REG - AEW UK REIT PLC - Acquisition of two high yielding retail assets

Aew UK ReitAnnouncement

01/12/2022 07:00

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RNS Number : 1400I  AEW UK REIT PLC  01 December 2022

1 December 2022

 

AEW UK REIT Plc

 

Acquisition of two high yielding retail assets

 

 

AEW UK REIT plc (LSE: AEWU) ("AEWU" or the "Company") is pleased to announce
that it has unconditionally exchanged on the purchase of a 67,020 sq ft
mixed-use block located in Bath city centre at a price of £13,000,000,
reflecting a low capital value of £194 per sq ft and an attractive net
initial yield of 8.5%. Completion of the asset purchase is expected later this
week. The Company has also completed the purchase of a freehold retail asset
in the London Borough of Bromley for a price of £5,300,000, reflecting a low
capital value of £101 per sq ft and an attractive net initial yield of 8.7%.
Following these two acquisitions, the Company will have circa £7 million to
deploy on other new purchases while retaining sufficient cash for working
capital purposes.

The asset in Bath, known as Northgate House, provides 48,805 sq ft of retail
accommodation fronting on to Bath's High Street, Upper Borough Walls and Union
Passage.  The retail accommodation is let to 11 tenants anchored by TK Maxx
which has recently renewed its commitment to the location by agreeing the
removal of a tenant break option.  Retail lettings provide a weighted
unexpired lease term in excess of five years. The remaining 18,215 sq ft of
accommodation comprises grade A specification offices recently refurbished by
the vendor. The office accommodation is fully let to a wholly owned subsidiary
of Regus Group until 2032, trading as co-working brand, Spaces.

The Bath office market is characterised by tight supply and Spaces provides
the largest and only international brand of serviced office accommodation
trading in the city. The office passing rent of £22 per sq ft provides a low
base from which the Manager hopes to grow income due to a recent outstanding
rent review.

Northgate House is centrally located in Bath between Union Street, Bath's
prime retail pitch, and High Street which links to the famous landmark of
Pulteney Bridge. Bath is a designated UNESCO World Heritage Site and one of
the UK's top tourist destinations attracting some 6.25 million visitors per
annum.

The asset is held leasehold from Bath and North East Somerset Council for an
unexpired period of 178 years at a peppercorn rent.

The Bromley asset is located in a prominent position on the western side of
the pedestrianised Bromley High Street and provides 54,215 sq ft of
accommodation, let in its entirety to Next Holdings Limited. The accommodation
comprises a four-storey retail unit with the ground, basement and first floor
providing sales accommodation with ancillary accommodation on the second
floor. The unit is known to trade strongly for the retailer.

Next Holdings Limited has occupied the property since 2000 and, in September
2021, renewed on a four-year lease at a rebased level of rent. A comprehensive
store re-fit was undertaken by the tenant at this time, demonstrating the
retailer's commitment to the location.

Bromley is a well-connected Greater London borough, with direct train links to
London Victoria and London Bridge in 16 and 20 minutes, respectively. The area
is undergoing significant regeneration with numerous residential-led schemes,
including the significant Churchill Quarter mixed-use development providing
over 400 homes, situated just 50 metres to the south of the property.

Commenting on the purchase, Laura Elkin, Portfolio Manager of AEW UK REIT
said, "Over recent weeks, we have taken time to carefully consider where best
value can be found and we are delighted to have acquired these high yielding
retail assets both located in strong locations. The purchase prices of both
assets reflect low capital values which we believe will provide excellent
value to our shareholders over the long term. We continue to analyse a very
interesting pipeline of potential acquisitions for AEWU's strategy and,
following full investment of the remaining capital available for deployment,
the Company's earnings are expected to return to full cover of its dividend."

 

ENDS

 

 Enquiries
 AEW UK
 Laura Elkin                     laura.elkin@eu.aew.com (mailto:laura.elkin@eu.aew.com)

                                 +44(0) 20 7016 4869
 Henry Butt                      henry.butt@eu.aew.com (mailto:henry.butt@eu.aew.com)

                                 +44(0) 20 7016 4869
 Nicki Gladstone                 nicki.gladstone-ext@eu.aew.com (mailto: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 (mailto:AEW@tbcardew.com)
 Ed Orlebar                      +44 (0) 7738 724 630

 Tania Wild                      +44 (0) 7425 536 903

 Henry Crane                     +44 (0)7918 207 157

 Liberum Capital
 Darren Vickers / 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 £15 million), on shorter occupational leases in strong
commercial locations across the United Kingdom. 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 income streams.  AEWU is currently paying an annualised dividend
of 8p per share.

 

The Company was listed on the Official List of the Financial Conduct Authority
and admitted to trading on the Main Market of the London Stock Exchange on 12
May 2015. www.aewukreit.com (http://www.aewukreit.com/)

 

LEI: 21380073LDXHV2LP5K50

 

About AEW UK Investment Management LLP

 

AEW UK Investment Management LLP employs a well-resourced team comprising 26
individuals covering investment, asset management, operations and strategy. It
is part of AEW Group, one of the world's largest real estate managers,
with €85.2bn of assets under management as at 30 June 2022. 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 30
June, AEW Group managed €39.5bn of real estate assets on behalf of a
number of funds and separate accounts with over 470 staff located in 12
locations.

 

www.aewuk.co.uk (http://www.aewuk.co.uk/)

 

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