Aew Uk Reit Share Discussion Threads

[nickrl] 14/12/2020 22:50

Huge the dividend needs to come down at least 15% and given they've not yet replenished the rental coffers from the Corby sale I would concur with your 1.6p/qtr rate but still would provide a tasty 8.6%.

Personally i can see more impairments on receivables but if the cut dividend and then that turns out better gives them scope to increase the dividend.

[hugepants] 14/12/2020 20:51

"The portfolio had an EPRA vacancy rate of 8.21%. Excluding 225 Bath Street, Glasgow, which has been exchanged for sale with a condition of vacant possession, the vacancy rate was 4.90% (31 March 2020: 3.68%)."

I don't think so. Once 225 Bath Street is completely vacant its sold and vacancy reduces to 4.9%

I had a closer look at the balance sheet here and there's a significant net working capital surplus on top the low LTV. I reckon this has the best balance sheet of all the reits I hold. Best yield as well even if they do reduce it to 1.6p per quarter so that its fully covered.

[essentialinvestor] 05/12/2020 16:39

Vaccancy rate appezrs to have doubled of late?, if im reading it correctly.

[spectoacc] 05/12/2020 16:34

Always interesting to see the AEWU team perform so well, yet the AEWL (now AIRE) team do so poorly they were sacked. Same team :)

[loganair] 05/12/2020 15:01

AEW UK Reit:


Three of our four shortlisted UK generalist real estate investment trusts (Reit) display negative three-year shareholder returns, which underlines the trauma the sector has endured through the pandemic this year. Plunging rent collection levels have led to some trusts to suspend or cut dividends, while uncertainty over commercial tenants’ trading prospects has hit property valuations.

Nevertheless, the positive three-year net asset value figures suggest a turnaround could occur quickly once confidence returns. AEW UK (AEWU), a £119m Reit, wins our award this year with 26.6% portfolio NAV growth over three years. Managed by Alex Short and Laura Elkin at AEW UK Investment Management, AEWU is the only to have recorded NAV growth in the year to August with the portfolio up 3.75%, although recently it posted a 0.7% decline in the third quarter.

So far AEWU is the only UK Reit not to have cut shareholder pay-outs, maintaining a 2p per share quarterly dividend this year. This offers a high 10% yield on its depressed share price, although with the most recent dividend uncovered by earnings – or rental income – of 1.6p per share, the board noted the outlook for future distributions was unclear.

[gary1966] 04/12/2020 10:40

I am looking to take a position here but wondered if I could have your thoughts please.

From the interim results:

Dividends

The Company has continued to deliver on its target of paying dividends of 8.00 pps per annum. During the period, the Company declared and paid two quarterly dividends of 2.00 pps, in line with its target. Dividends for the period were 85.25% covered by EPRA EPS.

It remains the Company's intention to continue to pay dividends in line with its dividend policy, however the outlook remains very uncertain given the current COVID-19 pandemic. In determining future dividend payments, regard will be had to the circumstances prevailing at the relevant time, as well as the Company's
requirement, as a UK REIT, to distribute at least 90% of its distributable income annually, which will remain a key consideration.

What are peoples thoughts on the sustainability of the dividend at 8p or are the management letting us know that next year the dividend is likely to be re-based down to the 6-6.2p range.

TIA

[hugepants] 25/11/2020 13:15

Just looking at covenant headroom info from the 18 Nov interims;

"The Company's rent collection has been strong with at least 90% of contracted rent either collected - or payment plans agreed - for each of the March, June and September 2020 quarters. Based on the contracted rent as at 30 September 2020, a reduction of 64% could be accommodated before breaching the interest cover ratio (ICR) covenant in the Company's debt arrangements;

Based on the property valuation at 30 September 2020, the Company had room for a £59m fall in valuations before reaching the maximum Loan to Value (LTV) covenant in the Company's debt arrangements. If certain conditions are met, a further £16m fall in values could be accommodated."

So property values have to fall about 40% to breach LTV covenant. Rent has to drop 64% to breach ICR covenant. That's a lot of headroom.

[chucko1] 19/11/2020 10:27

they also indicated they had deals in the works, so the dividend is simply not an issue given the cash resources available to make up the smallish current difference.

And much better to take time doing the right deal(s) - this will save (additionally make) far more than the immediate uncovered cash outlay.

[stemis] 19/11/2020 10:20

It depends how quickly they reinvest the cash they have available. They've already invested £5.4m of it, plus bought back £0.26m of shares on a 10.8% yield. I'm guessing it won't be too long before we see further investment.

[nickrl] 19/11/2020 09:41

SteMiS for sure others ran uncovered dividends for years relying upon valuation increases but not such a certainty for next few years I would suggest but imv they will bankroll for another couple of payouts and then see how the land lies. Even reducing it so its covered still leaves them on best yield.

[stemis] 19/11/2020 09:06

I don't see them cutting the dividend. It's cost in H1 was £6.35m. H1 profit (before valuation gains/losses) was £5.38m. So they were short by £0.97m or £1.94m a year. To cover that they've got £13.3m cash and £20.5m headroom on its debt facility = £33.8m. Should be possible to reinvest and cover the dividend. On an average yield of 7.5% it would take £26m.

[nickrl] 18/11/2020 21:06

AEWU showing the impact of selling there best income asset at Corby with NRI down to a level below that which covers the cash dividend. OK they've benefited from selling Corby at a good profit so perhaps they will use that surplus to cover the deficit. Mind you they must have one of the lowest interest rates at 1.47%.

Would need to cut it by 15% to cover it but would still provide sector topping 8.5% on todays share price should they decide to do that.

[lord gnome] 10/11/2020 14:17

Yes, for my sins I also hold TW.

[skinny] 10/11/2020 12:30

Just to clarify the TW deal was Mowden's.

[lord gnome] 10/11/2020 11:41

Thanks Skinny. I didn't know about the Taylor Wimpey deal.

[skinny] 10/11/2020 10:25

Lord Gnome - possibly to fund ?

On the 4th, they sold a development for £17m in Wantage to Taylor Wimpey.

[glaws2] 10/11/2020 10:19

But miles from the sea :)

[corbeta] 10/11/2020 10:17

Not far from the beach.

[chucko1] 10/11/2020 07:55

There are parts of it that look OK - the grass, for instance.

[ramellous] 10/11/2020 07:50

Where there’s muck there’s brass as the old saying goes lol

[lord gnome] 10/11/2020 07:45

If this is it, it looks a right dump. I think it might be termed 'ripe for redevelopment'. Cheap enough at the price, but a lot of work to be done. Certainly potential for development profits in the longer term. So why have St Modwen sold it?

[chucko1] 10/11/2020 07:43

Just as you would expect. And good timing too.

[skinny] 10/11/2020 07:05

.

AEW UK REIT plc (LSE: AEWU) (the "Company") is pleased to announce that it
has acquired the multi-let Westlands Distribution Park in Weston Super Mare
for a purchase price of GBP5.4m.

The purchase price reflects a low capital value of GBP175,000 per acre which
provides strong potential for future capital value growth based upon nearby
comparable land transactions which range between GBP350,000 and GBP500,000 per
acre for other commercial and residential uses.

The estate provides a net initial yield of 6.4% which is expected to
increase to at least 7.4% within the medium term. The average passing rent
of GBP1.50 per sq ft also provides strong potential for rental growth.

The established 323,437 sq ft estate is let to 15 tenants including North
Somerset District Council who make up 30% of the income stream. It is
located 3 miles from the M5 Motorway and 20 miles south of Bristol city
centre.

Alex Short and Laura Elkin, Portfolio Managers, AEW UK REIT, commented:
"Following the very profitable sale of our largest asset in Corby during
May, we have undertaken cautious analysis of the investment market and our
pipeline in the intervening months when looking to replace Corby and its
income stream within the portfolio. This latest acquisition is an excellent
fit for the portfolio as it offers significant potential for future value
accretion in addition to its very low level of passing rent which provides
strong prospects for future rental growth"

Following completion of the above purchase, the Company holds cash of c
GBP9.24 million.

[badtime] 29/10/2020 16:51

Ex div today

[nickrl] 22/10/2020 20:11

The comment

"In determining future dividend payments, regard will be had to the circumstances prevailing at the relevant time, as well as the Company's requirement, as a UK REIT, to distribute at least 90% of its distributable income annually, which will remain a key consideration"

is this a warning we may not see 2p again. Some positive asset mgt activity but broadly neutral on rental income with future sales.

In another warning for the sector can be seen in Costa Coffee rent for a site in Nottingham being reduced from 110k to 52k as well as 9mths free reinforces why discount remains so high on retail centric propcos.