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Ken Baksh – Brexit worries?…Think instead about European Property play,on a discount with dividend yield over 5%..payable quarterly in Euros,if desired
Schroder European Real Estate Investment Trust-ISIN- Gb00By7R8K77
Launched in December 2015, the Schroder European Real Estate Investment Trust targets growth regions in Continental Europe and aims to provide a regular and attractive level of income together with the potential for long term income and capital growth.
With a certain degree of uncertainty surrounding the UK commercial property market (slowing economic growth, BREXIT) increasing number of investors are looking to continental Europe for their real estate exposure, and the SERE would seem to tick many boxes.
Ideal for an investor seeking above average income, with predominant exposure to European economies, and exhibiting low correlation with several other asset classes.May suit more cautious investor looking for income,paid quarterly, with lower correlation with mainstream bond and equity markets.
Following recent Interim figures published on June 12th-Hot from Press!
Results released on Tuesday 12th June, show Net Asset Value increasing 6.1% over the last six months to March 31st,2018 to Euro 1.39(£1.22), and dividend pay-out moving towards the company target of 5.5% on issue price. The current LTV ratio is 28%, and the company’s weighted interest cost is around 1.3% with a duration of over 6 years. The fund is fully invested in a portfolio with a value more than Euros 237 million and is currently 97% occupied. At current price of 113.5p, the stock trades on a discount to NAV of approximately 7% with a prospective annual yield of 5.4% payable in Euros or Sterling.
- Eurozone economic data continues to remain positive, growing faster than the UK over recent quarters and this relative outperformance is expected to continue. Private business surveys point to further growth and property and investment activity remains robust. A recent sample of German companies, for instance, showed rents rising between 4% and 6% over the last twelve months.
- SERE invests in cities/regions characterised by large liquid real estate markets such as Amsterdam, Berlin, Hamburg, Munich and Paris where local GDP are outperforming the national averages.
- The Trust is managed by Jeff O Dwyer, an experienced real estate investment manager, who is supported by nearly 100 property specialists located in key European hubs. The team see over Euro 2 billion of introductions each month, with the near-term pipeline comprising over Euros 115 million yielding between 5.8% and 7.5%.
- The process/risk control involves holding the bulk of the portfolio in stable income producing developments (approx. 70%) while adding a greater capital return component to the other 30% via refurbishments, change of use, lease extensions etc. A large portion of the rents are index linked.
- The purchase of a data/mixed user investment in Apeldoorn in February this year, on a very attractive 10% income yield leaves the fund fully invested.
- Geographical weighting is currently Germany (22.7%), France (50%), Holland and Spain (27%) by value. Approximately 45% of the property portfolio is represented by offices and 40.3% by retail, the latter predominantly in logistics centres, smaller supermarkets and convenience stores. These figures were effective on March 31, 2018.
- The top five properties were in Paris, Seville, Berlin and Biarritz.
- Portfolio is almost 100% occupied with a 6.8 years average lease time and net property income yield of 6%
SERE targets a fully covered Euro yield of 5.5%(7.5 Eurocents on a Euro equivalent issue price of Euro1.37). Dividends are declared in Euros, and paid quarterly, with UK shareholders being given the option of sterling or Euro pay-outs. Lease structures vary across Europe, but most typically have some form of inflation linkage, providing support for the target dividend.
Current discount to NAV (Euros 1.347-December 31st, 2017) represents a good level to be obtaining exposure to mainstream European property.
- The portfolio seeks to enhance property returns with a relatively modest level of gearing currently 28% LTV, (35% target LTV). The blended all in debt cost is 1.3% with an average maturity of around 6.5 years.
- Closed end fund structure with daily liquidity via a listing on the main market of the London Stock Exchange.
www.londonstockexchange.com/exchange/news/market-news/market-news-detail/SERE/13675397.html
Sources (LSE,company management and Numis Securities)
Ken Baksh
Ken has over 35 years of investment management experience, working for two major City institutions between 1976 and 2002.
Since then he has been engaged as a self-employed investment consultant. He has worked with investment trusts, unit trusts, pension funds, charities, Life Fund,hedge fund and private clients. Individual asset managed have included direct equities and bonds pooled vehicles currencies, derivatives and commodities.
Projects undertaken in a number of areas including asset allocation, risk control, performance measurement, marketing, individual company research, legacy portfolios and portfolio construction. He has a BSc(Mathematics/Statistics) and is a Fellow Member of the UK Society of Investment Professionals.
Disclaimer
All stock recommendations and comments are the opinion of writer.
Investors should be cautious about all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal ownership, may influence or factor into a stock analysis or opinion.
All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is not indicative of future price action.
You should be aware of the risks involved in stock investing, and you use the material contained herein at your own risk
The author may have historic or prospective positions in securities mentioned in the report.
The material on this website are provided for information purpose only.
Please contact Ken, (kenbaksh@btopenworld.com) for further information
Ken Baksh – Portfolio diversification..6% annual yield and 6% discount to assets for European property investment trust idea!
Schroder European Real Estate Investment Trust-ISIN- Gb00By7R8K77
Launched in December 2015, the Schroder European Real Estate Investment Trust targets growth regions in Continental Europe and aims to provide a regular and attractive level of income together with the potential for long term income and capital growth.
With a certain degree of uncertainty surrounding the UK commercial property market (slowing economic growth, BREXIT) increasing number of investors are looking to continental Europe for their real estate exposure, and the SERE would seem to tick many boxes.
Ideal for an investor seeking above average income, with predominant exposure to European economies, and exhibiting low correlation with a number of other asset classes
Following a recent meeting with management members, I update my initial note as below,
Results released on December 06,2017, show Net Asset Value increasing 13% over the last full year (September Year End) to Euro 1.33, and dividend pay-out moving towards the company target of 5.5% on issue price. At current price of 111.5p, the stock trades on a discount to NAV of approximately 6% with a prospective annual yield of 5.9% payable in Euros or sterling.
- Eurozone economic data continues to remain positive, growing faster than the UK over recent quarters and this relative outperformance is expected to continue. Private business surveys point to further growth and property and investment activity remains robust. A recent sample of German companies, for instance, showed rents rising between 4% and 6% over the last twelve months.
- SERE invests in cities/regions characterised by large liquid real estate markets such as Amsterdam, Berlin, Hamburg, Munich and Paris where local GDP is outperforming the national averages.
- The Trust is managed by Jeff O Dwyer, an experienced real estate investment manager, who is supported by nearly 100 property specialists located in key European hubs. The team see over Euro 2 billion of introductions each month, with the near-term pipeline comprising over Euros 115 million yielding between 5.8% and 7.5%.
- The process/risk control involves holding the bulk of the portfolio in stable income producing developments (approx. 70%) while adding a greater capital return component to the other 30% via refurbishments, change of use, lease extensions etc. A large portion of the rents are index linked.
- The purchase of a data/mixed user investment in Apeldoorn in February this year, on a very attractive 10% income yield leaves the fund fully invested.
- Geographical weighting is currently Germany (30%), France (50%), Holland and Spain (20%) by value.
- The top five properties were in Paris, Seville, Berlin and Biarritz.
- Portfolio is almost 100% occupied with a 6.8 years average lease time and net property income yield of 6%
- Loans of approx. Euros 73 million (compared with assets of approx. Euros 233 million), are usually employed on a loan to individual property asset basis, and in aggregate enjoy a maturity of about 6.6 years and interest rate of 1.3%
SERE targets a fully covered Euro yield of 5.5%(7.5 Eurocents on a Euro equivalent issue price of Euro1.37). Dividends are declared in Euros, and paid quarterly, with UK shareholders being given the option of sterling or Euro pay-outs. Lease structures vary across Europe, but most typically have some form of inflation linkage, providing support for the target dividend.
Current discount to NAV (Euros 1.347-December 31st, 2017)) represents a good level to be obtaining exposure to mainstream European property.
- The portfolio seeks to enhance property returns with a relatively modest level of gearing currently 25% LTV, (35% target LTV). The blended all in debt cost is 1.3% with an average maturity of around 6.5 years.
- Closed end fund structure with daily liquidity via a listing on the main market of the London Stock Exchange.
Sources (LSE,company management and Numis Securities)
By Ken Baksh
Ken has over 35 years of investment management experience, working for two major City institutions between 1976 and 2002.
Since then he has been engaged as a self-employed investment consultant. He has worked with investment trusts, unit trusts, pension funds, charities, Life Fund,hedge fund and private clients. Individual asset managed have included direct equities and bonds pooled vehicles currencies, derivatives and commodities.
Projects undertaken in a number of areas including asset allocation, risk control, performance measurement, marketing, individual company research, legacy portfolios and portfolio construction. He has a BSc(Mathematics/Statistics) and is a Fellow Member of the UK Society of Investment Professionals.
Disclaimer
All stock recommendations and comments are the opinion of writer.
Investors should be cautious about all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal ownership, may influence or factor into a stock analysis or opinion.
All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is not indicative of future price action.
You should be aware of the risks involved in stock investing, and you use the material contained herein at your own risk
The author may have historic or prospective positions in securities mentioned in the report.
The material on this website are provided for information purpose only.
Please contact Ken, (kenbaksh@btopenworld.com) for further information
Ken Baksh – Lots starting to happen in European Property Sector….
by Ken Baksh
Ken has over 35 years of investment management experience, working for two major City institutions between 1976 and 2002.
Since then he has been engaged as a self-employed investment consultant. He has worked with investment trusts, unit trusts, pension funds, charities, Life Fund,hedge fund and private clients. Individual asset managed have included direct equities and bonds pooled vehicles currencies, derivatives and commodities.
Projects undertaken in a number of areas including asset allocation, risk control, performance measurement, marketing, individual company research, legacy portfolios and portfolio construction. He has a BSc(Mathematics/Statistics) and is a Fellow Member of the UK Society of Investment Professionals.
Phone 07747 114 691
Schroder European Real Estate Investment Trust-Isin Gb00By7R8K77 (SERE)
Launched in December 2015, the Schroder European Real Estate Investment Trust targets growth regions in Continental Europe and aims to provide a regular and attractive level of income together with the potential for long term income and capital growth.
With a certain degree of uncertainty surrounding the UK commercial property market (slowing economic growth,
BREXIT) increasing number of investors are looking to continental Europe for their real estate exposure, and the SERE would seem to tick many boxes.
It should also be noted that corporate activity in the sector has picked up massively in recent weeks, with Hammerson/Intu,Unibail/Westfield ,and just this morning Vonovia/Buwog.
Results released on December 06,2017, show Net Asset Value increasing 13% over the last full year (September Year End) to Euro 1.33, and dividend pay-out moving towards the company target of 5.5% on issue price. Total dividends payable in respect of the financial year just ended 5.2 Euro cents per share.At current price of Euros 1.095,the stock trades on a discount to NAV of approximately 18% with a prospective annual yield of 6.8% payable in Euros.
- Eurozone economic data is positive, growing about twice as fast as the UK over the first half of 2017and this differential is expected to grow into 2018.Private business surveys point to further growth and property and investment activity remains robust. A recent sample of German companies, for instance, showed rents rising between 4% and 6% over the last twelve months.
- SERE invests in cities/regions characterised by large liquid real estate markets such as Amsterdam, Berlin, Hamburg, Munich and Paris where local GDP is outperforming the national averages.
- The Trust is managed by Tony Smedley, an experienced real estate investment manager, who is supported by nearly 100 property specialists located in key European hubs. The team see over Euro 2 billion of introductions each month, with the near-term pipeline comprising over Euros 115 million yielding between 5.8% and 7.5%.
- The process/risk control involves holding the bulk of the portfolio in stable income producing developments (approx. 70%) while adding a greater capital return component to the other 30% via refurbishments, change of use, lease extensions etc.
- As at end June 2017 the geographical weighting were France 56%, Germany 30% and Spain 14%, split 46% retail and 54% office.
- The top five properties were in Paris, Seville, Berlin and Biarritz. As at September 30th,2017, the portfolio contained nine properties, valued at Euros 211.7 million.
- Portfolio is almost 100% occupied with a 6.8 years average lease time and net property income yield of 6%
SERE targets a fully covered Euro yield of 5.5%(7.5 Eurocents on a Euro equivalent issue price of Euro1.37). Dividends are declared in Euros, and paid quarterly, with UK shareholders being given the option of sterling or Euro pay-outs. Lease structures vary across Europe, but most typically have some form of inflation linkage, providing support for the target dividend.
Current discount to NAV (Euros 1.33-September 30th) represents a good level to be obtaining exposure to mainstream European property.
- The portfolio seeks to enhance property returns with a relatively modest level of gearing currently 25% LTV, (35% target LTV). The blended all in debt cost is 1.3% with an average maturity of just over 7 years.
- Closed end fund structure with daily liquidity via a listing on the main market of the London Stock Exchange.
Full fourth quarterly report will be available in January and suggested portfolio strategy/individual recommendations are available. Ideas for a ten stock FTSE portfolio, new model pooled fund portfolios (cautious, balanced adventurous, income), 30 stock income lists, hedging ideas and a list of shorter term low risk/ high risk ideas can also be purchased, as well as bespoke portfolio construction/restructuring. I expect more clients to consider switching some final salary pots to SIPP over coming quarters, as transfer values start to slip (partially in line with rising gilt yields) and can work with you providing bespoke portfolios according to client needs.
Disclaimer
All stock recommendations and comments are the opinion of writer.
Investors should be cautious about all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal ownership, may influence or factor into a stock analysis or opinion.
All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is not indicative of future price action.
You should be aware of the risks involved in stock investing, and you use the material contained herein at your own risk
The author may have historic or prospective positions in securities mentioned in the report.
The material on this website are provided for information purpose only.
Please contact Ken, (kenbaksh@btopenworld.com) for further information