DJ AEW UK REIT plc: NAV Update and Dividend Declaration
AEW UK REIT plc (AEWU)
AEW UK REIT plc: NAV Update and Dividend Declaration
25-Jul-2019 / 12:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
25 July 2019
NAV Update and Dividend Declaration for the three months to 30 June 2019
AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 25 July 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 30 June 2019.
Highlights
· At 30 June 2019, the fair value independent valuation of the property
portfolio was GBP196.56 million (31 March 2019: GBP197.61 million). On a
like-for-like basis the valuation of the property portfolio decreased by
GBP1.05 million (0.53%) over the quarter (31 March 2019: decrease of GBP1.75
million and 0.91%).
· NAV of GBP148.33 million or 97.87 pence per share (31 March 2019: GBP149.46
million or 98.61 pence per share).
· EPRA earnings per share ("EPRA EPS") for the quarter of 2.25 pence per
share (31 March 2019: 1.99 pence per share).
· The Company today announces an interim dividend of 2.00 pence per share
for the three months ended 30 June 2019, in line with the targeted annual
dividend of 8.00 pence per share.
· Shareholder total return of 7.6% for the three months ended 30 June 2019
(three months ended 31 March 2019: 5.6%), driven by an increase in share
price to 97.88 pence per share as at 30 June 2019 (31 March 2019: 92.80
pence per share).
· The Company remains conservatively geared with a gross loan to value
ratio of 25.44% (31 March 2019: 25.30%).
· At 30 June 2019, the Company held GBP1.11 million cash for investment
which will be held for future capex projects.
Alex Short, Portfolio Manager, AEW UK REIT, commented:
"This quarter, the Company's EPRA EPS has increased to 2.25 pence per share,
as the Company remains fully invested and continues to benefit from its high
occupancy rate and the success of key asset management transactions.
The increase in EPRA EPS comes largely from a combination of increased
rental income, due to the impact of rent reviews and the most recent
acquisition of Lockwood Court in Leeds, and the one-off Prospectus costs
having been accounted for in the prior quarter's EPRA EPS, which no longer
impacts the EPRA EPS this quarter. The vacancy rate remains low at only
3.04% and we expect that the shorter than average portfolio Weighted Average
Unexpired Lease Term ("WAULT") of 4.27 years to break and 5.56 years to
expiry will provide the opportunity to boost income streams further through
the negotiation of higher levels of rent, particularly in the business space
sectors which constitute 69.8% of the portfolio.
Uncertainty remains in the wider political and economic environment. We hope
that the appointment of a new Prime Minister may bring a resolution to the
ongoing Brexit negotiations later this year which would provide some
certainty to investors and allow the opportunity for further growth in the
near future.
The like-for-like valuation decrease for the quarter of GBP1.05 million
(0.53%) is detailed as follows by sector:
Sector Valuation 30 June Valuation Valuation
2019 movement for the movement for the
quarter quarter
GBP million GBP million %
Industrial 93.88 (0.25) (0.27)
Office 43.21 0.00 0.00
Other 30.02 0.00 0.00
Retail 29.45 (0.80) (2.64)
Total 196.56 (1.05) (0.53)
While the income profile of the portfolio remains strong, valuations have
suffered in the retail sector, partly due to the wider economic environment,
but largely due to structural changes causing a mismatch of demand and
supply in many areas of the retail market. As shown above, our office and
alternatives valuations have remained flat for the quarter, while the
valuation of industrials has seen a small decrease and our retail valuations
have fallen more significantly. Our retail valuation movement reflects the
continued struggles of the sector as a whole. However, we consider the
portfolio to be defensively positioned, with retail making up just 15.0% of
the portfolio valuation. Our income streams from retail assets have also
remained relatively unaffected amongst an environment of company failures
and CVAs.
We are encouraged by the results of the Company, both for the year ended 31
March 2019, which were released on 24 June 2019, and for the quarter ended
30 June 2019. Both demonstrate the reliable income stream of the portfolio,
allowing the Company to consistently achieve its target dividend of 8.00 pps
per annum over the respective periods. We feel that this portfolio forms a
strong base from which to grow further and we hope to be able to capitalise
on attractive opportunities in the market by raising additional capital
under our placing programme."
Net Asset Value
The Company's unaudited NAV as at 30 June 2019 was GBP148.33 million, or 97.87
pence per share. This reflects a decrease of 0.76% compared with the NAV as
at 31 March 2019. The Company's NAV total return, which includes the interim
dividend for the period from 1 January 2019 to 31 March 2019 of 2.00 pence
per share, is 1.28% for the three month period ended 30 June 2019. As at 30
June 2019, the Company owned investment properties with a fair value of
GBP196.56 million.
Pence per share GBP million
NAV at 1 April 2019 98.61 149.46
Capital expenditure (0.11) (0.16)
Valuation change in property (0.85) (1.29)
portfolio
Valuation change in derivatives (0.03) (0.05)
Income earned for the period 2.93 4.43
Expenses and net finance costs for (0.68) (1.03)
the period
Interim dividend paid (2.00) (3.03)
NAV at 30 June 2019 97.87 148.33
The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards and incorporates the independent
portfolio valuation as at 30 June 2019 and income for the period, but does
not include a provision for the interim dividend for the three month period
to 30 June 2019.
Dividend
The Company today announces an interim dividend of 2.00 pence per share for
the period from 1 April 2019 to 30 June 2019. The dividend payment will be
made on 30 August 2019 to shareholders on the register as at 9 August 2019.
The ex-dividend date will be 8 August 2019.
The dividend of 2.00 pence per share will be designated 1.50 pence per share
as an interim property income distribution ("PID") and 0.50 pence per share
as an interim ordinary dividend ("non-PID").
The EPRA EPS for the three month period to 30 June 2019 was 2.25 pence (31
March 2019: 1.99 pence). This increase is partly attributable to one-off
costs equating to 0.12 pps having been recognised in the prior quarter.
Rental income also increased by 0.07 pps this quarter, due to rent reviews
coming into effect and due to a full quarter's income from the most recent
acquisition of Lockwood Court, Leeds, being recognised.
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
2020.
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
The Company's borrowings remained at GBP50.00 million throughout the quarter
and at 30 June 2019, the Company was geared at a gross loan to value of
25.44% and a net loan to value of 24.67%.
The loan continues to attract interest at LIBOR + 1.4%. To mitigate the
interest rate risk that arises as a result of entering into a variable rate
linked loan, the Company has entered into interest rate caps on GBP36.51
million of the total value of the loan (GBP26.51 million at 2.5% cap rate and
GBP10.00 million at 2.0% cap rate) up to October 2020, resulting in the loan
being 73% hedged.
The loan term runs to October 2023 and the Company has entered into
additional interest rate caps covering the period from October 2020 to
October 2023, capping a notional value of GBP46.51 million at LIBOR of 2.0%
per annum, which represents 93% of the current GBP50.00 million loan balance.
The Investment Manager and the Company will keep the levels of gearing and
hedging under review.
Portfolio activity and asset management
Brockhurst Crescent, Walsall
The Company has exchanged contracts on the surrender and re-letting of Unit
1, Brockhurst Crescent, Walsall. The rent will be unchanged at GBP231,728 and
the new tenant will benefit from a nine month rent free period. The new term
will be for eight years, compared with 3.15 years remaining on the previous
lease.
Clarke Road, Milton Keynes
A rent review was agreed and documented in March 2019, increasing the rent
from GBP134,000 per annum (GBP4.75 per sq ft) to GBP185,000 per annum (GBP5.15 per
sq ft).
Enquiries
AEW UK
Alex Short alex.short@eu.aew.com
+44(0) 20 7016 4848
Nicki Gladstone nicki.gladstone-ext@eu.aew.com
+44(0) 7711 401 021
Company Secretary
Link Company Matters Limited aewu.cosec@linkgroup.co.uk
+44(0) 1392 477 500
TB Cardew AEW@tbcardew.com
Ed Orlebar +44 (0) 20 7002 1482
Lucas Bramwell +44 (0) 7789 374 663
Liberum Capital
Gillian Martin/Owen Matthews +44 (0) 20 3100 2000
Notes to Editors
About AEW UK REIT
AEW UK REIT plc (LSE: AEWU) aims to deliver an attractive total return to
shareholders by investing predominantly in smaller commercial properties
(typically less than GBP15 million), on shorter occupational leases in strong
commercial locations across the United Kingdom. The Company was listed on
the Official List of the UK Listing Authority and admitted to trading on the
Main Market of the London Stock Exchange on 12 May 2015, raising GBP100.5m.
Since IPO it has raised a further GBP51m.
The Company is currently invested in office, retail, industrial and leisure
assets, with a focus on active asset management, repositioning the
properties and improving the quality of the income stream.
AEWU is currently paying an annualised dividend of 8p per share.
www.aewukreit.com [1] [2]
About AEW UK Investment Management LLP
AEW UK Investment Management LLP employs a well-resourced team comprising 25
individuals covering investment, asset management, operations and strategy.
It is part of AEW Group, one of the world's largest real estate managers,
with EUR67.6bn of assets under management as at 31 March 2019. AEW Group
comprises AEW SA and AEW Capital Management L.P., a U.S. registered
investment manager and their respective subsidiaries. In Europe, as at 31
March 2019, AEW Group managed EUR31.8bn of real estate assets on behalf of a
number of funds and separate accounts with over 400 staff located in 9
offices. The Investment Manager is a 50:50 joint venture between the
principals of the Investment Manager and AEW. In May 2019, AEW UK Investment
Management LLP was awarded Property Manager of the Year at the Pensions and
Investment Provider Awards.
www.aewuk.co.uk [3]
LEI: 21380073LDXHV2LP5K50
ISIN: GB00BWD24154
Category Code: MSCM
TIDM: AEWU
LEI Code: 21380073LDXHV2LP5K50
OAM Categories: 3.1. Additional regulated information required to be
disclosed under the laws of a Member State
Sequence No.: 14662
EQS News ID: 846903
End of Announcement EQS News Service
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(END) Dow Jones Newswires
July 25, 2019 07:00 ET (11:00 GMT)
