Schroder Real Estate

For release 15 November 2021

Schroder Real Estate Investment Trust Limited

("SREIT"/ the "Company" / "Group")

Asset management update

Schroder Real Estate Investment Trust, the actively managed UK-focused REIT, provides an update on asset management activity covering the period since the last update on 20 September 2021.

The Company has exchanged or completed 13 new lettings, renewals and reviews which will generate £300,000 per annum of rental income and increase contracted rental income by £185,000 per annum.  Alongside this, the Company is set to deliver 80,000 sq ft of operationally Net Zero Carbon ("NZC") industrial, storage and distribution space at Stanley Green Trading Estate after receipt of a resolution to grant planning permission.  The development is expected to be the first to achieve this status in the North West. 

The key activity is summarised below:

Cheadle, Stanley Green Trading Estate (Industrial)

The Company is set to commence the development of an 80,000 sq ft, NZC scheme in early 2022 on the 3.4 acre site adjoining the trading estate, which was acquired in December 2020, after Stockport Metropolitan Borough Council's planning committee unanimously resolved to grant planning permission.  The Company will proceed with the speculative development of 11 warehouse and trade units at a tendered total cost of approximately £8 million, with a target completion date of Q4 2022.  The combined estimated rental value ('ERV') of the units is expected to be approximately £950,000 per annum, with pre-lets to be targeted during the construction phase.

In line with the Company's commitment to incorporating high sustainability standards and building certifications across all new development activity, the scheme will be delivered to BREEAM Excellent, EPC A+ and NZC specification.  Where viable, the Company will use a range of local contractors and locally sourced materials and engage with the local authority in employment initiatives when delivering the scheme.

Norwich, Union Park (Industrial)

At Union Park, a five year lease renewal has been completed with Saint Gobain Distribution Limited (trading as CTD Tiles and International Decorative Surfaces) across three units totalling 24,784 sq ft, at a combined rent of £142,509 per annum, or £5.75 per sq ft.  This compares with the previous average passing rent of £4.65 per sq ft and represents an uplift of 23.7%. The letting is in line with the combined 30 June 2021 ERV for the three units.  As part of the agreement, the Company will carry out a refurbishment at a cost of approximately £450,000.

The Company has also completed a ten year lease renewal with Smith Metal Centres for a 4,972 sq ft unit at a rent of £28,590 per annum, or £5.75 per sq ft. This compares with the previous passing rent of £4.95 per sq ft and represents an uplift of 16.2%. The letting was achieved at 4.9% ahead of the 30 June 2021 ERV.

Manchester, City Tower (Mixed Use, SREIT's 25% Share)

At City Tower, a new five year lease has exchanged with Oodle Financial Services Limited, an existing tenant, for an additional 9,181 sq ft unit at a gross office rent (including service charge and fit-out rent) of £103,286 per annum, or £45.00 per sq ft. As part of this lease agreement the Company will undertake refurbishment works to deliver the suite under City Tower's Elevate flexible working concept.  The net office rent (excluding service charge and fit-out rent) equates to £68,147 per annum, or £27.73 per sq ft.  This compares with the previous passing rent of £22.50 per sq ft, reflecting a net uplift of 23.2%. 

A new five year lease has also completed with MAPP, an existing tenant, following surrender of their existing unit, for 2,647 sq ft at a gross office rent (including service charge and fit-out rent) of £29,117 per annum, or £44.00 per sq ft.  This unit was refurbished as part of the first phase of the Elevate concept.  The net office rent (excluding service charge and fit-out rent) equates to £16,656 per annum, or £25.17 per sq ft.  This letting was 17.1% ahead of the 30 June 2021 ERV. Further office lettings at City Tower are expected to complete shortly.

Finally, a new ten year lease has been completed for a ground floor retail/leisure unit with Min Kee Frozen Food Holdings Limited, an Asian grab-and-go operator, for a 1,002 sq ft unit at a rent of £14,375 per annum, or £57.39 per sq ft.  This compares with the previous passing rent of £39.82 per sq ft and reflects an uplift of 44.1%.  The letting was achieved at 36.9% ahead of the 30 June 2021 ERV, with the tenant receiving three months' rent free.

An update on current and future portfolio activity will be provided in the Company's interim results for the six month period to 30 September 2021, due to be released on 23 November 2021.

-ENDS-

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