TIDMAEWU
RNS Number : 0307Y
AEW UK REIT PLC
01 December 2017
1 December 2017
NAV Update and Dividend Declaration for the three months to 31
October 2017
AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 1
December 2017, directly owns a diversified portfolio of 32 regional
UK commercial property assets, announces its quarterly unaudited
Net Asset Value ("NAV") and interim dividend for the three month
period ended 31 October 2017.
Highlights
-- The Company raised gross capital proceeds of GBP28.05 million
pursuant to the Initial Placing, Initial Offer for Subscription and
Intermediaries Offer (the "Initial Issue") of the Share Issuance
Programme, as described in the prospectus published by the Company
on 28 September 2017 (the "Prospectus"). Net proceeds were GBP27.50
million.
-- At 31 October 2017, fair value independent valuation of the
property portfolio was GBP147.79 million (31 July 2017: GBP150.38
million), following a disposal at a sale price of GBP11.05 million
and an acquisition at a purchase price of GBP6.37 million. On a
like-for-like basis the valuation of the property portfolio
increased by GBP2.09 million (1.50%) (31 July 2017: GBP1.94 million
and 1.41%) over the quarter.
-- NAV of GBP148.22 million or 97.80 pence per share (31 July
2017: GBP119.76 million or 96.86 pence per share).
-- EPRA earnings per share for the period of 1.65 pence per
share (31 July 2017: 2.10 pence per share). The decrease in EPRA
earnings per share is partly attributable to a loss of income from
the sale of Valley Retail Park, Belfast, and increased lease
renewal costs during the quarter.
-- Interim dividend of 2.0 pence per share announced for the quarter ended 31 October 2017.
-- NAV total return of 3.10% and shareholder total return of
2.16% for the quarter ended 31 October 2017.
-- The Company remains conservatively geared with a gross loan
to value ratio of 22.0% (31 July 2017: 21.6%). The Company
increased its debt facility from GBP32.5 million to GBP40.0 million
during the quarter.
-- At 31 October 2017, the Company held GBP32.44 million cash
for investment with a further GBP7.5m of loan facility available
for new investment. At 31 October, the Company had one property
under offer to purchase for GBP10.5 million, which remains under
offer as at 1 December 2017.
-- Portfolio and asset management activity during the period included:
o Disposal of Valley Retail Park, Belfast, on 22 September for
GBP11.05 million. The asset was acquired for GBP7.1 million in
2015.
o On 5 October 2017, the Company completed the renewal of two
leases with its largest tenant Ardagh Glass securing the strong
covenant for an additional 3 years to expiry.
o On 31 October 2017, the Company purchased 208-220 Commercial
Road, Portsmouth, for GBP6.4 million. The asset is fully let and
provides a net initial yield of 9.6%.
Alex Short, Portfolio Manager, AEW UK REIT, commented:
"We are pleased to be investing again following our successful
raise of GBP28 million in October and already a significant amount
of these funds have been allocated to properties under offer. With
a lot of focus in the market currently on longer leased properties
we are seeing some very compelling buying opportunities at present
for our strategy which continues to find yield premium by investing
in smaller lot size properties let on shorter than average leases
but with a focus on sustainable locations and replicable income
streams. We therefore expect to be making further acquisition
announcements shortly. We have already completed one acquisition
since the close of the capital raise for over GBP6m being a High
Street retail asset in Portsmouth, a top 50 retailing centre which
is set to see GBP1 billion of investment over the next 20
years.
The performance of the Company's assets has continued strongly
again this quarter with like-for-like valuation growth of 1.5%.
This compares favourably to MSCI data which shows that the market
as a whole delivered growth of 1.3% over the quarter to 30
September 2017 on a "standing investment" basis (excluding
transactions and developments).
We are particularly pleased with the capital appreciation
delivered by the Company's industrial assets which have seen the
strongest growth of all of the sectors in which the Company is
invested, at an average of 3.2% within the quarter. The portfolio
has been particularly well placed to benefit from this movement
with its high weighting towards the industrial sector where many of
our recent acquisitions have been focused, particularly in
locations which exhibit low levels of supply alongside robust
tenant demand and a low level of passing rent.
Our asset management team have had another successful quarter
completing the disposal of the Valley Retail Park in Belfast which
is the culmination of 2 years of hard work that has seen some
significant value added to the asset with an overall valuation
uplift in excess of 50% achieved. The team have also this quarter
completed a lease renewal with the company's largest tenant Ardagh
Glass lengthening the income stream and creating a 9% valuation
uplift."
Net Asset Value
The Company's unaudited NAV as at 31 October 2017 was GBP148.22
million, or 97.80 pence per share. This reflects an increase of
0.97% per share compared with the NAV as at 31 July 2017, or a NAV
total return including the interim dividend for the period from 1
August 2017 to 31 October 2017 (of 2.0 pence per share), of 3.10%.
As at 31 October 2017, the Company owned investment properties with
a fair value of GBP147.79 million.
Pence per GBP million
share
NAV at 1 August 2017 96.86 119.76
Portfolio acquisition costs (0.26) (0.39)
Realised loss on sale of investments (0.17) (0.22)
Capital expenditure (0.03) (0.03)
Valuation change in property portfolio 1.60 2.00
Income earned for the period 2.55 3.20
Expenses and net finance costs for
the period (0.90) (1.13)
Interim dividend paid (2.00) (2.47)
Issue of equity (net of costs) 0.15 27.50
NAV at 31 October 2017 97.80 148.22
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards and incorporates
the independent portfolio valuation as at 31 October 2017 and
income for the period, but does not include a provision for the
interim dividend for the three month period to 31 October 2017.
Dividend
The Company today announces an interim dividend of 2.0 pence per
share for the period from 1 August 2017 to 31 October 2017. The
dividend payment will be made on 29 December 2017 to shareholders
on the register as at 15 December 2017. The ex-dividend date will
be 14 December 2017.
The dividend of 2.0 pence per share will be designated 1.0 pence
per share as an interim property income distribution ('PID') and
1.0 pence per share as an interim ordinary dividend
('non-PID').
The EPRA earnings per share for this period were 1.65 pence (31
July 2017: 2.10 pence). This decrease in earnings per share is
partly attributable to a loss of income following the sale of
Valley Retail Park, Belfast. There were also increased lease
renewal costs during the quarter, mostly associated with the lease
renewal of Ardagh Glass.
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 pence per share, over the 12 months ending 30 April
2017. Based on the current market conditions, the Company expects
to pay an annualised dividend of 8 pence per share in respect of
the financial period ending 31 March 2018 and for the interim
period to 30 September 2018.
In order to align dividend payments with the Company's new
accounting period, in respect of the 3 month period to 31 October
2017, the Company will pay a dividend of 2 pence per share and
then, in respect of the 2 month period to 31 December 2017, it
currently intends to pay a further dividend of at a rate of
two-thirds of the 2 pence per share dividend currently being paid
for a three month period (reflecting the two month period). With
the dividend to the period to 31 October 2017, the Company will
have paid 17.5 pence per share since launch.
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. The Company issued 27,911,001 Shares at a price of
100.5 pence per Share raising gross capital proceeds of GBP28.05
million on 24 October 2017.
Debt
The Company's borrowings remained at GBP32.50 million throughout
the quarter, representing a gross loan to value ratio of 22.0% as
at 31 October 2017. On 17 October 2017 the Company increased the
available facility to GBP40.0 million, which will allow the Company
to make further drawdowns on investment of the proceeds of the
capital raise. 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 GBP26.51 million of the total balance of
the loan at a strike rate of 2.5%, resulting in the loan being 82%
hedged. The Investment Manager and the Company will keep the level
of gearing under review and, if appropriate, will look to increase
the facility.
Portfolio activity and asset management
Valley Retail Park, Belfast
In September the Company completed the disposal of the Valley
Retail Park in Belfast for GBP11.05 million. The Company originally
purchased the 100,189 sq ft property for GBP7.1m in 2015 with a
WAULT of only 3 years to break and vacancy in excess of 20%. The
Company's proactive asset management activity has added significant
value with new lettings to Go Outdoors for a 20 year term and
Smyths Toys for a term of 15 years. A surrender premium of GBP1m
was also taken from outgoing tenant Harvey Norman.
After completion of the asset's business plan, it was felt to be
the most beneficial time to dispose given the pipeline of
attractive investment opportunities for the Company.
Langthwaite Industrial Estate, South Kirkby
In October the Company completed the renewal of two leases with
its largest tenant, Ardagh Glass, on two warehouse buildings at the
Langthwaite Industrial Estate in South Kirkby, Yorkshire, located
c.4 miles from Junction 38 of the A1M and c.10 miles from Junction
37 of the M1. Ardagh Glass, whose parent group's latest reported
full year figures show annual turnover in excess of EUR6,000
million, use the premises for storage and distribution serving
their nearby factories. The manufacturing group has taken the units
for an additional term with just under 3 years to expiry resulting
in a valuation uplift for the Company of 9%.
Commercial Road, Portsmouth
In October the Company acquired 208-220 Commercial Road and 7-13
Crasswell Street, Portsmouth for GBP6.4m. The asset provides a net
initial yield of 9.6% and is fully let to seven retail tenants and
one office tenant providing a WAULT of 4 years to expiry. The
12,475 sq ft retail property is situated within the prime
pedestrianised pitch of Commercial Road within Portsmouth's city
centre. The property is also directly opposite the main covered
shopping centre, The Cascades, which is anchored by Primark,
H&M, Next and Marks and Spencer.
As part of the 'Shaping Portsmouth' development initiative, the
city is set to receive GBP1 billion of investment from both public
and private sector organisations over the next 20 years.
Eastpoint Business Park, Oxford
The Company completed a new letting of 2,800 sq ft of office
accommodation to publishing company Capstone at the Eastpoint
Business Park in Oxford. The unit has been let for a term of 5
years with a break option in year 3 at a rent of GBP15.50 per sq ft
which is in excess of ERV.
Enquiries
AEW UK
Alex Short alex.short@eu.aew.com
+44(0) 20 7016 4848
Nicki Gladstone nicki.gladstone-ext@eu.aew.com
+44(0) 20 7016 4880
Company Secretary
Link Company Matters Limited T: +44(0) 20 7954 9547
Temple Bar Advisory
Ed Orlebar edo@templebaradvisory.com
T: 07738 724 630
Lucy Featherstone lucyf@templebaradvisory.com
T: +44 (0) 20 7002 1482
M: +44 (0) 7789 374
663
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 GBP10 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.
Since its IPO in May 2015, the Company has invested over GBP150
million in 32 assets. It 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. Whilst occupational demand in strategic
locations remains, securing tenants on shorter leases allows AEWU
to crystallise value through rent reviews and lease re--gears.
AEWU is currently paying a dividend of 8p per share p.a.
AEW UK Investment Management LLP employs a well-resourced team
comprising 25 individuals covering investment, asset management,
operations and strategy. It is part of AEW Group, one of the
world's largest real estate managers, with EUR58.5 billion of
assets under management as at 30 June 2017. 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 June
2017, AEW Group managed EUR26.0 billion in value in properties of
all types located in 15 countries, with over 380 staff. The
Investment Manager is a 50:50 joint venture between the principals
of the Investment Manager and AEW.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCBMBATMBTJBPR
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December 01, 2017 02:01 ET (07:01 GMT)
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