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AEW UK REIT plc (AEWU)
NAV Update and Dividend Declaration
25-Jan-2019 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
25 January 2018
NAV Update and Dividend Declaration for the three months to 31 December 2018
AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 25 January 2019,
directly owns a diversified portfolio of 35 regional UK commercial property
assets, announces its unaudited Net Asset Value ("NAV") and interim dividend
for the three month period ended 31 December 2018.
Highlights
· At 31 December 2018, the fair value independent valuation of the
property portfolio was GBP192.66 million (30 September 2018: GBP193.53
million), following the sale of Stoneferry Retail Park, Hull, during the
quarter. On a like-for-like basis the valuation of the property portfolio
increased by GBP1.03 million (0.53%) over the quarter (30 September 2018:
GBP2.48 million and 1.30%).
· NAV of GBP152.12 million or 100.37 pence per share (30 September 2018:
GBP151.65 million or 100.06 pence per share).
· EPRA earnings per share ("EPRA EPS") for the quarter of 1.98 pence per
share (30 September 2018: 2.06 pence per share).
· The Company today announces an interim dividend of 2.00 pence per share
for the three months ended 31 December 2018.
· NAV total return of 2.31% for the three months ended 31 December 2018.
· The Company remains conservatively geared with a gross loan to value
ratio of 25.95% (30 September 2018: 25.84%).
· At 31 December 2018, the Company held GBP8.91 million cash for investment,
which we expect to invest in an attractive and high-yielding industrial
asset in the coming months.
· Portfolio and asset management activity during the period included:
· The renewal of the lease at Mangham Road, Rotherham, for a term of ten
years at a rent of GBP275,000 per annum, representing an increase in rent
of 20%.
· The letting of Unit 3, Above Bar Street, Southampton, for a ten year
term at a rent of GBP135,000 per annum.
· The sale of Stoneferry Retail Park, Hull, for gross proceeds of GBP1.80
million.
· A regear of the lease at London East Leisure Park, Dagenham, with
McDonalds Restaurants Ltd for a 15 year term at a rent of GBP75,000 per
annum in years 1 to 3, increasing to GBP90,000 thereafter.
Alex Short, Portfolio Manager, AEW UK REIT, commented:
"Despite an uncertain political outlook, property performance generated from
the Company's portfolio continues to be strong, highlighting the expertise
of the Manager in selecting assets that will deliver sustainably strong
returns under a range of economic outlooks. We are pleased to start the New
Year with both a valuation uplift and stable EPRA earnings for the quarter,
which demonstrates the ongoing resilience of our strategy.
The like-for-like valuation uplift for the quarter of GBP1.03 million (0.53%)
is detailed as follows by sector:
Sector Valuation 31 Dec Valuation Valuation
18 movement for the movement for the
quarter quarter
GBP million GBP million %
Industrial 87.23 2.35 2.77
Other 30.33 0.38 1.25
Office 43.20 (0.20) (0.46)
Retail 31.90 (1.50) (4.49)
Total 192.66 1.03 0.53
Whilst there continue to be concerns around the retail sector, we are
pleased the Company's exposure has fallen during the quarter from 18.24% to
16.56% of the portfolio valuation. This is partly as a result of the
disposal of Stoneferry Retail Park, Hull, for GBP1.80 million and partly as a
result of the valuation losses shown above. Although the Company's remaining
retail assets have seen a fall in valuation due to negative sentiment
towards the sector, they are generally located in town and city centres with
large catchment populations and in many cases are supported by strong
alternative use values and asset management options, limiting the downside
risk.
We firmly believe that, given the Company's light exposure to retail
property and lack of exposure altogether to the Central London Office Market
where Brexit related demand concerns may be building, the Company is well
positioned to weather challenges in the wider economy and to take advantage
of opportunities in the market.
Following on from recent quarters' asset management successes, this quarter
saw further letting success with a 10 year lease renewal being signed with
Hydro Components UK Ltd on an 80,000 sq ft industrial unit in Rotherham,
which crystallised a 20% uplift in the level of passing rent. In addition, a
new letting was completed with Footasylum on Above Bar Street in
Southampton, which highlighted that well located retail property is still
able to attract tenant demand and, as such, vacancy across the portfolio
remains low at 3.08%. Despite this low level of vacancy, we still expect to
see significant value add opportunity from the portfolio in coming quarters
as other asset management transactions that are currently being negotiated
start to reach fruition. Other activity during the quarter included the sale
of the Stoneferry Retail Park in Hull to an owner occupier which further
reduced the portfolio's exposure to the retail sector.
The sale of the asset in Hull, along with the use of our debt facility up to
an LTV of 25.95%, provides us with further capital to invest and as such, we
are currently undertaking detailed due diligence on a new industrial asset
which we hope to be able to announce imminently. As shown by this potential
acquisition, the Company's investment pipeline continues to look strong with
a variety of opportunities that could be accretive to our earnings."
Net Asset Value
The Company's unaudited NAV as at 31 December 2018 was GBP152.12 million, or
100.37 pence per share. This reflects an increase of 0.31% compared with the
NAV as at 30 September 2018. The Company's NAV total return, which includes
the interim dividend for the period from 1 October 2018 to 31 December 2018
of 2.00 pence per share, is 2.31% for the three month period ended 31
December 2018. As at 31 December 2018, the Company owned investment
properties with a fair value of GBP192.66 million.
Pence per share GBP million
NAV at 1 October 2018 100.06 151.65
Loss on disposal of investment (0.20) (0.30)
properties
Capital expenditure (0.13) (0.21)
Valuation change in property 0.75 1.14
portfolio
Valuation change in derivatives (0.09) (0.14)
Income earned for the period 2.90 4.40
Expenses and net finance costs for (0.92) (1.39)
the period
Interim dividend paid (2.00) (3.03)
NAV at 31 December 2018 100.37 152.12
The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards and incorporates the independent
portfolio valuation as at 31 December 2018 and income for the period, but
does not include a provision for the interim dividend for the three month
period to 31 December 2018.
Dividend
The Company today announces an interim dividend of 2.00 pence per share for
the period from 1 October 2018 to 31 December 2018. The dividend payment
will be made on 28 February 2019 to shareholders on the register as at 8
February 2019. The ex-dividend date will be 7 February 2019.
The dividend of 2.00 pence per share will be designated 2.00 pence per share
as an interim property income distribution ("PID").
The EPRA EPS for the three month period to 31 December 2018 was 1.98 pence
(30 September 2018: 2.06 pence). The fall in EPRA earnings is largely as a
result of one-off charges on void units, equating to 0.07 pence per share.
The Company had GBP8.91 million cash for investment as at 31 December 2018,
which will provide the opportunity to increase earnings through
re-investment into high yielding assets.
The Directors will declare dividends taking into account the level of the
Company's net income and the Directors' view on the outlook for sustainable
recurring earnings. As such, the level of dividends paid may increase or
decrease from the current annual dividend of 8.00 pence per share. Based on
current market conditions, the Company expects to pay an annualised dividend
of 8.00 pence per share in respect of the financial period ending 31 March
2019.
Investors should note that this target is for illustrative purposes only,
based on current market conditions and is not intended to be, and should not
be taken as, a profit forecast or estimate. Actual returns cannot be
predicted and may differ materially from this illustrative figure. There can
be no assurance that the target will be met or that any dividend or total
return will be achieved.
Financing
Equity
The Company's issued share capital consists of 151,558,251 Ordinary Shares
and there was no movement during the quarter.
Debt
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