Occupancy rate rise buoys Sereit

• Profits almost quadrupled to R515m in Europe-focused fund s year to end-September

Schroder European Real Estate Investment Trust (Sereit), which gives SA investors exposure to Western European cities, says it remains optimistic about the prospects of large urban centres despite the Covid-19 pandemic, with it having seen a rise in occupancies during its year to end-September.

Schroder European Real Estate Investment Trust (Sereit), which gives SA investors exposure to Western European cities, says it remains optimistic about the prospects of large urban centres despite Covid-19, having seen a rise in occupancies during its year to end-September.

Sereit acts as a rand hedge for SA investors who want exposure to European commercial real estate.

The growth in working from home will have a negative effect on office demand in the short term as some businesses downsize, the landlord said on Wednesday, adding it believes this will be offset in the medium term by employment growth in information technology, media and professional services.

Companies may also look to upgrade their space to attract staff and foster collaboration, the group said. However, the group said the environment remains uncertain and much depends on how quickly the pandemic is brought under control.

Profits almost quadrupled to € 28.4m (R515m) in the group’s year to end-September, underpinned by a strong valuation uplift of its Boulogne-Billancourt office asset in Paris, its largest asset, which represents almost a quarter of its portfolio.

The value of the group’s portfolio rose to € 268.6m at the end of September, from € 242.7m in the previous year, while occupancies rose to 96% from 94%.

Dividends continued to be paid throughout the year, totaling 78% of payouts declared in 2019, with the group passing on € 7.7m to its shareholders.

The group had 13 properties at the end of the period under review, with about half its portfolio located in France, while it also has assets in Germany, Spain and the Netherlands.

“While we continue to deal with small pockets of underperformance in the portfolio, Sereit is extremely well placed as we move into 2021 to deliver further income and capital growth on behalf of shareholders,” said fund manager Jeff O’Dwyer.

He said he was happy with the results achieved during a year in which the world had faced a pandemic. “I am very pleased with what has been achieved in 2020. Going forward, we are going to focus on France, Germany and the Netherlands, where our strongest teams are,” he said.

O’Dwyer said Sereit’s strengths were that between 75% and 80% of its total return will come from income and its high occupancy rate.

In morning trade on Wednesday, Sereit’s share was unchanged at R20.14, giving the group a market capitalisation of R2.7bn.

Sereit ’ s share has lost 3.77% so far in 2020, while over the same time the JSE’s property index has lost 40.61%.