28th Jan 2015 09:21
LONDON (Alliance News) - Schroder Real Estate Investment Trust Ltd Wednesday said it is planning to use existing cash to make acquisitions, as it said that issuing new shares by March 19 may not be on the cards due to the potential for political uncertainty and volatility in the capital markets in the year ahead.
The real estate investor said it is cautious despite an expectation of continuing momentum in the UK property market in 2015.
"Whilst this should lead to opportunities to enhance shareholder returns through further growth, the potential for capital market volatility and political uncertainty during 2015 will require a continued disciplined approach to new investment," Schroder REIT said in a statement.
"Against this backdrop, and the shift from an investor-led cycle to an occupier-led cycle, we will continue to target stronger towns and cities that we expect to benefit disproportionally from higher GDP and jobs growth that should in turn lead to higher rental growth and total returns," the company added.
Under a placing programme established last March, Schroder REIT has the ability to issue up to a further 71 million new shares up to March 19 this year, with any shares to be issued at a premium to book value in order to cover the costs of raising equity.
However, the call for discipline means that although the company is "actively seeking potential acquisitions to be funded from existing cash, the remaining capacity to issue new shares may not be issued prior to March 19".
During 2014, the company raised total equity of GBP84.4 million by issuing 162.6 million shares, deploying the funds, together with proceeds from lower yielding disposals, into nine acquisitions amounting to GBP120 million at an average yield of 6.6%.
Schroder REIT said it had GBP28.0 million in cash as at December 31, 2014.
According to the company, its unaudited net asset value was GBP290.7 million, or 56.1 pence per share, at the end of 2014, an increase of 1.8% on that reported for September 30 last year.
Schroder REIT shares were down 3.2% at 58.83 pence on Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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