REG - AEW UK REIT PLC - Shareholder Update and Dividend Declaration
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RNS Number : 4422E AEW UK REIT PLC 23 October 2025
23 October 2025
AEW UK REIT plc
Shareholder Update and Dividend Declaration
AEW UK REIT plc (LSE: AEWU) ("AEWU" or the "Company"), which directly owns a
value-focused, diversified portfolio of 34 UK commercial properties,
announces its unaudited Net Asset Value ("NAV") as at 30 September 2025 and
interim dividend for the three months ended 30 September 2025.
Highlights
· NAV of £172.82 million or 109.09 pence per share as at 30 September
2025 (30 June 2025: £172.47 million or 108.87 pence per share).
· NAV total return of 2.04% for the quarter (30 June 2025 quarter:
0.69%).
· 0.11% like-for-like portfolio valuation increase for the quarter (30
June 2025 quarter: 0.05% increase).
· PRA earnings per share ("EPRA EPS") for the quarter of 2.19 pence (30
June 2025 quarter: 1.73 pence).
· Interim dividend of 2.00 pence per share for the three months ended 30
September 2025, paid for 40 consecutive quarters and in line with the targeted
annual dividend of 8.00 pence per share, representing a dividend yield of 7.3%
as at quarter-end.
· Loan to GAV ratio at the quarter end was 25.17% (30 June 2025:
25.21%). Significant headroom on all loan covenants.
· Company continues to benefit from a low fixed cost of debt of 2.959%
until May 2027.
· £354,459 annualised rental income increase during the quarter via
completed asset management initiatives.
· Share price strength enabling reissuance of 150,000 treasury shares
post quarter-end.
Laura Elkin, Portfolio Manager, AEW UK REIT, commented:
"We are pleased to report another quarter of strong performance, with earnings
of 2.19 pence per share and NAV total return of 2.04%. The strength of this
quarter's EPS is partly due to the Company being close to fully invested,
which was not the case for the previous three quarters. The Company's earnings
also continue to benefit from rental growth in its portfolio, with ROM Group
Ltd's rent review at Brightside Lane, Sheffield, and a lease renewal for
Fieldrose Limited (trading as KFC) at The Railway Centre, Dewsbury, being
notable examples, collectively adding £177,250 of annualised rental income.
With circa £5.8 million of available capital cash at quarter-end, in addition
to the Company's usual £5 million buffer, we are working on several near-term
asset management opportunities and considering an exciting medium-term
pipeline of potential acquisitions to maximise income. Careful management of
the Company's cost base continues to underpin robust earnings, with low
incurrence of bad debt and void costs reflecting the quality and stability of
the portfolio.
The Company's shares continue to trade at close to NAV, being at a 0.08%
discount at quarter-end. On several occasions during the quarter, the
Company's shares traded at a premium to NAV, allowing the recent reissuance of
150,000 treasury shares. We are delighted that the market is starting to
recognise our achievement of seven consecutive quarters of like-for-like
valuation gain in the Company's portfolio during a period when property
markets have remained subdued. This success demonstrates the effectiveness of
the Company's counter-cyclical investment approach and active asset management
strategy in driving income and capital growth through market cycles.
The prior quarter marked the tenth anniversary of AEWU's IPO, since when the
Company has delivered a decade of outperformance against both the MSCI
Balanced Funds Quarterly Property Index and its peers in the UK diversified
REIT space, the data for which was released this quarter. Over this time
frame, the Company has achieved an annualised NAV and shareholder total return
of 9%, and maintained its quarterly dividend of 2.00 pence per share, which
has now been paid for 40 consecutive quarters.
Finally, we are delighted that the Company won the 'Best for Property'
category in the QuotedData Investors' Choice Awards 2025 during the quarter.
This is testament to the consistently strong performance delivered by the
Company, which AEW, as Manager, looks forward to building on in the future."
Valuation Movement
As at 30 September 2025, the Company owned investment properties with a total
fair value of £216.05 million, as assessed by the Company's independent
valuer, CBRE. The like-for-like valuation increase for the quarter of £0.25
million (0.11%) is broken down as follows by sector:
Sector Valuation 30 September 2025 Like-for-like valuation movement for the quarter
£ million % of portfolio £ million %
Industrial 80.41 37.22 1.76 2.23
High Street Retail 44.32 20.52 (0.14) (0.30)
Other 38.71 17.92 (0.53) (1.34)
Retail Warehouses 29.28 13.55 0.34 1.16
Office 23.33 10.79 (1.18) (4.83)
Total 216.05 100.00 0.25 0.11*
* This is the overall weighted average like-for-like valuation increase of the
portfolio.
Portfolio Manager's Review
The Company's portfolio achieved a like-for-like valuation increase of 0.11%
for the quarter. The industrial and retail warehousing sectors, in particular,
displayed notable gains, rising by 2.23% and 1.16% respectively. In both
instances, valuation gains were driven principally by active asset management,
which continues to distinguish the Company's investment style.
The Company's industrial assets, which represent the largest sector exposure
at 37% of the portfolio, recorded a seventh consecutive quarter of valuation
growth, being up 6.05% over the past year alone. During the quarter, the
Company settled ROM's outstanding rent review at Brightside Lane, Sheffield,
increasing the rent by £155,500 per annum. The valuation of the property
subsequently increased by 21.5% over the period. With a further 4.5 years
unexpired lease term, and the prospect of further rental growth, whether the
tenant renews or vacates, the asset remains a hold for the Company. The
example of Brightside Lane highlights the ongoing positive momentum for rents
in the industrial sector, where the Company's net initial yield and
reversionary yield stand at 7.16% and 9.57% respectively. Additionally, the
average passing rent for the portfolio's industrial sector is notably low
at £3.80 per sq. ft. versus an ERV of £4.71 per sq. ft.
Industrial gains were also recorded at Storey's Bar in Peterborough and
Gresford Industrial Estate in Wrexham, with values increasing by 4.21% and
3.41% respectively. These rises were fuelled by strengthening occupier
sentiment, as the tenants have historically made substantial investments in
their properties and remain committed to their locations. Additionally, the
potential for rental growth, with upcoming rent reviews on the horizon, has
bolstered this positive trend.
During the period, four retail warehousing transactions were completed,
securing a combined annual rent of circa £248,500. Most notably, the Company
completed a new letting to Wren Kitchens Limited at Barnstaple Retail Park,
where, following completion of the refurbishment works at the former Poundland
unit (referenced in last quarter's announcement), the tenant entered a 10-year
lease at a rent of £98,500 per annum in return for 12 months' rent free.
After protracted negotiations with Fieldrose Limited (trading as KFC), the
tenant renewed their lease on a 15-year term at an annual rent of £86,000
with no tenant incentive. Both these deals highlight the Company's active
management style, as well as the ongoing positive occupational momentum in the
sector. The retail warehousing sector was consequently up by 1.16% for the
period, building on the success of the past two quarters.
After a strong previous quarter in high street retail, during which the
Company's standard retail assets rose by 1.51% due to improved sentiment and
leading retailers reaffirming their commitment to physical locations, this
quarter has been relatively subdued (down 0.30%), with no notable asset
management transactions to report.
Finally, the office sector, representing the Company's smallest weighting at
11%, faced a challenging quarter, with the overall valuation down 4.83%. This
decline is largely attributed to Novia Financial plc's notice to vacate 16,500
sq. ft. of space at Cambridge House, Bath, where it currently pays a rent of
£362,000 per annum. The Company is exploring both office lettings and
alternative uses in this busy city centre location. In tandem with the ongoing
refurbishment of Queens Square, Bristol, the Company's office sector exposure
continues to experience muted performance while asset management initiatives
mature.
Net Asset Value
The Company's unaudited NAV at 30 September 2025 was £172.82 million,
or 109.09 pence per share. This reflects an increase of 0.20% compared with
the NAV per share at 30 June 2025. The Company's NAV total return, which
includes the interim dividend of 2.00 pence per share for the period from 1
April 2025 to 30 June 2025, was 2.04% for the three-month period ended 30
September 2025.
Pence per share £ million
NAV at 1 July 2025 108.87 172.47
Capital expenditure (0.11) (0.18)
Valuation change in property portfolio 0.15 0.24
Income earned for the period 3.16 5.01
Expenses and net finance costs for the period (0.98) (1.55)
Interim dividend paid (2.00) (3.17)
NAV at 30 September 2025 109.09 172.82
The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards. It incorporates the independent
portfolio valuation at 30 September 2025 and income for the period, but does
not include a provision for the interim dividend declared for the three-month
period to 30 September 2025.
Share Price
The closing ordinary share price at 30 September 2025 was 109.0p, an increase
of 0.55% compared with the share price of 108.4p at 30 June 2025. The closing
share price represents a discount to the NAV per share of 0.08%. The Company's
share price total return, which includes the interim dividend of 2.00
pence per share for the period from 1 April 2025 to 30 June 2025, was 2.40%
for the three-month period ended 30 September 2025.
Dividend
Dividend declaration
The Company today announces an interim dividend of 2.00 pence per share for
the period from 1 July 2025 to 30 September 2025. The dividend payment will be
made on 28 November 2025 to shareholders on the register as at 31 October
2025. The ex-dividend date will be 30 October 2025. The Company operates a
Dividend Reinvestment Plan ("DRIP"), which is managed by its registrar, MUFG
Corporate Markets Limited. For shareholders who wish to receive their dividend
in the form of shares, the deadline to elect for the DRIP is 7 November 2025.
The dividend of 2.00 pence per share will be designated 2.00 pence per
share as an interim property income distribution ("PID").
The Company has now paid a 2.00 pence quarterly dividend for 40 consecutive
quarters(1), providing consistently high levels of income to our shareholders.
(1)For the period 1 November 2017 to 31 December 2017, a pro rata dividend
of 1.33 pence per share was paid for this two-month period, following a
change in the accounting period end.
Dividend outlook
It remains the Company's intention to continue to pay dividends in line with
its dividend policy. In determining future dividend payments, regard will be
given to the financial 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.
Financing
Equity:
At 30 September 2025, the Company's share capital consisted of 158,424,746
ordinary shares in issue, with 350,000 shares held in treasury.
Post quarter end, the Company re-issued 150,000 treasury shares. Consequently,
the Company's share capital now consists of 158,574,746 ordinary shares in
issue, with 200,000 shares held in treasury.
Debt:
The Company has a £60.00 million, five-year term loan facility with AgFe, a
leading independent asset manager specialising in debt-based investments. The
loan is priced as a fixed rate loan with a total interest cost of 2.959% until
May 2027.
The loan was fully drawn at 30 September 2025, producing a Loan to GAV ratio
of 25.17%.
Headroom on the debt facility's 60% loan to value ("LTV") covenant continues
to be conservative. For those properties secured under the loan, a 53.25% fall
in valuation would be required before the LTV covenant were to be breached.
Investment Update
There were no acquisitions or disposals during the quarter.
Asset Management Update
The Company completed the following asset management transactions during the
quarter:
710 Brightside Lane, Sheffield (industrial) - The Company settled ROM Group
Limited's (ROM) outstanding open market rent review at £529,500 per annum
(£4.25 per sq. ft.) representing a 41.57% increase in the previous passing
rent of £374,000 per annum (£3.00 per sq. ft.). The valuation of the asset
subsequently increased by 21.51% this quarter.
ROM is a specialist supplier of steel reinforcement solutions primarily for
the construction industry. ROM will occupy the 124,577 sq. ft. manufacturing
facility for a further 4.5 years.
Carrs Coatings, Eagle Road, Redditch (industrial) - The Company settled Carrs
Coatings Ltd's August 2025 annual uncapped RPI rent review at £319,519 per
annum (£8.41 per sq. ft.), representing a £14,709 per annum (4.83%)
increase.
The unit is single-let to Carrs Coatings Ltd until August 2028. The lease was
entered into as a sale and leaseback in 2008 at an initial starting rent
of £170,300 per annum (£4.50 per sq. ft.).
Diamond Business Park, Wakefield (industrial) - The Company has commenced the
demolition of Diamond House, an obsolete 1970s purpose-built office block
consisting of 27,098 sq. ft., at a cost of £229,807 (inclusive of fees and
contingency). The office became fully vacant earlier this year with the last
remaining tenant surrendering their lease to vacate early. Refurbishment or
conversion to residential use were also considered, with demolition being the
most viable route forward, with the cleared land creating a 1.8 acres
industrial open storage letting opportunity with an ERV of £50,000 per acre,
as well as eliminating approximately £79,000 per annum of landlord
shortfalls. Practical completion is expected later this month.
Barnstaple Retail Park, Barnstaple (retail warehousing) - The Company
completed a new lease to Wren Kitchens Limited, who has taken the former
Poundland unit. Wren has signed a 10-year lease with a tenant break option on
the expiry of the fifth year at a rent of £98,500 per annum (£17.25 per sq.
ft.). On the expiry of the fifth year, the rent will be reviewed to the lower
of open market or 2.5% per annum, compounded. Wren has been granted a 12-month
rent free period, with a further six months should it not exercise the break
option.
Railway Centre, Dewsbury (retail warehousing) - After protracted negotiations,
the Company completed a lease renewal with Fieldrose Limited (Fieldrose),
trading as KFC, whose lease expired on 23 December 2023. Fieldrose has signed
a 15-year lease, which includes a tenant break option at the end of the tenth
year, at an annual rent of £86,000. No rent-free period or tenant incentive
was given. Additionally, the outstanding rent review from December 2018 has
also been settled at £67,000 per annum. The previous passing rent was
£64,250 per annum.
Unit B, Arrow Retail Park, Shrewsbury (retail warehousing) - The Company
completed a new lease of Unit B to Summerhouse Solutions Limited
(Summerhouse), trading as Summerhouse Interiors. Summerhouse has signed a
five-year lease which includes a tenant-only break option on the expiry of the
third year, subject to a penalty of three months' rent. The annual rent is
£32,000 (£6.96 per sq. ft.), and the letting includes an initial three-month
rent-free incentive.
Unit C, Arrow Retail Park, Shrewsbury (retail warehousing) - The Company
completed a new lease of Unit C to Lifecycle Group Holdings Limited. The
tenant has signed a 10-year lease which includes a tenant-only break option on
the expiry of the fifth year. The annual rent is £32,000 (£6.96 per sq.
ft.), with no rent-free incentive being given.
Glossary of Commonly Used Terms
Industry specific terms used in the Company's communications are defined in
the glossary of commonly used terms which can be found on the Company's
website: https://www.aewukreit.com/investors/glossary
(https://www.aewukreit.com/investors/glossary)
AEW UK
Laura Elkin laura.elkin@eu.aew.com
Henry Butt henry.butt@eu.aew.com (mailto:henry.butt@eu.aew.com)
AEW Investor Relations investor_relations@eu.aew.com
Company Secretary
MUFG Corporate Governance Limited aewu.cosec@cm.mpms.mufg.com
Cardew Group AEW@cardewgroup.com (mailto:AEW@cardewgroup.com)
Ed Orlebar +44 (0) 7738 724 630
Tania Wild +44 (0) 7425 536 903
Henry Crane +44 (0) 7918 207 157
Panmure Liberum
Darren Vickers +44 (0) 20 3100 2222
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
AEW is one of the world's largest real estate asset managers, with €73.8bn
of assets under management as at 30 June 2025. AEW has over 860 employees,
with its main offices located in Boston, London, Paris and Singapore and
offers a wide range of real estate investment products including comingled
funds, separate accounts and securities mandates across the full spectrum of
investment strategies. AEW represents the real estate asset management
platform of Natixis Investment Managers, one of the largest asset managers in
the world.
As at 30 June 2025, AEW managed €35.8bn of real estate assets in Europe on
behalf of a number of strategies and separate accounts. AEW has over 520
employees based in 11 offices across Europe and has a long track record of
implementing core, value-add and opportunistic investment strategies on behalf
of its clients. In the last five years, AEW has invested and divested a total
volume of almost €15.0bn of real estate across European markets.
www.aew.com (http://www.aew.com)
AEW UK Investment Management LLP is the Investment Manager. AEW is a group
of companies which includes AEW Europe SA and its subsidiaries as well as
affiliated company AEW Capital Management, L.P. in North America and its
subsidiaries. AEW Europe SA, together with its subsidiaries AEW UK Investment
Management LLP, AEW S.à.r.l., AEW Invest GmbH and AEW SAS, is a European real
estate investment manager with headquarter offices in Paris and London. AEW
Europe SA and AEW Capital Management, L.P. are owned by Natixis Investment
Managers. Natixis Investment Managers is an international asset management
group based in Paris, France, that is principally owned by Natixis, a French
investment banking and financial services firm. Natixis is principally owned
by BPCE, France's second largest banking group.
Disclaimer
This communication cannot be relied upon as the basis on which to make a
decision to invest in AEWU. This communication does not constitute an
invitation or inducement to subscribe to any particular investment. Issued by
AEW UK Investment Management LLP, 8 Bishopsgate, London, EC2N 4BQ.
Company number: OC367686 England. Authorised and regulated by the Financial
Conduct Authority.
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