Schroder REIT Reports Strong Interim Results with NAV Growth and Dividend Increase

Schroder REIT’s interim results: NAV up, dividend higher, and momentum building

Schroder Real Estate Investment Trust (SREIT) has posted a tidy set of half-year numbers to 30 September 2025. NAV nudged higher, dividends increased again, and the portfolio continues to beat the benchmark on income and total return. The real kicker is the debt profile: cheap, long-dated and mostly fixed – a valuable asset in its own right.

Management is leaning into higher growth sectors, pushing rents through active asset management, and selling non-core assets above book value. There is still work to do on leverage, but the direction of travel is encouraging.

Key numbers at a glance

Net asset value	£302.9 million (61.9 pps), up from £301.4 million (61.6 pps)
NAV total return	3.5%
Dividends paid	£8.8 million (1.79 pps), up 5%; 96% covered by EPRA earnings
EPRA earnings per share	1.7p
IFRS profit	£10.3 million
Debt profile	Average interest cost 3.4%; 7.9-year maturity; 87% fixed or hedged
Loan to value (net of cash)	35.9% (31 March 2025: 36.9%); target range 25-35%
Portfolio valuation	£481.8 million; like-for-like up 0.7% net of capex (MSCI: 0.5%)
Sector mix	64% multi-let industrial and retail warehousing
Reversionary yield	8.3% (MSCI: 6.2%), equating to £12.1 million of potential additional rent
Leasing and rent actions	45 deals across 434,000 sq ft generating £4.0 million pa; reviews +29%, renewals +24%
Underlying six-month total return	3.5% (MSCI: 2.8%); income return 2.7% (MSCI: 2.3%)
Disposals	Five non-core assets sold for £10.5 million, 6% above opening book value
Sustainability	14% reduction in emissions intensity (2024 vs 2023); GRESB score 80/100, first in defined peer group

Dividend growth with cover and low-cost debt support

The dividend rose 5% to 1.79 pps over the half, with 96% EPRA cover and “full cover” expected for the year. EPRA earnings per share of 1.7p broadly match last year’s level, signalling stability as asset management gains feed through.

Crucially, SREIT’s debt is in great shape: an average cost of 3.4%, 7.9 years to maturity, and 87% fixed or hedged. In plain English, the trust has locked in cheap borrowing and insulated itself from rate shocks – a competitive advantage while the wider market is still digesting higher rates.

Leverage edging down, but still above target

Loan to value (LTV – debt as a proportion of asset value) is 35.9% net of cash, helped by post-period disposals. The target is 25-35%, so SREIT is just above the top end, but the ongoing sale of non-core assets should nudge this lower.

Selling five assets for £10.5 million at a 6% premium to opening book value suggests there is genuine buyer demand for the pieces SREIT is offloading. Recycling proceeds into higher-growth opportunities – or simply reducing debt – should be supportive for future returns.

Reversionary yield points to earnings upside

The portfolio has a reversionary yield of 8.3% (versus a 6.2% MSCI benchmark). Reversion means the gap between current passing rent and the estimated rental value (ERV), and here it equates to £12.1 million of potential extra rent if the whole portfolio moves to market levels.

There is more in the near-term pipeline too: fixed income uplifts expected over the 12 months from period end and leases exchanged at period end total £5.9 million. Add the 45 leasing and rent actions since April generating £4.0 million per annum – including rent reviews 29% ahead and renewals 24% ahead – and you can see how earnings could accelerate from here.

Industrial and retail warehousing weighting doing the heavy lifting

Multi-let industrial estates and retail warehousing now make up 64% of the portfolio by value, up from 63% in March. That is where rental growth has been strongest across UK real estate, backed by constrained supply and steady occupier demand.

Like-for-like, net of capital expenditure, the portfolio’s value rose 0.7% over the half, beating the MSCI benchmark at 0.5%. Total return from the underlying portfolio was 3.5% versus 2.8% for MSCI, with the income return at 2.7% (MSCI: 2.3%). This is exactly where you want a REIT to outperform – income today with embedded growth for tomorrow.

Sustainability performance turning into a green premium

SREIT reported a 14% reduction in operational whole building greenhouse gas emissions intensity in 2024 versus a 2023 baseline. The GRESB score improved to 80/100, placing first within a defined peer group of six Northern European diversified listed real estate companies.

Why it matters: better-performing, energy-efficient buildings are more attractive to tenants and can achieve higher rents and tighter yields. Management’s strategy is to extract this “green premium” to lift both income and capital values over time.

Management commentary: steady market, selective opportunity

The Chair flags ongoing macro headwinds but sees an expected market recovery underway and a potential sector rerating in 2026. Limited new supply – thanks to high build costs and constrained construction capacity – should support rents, particularly for modern, good quality space.

The Fund Manager’s focus is clear: execute asset management, improve sustainability, cut costs, and dispose of non-core assets while unlocking the £12.1 million rental reversion. The dividend remains “fully covered” and “progressive” by policy.

What I like, and what to watch

Positives that stand out

• Debt advantage: 3.4% average cost, long maturity, and 87% fixed/hedged reduces interest-rate risk.
• Operational delivery: 45 deals since April with chunky uplifts at review and renewal signal strong tenant demand.
• Income engine: portfolio income return and total return both beat the benchmark.
• Reversion runway: an 8.3% reversionary yield and £12.1 million potential rent give clear earnings upside.
• Disposals at a premium: five sales at 6% above opening book value help de-risk and fund the plan.
• Sustainability edge: improved GRESB score and emissions cuts should aid leasing and valuations.

Risks and watch items

• Leverage still high: LTV at 35.9% is just above the 25-35% target range and needs continued disposals to bring it down.
• NAV growth modest: NAV per share rose from 61.6 pps to 61.9 pps – fine, but not fireworks.
• IFRS profit lower year-on-year: £10.3 million versus £11.7 million; underlying EPRA EPS held at 1.7p.
• Execution required: the £12.1 million reversion and £5.9 million fixed uplifts need to be captured to deliver the promised earnings acceleration.

Bottom line: a well-positioned REIT with visible catalysts

This is a disciplined, active strategy doing what it says: improving assets, harvesting rental growth, and recycling capital. Debt is a strength, the dividend is rising and largely covered, and the portfolio is tilted to the right sectors.

If SREIT continues to bank reversion, push through fixed uplifts, and trim leverage through value-accretive disposals, earnings should accelerate. With management talking about an expected market recovery and a potential sector rerating in 2026, the set-up looks constructive – with a sensible list of things to watch.