TIDMAEWU
RNS Number : 9805C
AEW UK REIT PLC
26 January 2018
26 January 2018
NAV Update and Dividend Declaration for the two months to 31
December 2017
AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 26
January 2018, directly owns a diversified portfolio of 32 regional
UK commercial property assets, announces its unaudited Net Asset
Value ("NAV") and interim dividend for the two month period ended
31 December 2017.
Highlights
-- The Company is reporting on a two month reporting period from
1 November 2017 to 31 December 2017 in order to align quarter-end
dates and dividend payments with the change in the Company's period
end to 31 March 2018.
-- At 31 December 2017, fair value independent valuation of the
property portfolio was GBP151.59 million (31 October 2017:
GBP147.79 million), following one acquisition during the period for
GBP3.10 million. On a like-for-like basis the valuation of the
property portfolio increased by GBP0.70 million (0.47%) over the
two month period (three month period ended 31 October 2017: GBP2.09
million and 1.50%).
-- From 31 December 2017, the whole of Sarus Court Industrial
Estate is being treated as a single property. Prior to this, the 6
units had been split into 3 separate holdings, as they were
purchased on different dates. This has had the effect of reducing
the reported number of properties from 33 to 31 as at 31 December
2017, including one acquisition during the period.
-- NAV of GBP147.34 million or 97.21 pence per share (31 October
2017: GBP148.22 million or 97.80 pence per share).
-- EPRA earnings per share ("EPRA EPS") for the two month period
of 1.09 pence per share (three months to 31 October 2017: 1.65
pence per share).
-- Interim dividend of 1.33 pence per share announced for the
two months ended 31 December 2017.
-- NAV total return of 1.47% for the two months ended 31 December 2017.
-- The Company remains conservatively geared with a gross loan
to value ratio of 21.44% (31 October 2017: 21.99%).
-- At 31 December 2017, the Company held GBP28.32 million cash
for investment with a further GBP7.50 million of loan facility
available for new investment. On 24 January 2018, the Company
completed the purchase of Knowles Lane, Bradford, for GBP2.10
million. As at 26 January 2018, the Company has unconditionally
exchanged to purchase Geddington Road, Corby, for GBP12.40 million,
which is due to complete on 16 February 2018. The Company has a
further two assets under offer for a combined purchase price of
GBP15.78 million.
-- Portfolio and asset management activity during the period included:
o Acquisition of Cedar House, a single let office building in
Gloucester for GBP3.10 million. The asset is fully let and provides
a net initial yield of 9.1%.
Alex Short, Portfolio Manager, AEW UK REIT, commented:
"We have now made good progress on investing the GBP28 million
that was raised in October 2017 with another new acquisition that
was announced during December 2017, yielding just over 9%. The
asset, acquired for c. GBP3 million, comprises an office building
in Gloucester which we expect will remain occupied by the Secretary
of State for Communities & Local Government for the coming few
years and provides good potential to add value in the medium term
by way of conversion to residential use. The remainder of the
equity raise is now fully allocated to assets that are under offer
and well progressed in due diligence and, as such, we expect to be
making further acquisition announcements shortly, subject to
prevailing market conditions. During 2017 we saw a significant
focus in the market on long leased properties and as a result, saw
compelling buying opportunities for the Company's strategy which
continues to find yield premium by investing in smaller lot size
properties let on shorter than average leases in sustainable
locations.
Capital growth of the Company's assets has continued over the
two month period with like-for-like valuation growth of 0.47% and,
as was seen throughout 2017, this was focused mainly within the
industrial sectors. The Company is well placed to benefit from
this, having an industrial weighting of over 40%. This growth
figure compares well to the like-for-like growth reported by the
Company throughout the year although, due to the Company's change
of year end, the reporting period is one month shorter."
Net Asset Value
The Company's unaudited NAV as at 31 December 2017 was GBP147.34
million, or 97.21 pence per share. This reflects a decrease of
0.60% per share compared with the NAV as at 31 October 2017. This
is due to having paid a full quarter's dividend (relating to the
three month period ended 31 October 2017) during the two month
reporting period. The Company's NAV total return, which includes
the interim dividend for the period from 1 August 2017 to 31
October 2017 (of 2.0 pence per share), is 1.47% for the two month
period ended 31 December 2017. As at 31 December 2017, the Company
owned investment properties with a fair value of GBP151.59
million.
Pence GBP million
per share
NAV at 1 November 2017 97.80 148.22
Portfolio acquisition costs (0.13) (0.20)
Valuation change in property
portfolio 0.46 0.71
Valuation change in derivatives (0.01) (0.01)
Income earned for the period 1.44 2.19
Expenses and net finance
costs for the period (0.35) (0.54)
Interim dividend paid (2.00) (3.03)
NAV at 31 December 2017 97.21 147.34
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards and incorporates
the independent portfolio valuation as at 31 December 2017 and
income for the period, but does not include a provision for the
interim dividend for the two month period to 31 December 2017.
Dividend
The Company today announces an interim dividend of 1.33 pence
per share for the period from 1 November 2017 to 31 December 2017.
The dividend payment will be made on 28 February 2018 to
shareholders on the register as at 9 February 2018. The ex-dividend
date will be 8 February 2018.
In order to align dividend payments with the Company's new
accounting period end, in respect of the two month period ended 31
December 2017, the Company announces a dividend at a rate of
two-thirds of the 2 pence per share dividend currently being paid
for a three month period. Including the dividend for the period to
31 December 2017, the Company will have paid 18.83 pence per share
since launch.
The dividend of 1.33 pence per share will be designated 1.33
pence per share as an interim property income distribution
("PID").
The EPRA EPS for the two month period was 1.09 pence (three
months ended 31 October 2017: 1.65 pence). Extrapolating EPRA EPS
over a three month period would give 1.64 pence. This is roughly in
line with EPRA EPS for the three months ended October 2017, as the
proceeds of the capital raise in October are yet to be fully
invested. As at 26 January 2018, the Company has invested a further
GBP14.50 million in two assets and has two assets under offer for a
combined purchase price of GBP15.78 million.
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 ended 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.
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.
Debt
The Company's borrowings remained at GBP32.50 million throughout
the period, representing a gross loan to value ratio of 21.44% as
at 31 December 2017. The Company has an available facility of
GBP40.0 million, which allows the Company to make further drawdowns
on new investments. 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
Cedar House, Gloucester
In December 2017 the Company announced the acquisition of Cedar
House, Spa Road, Gloucester for GBP3.10 million. The five-storey
office block, which is located within the city centre adjacent to
Gloucester Park, was acquired for a price reflecting a low capital
value of only GBP80 per sq. ft. and an attractive net initial yield
of 9.1%. The property is currently let to the Secretary of State
for Communities & Local Government for use as a Job Centre,
with a short unexpired lease term of 0.3 years. However, the tenant
has already served a Section 26 notice to renew the lease and as
such the Investment Manager believes that the income can be
extended.
The property is situated within a mixed office and residential
area and as such the Investment Manager believes that it provides
good long-term alternative use potential. Public transport is
easily accessible, with good links to Gloucester Railway Station
and a central bus route. The asset provides a total floor area of
38,427 sq. ft. and includes substantial car parking facilities,
with 103 spaces available.
Knowles Lane, Bradford
After the period-end, the Company completed the purchase of
Knowles Lane, Bradford, for GBP2.10 million. The asset is fully let
to one tenant, Pilkington UK Ltd, who have been in occupation for
c. 30 years. The property comprises an industrial warehouse and two
storey ancillary offices and was acquired for a price reflecting a
low capital value of GBP45 per sq ft and a net initial yield of
7.2%. The property is located 2 miles south of Bradford and 8 miles
to the west of Leeds and is well located for the national motorway
network.
Enquiries
AEW UK
Alex Short alex.short@eu.aew.com
T: +44(0) 20 7016
4848
Nicki Gladstone nicki.gladstone-ext@eu.aew.com
T: +44(0) 20 7016
4880
Company Secretary
Link Company Matters aewu.cosec@linkgroup.co.uk
Limited
T: +44(0) 20 7954
9547
TB Cardew
Ed Orlebar ed.orlebar@tbcardew.com
T: +44(0) 7738
724 630
Lucy Featherstone lucy.featherstone@tbcardew.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 8 pence 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 EUR57.7 billion of
assets under management as at 30 September 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 September 2017, AEW Group managed EUR26.6 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
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