REG-AEW UK REIT plc AEW UK REIT plc: NAV Update and Dividend Declaration
22/04/2021 07:05
============
AEW UK REIT plc (AEWU)
AEW UK REIT plc: NAV Update and Dividend Declaration
22-Apr-2021 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
══════════════════════════════════════════════════════════════════════════
22 April 2021
AEW UK REIT Plc (the "Company")
NAV Update and Dividend Declaration
AEW UK REIT plc (LSE: AEWU) (the "Company"), which, as at 22 April 2021,
directly owns a diversified portfolio of 34 regional UK commercial
property assets, announces its unaudited Net Asset Value ("NAV") and
interim dividend for the three month period ended 31 March 2021.
Highlights
• Interim dividend of 2.00 pence per share for the three months ended 31
March 2021, in line with the targeted annual dividend of 8.00 pence
per share.
• EPRA earnings per share ("EPRA EPS") for the quarter of 1.10 pence (31
December 2020 quarter: 1.68 pence).
• NAV of £157.08 million or 99.15 pence per share as at 31 March 2021
(31 December 2020: £151.88 million or 95.87 pence per share).
• NAV total return of 5.51% for the quarter (31 December 2020: 5.53%).
• During the quarter the Company completed the sale of Sandford House,
Solihull at a price of £10.5 million. The asset was acquired in August
2015 for £5.4 million and the Company invested no further capital in
the asset during its hold period.
• The Company remains conservatively geared with a loan to NAV ratio of
25.15% (31 December 2020: 26.01%). As at 31 March 2021, the Company
had a cash balance of £17.45 million and has £15.48 million of its
loan facility available to draw up to the maximum 35% Loan to NAV at
drawdown.
• Having sold two properties in the past 12 months, the Company is
currently in the process of acquiring new assets.
• For the rental quarter commencing on 25 March 2021, 84% of rent has
been collected or is expected to be received under monthly payment
plans prior to quarter end. The remainder of rents owed will continue
to be pursued.
Alex Short, Portfolio Manager, AEW UK REIT, commented:
"We are pleased to see continued NAV recovery during the quarter, driven
by the strong performance of the Company's industrial properties which saw
a like-for-like valuation increase of 5.78%. Changing consumer habits and
the resulting improved sentiment towards the industrial sector have been
accelerated somewhat by the pandemic and, as the general economic outlook
begins to improve with the effective rollout of vaccines and the easing of
lockdown measures, we are beginning to see this reflected in valuations.
In this respect, the Company benefits from its high weighting towards
industrials, which was 60.8% of the portfolio valuation (excluding cash)
as at 31 March 2021. Weightings in the retail and leisure sectors, which
have been most negatively affected by the pandemic, remain low at 11.6%
and 7.0% respectively.
The Company also saw a steep like-for-like valuation increase of its
business park in Oxford, increasing 19% to a value of £13.15 million. This
reflects the investment market's strong appetite for properties and
locations associated with life sciences and the medical industry.
Stock selection and active asset management continue to be key features of
the Company's strategy and drivers of performance. During the quarter, the
Company completed the sale of Sandford House, Solihull, for gross proceeds
of £10.5 million. The asset was acquired in August 2015 for £5.4 million
and the Company invested no further capital in the asset during its hold
period. Significant value was gained from the completion of a 15-year
lease agreement in July 2020 with the existing tenant, the Secretary of
State for Communities and Local Government, and the asset delivered an IRR
in excess of 20% over the hold period. This demonstrates how shorter
income assets in strong locations can be used to create value for
shareholders.
The Company's EPRA EPS was 1.10 pps for the quarter, providing dividend
cover of 55.0% (31 December 2020: 1.68 pence and 84.0%). This fall in
earnings is partly due to the Company's prudent doubtful debt provision
policy, which reduced EPRA EPS by £0.52 million or 0.33 pps this quarter.
While rent collection rates have remained high throughout the pandemic,
there remain certain tenants who appear able, but unwilling, to pay. These
tenants are being pursued and the ability to recover their rent arrears
will be subject to a decision by the Court imminently.
The Company's income also fell following the disposal of Sandford House,
Solihull, on 1 February 2021, amounting to a loss of income of c. £0.11
million (0.07 pps) during the quarter. As at 31 March 2021, the Company
had a cash balance of £17.45 million and has £15.53 million of its loan
facility available to draw up to the maximum 35% Loan to NAV at drawdown.
As the economic backdrop improves, this spending power puts the Company in
a good position to take advantage of attractive opportunities coming to
the market and it is our aim over the coming months to return the Company
to a position of being fully invested and increase EPRA EPS to its target
of 8 pps per annum.
Ongoing remedial works at the Company's property in Blackpool, which
amounted to 0.13 pps for the quarter, and a high level of vacancy at its
property in Glasgow, which has exchanged to be sold subject to achieving
planning for student accommodation and vacant possession, are also
temporarily restricting the Company's earnings potential. Both are
expected to be complete by early 2022.
We are encouraged that the Company's defensive strategy and
diversification has allowed it to manage its risk profile during this
turbulent economic period, while maintaining its target dividend of 8 pps
per share per annum and increasing its NAV per share in comparison with
the pre-pandemic level. As lockdown measures begin to ease, and the
economic outlook improves, we believe the Company is well positioned to
take advantage of opportunities in the market and our short term focus
will be to optimise shareholder value from the deployment of available
cash and debt, with a view to restoring earnings to target levels."
Valuation movement
As at 31 March 2021, the Company owned investment properties with a fair
value of £179.00 million. The like-for-like valuation increase for the
quarter of £6.85 million (3.98%) is broken down as follows by sector:
Sector Valuation 31 March 2021 Like-for-like valuation movement for
the quarter
£ million % £ million %
Industrial 108.85 60.81 5.95 5.78
Office 36.80 20.56 1.75 4.99
Retail 20.80 11.62 (0.85) (3.93)
Other 12.55 7.01 0.00 0.00
Total 179.00 100.0 6.85 3.98
Net Asset Value
The Company's unaudited NAV as at 31 March 2021 was £157.08 million, or
99.15 pence per share. This reflects an increase of 3.43% compared with
the NAV per share as at 31 December 2020. The Company's NAV total return,
which includes the interim dividend of 2.00 pence per share for the period
from 1 October 2020 to 31 December 2020, was 5.51% for the three-month
period ended 31 March 2021.
Pence per share £ million
NAV at 1 January 2021 95.87 151.88
Loss on sale of investment property (disposal (0.08) (0.13)
costs)
Valuation change in property portfolio 4.24 6.72
Valuation change in derivatives 0.02 0.04
Income earned for the period 2.30 3.64
Expenses and net finance costs for the period (1.20) (1.90)
Interim dividend paid (2.00) (3.17)
NAV at 31 March 2021 99.15 157.08
The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards. It incorporates the
independent portfolio valuation as at 31 March 2021 and income for the
period, but does not include a provision for the interim dividend for the
three month period to 31 March 2021.
Dividend
Dividend declaration
The Company today announces an interim dividend of 2.00 pence per share
for the period from 1 January 2021 to 31 March 2021. The dividend payment
will be made on 28 May 2021 to shareholders on the register as at 30 April
2021. The ex-dividend date will be 29 April 2021.
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 March 2021 was 1.10 pence
(31 December 2020: 1.68 pence).
Dividend outlook
It remains the Company's intention to continue to pay dividends in line
with its dividend policy and this will be kept under review given the
current COVID-19 situation. In determining future dividend payments,
regard will be given to the circumstances prevailing at the relevant time,
as well as the Company's requirement, as a UK REIT, to distribute at least
90% of its distributable income annually, which will remain a key
consideration.
Financing
Equity
The Company's share capital consists of 158,774,746 Ordinary Shares, of
which 350,000 are currently held by the Company as treasury shares.
Debt
The Company had borrowings of £39.50 million as at 31 March 2021,
producing a Loan to NAV ratio of 25.15% and had a total undrawn facility
of £20.50 million of which £15.48 million was available as at 31 March
2021 up to the maximum 35% Loan to NAV at drawdown.
The loan continues to attract interest at LIBOR + 1.4% and the Company's
all-in interest rate as at 31 March 2021 was 1.44%.
To mitigate the risk of interest rates rising, the Company has interest
rate caps effective for the remaining term of the loan, capping LIBOR at
1.0% on a notional value of £51.50 million.
Rent Collection
As at the date of this announcement, the Company had collected the
following rental payments for the rental quarter commencing 25 March 2021
and for previous quarters since the onset of the COVID-19 pandemic,
expressed as a percentage of the quarter's total rental income:
Current Position as at 22 April Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
2021
Received 96% 89% 87% 87% 68%
Monthly Payments Expected Prior - - - 16%
to Quarter End
96% 89% 87% 87% 84%
Agreed on longer term payment 1% 2% 2% 2% 0%
plans
2% 1% 2% 2% 5%
Under Negotiation
99% 92% 91% 91% 89%
Outstanding 1% 8% 9% 9% 11%
Total 100% 100% 100% 100% 100%
Further payments expected prior to March 2021 quarter end total £693,741
(including VAT). Aggregate amounts outstanding under longer term payment
plans total £308,390 and those currently under negotiation total £539,777.
Of the remaining £1,693,676 outstanding since March 2020, £1,022,535 has
been provided for as at 22 April 2021. All sums are inclusive of VAT.
It should be noted that this is an evolving picture with further payments
being received each week.
For any amounts that remain outstanding that are owed by tenant companies
who are known to have the ability to pay, the Company is pursuing these
tenants.
Asset Management Update
During the quarter the Company completed the following asset management
and investment transactions:
Sandford House, Solihull - On 1 February 2021 the Company completed the
sale of Sandford House, Homer Road, Solihull for £10.5 million. The sale
price crystallises significant profit by exceeding both the valuation
level immediately prior to the sale by over 9% and the acquisition price
by 94%. The asset was acquired in August 2015 for £5.4 million and has
been fully let to the Secretary of State for Communities and Local
Government since this time, producing a net income yield against the
purchase price of 9.6%. The Company invested no further capital in the
asset during its hold period. A new 15-year lease agreement was signed
with the tenant in June 2020, which increased the rental income received
from the asset by 30%. The lease also provides for five yearly, open
market, rent reviews and a tenant break option at year 10.
Land off Chester Road, Gresford - The Company has exchanged contracts on
the acquisition of a 2.76 acre plot of land adjacent to its existing
industrial holding at Wrexham for a price of £60,200. The freehold vacant
land, being sold by administrators in auction, has rights over the
Company's existing ownership, therefore the purchase of this land prevents
any risks from third parties demanding access. Plastipak, the tenant of
the existing property is potentially interested in expanding into this
newly acquired piece of land.
Clarke Road, Milton Keynes - Following the administration of the previous
tenant, Nationwide Crash Repair Centres Limited on 3 September 2020, a new
letting has been completed to Run My Car Ltd with a parent company
guarantor provided by Northgate Vehicle Hire Limited. The letting provides
for a new 10 year lease with a tenant break at the end of the fifth year,
subject to a 3 month rent penalty being paid by the tenant if exercised.
The commencing rent of £185,000 pa equates to £5 per sq ft, with an open
market rent review at the end of the fifth year. Only three months' rent
free incentive was given and the administrator paid all the rent due up to
lease completion. In completing this letting we have let the unit to a
stronger tenant and now have the benefit of a parent company guarantee.
Enquiries
AEW UK
Alex Short 1 alex.short@eu.aew.com
+44(0) 20 7016 4848
2 henry.butt@eu.aew.com
Henry Butt
+44(0) 20 7016 4855
Nicki Gladstone 3 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 4 AEW@tbcardew.com
Ed Orlebar +44 (0) 7738 724 630
Tania Wild +44 (0) 7425 536 903
Lucas Bramwell +44 (0) 7939 694 437
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 £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 UK Listing Authority
and admitted to trading on the Main Market of the London Stock Exchange on
12 May 2015. 5 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 €69.8bn of assets under management as at 31 December 2020.
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 December 2020, AEW Group managed €34.6bn of real estate
assets on behalf of a number of funds and separate accounts with over 430
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.
6 www.aewuk.co.uk
══════════════════════════════════════════════════════════════════════════
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.: 100395
EQS News ID: 1187359
End of Announcement EQS News Service
══════════════════════════════════════════════════════════════════════════
7 fncls.ssp?fn=show_t_gif&application_id=1187359&application_name=news&site_id=reuters8
References
Visible links
1. mailto:alex.short@eu.aew.com
2. mailto:Laura.elkin@eu.aew.com
3. mailto:nicki.gladstone-ext@eu.aew.com
4. mailto:AEW@tbcardew.com
5. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=9220892e63355ca6947a3a3423a3bac8&application_id=1187359&site_id=reuters8&application_name=news
6. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=c3ab986d9b746ee23c3523d74649f8db&application_id=1187359&site_id=reuters8&application_name=news
============Recent news on Aew UK Reit
See all newsREG - AEW UK REIT PLC - Investor Presentation
AnnouncementREG - AEW UK REIT PLC - NAV Update and Dividend Declaration
AnnouncementREG - AEW UK REIT PLC - Half Yearly Results
AnnouncementREG - AEW UK REIT PLC - Closed Period – Compliance with MAR
AnnouncementREG - AEW UK REIT PLC - Investor Presentation
Announcement