Aew Uk Long Lease Reit Share Discussion Threads

[spectoacc] 09/7/2019 09:18

@Sky - I disagree, I think they'll keep same management on a slightly reduced fee. I think they'll say they tried punting it around but found no takers, either for managing at lower cost, or absorbing into another fund. Hope I'm wrong - would rather your option - but I think if anything was going to happen, it would have happened by now.

Suspect they'll caveat it by setting a continuation vote/date by which the fund needs to have grown in size to continue.

Note also that the Meridian Metal fiasco kicked this off, and actually resolved not too badly.

Agree that they should have at least released a "progress" RNS by now. Hope they don't think they have until the April 2020 termination date!

"Ultimately, after all options have been considered, the Board may decide to continue to pursue the Group's existing strategy with AEW UK Investment Management LLP."

[skyship] 09/7/2019 09:05

It will be 3months tomorrow since the Strategic Review RNS - see below.

To do nothing would be a real admission of defeat; and IMO not really an option. Has to be a trade sale or liquidation; after all, they admit AEWL is sub-scale

Really is about time they said something, if not just a holding statement whilst talks continue with 3rd parties etcetcetc…

Most likely outcome has still to be a sale of the portfolio @ c8% discount to AEWU; followed by swift liquidation.

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10 April 2019:

In view of the sub-scale size of the Group, its performance since IPO, and the recent news in respect of Meridian Metal Trading Limited, the Board is reviewing the options for the future of AEWL.

The Board will seek to achieve value for shareholders either by expanding the Group's equity and asset base to achieve full dividend cover, considering offers from interested parties, or by selling the Group's portfolio and returning funds to shareholders.

To ensure that all options can be considered, the Board has today served protective notice of termination of the investment management agreement with AEW UK Investment Management LLP (which will expire on 9(th) April 2020).

Ultimately, after all options have been considered, the Board may decide to continue to pursue the Group's existing strategy with AEW UK Investment Management LLP.

Further announcements will be made in due course.

[edinandy] 09/7/2019 08:35

Surely they have a duty of care to shareholders to explain what’s happening?

[spectoacc] 04/7/2019 06:49

Absolute silence, pretty poor from the Board.

[edinandy] 03/7/2019 18:34

Any news on the management changes? Can’t seem to see an update? Are they likely to sell or keep the manager?

[spectoacc] 27/6/2019 15:00

Hope so, I'm absurdly long AEWL ;) Tho I still think they outcome will be no change, perhaps a slight fee reduction, same manager & carry on as you were.

[skyship] 27/6/2019 14:52

I took 10k at 77.9p....now cheapest offer seems to be 79.44p!

Bid price unchanged @ 76.675p.....that = an absurd 3.5% spread.

Seller must have dried up and MMs unsure where to go.

[skyship] 27/6/2019 11:24

Incidentally, share price has closed in a little today. Currently 76.675p-77.90p...

[skyship] 27/6/2019 11:15

Specto/Jonwig - thnx for that link.

Wouldn't discount LXI entirely as the situation changed somewhat with MMT back in the saddle.

The rather long wait for news here could be construed in a positive fashion - time needed to negotiate with a buyer.

Whatever, I certainly don't see much in the way of downside as the possibility of throwing in the towel and liquidating will remain; and in the meantime a nice yield to reward the hold.

[spectoacc] 27/6/2019 06:59

@chucko1 - but the point is, AEWL's assets are worth 4.5% more to a buyer who buys the shares outright. Or rather, they're worth 5% less if sold individually.

I don't see any indication they're going to wind up AEWL tho.

[chucko1] 26/6/2019 18:03

The buyer will pay the SDRT. They would have to do that anyway whenever they buy assets, so it depends on how much capital is free for investment, and whether most of AEWL’s assets are attractive.

[spectoacc] 26/6/2019 17:14

Thanks @Jonwig - yes, was post 217 above. Point stands that with no buyer, selling off individually would incur c.5% SDRT. I still think most likely is perhaps a reduced fee going forward but same management. Board been very quiet for a while now.

[jonwig] 26/6/2019 16:55

LXI not interested in AEWL:

[skyship] 26/6/2019 16:49

Specto - unable to find anything re LXI ruling themselves out of contention for AEWL. Could you pls advise, or post a link. Thnx.

[chucko1] 26/6/2019 16:29

1. Perhaps, but then spend a year or so selling the assets. Like Axa Property Fund.

2. MM turned out to be a smallish loss.

3. Applies to everything (apart from donkey-jacket manufacturers).

4. Ditto above (even more so).

[spectoacc] 26/6/2019 15:44

1. No one wants to buy them (with LXI ruling themselves out already), co remains sub-scale
2. Another Meridian Metals happens
3. Brexit/recession/whatever
4. Labour get in post-Boris

[chucko1] 26/6/2019 14:05

Let’s think about this the other way - what more could go wrong with AEWL (with reasonable probability)?

[skyship] 26/6/2019 14:01

BT - welcome - hopefully we'll make a few pennies here when we get the result of the Strategic Review.

Sp here is 76.53p-77.97p. Why the mms put 79p as the offer price is beyond me!

[chucko1] 24/6/2019 12:38

I get the sense that from 82p down to 76.5p, someone was simply throwing in the towel. Not sure why at 7% yield (largely covered). The damage is already done (concerning share price) and future prospects, although not exciting at all, are very attractive at the current price. 19% discount to NAV, it seems, and very little retail.

[badtime] 24/6/2019 12:07

Took a few early doors

[nimbo1] 24/6/2019 10:36

I took most of the buys... might be early so have some spare pennies to buy more if opportunity knocks.

[skyship] 24/6/2019 10:25

Welcome Nimbo - hopefully good news ahead.

At the moment 12 trades totalling 173k - 163k BUYS & 10k SALES.

The cheap stock could be drying up.....we'll see soon enough.

[nimbo1] 24/6/2019 10:17

thanks for your thoughts. joined you here having watched since the initial news broke

[skyship] 23/6/2019 09:47

AEW UK Long Lease REIT (AEWL)

AEWL’s Mission is to invest in long lease properties to generate a secure and predictable income return, sustainable in real terms, whilst at least maintaining capital values in real terms.

It has however been a bit of a dog since its over-confident IPO two years ago.
Then 2 months ago they announced the Administration of their largest tenant, which accounted for 9.8% of their rent roll and 9.4% of their property portfolio. Their valuers stated that should the properties be vacated then the result would be to wipe £4m off the previous £10.75m valuation - a 4% NAV impairment !
On 10th April the Company issued a statement saying:

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“In view of the sub-scale size of the Group, its performance since IPO, and the recent news in respect of Meridian Metal Trading Limited (MMT), the Board is reviewing the options for the future of AEWL.
The Board will seek to achieve value for shareholders either by expanding the Group's equity and asset base to achieve full dividend cover, considering offers from interested parties, or by selling the Group's portfolio and returning funds to shareholders.”
============================================

On 9th May a further statement conveyed better news re MMT and this was fully confirmed with an Update on 22nd May:

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-- We are pleased to announce that earlier today the leases have been assigned to Meridian Steel for all three properties. Under the terms of the new lease arrangements, the passing rental income for the three industrial assets, two located in Dudley and one in Sheffield, will remain unchanged at GBP659,000, following an initial 12-month rent free period. The leases, which will run for a period of eight years, are linked to the Retail Price Index, with annual reviews and are all guaranteed by DITH.

-- Following the assignment of the leases, Knight Frank LLP, AEWL's independent valuer, has valued the properties at GBP8.85 million. The impact of this revised valuation would increase the Group's reported NAV based on the balance sheet as at 31 March 2019 (see below) by GBP2.05 million (2.55 pence per share).

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So, the net effect is that the NAV is restored to 95.77p and the Company is undergoing a Strategic Review, as essentially it lacks the critical mass to continue as it is.

Other high-yielding propcos confronted this problem earlier in the cycle through a placing, or by underwriting large portfolio acquisitions – EPIC & WHR are two such, both doing so at the underlying NAV.

IMO it may now be too late to adopt the same route, so perhaps more likely that AEW, the £60billion AUM property asset manager, may have to call time on this minnow and ease it out of the public sector through a trade sale or liquidation.
It is now nearly 11weeks since the Review announcement; so it is surely likely that some resolution will need to be announced fairly soon, I would suggest certainly before mid-July.

With the shares trading at 76.5p-77.0p; one is buying at a 19.6% NAV discount and a 7.1% yield. So a good yield whilst one waits for whatever outcome; but IMO the most likely outcome is some corporate action which will provide shareholders with a quite rapid c12.5% capital gain from current levels.

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Incidentally, one last thing, just in case you are wondering about their Retail exposure, here is a sector breakdown of their property portfolio:

Sector weightings
The sector weightings, by value, of the property portfolio as at 31 March 2019 were: Hotels 21.9%; Industrial 18.3%; Residential care homes 16.3%; Car showrooms 13.6%; Student accommodation 10.9%; Leisure 8.7%; Power station 4.4%; Petrol station 4.0%; and Nursery 1.9%.