Our opinion on the current state of SEREIT(SCD)Schroder European Real Estate Investment Trust (SCD), or SEREIT, is a real estate investment trust (REIT) which invests in properties across Europe. The company listed in London and on the JSE on 9th December 2015. It owns a diverse range of properties in high-growth cities across Europe, including London, Paris, Frankfurt, and Zurich. Its portfolio includes logistics, office, retail, and leisure properties, and it targets a dividend yield of 5.5% per annum.
In its results for the year to 30th September 2024, the company reported EPRA earnings up 3% to €8.2m, a net asset value (NAV) of €164.1m, and a loan-to-value (LTV) of 25%. Occupancy was at 96%, demonstrating the resilience of its portfolio in challenging market conditions.
Technically, the share has been in a decline since February 2022, reflecting broader concerns in the global real estate and investment markets. Despite this, we believe that this rand-hedge REIT represents one of the better options on the JSE due to its focus on stable and high-growth European cities and its low LTV, which provides financial flexibility and reduced risk.
The company has plans to spend at least €50m on acquisitions, which could further enhance its portfolio and growth prospects. However, its performance may still be affected by developments in the war in Ukraine and other macroeconomic factors impacting the European property market.
Unfortunately, the share is relatively thinly traded, with only R50,000 worth of shares changing hands on average each day, which adds an element of liquidity risk for private investors. Those considering an investment should weigh the benefits of its robust property portfolio and rand-hedge status against the challenges of limited trading volume and broader geopolitical risks.
