Schroder refinances £130m loan and hikes dividend 20%

Schroder REIT has refinanced its £129.6m term loan with Canada Life. The transaction has generated an increased dividend of around £16.2m per year, equating to an increase of approximately 20%, starting at 1 October 2019. Duncan Owen, global head of Schroder Real Estate, said: “The transaction increases net operating income post all costs and debt reduction, and leads to a material increase in the dividend, thereby increasing shareholder’s returns. In addition, it reduces risk with long-term and low-cost debt. He added that Schroder has the capacity “to take advantage of lower pricing in the  real estate markets, with available cash and undrawn revolving debt facilities”. Following this deal, the REIT has £80m of cash and undrawn revolving credit facilities to invest in new opportunities and its underlying portfolio. The firm has extended the Canada Life loan’s maturity, with 50% of the loan maturing in 13 years and the other half maturing in 20 years. The refinancing also reduces the cost of debt on the loan from 4.4% to approximately 2.3%. Following this transaction and on completion of contracted disposals in November, the firm will have around £80m of cash and undrawn revolving credit facilities. The deal forms part of the REIT’s strategy to grow net operating income to continue its progressive dividend policy. This has included asset management, selective acquisitions and, over the past 12 months, a disposal programme totalling £85.6m, reflecting an average net initial yield of 3.1%. To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette