AEW UK REIT plc: NAV Update and Dividend Declaration (735635)
October 22 2018 - 2:02AM
UK Regulatory
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AEW UK REIT plc (AEWU)
AEW UK REIT plc: NAV Update and Dividend Declaration
22-Oct-2018 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
22 October 2018
NAV Update and Dividend Declaration for the three months to 30 September
2018
AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 22 October 2018,
directly owns a diversified portfolio of 36 regional UK commercial property
assets, announces its unaudited Net Asset Value ("NAV") and interim dividend
for the three month period ended 30 September 2018.
Alex Short, Portfolio Manager, AEW UK REIT, commented: "This has been
another quarter of strong performance for the Company, both in terms of
income and capital growth. The Company continues to consolidate its position
of having the highest dividend yield in the peer group, in excess of 8%,
whilst also providing capital growth, a proportionate level of risk, and is
managed by a very experienced team. Looking forward, the Company has a
strong pipeline of assets that we would like to purchase in order to grow
this strategy."
Highlights
· At 30 September 2018, the fair value independent valuation of the
property portfolio was GBP193.53 million (30 June 2018: GBP191.95 million),
following the sale of 18-36, Chapel Walk, Sheffield, during the quarter.
On a like-for-like basis the valuation of the property portfolio increased
by GBP2.48 million (1.30%) over the quarter (30 June 2018: GBP3.26 million and
1.73%).
· NAV of GBP151.65 million or 100.06 pence per share (31 March 2018: GBP149.14
million or 98.40 pence per share).
· EPRA earnings per share ("EPRA EPS") for the quarter of 2.06 pence per
share (30 June 2018: 2.04 pence per share), in line with the Company's
target annual dividend of 8.00 pence per share.
· The Company today announces an interim dividend of 2.00 pence per share
for the three months ended 30 September 2018.
· NAV total return of 3.80% and shareholder total return of 0.42% for the
three months ended 30 September 2018.
· The Company remains conservatively geared with a gross loan to value
ratio of 25.84% (30 June 2018: 26.05%).
· At 30 September 2018, the Company held GBP7.40 million cash for
investment, most of which we expect to invest in an attractive and
high-yielding asset in the coming months.
· Portfolio and asset management activity during the period included:
· The letting of Orion House, Eastpoint Business Park, Oxford, for a
term of 25 years at a rent of GBP179,410 per annum.
· The letting of Third Floor East, 225 Bath Street, Glasgow for a five
year term at a rent of GBP88,608 per annum.
· The sale of 18-30, Chapel Walk, Sheffield for gross proceeds of GBP0.90
million.
Alex Short, Portfolio Manager, AEW UK REIT, commented:
"This has been another quarter of strong performance for the Company, both
in terms of income and capital growth. The Company continues to consolidate
its position of having the highest dividend yield in the peer group, whilst
providing both capital growth, a proportionate level of risk, and is managed
by a very experienced team. Asset Management continues to deliver strong
performance with deals now being progressed on the majority of assets in the
portfolio. The Company's vacancy is now at an all-time low with a 97%
occupancy rate, and as a result we have seen a covered dividend for the last
two quarters. Ongoing potential income growth raises the prospects for the
Company's earnings in the near future.
The performance of the portfolio, both in terms of income and capital, also
reinforces the success of the strategy we continue to pursue. The Company
holds a significantly underweight retail position and has no exposure to
London offices, reflecting our view on the poor performance prospects in
these sectors. The few retail assets we do own were purchased in areas of
high land value with options for long term alternative uses.
The Company's largest sector exposure remains well located, second hand
industrial warehousing, where we are commonly seeing rental value growth of
20-30% when we reach a lease event. This is, in part, as a result of our
stock selection expertise focusing on well located assets, in areas of low
supply, that have been purchased at levels below replacement cost and with
an income stream that provides strong returns.
Notable new lettings this quarter include c 13,000 sq ft at Eastpoint
Business Park, Oxford, where a new 20 year lease to Genesis Health Care has
been completed, increasing the value of the estate by c. 23% over the
quarter. A new letting of c. 8,000 sq ft has also been completed at Bath
Street in Glasgow which will increase the income received from this asset by
c. GBP90,000 per annum following the expiry of the tenant's rent free period.
Looking forward, the Company has a strong pipeline of assets that we would
like to purchase. With a yield in excess of 8% and capital value growth as
well, we think that we are in a position to expand the size of the
portfolio. As the Company's asset management initiatives are reaching
maturity, we are starting to see promising returns, which we believe could
be replicated in other attractive opportunities as we continue to track a
strong pipeline of assets.
Net Asset Value
The Company's unaudited NAV as at 30 September 2018 was GBP151.65 million, or
100.06 pence per share. This reflects an increase of 1.69% compared with the
NAV as at 30 June 2018. This increase is largely due to the increase in fair
value of the investment property portfolio of GBP2.50 million. The Company's
NAV total return, which includes the interim dividend for the period from 1
April 2018 to 30 June 2018 of 2.00 pence per share, is 3.80% for the three
month period ended 30 September 2018. As at 30 September 2018, the Company
owned investment properties with a fair value of GBP193.53 million.
Pence per share GBP million
NAV at 1 July 2018 98.40 149.14
Loss on disposal of investment (0.05) (0.08)
properties
Capital expenditure (0.10) (0.15)
Valuation change in property 1.75 2.65
portfolio
Income earned for the period 2.81 4.26
Expenses and net finance costs for (0.75) (1.14)
the period
Interim dividend paid (2.00) (3.03)
NAV at 30 September 2018 100.06 151.65
The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards and incorporates the independent
portfolio valuation as at 30 September 2018 and income for the period, but
does not include a provision for the interim dividend for the three month
period to 30 September 2018.
Dividend
The Company today announces an interim dividend of 2.00 pence per share for
the period from 1 July 2018 to 30 September 2018. The dividend payment will
be made on 30 November 2018 to shareholders on the register as at 2 November
2018. The ex-dividend date will be 1 November 2018.
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 EPRA EPS for the three month period to 30 September 2018 was 2.06 pence
(30 June 2018: 2.04 pence), exceeding the target 2.00 pence per share
quarterly dividend. Based on the current leasing profile of the portfolio,
and with all else being equal, the current level of earnings is expected to
be sustainable. The Company had GBP7.40 million cash for investment as at 30
September 2018, which will provide the opportunity to increase earnings
further through re-investment into high yielding assets.
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
2019.
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.
Debt
The Company's borrowings remained at GBP50.00 million throughout the quarter
and at 30 September 2018, the Company was geared at a gross loan to value of
25.84% and a net loan to value of 21.63%.
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), resulting in the loan being 73% hedged.
The Investment Manager and the Company will keep the levels of gearing and
hedging under review.
The Company is in the process of amending its credit facility agreement to
extend the term of the facility by at least three years beyond the current
termination date in October 2020. The amended and restated loan agreement is
expected to be signed in the coming weeks and the Directors consider that
extending the term of the facility will be risk mitigating.
Portfolio activity and asset management
Eastpoint Business Park, Oxford
In August 2018, the Company completed the letting of Orion House, Eastpoint
Business Park, Oxford, to Genesis Cancer Care UK Limited. The lease is for a
term of 25 years, at a rent of GBP179,410 per annum. There are five-yearly,
upward only rent reviews linked to the Retail Price Index ("RPI") measure of
inflation and the tenant benefits from a 12 month rent free period, followed
by six years at half rent. The valuation of the property increased by 22.7%
over the period, largely as a result of this transaction.
225 Bath Street, Glasgow
In July 2018, the Company completed the letting of Third Floor East, 225
Bath Street, Glasgow, to International Correspondence Schools Limited. The
lease is for a term of five years, with a tenant break option at the end of
the third year, at a rent of GBP88,608 per annum. The tenant benefits from a
ten month rent free period.
Chapel Walk, Sheffield
Also in July the Company completed a part sale of a retail asset in
Sheffield. The sale comprised largely vacant elements of the asset on Chapel
Walk which comprised c. 0.4% of the whole portfolio vacancy at the time of
sale.
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) 7711 401 021
Company Secretary
Link Company Matters Limited aewu.cosec@linkgroup.co.uk
T: +44(0) 1392 477500
TB Cardew
Ed Orlebar ed.orlebar@tbcardew.com
T: 07738 724 630
Lucy Featherstone lucy.featherstone@tbcardew.com
T: +44 (0) 20 7002 1482
M: +44 (0) 7789 374 663
Liberum Capital
Gillian Martin T: +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 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, 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 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 just over EUR62bn of assets under management as at 30 June 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
June 2018, AEW Group managed nearly EUR30bn in value in properties of all
types located in 14 countries, with close to 400 staff. The Investment
Manager is a 50:50 joint venture between the principals of the Investment
Manager and AEW.
ISIN: GB00BWD24154
Category Code: DIV
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.: 6266
EQS News ID: 735635
End of Announcement EQS News Service
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(END) Dow Jones Newswires
October 22, 2018 02:02 ET (06:02 GMT)
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