According to a statement to the stock exchange, the directors of SGRE reviewed the fund’s strategy and decided to propose a liquidation scheme. They recognised the “difficulties of attracting long term demand for a closed-ended vehicle which is perceived to lack sufficient critical mass, impacting upon liquidity in the company’s shares and the discount at which they trade.”
Despite extensive marketing efforts, the directors therefore concluded that their aspirations to grow the company are not realisable in current market conditions.
Shareholders will be offered the choice of a cash exit or a rollover into one or more open-ended vehicles managed by Schroder Real Estate IM. They will be able to vote on the proposals during a general meeting in February.
In a note out on Monday Numis Securities said of the announcement: “The proposed liquidation of SGRE comes as little surprise to us, as the fund has been struggling for several years to broaden its shareholder base without success. Its global mandate differentiates the fund from TR Property, which focuses solely on Europe. However, it is far smaller and has been through several changes in investment strategy and dividend policy in recent years, as well as the introduction of a zero discount control policy.”
Given that the underlying holdings are listed, Numis Securities believes that a liquidation should be a “relatively straight forward process”. As at 30 November the fund’s top ten holdings represented 38% of NAV and included some of the largest listed REITs.
Even the move in management from CBRE Clarion to Schroder has failed to turn around the fund’s fortunes, the broker said.
Meanwhile, Schroder states that the company has performed well “both in absolute and relative terms since the appointment of Schroder Real Estate IM as the manager in July 2014”. The NAV total return was 16.4% during this period. SGRE’s share price went up 4.4% this morning.
According to Schroder, the directors continue to believe in the investment proposition.