The listing on the JSE is in order to diversify the shareholder base, to develop and grow Schroder’s presence in South Africa and to give South African investors access to the fund, according to the fund’s manager Tony Smedley. The firm is looking at a “variety of strategies” for growing in South Africa, said Smedley.
Duncan Owen, global head of real estate, said: “Through this process we have developed good new relationships with a large number of South African institutions and wealth managers.”
The initial placing has raised £107.5m ($161.5m, €148.7m) between the UK and South Africa. The aim is to grow the trust to £400-500m, a similar size as its UK equivalent SREIT. Shares will trade on both the LSE and JSE from 9 December. Schroders will invest up to 10%, or a maximum of £15m, in the fund.
Commercial property focus
The Schroder European Real Estate Investment Trust (SEREIT) will target commercial real estate with strong fundamentals in key European growth cities in Western Europe. They include Paris, Lyon, Berlin, Hamburg, Munich, Frankfurt, Amsterdam, Brussels, Stockholm, Helsinki, Madrid, Barcelona and Milan.
Schroder Real Estate has identified target centres in the Eurozone where there is rental growth as a consequence of constrained supply, improving infrastructure and competing demand from high growth companies for multiple uses.
SEREIT will offer investors liquid access to these continental European markets. “Growth is beginning to return to big cities in Europe,” said Smedley.
Once the initial capital is fully invested and debt is drawn down, a fully covered dividend to shareholders of 5.5% per annum is targeted. The investment trust will have debt at a maximum level of 35% loan to value.
SEREIT is the first trust to be launched by Schroders for 10 years. It is also the first ever European direct real estate investment trust to be listed on the London and Johannesburg Stock Exchanges simultaneously.
