April 2016
For professional investors only. Not suitable for retail clients.
Schroders
Schroder UK Real Estate Fund
www.schroders.com/sref
Schroder UK
Real Estate Fund
Highlights
Top quartile
performance
£2.2 billion
Diversified UK Real
Estate Portfolio*
Open-ended
fund with
outstanding
liquidity**
Schroders
flagship
real estate fund
*Source: Schroders, at 31 December 2015.
**Source: CBRE PropertyMatch, at 31 December 2015.
over 1, 3 and 5 years*
Authorised
for sale
across
Europe
Highly
experienced
management
team
45 years
experience
managing real
estate assets
Diversified UK
Commercial
Real Estate Fund
Chenies Street, London, WC1
The Schroder UK Real Estate Fund (SREF or the Fund) is Schroders’ flagship real estate
fund. It provides investors with diversified exposure to over £2.2 billion of UK commercial
real estate and is managed by our highly experienced team. SREF has achieved top quartile
performance and outperformed its benchmark over one, three and five years1. SREF is
available to UK domestic and international professional investors seeking to benefit from
Schroders’ real estate expertise.
Investment approach
We believe that real estate markets are fragmented and inefficient. We aim to achieve the
Fund’s performance objective through detailed research and analysis, coupled with our
extensive network of contacts and asset management skills.
Our dedicated real estate research team identifies those sectors, regions and property
characteristics which are expected to outperform the wider market. This helps the
investment team shape the portfolio by targeting particular sectors and properties which in
aggregate could meet the Fund’s performance objective. Throughout the process we remain
focused on the quality of the assets – and their value – when managing the portfolio. We aim
to generate the majority of the target outperformance through good stock selection and
active asset management.
Source: Schroders, IPD, at 31 December 2015.
1
1
Investment strategy
and performance
Fund objective
To outperform its benchmark2 by 0.5% per annum over rolling three
year periods.
Investment strategy
SREF has over 70 property investments, diversified by sector, region and
tenant, generating an income of £100 million per annum. Our investment
approach emphasises:
–– Income SREF’s investment team work to ensure the Fund has good
quality buildings let to financially secure tenants.
–– Stock selection We aim to capitalise on Schroders’ dedicated real
estate research team and our excellent network of contacts to source and
dispose of assets. This enables us to take advantage of the investment
cycle to give our investors the benefits of the UK real estate market.
–– Active asset management The Fund’s dedicated asset management
team work closely with our tenants to ensure our properties meet their
requirements. Our aim is to maximise income and minimise void rates.
Fund performance
at 31 December 2015 (% p.a)
2
Total Trust Returns
12 months
3 years
5 years
Schroder UK Real Estate Fund 14.2
14.1
10.3
Benchmark2
12.9
9.0
12.5
Source: AREF/IPD UK Quarterly Pooled Property Fund Index (PPFI). Performance is calculated on a net asset value
(NAV) to NAV price basis plus income distributed, compounded monthly, net of fees and based on an unrounded
NAV per unit.
2
AREF/IPD UK Quarterly Property Fund Index – All Balanced Property Fund Index Weighted Average.
City Tower, Manchester
An experienced
investment manager
The investment management team is comprised of highly experienced real
estate investment professionals supported by the wider Schroders group.
Schroders Group
Schroders is a global asset management company with £313.5 billion
(€425.4 billion/US$462.1 billion) under management at 31 December
2015. Our clients include corporations, insurance companies, local and
public authorities, charities, pension funds, high net worth individuals
and retail investors.
Our aim is to apply specialist asset management skills in serving the
needs of our clients worldwide. With one of the largest networks of
offices of any dedicated asset management company and approaching
400 portfolio managers and analysts covering investment markets,
we offer our clients a comprehensive range of products and services.
Schroder Real Estate
–investment manager
Schroders has managed real estate funds since 1971 and has £13.1 billion
(€17.8 billion / US$19.3 billion) under management as at 31 December 2015.
120 people at Schroders are involved in the management and operation
of real estate from offices across Europe, Asia and North America. We
manage a broad range of open and closed ended real estate funds offering
investors exposure to both diversified and sector focused portfolios.
The SREF team is comprised of highly experienced real estate investment
specialists. They have an extensive network of contacts including brokers,
letting agents, real estate advisors and tenants. They are supported
by accounting, research, client service and other investment functions
throughout the Schroders business.
3
Real estate portfolio
Case studies
Truro,
Lemon Quay
(1.9% NAV)
London,
Battersea Studios
(2.6% NAV)
–– Well located prime town centre retail parade,
including multi-storey car park, in dominant regional
shopping destination.
–– Two building office campus of 108,000 sq ft multi-let
to 31 tenants.
–– Strong occupier demand. Rents are affordable,
units are modern and flexible and retailers report
good performance.
–– Multi-let to 9 tenants including Marks and Spencer
and Debenhams who make up 53% of income.
Recent 20 year lease agreed with Primark.
NAV: net asset value.
Source: Schroders, at 31 December 2015.
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–– Strong income growth in 12 months since acquisition.
Rents have increased from £21.50 per sq ft to
£45.00 per sq ft.
–– Area is an emerging office location benefitting from
significant regeneration (American Embassy, Battersea
Power Station), while infrastructure spend (Northern
Line extension) is improving accessibility.
Cardiff,
Mermaid Quay
(2.8% NAV)
Worcestershire,
Hartlebury Trading Estate
(2.8% NAV)
–– Unique leisure and restaurant location on Cardiff Bay.
–– 1.4 million sq ft, dominant regional industrial estate
serving an affluent area of the Midlands.
–– Let to over 40 tenants such as Pizza Express,
Wagamama and Côte Restaurants.
–– Yielding over 6% with 9 years unexpired lease term.
–– Retailers have enjoyed strong trade which has helped
increase rents.
–– 182 units host a diversified tenant base including
multi-national (TNT/Fedex) as well as local
businesses. Largest single tenant accounts for
10% of rental income.
–– High tenant retention (approx. 90% over the past
five years) given attractively low rental levels (average
£3.45 per sq ft).
NAV: net asset value.
Source: Schroders, at 31 December 2015.
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Fund information
at 31 December 2015
Diversified
tenant base
2.6%
2.6%
2.3%
2.3%
2.2%
2.2%
1.9%
1.9%
1.8%
1.8%
1.7%
1.7%
1.4%
1.4%
4.2%
4.2%
3.5%
3.5%
2.9%
2.9%
Tenant profile %
(contracted rent)
75.5%
75.5%
Diversified
sector allocation
Sector weightings relative
to benchmark* (% NAV)
6.7% 4.8%
9.8%
4.8%
4.7%
9.5%
4.9%
14.4%
16.7%
5.5%
18.0%
929 other
other tenants
tenants
929
Regus
Regus
Tata Steel
Steel
Tata
Lloyds TSB
TSB Bank
Bank
Lloyds
The Secretary
Secretary of
of State
State
The
Universal Music
Music
Universal
Care UK
UK
Care
Pendragon Plc
Plc
Pendragon
B&Q Plc
Plc
B&Q
University of
of Law
Law
University
Royal Mail
Mail
Royal
Standard retail – South East
Standard retail – Rest of UK
Shopping centres
Retail warehouses
Offices – Central London
Offices – South East
Offices – Rest of UK
Industrial – South East
Industrial – Rest of UK
Other sectors
Cash
Source: Schroders, at 31 December 2015.
*Positions relative to AREF/ IPD UK Quarterly Pooled Property Fund Index – All Balanced Property Fund Weighted
Average. Data subject to rounding and may not add up to 100%.
6
Davidson House, Forbury Square, Reading
Diversified portfolio across the UK*
Retail – 23.9%
Offices – 40.4%
Industrial – 19.3%
Edinburgh
Other – 9.8%
Greater London
Glasgow
Retail – 23.9%
Offices – 40.4%
Newcastle
Industrial – 19.3%
Edinburgh
Other – 9.8%
Leeds
Manchester
Glasgow
City
Greater London
City
Newcastle
Leeds
Birmingham
Manchester
Bristol
Birmingham
London
Bristol
London
*Map shows location of assets which is not
proportionate to asset values. Sector weightings are
shown as a percentage of SREF’s gross asset value.
Cash has been excluded. Source: Schroders, at 31
December 2015, subject to rounding.
7
Battersea Studios, London, SW8
SREF
Fund information
Authorised corporate director
Investment manager
Depository
Schroder Unit Trusts Limited
Schroder Real Estate Investment
Management Limited
Natwest Plc
Valuer
BNP Paribas Real Estate
Auditor
PricewaterhouseCoopers
Structure
Life
Current total expense ratio (TER)
Current gearing level
UK Property Authorised Investment Fund
Open ended
0.78% of the Fund’s net asset value
1.5% of the Fund’s net asset value
Subscriptions
Monthly
Redemptions
Quarterly
Secondary market trading
Manager facilitates a secondary market
Source: Schroders, at 31 December 2015.
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S
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Further information
U
K
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F
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About Schroders
Olivia Pember
Product Manager
+44 (0)20 7658 3352
olivia.pember@schroders.com
£313.5 billion (€425.4 billion/
US$462.1 billion) managed across
equities, fixed income, multi-asset,
alternatives and real estate.
Schroder Unit Trusts Limited
31 Gresham Street
London
EC2V 7QA
+44 (0)20 7658 6000
realestate@schroders.com
An extensive global network of
3,700+ employees.
www.schroders.com/sref
Over 200 years’ experience of
investment markets.
38 offices in 28 countries across
Europe, the Americas, Asia,
Middle East and Africa.
Source: Schroders, at 31 December 2015.
Important Information: The Schroder UK Real Estate Fund is authorised by the Financial Conduct Authority (the ‘FCA’) as a Qualified Investor Scheme (‘QIS’). A QIS may not
be promoted to a member of the general public. Investors and potential investors should be aware that past performance is not a guide to future returns. No warranty is given,
in whole or in part, regarding the performance of the Fund and there is no guarantee that the investment objectives of the Fund will be achieved. The price of shares and the
income from them may fluctuate upwards or downwards and cannot be guaranteed. Property-based pooled vehicles, such as the Fund, invest in real property, the value of
which is generally a matter of a valuer’s opinion. It may be difficult to deal in the shares of the Fund or to sell them at a reasonable price because the underlying property may not
be readily saleable, thus creating liquidity risk. Shares can be purchased or redeemed upon application to the Authorised Corporate Director of the Fund, Schroder Unit Trusts
Limited. Neither this document nor any other statement (oral or otherwise) made at any time in connection herewith constitutes an offer to sell or exchange shares in the Fund
or any other fund or product and is not soliciting an offer to buy or exchange and does not constitute an invitation to subscribe for, buy or exchange any shares in the Fund or
any other fund or product in any jurisdiction where the offer, sale or exchange is not permitted. Potential investors are advised to obtain and review independent professional
advice and draw their own conclusions regarding the economic benefits and risks of investment in the Fund as well as the legal, regulatory, tax and accounting aspects in relation
to their particular circumstances. Any investment in the Fund must be based solely on the prospectus, or any other document issued from time to time by the Manager of the
Fund in accordance with applicable laws. The opinions, beliefs expectations or intentions, unless otherwise stated, are those of the investment manager, Schroder Real Estate
Investment Management Limited (‘SREIM’) of 31 Gresham Street, London, EC2V 7QA. All information and opinions contained in this document have been obtained from sources
we consider to be reliable. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in this document when
taking individual investment and/or strategic decisions. A potential conflict with the Manager’s duty to the shareholder may arise where a transaction is effected for the Fund
in the units of another fund(s) managed by the same Manager or an Associate of the Manager. However, the Manager will ensure that such transactions are effected on terms
which are not materially less favourable than if the potential conflict had not existed. The forecasts included in this document should not be relied upon, are not guaranteed and
are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. We accept no responsibility for any errors of fact or opinion and
assume no obligation to provide you with any changes to our assumptions or forecasts. Forecasts and assumptions may be affected by external economic or other factors.
Use of IPD data and indices: © and database right Investment Property Databank Limited and its Licensors 2015. All rights reserved. IPD has no liability to any person for any
losses, damages, costs or expenses suffered as a result of any use of or reliance on any of the information which may be attributed to it. This document is intended for the use
of the addressee or recipient only and may not be reproduced, redistributed, passed on or published, in whole or in part, for any purpose, without the prior written consent of
Schroder Unit Trusts Investments Limited. For the purposes of the Data Protection Act 1998, the data controller in respect of any personal data you supply is Schroder Unit
Trusts Limited. Personal information you supply may be processed for the purposes of investment administration by any company within the Schroder Group and by third parties
who provide services and such processing and which may include the transfer of data outside of the European Economic Area. Schroder Unit Trusts Limited may also use
such information for marketing activities unless you notify it otherwise in writing. For your security, calls may be recorded or monitored. Issued in April 2016 by Schroder Unit
Trusts Limited, 31 Gresham Street, London EC2V 7QA. Registered No: 4191730 England. Authorised and regulated by the Financial Conduct Authority. INS04720. w48627