AEW UK REIT plc: NAV Update and Dividend Declaration (954517)
16 January 2020 - 6:00PM
UK Regulatory
AEW UK REIT plc (AEWU)
AEW UK REIT plc: NAV Update and Dividend Declaration
16-Jan-2020 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
16 January 2020
NAV Update and Dividend Declaration for the three months to 31 December 2019
AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 15 January 2020,
directly owns a diversified portfolio of 35 regional UK commercial property
assets, announces its unaudited Net Asset Value ("NAV") and interim dividend
for the three month period ended 31 December 2019.
Highlights
· At 31 December 2019, the fair value independent valuation of the
property portfolio was GBP195.80 million (30 September 2019: GBP196.05
million). On a like-for-like basis the valuation of the property portfolio
decreased by GBP0.25 million (0.13%) over the quarter (30 September 2019:
decrease of GBP0.51 million and 0.26%).
· NAV of GBP147.38 million or 97.24 pence per share (30 September 2019:
GBP147.55 million or 97.36 pence per share).
· EPRA earnings per share ("EPRA EPS") for the quarter of 2.18 pence per
share (30 September 2019: 2.13 pence per share).
· EPRA occupancy 96.14%. The Manager's active asset management approach
has led to 12 lettings being completed during the year to 31 December 2019
with annual headline income totalling GBP1.63m against an estimated rental
value from independent valuers on these units of GBP1.49m.
· The Company today announces an interim dividend of 2.00 pence per share
for the three months ended 31 December 2019, in line with the targeted
annual dividend of 8.00 pence per share.
· NAV total return of 1.93% for the three months ended 31 December 2019
(three months ended 30 September 2019: 1.52%).
· The Company remains conservatively geared with a gross loan to value
ratio of 26.30% (30 September 2019: 25.50%).
· Share price total return of 20.67% for the 12 months ended 31 December
2019.
Alex Short, Portfolio Manager, AEW UK REIT, commented:
"The result of the UK general election on 13th December delivered a
significant majority to the UK government for the first time in a decade,
removing some of the political uncertainty which has prevailed for some time
and leading to improved sentiment across the market. This is encouraging for
the sector as a whole and positive for the Company. The Company's portfolio
is well-positioned as we move into 2020 and we are seeing many exciting
opportunities.
As manager, AEW UK Investment Management LLP is successfully executing the
investment strategy, which has seen the Company's assets generate property
level total returns of 6.69% over the 12 months to 30 September 2019 (being
the most recent date for which benchmark data is available) from standing
investments, an outperformance of 3.80% relative to the market (as measured
by the MSCI/AREF UK PFI Balanced Funds Quarterly Index). Over the 12 months
to 31 December 2019 the Company has generated total shareholder returns of
20.67% and, as noted above, has achieved a significant number of lettings
ahead of estimated rental values.
The REIT has consistently paid out dividends of 8 pence per share per annum,
making it one of the highest dividend yields among UK listed REITs. It has
paid total dividends of 32.8 pence per share since IPO, in addition to those
announced below. Annualised total property returns since the Company's May
2015 IPO have been 10.89% up to 30 September 2019 on standing investments,
an outperformance of 3.42% relative to the benchmark.
We are actively working on an exciting pipeline of potential acquisitions
with a particular focus on the industrial and office sectors, which we
believe will be accretive to the strategy both in terms of income but also
in terms of long term value retention and creation opportunities. To that
end, the Company intends to raise additional capital under its existing
Placing Programme in the near future.
Through the December quarter valuation, the portfolio maintained value on
the whole with a marginal decrease of 0.13%. Industrial and office performed
well increasing by 1.01% and 2.03% respectively, however this was offset by
a decrease in retail assets. Whilst the headwinds experienced by the retail
sector are well publicised, the portfolio has a low vacancy rate (at 3.9%)
amongst its assets and we have identified certain potential value creation
opportunities which we are actively pursuing."
The like-for-like valuation decrease for the quarter of GBP0.25 million
(0.13%) is detailed as follows by sector:
Sector Valuation 31 Valuation Valuation
December 2019 movement for the movement for the
quarter quarter
GBP million GBP million %
Industrial 94.88 0.95 1.01
Office 45.25 0.90 2.03
Other 29.67 (0.35) (1.17)
Retail 26.00 (1.75) (6.31)
Total 195.80 (0.25) (0.13)
Strong valuation uplift for the quarter came from the Company's office asset
in Solihull where the Secretary of State for Communities and Local
Government has agreed to take a new 15 year lease at an increased rental
level with very limited capital cost to the REIT. This transaction is
currently in solicitors' hands and is due to complete within the coming
quarters, at which point we expect further valuation uplift.
Net Asset Value
The Company's unaudited NAV as at 31 December 2019 was GBP147.38 million, or
97.24 pence per share. This reflects a decrease of 0.12% compared with the
NAV as at 30 September 2019. The Company's NAV total return, which includes
the interim dividend for the period from 1 July 2019 to 30 September 2019 of
2.00 pence per share, is 1.93% for the three-month period ended 31 December
2019. As at 31 December 2019, the Company owned investment properties with a
fair value of GBP195.80 million.
Pence per share GBP million
NAV at 1 October 2019 97.36 147.55
Capital expenditure (0.07) (0.10)
Valuation change in property (0.23) (0.35)
portfolio
Valuation change in derivatives (0.00) (0.00)
Income earned for the period 2.95 4.47
Expenses and net finance costs for (0.77) (1.16)
the period
Interim dividend paid (2.00) (3.03)
NAV at 31 December 2019 97.24 147.38
The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards. It incorporates the independent
portfolio valuation as at 31 December 2019 and income for the period, but
does not include a provision for the interim dividend for the three month
period to 31 December 2019.
Dividend
The Company today announces an interim dividend of 2.00 pence per share for
the period from 1 October 2019 to 31 December 2019. The dividend payment
will be made on 28 February 2020 to shareholders on the register as at 24
January 2020. The ex-dividend date will be 23 January 2020.
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 December 2019 was 2.18 pence
(30 September 2019: 2.13 pence).
The Directors will declare dividends taking into account the level of the
Company's net income and the Directors' view on the outlook for sustainable
recurring earnings. As such, the level of dividends paid may increase or
decrease from the current annual dividend of 8.00 pence per share. Based on
current market conditions, the Company expects to pay an annualised dividend
of 8.00 pence per share in respect of the financial period ending 31 March
2020.
Investors should note that this target is for illustrative purposes only,
based on current market conditions and is not intended to be, and should not
be taken as, a profit forecast or estimate. Actual returns cannot be
predicted and may differ materially from this illustrative figure. There can
be no assurance that the target will be met or that any dividend or total
return will be achieved.
Financing
Equity
The Company's issued share capital consists of 151,558,251 Ordinary Shares
and there was no movement during the quarter.
The Company has a strong pipeline of opportunities which it is actively
pursuing. Accordingly, the Company intends to raise additional capital under
its existing Placing Programme in the near future. Further announcements of
any potential equity fundraise will be made as and when appropriate.
Debt
During the quarter, the Company drew GBP1.50 million of its loan facility, to
bring the total borrowings to GBP51.50 million and producing a gross loan to
value of 26.30% and a net loan to value of 24.74%.
The loan continues to attract interest at LIBOR + 1.4%. To mitigate the
interest rate risk that arises as a result of entering into a variable rate
linked loan, the Company has entered into interest rate caps on GBP36.51
million of the total value of the loan (GBP26.51 million at 2.5% cap rate and
GBP10.00 million at 2.0% cap rate) up to October 2020, resulting in the loan
being 71% hedged.
The loan term runs to October 2023 and the Company has entered into
additional interest rate caps covering the period from October 2020 to
October 2023, capping a notional value of GBP46.51 million at LIBOR of 2.0%
per annum, which represents 90% of the current GBP51.50 million loan balance.
The Investment Manager and the Company will keep the levels of gearing and
hedging under review.
Enquiries
AEW UK
Alex Short alex.short@eu.aew.com
+44(0) 20 7016 4848
Laura Elkin Laura.elkin@eu.aew.com
+44(0) 20 7016 4869
Nicki Gladstone 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
Ed Orlebar +44 (0) 7738 724 630
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 GBP15 million), on shorter occupational leases in strong
commercial locations across the United Kingdom. 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, raising GBP100.5m.
Since IPO it has raised a further GBP51m.
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 the income stream.
AEWU is currently paying an annualised dividend of 8p per share.
www.aewukreit.com [1] [2]
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 EUR70.2bn of assets under management as at 30 September 2019. 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
September 2019, AEW Group managed EUR32.3bn of real estate assets on behalf
of a number of funds and separate accounts with over 400 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.
www.aewuk.co.uk [3]
LEI: 21380073LDXHV2LP5K50
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.: 40858
EQS News ID: 954517
End of Announcement EQS News Service
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January 16, 2020 02:00 ET (07:00 GMT)
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