SEREIT proposes managed wind-down

Schroder European Real Estate Investment Trust (SEREIT) has announced its intention to propose a managed wind-down of the company, which would involve selling off its assets and returning capital to shareholders.

Phil Redding

This decision comes after the Board and Investment Manager explored various options to tackle the persistent discount at which the company's shares trade compared to its Net Asset Value.

The company notes that smaller, listed investment vehicles, especially those under £100 mln (€118 mln) market capitalisation, are increasingly disadvantaged in equity markets. Even though SEREIT has provided unique access to a diverse portfolio of Continental European commercial real estate, paid out over £80 mln (€94 mln) in dividends since its IPO, and maintained a strong balance sheet, its smaller size and low liquidity have negatively impacted its share price for an extended period.

Following discussions with major shareholders, the Board and Investment Manager believe a managed wind-down is in the best interest of shareholders.

They are confident that the company's property portfolio can be sold in the direct property market for a value higher than what is currently reflected in the share price.

SEREIT plans to publish a circular soon to convene a general meeting where shareholders will vote on an ordinary resolution to modify the company's investment objective and policy to facilitate the wind-down.

The company's diversified portfolio consists of 14 assets in high-growth areas across France, Germany, and the Netherlands, which should attract buyers. The Investment Manager can also leverage the broader Schroders pan-European platform. Due to current market conditions and geopolitical risks, the managed wind-down is expected to take approximately two to three years.

Jeff O'Dwyer, fund manager for the Investment Manager, commented: "Since our inception in December 2015, we have successfully achieved our objectives of establishing a differentiated platform with a diversified income profile generated from high-performing assets in prominent growth centres across Continental Europe. However, the ongoing discount to NAV has hindered our ability to scale and achieve our growth potential, particularly against the deteriorating market backdrop."

Phil Redding, chairman of the Company, commented: "The challenging market backdrop for smaller UK-listed real estate companies, which has been widely reported and further exacerbated by more recent interest rate and inflationary concerns, has resulted in the Company's shares having traded at a persistent and material discount to the Company's net asset value. The Board of SEREIT and its Investment Manager, Schroders, have reviewed a full range of options to maximise shareholder value and have concluded that a managed wind-down strategy and return of capital is in the best interests of the Company's shareholders."