IFRS equity attributable to shareholders 300,689 372,183

Adjustment in respect of real estate transfer taxes and costs 31,489 35,134

EPRA Net Reinstatement Value 332,178 407,317

Shares in issue at the end of the period 489,110,576 491,080,301

EPRA NRV per share (pence per share) 67.9p 82.9p

Overview Strategic Report Governance Financial Statements Other information (unaudited)

c. EPRA Net Tangible Assets per share

The IFRS equity attributable to shareholders adjusted to reflect a Company’s tangible assets and assumes that no

selling of assets takes place.

31/03/2023

£000

31/03/2022

£000

IFRS equity attributable to shareholders 300,689 372,183

EPRA Net Tangible Assets 300,689 372,183

Shares in issue at the end of the year 489,110,576 491,080,301

IFRS NAV per share (pence) 61.5p 75.8p

EPRA Net Tangible Assets per share (pence) 61.5p 75.8p

d. EPRA Net Disposal Value per share

The IFRS equity attributable to shareholders adjusted to reflect the NAV under an orderly sale of business, where any

deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability.

31/03/2023

£000

31/03/2022

£000

IFRS equity attributable to shareholders 300,689 372,183

Adjustments to calculate EPRA Net Disposal Value:

The fair value of fixed-interest rate debt 16,759 3,750

EPRA Net Disposal Value 317,448 375,933

Shares in issue at the end of the year 489,110,576 491,080,301

EPRA Net Disposal Value per share (pence) 64.9p 76.6p

e. EPRA Net Initial Yield

Annualised rental income based on the cash rents passing at the Balance Sheet date (but adjusted as set out below),

less non-recoverable property operating expenses, divided by the gross market value of the property.

The EPRA “topped up” NIY is the EPRA NIY in respect of the expiration of rent free periods.

31/03/2023

£000

31/03/2022

£000

Investment property – wholly-owned 398,560 440,100

Investment property – share of joint ventures and funds 71,800 83,363

Complete property portfolio 470,360 523,463

Allowance for estimated purchasers’ costs 31,489 35,134

Gross up completed property portfolio valuation 501,849 558,597

Annualised cash passing rental income 29,292 30,085

Property outgoings (2,258) (1,919)

Annualised net rents 27,034 28,166

Notional rent expiration of rent-free periods

2,177 340

Topped-up net annualised rent 29,211 28,506

EPRA NIY 5.4% 5.0%

EPRA “topped-up” NIY 5.8% 5.1%

1 The period over which rent free periods expire is one year for 2023 (2022: 1 year).

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Other information (unaudited)

EPRA Performance Measures (unaudited) continued

f. EPRA cost ratios

Administrative and operating costs (including and excluding costs of direct vacancy) divided by gross rental income.

31/03/2023

£000

31/03/2022

£000

Administrative/operating expense line per IFRS income statement 7,662 7,311

Share of Joint Venture expenses 591 1,236

Less: Ground rent costs (68) (95)

Costs (including direct vacancy costs) 8,185 8,452

Direct vacancy costs (2,026) (1,592)

Costs (excluding direct vacancy costs) 6,159 6,860

Gross rental income less ground rent costs – per IFRS 25,103 23,764

Add share of Joint Ventures (Gross Rental Income less ground rent costs) 4,106 3,976

Gross rental income 29,209 27,740

EPRA cost ratio (including direct vacancy costs) 28.0% 30.5%

EPRA cost ratio (excluding direct vacancy costs) 21.1% 24.7%

There were no directly attributable overhead and operating costs capitalised during the year (2022: Nil). The Company

does not have a policy to capitalise such expenses (as per note 1).

g. EPRA vacancy rate

Estimated market rental value (ERV) of vacant space divided by the ERV of the whole portfolio.

31/03/2023

£000

31/03/2022

£000

Estimated rental value of vacant space 4,192 2,356

Estimated rental value of the whole portfolio 37,8 4 3 33,800

EPRA vacancy rate 11.1% 7.0%

There were no significant or distorting factors in the above.

h. EPRA LTV

The gearing of the shareholder equity within the Company.

31/03/2023

£000

31/03/2022

£000

Borrowings from financial institutions 177,885 162,252

Cash and cash equivalents (8,419) (11,601)

Cash and cash equivalents – share of joint ventures (302) (859)

Net Debt 169,164 149,792

Investment properties at fair value – direct portfolio 398,560 440,100

Investment properties at fair value – share of joint ventures 71,800 83,363

Total Property Value 470,360 523,463

LTV 36.0% 28.6%

Overview Strategic Report Governance Financial Statements Other information (unaudited)

i. EPRA capital expenditure

In accordance with EPRA’s core recommendations, the Group’s capital expenditure invested in the year can be broken

down as follows:

Group

(excluding Joint

Ventures)

£m

Joint Ventures

(proportionate

share)

£m

Total

Group

£m

Acquisitions (including transaction costs) 16.1 – 16.1

Developments 9.6 – 9.6

Investment properties

– Tenant incentives 0.3 – 0.3

– Other material non-allocated types of expenditure 0.2 0.1 0.3

Total Capital Expenditure 26.2 0.1 26.3

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Other information (unaudited)

Alternative Performance Measures (unaudited)

The Company uses the following Alternative Performance Measures (“APMs”) in its Annual Report and Consolidated

Financial Statements. The Board believes that each of the APMs provides additional useful information to the

shareholders in order to assess the Company’s performance.

Dividend Cover – the ratio of EPRA Earnings (page 88) to dividends paid (note 9) in the period.

Dividend Yield – the dividends paid, expressed as a percentage relative to the Company’s share price.

EPRA Earnings – earnings excluding all capital components not relevant to the underlying net income performance of

the Company, such as the unrealised fair value gains or losses on investment properties and any gains or losses from

the sales of properties. See page 90 for a reconciliation of this figure.

EPRA Net Tangible Assets – the IFRS equity attributable to shareholders adjusted to reflect a Company’s tangible

assets and assumes that no selling of assets takes place.

EPRA Net Disposal Value – the IFRS equity attributable to shareholders adjusted to reflect the NAV under an orderly

sale of business, where any deferred tax, financial instruments and certain other adjustments are calculated to the full

extent of their liability.

EPRA Net Reinstatement Value – 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 LT V – the value of the external loans unadjusted for unamortised arrangement costs (note 15) expressed as a

percentage of the market value of property investments as at the Balance Sheet date. The market value of property

investments includes joint venture investments and are as per external valuations and have not been adjusted for

IFRSlease incentive debtors nor the fair value of the head lease at Luton.

LTV net of cash – the value of the external loans unadjusted for unamortised arrangement costs (note 15) less cash

held (note 13) expressed as a percentage of 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 as per external valuations and

have not been adjusted for IFRS lease incentive debtors or the fair value of the head lease at Luton.

Ongoing charges (including Fund expenses) – all operating costs expected to be regularly incurred and that are

payable by the Company expressed as a percentage of the average quarterly NAVs of the Company for the financial

period. No capital costs, including capital expenditure or acquisition/disposal fees, are included as costs.

Ongoing charges (including Fund and property expenses) – all operating costs expected to be regularly incurred

and that are payable by the Company expressed as a percentage of the average quarterly NAVs of the Company for

the financial period. Any capital costs, including capital expenditure and acquisition/disposal fees, are excluded as

costs, as well as interest costs and any other costs considered to be non-recurring. In the current period the material

non-recurring costs include non-cash bad debt expenses of £0.4million.

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 at a discount. Shares trading above

the NAV per share are said to be at a premium. The discount/premium is calculated as the variance between the share

price as at the Balance Sheet date and the NAV per share (page 65) expressed as a percentage.

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 6).

Overview Strategic Report Governance Financial Statements Other information (unaudited)

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 2022

Remuneration disclosures

These disclosures form part of the non-audited section of this annual report and accounts and should be read in

conjunction with the Schroders plc Remuneration Report on pages 76 to 107 of the 2022 Annual Report & Accounts

(available on the Group’s website – https://www.schroders.com/en/investor-relations/results-and-reports/annual-

report-and-accounts-2022/), which provides more information on the activities of our Remuneration Committee and

our remuneration principles and policies.

The AIF Material Risk Takers (“AIF MRTs”) of SREIM are individuals whose roles within the Schroders Group can

materially affect the risk of SREIM or any AIF fund that it manages. These roles are identified in line with the

requirements of the AIFM Directive and guidance issued by the European Securities and Markets Authority.

The Remuneration Committee of Schroders plc has established a remuneration policy to ensure the requirements

ofthe AIFM Directive are met for all AIF MRTs. The Remuneration Committee and the Board of Schroders plc review

remuneration strategy at least annually. The directors of SREIM are responsible for the adoption of the remuneration

policy and periodically reviewing its implementation in relation to SREIM. During 2022 the Remuneration Policy was

reviewed to ensure compliance with the UCITS/AIFMD remuneration requirements and no significant changes

weremade.

The implementation of the remuneration policy is, at least annually, subject to independent internal review for

compliance with the policies and procedures for remuneration adopted by the Board of SREIM and the Remuneration

Committee. The most recent review found no fundamental issues but resulted in minor recommendations relating to

process documentation.

The ratio of total costs to net income through the market cycle guides the total spend on remuneration each year. This

is recommended by the Remuneration Committee to the Board of Schroders plc. This approach aligns remuneration

with Schroders financial performance. In determining the remuneration spend each year, the underlying strength and

sustainability of the business is taken into account, along with reports on risk, legal, compliance and internal audit

matters from the heads of those areas.

The remuneration data that follows reflects amounts paid in respect of performance during 2022.

– The total amount of remuneration paid by SREIM to its staff is nil as SREIM has no employees. Employees of SREIM

or other Schroders Group entities who serve as Directors of SREIM receive no additional fees in respect oftheir

role on the Board of SREIM; and

– The following disclosures relate to AIF MRTs of SREIM. Those AIF MRTs were employed by and provided services

to other Schroders group companies and clients. In the interests of transparency, the aggregate remuneration

figures that follow reflect the full remuneration for each SREIM AIF MRT. The aggregate total remuneration paid to

the 73 AIF MRTs of SREIM in respect of the financial year ended 31 December 2022 is £53.67 million, of which

£33.91 million was paid to senior management, £16.68 million was paid to MRTs deemed to be taking risk on behalf

of SREIM or the AIF funds that it manages and £3.08 million was paid to control function MRTs.

For additional qualitative information on remuneration policies and practices

see www.schroders.com/rem-disclosures.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Other information (unaudited)

AIFMD Disclosures (unaudited) continued

Leverage disclosure

In accordance with AIFMD the Company is required to make available to investors information in relation to leverage.

Under AIFMD, leverage is any method by which the exposure of the Company is increased through the borrowing of

cash or securities, leverage embedded in derivative positions or by another means. It is expressed as a ratio between

the total exposure of the Company and its net asset value and is calculated in accordance with the “Gross method” and

the “Commitment method” as described in the AIFMD. The Gross method represents the aggregate of all the

Company’s exposures other than cash balances held in the base currency, while the Commitment method, which is

calculated on a similar basis, may also take into account cash and cash equivalents, netting and hedging arrangements,

as applicable.

The Investment Manager has set the expected maximum leverage percentages for the Company and calculated the

actual leverages as at 31 December 2022 as shown below (the Company calculates and externally reports its leverage

one quarter in arrears):

Maximum limit set

Actual as at

31.12.2022

Gross leverage 195 158

Commitment leverage 220 161

There have been no changes to the maximum levels of leverage employed by the Company during the financial year

nor any breaches of the maximum levels during the financial reporting period.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Task Force on Climate-related Financial Disclosures (“TCFD”)

The Company reports sustainability information in accordance with EPRA Best Practice Recommendations on

Sustainability Reporting (“sBPR”) 2017, Third Edition for the 12 months 1 January 2022–31 December 2022, presented

with comparison against 2021. As permitted by the EPRA Sustainability Reporting Guidelines, environmental data has

been developed and presented in line with the Global Real Estate Sustainability Benchmark (“GRESB”).

The Task Force on Climate-related Financial Disclosure (“TCFD”) aims to mainstream reporting on climate-related risks

and opportunities in organisations’ annual financial filings. Launched in 2017, the 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. Key concepts within the framework include:

– “transition” risks: arising from society’s transition to a low carbon economy (changing regulation and market

expectations, new technologies etc) and;

– “physical” risks: relating to the acute (storms, floods and wildfires etc) and chronic (rising sea levels, increasing

heatstress etc) physical effects of a changing climate.

Additional principles within TCFD include the importance of forward-looking assessment of climate-related risks

andopportunities, and “scenario analysis”. Scenario analysis is a process of identifying and assessing the potential

implications of a range of plausible future states under conditions of uncertainty. The recommendations note that

scenario analysis for climate-related issues is a relatively new concept and that practices will evolve over time.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Other information (unaudited)

Task Force on Climate-related Financial Disclosures (“TCFD”)

continued

In 2022, the 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,

Schroder’s believes it will be important to further integrate the assessment of climate-related risks and opportunities

into decision-making and reporting processes. The outcome of our review and progress towards further alignment is

set out below.

TCFD Recommendation Approach

Governance

Describe the board’s oversight

ofclimate-related risks and

opportunities.

The Board formally reviews the Manager’s performance, including ESG-related activity, at quarterly Board meetings.

A more detailed review of the Manager’s approach to ESG is carried out at the annual strategy review which

includes but is not limited to (i) Fund level sustainability performance measured by both the Manager and third

parties such as the Global Real Estate Sustainability Benchmark (“GRESB”); (ii) asset level analysis; (iii) a review of the

Manager’s ESG policies and procedures and (iv) presentations from sustainability specialists.

The Manager reviews a materiality assessment annually to identify and assess material impacts, sustainability risks

and opportunities arising from our sustainability aspects alongside severity, likelihood, and ability to influence.

Impacts, risks and opportunities are also identified as originating from normal, abnormal or emergency conditions.

Describe management’s role

in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, supported by regular reporting to the Investment Committee. Schroders Head of Sustainability and Impact

Investing recommends the Manager’s annual Sustainability Policy and Objectives, which are reviewed and approved

by the Investment Committee. The Manager incorporates climate-related considerations into key stages of the

investment process, including acquisition proposals, annual Asset Business Plans and annual Fund Strategy

Statements. Each of these steps of the investment process require approval by the Investment Committee. The

Manager also prepares annual report and financial accounts for the Company, which include climate-related

metricsand supports the Manager and Board’s monitoring of performance and progress towards climate-related

goals and targets.

During the financial year ended 31 March 2023, the Manager’s sustainability team was bolstered with the

recruitment of an Energy and Carbon Lead, alongside a Climate Lead who maintains oversight of the Manager’s

climate resilience programme.

Engagement is a critical component of the Manager’s climate resilience programme with regular touchpoints with

the Schroders Capital Sustainability & Impact working groups ensuring alignment of frameworks and approaches

across the business and benefitting from this extensive pool of resource.

The Manager includes ESG criteria, including climate-related risks, as part of its formal quarterly investment risk

monitoring, which is overseen by Schroders Group Investment Risk function, the results of which are presented to

the Company Board as part of the quarterly Board materials and discussed as necessary.

Strategy

Describe the climate-related risks

and opportunities the Company has

identified over the short, medium,

and long term.

Our investment philosophy and process is underpinned by fundamental research and an analytical approach that

considers economic, demographic and structural influences on the market. We are considering how climate change

may impact on these factors over time, as well as how government policies may enable mitigation of and adaption to

climate change.

Energy and carbon emissions performance of our assets is a critical climate-related strategic issue. As part of net

zero carbon analysis utilising the industry standard Carbon Risk Real Estate Monitor (“CRREM”) the Manager has

identified those assets which may be exposed to potential stranding risk (including Carbon Value at Risk (“cVaR”)) in

the short, medium and longer term.

The company continues to review asset ratings with respect to Energy Performance Certificates (“EPC”) and

sustainability certifications (e.g. BREEAM) in recognition of the legislative, policy and investor landscape continuing

to strengthen over time in this regard.

In the short, medium and longer term, the physical effects of changing climate also present potential material

financial impacts to the Company. Using a third-party physical risk database the Manager has identified the highest

risks as follows: Drought, Extra-tropical cyclone, Heating degree days, Heat stress, water pollution and water stress.

Describe the impact of climate-

related risks and opportunities on

theCompany’s businesses, strategy,

and financial planning.

The Manager’s acquisition and asset business planning processes include consideration of climate-related issues,

and will include forward-looking assessment of asset alignment to Paris Aligned energy and carbon performance

benchmarks, where information permits. We are also reviewing our existing processes for screening acquisitions

and standing investments for climate-related physical risks (e.g. flooding).

As part of the Net Zero Carbon project on standing investments actions identified in the asset business plans have

been fed through, via the asset Impact and Sustainability Action Plans, into the forward looking decarbonisation

pathways to present the impact of known interventions. Conversely this also identifies where more action is required

to achieve decarbonisation goals.

We recognise the need and opportunity presented by climate change to improve operational efficiency,

maintenance costs and generate new income streams (e.g. onsite energy) and which all support asset values. These

actions also support the Company with increasing investor expectations in relation to climate action and preparing

portfolio assets for new and emerging energy efficiency regulations, increases in energy costs, carbon taxes,

changing occupier preferences and valuation considerations.

With respect to physical risk adaptations considerations will likely include water recycling, overheating and solar

gain reduction, cooling load capacity and plant sizing, and suitable surface flooding mitigations should be reviewed

moving forward.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

TCFD Recommendation Approach

Describe the resilience of the

Company’s strategy, taking into

consideration different climate-

related scenarios, including a 2°C

orlower scenario.

Since 2016, assets of the Company have been included in the Manager’s UK energy consumption and carbon

emission reduction targets for assets where landlord operational control is retained. As part of the Manager and

Company’s Net Zero Carbon commitments, during 2022, the Manager reviewed the Company’s progress against

the baseline exercise conducted in 2021. Net Zero Carbon pathways have been developed using CRREM to present

the decarbonisation requirements needed to achieve Net Zero Carbon by 2050 or sooner; aligned with a “Paris

Proof” decarbonisation trajectory to pursue efforts to limit global warming to 1.5°C. Further details on the

Company’s approach to Net Zero Carbon are presented on page26.

On physical risk, Schroders has licenced a physical risk database through a third-party provider. Heat stress, water

stress, flood hazard, heating degree days and cooling degree days are presented as both current and future risk

scenarios allowing for interpretation of increasing or decreasing exposure of the portfolio. These are aligned either

with RCP4.5 or RCP8.5 scenarios, and range in timeframes from 2030, 2060 and 2100. Natural hazard vulnerability

risks are present day assessments.

Engaging tenants to collaborate to reduce building energy and carbon emissions is an increasingly important

element of our sustainability and business strategy. We have green lease provisions within our standard lease

agreement and have developed both a Schroders Sustainable Occupier Guide and Fit Out Guides for Tenants.

The Manager continues to engage with the wider sector to determine and develop best practice with regards to

climate resilience. One such example being the sponsorship of the ULI C-Change project. This aims to determine

sector-level definitions and best practices in accounting for transitional risk cost implications for asset valuations,

and inclusion of costs within business plan discounted cash flows.

Risk Management

Describe the Company’s processes

for identifying and assessing

climate-related risks.

Schroders Environmental Management System (“EMS”) is certified to ISO 14001 and applies to the asset

management of the Company’s real estate assets. Key components of the EMS include a detailed materiality

assessment of risks and opportunities, and a register to monitor existing and emerging regulatory requirements

related to energy and carbon emissions. The EMS includes subscription to a third-party sustainability legal review

partner which supports ongoing compliance and future resilience.

The Company’s processes for climate-related (including transition and physical risks) risk management are as

defined in the “Strategy” section above.

Describe the Company’s processes

for managing climate-related risks.

Climate-related risks are tracked and managed through ongoing monitoring (e.g. energy and greenhouse emissions

trends), action plans (e.g. energy efficiency improvement measures), certification programmes (e.g. Energy

Performance Certificates) and technical energy audits. Impact and Sustainability Action Plans also promote and

track initiatives relating to climate opportunities (e.g. on site renewables and electric vehicle charging provision).

Applying an assessment of Paris Alignment using the CRREM tool as part of our Net Zero Pathway enables

consideration of “stranding risk” which will also feed into our asset action plans for managed standing investments.

On physical risk, the strategy is to third-party physical risk database to screen acquisitions, assess standing

investment portfolios and identify required risk mitigation (i.e. enhanced defences, divestment), adaptation, or

transfer (i.e. revised insurance policies) strategies.

During the reporting year the Manager developed an ESG Scorecard to help quantify the sustainability performance

of its real estate assets and manage opportunities for improvement. The Company has adopted this as part of its

sustainability audits programme detailed on page 31 and will seek to roll this out universally starting with mandatory

adoption for all new acquisitions.

Describe how processes for

identifying, assessing, and managing

climate-related risks are integrated

into the Company’s overall risk

management.

The Manager includes ESG criteria, including climate-related risks, as part of its formal quarterly investment risk

monitoring, which is overseen by Schroders Group Investment Risk function, the results of which are presented

tothe Company Board as part of the quarterly Board materials and discussed as necessary.

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.

In the “EPRA Sustainability Reporting Performance Measures (unaudited)” section of this report we report detailed

performance trend data, intensity ratios and assessment methodologies covering energy consumption, GHG

emissions, water consumption, waste generation, Energy Performance Certificate (“EPC”) profiles and other

sustainability certifications (e.g. BREEAM).

The Manager’s subscription to a third-party physical risk database enables the Company to quantify its exposure to

physical risks at the asset and portfolio level including weighted averages based on Gross Asset Value.

Disclose Scope 1, Scope 2, and, if

appropriate, Scope 3 greenhouse

gas(GHG) emissions, and the related

risks.

Scope 1 and Scope 2 emissions for operational energy usage for the reporting year are disclosed in the “EPRA

Sustainability Reporting Performance Measures (unaudited)”.

Scope 3 emissions are not currently presented in the “EPRA Sustainability Reporting Performance Measures

(unaudited)”. However, where available, those associated with tenant energy data have been included within the

Manager’s operational Net Zero Carbon baseline.

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 Carbon Risk Real Estate Methodology (“CRREM”) tool,

to present the decarbonisation requirements needed to achieve Net Zero Carbon by 2050 or sooner; aligned with

a“Paris Proof” decarbonisation trajectory to pursue efforts to limit global warming to 1.5°C and include interim

milestones at 2030. At portfolio level this equates to a 21% reduction in GHG emissions to be achieved by 2030.

The Company adopts the Managers target as part of Schroders PLC’s RE100 commitment to source 100% of

landlord electricity using renewable sources by 2025. As at 31 Dec 2022 the Company can report 74% of landlord

electricity as being procured through renewable tariffs.

The Company continues to measure its exposure to physical climate risks using a third-party data provider.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

Other information (unaudited)

Sustainability Performance Measures (Environmental) (unaudited)

The Company reports sustainability information in accordance with EPRA Best Practice Recommendations on

Sustainability Reporting (“sBPR”) 2017, Third Edition for the 12 months 1 January 2022–31 December 2022, presented

with comparison against 2021. As permitted by the EPRA Sustainability Reporting Guidelines, environmental data has

been developed and presented in line with the Global Real Estate Sustainability Benchmark (“GRESB”).

The reporting boundary has been scoped to where the Company has operational control: managed properties where

the Company is responsible for payment of utility invoices and/or arrangement of waste disposal contracts.

“Operational control” has been selected as the reporting boundary (as opposed to “financial control” or “equity share”)

as this reflects the portion of the portfolio where the Company can influence operational procedures and, ultimately,

sustainability performance. The operational control approach is the most commonly applied within the industry.

In 2022, 45 assets were held by the Company during the reporting year (including two sales). In total, 23 assets were

within the operational control reporting boundary of the Company during the reporting year (i.e. “managed”). In 2021,

there were 24 such managed assets within the portfolio.

Where data coverage is less than 100%, a supporting explanation is provided within the data notes immediately below

the relevant table. Energy and water 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 data tables. Historic consumption data has been restated where more complete and/or accurate records have

become available.

The Company does not contain any managed assets that consume energy from district heating or cooling sources.

Therefore, the EPRA sBPR DH&C-Abs and DH&C-LfL indicators are not applicable and not presented in this report.

Furthermore, the Company does not have any direct employees; it is served by the employees of the Investment

Manager (Schroder Real Estate Investment Management Limited). Accordingly, the EPRA Overarching

Recommendation for companies to report on the environmental impact of their own offices is not relevant/material

and not presented in this report.

This report has been prepared by energy and sustainability consultants, EVORA Global. The Sustainability

Performance Measures have been assured in accordance with AA1000 to provide a Type 2 Moderate Assurance

unqualified audit of the sustainability content within the SREIT annual report for the year ended 31 March 2023.

Thefull Assurance Statement is available upon request.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

Total energy consumption (Elec-Abs; Fuels-Abs)

The table below sets out total landlord obtained energy consumption from the Company’s managed portfolio by

sector.

Total electricity

consumption

(kWh)

Total fuel consumption

(kWh)

Absolute energy intensity

(kWh/m

)

Sector 2021 2022 2021 2022 2021 2022 % Change

Office: Corporate: Low-Rise Office

1,501,076 800,234 1,082,777 637,572 98 26 -74%

Coverage

100% 100% 100% 100% 100% 100%

Retail: High Street

26,707 16,992 – – 14 9 -36%

Coverage

(landlord-procured consumption)

100% 100% – – 100% 100%

Retail: Retail Centres: Warehouse

38,531 34,960 – – 2 2 -10%

Coverage

100% 100% – – 100% 100%

Mixed use: Other

1,886,725 1,911,974 – – 101 103 2%

Coverage

(landlord-procured consumption)

100% 100% – – 100% 100%

Mixed use: Office/Retail

287,802 407, 973 – 131,601 101 96 -5%

Coverage

(landlord-procured consumption)

100% 100% – 100% 100% 100%

Industrial: Distribution Warehouse

1,412,447 1,401,413 1,002,455 1,075,277 0.6 0.6 3%

Coverage (landlord-procured consumption)

100% 100% 100% 100% 100% 100%

Lodging, Leisure & Recreation: Other

239,163 311,299 – – 69 75 9%

Coverage

(landlord-procured consumption)

100% 100% – – 100% 100%

Office: Corporate: Mid-Rise Office

277,019 268,733 496,144 448,859 192 178 -7%

Coverage

(landlord-procured consumption)

100% 100% 100% 100% 100% 100%

Total

5,669,470 5,153,578 2,581,376 2,293,309

Coverage

(landlord-procured consumption)

100% 100% 100% 100%

Total electricity, fuels and district heating

8,250,846 7,446,887

Coverage

(landlord-procured consumption)

100% 100%

Renewable electricity %

76% 74%

Coverage

(landlord-procured consumption)

100% 100%

– Consumption data relates to the managed portfolio only:

- Industrial: Distribution warehouse: 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.

- Mixed use office/retail: whole building

- Mixed use other: whole building; common parts; tenant space, where procured by the landlord.

- Office low-rise: whole building; common parts; shared services; outdoor areas; tenant space, where procured by

the landlord.

- Office mid-rise: shared services, 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.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

100

Other information (unaudited)

– Percentage of data estimated pro-rata across 2021 and 2022: 0.3%.

– Renewable electricity (%) is calculated according to the attributes of energy supply contracts as at 31 December

2022 and only reflects renewable electricity procured under a 100% “green tariff” (i.e. where generation is from

a100% renewable source). The renewables percentage of standard (non “green tariff”) energy supplies are not

currently known and therefore has not been included within this number.

– Intensity: Numerators/denominators are aligned at the sector level as follows:

- Lodging, Leisure, & Recreation: Other, Retail: High Street & Retail: Retail Centres: Warehouse – Common areas

energy consumption (kWh) divided by common parts area (CPA m

)

- Industrial: Distribution Warehouse – External areas energy consumption (kWh) divided by the external area (m

)

- All other sectors – Common areas and shared service or whole building energy consumption (kWh) divided by

gross internal area (GIAm

)

– All energy was procured from a third-party supplier. No “self-generated” renewable energy was consumed during

the reporting period and therefore is not presented here.

– Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has

been reported.

– Where appropriate (for relevant assets), consumption data and asset NLA/GIA has been adjusted to reflect the

Company’s share of ownership.

Sustainability Performance Measures (Environmental) (unaudited)

continued

Overview Strategic Report Governance Financial Statements Other information (unaudited)

101

Like for like energy consumption (Elec-LfL; Fuels-LfL; Energy-Int)

The table below sets out the like-for-like landlord obtained energy consumption from the Company’s managed

portfolio by sector.

Total electricity consumption

(kWh)

Total fuel consumption

(kWh)

Like-for-like Energy Intensity

(kWh/m

)

Sector 2021 2022 % Change 2021 2022 % Change 2021 2022 % Change

Office: Corporate:

Low-Rise Office

680,420 629,791 -7% 738,697 637,572 -14% 17 12 -33%

Coverage

(landlord-procured consumption)

100% 100% 100% 100% 100% 100%

Retail: High Street

18,048 16,992 -6% – – – 9 9 -6%

Coverage

(landlord-procured consumption)

100% 100% – – 100% 100%

Retail: Retail Centres:

Warehouse

38,531 34,960 -9% – – – 2 2 -10%

Coverage

(landlord-procured consumption)

100% 100% – – 100% 100%

Mixed use: Other

1,684,664 1,911,974 13% – – – 77 88 15%

Coverage

(landlord-procured consumption)

100% 100% – – 100% 100%

Mixed use: Office/Retail

287,802 273,793 -5% – – – 101 96 -5%

Coverage

(landlord-procured consumption)

100% 100% – – 100% 100%

Industrial:

DistributionWarehouse

1,410,363 1,394,575 -1% 1,002,455 1,074,358 7% 0.4 0.5 3%

Coverage

(landlord-procured consumption)

100% 100% 100% 100% 100% 100%

Lodging, Leisure & Recreation:

Other

239,163 311,299 30% – – – 11 12 9%

Coverage

(landlord-procured consumption)

100% 100% – – 100% 100%

Office:

Corporate: Mid-Rise Office

277,019 268,733 -3% 496,144 448,859 -10% 192 178 -7%

Coverage

(landlord-procured consumption)

100% 100% 100% 100% 100% 100%

Total

4,636,009 4,842,117 4% 2,237,297 2,160,790 -3%

Coverage

(landlord-procured consumption)

100% 100% 100% 100%

Total electricity, fuels and

district heating

6,873,306 7,002 ,906 1.9%

Coverage

(landlord-procured consumption)

100% 100%

Renewable electricity %

71% 79%

– Like-for-like excludes assets that were purchased, sold, under refurbishment or subject to a significant change in

the scope of reported data during the two years reported.

– Consumption data relates to the manage portfolio only:

- Industrial: Distribution warehouse: 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.

- Mixed use office/retail: whole building.

- Mixed use other: whole building; common parts; tenant space, where procured by the landlord.

- Office low-rise: whole building; common parts; shared services; outdoor areas; tenant space, where procured by

the landlord.

- Office mid-rise: shared services, tenant space, where procured by the landlord.

- Retail high street: common parts, tenant space, where procured by the landlord.

– Percentage of data estimated pro-rata across 2021 and 2022: 0.3%.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

102

Other information (unaudited)

– Renewable electricity (%) is calculated according to the attributes of energy supply contracts as at 31 December

2022 and only reflects renewable electricity procured under a 100% “green tariff” (i.e. where generation is from

100% renewable source). The renewables percentage of standard (non “green tariff”) energy supplies are not

currently known and therefore has not been included within this number.

– Intensity: Numerators/denominators are aligned at the sector level as follows:

- Lodging, Leisure, & Recreation: Other, Retail: High Street & Retail: Retail Centres: Warehouse – Common areas

energy consumption (kWh) divided by common parts area (CPA m

)

- Industrial: Distribution Warehouse – External areas energy consumption (kWh) divided by the external area (m

- All other sectors – Common areas and shared service or whole building energy consumption (kWh) divided by

gross internal area (GIA m

)

– All energy was procured from a third-party supplier. No “self-generated” renewable energy was consumed during

the reporting period and therefore is not presented here.

– Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has

been reported.

– Where appropriate (for relevant assets), consumption data and asset NLA/GIA has been adjusted to reflect the

Company’s share of ownership.

– Variance Commentary:

- The like-for-like variance for the Mixed use: Other shows an increase in electricity. The increase here can be

explained by the single asset which comprises this sector (Manchester City Tower) having higher consumption in

2022 due to an increase in occupancy.

- The like-for-like variance for Lodging, Leisure & Recreation: Other shows an increase in electricity. The increase

here can be explained by the single asset which comprises this sector (Luton The Galaxy) having higher

consumption in 2022 due to an increase in occupancy.

Sustainability Performance Measures (Environmental) (unaudited)

continued

Overview Strategic Report Governance Financial Statements Other information (unaudited)

103

Greenhouse gas emissions (GHG-Dir-Abs; GHG-Indir-Abs; GHG-Int)

The table below sets out the Company’s managed portfolio greenhouse gas emissions by sector.

Absolute emissions

(tCO

Like-for-like emissions

(tCO

Like-for-like Intensity

(kg tCO

e/m

)

Absolute Intensity

(kg tCO

e/m

)

Sector 2021 2022 2021 2022

Change 2021 2022

Change

Office: Corporate:

Low-Rise Office

Scope 1

198 116 135 116 -14%

3.6

2.2 -38% 20.1 5.0

-75%

Scope 2

319 155 144 122 -16%

Scopes 1 & 2

517 271 280 238 -15%

Coverage

(landlord-procured

consumption)

100% 100% 100% 100% 100% 100% 100% 100%

Retail: High Street

Scope 1

– – – – –

2.0

1.7

-14%

3.0 1.7

-42%

Scope 2

6 3 4 3 -14%

Scopes 1 & 2

6 3 4 3 -14%

Coverage

(landlord-procured

consumption)

100% 100% 100% 100% 100% 100% 100% 100%

Retail: Retail Centres:

Warehouse

Scope 1

– – – – –

0.5 0.4

-18%

0.5 0.4

-18%

Scope 2

8 7 8 7 -17%

Scopes 1 & 2

8 7 8 7 -17%

Coverage

(landlord-procured

consumption)

100% 100% 100% 100% 100% 100% 100% 100%

Mixed use: Other

Scope 1

– – – – –

16.3 1 7.1 5% 21.4 19.9

-7%

Scope 2

401 370 358 370 3%

Scopes 1 & 2

401 370 358 370 3%

Coverage

(landlord-procured

consumption)

100% 100% 100% 100% 100% 100% 100% 100%

Mixed use:

Office/Retail

Scope 1

– 24 – – –

21.5 18.7

-13%

21.5 18.7

-13%

Scope 2

61 79 61 53 -13%

Scopes 1 & 2

61 103 61 53 -13%

Coverage

(landlord-procured

consumption)

100% 50% 100% 100% 100% 100% 100% 100%

Industrial: Distribution

Warehouse

Scope 1

184 196 184 196 7%

0.1 0.1 -6% 0.1 0.1

-6%

Scope 2

300 271 299 270 -10%

Scopes 1 & 2

484 467 483 466 -4%

Coverage

(landlord-procured

consumption)

100% 100% 100% 100% 100% 100% 100% 100%

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

104

Other information (unaudited)

Sustainability Performance Measures (Environmental) (unaudited)

continued

Absolute emissions

(tCO

Like-for-like emissions

(tCO

Like-for-like Intensity

(kg tCO

e/m

)

Absolute Intensity

(kg tCO

e/m

)

Sector 2021 2022 2021 2022

Change 2021 2022

Change

Lodging, Leisure &

Recreation: Other

Scope 1

– – – – – 2.3 2.2

-1%

14.8 14.6

-1%

Scope 2

51 60 51 60 19%

Scopes 1 & 2

51 60 51 60 19%

Coverage

(landlord-procured

consumption)

100% 100% 100% 100% 100% 100% 100% 100%

Office: Corporate:

Mid-Rise Office

Scope 1

91 82 91 82 -10%

37. 2 33.3

-11%

37. 2 33.3

-11%

Scope 2

59 52 59 52 -12%

Scopes 1 & 2

150 134 150 134 -11%

Coverage

(landlord-procured

consumption)

100% 100% 100% 100% 100% 100% 100% 100%

Total Scope 1

473 419 410 394 -4%

Total Scope 2

1,204 997 984 936 -5%

Total Scope 1 & 2

1,677 1,415 1,394 1,331 -5%

Coverage

(landlord-procured

consumption)

100% 100% 100% 100%

– Like-for-like excludes assets that were purchased, sold, under refurbishment or subject to a significant change in

the scope of reported data during the two years reported.

– The Fund’s greenhouse gas (GHG) inventory has been developed as follows:

- Scope 1 GHG emissions relate to the use of onsite natural gas.

- Scope 2 GHG emissions relate to the use of electricity.

– GHG emissions from electricity (Scope 2) are reported according to the “location-based” approach.

– GHG emissions are presented as tonnes of carbon dioxide equivalent (tCO

e) and GHG intensity is presented as

kilograms of carbon dioxide equivalent (kg CO

e), where available greenhouse gas emissions conversion factors

allow.

– Fuels/electricity GHG emissions factors have been taken from the UK government’s Greenhouse Gas Reporting

Factors for Company Reporting (2021 and 2022).

– Emissions data relates to the managed portfolio only:

- Industrial: Distribution warehouse: 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.

- Mixed use office/retail: whole building.

- Mixed use other: whole building; common parts; tenant space, where procured by the landlord.

- Office low-rise: whole building; common parts; shared services; outdoor areas; tenant space, where procured by

the landlord.

- Office mid-rise: shared services.

- 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.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

105

– Percentage of data estimated pro-rata across 2021 and 2022: 0.3% for electricity and gas.

– Intensity: Numerators/denominators are aligned at the sector level as follows:

- Lodging, Leisure & Recreation: Other, Retail: High Street & Retail: Retail Centres: Warehouse – Common areas

GHG emissions divided by common parts area (CPA m

- Industrial: Distribution Warehouse & Retail: Retail Centres: Warehouse – External areas GHG emissions divided

by the External Area.

- All other sectors: Common areas, shared service and/or whole building GHG emissions divided by gross internal

area (GIA m

– Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has

been reported.

– Where appropriate (for relevant assets), consumption data and asset NLA/GIA has been adjusted to reflect the

Company’s share of ownership

– Variance Commentary:

- There was a significant drop in the absolute intensity for the sector Office: Corporate: Low-Rise Office due to

efficiency measures which include: a boiler replacement at lighting upgrades at Cheltenham, The Promenade

but this reduction is mainly due to the asset “The Arc Nottingham” being sold at the beginning of 2022 and

therefore is excluded from the 2022 analysis.

- The decrease in absolute intensity for the sector Retail: High Street can be explained by a single electricity meter

becoming inactive at the of 2021 and therefore consumption previously attributed to this meter is not factored

into the analysis for 2022.

- There was a significant 18% decrease in the like-for-like emissions for the sector Retail: Retail Centres:

Warehouse. The decrease here can be explained by the fact that the electricity & fuel for the single asset which

comprises this sector (St. John’s Retail Park) was lower in 2022 partly due to LED lighting upgrades.

- Carbon emissions factors for electricity have reduced in 2022 in the UK which has contributed to reductions in

GHG intensity.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

106

Other information (unaudited)

Water (Water-Abs; Water-LfL; Water-Int)

The table below sets out water consumption from the Company’s managed portfolio by sector.

Absolute

Waterconsumption

)

Like-for-like

Waterconsumption

)

Like-for-like

Intensity

(m³/m²)

Sector 2021 2022 2021 2022

Change 2021 2022

Change

Office: Corporate: Low-Rise Office

7,6 52 5,793 3,448 4,029 17% 0.08 0.13

54%

Coverage (landlord-procured consumption)

100% 100% 100% 100% 100% 100%

Retail: High Street

2,941 2,882 2,941 2,882 -2% 0.22 0.20

-11%

Coverage (landlord-procured consumption)

100% 100% 100% 100% 100% 100%

Retail: Retail Centres: Warehouse

325 331 325 331 2% 0 0

Coverage (landlord-procured consumption)

100% 100% 100% 100% – –

Mixed use: Other

1,990 3,861 1,990 3,861 94% 0.11 0.22

94%

Coverage (landlord-procured consumption)

100% 100% 100% 100% 100% 100%

Mixed use: Office/Retail

– 2,531 – – – 0 0

–

Coverage (landlord-procured consumption)

– 100% – 0% – –

Industrial: Distribution Warehouse

– – – – – 0 0

Coverage (landlord-procured consumption)

– – – – – –

Lodging, Leisure & Recreation: Other

130 149 130 149 15% 0.01 0.01

15%

Coverage (landlord-procured consumption)

100% 100% 100% 100% 100% 100%

Office: Corporate: Mid-Rise Office

42 114 – – – 0 0

Coverage (landlord-procured consumption)

100% 100% – 0% – –

Total

13,080 15,662 8,835 11,252 27%

Coverage (landlord-procured consumption)

100% 100% 100% 100%

– Like-for-like excludes assets that were purchased, sold, under refurbishment or subject to a significant change in

the scope of reported data during the two years reported.

– Consumption data relates to the manage portfolio only:

- Industrial: Distribution warehouse: tenant space, where procured by the landlord.

- Lodging, leisure & recreation: common parts.

- Mixed use other: whole building; common parts.

- Office low-rise: whole building; common parts; tenant space, where procured by the landlord.

- Office mid-rise: tenant space, where procured by the landlord.

- 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 2021 and 2022: 0.3%.

– Intensity: Numerators/denominators are aligned as follows:

- Office Corporate: Low-Rise Office, Mixed use: Other, Mixed use: Office/Retail & Lodging, Leisure & Recreation:

Other – Whole building water consumption (m

) divided by gross internal area (GIA m

- Retail: High Street – Common Areas water consumption (m

) divided by Common Parts Area (CPA m

- For sectors Mixed use: Office/Retail, Industrial: Distribution Warehouse & Office: Corporate: Mid-Rise Office

there was no water data available.

- The sector Retail: Retail Centres: Warehouse sector is showing as 0 consumption due to insufficient data.

– Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has

been reported.

– Where appropriate (for relevant assets), consumption data and asset NLA/GIA has been adjusted to reflect the

Company’s share of ownership.

Sustainability Performance Measures (Environmental) (unaudited)

continued

Overview Strategic Report Governance Financial Statements Other information (unaudited)

107

– Variance Commentary:

- The notable increase in like-for-like water intensity for the Office: Corporate: Low-Rise Office sector can largely

be attributed to the asset Northampton, Century & Peterbridge. This is due to a catch up read received from the

supplier for 2022 which was not based on estimates and showed higher consumption than 2021. As

consumption at this meter is minimal, year on year variances can have an outsized impact.

- The notable increase in like-for-like water intensity for the Mixed use: Other sector is attributed to the asset

Manchester City Tower having increased occupancy in 2022 compared to 2021.

Waste (Waste-Abs; Waste-LfL)

The table below sets out waste from the Company’s managed portfolio by disposal route and sector:

Absolute tonnes Like-for-like tonnes

2021 2022 2021 2022

Tonnes % Tonnes % Tonnes % Tonnes %

Change

Office:

Corporate: Low-Rise Office

Recycled

47.90 66.5% 50.50 64.6% 47.90 66.5% 50.50 64.6% 5.4%

Incineration

with energy

recovery

24.12 33.5% 27.72 35.4% 24.12 33.5% 27.72 35.4% 14.9%

Unknown

0 0% 0 0% 0 0% 0 0% –

Landfill

0 0% 0 0% 0 0% 0 0% –

Total

72.01 78.22 72.01 78.22 8.6%

Coverage

(landlord-

procured

consumption)

100% 100% 100% 100%

Retail:

High Street

Recycled

8.38 34.3% 14.04 40.8% 8.38 34.3% 14.04 40.8% 6 7.6%

Incineration

with energy

recovery

16.03 65.7% 20.35 59.2% 16.03 65.7% 20.35 59.2% 27.0%

Unknown

0 0% 0 0% 0 0% 0 0% –

Landfill

0 0% 0 0% 0 0% 0 0% –

Total

24.40 34.38 24.40 34.38 40.9%

Coverage

(landlord-

procured

consumption)

100% 100% 100% 100%

Retail: Retail Centres:

Warehouse

Recycled

0 – 0 0% 0 – 0 – –

Incineration

with energy

recovery

0 – 1.82 100% 0 – 0 – –

Unknown

0 – 0 0% 0 – 0 – –

Landfill

0 – 0 0% 0 – 0 – –

Total

0 1.82 0 0 –

Coverage

(landlord-

procured

consumption)

– 100% – –

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

108

Other information (unaudited)

Absolute tonnes Like-for-like tonnes

2021 2022 2021 2022

Tonnes % Tonnes % Tonnes % Tonnes %

Change

Mixed use:

Other

Recycled

169.90 55.6% 168.95 55.6% 169.90 55.6% 168.95 55.6% -0.6%

Incineration

with energy

recovery

135.82 44.4% 135.06 44.4% 135.82 44.4% 135.06 44.4% -0.6%

Unknown

0 0% 0 0% 0 0% 0 0% –

Landfill

0 0% 0 0% 0 0% 0 0% –

Total

305.72 304.01 305.72 304.01 -0.6%

Coverage

(landlord-

procured

consumption)

100% 100% 100% 100%

Mixed use:

Office/Retail

Recycled

4.60 41.4% 10.40 36.0% 4.60 41.4% 2.40 22.0% -47.8%

Incineration

with energy

recovery

6.50 58.6% 18.50 64.0% 6.50 58.6% 8.50 78.0% 30.8%

Unknown

0 0% 0 0% 0 0% 0 0% –

Landfill

0 0% 0 0% 0 0% 0 0% –

Total

11.10 28.90 11.10 10.90 -1.8%

Coverage

(landlord-

procured

consumption)

100% 100% 100% 100%

Industrial:

Distribution Warehouse

Recycled

0 – 0 – 0 – 0 – –

Incineration

with energy

recovery

0 – 0 – 0 – 0 – –

Unknown

0 – 0 – 0 – 0 – –

Landfill

0 – 0 – 0 – 0 – –

Total

0 0 0 0 –

Coverage

(landlord-

procured

consumption)

0 0 0 0

Lodging, Leisure & Recreation:

Other

Recycled

128.19 52.4% 250.28 53.5% 128.19 52.4% 250.28 53.5% 95.2%

Incineration

with energy

recovery

116.35 47.6% 217.84 46.5% 116.35 47.6% 217.84 46.5% 87. 2%

Unknown

0 0% 0 0% 0 0% 0 0% –

Landfill

0 0% 0 0% 0 0% 0 0% –

Total

244.54 468.12 244.54 468.12 91.4%

Coverage

(landlord-

procured

consumption)

100% 100% 100% 100%

Office: Corporate:

Mid-Rise Office

Recycled

20.93 69.7% 12.76 61.5% 20.93 69.7% 12.76 61.5% -39.0%

Incineration

with energy

recovery

9.09 30.3% 7.97 38.5% 9.09 30.3% 7.97 38.5% -12.3%

Unknown

0 0% 0 0% 0 0% 0 0% –

Landfill

0 0% 0 0% 0 0% 0 0% –

Total

30.02 20.73 30.02 20.73 -31.0%

Coverage

(landlord-

procured

consumption)

100% 100% 100% 100%

Sustainability Performance Measures (Environmental) (unaudited)

continued

Overview Strategic Report Governance Financial Statements Other information (unaudited)

109

Absolute tonnes Like-for-like tonnes

2021 2022 2021 2022

Tonnes % Tonnes % Tonnes % Tonnes %

Change

Total

Recycled

379.89 55.23% 506.92 54.1% 379.89 55.2% 498.62 54.4% 31.3%

Incineration

with energy

recovery

307.90 44.77% 429.96 45.9% 307.90 44.8% 417.44 45.6% 35.6%

Unknown

0 0% 0 0% 0 0% 0 0% –

Landfill

0 0% 0 0% 0 0% 0 0% –

Total

688 936 688 916 33.2%

Coverage

(landlord-

procured

consumption)

100% 100% 100% 100%

– Whilst zero waste is sent direct to landfill, a residual component of the “recycled” and “incineration with energy

recovery” waste streams may end up in landfill.

– Like-for-like excludes assets that were purchased, sold, under refurbishment or subject to a significant change in

the scope of reported data during the two years reported.

– Waste data relates to the managed portfolio only.

– Waste management procured directly by tenants is not reported.

– Reported data relates to non-hazardous waste only, robust tonnage data on the small quantities of hazardous waste

produced is not available.

– Coverage (landlord-procured consumption) relates to the proportion of assets for which landlord obtained data has

been reported

– Where appropriate (for relevant assets), consumption data and asset NLA/GIA has been adjusted to reflect the

Company’s share of ownership.

– Variance Commentary:

- Due to Covid-19 closures in early 2021, occupancy levels across the Fund were down but this generally

increased across the Fund towards the latter half of 2021 and in many cases throughout 2022. Some assets have

recorded modest decreases in waste. However, overall, there has been a 33.2% increase in like-for-like waste

tonnage which can mainly be attributed due to higher occupancy levels across a number of assets.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

110

Other information (unaudited)

Sustainability Performance Measures (Environmental) (unaudited)

continued

Sustainability certification: Green building certificates (Cert-Tot)

The table below sets out the proportion of the Company’s total portfolio with a Green Building Certificate by floor

area.

Rating Portfolio by Floor Area

BREEAM/Refurbishment and Fit-out | Very Good 11.7%

BREEAM/Refurbishment and Fit-out Coverage 11.7%

BREEAM In Use | Very Good 1.1%

BREEAM In Use | Good 3.7%

BREEAM In Use | Acceptable 1.5%

BREEAM In Use | Pass 0.1%

BREEAM/In Use Coverage 6.4%

WiredScore | Platinum 15.1%

WiredScore | Silver 0.8%

WiredScore | Certified 0.8%

WiredScore Coverage 16.7%

Total Portfolio Coverage 23%

– Green building certificate records for the Company are provided as at 31 March 2023 by portfolio net lettable floor

area.

– Data provided includes managed and non-managed assets (i.e. the whole portfolio).

– Where appropriate (for relevant assets), asset NLA/GIA has been adjusted to reflect the Company’s share of

ownership.

– To avoid double counting, the Total Portfolio Coverage excludes the floor area for the certificate “BREEAM/

Refurbishment and Fit-out” as this relates to an asset which is already factored into the “BREEAM In Us” portion

ofthe analysis.

Sustainability certification: Energy Performance Certificates (Cert-Tot)

The table below sets out the proportion of the Company’s total portfolio with an Energy Performance Certificate by

floor area.

Rating Portfolio by Floor Area

15%

40%

28%

11%

Exempt

No EPC

Coverage

97%

– Energy Performance Certificate (“EPC”) records for the Company are provided for the portfolio as at 31 March

2023 by portfolio floor area.

– Data provided includes the whole portfolio i.e. managed and non-managed assets.

– Where appropriate (for relevant assets) asset NLA/GIA has been adjusted to reflect the Company’s share of

ownership.

– EPCs are known for 97% of the portfolio by floor area. In general terms, since the introduction of the EPC

Regulations in 2008, EPCs are required for the letting of units or buildings or the sale of buildings. In addition,

theUK Minimum Energy Efficiency Standards regulations (“MEES”) came into force for commercial buildings on

1 April 2018 and require a minimum EPC rating of E for new lettings; the rules apply to all leases from 1 April 2023.

The EPCs for the portfolio are managed to ensure compliance with the MEES regulations.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

111

Sustainability Performance Measures (Social)

EPRA’s Sustainability Best Practices Recommendations Guidelines 2017 (“EPRA’s Guidelines”) include Social and

Governance reporting measures to be disclosed for the entity i.e. the Company. The Company is an externally

managed real estate investment trust and has no direct employees. A number of these Social Performance measures

relate to entity employees and therefore these measures are not relevant for reporting at the entity level. The

Investment Manager to the Company, Schroder Real Estate Investment Management Limited, is part of Schroders

PLC which has responsibility for the employees that support the Company. The Company aims to comply with

EPRA’sGuidelines and therefore has included Social and Governance Performance Measure disclosures in this report.

However, these are presented as appropriate for the activities and responsibilities of the Schroder Real Estate

Investment Trust Limited (the “Company”), Schroders PLC or the Investment Manager, Schroder Real Estate

Investment Management Limited.

The Schroders PLC Annual Report and Accounts for the 12 months to 31 March 2023 supports the performance

measures in relation to the Investment Manager as set out below. Schroders PLC’s principles in relation to people

including diversity, gender pay gap, values, employee satisfaction survey, wellbeing and retention can be found at:

– Schroders 2022 Annual Report and Accounts

– https://www.schroders.com/en/working-here/inclusion-and-diversity/

– https://prod.schroders.com/en/sysglobalassets/annual-report/2021/documents/schroders-workforce-diversity--

gpg-report-2021.pdf

Employee gender diversity (Diversity-Emp)

As at 31 December 2022 the Company Board comprised four members: 2 (50% female); 2 (50% male).

For further information on Schroders PLC employee gender diversity, covering more employee categories, please

refer to Schroders 2022 Annual Report and Accounts (page 110):

– Schroders 2022 Annual Report and Accounts

Gender pay ratio (Diversity-Pay)

The remuneration of the Company Board is set out on page 52 of this Report and Accounts document.

Schroders PLC female representation and gender pay report can be found in the Schroders 2022 Annual Report and

Accounts (page 110) and Schroders PLC Gender Pay Gap Report:

– Schroders 2022 Annual Report and Accounts

– https://prod.schroders.com/en/sysglobalassets/annual-report/2021/documents/schroders-workforce-diversity--

gpg-report-2021.pdf

Information on Diversity and Inclusion at Schroders can be found at:

– https://www.schroders.com/en/working-here/inclusion-and-diversity/

– https://prod.schroders.com/en/sysglobalassets/annual-report/2021/documents/schroders-workforce-diversity--

gpg-report-2021.pdf

The following are reported for Schroders in relation to the Investment Management of the Company:

Training and development (Emp-Training)

Schroders requires employees to complete mandatory internal training. Schroders encourages all staff with

professional qualifications to maintain the training requirements of their respective professional body.

Employee performance appraisals (Emp-Dev)

Schroders performance management process requires annual performance objective setting and annual performance

reviews for all staff. The Investment Manager confirms that performance appraisals were completed for 100% of

investment staff relevant to the Company in 2022.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

112

Other information (unaudited)

Sustainability Performance Measures (Social) continued

The following are reported for Schroders PLC:

For Schroders PLC turnover and retention rates please refer to Schroders Annual Report and Accounts (page 30):

– Schroders 2022 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.

The following are reported in relation to the assets held in the Company’s portfolio over the reporting period

to31 March 2023:

Asset health and safety assessments (H&S-Asset)

The table below sets out the proportion of the Company’s total portfolio where health and safety impacts were

assessed or reviewed for compliance or improvement.

Portfolio by floor area (%)

2021 2022

All sectors

81% 100%

Asset health and safety compliance (H&S-Comp)

The table below sets out the number of incidents of non-compliance with regulations/and or voluntary codes identified.

Number of incidents

2021 2022

All Sectors

1 1

In 2022, there was an issue with a fire panel at one asset within the portfolio. The issue was rectified by replacing

thepanel.

Community engagement, impact assessments and development programmes (Comty-Eng)

The table below sets out the proportion of the Company’s total portfolio which completed local community

engagement, impact assessments and/or development programmes:

Portfolio by number assets (%)

2021 2022

Industrial, Distribution Warehouse 7% 2%

Mixed-use, Other 2% 4%

Office, Low-Rise 9% 11%

Office, Mid-Rise 0% 2%

All other sectors 10% 8%

Total 28% 29%

Community engagement initiatives are conducted on an asset-by-asset basis in collaboration with the relevant site team:

– All sectors have created employment opportunities for the local community. Industrial, Distribution Warehouse,

Office, Low-Rise & Office, Mid-Rise: a number of assets within these sectors have also provided support for local

charities such as the KidsOut campaign at The Tun, Edinburgh to The Island Charity at York Clifton Park, Shipton Rd

and through support for the local food bank at Norwich, Fifers Lane.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

113

Sustainability Performance Measures (Governance)

Composition of the highest governance body (Gov-Board)

The Board of the Company comprised four non-executive independent directors (no executive board members) as at

31 March 2023.

– The average tenure of the four directors to 31 March 2023 is three years and nine months; and

– The number of directors with competencies relating to environmental and social topics is two and their experience

can be seen in their biographies.

Nominating and selecting the highest governance body (Gov-Select)

The role of the Nomination Committee, chaired by Alastair Hughes, is to consider and make recommendations to the

Board on its composition so as to maintain an appropriate balance of skills, experience and diversity, including gender,

and to ensure progressive refreshing of the Board. On individual appointments, the 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. While the Nomination Committee is dedicated to selecting the best

person for the role, it aims to promote diversification and the Board recognises the importance of diversity. The Board

agrees that its members should possess a range of experience, knowledge, professional skills and personal qualities, as

well as the independence necessary to provide effective oversight of the affairs of the Company.

Process for managing conflicts of interest (Gov-Col)

The Company’s Conflicts of Interest Policy sets out the policy and procedures of the Board and the Company

Secretary for the management of conflicts of interest.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

114

Other information (unaudited)

Streamlined Energy and Carbon Reporting

Schroder Real Estate Investment Trust Limited (the “Company”) is a real estate investment company with a premium

listing on the Official List of the UK Listing Authority and whose shares are traded on the Main Market of the London

Stock Exchange (ticker: SREI).

The Company is a real estate investment trust (“REIT”) and benefits from the various tax advantages offered by the UK

REIT regime. The Company 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 Collective Investment Schemes Rules and Guidance, 2021.

The Board and Investment Manager, in recognition of the importance it places on sustainability, has voluntarily

included a report for the Company aligned with the UK Companies (Directors’ Report) and Limited Liability

Partnerships (Energy and Carbon Report) Regulations 2018, (the Regulations) on its UK energy use, associated Scope1

and 2 greenhouse gas (“GHG”) emissions, an intensity metric and, where applicable, global energy use. Thisreporting

is also referred to as Streamlined Energy and Carbon Reporting (“SECR”).

This Energy and Carbon Report applies for the Company’s annual report for the 12 months to 31 March 2023. The

statement has, however, been prepared for the calendar year, the 12 months to 31 December 2022, to report annual

figures for emissions and energy use the available period for which such information is available. In addition, the

regulations advise providing a narrative on energy efficiency actions taken in the previous financial year.

As a property company, energy consumption and emissions result from the operation of buildings. The reporting

boundary has been scoped to those held properties where the Company retained operational control: where the

Company is responsible for operating the entire building, shared services (e.g. common parts lighting, heating and air

conditioning), external lighting and/or void spaces. “Operational control” has been selected as the reporting boundary

(as opposed to “financial control” or “equity share”) as this reflects the portion of the portfolio where the Company can

influence operational procedures and, ultimately, sustainability performance. This incorporates consumption in tenant

areas, where the landlord procures energy for the whole building. In 2022, within the portfolio, there were 23

properties within the operational control reporting boundary and in 2021 there were 24 such properties. All Company

assets are located in the UK.

The Company is not directly responsible for any GHG emissions/energy usage at single-let/FRI assets, nor at multi-let

assets where the tenant is responsible for procuring their own energy. These emissions form part of the wider value

chain (i.e. “Scope 3”) emissions, which are not monitored at present. As a real estate company with no direct

employees or company-owned vehicles as at 31 December 2022, there is no energy consumption or emissions

associated with travel or occupation of corporate offices to report. Fugitive emissions associated with refrigerant

losses from air conditioning equipment are widely understood by the 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 years

and this confirmed that they were de minimis and consequently have not been captured in the current reporting.

In addition to reporting absolute energy consumption and GHG emissions, the Company has reported separately on

performance within the “like-for-like” portfolio, as well as providing intensity ratios, where appropriate. The like-for-like

portfolio includes buildings where each of the following conditions is met:

– Owned for the full 24-month period (sales/acquisitions are excluded);

– No major renovation or refurbishment has taken place; and

– 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 Distribution Warehouses, Leisure, Mixed-Use, Offices and Retail Warehouses.

For Retail High Street, the most relevant denominator is the common parts area. The intensity ratio is expressed as:

– Energy: kilowatt hours per metre square (net lettable area or common parts area) per year or kWh/m

/yr.

– GHG: kilograms carbon dioxide equivalent per metre square (net lettable area or common parts area) per year, or

kgCO

e/m

/yr.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

115

Energy Consumption and Greenhouse Gas Emissions

The table below sets out the Company’s energy consumption:

Absolute Energy

(kWh)

Like-for-like Energy

(kWh)

2021 2022 2021 2022 % Change

Gas 2,581,376 2,293,309 2,237,297 2,160,790 -3%

Electricity 5,669,470 5,153,578 4,636,009 4,842,117 4%

Total 8,250,846 7,446,887 6,873,306 7,002,906 1.9%

The table below sets out the Company’s greenhouse gas emissions:

Absolute Emissions

(tCO

Like-for-like Emissions

(tCO

2021 2022 2021 2022 % Change

Scope 1 (Direct emissions from gas consumption) 473 419 410 394 -4%

Scope 2 (Indirect emissions from electricity) 1,204 997 984 936 -5%

Total 1,677 1,415 1,394 1,331 -5%

The like-for-like energy consumption for the 2022 calendar year for the managed assets held within the Company

hasslightly increased by 1.9% (due to occupancy changes following Covid-19 related closures), the greenhouse gas

emissions have decreased by 5%. Energy performance improvement opportunities continued to be considered across

the portfolio. Initiatives undertaken during the reporting year include boiler and hot water system replacements/

upgrades, wall and roof insulation upgrades, window replacements/upgrades, LED lighting upgrades and installation

of lighting and ventilation occupancy sensors. Automatic Meter Readers are consistently being rolled out to all landlord

electricity supplies for improved energy monitoring.

The table below sets out the Company’s energy and greenhouse gas emissions intensities by sector:

Energy Intensities

(kWh per ft

)

Emissions Intensities

(tCO

e per ft

)

2021 2022 2021 2022

Industrial Distribution Warehouses 0.6 0.6 0.1 0.1

Leisure 69.5 75.5 14.8 14.6

Mixed Use, Office/Retail 101.4 96.4 21.5 18.7

Mixed Use, Other 101.0 103.0 21.4 19.9

Office, Low-rise 98.3 25.9 20.1 5.0

Office, Mid-rise 192.2 178.4 37.2 33.3

Retail High Street 14.0 8.9 3.0 1.7

Retail Warehouse 2.3 2.1 0.5 0.4

Methodology

– All energy consumption and GHG emissions reported occurred at the Company assets all of which are located in

the UK.

– Energy consumption data is reported according to automatic meter reads, manual meter reads or invoice

estimates. Historic energy and consumption data have been restated where more complete and or accurate

records have become available. Where required, missing consumption data has been estimated through pro rata

extrapolation. Data has been adjusted to reflect the Company’s share of asset ownership, where relevant.

– The sustainability content located in the Sustainability Performance Measures section of the SREIT annual report

for the year ending 31 March 2023 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.

– The Company’s GHG emissions are calculated according to the principles of the Greenhouse Gas (“GHG”)

Protocol Corporate Standard.

- The Company’s Greenhouse Gas Emissions are reported as tonnes of carbon dioxide equivalent (tCO

e), which

includes the following emissions covered by the GHG Protocol (where relevant and available greenhouse gas

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

116

Other information (unaudited)

emissions factors allow): carbon dioxide (CO

), methane (CH

), hydrofluorocarbons (HFCs), nitrous oxide (N

0),

perfluorocarbons (PFCs), sulphur hexafluoride (SF

) and nitrogen trifluoride (NF

);

- GHG emissions from electricity (Scope 2) are reported according to the “location-based” approach; and

- The following greenhouse gas emissions conversion factors and sources have been applied:

Country Emissions Source GHG Emissions Factor Emissions Factor Data Source

United Kingdom

Electricity 2021 0.2123kg CO

e UK Government’s GHG Conversion Factors for

Company Reporting (2021)

Electricity 2022 0.1934 kg CO

UK Government’s GHG Conversion Factors for

Company Reporting (2022)

Gas 0.1825kg CO

Energy Efficiency Actions

Environmental data management system and quarterly reporting

Environmental data for the Company is collated by sustainability consultants Evora Global supported by their

proprietary environmental data management system SIERA. Energy, water, waste and greenhouse gas emission data

are collected and validated for all assets where the portfolio has operational control on a quarterly basis.

Energy target, improvement programme and net zero carbon

In 2019 the Manager signed the Better Building Partnership’s (“BBP”) Climate Commitment and we have a net-zero

ambition aligned to the Paris Agreement aim to limit warming to 1.5°C. The Manager’s commitment was further

underlined by the Company who last year announced their “Pathway to Net Zero Carbon” committing to:

– Operational whole buildings emissions to be aligned to a 1.5°C pathway by 2030;

– Embodied emissions for all new developments and major renovations to be net zero by 2030;

– Operational Scope 1 and 2 (landlord) emissions to be net zero by 2030; and

Operational and embodied whole building (scope 1, 2 and 3 – landlord and tenant) emissions to be net zero by 2040.

The Investment Manager, together with sustainability consultants Evora Global and property managers looks to

identify and deliver energy and greenhouse gas emission reductions on a cost-effective basis. The programme

involves reviewing all managed assets within the Company and identifying and implementing improvement initiatives,

where viable. The process is of continual review and improvement.

Energy performance improvement initiatives undertaken at several assets during the reporting period include HVAC/

lighting upgrades, wall and roof insulation upgrades, upgrades to Automatic Meter Readers for improved energy

monitoring, LED upgrades and window upgrades/replacements.

Renewable electricity tariffs and carbon offsets

The Investment Manager has an objective to procure 100% renewable electricity for all landlord-controlled supplies

for which it has responsibility, which includes the asset of the Company, by 2025. As at 31 December 2022 74% of the

Company’s landlord-controlled electricity was on renewable tariffs. No carbon offsets were purchased during the

reporting period.

1 Better Buildings Partnership Climate Commitment available here: https://www.betterbuildingspartnership.co.uk/member-climate-commitment

Streamlined Energy and Carbon Reporting continued

Overview Strategic Report Governance Financial Statements Other information (unaudited)

117

Asset list

The table below summarises the portfolio information as at 31 March 2023, excluding post year end activity.

Theproperty values presented represent the year end valuations as determined by the independent valuers as at

31 March 2023:

Property Sector Region

Value range

(£m)

Milton Keynes, Stacey Bushes Industrial Estate Industrial South East 50-60

Leeds, Millshaw Park Industrial Estate Industrial Yorkshire & Humberside 40-50

London, Store Street, The University of Law

Campus (50% share)’

Office/university London 30-40

Cheadle, Stanley Green Trading Estate Industrial North West 30-40

Manchester, City Tower (25% share) Office/hotel/retail/

leisure/car park

North West 30-40

St.John’s Retail Park, Bedford Retail Warehouse Eastern 30-40

Chippenham, Langley Park Industrial Estate Industrial South West 20-30

Leeds, Headingley Central Retail/mixed-use Yorkshire & Humberside 20-30

Norwich, Union Park Industrial Estate Industrial Eastern 20-30

Telford, Hortonwood 7 Industrial West Midlands 10-20

Uxbridge, 106 Oxford Road Office South East 10-20

Birkenhead, Valley Park Industrial Estate Industrial North West 10-20

Manchester, St. Ann’s House Other North West 10-20

Salisbury, Churchill Way Retail Warehouses South West 0-10

Edinburgh, The Tun Office Scotland 0-10

Luton, The Galaxy Other Eastern 0-10

Cheltenham, The Promenade Office South West 0-10

Milton Keynes, Matalan Retail Warehouses South East 0-10

Chester, Sealand Road Retail Warehouses North West 0-10

Northampton, Century & Peterbridge Office East Midlands 0-10

Liverpool, 88-94 Church Street Retail North West 0-10

Cardiff, Haywood House Office Wales 0-10

Sheffield, Pinstone St Retail Yorkshire & Humberside 0-10

Warwick, 55/56 Heathcote Industrial Estate Industrial West Midlands 0-10

York, Clifton Park Office Yorkshire & Humberside 0-10

Haydock Industrial Estate Industrial North West 0-10

Leeds, Coverdale House Office Yorkshire & Humberside 0-10

Ilkeston, Albion Shopping Centre Retail East Midlands 0-10

Sandbach, Hall Lane Industrial North West 0-10

Warwick, Seton House Office West Midlands 0-10

Marlow, Pacific House Office South East 0-10

Swindon, 21/27 Stirling Court Industrial South West 0-10

Chelmsford, 24-25 High St Retail South East 0-10

Bedford, Howard House Office Eastern 0-10

Fareham, Delme Place, Cams Estate Office South East 0-10

Truro, 15/16 King Street Retail South West 0-10

Chelmsford, 67 & 68 High Street 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.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

118

Other information (unaudited)

Report of the Depositary to the Shareholders

Established in 2013, Langham Hall UK Depositary LLP is an FCA regulated firm that works in conjunction with the

Manager and the Company to act as depositary. Consisting exclusively of qualified and trainee accountants and

alternative specialists, the entity represents net assets of US$110 billion and we deploy our services to over 120+

alternative investment funds across various jurisdictions worldwide. Our role as depositary primarily involves

oversightof the control environment of the Company, in line with the requirements of the Alternative Investment Fund

Managers Directive (AIFMD).

Our cash monitoring activity provides oversight of all the Company held bank accounts with specific testing of

banktransactions triggered by share issues, property income distributions via dividend payments, acquisitions, and

third-party financing. We review whether cash transactions are appropriately authorised and timely. The objective

ofour asset verification process is to perform a review of the legal title of all properties held by the Company, and

shareholding of special purpose vehicles beneath the Company.

We test whether on an ongoing basis the Company is being operated by the Manager in line with the Company’s

prospectus, and the internal control environment of the Manager. This includes a review of the Company’s and its

subsidiaries’ decision papers and minutes.

We work with the Manager in discharging our duties, holding formal meetings with senior staff on a quarterly basis and

submit quarterly reports to the Manager and the Company, which are then presented to the Board of Directors, setting

out our work performed and the corresponding findings for the period.

For the financial year ending 31 March 2023, our work included the review of two investment property acquisitions,

two investment property disposals, one third party borrowing and four interim dividends. Based on the work

performed during this period, we confirm that no issues came to our attention to indicate that controls are not

operating appropriately.

Joe Hime

Head of Depositary

For and on behalf of

Langham Hall UK Depositary LLP, London, UK

Langham Hall UK Depositary LLP is a limited liability partnership registered in England and Wales

(with registered number OC388007).

Overview Strategic Report Governance Financial Statements Other information (unaudited)

119

Glossary

Alternative performance measure

(“APM”)

please see page 92 for full details of the key APMs used by the Company.

Annualised dividend yield being the dividend paid during the period annualised and expressed as a percentage of the

period end share price.

Articles means the Company’s articles of incorporation, as amended from time to time.

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 40 and 41 of this document and “Director” means any one of them.

Disclosure Guidance and

Transparency Rules

means the disclosure guidance and transparency rules contained within the FCA’s Handbook of

Rules and Guidance.

Earnings per share (“EPS”) is the profit after taxation divided by the weighted average number of shares in issue during the

period. Diluted and adjusted EPS per share are derived as set out under NAV.

Estimated rental value (“ERV”) Is the Group’s external valuers’ reasonable opinion as to the open market rent which, on the date

of the valuation, could reasonably be expected to be obtained on a new letting or rent review of

a property.

EPRA is the European Public Real Estate Association.

EPRA Net Tangible Assets is the IFRS equity attributable to shareholders adjusted for items including deferred tax, the fair

value of financial instruments and intangible assets.

EPRA Net Disposal Value is the IFRS equity attributable to shareholders adjusted for items including goodwill as a result

of deferred tax and the fair value of interest rate debt

FCA is the UK Financial Conduct Authority.

Gearing is the Group’s net debt as a percentage of adjusted net assets.

Group is the Company and its subsidiaries.

GFSC is the Guernsey Financial Services Commission.

Initial yield is the annualised net rents generated by the portfolio expressed as a percentage of the portfolio

valuation.

Interest cover is the number of times Group net interest payable is covered by Group net rental income.

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 means regulation (EU) No.596/2014 of the European Parliament and of the Council of 16 April

2014 on market abuse.

MSCI (formerly Investment Property Databank or “IPD”) is a Company that produces an independent

benchmark of property returns.

Net asset value and NAV per share is shareholders’ funds divided by the number of shares in issue at the year end.

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.

Weighted average unexpired lease

term (“WAULT”)

Weighted average unexpired lease term assuming earlier of lease break or lease expiry.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

120

Other information (unaudited)

Resolutions at 2023 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 your own personal financial advice from an appropriately qualified

independent advisor authorised pursuant to the Financial Services and Markets Act 2000 (as amended).

If you have sold or otherwise transferred all your shares in the Company, please send this document (including the

Notice of AGM) 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 effected for onward transmission to the purchaser or transferee.

However, such documents should not be distributed, forwarded or transmitted in or into the 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.

The Notice of the Annual General Meeting of Shareholders is set out on pages 122 to 123. The following paragraphs

explain the resolutions to be put to the AGM.

Resolutions 1–9 (ordinary resolutions)

Resolutions 1-9 are being proposed to approve the ordinary business of the Company to: (i) consider and approve

theconsolidated Annual Report of the Company for the year ended 31 March 2023; (ii) consider and approve the

Directors’ remuneration policy and the remuneration report, (iii) elect or re-elect the Directors; and (iv) appoint the

Auditors and authorise the Directors to determine the Auditor’s remuneration.

Resolution 10: Approval of the Company’s dividend policy (ordinary resolution)

The Company’s dividend policy is to pay a sustainable level of quarterly dividends to shareholders (in arrears).

Itisintended that successful execution of the Company’s strategy will enable a progressive dividend policy.

The Company’s objective and strategy, outlined in the Chair’s Statement and Investment Manager’s Report, is to

deliver sustainable net income growth 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refinancing.

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 of the UK Corporation Tax Act 2010) in order to maintain the Company’s

REIT status. Shareholders should note that the dividend policy is not a profit forecast and dividends will only be paid to

the extent permitted in accordance with the Companies Law and the UK REIT regime.

The Board acknowledges that the dividend policy is fundamental to shareholders’ income requirements as well as

theCompany’s investment and financial planning. Therefore, in accordance with the principles of good corporate

governance and best practice relating to the payment of interim dividends without the approval of a final dividend bya

company’s shareholders, a resolution to approve the Company’s dividend policy will be proposed annually

forapproval.

Resolution 11: Authority to disapply pre-emption rights (special resolution)

The Directors require specific authority from shareholders before allotting new ordinary shares for cash (or selling

shares out of treasury for cash) without first offering them to existing shareholders in proportion to their holdings.

Resolution 11 empowers the Directors to allot new ordinary shares for cash or to sell ordinary shares held by the

Company in treasury for cash, otherwise than to existing shareholders on a pro rata basis, up to such number of

ordinary shares 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 from treasury.

Overview Strategic Report Governance Financial Statements Other information (unaudited)

121

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 believe it to be advantageous to the Company’s existing shareholders and when

it would not result in any dilution of the net asset value per ordinary share (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).

This authority will expire on the earlier of the conclusion of the annual general meeting of the Company to be held in

2024 or on the expiry of 15 months from 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, gearing and market sentiment. Accordingly, it focuses its efforts principally

on addressing sources of risk and return as the most effective way of producing long-term value for Shareholders.

However, the Directors may consider repurchasing ordinary shares if they believe it to be in Shareholders’ interests as

a whole and as a means of correcting any 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 the Board, although the Board will

have regard to the effects of any such repurchase on long-term shareholders in exercising its discretion. Any

repurchase 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 2023 the Company repurchased 1,969,725 shares.

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.

In the event that the Board decides to repurchase ordinary shares, purchases will only be made through the market for

cash at prices not exceeding the prevailing NAV of the ordinary shares (as last calculated) where the Directors believe

such purchases will enhance shareholder value. Such purchases will also only be made in accordance with the Listing

Rules and the Disclosure Guidance and Transparency Rules which provide that the maximum price to be paid for each

ordinary share must not be more than the higher of: (i) 5% above the average mid-market value of the ordinary shares

for the five business days 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.

This authority will expire at the conclusion of the annual general meeting of the Company to be held in 2024 unless

varied, revoked or renewed prior to such date by ordinary resolution of the Company.

The Board considers that the resolutions to be proposed at the AGM are in the best interests of the Company’s

shareholders as a whole. The Board therefore recommends unanimously to shareholders that they vote in favour of

each of the resolutions, as they intend to do in respect of their own beneficial holdings.

Alastair Hughes

Chair

7 June 2023

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

122

Other information (unaudited)

Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting of the Company will be held at 1 London Wall Place,

EC2Y5AU on 27 September 2023 at 1.30 p.m.

Resolution To consider and, if thought fit pass the following Resolutions

Resolution 1 (Ordinary Resolution) – To receive, consider and approve the Consolidated Annual Report and Financial

Statements of the Company for the year ended 31 March 2023.

Resolution 2 (Ordinary Resolution) – To approve the Directors’ Remuneration Policy.

Resolution 3 (Ordinary Resolution) – To approve the Remuneration Report for the year ended 31 March 2023.

Resolution 4 (Ordinary Resolution) – To elect Alexandra (“Ali”) Innes as a Director of the Company.

Resolution 5 (Ordinary Resolution) – To re-elect Alastair Hughes as a Director of the Company.

Resolution 6 (Ordinary Resolution) – To re-elect Stephen Bligh as a Director of the Company.

Resolution 7 (Ordinary Resolution) – To re-elect Priscilla Davies as a Director of the Company.

Resolution 8 (Ordinary Resolution) – To appoint Ernst and Young LLP as Auditor of the Company until the conclusion of the next

Annual General Meeting.

Resolution 9 (Ordinary Resolution) – To authorise the Board of Directors to determine the Auditor’s remuneration.

Resolution 10 (Ordinary Resolution) – To receive and approve the Company’s Dividend Policy which appears on page 32 of the

Annual Report.

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;

provided that such power shall expire on the earlier of the conclusion of the annual general

meeting of the Company to be held in 2024 or on the expiry of 15 months from the passing

of this Special Resolution, except that the Company may before such expiry make offers or

agreements which would or might require ordinary shares to be allotted or sold after such

expiry and notwithstanding such expiry the Directors may allot or sell ordinary shares in

pursuance of such offers or agreements as if the power conferred hereby had not expired.

Resolution 12 (Special Resolution) That the Company be authorised, in accordance with section 315 of The Companies

(Guernsey) Law, 2008, as amended (the “Companies Law”), to make market acquisitions

(within the meaning of section 316 of the Companies Law) of ordinary shares in the capital

of the Company (“Ordinary Shares”) either for retention as treasury shares, insofar as

permitted by the Companies Law or cancellation, provided that:

a. the maximum number of ordinary shares hereby authorised to be purchased shall be

14.99% of the issued 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;

c. the maximum price (exclusive of expenses) which may be paid for an ordinary share shall

be an amount equal to the higher of (i) 5% above the average of the mid-market value of

the ordinary shares (as derived from the regulated market on which the repurchase is

carried out) for the five business days immediately preceding 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;

d. such authority shall expire at the conclusion of the annual general meeting of the Company

to be held in 2024 unless such authority is varied, revoked or renewed prior to such date of

the general meeting; and

e. the Company may make a contract to purchase ordinary shares under such authority prior

to its expiry which will or may be executed wholly or partly after its expiration and the

Company may make a purchase of ordinary shares pursuant to any such contract.

By Order of the Board

For and on behalf of

Schroder Investment Management Limited

Company Secretary

7 June 2023

Overview Strategic Report Governance Financial Statements Other information (unaudited)

123

Notes

1 To be passed, an ordinary resolution requires a simple majority of the votes cast by those shareholders voting in person or by proxy at the AGM (excluding

any votes which are withheld) to be voted in favour of the resolution.

2 To be passed, a special resolution requires a majority of at least 75% of the votes cast by those shareholders voting in person or by proxy at the AGM

(excluding any votes which are withheld) to be voted in favour of the resolution.

3 A member who is entitled to attend and vote at the meeting is entitled to appoint one or more proxies to exercise all or any of their rights to attend, speak and

vote instead of him or her. A proxy need not be a member of the Company. More than one proxy may be appointed provided that each proxy is appointed to

exercise the rights attached to different shares held by the member.

4 If returned without an indication as to how the proxy shall vote on any particular matter, the proxy will exercise discretion as to whether, and if so how, to

vote.

5 A form of proxy is enclosed for use at the meeting and any adjournment thereof. The form of proxy should be completed and sent, together with the power

of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, so as to reach the Company’s

Registrars, Computershare Investor Services (Guernsey) Limited, at The Pavilions, Bridgwater Road, Bristol, BS99 6ZY at least 48 hours before the time of

the AGM (excluding any part of a day that is not a working day).

6 Completing and returning a form of proxy will not prevent a member from attending in person at the meeting and voting should he or she so wish.

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 25 September 2023.

8 Pursuant to Article 41 of the Uncertificated Securities (Guernsey) Regulations 2009, entitlement to attend and vote at the meeting and the number of votes

which may be cast thereat will be determined by reference to the register of members of the Company at close of business on 25 September 2023.

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 or transfer was effected for transmission to the purchaser or transferee.

Schroder Real Estate Investment Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 31 March 2023

124

Other information (unaudited)

The Company’s privacy notice is available on its webpages.

Corporate Information

Registered Address

North Suite 2

Town Mills

Rue du Pre

St. Peter Port

Guernsey GY1 1LT

Directors (all Non-executive)

Alastair Hughes (Chair)

Lorraine Baldry (resigned 26 July 2022)

Graham Basham (resigned 15 November 2022)

Stephen Bligh

Priscilla Davies (appointed 7 June 2022)

Alexandra Innes (appointed 16 November 2022)

Investment Manager and Accounting Agent

Schroder Real Estate Investment Management Limited

1 London Wall Place

London EC2Y 5AU

Independent Auditor

Ernst & Young LLP

PO Box 9

Royal Chambers

St. Julian’s Avenue

St. Peter Port

Guernsey GY1 4AF

Property Valuer

CBRE Limited

Henrietta House

Henrietta Place

London W1G 0NB

Sponsor and Brokers

J.P. Morgan Securities plc

25 Bank Street

Canary Wharf

London E14 5JP

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

Tax Advisors

Deloitte LLP

2 New Street Square

London EC4A 3BZ

Receiving Agent and UK Transfer/Paying Agent

Computershare Investor Services (Guernsey) Limited

13 Castle Street

St. Helier

Jersey JE1 1ES

Solicitors to the Company

as to English Law:

Stephenson Harwood LLP

1 Finsbury Circus

London EC2M 7SH

as to Guernsey Law:

Mourant Ozannes (Guernsey) LLP

Royal Chambers

St. Julian’s Avenue

St. Peter Port

Guernsey GY1 4HP

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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 2023