Investment Report – 31 March 2011
Schroders
Investment Report - Summary
Schroder Exempt Property Unit Trust
Performance Data
(unaudited)
Please see below unaudited performance data as at 31 March 2011 for the Schroder
Exempt Property Unit Trust. Audited performance data by the Investment Property
Databank will be available in the quarterly investment report on the 26 April 2011 which
can be found on the fund website at www.schroders.com/seput
Once available the performance data in the quarterly investment report replaces the
performance data provided below.
Performance
(unaudited)
Total returns
3 months
%
12 months
%
3 years
% p.a.
5 years
% p.a.
Periods to 31 March 2011
SEPUT
Benchmark1
+2.1
-
+10.2
-
-5.9
-
-3.2
-
Source: Schroders, 31 March 2011; Performance calculated on a net asset value (NAV) to NAV price plus income distributed,
compounded monthly, net of fees and based on an unrounded NAV per unit.
1
Benchmark information is not available at the time of publication. Benchmark is the IPD UK Pooled Property Fund Indices - All
Balanced Funds Index Median. The Trust benchmark has changed over time and a composite for 10 years is available upon request.
Performance
Summary
The strength of tenant demand currently divides between central London and the rest of
the UK. In the central London office market the space vacated during the recession has
been quickly reabsorbed, leading to rising rents. This is generally not the case in regional
offices markets. In the retail sector clear evidence has emerged in the first quarter that a
decline in real income levels is leading to weak consumer demand and lower retail sales.
Here too, tenant demand is polarised between London and the rest of the UK. This
reflects that London’s economy is driven by global, rather than domestic, demand. This is
one reason for continued investor interest in the south east over the rest of the UK.
We estimate SEPUT may have outperformed the benchmark over the 12 months to 31
March 2011. Performance has been driven by the indirect assets, (most recently from the
valuation uplift from the sale of Chiswick Park) and realisation of value from the sale of
properties at above previous valuations as the portfolio was repositioned.
Portfolio Activity
Activity was limited over the quarter. Sale proceeds were received from a reduction in the
stake in Monks Cross Retail Park joint venture. The sale reduces stock specific risk in the
portfolio. Additional units were purchased in the Schroder Emerging Retail Property Unit
Trust (SERPUT), taking SEPUT’s ownership to 99.8%. The sale of Chiswick Park Unit
Trust (ChisPUT), completed in March.
Policy
The fund manager’s strategy of repositioning the portfolio is now largely complete, with
exposure to indirect assets reduced significantly, with a corresponding fall in gearing
levels. Some non-income producing assets have also been sold, with proceeds
reinvested in assets to improve both the quality and length of Trust income. Asset
management initiatives have also contributed to a fall in the portfolio’s vacancy rate and an
increase in the average lease length.
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Investment Report – 31 March 2011
Schroders
Investment Report - Summary
SEPUT’s relative sector
positions, % (IPD PPFI - All
Balanced Funds Weighted
Average)
Underweight
Standard Retail - South East
Standard Retail - Rest of
Shopping Centres
Retail Warehouses
Offices - Central London
Offices - South East
Offices - Rest of UK
Industrial - South East
Industrial - Rest of UK
Other
Cash
Overweight
-1.2%
-5.4%
-4.2%
0.6%
3.2%
8.1%
-1.2%
9.6%
-6.4%
-0.8%
-1.8%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Source: IPD, Schroders, 31 December 2010
*Positions relative to IPD UK Pooled Property Fund Indices – All Balanced Funds Weighted Average. The weighted average has
been used as this level of information is not available in the median.
Data subject to rounding
Notes
Socially Responsible Investing: Schroders Responsible Property Investment policy can be found on our website
http://www.schroders.com/property/home/. We also publish regular articles on Socially Responsible Investing, which can be found on Schroders Talking
Point www.schroders.com/talkingpoint.
Corporate Governance: Schroders Corporate Governance Policy can be found at http://www.schroders.com/staticfiles/Schroders/Sites/global/Int-CorpGov-Policy.pdf.
Important Information
For professional investors and advisors only. This document is not suitable for retail clients.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as
an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting,
legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Property Investment Management Ltd
(SPrIM) does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any
duty or liability that SPrIM has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory
system. SPrIM has expressed its own views and opinions in this document and these may change. Reliance should not be placed on the views and
information in the document when taking individual investment and/or strategic decisions.
Issued by Schroder Property Investment Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial
Services Authority.
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