What’s Ahead For Schroder European Real Estate Investment Trust Plc (LON:SERE)?

Schroder European Real Estate Investment Trust Plc (LSE:SERE), a UK£137.41M small-cap, operates in the real estate industry which remains the single largest sector globally, and has continued to play a key role in investor portfolios as an asset class. Real estate investment trust, or a REIT, is a collective vehicle for investing in real estate that began in the US and has since been adopted worldwide as an investment asset. Real estate analysts are forecasting for the entire industry, negative growth in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the UK stock market as a whole. Is now the right time to pick up some shares in real estate companies? In this article, I’ll take you through the real estate sector growth expectations, and also determine whether Schroder European Real Estate Investment Trust is a laggard or leader relative to its real estate sector peers. Check out our latest analysis for Schroder European Real Estate Investment Trust

What’s the catalyst for Schroder European Real Estate Investment Trust's sector growth?

Concerns surrounding rate increases and treasury yield movements have made investors dubious around investing in REIT stocks. This is because REITs tend to be dependent on debt funding. They are also considered as bond investment alternatives due to their high and stable dividend payments. Over the past year, the industry saw negative growth of -5.26%, underperforming the UK market growth of 11.90%. Given the lack of analyst consensus in Schroder European Real Estate Investment Trust’s outlook, we could potentially assume the stock’s growth rate broadly follows its REIT industry peers. This means it is an attractive growth stock relative to the wider UK stock market.

Is Schroder European Real Estate Investment Trust and the sector relatively cheap?

REIT companies are typically trading at a PE of 11.03x, below the broader UK stock market PE of 17.4x. This illustrates a somewhat under-priced sector compared to the rest of the market. Though, the industry did returned a lower 8.58% compared to the market’s 12.78%, which may explain the lower relative valuation. On the stock-level, Schroder European Real Estate Investment Trust is trading at a PE ratio of 14.99x, which is relatively in-line with the average REIT stock. In terms of returns, Schroder European Real Estate Investment Trust generated 6.38% in the past year, which is 2.20% below the REIT sector.

Next Steps:

If you’ve been keeping an eye on the real estate sector, now may be the right time to dive deeper into the stock-level. Although it is expected to deliver lower growth on an industry level relative to the rest of the market, it is also trading at a PE below the average stock. In the case that the market is overly pessimistic on the real estate sector, there could be a mispricing opportunity to take advantage of. However, before you make a decision on the stock, I suggest you look at Schroder European Real Estate Investment Trust's fundamentals in order to build a holistic investment thesis.

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
• 2. Historical Track Record: What has SERE's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Schroder European Real Estate Investment Trust? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.