REG-AEW UK REIT plc AEW UK REIT plc: NAV Update and Dividend Declaration
21/07/2021 10:35
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AEW UK REIT plc (AEWU)
AEW UK REIT plc: NAV Update and Dividend Declaration
21-Jul-2021 / 10:34 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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The information contained within this announcement is deemed by the
Company to constitute inside information as stipulated under the Market
Abuse Regulation (EU) No. 596/2014 as amended by The Market Abuse
(Amendment) (EU Exit) Regulations 2019.
21 July 2021
AEW UK REIT Plc (the "Company")
NAV Update and Dividend Declaration
AEW UK REIT plc (LSE: AEWU) (the "Company"), which, as at 21 July 2021,
directly owns a diversified portfolio of 36 regional UK commercial
property assets, announces its unaudited Net Asset Value ("NAV") and
interim dividend for the three month period ended 30 June 2021.
Highlights
• Interim dividend of 2.00 pence per share for the three months ended 30
June 2021, in line with the targeted annual dividend of 8.00 pence per
share.
• EPRA earnings per share ("EPRA EPS") for the quarter of 2.14 pence (31
March 2021 quarter: 1.10 pence).
• NAV of £169.69 million or 107.11 pence per share as at 30 June 2021
(31 March 2021: £157.08 million or 99.15 pence per share).
• NAV total return of 10.04% for the quarter (31 March 2021 quarter:
5.51%).
• Acquisitions of two properties: Arrow Point Retail Park, Shrewsbury,
for £8.35 million and 15-33 Union Street, Bristol, for £10.19 million.
• Successful outcome of legal action against two well-funded national
tenants to recover unpaid rent. All rent arrears due from these
tenants have since been collected.
• The Company remains conservatively geared with a loan to NAV ratio of
29.76% (31 March 2021: 25.15%). As at 30 June 2021, the Company had a
cash balance of £8.43 million and £8.89 million of its loan facility
available to draw up to the maximum 35% Loan to NAV at drawdown.
• For the rental quarter commencing on 24 June 2021, 88% 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:
"The Company's portfolio generated record strong capital growth for the
quarter with valuations increasing by 7.47% on a like-for-like basis, the
highest quarterly increase since IPO in 2015. As with the previous
quarter, this was largely driven by the performance of the industrial
assets in the portfolio which saw a like-for-like increase of 10.62% for
the quarter and make up 57% of the portfolio as at 30 June 2021. The
industrial and logistics sectors have benefitted from accelerated changes
in consumer habits and the shift towards online retail and this continues
to be reflected in valuation movements. There is also some expectation
that the UK will begin to see an increase in localised production as a
result of supply chain disruption and this could lead to take up being
focussed more on traditional manufacturing accommodation, which has seen a
decline in total stock in recent years, rather than the currently favoured
logistics assets.
We are now seeing more attractive investment opportunities coming to the
market and the Company made two acquisitions during the quarter for a
combined gross purchase price of £18.54 million, drawing £11.00 million of
its loan facility. The first, Arrow Point Retail Park in Shrewsbury, was
acquired in May for £8.35 million and is a fully-let, purpose-built retail
park prominently located on a busy commercial estate, providing a net
initial yield of 8.7%. The second, 15-33 Union Street, Bristol, is a
retail site located on a busy pedestrian thoroughfare in Bristol city
centre and provides a net initial yield of 8.0%. Both of these assets
provide opportunity for value growth in the medium to long term, and also
strong and stable income streams from their tenancy profiles. While we
continue to take a cautious approach towards the retail sector, judging
each site on its specific merits, these two acquisitions are an excellent
fit for the portfolio. The retail sector now makes up 18% of the portfolio
valuation.
The Company's EPRA EPS was 2.14 pence for the quarter, providing a
dividend cover of 107% (31 March 2021: 1.10 pence and 55%). During the
quarter, the Company announced the successful outcome of legal action
against two well-funded national tenants to recover unpaid rent and
subsequently recovered all rent arrears due from those tenants. The
collection of these significant arrears allowed the reversal of the
prudent doubtful debt provision which contributed a one-off 0.37 pence to
EPRA EPS during the quarter.
In the coming quarters the Company's earnings will benefit from its recent
acquisitions as well as the completion of asset management initiatives.
Ongoing remedial works at the Company's property in Blackpool, which
amounted to 0.13 pence per share 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
temporarily restricting the Company's earnings potential. Both are
expected to be complete by early 2022. We are also encouraged by recent
improvements in rent collection levels, which now stand at over 96% for
each quarter since the onset of the pandemic (ex current quarter). It is
hoped that continued easing of lockdown restrictions will allow this trend
to continue.
The Company has £8.43 million of cash and £8.89 million of its loan
facility available to draw up to the maximum 35% Loan to NAV at drawdown,
which will allow us to take advantage of further attractive opportunities
in the market. The Company's share price was 96.00 pence as at 30 June
2021 (31 March 2021: 83.20 pence) and we hope that continued improvements
in economic conditions will bring about the return of trading at a premium
to NAV and enable growth of the Company to resume, which remains a key
objective."
Valuation movement
As at 30 June 2021, the Company owned investment properties with a fair
value of £210.91 million. The like-for-like valuation increase for the
quarter of £13.37 million (7.47%) is broken down as follows by sector:
Sector Valuation 30 June 2021 Like-for-like valuation movement for the
quarter
£ million % £ million %
Industrial 120.42 57.10 11.57 10.62
Office 39.00 18.49 2.20 5.98
Retail 38.94 18.46 (0.40) (1.92)
Other 12.55 5.95 0.00 0.00
Total 210.91 100.0 13.37 7.47
Net Asset Value
The Company's unaudited NAV as at 30 June 2021 was £169.69 million, or
107.11 pence per share. This reflects an increase of 8.03% compared with
the NAV per share as at 31 March 2021. The Company's NAV total return,
which includes the interim dividend of 2.00 pence per share for the period
from 1 January 2021 to 31 March 2021, was 10.04% for the three-month
period ended 30 June 2021.
Pence per share £ million
NAV at 1 April 2021 99.15 157.08
Portfolio acquisition costs (0.74) (1.16)
Valuation change in property portfolio 8.56 13.55
Income earned for the period 2.51 3.97
Expenses and net finance costs for the period (0.37) (0.58)
Interim dividend paid (2.00) (3.17)
NAV at 30 June 2021 107.11 169.69
The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards. It incorporates the
independent portfolio valuation as at 30 June 2021 and income for the
period, but does not include a provision for the interim dividend for the
three month period to 30 June 2021.
Dividend
Dividend declaration
The Company today announces an interim dividend of 2.00 pence per share
for the period from 1 April 2021 to 30 June 2021. The dividend payment
will be made on 31 August 2021 to shareholders on the register as at 30
July 2021. The ex-dividend date will be 29 July 2021.
The dividend of 2.00 pence per share will be designated 1.00 pence per
share as an interim property income distribution ("PID") and 1.00 pence
per share as an interim ordinary dividend ("non-PID").
The Company has now paid a 2.00 pence quarterly dividend for 23
consecutive quarters1.
1For the period 1 November 2017 to 31 December 2017, a pro rata dividend
of 1.33 pence per share was paid for this 2 month period, following a
change in the accounting period.
The EPRA EPS for the three-month period to 30 June 2021 was 2.14 pence (31
March 2021: 1.10 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
During the quarter, the Company drew £11.00 million of its loan facility,
taking its total borrowings to £50.50 million as at 30 June 2021. This
produces a Loan to NAV ratio of 29.76% and allows a further £8.89 million
of the remaining £9.50 million facility to be drawn up to the maximum 35%
Loan to Value at drawdown.
During the quarter, the Company agreed to move its loan agreement to be
linked to the Sterling Overnight Index Average ("SONIA") as a result of
the FCA's expectation that LIBOR will no longer be available after 31
December 2021. The loan will attract interest at SONIA + 1.4% from the
date of the next interest payment in July 2021. As at 30 June 2021 the
Company's all-in interest rate was 1.49%.
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. The interest rate caps will
transition to SONIA on 31 December 2021.
Rent Collection
As at the date of this announcement, the Company had collected the
following rental payments for the rental quarter commencing 24 June 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 21 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021
July 2021
Received 99% 99% 98% 98% 96% 75%
Monthly Payments Expected - - - - - 13%
Prior to Quarter End
99% 99% 98% 98% 96% 88%
Under Negotiation
1% 3% 5%
1% 1% 1%
100% 100% 99% 99% 99% 93%
Outstanding 0% 0% 1% 1% 1% 7%
Total 100% 100% 100% 100% 100% 100%
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
transactions:
Arrow Point Retail Park, Shrewsbury - We have extended British Heart
Foundation's unexpired term to break by pushing their November 2021 break
option out to December 2024 in return for 4 months' rent free. The
majority of the rent free was used to write off rent arrears predating
AEWU's ownership.
Diamond Business Park, Wakefield - We have completed a new 5 year ex-Act
lease at £41,866 pa / £3.75 per sq ft on Unit 14, which reflects a rent
25% above the March 2021 ERV. 6 months' rent free was given as an
incentive.
Bristol, 40 Queen Square - We have completed a new 5 year ex-Act lease to
Brewin Dolphin at £103,770 pa / £30 per sq ft versus the previous passing
rent of £22 per sq ft and the March 2021 ERV of £26 per sq ft. A 12 month
rent free incentive was given.
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
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 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 €72.8bn of assets under management as at 31 March 2021. 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 2021, AEW Group managed €35.7bn 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
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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.: 118148
EQS News ID: 1220635
End of Announcement EQS News Service
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References
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4. mailto:AEW@tbcardew.com
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