Schroder European Real Estate Investment TrustZurich. Benelux. Fanny Guenzl. ... Fund Manager. Hotel...

Marketing material for professional investors or advisers only.

Jeff O’Dwyer, SEREIT Manager

Attractive, diversified income from investing in growth European cities

Schroder European Real Estate Investment Trust

5 February 2020

Contents page

1

01 Highlights

02 Portfolio and asset management

03 Markets

04 Debt

05 Summary

The European growth city strategy

2

Acquisitions and asset management support long term dividend and growth

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.Source: Schroders, December 2019. ¹As at 30 September 2019. ²Based on share price of £1.17 p.s. and GBP:EUR FX Rate of 1.17.

Investment

– €242.7m¹ portfolio in growth cities and regions; up 9% on purchase price

– 100% of portfolio located in higher growth locations

– Increased exposure to 20% for warehouse sector

– Secured conditional 10 year lease for largest tenant

– Concluded 18 new leases and re-gears at a 2% uplift and a weighted lease term of c. 9 yrs

– 94% occupancy, 6.4 yrs lease length

– GRESB Green Star rating achieved

– Good diversification: across city, sector and tenant

Finance

– Quarterly dividend equating to annual yield c.5.5% on share price²

– 30 September 2019 NAV remained flat at €182.1m(136.2 cents per share)

– NAV total return of 4.1% over the financial year to Sept 2019

– 29% LTV at interest cost of 1.4% and duration of 4.9 years¹

European markets

– Markets: Positive relative economic backdrop:

– GDP positive

– Low unemployment

– Voids falling

– Rents increasing

– Price growth continues

– Modest development pipeline

– Megatrends: Urbanisation, infrastructure, demographic change

– Market presence: Deep local market knowledge and access of Schroder European teams

Growth strategy

Asset Management: Execute key asset management initiatives to deliver shareholder returns

Accretive growth: Grow portfolio through identifying earnings enhancing capex and acquisitions

Scale benefits: Improves diversification, liquidity and cost economies

Portfolio and asset management

Portfolio€242.7m¹ invested across 13 assets in France, Germany, Spain and Netherland

Source: Schroders, December 2019. For illustrative purposes only and should not be viewed as a recommendation to buy or sell. ¹Portfolio market value and individual values are based on 30 September 2019.

Retail Warehouse €26.9m

Berlin, Germany

Office €17.2m

Stuttgart, Germany

Retail €11.45m

Frankfurt, Germany

Retail €23.5m (50%)

Seville, Spain

Logistics €17.6m

Rennes, France

Logistics €8.7m

Rumilly, France

Jan 2016

€0 €243m¹

2019

Office €41.6m

Paris, France

Office €37.9m

St. Cloud, Paris,FranceOffice €16.7m

Hamburg, Germany

Data centre/mixed use €20m

Apeldoorn,Netherlands

Logistics €7.8m & €3.1m

Houten & Utrecht, Netherlands

Logistics €10.25m

VenrayNetherlands

4

https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwi2g4HTwrnZAhUEthQKHSuoBxIQjRx6BAgAEAY&url=https://en.wikipedia.org/wiki/Flag_of_the_Netherlands&psig=AOvVaw02C7SiUbmfUgXnElsr84rm&ust=1519388839210754



Investment activity during the period

5

Strengthening industrial warehousing allocation – 20% of portfolio

Source: Schroders, December 2019.

Rennes, France logistic purchase

Purchase price €17.3m/€725 psm/5.9% NIY

LocationLocated in Eastern Brittany, 60km from Rennes and 16km from Saint-Malo. The property is located at the junction of two major arterial routes and benefits from excellent sea, high speed rail and air connectivity

Description

– Two separate and divisible warehouses totalling 23,852 sqm (98% warehouse, 2% office) with 21 loading docks, 11-13 m clear height with 7Tm2 floor load

– Built-to-suit asset enjoying excellent tenancy history, with strong retention potential given C-Log’s €11m investment for its automated equipment and installation

– A net rental income equating to €45/sqm p.a., in line with the market

– Site cover 33% providing for scope for expansion

Strategy

– Located in one of France’s fastest growing locations from a GDP perspective

– Excellent specification, divisible and suitable for multiple users

– Long term 12 year income supported by substantial tenant investments, heightened tenant retention

– Accretive to SEREIT distribution; adding further diversification benefits (sector, WAULT, building quality)

Asset management initiatives

Boulogne-Billancourt

Office Paris, France

– Agreed heads of terms with Alten for a new 10 year fixed term lease subject to a capex programme– Advanced detail design, planning and financing– Potential to create c. 20% profit on cost whilst also strengthening portfolio income and

building quality

Saint Cloud Office Paris, France – Secured two new leases over c. 3,500 sqm/22% of total area at rents 8% above previous rent

City Sud OfficeHamburg, Germany

– Secured new lease agreements with three tenants for c. 50% of the Hamburg vacant space; achieved at rents 13% above business plan and at an average WAULB and 10 years to final expiry

– Extended lease term for levels 2 and 3 (c. 25% of area) to 10 years – In discussions on a further two floors representing c. 25% of space

Metromar Retail Seville, Spain

– Completion of €800,000 scope of works to improve quality of centre – Opened leisure specialist, Urban Planet– Collective measures to enhance the centres defensive capabilities in an increasingly competitive local market and

challenging retail sector– Focus on leasing vacancy following recent H&M departure

TransactionsIndustrialWarehouse

Rennes, France

– Acquisition of two industrial warehouses leased on a 12 year fixed term; enhancing income security and sector diversification

Portfolio – Achieved green star GRESB rating across the portfolio

2018/19 asset management

6

Further strengthening income profile

Source: Schroders, December 2019. 2018/19 is year end September 2019. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Asset management

7

SEREIT is due to deliver short, medium and long-term opportunities

Source: Schroders, December 2019. Forecast risk warning: Please see the information slide at the end of this presentation.

Metromar – lease c. 3,000 sqm Hamburg – lease remaining City BKK vacancy

2019/20 2020/21 2022/232021/22

Potential to expand supermarket to part of H&M space at Metromar

Conclude fit-out of level 8 to expedite leasing of remaining vacant space in Hamburg

Stuttgart to benefit from improved infrastructure from the completion of ‘Stuttgarter 21’

Conclude planning approval, detail design, tender and financing for refurbishment of c. 7,000 sqm at Boulogne Billancourt

2026+

2025 expiry of initial term at Hornbach, Berlin –4 hectare site with alternate use potential

Grand Paris Transport improvements St Cloud, Paris

St Cloud (Paris) – re-gearing/transport Berlin – 4 hectares in growth corridor

Potential profit from the completion of refurbishment at Boulogne Billancourt

Asset management

8

Paris B.B lease re-gear and refurbishment

Source: Schroders, December 2019. 1Subject to planning approval.

2. 'Winning city'Increased exposure to Paris, a city forecast to be an upper quartile growth performer

1. Profitable– Potential forecast value on completion €75–

80m– Profit of c.€12–15m resulting in a c. 20% profit

on cost

4. Income growth and quality– 10 year lease to a strong public covenant– Adding €1m in headline rental income– Increase portfolio WAULT from c. 5 years to >6 years

3. Building quality – Opportunity to take a grade C asset to Grade A – Investing c.€21m in an extensive refurbishment1.

Specification includes:– lobby transformation/double height atrium – new technical equipment– addition of floor space– increase floor to ceiling heights

– Improved environmental certification – BREEAM certification forecast ‘very good’

5. LiquidityEnhanced ‘core’ profile improves

the disposal appeal to institutional investors

6. FinancePre-let, value enhancing profile provides

opportunity to consider optimal financing structure for capital investment required

7. GrowthOpportunity to implement asset

management initiatives that can grow the portfolio 7. Growth

1. Profitable

2. Winning city

3. Building

quality

4. Income growth

profile

5. Liquidity

6. Finance

Management of breaks and lease expiries

9

Lease expiry to earliest termination

Asset business plans being executed

Source: Schroders, December 2019. Data per 30 September 2019.

Country allocation

47%

25%

20%

8%

Office Retail Industrial Mixed

Sector allocation

43%

30%

17%

10%

France Germany Netherlands Spain

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

5%

10%

15%

20%

25%

30%

2019 2020 Current2021

Regear2021

2022 2023 2024 2025 2026 2027 2028 Current2029+

Regear2029+

Other (remaining portfolio) Other (Seville property) LandBW

Alten Ethypharm Filassistance

Cereal Partners Hornbach Inventum

KPN DKL C-log

Total per year Portfolio Wault (current) Portfolio Wault (re-gear)

WAULB increase from 5 years to over 6 years

% of income at break (p.a.) % of cumulative income at break

2%

8%

28%

14%

4%

1% 2%

14%

24%

4% 4%

9%

23%

Schroder Real Estate overview

10

Local presence, active management expertise and strong performance

Past performance is not a guide to future performance and may not be repeated. Source: Schroders, 30 June 2019. 1Represents 3 years to 30 June 2019. AUM and performance data represented by Funds (42 funds/mandates) with consistent timeline for respective period. Relative return funds composed against independent benchmarks. Absolute return funds compared against performance target. Performance is net of fees on an annualised basis; 2Transactions including direct and indirect investments for the five year period to 30 June 2019. Exchange rates of £1:€1.12; £1:$1.27 .

Global real estate manager investing in real

estate since 1971

Active management with core+ style

Over €18.1 billion of real estate AUM

Over 200 people involved in the

management of real estate with over 100 in London

Investing in ‘Winning Cities’ with active management style

89% of real estate AUM outperformed client benchmarks or

performance targets over three years1

€15 billion of transactions in UK and

Europe in the last five years2

Real estate personnel in 16 locations across Europe, Asia and the USA

Pension funds and insurance companies represent over 60% of our client base

BermudaMexico City

New YorkPhiladelphia

Cape Town

BeijingHong KongJakarta

SingaporeSydneyTaipeiTokyo

SeoulShanghai

Locations shown in bold detail offices with real estate personnel

DubaiMumbai

Buenos AiresSantiago

São Paulo

AmsterdamBrussels

CopenhagenEdinburghFrankfurtGibraltar

GenevaJerseyGuernseyLondonLuxembourgMadridManchester

MilanMunichOxfordParisRomeStockholmZurich

BeneluxFanny Guenzl

Continental European expertise

11

Senior team overseeing real estate platform of over 180 people

Support from legal, accounting, operations, risk and client servicing teams basedin London, Jersey and Luxembourg

Source: Schroders, December 2019.

NordicsEva Granlund

Local Asset Management Teams

Duncan OwenGlobal Head of Real Estate

FranceLaurent Dubos

SwitzerlandRoger Hennig

GermanyNils Heetmeyer

Mark CallenderHead of Real

Estate Research

Andrew MacDonaldHead of Real

Estate Finance

Robin HubbardHead of Real Estate Capital

Offices Retail Industrial

Jeff O’DwyerPan European Fund Manager

Hotel

Jonathan HarrisHead of Continental Europe Real Estate

Markets

Focus on growth – cities not countries

17

Average GDP Growth End 2018 – End 2023, % pa

Target cities and regions forecast to enjoy faster economic growth

Hatched refers to the location of some of the SEREIT investments.Source: Oxford Economics, Schroders. October 2019.The forecast should be regarded as illustrative of trends. Actual figures will differ from forecasts. Please refer to Important Information regarding forecasts. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.

What makes winning cities?

Infrastructure improvements

Transport; distribution; energy; technology

Differentiated economy

Globally facing; niche; financial services and

TMT hub; value added

engineering

EnvironmentLive and work; tourism

and amenities; universities; cathedral

cities; dominant retail and leisure

Employment growthHigh value new jobs;

wealth effect; population growth0.0

0.5

1.0

1.5

2.0

2.5

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Fran

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Mad

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Val

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Sevi

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Am

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Fin

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Bru

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aly

49%

26%

21%

4%

81%

19%

Fastest Growing Regions Second Quartile

Third Quartile Slowest Growing Regions

Exposure to higher GDP growth, winning centres

14

SEREIT’s Investment universe

SEREIT portfolio located in highest growth regions of Western Europe

Source: Oxford Economics, Schroders. September 2019 – Total of 13 assets and exposure calculated on investment size. Investment universe consisting of 851 NUTS3 regions in countries shown on map. Data based on Oxford Economics’ annual GDP growth forecasts 2019–end 2023. Forecasts should be regarded as illustrative of trends. Actual figures will differ from forecasts. See ‘important information’ regarding forecasts.

SEREIT’s portfolio vs. Investment universe

Outer ring shows SEREITs direct exposure as a % of value

Inner ring shows average for investment

universe

Hamburg

Paris

Seville

Frankfurt

Stuttgart

Berlin

Rumilly

Rennes

Utrecht

European macro backdrop

15

Market fundamentals remain supportive

Source: European Commission, Oxford Economics, JLL, PMA, Schroders. October 2019. Note forecasts should be regarded as illustrative of trends. Actual figures will differ from forecasts. See ‘important information’ regarding forecasts. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Economic Sentiment in the EU and Eurozone

60

70

80

90

100

110

120

Jan

07

Jan

08

Jan

09

Jan

10

Jan

11

Jan

12

Jan

13

Jan

14

Jan

15

Jan

16

Jan

17

Jan

18

Jan

19

EU28 Eurozone

Take-up, 12m rolling Totals, ‘000 sq m – Growth is slowing over a number of global headwinds, but remains positive

– Economic sentiment is at long-term trend average but remains positive for services and consumers

– Unemployment falling further – strong growth in office employment, increasing consumer spending

– Supply level increasing, but moderate, with in some cases extremely low vacancy

– Ongoing positive rental growth forecasts

– No threat from extreme levels of debt

– Yields low – but rational as interest rates will remain lower for longer

2.0

4.0

6.0

8.0

10.0

12.0

14.0

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

Germany France Italy Netherlands Sweden

ILO-Unemployment rates (%) Office completions and net additions

Forecast

0

2,000

4,000

6,000

8,000

10,000

12,000

Q1

06

Q3

06

Q1

07

Q3

07

Q1

08

Q3

08

Q1

09

Q3

09

Q1

10

Q3

10

Q1

11

Q3

11

Q1

12

Q3

12

Q1

13

Q3

13

Q1

14

Q3

14

Q1

15

Q3

15

Q1

16

Q3

16

Q1

17

Q3

17

Q1

18

Q3

18

Q1

19

Q3

19

Germany France UK and Ireland Italy BeNeLux Iberia Sweden

Office completions, million square metres Net-additions (% of stock)

Germany France Italy Spain

Benelux Nordic Net-additions (lhs)

Debt

Debt financing

17

Current borrowing rates accretive to income returns

1LTV based on net LTV vs. GAV of overall company. Source: Schroders, December 2019. Not a recommendation to buy or sell.

Loans summary Loans by maturity (incl. loans completed post 30 Sep 2019)

New Loans in 2019

– Gearing targeted against individual assets or groups of assets in order to optimise borrowing strategy

– 11 of the 13 assets are geared; Paris BB office and the Apeldoorn office are currently ungeared

– In discussions with banks regarding debt facility for Paris BB project; will take LTV to c.35%

– 100% of interest rate exposure either fixed or capped

Loan Loan Amount LTV Maturity Interest Rate

Hamburg/Stuttgart €14.0m 49% June 2023 0.85%

Frankfurt/Berlin €16.5m 43% June 2026 1.31%

Dutch Logistics €9.25m 44% Sept 2023 2.15%

Seville €11.7m 50% May 2024 1.76%

St. Cloud €13.0m 34% Dec 2024 1.30%

Rennes €8.4m 49% Mar 2024 1.40%

Total as at 30 Sept €73.0m 29%1 4.9 Years 1.42%

Loans completed post 30 Sept 2019

St. Cloud loan increase €4.0m 45% Dec 2024 1.45%

Rumilly €3.7m 43% Apr 2023 1.30%

Total inc. post 30 Sept loans €80.7m 31% 4.9 Years 1.41%

33%

46%

21%

2023 2024 2026

Lender Saar LB

Loan €8.4m

Interest rate 1.40%

Maturity 5 Years

Paris BB lease regear and refurbishment

18

Capital profit and rental increase

Source: Schroders, December 2019. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Funding

– Refurbishment works and dividend shortfall during works and rent free period likely to be fully/majority funded via debt

– Main loan will be secured against Paris BB asset (currently ungeared)

– Good initial interest from banks to provide debt finance; margin indications 1.4–2% p.a.

– Likely to take overall company gearing to c.35% LTV

– Keep under review opportunities to raise equity to partially fund capex and reduce gearing

Estimated completed value c.€75–80m

Current value €41.6m

Capex of c. €21m– Comprehensive

refurbishment and addition of space

New 10 year lease– Increased rent by €1m p.a.

to €3.4m p.a.– 20 months rent free

(€5.7m)

– c.15% – 20% profit on cost

– +€1m p.a. increase in headline rent

Summary and outlook

The company investing in European growth cities

20

Delivering investment performance; well positioned for future growth

Source: Schroders, December 2019. ¹Data per 30 September 2019.

High quality c. €242.7m1 portfolio located in growth cities and regions across France, Germany, Netherlands and Spain

Strong income profile with 94% occupancy and long term leases/attractive WAULT

Investment and asset management activities positioning the Company for growth

Annualised Euro dividend yield c.5.5% p.a. based on current share price

Low cost, long duration debt financing at c. 30% LTV1 – accretive to income return

Eurozone economic backdrop relatively stable; low unemployment

Investor and occupier activity in target markets remains strong; potential for rental growth

Megatrends (e.g. urbanisation, infrastructure investment) support long-term focus on growth cities

Pursuing major asset management initiatives to deliver outperformance and support growth ambitions

Ambition to grow portfolio via new acquisitions in 2020

Appendix

Portfolio overview

22

Thirteen institutional grade assets located in target growth markets

Schroders, December 2019. Data per 30 September 2019.

Country allocation

47%

25%

20%

8%

Office Retail Industrial Mixed

Sector allocation

43%

30%

17%

10%

France Germany Netherlands Spain

Rent

Contr.ERV NIY

Vacan-

cy

Wault

Break

Wault

Expiry

€m% of

total€m €m % % yrs yrs

Mar 16 Par is (B-B) France Off ice 41.6 17% 4 2.5 2.9 5.5% 1.6 1.6

Feb 17 Par is (SC) France Off ice 37.9 16% 12 3.1 3.5 5.9% 15% 1.9 5.5

Mar 19 Rennes France Industr ial 17.6 7% 1 1.1 1.1 5.7% 11.4 11.4

Aug 18 Rumilly France Industr ial 8.7 4% 1 0.7 0.6 7.3% 5.6 6.6

France subtotal 105.8 43% 18 7.4 8.1 5.8% 7% 3.6 5.2

Mar 16 Ber lin Germany Retail 26.9 11% 1 1.6 1.7 5.4% 6.3 6.3

Apr 16 Stuttgart Germany Off ice 17.2 7% 4 0.8 0.8 4.1% 0% 5.8 6.1

Apr 16 Hamburg Germany Off ice 16.7 7% 13 0.6 0.9 2.1% 37% 7.6 7.6

Apr 16 Frankfurt Germany Retail 11.5 5% 6 0.7 0.7 5.0% 5.6 5.6

Germany subtotal 72.3 30% 24 3.7 4.2 4.3% 8% 6.3 6.3

Feb 18 Apeldoorn Nether lands Mixed 20.0 8% 1 2.5 2.0 11.5% 7.3 7.3

Sep 18 Venray Nether lands Industr ial 10.3 4% 1 0.7 0.6 5.7% 9.0 9.0

Aug 18 Houten Nether lands Industr ial 7.8 3% 1 0.6 0.6 6.7% 6.8 6.8

Sep 18 Utrecht Nether lands Industr ial 3.1 1% 3 0.3 0.2 7.5% 7.3 7.3

Netherlands subtotal 41.2 17% 6 4.0 3.4 8.8% 7.5 7.5

May 17 Seville Spain Retail 23.5 10% 48 2.0 2.1 4.7% 9% 3.5 8.7

Spain subtotal 23.5 10% 48 2.0 2.1 4.7% 9% 3.5 8.7

Total Portfolio 242.7 100% 96 17.1 17.9 5.8% 6% 5.0 6.4

Value

TenantsCompl.

DateProperty Country Sector

Tenant overview

23

Over 90 tenants and weighted average lease term of 6.4 years

Schroders, December 2019. Data per 30 September 2019.

1 KPN Apeldoorn 2.5 14.6% 7.3 7.3

2 Alten Par is (B-B) 2.4 14.1% 1.5 1.5

3 Hornbach Ber lin 1.6 9.4% 6.3 6.3

4 C-log Rennes 1.1 6.3% 11.4 11.4

5 Filassistance Par is (SC) 0.9 5.0% 2.3 7.3

6 Cereal Partners Rumilly 0.7 4.0% 5.6 6.6

7 DKL Venray 0.7 3.9% 9.0 9.0

8 LandBW Stuttgart 0.7 3.8% 6.4 6.8

9 Inventum Houten 0.6 3.5% 6.7 6.7

10 Ethypharm Paris (SC) 0.6 3.2% 1.7 7.3

11.6 67.8% 5.6 6.3

Remaining tenants 5.5 32.2% 3.9 6.5

17.1 100.0% 5.0 6.4Total

Total top ten tenants

Rent

(€m)PropertyTenant#

% of Total

Portfolio

Wault Brk

(yrs)

Wault Exp

(yrs)

SEREIT portfolio

24

Paris office investment – Boulogne Billancourt

Source: Schroders, December 2019. Maps – http://maps.stamen.com. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Opportunity Fully let office building with reversion potential

Location Jean Jaurès 221, 92100 Boulogne Billancourt (Paris), France

Tenure/built Freehold – co-ownership

Asset description

– Established market in Paris’ Western Crescent

– Good location within Boulogne-Billancourt

– Metro line 9 and Paris ring road nearby

– Built in 1989, flexible T-shaped floor plates (ca. 800 sqm)

– 100%-let to ALTEN, a technology consulting and engineering company until 31 March 2021

WAULT 1.6 years (from 1 October 2019) and 1.6 years to break

Purchase price €37.5m/NIY 5.7%/€5,522 psm

Current value €41.6m as at 30 September 2019

Investment rationale

– Medium duration lease term with a strong covenant tenant present in the building since 1998 – provides time to consider refurbishment

– Conservative rent level (€312/‘office’ sqm/pa) offering a good alternative to La Défense in a more attractive environment

– Area where people live and work; supply constrained

– Boulogne-Billancourt is an established market (1.2m sqm of office stock, the second largest market in the Western Crescent) with average take-up over 100,000 sqm/pa

– Potential to create value and significant reversion potential (c.30%) by redeveloping the property at lease expiry

http://maps.stamen.com/

SEREIT portfolio

25

Paris office investment – Saint Cloud


Paris

Opportunity Best premises in a large office complex at an extremely attractive price

Location Saint-Cloud, an upscale suburban city bordering Paris

Tenure/built Freehold in a co-ownership/Built in the 1970s, well maintained since

Asset description

– Ca. 15,800 sqm of office and storage areas located in ‘Les Bureaux de la Colline’, a well maintained 65,000-sqm office complex;

– Entire building E and the four highest floors in building D i.e. the best premises in the complex: located near the main entrance with the best views of Paris and over Parc de Saint-Cloud;

– Office area 100% let to 12 tenants with very high historical occupancy ratio (> 90%) at a defensive average rent of €215/sqm/year, but with high service charges;

– Office floor areas range from 700 to 1,500 sqm;

– Very good accessibility to the property by car (A13 in front of the building) and good accessibility using public transport (tramway, metro and bus stations nearby). Premises includes 303 car spaces


Purchase price €30m i.e. €1,959/sqm and 9.5% NIY



– Acquisition at a discount to conservative estimate of intrinsic/long term value given special situation (sale before year end)

– 5 largest tenants of good covenant account for 70%+ of rental income;

– Largest shareholding stake in the co-ownership by far (22.4%)

– Immediate area to benefit from Line 15 train expansion in 2028


SEREIT portfolio

26

Rennes logistics investment


Rennes

St MaloOpportunity

Sale and leaseback investment regarding two logistics assets fully let on a long term basis to e-commerce specialist, C-Log, located near Rennes, east Brittany, one of the fastest growing regions in France

LocationLocated in Eastern Brittany, 60km from Rennes and 16km from Saint-Malo. The property is located at the junction of two major arterial routes and benefits from excellent sea, high speed rail and air connectivity

Tenure/built Freehold – two separate warehouses constructed in 2003 and 2014

Asset description

– Two separate and divisible warehouses totalling 23,852 sqm (98% warehouse, 2% office) with 21 loading docks, 11–13 m clear height with 7Tm2 floor load

– Built-to-suit asset enjoying excellent tenancy history, with strong retention potential given C-Log’s €11m investment for its automated equipment and installation

– A net rental income equating to €45/sqm p.a., in line with the market

– Site cover 33% provides scope for expansion


Purchase price €17.3m/5.9% NIY and €725/sqm



– Located in one of France’s fastest growing locations from a GDP perspective

– Excellent specification, divisible and suitable for multiple users

– Long term 12 year income supported by substantial tenant investments, heightened tenant retention

– Accretive to SEREIT distribution; adding further diversification benefits (sector, WAULT, building quality)


SEREIT portfolio

27

Rumilly logistics investment


Rumilly

OpportunityOpportunity to invest in a warehouse in Rumilly (French Alps), an area well-situated with close proximity to Lyon and Geneva

LocationLogistics platform located in Rumilly (Haute-Savoie), close to Annecy in the French Alps. The asset is close to A41 towards Geneva, to A6 towards Paris and to A43 towards Lyon. Rumilly can be reached by the railway network and the highway network (Chambery airport, Lyon Airport and Geneva in less than one hour).

Tenure/built Freehold – constructed in three stages: 1994, 2003 and 2010

Asset description

– 16,700 sqm (97% warehouse, 3% office) with 22 loading docks, 14 truck and 28 car parking spaces

– Built-to-suit asset enjoying excellent tenancy history, fully let to Cereal Partners France (Nestlé subsidiary) for the past 24 years with three extensions

– A net rental income of €650k equating to €40/sqm p.a.





– Scarcity in land plot, meaning strong interest for occupiers and distributors

– Strong credit tenant (Nestlé subsidiary) with a WALB of ca. 6.5 years

– Long term hold with a favourable cash yield/Attractive NIY of 7.0%

– Accretive to SEREIT distribution profile and adds further diversification benefits


SEREIT portfolio

28

Berlin retail warehouse investment – Mariendorf


Opportunity Long let retail warehouse in a growing Berlin sub-market

Location Großebeerenstraße 30, 12107 Berlin, Germany

Tenure Freehold

Asset description

– DIY retail unit in Mariendorf, 10 km south of Berlin City Centre

– Asset comprises 3 parts: a DIY unit, a garden centre and a trade counter, let to Hornbach, with a total lettable area of 16,800 sqm

– Urban location, surrounded by medium density residential and commercial accommodation. A separately owned Aldi supermarket adjoins the site; small potential residential site within ownership

– Large site of over 4 hectares

– Let to Hornbach Baumarkt AG until 2026





– Characteristics consistent with our house view of targeting institutional grade real estate in growth cities

– Hornbach Baumarkt is the one of the strongest DIY operators in Germany; sector has witnessed some consolidation

– Long income stream in defensive segment at an attractive cash yield

– Land value is relatively high (c. 20-30% of value) underpinning residual value

– Potential for residential conversion in the long run

– Small residential site at the rear; opportunity to redevelop


SEREIT portfolio

29

Stuttgart office investment


Opportunity Fully let, core office investment anchored by Government tenant

Location Neckarstrasse 121, 70190 Stuttgart, Germany

Tenure Freehold

Asset description

– Core office investment centrally located in Stuttgart, the political, economic and cultural centre of Baden-Württemberg, Germany’s third largest state by population

– Strong micro location close to central station and Schlossgarten park. The sub-market has a range of government occupiers including various courts of justice and ministries

– Originally constructed in 1960 and comprehensively refurbished in 2005 with a total lettable area of 5,832 sqmand parking for 71 cars

– Efficient floor plate of c. 750 sqm, divisible in two for either cellular or open-plan offices. Good specification

– Currently 100% occupied with the main tenant being the Federal State of Baden-Württemberg (81%) with a lease expiry in July 2026





– Characteristics consistent with our house view of targeting institutional grade real estate in growth cities

– Stuttgart is one of Germany’s top 7 office markets; very low vacancy

– Excellent covenant strength providing long term, secure cash yield

– Highly liquid lot size that appeals to both institutional and private investors


SEREIT portfolio

30

Hamburg office investment


Opportunity Fully let, multi tenanted office property on the edge Hamburg CBD

Location Hammerbrookstraße 94, 20097 Hamburg, Germany

Tenure Freehold

Asset description

– Core office investment in Hamburg’s Centre South office sub-market. This area continues to improve through new retail, residential and office development; mixed use location

– Good micro location, alongside public transport and main arterial roads. Hammerbrook S-Bahn station (lines S3 & S31) located within 250m, one stop to central station

– Varied office sub-market, catering for private and public sector occupiers. Increasingly become a back office location; rents at 50% discount to CBD

– Modern asset built in 2005. Ground floor retail with strong convenience offer with office space above





– Sub market is improving and increasingly becoming a place where people want to live and work

– Highly liquid lot size that appeals to both institutional and private investors

– High yielding investment with favourable unexpired lease term and an acquisition price in line with replacement cost

– Opportunity to re-gear head lease with BKK


SEREIT portfolio

31

Frankfurt retail investment


OpportunityMulti let convenience retail centre anchored by Lidl supermarket, located in a growing urban area of Frankfurt am Main

Location Lorscher Straße 41, 60489 Frankfurt/Rödelheim, Germany

Tenure Freehold

Asset description

– Fully let, multi tenanted convenience retail centre located in Rödelheim, a growing suburb of Frankfurt am Main with good transport connections and visibility to main highway

– Built 2004 and modernised in 2015 to a high specification

– 4,525 sqm total rental space with more than 350 parking spaces. 1,600 sqm Lidl supermarket is considered to be the ideal size for new style convenience/small basket retailing

– All retail units have dedicated, secure delivery areas

– Site area 8,097 sqm





– Well located, high quality building, catering for demand for grocery/convenience stores from locals and commuters

– Fully let with opportunity to change tenant mix and increase rental income over the medium term

– Income underpinned by c.11 year unexpired lease term with main tenant Lidl

– Plan to introduce drug store to improve footfall


SEREIT portfolio

32

Data centre/office investment, Netherlands

Source: Schroders, December 2019. Maps – http://maps.stamen.com. For illustrative purposes only and not a recommendation to buy or sell.

Apeldoorn

A-50

A-1

OpportunityOpportunity to acquire a freehold office/data centre in Apeldoorn (NL), fully leased to KPN till Dec ‘26, the largest telecom/IT service provider in the Netherlands. Attractive yield and purchase price at a significant discount to replacement cost

LocationApeldoorn (pop. c. 160k) is located in the centre of the Netherlands with good infrastructure links to both the north/south (via the A-50) and the east/west (via the A-1). Amsterdam is within an hour drive. The city is an important ICT employment centres in the Netherlands, catering for over 6,500 jobs in the sector and growing

Tenure/built Freehold – Constructed in stages between 1975-85. Renovated 2006, 2016

Asset description

– 23,700sqm of GLA (56% office, 22% dataroom, 23% storage) across four floors + basement.

– Site area of 35,731sqm with 495 on site parking spaces (1:48sqm)

– Strategic location for KPN – 1 of 10 locations for key data centres

– Average rent of €101/sqm – discount to Apeldoorn prime





– Attractive inflation linked 9 year income stream, strong covenant

– Good location: central Netherlands and at the intersection of the A-1 and A-50, with strong alternate use potential

– Apeldoorn expected to be a beneficiary of the trend of the relocation of back-office functions (particularly ITC) to secondary cities (rents currently stand at c. 30% of Amsterdam rents)


SEREIT portfolio

33

Venray logistics investment


Venray

Opportunity Invest in a light industrial asset in one of the largest logistics regions of the Netherlands

Location

Located in the north-west of the Limburg province, Venray (pop. 43.2k) forms part of the established Venlo-Venray logistics corridor. Good infrastructure links with 4 international airports within 65km and direct access to the A-73 motorway and the N-270 which connects the city both north/south and east/west respectively to Arnhem and Eindhoven. The city is therefore a strategic location for distribution activity nationally

Tenure/built Freehold – 1999

Asset description

– Site area of 22,450 sqm with 24 parking spaces and 15 loading docks

– 15,290 sqm (97% warehouse, 3% office)

– Building constructed in 1999 with clear height of 9.5 m

– DKL is a tenant specialising in road transportation and logistic services

– Average rent of €42.5/sqm





– The Venray-Venlo region is regarded as the top logistics location in the Netherlands and top 5 in Europe

– Strong industrial/logistics asset in a supply constrained location

– Adds further sector diversification to SEREIT

– Attractive inflation linked 10 year income stream


SEREIT portfolio

34

Houten logistics investment


UtrechtHouten

Opportunity An industrial investment located in an established mixed use area of Houten

LocationLocated in the de Meerpaal business park 2km south west of Houten and 13km south of Utrecht city centre. The area has good accessibility by car and public transport with close proximity to the A27 and A12 motorways. A bus stop is located 2 minutes walking distance from the property

Tenure/built Freehold – 2010

Asset description

– 9,149 sqm of GLA (80% warehouse, 20% office)

– Site area of 12,100 sqm with 120 parking spaces and 2 loading docks

– Modern building constructed in 2010 with clear height of 12m

– Strong tenant specialising in ventilation heat pumps, boiler systems and water heater appliances with 110+ year history

– Average rent of €63/sqm in line with market




Investment rationale– Strong industrial asset within de Meerpaal, the largest business park in Houten

– Attractive inflation linked 8 year income stream, leased to a strong covenant


SEREIT portfolio

35

Utrecht logistics investment


Utrecht

OpportunityOpportunity to acquire a light industrial asset fully let to three tenants in a popular business park within the Utrecht region

LocationLocated in de Wetering, which is 7.5km north-west of Utrecht city centre and 5 minutes by car from the A-2, motorway. The region neighbours the new and growing Leidsche Rijn residential district The asset is 6 minutes walking distance to the bus stop which offers a 16 minute journey to Utrecht central station

Tenure/built Perpetual leasehold – 2001

Asset description

– Total lettable area of 2,492 sqm split between 37% warehouse, 39% office and 24% other including studio and research areas

– 30 parking spaces and 1 loading dock

– Multi tenanted with 3 tenants including lighting, audio and security specialists with operations across the Netherlands and internationally

– Average rent of €103/sqm


Purchase price €3.1m/7.3% NIY and €1,244/sqm



– Strong industrial asset with attractive tenant profiles and covenant terms

– Good location: central Netherlands and close to the intersection of the A-2 and A-21 connecting the region to the rest of the country

– Provides modern and functional accommodation

– Given the small size of the transaction, asset liquidity is an additional strength


SEREIT portfolio

36

Metromar shopping centre, Seville


Central Seville

OpportunitySpanish recovery play via the acquisition of a urban shopping centre located in one of the fastest growing and most affluent suburbs of Seville, Spain’s fourth largest city

LocationLocated in the south western Seville suburb of Mairena del Aljarafe. The centre benefits from easy car access and is well serviced by public transport with frontage to the only line that services this part of Seville with the city centre, making the area a key growth corridor

Tenure/built Freehold. Constructed in 2006 and acquired by UBS for €104m in 2007

Asset description

– Urban shopping centre totalling c. 23,000 sqm servicing a catchment of 250,000 people within 15 minutes

– Strong tenant mix centred on grocery, fashion (50%) and leisure. Recognised as the fashion destination for its catchment and surrounding towns. Key brands include Mercadona, Zara, Mango, Bershka and Pull & Bear

– Strong like for like sales growth; +8% in 2015 and +4% in 2016 and a annual footfall of c. 4 million. Reasonable rent/TO ratios

– Good income diversification with over 50 occupiers

– 2,787 sqm of vacancy providing for upside potential


Purchase price €25.5m and 6.2% NIY (50% interest)



– Spain is in its early stages of recovery. Retail is expected to be a key beneficiary of improved economic and consumer sentiment

– Established and dominant centre within its local trade area offering scope for income growth potential


Schroder European Real Estate Investment Trust Plc

37

Discrete yearly performance

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Source: Schroders, December 2019.¹Source: Schroders, Datastream, bid to bid price with net income reinvested in GBP.²Source: Schroders, NAV to NAV (per share) plus dividends paid.³Source: Schroders, NAV to NAV (per share) plus dividends paid. Converted into GBP.4Performance data does not exist for periods before launch in December 2015.

Risk factors:

– The trust may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value of the fund, both up or down, which may adversely impact the performance of the fund

– The Company may borrow money to invest in further investments, this is known as gearing. Gearing will increase returns if the value of the assets purchased increase in value by more than the cost of borrowing, or reduce returns if they fail to do so

– The trust can be exposed to different currencies. Changes in foreign exchange rates could create losses

– The dividend yield is an estimate and is not guaranteed

Q3 2018–Q3 2019 Q3 2017–Q3 2018 Q3 2016–Q3 2017 Q3 2015–Q3 20164 Q3 2014–Q3 20154

Share Price Total Return (GBP)¹ +3.3 +9.5 -8.5 – –

NAV Total Return (Euro)² +4.1 +7.5 +6.0 – –

NAV Total Return (converted to GBP)³ +3.4 +8.9 +7.8 – –

Important information

For professional investors or advisers only. This material is not suitable for retail clients. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Schroders has expressed its own views and these may change. The data contained in this document has been sourced by Schroders and should be independently verified before further publication or use. This presentation is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The information provided is not intended to constitute investment advice, an investment recommendation or investment research and does not take into account specific circumstances of any recipient. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Information herein is believed to be reliable but Schroder Unit Trusts Limited (Schroders) does not warrant its completeness or accuracy. No responsibility can be accepted for error of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.Risk factors: 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.The trust may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value of the fund, both up or down, which may adversely impact the performance of the fund.The Company may borrow money to invest in further investments, this is known as gearing. Gearing will increase returns if the value of the assets purchased increase in value by more than the cost of borrowing, or reduce returns if they fail to do so. The trust can be exposed to different currencies. Changes in foreign exchange rates could create losses.The dividend yield is an estimate and is not guaranteed.

Any references to securities, sectors, regions and/or countries are for illustrative purposes only. Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at www.schroders.com/en/privacy-policy or on request should you not have access to this webpage. For your security, communications may be recorded or monitored.

Issued in December 2019 by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered No: 4191730 England. Authorised and regulated by the Financial Conduct Authority.

38

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ContactSchroder Investment Management Limited,

1 London Wall Place, London EC2Y 5AU.

schroders.com

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