AEW UK REIT plc (AEWU) AEW UK REIT plc: NAV Update and Dividend
Declaration 21-Oct-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.
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21 October 2021
AEW UK REIT Plc
NAV Update and Dividend Declaration
AEW UK REIT plc (LSE: AEWU) (the "Company"), which 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 30 September 2021.
Highlights
-- Interim dividend of 2.00 pence per share for the three months
ended 30 September 2021, in line with thetargeted annual dividend
of 8.00 pence per share.
-- NAV of GBP174.29 million or 110.01 pence per share as at 30
September 2021 (30 June 2021: GBP169.69 millionor 107.11 pence per
share).
-- NAV total return of 4.58% for the quarter (30 June 2021
quarter: 10.04%).
-- EPRA earnings per share ("EPRA EPS") for the quarter of 1.30
pence (30 June 2021 quarter: 2.14 pence).
-- Sales of Langthwaite Industrial Estate, South Kirkby for
GBP10.84 million and Wella Warehouse, Basingstokefor GBP5.86
million. The sales prices achieved were 1.9x and 1.7x the purchase
prices respectively.
-- The Company remains conservatively geared with a loan to NAV
ratio of 28.97% (30 June 2021: 29.76%). Atthe quarter end, the
Company had a cash balance of GBP15.16 million and GBP9.50 million
of its loan facility availableto draw up to the maximum 35% Loan to
NAV at drawdown. Following completion of the sale of Wella
Warehouse,Basingstoke, on 15 October 2021, the Company's cash
balance is GBP20.06 million, all else equal.
-- For the rental quarter commencing on 29 September 2021, 89%
of rent has been collected or is expected tobe received under
monthly payment plans prior to quarter end. The remainder of rents
owed will continue to bepursued.
Alex Short, Portfolio Manager, AEW UK REIT, commented:
"Following its highest quarterly valuation increase since IPO
last quarter (30 June 2021 quarter: 7.47% on a like-for-like
basis), the portfolio has again generated strong capital growth,
with valuations increasing by 3.11% on a like-for-like basis. 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 4.33% and make up 55.5% of the portfolio
as at 30 September 2021. This has again partly been driven by yield
compression, but we have also seen our ERVs move on as a result of
continued strong occupier demand, supported by a compelling asset
management story. We have also seen good performance at our office
holding in Bristol, with two recent lettings at above ERV moving
the valuation onwards. Our office park at Oxford continues to
perform well with its transition to life sciences/medical use, a
sector which is seeing particularly strong investor demand. After a
tumultuous period for the retail sector, we have seen valuations
stabilise this quarter, with our valuations increasing by 1.36% on
a like-for-like basis, particularly driven by our new retail
warehousing holding in Shrewsbury.
Over the summer, the Company decided to sell two of its strong
performing industrial holdings which have delivered excellent
returns to AEWU shareholders over the last few years (Units 16
& 16A, Langthwaite Industrial Estate in South Kirkby for
GBP10.84 million and Wella Warehouse in Basingstoke for GBP5.86
million). The value of the properties had climbed considerably, and
these sales allowed us to realise a profit, exceeding both the
prevailing valuations and the prices AEWU paid at acquisition. The
sale of South Kirkby, which completed in August, was 31% ahead of
the March 2021 valuation and 87% ahead of its purchase price.
Basingstoke, which completed recently on 15th October, was 35% and
72% above the March 2021 valuation and purchase price respectively.
The combined total of these sales (GBP16.7 million) will be
reinvested into exciting opportunities that we are seeing in the
market.
The Company's EPRA EPS was 1.30 pence for the quarter, providing
a dividend cover of 65% (30 June 2021: 2.14 pence and 107%). During
the quarter, the Company made a prudent provision against service
charge arrears on the ongoing remedial works in Blackpool, which
amount to 0.27 pence per share. The Company also continues to incur
vacancy costs at its property in Glasgow where contracts have been
exchanged for sale. The Blackpool and Glasgow properties are
temporarily restricting the Company's earnings. Following the
planned sale of Glasgow in December 2021 and completion of the
works at Blackpool in early 2022, we expect the cost overhead to
fall, leading to an increase in the EPRA EPS.
In the coming quarters, the Company's earnings will also benefit
from new acquisitions as well as the completion of asset management
initiatives. We currently have an attractive retail warehouse
opportunity under offer and expect to complete imminently.
We are very encouraged by continuing improvements in rent
collection levels, which now stand at over 99% for each quarter
since the onset of the pandemic (excluding current quarter).
The Company has GBP15.16 million of cash and GBP9.50 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. Following completion of the
sale of Wella Warehouse, Basingstoke, on 15 October 2021, the
Company's cash balance is GBP20.06 million, all else equal. The
Company's share price was 102.80 pence as at 30 September 2021 (30
June 2021: 96.00 pence) and we hope that continued improvement in
economic conditions will bring about the return of a share price
premium to NAV."
Valuation movement
As at 30 September 2021, the Company owned investment properties
with a fair value of GBP206.69 million. The like-for-like valuation
increase for the quarter of GBP6.24 million (3.11%) is broken down
as follows by sector:
Sector Valuation 30 September 2021 Like-for-like valuation movement for the quarter
GBP million % GBP million %
Industrial 114.72 55.50 4.76 4.33
Office 39.95 19.33 0.95 2.44
Retail 39.47 19.10 0.53 1.36
Other 12.55 6.07 0.00 0.00
Total 206.69 100.0 6.24 3.11
Net Asset Value
The Company's unaudited NAV at 30 September 2021 was GBP174.29
million, or 110.01 pence per share. This reflects an increase of
2.71% compared with the NAV per share at 30 June 2021. The
Company's NAV total return, which includes the interim dividend of
2.00 pence per share for the period from 1 April 2021 to 30 June
2021, was 4.58% for the three-month period ended 30 September
2021.
Pence per share GBP million
NAV at 1 July 2021 107.11 169.69
Portfolio acquisition costs (0.01) (0.01)
Profit on sale of investments 0.90 1.42
Capital expenditure (0.02) (0.04)
Valuation change in property portfolio 2.70 4.28
Valuation change in derivatives 0.03 0.05
Income earned for the period 2.63 4.17
Expenses and net finance costs for the period (1.33) (2.10)
Interim dividend paid (2.00) (3.17)
NAV at 30 September 2021 110.01 174.29
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards. It incorporates
the independent portfolio valuation at 30 September 2021 and income
for the period, but does not include a provision for the interim
dividend for the three-month period to 30 September 2021.
Dividend
Dividend declaration
The Company today announces an interim dividend of 2.00 pence
per share for the period from 1 July 2021 to 30 September 2021. The
dividend payment will be made on 19 November 2021 to shareholders
on the register as at 29 October 2021. The ex-dividend date will be
28 October 2021.
The dividend of 2.00 pence per share will be designated 1.50
pence per share as an interim property income distribution ("PID")
and 0.50 pence per share as an interim ordinary dividend
("non-PID").
The Company has now paid a 2.00 pence quarterly dividend for 24
consecutive quarters1, representing an unbroken record since
IPO.
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 September 2021 was
1.30 pence (30 June 2021: 2.14 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 GBP50.50 million at 30 September
2021, producing a Loan to NAV ratio of 28.97% and allowing a
further GBP9.50 million of the remaining facility to be drawn up to
the maximum 35% Loan to Value at drawdown.
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