TIDMAEWL
RNS Number : 7302O
AEW UK Long Lease REIT PLC
31 January 2019
AEW UK Long Lease REIT plc ("AEWL" or "the Group")
LEI: 213800MPBIJS12Q88F71
31 January 2019
NAV Update and Dividend Declaration for the quarter ended 31
December 2018
AEW UK Long Lease REIT plc (LSE: AEWL) (the "Group"), which owns
a diversified portfolio of 18 regional UK commercial property
assets, announces its unaudited Net Asset Value ('NAV') and interim
dividend for the quarter ended 31 December 2018.
Highlights
-- EPRA earnings per share ("EPRA EPS") for the quarter
increased by 12% to 1.42 pence per share (quarter to 30 September
2018: 1.27 pence per share), which represents dividend cover for
the quarter of 103%.
-- The Group today declares an interim dividend of 1.375 pence
per share for the quarter ended 31 December 2018 thus making the
aggregate dividends paid and declared for the half year ended on
that date 2.75 pence per share (in line with the targeted annual
dividend at IPO) and total dividends since IPO to 6.00 pence per
share. The dividend is to be paid on 28 February 2019 to
shareholders on the register on 8 February 2019.
-- For the first half of the Company's current financial year,
EPRA earnings were 2.70 pence per share reflecting dividend cover
for the half year of 98.18 %. The EPRA earnings per share include
an accrual to reflect the minimum contracted uplifts under the
Group's leases, without this accrual, the cash earnings were 2.31
pence per share reflecting 84.18% cash dividend cover for the half
year.
-- At 31 December 2018, the independent fair valuation of the
property portfolio was GBP112.23 million (30 September 2018:
GBP103.98 million), a like-for-like increase of GBP1.60 million
(1.54%) over the quarter (quarter to 30 September 2018: GBP0.95
million or 0.96%). The fair valuation of the property portfolio
includes the GBP6.65 million (excluding purchase costs) of a Care
Home in Nailsea, Bristol which exchanged unconditionally on 21
December 2018 and completed on 11 January 2019.
-- Unaudited NAV increased to GBP78.46 million, 97.46 pence per
share (30 September 2018: GBP76.94 million, 95.58 pence per share),
an increase of 1.97%.
-- An GBP11 million increase to the loan facility with Canada
Life Investments was drawn down on 11 January 2019 which funded the
acquisition of Nailsea, Bristol, reflecting a net initial yield of
5.8% on a 30 year lease.
Alex Short, Portfolio Manager, AEW UK Long Lease REIT,
commented
The Group's performance during the quarter was strong; we have
seen capital growth from our properties of 1.54% and a NAV increase
of 1.97%. In addition to this, following the Group's ramp up
period, its dividend going forward should be fully covered by EPRA
earnings and will be further enhanced in future periods by income
received from further acquisitions using the additional debt. We
continue to see reliable performance and prompt rent payments from
our tenants, which is key to our strategy with its target of
providing our shareholders with a stable income stream, growing in
line with inflation.
The decision has been taken by the Board to increase the Group's
debt levels from 28% to 35% loan to gross asset value, in order to
achieve increased diversification of income and exposure to our
pipeline of attractively priced assets as well as being accretive
to dividend cover.
Our aim is to grow the Group at the appropriate time to achieve
economies of scale that will benefit our investors and enhance
earnings per share. We are currently seeing a strong and varied
pipeline of attractively priced assets across the range of our
target sectors.
Net Asset Value
The Group's unaudited NAV as at 31 December 2018 was GBP78.46
million, 97.46 pence per share, reflecting an increase of 1.97% per
share compared with the NAV as at 30 September 2018 due to the
valuation uplift during the quarter and, for the first time since
IPO, EPRA earnings per share exceeding the dividend paid during the
quarter. As at 31 December 2018, the Group owned 18 investment
properties with a fair value of GBP112.23 million.
Movement during the Quarter Pence per GBP
share million
NAV at 30 September 2018 95.581 76.94
Net portfolio acquisition costs (0.158) (0.13)
Valuation change in property portfolio 1.994 1.61
Income earned for the period 2.171 1.75
Expenses and net finance costs for
the period (0.749) (0.60)
Interim dividend paid (1.375) (1.11)
NAV at 31 December 2018 97.464 78.46
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards as adopted by the
European Union and incorporates the Group's individually valued
property portfolio as at 31 December 2018 and income for the
quarter, but does not include a provision for the interim dividend
for the quarter ended 31 December 2018.
The income earned for the period includes an accrual for the
minimum contractual uplifts defined within the index linked leases.
In the event that inflation is greater than these minimum
contractual uplifts, the income realised will ultimately be greater
than that currently accrued.
Dividend
The Board has today declared an interim dividend of 1.375 pence
per share for the quarter ended 31 December 2018. The dividend
payment will be made on 28 February 2019 to shareholders on the
register as at 8 February 2019. The ex-dividend date will be 7
February 2019. All of the dividend of 1.375 pence per share will
all be designated as a property income distribution ("PID").
Based on the target dividends set out within the Group's
Prospectus, the Board is targeting an aggregate dividend of 5.50
pence per share for the year ending 30 June 2019.
Investors should note that any dividend targets are 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.
Debt
As at 31 December 2018, the Group had utilised all of its GBP30
million fixed interest loan facility with Canada Life Investments
and at that date was geared at a loan to Gross Asset Value ('GAV')
of 27.7%. On 11 January 2019, the Group increased its loan facility
by GBP11 million with its existing lender, Canada Life Investments,
taking the total loan drawn down to GBP41 million. The weighted
average interest cost of the Group's increased facility is 3.19%
and is repayable on the 20 October 2025.
Portfolio Activity
Nailsea, Bristol
On 17 January 2019, the Group announced the completion of the
acquisition of a Care Home in Nailsea, Bristol for GBP6.65 million,
reflecting a net initial yield of 5.8%, comprising a 62-room,
purpose built care home located in an affluent suburb approximately
8 miles south west of Bristol, fully let, on a new 30 year lease,
operated by Handsale Ltd, an established national provider of care
services for the elderly. A new 30 year fully repairing and
insuring lease has been granted by the Group from the date of the
acquisition providing the Group with annual rental uplifts in line
with the Retail Price Index, with a minimum uplift level of 1% and
a cap of 4%.
Inflation linked rent reviews
92% of the portfolio's income stream is reviewed periodically,
on an upward only basis, in line with inflation; with 71% and 21%
of the portfolio indexed to RPI and CPI respectively.
Sector weightings
The sector weighting, by value, of the property portfolio as at
31 December 2018 was: Hotels 21.6%; Industrial 21.6%; Residential
care homes 16.0%; Car showrooms 13.2%; Student accommodation 10.8%;
Leisure 8.6%; Power station 4.4%; and Petrol station 3.8%.
Future publications
The Group's December 2018 Quarterly Investment Report will be
available on the Group's website on 4 February 2019.
About AEW UK Long Lease REIT (www.aewukllreit.com)
AEW UK Long Lease REIT plc (LSE: AEWL) aims to generate a
sustainable, secure and predictable income return, whilst at least
maintaining capital values in real terms, by investing in a
diversified portfolio of UK properties, with an attractive entry
yield, predominately in alternative and specialist sectors. It will
invest in a diverse range of sectors that are underrepresented in
institutional portfolios including leisure, healthcare, education,
hotels, student accommodation, supported living and automotive. At
least 85% of the gross passing rent from the portfolio's leases
will contain inflation linked rent reviews, and average initial
unexpired leases in excess of 18 years at the time of
investment.
About AEW UK Investment Management LLP (www.aewuk.co.uk )
AEW UK Investment Management LLP ("AEW UK") is the investment
manager of AEWL. It employs a well-resourced team comprising 23
individuals covering investment, asset management, operations and
strategy. It is part of AEW Group, one of the world's largest real
estate managers, with just over EUR63.5bn of assets under
management as at 30 September 2018. 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
2018, AEW Group managed nearly EUR30bn in value in properties of
all types located in 9 countries, with close to 400 staff. The
Investment Manager is a 50:50 joint venture between the principals
of the Investment Manager and AEW.
Enquires
AEW UK
Alex Short alex.short@eu.aew.com
Laura Elkin laura.elkin@eu.aew.com
Nicki Gladstone Nicki.Gladstone-ext@eu.aew.com
+44(0) 771 140 1021
Cenkos Securities plc
Tom Scrivens +44(0) 207 397 1915
Sapna Shah +44(0) 207 397 1922
TB Cardew aew@tbcardew.com
Ed Orlebar +44(0) 7738 724 630
Tom Allison +44(0) 7789 998 020
Lucy Featherstone +44(0) 7789 374 663
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END
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