JSE-listed Schroder European Real Estate Investment Trust has disposed of its retail asset on Frankfurt, Germany, for R228 million, the company said yesterday, highlighting that this was in line with a valuation carried out in September last year.
Schroder European REIT invests in real estate assets in growth cities across Europe.
It said yesterday that it had sold off a “grocery-anchored retail asset” in Frankfurt, Germany, for €11.8 million. The 4 525 square meter asset disposed of was acquired in April 2016 for about €11m.
“This asset was acquired in April 2016 and has provided the company with a stable income stream over the eight years of ownership. Following the completion of our asset management plan, and given the limited scope for future rental growth, we felt that now was the right time to sell and crystallise a profit for our shareholders,” said Jeff O’Dwyer, fund manager for Schroder Real Estate Investment Management.
He added that the disposal of the Germany retail asset demonstrated “current investor demand for assets in the grocery sector” in Europe. Schroder European REIT was now expecting to use the proceeds from the disposal to “enhance” shareholder returns.
Management at Schroder recently completed various asset management initiatives, including securing longer-term leases with Lidl and Fresnapf. This had helped improve the long-term income profile of the asset.
Schroder will be able to retain income from the asset until the end of March this year when the transaction is expected to complete.
The company recently announced that tax authorities in France were proceeding with a tax audit in relation to the group's French tax structure. In its 2024 annual report, Schroder disclosed that the range of potential outcomes indicates a possible exposure of between €nil and €12.6m, excluding potential penalties.
“As part of the ongoing tax audit, a formal ‘Proposal for Adjustment’ has been received from the French tax authority which includes a proposed penalty on any tax found ultimately due. Including the application of interest and penalties, the potential exposure for the Group is expected to be up to €14.2 million,” the company said last month.
It added that based on external tax and legal advice received at the time of implementation, it believes that an “outflow is not probable and therefore no provision” is recognised as the group “disagrees with the ‘Proposal for Adjustment’ and hopes to “continue to contest” its position.
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