REG - AEW UK REIT PLC - Shareholder Update and Dividend Declaration
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RNS Number : 6069Q AEW UK REIT PLC 28 January 2026
28 January 2026
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 31 December 2025 and
interim dividend for the three months ended 31 December 2025.
Highlights
· NAV of £173.47 million or 109.32 pence per share as at 31 December
2025 (30 September 2025: £172.82 million or 109.09 pence per share).
· NAV total return of 2.05% for the quarter (30 September 2025
quarter: 2.04%).
· 0.33% like-for-like portfolio valuation decrease for the quarter (30
September 2025 quarter: 0.11% increase), outperforming the CBRE December UK
Index.
· EPRA earnings per share ("EPRA EPS") for the quarter of 2.36
pence (30 September 2025 quarter: 2.19 pence).
· Interim dividend of 2.00 pence per share for the three months ended 31
December 2025, paid for 41 consecutive quarters and in line with the targeted
annual dividend of 8.00 pence per share, representing a dividend yield of 7.4%
as at quarter-end.
· Loan to GAV ratio at the quarter end was 25.06% (30 September 2025:
25.17%). Significant headroom on all loan covenants.
· Company continues to benefit from a low fixed cost of debt of 2.959%
until July 2027.
· Reissued 250,000 treasury shares during the quarter, taking
advantage of periods of share price premium to NAV.
Laura Elkin, Portfolio Manager, AEW UK REIT, commented:
"We are pleased to report another quarter of strong performance, with earnings
of 2.36 pence per share and NAV total return of 2.05%. The Company's earnings
continue to benefit from a solid tenant base, contributing to another period
of portfolio stability. This has led to reduced bad debt occurrences, as well
as a decrease in professional fees, typically associated with times of greater
transactional activity.
Following the disposal of a vacant office unit at the Company's holding in
Hitchin, there is circa £6.8 million of available capital cash at quarter-end
above the Company's retained £5.0 million cash buffer. We are progressing
several near-term asset management opportunities, such as the planned
refurbishment of Queen's Square, Bristol, and are considering an exciting
medium-term pipeline of potential acquisitions to increase income.
The Company's shares continue to trade close to NAV, being at a 1.39% discount
at quarter-end. On several occasions during the quarter, the Company's shares
traded at a premium to NAV, allowing the reissuance of 250,000 shares from
treasury. We are delighted that the market is recognising the Company's
consistently strong performance 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.
Steady growth in the Company's share price over the last year from 100.4p to
107.8p as at 31 December 2025 has been encouraging. This progress, combined
with consistent payment of the Company's quarterly dividend of 2.00 pence per
share, which has now been paid for 41 consecutive quarters, has delivered a
one-year shareholder total return of 15.3%. Against this backdrop of
compelling NAV and shareholder total returns, the Company continues to assess
opportunities for growth."
Valuation Movement
As at 31 December 2025, the Company owned investment properties with a total
fair value of £215.34 million, as assessed by the Company's independent
valuer, CBRE. The like-for-like valuation decrease for the quarter of £0.71
million (0.33%) is broken down as follows by sector:
Sector Valuation 31 December 2025 Like-for-like valuation movement for the quarter
£ million % of portfolio £ million %
Industrial 79.73 37.03 (0.68) (0.85)
High Street Retail 44.32 20.58 - -
Other 38.66 17.95 (0.05) (0.13)
Retail Warehouses 30.18 14.01 0.90 3.07
Office 22.45 10.43 (0.88) (3.75)
Total 215.34 100.00 (0.71) (0.33)*
* This is the overall weighted average like-for-like valuation decrease of the
portfolio.
Portfolio Manager's Review
Despite the Company's increase in NAV for the quarter, its portfolio
experienced a modest like-for-like valuation decrease of 0.33%. Whilst this
marks a departure from the trend of 11 consecutive quarters of like-for-like
valuation gains, the Company's portfolio has outperformed CBRE's December UK
Index, which, for the same period, reported a capital value decline of -0.6%,
and a total return of only 0.8%.
The retail warehousing sector, in particular, demonstrated a significant gain
during the quarter, rising by 3.07%. This increase was solely driven by
proactive asset management at Barnstaple Retail Park, where the Company
completed a reversionary lease with B&Q Limited. This lease regear
resulted in a new 'term certain' of 15 years and an annual rent increase of
£80,280, leading to a valuation increase of £900,000, or 11.94%, for the
quarter. Additionally, the EPS for this quarter benefited from a £125,000
dilapidations payment received from Sports Direct concerning its former store
at Barnstaple, which was subsequently let to Farmfoods Limited in Q4 2024.
It was a relatively quiet quarter for the high-street retail sector,
characterised by minimal overall valuation movement and only one leasing
transaction, being a 10-year lease renewal with Costa Limited, documented in
line with the previous rent of £52,000 per annum, at Pearl House, Nottingham.
The Company successfully disposed of a vacant 5,225 sq. ft. office block
located behind its high-street retail asset on Bancroft in Hitchin. The
property was sold for £1,000,000, over two times the September 2025 book
value. This transaction has also increased the net initial yield of the
remaining asset from 8.29%, as at 30 September, to 8.67%, as at 31 December
2025.
The Company's industrial assets, which constitute the largest sector exposure
at 37% of the portfolio, recorded a valuation decline of 0.85%, following an
impressive seven consecutive quarters of like-for-like valuation growth. This
downturn was primarily influenced by Apollo Business Park in Basildon, where
Vink UK Limited, previously paying an annual rent of £256,500 per annum,
vacated on 30 September 2025. In response, we are actively pursuing planning
permission for a new prime 58,500 sq. ft. unit. This strategic asset
management decision has led to the property being revalued as a development
site. The valuation decline incurred at Basildon has been mitigated by gains
elsewhere in the industrial sector, most notably at Walkers Lane in St Helens,
where terms have recently been agreed for the renewal of the exiting tenant's
lease, and at Mangham Road in Rotherham where the ERV has increased over the
quarter. The example of Rotherham highlights the ongoing positive momentum for
rents in the industrial sector, where the Company's net initial yield and
reversionary yields stand at 6.76% and 9.55%, respectively. Additionally, the
average passing rent for the portfolio's industrial sector is notably low
at £3.59 per sq. ft. versus an ERV of £4.85 per sq. ft.
Like the high street retail sector, the leisure sector also had a quiet
quarter while asset management initiatives progress. The Company billed Neos
13 Ltd (trading as Circuit nightclub) annual turnover rent equating to
£57,862 per annum which also benefited EPS for the period.
Finally, the office sector, representing the portfolio's smallest weighting at
10.43%, faced a challenging quarter as asset management initiatives are yet to
mature, with the overall valuation down 3.75%. This decline is largely
attributed to shortening lease lengths at Queen's Square in Bristol, where the
planned refurbishment of 11,681 sq. ft. of vacant space is due to commence in
February.
Net Asset Value
The Company's unaudited NAV at 31 December 2025 was £173.47 million,
or 109.32 pence per share. This reflects an increase of 0.22% compared with
the NAV per share at 30 September 2025. The Company's NAV total return, which
includes the interim dividend of 2.00 pence per share for the period from 1
July 2025 to 30 September 2025, was 2.05% for the three-month period ended 31
December 2025.
Pence per share £ million
NAV at 1 October 2025 109.09 172.82
Capital expenditure (0.32) (0.51)
Gain on sale of investments 0.30 0.48
Valuation change in property portfolio (0.10) (0.16)
Income earned for the period 3.30 5.24
Expenses and net finance costs for the period (0.95) (1.50)
Interim dividend paid (2.00) (3.17)
Issue of treasury shares - 0.27
NAV at 31 December 2025 109.32 173.47
The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards. It incorporates the independent
portfolio valuation at 31 December 2025 and income for the period, but does
not include a provision for the interim dividend declared for the three-month
period to 31 December 2025.
Share Price
The closing ordinary share price at 31 December 2025 was 107.8p, a decrease of
1.10% compared with the share price of 109.0p at 30 September 2025. The
closing share price represents a discount to the NAV per share of 1.39%. The
Company's share price total return, which includes the interim dividend
of 2.00 pence per share for the period from 1 July 2025 to 30 September
2025, was 0.73% for the three-month period ended 31 December 2025.
Dividend
Dividend declaration
The Company today announces an interim dividend of 2.00 pence per share for
the period from 1 October 2025 to 31 December 2025. The dividend payment will
be made on 4 March 2026 to shareholders on the register as at 6 February
2026. The ex-dividend date will be 5 February 2026. 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 18 February 2026.
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 41 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:
During the quarter, the Company re-issued 250,000 treasury shares. At 31
December 2025, the Company's share capital consisted of 158,674,746 ordinary
shares in issue, with 100,000 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
July 2027.
The loan was fully drawn at 31 December 2025, producing a Loan to GAV ratio of
25.06%.
Headroom on the debt facility's 60% loan to value ("LTV") covenant continues
to be conservative. For those properties secured under the loan, a 53.10% fall
in valuation would be required before the LTV covenant were to be breached.
Investment Update
The Company completed the following part disposal during the quarter:
3-4 Portmill Lane, Hitchin (office) - On 14 October 2025, the Company
completed the sale of 3-4 Portmill Lane, a vacant office block comprising
5,225 sq. ft., located behind the main retail parade on Bancroft in Hitchin.
Competitive pricing was secured from a local owner-occupier at £1,000,000
(£191 per sq. ft.), significantly above the assets September 2025 book value
of circa £497,000 (£95 per sq. ft.). The sale boosts the net initial yield
of the remaining asset from 8.29%, as at 30 September, to 8.67%, as at 31
December 2025.
The decision to sell was driven by the office's non-core location with limited
demand for occupational use, which did not align with the three retail
frontages on Bancroft. Additionally, there was a risk of incurring vacant
holding costs while exploring alternative uses for the property. This
consideration was particularly relevant as the 12-month rent and shortfall
guarantee, provided by the vendor at the time of purchase, is set to expire on
12 March 2026.
No acquisitions were made during the quarter.
Asset Management Update
The Company completed the following asset management transactions during the
quarter:
Barnstaple Retail Park, Barnstaple (retail warehousing) - The Company
completed a reversionary lease with B&Q Limited (B&Q) for a duration
of seven years and seven months, resulting in a new lease expiry of 31
December 2040 (15 years in total). As part of this agreement, B&Q also
signed a Deed of Variation increasing the rent from £348,000 per annum
(£9.75 psf) to £428,280 per annum (£12.00 psf), reflecting an increase of
£80,280 per annum. In return, the Company has granted B&Q a six-month
rent-free period which started on 1 January 2026. Subsequently, the valuation
of the property increased by £900,000, representing an 11.94% increase.
The Company billed SportsDirect.com Retail Limited a £125,000 dilapidations
payment from following the refurbishment of its unit, which subsequently
facilitated the letting to Farmfoods Limited in Q4 2024.
The Railway Centre, Dewsbury (retail warehousing) - After protracted
negotiations, the Company completed a five-year lease renewal to
SportsDirect.com Retail Limited, commencing on 31 December 2025, at an annual
rent of £140,000 (£9.10 psf). The previous passing rent was £122,544 per
annum (£7.96 psf), reflecting an increase of £17,456 per annum. Six months
rent-free was given as an incentive.
Pearl House, Nottingham (high street retail) - Costa Limited, whose lease
expired in September 2025 paying a rent of £52,000 per annum, has renewed its
lease at the same rent for a term of 10 years with a break on the anniversary
of the sixth year, with no rent-free tenant incentive.
Circuit, Cardiff (leisure) - Neos 13 Ltd (trading as Circuit nightclub), has
been billed turnover rent for the period 1 October 2024 to 30 September 2025,
equating to £57,862 per annum.
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 €73.4bn
of assets under management as at 30 September 2025. AEW has over 830
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 September 2025, AEW managed €35.6bn of real estate assets in Europe
on behalf of a number of strategies and separate accounts. AEW has over 515
employees based in 12 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 circa €14.0bn 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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